WAR MARINE INSURANCE.
[To THE EDITOR Or THE "SPECTATOR:]
SIR,—It is the desire of all good citizens to assist in endeavouring to "carry on business as usual." The Govern- ment have done much to help in the good work, and they have it in their power to benefit the trade of the country and the nation at large to an incalculable extent by boldly reversing the war insurance scheme and adopting in its stead the plan of a free national indemnity. The Government admit that there is much to be said in favour of a scheme of national indemnity, and their principal argument in favour of a continuance of the present system is that it would be quite imica3ible to "change horses while crossing the stream." Compared to the many problems which the Government have bad to face and have successfully solved, the adoption of a free indemnity policy would surely involve very little difficulty. Practical experience of import and export business shows that British merchants are buying food and raw materials to be imported from abroad in exceedingly restricted quantities, owing to the higher prices, amounting to an increase of from 6 to 15 per cent., produced by increased freight and war risk premium. (Freights have been advanced from 12i to 50 per cent. on account of war risk premium and diminished cargoes.) As importers do not know how long the war will last, nor how soon freights and war risk premium may be reduced, they will not freely import stocks of food or raw materials at the increased prices. They are faced both with a poor market, and a new risk of a fall in price following a possible reduction in freights and war risk premium before their imports are realized. Precisely the same conditions affect manufacturers and export merchants. Prices are artificially advanced by a charge of a more or less temporary nature, and operations are reduced to a minimum. Merchants here and merchants
abroad keep their money in their pockets rather than face the unprecedented risks, and so trade is reduced to a minimum. It is a vicious circle of obstruction and restriction. Seeing that the trade of the nation is conducted by individuals, the interests of the nation as a whole are injured if the conditions are such as to deter these individuals from taking the risk of operating freely.
I think the position may be fairly summed up as follows :- Government insurance on the present basis will restrict trade : operations, both import and export, will be reduced to a minimum, and profits on trade and manufacture will be similarly reduced. Government insurance, free of premium, would foster trade, would restore confidence, and would
greatly help to maintain the volume and the profitable results of trading and manufacturing. It is advisable that the profits of traders and manufacturers should be maintained, so that the Chancellor of the Exchequer may be able to collect the Income Tax which will be necessary in order to finance the war. The benefits to be derived from free insurance versus insurance at a premium may be fairly expected to be: Reduced cost of living ; increase of employment; reduction of distress; restoration of trade to a profit-earning basis ; profit to the Exchequer by (a) the reduction in the amount which the Government will have to spend on relieving distress ; (b) the increased yield of the Income Tax. It may be reason- ably expected that these gains to the Exchequer would far exceed the loss arising from captures.
British manufacturers are invited to make an effort to capture the export trade of Germany and Austria while the overseas trade of these Powers is suspended. Bow much easier would it be to accomplish this task if the costs were not saddled with the war insurance premiums ! Trade in export manufactured articles is doubly handicapped by having to bear the war risk premium and increased freight (1) on imported raw material; (2) on the exported manufac- ture. Our competitors in neutral countries who export their goods in neutral vessels, through escaping the war risk premiums, will have a much better chance of capturing this trade than British manufacturers.
There is reason to believe that the financial difficulties in
the way of a resumption of business will soon be overcome. If trade does not revive under the improved financial con- ditions, however, it will be because it is still handicapped by the heavy war risk premiums. The Government have accumulated a considerable insurance fund from premiums already paid and from captures from the enemy. If they cannot see their way to revise their policy and give a com- plete national indemnity, the premiums might for the time being be experimentally reduced to a nominal rate. They could be raised again, if necessary.-1 am, Sir, &C.,
LIVERPOOL MERCHANT.
[Our correspondent is only asking for what the editor of the Spectator asked for six years ago when he gave evidence before Mr. Austen Chamberlain's Committee, and for what the Spectator has asked for the past ten years, and asked for on the first day of the ear—free universal insurance against capture by the King's enemies. We may point out that not a shipper or a merchant ever lifted a hand to help us in our campaign during peace. That, however, is unimportant. What is important is that the Government should at once give free insurance for a purely nominal premium.—En. Spectator.]
Previous page
