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The Empire and the century/The Mercantile Marine



From the days of Queen Elizabeth our commercial fleet has grown with wonderful regularity, and its growth has been commensurate with, or an indication of, the growth of the British Empire. It is not too much to say that the Empire and our commercial fleet stand or fall together. Dominion in former times depended upon conquest; now, fortunately, it rests more largely upon peaceful expansion and the reciprocity of commercial ties. Commerce cannot be divorced from merchant shipping, and whatever is beneficial to our merchant shipping is also beneficial to our commerce. Any benefit of this nature strengthens that important trade connection between ourselves and our Colonies which mutual regard, affection, and advantage have allied themselves to create.

The origin of our commercial fleet is to be traced, in a very considerable degree, to the period of the predominance in the sixteenth century, and for two hundred years afterwards, of the policy known in political economy as the mercantile system. It was a policy of encouraging shipbuilding, supporting fisheries, and promoting trading companies. The means used would not always commend themselves to modern schools of political economy. Elizabeth and Charles I. gave bounties for the construction of ships above a certain size. Fisheries were stimulated by giving bounties to some of the vessels employed in them, and upon the taking and curing of various fish, as an incentive to sea-faring life. The fleet that harassed the Armada in fact consisted of many merchant ships, fostered, perhaps, by such methods. The promotion of trading companies was steadily followed, but the grant of their charters was regarded with considerable jealousy by some of the merchants of the age. The Eastland Company was established in 1579, and traded with ports in the Baltic, possessing factories in Prussia. The Levant Company was started in 1581, and had factories in Smyrna. The famous East India Company was chartered in 1600, just at the close of the reign of Queen Elizabeth. Though at first it was attacked at home as the monopoly of a few which injured the trade of other merchants, and had to maintain a strenuous competition with the Dutch, it did not cease to direct Eastern affairs until it was able to hand over the sovereignty of India to the British Crown. The Hudson Bay Company dates from the grant of a charter by Charles II. in 1670 to Prince Rupert and seventeen other noblemen and gentlemen, securing to them 'the sole trade and commerce' of a vast undefined tract of land and sea round Hudson's Straits. Though it now only trades as a private corporation, it retains its original possessions till 1869, when they were sold for £800,000 to the British Government, and transferred in the following year to the Dominion of Canada. All these successful trading companies were an immense assistance towards the formation of a commercial fleet. Indirectly they did more, for they may be said to have been instrumental in setting up that line of communications—by ports or islands—which forms a basis of Imperial expansion. Without the distant goals of the trading companies, it is doubtful whether it would have ever been thought worth while to hold Gibraltar, Cape Town, Ceylon, or Hong Kong, or the eastern settlements of Canada, to mention only some of the points or coaling-stations so valuable to British traffic. Thus, the energy of the trading corporations has helped to teach a wider lesson.

A well-known feature of the era of the so-called mercantile system was the Navigation Acts, passed in 1651 and 1660 for the protection of British shipping and commerce as against foreign countries. They prohibited the importation of goods into England or any of its dependencies in other than English bottoms, except only in the ships of a foreign country of which the merchandise imported was the genuine growth or manufacture; and in the case of the English ships it was required that the master and three-fourths of the mariners should also be English. The intention of the Acts, to judge from the preamble, was to encourage, by the exclusion of foreign competitors, the ships, seamen, and commerce of Great Britain; and no departure from this policy took place until the middle of the nineteenth century. It was by no means an ideal policy, for it deliberately cramped the expansion of colonial trade to benefit the Mother Country. But it is admitted by Adam Smith that during the epoch of the mercantile system two foremost objects of English statesmanship were attained, namely, the supremacy of England on the seas, and the furtherance of English commerce, shipping, and manufactures.

The mercantile system or doctrine did not owe its rise to dogmatic theory or scientific speculation. It was rather the outcome of practical activities, influenced by the force of surrounding events and special exigencies. Cromwell was keenly alive to the rivalry of Holland, and Sully and Colbert practised a carefully considered limitation on the importation of foreign goods into France; while the advance of French manufacture was the talk of Europe. The diminution of the commercial fleets of the Italian republics, and the decadence of their trade, owing partly to the discovery of America and of a passage to the East Indies, and partly to internal troubles, had already given openings to other Powers. All these and other circumstances combined to inaugurate the Cromwellian policy of restrictive legislation against foreign ships, during which—whether because or in spite of it—the commercial navy of Great Britain made such rapid strides.

