Edward N. Hurley



THE year 1910 marked the beginning of a new era in the political history of the United States. The Roosevelt régime had lived its day and although William Howard Taft was enjoying nation-wide popularity, he had been in office less than a year when it became plainly discernible that politically his administration. was doomed to failure. Hence, the Democrats, who had suffered defeat successively for sixteen years, began to revive hopes of national success at the polls.

Although I had not actively identified myself with my party and never had entertained the thought of holding official position under the government, my business connections brought me into association with men actively engaged in politics. Among such men was my attorney, Mr. John Maynard Harlan, an able lawyer with long training in politics.

Harlan was a Princeton man, and because he knew well the high qualities of character, the sterling integrity and the intellectual ability of Woodrow Wilson, President of Princeton University, he was one of Doctor Wilson's staunch supporters in the latter's series of struggles with the university trustees. Although in politics Harlan was a Republican, he was of the independent type and felt himself at liberty to espouse a man or a cause outside of the party to which he usually gave allegiance. Men and the causes or principles for which they stood were more to Harlan than party affiliations. It was this fact which made Harlan an advocate of Woodrow Wilson.

From time to time Doctor Wilson's name had been mentioned in the public press in connection with the governorship of New Jersey, which was at issue in the campaign that year, and even in connection with the Presidency itself. Nevertheless, there had been no serious consideration of Doctor Wilson by the Democratic party of New Jersey with regard to the governorship, nor by the people of the country with regard to the Presidency. Suggestions of the availability of the president of Princeton University for high political office in New Jersey and in the nation were advanced almost exclusively by persons in no wise in positions to do more than. make suggestions. What was needed to bring such recommendations into accomplishment was an active organized force. Without such an organization, he might have continued for an indefinite period as the head of Princeton University.

While Harlan was not interested in the success of the Democratic party, he was able to perceive that the time was approaching when there would be a political upheaval in the country and that the Republican party would likely go down to defeat at the next election. Hence, if the Democratic party were to be returned to power in the government, it were better, in the opinion of a man of Harlan's political judgment, that it should be led by a man of Woodrow Wilson's type. Although Harlan, being a Republican, did not command the necessary machinery to be placed at the disposal of Woodrow Wilson, he did have a knowledge of the way in which that necessary machinery might be acquired and applied.

As a member of the Princeton Club of Chicago, Harlan was instrumental in having Doctor Wilson deliver an address before the Club, late in the spring of 1910. While Doctor Wilson was in Chicago it was my good fortune to meet him at Harlan's office. A few days later Harlan recounted to me that Woodrow Wilson was a very earnest Democrat; that he had been mentioned as a possible candidate for the gubernatorial nomination of the Democratic party of New Jersey and that in event of Wilson's nomination and election to that office, his nomination for the Presidency would be by no means a remote possibility.

Harlan was aware that I had enjoyed a long acquaintance with the late Roger C. Sullivan, afterwards the Illinois member of the Democratic national committee. He knew that Sullivan was an influential factor in affairs and management of the Democratic party and in its national councils, and that he was a friend of Senator James Smith, Jr., of New Jersey, who at that time was in Chicago because of the illness of his daughter. Accordingly, Harlan asked me if I would discuss with Sullivan Doctor Wilson's prospective candidacy for the governorship of New Jersey and through Sullivan ascertain the feelings of Senator Smith toward Doctor Wilson as a candidate in the forthcoming campaign. This I agreed to do, but at that time I did not visualize the far-reaching results which followed my mere presentation of Harlan's request to Roger C. Sullivan. Nevertheless, this action prompted by John Maynard Harlan set in motion machinery which brought into the political arena the man destined to become a great world leader in the most titanic struggle in the history of civilization.

When I discussed with Sullivan the conversation I had with Harlan, I found him very sympathetic. He was frank and open-minded on the matter and suggested that we have luncheon with Senator Smith. At the luncheon Sullivan and Senator Smith promptly entered upon a discussion. of politics. During the course of the conversation Sullivan asked Senator Smith what he thought of Woodrow Wilson, president of Princeton University. Without hesitation., Smith replied: "I think very well of him. While he has had no practical experience in politics, he is a wonderfully able man, and under certain conditions I would be glad to see him nominated for the governorship of New Jersey."

Although he believed Doctor Wilson to be a sterling Democrat and well grounded in the principles of the party, Senator Smith knew that Wilson had not been active with the party organization in its campaigns. It had been his experience, he said, that party organizations desired something of record to show that candidates placed in nomination would be what is termed "regular "; and that if he had anything to exhibit to leaders of his organization to assure their followers that Woodrow Wilson would not be unfriendly to them, he thought they would be willing to approve of his selection of Wilson as the Democratic nominee for Governor of New Jersey. In the course of our talk, Senator Smith took occasion to express a firm conviction that with the party organization lined up in his support, if Doctor Wilson should be nominated his election would be assured, and that thus he would become a national figure for the Presidency. It is evident, therefore, that Senator Smith, even at that early date was sufficiently alert to the political trend of the times toward progressive policies to realize the great potential possibility in Wilson's candidacy.

I was well satisfied with the outcome of our talk. It gave me assurance that Senator Smith would be willing to take up the prospective candidacy of Doctor Wilson., if he received reasonable assurance of a favorable political attitude on the part of Doctor Wilson toward the organization of which Smith was the head and whose active support was absolutely necessary to insure Wilson's nomination. I promptly communicated the results of our conversation to Harlan, who regarded them as highly important and indicative of success. He lost no time in getting to his office and inditing a personal letter to Wilson. That letter records the inception of the practical movement that brought about the

nomination of Doctor Wilson for the governorship of New Jersey and started him on the high road to national and international prominence as a world statesman. Copy of the letter, which heretofore never .has been given to the public, is as follows:

Marquette Building

June 11, 1910


Woodrow Wilson, Esq.,
Princeton, N.J.

Dear Mr. Wilson:--

Within the last two or three days Mr- Smith, who, I believe, dominates the Democratic organization in New Jersey, was in Chicago, and my friend, Mr. Edward N. Hurley, knowing my regard for and admiration of you, utilized the opportunity of talking with Mr. Smith, whom he knows pleasantly, about the political situation in New Jersey and the possibilities in that connection with reference to yourself. Mr. Smith welcomed Mr. Hurley's suggestion that possibly he might arrange, through me, to have you and Mr, Smith lunch with him some day in the near future when he may be in New York. Mr, Smith said that he would be glad of an opportunity to talk with you and learn what would be your attitude toward the Democratic organization in New Jersey in the event you were nominated Democratic candidate for Governor and elected, Mr. Smith expressing the opinion that you would win "in a walk" if you were nominated. Mr. Smith did not say what Mr. Hurley, however, did vouchsafe, confirming the impression which I already had. that Mr. Smith was in a position to bring about your nomination without difficulty. Mr. Burley said very positively that Mr. Smith had not the slightest desire that you commit yourself in any way as to principles, measures or men, but that he would wish only to be satisfied that you, if you were elected Governor, would not set about fighting and breaking down the existing Democratic organization and replacing It with one of your own. In other words, Mr. Smith's thought seems to be the quite natural one that an organization in control of the machinery of nomination of the Democratic party in New Jersey could hardly be expected to proceed with enthusiasm to the nomination and election of a Governor who, after being so nominated and elected, would feel it his duty or make it his business to turn upon and wreck that organization. I suppose that Mr. Smith's solicitude on that score is simply a manifestation in the political field of the natural law of self-preservation --- the self, however, to be preserved not being his own personality (that presumably being beyond the need of anyone's help or the fear of anyone's attack), but rather the organization of which he is the master or dominating factor.

