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1903.] MARINE REVIEW AND MARINE RECORD. SUBSIDIES AND BRITISH SHIPPING. By Lawrence I:well. The commission appointed by the British government to inquire into the subsidies paid to steamship companies and sail- ing vessels under non-British governments, and the result to British trade, has made its report, but little comment has ap- peared upon this side of the Atlantic, although the report itself has been printed in more than one journal. 'The commission can- not be said to have clearly defined the difference between a sub- sidy as a subverition for services rendered to the nation and a subsidy as a mere bounty to the recipient. A mail subsidy is obviously unlike a navigation subsidy. 'It cannot be a matter of serious importance whether the carriage of mails is somewhat more costly to one country than to another, always provided that the contract is given to the lowest bidder, only as a matter of freight, and not as a matter of favor. This is, of course, the free trade view, which is so strongly favored in England. British mail contracts would cost less if more ship owners com- peted for them, but the fact that few ship owners do compete for them proves that they are not pagal tls profitable and that the conditions are somewhat exacting. Regarded purely as con- tracts for conveyarice of mails, however, British mail subven- tions are lower than those of this country or Germany. But the German mail subventions, although not subsidies in the common meaning of the term, are associated with indirect forms of bounty granted by the German government for the encourage- ment of foreign trade. These bounties take the form of ex- emption fromm customs dues on all material required for the con- struction, equipment, repair and provisioning of ocean-going ships, and of preferential rates over the railroads owned by the 'government. American mail payments practically include boun- ties, as far as the Atlantic service is concerned. There is a 'payment per trip of each mail steamer, irrespective of the amount of mail carried, and the mail matter is paid for at the rate of about $1.68 per pound for letters conveyed by American 'ships, while only about 35 cents per pound is paid for the same service by non-American vessels. The British commission realized, of course, that there is a possibility of the United States 'inaugurating the most complete system of subsidies ever under- "taken by any nation. France, Russia and Italy subsidize their ishipping for navigation and other postal purposes, but it cannot be said that the result has been specially beneficial to the ship- 'ping business. Sweden, Norway, Denmark and Belgium pay some small subventions, which are closely allied to bounties, but they are not of great importance, as these countries cannot be said to seriously compete with British shipping. Japan pays something like $4,000,000 a year in construction and navigation 'bounties. No member of the English commission contended that foreign subsidies do not deprive British ship owners of some "business which they might otherwise have obtained; and the 'report correctly asserts that the granting of shipping subsidies by foreign governments has "favored the development of competi- tion against British ship owners and trade upon the prin- 'cipal routes of ocean communication." What right Great Britain has to,expect to continue to do one-half of the total carrying trade of the world on all seas is not explained, although there is a distinct assertion that "notwithstanding the fostering effect of subsidies upon foreign competition, British steam shipping and trade have, in the main, held their own, and, under fair conditions, British ship owners 'are able to maintain the maritime commerce of the country." No definition is given of the words "fair conditions." The whole truth is that England has created more unfair conditions 'against her own shipping than foreign nations have produced by 'their bounties. They have been created by legislation, and however necessary they may be in the cause of humanity, they sare unfair from a commercial point of view, because they are not 4mposed upon non-British ships which enter British ports. The 'committee recommended that "board of trade regulations should 'be enforced against foreign ships equally with British ships." To do this may be difficult--or impossible--until the legislature takes some action. That time is not far distant and American steamship companies would do well to keep that point in mind. A ship is a part of the country whose flag it flies and the com- mission has not explained how "all legislative restrictions ap- plicable to British ships should be made applicable to all foreign ships coming to British or colonial ports and competing with British ships." Until parliament has carried out this idea, John Bull might perhaps act wisely in relaxing the legislative restrictions on his own ships. Although merchant shipping 1s the industry upon which British national life to an important extent depends yet it appears to be oppressed by legislation in 'a way that seems unreasonable to foreigners. For example an individual who is not a British subject cannot own a British ship. But a corporation registered as British can own any nuni- 'ber of such vessels although all the shares may be held by foreigners, provided there is a resident nominee to fulfil statutory "requirements. Attention has been drawn to this anomoly in the criticism of the Cunard agreement which has appeared in 'the Marine Review. a -. The removal of legislative restrictions would probably com- pensate for American subsidies because wages are comparatively low on British steamers, and anybody who supposes that the es- tablishment of the