OUR MERCHANTMEN & TRADE ROUTES

Dominion, Volume 7, Issue 2219, 4 August 1914, Page 6

OUR MERCHANTMEN & TRADE ROUTES

WHAT MAY HAPPEN OPINIONS OF SHIPPING MEN. What will be Now Zealand's position as far as her trado and commerce are coucorned if Britain is compelled to go to war is a question of importance just-now. 'With tho object of ascertaining whether the various oversea shipping companies trading to and from Mew Zealand had made any preparation, or contemplated any alterations in their regular timo-tablo running in case of war, a representative of this paper made some exhaustive inquiries during the week-end. "Guided by Clroumatances." At the outset it cau bo 6aid that practically all the shipping companies approached said that they woiifd be guided by circumstances. On the other hand, one or two managers of well-known shipping firms proffered the opinion that if Britain did g& to war it would bo found that \\xe regular direct services between New' Zealand and English ports. would bo much curtailed. It was pointed- out that the recognised ocean routes would be sought by hostile oruisers. and theie'fore steamers outward and Homeward.. bound' would have to be \ protected. This line of aotibn, it was said, would open up ono of the biggest questions in the.mercantile marine. For instance, it' was held that'every Home liner leaving New Zealand snores for the Old Couutry could 1 not, for obvious reasons, bo escorted by cruisers all the way to En* land. Neither could vessels le.iving Home ports be; similarly treated on tlie outward journey. Naturally, tho question arises, What is to bo done? Tho answer is that tho services will havo to be cut down to a minimum if war does occur between Britain said any other countries or country. .

Direct Mail Service Retained. From what could be gathered, it was understood that as. far as practicable tho regular direct mail service between England and New' Zealand and vice versa would be maintained, but the Bame number of steamers would not be employed. That would mean that instead of.:having direct _ xiiail. steamers arriving at and departing from Wellington every fortnight as at present, the services would in all probability be cut dowii considerably, and there would be much longer intervals between tho arrival 'and departure of \the . steamers employed. ' ■:, Again, it was pointed put that if war is declared, tho question of haying faster mail steamers' on tho. run beJ tween Wellington and London. .would\ have to be seriously considered.

How the service Would bo Operated.

The opinion was held that these fast steamers would, be quite safe without an escort steaming across the Pacific to Cape, Horn, -and perhaps up_as far as Monte Video. It was- considered that from tho latter port up to Cape Verde Islands or Tenenffe the routo would be comparatively safe. From the latter points to the English Channel and London, •or West: of England ports, is whore our traders would be likely, to meet considerable 'trouble.. It' is in these % waters.that the British cruisers would ,have .to be most actively engaged in escorting merchantmen. It. was considered likely that a rendezvous for merchantmen crossing the , Atlantic ,would be appointed, and from"-there a. fleet of warships would escort them to England.-' •'■ . ;-.'.-', . The same plan would, it, was held,,be worked on the outward journey. ~ Merchantmen bound out here and to 1 Australia and South Africa would -bo escorted by British mea-o'-war to a certain point on the African coast, perhaps; down as far as the Ascension or St. _ Helena. At these points - the Atlantio fleet, or portions-of it, would then escort' them to Cape Town. From the latter port across the Indian Ocean to Australia they would by a smaller number of warships. It will ho seen from the above that to keep the British trade routes open in time of war is no easy task, and if it has to bo undertaken the services all over the world, and especially to New Zealand, will have to be cut down to a minimum. /

Our Trade and What Will Happen. One well-known shipping man in Wellington, whose firms has hod a long connection with the London-New Zealand trailed ventured the opinion that in the event of Britain going to war the shipping companies would have to tie. a great number of their ships the Admiralty ordered them for (.colliers and transports, which ho thought was probable. Ho expressed the opinion that New Zealand produce would not be sent forward if war did happen. It was also pointed -out that- this;is the slack season of the year as far' as New Zealand's trade with the Old Country is concerned, so that the effect of cutting down the services would hot result in as muohloss as it would in,, the busy season.

