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bank on ships and the reserve funds which were formed as time went on. The whole development of this type of institution-14 in all—was not gradual but spasmodic, occurring in about four cycles, 1899–1901, 1902–10, 1911-16, 1917-25the first year of each one being the principal period of foundation. Of these 14 banks, 6 were liquidated.

BANKS NOW IN OPERATION (1932)

Eliminating the six companies mentioned above, there are now in operation in the Netherlands eight recognized companies, or banks, engaged solely in extending credit on ships, with mortgage on ship as security. Their bonds or debentures are quoted as the local exchanges. The following table shows the nominal, placed, and paid-in capital, together with reserve funds, of the eight banks as of December 31, 1931:

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The maximum amount of loans advanced on ships as security does not exceed 60 percent of the estimated value of the ship. Exceptions are made in special cases when approved unanimously by the board of supervisors. Loans are not granted on ships not insured, unless approved by the board of supervisors.

Mortgages are closed for periods not longer than 10 years and in recent years frequently for 5 years. In cases where a debtor promptly fulfills his obligations, requests for prolongations for a further 5 years are often allowed.

Mortgages are granted principally on sea-going cargo and fishing vessels and on inland craft. Seldom, if ever, are they granted on sea-going passenger vessels because the value of such vessels is considered too unstable.

The yearly rate of interest is from 5 to 6 percent, in a few instances as high as 7 percent-depending upon the size and type of vessel and general conditions and is payable semiannually as are installment payments which are usually at the annual rate of 772 percent of the amount of the loan, and 10 percent on sea-going vessels.

Mortgage transactions, 5 leading banks, 1921, 1930, and 1931

MORTGAGES GRANTED

Name of bank

1921

1930

1931

Eerste Nederlandsche Scheepsverband Mij.
Nederlandsche Scheepshypotheekbank
Rotterdamsche Scheepshypotheek bank.
Amsterdamsche Scheepsverbandbank.
Zuid Nederlandsche scheepshypotheek.

Total.

Florins
3, 815, 513
2, 952, 550
3,882, 500
2,840.000

925, 000

Florins
11, 322, 184
7, 123, 600
5, 525, 820
2, 977, 850

145, 340

Florins 4,726, 500 2, 450, 540 2,895, 800 1, 101, 750

88, 900

14, 415, 563

27,094, 794

11, 263, 490

MORTGAGES REDEEMED

Eerste Nederlandsche Scheepsverband Mij.
Nederlandsche Scheepshypotheekbank.
Rotterdamsche Scheepshypotheekbank.
Amsterdamsche Scheepshypotheekbank
Zuid Nederlandsche scheepsbypotheek bank.

Total..

4, 673, 480
4, 280, 676
4, 333, 976
2, 330, 963

368, 487

6,099, 316
5, 293, 079
4, 312, 657
2, 282, 385

201, 473

4, 124, 337 3, 175, 764 4, 415, 481 1,576, 894

109, 820

15, 987, 582

18, 188, 910

13, 402, 296

Mortgage transactions, 5 leading banks, 1921, 1930, and 1931---Continued

MORTGAGES OUTSTANDING

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Total amount granted and redeemed by each of the 5 leading banks from the date of

foundation to Dec. 31, 1931

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Mr. Culkin. How do the Netherlands rank now in shipping tonnage? Are they pretty well up?

Mr. SAUGSTAD. Lloyds showed as of July 1, 1934, a gross tonnage registered of 2,618,016 tons, which is a decrease from the previous year of about 150,000 tons. They are falling off.

Mr. Culkin. Can you put something in the record on that

The CHAIRMAN. I think that will be put in when Mr. Smith, of the American Shipbuilders Council, takes the stand. I presume he will cover many of those facts. He is going to follow Mr. Saugstad.

Mr. SauGSTAD. Another statement I might make in connection with the Netherlands would be the operations of a certain limited liability company that has been organized in the past 2 or 3 years to aid shipping generally.

The CHAIRMAN. We would be glad to have you make such statement in connection with this as you think may throw any light on the problems we have before us here.

(The statement referred to is as follows:)

COMPANY FOR PROTECTION OF NATIONAL SHIPPING INTERESTS, 1932 Conditions in the Netherlands overseas shipping trade became so grave in 1931-32 that consideration of the situation was undertaken by the Government following an appeal for aid by the shipping industry. The appeal was endorsed by such representative organizations as the Netherland Shipping Union which comprises about 96 percent of the Netherland m ha fleet and the Rotterdam shipowners engaged in the coasting trade. The principal reasons advanced for public aid dealt with the general competitive conditions in the international sea trade, especially as between the Netherlands and important maritime countries with a depreciated currency. Accordingly the Government in 1932 laid before the two chambers of the legislative body a proposal for aid to the shipping industry which was later adopted.

It appears from the official debates, reports, and current press discussions, that in this instance all Netherland shipowners and the Netherland Government did not present a united front before the two chambers.

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 florins ($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.

CAPITAL

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: (@) 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.

MANAGEMENT

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.

CREDIT BALANCE

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. Repayments 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. It would be about $3,200,000, I would say.
Mr. Hart. That is the amount of the subsidy?

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:)

NORWAY

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 Yorwegian Shipowners Association was to guarantee 2,000,000 kroner. The 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 Narodoy 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.

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