sharply when the supply of bottoms is low. Therefore the policy of freight-rate control recently has been centered on tramp service. Furthermore, the cargo carried by liners consists largely of miscellaneous products which move regularly in package lots, while the tramp vessels carry bulk cargoes such as iron ore, coal, and lumber and their freight rates on these commodities are high in proportion to their value. This is especially true of iron ore and pig iron. On the high-grade ore from Lungyen, which is within fairly easy reach, the rail freight from the mine to Taku is 3.50 yen and the ocean freight from Taku to Yawata is 7 yen, or twice as much. Of the c. i. f. cost of 23.80 yen at Yawata, the rail freight represents about 15 percent and the ocean freight 29 percent. At Tayaoshan in central China the costs of mining ore and shipping to seaboard are extremely low, but the ocean freight represents 50 percent of the cost. The proportion for Indian pig iron is even higher, at nearly 60 percent. TRAMP FREIGHTS ARE IMPORTANT ELEMENT IN IMPORT PRICE STRUCTURE A similar condition exists for coal. The price of Kokkaido coal delivered at Yokohama or Tokyo is given by the Showa Coal Co. (a sales syndicate) at 21.39 yen, of which the ocean freight represents 30.3 percent. The freight charge on Kyushu coal is lower because shipping-operation conditions are better, the proportion being 23.4 percent of the price at Tokyo or Yokohama and 18.5 percent of that at Kobe or Osaka. Ocean transportation charges on coal from Chunghsing and Kailuan make up about 30 percent of the cost. The proportion of freight charges is higher of course when cargo is carried over long distances. Industrial salt, for instance, comes from three sources of supply that can be classified as "near sea," "quasidistant sea," and "distant sea," which are represented respectively by Chunglu or North China salt, Java salt, and African salt. The respective ratios of freight charges to delivered cost are 38.8, 52.4, and 73 percent. In the last instance about three-quarters of the cost consists of freight, and even though the proportion is reduced to 68.7 percent when the carriers are foreign vessels whose rates are lower, it is not surprising that consumers such as the manufacturers of alkali products and glass are seriously concerned. The proportion of the freight is 26 percent for North Saghalien lumber as against 52.9 percent for South Sea lumber. It also varies according to the kind of product, that for large and medium squares of Oregon pine being 39.5 percent, and that for lower priced uchikomi long logs being as high as about 67 percent. As tramps generally carry low-priced commodities in bulk, the freight constitutes a higher percentage of the cost, while the ratio for commodities carried by liners is relatively lower because the cargoes are more expensive and the freight rates are restricted. The ratios for Indian cotton and American cotton are respectively 4.1 and 3.8 percent and those for Australian and South African wool are as low as 2.1 and 2.2 percent, respectively. It is evident that the freight rates in tramp service are an important element in the price structure of imported commodities. Their percentages have been held in check since the China trouble, by means of autonomous measures taken by the ship operators; but as compared with June 1937 both the freight rates themselves and their ratio to the prices of commodities are considerably higher. HIGH COST OF SHIPBUILDING ADDS TO FREIGHT RATES A point to be considered is the high cost of shipbuilding. According to a mover made by the Marine Transporation Club, the cost of Constracting large-sized cargo vessels equipped with reciprocating engine, at its peak in 1999, was 25 percent over the year 1936, or thereabonte, add a gain of nearly 6 percent over 1938. When the adranos in the price of fuel and other operating expenses are taken into account, the cost of ocean transportation must be considerably Liter OUTLINE PLAN FOR PRICE CONTROL The "Outline Plan for Price Control" to which reference already Las been made includes the following items: official rates for cargo transportation, expansion of transportation capacity, adjustment of goods for transportation in terms of transportation capacity, and the integration of transport systems. Other measures also have been considered: Standard ship types have been adopted to reduce shipbuilding costs and raise the efficiency of construction facilities, and capital funds are to be provided at low interest to facilitate construction. The questions of improving shipping from the viewpoint of rates and supply have been taken up from the same standpoint, and this has made it necessary to extend official control even to the shipyards. In practice, moreover, it may be found necessary to introduce even more highly sectionalized forms of control, such as extending the new control organs to owners of oil tankers who now operate as outsiders. GOVERNMENT PROMULGATES MARINE TRANSPORTATION CONTROL ACT The Price-Control Ordinance freezing all official prices as of September 18, 1939, was made to apply to charter rates and near-seas freight rates, whereas through Government subsidization of the Nippon Yusen Kaisya, for example, it was possible to keep the overseas trans-Pacific conference rates at the Government-desired