On the other hand, Australia is demanding all the bottoms at the present time : to take away her. wheat and other products.' Then her: wool season will be here in a few.month's. New Zealand's busy_ seateon as far as her export trade is concerned, does not commence till the end of October or.November, and it was hold that by that time the supremacy of the .seas would probably be sottlod for many years to come.

Position of the Boats To-day. There are foUr direct lines of steamers operating between England arid New Zealand, and vice versa. They are theNew Zealand Shipping Company, Shaw, Savill, and Albion Company, Commonwealth and Dominion Line, and the Fed-eral-Shire Line. The first two mentioned companies have | steamers engaged in the direct, mail service from. Wellington to London, and vice-versa, as well as steamers running between. New Zealand and. West of- England, and Canadian porta. The other two companies operate.their lines between England, United States,_ Australia, and New . Zealand. There is another British shipping company—the American and Australian Line—rwhich operates between New York and Wellington, via Australian ports, and. another lino, the United States and Australian Line runs German chartered steamers down from New York to Australian and ; New Zealand ports.. From the above it will be seen that at the present time (although' it is the 6lack time of the year as far as our export trade is concerned) there are a number of British-owned steamers either en route from New Zealand to England or the East Coast ports of the United States, or bound from English, Canadian, or East Coast ports of the.United States to New Zealand. That being so, if Britain is compelled to go to war almost immediately, itwill be aeon that a number, of our steamer*, both outward and , homewardbound, would be affected. With the idea of giving _ some information concorning the positions of various oversea steamers journeying to and from New Zealand snores to-day, the following has-been compiled-from the latest movements sheets of the. shipping companies mentioned. Steamers which aro bound to Now Zealand ports and have arrived at Australian ports have been omitted from the following list:— . New Zealand Shipping Company. Steamers bound to. New Zealand ports:— Karamea, boimd from St. John to WeUiiifiton, via way ports. Passed Cape of Good Hope July o and left Durban July 9. Nearing Adelaide'. Anglo-Egyptian, bound, from Mon- , treal to, -Wellinatflft. via, -icasipjfe sfid,

left Durban July 23. She is'somewhero in tho Southern Indian Ocean. Kaikouia, bound from London to Auckland and AVellingtori. Left Durban July 30. About 1200 miles out from latter port. Itemuora, bound from London to Wellington. Left Cape Town July 31. About 1100 miles out from lator port. Steamers bound from Now Zealand ' ports:— Kaipara, left Lyttclton, July 11, for West Coast ports of United Kingdom. Somewhere' between Monte Video and Teneriffe. Whakatano, left' Lyttelton June 29 for London. Somewhere between Video and. Gibraltar. V Rotorua, loft Wellington for London July 2, at Monte Video July 21. Between that port and Teneriffe. Rimutaka, left Wellington for Avonmouth, July' 1. Nearing Monte Video. Turakina left Wellington for' London last Thursday. : ~ '-■'■-■; Shaw, Savlll, and Albion Company. Steamers bound to New Zealand port's :— Athenic, bound from London to Wellington. Left Cape Town July 17 .and due at Hobart August 6. - Rangatira, bound from-Liverpool to Wellington, via way ports. Left Cape Town July 25. About half way across tho Indian Ocean. • Cbrinthic, bound from London'-to Wellington. At Teneriffe July 30„ and due Capo Town August 15. ■' -.' -\: Matatua, bound from London to Dunedm. Left Home July' 3. Between Capo Town and HobartT Steamers bound from New' Zealand ports:—- - •■••'■:'.

