Italy’s shipping policy

«The Economist», 16 ottobre 1909, pp. 756-757

Turin, October 12

In a recent issue[1] the Economist criticised the Mercantile Marine Convention Bill, which proposed to give 22 million lire of shipping subsidies, nearly all to one company, named the Italian Lloyd. This Bill was defeated in July last, and the Government has now taken the bold step of dividing the services into three groups, one at Genoa, another at Palermo, and a third at Venice; and will invite biddings at a public auction on October 23rd, on the basis of a subsidy of 9,193,100 lire for the first group, 5,646,500 lire for the second group, and of 4,939,250 lire for the third group. The services will be allocated to the lowest bidders, after the approval of the Parliament to a new Bill embodying the results of the biddings.

In November next the Chambers will have to give their vote to another Bill, which is to continue the evil system of shipping bounties to Italian shipyards and shipowners. It is also probable that on this occasion strenuous efforts will be made by the interested circles to secure regulations which will shut off foreign competition in the transportation of Italian emigrants from and to Italian ports, and of coal, which is today carried almost wholly by English vessels to Italian ports, and which would be legally reserved, in part at least, to the Italian flag. The subject is, as one may see at once, of real importance to British shipowners, and well deserves some comment.

The shipping bounties had their origin in Italy in the law of December 5, 1885, but as the bounties were not extremely high, they failed to promote a large activity in the shipyards. The new ships launched under that law amounted to 8,797 tons a year from 1886 to 1889, grew to 22,412 tons a year from 1890 to 1893 by virtue of a rise in the freight rates, and fell to 7,097 tons from 1894 to 1896, when the freight rates again declined. As the bounties had failed to give a stimulus to shipyards, the new law of July 23, 1896, added a new bounty to navigation of 80 centimes per 1,000 miles, and per ton of gross gauge. The effects were truly marvellous. The new ships launched by Italian shipyards went on rising from 6,606 net tons in 1896 to 11,458 in 1897, 19,478 tons in 1898, 33,802 tons in 1899, and 51,476 in 1900. The expenditure by the Treasury rose rapidly and it was foreseen that in a few years it would touch the huge sum of 25 million lire a year. The bounties, which were ineffective when moderate, had become a growing menace to the Treasury when fixed at a rate that effectively encouraged shipbuilding. A new law of May 16, 1901 provided in great haste for a reduction of the bounties which had proved too potent. With a flagrant disregard for past promises (on the security of which the shipbuilder had invested considerable sums), the expenditure by the State Treasury was reduced to the maximum of 8 million lire a year; the navigation bounties granted by the 1896 law were suppressed for the new ships, and reserved to the ships registered before September 30, 1899, but were reduced from 80 cents to 45 cents for steamers, and 30 cents for sailing vessels. The old shipbuilding bounties were limited to a maximum of 40,000 tons a year.

From 1886 to 1908 the laws of 1885, 1896, and 1901 cost the Italian Exchequer a sum of 122,517,000 lire. That the results were practically nil may be seen from the fact that the mercantile fleet of Italy at December 31, 1908, numbered 4,701 sailing vessels of 453,324 net tons, and 626 steamers of 566,738 tons. The value of this whole fleet may be put at not over 300 million lire, so that the Exchequer will have paid from 1886 to 1888 over 122 million lire in shipping bounties, and over 420 million lire from 1862 to 1908 in subsidies to navigation companies, or 542 million lire in all; and the net result was that on December 31^st Italy had a mercantile fleet of a million net tons, and of a value of 300 million lire.

It is fair to add that after 1900 the progress in the mercantile marine of Italy was by no means inconsiderable, as may be seen in the following table:

One must observe, however, that the progress is not due to the bounty policy, but to two entirely different causes. One is the rise in the freight rates, which began after 1900, and has given great impulse to shipbuilding in all countries. The other is the extraordinary growth of Italian emigration to the United States, Argentina, and Brazil. The importance of this second and more potent cause may be gauged from the fact that the number of Italian emigrants to transoceanic countries had grown from 166,503 in 1900 to 511,935 in 1906, and the number of Italian returning to their native country from 80,570 to 156,273 in the same time. This great traffic, which yields 100,120 million lire a year, has provided plenty of employment for Italian and foreign vessels, and has given to shipowners a great stimulus to order new and more rapid steamers.

