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UNITED STATES SHIPPING ACT

GOVERNMENT REGULATION OF OCEAN

TRANSPORTATION

NECESSITY

Government regulation of ocean transportation, in so far as it affects the United States, became apparent a number of years ago, and more so during the year 1916, when the Congress of the United States passed the Shipping Act, and in 1920, when the Merchant Marine Act was passed.

Under The Shipping Act, as amended, the United States Government becomes an institution to perform every function in connection with ocean transportation. It is also, as set forth, the duty of the Shipping Board to protect the public against unjust and unreasonable practices and charges and to develop and encourage the maintenance of a merchant marine.

The Shipping Act provides for a Transportation or Shipping Board to enforce the law relating to ocean transportation, and accordingly the United States Ship

ping Board was established, with its principal office located at Washington, D. C. UNITED STATES SHIPPING The duties of the Shipping Board as to ocean transportation are similar to those

of the Interstate Commerce Commission as to interstate transportation by rail and water. The Shipping Board is composed of seven members who are appointed by the President of the United States, with the consent of the Senate.

BOARD

JURISDICTION

The jurisdiction of the Shipping Board embraces transportation by water of property or passengers on the high seas or the Great Lakes on regular routes from port to port between one State, Territory, District or possession of the United States and any other State, Territory, District or possession of the United States, or between places in the same Territory, District or possession. This jurisdiction also covers all branches of ship operation, including chartering, leasing, owning, port facilities, rates, charges, etc., and the act further provides that carriers by water coming within the provisions of the act must file tariffs in accordance with the rules and regulations of the United States Shipping Board.

UNITED STATES SHIPPING ACT

sess.

1916.

Sept. 7, 1916. (H. R. 18456.)

(39 U. S. Statutes at Large, 728.) Public No. 36064th Cons, 1st CHAP. 451.-An act to establish a United States Shipping Board for the purpose of encouraging, Shipping

developing, and creating a naval auxiliary and naval reserve and a merchant marine to meet act,

the requirements of the commerce of the United States with its Territories and possessions and with foreign countries; to regulate carriers by water engaged in the foreign and interstate commerce of the United States; and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America

in Congress assembled, That when used in this act: Definitions:

The term "common carrier by water in foreign commerce" means a common carrier, except common car- ferryboats running on regular routes, engaged in the transportation by water of passenger or propforeign commerce." erty between the United States or any of its Districts, Territories, or possessions and a foreign Proviso.

country, whether in the import or export trade: Provided, That a cargo boat commonly called

tramps an ocean tramp shall not be deemed such “common carrier by water in foreign commerce.” excepted.

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UNITED STATES SHIPPING ACT

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The term "common carrier by water in interstate commerce" means a common carrier enCommon rier by water in gaged in the transportation by water of passengers or property on the high seas or the Great

com- Lakes on regular routes from port to port between one State, Territory, District, or possession

of the United States and any other State, Territory, District, or possession of the United States, or between places in the same Territory, District, or possession.

The term "common carrier by water” means a common carrier by water in foreign commerce Common rier by water.

or a common carrier by water in interstate commerce on the high seas or the Great Lakes on regular routes from port to port.

The term "other person subject to this act” means any person not included in the term "comsubject to this act. mon carrier by water,” carrying on the business of forwarding or furnishing wharfage, dock, ware

house, or other terminal facilities in connection with a common carrier by water. Person.

The term “person” includes corporations, partnerships, and associations, existing under or authorized by the laws of the United States, or any State, Territory, District, or possession there

of, or of any foreign country. Vessel.

The term "vessel” includes all water craft and other artificial contrivances of whatever description and at whatever stage of construction, whether on the stocks or launched, which are

used or are capable of being or are intended to be used as a means of transportation on water. Documented.

