588.C1/11
The Ambassador in Great Britain (Bingham) to the Secretary of State
No. 836
London, July 18,
1934.
[Received July 28.]
Sir: I have the honor to enclose a memorandum,
forwarded by the Foreign Office, dealing with the situation in shipping,
which, it states, has for some time been causing the gravest concern to
His Majesty’s Government in the United Kingdom. The covering Foreign
Office note and memorandum are self-explanatory, and I venture to point
out the request that His Majesty’s Government in the United Kingdom may
be furnished with the views of the American Government, not only on the
situation generally, but also on the matters to which special attention
has been invited in the memorandum.
Respectfully yours,
For the Ambassador:
Ray Atherton
Counselor of Embassy
[Enclosure]
The British Secretary of State for Foreign
Affairs (Simon) to the American
Ambassador (Bingham)
No. W6652/291/50
[London,] 16 July, 1934.
Your Excellency: I have the honour to
enclose herein a Memorandum on the shipping situation, which has for
some time been causing the gravest concern to His Majesty’s
Government in the United Kingdom. The Memorandum is being
communicated to the representatives of the principal maritime
countries, including those referred to in paragraphs 7 and 8.
- 2.
- His Majesty’s Government have endeavoured in the Memorandum to
set forth briefly the position as regards world shipping in
general and British shipping in particular, and have called
attention to some of the remedies which have been proposed for
the present situation.
- 3.
- I have the honour to request that His Majesty’s Government in
the United Kingdom may be furnished with the views of Your
Excellency’s Government, both on the situation generally and on
the matters to which special attention has been invited in the
Memorandum.
I have [etc.]
[Subenclosure]
Memorandum by the British Foreign Office on the
Shipping Situation
The fundamental cause of the existing shipping depression is to be
found in the great reduction which took place in the volume of
overseas trade at a time when the expansion of the mercantile fleets
of most maritime countries (due in certain cases to subsidies or
other artificial assistance given by the Government) had brought the
volume of world tonnage up to a figure never previously attained. It
has been estimated that, when increased speed and other improvements
are taken into account, the capacity of the world’s shipping is
nearly twice that required to carry the reduced volume of trade. The
results of this disparity are seen in the depression which now lies
heavy on the industry.
- 2.
- In these circumstances, the position of the British Mercantile
Marine has called for serious consideration. The great increase
in shipping under other flags which continued generally up to a
year or two ago was not accompanied by any comparable increase
in British shipping, and since 1931 the British Mercantile
Marine has declined more heavily than world tonnage as a whole.
It now represents a smaller proportion of world tonnage than has
hitherto been the case under modern conditions. In view of the
vital importance of sea
[Page 725]
transport to the British Commonwealth generally and to the
United Kingdom in particular a strong Mercantile Marine is a
fundamental necessity. The present situation is, therefore, a
matter of serious concern to His Majesty’s Government in the
United Kingdom; and they find themselves forced to seek means of
safeguarding the British Mercantile Marine and securing for it
employment on a more profitable basis.
- 3.
- The tramp shipowners of the United Kingdom, who had been
particularly affected by the present depression, have addressed
an urgent request to His Majesty’s Government that, pending the
establishment of more favourable trading conditions, Government
assistance may be granted to enable them to maintain their ships
in trade and prevent further depletion of their fleets. His
Majesty’s Government are satisfied that British tramp ships
require assistance to enable them to secure employment in
competition with subsidised ships of other countries. They have,
therefore, announced that they are prepared to consider the
grant of a defensive subsidy for this purpose and they have
asked their shipowners to formulate an appropriate scheme. As
was made clear in the announcement, the subsidy would be subject
to withdrawal if the circumstances which led to its introduction
were altered. His Majesty’s Government are, therefore, ready to
enter into individual discussion with the Governments of
countries which at present subsidise their cargo shipping, in
order to ascertain whether, so far as those Governments are
concerned, conditions could be established which would enable
His Majesty’s Government to contemplate the withdrawal of the
defensive subsidy granted to British tramp ships.
- 4.
