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UNITED STATES SHIPPING ACT

NECESSITY

UNITED STATES
SHIPPING
BOARD

JURISDICTION

GOVERNMENT REGULATION OF OCEAN

TRANSPORTATION

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 Shipping Board was established, with its principal office located at Washington, D. C. 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.

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.

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Public No. 260

sess.

Shipping 1916.

64th Cong.,

Definitions:

act,

UNITED STATES SHIPPING ACT

(39 U. S. Statutes at Large, 728.)

1st CHAP. 451.-An act to establish a United States Shipping Board for the purpose of encouraging, developing, and creating a naval auxiliary and naval reserve and a merchant marine to meet 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:

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 proprier by water in foreign commerce. erty between the United States or any of its Districts, Territories, or possessions and a foreign country, whether in the import or export trade: Provided, That a cargo boat commonly called Ocean tramps an ocean tramp shall not be deemed such "common carrier by water in foreign commerce." excepted.

Proviso.

Common

UNITED STATES SHIPPING ACT

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

merce.

Common rier by water.

Other

car

person

The term "common carrier by water" means a common carrier by water in foreign commerce 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, warehouse, or other terminal facilities in connection with a common carrier by water.

Person.

Vessel.

Documented.

Citizen of United States.

Controlling

tions.

the

in

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 thereof, or of any foreign country.

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. The term "documented under the laws of the United States," means "registered, enrolled, or licensed under the laws of the United States."

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

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 persons.

etc.

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, 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.

created.

by President.

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

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The Commissioners shall be appointed with due regard to their fitness for the efficient discharge of the duties imposed on them by this act, and to a fair representation of the geographical divisions of the country. Not more than three of the commissioners shall be appointed from the 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 inefficiency, neglect of duty, or malfeasance in office. A vacancy in the board shall not impair the 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.

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Salaries.

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

The

SEC. 4. That each member of the board shall receive a salary of $7,500 per annum. board shall appoint a secretary, at a salary of $5,000 per annum, and employ and fix the compensation 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 appropriated for by the Congress. The President, upon the request of the board, may authorize the

Detail of military to board.

Amended by Section 38, Merchant Marine Act, 1920. †Amended by Section 3, Merchant Marine Act, 1920. Amended by Section 4, Merchant Marine Act, 1920.

UNITED STATES SHIPPING ACT

Employees to be under Civil Service Exceptions.

Expenses of board and its employees to be paid.

Rent of offices.
Auditing ac-

counts.

Board authorized

or charter vessels.

Preference to be given to American yards.

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.

With the exception of the secretary, a clerk to each commissioner, the attorneys, naval architects, 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 eligibles to be supplied by the Civil Service Commission and in accordance with the civil service law. 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 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. 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.

†SEC. 5. That the board, with the approval of the President, is authorized to have constructed to build, buy, lease, 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 as the commercial requirements of the marine trade of the United States may permit, for use as 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 corporation formed under section eleven in which the United States is then a stockholder shall purchase, lease, or charter any vessel

Proviso.

Restrictions as to vessels board may acquire.

Transfer of War and Navy vessels to board.

Board may sell, lease, or charter its vessels.

May sell vessels unfit for service.

Vessels acquired from the board allowed American

(a) Which is then engaged in the foreign or domestic commerce of the United States, unless 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 commission as a seaworthy vessel.

SEC. 6. That the President may transfer either permanently or for limited periods to the 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.

SEC. 7. That the board, upon terms and conditions prescribed by it and approved by the President, may charter, lease, or sell to any person, a citizen of the United States, any vessel so purchased, constructed, or transferred.

†SEC. 8. That when any vessel purchased or constructed by or transferred to the board as 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.

SEC. 9. That any vessel purchased, chartered, or leased from the board may be registered 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 foreign

rollment.

Proviso.

built vessels admitted to American registry or enrollment and license under this act, and vessels 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 such a person.

coastwise trade.

May be operated only under American documentation.

Every vessel purchased, chartered, or leased from the board shall, unless otherwise authorized 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 board, shall be transferred to a foreign registry or flag, or sold; nor, except under regulations prescribed by the board, be chartered or leased.

Restrictions

transfer.