The term “documented under the laws of the United States,” means "registered, enrolled,

or licensed under the laws of the United States." Citizen

OSEC. 2. That within the meaning of this act no corporation, partnership, or association United States.

shall be deemed a citizen of the United States unless the controlling interest therein is owned by citizens of the United States, and, in the case of a corporation, unless its president and managing directors are citizens of the United States and the corporation itself is organized under the

laws of the United States or of a State, Territory, District, or possession thereof. Controlling in

The controlling interest in a corporation shall not be deemed to be owned by citizens of the terest in corpora- United States (a) if the title to a majority of the stock thereof is not vested in such citizens free

from any trust or fiduciary obligation in favor of any person not a citizen of the United States; or (b) if the majority of the voting power in such corporation is not vested in citizens of the United States; or (c) if through any contract or understanding it is so arranged that the majority of the voting power may be exercised, directly or indirectly, in behalf of any person who is not a citizen of the United States; or (d) if by any other means whatsoever control of the corporation is conferred

upon or permitted to be exercised by any person who is not a citizen of the United States. Act to apply to

The provisions of this act shall apply to receivers and trustees of all persons to whom the receivers, assigns, act applies, and to the successors or assignees of such personis.

Sec. 3. That a board is hereby created, to be known as the United States Shipping Board, Shipping Board and hereinafter referred to as the board. The board shall be composed of five commissioners, created.

to be appointed by the President by and with the advice and consent of the Senate; said board Appointment of, shall annually elect one of its members as chairman and one as vice-chairman. by Terms of office

The first commissioners appointed shall continue in office for terms of two, three, four, five, of commissioners. and six years, respectively, from the date of their appointment, the term of each to be designated

by the President, but their successors shall be appointed for terms of six years, except that any Filling of vacan

person chosen to fill a vacancy shall be appointed only for the unexpired term of the commissioner

whom he succeeds. Qualifications of The Commissioners shall be appointed with due regard to their fitness for the efficient discommissioners.

charge of the duties imposed on them by this act, and to a fair representation of the geographical Board

be

divisions of the country. Not more than three of the commissioners shall be appointed from the nonpolitical same political party. No commissioner shall be in the employ of or hold any official relation

to any common carrier by water or other person subject to this act, or own any stocks or bonds not to engage in thereof, or be pecuniarily interested therein. No commissioner shall actively engage in any other other business.

business, vocation, or employment. Any commissioner may be removed by the President for Removal, cancies, etc. inefficiency, neglect of duty, or malfeasance in office. A vacancy in the board shall not impair the Official seal.

right of the remaining members of the board to exercise all its powers. The board shall have an

official seal, which shall be judicially noticed. Rules of proce

The board may adopt rules and regulations in regard to its procedure and the conduct

of its business. Salaries.

Sec. 4. That each member of the board shall receive a salary of $7,500 per annum. The

board shall appoint a secretary, at a salary of $5,000 per annum, and employ and fix the compenDetail of military

sation of such attorneys, officers, naval architects, special experts, examiners, clerks, and other and naval officers employees as it may find necessary for the proper performance of its duties and as may be appro

priated for by the Congress. The President, upon the request of the board, may authorize the Amended by Section 38, Merchant Marine Act, 1920. Amended by Section 3, Merchant Marine Act, 1920. Amended by Section 4, Merchant Marine Act, 1920.

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UNITED STATES SHIPPING ACT

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detail of officers of the military, naval, or other services of the United States for such duties as

the board may deem necessary in connection with its business. Employees to be under Civil Service

With the ption of the secretary, a clerk to each commissioner, the attorneys, naval archiExceptions.

tects, and such special experts and examiners as the board may from time to time find necessary

to employ for the conduct of its work, all employees of the board shall be appointed from lists of Expenses of eligibles to be supplied by the Civil Service Commission and in accordance with the civil service law. board and its employees to be paid. The expenses of the board, including necessary expenses for transportation, incurred by the

members of the board or by its employees under its orders, in making any investigation, or upon Rent of offices.

official business in any other place than in the city of Washington, shall be allowed and paid on

the presentation of itemized vouchers therefor approved by the chairman of the board. Auditing ac

Until otherwise provided by law, the board may rent suitable offices for its use.