You might write me a line indicating whether you care to have me proceed further with the matter, taking care of course to not put you in a position of initiative in the matter.

Doctor Wilson was greatly interested in the report which Harlan made to him regarding the feeling of Senator Smith toward him. His letter of reply to Harlan also is evidence of the fact that Doctor Wilson appreciated Senator Smith's request for an assurance that his attitude would be friendly toward the existing Democratic organization in New Jersey. He realized, as any one entering upon a career of politics should realize, that success at the polls comes as a result of organized effort, and that the medium of such effort must be the machinery maintained by political parties.

In the interim between his receipt of Harlan's letter and the time when he found opportunity to reply, it is not improbable that Doctor Wilson gave careful consideration to the subject, as he did to every proposal which touched upon an important question. He replied to Harlan's letter on June 23rd apologizing for not having replied sooner and explaining that the commencement season had started on June 10th and had taken up all his time. He said he had read Harlan's letter with great interest, and explained that he was perfectly willing to assure Mr. Smith that if elected governor he would not start fighting or breaking down the existing Democratic organization and replacing it with one of his own. In fact he said the last thing he would think of doing would be the building up of a machine of his own.; and that so long as the existing Democratic organization was willing to work with heartiness for such policies as would reestablish the reputation of the state and the credit of the party in serving it, he would deem himself inexcusable for antagonizing it if he was left absolutely free in the matter of measures or men.

Doctor Wilson concluded his letter by saying he felt that the developments in Princeton made it certain that his duty lay there in the immediate future, and not in the political field; but that he was as eager as ever to do anything consistent with his other obligations to help forward the rehabilitation of the great party in which he believed.

Very well pleased with the tone of Doctor Wilson's letter, which he felt would suffice to meet Senator Smith's requirement, and having communicated the contents of the letter to me, Harlan stated that if I desired to do so I might show Doctor Wilson's letter to Senator Smith and give him a copy.

Although the State Convention in New Jersey was not scheduled to take place until the middle of the following September, Harlan and I realized that no time should be lost in pursuing the matter. He felt that with Senator Smith in a mood to commit himself in Wilson's favor, the situation as it had developed was highly advantageous to the prospective candidacy of Doctor Wilson. We knew that if Senator Smith should determine to push Wilson's candidacy to a successful conclusion it would be necessary for him to make his decision and lay out his plans without further delay.

By the time Doctor Wilson's letter reached Harlan, Senator Smith had returned to New Jersey. Therefore, I went to Now York and got into communication with him, showing him the original of Doctor Wilson's letter and giving him a copy for his use. No one realized more than Senator Smith that in order to carry out his purpose in nominating Doctor Wilson he would be obliged to exert pressure upon the various local party leaders in New Jersey. Evidently he was well pleased with the prospect of having so strong a candidate at the head of the Democratic ticket in the approaching campaign. After reading the letter, Smith finally said that it was entirely satisfactory; that he had no doubt Wilson's candidacy would be acceptable to the Democratic organization and that he was confident of the nomination and subsequent election.

It has been said that the reason Senator Smith so readily and willingly accepted the candidacy of Doctor Wilson was that because of his knowledge of political conditions in New Jersey he was confident of Wilson's election by so large a majority as to carry the Democrats into control of the Legislature which would give them power to name a United States Senator. It also has been said that Senator Smith was anxious to be returned to the Senate wherein he had served during President Cleveland's second administration, but that he wished to keep his candidacy secret because he knew that the Democrats would be unable to elect a majority of the Legislature if his own candidacy was an issue in the campaign. If Senator Smith had any such thought in mind during the several conferences I had with him, he said nothing to me about it. His statements led me to believe that his aim was only the rehabilitation of the party in New Jersey by the nomination of a man of high character and outstanding ability who unquestionably would be successful at the polls.

Senator Smith delighted in playing the game of politics, not for the purpose of obtaining office for himself but because it is an absorbing diversion which calls for the display of an unusual sort of ability and a keen understanding of human impulses. Whatever may have been the Senator's object in accepting and espousing the candidacy of Doctor Wilson, there can be no question but that he entered into the fight to nominate him with a spirit of determination and in spite of the obstacles in his own organization, some of whose members harbored personal ambitions for the governorship.

With a copy of Doctor Wilson's letter in his possession, Senator Smith left me, firmly resolved to make Woodrow Wilson Governor of New Jersey. At that time, however, Doctor Wilson had not finally expressed his willingness to run. Hence, Senator Smith's next step was to get from Doctor Wilson a definite statement regarding his candidacy. On the second day following a conference was held by several Democratic leaders. Among them was Colonel Henry Waterson who previously had looked with favor upon Wilson's candidacy for the Presidency, but who realized that the governorship of New Jersey would have to be a stepping stone to nomination. Doctor Wilson was present at this conference. There was free and full discussion of the situation as it seemed to be lining up in his behalf.

The question of his becoming a candidate for Governor of New Jersey was put squarely up to Doctor Wilson. Explaining that he desired to get the counsel and advice of three of his most intimate friends, he asked that he be given a few days in which to make his decision. Mr. Cyrus H. McCormick, Sr., Mr. Thomas D. Jones and Mr. William B. McIlvaine, all of Chicago (and trustees of Princeton University) had stood loyally by him in all matters pertaining to the administration of Princeton. They had been his steadfast supporters; and since to become a candidate for governor would necessitate his severing connections with the University, Doctor Wilson felt himself under an obligation to consult them. While those present at the conference readily assented to this delay, how keenly Senator Smith felt in regard to the matter and how anxious he had become to enlist Doctor Wilson in the fight for the governorship, is evident from the letter he sent to me immediately following the conference. The letter to which I refer is as follows:

This communication, addressed to me at Chicago, was forwarded to me at Toronto. Its importance and the need of prompt action impressed themselves upon me. I called Harlan over the long distance telephone, to advise him of Senator Smith's suggestion. On my return to Chicago I stopped off at New York for a. further conference with Senator Smith. He emphasized again the importance of getting Doctor Wilson's Chicago advisers to consent to his candidacy. When I arrived in Chicago I found that Harlan already had gone to New York to consult with Doctor Wilson and advise him personally as to Senator Smith's anxiety.


July 2, 1910

Mr. John W. Harlan,
Hotel Belmont
New York City.

