PART V.-Subsidies granted by foreign countries to shipping and shipbuilding Maritime credit.-The Trade Facilities Acts in Great Britain and Ireland have given aid to British maritime interests. Sums expended as loans for shipbuilding in Great Britain between 1922-29 amounted to £27,487,745. In Ireland sums expended between 1922-34 amounted to £14,909,237, giving a total of £42,396,982, or about $210,000,000. Legislation enacted December 1933, provided for a loan of £9,500,000 to a new organization resulting as a merger of the Cunard and White Star North Atlantic service. The financing plan is as follows: £3,000,000 allocated for the completion of the superliner Queen Mary; £1,500,000 allocated for working capital of the new organization; £5,000,000 allocated for the building of a second superliner. Interest allowance on ship construction loans.-Loans bear a rate of interest of 3 percent (which is the rate of the Bank of England). Loans in conjunction with the subsidy for tramp steamers also bear an interest rate of 3 percent. Marine insurance.-The Government has agreed to provide marine insurance on the Queen Mary and her contemplated sister ship, insofar as the ordinary insurance market is unable to do so. Approximately £2,000,000 of the insurance on the Queen Mary was absorbed by the Government. Mail pay. During the past 40 years, the ocean-mail pay awarded British vessels has aggregated over £32,921,790 or about $160,000,000. Mail pay is awarded on a contract basis and for the year 1930-31 it totaled £820,000 (about $4,000,000), of which three routes alone received £650,000 or 80 percent of the estimate. The budget estimates for 1933 were £721,370. Subsidy for tramp steamers (pending).-It is proposed to grant for the next year £2,000,000, the subsidy to be applied to British tramp shipping. The plan provides for scrapping obsolete tonnage in favor of up-to-date cargo vessels. The value of scrapped vessels will be credited to the party applying for a loan, the balance to be loaned at 3 percent interest with repayment over 12 years. Ship-scrapping subsidy (pending).—In connection with ship scrapping the value of scrap vessels is to be credited to the owners in applying for a subsidy under the subsidy plan for tramp steamers. A bill now pending authorizes construction loans of £10,000,000 at 3 percent interest providing 2 tons of shipping are scrapped for every ton built. Tax exemptions.-Under the North Atlantic Shipping Act of 1934, various agreements and mortgages of the Cunard and White Star lines are exempt from stamp duty and other fees. Preferences or restrictions.-Imperial preference policies such as the Ottawa agreements are intended to foster British shipping. In 1932 only 19 percent of Canadian grain was shipped through the United States as compared with 49 percent in 1929. Duty discounts are granted by Canada and Australia to most British goods. A result of this has been that shippers in the United States favor Canadian railways, ports, and ships at the expense of American services. Source: Shipping and Shipbuilding Subsidies, United States Department of Commerce Trade Promotion Series No. 129, supplements nos. 1, 2, 3, 4; Shipbuilding and Shipping Record November 30, 1930; The Shipbuilder and Marine Engine Builder, November 1934; The Natuical Gazette, December 22, 1934. FRANCE Varstime crevist - The building of the new superliner Normandie was a te pele ya Government construction loan of 655.000.000 francs about 826,***ox at 3 percent it ferest Iurance of about 450.000.000 frates in carried Do the GoVETY mert Provision is made for a Government loan of 30 000,000 france per annum in the event of jom it, operation A graet of 110.000.000 franees – $4.323,000 was awarded to cover estimated definita for the French, Fine's operati ins in Apel a sum of 68,748 000 franc-82711,796 was loaned for the completion g program for the Compagie General Transatlantique Interest allowance on ship construction loans. For the year 1934, 18,500,000 frames adiva.red to pat interest on ship construction joar.s jete var 14s5 21 Soooo francs advanced for the same purpose, In add tition, the regular interest rate on loanın is kept at 3 percent for passenger Venaria and 2 percent for freighters, the Government contributing the difference between that rate and the commercial rate For 1933, the interest contribution Was 14 (w) 000 francs Map I