- His Majesty’s Government in the United Kingdom have also
received strong representations as to the difficulties
experienced by British liners through the competition of foreign
liners supported by subsidies on particular routes; and they
have expressed their willingness to examine such cases with a
view to rendering assistance (where assistance is found to be
justified) either by way of a defensive subsidy or in such other
form as may be most likely to remove those difficulties. In all
such cases, His Majesty’s Government would endeavour so far as
practicable to arrange that the position should be discussed
with representatives of the country or countries to which the
subsidised foreign liners belong, in order to reach a
satisfactory solution.
- 5.
- The foregoing decisions were announced by the President of the
Board of Trade62 to the House of Commons on the 3rd July,
1934, in the course of a statement of which a copy is enclosed
herewith.63
- 6.
- His Majesty’s Government regret that the subsidising policy
followed by the Governments of other countries should have
forced them to adopt similar measures in defence of the British
Mercantile Marine. This possibility was, however, foreseen at
the Monetary and Economic Conference held last year, and was
referred to in the Memorandum64 circulated
by the United Kingdom Delegation, in which they called attention
to the effects which the continuation of subsidies to shipping
on competitive routes would have and pointed out that “countries
which do not at present subsidise will have to resort either to
protection of their shipping or to subsidies.”
- 7.
- As regards the general position of shipping, His Majesty’s
Government in the United Kingdom find that there is agreement
among a number of maritime countries as to the remedies which
ought to be applied. The Governments of Denmark, the
Netherlands, Norway and Sweden addressed towards the end of
March last identic notes to His Majesty’s Government, expressing
their deep regret at the failure of the Monetary and Economic
Conference to arrive at an economic disarmament and particularly
at the failure of its efforts to remove or to limit the practice
of shipping subsidies. These Governments are of opinion that
such artificial State aid to shipping, whether direct or
indirect, is harmful to the sound economic operation of the
shipping trade in particular, and to world trade in general,
besides involving a heavy burden on the national exchequers.
They view with apprehension, therefore, the consequences which
in their opinion must surely follow from a continuation of this
policy. They realise that the precarious state of shipping is
chiefly due to the shrinkage of world trade, the over-production
of ships in past years and the uneconomic competition of
subsidised vessels. They express their willingness to co-operate
with His Majesty’s Government in any attempt to find remedies
for the evils from which the shipping industry is suffering; and
they undertake that if His Majesty’s Government should convene a
maritime conference for this purpose they themselves would be
willing to send delegates to such a meeting. They suggest that
its object should be to discuss—
- (a)
- the abolition or limitation of subsidies:
- (b)
- the restoration of equilibrium in the shipping trade
by adjusting the supply of tonnage to actual world
requirements;
- (c)
- any other measures that may be submitted to the
Conference which would help to combat depression and
have for their ultimate aim the restoration of this
important international industry to its former condition
of sound economic competition.
- 8.
- A note to the same effect was subsequently received from the
Greek Government; and a note couched in more general terms was
[Page 727]
also received from
the German Government expressing their readiness to take part in
a conference, and adding that they shared the view that
co-operation between the shipping countries offers the
possibility of a thorough improvement in the position of the
entire shipping trade of the world.
- 9.
- His Majesty’s Government feel that no useful purpose would be
served by an international conference of maritime Governments
until it is clear that all the countries interested are ready in
principle to join in international measures for remedying the
present difficulties and are in general agreement as to the
measures to be taken. The first of the two specific subjects
suggested for discussion, the abolition or limitation of
subsidies, was one of the matters discussed at the Monetary and
Economic Conference of 1933, but unfortunately no progress was
made towards an agreement on the subject. The present position
of His Majesty’s Government in the matter is stated in the
earlier part of this memorandum.
- 10.
- As regards the second subject suggested for international
consideration, namely, the restoration of equilibrium in the
shipping trade by adjusting the supply of tonnage to actual
world requirements, His Majesty’s Government consider that the
formulation and discussion of schemes for this purpose should be
undertaken, in the first instance at least, by the shipowners of
the chief maritime countries. The history of schemes of this
kind shows the difficulty of framing a scheme likely to find
general acceptance, particularly so long as the question of
subsidies has not been disposed of. His Majesty’s Government
have, however, urged the shipowners of the United Kingdom that
they should, through their international organisations and in
any other ways open to them, press upon the shipowners in other
maritime countries the framing of proposals tending to adjust
the supply of tonnage in the world to the demand; and they hope
that the Governments of other maritime countries will similarly
urge their shipowners to co-operate to this end.