My dear John:

In accordance with my promise to you on the long-distance telephone at Toronto, and confirming our conversation, wish to say that Senator Smith called on me at the Waldorf yesterday at 2:30, just before I left for Chicago, and stated that he and Mr. Henry Watterson had a very pleasant visit with Dr. Woodrow Wilson, and the question of the Presidency came up and was discussed in detail.

The question of Dr. Wilson running for Governor of New Jersey was also mentioned, as, of course, a preliminary stop to the Presidency, and Senator Smith stated that Dr. Wilson was inclined to get an expression from Mr. Cyrus McCormick, Thomas D. Jones and William B. McIlvaine (whom I believe are Trustees in Princeton University, and have always been very loyal to Dr. Wilson in any questions that have come up regarding the policy of the University.)

Senator Smith expressed himself very favorably in regard to Dr. Wilson taking this stand; and the Senator hoped that the gentlemen mentioned above would feel that Dr. Wilson was taking a step in running for Governor of New Jersey that would lead to his nomination for the Presidency in 1912. 1 sent you a wire from New York yesterday, of which I enclose a copy.

I am quite satisfied that the Senator is anxious for an early reply. I believe there is no question but what Dr. Wilson will be elected for Governor by the largest majority ever given a Governor in the State of New Jersey; but you, having had practical experience in this line, know that there is no time like the present in taking action, and the Senator of course, has a number of other candidates, and while he prefers Dr. Wilson and will nominate him, I am sure; at the same time it is a hard matter to keep from declaring himself unless there is some immediate action taken. If I were you, I would call Dr. Wilson on the long-distance telephone and explain the situation and ascertain some facts and let me know promptly by wire.

Send a night letter, so that I may advise Senator Smith.

Of course, I hope that Messrs. McCormick. Jones and McIlvaine will see things as you and I see them, and will not try to stop the Doctor from taking this very important nomination at this particular time.

With kind personal regards, I am,

Yours very truly,

On the morning of July 5th I received the following telegram from Harlan, in which the words "our friend" refers to Doctor Wilson and "other" to Senator Smith:

It will be noted from the tone of his telegram that Harlan felt confident Doctor Wilson's response would be favorable and that he had reached a decision pursuant to the advice of Messrs. McCormick, Jones and McIlvaine to enter the race for the governorship. Upon receipt of this telegram from Harlan I wired Senator Smith, as follows:

In acknowledgment of this message, the following morning I received this telegram from Senator Smith:

Events which followed those I have related here are well known. Woodrow Wilson was virtually forced upon the somewhat reluctant Democratic organization in New Jersey. Had it not been for the early step taken by John Maynard Harlan to assure Senator Smith that Doctor Wilson would be favorable to the organization, Wilson would not have been nominated for the governorship. If Senator Smith had not been satisfied that Wilson would be a suitable and formidable candidate with a high prospect of success at the polls, that astute leader would not have made him the party's candidate.

It was Harlan, with his keen analytical mind, who saw that the only way to gratify the desire of Woodrow Wilson's friends to have him elected to the Presidency was by bringing to his support the one man in whose power it lay to make him Governor of New Jersey first. Harlan knew from experience how to approach a political leader: that he was a master of political strategy is shown by his letter to Doctor Wilson. In that letter Harlan displayed rare tact in formulating the basis upon which Doctor Wilson and Senator Smith could reach an agreement. The language he selected to convey to Doctor Wilson the thought he had in mind was calculated to get a reaction which unquestionably would be satisfactory to Senator Smith. The response was quite what he had planned it should be, for Doctor Wilson used practically the identical words employed by Harlan. Harlan stated in his letter that I had said very positively that Senator Smith had not the slightest desire to have Doctor Wilson commit himself "in any way as to principles, measures or men." This phrase evidently struck a responsive chord in Doctor Wilson's mind, for in his reply he stated, "I should deem myself inexcusable for antagonizing it (the Democratic organization) so long as I was absolutely free in the matters of measures or men." The words "measures or men" originally used by Harlan and adopted by Doctor Wilson, satisfied Senator Smith that he would be warranted in pressing the Wilson candidacy, and when he read Doctor Wilson's letter he emphasized and directed my attention to those words. Here is the keynote to the whole understanding.

It will be recalled that in the Presidential primaries of 1912 the Democrats of Illinois declared their preference for Champ Clark. At the Baltimore convention when it became apparent that Clark could not be nominated Roger C. Sullivan was the first leader to swing an important state delegation from Clark to Governor Wilson. Thus the break of the Illinois delegation under Sullivan's leadership led to Woodrow Wilson's triumph in the convention. Roger C. Sullivan, therefore, was helpful not only in bringing about the nomination of Doctor Wilson for Governor of New Jersey, but also in accomplishing his nomination for the Presidency.

In what I have said about Senator Smith I am not heaping encomiums upon him for his advocacy of the Wilson candidacy. I am merely stating the facts as the records show. Whatever may have been Senator Smith's purpose, the fact is that he is the man who gave Woodrow Wilson his opportunity. For this reason I have regretted that the men and the organization which had the political foresight to appreciate the progressive vision of Woodrow Wilson could not share in carrying out his ideals, so important in the recent history of the world.




IN THE preceding pages I have recorded many facts never before narrated, concerning incidents which brought Woodrow Wilson into political public life. I have done this because they are an important part of political history in which this great man was the central figure, and because they likewise constitute my own introduction into public affairs in a more limited way.

It was my good fortune to have been placed in a position in Washington, and later at the Peace Conference in Paris, wherein I was able to perform some service to my country. In the acquisition, construction and operation of ships essential to the conduct of the war, I was privileged to contribute my part to the success of American arms. It is therefore with that phase of Woodrow Wilson's administration that I intend to deal in this volume.

It was not until January, 1914, nearly a year after President Wilson had entered the White House, that I was invited by him to go to South America and make a report on banking and credits in Argentina, Brazil, Chile and Peru. I was happy to accept the President's invitation, and I promptly arranged my business affairs. The trip lasted about three months. Upon returning home my report was published by Secretary Redfield of the Department of Commerce.

This service constituted my first connection with the administration of President Wilson.

When the President considered naming the members of the newly created Federal Trade Commission, he invited me to serve upon it. The work contemplated for the Commission, under the statute creating it, was along lines familiar to me for many years. I was heartily in sympathy with its purpose and therefore was glad to accept an appointment on the Commission.

I served first as Vice-chairman, and later as Chairman, until I resigned in February, 1917.

Shortly after war was declared, I received a telegram from Mr. Charles D. Norton of the American Red Cross, saying that Mr. Henry P. Davison, Ex-president William Howard Taft, Mr. Robert N. DeForest, and Col. Grayson M. P. Murphy had called at the White House, in response to an invitation from the President to organize the Red Cross War Council; that, among other matters, they had suggested to the President was that he appoint me one of the five members of the Red Cross War Council with which suggestion the President had expressed his willingness and desire to comply. This appointment carried me back to Washington.


I served on the War Council during the One Hundred Million Dollar Drive and have felt myself amply repaid by my association with Mr. Henry P. Davison. He had wonderful organizing ability. His skill in inducing others to accomplish things was a great revelation to me. He was warm-hearted, a lovable character and a leader who commanded respect and admiration.

