We examined this question and we presented two reports, an interim report and a final report. The interim report dealt with a special and urgent point. The Commonwealth Government Line represented to us that those who shipped with them had on a number of occasions been penalised by the Conference Lines by having their goods tendered for shipment refused, even though the ship had sailed not full-practically refused on the ground of what is technically called disloyalty. You see, that goes beyond merely refusing to pay up the deferred rebate; you boycott a particular shipper because he has shipped with your competitor. Lord Inchcape was before us giving evidence and we put this point to him, and he, with great emphasis, said, that no line he was connected with would do such a thing. We came to the conclusion that it had been done, but that in all probability it had been done by the zealous action of subordinates, and therefore I was authorised by the Committee to communicate with Lord Inchcape calling his attention to the evidence which he had given, informing him that it was our intention to examine any case of such boycotting that in future came before us, and asking him whether he could enlist the assistance of the Australian and New Zealand conferences in the event of our having to make such an enquiry.

Lord Inchcape called meetings of the two conferences and replied that the conferences would give us assistance, and the result was that we were able to report to Mr. Hughes-then Prime Minister in Australia-in our interim report, that should such a case occur again we would investigate it and that we had been promised the help of the Shipping Lines themselves. From that day to this no such case has been brought to our attention.

A Quasi-Monopoly Essential in the Case of Liners.

The

We were then free to go on to consider the main question of rebates, which are illegal, of course, in various portions of the Empire, and which, in the main, affect only the outward trade from this country to other portions of the Empire. Committee came to the unanimous conclusion that in the case of liners-and this matter does not touch tramps-a quasimonopoly, if I may be allowed to use the phrase, was essential to the maintenance of a permanent and healthy service. A railway has a physical monopoly except at certain points where it comes into competition with other railways, and when a Government gives statutory powers to construct a railway it is, within limits, granting a monopoly. Now, from its very nature, no traffic on the ocean can have a physical monopoly. The shipping of any country is free to come and cut in, to stand for business, at any port to which it is admitted; but a shipping line, a regular line of steamers, if it is to render the services that are expected of it, must put steamers on the berth regularly, in the slack season as well as in the good season, and must sail at the advertised date, full or empty. It is quite obvious, therefore, that the whole year's business. must be the economic unit of liner business. If that is not so, then at the time of harvest the tramps will come in, will take the cream of the business, and will leave the liners to deal with the slack season.

On such a basis, no liner company can possibly survive in the long run, and therefore, though it was against the may I use the expression-prejudice of a number of the members of the Imperial Shipping Committee, having heard all the evidence, having weighed up the whole position, they came to the conclusion that a certain quasi-monopoly was essential, and that, given the fluid conditions of the ocean and the unity of the ocean, that could only be arrived. at by some tie of some description between the shipper who wished to ship parcels at any time by the liners and the owners of the line.

Now, may I say at once that as between the North Atlantic and all the rest of the ocean there is a great distinction to be drawn. In the case of the North Atlantic your shipping is plying between two vast communities, and both of them wealthy communities. Take the United States and Canada, on the one side, with 120 million people, and Europe, on the other side, with 300 or 400 million people. Many things can be done on the North Atlantic which cannot be done in the rest of the world, and what I am now saying would be subject to very considerable exceptions if you were thinking of the North Atlantic.

The Tie of "Loyalty."

As regards the rest of the world, we arrived at the conclusion that a certain tie-it is technically called of "loyalty"-was essential between the shipping line and the shipping communities which it served. But the deferred rebate was not the only possible tie, and we had brought to our notice a practice which had recently arisen in South Africa. There the granting of a deferred rebate has for some time past been made illegal, but a tie had been established between the merchant and producing community and the shipping lines by means of an agreement.

Instead of having the promise of a rebate to be paid to you after a certain period of deferment, provided you are loyal in the meantime, there was substituted an agreement whereby you sign a contract to remain loyal to the companies, and to ship, with certain exceptions, with the companies belonging to the Conference under the penalty of liquidated damages. So that there are two possible sanctions for loyalty. On the one hand is the promise of a rebate which you will forfeit if you are not loyal; on the other hand is the payment of damages if you fail to act up to your agreement to be loyal.

Optional System of Rebates or Agreement Recommended.

We took careful evidence in regard to the South African practice. The shipowners were very tenacious, and we finally came to the conclusion that in view especially of the nugatory character of the recommendations of the Royal Commission, we would recommend the experiment of allowing an option, so that, on a given trade, shippers would have an option of whether they would commit themselves to the liner service which was catering for them by an agreement or by the system of deferred rebates.

Danger of Rate War Averted.

Well, Sir, our report was drawn up unanimously and was despatched to the Prime Ministers. We allow normally six weeks in order that the report may reach New Zealand, the most distant of the Dominions, before it becomes public. In that six weeks, one morning I read my newspaper at breakfast and I found that the Commonwealth Government Line had suddenly cut its rates, and that it was expected that within another day or two the Conference Lines would reply with a still more drastic cut; in other words, we were probably in for a rate war. This was in the middle of last winter. I at once felt that since these two parties had been before us, and, indeed, were represented within the Imperial Shipping Committee itself, the position had an element of the ludicrous in it, and, in any case, was most undesirable. There was no time to be lost; issue had not been joined; that is to say, Conference Lines had not replied by cutting their rates. I therefore at once, got on to the telephone and asked the two parties if they would meet me. I subsequently had condonation from the Imperial Shipping Committee. Well, Gentlemen, when they met I found that the issue between them was in regard to the detailed application to the Australian trade of the general principles that we had come to. My hope was to get a truce, and I trusted that if I could get a truce the publication of our report would put such public pressure on the two interests that such a rate war would be impossible.

