Manual of Ship Subsidies Part 1

Manual of Ship Subsidies.

by Edwin M. Bacon.

PREFACE

The intent of this little book is to furnish in compact form the history of the development of the ship subsidies systems of the maritime nations of the world, and an outline of the present laws or regulations of those nations. It is a manual of facts and not of opinions. The author's aim has been to present impartially the facts as they appear, without color or prejudice, with a view to providing a practical manual of information and ready reference. He has gathered the material from doc.u.mentary sources as far as practicable, and from recognized authorities, American and foreign, on the general history of the rise and progress of the mercantile marine of the world as well as on the special topic of ship subsidies. These sources and authorities are named in the footnotes, and volume and page given so that reference can easily be made to them for details impossible to give in the contracted s.p.a.ce to which this manual is necessarily confined.

E.M.B.

BOSTON, Ma.s.s.

September 1, 1911.

CHAPTER I

INTRODUCTORY

The term _subsidy_, defined in the dictionaries as a Government grant in aid of a commercial enterprise, is given different shadings of meaning in different countries. In all, however, except Great Britain, it is broadly accepted as equivalent to a bounty, or a premium, open or concealed, directly or indirectly paid by Government to individuals or companies for the encouragement or fostering of the trade or commerce of the nation granting it.

Ship subsidies are in various forms: premiums on construction of vessels; navigation bounties; trade bounties; fishing bounties; postal subsidies for the carriage of ocean mails; naval subventions; Government loans on low rates of interest.

In Great Britain they comprise postal subsidies and naval subventions, ostensibly payments for oversea and colonial mail service exclusively, or compensation for such construction of merchant ships under the Admiralty regulations as will make them at once available for service as armed cruisers and transports. They are a.s.sumed to be not bounties in excess of the actual value of the service performed, with the real though concealed object of fostering the development of British overseas navigation. Still, notwithstanding this a.s.sumption, such has been their practical effect.

Their original objects when first applied to steamship service, as defined by a Parliamentary committee in 1853, were--"to afford us rapid, frequent, and punctual communications with distant ports which feed the main arteries of British commerce, and with the most important of our foreign possessions; to foster maritime enterprise; and to encourage the production of a superior cla.s.s of vessels, which would promote the convenience and wealth of the country in time of peace, and a.s.sist in defending its sh.o.r.es against hostile aggression." To foster British commerce they have undeniably been employed to meet and check foreign compet.i.tion on the seas, as the record shows.

In the United States they have taken the form of postal subsidies openly granted for the two-fold purpose of the transportation of the ocean mails in American-built and American-owned ships, and the encouragement of American shipbuilding and ship-using.

CHAPTER II

GREAT BRITAIN

England has never granted general ship-construction or navigation bounties except in the reigns of Elizabeth and James I. Under Elizabeth Parliament offered a bounty of five shillings per ton to every ship above one hundred tons burden; and under James I that law was revived, with the bounty applying only to vessels of two hundred tons or over.[A]

A policy of Government favoritism to shipping, however, began far back in the dim ninth century with Alfred the Great. Under the inspiration of this Saxon of many virtues, his people increased the number of English merchant vessels and laid the foundation for the creation and maintenance of a royal navy.[B] The Saxon Athelstan, Alfred's grandson, whose attention to commerce was also marked, first made it a way to honor, one of his laws enacting that a merchant or mariner successfully accomplishing three voyages on the high seas with a ship and a cargo of his own should be advanced to the dignity of a thane (baron).[C]

The first navigation law was enacted in the year 1381, fifth of Richard II. This act, introduced "to awaken industry and increase the wealth of the inhabitants and extend their influence,"[D] ordained that "none of the King's liege people should from henceforth ship any merchandise in going out or coming within the realm of England but only in the ships of the King's liegeance, on penalty of forfeiture of vessel and cargo."[E]

This act of Richard II was the forerunner of the code of Cromwell, which came to be called the "Great Maritime Charter of England," and the fundamental principles of which held up to the second quarter of the nineteenth century.