After he had organized the different branches of the Red Cross in America as well as abroad, the work became somewhat routine. Hence when Secretary Redfield asked me to represent the Department of Commerce on the newly organized War Trade Board, I felt at liberty to leave the Red Cross.

I had been serving on the War Trade Board only a short time when the Denman-Goethals controversy developed in the Shipping Board. Through the medium of the press, the public was being regaled daily with accounts of their troubles which were seriously interfering with the work of providing ships. The public believed, and rightfully, that ships constituted one of .the most important contributions that America could provide toward winning the war. The fact that the Shipping Board was not making progress towards providing them, because of internal differences in the organization of that body, had a very depressing effect.

In July, 1917, when this controversy was at its height, the President's Secretary, Mr. Joseph P. Tumulty, informed me that the President wanted me to accept the Chairmanship of the United States Shipping Board and the Presidency of the Emergency Fleet Corporation. I protested that it was impossible, that I was very happy on the War Trade Board, and that I believed I could render efficient service there. Moreover, I pointed out to him that I was not a shipbuilder and that the position did not appeal to, me. Tumulty evidently was not surprised at my attitude. "Well," he said, "I told the President you would not be interested but he replied. 'You tell Hurley this is personal.'" Of course, I considered this a command.




For, more than fifty years it has been definitely recognized by Congress that without enabling national legislation our former maritime position cannot be regained. But because of the many conflicting views on the character which that legislation should assume, Congress never was able to agree on a general shipping bill until the World War drove home relentlessly our utter dependence on foreign vessels.

For the protection of what American shipping there was, Congress had enacted laws which, while intended to assist our ships and shippers, actually strengthened the hold of European maritime countries on our ocean traffic. Attempts to ameliorate the more drastic provisions of these laws without departure from the general policy of making it easier for American ships to take their rightful place in international trade often were frustrated. Thus, when in March, 1914, Secretary of Commerce Redfield (1) suggested the repeal of that clause of the Panama Canal Act of 1912 which made it impossible for foreign-built vessels which were not at least five years old to secure admission to American registry, Congress characteristically failed to take immediate, action. The declaration of war, followed by the withdrawal of about 6,000,000 gross(2) tons of ships by Germany and Austria, 1,000,000 gross tons by France and Russia, and by the diversion of much of Great Britain's huge tonnage to the transportation of troops, supplies and munitions, spurred Congress. We could not do without ships. Little more than 10 per cent. of our water-borne foreign commerce (measured in dollars) was carried in American bottoms. After six months' delay, Congress passed the Shipping Act of 1914 on August 18th of that year, thereby carrying out Secretary Redfield's recommendation. In addition to permitting the registration of the ships excluded from American ownership by the Panama Canal Act of 1912, the President was given the power, for a period of two years, to deal with the nationality of watch officers of the foreign vessels admitted to American registry; and also with such matters as inspection and survey. The Treasury Department came to the aid of American shippers with decisions that admitted to free entry through the customs, materials for construction of vessels, their machinery and general equipment.(3)

The result of this salutary legislation and official action was the immediate increase of our merchant marine. Up to and including June 30, 1915, a period of ten months, 148 vessels of 523,361 gross tons were registered. While these measures apparently produced the desired effect, so far as foreign tonnage was concerned, the American Merchant Marine and the American shippers were no better off than they had been before. During the same period American shipbuilding actually decreased by an amount almost equal to the foreign tonnage acquired. Indeed, the output of ships on the seaboard for the fiscal year ending June 30, 1915, was a third less than for the previous fiscal year; and was less than for any twelve months in the preceding sixteen years.(4)

Such was the demand for bottoms, now that Europe was completely embroiled in war, that Congress passed an act (38 Stat. L. 812), approved February 24, 1915, admitting to American registry foreign vessels wrecked on our coasts or adjacent waters, and owned or repaired by Americans. As might have been foreseen, the effect was almost negligible. Only seven vessels, aggregating 11,630 gross tons, were thus admitted to American registry.

The next step in the effort to assist the American exporter and importer was the repeal of penalties on foreign-built vessels owned by Americans, a repeal effected by the Act of March 4, 1915. On the same date Congress passed an act enabling consular officers to issue provisional certificates of registry to vessels purchased abroad by American citizens.(5)

These laws removed some of the more serious handicaps with which American shipping had to contend. While they could not meet the greatest economic crisis to which the United States ever had been exposed, they did at least pave the way for the formidable constructive work that the war pressed.


Despite the urgent need of ships, manifest even before the United States declared war, Congress, did not heed it at once. An attempt to create a Shipping Board by a bill introduced on September 4, 1914, by Representative Alexander of Missouri was not acted upon, much to President Wilson's disappointment. Between December, 1914, and May, 1916, bill after bill was introduced. One of these (that introduced by Senator Stone in the 63rd Congress) was debated uninterruptedly for sixty-five hours before it died with adjournment on March 4, 1915. President Wilson, more than once, pleaded for the enactment of an adequate shipping act. During the first session of the 64th Congress, six merchant marine bills were introduced, of which one came to the floor for debate. This was House Bill 15455, introduced May 8, 1916, by Representative Joshua W. Alexander. Again there was a keen contest. At the end of the session (September 7, 1916) this bill became law as the Shipping Act of 1916 (39 Stat. L. 728). After two years of wordy contest Congress had agreed on a shipping policy and expressed it in a law.

We were still at peace. Hence the Shipping Act of 1916, which created the Shipping Board, was not, strictly speaking, a piece of American war legislation. Moreover, the Act as it stood at the time of its passage would not have enabled us to meet the exigencies of the war into which we were destined to be plunged.

The title of the Act indicated its purpose. It reads: "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 for other purposes." The Board was to consist of five commissioners,(6) to be appointed by the President with the advice and consent of the Senate, and was granted broad powers to construct, equip or acquire vessels suitable for commerce and military and naval purposes. Most important of all, it was given the power to form one or more corporations for the purchase, construction, equipment, lease, charter, maintenance and operation of merchant vessels in the commerce of the United States under certain conditions. It could subscribe for the stock of these corporations, protect government interests, and sell stock to the public with the approval of the President. The Board had other powers which need not be dwelt upon here--- powers which gave complete control over American ships and shipping.

The Board made ready and quick use of its authority. Its first act (January 31, 1917) was to pass a resolution requesting the President to place an embargo on the transfer of vessels from the American flag, a request with which the President complied on February 5, 1917, and which was prompted by Germany's avowed declaration to pursue a policy of indiscriminate sinking. There can be no doubt that this prompt action of the Board checked the flow of tonnage from American into foreign hands. The next important step of the Board was the creation of the Emergency Fleet Corporation on April 16, 1917.


Although the demands that the war was destined to make upon the resources of the country hardly could have been foreseen in 1916, the Shipping Act of that year was wisely drawn, in so far as the necessity of building ships with the machinery of a private corporation was recognized. It is to the credit of Congress that it recognized the utter hopelessness of relying upon the cumbrous machinery of the government to build merchant ships for war or peace.

