The Jones Act: History, Essentials, and More

The Jones Act, or the Merchant Marine Act of 1920, is a federal statute of the United States. The Act says that goods shipped between US ports or domestic trades must be transported through the ships owned, built, and operated by the citizens or residents of the United States. 

Businesses that are involved in the shipment and trade of consumer goods should first focus on understanding the Jones Act, as violating this can leave a bad impact and impression on the business. 

In this article, we will learn what the Jones Act is, its historical context, core provisions, and economic implications. Also, learn about History and Diversity of Contemporary Art by reading this article.

Historical Context

Before the enactment of the Jones Act in 1920, the domestic maritime industry of the United States faced a lot of challenges and competition from international shipping services. Most of the domestic trade was conducted on and dependent on foreign-built ships. 

It was the time when the chairman of the Senate Commerce Committee, Senator Wesley Jones, introduced the Jones Act to create a monopoly on the domestic shipment trade in the US. This law was later passed by President Woodrow Wilson, implementing the supply chains, costs, and overall economic landscape of the domestic shipment trade. 

These changes in the economy increased the shipping cost of goods to Alaska, Puerto Rico, Hawaii, and other non-continental U.S. lands that depend on imports.

Core Provisions of the Jones Act

The following are the provisions that must be met by vessels before conducting trade.

• Crewing: At least 75% of the crew must be U.S. citizens or permanent residents.
• U.S.-Flagged Vessels: The ships that are used for trading must be registered under the U.S. flag and comply with American maritime laws.
• Build Requirement: The shipment vessels must be constructed in shipyards by the US shipbuilding industry, supporting domestic workers. 
• Ownership: The US-flagged ship vessels must be owned by residents or citizens of the United States of America. 

Over the years, there have been various amendments made to the Jones Act to address the changes and challenges of the current scenario. These amendments include changes in the crewing requirements and eligibility to improve safety and environmental standards. 

Economic Implications of the Jones Act

The following are the economic implications of the Jones Act:

One of the major benefits of the Jones Act is the creation of jobs. Discontinuation of the association of foreign trade vessels with domestic trade generated various employment opportunities for the citizens and residents of the US, such as chiefs, shore-side management, vessel repairers, etc. 

Moreover, the enactment of the law also lowered the safety and security concerns of the authority and the domestic maritime industry during times of conflict or national emergencies. 

Due to the monopoly and limited competition in the domestic trade industry, the opposition opposes the act and claims that the Jones Act leads to increased consumer costs. 

The opposition contends that low-level competition increased the cost and even hindered the shipment in areas like Hawaii, Puerto Rico, Alaska, and Guam, raising the cost by over a billion worth of US dollars. 

Moreover, they also confront the law by saying that the US-flagged ships require higher operational and repair costs, significantly increasing the cost of the transported goods. 

The following are the two best case studies or examples to understand the benefits and consequences of the Jones Act: 

• Puerto Rico, an unincorporated US territory that used to heavily rely on imported goods, faced higher cost challenges. Due to the Jones Act, goods shipped from the mainland U.S. to Puerto Rico are subject to higher costs, making everyday items more expensive for residents.
• According to PWC, the Jones Act resulted in the generation of around  650,000 jobs for US citizens and residents but increased the domestic shipping cost of goods from 10% to 40%.

The Jones Act in the Modern Era

To this date, the Jones Act, or the Merchant Marine Act of 1920, has still been a controversial topic to talk about. This is a topic that still gets raised during the debates and discussions of national issues. Due to the economic impact and potential free trade hindrances, appeals for reforms or even repeal of the Act were raised. 

To get the results, various analyses and studies were conducted to evaluate the effect of the Jones Act, and it was found that it has both benefits and consequences for the US economy. 

However, supporters argue that any reforms should not come at the cost of national security and domestic job preservation.

Wrapping Up

The Jones Act is a law that was created and passed by Senator Wesley Jones and President Woodrow Wilson, respectively. The law states that the domestic trade of the US must be conducted through vessels constructed, owned, and operated by US residents or citizens. 

Since the enactment of the law, this has remained a debatable topic, where some support the benefits of it, and some point out its consequences in the economy.

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