Manual of Ship Subsidies Part 5

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 compet.i.tion, 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 cla.s.ses 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 ent.i.tled 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 ent.i.tled to a bounty, a deduction of fifteen per cent was to be made for each year that had pa.s.sed. 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 ent.i.tle 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 Ca.n.a.l tolls were to be paid by the Government as before.

The Kingdom of Hungary grants bounties to Hungarian ships, or ships owned in greater part by Hungarian subjects, independently of the Imperial Government. Her first general bounty law was also enacted in 1893 and was limited to ten years. The subsidies granted were of two cla.s.ses--premium on purchase, and a mileage bounty. The purchase subsidy was based on net tonnage and was payable for a term of fifteen years from the date of the ship's launching, reduced each succeeding year by seven per cent; the mileage subsidy, for the same term, was in proportion to the length of the voyages made "in the interest of national commerce whether to or from Hungarian ports." The premiums on purchase were thus fixed for the first year: for vessels employed in long-distance coasting trade--sailing-ships, six krone (each 20 cents); steamers, nine krone per ton; employed in deep-sea trade,--sailing-ships, nine krone; steamers, twelve krone per ton. Iron or steel ships rated first cla.s.s were ent.i.tled to these bounties. The mileage subsidy was fixed at five h.e.l.lers per ton, per hundred nautical miles run. It was offered only for voyages "to places where no company in receipt of State subsidies is obliged to maintain regular communications;" and it was not to be given for "petty coasting trade."[DK]

This law was succeeded by an act of 1895 granting construction bounties, with the intent of fostering domestic shipping and the use of domestic material. The rates were proportioned according to the amount of foreign or domestic material used, construction with domestic product receiving the highest bounty. These rates were: for iron or steel hulls, thirty to sixty krone per ton; for wooden ships, ten to twenty-five krone per ton; for engines and auxiliary machinery, ten to fifteen krone per ton of materials used; for boilers and pipes, six to ten krone per ton of material. The total amount to be paid out yearly was limited to the modest figure of two hundred thousand krone ($40,600).[DL]

The law of 1895 in reality was not effective, for ships of the Hungarian merchant marine continued to be built in foreign parts--mainly in British yards;[DK] and while the carrying capacity had considerably increased, the tonnage had continued to decline.[DK] By 1904 the situation had become so unsatisfactory that, as the American consul at Budapest wrote, the pa.s.sing of a new navigation-development law by Hungary's Parliament had, it was believed, become a pressing necessity.[DM]

In 1909 the Austrian Government guaranteed a maximum sum of one million crowns (approximating $200,000) annually to the Austro-American Shipping Company for their service between Trieste and Brazil and Argentine ports. Should the service tend successfully to promote home industries and agriculture, this subsidy was to be increased, the amount of increase to depend upon the amount of cargo carried in excess of a certain minimum. The contract was to run for fifteen years from January 1, 1910. The service, beginning with sailings three times a month, was to become weekly on January 1, 1911.[DN]

The total Austria-Hungary tonnage in 1910-11 was recorded at 779,029 tons.[DO]

FOOTNOTES:

[Footnote DD: Meeker.]

[Footnote DE: U.S. Con. Rept., Jan., 1890, no. 112, p. 95-96.]

[Footnote DF: U.S. Con. Repts., vol. x.x.xII, 1890, no. 112, pp. 23-24.]

[Footnote DG: Meeker.]

[Footnote DH: U.S. Con. Rept., no. 282, March, 1904, pp. 645-646.]

[Footnote DI: Meeker.]

[Footnote DJ: U.S. Con. Rept., no. 320, July, 1907, p. 180.]

[Footnote DK: Meeker.]

[Footnote DL: Meeker. Also Parl. papers, Com., 1909, no. 4, p. 8.]

[Footnote DM: U.S. Con. Rept., no. 283, April, 1904, p. 304.]

[Footnote DN: U.S. Con. Rept., no. 352, Jan., 1910, p. 45.]

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

CHAPTER VII

ITALY

Early after its establishment in 1861 the Kingdom of Italy adopted a subsidy system with the object of reviving and upbuilding the then languishing Italian merchant marine. This policy was inst.i.tuted in 1866 with the grant of premiums on the construction of wooden ships. At the same time materials used in the construction, repair, or enlargement of ships were made duty-free.[DP]

For a while under these conditions, before iron ships had come much into use, the merchant marine prospered. Then it again began to languish; and in 1881 the promulgation of the French general bounty law was made the special occasion for considering the adoption of a similar measure.[DQ]

The draft of a bill modelled after that law was promptly introduced in the Chamber of Deputies, in February. But with its consideration such perplexities arose that at length the whole subject was referred to a commission of inquiry, to investigate and report a more satisfactory one. The result of this inquiry was a bill which became law December 6, 1885, to continue in force for ten years.

This law provided for general construction subsidies, on the following scale: for steamers and sailing-ships built of iron or steel, sixty lire ($11.58) per gross ton; for steam or sailing ships built of wood, fifteen lire; for _galleggianti_ (floating material: the term signifying merchant ships navigating the Italian seaboard, rivers, and lakes, but not provided with certificates of nationality), of iron or steel, thirty lire; for construction and repairs of marine engines, ten lire per quintal; for marine boilers, six lire per hundred kilograms of weight.

