The Effects of the Jones Act on the Economy of Hawaii

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The Effects of the Jones Act on the Economy of Hawaii
Christer Tvedt
Hawai’i Pacific University
February 10, 2010
ECON 6000
Dr. Leroy Laney

The effects of the Jones Act on the economy of Hawaii
The Jones Act, or the Merchant Marine Act of 1920, which is the act’s name, is a United States Federal statute, or “cabotage law”, that regulates trade between ports within the United States. The act was passed 90 years ago, in an era where protectionism was a dominant political idea, and when strong forces were pushing for keeping as much American trading dollars in American hands. This paper will focus on the background and intention of the Jones Act. Through examining the supporter and proponent arguments, a foundation for the act’s validity will be built. Further, the effect of the Jones Act on the Hawaiian economy will be looked in to, and to which extent it affects the cost of living in this state. Although little research has been done on the actual effect of the Jones Act on the Hawaiian economy, investigating the fundamental differences between American shipping and International shipping, will give some insight in the economic benefits of a waiver for the state. Historical Background and Purpose of the Jones Act

The Jones act is officially named The Merchant Marine Act of 1920, but the original Act dates from 1898, and was, subsequently incorporated into the act of 1920. It was named the Jones Act after senator Wesley Jones who sponsored it, and the name stuck around. Concerns about the health of the merchant marine and the protection of U.S. seamen were the cause for passing the act in the first place. It recognized the innate dangers of working at sea, and the value of training and educating seamen. Wesley Jones was strongly influenced by protectionist political views to ensure U.S superiority and dominance in domestic marine trade. “Considerable discussion has arisen with reference to section 34, which directs the President to give notice of abrogation of the provision of certain commercial treaties. The purpose of this section is to terminate in an orderly, courteous and diplomatic way treaties which are detrimental to our interests, and which prevents us from doing what we think ought to be done to encourage and build up our American merchant marine.” (Jones, Wesley. 1920) In addition it was meant to bolster the growth of both domestic and foreign marine trade, and strengthen the position of the American merchant fleet. “The trade of some of our island possessions is over a hundred million dollars a year. It has been largely carried in foreign ships. It ought to be carried in American ships and opportunity to only to put under the American flag more ships but ships of the highest type and most desirable for ocean commerce. The carrying of that trade should be ours. We have it if we will. If we do not take it no one is to blame but us. With the assurance given private enterprises should prepare to handle this trade. “ (Jones, Wesley. 1920) “They will overlook the terrible experience that came to us at the beginning of the world war (one) as the result of such a policy. Our shipping could be done more cheaply by others, and so we had none.” Wesley Jones (1920) argued that the U.S had to take charge of their commercial situations following world war one. “We are seeking to only do what other countries are doing. France has already notified s of her intention to terminate her commercial treaty with us, and has given a similar notice to Great Britain, Canada, Spain Greece, and Other countries.” “Other countries are getting rid of treaties that may hamper them in the contest of the world’s trade. It will be little short of criminal if we do not free ourselves from those things that shackle us and prevent us from doing what we know is for our best interest. These other countries are looking after their own interest. If we do not look...
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