CHAPTER VI

AUSTRIA-HUNGARY

The Imperial Government of Austria-Hungary spurred by the action of Germany, instituted a direct subsidy system, also modelled after that of France, in 1893, when the Austrian merchant marine was languishing.[DD]

A postal subsidy had long been in operation, the subsidies being all awarded to a single steamship company--the Austrian Lloyd, earlier the Austro-Hungarian Lloyd. They were practically mileage and speed bounties,[DE] increasing with the extension of service. Ten-years' contracts were at first made with this company. The contracts, executed in 1888, particularly guarded domestic interests. In the purchase of materials it was required that preference be given to Austro-Hungarian industries. The coal used must be bought from Austro-Hungarian subjects in the proportion of two tons from Austria and one ton from Hungary, provided that "the price is not greater than foreign coal, and that the steam-producing power of the native coal is equal to at least eighty-four per cent of that of foreign coal." In the building and repairing of their ships, or parts of ships, and engines, the company must also favor home interests. Ships, engines, or boilers could be ordered abroad only with the consent of the foreign office when shown that the work cannot be made in Austria within proper time, or that the want can be supplied by a foreign country on more favorable terms.[DF]

By a law of July, 1891, the rates for mail-contract steamships were fixed as follows: for fast lines, making above ten knots, a maximum rate of seventy kreutzers per nautical mile; for slower lines, fifty kreutzers a mile. The total amount of mileage bounty payable each year was limited to two million nine hundred and ten thousand florins. But in addition to this bounty the Government agreed to pay the Suez Canal tolls. To encourage the Austrian Lloyd to build larger and swifter vessels the Government further agreed to advance the company one million and a half florins. This was to be furnished in three equal payments yearly (1891, 1892, 1893), and was to be repaid in five equal payments of three hundred thousand florins each, beginning in January, 1902. The company's ships were to be exempted from consular fees, "the same as vessels of the imperial navy"; and were to be at the disposal of the naval and military departments in case of war. All the officials of the company were to be Austrian subjects, "naval officers either active or retired to be given the preference"; and there was to be an administrative committee of eight members, the president appointed by the Emperor and two other members by the ministry of commerce, the intention of this provision being to give the Government control over the company's affairs.[DG]

The general subsidy law of 1893 (November 28) was the outcome of the deliberations of a special Parliamentary committee appointed that year; and its declared object, as set forth in this committee's report, was "to put a stop to the decline of our merchant fleet, to allow it to cope with foreign competition, and to secure for the inhabitants of our coast needed employment and profits in maritime pursuits."[DG] Three years before (1890), with the same object in view, a preliminary step had been taken in the exemption of all iron and steel steam and sailing ships from trading and income taxes while engaged in ocean voyages.[DG]

The law provided two classes of subsidies--a trade bounty and a navigation bounty. They were to go to all steamers and sailing-ships engaged in the deepseas trade or long-coasting trade, and not receiving mail subventions. At this time a large percentage of the Austrian steam tonnage was receiving the postal subsidies, and most of this tonnage was owned by the Austrian Lloyd Company.[DG] The trade bounty was for ships making long voyages; the navigation bounty for those engaged in coastwise voyaging. Ships entitled to the trade bounty were required to be owned at least two-thirds by Austrian subjects, to be not over fifteen years old, and registered A1 or A2. The rates were thus fixed: for the first year after launching, iron or steel steamers, six florins ($2.44) per ton, iron or steel sailing-ships, four florins and fifty kreutzers; wooden or composite (part iron) sailing-ships, three florins. After the first year the rate was to be reduced five per cent annually till the end of the fifteenth year. As an inducement to employ home work and to utilize home materials, the bounty was to be increased by ten per cent for iron or steel sailing-ships built in the Austrian ship-yards, and by twenty-five per cent if at least one-half of the materials used in the construction were of Austrian origin. If more than one year had elapsed since the launching of a ship otherwise entitled to a bounty, a deduction of fifteen per cent was to be made for each year that had passed. The navigation bounty was fixed at five kreutzers per net ton of capacity for every hundred nautical miles sailed. The exemption from the production and income taxes, granted in 1890, was extended for a term of five years from January 1, 1894. The law was to be in force for ten years.

