The Abandoned Ocean: A History of United States Maritime Policy

Published by EH.NET (September 2000)

Andrew Gibson and Arthur Donovan, The Abandoned Ocean: A History of United

States Maritime Policy. Columbia, South Carolina: University of South

Carolina Press, 2000. xiv + 362 pp. $39.95 (hardback), ISBN: 1-57003-319-6.

Reviewed for EH.NET by Gordon Boyce, School of Economics and Finance, Victoria

University of Wellington, New Zealand.

In this well-written volume, Gibson and Donovan provide a concise analysis of

American maritime policy from the early republic to the present. Their aim is

to explain why since about 1860 the United States failed to achieve “its stated

goal of promoting a commercially viable merchant marine engaged in foreign

trade” even though a strong merchant navy was considered essential in times of

national emergency. In so doing, Gibson and Donovan endeavour to furnish the

historical background needed to guide future policy. Their advice is

unequivocal: the government should eliminate restrictions and subsidies in

order to let the industry operate freely on the same basis as its international

rivals.

Yet, the argument does not come across as ideologically motivated or

doctrinaire. Indeed, Gibson and Donovan carefully explain that America made a

critical mistake by continuing to pursue protectionist practices. Specifically,

the authorities required U.S. flagged vessels to be U.S.-owned and -built and

reserved coastal trades for U.S. registered ships. Between 1830 and 1860, when

America had an international comparative advantage in shipbuilding and

formidable ship operating capabilities, these restrictions were unnecessary.

After the Civil War, which caused the destruction of a large part of the

national fleet, American shipbuilding lost its prowess as the shift from sail

to steam and from wood to iron and later steel conferred advantages upon

Britain’s shipyards. Yet, U.S. flag restrictions compelled domestic operators

to remain bound to an inefficient shipbuilding industry. The chosen solution

was to provide subsidies, but these were inadequate to prevent a continued

decline, especially as land ward opportunities offered greater returns. After

1880, the U.S. navy expanded as the country sought to enhance its international

position, but the merchant marine withered to the extent that by 1900, American

ships carried just eight percent of their country’s foreign trade. During World

War I, the consequences of this dangerous state of affairs finally revealed

themselves, and the government responded by building and operating a huge

fleet. It also passed the famous Shipping Act of 1916 which ignored

international practices and compelled domestic and foreign ship owners

servicing U.S. trades to operate within “open” conferences (rate-setting

cartel-like organizations) that were subject to federal regulation.

America’s policy settings were reinforced by subsequent legislation, which

offered the industry more support in the form of postal, construction, and

operating subsidies. The Shipping Act of 1920 committed the government to

preserving a merchant marine capable of supporting the nation’s trade and

acting as a naval reserve and the Act of 1936 compelled ship operators to offer

seafarers remuneration at levels above international standards. A divided union

movement created chronically unstable labour relations to which ship owners

responded by making generous concessions. Moreover, because the U.S.

shipbuilding industry failed to exploit fully innovations (including modular

construction) vessel costs were much higher than overseas. Subsidies, which

were especially wasteful and corrupt in the 1930s, propped up the edifice.

Political leaders were unwilling to make fundamental changes in the face of

opposition from politically powerful interest groups. The fire sales of vessels

that followed massive war-induced shipbuilding programmes gave the industry

temporary fillips that could not compensate in the long-term for a lack of

international comparative advantage.

By the 1980s, the link between commercial shipping and military support had

been all but broken by changes in sealift requirements. (The army required

Roll-on Roll-off vessels to carry heavy vehicles, but U.S. shipowners possessed

few of these craft with the result that the world had a very close call when

Saddam Hussein invaded Kuwait.) Moreover, subsidies were becoming increasingly

politically unpalatable. Currently, U.S. policies are completely out of touch

with international conventions that allow the use of flags of convenience and

support open registers.

Gibson and Donovan argue that the solution is to leave shipping free to meet

foreign competition. By eliminating onerous registry rules and allowing

American ship owners to buy vessels from foreign yards, to employ lower cost

labour, and permit the same type of tax advantages enjoyed by international

competitors, the U.S. might prevent the complete disappearance of its merchant

marine. In so doing, the nation could preserve the industry’s formidable

innovative capabilities, while securing commercial and perhaps strategic

advantages.

The Abandoned Ocean is not a typical “policy” book; it is written in a

lively and compelling style, provides a broad context, and presents a clear

analysis. This splendid volume will attract government officials, business

historians, maritime historians, and economists. By highlighting the difficulty

of regulating an international industry this volume indirectly offers guidance

to those who might consider imposing restrictions on businesses like those

conducted over the internet. It also draws attention to the way in which

political factors that shape regulatory traditions can create enduring path

dependency. The chapters on recent developments are particularly valuable.

The Abandoned Ocean should be included in the reading lists of a variety

of courses, including the economics of regulation, policy formulation and

execution, and business and maritime history, as well. Individual chapters can

be used as required reading for historical survey courses to develop

maritime/international themes. Maritime historians will be anxious to see

Gibson and Donovan’s next work which examines the history of the container

revolution.

Gordon Boyce’s publications include Information, Mediation and

Institutional Development: The Rise of Large-scale Enterprise in British

Shipping, 1879-1914, Manchester University Press, 1995.