CORRESPONDENCE.
AMERICAN AND BRITISH SHIPPING.--comPETrriox OR CO-OPERATION ?
(To THE EDITOR OF THE " SPECTATOR."] 61'4—Shall British and American shipping compete or co-operate ? Our American friends did wonders during the war in helping to counteract the effects of the German submarine campaign. They helped to make good the international shipping shortage due to the war. But, having built many ships at great cost in an abnormal time, the Americans are now at a loss to find ways and means of profitably employing the vessels. Bold legislative measures have been proposed, even to the extent of abrogating solemn treaties, encouraging our seamen to desert their ships when in United States ports, and lavishly subsidizing the American ships. The proposal to abrogate the Hay- Pauncefote Treaty, which stipulated that all vessels should have equal treatment in the matter of Panama Canal dues, is evidence of what some American politicians are prepared to do. But our friends are up against some hard economic facts as well as against the terms of international law and treaties. So, whilst American politicians have been trying to frame drastic shipping laws to penalize our vessels and favour their own, representatives of the United States Shipping Board have endeavoured to form an agreement with our British shipping interests. They have sought to maintain freights at levels which would render even American ships profitable. However, State shipping is proving a huge financial failure, and efforts are being made to get the vessels into private ownership. But under whatever conditions this great new fleet of American ships are operated—whether nationalized or private, or partly State and partly capitalistic— the problem of finding profitable employment for them stands to be solved. These ships have cost enormous sums to build. They are abnormally costly to operate, owing to the peculiar economic conditions of the United States. It appears to our American friends that the only way to find employment and profits for their ships is through some agreement with British shipping. Negotiations have been going on for a couple of years, and certain terms have been provisionally agreed upon. Herein lies profound danger to British interests. The facts had better be faced fairly and squarely. After what we saw in connexion with the international steel trade before the war, we ought to think seriously about the probable cost and conse- quences of an international shipping syndicate before we enter such a combine. To Britain shipping is vital. To America it is but a luxury. We can enter into no sort or kind of inter- national agreement except as losers.
First, let it be observed very specially that shipping is of very little importance to the United States, practically a self-contained country, producing nearly all its own food and materials and manufactures, not needing to import much, or export much to balance imports ; whereas shipping is of supreme and vital importance to the United Kingdom, a country needing to import ibnormal quantities of food and materials and to export abnormal quantities of manufactures and coal to balance these
imports. America is a great internal trading country. Britain is a great external trading country. But America seems to desire to be great in shipping as well as in domestic trade. If America could beat us in shipping, as she does beat us in some lines, she would do so. As she cannot beat us by competition in this particular line, she seeks to attain her object by co- operation. It is for British interests to decide whether they will retain or surrender their supremacy. If we are going to allow ourselves to be beaten in shipping by the same sort of syndicate agreement as we allowed ourselves to be beaten by in the steel rail trade—if we are going to play second fiddle in external commerce as we play second in agriculture, mining, and some other internal industries—then wo may as well put up our shutters at once. Our shipping supremacy must be maintained, or we perish. America can be pros. porous without ships. Britain cannot. The greatest era of United States prosperity coincided with the decline of United States shipping. British prosperity depends upon shipping. And nothing can beat Britain in shipping except British foolishness.
A note of history may be ventured. American shipping has had two generations of progress, followed by two generations of retrogression, up to the war. Between 1790 and 1850 United States shipping was raised from a very low to a very high status. In the fifties of the last century the American flag was in every port, and United States shipbuilders launched 60 per cent. more tonnage than United Kingdom builders did. It was not until the seventies that British builders launched as much shipping as the Americans put in the water in the fifties. The first Federal Government, formed after Independence, in its first Act for the protection and development of home industries, laid down a special set of laws, dues, and customs duties designed to foster shipping. At that time the situation was pretty much as it was just before the latest war. The tonnage of United States ocean-going ships was only 123,000 tons. Of the imports and exports 90 per cent. was carried in foreign vessels-80 per cent. in British ships. But under the laws enacted in 1789 United States tonnage increased up to a round million tons by 1820, and the percentage of the nation's commerce carried in home vessels reached 90. Foreign ships were driven out of American trade as fast as possible. There were subsidies for American shipowners and builders and sailors. There were preferential tariffs on goods carried in American ships. There were discriminatory dues on foreign ships, and penal tariffs on goods carried in foreign ships. The favours continued till the fifties, and in 1855 United States ocean shipping stood at the then high level of 2,500,000 tons, plus the great lake, river, and coastal tonnage. About that time the agricultural interests set up vigorous opposition to the shipping favours, and by 1862 the last favour was withdrawn. American shipping had then to compete against the world unaided, and it at once began to decline. Although United States population, industries, and trades continued to grow, ocean shipping went down until, before the latest war, it was only a paltry 1,000,000 tons, against Britain's 18,000,000 tons, and Germany's 5,000,000 tons. Both American capital and labour could find better employment in the internal protected trades than in such external competitive enterprises as shipping and shipbuilding.
