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.]

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