The increase of the British merchant navy has indeed been remarkable, if it is judged by the standard of continuous growth. Its total tonnage at the time of the Armada in 1588 was 12,500 tons, exclusive of fishing-boats. In 1791, just before the wars occasioned by the French Revolution, it amounted to 1,511,400 tons, including the shipping of the colonies. Half a century later, in 1840, the merchant navy of the United Kingdom and the Colonies reached a total of 3,311,000 tons; in 1880 the total was 8,447,000 tons; in 1890, 9,688,000; in 1900, 10,751,000; and in 1903, 11,831,000. The progress is striking, and the growth is certainly continuous. The fifties, so far as they are by themselves a test, give much cause for satisfaction, and are in any case an excellent barometer to indicate the power and importance of the Empire. They have risen with its rise; they have multiplied with its power and position; and they bear witness to valiant and indomitable effort in the past.

There is, however, some reason for not coming to a conclusion too hastily, or, at least, for not assuming that progress, because it has been very good during many years, will spontaneously continue so without great energy on the part of traders and careful attention by statesmen. Comparison with foreign merchant navies is instructive. It has just been mentioned that the merchant navy of the British Empire increased between 1880 and 1890 from 8,447,000 tons to 9,688,000 tons, which is 12·8 per cent. of the total British merchant tonnage in 1890; and between 1890 and 1902 (the last year for which all the comparative foreign figures are available) the growth was from 9,688,000 to 11,566,000 tons, or 16·2 per cent. What are the corresponding tonnages of the combined principal foreign merchant navies? Between 1880 and 1890 they rose from 8,812,000 tons to 8,497,000 tons, or 2·2 per cent., and from 1890 to 1902 from 8,497,000 tons to 11,136,000 tons, or 28·6 per cent.; so that while the British merchant tonnage rose 12·8 per cent. to 16·2 per cent. in the two periods, foreign merchant tonnage made the astonishing rise from 2·2 per cent. to 28·6 per cent. It may be argued that percentages are misleading, that the proportionate foreign rise is much more rapid, because the foreign tonnage starts from so low a figure, and that it was much easier to rise from one ton to two tons than from a million to two million. This is perfectly true so far as it goes; yet, even making all allowances, it does not account for everything. It is a most striking fact that, of all the tonnage entering our own British ports between 1892 and 1902, the foreign tonnage shows an absolute increase much greater than ours. The total of all the tonnage entering British ports in 1892 was 75,000,000, and in 1902 it was 99,000,000, or an increase of 24,000,000. Out of that increase, which has nothing to do with percentages, the British have only ten and a half millions of tons, and the foreigners thirteen and a half.

On the whole, it may be still said that British shipping creditably holds its own. There is no reason for sounding a note of serious alarm, but there is reason for a distinct note of warning. The British flag is a great heritage, and we have been the possessors of the most magnificent mercantile fleet in the world. We are now subject to keener competition than we have ever experienced, and a proportionate increase of effort is necessary if we are to maintain our supremacy. In regions where we were first in the field, where all our agencies were established, where there was ample shipping at our command, there has been striking expansion—but it has not always been British development that has been especially marked. It might have been expected that, with all these advantages of priority of settlement and management, we could have increased our trade and shipping more easily than those who were not on the spot. But to take the instance of Singapore, an important and typical colony, it has been stated by Sir Alexander Swettenham, who was long connected with the government of the Straits Settlements, and has an intimate knowledge of trade and shipping questions, that certain foreigners, notably the Germans and Japanese, have improved their trade very much more rapidly and very much more efficiently than we have improved ours. He adds that these nations, who have had this large increase of trade, at the same time have granted to their merchant shipping a large accession of Government subsidy, and if the increase of trade is not largely due to the accession of subsidy, it seems only explicable by attributing 'want of go' to the British. A reminder of such examples does not seem to be out of place.

