Page 123
Page 123
Page 123
13
with consequences possibly disastrous upon our naval strategy. The risks to our shipping might, of course, be reduced by adding largely to our strength in cruisers, but the cost in money would be very heavy, perhaps prohibitive, and there would be very great difficulty in providing the vessels with crews.
MR. CHURCHILL said that, efficiently to safeguard our trade routes in war, it would be important for the Admiralty to be able to lay down the routes to be followed. It might, indeed, be essential for the Admiralty to dictate the routes and the ports of delivery as well, if the food supply of the people of these islands was to be ensured. In no way could this power be secured to the Admiralty more easily than by a national guarantee being given to vessels complying with Admiralty instructions. But the main question was, and to this no answer had been given, without some system of national guarantee, what inducement would there be to vessels to put to sea except the prospect of high prices?
Br
SIR HUBERT LLEWELLYN SMITHI said that the scheme which he had laid before the Sub-Committee as a basis of discussion, and which they had recommended for further consideration, contained no new principle, as would be evident if the extracts from the Board of Trade remarks on C.I.D. papers 16-B and 56-B, as given in 69-B, were referred to. The essential features were that it was not gratuitous, and that the premium charged was a flat rate, which obviated the necessity of the Government undertaking the difficult task of adjusting premiums to particular risks, and also the danger of disclosing the real state of affairs to the enemy. Its object was to interfere as little as possible with the business of underwriting, while preventing rates from going too high or the market for war risks from drying up altogether; thus the rate to be charged was sufficiently high to restrict the amount of business brought to the State, and so to lessen the administrative difficulties. Particular voyages might be barred altogether, but in all other cases the rate would be the same. It was not possible to foretell whether the scheme would prove self-supporting. It seemed generally to be thought that the estimated risks would be greater than the real risks. If that were the case the scheme might be self-supporting, although all the worst risks would fall to the Government. În auy case it would be far less costly than any scheme of free indemnity. The evidence tendered by Mr. Austen Chamberlain's Committee brought out clearly that free indemnity required valuations and voyage policies. This would involve the State in a very large and complicated business, and would prove very difficult to work. charging a high rate the bulk of the business would be left to the underwriters, and the State's share would be brought within the bounds of administrative possibility. He had been a member of Mr. Austen Chamberlain's Committee, and had himself signed the report. At that time he had been influenced by the fact that no scheme put forward appeared to be workable. They all attempted to discriminate between marine risks and war risks, and did not satisfactorily solve the difficulty. Then, too, the balance of opinion was that the market for war risks was wide enough to be able to bear the strain. Now the opinion was decidedly the other way. Two successive chairmen of Lloyds had expressed the opinion that the market was narrowing, and that it certainly could not stand the strain of war.
If this were compared with the conclusion arrived at by Mr. Austen Chamberlain's Committee, paragraph 56, it would be seen that this constituted a new fact from the Board of Trade point of view. If vessels were uninsurable many of them would not go to sea. The only difference between his scheme and that adumbrated by the Board of Trade on p. 2 of C.I.D. paper 69–B, was that he had raised the rate of premium to 10 per cent. The object was both to reduce the inducement to over-valuation and to limit as much as possible the amount of insurance brought to the State, while keeping the rates so low as not seriously to affect the price of goods. A premium of 10 per cent. charged for the insurance of ship and cargo, in the case of a cargo of grain, would not raise the price by more than 15 per cent., which was well within the ordinary fluctuation of prices. If ships could thus be induced to keep the sea, and the rise of prices could be kept within these limits, there was no justification for further expenditure. The premium charged should cover both marine and war risks. Their separation would be very difficult, and the inclusion of marine risks was, not likely appreciably to affect the cost to the State.
THE PRIME MINISTER enquired whether shipowners would be willing to pay so much as 10 per cent.
[334]
E
Page 123
Page 123