Can Our White Elephant Swim?

The taxpayers of Canada are maintaining a fleet of merchant ships. In Parliament, on the hustings, in the press, this fleet, the Canadian Mercantile Marine, has been the subject of much criticism. What does the taxpayer know about his ships?

NORMAN REILLY RAINE May 15 1926

Can Our White Elephant Swim?

The taxpayers of Canada are maintaining a fleet of merchant ships. In Parliament, on the hustings, in the press, this fleet, the Canadian Mercantile Marine, has been the subject of much criticism. What does the taxpayer know about his ships?

NORMAN REILLY RAINE May 15 1926

Can Our White Elephant Swim?

The taxpayers of Canada are maintaining a fleet of merchant ships. In Parliament, on the hustings, in the press, this fleet, the Canadian Mercantile Marine, has been the subject of much criticism. What does the taxpayer know about his ships?

NORMAN REILLY RAINE

NOT many moons ago, a young Canadian business man was having a holiday in the British West Indies. He enjoyed the balmy climate, the beat of surf on the coral, the whisper of alluring breezes through the palms and the quaint, half-indolent life of the inhabitants. But, being a business man as well as young, and combining acumen with imagination—a partnership not so lacking in the average Canadian as some of our national mallet-wielders would have us believe—he did not allow those tropic langours to close his eyes to the main chance; and when an idea came

to him he did not shoo it away because he was on a holiday. Instead, he prolonged his stay, and extended his wanderings through the island paradises of the Caribbean. Nature there was generous. She had endowed those favored climes with many things not given to the sterner zones. But there was one great lack, and our young Canadian proposed to remedy it. The natives did not

drink enough.

Upon his return to Canada several weeks later, the young man visited the officials of the Canadian Government Merchant Marine on St. James Street, Montreal.

“I am a manufacturer of aerated soft drinks,” he said, and after detailing some of his recent experiences in the West Indies, summarized as follows:

“There is a tremendous market, I am convinced, for my product among the islands. I have secured a number of merchants who will handle it if it can be carried to them. What can you do to help me out?”

“We maintain a regular service to the West Indies. Make up a sample case,” he promptly was told, “and we will see that it is delivered in good shape.”

The sample lot was despatched. The young man had studied his ground to good effect, for an order for ten cases followed. The shipments grew to one hundred cases and more. Then one cold, February day the young man again appeared at the offices of the fleet.

“I have an order for a full carload,” he said, “but this hard weather raises the devil with my stuff.

The bottles are liable to burst, and I don’t know quite what to do about it. Your ships are sailing from Halifax, Nova Scotia, now, and that means a long, cold rail haul.

My business associates tell me I am in for a hundred per cent, loss if I risk it.

What do you say?”

It doesn’t matter what the fleet officials said. But a few days later a specially heated Canadian National Railway car was speeding east for Halifax with that load of soft drinks bound for the Spanish Main. At Saint John it was necessary to divide the carload into two lots for shipment on different vessels.

Again special care was taken ■ under direction from the main office, the shipments were stowed, and they reached their destination without losing one bottle. Again the business increaseb, and a nice little sequel was the receipt by the Cana-

dian Government Merchant Marine of a letter from the young man’s firm, expressing appreciation of the service given and stating that without the aid and co-operation of the merchant fleet officials, it would have been impossible to build the trade in soft drinks from Canada to the West Indies, to the magnitude it has attained to-day. To the officials it was but one more demonstration ot the manner in which the much criticised merchant ships of

the Canadian people have helped to foster Canadian foreign trade.

A War Baby

' I 'HE man in the street—Barrington Street, St. Catherine Street, Yonge Street, Main Street, Granville Street, which is to say, from Halifax to Vancouver—is not the man to inform you as to the inception, development and duties of the Canadian Government Merchant Marine. He, generally speaking, doesn’t know anything about it, unless he is an exporting manufacturer or does business with rail or water transportation. He does know, however, that it comes in for periodic castigations at the hands of zealous politicians who inflate their ignorance of ships and shipping and foreign trade with party rancor, when no other important national issues offer themselves to the pillory.

The Canadian Government Merchant Marine was a war baby that grew into a Frankenstein monster which threatened to devour its parents, until they learned to curb it and to turn its strength into the ways of commercial usefulness, and the story of its development forms one of the unheralded epics of our national economic history. Certain facts in connection with the fleet must be comprehended, however, in order to gain a true perspec-

tive, and a certain amount of debris kicked out of the path so that the road to understanding will stretch out sharp and clear.

