GERMAN SHIPPING.

Otago Witness, Issue 3698, 27 January 1925, Page 29

GERMAN SHIPPING.

ILLUSORY PROSPERITY. LONDON, December 16. In six years Germany has replaced 50 per cent, of the shipping confiscated by the Allies in execution of the Treaty of Versailles. Although this would seem to indicate clearly the prosperity and vast resources of the German shipping interests the Berlin correspondent of the Financial Times explains that things are not quite what they seem. In the first place, since the mercantile fleet was privately owned, the Treaty of Versailles obliged the German Government to pay the owners compensation for their losses. Many causes coincided to convince tho German Government that delay in setting to work to rebuild would be perilous to the country. The confiscation of the merchant fleet and most of the defence navy threw large bodies of men on to the labour market, for whom, in the disturbed days following the revolution, work was not to be found. The Government had then no option but- to pay these men unemployment relief that would have been bettor spent in productive work at the docks, for as fast as new ships left the stocks this army of discontented seamen would bo reduced. It was therefore, in every sense, a policy of economy to build rapidly and keep shipyards, dock bands, and crews busy. Meanwhile, the rate of currency depreciation in Germany went on faster and faster. Freights paid to foreign shipping companies had to be paid for in foreign currencies, and this helped to undermine the paper mark still further. German ships, on the other hand, had the rare advantage off earning freights in foreign currencies, and thus benefiting by the fall of the mark. The advantage was immense. It was also clear that the longer the building was delayed the more it would ultimately cost in paper marks, which,* in those days, was the unit in which everyone in Germany reckoned.

The building programme laid down at that time has, however, now been completed. It was not possible, with the compensation received from the German Government, to carry out the full programme as first adopted. The Ruhr occupation set in, and the Government then came to an agreement with the shipping companies by which the Government’s further liability in marks was prescribed. But the Ruhr occupation led to the complete ruin of such residual value as the mark still possessed. It frequently happened that the mark one day had only half the purchasing power that it had had the day before. The harassing delays in getting building materials from the Ruhr during the occupation led to still further losses through currency depreciation. The net result was that the shipping companies had lo devote their last reserves to completing the ships they had laid down. Since that time shipbuilding has all but ceased. The reserve capital of the great shipping companies has suffered as greatly os that of any other branch of industry, owing to the depreciation, so that nothing remains after the currency stabilisation with which to finance further extension .

Since the stabilisation of the German currency Germany has become the dearest country in the world for everything except labour, and it is only a question of time when, in this respect also, the world’s market price will be reached. That means that not only is shipbuilding in Germany dearer than elsewhere, but the fitting out and victualling of ships is far more expensive in German ports than abroad. German shipbuilders would therefore not be disposed to lay down further keels at this moment even if they had the reserves, sinco the ships built during this transition period would be over-capitalised. German coal, again, is far too dear today for the German mercantile marine, because the rail freights from tho Ruhr jiro far higher than the collier freights from Cardiff. The result is that British coal is being used, but unless the German ships in question call directly at a British port where they can coal, the British coal will cost them 25 per cent, more than the same coal costs their British rival shippers.