CHAPTER VI
AUSTRIA-HUNGARY
The Imperial Government of Austria-Hungary spurred by the action of Germany, instituted a direct subsidy system, also modelled after that of France, in 1893, when the Austrian merchant marine was languishing.[[DD]]
A postal subsidy had long been in operation, the subsidies being all awarded to a single steamship company—the Austrian Lloyd, earlier the Austro-Hungarian Lloyd. They were practically mileage and speed bounties,[[DE]] increasing with the extension of service. Ten-years' contracts were at first made with this company. The contracts, executed in 1888, particularly guarded domestic interests. In the purchase of materials it was required that preference be given to Austro-Hungarian industries. The coal used must be bought from Austro-Hungarian subjects in the proportion of two tons from Austria and one ton from Hungary, provided that "the price is not greater than foreign coal, and that the steam-producing power of the native coal is equal to at least eighty-four per cent of that of foreign coal." In the building and repairing of their ships, or parts of ships, and engines, the company must also favor home interests. Ships, engines, or boilers could be ordered abroad only with the consent of the foreign office when shown that the work cannot be made in Austria within proper time, or that the want can be supplied by a foreign country on more favorable terms.[[DF]]
By a law of July, 1891, the rates for mail-contract steamships were fixed as follows: for fast lines, making above ten knots, a maximum rate of seventy kreutzers per nautical mile; for slower lines, fifty kreutzers a mile. The total amount of mileage bounty payable each year was limited to two million nine hundred and ten thousand florins. But in addition to this bounty the Government agreed to pay the Suez Canal tolls. To encourage the Austrian Lloyd to build larger and swifter vessels the Government further agreed to advance the company one million and a half florins. This was to be furnished in three equal payments yearly (1891, 1892, 1893), and was to be repaid in five equal payments of three hundred thousand florins each, beginning in January, 1902. The company's ships were to be exempted from consular fees, "the same as vessels of the imperial navy"; and were to be at the disposal of the naval and military departments in case of war. All the officials of the company were to be Austrian subjects, "naval officers either active or retired to be given the preference"; and there was to be an administrative committee of eight members, the president appointed by the Emperor and two other members by the ministry of commerce, the intention of this provision being to give the Government control over the company's affairs.[[DG]]
The general subsidy law of 1893 (November 28) was the outcome of the deliberations of a special Parliamentary committee appointed that year; and its declared object, as set forth in this committee's report, was "to put a stop to the decline of our merchant fleet, to allow it to cope with foreign competition, and to secure for the inhabitants of our coast needed employment and profits in maritime pursuits."[[DG]] Three years before (1890), with the same object in view, a preliminary step had been taken in the exemption of all iron and steel steam and sailing ships from trading and income taxes while engaged in ocean voyages.[[DG]]
The law provided two classes of subsidies—a trade bounty and a navigation bounty. They were to go to all steamers and sailing-ships engaged in the deepseas trade or long-coasting trade, and not receiving mail subventions. At this time a large percentage of the Austrian steam tonnage was receiving the postal subsidies, and most of this tonnage was owned by the Austrian Lloyd Company.[[DG]] The trade bounty was for ships making long voyages; the navigation bounty for those engaged in coastwise voyaging. Ships entitled to the trade bounty were required to be owned at least two-thirds by Austrian subjects, to be not over fifteen years old, and registered A1 or A2. The rates were thus fixed: for the first year after launching, iron or steel steamers, six florins ($2.44) per ton, iron or steel sailing-ships, four florins and fifty kreutzers; wooden or composite (part iron) sailing-ships, three florins. After the first year the rate was to be reduced five per cent annually till the end of the fifteenth year. As an inducement to employ home work and to utilize home materials, the bounty was to be increased by ten per cent for iron or steel sailing-ships built in the Austrian ship-yards, and by twenty-five per cent if at least one-half of the materials used in the construction were of Austrian origin. If more than one year had elapsed since the launching of a ship otherwise entitled to a bounty, a deduction of fifteen per cent was to be made for each year that had passed. The navigation bounty was fixed at five kreutzers per net ton of capacity for every hundred nautical miles sailed. The exemption from the production and income taxes, granted in 1890, was extended for a term of five years from January 1, 1894. The law was to be in force for ten years.
As the end of the term of this law was approaching ship-owners began agitating for its renewal with an increase in the subsidy. Since its enactment the production of steam tonnage had been accelerated, and the decline of sail tonnage had been checked; but no marked change in the merchant marine generally had been manifest.[[DH]] Of the bounties paid the Austrian Lloyd had received a large share in behalf of their ships which were not directly under contract for the mail service. The remainder went to the various companies controlling the coast and river trade. The ten to twenty-five per cent addition to the trade bounty for ships built in domestic yards and from domestic materials, finally went for the most part to a single large building concern at Trieste. While most of the Austrian tonnage was yet of foreign build, mostly constructed in British yards, the increase in the proportion of domestic build was considerable after 1893. The greater part of the materials used was Austrian product. Consequently allied industries increased with this increased output of home ships.[[DI]]
At length in 1907 (February 23) a new law was enacted increasing the navigation and construction bounties. For the navigation subsidies, to go to shipowners according to the tonnage of the ships and the number of miles run, allotments were thus made: for the first year, $852,600; for 1908, $893,200; 1909, $954,100; 1910, $1,015,000; 1911, $1,075,000; and for the five years remaining of the term, of the law—which ends December 31, 1916—$1,136,800 a year. The construction subsidies were raised as follows: for ships launched after July 1, 1907: steamers built of iron and steel $8.12 per gross ton, sailing-ships of iron and steel, $2.84; for marine engines, boilers, pipes, and auxiliary apparatus, $1.62 per 220.46 pounds. To entitle a ship to these bounties fifty per cent of the materials used in its construction must be home product.[[DJ]]
This year (1907) also the annual postal subventions to the Austrian Lloyd were increased $1,486,586, for a further period of fifteen years. This contract called for an increase of speed to the Levant and the Orient. The Suez Canal tolls were to be paid by the Government as before.