All told, the annual, unsubsidized cost of running the ship came to about $9.5 million. Subtracting operating expenses from revenues, United States Lines figured on annual earnings of $4.3 million, with a subsidy. The company hoped for a 13 percent annual return on the company’s total investment of $25 million.
Frederic Gibbs did not stop with the one-ship scenario. Like his brother, he strongly believed that having a two-ship schedule of weekly sailings was essential to compete effectively with the two British Queen s. There was every reason to believe that a new weekly service by two fast, modern ships could capture the lion’s share of the transatlantic traffic from the prewar Queen s, increasing occupancy, revenues, and the bottom line.18
This seemed excellent news for a government looking to support a healthy shipbuilding industry and merchant marine. But there was another way to look at the project. Antispending pit bulls like Lindsay Warren, Truman’s comptroller general, strongly believed that hefty government payments would contribute too much to the company’s bottom line.
To shipbuilding advocates, the subsidies were essential to creating high-paying union jobs and business for shipyards and marine suppliers starved for work after the Truman defense cutbacks. But Warren raised a fair point, and perhaps a compelling political one. Was taxpayer money going to subsidize wages and the national economy, or was it lining the pockets of rich company shareholders like Vincent Astor?
During the next year, Frederic carefully reworked his projections, this time on the basis of one ship of the 12201 design. He came up with slightly higher ship earnings, but he had bad news on the construction front. Thanks to rising postwar labor and material costs, building one ship would cost not $50 million, but $70 million. Even assuming the higher-than-average, 50 percent government subsidy, the United States Lines’ contribution would climb to $35 million—$10 million more than General Franklin had said the United States Lines could make.
Frederic presented his revised projections to John Franklin on July 17, 1947, and the general balked. A $35 million contribution was simply unacceptable. The interest payments on that amount would be enough to kill the deal for him. Franklin had to stay on Truman’s good side. He knew the president was a tough customer.
After World War II, Queen Mary, Queen Elizabeth, and other great liners had brought thousands of soldiers back to American shores, but Truman realized that many other American troops would not be coming home any time soon. To maintain political stability in an economically and physically shattered Europe and Asia, America would be maintaining permanent military bases all over the world. To do otherwise might easily lead to the rise of new demagogues, Truman concluded.
And then there was the growing threat of the Soviet Union. Truman was present when a British politician delivered a speech at Westminster College in the president’s home state of Missouri on March 5, 1946. “From Stettin in the Baltic, to Trieste in the Adriatic,” former prime minister Winston Churchill asserted, “an iron curtain has descended across the Continent. Behind that line lie all the capitals of the ancient states of Central and Eastern Europe.”19
Earlier, George Kennan, chargé d’affaires at the U.S. Embassy in Moscow, had written his famous “Long Telegram” of February 22, 1946. “We have here a political force committed fanatically to the belief that with U.S., there can be no permanent modus vivendi,” Kennan wrote; a political system believing “that it is desirable and necessary that the internal harmony of our society be disrupted, our traditional way of life be destroyed, the international authority of our state be broken, if Soviet power is to be secure.”20
On November 1, 1947, the Merchant Marine Advisory Committee sent Truman its report. It found that tensions abroad meant prudence at home; namely, the country should not again find itself in a massive emergency buildup of its merchant marine. Its decline during the 1930s, caused by the Great Depression, scandal, and labor problems, left the country woefully unprepared to transport cargo and troops to the battlefields of Europe and the Pacific. A strong, postwar merchant marine, anchored by refitted wartime vessels and bolstered by new construction, would be integral to keep the peace and to wage war if necessary.21
The Advisory Committee then argued for not one, but two superliners. “The building of two express-type passenger carrying ships for the New York to Channel-port service,” the report noted, “will help to restore the heavy war losses in transatlantic express passenger tonnage and will provide a type of vessel particularly useful in time of emergency.”22
This was exactly the rationale, based on military need, that General Franklin and the Gibbs brothers wanted the president to read.
The Advisory Committee also supported continued subsidies, to encourage companies to invest in passenger ship construction. If the transatlantic liner business collapsed as it did during the Depression, the Advisory Committee wrote, “the commercial market value of such a vessel except for scrap because of complete loss of earning power… would become zero.” However, as a military asset, the ship “might exceed several times the unpaid balance of the purchase price.”23 Queen Mary and Queen Elizabeth, the Advisory Committee was saying between the lines, were floating testaments to the idea that a big ship was more valuable than her commercial earning power in peacetime.
The message of the Advisory Committee was clear on ships. But it presented a problem for the president. Truman was committed to a strong defense, but two years after war’s end, he was adamant that it was time to rein in the free-spending ways of the military. In the last years of war, the annual defense budget had risen to about $90 billion a year; Truman wanted to ratchet it down to around $15 billion.24 Moreover, he believed that corruption easily resulted when the government and private companies worked in tandem. And as a former U.S. senator, he knew that the shipping lines had a particularly bad track record when it came to gorging on subsidies provided by the taxpayers.
Partly to get control of the military budget, Truman had advocated a unified Department of Defense, bringing the three military services (Army, Navy, and the newly independent Air Force) together in one National Military Establishment. The man Truman chose as his first defense secretary was James V. Forrestal, a son of Irish immigrants who had driven himself mercilessly to join the nation’s elite. Fortunately for Gibbs, Forrestal was one of William Francis Gibbs’s greatest champions during his time as secretary of the Navy, writing to the naval architect that his wartime designs were a “great national achievement.”25
After the war, as defense secretary, Forrestal was the principal advocate for spending on defense, including the construction of a large troop carrier that could ferry 14,000 soldiers anywhere in the world. This, he thought, would constitute a powerful deterrent to the spread of communism in both Europe and Asia. For his part, Truman wanted Forrestal to show a tight civilian grip over the military and to support his defense cuts. The two men quickly began bickering over how much to cut and where. Forrestal’s days as defense secretary were numbered, and his health declined rapidly as well.