Manual of Ship Subsidies Part 7

In Russia steamship lines were early subsidized with mileage bounties, besides receiving postal subventions; and later the Government adopted the policy of returning the Suez Ca.n.a.l tolls to the subsidized lines.

The mileage subsidies are direct bounties avowedly for the encouragement of Russian navigation, and are very large.[EQ]

In 1898 a Government commission, appointed to consider and report upon the state of the empire's mercantile marine, declared that Russia was losing a vast sum annually through the lack of a sufficient commercial fleet of her own, and yet no progress seemed to be making toward increasing her tonnage. To remedy this unsatisfactory condition the commission suggested the removal of the duty on ships built abroad for Russia, and the free admission of all material necessary for ship construction.[ER]

Favoring laws followed. By a measure of July that year (1898) ships bought abroad, if destined for the foreign sea-borne trade, were exempted for a period of ten years from the heavy duties levied on such vessels.[EQ] The next year (1899) the coasting trade, reserved exclusively for Russian ships, was extended to include navigation between any two Russian ports in any seas; and, further to restrict this trade to subjects of the empire, it was enacted that ships engaged in it must be manned exclusively by Russian officers and seamen.[EQ]

At this period Russia's shipping industry, outside the Government works for the construction of battle-ships, was of comparatively little consequence. In the few extensive ship-yards river steamers, tugs, and other small craft, built from Russian materials and by Russian workmen, were chiefly turned out. The materials could be bought cheaper abroad, but Russian labor was cheaper. According to the United States consul at St. Petersburg, the wages of common workmen were then from fifty-one to sixty-four cents a day, while skilled workmen were receiving but seventy-seven cents to one dollar a day.[ES]

In the decade 1890-1901 the amount of subsidies expended directly to encourage shipping increased rapidly, and the tonnage increased in extent and importance. In 1890-91 the total tonnage stood at 427,335 tons of which 156,070 were steam and 271,265 sailing ships. In 1902-03 a total of 800,334 tons was reached, of which 556,102 were steam and 244,232 sailing ships.[ET]

In 1902 the granting of bounties in the form of loans to ship-owners was proposed, with the object of inducing them to buy Russian ships built of Russian materials instead of foreign product. The scheme contemplated a mortgage on the finished ship at fifty per cent of the actual cost, without interest, to cover a period of twenty years, the loans to be in equal yearly payments. The amount of the bounty was to depend upon the difference between the cost of home-built and foreign-built ships. The loans were to be made only on first-cla.s.s sea-going steamers. The plans and specifications were to be approved by the minister of finance before building; and steamers of over one thousand tons register must show an average speed of not less than ten knots on a six hours' trial; those under one thousand tons, of not less than eight knots. In addition to the loans the Government was to bear part of the expense of insurance.

To facilitate the export of Russian goods in Russian-built ships, a rebate was allowed of half the expense of Russian coal used in steamers carrying less than three-fourths of a full cargo on export, and one-half cargo on import. It was estimated that this scheme for fostering domestic shipbuilding would entail smaller drafts on the national treasury than would the granting of direct construction and navigation premiums.[EU]

Progress was checked appreciably by the war with j.a.pan (1904-05). But the year after, the empire was active again in advancing her interests in the East, by systematically granting subsidies to steamship lines to various Asiatic points.[EV] By 1909 the tonnage had been brought to a total of 700,959 tons, approaching that of the year before the war. Of this total 443,243 was steam tonnage. The greater part of the steam fleet was foreign built, only 167 of the total, 898 steamers, being of Russian product. The largest number were built in England (341). Others were obtained from various European yards. More than ninety per cent were of iron and steel. Of the sailing-ships, ninety per cent were home product.[EW] In 1910 the total tonnage stood at 887,325 tons.[EX]

The mileage subsidies in 1910 were going princ.i.p.ally to eleven steamship companies; the postal subventions mainly to four. Those receiving the mileage subsidies carry the mails and Government pa.s.sengers free. The largest mileage subsidy goes to the Black Sea Navigation Company, the oldest and most important of the subsidized lines (founded in 1856, with Government aid).[EY] In addition to the subsidy the Government pays back the Suez Ca.n.a.l tolls. The Russian Volunteer Fleet stands second on the list of subsidy receivers. This is practically a Government affair. It was created in the war-time of 1877-78, by private subscription, as an auxiliary war fleet; and was reorganized for general service in 1892.

The members of the board of managers are State nominees, and the officers and crews are regarded as employees of the crown.[EZ] The subsidy is fixed at six hundred thousand rubles ($309,999) a year; and the refunded Suez Ca.n.a.l tolls amount to another six hundred thousand rubles.[FA]

The mileage subsidies, given directly to foster shipping, increased rapidly from year to year after 1890, while the postal subventions, for mail carriage chiefly, remained practically constant.[FB]

FOOTNOTES:

[Footnote EQ: Meeker.]

