The two great oceans that lap at America’s shores have shaped our collective consciousness in myriad ways. Moby-Dick may always be the greatest American novel. Paintings and models of clipper ships, three-masted schooners, and frigates in full sail still adorn the walls of the country’s law firms, boardrooms, and government buildings. Common American English is rife with nautical words and phrases—skyscraper; close quarters; give a wide berth; high and dry; know the ropes; slush fund; and fly-by-night.
Many people can trace their roots back to ancestors who arrived in the New World by boats, powered by sail or steam.
Sailing ships symbolize economic power born of equal parts folly and freedom—folly in that we willingly leaped into the great unknown; freedom in that with ships, we could travel anywhere in the world or get dashed on the rocks trying.
Shipping is in our blood and baked into our laws.
America’s earliest European settlers sailed here from England and clung to the coast where they eked out a living from the rocky soil while awaiting sight of sails. They did what they could to praise God and carve out a devout life from a lawless land, willingly accepting their dependence on a steady influx of ships to maintain a modicum of civility on the edge of a great wilderness.
When New England’s soil revealed itself less than suitable for farming, eyes turned to the sea. Massachusetts Bay colonists built a few boats and tentatively dipped them into the North Atlantic. The ocean might have spit them out or drowned them, but it held promise for the hardiest men and women. With enough practice, intrepid mariners discovered plentiful fisheries rife with cod. Some outfitted their boats for longer voyages, spawning a robust shipbuilding industry that attracted French, British, and Dutch buyers.
Successive generations embraced the economic freedom that fishing and shipping offered, and they proved quite adept at both. Soon, young America’s merchant vessels were ubiquitous in every ocean.
It was shipping that first pried open the great divide between north and south, a cultural difference once best understood a thousand miles offshore. New Englanders had little to sell but an intrepid spirit, so they became global merchants, hustling goods across many oceans, creating intricate financial instruments to spread profit and risk. Meanwhile, Europeans’ insatiable demand for cotton and tobacco kept southern planters anchored to the land; they generally left complex trans-Atlantic logistics to others. As long as the ships—most often British—came with slaves and departed with crops, southerners had no need to complain, or rebel.
New Englanders were global citizens. Southern planters waited for the world to come to them.
America’s first merchants didn’t just transport goods from here to there; they were inveterate speculators. New England shippers bought their own cargo at the lowest possible prices and sold it off wherever its value might be highest. Aboard every vessel was a supercargo—a trained broker who earned a share of the voyage’s profits. His job was to haggle and plot on behalf of the ship’s owners. He would chart the ship’s course for the best payoffs—buying fish and pine from New England’s fishermen and farmers; demanding hefty returns in the Caribbean islands in the form of molasses and mahogany; then heading to European ports hoping for big payouts for these highly coveted raw goods.
Colonial merchants also opened up new markets to trade. Their unquenchable thirst for rare and pricey goods sent them dodging their European competitors around the treacherous Cape Horn to California and the Pacific Northwest, where Native Americans supplied them with luxurious furs, and on to Asia, especially China, where they traded these furs for even rarer spices and silks.
The shipowners, often small consortia of men from a single New England town, may have assumed all the liability of these risky voyages, but also reaped impressive rewards, if and when the vessels returned. Shippers crewed their boats with men and boys who, through profit-sharing, enjoyed an economic mobility unknown in Europe. A twelve-year-old Maine boy could leave the family farm to cook in a ship’s galley and work his way up to captain by the age of twenty-five, then retire onshore at age forty wealthy enough to run his own fleet. By the mid-1700s, fine silver, porcelain, and furnishings began flowing back to the New World.
Throughout the eighteenth century, a robust shipbuilding industry blossomed, attracting the best engineering minds to American shores, so much so that master builders in London petitioned their government to write laws that would discourage talented shipwrights from emigrating. Regardless, they went, drawn to the booming economy abroad where virgin forests provided tall, strong wood for masts, cladding, and hulls, and hemp created strong, pliable rope for rigging and sails.