tai minil subventions for 1933 were 263 700,000 franes, for 1934, 349 6000 franes, and proposed mai subventions for 1935, 405,650,000 francs. Provision is made for repaci' g vessels 25 years old or over Siap mubashes For Veanels tot el gale to receive mal pay, the Tasso bill CondiCeffitae A g −14, 194 provides 170 000 000 frases about 89 9x5 000 of subsidy Vesseln must be of French tegestry, Ilaved by French crews, sch whipping firms as receive 1,000,000 frases a year or more must use 20 queret for row for struction in French stipvar is w.thir. 5 years Sahin an for bankera A law of Jaary 10, 1925, extended in 1926 for a period ef 20 vests, provided a subady for Frete built tar kers, less than 15 years old. Fram 1925 to 1925, the sum of 24,200,129 fra: es was expended on subsidies for Fromption from fazer -- A law of August 1, 1928, exempts from business transact, taxes aui de ais cor eluded by sl. powner with French shipyards where work ti, veuseja ja ecu.cured within 5 years from March 1, 1928. Preferences or realticltiMA 1 M..mum transfer taxes on vessels, 2 materials admitted duty free. 3 × jowsers exempt from business-turn-over taws in transactions with 4 Coastal trade of France between France and A'geria, Tunis and Morocco restricted to brynich venne is 5 God and materials trar sported for State account are giver preferer ce in natural veu da 6 l'aviments of bounty on colonial products conditioned upon transport on gar! shipbuilding wibe: dies, United States Department of Cor 1 ree Trade Pr motion series No. 129, Supplements i 3. Nactical Gantte, Juis December 1954 GERMANY སྙན་ A loan ford af 50 000 add) n grom msa ant), wized in In 1954 a tentative sim s! % 700 000 faran was not I testpowners receive a subsi iv of ope-f. 12, of 1' e cole 1925 for ** ip constrjet.n as, le for this purpose tract price of the new vessel and in addition, 4-percent interest on the remaining four-fifths, the latter being in the nature of a loan for a 6-year period. Interest rate contribution.-An interest rate of only one-half of 1 percent is charged on the advances made during the period of construction. On other loans, wherein maritime credit is extended to shipping companies, 5 percent of the market interest rate is absorbed by the Government. Ship scrapping.-A total subsidy of 12,000,000 reichsmarks was provided in 1932 for ship scrapping. No provision was made for replacement. The rate paid by the Government for each gross ton scrapped is 30 reichsmarks. Vessels must be of German registry, built prior to January 1, 1913, and must be scrapped in German shipyards. Exemption from fiscal charges.-Foreign materials required for the construction, equipment, or repair of vessels other than pleasure craft are imported free of duty by German shipbuilders. Preferences or restrictions.-Special railway tariffs on Government-owned railways are in effect for exports and imports through German seaports. (Source: Shipping and Shipbuilding Subsidies, United States Department of Commerce, Trade Promotion Series No. 129, Supplements 1-3.) ITALY Maritime credit. Since 1928 the Maritime Credit Institute has set aside a capital of 100,000,000 lire for shipowners. In addition the institute raised a loan of 300,000,000 lire to finance the construction of the superliners, Rex and Conte di Savoia. The Italia Line recently borrowed 170,000,000 lire from the institute to settle its financial position. Within the past year, the Cosulich Line was granted a loan of 30,000,000 lire from the institute. Interest contribution on ship-construction loans.-The Government's contribution to the payment of interest on maritime loans has lately been increased from 2.2 percent to 5 percent. Insurance.-Insurance required on the Rex and the Conte di Savoia amounted to about $28,500,000. Fifteen million dollars was assumed by the Government through the National Insurance Institute. Mail-contract pay.-Total subventions for the Italian mail services for the current year amount to 284,834,000 lire. Navigation bounty.-A navigation bounty of 50,000,000 lire enables shipowners to be compensated for losses resulting from the fact that collected freights are lower than usual because of depreciated currencies. Construction bounties.-The following appropriations have been granted by the Italian Government: Tariff bounties.