The government fleet at present consists of forty-eight cargo ships, forty-four of which are in active operation on

the sea lanes of the world. The other four are laid up. The vessels were built for and belong to the Canadian people, and all profits (if or when made) are returned to the federal treasury. Ever since the slumo of 1920 the fleet has been operating under what its critics love to refer to as an accumulating deficit, but which, more justly, might be described as a decreasing operating loss. That loss, in 1921, was $2,210,724. Each year since then, except in 1922, that loss has been cut down, until, for the year ending December 31st, 1924, the operating loss was $1,440,880. Figures for

1925 are not yet available, but indications point to a further large decrease, and it does not require an economic expert to foresee that, given normal shipping conditions in the next two or three years, the pendulum will swing back, and the fleet will show a profit.

The writer who attempts to reach his public across the barb-wire entanglements of figures invites defeat through a drop in reader interest, unless the figures are becomingly catch-phrased and captioned, or, better still, hint at a stench in Denmark. Well, here’s an attractive caption. It appeared in a recent edition of a large Canadian daily and duly was copied into the press of our Southern neighbor: “Boats That Cost Millions are Sold for a Song.” It was followed by text which accurately stated the names and building costs, paid by the Canadian public, of fifteen vessels of the Canadian Government Merchant Marine, and the prices at which some of them were sold.

Cost Sold For Canadian Miner 588,000 $100,000 Canadian Logger 704.000 100~000 Canadian Engineer 1,018000 50,000 Canadian Adventurri 717.000 40,000 Canadian Pathfinder 957,000 60,000 Canadian Sailor 690,000 40,000 Canadian Settler 98.5,000 140,008 Canadian Warrior 819,000 40,000 Canadian Trader. Canadian Sower and Canadian Signaller et from 8.600.000 to 0fl(i,fl0O and were sold for $40,000 each.

Looks bad, doesn’t it? Averaging the building cost of the three last at $700,000 each, the figures boil down to: Cost of

building, $8,573,000: selling price $680,000. That, on the surface, means a loss of nearly eight million dollars.

But there are certain factors, very definite and unpleasant factors, which, possibly because space is precious, the newspaper did not mention, but which govern a sale of this kind, and which still govern most of the vessels now in operation.

Built at Swollen Prices

npHE most import* ant is that the cost price does not, and never did, represent the normal commercial value of those vessels. They were built in wartime, at wartime prices, when British shipping to a total of hundreds of thousands of tonnage monthly was being sent to the ocean floor by German submarines: when Lloyd

George, at the top of a most capable pair of lungs was pleading for “Ships and more Ships!": when the fate of the British Empire hung in a precarious balance and shipping had to be produced with reckless disregard of cost. Shipyard owners fattened, and taxpayers the Empire over paid through the nose, and Canadians were no exception. It was a wild game while it lasted, and a costly one, and everything built for a wartime government purpose was inflated to a price at which a peacetime world would have shuddered Then the aftermath. The dogs of war dragged themselves to their kennels and Canada licked her wounds and gazed about her. Tied to her tail were the emergency-built-or-contracted-for vessels of the government merchant marine.

For the space of two years or so, conditions in oceangoing traffic held up fairly well, and the ships, capably managed by men who knew the sea-trading game inside out, showed a gratifying operating profit, despite the fact that many of the vessels were deplorable tubs at best. Then the toboggan. Canada owned the ships. They were consuming themselves with overhead and depreciation. Tonnage could hardly be given away, and certainly there ' were no buyers for them. Other countries were up against the same thing, only in greater measure. The writer remembers being in New York during that period, and seeing literally dozens of fine ships being taken to the boneyards to be scrapped or burned because there was no other way of getting rid of them. That was the situation, then, in 1921 and 192?, and from that period of terrible maritime depression the world has not yet fully recovered. All of which brings us back to the point that, judged at normal pre-and-post-war ship-building prices, the discrepancy between cost and selling price of the ships I have mentioned was not beyond reason.

Another factor, and a most important one, was this. Most of the vessels sold were small and woefully slow, yet they cost nearly as much to keep up and operate as other vessels of the fleet three and four times their size. They could never hope to show a profit on the trade routes which were being developed for their bigger sisters, and their disposal at any figure was real economy in the long run, and made for greater efficiency within the fleet that was left. It was worth paying a big premium to get rid of them, and no shipping man would dream of questioning the wisdom of the step.

