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Apparently certain sections of the shipping industry desired state aid in the form of direct subsidies through legislation which would be generally applicable to the entire shipping industry. The Government expressed no desire to subsidize all Netherland shipping companies in distress but indicated willingness to aid them by means of credit based on commercial securities. The shipowners contended that the project proposed by the Government would not bring about the desired results since closer relations between certain companies had already been accomplished by them in their own interests without any form of Government aid. The basis of subsidy proposed by the shipowners was that the Government should grant a subsidy equivalent to the cost of laying up a vessel by the most efficient methods for a term of 3 months; that cost items and subsidies be revised and renewed every 3 months. In fixing the amount of subsidy there were to be considered the status of wages, the cost of living index, the quotations on the British pound and other currencies, the freight market situation and other factors affecting operating costs. To the expressed Government fear, that subsidy would impose unendurable burdens on the state, the shipping companies replied that the cost of their program would amount to 1,050,000 forins ($422,100) per month or about 12,600,000 florins ($5,065,200) annually.
The Government stated that its object from the national viewpoint was merely to save the capital invested in shipping concerns. It stated that it could not undertake the responsibility of further aid without a voice in the management of the companies receiving aid. It held that all reasons for State interference would disappear as soon as the shipping companies have overcome their present difficulties and indicated a belief that a subsidy program such as outlined by the shipowners would merely continue existing conditions; it was not considering a dictatorship over the shipping industry and believed that when subsidies were not granted, the stockholders and creditors must bear the consequences of changed conditions.
Accordingly, after several debates in the second chamber the Government succeeded and the project was passed by the second chamber and on July 22, 1932, it was passed by the first chamber.
FINANCE COMPANY ORGANIZED
The company for the Protection of National Shipping Interests is a Statecontrolled finance organization in the form of a limited liability company for the purpose of advancing funds to shipping enterprises. In promoting this project the Government restricted its policy to the following three principal conditions:
1. The enterprise desiring help must submit an acceptable reorganization plan, the execution of which is to be guaranteed and which is to include adequate economy measures.
2. Investigation is to be made in each instance to ascertain whether by merger or other forms of close cooperation better results are to be expected for the future, and
3. Assistance may not be given in the manner involving burdens too heavy upon the treasury or apt to endanger the State's credit by unsecured advances.
As organized the company for the Protection of National Shipping Interests, at The Hague, has for its purpose the strengthening of the position of the Netherland merchant fleet in the international sea-going trades. The company began its activities on the date the law became effective and is to terminate on December 31, 1940, at the annual meeting of shareholders to be held in the first half of the year 1940 when it will be decided whether its duration will extend beyond December 31, 1940. The shareholders may liquidate the company prior to that date.
The authorized capital of the company is 5,000,000 florins ($2,010,000) divided into 5,000 shares each of 1,000 florins. Two thousand six hundred and twenty-five shares were to be placed when the company began activity under the law, and of this 10 percent was required to be paid in. Shares in the company may be only by and made out in the name of:
(a) The Kingdom of the Netherlands which is represented for all acts and deeds connected with the possession of shares by the minister of economics and labor.
(6) Netherland shipping companies, by which are understood companies sailing the Dutch flag and operating between Dutch territories in Europe and in overseas countries, and between foreign ports.
Should the share capital be insufficient to meet requirements, the Government treasury will advance interest-bearing loans, or other loans may be negotiated under the guarantee of the Government.
The company's business will be transacted by not more than two managers who will be under the general supervision of a board of directors. The managers represent the company in all matters. They are not permitted to act as managers of Dutch shipping concerns unless by special permission of the board of directors. They require the approval of the board of directors in the following instances: (a) when purchasing, selling, and/or mortgaging immovables; (b) when advancing loans to shipping companies and fixing the conditions under which such loans will be advanced; (c) when determining collateral which serves as security for the payment of interest and redemptions of funds loaned.
BOARD OF SUPERVISORS The control of the management is entrusted to a board of supervisors consisting of five members, three of whom must be Government supervisors. The Government supervisors have the same rights and duties as the other members. The board meets when necessary, but at least once every 3 months.
If after the liquidation there should be a credit balance, same will be divided among the shareholders in proportion to the number of shares they own.
(Sources: Commercial Attaché Jesse F. Van Wickel, The Hague; Vice Consul Eugene W. Nabel, Rotterdam; American Minister Laurits S. Swenson, The Hague; Wirtschaftsdienst, July 29, 1932.)