lonic, left 'Wellington for London, July 16. Due at Monte Video on Wed- • nesday of.this week..' Kla Ora, left Auckland for London, Hull, and Newcastle, July 18. Left Monte Video July 9, and due London July 29.. advice of her arrival as. yet.. Waiwera, left Wellington for London July-14. Somewhere this Bid© of Monte Video. ■'... .... / . ■•- '._ _ Tok'omani; is probably in the Atlantic at present,, a few days out from Home, bound for Canada. ■'. , , Pakeha left London on Friday, with a fairly valuable oargo for, Auckland and other New Zealand ports. Commonwealth and Dominion Lino. Steamers bound'to Now Zealand ports:—■' ' ' Hawke's Bay, bound from London to' Wellington. Left Capo' Town, July 10. About three parts of the way: across the Indian Ocean. Star of Australia, bound from New York to Wellington.. Between. Cape Town': and Melbourne. -..-'.-!'■ Star of '-Victoria, left July 21.'. -In the vicinity of. Cape Verde Islands'. ■■', ■ •■'-- .'■' :. ■ ■ l. Indrale'ma, left New York. Julv 27. tn the vicinity of the Bermuda.lslands. Steamers bound from New Zealand ports:—.;. ,-..'.- ~■■.■.. Indrabarah, left Lyttelton' July 7, for Home. •'- ' ' . . Left Australia:. Homeward bound: Niwaru, sailed from Sydney, July.' 9. , Mimiro, sailed from-'Sydhey. July 9. Whakarua, sailed , from Sydney July 26. , Federal Shire LinerSteamers bound to- New' Zealand ports:—' ■ • ' ■ Surrey, bould from Liverpool to Wellington; In the'.vicinity -'or the Sierra Leone Coast, British West■ Affica. : ; Steamers bound from New Zealand ports:— ■ ■". Kent, left Wellington July 22, for Boston, and New York.' Between Cape Horn and Wellington'. ; .< "'."'■'•..'. .. Durham, left Lj-ttelton Julym. B<* 'tween Teneriffe and Las Palmas. . Rimutaka, * Homeward bound, a few' days out from Montevideo/ , : , -.-, '. Australian and Amerlcanf Line.. The In'dfalema was to' have left" New. York on. July 27 for Wellington. If she got away she should be. well off the : coa'st' of the United States. !.•:" '".''■, United States and Australian Line. . The Gernian chartered steamers Stolyenfels. and Wildenfels are both en route from ,New ; York, to Wellington under :the above'. line's flag. The-for ; vessel is in Australian waters, and 'the latter left New York on July 4. Consequently she' is in the North Atlantio Ocean. .' ' [ German Australian Line, . '.' \ The first'steamer, to leave Hamburg for, Wellington in the new German-Aus-tralian Line-rthe Wismar—is.now. on her way down here. .She should show up at Wellington about the; end cf. this month provided she is not diverted by 'aWireless message,. V. miANCE; ■•'■■ GROUPING OF EUROPEAN: .. NATIONS _.'.•■■ NEUTRALISED STATES The' relations of, -the». nations of Europe.to ono another'are governed bjan extensive system'of treaties' and' ' commercial conventions.' The rjresent grouping of the Powers dates b'ack to 1881 when the Triple ~ Alliance • was formed by Italy joining 'in the defen- ■ sive' alliauce . then existing between ': Germany and Austria. .'...'■-.

Russia; ih.1884, concluded a secret treaty with. Germany, which :>vas said to have in view a war with England, •but.this treaty was terminated in 1890. France, since the close of the FrancoFrussion war in 1871, had stood alone in Europe, and as soon- as Russia was released from her. obligations to Germany the foundations .of the present Franco-Russian alliance were laid. An understanding was arrived, at in 189], and was welcomed in both countries as enabling! to regain their influence in tho counsels of Europe. Secret conventions were signed .in 1891 and 1892, which in vho words .of. M. ; . Riboi, then Foreign Minister, secured for Franco '•the support of Russia for tho maintenance of the equilibrium in Europe." Tho word "aJliance" was : first, used tentatively in 1895, and was at last definitely proclaimed by the Tsar in 1897. Britain's connection with, tho Dual Alliance began in 1904, when the An-glo-French: Convention was signed providing for tho settlement of all outstanding , territorial questions between the two Powers and the Entente Cordiale thus established. In 1907 tho period of suspicion between Britain and Russia was closed by : tho signing of the Anglo-Russian Convention tho sphere?, of influence of the two Powers in Persia, aiid this convention was subsequently extended in 1911. Reference is made elsewhere to the obligations of Britain to France .and Russia. . ' *

