9 - Reconstruction and Change

Summary

The Transition from War to Peace

The official attitude towards decontrol was expressed by the Shipping Controller on the day after the armistice was signed, and this made it clear that requisitioning was to be ended as quickly as was compatible with the maintenance of essential services. The removal of restrictions on navigation and the ending of the convoy system gave an immediate increase to the efficiency of the existing ships, and new tonnage was rapidly replacing the 7,759,000 gross tons lost during the war. It was arranged that after 1 March 1919 those privately owned ships that were not required for special purposes would be released from requisition as soon as they returned to the United Kingdom, and the transfer from war duty to the import service proceeded quite quickly although the obligations to our allies remained high. The ending of the Liner Requisition Scheme on 15 February 1919 was a further step towards commercial freedom, but all vessels remained subject to licence and the government retained a certain amount of cargo space. The difficulties of re-starting normal trade with Europe meant that most sources of supply continued to require lengthy voyages. To this must be added the problems caused by port congestion and railway dislocation, and altogether the annual carrying power of the existing tonnage fell by thirty to forty percent as compared with 1913. All of these difficulties were, of course, to be anticipated and were gradually overcome, but their immediate effect was to inflate freight rates - and thus shipping prices - to still higher levels.

Unfortunately for British owners, most of their vessels were subject throughout 1919 to the limited rates permitted by the Shipping Controller. They did not therefore enjoy the huge increases obtained by many neutral owners although the free space on the liner routes did receive the market rate. Freights continued to rise until March 1920, when the Budget increased Excess Profits Duty from forty percent to sixty percent. Rates then commenced to decline and with the construction of surplus tonnage and the ending of port, railway and financial bottlenecks, the fall became catastrophic. The government was then able to secure ships on the open market at less than the “limited” rates they had formerly paid, and all licences and freight restrictions were ended in July.