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The Philippine Islands. While the trade between the United States and the Philippine Islands is open to the ships of all nations, the coasting trade among the islands is generally reserved for American ships. I am informed, however, that regular Hong Kong steamers sometime secure licences to trade between island ports.
China. The coasting trade of China is largely in the hands of two strong British companies, the China Navigation Co. (Managers, Messrs. Butterfield and Swire) and the Indo-China Steam Navigation Co., Ltd. (Managers, Messrs. Jardine, Matheson & Co., Ltd.). The principal competition experienced before the war was from Japanese companies. In 1910 the proportion of the share of the Chinese coasting trade taken by British and Japanese companies was 39 per cent. and 14 per cent, respectively. In 1911 the British share was 40 per cent. and the Japanese had risen to 20 4 per cent Chinese competition was strong but tended to remain constant, while the German steamers on the Yangtse and Tsingtao runs were not remunerative, and their competition on the whole was not serious.
As an
Japanese competition, however, is undoubtedly a most serious menace. indication of the phenomenal increase in Japan's share of the shipping trade of the Far East, the amount of Japanese tonnage entered at Hong Kong may be taken as an index. In 1889 the amount was 95,000 tons. In 1915 the high-water mark was reached with 2,275,000 tons. In 1913 the British tonnage entered at the port was 6,200,000 tons, and in 1915, owing to the war, the figures declined to 5,700,000 tons.
The Japanese shipping companies operating on the China coast and the Yangtse river are almost all subsidised. The Nisshin Kisen Kaisha, which is the principal competitor on the Yangtse, received a subsidy of 53,7752. in 1915, and although in that year a dividend of 9 per cent. was paid, and a large sum placed to reserve, the record during the past years proves that without the subsidy the company could not have paid its way. The Japanese enjoy other advantages. With a much lower scale of salaries for their deck and engineer officers, they can run their ships at a lower cost than is possible for British shipowners, My attention has been called to the desirability that Board of Trade regulations affecting British steamers employed in the Far East should not be imposed without due regard being given to the special conditions and requirements of the trade. In this connection, special attention may be drawn to the regulations in respect of the Convention for the Safety of Life at Sea, signed in London on January 20th, 1914. These regulations were made primarily relating to the Atlantic passenger trade. The conditions of the passenger trade on the China coast are so different that the application of the proposed rules without modification would be a burden upon British shipping in the Far East. It is held that the experience of many years' trading on the China coast has not shown the need for further and more stringent regulations, and that any addition or alteration of existing regulations should not be made until after careful consideration of local conditions. The shipping companies in the Far East, broadly speaking, deprecate Government interference with their activities and are quite prepared to face the competition of the future relying upon their own experience and knowledge of the trade.
Japan. The coasting trade of Japan is closed to all foreign ships. British steamers calling at Japanese ports may load and discharge cargo consigned to or from foreign ports, but may not carry either passengers or cargo between Japanese ports.
Although, strictly speaking, the subject does not lie within the purview of this report, it appears desirable to raise the question of the very serious competition which is being experienced in the coasting trade between India, Burma and the Straits Settlements. This competition became serious a year or two before the outbreak of war, a rate war ensued between the British India Steam Navigation Company and the Nippon Yusen Kaisha, and the former company retaliated for the entry of the Japanese into the coasting trade of India by placing its steamers on the China and Japan run. The great strength of the Japanese in the trade is derived from their heavy purchases of cotton in India, which provide the ships with a sure and certain freight, and enable them to maintain a regular service. The Japanese mill-owners collectively arrange the rates of freight with the Japanese shipping company before each shipping season, and specially low rates are secured in return for a pledge to confine shipments to Japanese steamers. The British company complain that while they are excluded from the coasting trade of Japan, the latter country is seriously competing with them in the large and valuable interport trade in India.
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During the war, owing to the shortage of tonnage and the higher rates of freights, competition has increased to a serious extent. The British company has been unable to meet this competition, owing to the fact that fally haif its fleet has been requisitioned by the Government, and the company realises that while it is supporting the Government in every possible way in order to win the war, advantage is being taken of its disabilities by an Allied Power in order to secure a strong hold of its pormal trade. The company states:-
"Unless Government assistance is given to win back what we have lost, the Japanese may be permanently established in the coasting trade to the detriment of the interests of India. There is no doubt that the Japanese object in getting a foothold in the trade on the coast of India has a political end more than a commercial end in view, and the Directors would advocate such measures being taken as would altogether exclude them, after the war, from the trade between British Indian ports and generally between ports in the British Possessions in the East.
LL
The Japanese do not allow foreign tonnage to trade between ports in Japan, and they should not be allowed to trade between British ports. At the same time, it should be mentioned that the privilege to trade between Japanese ports would not be a quid pro quo for the privilege to trade between British India ports, as the trade between the former is negligible, whereas the trade between the British India ports is important."
This is obviously a question which should be referred to the Shipping Committee. From the point of view of British political interests and prestige in India, I am inclined to agree that the coasting trade between British India ports should be confined to British ships after the war. I would strongly commend this question to H.M. Government as being one which calls for early investigation and decision.
SECTION 10.- Review of the British Insurance Position in the Far East.
(a) FIRE INSURANCE. The whole future of fire insurance business in the Far East turns upon the agency question, and the desirability of British fire offices being free to accept any legitimate risks which they may care to take, and to appoint the most suitable agents in the countries served, irrespective of nationality.
The local agents in the Far East are usually merchant firms who carry on insurance business as an adjunct to their ordinary commercial transactions. The fire business influenced by these agents is largely connected with their own property and that of the traders with whom they have dealings, and, in places where German commercial interests have acquired considerable influence, British companies have frequently appointed German firms as agents, thus securing a business which they would otherwise not have obtained. This system of absolutely free intercourse with all nationalities, together with an active forward policy on the part of the companies themselves--who usually maintained managers and staffs in the Far East to supervise the work of the agents-has resulted in the British insurance offices holding a predominant position in the field.
While I am of opinion that agencies for British manufacturers should be held so far as possible by British merchants in the countries under review. I contend that insurance agencies should not be subject to any restrictions. The appointment of a leading German merchant as agent for a British company in an Eastern port does not, as a rule, affect the position or trade of the British merchants in that port, and results in that British company securing the premia on the German shipments which they would otherwise not have obtained. In most Eastern ports it is the custom for a large fire office to have two agents, and very often one of these is British and the other German or French as the case may be. In this way the trade of the port, whether in British or in foreign hands, is secured. This result could usually not have been obtained if the company had been restricted to the British house,
I therefore eutirely endorse the following statements of the Fire Offices Committee, and commend them to the attention of H.M. Government :
"The number of Geruan companies and their strength will naturally increase if the British companies refuse German business, and the refusal to appoint German agents will, under certain circumstances, be tantamount to refusing German business. The release of any mass of insurance business will, without doubt, result in the opening of agencies for German, Dutch, American,
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