*EARL GREYMy Fords, I beg to ask His Majesty's Government whether it is not the practice of the India Office to place all freights by public tender, and if the same practice is followed by the other Departments of His Majesty's Government.
§ THE UNDER SECRETARY OF STATE FOR WAR (The Earl of HARDWICKE)My Lords, as far as the India Office is concerned, I may state generally that all. freights of importance are advertised. The Admiralty is the only other Government Department concerned. All engagements for freights of Arms or Navy stores are made through the Admiralty shipping agents, Messrs. Hogg and Robinson, who are given a free hand as to the method of engagement, and who advertise their requirements at their office, 101 Feadenhall-street, and at the Shipping Exchange. This plan was adopted more than thirty years ago because it was found that formal tenders at headquarters led to difficulty and delay, as most of the shipments of Army and Navy stores which are destined for many ports are necessarily made in comparatively small consignments at frequent intervals in regularly-running ships. The practice has proved in every way satisfactory. The Crown Agents for the Colonies, whose shipments are very large, adopt a precisely similar plan.
*EARL GREYMy Lords, in moving for the Return which stands in my name on the Paper, I must ask the indulgence of the House while I make a few observations. From the statement which has just been made by the noble Lord it appears that while it is the general practice of the India Office to place all freight contracts by public tender the same practice does not obtain in respect of other Government freight contracts, which are only advertised in exceptional cases. Having looked very carefully into this question I have come to the conclusion that the practice of privately placing freight contracts for Government cargoes instead of placing them by public tender is most injurious to the public interest. I maintain, looking to South African experience, that the result of this practice has been, first of all, to impose an unnecessary burden upon the South African taxpayer; secondly, to increase the cost of living to the South African consumer; and, thirdly, which is the most important of all, to divert trade to Germany and America which would otherwise have remained in England. I should like to amend my Motion, so as to include Rhodesia, and if the Return is granted in that form, it will enable the House to compare the freight contracts of Rhodesia with those of other administrations in South Africa. In the case of Rhodesia the greatest trouble has been taken to secure fair contracts; and, owing to the strenuous efforts and business capacity of Mr. Jones, joint manager of the Chartered Company, the taxpayers of Rhodesia have paid a lower rate by at least 15s. per ton on Government goods and rails imported, as compared with taxpayers of the other British colonies in South Africa. Rut there are other and more important benefits that have been secured by the action of the Chartered Company. Not only have the Rhodesian taxpayers been relieved of an unnecessary tax, but the people themselves have shared the advantage of the low rates on all their imports. The power of placing Government cargoes, even to small amounts, is a powerful lever which can be used with great effect for the purpose of obtaining cheaper rates for ordinary merchants. If Rhodesia, with its comparatively small population of 15,000 whites, can, by the exercise of vigorous business methods, reduce the rates payable by the ordinary 1038 merchant on imported tonnage by a sum varying from 15s. to 45s. a ton, what are we to think of administrative methods which not only fail to secure fair freights for themselves, but support a system which imposes a charge of 10s. to £1 more than is necessary on all important tonnage.
It is well known that the German Government, in return for their steamship subsidies, secure the right to control freights, and they exercise that right in such a way as to secure favourable terms for the ordinary shipper in their subsidised steamers, which acts to the great disadvantage of British shipping. The patronage of Government cargoes operates in much the same way as the German subsidy that is to say, shipowners, in order to obtain these Government freights, are ready to make concessions in the matter of the freights charged to ordinary merchants. Your Lordships will therefore readily realise that the larger the volume of freights handled by the Government Departments, the greater is the leverage they can use to induce shipowners to reduce their rates to the public generally. When I state that the tonnage imported into South Africa amounts to something over 4,000,000 a year it will at once be seen that we are dealing with a large matter, and one of vital importance to our South African fellow subjects; and I contend that if the Government Departments of this country and the various Governments in South Africa, had adopted the methods so successfully employed by the Chartered Company, a. saving would have been effected of 10s., or at the least 5s., per ton, which, on 4,000,000 of tonnage, amounts to a sum considerably larger than the Transvaal has to pay as interest on its war contribution of £30,000,000. There is another consideration of even greater national importance. It is an elementary truism that the country which controls the trade routes of the world is at once the centre of monetary exchange and the seat of empire. Any action, therefore, which tends to divert a trade route from England to Germany and America is an act of the blackest disloyalty to the best interests of our country, and, having looked carefully into the whole subject, I not only deplore but condemn what I cannot describe by any less forcible term than 1039 the culpable inertia of our Government officials, which has been responsible for driving into Germany and America trade which ought to have remained in this country. Let me explain how the Conference lines have fought and often killed opposition by forfeiting the 10 per cent. rebates due to shippers who ship a single ton of cargo by non-Conference lines, and by charging them double rates on all future cargoes. By this device they have been able to keep for themselves the trade, and at their own rates, because British shippers naturally hesitate before they take any step, the effects of which would be to penalise them severely should they desire to ship their goods in the future by one of the Conference steamers. The English shippers who send their goods by the German lines on the East Coast are not thus terrorised, and thus a direct inducement is afforded to British shipper's to use German ships for the South African trade. On freights from New York a, different system is employed. To all shippers other than those who are already tied hand and foot to the Conference lines by the rebate system, they offer the advantage of a rate less than half the rates charged for the same class of goods from England, with the result that American manufacturers are supported and encouraged at the expense of our own employers and artizans. The Return I am asking for will show what support the Government have given to the competing lines. The interest of the South African taxpayer, the consumer', and British commerce, all demand that their opposition should be successful, and now that they have succeeded, through the support of the Chartered Company, and the people of Rhodesia, in compelling the Conference lines to reduce their rates to all South African ports, I trust His Majesty's Government will recognise their claim, other things being equal, to a fair share of the cargoes they control. I have to-day received a private communication from a firm of shipowners who for reasons which the House will appreciate do not wish their name to be made public, although I shall be glad to hand their communication to His Majesty's Government, in which they express the hope that the scope of the Return which I hope the House will grant, shall include cargoes sent to India and to all Crown Colonies. It appeal's that this firm, which, 1040 owing to the practice of the India Office in advertising for tenders has been able to secure continuous freight contracts of Government cargoes sent to India, has been unable to obtain a single freight contract of recent years to any of the Crown Colonies. This fact alone is sufficient to convince your Lordships of the importance of the enquiry I submit ought to be made, and I now have the honour to move for the Return.
