The Evening Star MONDAY, MAY 14, 1934. BRITISH SHIPPING.

Evening Star, Issue 21719, 14 May 1934, Page 8

The Evening Star MONDAY, MAY 14, 1934. BRITISH SHIPPING.

One of the subjects discussed at the World Economic Conference in London was subsidised shipping, but as on most other questions proceedings were abortive. The British delegation stated their country’s objections to subsidies, but the conference failed to denounce the system, and it continued throughout 1933. Subsidised foreign vessels cut rates of freight, not merely diverting cargo from British ships, but so depressing freight rates generally as to force sales, on a large scale and at low prices, of British tonnage to foreign owners. The only country with a mercantile marine worth notice which competes with Britain on even terms is Norway. Among the forty countries which either subsidise fhcir shipping directly or indirectly, or reserve their carrying trade to their own vessels, or sweat those employed in the industryunder their own flag, are America, Germany, France, Italy, Holland, and Japan. British shipowners have all along firmly believed that Britain was in a position to retaliate effectively, but their great difficulty has been to got the British Government to act. At the end of last year the council of the Chamber of Shipping affirmed the principle of equal opportunity for vessels of all flags in international trade. Under that policy world trade was developed, but its abandonment' by most countries has helped to diminish trade and has caused a disastrous glut in tonnage. The British shipping industry does not believe that subsidies can prove any permanent basis for the maintenance of British sea power, though, like oxygen, they may require to be administered to save the patient’s life. Accordingly, the council recommended that the Government be advised that when any section of the British mercantile marine could show that a temporary subsidy was necessary, and would ensure its preservation for the time, the Government should consider favourably the granting of such assistance. The council then urged that the Government should be asked to intensify its efforts to promote a trade group of nations willing to trade on a reciprocal basis of equality of treatment, and that, with this object, bilateral or multilateral trade agreements should be made with as many nations as possible, one of the terms of which should be that they no longer discriminated against British ships, either directly or by the grant of uneconomic subsidies. ’ They urged, further, that in calculating the trade balance the services of British ships should be remembered as an important national export, and that the buying power of the United Kingdom should be consistently and firmly used, wherever possible, to defend British shipping against uneconomic shipping practices.

They agreed that the Government should be urged to take immediate steps to ensure the recognition in every part of the Empire of the gravity of the situation and the jeopardy in which their trade and communications would bo placed if the present tendencies continued. The British Cabinet cannot be accused of precipitancy in the matter. After the lapse of nearly five months the Government’s plans arc said (by the ‘ Daily Telegraph ’) to lie “ nearing completion.” The general principle of subsidies is not conceded, but special cases are to receive special consideration in the form of “ fighting subsidies.” It appears that the principle of discrimination, or the reservation of intcr-Imperial cargoes to ships flying the British flag, has not the Government’s approval. There may be political reasons against this, but there arc strong economic reasons for it. The chairman of a British shipping firm has just brought forward a proposition that, in cases where countries sell to Britain goods whose value is far in excess of what they buy from her, those countries should bo obliged to reduce Britain’s consequent adverse trade balance with them by utilising British ships for the transport of, those goods. This appears to us an eminently equitable proposition, but it would possibly mean retaliation by a very formidable combination of countries, for, even in normal trading conditions, nearly every country sells more to Britain than it buys from her. But a point has been reached, particularly in the tramp section of cargo carrying, when it might be safer to risk such retaliation than to see British shipping being sacrificed to foreign naval ambitious as a sort of peace offering. The deciding factor in the Great War was British command of the sea, and the part played by the mercantile marine therein was complementary to that of the Navy and scarcely less valuable. When Mr Alexander Shaw, chairman of the P. and O. Company, was in New Zealand early this year he emphasised British shipping’s defencelessnoss against an economic aggression, due to the desire of certain foreign countries to build up mercantile marines so as to have the foundations for the personnel of enormous navies. How impoverished countries find the money for the subsidies to their shipping we do not know, unless taxpayers are stimulated by the ambition mentioned. What wo do know is their ruinous effect on the British shipping industry, which is being worn down by the constant pressure of £30,000,000 worth of foreign subsidies every year. The last annual report of the Chamber of Shipping declared that the tramp section, representing about one-quarter of British shipping, is on the verge of bankruptcy, making heavy losses on running expenses without any allowance for depreciation, and with reserves exhausted by the unequal struggle. In consequence there has been pressure by the British banks (which largely finance the cargo-carrying ownerships) on such companies or firms to realise their assets. Latterly there has been some easing of the pressure on British owners to sell their vessels to foreign owners for operation. Because of hopes that the Government would assist in some way ou the lines urged by the Chamber of Shipping, owners have been inclined to retain their tonnage, and prices for second-hand vessels have hardened somewhat from the disastrously low levels they had reached. A recent Board of Trade return showed that last year 237 vessels, of 972,000 tons gross, were sold to 1 foreign owners, compared with 167 vessels, of 646,000 tons, in 1932, and 172, of 571,000 tons in 1931. The question is whether the banks will consider that the present Government proposals warrant them in continuing to relax their pressure on shipowners, or whether they shall resume it and thus afford foreign owners further opportunities of securing tonnage dirt cheap. From an official source it is gathered that the value of Britain’s 11 invisible shipping exports ” fell from £340,000,000 in 1920 to £73,000,000 in 1931. The Government, recognising the close connection between building ships and operating them, proposes to do something for the shipbuilding industry by a State guarantee for the construction of new ships designed for a specific purpose. Possibly the idea is to unload semi-obsoleto vessels ou to foreigners and then compete with them with up-to-date vessels. Recently Mr J. Denham Christie, chairman of a well-known shipbuilding firm, suggested that Government linan ciai assistance should take a form which would assist owners to scrap old vessels; recondition and bring up to date comparatively new ships which were not fitted with economical machinery; and replace old ships by more efficient c^ntt.