[Footnote ER: U.S. Consul Smith, Moscow, in Con. Rept., no. 216, p. 149, Sept., 1898.]

[Footnote ES: U.S. Con. Gen. R.T. Greener, St. Petersburg, in U.S. Con.

Rept., no. 236, p. 91, May, 1900.]

[Footnote ET: Report of The Merchant Marine Commission (U.S.), 1905, vol. II, p. 947.]

[Footnote EU: U.S. Commercial Agent R.T. Greener, Vladivostock, in U.S.

Con. Repts., no. 265, p. 218, October, 1902.]

[Footnote EV: Same, no. 313, p. 140, October, 1906.]

[Footnote EW: Con. Gen. John H. Snodgra.s.s, Moscow, in U.S. Con. Repts., no. 354, pp. 32-33, March, 1910.]

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

[Footnote EY: Con. Gen. Snodgra.s.s, Con. Repts., no. 102, Oct., 1910.]

[Footnote EZ: Parl. papers: Report of com. of enquiry into Steamship Subsidies, 1901.]

[Footnote FA: List given in Rept. of Mer. Marine Com., with totals paid in 1902-03, vol. 2, p. 946.]

[Footnote FB: Mecker.]

CHAPTER XI

j.a.pAN--CHINA

While France is the bounty-giving nation _par excellence_, j.a.pan is a pressing second. The development of a modern merchant marine, together with a modern navy, was among the first undertakings of the awakening empire upon her a.s.sumption of Occidental civilization. Adopting what seemed to her statesmen of the new regime, from their study of Western methods, to be the speediest way to that end, she started out energetically to attain it through lavish money-grants from the national treasury for the establishment of steamship companies of her own people in coastwise and ocean service, and of modernized ship-yards and shipbuilders.

The initial venture resulted in the creation of a steamship monopoly.

This was the subsidizing, in 1877, of the pioneer concern, to supply steam communication between various domestic ports, and also with Siberia, China, and Corea. It was founded by a broad-visioned j.a.panese merchant, Jwasaki Yataro,[FC] and controlled by him. To break his monopoly the Government in 1882 set up a rival State-supported company.[FC] After a period of "desperate compet.i.tion" and warfare, Jwasaki persuaded the new concern to unite with his. So was effected a community of interests after the most approved Western pattern.[FC] By this union was formed, in 1885, the powerful _Nippon Yusen Kaisha_ (j.a.pan Mail Steamship Company), which remained the most powerful of j.a.panese steamship establishments, with lines running to the same ports to which the American steamers run.

Coincident with the State-aiding of steamship companies was the granting of liberal postal subvention. Next followed the inst.i.tution of a general subsidy system, frankly designed to stimulate domestic shipbuilding and to further navigation by j.a.panese ships.

This system was embodied in two acts promulgated in 1896, the year after the finish of the j.a.pan-China War (1894-95), when the merchant marine was growing pretty rapidly, but not rapidly enough for the aspiring nation. These were, a Shipbuilding Encouragement Law, the aim of which was to stimulate the building of vessels above 700 tons; and a Navigation Encouragement Law, to foster open-sea navigation. Their model was the French system.

These laws offered construction and navigation subsidies, and also made provision for a widely extended postal service with increased postal subventions. The construction bounties were available for "any company composed of j.a.panese subjects exclusively as members and shareholders which shall establish a ship-yard conforming to the requirements of the Minister of State for Communications, and shall build ships." The rates were fixed as follows: for ships of over 1000 tons, twenty yen ($9.96) per gross ton; of over 700 and under 1000 tons, twelve yen; for engines built with ships, or in any other domestic dock-yard, with the consent of the Minister of Communications, five yen per horsepower. j.a.panese materials only were to be used, unless the Minister of Communications should give permission to use foreign materials. The navigation bounties were granted only for iron and steel ships owned exclusively by j.a.panese subjects, and plying between j.a.pan and foreign ports. The rates in this cla.s.s were: twenty-five sen (about 12-1/2 cents) per gross ton per thousand miles run for ships of 1000 tons steaming at ten knots an hour; ten per cent added for every additional 500 tons up to 6000 tons, and twenty per cent for every additional knot up to seventeen. Foreign-built ships less than five years old, owned by j.a.panese, were admitted to these bounties. The postal routes established were fifteen in number, calling for an annual expenditure of 4,964,404 yen (about $2,482,202) when in full operation. The payments for postal service were to be computed at the mileage rate given for navigation. Previous to this act the postal subventions had amounted annually to nine hundred and forty-five thousand yen in 1890 and 1891, and nine hundred and thirty thousand yen in the subsequent years.[FD]

The effect of these laws was to stimulate overproduction. The _Nippon Yusen Kaisha_ ordered eighteen large freight steamers aggregating 88,000 tons. Other companies doubled and trebled their fleets.[FD] One result of the overproduction was the forcing down of freights. This, together with the business depression of 1898-99, brought losses to the shipping companies despite the large subsidies. The rapidly increasing amounts of the subsidies, too, were giving the Government concern. From a total of 1,027,275 yen in 1896 the sum expended annually had grown by 1899 to 5,846,956 yen. The total paid between 1896 and 1899 had amounted to 13,133,440 yen, about $6,566,720.[FD]

Accordingly, in 1899 (March), a law was enacted modifying the system.