The creation of a corporation for the performance of an important constructive task had a precedent in the use of the Panama Railway Company during the construction of the Panama Canal by the War Department. The Secretary of War owned all the stock of that company and to the company were entrusted many of the functions of constructing the canal.

On April 6, 1917, the United States declared war. It was no time to wait for private enterprises to furnish the tonnage which the army would require to maintain an immense force overseas, or to try to get low bids on tonnage required for war purposes. A huge, coordinated program of government construction and financing clearly was called for. Yet the government, because of checks and balances it encountered on every side, could not of itself make the necessary rapid progress. A private corporation was needed. The Shipping Act provided for it. Accordingly the United States Shipping Board Emergency Fleet Corporation---to give it its full official title---was formed under that provision of the Shipping Act of 1916 which empowered the United States' Shipping Board to found a stock corporation.

The Fleet Corporation was organized under the laws of the District of Columbia on April 16, 1917 (ten days after the declaration of war) with a capital stock of $50,000,000, all of which was subscribed for by the United States Shipping Board on behalf of the United States. The corporation was destined to spend far more for a single shipyard. Indeed, it never could have accomplished its stupendous task without powers far broader than those which the Shipping Board could delegate it under the Act of 1916. Throughout the war Congress clothed the President of the United States with extraordinary, sweeping authority; and this power he conferred upon his agents---the Shipping Board or the Fleet Corporation---by Executive Orders. With the aid of Congress and the Executive Orders, the Fleet Corporation was able to avoid the system of legislative checks and balances which would have shackled it had they not been removed.

Thus the Emergency Shipping Fund Act of June 15, 1917, conferred upon the President far-reaching authority to requisition, construct and operate ships ---without limitations or conditions except those of a financial nature. These powers were extended directly to the President and not to the Shipping Board or the Fleet Corporation. By Executive Order dated July 11, 1917, the President delegated directly to the Fleet Corporation all power and authority vested in him relating to the construction of vessels. To the Shipping Board he delegated all his power and authority to acquire vessels already constructed and to operate and dispose of all vessels acquired or to be acquired by the United States. During the years 1917 and 1918 most of the powers of the Shipping Board and the Fleet Corporation were exercised under these delegations of authority from the President and not under the original Act creating the Board. Hence the Emergency Fleet Corporation was the direct agent of the President.

The United States Shipping Board and the United States' Shipping Board Emergency Fleet Corporation, despite the similarity of their names, are distinct entities. Such was the method of control, that the vast responsibilities created by the war rested, in the final analysis, upon the Chairman and the Commissioners of the Shipping Board. The Fleet Corporation has been the creature of the Shipping Board and under the Board's full control. The Board was in essence regulative and the Fleet Corporation operative, a difference similar to that which existed between the Interstate Commerce Commission and the United States' Railroad Administration.

The Emergency Fleet, as organized, departed widely from the End of stock corporation contemplated by the Shipping Act of 1916. It was provided in the Act that the majority of the stock of the corporation always should lie in the United States, the United States controlling the majority of the stock, while private capital might acquire the minority stock. In practice the government held all the stock with the exception of a few qualifying shares. This corporation in which the United States was a stockholder could not legally operate Shipping Board vessels, unless it should be impossible to induce private enterprise to purchase or charter them under conditions that the Board approved. We easily could have turned over all our ships to private companies at very profitable rates had the provisions of the Shipping Act been strictly obeyed. The war created exigencies which far transcended those of commerce. Government ownership and operation were imperative. As a result, responsibility for both functions was assumed by the Shipping Board and transferred to the Fleet Corporation. Hence, the Shipping Board, illegally but necessarily, operated vessels through the Division of Operations of the Fleet Corporation. In practice, the main functions of the Shipping Board were carried on by the Fleet Corporation.




ALTHOUGH the Shipping Act was approved on September 7, 1916, the members of the Shipping Board were not designated and appointed until December 22nd. The original members were William Denman, a distinguished admiralty lawyer of San Francisco, California (Chairman); Bernard N. Baker, of Maryland; John A. Donald, of New York; John B. White, of Missouri; Theodore Brent, of Louisiana. Baker soon resigned as a commissioner and the President nominated Raymond B. Stevens of New Hampshire in his place. The Board, thus constituted, functioned until July 24, 1917, at which time a clash of personalities and functions culminated in the resignation of Messrs. Denman and White and also of Major-General Goethals, General Manager of the Emergency Fleet Corporation.


In accordance with its original by-laws, the Emergency Fleet Corporation had a Board of Trustees consisting of seven members, all of whom were required to be stockholders in the Corporation. The seven original trustees were Messrs. Goethals, Denman, Donald, Soleau, Bailey, Abbott and Bertholf. The by-laws of the Corporation provided that its officers should be a President, a Vice-president, a Treasurer, a Secretary, a General Manager and such other officers as the Trustees might determine. They further provided that the General Manager should have oversight and management of the Corporation's business affairs and should have the power to employ and discharge clerks, employees and agents, fix their salaries and prescribe their respective duties. To the titular head of the Corporation, who happened also to be the Chairman of the Shipping Board, merely nominal powers were assigned. The General Manager was given full control and responsibility, but not the right to sign contracts, which was the most important and necessary function that he could exercise under the stress of war.

Out of this faulty scheme of organization and division of authority the unfortunate Denman-Goethals controversy quite naturally arose. It is popularly supposed that Mr. Denman (Chairman of the Board) wanted wood ships; that General Goethals (General Manager of the Fleet Corporation) was steadfastly opposed to them; and that, as a result, two able men found it impossible to agree. It is true that Denman believed in wood ships for this critical war emergency, and that General Goethals theoretically objected to them; but the records of the Shipping Board and of the Fleet Corporation show that General Goethals negotiated with contractors for wood vessels and approved many contracts for building them, and that Denman advocated the construction of as many steel ships as possible. So far as wood or steel ships were concerned it is evident that the two men found no difficulty in sinking their differences of opinion. The mere fact that General Goethals, as general manager of the Emergency Fleet Corporation, could not sign contracts but was expected to build ships, made his position impossible. On the other hand the Chairman of the Shipping Board, who was the real head as President of the Fleet Corporation, could know nothing of the general manager's methods or acts, for there was no obligation on the general manager's part to acquaint him with necessary facts. Discord inevitably resulted, and the resignation of both Denman and Goethals was the consequence. The controversy attracted world-wide attention. It produced an unsalutary effect at home and abroad, as the press and public became very critical and fearful that the building of ships was being seriously retarded by their differences.

General Goethals wrote a letter to the President regarding the organization of the Shipping Board, asking the President to define his authority more clearly, and said that unless some change was brought about he could not accomplish the work he had planned. The President took Goethal's letter as an indication that he would resign, and sent for Tumulty, saying "I am going to accept Goethal's resignation." The President liked Denman, and realized that Denman had been placed in an impossible position because he had no authority over Goethals, and that the two men could not work harmoniously together. Therefore, the President accepted the resignations of both Denman and Goethals. Tumulty suggested the appointment of a business man as Chairman of the Shipping Board and President of the Emergency Fleet Corporation. The result was, that the President asked Tumulty to ascertain if I would accept the place.