Under Charles I was enacted (1646) the first restrictive act with relation to the commerce of the colonies, which ordained "That none in any of the ports of the plantations of Virginia, Bermuda, Barbados, and other places of America, shall suffer any ship or vessel to lade any goods of the growth of the plantations and carry them to foreign ports except in English bottoms," under forfeiture of certain exemptions from customs.[F] It was followed up four years later (1650) under the Commonwealth, by an act prohibiting "all foreign vessels whatever from lading with the plantations of America without having obtained a license."[G]

Cromwell's code, of which the act of 1381 was the germ, was established the next year, 1651. Its primary object was to check the maritime supremacy of Holland, then attaining dominance of the sea; and to strike a decisive blow at her naval power. The ultimate aim was to secure to England the whole carrying trade of the world, Europe only excepted.[H]

These were its chief provisions: that no goods or commodities whatever of the growth, production, or manufacture of Asia, Africa, or America should be imported either into England or Ireland, or any of the plantations, except in English-built ships, owned by English subjects, navigated by English masters, and of which three-fourths of the crew were Englishmen; or in such ships as were the real property of the people of the country or place in which the goods were produced, or from which they could only be, or most usually were, exported.[I] This last clause was the blow direct to Holland, for the Dutch had little native products to export, and their ships were mainly employed in carrying the produce of other countries to all foreign markets. It was answered with war, the fierce naval war of 1652-1654, in which was exhibited that famous spectacle of the at first victorious Dutch admiral, Van Tromp, sweeping the English Channel with a broom at his masthead.

With the final defeat of the Dutch after hard fighting on both sides, their virtual submission to the English Navigation Act, and their admission of the English "sovereignty of the seas,"[J] by their consent to "strike their flag to the shipping of the Commonwealth," England, in her turn, became the chief sea power of the world.[K] During the ten years of peace that followed, however, the Dutch despite the English Navigation Act, succeeded in increasing their shipping, and regained much of the carrying trade if not their lost leadership.[L]

Cromwell's act was confirmed by Charles II in 1660, and made the basis of the code which then her statesmen exalted as "The Great Maritime Charter of England."

Early in Charles II's reign also (in 1662) indirect bounties were offered for the encouragement of the building of larger and more efficient ships for service in time of war. These were grants of one-tenth of the customs dues on the cargo, for two years, to every vessel having two and one-half or three decks, and carrying thirty guns.[M] Thirty years later (1694), in William and Mary's reign, the time was extended to three years. Under William and Mary the granting of bounties on naval stores was begun, and this system was continued till George III's time.[M] With William and Mary's reign also began the giving of indirect bounties to fishermen for the catching and curing of fish. After the middle of the eighteenth century vessels engaged in the fisheries were regularly subsidized, with the object of training sailors for the merchant marine and the royal navy.[M]

While the fundamental rules of the "Maritime Charter" of 1660 remained practically unimpaired, although in the succeeding years hundreds of regulating statutes were pa.s.sed, breaks were made in the restrictive barriers of the code during the first third of the nineteenth century by the adoption of the principle of maritime reciprocity.[N] In 1815 (July 3) a convention establishing a "reciprocal liberty of commerce," between the "territories of Great Britain in Europe and those of the United States," was signed in London.[O] In 1824-1826 reciprocity treaties were entered into with various continental powers. In 1827 (August 6) the treaty of 1815 with the United States was renewed. In 1830 a treaty for regulating the commercial intercourse between the British colonial possessions and the United States was executed.[P] Under these conventions, repeatedly interrupted by British Orders in Council and by Presidents' proclamations,[Q] the trading intercourse between both countries was regulated till the abrogation of the code of 1660.

In 1844 an indirect move against the code was made, with the appointment of a committee of the House of Commons to inquire into the working of the reciprocal treaties and the condition of the mercantile marine of the country.[R]

At this period the compet.i.tion of the United States in the overseas carrying trade of the world was hard pressing England. The Americans were building the best wooden ships, superior in model and seaworthiness, the fastest sailers. They were leading in shipbuilding.

Much of the British shipping trade was carried on in American-built vessels. The splendid American clipper ships were almost monopolizing the carrying trade between Great Britain and the United States. Most of the shipping of the world was yet in wooden bottoms. Iron ships were in service, but iron-shipbuilding was in its infancy.

The Parliamentary inquiry of 1844 was followed up in 1847 with a move openly against the ancient code. Its principles as they then stood, essentially as in 1660, despite the mult.i.tude of regulating statutes, are thus enumerated:

1. Certain named articles of European produce could only be imported into the United Kingdom for consumption in British ships, or in ships of the country of which the goods were the produce, or of the country from which they were usually imported.

2. No produce of Asia, Africa, or America could be imported for consumption into the United Kingdom from Europe in any ships; and such produce could only be imported from any other place in British ships, or in ships of the country of which the goods were the produce and from which they were usually imported.