Hence, the Bill on shipping bounties which has been laid before Parliament is altogether unjustified. The Bill seeks to perpetuate the old bounties to shipbuilding and to revive in a new name the navigation bounties abolished by the law of 1901. The bounties on shipbuilding are to be as follows: 1) A customs duty restitution of 38 lire per gross ton to the hulls of steamers and of 20 lire to the hulls of sailing ships. The restitution is reduced by 10 per cent, if less than two-thirds of Italian made materials have been employed in the construction of the hull; 2) a construction bounty of 54 lire per gross ton to the metallic hulls of ships (not inferior to 400 gross ton of gauge if steamers and to 100 tons if sailers) if launched in the five years after the passing of the law, of 49 lire if launched in the second five years’ period, and of 44 lire if launched in the third five years’ period; to the timber hulls is to be given a bounty of 10 lire per gross ton; 3) a bounty of 15 lire per horse power to the motor machines and auxiliary apparatus; 4) a bounty of 12 lire per 100 kilograms to the boilers of motor machines; 5) a bounty of 13.50 per 100 kilograms to the other board engines. These bounties and duty restitutions are limited to a maximum of 40,000 tons of gross gauge per year.

The navigation bounties are to be as follows: 1) A yearly armament bounty of 4 lire per gross ton to steamers and 2 lire to sailing ships. To gain the bounty the ship will have to remain at sea for 300 days a year, and to navigate not less than 80 miles a day in the case of steamers and 30 miles in that of sailing vessels; 2) a yearly speed bounty for ships having a speed from 14 to 17 miles. The bounty gives 70 centimes per gross ton and per half knot above the 14 miles, and rises to 2 lire per half knot as the speed progresses up to 17 miles. The armament bounty and the speed bounty are reduced by 50 per cent, when a ship is ten years old and are to cease after the fifteenth year.

The navigation bounties are apparently given to foster the mercantile marine, but in reality will be entirely transferred from shipowners to the shipyards in the shape of an increased price for ships launched in Italy. Owing to the protectionist system the bounties will have to be divided between the shipyards and the iron and steel manufacturers, machinery makers, and naval engineers, who furnish the highly protected materials for shipbuilding. All these interests have constituted a potent, tariff-nursed trust, generally known as the gruppo siderurgico, to which the principal shipyards have in the end become affiliated. The trust will practically absorb the whole of the 8 million lire yearly paid in bounties by the Treasury, and nothing will be left to the mercantile marine. This piece of corrupt legislation the Italian Parliament is invited to approve, and probably will approve, as a means of fostering the national maritime industry!

The powerful interests which will have the benefit of the 22 million lire of subsidies to postal and commercial lines, and of the above 8 million lire of bounties, have conceived another and more ambitious plan of obtaining a monopoly of the rich emigrant traffic and of coal transportation. The existing commercial treaties are an obstacle to immediate legislation, but a campaign has been started in the Press to force the government to accept the exclusive principle in future commercial treaties. In the meantime a strenuous effort is being made to obtain regulations which, by skilful devices, shall prevent the foreign flag from carrying Italian emigrants. It is always possible to enact regulations which, while respecting in principle the equality of flags, are directed only against foreign flags, and a long list of these regulations has been recommended in the report of the Royal Commission on Maritime Services. As the emigrant traffic yields yearly some 100-120 million lire, and as the foreign flag participated in this traffic in to the extent of 47.9 per cent. (French flag 9.4 per cent., British 17.8, German 18.4, Austro-Hungarian 0.6, Spanish 1.7 per cent.), it is evident that the national mercantile marine would gain some 50-60 million lire annually. Similarly a monopoly in the transportation of coal, of which in Italy imported 8,452,320 tons (8,128,428 from Great Britain), would be a great boon to national shipowners. As the treaties of commerce stand in the way, it is proposed that the state Railway Administration, the Marine Department, and the other State Departments should in future carry all the coal they need by means of the Italian flag. Such a policy would undoubtedly inflict a great loss on poor emigrants and on the Departments, which will have to pay higher freights to the privileged Italian shipowners. But the emigrants are poor people whom poverty banishes from the mother country, and for whom no one cares, not even the Socialist M.P., as their votes are lost in the political struggles; while the enhanced cost of State railway service, &c, will hurt only the humble taxpayer, whose voice is practically unheard by all political parties. The democratic and Socialist Press is always clamouring for a great tax reform, which will never come, and meanwhile allows the present Protectionist system to continue undisturbed, and even to grow worse.