The navigation bounties on foreign-built ships were reduced by half, while the subventions to the postal lines were fixed at certain yearly sums. A law of 1900 (February 23) extended the postal services. Under these laws the postal subventions reached a total of about 5,647,811 yen ($2,823,905) a year. Of this total the _Nippon Yusen Kaisha's_ was the lion's share,--4,299,861 yen, about $2,149,930.[FD]

After the pa.s.sage of these laws the various companies further increased their tonnage, but the merchant marine grew more wholesomely for a while. In 1902 the total tonnage had reached 934,000 tons, and the j.a.panese mercantile fleet had risen to the position of eighth in the world in point of tonnage, whereas in 1892 it was only thirteenth.[FE]

In 1907 the United States consul at Yokohama wrote: "The building of ships of over ten thousand tons in j.a.panese yards is now quite common.... The war [with Russia] has given a great impetus to the shipbuilding and dock-yard industry which has made remarkable progress during the last few years."[FF]

That year (1907) the Government brought forward several ship-subsidy bills making provision for further j.a.pan sea services.[FG] In 1908 the amount of State aid to the merchant marine had increased to an equivalent of $6,170,566 and additional amounts were asked for, one for the line to South America.[FH] The budget for 1908-09 carried the largest amounts yet devoted by j.a.pan to ship subsidizing. At the end of 1908 official statistics placed the number of steamers at 1618, with a gross tonnage of 1,153,340.42. Of these, one hundred and one were steamers of more than three thousand tons.[FH]

In 1909 a new subsidy system was adopted (the laws of 1896 revised), to go into effect January 1 1910. The fixed navigation bounties granted by the old system on specified routes were abolished, and a general subsidy offered open to all steamships conforming to the provisions of the new law. The subsidized open-sea routes, however, were limited to four--the European, the North American, South American, and Australian;[FI] and coasting services in the Far East were not affected. Among other conditions imposed on the beneficiaries were the requirements that steamers must carry more than one-half their maximum load; that each must have a wireless telegraph outfit, this, however, inst.i.tuted at the Government's expense; that the Department of Communications be furnished with information as to freights and pa.s.senger rates; and that proper terminal facilities, as piers, warehouses, lighters, be provided by the subsidized companies.[FJ] The steamers receiving the full subsidy must be home-built, of steel, of over 3000 tons gross, and showing a speed of at least twelve knots per hour. The rate was fixed at fifty sen per gross ton for every thousand nautical miles, and ten per cent of this sum added per additional speed of one nautical mile an hour, according to the conditions of the route. Upon a vessel the age of which exceeds five years the subsidy decreases five per cent each year till the age of fifteen is reached, when it ceases. Foreign-built steamers under five years of age, which may be put in service with the sanction of the Government authorities, are ent.i.tled to half of the subsidy. The construction subsidies were arranged in two cla.s.ses, and each cla.s.s in four grades.[FK] The rates were slightly increased over those of the law of 1896, and their benefits were limited to steel vessels of over 1000 tons instead of 700 tons.

The total appropriations for ship subsidies in the budget for 1911-12 amounted, in American money, to $6,845,995, of which $6,294,020 were for navigation, and $551,975 for construction subsidies: an increase of $478,387 in the former cla.s.s over the appropriation of the previous year, and a decrease in the latter cla.s.s of $6,835.[FL]

The total j.a.panese tonnage in 1910 stood at 1,149,200 tons.[FM] The _Nippon Yusen Kaisha_ practically owns nine-tenths of the ocean-going steamships flying the j.a.panese flag.[FN]

China, too, taking on Western ways, is emulating j.a.pan in establishing a modern merchant marine. The Government is giving State aid to native steamship companies, and subsidizing ship-yards. According to the United States consul-general at Hongkong the Government is now (1911) to furnish half of the amount of an extension of the capital of the Chinese Merchants' Steam Navigation Company to twenty million taels (about $12,600,000 gold), and thirty additional steamers of modern type are to be built for service--ten on foreign routes, including a route to the United States, and twenty on routes between Chinese ports; while a new ship-yard is to be set up at Shanghai under Government auspices, capitalized at five million taels (about $3,200,000 gold).

FOOTNOTES:

[Footnote FC: Meeker.]

[Footnote FD: Meeker.]

[Footnote FE: U.S. Con. Rept., no. 282, March, 1904.]

[Footnote FF: U.S. Con. Rept., no. 316, Jan, 1907, pp. 92-93.]

[Footnote FG: Con. Gen. H.B. Miller, Yokohama, in Con. Repts., no. 32, pp. 120-121, May, 1907.]