-An annual appropriation of 26,000,000 lire is authorized until July 1938 for the benefit of Italian steel and metal manufacturers engaged in construction of shipbuilding machinery, boilers, etc. Approximately one-half of the materials for hulls may be admitted free of duty. Other materials for construction of ship machinery are admitted free. Ship-scrapping subsidy.-Italy also subsidizes ship 15,000,000 lire was appropriated for the years 1931-33. Government for each ton scrapped is 25 lire. scrapping. A total of The rate paid by the Income-tax exemption.-Merchant vessels entitled to bounty provisions have the privilege of exemption from taxes earned during the first 5 years of their actual service. (Law in effect from 1926-34.) An appropriation of 5,000,000 lire is made annually to meet the extra cost of constructing vessels with steel hulls according to special plans approved by the Comertiment so as to permit the installation of gins up to a maximum of 6-inch cater for deferimve purposes (Boures. Shipping and Mapbuilding 8a) sudies, United States Department of Commerce, Irale Promota, ni Series No. 129, s.pplements 1. 3, Fairplay, Nov. 8, 1947 JAPAN Maritime cre sit bill passes! June 1930 prov. de 1 for a loan find of 30,000,000 $249 mom to be advanced by the Ind strial Bark of Japan, for the period 169 34 Ion • are for 15 year per. «d« with a 2 year torre demption period. Ala ce are unded to two far is the value of † je vested at i secured by a first At least 15 vessels of an aggregate of 150 000 gross tons have been bant under tie plan Interest allowance on abip construction — The Government contributes 2 percent of the market interest rate on loans Mail pay For the year ending Mar 31, 1934 10 500 299 10,400 000 NOTE Approximatel; 7.000.000 ven is all cated each year to ore line, the } „set. Kaista, operatg between Japan and the United States ) ketij pang and constructs in abrily Provas 25 18 made u fer Japanese law ps and replacer est on a twof rune plan A 15 of 11 000 000 yer, was awarded for tile period 1952-34 Try one apred aluja, negregating 194 310 tors were bait y fer t'is plan. prin from tonal charger By Imperial order, dated December 1906, and eet, a rebate is provided of import d „*iew on #? j» baltu grater als Preferestră or realevittiNE Coastal trade is restricted to Japanese vennels, • 1! =), dcs (*)...«en Ia.wa", Kwartung Leased Territory and Karafato, Steri bi arty low in Japan A mats, dy in paid to man facturers of pag iron a d which varies in arount from 3 to 6 ver, per metric ton The purpose of tas laws to er courage the steel industry generally and the manufacture of slipb. lng materials particularly at. T Aammondi kutista (penting Effective October 1935, Japan plans to subBelize her ship tausting industry by suppiving 24,000 000 yen over a period of Sears 0.1 slups are to be scrapped and replaced with new tollage on a oneforore jat. ༢, Shapeg and Stopt „ldog Shades United States Department of Comer e Irade Promotion Series No. 129 Incrading Supplements i 3 All e' arta an illustrations are omitted in the printed record A "FLEXIBLE" SUBSIDY Reprinted from Marine Progress, March 1935) CONDITIONS CHANGE, AND The subsidy METHOD WHICH PROVER EFFECTIVE TODAY MAY BE TOTALLY INADEQUATE OR FXCESSIVE IN YEARS TO COME HERE IS A PLAN, BASED UPON A DEFINITE BUSINES QUOTA FOR THE AMERICAN LINE, WHICH APPEARS TO MEET CHANGING CONDITIONS AND TO OFFER A WORKABLE SOLUTION TO THE PROBLEM The ocean ma:¡ contract system as a means of adding in the uphui' lng of the Ate tient, merchant marite it fore gr, tracje w dentured to be replaced w 1, note other form of s‚' @ iv Pres, dert Roosevelt's message is clear on this pi: t, bit hether the message for the acenja*\*g rej«rt contains ar y niggest = n. a to how the amourt of the proposed outright sits.dy should be determined in the case of any ir divad ind. Amer.can flag steatust ip il.ne No one yardstick can be used to measure D'e requirements for governmental subver tion in, aŭ trajes, for no two are exactiv alike in their needs. The system by word mi, ships of a certait, size and speed receive the same remuneration per Die traveed does not fit the station Itus, the bus of the man contract subs,dy, worked out in, wich, a manner daring good times t'at some lines received thore tian was actually necessary, wine practica...) au found the subsidy to be inadequate when basiliens fell off The mail contract system was adopted at a time our foreign commerce