When the Nantucketers perfected the whaling ship, installing try-pots directly onto its deck so they could refine the blubber at sea, they were able to sail around the world, sometimes several times over, filling their stores with fine oils that fetched high prices, which in turn financed more whalers and whaling men, as well as handsome homes and new industries ashore.
From the first, America’s seamen were rebels. They constantly defied British law, sailing into any ports they pleased, trading with whomever they liked. Such violations were generally tolerated until George III’s ascension to the throne in 1760. During his rule, the English Parliament became increasingly frustrated with the colonists’ lack of respect, and revenue. Displeased with their zeal for free trade, clearly in violation of the Crown’s restrictive Acts of Trade and Navigation, the British clumsily clamped down, issuing harsher tariffs and penalties. In response, America’s great shipping families, merchants, and lawyers pooled their resources to battle the king across the pond.
The American Revolution was as much a maritime dispute as it was a philosophical battle. The wealthiest colonists—the captains and merchants—would not be legislated and taxed without representation.
By 1776, America’s vast fleet of merchant and fishing boats, expertly handled by some of the world’s best seamen, as well as their world-class shipbuilding knowledge, was poised to play a critical role in the Revolutionary War. Though the merchant vessels generally fell short as battleships, wrote the popular historian Samuel Eliot Morison in 1921, they proved excellent at foiling the British navy’s efforts in other ways. They were a constant nuisance—intercepting communications, forcing the enemy into rocky shores, seizing vessels and cargo. The king quickly learned that fighting a war across the Atlantic against such savvy foes was an exercise in frustration.
In the early days of the United States, shipping tariffs made up 90 percent of the federal revenue. Accordingly, the Founding Fathers had an intense interest in protecting the new country’s shipping families. “Maritime interests were supreme,” wrote Morison. “The Constitution of 1780 was a lawyers’ and merchants’ constitution, directed toward something like quarterdeck efficiency in government and the protection of property against democratic pirates.”
When drafting the US’s earliest laws, Alexander Hamilton relied on a brain trust of shipowners—the so-called Essex Junto—a group of influential New England merchants who championed neutrality with Britain after the war to protect their assets on the high seas. Hamilton supported their financial interests; in return, they buoyed his efforts to establish the federal treasury and Bank of the United States. From that alliance emerged America’s first cabotage law, “An Act for Registering and Clearing Vessels, Regulating the Coasting Trade, and for Other Purposes,” in 1789. It ensured that the domestic coastal trade was exclusively open to American-owned ships, a sweet deal for America’s shippers. Many countries now have such laws as well.
Hamilton had other reasons for supporting the country’s commercial fleet any way he could. In his mind, the idea of a merchant marine—a fleet of privately owned ships crewed by American seamen ready to deploy in defense of country—presented a compelling public-private partnership opportunity.
That notion would prove critical during the War of 1812. The turn of the nineteenth century found England at war with Napoleon. American merchants, always looking for an edge, embraced the role of war profiteers—brazenly trading with the Crown’s enemy, demonstrating little loyalty to the country that begat them. What’s worse, British seamen abandoned their naval posts to join the lucrative American ships, undermining His Majesty’s sea power. When the British navy began seizing American vessels and impressing sailors in retaliation, President James Madison asked Congress to declare war.
The young country was not prepared. Big-government foes, especially Thomas Jefferson, had lowered taxes, reduced the military to a few soldiers, and allowed Hamilton’s national bank charter to expire, leaving precious few resources for the government to fight England. Madison struggled to rally support and floundered.
This would be the first test of America’s merchant marine as defender of American interests. Comprising one of the largest fleets in the world, the country’s commercial vessels departed ports as privateers—bounty hunters sanctioned by the US government—with the rallying cry, “Free trade and sailors’ rights!” Financed by speculators ashore, they seized foreign vessels, captured the sailors aboard, and sold the pirated goods for tremendous profit. Privateering was a business venture, not a military mission, but it wreaked havoc on Britain’s ability to fight the Americans. (Even so, the British managed to burn down the White House in 1814.)