On July 27, 1917, I became Chairman of the Shipping Board by virtue of presidential appointment and confirmation by the Senate. The President nominated Bainbridge Colby of New York to succeed Mr. White, which nomination subsequently, was confirmed by the Senate. Raymond B. Stevens was elected by the Board to succeed Mr. White as Vice-chairman. Mr. Brent retired at about the same time and his place was filled by the appointment and confirmation of Charles R. Page of California, although it was several weeks before he was able to arrange his private affairs so as to take up his duties in Washington.

The reorganized Board was thus constituted: Edward N. Hurley, Chairman; Raymond B. Stevens, Vice-chairman; John A. Donald, Bainbridge Colby and Charles R. Page, Commissioners. All continued in office during the stress of the war period. I have deeply appreciated the cordial support which my associates on the Board unfailingly gave me. They fully realized the responsibility of providing the ships without which the war could not have been won. In every activity of the Board they displayed great willingness to cooperate and cut red tape. Each performed yeoman service.

The President had decided also that Rear Admiral Washington L. Capps, an officer with a brilliant record as a naval constructor, would be a distinct acquisition, and hence had named him to fill the place of general manager left vacant by General Goethals' resignation.


After I assumed my duties on the Shipping Board I asked Mr. John E. Barber, who acted as my secretary on the War Trade Board, to join me as my chief assistant. In endeavoring to get our bearings we found that each group of the Denman-Goethals factions was disposed to discuss the inefficiency of the other. Barber informed them that I always blamed the complainant for about 98 per cent. of the trouble whenever there was discord; and advised them to have something concrete and definite to recommend for the improvement of the service, rather than to try to interest me in a personal quarrel. He told them I maintained that while we were at war the only people we were really fighting were the Germans; and that any who were looking for trouble and wanted to fight we would refer to General Enoch H. Crowder, in charge of the draft, who would arrange to satisfy their belligerent desires in France. This advice had a most soothing effect on the entire organization, and resulted in the creation of a cordiality that could not have been accomplished if I had listened to the grievances of the factions. Both Denman and Goethals had appointed some very efficient men and many of them were with us during the entire war.


Seven days after I assumed office, I appreciated the fact that the United States must act quickly if it were to become a factor in winning the war; and that ships in course of construction in American yards must be taken over by the Shipping Board. It fell to my lot to issue the necessary order to that effect.

On August 3, 1917, I issued the first requisition order. It was signed and sent out by Admiral Capps, then General Manager of the Fleet Corporation, and was the outcome of a Presidential Executive Order which in turn embodied provisions of the Urgent Deficiencies Act of June 13, 1917. This order of the Fleet Corporation was the first step taken to assume control of our shipping and to prevent American shipyards from working for any country but our own. Our general purpose was to secure control of the yards so as to be able to assist them in financing and in delivering materials; to prevent the use of the yards, sorely needed for our own purpose, by foreigners, some of whom were our allies but most of whom were neutrals; to permit the simplification of the ships so that they might be more speedily completed and more thoroughly adapted to our own war uses; and generally to permit the Fleet Corporation to place additional direct contracts with the same yards without interfering with any of their other work.

The order produced consternation in the shipyards.

It was as if 431 bombshells, the number of ships involved, had exploded. There were endless hearings. Practically every shipyard and ship owner appeared and put up a desperate fight. There was, however, but one obvious answer:---the necessities of our Army.

In accordance with the terms of the order, the Fleet Corporation commandeered all steel ships over 2500 deadweight tons under construction in American yards. No fewer than 431 uncompleted ships totalling 3,068,431 deadweight tons were covered by this important order of August 3, 1917. The compensation of the owners, many of whom were foreign, was given the most careful attention, and the completion of the unfinished ships (though the types were not always such as would have been chosen for the emergency) became an important function of the Fleet Corporation. By the close of 1918 nearly 90 per cent. of the construction work on this tonnage had been carried on under the Corporation's direction.

The 431 "Hulls" commandeered were largely so many contracts, so many orders for materials. Therefore, we requisitioned not ships in course of construction but a huge shipbuilding job. We already had a construction division in the Fleet Corporation which was charged with the building of ships of any type. Admiral Bowles joined the Fleet Corporation at about this time, and to him Admiral Capps assigned the duty of creating such a division. Bowles was ably assisted by Commander John L. Ackerson, later Vice-president of the Fleet Corporation, Mr. W. L. Ferguson, Mr. Daniel H. Cox, afterwards appointed manager of the Division, Mr. Laurens N. Prior, well known as a naval architect, Mr. George Crouse Cook, and Mr. Pierce J. McAuliffe.

Not only did protests come from domestic shipping owners, but we were deluged with protests from foreign owners who had placed contracts for the building of ships in American yards. The issue thus raised presented an international aspect. Foreign builders through their respective governments took up the question with the State Department. On August 23, 1917, I received a letter from Secretary of State Lansing with a letter from the Rt. Hon. Arthur J. Balfour which was forwarded by cable(7) by Ambassador Walter H. Page, in London, to the State Department.

Mr. Balfour stated that he would feel very much gratified if the United States Government thought it would be consistent with the claims of its own national interests to allow the ships then building for Great Britain in America to remain in British ownership, but that if the United States Government surveying all circumstances of the case, thought the British ships that had been ordered built in American shipyards should belong to the States, then the British would not think of making any protest nor were they of the opinion that if the ships on completion were used in the war work of the allies the question of ownership would have any material bearing on the conduct of the war. He further stated that they would not press the point but would rely on our justice and good-will.

In my letter(8) to Secretary Lansing under date of August 29, 1917, in reply to Mr. Balfour's communication I said that with me the question of ownership was not nearly so important as winning the war with ships. It was not a matter of ultimately augmenting the British mercantile marine with the aid of American capital and labor, but of triumphing over the German submarines. Military necessity only, and not ownership, could decide what flag the requisitioned ships under construction were to fly. When the War Sword, which had been built by the Union Iron Works for the Cunard Company, was loaded and ready to sail, I had to reach some decision. I took up the whole question with President Wilson. After the fullest discussion, the conclusion was reached that the War Sword ought to be permitted to leave promptly, in view of the fact that the Cunard Company had paid for her in full before our requisitioning order went into effect. Apart from our own vital need of shipping in winning the war, I felt that we were called upon to bear a burden which was heavier than the British Government probably realized. Because of the uncertainty as to the amount of tonnage which would be required to maintain our troops in France it was necessary to exercise the greatest caution in committing ourselves on the question of ownership. It was our first duty to maintain our line of communication; and that extended over the Atlantic Ocean. We would be held responsible for the fighting efficiency of our men on European soil. We had not only to feed these men, but also to aid in feeding the nations associated with us. The responsibility for this vital war service rested primarily with the Shipping Board. We could not shirk it nor share it. Had it been possible to calculate the amount of tonnage which would be sunk by German submarines we might have permitted ourselves greater freedom of action; but as we could only guess what the submarine would do, we could not adopt a policy which would reduce our control of shipping. If we had acted hurriedly and turned over foreign tonnage to its owners we might have been placed in the position of having failed to use good judgment. The very labor used in constructing the foreign ships might justly have complained that its work had not saved American soldiers in the. trenches from a disaster directly traceable to a lack of supplies. I came to the conclusion that there was only one safe course to pursue: We must control all ships built in the United States, and to control them they must fly the American flag. Secretary Lansing replied:

I laid this correspondence before President Wilson, so that he might be fully informed of the conclusions that had been reached. He sent me an expression of his approval, saying that he thought the necessities and policy of the case could not have been better stated.