Shipbuilding in Great Britain is in a sound position for constructing any class of vessel at very moderate cost, but British shipowners must not rely too much upon present superiority, and must be continually seeking for newer and up-to-date methods, and unremittingly aim at adopting the most scientific principles in the conduct of their business. Practical labour-saving appliances, such as automatic and electric machines, are an immense gain in the long-run, although perhaps naturally they are not always at first acceptable to trades unions, who are sometimes apt to take a short-sighted view of economic development. Shipbuilding materials are duty-free in Germany, as in England, and no stone should be left unturned to keep pace with such honourable competitors as the Germans, or, indeed, such commercial maritime power as may be prophesied for the Japanese.

Turning now to the future, two main questions arise with regard to the steps required to maintain the efficiency of our commercial fleet as a link of Empire. In the first place, what can statesmen do for shipowners and traders? Secondly, what can they do for themselves?

In reply to the first question, statesmen can render material assistance, both by directly encouraging adequate mail speed by present services, and also by exercising a watchful control of British oversea traffic in view of trade rivalry. The importance of adequate mail speed to Imperial communications cannot be exaggerated, and rapidity of transit largely depends upon the amount of the mail subsidy which is granted. What the precise rate of speed should be must necessarily vary according to circumstances. In some cases high speed is essential, and in general the speed should not be less than that of foreign mail-ships running on the same routes; but no limit should be placed upon the amount of subsidy where, in the opinion of the Government, the needs involved relate to Imperial communication; for the first object of a subsidy is political. Fast mail-steamers of any nation follow the lines of great commercial traffic, and promote trade, whether they are directly subsidized for that purpose or not. In these days of doctrinaire theory, and in order to appear to conform to it, the maxim is too often ignored that aid to postal communication and benefit to trading interests cannot be entirely dissociated. They are mutually auxiliary, and a subsidy to one of these objects is largely a subsidy to the other, however much it may be disguised or labelled as separate and exclusive. The fact is very relevant in considering the value of mail subsidies to merchant shipping, and at the same time shows that it would be foolish to cut down mail subsidies in obedience to a theory, merely on the ground that they gave indirect help to our merchant fleet. Nor can the use of merchant ships in time of war be overlooked. The United States very effectively commissioned the St. Paul and other vessels of the America Line during the Spanish-American War in 1898. If, however, the British Admiralty is satisfied that it can build thoroughly efficient ships more economically than it can subsidize the mercantile marine for Admiralty requirements, it seems likely that merchant ships may in future have little use in time of war except so far as they are employed to carry food-supplies. In the latter capacity we depend on them much. In the words of the recent Royal Commission, though we look mainly for security to our navy, we rely only in a less degree upon the widespread resources of our mercantile fleet, and its power to carry on our trade and reach all possible sources of supply wherever they exist. A guarded scheme of national indemnity, which the Commission advocates against loss from capture by the enemy is also within the sphere of statesmen to furnish. It would steady prices, moderate the cost of transport, and encourage the maintenance of trade and regularity of sailing in time of war.

Another aim which statesmen should endeavour to secure as far as possible is that British regulations as to seaworthiness, overloading, and the like, should be enforced against foreign ships equally with British ships. Otherwise it is plain that foreign ships in our ports will have an undue advantage. Many cases are on record of a British ship being sold to a foreign owner, and returning to this country loaded far more heavily and hazardously than would have been permitted had she started from a British port. As at present a foreign ship is seldom marked with any load-line, the overloading is by no means always easy to detect at sight. The result is a serious handicap to the British shipowner and to British trade in its Imperial aspect. Every available means, therefore, must be taken to bring the foreign ship under the same regulations. The question has recently engaged the attention of two Committees of the House of Commons, and recommendations have been made in favour of giving power to take more stringent action at British ports if negotiation with foreign nations fails. It is much to be desired for public safety that an international, load-line should be agreed upon.

In other directions British shipowners complain that they are unfairly taxed or improperly restricted. They demur to paying light dues—that is, dues charged upon all merchant ships entering British ports in respect of lighthouses, lightships, buoys, beacons, and fog-signals, and for removing dangerous wrecks, on the ground that these should be a public charge, like highways. It is stated that Great Britain and Turkey are the only countries which levy light dues, although possibly other countries raise dues of this kind under other forms. There are signs that the abolition of these dues will come, though hitherto every Chancellor of the Exchequer has consistently opposed it.