lower level, since any rate changes needed Government approval. On January 31, 1940, however, the Government promulgated through the "Official Gazette" Imperial Ordinance No. 38, entitled the "Marine Transportation Control Act." This ordinance was issued jointly by the Minister of Finance, the Minister of Overseas Affairs, and the Minister of Communications. The provisions with respect to freight rates are as follows: The Minister may fix the prices of ships, freight rates, and charterage. Prices of ships, freight rates, and charterage of the associations of shipowners, marine carriers, or shipbuilders designated by the Minister must be adhered to by the affiliated members and outsiders when approved by the Minister. The Minister of Communications may direct shipowners, or parties engaged in marine transportation, with respect to chartering of ships (including time chartering, the same applies hereafter) or navigation of ships. When an order referred to in the preceding paragraph is issued, parties concerned shall confer among themselves regarding charterage, navigation commission, and other matters. In case they are unable to come to an agreement or such conference cannot be conducted, these matters shall be dealt with according to decision of the Minister of Communications. With some exceptions, when the Minister of Communications has designated prices of ships, charges foi transportation by water, or charges for chartering ships, no contract or no payment exceeding the amounts thus fixed shall be made or accepted. Freight and charter rates were pegged at prevailing levels when the Price Control Ordinance was put into effect in September 1939. On that occasion it was stated that changes would be made from time to time. Shipowners subsequently demanded higher charter rates, and these were allowed by the Ministry of Communications in a notification No. 482 promulgated on March 1, 1940. The standard charterage rates for vessels over 1,000 gross tons on deep-sea routes are as follows: Standard 6-Months Charterage-Rates for Ordinary Reciprocating-engined In applying the foregoing standard rates, however, if the total charterage during one calendar month for one steamer is less than that for a steamer of less tonnage, the highest charterage for a steamer of less tonnage may be used as the total charterage for the steamer in question. Furthermore, consideration will be given in the case of steamers for special purposes, for example, oil tankers, passenger boats, floating canneries, etc. (2) Extra charges for new ships (excluding Diesels).-For new vessels (under 5 years of age) owners will be permitted to make extra charges not exceeding 20 percent of the standard rate. (3) Extra charges for new ships (with Diesel engines). For new vessels (under 5 years of age) owners will be permitted to make extra charges not exceeding 20 percent of the standard rate. For vessels over 5 years of age, owners will be permitted to make charges not exceeding 5 percent of the standard rate. (4) Extra charges for high-speed vessels. For ordinary vessels capable of a speed of more than 14 knots, owners may charge extra but not exceeding 30percent of the standard rate. (5) Method of assessing extra charges.--The extra charges listed in (2), (3), and (4) may not be assessed at the same time. (6) Additional charges against period.-(a) For periods of different lengths, but always shorter than 6 months, the maximum additional charge in charterage should not exceed 10 percent. (b) When a contract is concluded for a period of 6 months or longer, the rate of charge shall not exceed the standard rate for 6. months. (7) Extra charges for certain routes.-According to the zoning of routes, extra charges may be made for each gross ton on a per ton per month basis as follows: To the foregoing schedule which applies to coastwise shipping the following amounts are added for deep-sea shipping: Routes Extra charges First-class deep-sea routes (Australia, India, and North NETHERLANDS 0.25 0. 35 The Netherlands Government apparently did not find it necessary, upon the advent of war, directly to control or regulate ocean freight rates in its foreign trade. However, the Government closely watched ocean freight-rate developments, and it felt that through the application and adminis tration of other legislative acts already in existence, adequate control could be maintained. There are three laws which might be applied in this connection, particularly in case rates should become so high as to affect seriously the living conditions in the Netherlands. First, there are the "Ship Requisition Law, 1939," and the “Law Covering the Conservation of Cargo Space, 1939," the former being designed to require Netherlands shipowners and operators to place their ships at the disposal of the Government if necessary in the public interest, and the latter providing the Government with authority to prevent the foreign sale or use of Netherlands ships, or their operation outside of territorial waters, except under special license. In order to give the Government a survey of the available tonnage, article 5 of the "Ship Requisition Law, 1939," was placed in effect, and accordingly shipowners had to furnish the Government with statements of contracts concluded by them before such contracts had been executed. Thus, the