INTERIM REPORT ON RATES OF FREIGHT ON CANADIAN TO THE RIGHT HONOURABLE J. RAMSEY MACDONALD, Prime Minister, First Lord of the Treasury and Secretary of State for Foreign Affairs; TO THE RIGHT HONOURABLE W. L. MACKENZIE KING, C.M.G., Prime Minister of the Dominion of Canada. REPORT. We, the Imperial Shipping Committee, acting under the first part of our terms of reference, are making enquiry into a complaint received from the Government of the Dominion of Canada in regard to discrimination against Canadian Flour in the freight rates on the North Atlantic. We have not yet completed our investigation, but have made sufficient progress to enable us to dispose of one portion of our enquiry. We beg leave, therefore, to present the following Interim Report to the Governments of the Dominion of Canada and the United Kingdom, since they are the Governments primarily concerned. 1. The complaint was originally brought before us by the Government of the Dominion of Canada, in a letter from the Hon. Thomas A. Low, Minister of Trade and Commerce, dated 13th November, 1923, and printed in Appendix I. We found that it fell under two heads, namely : - (a) that the freight on flour milled in Canada and shipped from American ports was higher than that on flour milled in the United States and shipped from those same American ports in the same vessels to the same destinations; and (b) that the freight on flour shipped from Canadian ports was higher than that from American ports. 2. At the outset of our investigation we took evidence from the following witnesses in London : Sir Frederick Lewis, Bart. Mr. P. A. Heitland, of Messrs. Furness, Withy & Co. on behalf of the Shipowners. Mr. J. C. Pillman, of the National Association of Flour Importers. Mr. F. T. Collins, representing the Canadian National Mr. R. Hutchinson, President of the National Association of 3. In the course of our enquiry in the United Kingdom, however, we found that, inasmuch as eastbound freight rates on the North Atlantic are fixed in Montreal and New York, the representatives of the shipowners who appeared before us were unable to furnish the detailed information which we required. It also appeared desirable, if possible, to get into direct touch with the Canadian millers. 4. We accordingly suggested to the Canadian Government that it would be of the utmost assistance to our enquiry if a SubCommittee could visit Canada with a view to obtaining evidence on the spot. To this course they readily agreed, and a SubCommittee consisting of the Chairman and Mr. H. B. G. Larkin, the representative of Australia on the Committee, on their invitation, proceeded to Canada, where evidence was taken in various places between April 12th and May 1st, 1924. The Report of this Sub-Committee is printed as Appendix IV.* 5. The main evidence was obtained by the Sub-Committee in Montreal and Toronto from the millers, and in Montreal from the shipowners. The witnesses who appeared were as follows:Montreal. Mr. Pollock, on behalf of the Dominion Millers' Association. 6. The Sub-Committee were assisted in their enquiry at Montreal by Mr. Alex. Johnston, Deputy-Minister of Marine and Fisheries, acting on behalf of the Canadian Government. 7. As far as we can ascertain, the discrimination against Canadian flourt at American ports arose in the following manner. Towards the end of 1920, the United States Shipping Board made an agreement with the United States millers to carry flour at a The Report of the Sub-Committee deals with several other questions affecting Canadian Trade as well as with the discrimination against Canadian flour. In the remainder of this Report, "Canadian Flour" is used to indicate flour milled in Canada and "American Flour" is used for flour milled in the United States, in both cases regardless of the origin of the wheat. differential of five cents over the prevailing liner rates for wheat. This differential principle was not adopted by the British lines trading out of American ports, but competitive freight conditions ensued and in practice the British lines were compelled to accept the rates quoted by the Shipping Board. Subsequently the rate on wheat, which is often used by liners for stiffening or ballast purposes, dropped to an unremunerative level, and the flour rate. fell with it. As a consequence, in April, 1922, the lines trading out of Canadian ports, with headquarters at Montreal, holding that the flour rate being charged from American ports was now uneconomic and fearing that traffic would be diverted from Canadian ports, requested the New York Conference to respect their rate on flour of Canadian origin shipped from United States ports. Thus discrimination arose in New York and elsewhere in the United States against Canadian flour as compared with American flour although shipped from the same ports. These facts are not, so far as we are aware, contested. 8. Subsequently, however, towards the end of 1923, the wheat rate from New York advanced and carried with it the rate on flour so that the rates from Canadian and American ports reached much the same level. Hence the discrimination was, for the time being, incidentally removed. But the cause of it, namely, the request from the Montreal to the New York steamship lines, still remained and might again operate if a decline in wheat rates lowered the rate on American flour, and the Canadian Government therefore asked us to continue our enquiries with a view to arriving at a permanent solution. 9. As our investigations proceeded, we found that the millers really had in their minds the establishment of some definite differential as between wheat, the raw product, and flour, the manufactured article, in the matter of ocean rates." Close examination of this question, however, shows that problems of some difficulty arise owing to conditions governing the whole chain of transport of wheat from the farmer in Canada to the buyer in Europe, with its complicated inter-relation of rail, lake, canal, and ocean rates and the competition between ports on the Atlantic coast. The question of a differential as between wheat and flour. will therefore require most careful investigation, and we accordingly propose to continue our enquiry and to present a further report. The second head of the complaint as set out in paragraph 1 above will be treated in this connection. 10. After careful discussion both with the shipowners and the millers, our Sub-Committee, while in Canada, received an assurance (Printed in Appendix II), from the Montreal Steamship lines acting in conference, that they will not in future request the New York lines, members of the North Atlantic Freight Conference, to quote Montreal rates on Canadian flour shipped through any United States port. This promise was accepted as * Cf. Appendix III. satisfactory by the millers in Canada. Further, in view of this undertaking by the Montreal lines, the principal British lines engaged in the North Atlantic trade have since assured us that they will in future quote the same rates from United States ports on Canadian flour as on American flour. These assurances are of considerable importance in that they definitely remove the risk of any recurrence of similar discrimination in this form and we therefore feel that the fact that they have been given should become generally known at once. 11. We desire to take the opportunity of this Interim Report to express our thanks to the Canadian Government for the many courtesies shown to the members of our Sub-Committee during their visit to Canada and for the ready and valuable assistance accorded to them by all parties in pursuing their investigations. [NOTE.-Owing to his absence from this Country, Sir Edgar Bowring has been unable to sign the Report.] |