3. No goods could be carried coastwise from one part of the United Kingdom to another in any but British ships.

4. No goods could be exported from the United Kingdom to any of the British possessions in Asia, Africa, or America (with some exceptions with regard to India) in any but British ships.

5. No goods could be carried from any one British possession in Asia, Africa, or America, to another, nor from one part of such possession to another part of the same, in any but British ships.

6. No goods could be imported into any British possession in Asia, Africa, or America in any but British ships, or in ships of the country of which the goods were the produce; provided, also, that such ships brought the goods from that country.

7. No foreign ships were allowed to trade with any of the British possessions unless they had been especially authorized to do so by an Order in Council.

8. Powers were given to the Queen in Council which enabled her to impose differential duties on the ships of any foreign country which did the same with reference to British ships; and also to place restrictions on importations from any foreign countries which placed restrictions on British importations with such countries.

Finally, in 1849, with the adoption of the commercial policy founded on freedom of trade, came the repeal of the restrictive code, excepting only the rule as to the British coasting trade; and in 1854 the restrictions on that trade were removed, throwing it also open to the partic.i.p.ation of all nations.

Meanwhile the British ocean-mail subsidy system for steamship service, inst.i.tuted with the satisfactory application of steam to ocean navigation, in the late eighteen-thirties, had become established: the first contract for open ocean service, made in 1837, being for the carriage of the Peninsular mails to Spain and Portugal. Although successful ventures in transatlantic steam navigation had begun nearly a score of years earlier, the practicability of the employment of steam in this service was not fully tested to the satisfaction of the British Admiralty till 1838.

In this, as in so many other innovations, Americans led the way. The first steamer to cross the Atlantic was an American-built and American-manned craft. This pioneer was the _Savannah_, built in New York and bought for service between Savannah and Liverpool. She was a full-rigged sailing-vessel, of 300 tons, with auxiliary steam power furnished by an engine built in New Jersey. Her paddles were removable, so fashioned that they could be folded fan-like when the ship was under sail only.[S] She made the initial voyage, from Savannah to Liverpool, in the Summer of 1819, and accomplished it in twenty-seven days,[T]

eighty hours of the time under steam. Afterwards she made a trip to St.

Petersburg, partly steaming and partly sailing, with calls at ports along the way. Her gallant performance attracted wide attention, but upon her return to America she finally brought up at New York, where her machinery was removed and sold.

An English-built full-fledged steamer made the next venture, but not until a decade after the _Savannah's_ feat. This was the _Curacoa_, 350 tons, and one hundred horsepower, built for Hollanders, and sent out from England in 1829. The third was by a Canada-built ship--the _Royal William_, 500 or more tons, and eighty horsepower, with English-built engines, launched at Three Rivers. She crossed from Quebec to Gravesend in 1833. The next were the convincing tests that settled for the Admiralty the question of transatlantic mail service by steamship instead of sailing packet. These were the voyages out and back of the _Sirius_ and the _Great Western_ in 1838.

The _Sirius_ had been in service between London and Cork. The _Great Western_ was new, and was the first steamship to be specially constructed for the trade between England and the United States. Both were much larger than their three predecessors in steam transatlantic ventures, and better equipped. The _Sirius_ started out with ninety-four pa.s.sengers, on the fourth of April, 1838, and reached New York on the twenty-first, a pa.s.sage of seventeen days. The _Great Western_, also with a full complement of pa.s.sengers, left three days after the _Sirius_, sailing from Bristol, and swung into New York harbor on the twenty-third, making her pa.s.sage in two days' less time than her rival.

Both were hailed in New York with "immense acclamation." They sailed on their homeward voyage in May, six days apart, and made the return pa.s.sage respectively in sixteen and fourteen days. The _Great Western_ on her second homeward voyage beat all records, making the run in twelve days and fourteen hours, and "bringing with her the advices of the fastest American sailing-ships which had started from New York long before her."[U] This clinched the matter. The Admiralty now invited tenders for the transatlantic mail service, by steam, between Liverpool, Halifax, and New York.

The first call for tenders was made in October, 1838. The St. George's Packet Company, owners of the _Sirius_, and the Great Western Steamship Company, owners of the _Great Western_, put in bids, the former offering a monthly service between Cork, Halifax, and New York for a yearly subsidy of sixty-five thousand pounds; the latter, a monthly service between Bristol, Halifax, and New York for forty-five thousand pounds a year.