International Mercantile Marine Co. has Healt a death-blow to English shipping on the Atlantic is making 'a serious error. This opinion, however, is probably confined to a few daily newspapers. Foreign bounties do not oppress British steamship companies very seriously at present, and the commis- sion reports "that the competition of British ship owners with their commercial rivals upon fair conditions, without govern- ment interference by way of subsidies, or by way of control. of freights, is more healthy, and likely to be more beneficial to the nation and empire than a state-subsidised. and state-controlled system, under which the ship owner would have to depend less upon his individual energy and skill and more upon the favor and support of the government." This seems to be incontesta- ble, as is the fifth conclusion "that a general system of subsidies, other than for services rendered, is costly and inexpedient." Nevertheless, the commission directly recommends government interference when it asserts that "no subsidy should be granted without government control over maximum rates of freight,' and over combinations between subsidized and unsubsidized owners. 'The answer to this is that no shipping company. of first-class standing would accept a subvention for doing public service if government control and all its operations were. to. fol- low. It is true that in tae Cunard agreement there is a' stipula- tion that the company shall not "unduly raise freights," but thére is no definition of the term "unduly," and, of course, the Cunard company cannot raise freights above a competitive level,or~it would lose business. .The. Cunard agreement is not likely 1o benefit either the nation or the company. It is: an injudicious attempt to give a stimulus to an unremunerative class of shipping with an outlay of public money. The commission, however, ex- pressed itself in favor of maintaining the pre-eminence of Brit- ish lines, and of a condition of "adequate speed" forming part of every subsidy to ensure rapid communication. within the empire, to secure fast carriers of food supplies in time of war, and to meet admiralty requirements. But all these things can be securéq without government bounties to individual enterprises, and with- out government interference. Two clauses in the commission's report relate to nationality. It is recommended that no British subsidy be granted, except on the condition that neither sale nor hire of any subsidized, ship should take place without the permission of the government. And it proposed as desirable that the majority of the boards of directors of subsidized companies should be British subjects, and that subsidized vessels should be entirely officered and propor- tionately manned by British subjects. | Nobody--at least no American--will deny the reasonableness of these proposals. A majority of directors of British subsidized steamship com- panies ought, of course, to be British subjects, but this would be of little avail if the shares were held by non-Britishers whose votes would control the management. 'There is no reason in law, nor in equity, why corporations should have privileges which are denied to individuals. The Morgan combine would not have taken place had the transfer of shares in the British companies to Americans necessitated the removal of the ships from the British register. As the vessels were built outside the United States, American registration was not open to them. The commission advises that "means should be taken for establishing reciprocal arrangements in respect of the coasting | trade of the several maritime countries." The suggestion is that not only the coasting trade of the British isles, but the whole inter-imperial trade should be forbidden to the vessels of those countries which persist in reserving their own coasting trades for their own vessels. 'This proposal will be popular, and there is a great deal of plausibility about it. But the wisdom of it is open to question. British ships no doubt lose some employment by the reservation of the trade from the Atlantic to the Pacific states of this country to American vessels. They have, however, no right to expect such trade, because it is strictly American. 'They lose some Russian trade between Russian ports on the Black sea and the Baltic, and between Russia and Siberia. They also lose some of the trade between France and Algeria to French vessels, and between Holland and India to Dutch vessels. To complain of this would be absurd. 'The numerous foreign banks doing business in New York city do not complain because they are for- bidden to receive deposits from the public. The shipping busi- ness from awhich English ships are: excluded is business which belongs rightfully to some other nation; it is not, in reality, inter- national business at all... And there is another point, If the business referred to were thrown open to the world, the ships at present exclusively engaged in it would soon enter into competi- tion with British ships elsewhere. So long as English. ship owners were carefully protected in the coasting and colonial trades, they did very little to improve their vessels or to develop external trade. It was in those days of British restrictions that the United States obtained the mastery of the transatlantic trade which, sad to relate, has since been lost. _ What happened before might easily happen again. . If Great Britain closes her own coasting trade and the trade between the. several members of the empire against foreign ships, the British empire would be placed within a protective freight fence, and all the carrying trade, be- tween foreign nations would be forced into the hands of foreign vessels. . John Bull would be the loser if this plan were carried out, a7