The company is popularly referred to in the trade press as “Benas”, and, through 1934, had advanced more than 11,000,000 florins to 11 shipping companies. It also advanced so-called "wage credits” to 25 shipping owners in amounts equal to 15 percent of wages paid to sea-going personnel, in order to enable them to compete with wage scales paid in countries with depreciated currencies. It was announced that further advances up to 21 percent of wages would be made against 1 percent interest, secured by mortgages on the vessels involved. Repay. ments must be made out of operating credits. No other financial assistance was extended to Netherlands shipping by the Netherlands Government during the year, 1934.
(Source: Acting Commercial Attaché Don C. Bliss, The Hague, Netherlands, Dec. 12, 1934.)
[Statement given on May 6] During the past year there has been a good deal of agitation in the Netherlands to have the Netherlands Government advance a loan to the Holland-America Line for the purpose of building a sister ship to the Statendam. The Government denied the application some time ago, but since the previous testimony there has been a change, apparently, because I have here an official report which states that the Privy Council has passed a measure which will soon be submitted to the Parliament to assist the Holland-America Line in building the Prinsendam, a sister ship to the passenger vessel Statendam, which was completed in April 1929, and for the support by second mortgages on small ship construction. It has been reported that the amount of credit to be extended will be approximately 8,000,000 guilders. Funds will come from the work fund of 1934, originally totaling 60,000,000 florins, of which 20,000,000 florins have been allocated so far. The ship is for the New York service.
The CHAIRMAN. Can you give us that in American money?
Mr. SAUGSTAD. That is the amount of the loan. That is a loan by the Netherlands Government.
Mr. Hart. The Statendam cost a little over $9,000,000, did it not?
Mr. Saugstad. I am not aware of that. I cannot say. Apparently the company has resources of its own, so that the Government would be asked to extend only a part of the necessary funds.
Mr. SAUGSTAD. With the consent of the committee, I will make a similar statement on the finance situation of Norway, and I believe a question was raised the other day as to Russia. If you think it is desirable, I will submit a statement on that. The CHAIRMAN. Yes, we will be very glad to have that, too. Mr. Saugstad. I have that, and also a final statement on Canada. (The statement referred to follows:)
Due to continued depression in the tonnage market, Norwegian shipowners in 1933 sought means of refinancing tonnage. The matter was first submitted to the Norwegian Parliament, which reached no decision prior to adjournment. As a basis for further consideration by the various shipping interests, the Norwegian Shipowners Association invited its membership to submit their credit requirements, the results of which indicated that 66 vessels needed a total credit of 42,500,000 kroner, of which the amount of 29,290,000 kroner needed special guarantees. The latter sum included the following amounts:
Kroner Due foreign shipbuilders
23, 700, 000 Due foreign creditors (Netherlands)
480, 000 Due Norwegian creditors..
5, 110, 000 Final arrangements had not been announced at the end of the fiscal year 1934,1 but press reports of further conferences ? indicate the plan then under discussion had taken the following form:
for large vessels mortgaged abroad.-Norwegian Ship Mortgage Bank (see Shipping and Shipbuilding Subsidies, p. 396), was to take over 50 percent of the value of vessels through 12-year loans against first mortgages on the vessels. The sum involved was reported to be about 10,000,000 kroner, of which the Norwegian Shipowners Association was to guarantee 2,000,000 kroner. T government was to advance or guarantee a further 30 percent of the value of the vessel on second mortgage security, repayable in 10 years, and up to a total amount of 6,500,000 kroner.
For small vessels mortgaged in Norway.—For these the Shipowners Ship Credit Association was to grant first-mortgage loans up to 60 percent of the value of the vessel, and the Norweigan Shipowners Association was to guarantee secondmortgage loans a further 15 percent, to a total of 1,500,000 kroner.
[From Monthly Review, issued by Moscow Narodny Bank, Ltd., London, December 1934) THE MERCHANT MARINE OF THE UNION OF SOVIET SOCIALIST REPUBLICS
A large and powerful merchant fleet is essential to the Soviet Union, both for her internal as well as her external trade. Its significance may be gathered from the fact that in 1933 the total cargo in connection with foreign trade carried over sea routes reached the high figure of 18,104,000 tons.
The merchant fleet of czarist Russia was on an extremely low level of development. In 1913 the total tonnage of the Russian mercantile marine comprised some 757,000 tons; 500,000 tons of which were steam-driven vessels and 257,000 tons were sailing vessels. Czarist Russia occupied ninth place in respect of tonnage owned, and the vessels were not up to date from a technical point of view.
Russia's shipbuilding yards were quite insignificant. At least three-quarters of the merchant fleet had to be ordered from abroad. So insignificant was the mercantile marine in relation to the volume of cargo to be carried that only one-tenth of the total cargo was carried in Russian bottoms.