The terms of neither the TriQlo Alliance nor the Dual Allianca have been officially published, but the throe nations of the Triplice are known to have agreed • to defend their territories against any other or others of the Great Powers. , It has been stated that Italy is bound to send a force.- into Franco in the event of a war between Germany and Franc*, but the Italian Government subsequently informed the French that in no cricumstances could ,slio become, an instrument of aggression against Franc*. _ In 1896 Rumania joined the Triple Alliance. The only othor nation in Europe connected by definite alliance with any member of either Kroup is Portugal, which has been an ally of Britain's for many years. According to'the treaty of alliance neither party is to help a nation attacking the other, nor to civo asylum' to the- enemies of,the other, except to political [fugitives or exiles. In case of war and invasion each lia.tiojA. is, to assM'the. pine* with armi

men, ( and ammunition when Tho treaty has been renewed from time to' time. \ • i

Four European States have been permanently neutralised by treaties among the great Powers.: The first was Swit- ■ zcrland, whose territorial integrity was permanently guaranteed in 1815 by Bri- ■ tain,_ Austria, France, ■: Prussia,- aud Russia. Belgium was also'. neutralised by tho Treaties of London'of 1831 and 1839 by ilhe samo Powers, and Luxemburg by the Treaty of London,of 1867.. ' In:1907 Britain, France, Germany, and: Russia signed a treaty guaranteeing the integrity of Norway.. By an international convention - signed ; in 1888,: the Suez Canal: and its approache : wero permanently neutralised. ■■ Tho position'of tlio nations of Europe ' and the population of each'may'thus :W Bet out as follows in relations to the : two groat combinations:— TRIPLE ENTENTE GROUP. :' • ■ '; Population. Great Britain .................. 45,300,000 France '...: 39,600,000 Russia • 122,500,000 Senia ... ; •••• 4,500,0Q0 ', Portugal ~.;.......;.....;...... 6,000,000 . : •■,'' .■■:.. :> v -, 217,900,000 TRIPLE ALLIANCE GROUP. Ckrmanv ......... 64.900,000 ■ Austria-Hungary* ............ 49.900,000. Italy ......;.......'......... ■■ 35.200.000 Rumania ....■■,.... 7,500,000 ; . . .157,500,000 PERMANENTLY NEUTRAL ■ STATES.Switzerland'. Norway. Belgium. .Luxemburg. UNATTACHED TO ANT GROUP. Sweden. • -, Greece." • Spain. . •' Bulgaria. Denmark. : Turkey, . Holland. '. ' • WAR AND FINANCE GOLD AND THE CREDIT SYSTEM ■,-' TREMENDOUS EOSSIBILITiES

