Manual of Ship Subsidies Part 4

Germany was a close follower of France in the adoption of the direct ship bounty system. Only two months after the promulgation of the initial French law of 1881, Bismarck brought the question before the Reichstag, with an exhibit of this act. In an elaborate memorial (April 6, 1881) he reviewed the general subject of State bounties and subsidies to shipping in various maritime countries, and closed with this pointed declaration: "It is deserving of serious consideration whether, under the circ.u.mstances as given, German shipping and German commerce can hope" for further prosperous developments as against the compet.i.tion of other nations aided by public funds and a.s.sistance.[CJ]

At this time the German marine was represented by a substantial fleet of merchant steamships, but all were foreign-built, mostly from British ship-yards. The Government was paying only a postal subsidy of about forty-seven thousand dollars--a sum in proportion to the weight of the parcels forwarded--in the overseas trade to the partic.i.p.ating German steam lines. A first step had been taken indirectly in favor of domestic shipbuilding six years earlier (1879), when Bismarck, in introducing the general protective system, exempted this industry, and free entry was permitted to German ship-yards of materials used in the construction and equipment of merchant as well as of war-ships, which then were only on the domestic stocks.[CK] Bismarck's proposal of 1881, to meet French subsidies with German subsidies, was avowedly with the single object of promoting with State aid a German mercantile marine.

The project was brought before the Reichstag early in 1884 and warmly discussed. Earnest protests were raised against it by shipping merchants of the chief German seaports;[CL] while earnest support came from other merchants and varied interests. The initial proposal was for the establishment of a subsidized mail service by German steamships. It contemplated an annual subsidy of four million marks, with fifteen years' contracts, for such service between Germany and Australia and East Asia. The measure was defeated in the Reichstag that year. Brought forward the next year (1885), and in a new form, it was finally enacted in April and went into effect the following July.

This law increased the annual subsidy from four million marks as first proposed to four million four hundred thousand marks, of which one million seven hundred thousand was offered for the East Asian line, to China and j.a.pan; two million three hundred thousand for the Australian line, and four hundred thousand for a branch line connecting Trieste with the Australian line at Alexandria. The contracts in accordance with it all went to the North German Lloyd Company, of Bremen. The convention between the Government and this company required that the new vessels to be furnished must be built in German yards and of German material. The coal supply was, as far as practicable, to be of German product. The chancellor was empowered to take over all the company's steamers for the mobilization of the navy, at their full value, or on hire at proper compensation. The sale or loan of a steamer to a foreign power could be made only by permission of the chancellor. The number of voyages to be made on each line yearly, and the rate of speed, were set down in careful detail. Failure to observe the table of voyages, without sufficient reason, subjected the company to heavy penalties. All persons employed in connection with the mail service were, if practicable, to be German subjects. All officers in the service of the empire, relief crews, weapons, ammunition, equipments, or supplies for the imperial navy, were to be carried at twenty per cent under the regular tariff.[CM]

Subsequent laws made additions to the free list of raw and manufactured shipbuilding material; and preferential rates on the State railroads were arranged for the transportation of steel, iron, timber, from the interior, where these are found at an average distance of some four hundred miles from the coast, to the ship-yards.[CN] Speedily large and superior steamships were designed and turned out from the enlarged ship-yards, the first ocean flyer being the _Auguste Victoria_ for the Hamburg-American Line. In 1890 a subsidy of ninety thousand marks annually was granted for an East African line on a ten-years' contract.

Within less than six years the establishment of a fortnightly Asiatic service was agitated; and in 1896 a bill granting a yearly subsidy of one million four hundred thousand marks therefor, was brought before the Reichstag. If this were forthcoming the North German Lloyd agreed, besides furnishing the fortnightly service, to increase the speed of their steamers, to send ships direct to j.a.pan, and to meet all requirements of the Admiralty with respect to ships and crews.[CO]

Now the advocates of further subsidies maintained that the policy inst.i.tuted with the law of 1885 had proved its effectiveness. The indirect advantages from the subventions were claimed to be quite as great as the direct. While before 1885 all large ships for German companies had been ordered in England, now all large ships for the German transatlantic lines were built in Germany.[CO] This condition, the increasing activity in domestic shipbuilding, and the steady growth of the empire's commercial marine, were presented as conclusive evidence of the law's effect. Germany was now pressing into sharp rivalry with England, and turning out larger and speedier steamships.[CP] The increased subsidy for the China service was especially urged upon these grounds: the importance of placing the German mail service in the East on a par with the services of England and France, the benefits to commerce, and the aid of the national defence.[CQ]

The measure met opposition at the session in which it was first introduced; but at the next session (1898), after amendment, it became law. By this act the subsidy was fixed at one million and a half marks a year for the extension of the East Asiatic service to China direct, and for making the whole service fortnightly; and the contract was extended for another fifteen years. It was conditioned that if foreign competing lines should increase the speed of their ships the North German Lloyd must do likewise, and without additional subsidy, unless the foreign companies should receive extra payments.[CR]

The total annual subventions for the Asiatic and Australian service had now reached five million five hundred and ninety thousand marks ($1,330,420). After January, 1899, under a contract between the North German Lloyd and the Hamburg-American Line then made, a part of this subsidy went to the latter. In 1901 the subvention to the East African line was increased to one million three hundred and fifty thousand marks. Thus Germany's grand total of annual payments in postal subventions had reached six million nine hundred and forty thousand marks.

