Coal Transport Monopoly between English and Italian Ports – State Railways

«The Economist»,18 febbraio 1911, pp. 333-334

Turin, February 10

The Italian Government is endeavouring to find new means of protecting the national shipowners against foreign competition, as the old methods of fixed subventions and navigation premiums are more or less discredited. The old subventions and premiums are to be almost entirely maintained, and so the squandering of public money, which characterise any such protection to the merchant navy is to be increased still further. A sum of 500,000 lire is to be spent for the inauguration of the “Credito Navale”. This institution will help to pay the interest due from shipowners to special banking institutions which encourage shipbuilding. The encouragement of shipbuilding by State-aided credit is likely to provoke irrational building. Adventurers will be tempted by the low interest at which the necessary capital can be obtained at the taxpayers’ expense.

The second new method of encouraging shipbuilding and navigation in Italy is to be a partial monopoly for the Italian flag in the coal transport between Great Britain and Italy. Our statistics give the following figures for coal imports into Italy:

As 95 per cent, of the coal imported into Italy is from Great Britain, the Government schemes relating to coal transport touch the British shipowners very closely. Already in 1885 a premium of 1 lira per ton carried had been promised to coal transports bearing the national flag; but, as no results followed, the premiums were abolished by a law of 1895. The present proposals will not touch general traffic, which will remain free to all flags. The Italian coal vessels will have the privilege of transporting a part of the coal necessary to State railways and to the Royal navy. The Government agree to contract exclusively with Italian companies the transport of 600,000 tons annually for the State railways and 100,000 tons for the Royal (war) navy. The contract will last ten years. The freight is fixed for the first five years at lire 8.50 (6s lOd) from any of the English ports of Cardiff, Penarth, Barry, Port Talbot, Newport (Alexandra Docks), to any of the Italian ports of Maddalena, Savona, Genova, Spezia, Livorno, Civitavecchia, Gaeta, Napoli, Torre Annunziata, Palermo, Taranto, Brindisi, Ancona, and Venezia. The freight for the second five years will be fixed on the basis of the mean freights resulting from Cardiff freights-bulletins and from the freights paid by the State railways administration for the transport of coal exceeding the 600,000 tons reserved to Italian carriers.

The privileged companies are to be administered by Italian citizens; the ships are to carry the Italian flag, and to be inscribed in the Italian National Register. Eight steamships will have to be built in Italy after the passing of the law; their designs must be approved by the Marine Department, which will insure that the ships are adapted to the transport of coal and naftatine. The building of these eight ships is to be reserved to Italian shipbuilders, provided that the price tendered is not more than 7 per cent, over the mean price tendered by six first-rate shipbuilding English firms, exclusive of the lowest and of the highest price. The ships are liable to requisition for the use of the navy in the State interest or for some public necessity; in this case an indemnity will be paid. As a compensation for their obligations the companies will receive, in addition to the freights as above determined, a sum of 300,000 lire annually, to be distributed amongst them in proportion to the coal carried.

A few observations will suffice. Any privilege of coal transport, however limited to transport on behalf of State railways and Royal Navy, is an infringement of the international treaties of navigation between Great Britain and Italy. The English Government should study the situation with great care, and make the necessary diplomatic representations to the Italian Government. Should it succeed in its remonstrances, the English Government will have saved a round sum of money for Italian taxpayers, and will have benefited the genuine interest of Italian industry. We Italians can gain nothing from fostering a commercial fleet which will prosper only at the expense of the taxpayers, and will hasten the financial ruin of the State railways. The net profit of the railways is rapidly dwindling, and one of the main causes of this wreck is the high price they are forced to pay for all their necessities. Cars, locomotives, rails are to be bought from Italian makers at prices greatly enhanced by privileges granted by law. At the beginning the contracts had to be granted to Italian makers provided that the price tendered did not exceed by more than 5 per cent, the lowest price tendered by a foreign firm. Afterwards the comparison was made with the mean of foreign firms; recently in the making of the mean foreign price, the highest and lowest tenders were excluded. The interested circles are clamouring to have the limit raised from 5 to 7 per cent., and to exclude all foreign tenders which do not appear to be fair to bureaucracy. If we are to add to these protectionist measures the privilege of coal transport granted to Italian vessels, we shall foster an artificial industry which will from time to time clamour for the progressive raising of their fixed freights above the level of competitive rates. Advocates of State-owned railways should pay a lengthy visit to Italy and watch the consequences of State administration. Great cost, increasing confusion, utter indiscipline amongst the railway servants, and gigantic squandering of public money to car, locomotive, and rail makers.