SUEZ CANAL

Greymouth Evening Star, 12 April 1933, Page 4

SUEZ CANAL

BURDEN ON BRITISH VESSELS British shipping is paying a heavy toll owing to the new fiscal policy which the National Government has adopted, in accordance with the mandate given by an overwhelming majority by the voters at the last general election, and it is also suffering owing to the subsequent departure from the gold standard. The position is anomalous since the British people, being islanders, are more dependent on shipping than any other community in Europe (writes Sir Archibald Hurd). What has happened can be briefly summed up. British shipping, which exists' to carry as many passengers and as large a. volume of goods as possible, is the one industry which has suffered most severely under the new economic policy, which has restricted its cargoes homewards. Then liners have to keep to their schedules under their mail contracts, whether they have large or small complements of passengers and whether they have large or small cargoes, or none at all, with the result that most of them are being run without profit. In the third place, British shipping owing to the United Kingdom goingoff the gold standard has to pay higher prices for most things bought on voyage, including the right to go through the Suez Canal. The position of British shipping in relation to the Suez Canal is peculiarly inequitable, because the British Government is the largest individual shareholder in the company which owns and operates the canal which links East and West. It is the essential highway of the British Empire. When the British Government in 1875, on the initiative of Disraeli bought from the Khedive of Egypt 176,902 shares in the Suez Canal Company for £4,000,000 it made a highly profitable investment and never more profitable than to-day. Though some of the shares have been redeemed the ‘British Government still holds 44J per cent, of the total issued capital.

PROFITABLE INVESTMENT The Suez Canal Company depends as to nearly GO per cent, of its receipts, on British shipping. Tn other words, of the £40,000,000 which the British Government has received in dividends during the past 57 years, about £24,000,000 have been contributed by British shipowners. Of course British shipowners derive considerable advantages from the existence of the Canal, but, from I he point, of view of Imperial defence the Canal is equally valuable to the British Empire. If the British Government had been satisfied with a. return of 5 per cent, per annum on its original investment, it would have received over the last 57 years a. total sum of about £11.500.000, or £28,500,000 less than it actually did receive. No otic can say that the Suez Canal does not pay handsomely in good times and bad. Taking the average of the years 1927 to 1931 and ronyerfin:; the results into sterling at the par of exchange, the total receipts of the canal work out at an average of £8.405,000 per annum. Expenses absorbed £2. 883,000, or 34.30 per cent, of the receipts, and the sums set aside for dividends £5,502,000, or 65.46 per cent. ' of the total receipts. The British Go- l vernnient’s share of the dividends Jias. • on the average, been £2,133,000 per t annum over the five years, this being < 28.95 per cent, of the total receipts • 6f the company, or nearly as much as | i its total expenses. Now a further point l has arisen. Assuming that for 1932. i

the British Government receives its dividends in paper francs to an amount equal to that of the average of last five years, it can convert these into sterling, at the present rate of exchange, so as to yield £3,53a,000. In other words, as the result? of the exchange, the British Government should earn an extra £1,000,000 on its Suez Canal investment.

If the matter be investigated more closely, remarkable results are disclosed. On the basis of the average annual net tonnage of these five years, the total average receipts each year work out at 5/5 per ton, at par of exchange, expenses at 1/11 per ton, and dividends at 3/6 per ton, the share of the British Government being 1/7 per ton. On the average during this period the total tonnage passing through the Canal was 31,206,000 tons per annum, of which 56.9 per cent, flew the British flag, and 43.61 per cent, foreign flags. At par of exchange, the receipts of the British Government from its dividends on the Suez Canal investment work out at 2/9 per ton net, of the British shipping using the Canalbut the corresponding figure at the present rate of exchange is 4/-. The matter may be carried a stage further. The present transit dues on loaded vessels, however small the cargo, using the Canal are six gold francs per ton net, having been reduced to that figure in November, 1931, and for vessels in ballast three gold francs. At the par of exchange, the former figure works out at 4/10 per ton, but at-the present rate of exchange to 7/- per ton. In the case of a vessel of 7500 I tons deadweight carrying capacity proceeding out in ballast to Australia j to load wheat for the European mar- I kets, the voyage out and home being via Suez Canal, dues in all amount to £950 at the par of exchange, but to’ £l3BO at the present rate of ex change. With a homeward freight of 28/6 per ton, the dues at par amount to over 9 per cent, of the gross earnings, and are now increased to over 13 per cent. Of the total dues payable the British Government receives in the form of dividends about £275 at par, and about £4OO at the present exchange.

| EFFICIENT ADMINISTRATION I > I British shipowners do not criticise - the administration of. or the services ’ rendered by, the Suez Canal Company. J The concern is well managed. But it i has been suggested whether the time . is not opportune, when world trade • is at the point of collapse, to review i again the policy which leads t.o the. : distribution of nearly two-thirds of its revenue year by year to its shareholders, among whom the British Government figures prominently. It is true that the company’s concessions were granted in 1869 for a term of 99 years so that in 1968 the Canal may revert to the Egyptian Government. But 1968 is a long way off! The experience of the British Government. proves that the shareholders have done very well, and if they never r< ceived another penny in dividends, they would still have, little, cause of complaint. The Liverpool Sleam Ship Owners’ Association, which has taken great, interest in the finances of the bu.ez Canal Company, pointed out in its annual report for the year 1930 that a few years after the concessions were granted to (lie Suez Canal Company, a vigorous agitation against the dues then charged took place on the part of British shipping interests, which finally tlircateiied to promote the construction of an alternative 1 canal. The dispute was evenluallv I settled at a meeting held in London * in 1883, when it was agreed that sur- ( plus profits, after payments of a 25 i per cent, dividend, should be allo<-,-n- 1

ecl to reducing the dues until the tran- | sit rate reached a level of five francs gold per ton. “The conditions,” the report, added, “which gave rise to the [agitation that led to the agreement exist to-day in a more aggravated form”- —and now, three years later, in a still more aggravated form, so far as British shipping is concerned, owing to the prevailing exchange rates. Apart from the British Government’s influence on the affairs of the company is it right, it is suggested, that the British Treasury should take from the pockets of British shipowners, and incidentally, Empire and other producers and consumers, such a large sum of money as is represented by the dividends on its holding in the Suez Canal Company, more especially as the shipping industry is the only industry in the Empire which receives no protection of any kind ? Because the United Kingdom is off the gold standard the Suez Canal dues cost owners about 550 per cent, more than they did, and for the same reason the revenue accruing from them to the British Government is about 50 per cent, more than it was. If the Government were to refund to British shipowners who use the Suez Canal the profit on exchange, it would greatly ease their burden and encourage British trade with the countries east of Suez. In normal circumstances little would have been heard of this matter, but the condition of British shipping is not normal. If relief to the extent of a million pounds a year were given, the shipping which passes through the Canal would be in a position to pro vide better services, and would be able, at least, to make ends meet.