(c) crown copyright
Catalogue Reference:CAB/129/54
Image Reference:0002
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CABINET OFFICfc
RECORD C O P Y
(THIS I ^ p U M E N I IS THE P R O P E R T Y O F HER B R I T A I W I G M A J E S T Y ' S GOVERNMENT)
CONFIDENTIAL
C.(52) 252
COPY N O . ,
2 ­
22nd JULY. 1 9 5 2 . CABINET ASSISTANCE FOR BUILDING FISHING VESSELS
/ M e m o r a n d u m b y the Chancellor of the E x c h e q u e r
The Home A f f a i r s C o m m i t t e e have had under c o n s i d e r a t i o n a s c h e m e
for Government a s s i s t a n c e in the r e c o n s t r u c t i o n of the F i s h i n g F l e e t . The
p r o p o s a l s they have d i s c u s s e d r e l a t e both to i n s h o r e and h e r r i n g boats and to
the l a r g e r v e s s e l s of the inner and middle w a t e r f l e e t s . T h e i r m a i n object
i s to find s o m e financial incentive which will induce o w n e r s to s c r a p and
r e b u i l d . E x p e r i e n c e h a s shown that l o a n s at n o r m a l r a t e s of i n t e r e s t a r e not
in t h e n i s e l v e s sufficient,
2,
The m o s t obvious solution i s , of c o u r s e , to make p r o v i s i o n for loans
at a r e d u c e d rate of i n t e r e s t . But I a m sure that this m u s t be r e j e c t e d . It
would undermine our w h o l e c r e d i t p o l i c y . The T r e a s u r y has e n f o r c e d with
­
vigour the new r a t e s of i n t e r e s t and has' s t e r n l y r e f u s e d to m a k e any e x c e p t i o n s .
T h e r e i s no doubt that if one w e r e a l l o w e d the p o s i t i o n would be weakened and
we should be f a c e d with, d e m a n d s for a h o s t of o t h e r s - ranging f r o m l o c a l authority
loans on the one hand t o the s m a l l l o a n s which the D e v e l o p m e n t C o m m i s s i o n m a k e s
to r u r a l c r a f t s m e n on the o t h e r . T h e r e are m a n y c a s e s in w h i c h the a r g u m e n t s
for a s p e c i a l rate are j u s t a s strong a s , if not s t r o n g e r than, t h e y a r e in the c a s e
of the fishing industry. I a m t h e r e f o r e convinced that it would be a g r a v e e r r o r '
t o s o l v e the p r o b l e m i n this p a r t i c u l a r w a y .
3.
What I have s a i d about l o a n s at r e d u c e d r a t e s of i n t e r e s t a p p l i e s
equally to any of the v a r i a t i o n s of this p a r t i c u l a r type of a r r a n g e m e n t . F o r
e x a m p l e , we would be e q u a l l y i l l - a d v i s e d to a g r e e to i n t e r e s t - f r e e l o a n s o r
m o r a t o r i a on i n t e r e s t p a y m e n t s ( e x c e p t , in the latter c a s e , w h e r e the i n t e r e s t
i s c a p i t a l i s e d and added to the l o a n ) .
4.
It w a s for t h i s r e a s o n that, before the m a t t e r c a m e to the Home A f f a i r s
C o m m i t t e e at a l l , other m e a n s of giving s p e c i a l a s s i s t a n c e in the building of the
fishing v e s s e l s w e r e c a n v a s s e d . In the c a s e of the owner who g o e s t o s e a with
h i s v e s s e l a s a m e m b e r of the c r e w , it has b e e n a g r e e d that p a r t of the a s s i s t a n c e
should take the f o r m of a grant. It w a s , h o w e v e r , g e n e r a l l y a c c e p t e d that this
a r r a n g e m e n t was s c a r c e l y appropriate in the c a s e of v e s s e l s owned b y c o m p a n i e s ,
m a n y of w h i c h a r e by n o m e a n s without funds. In the c a s e of c o m p a n i e s , it i s
in f a c t p u r e l y a p r o b l e m of providing ah incentive to r e b u i l d , and " a s s i s t a n c e "
a s we n o r m a l l y understand it t h e s e d a y s is probably not needed at a l l . N e v e r t h e l e s s
it s e e m s p r e t t y c l e a r that without a s u b s t a n t i a l financial incentive t h e s e c o m p a n i e s
m a y not rebuild t h e i r f l e e t s .
5.
The Home A f f a i r s C o m m i t t e e put in hand an i n v e s t i g a t i o n of the
p o s s i b i l i t y of s o l v i n g the p r o b l e m in the c a s e of c o m p a n i e s by paying thehci
retaining f e e s to s e c u r e the u s e of t h e i r v e s s e l s in w a r . But it t r a n s p i r e d that
I the v e s s e l s i n question w e r e not t h o s e in which the A d m i r a l t y w a s
p r i m a r i l y i n t e r e s t e d ; m o r e o v e r , it wouldnot have been p o s s i b l e to r e s t r i c t
the s c h e m e t o fishing v e s s e l s , nor would the a r r a n g e m e n t . h a v e proved
sufficiently a t t r a c t i v e to o w n e r s .
6.
T h e other idea which has been c a n v a s s e d i s that the Government
should g i v e p a r t of i t s a s s i s t a n c e by taking a s h a r e in the c o m p a n i e s owning
t h e s e v e s s e l s . T h i s s u g g e s t i o n originated with the White F i s h Authority^
who a l r e a d y have p o w e r s to take such s h a r e s . It would be understood
that t h e G o y e r n m e h t should n e v e r acquire a controlling i n t e r e s t in the
c o m p a n i e s ; but there would be the p o s s i b i l i t y of s o m e r e t u r n for the
i n i t i a l outlay. F r o m m y point of v i e w this i s the only one of the v a r i o u s
s u g g e s t i o n s for providing s p e c i a l a s s i s t a n c e which i s a c c e p t a b l e .
7.
A t their m e e t i n g on 8th July (H.A,(52) 19th M e e t i n g , Minute 3)
the H o m e Affairs Committee d i s c u s s e d the p r o b l e m and d e c i d e d that the
p u r c h a s e of s h a r e s , involving the d i r e c t participation of Government i n
p r i v a t e industry, w a s open to g r a v e objection. In the end they c a m e t o the
c o n c l u s i o n that the a s s i s t a n c e to be given should take the f o r m of l o a n s
a t s p e c i a l r a t e s of i n t e r e s t . I should add that t h e F i n a n c i a l S e c r e t a r y to
the T r e a s u r y was not able to be p r e s e n t at the t i m e . ' He conveyed m y v i e w ,
h o w e v e r , to the Committee b y l e t t e r .
8.
I can s e e why the idea of s h a r e s i s u n a t t r a c t i v e . But I hope,
f r o m what I have s a i d a b o v e , it will be accepted that the solution favoured
b y the Home A f f a i r s C o m m i t t e e is v e r y m u c h m o r e objectionable f r o m the
point ^f v i e w of the national i n t e r e s t . To m y mind the c h o i c e l i e s b e t w e e n the
adoption of the s h a r e s idea or a d e c i s i o n that in the c a s e of boats owned
b y c o m p a n i e s we can offer nothing m o r e than loans at the n o r m a l rate of
interest.
R.A.B.
T r e a s u r y Chambers, S.W.1.
22nd J U L Y , 1 9 5 2 .