In arriving at a decision which thus became part and parcel of the State Department's policy, I had many consultations with British shipping representatives. Taken as a whole I found them patriotic, broadminded men who fully appreciated the vital importance of shipping from the point of view of the United States and who were willing to forego private advantages as soon as our military situation was explained to them. There was Sir Thomas Royden, for instance, now Chairman of the Board of Directors of the Cunard Steamship Company, Ltd., who represented Great Britain in the negotiations affecting the War Sword and other ships built in our yards under contracts with British subjects. He was a fine type of business man, very keen in looking after the interests of his country and in urging the adoption of a policy which would have committed us to turning over to the British, after the war, those ships which they had ordered or acquired in this country. He wanted to aid us in meeting our military exigencies and yet do justice to Great Britain; but he yielded as gracefully as did Mr. Balfour when I indicated that we could not make any such agreement at that time and that we must have absolute control over all ships which we had requisitioned.

It must be conceded that, from their standpoint at least, the British understood their business exceedingly well. The thoroughness with which they went into all matters to obtain information upon which to base their conclusions always was interesting and sometimes was amusing. I had an illustration of this in connection with an incident involving Sir Cecil Spring-Rice, the British Ambassador. It came to my knowledge that when my appointment as Chairman of the Shipping Board was announced there was some little anxiety on the part of the British as to just what my attitude toward them would be. I learned that it was a practice on the part of the British,---and one which may be followed to a greater or lesser extent by other countries, ---to investigate as far as possible appointments made by the President which are likely to have an international importance. They are concerned in knowing the appointee's attitude affecting their particular interests. This information their ambassadors and diplomatic representatives endeavor to obtain from their nationals living in this country.

After my appointment to the Shipping Board, Sir Cecil received a letter from a prominent Englishman in New York, a copy of which an interested friend was kind enough to put in my possession. The letter gave a quite full history of my activities in private and public, life, in some respects going into rather minute and surprising details. One of these details was the mention of the fact that my parents both were born in Ireland, one of them in County Limerick. The writer raised the point that because all of my ancestors were Irish there might be some question as to my attitude toward the British in the handling of shipping matters. He stated, however, that he knew of no acts of mine that were inimical to the British, and that he believed I would be fair, particularly as I had been in the manufacturing business in England for a number of years and knew and understood the British people.

Sir Cecil was a diplomat of the old school and always aimed to make friends. Armed with the information. which he had received concerning me, he was anxious to take advantage of anything we might have in common upon the occasion of our first meeting. His memory evidently was a little bit faulty concerning the place of my nativity, for when I was introduced to him he said most cordially: "Well, Mr. Hurley, I am very happy indeed to have the pleasure of meeting YOU, particularly as we come from the same part of Ireland. I am a Limerick man and so are you." As I was born in this country and my parents were married here, it was the first time that I had been called a Limerick man. Knowing the source of the Ambassador's information, however, I very much enjoyed his greeting and did not correct him. At a subsequent dinner which the Ambassador and I attended, Sir Cecil presented Mrs. Hurley and me to Lady Spring-Rice. In doing so he said, "You know, Mr. Hurley is from the same county in Ireland that I am from. We are both Limerick men. "My wife later chided me for having told Sir Cecil that I was from Limerick in order to court his favor. I learned afterward that while Sir Cecil was not born in County Limerick, his father (the youngest son of Lord Monteagle whose family estate was near Foynes, County Limerick) had come from that section of Ireland, as had my mother. I presumed he was using that fact, after the manner of clever diplomacy, to gain my good-will in dealing with the Shipping Board. He was a delightful character and we became warm friends.

The requisition order which I issued on August 3, 1917, must be regarded primarily as a step to prevent the soaring of prices of tonnage and to insure the proper mobilization of all our economic resources. We made it as easy as possible for those affected by the order. The ships requisitioned were operated largely by their own. companies, which were credited with the rate allowed by the Shipping Board. Control was maintained over all these vessels as to cargoes, rates and safety in the war zone. War needs were given priority, and the Allies were protected against oppressive transportation rates. Aside from the requisitioning power, the Board was without jurisdiction over rates in foreign trade or over interstate ocean carriage, rates, unless the vessels were common carriers and running on regular routes. In fixing rates for requisitioned vessels left in the commercial service or assigned to foreign governments, the Board was careful to see that reductions inured to the benefit of the shipper, and were not used as instruments of favoritism.




DURING the early period of our board activities we acquired tonnage not by actual construction but by seizing interned enemy vessels; by requisitioning ships on the ways, no matter for whom they were being built; by commandeering American ships in service; by securing enemy tonnage from foreign countries; by chartering or commandeering foreign vessels in our ports; by purchasing ships under construction in foreign yards; and by letting contracts in foreign countries for building ships.

The first important acquisition was that of German and Austrian ships within jurisdiction of the United States. These vessels had been interned in American ports immediately following the outbreak of the war in 1914. The United States having been neutral, many German and Austrian ships upon the high seas had sought our protection in. order to escape capture by the British Navy. The Custom House officials seized them under the power conferred upon the President by the Joint Resolution of May 12, 1917. Later (by Executive Order of June 30, 1917) the President authorized their transfer to the Shipping Board. The interned enemy vessels acquired numbered ninety-seven of nearly 700,000 gross tons. They included many fine hulls of the passenger-cargo type. Some of these were turned over to the Navy for repair and operation, but the greater number passed under the control of the Shipping Board. It will be noticed from the dates given that the seizure and transfer occurred while Denman still was chairman of the Shipping Board and president of the Emergency Fleet Corporation.

Senator Lodge criticized Denman rather unjustly for delaying the repairing and re-fitting of these ships. Denman replied adequately, but not too good-naturedly, to Senator Lodge in a letter dated August 21, 1917.(9) The Fleet Corporation under General Goethals repaired twenty-nine German and Austrian ships aggregating 180,000 tons and operated them by the time I assumed the chairmanship of the Shipping Board. Some of these plied between this country and Italy, Russia and France; others were turned over for Operation to private corporations. Contracts also were let for repairing sixteen fast German passenger liners even before cost estimates were approved by the Treasury Department. The ships were turned over to the Navy while they were being overhauled. There can be no question of the diligence of both Denman and Goethals.