A Formidable Problem

THE problem confronting the Government at the close ol hostilities was a formidable one. Sixty-three ocean-going vessels were being constructed in Canadian shipyards at Halifax and New Glasgow, N.S., Three Rivers and Montreal,

P.Q., Toronto, Midland, Collingwood and Port Arthur, Ont., and \ancouver and Prince Rupert,

B.C. They were destined, of course, to replace British shipping sunk in the Western Ocean and elsewhere, and had the war continued there would have been no difficulty in finding them cargoes and trade routes. The armistice blew these prearrangements sky-high, but that did not stop the vessels from pouring from the shipyards.

It was decided then to employ the ships in building up Canadian export trade. R. B.

Teakle, a Canadian born and educated in Quebec, with wide experience in shipping, represented the Allan Line in the United States. He accepted an invitation to return to Canada and take charge of the new fleet. There were ships but no crews, agents, or foreign representatives.

Over the fleet, as to-day, presided the same chairman and board of direc-

tors as the Canadian National Railways, but it had no shore business organization. Fortunately, at that time, there were two or three men in the offices of the railway with considerable and varied experience in transportation, and with vision sufficient to make provision for contingencies as yet unmet. These Teakle enrolled, and the work of putting the ships on an operating basis went swiftly forward. Captains, officers, and crews were found, somehow, by raking the docks and other waterfront environs of Canadian ports. Headquarters was established in Montreal, with a branch office in Vancouver.

With his knowledge of shipping, the general manager was able to make connections with agents in foreign countries, and wires and cables were kept red hot while these connections were solidified and made active. Still the ships poured in. Trade routes were considered, bearing in mind the profit of the future as well as of that time, and were decided upon. Within five days of her delivery, the first ship, the Canadian Voyageur as she so appropriately was named—was steaming out of Halifax with a general cargo, bound for the West Indies. During 1919, nineteen ships were delivered, officered, manned and sent

out to carry the house flag of the Canadian people to foreign ports, many of which had never before received Canadian merchandise carried in Canadian bottoms. The following year, twenty-five additional ships were completed and added to the fleet, and with the new routes in operation it then was possible to send a consignment of goods, in co-operation with the Canadian National Railways, from Halifax or any other Canadian point, completely around the globe, without it once passing out of the hands of the transport system owned by our Dominion. What had taken old, established shipping companies fifty years to build was accomplished by that small band of energetic Canadians in three years—a feat that has not been equalled, I think, in the maritime history of the world.

It is not amiss to mention that during these days of discouraging trade depression another formidable agency was at work combatting the adverse conditions, and

helping to keep Canada’s exports moving across the long sea lanes. The beautiful “Empress” ships of the Canadian Pacific were in continuous operation from the ports of the Dominion to Europe and the Orient, and the impression left upon people abroad that Canada still was carrying on, bore valuable fruit, in that

the confidence thus instilled moved foreign importers to order goods, knowing that they would be delivered according to contract. Business rivalry need not imply personal antagonism, and the C.P.R. and the C.G.M.M. worked as a powerful team, in pulling Canada out of the slough.

The Government ships were built, owned and manned so far as possible, by Canadians. They all carried the prefix “Canadian” to their names, and the people of China, of Manchuria, Japan, Straits Settlements, Ceylon, India, Lower Egypt, Australia, New Zealand, Tasmania, the South Seas, the West Indies, South and Central America got a new and more useful appreciation of what to many of them heretofore had been a geographical term. To-day, Canadian railroad ties stretch under twin rails across the Nubian Desert in Africa and through the Indian jungle. Canadian agricultural implements harvest the crops of the vast South American pampas. Canadian motor cars speed under the gum-tree lined highways of far-off Australia. Canadian goods are well and favorably known in the countries that border the Aegan and Mediterranean Seas. Copra and spices from the South

Sea Islands, eucalyptus oil from Tasmania, rabbit skins from New Zealand, fruit from the West Indies, the products of loom and factory and mill in the United Kingdom have been carried to all the wide-flung seaports of the world in Canadian ships.