These bounties were to be increased from 10 to 20 per cent (according to the degree of speed and other desirable qualities shown) for steamers built on plans approved by the Government engineers as to be convertible into cruisers, showing a speed of not less than fourteen knots an hour, and with sufficient coal-carrying s.p.a.ce to steam four thousand miles at ten knots. The law was applicable to ships bought abroad as well as those of domestic build. But it forbade the sale or charter to a foreigner of any steamer upon which the bounty had been paid, except by Government permission. The laws of 1866 granting premiums and free entry to shipbuilding materials were suspended during the ten years' term of this act.[DR]

In 1888, a new tariff of the previous year (July, 1887) having increased the customs duties on shipbuilding materials, additional bounties on construction and repair were granted by a royal decree to offset these disadvantages to the shipbuilders. A provision was added for the payment of fifty lire per gross ton for construction of war-ships, and eight and a half-lire per horsepower for engines, nine and a half lire per quintal for boilers, and eleven lire per quintal for other apparatus, to be used in war-ships. Navigation bounties were also added to Italian ships as follows: 0.65 lire per gross ton for every thousand sea miles run beyond the Suez Ca.n.a.l or the Strait of Gibraltar to or from ports outside of Europe; the same for ships sailing between one continent with its adjacent islands and another continent with its adjacent islands, outside the Mediterranean. Sailing-ships of above fifteen years of age were ineligible to these bounties; so also were mail-route steamers.[DS]

In 1896, after the expiration of this law, a new law was enacted (July 23) closely modelled upon it. The construction subsidies were the same, except that war-ships built for foreign countries were debarred from receiving bounties. The navigation subsidy per gross ton for every thousand sea miles sailed beyond the Suez Ca.n.a.l and the Strait of Gibraltar was increased to 0.80 lire, the rate to be diminished by ten centimes for steamers and fifteen centimes for sailing-ships every three years. An important addition was the reenactment of the customs rebates on shipbuilding materials. This law was also to be in force ten years.[DS]

In 1900 (November 16) a royal decree was issued modifying the law of 1896 in several particulars. No bounty was hereafter to be allowed to vessels built in Italian yards for foreigners. The customs drawbacks were abrogated, and in place of them was granted a bounty of five lire per quintal of metal used in repairs. A bounty of fifty-five lire per gross ton was offered for iron or steel steamers showing a speed of above fifteen knots; fifty lire, for steamers speeding twelve to fifteen knots; forty-five lire, for steamers or sailing-ships with speed below twelve knots; and thirteen lire per net ton for modern hulls. The navigation subsidies per gross ton per thousand miles, were thus fixed: for steamers, forty centimes up to the fifteenth year after construction; for sailing-ships, twenty centimes up to the twenty-first year after construction. The yearly distances run for which the bounties were to be paid were limited to thirty-two thousand miles for a steamer below twelve knots; forty thousand for one of twelve to fifteen knots; fifty thousand above fifteen knots, and ten thousand for a sailing-ship.

All Italian ships were eligible to this bounty; foreign ships were debarred. The maximum expenditure for all the bounties was limited to ten million lire ($2,000,000) a year.

In 1910 (May) a new subsidy bill was enacted providing for the continuance of the arrangement under the measure of 1900, with a few immaterial modifications.[DT] Early in 1911 the Government was reported to have in readiness ten bills looking to the support of domestic shipping and shipbuilding. Eight of these had relation to the increase of subsidy on the Italian mail and cargo service of the Mediterranean.

Other routes subsidized included lines to Central America, Chile, Canada. Domestic shipbuilding was to be aided to the extent of twelve hundred and forty thousand dollars.[DU]

Italy's mail subvention system dates from 1877, when the Italian steamship companies by a convention (July 15) consolidated with the Government.[DV] All the lines receiving the mail subsidy came to be owned by a single powerful corporation, the Italian General Navigation Company. While the rates paid per mile are not so high as those paid by several other countries, the requirements as to size of vessels, speed, and amount of service to be rendered, are less exacting. Accordingly these subventions are in fact, as Professor Meeker recognizes them, "partly in the nature of concealed bounties." In 1879 the Government spent in these subventions a total equalling $1,593,214. By 1889 the total had only slightly increased, the amount that year being $1,849,392. In 1908 the total was $2,328,917. The mail steamships are required to carry government civil and military employees at half price.

Previous to 1896 the Italian General Navigation Company owned more than half of the Italian steam tonnage, and most of the large steamships.[DW]

After 1896 the sail tonnage steadily increased. In 1905 it was recorded that "the Italian flag now flies over some of the best modern transatlantic liners in the port of New York; the Mediterranean is full of Italian ships; and the Lloyd Italiano has five new ten-thousand-ton steamers nearly ready for service in South America."[DX] Between 1890 and 1910 the Italian gross tonnage increased from 809,598 tons to 1,320,653 tons.[DY]

FOOTNOTES:

[Footnote DP: Meeker.]

[Footnote DQ: Bismarck's Memorial to the German Reichstag, April, 1881.]

[Footnote DR: U.S. Con. Rept., Jan., 1890, no. 112, pp. 61-62. Also Meeker.]

[Footnote DS: Meeker.]

[Footnote DT: U.S. Consul J. K. Wood, Venice, in Daily Con. Repts., no.

30, Aug 9, 1910.]

[Footnote DU: U.S. Consul T. St. J. Gaffney, Dresden, Germany, in Daily Con. Repts., no. 83, April 10, 1911.]

[Footnote DV: Meeker.]