As shipping evolved from sail to steam, the federal government further defined and regulated its maritime industry, but it wasn’t until the creation of the Merchant Marine Act of 1920 (commonly known as the Jones Act) that these laws became fully codified.
The Jones Act shaped the modern American sailor and the modern American shipper in profound ways. Rooted in the country’s earliest laws, the Jones Act is unabashedly protectionist. It shelters domestic shipping from the pressures of the global market by upholding an America-first monopoly. To participate in the US trade along its coasts and interior waterways, ships must be owned and crewed by US citizens, and they must be built in domestic shipyards. Today, nearly all the country’s goods and petroleum products spend some time aboard US-registered boats, manned by a twenty-seven-hundred-odd-member seafaring corps, the great majority of them union men and women.
The Jones Act also offered American seamen unprecedented rights. Whereas the British navy ran by “Rum, sodomy, and the lash,” quipped Winston Churchill, American seamen were suddenly permitted to sue shipping companies for negligence (if mariners could prove that their employer put them at undue risk) or unseaworthiness (if the seaman could prove that the substandard condition of the vessel caused injury). This was a triumph of maritime’s labor leaders who had fought more than three decades for protections for the men who served on merchant ships.
As the twentieth century marched on, the union’s hard-earned grip on the industry put it at odds with conservatives and anticommunists. William Randolph Hearst planted his tabloids with antiunion and antimariner messaging. Ronald Reagan, who called the merchant mariners “little children,” worked throughout his tenure to reduce their public benefits.
The Jones Act has inherent economic costs: According to the World Economic Forum, banning foreign vessels from carrying cargo between US ports costs Americans at least $200 million each year. Some studies estimate that Americans pay $.15 more for every gallon of gas, thanks to lack of shipping competition. Just before being diagnosed with a brain tumor in the summer of 2017, Senator John McCain introduced legislation for the umpteenth time to repeal the Jones Act, calling it “an archaic and burdensome law that hinders free trade, stifles the economy, and ultimately harms consumers. The protectionist mentality embodied by the Jones Act directly contradicts the lessons we have learned about the benefits of a free and open market.”
Defenders of the Jones Act view it as economically and strategically crucial to the American way of life. The Jones Act bolsters the domestic maritime industry by guaranteeing buyers for American-made ships and American-trained sailors. These days, that’s significant: Ships built stateside can cost twice as much as those manufactured abroad. The creators of the Jones Act recognized these discrepancies and created generous federal tax subsidies to soften the blow.
Ultimately, it’s a small price to pay for a standing quasi-navy, ready to deploy at a moment’s notice, which made all the difference during World War II when the US government conscripted America’s merchant fleet and seamen to transport troops and munitions to Europe under risk of U-boat fire. This was exceptionally dangerous work; the US Merchant Marine suffered more casualties than any other military division in the war.
But heavily regulating and subsidizing an industry can have unintended consequences. Until midcentury, the US Merchant Marine dominated the seas. Now the dwindling number of American-flagged ships comprise merely 4 percent of the world’s fleet. The shift is due to simple economics: it’s cheaper to register ships in countries that have looser regulations, like Liberia and Panama.
Plenty of American-owned ships fly foreign flags to get around Jones Act requirements. This flight among shippers from America’s registers, called “flags of convenience,” is an invitation to anarchy, argues William Langewiesche in the Outlaw Sea. By registering a ship elsewhere, shipowners can avoid US taxes, labor laws, domestic construction requirements, and anything else that cuts into profitability. And oftentimes ships are registered to landlocked nations, which underscores the free-for-all nature of this system and the Wild West nature of the sea. When a non–Jones Act ship goes down, Langewiesche notes, there’s little risk to the customers and shipping companies. The hulls and cargoes are fully insured and actual ownership is obfuscated by a rat’s nest of LLCs and shell corporations.
