THE STATE IN BUSINESS.

New Zealand Herald, Volume LXII, Issue 18929, 29 January 1925, Page 12

THE STATE IN BUSINESS.

SURE AND CERTAIN FAILURE"

LOSSES IN SHIPPING TRADE. LORD INCHCAPE'S REVIEW. The entry of tho state into business was condemned as doomed to failure by Lord lnchcape in his address to the annual meeting of the Peninsular and Oriental Steam Navigation Company in London. He referred particularly to the losses incurred by State-owned shipping. Lord lnchcape said that during the war. the British Government built a great many steamers. Very wisely, as soon as the war was over, it got rid of them, and at high prices, for trade was,? booming. Not so wise were Canada, America, Australia, Braziland Portugal, which held on to their State-owned steamers. These had been competing with privatelyowned vessels the world over, with the result that these countries had lost millions of pounds which had had to be made good by the taxpayers. Some of these Governments were now attempting to dispose of their ships, but tho vessels, if sold, would not realise one-fourth of meir cost. In saying this, he was not exaggerating. ; He recently bought fqr about £60,000 two steamers which had cost, a certain Government no less than £600,000 only four years ago, and heaven only knew how much more they had cost in tho interval. Centuries ol Experience. It was, he continued, not within the capacity of public servants or Government departments to manage great international enterprises such as shipping. In this connection he quoted a speech which ho had heard Lord Birkenhead make in tho House of Lords a few monUis ago:—"You cannot master the, business system of this country in tho cloisters of Oxford, and suddenly take up and deal with a most complex organisation which has developed and grown up with centuries of our life. You can no more become an adequate and intelligent reformer in this respect than you can at the age of 50 or 55 go suddenly into the practice of law or medicine. The whole business is one of the most, extraordinary nicety and complexity, and to attempt to deal with it without the advantage of most careful preparation is to invite a sure and certain failure." Lord Birkenhead's axiom was, he thought, illustrative of the fallacy of anv Government embarking on shipping or business of any kind. Such businesses were built up by men -who had been trained for, and' devoted themselves to, commerce. It would, he believed, have, paid tho shipowning Governments to have sunk their ships rather than to have kept them running during the last four years. When Governments had rid themselves of the incubus of State-owned vessels, the public, might see a moderate return to prosperity in the shipping industry, Meantime, the shipbuilding yards would have many empty berths, with resulting lick of employment; but shipowners would not go on building ships unless they could expect a reasonable margin of profit. State's Share ol Profits.

Governments would 1* better off if, instead of competing with private enterprise, they took a share of business profits in the form of income-tax. If they continued to run ships, they would fail commercially, and, to make good their losses, would have recourse to additional taxation. He had heard a good deal of a proposal to build six 20-knot steamers to carry only passengers, mails, chilled moat, and fruit between England and Australia, proposal in which the Commonwealth Government had been 1 invited to assist financially. Application had also been made to the Trade Facilities Committee for public money to finance the project. If was said that £9,000,000 would have to ho put into the venture. Such proposals had been hardy annuals for 25 years. Let the promoters, he said, go to the public for the money; he doubted if they would get if, and if they got it. he doubted whether the subscribers would ever see any interest oil their investment. It was much more likely that- the principal would vanish. In his opinion the whole idea was doomed to failure.