Lumber Industry Helped

THE fleet built up the lumber and pulp paper industry on the British Columbia coast to a point never before reached. For countless centuries the forest wealth'of the province had lain dormant, except for a few| feeble scratches here and there. There was no means of getting the product to market before the advent of the government ships— because foreign shipowners refused to send their vessels up into the countless little bays-and channels of Vancouver Island, and the coast of the mainland bordering the Strait of Georgia and the Inside

Passage to Alaska. In co-operation with the lumber and paper interests a service to these points was instituted, first with small vessels, then with large ones. Mills were opened up and successfully operated all along the coast. Markets in Europe, the Orient and the Western American seaboard became available, and produced eager customers. Work was provided for large numbers, in the lumber camps and

paper mills, and the benefit to this Canadian industry must be reckoned in millions of dollars.

Before the advent of the fleet the Canadian Government annually paid to New Zealand a subsidy of $140,000, to carry Canadian exports to that country. To-day, by far the bulk of the commodities exchanged between the two Dominions is carried in Canadian bottoms, and the subsidy is, of course, wiped out. A similar instance might be cited concerning Newfoundland, between which country and Canada trade measurably has increased since the institution of a regular, cargo-carrying service.

With development on so colossal a scale in such a short time, it was inevitable that mistakes should occur. Some trade routes were not so profitable as had been anticipated—for it must be borne in mind that the ships were operating against the vessels of countries that had engaged in maritime commerce for centuries, and whose foreign connections had been established for generations. These rival firms intimately were acquainted with conditions in foreign countries; they knew the best time to bid for sugar in Cuba and rice in Saigon; they were on to all the little tricks of the trade’ regarding the peculiarities of port officials and customs regulations; yet despite these obstacles the Canadian fleet continued and improved. It cut in on the business of foreign ships in a way that made their owners sit up. When large consignments of case oils were being transported from the United States to Australasia they slipped in and almost monopolized the business, until it slackened off. When it was found that a trade route did not come up to expectations the ships on that run were withdrawn and other lines found for them.

In all this time it was necessary to contend against a serious obstacle that arose, not from foreign sources, but from within. It still confronts the ships and increasingly will, as time goes on. The reason is not flattering to our national pride, perhaps, but it must be faced squarely, whether we like it or not. All of the ships are Canadian built and, with the exception of four engines for the larger ships, which were made in Great Britain, all of their eiigines, accessories and fittings were manufactured and installed in Canada. They are not, generally speaking, as good as foreign built ships, and cannot be compared with the vessels of, say, the Cunard or Blue Funnel line, yet they must compete with the fast, well-equipped units of those and other companies. Our ships are seaworthy but, with a few—very few—exceptions, they are slow; and speed has a tremendous influence in the securing of profitable cargoes.

But this discouragement is not allowed to interfere with the work of squeezing the last ounce of efficiency from the fleet, and the steady decrease in operating deficit, coupled with the impetus given through the selling of the dead wood—the smaller, more costly to run, and slower vessels—has placed the government merchant marine this year in the most favorable position it has enjoyed since the great world shipping slump of nearly five years ago.

Manned by Canadians

SO FAR as can be accomplished, the vessels are manned by Canadians. There are no Lascars or Coolies employed, as in the great majority of cargo vessels engaged in beating the seas of the globe for trade. Wages, while not high, are greater than those prevailing in ships of the United Kingdom, and most foreign countries.

The vessels carry varied cargoes, which differ, of course, with the runs they are on. In conformity with the trade treaty between Canada and the British West Indies, a regular service is maintained between Canadian ports and the countries of the Caribbean. General merchandise, which includes motor cars, machinery, furniture and other output of our factories and farms, is exchanged for a return cargo of sugar, fruit, and other products of the islands. The slow speed of the vessels prevents effective competition in the fruit trade against certain United States companies with their fast, refrigerated steamers. These companies have almost monopolized the business for m?.ny years in North America. That is why 2,463,925 stems or bunches of bananas which entered Canada in 1924 came through United States ports. If the amplified treaty between Canada and the West Indies, now under discussion, is effected however, it is expected to divert most of this fruit business to Canadian ports direct. As it was, each government ship on the B.W.I. run carried home an average of one thousand cases per trip of citrous fruits such as lemons, oranges limes and grape fruit, which allow greater time margin. This trade formerly entered Canada via Boston and other United States ports.

