It seems to be meant to perform a specific turning job (boring packing from the description), as opposed to a general purpose lathe. Liberty ships weren't expected to survive more that a couple of trans-Atlantic trips which might explain why they didn't want to "waste" scarce resources for a motor to power something that might (?) only see occasional use.
Actually, from its appearance, calling it a lathe seems to be something of a stretch. It looks more like a Cole drill adapted to boring specific sizes of packing.

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