1.—Now and After
It is unfortunate that no adequate statement has been forthcoming setting before the public the important services shipowners are performing for the country, and the serious position of the shipping industry. Even in the House of Commons the voice of the shipowner has never been effectively raised.
It is no exaggeration to say that the shipping interest of Great Britain has sacrificed more than any other leading industry—and the country does not realise the serious difficulties which are in front of shipowners if they are to “carry on” after the war and maintain our maritime position. Indeed, so far from the true position of the shipowner being realised, there appears to be a general impression that he has made undue profits out of the war, and is still in a privileged position, and is gathering in exceptional riches.
It will scarcely be disputed that the material prosperity of the country depends upon the existence of a great mercantile marine, and that our shipping industry is vital to the existence of the nation. In times of peace we depend upon it to feed and clothe our people, and to bring us the necessary raw products, the manufacturing of which gives employment to our industrial population. We are apt to forget that we live upon an island, and with the exception of coal and iron, we depend almost entirely upon our shipping to supply the wants of our forty-five millions of people and to maintain our industries.
Were it not for our merchant ships the present war could not have been carried on. It would, ere now, have been lost, and the people of this country would be in the grip of famine. Nor have our shipowners merely supplied our commercial wants; our merchant ships have been turned into armed cruisers, patrol ships, hospital ships, and transports, and have thus rendered the most effective assistance in the conduct of the war.
Anyone who realises these facts will see how important it is that our shipping interest should be supported, so that it may be in a position to resume its activities; and that its individuality should not be crushed and extinguished by Government control and bureaucracy. As a proof of the successful enterprise of our shipowners in the twenty years prior to the war, our tonnage increased from 8,653,543 tons to 19,145,140 tons, and we owned 43 per cent. of the world’s shipping.
SS. “Olympic,” 1911
It may be well to deal at once with the allegation that shipowners have made excessive profits. There is no doubt that during the first two years of the war ships earned large freights, not, however, due to what is commonly called “profiteering,” but simply because the Government hesitated to check the imports of merchandise of a bulky character. After the Government had taken up the tonnage necessary for their transport purposes, what remained was not sufficient to convey the produce pressing for shipment. If imports had been regulated as they are now, the pressure for freight room would have been reduced and freights kept within moderate limits.
The urgent need for checking imports of a bulky character was, I know, urged upon the Government by shipowners who foresaw the scramble for freight space, but the Government failed to respond to these representations. Their hands were very full, the tonnage problem was a new and difficult one, opening up many embarrassing questions, viz., as to what imports should be checked, the effect of this upon our manufacturers, and what would be the result of checking trade in one direction, in causing its dislocation in another, and the consequent disturbance of our foreign exchanges. All these and others were points upon which we had little or no experience to guide us, and the position was aggravated by the loss of tonnage due to the ravages of the submarine.
Taking a calm view of the retrospect, and the gigantic and unique task with which the Government has been faced, they have accomplished their work with fewer blunders than might have been expected. After all, freights have not bulked largely in the increased cost of produce; a freight of £10 per ton is only 1d per pound. If we are to find the true cause of our high cost of living we must look at the inflation and consequent depreciation of our currency, the high rate of wages, and increased spending power of our working classes, and the indifferent harvests of last year in all parts of the world.
The high freights earned by our shipping in 1914, 1915, and part of 1916 naturally caused the value of shipping to rapidly advance. Very few new merchant ships were being constructed; ships were being destroyed, and shipowners possessing established lines were forced to buy to maintain their services, and thus the value of secondhand steamers advanced to two, three, and even four times their pre-war values. Many holders, especially of tramp steamers, sold out and realised great fortunes, and these unexpected and unprecedented profits unfortunately escaped taxation, on the ground that they represented a return of capital; and it is these profits that have appeared unduly large in the public eye.
The shipowners who remained in business, and this comprised the great majority, were deprived of 80 per cent. of all their profits above their pre-war datum, and afterwards this tax on their excess profits was relinquished, and the Government requisitioned all tonnage on what are known as Blue Book rates—which on the basis of the present value of shipping yield only a poor return.
It is difficult to understand why the Government should have placed shipping on a basis of taxation differing from all other industries—it is the industry which beyond all others is essential to the conduct of the war, and which is exceptionally subject to depreciation. The Chancellor of the Exchequer (The Right Hon. A. Bonar Law) was undoubtedly carried away by his own amateur experience as a shipowner, and thought there was no limit to the extent he might filch away the shipowner’s earnings, little recking that if the shipowner is unable to put on one side a reserve to replace the tonnage he loses, he is forced to go out of the trade; and also utterly disregarding the rapid headway being made by neutral countries, who are profiting by the high freights and using their profits to greatly extend their mercantile fleets.
In estimating the financial results of our shipowning industry during the early period of the war, allowance must be made for the increased cost of working a steamer. Coals, wages, insurance, port charges, and cost of repairs, and upkeep were all very high; indeed, it may be said that the nett results to the shipowner of the high freights which prevailed in 1915 and 1916 were not very excessive when all these things are considered, for in addition to the increased cost of working, there was heavy depreciation to provide for, the shipowner suffered a complete dislocation of his trade, and in many cases lost his entire fleet, the creation of long years of toil, and with this his means of making a livelihood.