2.—Difficulties of Restoration

We have considered the position of shipping as the paramount industry of the country—its great services in the conduct of the war, and what it is suffering in consequence of the diffusion of fairy tales of the excessive profits made by shipowners. We can now turn our attention to the extraordinary difficulties which stand in the way of the restoration of the shipping industry, which are fraught with considerable peril to the future of our Empire.

Shipping may be divided into two classes, both of which are of national importance. The liners, which comprise fixed services of passenger and cargo ships. These services must be maintained, and new tonnage built at whatever cost to replace lost ships. The other class is our cargo ships. Many of these conduct regular services; others are what are known as “tramps,” and go where the best freights offer. It is the owners of the tramp steamers who have realised large profits by selling their ships. The Government in their shipping policy have entirely failed to discriminate between these classes, not recognising that the liner services involve a complete and costly system of organisation both at home and abroad, which, once dislocated, is difficult to restore. The urgency for additional cargo ships prevents the building of liners, and there must be a considerable shortage of this description of vessel when the war ends.

Probably the cause which has been most detrimental and disastrous to shipping was the obstinacy of the Admiralty in declining to recognise the urgent necessity for building more merchant ships. They filled all the yards with Admiralty work, and when the violence of the submarine attack aroused the nation to a sense of the danger before it, and the cry went up throughout the land “Ships, ships, and still more ships,” the Government then—only then—responded, and decided that further merchant ships must be built at once. There was great delay in giving effect to their decision to build “standard” ships—plans had to be submitted and obtain the approval of so many officials that many months elapsed before the keel of the first standard ship was laid, and in the meanwhile the losses through the submarine attack continued.

The destruction of tonnage by submarine attack in 1917 assumed very serious proportions, but latterly the number of vessels sunk has been gradually reduced, and we have the recent assurance of the Secretary to the Admiralty that our methods of dealing with submarines have improved, and that we are now achieving considerable success in destroying them. The following statement gives the position to-day in gross tonnage:—

1917.
U.K.World.
Sunk4,009,5376,623,623
Built1,163,4742,937,785
Nett loss2,846,0633,685,838
January-March, 1918.
Sunk687,5761,123,510
Built320,280864,607
Nett loss367,296258,903

The nett loss of British tonnage of 367,296 tons during the first three months of 1918 was still very serious, but we were told that we were making distinct progress in our rate of shipbuilding, and the following returns seem to bear this out.

The United Kingdom monthly output of new ships from May, 1917, was in tons:—

May69,773
June109,847
July83,073
August102,060
September63,150
October148,309
November158,826
December112,486
January58,568
February100,038
March161,674
April111,533

In the year ended April, 1917, new U.K. ships totalled 749,314 tons, and for the year ended April, 1918, 1,279,337 tons.

The growing scarcity of shipping, the urgent need of providing tonnage for the food supplies, not only for this country, but also for our Allies, forced the Government to consider in what way they could make the most economical use of the tonnage available. The position was rendered more acute by the entry of America into the war, and the adoption of the “convoy” system as a protection against submarine attack.

There were two policies open for adoption by the Government. One was to marshal and organise shipowners, and place in their hands the provision of the necessary tonnage, thus securing the co-operation and assistance of trained specialists. The other policy was to “control” the trade, requisition the whole of our shipping, and to work it themselves. They unfortunately adopted the latter policy, and by so doing they not only lost the individual enterprise and supervision of the trained shipowners, but practically placed shipowners out of business, and this at a time when “neutrals,” who continue to benefit by the high freights, are making rapid strides as shipowners.

The shipping control, under the able direction of Sir Alexander Maclay, is doing its work on the whole better than might have been expected—thanks to the voluntary assistance of many of our younger shipowners. Under the control, the shipowner is paid at rates laid down in the Blue Book, and without going into figures it may be roughly stated that on the pre-war values of steamers these rates leave him 6 per cent. or 7 per cent. on his capital, and 6 per cent. for depreciation, but on to-day’s values the return upon his capital is very poor. A steamer now costs to build at least three times its pre-war cost. Therefore, it is obvious a provision of 15 per cent. for interest and depreciation on pre-war cost is only 5 per cent. on to-day’s values. This affords no inducement to enterprise, and it is not surprising that many shipowners have gone out of business.

The Government control has taken ships out of the long voyage trades and placed them in the Atlantic trade, where they are required as transports and for the conveyance of food. This policy, which was perhaps inevitable, may involve far-reaching consequences. The long voyage trades have been built up by shipowners at a heavy cost, and are also the creation of generations. These services involve costly adjuncts in the shape of docks, piers, barges, repairing shops, branch steamers, and through traffic arrangements. It may be said all this will be recovered after the war; but this loses sight of the difficulty of regaining a trade once its associations and connections are severed; and also of the probable competition of America and neutral countries. Certainly, the Blue Book rates give no compensation for such a disturbance.

The Government are making huge profits out of shipping, but what becomes of these profits we have been unable to discover; they do not appear in any returns we have seen. But the time has arrived when the “Blue Book” rates require to be revised—this, in view of the heavy cost of the repairs which will be necessary when the war is over, and the necessity of placing the shipowner in a position to replace his tonnage at the enhanced prices which will prevail.