Varied Cargoes

IT WOULD be almost impossible to A detail the cargoes carried by the government ships. Lumber, canned fish, rice milled in Vancouver and many other products of the Orients as well as Western Canada, are carried by the all-water route via the Panama Canal, from our Pacific coast to the Atlantic, and the output of our Eastern factories is transported in return. Dried fish and manufactures are conveyed to the British Isles. Grain in bulk also comes from the prairies, via Vancouver and Panama to Europe, thus effecting tremendous saving for the shippers on a long rail haul. Flour in bags, and bagged grain amounting to thousands of tons, have been transported to Asiatic countries, and porcelain insulators, automobiles, machinery, footwear, women’s garments and lingerie, tooth paste, soap, and hundreds of other lines to the Antipodes and South America. The rebuilding of Yokohama, Tokyo and other Japanese cities devastated by the earthquake and fire was due in large measure to the lumber carried out from British Columbia in Canadian Government ships.. The vessels entered the Atlantic Ocean cattle trade between Canada and the United Kingdom, carrying the beasts at twenty dollars a head, and have lost only nineteen head in two years. Any WTestern cattle man or shipper will tell you what that indicates.

The trade routes followed to-day by -these ships are as follows:

London and Antwerp from Vancouver, four ships.

United Kingdom ports from Vancouver, four ships.

Intercoastal serviced Vancouver -to Canadian. Atlantic ports via Panama, three ships.

London and Antwerp from Eastern Canada, five ships.

Cardiff and Swansea from Eastern Canada, four ships.

Eastern Canada to British West Indies, including two passenger carriers, seven ships.

Canada to Australia, seven ships.

Canada to New Zealand, four ships. Canada to Newfoundland, one lihip. Vancouver via ports to San Francisco, four ships.

Under charter, one ship.

These, with the four ships laid up, constitute the full fleet of the Canadian Government Merchant Marine.

These, then, are the vessels entrusted with carrying the commercial banner of the Dominion of Canada over the world. At the masthead flies the house flag, a pennant with the red, white and blue of the Union Jack, and carrying in the centre of it a circle containing an autumn-tinted maple leaf. Most of them are slow; nearly all are expensive to operate; and they are costing Canadians a large sum yearly, for which, on the surface, they cannot see adequate returns. What is there, then, to justify the supreme optimism of the hard-headed businessmen who run them for us?

The answer lies in the vastly improved balance of trade, and the buying power of the Canadian dollar in the markets of the world. Never before in our commercial history have exports so preponderated over foreign goods brought into this country. The ships have established communication with buyers all over the globe who heretofore had no means of knowing what Canada had to offer them. Other countries have bought, and bought increasingly, the products of Canadian industries. Supposing a vessel carrying Canadian manufactures abroad lost money on the voyage: it meant money out of our pockets,yours and mine. But those manufactures were produced by Canadian workmen, to whom employment was given. The profit to the manufacturers remained in Canada, and probably would not have been made, had the ships not been available to carry the goods.

The names of the vessels alone— the Canadian Pioneer, Canadian Conqueror, and so on—have inestimable value as advertising mediums, and supplement the efforts of Canadian Trade Commissioners abroad in their work of securing business for this country. Much of the work of these commissioners cannot be measured in actual dollars and cents. We cannot box their business-getting talks in a frame of figures, yet we do not doubt their usefulness on that account, nor grumble that Canadian manufacturers and the Dominion as a w'hole profit by their efforts, rather than the particular department at Ottawa which pays their salaries.

The home ports of the fleet are Canadian, and the great stores of food and supplies are bought in this country The ships consume hundreds of thousands of tons of Canadian coal annually. CanI adian shipyards and drydocks are given employment through repair work to the fleet. An army of dockside workers and stevedores is employed the year round, loading and discharging cargoes. Their wages, and those of the 1,400 or more men composing the personnel of the fleet, are paid and, for the most part, spent, in Canada. Only such repairs and supplies as imperatively are necessary, are secured abroad. These are items which the comparatively small population of this country cann„ot afford to disregard.

One Serious Handicap

CONSTANTLY officials of the fleet are asked by the press and others to reveal the names of their most profitable trade routes, when it should be obvious to all that to do so would be to play directly into the hands of their competitors. Yet the importunities continue, and considerable resentment is manifested when this information is withheld. They work Under a serious handicap, in that they have to answer for every move, not to one or a few masters, as with private shipping concerns, but to a nation. Initiative is hampered by the possibility that actions taken, which might involve expenditure without prospect of an immediate profit, will come under the fire of those who think that any government-owned enterprise, because it is government owned, cannot be efficient and economic, and therefore is legitimate game for their popguns.

The progress of more than half a century has been crammed into a few years by the builders of the Canadian Government Merchant Marine, and only now are the men and ships beginning to come into their own. Bit by bit they are shedding the encumbering burden of operating losses, and their future has never been so bright.