The Auditor for the State and Other Departments shall receive and examine all accounts of

expenditures of the board. Board authorized

Sec. 5. That the board, with the approval of the President, is authorized to have constructed to builde bure.stease, and equipped in American shipyards and navy yards or elsewhere, giving preference, other

things being equal, to domestic yards, or to purchase, lease, or charter vessels suitable, as far Preference to be

as the commercial requirements of the marine trade of the United States may permit, for use as given to American yards.

naval auxiliaries or Army transports, or for other naval or military purposes, and to make necesNaval auxiliaries.

sary repairs on and alterations of such vessels: Provided, That neither the board nor any cor

poration formed under section eleven in which the United States is then a stockholder shall purProviso.

chase, lease, or charter any vesselRestrictions as to vessels board may (a) Which is then engaged in the foreign or domestic commerce of the United States, unacquire.

less it is about to be withdrawn from such commerce without any intention on the part of the owner to return it thereto within a reasonable time;

(b) Which is under the registry or flag of a foreign country which is then engaged in war;

(c) Which is not adapted, or can not by reasonable alterations and repairs be adapted to the purposes specified in this section;

(d) Which, upon expert examination made under the direction of the board, a written report of such examination being filed as a public record, is not without alteration or repair found to be at least seventy-five per centum as efficient as at the time it was originally put in commis

sion as a seaworthy vessel. Transfer of War Sec. 6. That the President may transfer either permanently or for limited periods to the and Navy vessels to board.

board such vessels belonging to the War or Navy Department as are suitable for commercial uses and not required for military or naval use in time of peace, and cause to be transferred to the

board vessels owned by the Panama Railroad Company and not required in its business. Board may sell, Sec. 7. That the board, upon terms and conditions prescribed by it and approved by the lease, charter its vessels.

President, may charter, lease, or sell to any person, a citizen of the United States, any vessel so

purchased, constructed, or transferred. May sell vessels Sec. 8. That when any vessel purchased or constructed by or transferred to the board as unfit for service.

herein provided, and owned by the United States, becomes, in the opinion of the board, unfit for the purposes of this Act, it shall be appraised and sold at public or private competitive sale after

due advertisement free from the conditions and restrictions of this act. Vessels acquired Sec. 9. That any vessel purchased, chartered, or leased from the board may be registered from allowed American or enrolled and licensed, or both registered and enrolled and licensed as a vessel of the United register and

en- States and entitled to the benefits and privileges appertaining thereto: Provided, That foreignrollment.

built vessels admitted to American registry or enrollment and license under this act, and vessels Proviso.

owned, chartered, or leased by any corporation in which the United States is a stockholder, and

vessels sold, leased, or chartered to any person, a citizen of the United States, as provided in this May, engage in act, may engage in the coastwise trade of the United States while owned, leased, or chartered by coastwise trade.

such a person. May be operated Every vessel purchased, chartered, or leased from the board shall, unless otherwise authorized onlyunder American documentation

by the board, be operated only under such registry or enrollment and license. Such vessels while

employed solely as merchant vessels shall be subject to all laws, regulations and liabilities governSubject to navi- ing merchant vessels, whether the United States be interested therein as owner, in whole or in part, gation laws.

or hold any mortgage, lien, or other interest therein. No such vessel, without the approval of the Restrictions

board, shall be transferred to a foreign registry or flag, or sold; nor, except under regulations pretransfer.

scribed by the board, be chartered or leased. Restrictions

No vessel documented under the laws of the United States or owned by any person a citizen transfer of docu- of the United States or by a corporation organized under the laws of the United States, or of any

State, Territory, District, or possession thereof, except one which the board is prohibited fAmended by Section 2, Merchant Marine Act, 1920. Amended by Sections 5 and 18, Merchant Marine Act, 1920.

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first placed under a foreign registry or flag, unless such vessel is first tendered to the board at the price tendered to board.

in good faith offered by others, or, if no such offer, at a fair price to be determined in the manner

provided in section ten. Penalties.