During the war a considerable part of the fleet was destroyed, another part was utilized by the Russian White émigrés in their flight abroad, the vessels being afterwards sold in foreign countries.
By the end of the civil war, Russia's mercantile marine was reduced to about 300,000 tons, while most of the shipbuilding centers had been destroyed.
Norwegian Shipowners Association, Annual Report, July 1, 1933, to June 30, 1934. ? Lloyd's List, Oct. 3, 1934, Annual Meeting Norwegian Shipowners Association.
REESTABLISHMENT OF FLEET Thanks to the energy with which the Soviet Government pursued an intensive construction policy in this sphere, some of the leeway has been made up. Under the first Five-Year Plan the capital investments in this industry exceeded the original estimates and 1,233 million rubles were spent on river- and ocean-going vessels. The number of ocean-going vessels has increased by 120, while larger additions were made to the river fleet. The increase in the cargo turnover at the ports during the operation of the first plan was 92 percent, the total in 1932 being 49.7 million tons. In the short period of 4 years the mercantile marine almost doubled the quantity of goods carried in Soviet vessels—from 8 million tons in 1928 to 15 million tons in 1932.
Some idea of the general progress in this direction can be seen from the following table:
As will be seen, between 1928 and 1933 the Soviet merchant fleet increased from 222 vessels to 352 vessels, or an increase by nearly 60 percent in number while the tonnage increased by nearly 160 percent. Recent years have also witnessed tremendous achievements in respect of the construction of new shipbuilding yards, and the reequipment and reconstruction of wharves. One of the great achievements of recent times is the construction of the Baltic White Sea Canal. Work is also being carried out to connect Moscow and Leningrad with the Volga River, which when completed will revolutionize the internal transport system. Noteworthy achievements have also been recorded in the navigation of the Arctic.
NEED FOR FURTHER DEVELOPMENT Though enormous progress has been made in respect of improving Soviet merchant shipping, there still remain a number of shortcomings that require remedying. Undoubtedly the chief of these is the fact that the existing merchant fleet is incapable of meeting the growing requirements of sea and river transport.
The Soviet mercantile marine at present comprises an insignificant proportion of the world's total tonnage.
The Soviet merchant fleet at present carries only a small part of the total sea cargoes. Last year, for instance, it carried only about 20 percent of the total cargo turnover, the remainder being carried in vessels chartered in foreign countries.
It is considered that the most important immediate task is to accelerate the carrying out of the second 5-year plan decisions in respect of the mercantile marine. In the materials prepared by the state planning commission it is proposed during the period of the second plan to increase the cargo-carrying capacity of the existing merchant fleet by 74 percent. This, however, will mean that a considerable proportion of the Soveit foreign trade will still be carried in foreign bottoms.
At the present time there is a particular shortage of tonnage for dealing with foreign trade. With regard to the share of sea transport in the foreign trade, the following table showing exports and imports in the last 2 years in thousand tons is instructive:
Imports to Union of Soviet
Socialist Republics.... Exports from Union of Soviet Socialist Republics....
As can be seen from the above table, transport by sea routes is by far the more extensive, while transport over land routes takes quite a small part of the total cargo turnover.
To meet effectively the existing requirements, it will be necessary completely to transform the work in connection with shipbuilding. The present shipbuilding centers are inadequate in many respects. The following table shows the construction of tonnage in the shipbuilding yards of the People's Commissariat for Heavy Industry:
In connection with the building up of a powerful merchant fleet, the possibilities of purchasing foreign vessels are not overlooked. The Soviet authorities have purchased a number of vessels abroad in the last few years and have repeatedly expressed their willingness to place orders for ships in foreign shipbuilding yards provided that satisfactory prices and credit conditions can be arranged.
Official sources show the following comparative progress figures for 1930 and 1934:
Expenditures on contract services in Canada have doubled since 1930 because of the subsidies granted to services between Canada and the United Kingdom and between Canada, Japan, and China. The development is shown in the following table: Expenditures by Canadian Government for subsidized services, 1929-30 to 1934-35
In addition to its trans-Atlantic and trans-Pacific contracts. the Canadian Pacific Railway Co. acquired a half interest in the two vessels operated by the Union Steamship Co. between New Zealand, Australia, and Canada, now operating as the Canadian Australasian Line, Ltd. The line is under a contract with the Canadian Government, which for 1934–35 amounted to $118,800, in addition to a supplementary contract with the Fiji Government for an annual subsidy of £5,000 in consideration of calls at Suva.