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for a time policy of three months to 30 shillings per cent. This last rate of 30 shillings amounts, it will be seen, theoretically to an annual charge of 6 per cent. on the value of the steamers. In practice the charge is lower, because for a certain proportion of the year vessels are in port and may then not be covered at all against war risks. The values were to be arrived at by deducting an allowance of 4 per cent. per annum for depreciation from the first cost. The system had this effect, that in the event of loss the owner might not receive the full value which he placed on the ship or even a sum sufficient to replace her by another. Many owners have, therefore, been placing additional insurances in the open market.

It was an essential part of the scheme that all owners and captains should conform to the Admiralty instructions. Thus, in certain trades, vessels have been detained under Admiralty instructions until the route was considered safe for them to proceed. In preparing the scheme the Committee naturally could only conjecture what would be the effect of the war on British shipping. They assumed a possible loss during the first six months of nearly 10 per cent. of the number of British vessels engaged in foreign trade. On this assumption the total losses on hulls insured against premiums was expected to be 6,133,7501., of which the Government share was estimated at 4,907,0001. The cost of losses on cargo to be borne by the State was placed at 8,000,0001. ; and, including losses on hulls at sea or in enemy ports on the outbreak of war, for which no premiums were receivable by the State, the grand total of the State's share of the losses, without taking into account premiums, was estimated at 16,367,0001. It should, perhaps, be pointed out that marine insurance experts who do not possess inside information have sought in vain to follow the calculations on which these estimates were based.

The returns of Lloyd's Register show that on March 31, 1914, there were 8,514 steamers, excluding fishing boats and all vessels of less than 100 tons, of 18,273,944 tons registered in the United Kingdom. The value of tonnage varies enormously. A new first-class passenger liner may be worth as much as 301. a ton; an old “tramp' steamer

may
be worth not more than 51.

per

ton. Probably many underwriters would agree that the average

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value of all British tonnage might be put at 101. That gives the value of all British vessels as 182,739,4401. ; and, assuming that ten per cent of that were lost within six months, the cost would amount to 18,273,9441. The figure is very different from the 6,133,7501. allowed for in the Government scheme. From the larger figure, however, apparently there must be deducted the value of vessels engaged in home trade and also the amount of tonnage laid up,

but it would seem that there would still be a big discrepancy.

Calculations which I am permitted to use show that, in the British Mercantile Marine, 142 vessels of 436,787 tons have been lost by capture or seizure or through striking mines, i.e. 1•67 per cent. of the number and 2:39 per cent. of tonnage. Again on the basis of Lloyd's Register, Germany had 2,019 steamers of 4,743,046 tons and has lost 379 vessels of 981,870 tons, which represent 18:77 per cent of the number and 20:77 per cent. of the tonnage. Included in these losses are the vessels which were in Antwerp and were subsequently sunk or disabled before the Allies evacuated the port. If these vessels should in the course of time be put into working order by the Germans they would have to be regarded as recaptures and the German losses would be diminished accordingly. On the same basis of calculation AustriaHungary owned 419 vessels of 1,010,347 tons and has lost 47 vessels of 149,021 tons, equivalent to 11:21 per cent. of the number and 14.75 per cent. of the tonnage.

I need make no apology for devoting much space, in an article on British oversea commerce, to the State Insurance schemes. Undoubtedly their influence has been enormous. No private institutions could have withstood unmoved the shocks, temporary though they were, caused by the enemy cruisers, by the raids on mercantile ships, and particularly by the Emden' and the ‘Karlsruhe.' Rates must have been jumpy'; and the effects of this would certainly have permeated through commerce from the producers and large houses to the consumer.

Shipping is always divided roughly into two classes, liners and tramp steamers—and the war affected them at first in rather different ways. Almost the first indications that the public had of anything abnormal in shipping were announcements of additional surcharges by the liner companies. These surcharges were in some cases as much as 50 per cent., in others not more than 25 per cent. The announcements were followed by various protests from merchants, who seemed to think that they were being asked to pay too much. The truth probably was that shipowners could form no real estimate of the probable additional expenses and risks, and they wanted to be on the safe side. Within a few weeks many reductions of the surcharges were made, until some of them stood at only 10 per cent. It has already been explained that the shipowners have not considered that the Government War Insurance scheme completely indemnified them against loss, and therefore they maintained that a higher level of earnings was necessary to recoup them for what they might lose in the event of capture. Coals and all stores were dearer, and higher wages were being paid to the crews, partly because of the extra risks they were incurring, and partly because there was a certain shortage. This shortage was, perhaps, influenced to some small extent by the fact that in times of peace large numbers of Germans had been employed in the British Mercantile Marine.

