PUBLIC RECORD OFFICE
Reference :-
C.O. 885
24 PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
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APPENDIX A.-REPORTS.
A few of the smaller ships in the more distant oversea ports have been hired out in local trades on time charter on demise terms, and we understand that the It is important to preserve Transport Department are not likely to require these. these trades, particularly in the Far East, where it is undesirable to give an opening to foreign competitors. It is, therefore, recommended that these ships should not
be interfered with.
The remainder of the detained ships in oversea ports (except ships under the control of the Governments of India and of the Commonwealth of Australia) which have discharged their original cargoes and have not been taken up by the Transport Department, are being chartered for our account, under the management of various shipping companies, for trading purposes. There are two arguments which may be advanced to support the continuance of their employment in this way.
1. Under present arrangements the Admiralty obtains the tonnage which it requires by requisition from private shipowners at schedule rates, whereas the ships controlled by the Committee are chartered, for the benefit of the taxpayer, at the high freight rates now prevailing. Under the proposed arrangements the owners of the released British ships would be enabled to earn the high freights and the taxpayer would only be relieved of the cost of employing British ships.
2. It should be pointed out that many parts of His Majesty's oversea dominions have been placed in serious difficulties owing to the general shortage of tonnage, and in some cases their produce is not in a position to pay the high freights which would divert to their ports some of the available shipping. We have endeavoured to meet these needs to some extent by sending ships under our control to those parts of His Majesty's dominions which we had reason to believe were being seriously inconvenienced by lack of shipping facilities.
We do not think, however, that either of these arguments would justify us in recommending that these detained ships should continue to be employed by the Crown in trade as at present. No altogether satisfactory machinery for their employment in this manner can readily be improvised, whereas if they were run for transport services in the manner proposed they would be worked by a department thoroughly conversant with the requirements of the case and organized for the Moreover, the Transport express purpose of handling ships in these services. Department find considerable discontent expressed among shipowners against their present practice of requisitioning British ships at schedule rates while detained ships continue to be run in trade by the Crown at the present high market rates.
With regard to the second point we have found more difficulty, but we think that it could be met satisfactorily if for every enemy ship taken up under the proposed arrangement the Transport Department would, wherever possible, release a requisitioned British ship formerly employed in the same trade as the enemy ship so taken. This would have the further advantage that it would result in releasing private ships to their proper owners, who could work them in the trade for which they were designed, and who would have the necessary organization ready to hand for employing them to the best advantage.
We think, however, that one exception should be made to the foregoing state- ment. Certain ships are being allocated for the carriage of wheat to the United Kingdom from British India, in accordance with the scheme sanctioned by His Majesty's Government, and we recommend that they should continue to be used for this purpose, under our management.
(b) Condemned Ships.-Various considerations arise in connexion with these ships to distinguish them from class (a).
1. These ships can be sold immediately, and will on sale probably find their way to the routes where they are most needed, thus being economically employed in trade without involving His Majesty's Government in any commercial undertaking.
The prizes when sold will go out into the general trade of the country, and firms who find themselves short of tonnage will thus have the opportunity of increasing their supply. The effect on the trade will be the same as that of releasing requisitioned ships, and the State will not retain valuable property locked up. Moreover, we are by no means certain that the gradual release of the requisitioned ships would make up for the general disappointment which must inevitably be caused by the withdrawal from sale of the prize ships, the distribution of which has long been eagerly expected by the shipping world. It may be argued that the firm which buys a prize ship would feel aggrieved if she was immediately requisi- tioned for Government service, but the chances of her being so taken are not more than those of any other British ship, and it is a contingency which might with a
APPENDIX A.-REPORTS.
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It would appear, therefore, that there is no little care be generally avoided. sufficient justification for transferring these ships to the Admiralty solely for the purpose of releasing British ships already requisitioned.
2. According to the ordinary procedure the ships will be put up for public auction and the net proceeds credited to the Prize Fund; to retain them and use them in the transport service would be to depreciate their value and reduce the amount they would fetch at auction.
Until the constitution of the Prize Fund is finally decided by His Majesty's Government it is difficult to indicate precisely what the financial effect of the proposed retention would be as regards the State. But whether the State alone, or the Navy alone, or both the State and the Navy, are interested in the prize receipts, there is an obvious advantage in being able to sell these vessels promptly so as to reap the full benefit of the good market and realize as large a sum as possible.
The Prize Fund or other separate interest could to some extent be protected by having the ships valued on an auction basis at the date of transfer and their The date of transfer value credited as suggested by the Transport Department. seems preferable to that of condemnation, which is that suggested in paragraph 6 of the Transport Department's proposals, and we understand that the Department It is, however, to be observed that this course have no objection to the former date. might in the majority of cases result in sales being indefinitely postponed, with the result that in the event of a fall in prices the State might prove the loser, either by the direct loss of the high price which might have been obtained or by having to make up to the Prize Fund or other separate interest the amount of the valuation Under these circumstances the Transport Depart made at the date of transfer. ment's proposal as to condemned ships does not appear to be a justifiable financial operation, since it seems likely to involve the State in loss, unless the amount saved on the hire of requisitioned British ships exceeds or equals that lost in respect of capital and interest by the postponement of sale.
3. The sale of all prize ships of any considerable value bas hitherto been confined to British subjects. At the present moment, after at least four months of discussion with the French Government, an arrangement is on the point of being concluded by the Foreign Office under which French citizens will be allowed to bid at all sales of prize ships. It is feared that the French Government may, with a certain amount of justice, feel aggrieved if, after they have been excluded from bidding throughout the time during which sales have been taking place, all sales are stopped by a decision of His Majesty's Government just when the arrangement admitting French nationals to participate has been concluded.
We are, however, informed by the Transport Department that they are carry- ing, in ships requisitioned by the Admiralty from British subjects, large quantities A statement of stores of stores for the account of the French Government. carried, which has been supplied to us by the Transport Department, is appended to this report (see Annexure B).
It is
It is stated, moreover, that the French Government have not to the full extent utilized their power to requisition French tonnage for transport purposes. also alleged that there are German ships now lying idle in French ports, but, so far as we have been able to ascertain, the number of enemy ships in the hands of the French Government is only about twelve; we have no definite information as to the extent to which these have been sold or utilized.
The argument is also put forward that, even if the Transport Department's proposals are adopted to the full, French citizens can still be allowed to bid when the ships are ultimately released by the Admiralty and put up for sale. Against this, however, it must be said that the demand for tonnage may not be equally great at that date and that the object of the French Government in the recent negotia- tions appears to have been to secure permission for its subjects to bid for British prizes now. Moreover, it is not certain that it would be possible at the close
of the war to put French citizens in the privileged position which they would occupy at present.
On the whole, therefore, after considering the various arguments on either side, we recommend that the Transport Department should take over only such prizes as possess some special quality rendering them particularly desirable vessels for transport purposes, and should not take over prizes solely in order to relieve British ships from requisition.