The curious incident of the tariffs in the nighttime

The curious incident of the tariffs in the nighttime

In the 1930s the wage for an able seaman on a British foreign going ship was £8 ($32, in those days) a month, reduced from £9 ($36) in the ‘20s. Food was “According to the Act”, on the Board of Trade “pound and pint scale”. Salt beef and salt pork, dried peas, ship’s biscuit, and four quarts of water a day for all purposes; no refrigeration, no air conditioning, no private cabins, no “en-suite facilities”, no phone calls home, and not much chance of getting home for two years at least.

Yet, in those years, several British ships left for foreign ports with crews consisting entirely – and these were large crews – of officers.

I rather confidently expect that the same thing happened with Greek and Norwegian ships, also. The reason was, of course, the Depression. Officers’ jobs were not to be had, but by signing on (and, in those days, you really did “sign on”) as ratings, officers were able to “preserve their superannuation” – their employers’ pension contributions were still paid. I knew the son of a man who had gone to sea, in those years, with his regular employers, as an AB, with his Master’s FG certificate in his pocket – and who had been glad of the opportunity.

You have probably guessed my reason for mentioning this now.

As every schoolgirl knows, the Great Depression started with the Wall Street Crash of 1929 and was then made very much worse by the Smoot-Hawley Tariff Act, passed in 1930 by the Republican Congress and then signed, reluctantly by the Republican President, Herbert Hoover, against the advice almost every economist in the United States. Never underestimate the power of human stupidity.

Trade between the USA and the rest of the world fell by half. And Master Mariners and Chief Engineers in the great maritime nations across the world went to sea as able seamen and oilers.

President Trump has made it clear that he means what he says, about international trade, by announcing a 10% tariff on goods from China effective from Monday. This will rise to a 25% tariff in January.

The effect on stock markets of this announcement was one that the great fictional detective, Sherlock Holmes, was familiar with:

Gregory (a Scotland Yard detective, speaking to Holmes): “Is there any other point to which you would wish to draw my attention?”

Holmes: “To the curious incident of the dog in the nighttime.”

Gregory: “The dog did nothing in the nighttime.”

Holmes: “That was the curious incident.”

The dog did nothing because he recognised his owner. The stock markets in China, and the share prices of the iron ore miners, BHP and Rio Tinto, have done nothing, after this announcement. And that is the curious incident.

The assumption being made is that Mr Trump’s tariffs will have no effect on China. But that is because the Chinese economy will continue to “deepen” rather than to trade more internationally.

We have seen a brief flurry on the transpacific container lanes as people bought ahead of the tariffs; this might even last until January, in some form. But after that, things don’t look so rosy, and the supply and demand balance in the box business is such that ships displaced off the North Pacific will have to look elsewhere.

At this moment, we are all happy about the general recovery in dry freight rates, and, the way things are going, even the offshore oil patch may have cause to become slightly more cheerful as the oil price, helped along by OPEC and by Chinese tariffs on oil imports from the USA, tends upwards.

Maybe we should factor politics into our predictions, alongside technology and economics. If we just look at the politics, it is clear that “globalisation”, which our industry has done so much to promote, is now a dirty word in much of Europe and certainly in Britain and the United States. People may – I only say may – keep up the trend of nationalism and the things that go with it.

Things might get very nasty, very quickly, in the deep sea shipping business. Those 1930s officers at least had jobs, and pensions. An awful lot of shipbrokers, bankers and insurance people had nothing at all, and a good many owners went bankrupt.

Related Posts