Perhaps the most deliberate method by which some countries put a restraint upon British shipping is what is called the reservation of coasting-trade. This is simply the reserving, by certain nations, of the trade between their own ports exclusively to their own ships. Nearly half the countries of the world have adopted this system, and the tendency appears to be growing, so that the area for British trading is being slowly but surely reduced. What makes matters more noticeable is the extended interpretation which the United States and Russia give to the term 'coasting trade.' They do not consider it only to mean steaming from one of their ports to another along the coast, but from one of their ports to another anywhere in the world. Thus, it is a coasting journey from New York to Boston, or from Odessa to Sebastopol; but it is also a coasting journey, prohibited to foreign ships, from San Francisco to Honolulu, or from Riga in the Baltic to Vladivostok in the east of Siberia. France adheres to the same doctrine in connection with French ports and Algeria. In another particular, peculiar to France, British ships are at a further disadvantage. This is the surtaxe d'entrepôt, which is a double duty charged on all goods sent to France from abroad and transhipped in a non-French port on their way. For instance, a large ship coming from Bombay, with 5,000 tons of cargo for London and 100 tons for Havre, could only tranship in London these 100 tons into a steamer plying to Havre by paying double French duty on every ton. Failing that, the large steamer must first call at Havre and become liable to heavy port dues and charges, and then proceed to London. But this is only another example of the disposition among foreign nations to restrict operations to their own ships, of which the reservation of coasting trade is the chief illustration.

Is there any step which the British Empire might take to protect itself in such matters? It would be a useful subject for discussion at the next Colonial Conference. The reservation of British Imperial coasting trade to British ships, if adopted at all, should be reservation in the broadest sense—to British and colonial ships between one portion of the British Empire and another, between the United Kingdom, Canada, India, Australia, and South Africa, and so on. But complete reservation would be contrary to the spirit of government often described as the 'open door,' and would not be justifiable against foreign Powers who admit British ships to their own coasting trade. The wiser course would be a qualified reservation of the coasting trade of the British Empire, exercised only against foreign vessels belonging to those nations which did not grant reciprocal treatment to British shipowners abroad. It may possibly be urged that, as the tonnage of foreign nations trading between British ports is comparatively small, it is not worth risking reprisals by them against us with our extensive merchant fleet as a target But we need not fear reprisals, for several reasons. The nations in question already do what it is suggested the United Kingdom should do, and would therefore have no cause of resentment; the United Kingdom has a latent strength for effective retaliation, because the coast-line of her Empire is the greatest of any country in the world; and even if the tonnage of foreign vessels trading between British ports is comparatively small, it is not so insignificant that it ought to be ignored. It has been calculated to be 9 per cent. The qualified reservation of British Imperial coasting trade, as above indicated, deserves the careful consideration of the Imperial Government. Complete reservation is very undesirable; but qualified reservation, in the sense explained, is supported by most British shipowners. Statesmen, therefore, can help to maintain the ascendancy of our commercial fleet as a link of Empire in respect of speed, the equal application of shipping regulations to British and foreign vessels, the promotion of international agreement with regard to these regulations, the incidence of light dues, and, if need be, the qualified reservation of British Imperial coasting trade.

The other question is, What can shipowners and traders do for themselves? In the past they have done a great deal. For proof it is only necessary to look at the history of some of the famous steamship lines to see how much has been achieved. Although the first receipt of a mail subsidy from the Government generally marks a rapid stride in their development, it has been in the main due to individual effort.

The steady advance of British merchant shipping during the nineteenth century is undeniable, but the progress of one or two foreign steamship lines should not be forgotten. The Hamburg-American is a remarkable case. It was founded in 1847, and possessed in 1851 six vessels, amounting together to 4,000 tons. Its present tonnage consists of 331 vessels with 764,000 tons, including the Deutschland, which so far holds the record of the Atlantic with a speed of 23½ knots. The North German Lloyd, which was founded in 1857, has passed through immense financial obstacles, and has now a world-wide reputation. And last, but not least, the Japanese Nippon Yusen Kaisha, or Japan Mail Steamship Company, is a marvel of modern success. It dates from the amalgamation of two smaller companies in 1885, and now owns about 220,000 tons.