To repair the remaining enemy tonnage and to equip and man them for war-zone service became one of the first duties of the Fleet Corporation in my administration. Up to the time the armistice was signed the sum of $11,000,000 had been spent or set aside for the reconditioning of the vessels. These enemy ships were scattered in many ports---New York, Boston, San Francisco, Seattle, Puget Sound, southern harbors, Honolulu, Samoa and Manila. This complicated the problem of repairing them. These vessels had been seriously damaged by their own officers and crews in order to prevent their immediate use by the United States. The boilers had been ruined by firing them without water; and as a rule, the Germans had knocked off castings at the sides of the high pressure valve chests, and broken holes in the cylinders themselves. Evidently the Germans reasoned that entirely new cylinders would have to be cast, which would have been a very difficult and time-consuming undertaking. But we fooled the Germans by electrically welding the valve chests and cylinders, thus adapting to ship-repairing a practice well established in railroad shops.

Some of the seized ships were delivered to the associated governments. Others were turned over to the Army or Navy. The rest were retained by the Shipping Board. The Leviathan, formerly the Vaterland, one of the German interned vessels, and at that time the largest ship in the world, transported approximately one hundred thousand American troops to France. By the treaty of peace the German vessels seized by this country became a permanent part of the American Merchant Marine.


The hazards of the high seas were such that some German and Austrian ships took refuge in the ports of neutral countries, where they were promptly interned. This meant that they enjoyed full protection from interference by British or other Allied Fleets so long as the country in whose ports they sought safety remained out of war. Because of our dire need of ships I wanted to acquire all such vessels as had been interned in the ports of the United States. I turned over the job to Mr. Clifford Mallory.

Negotiations for enemy tonnage in foreign countries were initiated on November 1, 1917. We succeeded in December, 1917, in chartering two Austrian ships seized by China and two German vessels seized by Siam. Several Austrian vessels were purchased.

Some of these afterwards were sold to France.(10) The number of Austrian vessels acquired by purchase soon increased to nine, totalling 58,000 deadweight tons. Similar negotiations were undertaken with Brazil for ex-German tonnage there interned, while a few Austrian ships in other South American ports were purchased.




WE HAD gone far in commandeering shipyards and the craft which they were building. But in order that control over shipping might be absolutely complete we also had to seize, or practically seize, American vessels actually in service.

The Fleet Corporation's requisitioning order of August 3rd applied only to ships in course of construction. More were wanted---ships in actual service. Accordingly, I issued through the Fleet Corporation on October 12, 1917, an order which gave us, three days later, the use of all American steel cargo vessels of 2500 deadweight tons and over, and all American passenger vessels of 2500 deadweight tons and over, suitable for ocean service.

We realized that transportation was the life-blood artery of the Army, the Navy and of essential industries. The United States needed raw materials required for producing military supplies. Farmers demanded nitrates from Chile, and so did manufacturers of explosives. Steel plants wanted manganese ore from Brazil and chrome from Australia. The World had to be scoured for essential raw materials, which had to be carried in ships under our control. Every industry was crying for coal, which of necessity had to be carried by water so far as that was possible because of railway congestion. Charter and freight rates were rising rapidly. In the spring of 1914 time-charters for cargo steamers were obtained for about one dollar a deadweight ton per month. By the summer of 1917 they had risen to $13.88 in trades outside the war zone and to about $20 within the war zone, the charterer assuming all risks. For tankers, the time-charter rates rose from $1.70 and $2.40 in 1914 to $12.50 in 1917. Even more startling was the increase in freight rates because they included war risk, while in the case of charter rates the risk was taken by the charterer. Ocean freight rates on cotton from Savannah to Liverpool rose from 35 cents per 100 pounds in 1914 to $6.00 In 1917; from Savannah to Genoa from 55 cents to $10; and the rates from Gulf ports to European ports increased in proportion. Special war bonuses had to be paid officers and crews because of the increased hazard. In fact every item in the cost of transportation was multiplied, some by tons. The market value of ships rose from $60 to $80 per ton, the pre-war price, to $300 and over by the autumn of 1917. While there was some justification for these enormous increases in charter rates, ship costs and freight rates, it was evident that they had been artificially inflated. There was nothing to do but to own or control every ship that flew the American flag and to fix the scale of requisition rates ourselves at some fair level below that prevailing in the market, a level that represented legitimate values.

The owners of requisitioned ships (both those commandeered in the shipyards and those flying the American flag in actual service) became operators for the Fleet Corporation. The expense of operation had to be properly apportioned between the Corporation and the owner as in normal times. We had to assume the risk of loss, except under the "bare-boat" type of contract.(11) We also had to provide for taking over a ship entirely and operating her ourselves without the owner's aid and for returning her after she had served our purpose. These were but a few of the problems that had to be considered.

The extent to which we had to go in controlling shipping, so as to permit the flow of necessary raw material to our industries, is seen in the modification of the typical American coastwise shipping policy. The United States had jealously protected coastwise trade, permitting only American ships to engage in it. But when we needed every available ship for trans-Atlantic service it became impossible to permit the old tradition to dominate us. At my instigation the President had Congress pass the Act of October 6, 1917, which authorized the Shipping Board to suspend the old laws and to grant permits to foreign vessels to engage in our coastwise trade during the war and for a period of 120 days thereafter. Thus Canadians were permitted to engage in Great Lakes traffic, and two Japanese companies to engage in the trade between San Francisco and Honolulu. Up to September 30, 1918, we granted permits to 342 different vessels in this way, 58 of which operated in the Great Lakes and 284 in the Atlantic and Pacific coastwise trade.


Confronted with a desperate shortage of tonnage, we found a valuable source of shipping on the Great Lakes where several important shipyards were located and where practically nine-tenths of the larger American merchant ships for use on the Great Lakes had been built. We commandeered an extensive tonnage of Lake vessels, re-fitted them for ocean service and brought them down to the sea-board.

Twelve of these ships were too large to pass through the Welland Canal and the novel method of bisecting them while afloat was employed. The hulls were cut squarely amidships, the parts were sealed by watertight bulkheads, and the sections were taken through the canal. In some cases the rear half of the ship was sent under its own steam, stern first, while the forward half was towed. Some of the largest boats had to be turned on the side and towed on pontoons specially constructed. The rejoining was done for the most part in dry dock. Sixty-four requisitioned or purchased vessels had been brought down from the Lakes by the time the armistice was signed. The credit for cutting some of the ships in two, and rejoining and re-fitting them, must go to the Board of Survey in general and to Commissioner Donald for his able supervision.

All the seizing of enemy tonnage, chartering neutral tonnage, requisitioning of ships under the right of angary, repairing of ships, and reconstructing Great Lakes steamers, could not solve our war-time shipping problem. Building new ships from the keel up necessarily became our chief concern and to this we applied ourselves as soon as we learned from the War Department what was expected of us.

Chapter Seven: the Emergency Fleet Corporation begins its work.

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