For several years before the war there had been an agitation in the United States for more ships, and the almost simultaneous opening of the Panama Canal and the outbreak of the war in Europe combined to convert the agitation into a movement. Two or three Acts were carried designed to favour shipbuilding and shipping. There was a measure obviously framed to encourage foreign sailors to desert their vessels when in American ports. There was a proposal to discriminate against foreign ships using the Panama Canal, in spite of treaties guaranteeing equality. In the early days of the war, when it was thought that America would keep out, it was assumed that one result of the struggle in Europe would be the forcing of costa so high that America would at last be able to compete with our side. It was also expected that the Government would subsidize shipping. In those expectations vast amounts of capital were invested in United States shipping and shipbuilding. Soon the Govern- ment entered into the move. Hundreds of millions of State money was invested. A great boom set in. But it was soon discovered that costs mounted up in America in much the same way as in Europe. The new American fleet has cost an almost
fabulous sum of money. The problem now is how to employ this fleet. America has very little import trade, relatively to her population. Her exports are handicapped by the big premium at which the dollar stands. When her ships get outward cargoes they can seldom obtain homeward freights. In international commerce they are up against the competition of nations with cheaper building, cheaper operation, cheaper seamen, cheaper dock charges. They are up against nations with generations of experience in foreign laws and customs. They are up against nations which subsidize their ships. Above all, they are up against the huge economic fact that, whilst the United States may be the largest, richest, and most pro- gressive internal industrial country in the world, it is entirely unsuited to external shipping. Before America was a self- contained country, before her costs and wages had been inflated by protection and a high living standard, and when ships were tuilt of wood, America was suited to shipping. But things are very different to-day.
Shipbuilding is now based on steel. Shipping is based on imports and exports. In the United States the iron ore is deposited a thousand miles from the coal, and the steel mills are 500 miles from the shipbuilding yards. Shipbuilding is a naturally costly business it America. Then, when the ships are built, there is little home trade for them, there are few experienced seamen to sail them, and few experienced agents to manage them. An effort has been made to employ German shipping everts, just as an effort has been made to secure British seamen. American ships cannot be made to pay. And if they are heavily subsidized the agricultural interests will set up opposition, as they did two generations ago. On the ether hand, little Great Britain has iron and coal supplies, steel works, and shipyards and shipping ports all practically side by Fide. She has an abnormal external commerce to employ ships. She has vast and widely scattered Colonies to give her goods and ships preference. She has an inherent skill in building ships, and likewise in sailing them. She has had centuries of experience in getting over, under, or through the multitude of difficulties that crop up in foreign trades and ports. Nothing can beat Britain in shipping except British slackness. It is because the Americans do not feel themselves strong enough to beat us in competition that they seek this co-operation. It is the case of steel rails over again. We exported more steel rails than all other countries put together. We did so by reams. of the quality of our steel, by reason of our great Colonies needing rails, by reason of our huge investments in foreign railways, and by reason of our dependence on manufactured exports to balance food imports. Our rivals could not beat us in open competition, so they proposed a syndicate. They proposed that trade be shared. A syndicate was formed. The trade was shared on the basis of productive capacity and population. Our special needs were ignored. We were rapidly relegated from first to third position. We were beaten by both America end Germany. It will be just the same if we enter an inter- national shipping syndicate. Our contemporaries will base their claims on area, or population, or productive capacity. Our external trade needs will be ignored. We shall lose our supremacy. What British trade cannot obtain by its own organization it can never hope to attain as a mere unit of an international syndicate. There is no proposal to share trade in typewriters or automobiles, where the Americans are strong. It is only in ships and heavy steel goods, where they are naturally and economically weak, that we are favoured with these ambitious sharing schemes. Where we can be beaten it is competition, keen and relentless. Where we cannot be beaten in competition it is coolly proposed that we shall be beaten by co-operation. Shall we surrender through folly that supremacy which it has taken generations of patient effort to build up ?—I am, Sir, &c., E. T. Goon.
[We publish Mr. Good's letter with pleasure as it is obviously a sincere contribution to a very important problem. We are not convinced, however, that co-operation would have all the dangers that Mr. Good imagines. Americans are much con- cerned just now with the American proposal to discriminate against cargoes which had not their origin in the country to which the carrying ship belongs. This would hit the carrying trade of Britain very hard indeed as she carries for all the world. Co-operation of the kind which Mr. Good demands might well be the lesser of two evils, if it could serve in any way as a miti- gation of, or an alternative to, this proposed discrimination.— En. Spectator.]
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