Moved, "For a Return showing during the year 1902: (a) the total tonnage despatched by His Majesty's Government and the Governments of the Transvaal and the Orange River Colony to South Africa; (b) the ports to which this tonnage was despatched, and the tonnages carried to each port; (c) the average freight paid for the various classes of goods despatched to each port; (d) the names of the shipping companies employed and the tonnage dealt with by each company; and for similar Returns, if possible, in regard to the tonnages shipped by the Governments of Cape Colony, Natal, and Rhodesia."—(Earl Grey.)
*THE UNDER SECRETARY OF STATE FOR THE COLONIES (The Earl of ONSLOW)My Lords, this Return has often been asked for before, and it has been the subject of a Report from a Joint Committee of the directors of Army and Navy contracts, who held that it would be most undesirable that any departure should be made from the present practice of treating tenders for the Government freights as confidential. In view of the invariable refusal of this Return by different Governments, and the fact that its preparation would involve work scarcely commensurate with the object the noble Earl desires to attain, I cannot accede to the motion. These contracts are not entered into without very careful inquiry as to what competition there is in the market for freights. It is the practice of the broker of the Government to go into the freight market and announce what freight he has to send and to what port, and then to invite competition on the part of those who ship to the port. The noble Earl has claimed for the Rhodesian Company, of which he is a distinguished ornament, that it has succeeded not only in getting very low rates for the conveyance of 1041 the company's freight, but also low rates for the public. I desire to congratulate the noble Earl on the success which has attended the efforts of the agents of the British South Africa Company, and to assure him that, so far as the Governments of the Transvaal and of the Orange River Colony are concerned—and I include the Secretary of State for the Colonies, who is responsible to Parliament for these Governments—the intention is that the freight contracts shall not be arranged solely on the basis of what is cheapest for the Colonial Governments themselves, but also in the interests of the public who are shippers to South Africa. The Government are in negotiation both with the opposition and with the Conference lines. Every opportunity has been given to them respectively to offer to the Government and the people of South Africa the most favourable terms. The whole question is under the careful consideration of the Colonial Office, and I hope will be settled in a very short time. I do not think it would be possible to interfere with the discretion of the shipping companies as to rebates. The opposition line for which the noble Earl claims consideration on behalf of the Government also runs from America to South Africa. A circular letter addressed by one of its agents to merchants in New York says—
In entering on African trade this line begs to assure yon that it will at all times make rates that will enable the American manufacturers to compete with those of Europe.In the face of a circular of that kind any claim for that company on the ground of special patriotism may be allowed to stand aside. But the Government will be guided by considerations of what is best and cheapest both for the Government and for the public—the merchants as well as the people of South Africa—in placing the large amount of freights that will shortly be at their disposal. During the present year they may not amount to more than 60,000'or 70,000 tons for the Transvaal and Orange River Colony; but as soon as the Transvaal loan has been successfully floated, the proceeds will be applied to the purchase of large quantities of material for railway lines and rolling stock for South Africa, and the Government will take care to give 1042 their patronage only to those lines which will carry their freight at reasonable rates and give reasonable rates to the public as well.
*EARL GREYDo I understand the noble Earl to say that the freight offers will in future be posted so as to be open to the inspection of shipowners?
*THE EARL OF ONSLOWI did not say anything about their being posted. What I said was that they were entrusted to the Government broker, and that he went round to the representatives of the shipowners and invited tenders from them in competition. That is the practice which has been observed in the past and which will be followed in the future.
*EARL GREYThe practice of the Government brokergoing round to selected shipowners docs not lead to free and open competition. The India Office freight offers are posted.
*THE EARL OF ONSLOWI am afraid I cannot undertake that the Colonial Office will follow the practice of any other office.
*EARL GREYI regard the answer of the noble Earl as so unsatisfactory that I must put the House to the trouble of dividing.
§ EARL SPENCERI doubt whether it is desirable that your Lordships should divide on the subject this evening. I do not want to take part one way or the other, but I think a prima fade case has been made out for the Return. Possibly time will be taken by the Government for reconsideration.
§ THE FIRST LORD OF THE ADMIRALTY (The Earl of SELBORNE)The objection to the granting of the Return is not on the score of the labour it would involve. In the opinion of the Government it would be against the interest of the public if these Returns were made. The Transport Department of the Admiralty, as to the efficiency of which all are agreed, have stated most distinctly that in their opinion it would be against the public interest to make these Returns, and that the consequence of making them would be that the public would get worse terms in the future than they have got in the past.
§ On Question, Motion negatived.