Any vessel sold, chartered, leased, transferred to or placed under a foreign registry or flag, or operated in violation of any provision of this section shall be forfeited to the United States, and whoever violates any provision of this section shall be guilty of a misdemeanor and subject to a

fine of not more than $5,000 or to imprisonment for not more than five years, or both. Seizure of ver

SEC. 10. That the President, upon giving to the person interested such reasonable notice in sels by. President writing as in his judgment the circumstances permit, may take possession, absolutely or temfor military or naval

porarily, for any naval or military purpose, of any vessel purchased, leased, or chartered from the board: Provided, That if, in the judgment of the President, an emergency exists requiring such

action, he may take possession of any such vessel without notice. Compensation

Thereafter, upon ascertainment by agreement or otherwise, the United States shall pay the seized.

person interested the fair actual value based upon normal conditions at the time of taking of the interest of such person in every vessel taken absolutely, or if taken for a limited period, the fair charter value under normal conditions for such period. In case of disagreement as to such fair value, it shall be determined by appraisers, one to be appointed by the board, one by the person interested, and a third by the two so appointed. The finding of such appraisers shall be final and

binding upon both parties. Formation by fSec. 11. That the board, if in its judgment such action is necessary to carry out the purposes board

$50,000,000 shipping of this act, may form under the laws of the District. of Columbia one or more corporations for the corporation thorized.

purchase, construction, equipment, lease, charter, maintenance and operation of merchant vessels

in the commerce of the United States. The total capital stock thereof shall not exceed $50,000,000. Minority stock ownership by

The board may, for and on behalf of the United States, subscribe to, purchase, and vote not less

States than a majority of the capital stock of any such corporation, and do all other things in regard forbidden.

thereto necessary to protect the interests of the United States and to carry out the purposes of Sale of stock. this act. The board, with the approval of the President, may sell any or all of the stock of the Proviso,

United States in such corporation, but at no time shall it be a minority stockholder therein: Pro

vided, That no corporation in which the United States is a stockholder, formed under the authority Not to operate of this section, shall engage in the operation of any vessel constructed, purchased, leased, chartered, to sell, lease, or or transferred under the authority of this act, unless the board shall be unable, after a bona fide charter private

effort, to contract with any person a citizen of the United States for the purchase, lease, or charter corporations.

of such vessel, under such terms and conditions as may be prescribed by the board.

The board shall give public notice of the fact that vessels are offered and the terms and convessels to private ditions upon which a contract will be made, and shall invite competitive offerings. In the event capital dirin public the board shall, after full compliance with the terms of this proviso, determine that it is unable to

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enter into a contract with such private parties for the purchase, lease, or charter of such vessel, Consent of President to operation of it shall make a full report to the President, who shall examine such report, and if he shall approve ships by such cor- the same, he shall make an order declaring that the conditions have been found to exist which

justify the operation of such vessel by a corporation formed under the provisions of this section. Life of corpora

At the expiration of five years from the conclusion of the present European war, the operations limited.

tion of vessels on the part of any such corporation in which the United States is then a stockholder Disposal of shall cease, and the said corporation stand dissolved. The date of the conclusion of the war shall property solution.

be declared by proclamation of the President. The vessels and other property of any such corporation shall revert to the board. The board may sell, lease, or charter such vessels as provided in

section seven and shall dispose of the property other than vessels on the best available terms and, Board to take up outstanding stock after payment of all debts and obligations, deposit the proceeds thereof in the Treasury to its credit.

All stock in such corporations owned by others than the United States at the time of dissolution Compensation

shall be taken over by the board at a fair and reasonable value and paid for with funds to the for.

credit of the board. In case of disagreement, such vessel shall be determined in the manner pro

vided in section ten. Investigations by SEC. 12. That the board shall investigate the relative cost building merchant vessels in board.

the United States and in foreign maritime countries, and the relative cost, advantages, and disof ship- advantages of operating in the foreign trade vessels under United States registry and under foreign building.

registry. It shall examine the rules under which vessels are constructed abroad and in the United Rules con- States, and the methods of classifying and rating same, and it shall examine into the subject of struction and classification.

marine insurance, the number of companies in the United States, domestic and foreign, engaging

in marine insurance, the extent of the insurance on hulls and cargoes placed or written in the Marine

insur- United States, and the extent of reinsurance of American maritime risks in foreign companies,

and ascertain what steps may be necessary to develop an ample marine insurance system as an aid Amended by Section 12, Merchant Marine Act, 1920.

