The Timaru Herald MONDAY, MARCH 19, 1934. SHIPPING FINANCE.

Timaru Herald, Volume CXXXVII, Issue 19751, 19 March 1934, Page 6

The Timaru Herald MONDAY, MARCH 19, 1934. SHIPPING FINANCE.

American criticism of the proposals submitted to shareholders in the great shipping companies involved in the merger of Atlantic interests to conform to the conditions imposed by the Imperial Treasury, -would seem to suggest an assumption that British and oversea opinion is ignorant of the conditions prevailing on the seas to-day. The suggestion that the proposal of the Imperial Treasury to make substantial advances to assist the merged companies to complete the construction of giant liners for the Atlantic trade now held up for lack of finance, savours of the conversion of the Cunard and White Star lines into State services with substantial financial backing, reveals manifestly erroneous conclusions. It is significant that the protest should come from a country which has for long years been deeply involved in the practice of subsidising shipping under the guise of help for mail services. In this connection evidence is available to show that financial aid is given to United States shipping by the American Government under two heads, namely; (1) loans for building ships; (2) subsidies for running ships. Moreover, United States shipping interests are protected from all competition by foreign vessels in the trade between their own ports by the navigation laws of the United States, which provide that “no merchandise shall be transported by water under penalty of forfeiture thereof, from any port of the United States, either directly or via a foreign port or for any part of the voyage in any other vessel than a vessel of the United States,' 1 and that “no foreign vessel shall transport passengers between ports or places in the United States, either directly or by way of a foreign port under a penalty of §2OO for each passenger so transported or landed.” It is hard to find any grounds for the American protest which is designed to defeat the plans made by the Imperial Government to help British shipping lines hold their place in the intense competition in the Atlantic trade, except on the grounds that the Americans do not wish to meet British competition on equal terms. It is perhaps pertinent to mention that under the United States Merchant Marine Act, 1928 (known as the Jones-White Act) a fund of §250,000,000 was established for the purpose of lending money to shipowners for the building or reconditioning of vessels in the United States. The Act provides that in the case of building vessels, threequarters of the cost may be advanced from the fund, at the lowest rate of interest (while the vessel is operated in foreign trade). That this fund is largely drawn upon by enterprising shipowners is shown in the returns which indicate that up to July 31, 1932, the loans authorised totalled §148,906,723. The rates of interest are such as to be described in the United States Senate as “ruinous,” being as low, in some cases, as onefourth, three-eighths, and one half of one per cent., though loans made after February 2, 1931, are to be fixed at the rate of 31 per cent, for vessels engaged in the foreign trade. But if American shipping interests would raise protesting voices because the Imperial Treasury proposes to render substantial financial assistance to a British shipping merger to maintain British prestige in the Atlantic shipping trade, how much more violent would these voices grow if Britain adopted the policy of subsidising mail services along the lines of American policy. Under the JonesWhite Act of 1923, the United States Congress gave authority for the granting to United States vessels engaged in the foreign trade of subsidies varying from §l2 for each mile of the outward voyage in the case of vessels of 24 knots speed, down to §2.50 per mile for vessels of 10 knots speed. Though these subsidies are described in the Act as “compensation for ocean-mail services,” they are admittedly not mail subsidies. “They have no special relation to the postal service,” declared the Postmaster-General of the United States in the broadcast speech in 1931, “Ocean mail pay is simply a form in which Congress has elected to extend financial aid to the shipping industry.” Other subsidies are offered for passenger and cargo services. Moreover, it has been pointed out, by British shipowners, as showing how little mail carriage enters into the question of the subsidies, that for fifteen voyages, one subsidised mail carrying line of ships, drew something like §240,000 in subsidies, whereas if the payment had been made at the usual poundage rates. for unsubsidised vessels, the line would have carried a payment of only §6BO. It is also stated that subsidies alone are more than sufficient to pay the whole of the interest at 8 per cent, upon the proportion of the capital cost found by the companies (onefourth) plus the interest upon the loan from the Government, and to leave each year a sum, which if devoted to that purpose, would be sufficient to wipe out the Government loan in twenty years. Doubtless it will be said that this is America’s business. So it is. Hence in view of the favourable conditions under which American shipping operates in

foreign seas, we do not think the Americans have any ground for their criticism of the decision of the Imperial Treasury to provide substantial financial backing for the shipbuilding operations of the British companies who are entrusted with the increasingly difficult task of maintaining Britain’s sea prestige in the Atlantic -service, in competition with the richly subsidised companies of other great mercantile nations.