The British Tramp Shipping and the Government's Shipping Assistance Policies in the 1930s

Abstract

The British Shipping (Assistance) Act, 1935 had the following two implications. First, this Act constituted part of the series of the Government's rationalization programs in the 1930s for the sake of the old key industries such as iron and steel, coal or cotton industries. Second, the Act concretized the first comprehensive protection policies for the tramp shipping which was a highly cometitive section within the shippimg industry. In this article, it was confirmed at first on a statistical basis that the British tramp tonnage diminshed in the inter-war years ; then the reasons for this decline were examined with regard to both demand for and supply of tonnage. Through such an inquiry, it was affirmed that the British tramp shipping as a section of the shipping industry was on the decline in the long run. As expected, the earnings of tramp owners which had been extremely low throughout the 1920s were further worsened by the Great Depression. With a view to relieving the tramp sector from "being on the edge of bankruptcy," the Shipping Assistance Act came into force in 1935. The Act prescribed two policies, i. e., the payment of voyage subsidy tied up with the minimum freight scheme, on the one hand, and the scrap and build scheme, on the other. Although each policy contributed, to some degree, to mitigate the financial difficulties of tramp owners and to stimulate replacement of older vessels, it failed to relieve the British tramp shipping from "being declining." One of the reasons for this is that the aims of the two policies were incompatible with each other ; however, a more important reason is that the tramp owners reacted differently to the two policies. The voyage subsidy and the minimum freight scheme were welcomed by shipowners because these, regardless of their efficiency, would serve to preserve the existing tonnage; and therefore, even after the expiration of the subsidy Act in 1937, the minimum freight scheme was maintained as a voluntary scheme of cooperation among shipowners until the outbreak of World War II. On the other hand, shipowners took a half-hearted attitude to the scrap and build scheme because it aimed at the improvement of tramp fleet at the expense of less efficient vessels. With regard to replacement of older vessels, too, the British shipowners' response to technical innovation was rather slow in the sense that they preferred steam vessels to diesel vessels. These conservative managerial attiudes of the tramp owners constituted one, nevertheless most important, factor that perpetuated low margins in their shipping sector and induced the sector's decline over a long run.