On the outbreak of war freight-markets were in a very depressed condition. There had during the first half of the year been a steady decline from the high rates of 1912 and 1913. The boom' period had, as usual, been followed by reaction. An immense amount of tonnage had been built, and there was not employment for all the older and less efficient boats. The first result of the war on shipping was almost entirely to kill any new chartering. This was not so much because shipowners had any qualms about sending their ships to sea, but because merchants, owing to the breakdown of the credit system, were not buying produce. The buying and selling of grain and other commodities is done mainly on bills of exchange; and, since all credit facilities were withdrawn, new business dwindled to very small proportions. It was not easy to transact business solely on a cash basis. Slowly, but surely, the financial difficulties were overcome, and freight markets then steadily revived. By the middle of September rates were generally rising. As the demand for tonnage increased, so

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the supply decreased. The unfavourable effects of the trade dislocation seemed to have spent themselves, and the favourable factors began to be felt. Many liners had been requisitioned by the Government to act either as merchant-cruisers or as transports; and the withdrawal of these ships was bound sooner or later to make itself felt. Many ships had also been chartered by the British and allied Governments to carry coals and other stores, so that the supply of tonnage for ordinary purposes was very much restricted. It is unlikely that the large sums earned by the liner companies during the South African war will be repeated, but there seems no reason why those owners whose vessels are not captured should not emerge from the war in a satisfactory condition.

By the end of the year freight markets were 'booming. The demand for tonnage had quite outstripped the supply, and the highest rates ever recorded were being paid. Shippers in North America were taking large numbers of British boats to bring the cotton and grain crops to this country; and South America was requiring a large quantity of tonnage for her wheat crop. Italy was chartering heavily for the purpose of importing wheat; and neutral owners reaped extraordinarily good profits from carrying foodstuffs to Holland and the Scandinavian countries. In bad times tramp-owners feel the depression more than the liner companies; but, when rates are soaring in certain trades, the power of diverting their boats from one continent to another enables trampowners to gain most.

Complicated problems were created for merchants by the paralysis of German shipping. Much of the cargo in the German ships which sought shelter in neutral ports throughout the world was British. It appears that, according to German law, shipowners were entitled to levy a general average deposit on all cargo carried in the ships, for expenses of detention. British underwriters have not admitted their liability. Those who covered the cargo against marine perils argued that the putting into neutral ports was not a risk w ich was included the policy, or ever anticipated by them. Those that insured the cargo against war risks pointed out that they wanted nothing better than that the vessels should

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proceed to sea, and be captured-as they believed they would be—by British warships. In that case they would obtain release of their cargo. It is to be presumed that the question of liability will only be settled by litigation. By a judgment delivered in Genoa in the case of the 'Rhenania,' the owners of the ship were held entitled only to charge general average from the time that the vessel put into the neutral port until the owners of cargo made a claim for delivery.

Then there was the case of German ships captured by British warships and taken during the course of their voyages into intermediate ports. Liners have thus been taken into Cape Town while bound to Australia. Merchants have made strong representations that these ships, which contained large quantities of British cargo, should be sent on to Australia ; and British owners have offered to send out officers and crews to replace the Germans.

The main difficulty in the way of adopting this plan was due to the law which requires that the ships and their cargoes must be dealt with by the Prize Courts instituted in the ports into which the ships were taken. Thus it was decided that the three German liners Hamm,' 'Apolda,' and Birkenfels,' which were captured while outward bound to Australia, should be dealt with at Cape Town, whither the ships were taken, although it would have suited the British owners of cargo better that the cases should be heard in Australia. In the absence of any amending Act it is necessary, apparently, for the Australian cargo-owners to prove their ownership before the Prize Court at Cape Town, employing agents for the purpose and incurring costs estimated at 10,0001. The Commonwealth Government offered to act as agents for the Cape Town Prize Court or Admiralty, to guarantee proper delivery of the merchandise to British owners and to hold for the Cape Court any enemy cargo. Further, the shipowners who were willing to provide British crews to navigate the ships to Australia were willing to enter into similar bonds; but such proposals did not seem to be sufficient to satisfy the law. Consequently, the Australian consignees, helpless in the face of these difficulties, were inclined to think that the law is an ass. These particular cases are only

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