All these facts ought to stimulate British shipowners and traders to continued zeal, honourable competition, and a reciprocally advantageous understanding between the Mother Country and her Colonies. Shipowners and traders can mutually help each other in the future in several ways. In the first place, where there is a good opening in the Colonies or abroad for British manufactures, or where there is a good market in the United Kingdom for colonial produce, rail and steam carriers can develop them by establishing low through rates. The art of this method has been well studied in Germany, where railway and steamship lines are largely under Government guidance and management, and oversea trade is often assisted by Government subsidy. A special low through rate may be quoted from the German inland town of manufacture to the region or town abroad, so as to encourage export trade and cut out foreign competitors. This would be done, for example, from Berlin to the Levant, or from Leipzig to East Africa. The effect is first to create an attractive channel for the export of German goods; then by skilful calculations to enable the exporters just to undersell their foreign rivals; and finally to obtain a firm footing in a fresh and congenial market, where, owing to the natural conservatism of merchants, the trade remains with the original exporters to the exclusion of latecomers. If this can be achieved by Germany, why not by Great Britain, and especially within her own Empire? The initiative for such a patriotic move lies largely with British steamship companies, since by far the longest distance to be traversed in nearly all these cases is by sea.

In the next place, shipowners and traders could help each other if they were more often able to come to a better understanding about ordinary shipping rates. These are sometimes unduly raised or depressed by the action of shipping 'conferences' or rings, formed by combination of two or more shipping companies trading on the same routes. There is nothing harmful in this in itself, and it is perfectly justifiable, but the harm arises if the rings abuse the situation which they are generally in a position to create. Sometimes, in order to undercut rivals, so-called fighting rates are fixed. Thus, for some years the rate of freight for paper between New York and Australia was on an average about 20s. per ton of 40 cubic feet From London to Australia during the same period the rate was about 42s. per ton. And this is by no means an isolated occurrence. It is needless to point out that the British paper manufacturer was so severely handicapped that Australian orders for paper always went to the United States. Even if fighting rates are inevitable for a time, it is highly undesirable that they should go on for years, to the immense detriment of the trade between Great Britain and Australia. Surely shipowners sufficiently realize the importance of inter-Imperial communication to strain every nerve to come to a better agreement in this and many similar cases.

There is one means by which, probably, British manufacturers can still both increase the output of their own factories and also assist our commercial fleet by supplying more freight for transport—namely, by taking pains to provide the exact pattern of article asked for in a colonial or foreign order, rather than the pattern of the article which they themselves consider best. It is obvious that a colonist is likely to know, and thinks he knows, most accurately what kind of plough or machinery, for example, will suit his particular soil, or crop, or mine. Many cases could be recalled where British manufacturers have lost an order, and British steamship companies the freight, through indifference of this character. The neglect causes loss to British oversea trade, and therefore indirectly weakens the importance of the commercial fleet as a means of inter-Imperial communication.

Two or three considerations regarding our commercial fleet stand out clearly from a review of its past and present history. Foremost among these is the fact that its prosperity is inextricably intertwined with that of the Empire. If its prosperity diminished, it is probable that the Empire would diminish too. Heralded or pioneered by trade corporations like the East India Company, it has risen from small beginnings to become the gauge of the uniting strength of British sovereignty and of the extent of British trade. Long may it remain so. Foreigners, we have been told by an eminent German writer, desire to cultivate trade relations with British Colonies in order to prevent a British Customs Union. Our commercial fleet will be the best mainstay of such a union if it is established, and it is the best substitute for it if it is not. But if it is attacked from abroad, in time of peace by means of foreign reservation of coasting trade and foreign subsidies, and injured at home by misdirected shipping regulations or self-inflicted disabilities as to rates, or is ill-sustained through want of specified manufactures, its value must be impaired. When these things happen, shipowners must either submit to loss, and all British traders with them, or else they may be tempted to transfer their vessels to a foreign flag under which the conditions are less adverse. There is no real reason why these disasters should overtake us, and any revival of industry would at once animate our mercantile marine with fresh vigour, and give an impetus to shipbuilding both at home and in the Colonies. If due precaution is taken and constant watchfulness exercised, there need be no fear for the future of the British commercial fleet.