As the end of the term of this law was approaching ship-owners began agitating for its renewal with an increase in the subsidy. Since its enactment the production of steam tonnage had been accelerated, and the decline of sail tonnage had been checked; but no marked change in the merchant marine generally had been manifest.[DH] Of the bounties paid the Austrian Lloyd had received a large share in behalf of their ships which were not directly under contract for the mail service. The remainder went to the various companies controlling the coast and river trade. The ten to twenty-five per cent addition to the trade bounty for ships built in domestic yards and from domestic materials, finally went for the most part to a single large building concern at Trieste. While most of the Austrian tonnage was yet of foreign build, mostly constructed in British yards, the increase in the proportion of domestic build was considerable after 1893. The greater part of the materials used was Austrian product. Consequently allied industries increased with this increased output of home ships.[DI]

At length in 1907 (February 23) a new law was enacted increasing the navigation and construction bounties. For the navigation subsidies, to go to shipowners according to the tonnage of the ships and the number of miles run, allotments were thus made: for the first year, $852,600; for 1908, $893,200; 1909, $954,100; 1910, $1,015,000; 1911, $1,075,000; and for the five years remaining of the term, of the law--which ends December 31, 1916--$1,136,800 a year. The construction subsidies were raised as follows: for ships launched after July 1, 1907: steamers built of iron and steel $8.12 per gross ton, sailing-ships of iron and steel, $2.84; for marine engines, boilers, pipes, and auxiliary apparatus, $1.62 per 220.46 pounds. To entitle a ship to these bounties fifty per cent of the materials used in its construction must be home product.[DJ]

This year (1907) also the annual postal subventions to the Austrian Lloyd were increased $1,486,586, for a further period of fifteen years. This contract called for an increase of speed to the Levant and the Orient. The Suez Canal tolls were to be paid by the Government as before.

* * * * *

The Kingdom of Hungary grants bounties to Hungarian ships, or ships owned in greater part by Hungarian subjects, independently of the Imperial Government. Her first general bounty law was also enacted in 1893 and was limited to ten years. The subsidies granted were of two classes--premium on purchase, and a mileage bounty. The purchase subsidy was based on net tonnage and was payable for a term of fifteen years from the date of the ship's launching, reduced each succeeding year by seven per cent; the mileage subsidy, for the same term, was in proportion to the length of the voyages made "in the interest of national commerce whether to or from Hungarian ports." The premiums on purchase were thus fixed for the first year: for vessels employed in long-distance coasting trade--sailing-ships, six krone (each 20 cents); steamers, nine krone per ton; employed in deep-sea trade,--sailing-ships, nine krone; steamers, twelve krone per ton. Iron or steel ships rated first class were entitled to these bounties. The mileage subsidy was fixed at five hellers per ton, per hundred nautical miles run. It was offered only for voyages "to places where no company in receipt of State subsidies is obliged to maintain regular communications;" and it was not to be given for "petty coasting trade."[DK]

This law was succeeded by an act of 1895 granting construction bounties, with the intent of fostering domestic shipping and the use of domestic material. The rates were proportioned according to the amount of foreign or domestic material used, construction with domestic product receiving the highest bounty. These rates were: for iron or steel hulls, thirty to sixty krone per ton; for wooden ships, ten to twenty-five krone per ton; for engines and auxiliary machinery, ten to fifteen krone per ton of materials used; for boilers and pipes, six to ten krone per ton of material. The total amount to be paid out yearly was limited to the modest figure of two hundred thousand krone ($40,600).[DL]

The law of 1895 in reality was not effective, for ships of the Hungarian merchant marine continued to be built in foreign parts--mainly in British yards;[DK] and while the carrying capacity had considerably increased, the tonnage had continued to decline.[DK] By 1904 the situation had become so unsatisfactory that, as the American consul at Budapest wrote, the passing of a new navigation-development law by Hungary's Parliament had, it was believed, become a pressing necessity.[DM]

* * * * *

In 1909 the Austrian Government guaranteed a maximum sum of one million crowns (approximating $200,000) annually to the Austro-American Shipping Company for their service between Trieste and Brazil and Argentine ports. Should the service tend successfully to promote home industries and agriculture, this subsidy was to be increased, the amount of increase to depend upon the amount of cargo carried in excess of a certain minimum. The contract was to run for fifteen years from January 1, 1910. The service, beginning with sailings three times a month, was to become weekly on January 1, 1911.[DN]

The total Austria-Hungary tonnage in 1910-11 was recorded at 779,029 tons.[DO]

FOOTNOTES:

[Footnote DD: Meeker.]

[Footnote DE: U.S. Con. Rept., Jan., 1890, no. 112, p. 95-96.]

[Footnote DF: U.S. Con. Repts., vol. XXXII, 1890, no. 112, pp. 23-24.]

[Footnote DG: Meeker.]

[Footnote DH: U.S. Con. Rept., no. 282, March, 1904, pp. 645-646.]

[Footnote DI: Meeker.]

[Footnote DJ: U.S. Con. Rept., no. 320, July, 1907, p. 180.]

[Footnote DK: Meeker.]

[Footnote DL: Meeker. Also Parl. papers, Com., 1909, no. 4, p. 8.]

[Footnote DM: U.S. Con. Rept., no. 283, April, 1904, p. 304.]

[Footnote DN: U.S. Con. Rept., no. 352, Jan., 1910, p. 45.]

[Footnote DO: Lloyd's Register, 1910-11.]