We sat for four hours, the ice was very hard and cold to begin with, but gradually the thaw came on, and finally the ice broke up and we achieved not a truce but a peace.

The other day, knowing that I was to speak to you, I thought it would be interesting to obtain from the two parties who are now friends, a statement of the present position, and I will read a letter which has been addressed to me by Sir Kenneth Anderson, the Chairman of the Orient Line, on behalf of the Conference Lines, and Mr. Eva, who is the representative in London of the Commonwealth Line.

"Dear Sir Halford,

"In reply to the question you have addressed to us, we are glad to say that the optional system of rebate or agreement, evolved in the Australian trade as a result of the enquiry by the Imperial Shipping Committee into the rebate system, is working satisfactorily. The form of agreement as originally introduced has already been signed by over 800 firms, and now that certain amendments are about to be made to meet the wishes of the Merchants' Association, and the document, subject to these, has been formally approved by them, it may be anticipated that the number of firms adopting the agreement alternative will be increased.

There are about 1,500 firms shipping in this trade, I understand, so that already more than half of them have agreed to abandon the rebates and to accept the agreement, and since a further number are likely now to come in-the amendments have been adopted only within the last few days-I think it probable that at least three-quarters of the trade will avail themselves of the offer which we induced the two interests to put before them. I hope that the freedom which we obtained will nave resulted in a settlement, at any rate in that trade, of this long-vexed question. I hope that the example may spread through the trade of the Empire generally.

Various Minor Complaints Dealt With.

Well now, Sir, a number of other and smaller questions were brought before us of the same character, dealing, that is to say, with complaints. The shipowners themselves having met us, and having learnt to trust us, came with their grievance, and we welcomed it as an indication of goodwill. Their first little grievance was that there was great delay in the bunkering of ships in Calcutta. We were able to make representations, and I understand that things are better. Then, Sir, certain shippers of rice from Rangoon came to us on the ground that the shipowning agents in Rangoon, being also concerned in the merchanting of rice, were discriminating against certain rice merchants. We made certain representations there which, I believe, had some effect.

In East Africa the merchants had some differences with the Lines serving the East coast of Africa, and as chairman of the Committee, I met a Conference representative of the various interests. It soon became apparent that we were dealing with a chaotic condition of affairs, and that the shippers in East Africa had no sort of association. I took it upon myself to tell them that until they had formed an association they did not deserve to carry weight with the shipping companies. I understand that an association has been formed and has been in negotiation with the shipping lines.

In the case of certain of the West Indies, we were appealed to to obtain reductions of freight, and I am glad to say that in certain cases we were able to induce the shipowners to listen to the complaint; in other cases we were not able to effect a reduction, but a full statement of the reasons why it could not be given was communicated to the commercial units concerned and we heard no

more.

Much the most important of these minor cases concerned New Zealand. The New Zealand Government sent to us the finding of a Select Committee of the New Zealand Parliament in regard to the freights charged for cargo on the voyage from New Zealand to this country. Well, Sir, we went into this question, and we made a report to the New Zealand Government. We came to the conclusion that, as regards the six months that we investigated, under all the circumstances holding after the war, we could not find that the charges had been excessive, but we took the opportunity to point out some of the reasons why high freights had had to be

charged on the homeward voyage, in the case especially of New Zealand, and in a less degree of some other countries.

The Round Voyage the Economic Unit.

Perhaps I may spend just one moment on that matter, because it clears up a good many others. As regards tramp economics, the round voyage must be the unit. Unless a tramp can obtain a cargo outward she cannot give favourable terms for cargo homeward. The most striking case of that occurred soon after the war, outside the Empire it is true. Wheat had to be brought home from Argentina. At that time we were exporting little or no coal from this country. Practically the whole of the cost of the voyage had to be thrown on the import of wheat from South America to this country. When the export of coal from Great Britain was resumed, freight on wheat homeward was halved. Well, that holds generally. In the case of the liner it also holds, but with the further addition which I have already mentioned, that there you have to consider good seasons and bad seasons, because the liner must sail, full or empty, and therefore the round voyages of the whole year must be taken into account when you come to deal with the liner.

The Question of Terminal Charges.

Not only must you have cargo to carry both ways but you must also have terminal charges reduced to the lowest. I have here, and I dare say members of the Conference have received from the Chamber of Shipping, a series of three resolutions with regard to high Port Charges, Light Dues, Pilotage, and Quarantine Expenses, at the Australian Ports, with regard to Light Dues levied by State Governments in Australia as distinct from the Federal Government, and with regard to Light Dues in New Zealand. Well, Sir, the questions are of an intricate character, and I am going to throw out the suggestion that, perhaps, Mr. Bruce himself, or if he is too busy he will nominate someone else, would like to meet some representatives of the Chamber of Shipping, and if so I would organise a little meeting in order that these very detailed questions affecting not the whole Empire, but a particular portion of the Empire, might be gone into in a practical way. Perhaps Mr. Massey would do the same thing with regard to New Zealand. It seems to me that that would be the shortest way, and, perhaps, as chairman of the Imperial Shipping Committee I might know whom to get together.

The Relation of Migration to Shipping Rates.

There are, of course, other matters which have to be borne in mind. Emigration bears a very important relation to the cost of the round voyage. Migrants, settlers, take the place of cargo. I have only this to say from a shipping point of view with regard to Empire Settlement, and that is that the steadier you can make the stream of settlers, the cheaper you will get them transported. The shipowner who is taking settlers out from this country has to fit his ship, and the fitments are, of course, up to a point expensive. If