Government could claim cargo space at any time should it be deemed necessary, presumably at rates and payments fixed by agreement between the Government and the operators. Naturally, the needs of the Government, as distinct from those of importers and consumers, were met in this manner, and the Government also purchased large quantities of supplies on its own account which later were utilized by the consuming public. The Law Covering the Conservation of Cargo Space, 1939," likewise could be utilized as a safeguard against prohibitive freight rates, in that obviously the Government would not permit the sale or transfer of tonnage to the extent that shortage would create a basis for increased rates. Second, the "Price-Forcing and Hoarding Law," passed originally in 1938, as one of the eight enabling acts for economic defense, and later extended, might be used to control rates. The Government constantly endeavored to ascertain the dividing line between reasonable prices—those prevailing before September 1939-and punishable increased prices, and good evidence had to be presented to indicate that price increases were attributable to reasonable causes. In this manner, undue freight rates could be subject to close Government scrutiny, although this law might be difficult to apply in this case since it related more to commodity prices than to services. As a matter of fact it does not appear that there was any occasion for the Netherland Government to take any action in respect of ocean freight rates, with the result that no precedent can be quoted. The result is that the Government concluded its own rates agreements with the shipping conference, and private shippers paid rates according to scales agreed upon by the ship operators. NEW ZEALAND Shortly after New Zealand's proclamation of a state of war on September 3, 1939, legislation was enacted on September 14, 1939, by the New Zealand Parliament giving to the Government wide powers over many phases of the Dominion's economic life. This statute was entitled the "Emergency Regulations Act." Paragraph 3 of the act empowered the Government to make regulations controlling prices. Paragraph 4 (1) (a) provided for regulations made under the act to apply to all ships in or registered in New Zealand. Previous to the date of enactment of the act, regulations to control the prices of commodities and services had been issued on September 1, 1939, as an Order-in-Council known as the Price Stabilization Emergency Regulations, 1939. These regulations were issued under the authority of the Public Safety Conservation Act of 1932 and a Proclamation of Emergency issued thereunder, which, however, limited their validity in point of time. Paragraph 5 of the Emergency Regulations Act, 1939, gave full validity to the Price Stabilization Emergency Regulations. The regulations broadly forbade any price increases for goods or services over those ruling on September 1, 1939, except with the consent of the Minister of Industries and Commerce, who was granted the power of judicial inquiry. This power in practice has been exercised through a Price Investigation Tribunal already in existence under previous legislation, the membership of which is appointed by the Government. Under the broad terms of the Emergency Regulations Act and the Price Stabilization Emergency Regulations, the tribunal has controlled freight rates on ships operating out of New Zealand ports. Prior to the enactment of the wartime legislation described above, ocean-freight-rate fixing was in the hands of private shipping conferences. However, the New Zealand Government was understood to have had the power to control freight rates from New Zealand on vessels carrying mail under subsidy from the Government. This power was granted expressly in the mail-subsidy contracts with the steamship companies concerned but is understood to have been rarely, if ever, used. The Government, moreover, negotiated contracts with British lines operating to the United Kingdom. It is reported that the New Zealand Government has not exercised its war emergency powers to alter existing freight rates but in two instances has modified proposed increases. Rates have increased since September 1, 1939. On the trans-Pacific service, the Canadian Australasian Line is reported to have advised the New Zealand Government that it proposed to raise all existing freight rates on its service from New Zealand to Canada by 20 percent. It is understood that the Government approved the proposed rate increases, which accordingly became effective in October 1939, on all ships of the Canadian Australasian Line. On the two trans-Tasman Sea services operating to Australia, general freight-rate increases of 20 percent were proposed by the two lines concerned. However, the Government permitted only a 10 percent increase which became effective in October 1939. On the other hand, the Government allowed a proposed increase of 20 percent in passenger rates to be advanced to 33% percent, which was later reduced by voluntary action of the steamship companies. Steamship lines operating from New Zealand to Europe increased their freight rates on both refrigerated and general cargo by 25 percent in September 1939, and this increase was raised to 50 percent in October. All of these lines operate only British-flag vessels, and nearly |