With the passing of the Jones Act in the 1920s, Puerto Rico had the potential to become one of the few lucrative runs in the shipping industry: a hungry customer completely dependent on imports via Jones Act vessels. But first, the island needed to develop a robust middle class—a new generation of Puerto Rican consumers who were wealthy enough to buy American goods. In 1950, Congress enacted Operation Bootstrap, a stimulation package that would check several boxes. The tax-based incentives gave mainland manufacturers a new source of cheap American labor—Puerto Ricans; it created a new market for American stuff; and all this would result in a booming new trade route for US-flagged ships. Bolstered by these local and federal tax credits, mainland corporations raced to offshore manufacturing jobs to the island. Billions of dollars flowed to island from the US to build plants where lower wages meant things could get built cheaper, without the penalty of import duties.
From the island’s sugar cane economy emerged an industrial one, complete with a thriving middle class reliant on imported food, clothing, and oil. El Faro was built for that first Puerto Rican boom.
New federal tax incentives introduced in the 1990s brought a second wave of investment to the island, this time in high-tech manufacturing. At its height, Puerto Rico was one of the top pharmaceutical producers in the world.
When those tax incentives expired in 2002, the companies pulled out. With them went jobs, and then the people—Puerto Rico’s population plummeted from 4.5 million in 2002 to 3.6 million people by the end of the decade as islanders in search of work moved to the US mainland.
In spite of economic collapse, the island couldn’t wean itself off imports. In a tropical paradise where some of the world’s best coffee grows in the mountains, many of the people still enjoy their highly processed, packaged, and imported Nescafé. Despite being awash in sunshine, Puerto Rico depends on imported petroleum products to run its electric plants. The island’s Electric Power Authority reportedly pays as much as 30 percent more than the US for LNG due to restrictions on foreign-flagged ships, yet efforts to convert to solar power have been stymied by a system that has strong allegiances to the oil industry. Puerto Rico was quickly buried in a mountain of debt.
Vulture capitalists vacuumed up the island’s massive debt under usurious terms, a solid bet considering the fact that Puerto Rico is prohibited by American law from declaring bankruptcy. This little known technicality became law when a tiny “with the exception of Puerto Rico and Washington, DC” amendment got tacked onto a bankruptcy restructuring bill passed by Congress in 1984. Among other things, the bill specifically exempted the island from bankruptcy protections all other American cities enjoy, so its debts must be paid, even if it means people starve and schools close. The origin of this exception is obscure, though some claim that South Carolina senator Strom Thurmond slipped in this seemingly minor point right before the bill became law.
Exploiting the ensuing chaos, Colombian drug cartels shifted their trafficking route into the US from Mexico to the struggling island. By 2010, DEA agents were finding drugs on the ships from San Juan—in containers, on the crew, and packed in cars in the cargo holds—while gang-related crime on the island skyrocketed.
Strapped for cash, the Puerto Rican government, a major employer of islanders, implemented austerity. But the one thing Puerto Rico couldn’t save money on: ultrahigh Jones Act shipping costs. Like the early American colonists, Puerto Ricans had found themselves at the mercy of the ships.
In 2017, that dependency would prove disastrous when Hurricane Maria hit the island, wiping out roads, power lines, and houses. Relief supply deliveries were hampered by Jones Act regulations, severely limiting the number of ships permitted to service the beleaguered island. Overnight, the law became national news as media outlets reported on the island’s frustratingly slow recovery. The opinion pages were inundated with calls for a repeal of the Jones Act, so much so that President Trump put a temporary ten-day waive on the law to allow international freighters the opportunity to deliver necessary goods. But by October of that year, public outrage dissipated, leaving the Jones Act’s grip on Puerto Rico’s economy intact. As of December 2017, the New York Times estimated that at least 1,052 Puerto Ricans had died as a direct result of the island’s handicapped efforts to reconstruct infrastructure.