Besides these postal subventions and the free entry to materials used in ship-construction and equipment, and the preferential railway rates on long hauls of the heavy domestic materials, barely covering the cost of handling and transportation,[CS] the Government bestows a special form of indirect bounty upon the subsidized steamship lines in the shape of largely reduced through freight rates. These include substantial reductions on merchandise exported from inland Germany to East Africa and the Levant. Thus the combined land and sea through rates are brought considerably below those in force on goods sent to German ports for direct importation.[CT]

Under these and other favoring conditions the German merchant marine has advanced in total tonnage from an insignificant place in 1880 to the third in rank among the maritime nations in 1911. Between 1885 and 1900, a period of only fifteen years, its growth was tenfold.[CU] In 1890 the gross tonnage stood at 928,911 tons: in 1900 it had reached a total of 2,159,919 tons. Steamers and sailing-ships were nearly equal in tonnage. German-built steamships had won the speed record in ocean liners. Thereafter the output of steamships became much the larger, and in 1906 the Government was taking measures to revive the sailing-ship trade, because of its value as a training-school for seamen for the navy.[CV] In 1910-11 the total tonnage was recorded at 4,333,186 tons.[CW]

The other influences contributing to this extraordinary growth are variously stated according to the observer's point of view. The United States consul at Hamburg sees them in the "rapid transformation of the country from a non-producing nation into one of the foremost industrial powers of Europe, a large available supply of excellent and cheap labor, and the geographical situation of the empire."[CX] The historian of Modern Germany sees them in German business methods:

"The astonishing success of the German shipbuilding industry is due partly to its excellent management and organization; partly to the application of science and experience to industry; * * *

partly to the harmonious co-ordination and co-operation of the various economic factors which in more individualistic countries, such as Great Britain, are not co-ordinated, and often serve rather to obstruct and to r.e.t.a.r.d progress by unnecessary friction than to provide it by harmonious action."[CY]

FOOTNOTES:

[Footnote CJ: For this Memorial see U.S. Con. Rept., no. 112, Jan., 1890, pp. 108-118.]

[Footnote CK: J. Ellis Barker, "Modern Germany," 3rd edition, 1909.]

[Footnote CL: Wells, p. 166.]

[Footnote CM: U.S. Con. Rept., no. 61, 1886, pp. 285-287.]

[Footnote CN: Barker, 3rd ed.]

[Footnote CO: Meeker.]

[Footnote CP: U.S. Con. Repts., 1889, no. 101, p. 544.]

[Footnote CQ: Meeker. Also German report on the operation of the law of 1885, in report of (U.S.) commissioner of navigation for 1898.]

[Footnote CR: Meeker. Also German report on the operating of the law of 1885, in report of commission of navigation for 1898.]

[Footnote CS: Barker, 3rd ed.]

[Footnote CT: Meeker.]

[Footnote CU: Barker, 3rd ed.]

[Footnote CV: U.S. Con. Rept, no. 13, July, 1906, pp. 87-89.]

[Footnote CW: Lloyd's Register, 1910-11.]

[Footnote CX: U.S. Consul General Robert P. Skinner, Hamburg, in Daily Con. Repts., April 8, 1911, no. 82.]

[Footnote CY: Barker, Modern Germany, p. 490.]

CHAPTER V

HOLLAND--BELGIUM

The home Government of the Netherlands gives neither construction nor navigation bounties. Only subventions to steamship lines for carrying the mails are granted. The single purpose of these subventions is declared to be to secure the prompt and effective furtherance of the mails at reasonable cost.[CZ] The contracts are not publicly let, but go to the several steamship lines plying to foreign ports and to the Dutch colonies. The amounts fixed by contract are at a given rate per voyage.

The cost of the subventions to the Dutch East Indian lines is divided equally between the home and colonial Governments. Independently of the home Government the Dutch East Indian Government grants general mileage subventions for the maintenance of lines making regular communication with the various ports of the East Indies.[CZ] Holland's gross tonnage in 1910 had reached the respectable total of 1,015,193 tons,[DA] ranking her eighth among the maritime nations.

Belgium had a subsidy system for shipbuilding before 1852. At present neither bounties to domestic shipping nor postal subventions are paid by the Government. Subsidies, or premiums, however, are given to certain foreign steamship lines to encourage the commerce of Antwerp. These include an annual payment of eighty thousand francs ($15,440), and the refunding of lighterage and pilotage dues, to the North German Lloyd on their East Asiatic and Australian lines; and fifteen hundred francs ($289.50) to the German-Australian line for each call to and from Australia, the maximum subvention limited to thirty-nine thousand francs ($7527). A Danish steamship concern is also exempted from lighterage and harbor dues and granted other facilities, but receives no money premiums.[DB] Belgium tonnage in 1910 comprised only 165 steam and sailing ships for a total of 299,638 tons.[DC]

FOOTNOTES:

[Footnote CZ: Meeker.]

[Footnote DA: Lloyd's Register, 1910-11.]

[Footnote DB: Meeker.]

[Footnote DC: Lloyd's Register, 1910-11.]

CHAPTER VI

AUSTRIA-HUNGARY

The Imperial Government of Austria-Hungary spurred by the action of Germany, inst.i.tuted 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 Ca.n.a.l 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]