The main purpose of this Bill is to give effect in permanent legislation to the provisions of a number of Emergency Powers Orders. These Orders were made during the war in connection with the establishment of Irish Shipping Limited, and to meet various difficulties that arose from time to time in its operations. These Orders were continued in the Supplies and Services Act, but at some stage that Act will cease to operate and it is desirable that the Orders should be placed in permanent legislation in accordance with the general policy of the Government. The only important new provision in the Bill is that it enables an increase to be made in the company's capital. The capital at present is out of all relation to the company's assets. It has an authorised capital of £200,000, all of which is held by the Minister for Finance except the qualifying shares held by directors.
The assets of the company now run into several million pounds, and it is proposed to increase the capital to £5,000,000. It is not contemplated that the company will require new capital at present. They have very substantial reserves and it is from these reserves that they are financing the provision of new tonnage. They were built up during the war largely out of their marine insurance operations. These tonnage replacement reserves are now being expended in the purchase of seven new ships, on order, three of 9,000 tons dead weight, two of 7,500 tons dead weight and two of 2,000 tons dead weight. There are further assets available to the company from which they can get new tonnage if required. It is contemplated not merely as being desirable to relate the capital of the company more closely to the assets, but it is contemplated that a stage may come when the development of the activities of the company will require it to obtain new capital.
It is possible that it will be regarded as desirable that the company should consider the possibilities of the cross-Channel trade. At present it is engaged entirely on deep-sea operations, but if it should be regarded as desirable that the company should enter the cross-Channel trade, or if it should propose to extend its deep-sea operations considerably beyond present plans, then further capital would be needed.
The Bill provides for the payment of subsidies to the company. At present it is operating at competitive rates, and doing so profitably, and there is no prospect that subsidies will be required. There is power to pay subsidies under the Emergency Powers Order, although it was never utilised. I think it is desirable to maintain that provision in the Bill as an intimation that the Government intends to support this company to the limit. It may be that circumstances which existed before the war will reappear, and that other companies engaged in the same trades as this company, will be inclined to cut freights or adopt other unfair tactics for the purpose of driving it out of business.
I think it is desirable to have notice given here, that they are up not merely against this company but the Government of the State, that we regard it as of essential national interest that we should develop the merchant shipping service and keep it in existence. We hope that all countries will agree to maintain competition in shipping on a basis of fair trading, but if other Governments resort to subsidising, or if other companies adopt methods which are capable of being described as unfair, then we will have to consider what support this company may require in order to ensure its continued existence and to maintain its operations.
At the present time all countries which are operating shipping on the routes upon which this company is engaged are subscribing to the general principle of fair competition without subsidies, without price cutting, without any national regulations designed to favour ships of a particular flag in preference to others. How long these good resolutions will last it is difficult to say, if a touch of depression comes.
I want to explain the reference to subsidies as indicating merely a declaration of the intention to support the company if necessary, and not as representing any present intention of doing so. Of course no money exists to pay subsidies and would not be available unless voted by the Dáil. There is also power to guarantee borrowing. It is clear from the financial position of the company that it will not have recourse to borrowing for any purpose in the near future. The proposal is to give power to guarantee borrowings by the company to enable it to get credit more readily and on more reasonable terms than might otherwise be possible. The company is a very interesting illustration of successful State enterprise which will gladden the heart of Senator Duffy. It was of course formed during the war, and for a time it charged high freights. These freights which were fixed provisionally in the early stages, were progressively reduced until very shortly after the company beginning operations they were fully competitive with freights charged by other companies on the same routes. Their freights are still fully competitive and any business which the company gets is in competition.
There is no preferential system or any obligation on Irish merchants to use these ships. We hope they will have the good sense to do so, even if they can get an occasional cut freight from other competitive lines because it is as much in their interest as anyone else's to keep the company in operation. I want it to be quite clear that it is operating on the basis of free competition with all comers, charging competitive freights, and getting whatever business it gets from the suitability of the service it renders.
At a stage during the war the company went into the marine insurance business very largely to meet a difficulty which could not be otherwise overcome. Senators will remember that during the war we imported goods from South America via Lisbon. Neutral ships were running from South America to Lisbon, but they would not come beyond Lisbon, or to any port in this country. We arranged there a sort of supply channel by which goods were brought to Lisbon and stored there until shipped into Irish ports in small ships, a very large number of which we lost in this operation. Because of the fact that the flow of goods into Lisbon was often much stronger than the flow out to this country, supplies began to accumulate there during the war and at one period traders could not get the necessary war risk cover for those goods. Insurance companies in Great Britain and elsewhere feared that the German forces might enter the Iberian peninsula and consequently it became impossible to effect insurance against the risk of storing the goods in Lisbon. There was a danger that this would cut that supply line to this country because traders naturally would not incur the risk of having goods at Lisbon that were uninsured. Consequently, Irish shipping, having an interest in the matter, went into the business itself and said: "We will insure you against storing those goods in Lisbon." As you know, the Iberian peninsula was never invaded and the premium income to the company from this business was all profit. The risk never materialised. Having tasted success in this matter, the company began to realise that it was paying in war risk insurance on its own ships a fantastic rate to Lloyds and other marine insuring organisations. They decided to take the risk themselves on their own ships and on other ships too. Not merely did they offer this insurance at competitive rates, but at substantially reduced rates and they forced all other marine insurance corporations to bring down their rates.
Although nobody was compelled to insure with Irish Shipping, it can be claimed that the company saved Irish merchants millions of pounds by expanding its business into war risks. It built up a very profitable trade at competitive rates, but a stage was reached, however, when it was considered undesirable that the company should remain in the marine insurance business and so it disposed of that section of its business to the Insurance Corporation of Ireland and now holds a substantial block of shares in that company. As a result of its pioneer work, a substantial marine underwriting business has been developed in this country which has now a substantial and rapidly growing premium income from abroad. It was very largely through its insurance business that the company was able to build up the reserve funds which it is now using to purchase tonnage. The company had a fortunate experience, although two ships sailing under its flag were lost, but they were under contract which provided that they must be insured in the United States of America. It was necessary for the working of the company that there should be sufficient repair facilities available. The Dublin ship repairing facilities were fully employed and it was found desirable in view of the increased tonnage to extend the ship repairing facilities in the country. It promoted, therefore, a subsidiary company which operated Cork dockyard and it is still in operation. It was necessary that there should be adequate facilities at all stages to ensure that the company's ships would be kept afloat and that repairs would be done with the least possible delay, for delay at that period might have been very critical for us. In addition, therefore, to its major interest of operating shipping, the company has investments. It has investments in the Insurance Corporation of Ireland in consideration of the transfer of its marine insurance business. It also has investments in the Cork Dockyard Company, of which it owns all the capital. As I explained already, there is nothing very new in the Bill. All the powers it confers and the provisions it makes are covered by existing emergency powers Orders, with the one exception —the section dealing with increasing the capital of the company. I doubt if there is any other matter to which it is necessary for me to refer at this stage.
