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that insurance against war risks will be impossible, or possible only at prohibitive rates; and, consequently, that the prices of food-stuffs and raw materials will rise to such an extent as seriously to affect the national life; whilst the strategic dispositions of the Admiralty will be hampered and perhaps over-ridden by the clamour of public opinion alarmed at the interruption of our trade, and inflamed by the scenes of distress to which that interruption would give rise.
3. In our opinion these apprehensions and the efficacy of the suggested remedy are exaggerated. We think, for the reasons already given, that, assuming the maintenance of an adequate naval force, there is little danger of British shipping being laid up on any large scale at any rate for any long period. There is more likelihood of transfers to a neutral flag being attempted, but when due allowance is made for the difficulties of the operation and for the uncertainty surrounding the question of contraband and the consequent insecurity of neutral ships and their cargoes, it seems improbable that they will affect any considerable proportion of the Mercantile Marine.
4. Some loss must, however, be expected under each of these heads, and, in so far as it takes the form of transfer, it might be permanent and attended with some loss of trade.
5. As regards the ordinary facilities for insurance it does not appear that there was ever real difficulty in securing a quotation in the past, and though it seems to be supposed in some quarters that rates have often been fixed too high, and that underwriters have been accustomed to make unduly large profits out of them, the evidence we have collected does not bear out this view. Nor has it been proved that
in future wars the market would be so restricted or the rates so prohibitive as to necessitate interference by the State. It is impossible to give any estimate of what the rates are likely to be in any future war in which we may be engaged, or to state with any approach to exactness what the extent of the facilities would be. They will vary with the circumstances and the episodes of the particular struggle. That the rates will be sometimes high enough to handicap seriously particular trades must, we think, be admitted as probable. This will almost certainly produce some increase in the cost both of living and of manufacture, which may even at times be serious.
6. But it is obvious that any National Guarantee for losses offers a very imperfect remedy for this particular evil. Such a guarantee would tend to prevent shipowners from laying up or transferring their ships, but could not of itself secure the safe arrival of ships and cargoes. This is the work of the Navy, and the Navy alone, and it is important that nothing should be allowed to obscure this vital portion of its duty (89-90). For prices, in so far as they are affected by sea risks, will in the main depend not upon the number of ships which put to sea, but on the proportion of voyages which are successfully completed. The fact that the merchant or the shipowner was compensated by the State for his loss would afford no relief to the nation which was deprived of its supplies. At best it could only relicve the consumer of that portion of the enhanced cost which represented the actual amount of the premiums otherwise payable; but in our opinion this would be only one, and by no means the most important, of the factors controlling prices.
7. At this point, therefore, we reach the conclusion that the dangers to be apprehended from our present situation, and the advantages which could under any circumstances be secured by a National Guarantee, are neither of them so great as the advocates of such proposals have generally supposed. We admit, however, that these dangers do exist to some extent, and that a suitable scheme of National Guarantee, if such could be devised, would diminish, though it could not absolutely remove them.
8. Can, then, such a scheme be devised, and do the advantages which it is capable of conferring outweigh the disadvantages which are inherent in any proposal of the kind?
9. It will be seen from the preceding paragraphs of this Report, and from the Minutes of Evidence, that we have given no small portion of our time and attention to these two questions, for it is upon the answer which is made to them that the final decision upon the subject of our Inquiry must turn.
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