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UNITED STATES SHIPPING ACT

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Navigation laws. in the development of an American merchant marine. It shall examine the navigation laws of the

United States, and the rules and regulations thereunder, and make such recommendations to the Vessel mort- Congress as it deems proper for the amendment, improvement, and revision of such laws, and for

the development of the American merchant marine. It shall investigate the legal status of mortgage loans on vessel property, with a view to means of improving the security of such loans and of

encouraging investment in American shipping. Annual

report and

It shall; on or before the first day of December in each year, make a report to the Congress,

Con- which shall include its recommendations and the results of its investigations, a summary of its gress.

transactions, and a statement of all expenditures and receipts under this act, and of the operations of any corporation in which the United States is a stockholder, and the names and compensation

of all persons employed by the board. Issuance $60,000,000

Sec. 13. That for the purpose of carrying out the provisions of sections five and eleven, no Canal liability shall be incurred exceeding a total of $50,000,000, and the Secretary of the Treasury, upon authorized.

the request of the board, approved by the President, shall from time to time issue and sell or use 36 Stat. L., 117, any of the bonds of the United States now available in the Treasury, under the acts of August 193, 1013.

fifth, nineteen hundred and nine, February fourth, nineteen hundred and ten, and March second,

nineteen hundred and eleven, relating to the issue of bonds for the construction of the Panama Proviso.

Canal, to a total amount not to exceed $50,000,000; Provided, That any bonds issued and sold To be payable within 60 years.

or used under the provisions of this section may be made payable at such time within fifty years after issue, as the Secretary of the Treasury may fix, instead of fifty years after the date of issue,

as prescribed in the act of August fifth, nineteen hundred and nine. Funds of board

The proceeds of such bonds and the net proceeds of all sales, charters, and leases of vessels permanently propriated. and of sales of stock made by the board, and all other moneys received by it from any source,

shall be covered into the Treasury to the credit of the board, and are hereby permanently appro

priated for the purpose of carrying out the provisions of sections five and eleven. No carrier by water

Sec. 14. That no common carrier by water, shall directly or indirectlyTo give deferred

First. Pay, or allow, or enter into any combination, agreement, or understanding, express or rebates.

implied, to pay or allow, a deferred rebate to any shipper. The term "deferred rebate" in this act

means a return of any portion of the freight money by a carrier to any shipper, as a consideration for the giving of all or any portion of his shipments to the same or any other carrier, or for any other purpose, the payment of which is deferred beyond the completion of the service for which it is paid, and is made only if, during both the period for which computed and the period of defer

ment, the shipper has complied with the terms of the rebate agreement or arrangement.

fighting ships.

Second. Use a fighting ship either separately or in conjunction with any other carrier, through agreement or otherwise. The term "fighting ship" in this act means a vessel used in a particular trade by a carrier or group of carriers for the purpose of excluding, preventing, or reducing com

petition by driving another carrier out of said trade.

retaliate against any ship

Third. Retaliate against any shipper by refusing, or threatening to refuse, space accommodations when such are available, or resort to other discriminating or unfair methods, because such shipper has patronized any other carrier or has filed a complaint charging unfair treatment, or

for any other reason. To discriminate

Fourth. Make any unfair or unjustly discriminatory contract with any shipper based on the unjustly fairly.

volume of freight offered, or unfairly treat or unjustly discriminate against any shipper in the matter of (a) cargo space accommodations or other facilities, due regard being had for the proper loading of the vessel and the available tonnage; (b) the loading and landing of freight in proper

condition; or (c) the adjustment and settlement of claims. Penalty.

Any carrier who violates any provision of this section shall be guilty of a misdemeanor,

punishable by a fine of not more than $25,000 for each offense. Agreements.

Sec. 15. That every common carrier by water, or other person subject to this act, shall file Must filed immediately with the board a true copy, or, if oral, a true and complete memorandum, of every by all whom this act applies.

agreement with another such carrier or other person subject to this act, or modification or cancellation thereof, to which it may be a party or conform in whole or in part, fixing or regulating transportation rates or fares; giving or receiving special rates, accommodations, or other special privileges or advantages; controlling, regulating, preventing, or destroying competition; pooling

or appropriating earnings, losses, or traffic; allotting ports or restricting or otherwise regulating Understandings, the number and character of sailings between ports; limiting or regulating in any way the volume conferences, and other arrangements or character of freight or passenger traffic to be carried; or in any manner providing for an excluincluded in "agreement." sive, preferential, or co-operative working arrangement. The term "agreement” in this section

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