Restrictions

mented vessels.

on

on 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 †Amended by Section 2, Merchant Marine Act, 1920.

Amended by Sections 5 and 18, Merchant Marine Act, 1920.

UNITED STATES SHIPPING ACT

Vessels may not from purchasing, shall be sold to any person not a citizen of the United States or transferred to or be sold to foreigners unless first placed under a foreign registry or flag, unless such vessel is first tendered to the board at the price 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.

tendered to board.

Penalties.

Seizure of ves

for military or naval use.

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.

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 temporarily, 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.

for vessels So seized.

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

board of $50,

corporation

thorized.

Minority ownership United

forbidden.

au

stock
by

SEC. 11. That the board, if in its judgment such action is necessary to carry out the purposes 000,000 shipping of this act, may form under the laws of the District of Columbia one or more corporations for the 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. 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 thereto necessary to protect the interests of the United States and to carry out the purposes of this act. The board, with the approval of the President, may sell any or all of the stock of the United States in such corporation, but at no time shall it be a minority stockholder therein: Provided, That no corporation in which the United States is a stockholder, formed under the authority 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 them to effort, to contract with any person a citizen of the United States for the purchase, lease, or charter private corporations. of such vessel, under such terms and conditions as may be prescribed by the board.

Sale of stock.
Proviso.

Not to operate ships unless unable

Must offer its

competition. Consent of Presi

Life of corporations limited.

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 in public the board shall, after full compliance with the terms of this proviso, determine that it is unable to enter into a contract with such private parties for the purchase, lease, or charter of such vessel, dent 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 poration required. justify the operation of such vessel by a corporation formed under the provisions of this section. At the expiration of five years from the conclusion of the present European war, the operation of vessels on the part of any such corporation in which the United States is then a stockholder of shall cease, and the said corporation stand dissolved. The date of the conclusion of the war shall 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 shall be taken over by the board at a fair and reasonable value and paid for with funds to the credit of the board. In case of disagreement, such vessel shall be determined in the manner provided in section ten.

Disposal property on solution.

dis

Compensation

for.

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SEC. 12. That the board shall investigate the relative cost of building merchant vessels in the United States and in foreign maritime countries, and the relative cost, advantages, and disship- advantages of operating in the foreign trade vessels under United States registry and under foreign registry. It shall examine the rules under which vessels are constructed abroad and in the United con- States, and the methods of classifying and rating same, and it shall examine into the subject of 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 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.

struction and classification.

Marine

ance.

UNITED STATES SHIPPING ACT

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 mort-Congress as it deems proper for the amendment, improvement, and revision of such laws, and for

Vessel gages.

Annual

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.

report 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

and recommendations to

gress.

Issuance $50,000,000

of

bonds authorized.

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.

of SEC. 13. That for the purpose of carrying out the provisions of sections five and eleven, no Panama Canal liability shall be incurred exceeding a total of $50,000,000, and the Secretary of the Treasury, upon 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 Canal, to a total amount not to exceed $50,000,000; Provided, That any bonds issued and sold 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.

Proviso.

Το be payable within 50 years.

Funds of board permanently

propriated.

ap

common

No carrier by water

To give deferred rebates.

use

To ing ships.

To

fight

retaliate against any shipper.

1

un

The proceeds of such bonds and the net proceeds of all sales, charters, and leases of vessels 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 appropriated for the purpose of carrying out the provisions of sections five and eleven.

SEC. 14. That no common carrier by water, shall directly or indirectly—

First. Pay, or allow, or enter into any combination, agreement, or understanding, express or 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 deferment, the shipper has complied with the terms of the rebate agreement or arrangement.

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 competition by driving another carrier out of said trade.

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 or 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.

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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.

SEC. 15. That every common carrier by water, or other person subject to this act, shall file filed immediately with the board a true copy, or, if oral, a true and complete memorandum, of every 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 other arrangements or character of freight or passenger traffic to be carried; or in any manner providing for an exclu"agreement." sive, preferential, or co-operative working arrangement. The term "agreement" in this section includes understandings, conferences, and other arrangements.

conferences, and

included in term

†Amended by Section 20, Merchant Marine Act, 1920.

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