. Some two years.ago . a remarkable article-.was: published in the "Round Table" bn v the credit system';of . the ■. world. The article excited a great deal of and it was' recognised that the 'wriier Had displayed' a v quito exceptional insight into the forces''which govern the system. The. writer. 6.aid:— r An infinite number .of strands binds all the great nations to one another, and,. .'•■ like the -nerves' of.,the. human body, these strands •■ radiate from the great nerve centres of credit "The art .of banking is to speculate with success on the chance that only a small proportion of 'creditors wilt-ask-for. their money in gold at the same moment. But they may all demand it; ■ - ..-■..'• ■ ■ Gold must be always available somewhere. And it is always available, but only from one place in the world, ton- - dbri alone among the i great .financial centres, has undertaken the task of meeting every legitimate demand ingold at and to any : amount)-. '..No other banking nation _has ventured to, face 'the'.risk of-meeting not only..tb« . demands of its own depositors,- but of the world itself, rlf. Germany,has.to pay gold to. Turkey for > a loan newly granted, she gets.it'from London; if , New York wants gold, 6he> gets it from London;.if the Argentine or Egypt'or India have had gjood harvests and want, gold, they get it from --. She undertakes to supply on demand not <ihly ; the countless depositors in her own bank','but the world at large. .Anybody in theijworld .who- keeps_ money far London or can raise: a credit .'or:' get an advance in London can get gold from the. ■Bank"of England.' - ...>..".•'.."-«' • . What,;, then, is likely, to'happen, on', the : . ! outbreak of such ' war?- Suppose; for instance, Germany deqlared war against us. A crisis in the money > market would be at once precipitated. Everybody would be seeking to. place themselves in a position to meet their engagements. Money would dry up, and the bank, Tate would be forced to a high figure. At the same time there would be a tremendous fall in value of all securities on the Stock Exchange, so great that the Stock Exchange might even have to be closed. Bank 3 would have to "carry" their customers who r had-borrowed against securities, and would find a, large part of their; assetr unrcalisable. , The.discount market— ■ i.e.,;the bill marketr-would be -no better.oft '■-, . ■-" '■"• v " The Bank of' Prance'holds'gold to' the amount of £128,000.000; the Bank of ;Russia,. £125,000,000; the- Beiohs-' bank,, £55,000,000; while the Bank .of England, with; world-wide : liabilities, has only: £35,000,000.1ying in bullion, or, coin, in the vaults of the Bank''of England,-- together with> thev stock of metal held' bv other banks', -perhaps, £70,000,000. .It.is estimated that this sum. is equal, to.not 'much moro than ' six per cent, of the'total deposits 'of the banks of the United Kingdom. ■\Vhile : the stocks scattered abfiut amona .tho different banks is a valuable stand; bv, the final reserve is the reserve o? . - tfie Bank of England.. That is the_re- ' serve which all the banks in the United Kingdom fall back on. In 1907 America drew.' nearly £15,000.000 in, tw;o months from London. The 'Bank of > England's reserve • fell over £6,000,000 in two weeks. There is no other nation which has been able'.to undertake ' .theseitremendous responsibilities. Since 1895 the world's gold has increased by ..-■ £1,000,000,000. ' A great portion or this huge sura has passed through London,v because London'is a free market, Only £20,000,000 has stayed there.; ; London finances Germany; by 'neans of acceptances to the extent probably i of about'£7o,ooo,ooo, at any one time. . This means that accepting houses in . Unaon will have- made themselves- re. I sponsible during tho two cfcv three months' after the outbreak of; war to* the payment, mainly to the joint stock banks, of £70,000,000, against" bills drawn on German account, which these hanks and others will have bought in ' the discount market. But the accept- ■ ing houses would only be in a position to pay the whole of this largo sum if they receive, as they would in the ordinary course of affairs, the same ' amount from their German clients, to finance whose business Khe .bills were : drawn. Tt.is quite probable that these clients would not, or could not, pay. It is probable that in any case, whether theif money were received or not, th« ' discount market would be so hopeless. 1 ly disorganised that a "moratorium ' would have tc be declared. ' 1 Tho whole credit svstem Tests on. ' the supply of banking currency.' If 1 this currency is withdrawn ntf one can 1 meet, his debts, because no one has the meaiis to pay. The whole mowy nuyr--1 ket' would be struck with paralysisi : 1 As Bagchot said, all that would be left would bo a mass of failures, and a ■ bundle of securities. In any'case, ths 1 sudden stop of the discount, machinery ■ would cause incalculable damage ana i confusioti to trado and enterprise i throughout the world ; Everything ■ would depend on the action of our for-. • oign clients as a whole. If.they took' i fright and demanded immediate pay--i ment in gold, London might have to i put up her shutters as a free gold mar- > Ket simplv through lack of • time to i savo herself by.tho realisation of some • of her immense assets abroad. Loni don might never regain her place, v Gold would flow in again, no doubt _to • pay for the interest on our 'present -in-, • vestments, which amounts to some- , thing' like £180,000,000 per annum on • a capital invested of £3,300,000,000. • Tho most dangerous, period, therefore, i will bo tho few days or weeks'after the i deelaratiou of war, or. if it. was quite , clear wJas was inevitable, the few days . before that declaration, -when' our • enemies might attempt to withdraw , I much mousy a? posaiblo. • •