was practically at its peak. The rate of compensation, based on 1928 conditions, might have been sufficient in the years that followed, even though the depression more than cut available cargo tonnage in half, were it not for the fact that most of the contractors had assumed the financial obligations entailed by new construction. Yet, any system of subvention, to be effective, must provide for the perpetuation of the merchant marine. This naturally involves the replacement of toagenu which is rapidly becoming obsolescent. "PARITY" FOR THE AMERICAN SHIP It is frequently said that the solution to the problem lies in placing the American ship on a parity as to capital and operating costs with its foreign flag competitor. But competition is always more or less flexible and any subsidy system must be equally flexible in order to meet changing conditions. A lack of such flexibility was one of the weak spots in the mail-contract system. To illustrate: At the time the system was adopted a certain American line may have had one foreign flag line as its sole competitor in its particular trade, and the mail compensation was sufficient to place the American line on an equality with that competitor. But later, another foreign flag line entered the trade, and to further complicate the situation, the original competitor placed faster, more modern, more economical ships on the route. As a result, the American line's competition was practically doubled, and although it, too, had placed 2 or 3 new and faster ships in service, the increase in mail compensation by reason of the greater speed of the new vessels was not sufficient to overcome the altogether changed differential. The American line's ships cost considerably more to build than its competitor's-and the latter, by the way, had been granted a subsidy by its government, ostensibly to meet the still lower operating costs of the third entrant. Can a subsidy method be worked out which will provide that much needed flexibility, and at the same time furnish some incentive to the American owner, so that eventually the necessity for subsidy may be reduced and perhaps removed entirely? ACCURATE STATISTICS Today we are better equipped to devise ways and means to this end than we were in 1928. Of course, no one can predict the future, but to a certain extent it may be judged by the past, and in this we have readily accessible a wealth of facts and figures relating to foreign and domestic shipping and commerce. The Division of Statistics of the Shipping Board Bureau has been engaged for many years in the compilation of data and figures concerning ship and cargo tonnage, points of origin and destination, and other information of the greatest valne in any study of the subsidy question. Indeed, it seems that the true worth of the work of the Division of Statistics has never been fully appreciated by the shipping industry or by the various Government agencies having to do with shipping and commerce. In the past, projects have been undertaken which were foredoomed to failure and which could have been avoided had full use been made of the facilities for accurate statistics and information. The facilities of the Division of Statistics may be employed to remove any future subsidy proposal from the realm of guesswork. In any projected subsidy plan, a fair test may be made by applying the actual figures of the past 5 years to that plan and thus determining how that plan would have worked out had it been in effect during that period. If the results would have proved unsatisfactory over the past 5 years, it is reasonable to believe they would not prove satisfactory over the next 5 for it is to be expected that recovery in our foreign trade is going to be a slow and gradual process. THE "GREATER PORTION" In the Merchant Marine Act of 1920, and again in the act of 1928, Congress declared it to be necessary for our national defense and for the proper growth of our foreign and domestic commerce that the United States have a merchant marine of the best equipped and most suitable types of vessels, sufficient to carry the "greater portion" of our commerce. This "greater portion" cannot be interpreted to mean anything less than 51 percent. At present, American ships are transporting about 34 percent by volume (not including Great Lakes cargoes), but this includes tanker cargoes transported for the most part by com |