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U
DOCUMENT i s THE PROPERTY oi? H I S BRITANNIC
MAJESTY'S.GWERNMENT )
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T O B E K E T U N D E R L O C K & KEY. It is requested t h a t special c a r e may be taken t o e n s u r e t h e secrecy of t h i s document. S E C R E T . '
W.P.(UD)
^SC^S" .
9TH SEPTEMBER,'19U0.
COPY N O . .
WAR CABINET,
MERCHANT SHIPBUILDING-.
J o i n t Memorandum by t h e M i n i s t e r w i t h o u t P o r t f o l i o ,
t h e C h a n c e l l o r of t h e Exchequer., the F i r s t L o r d of
t h e A d m i r a l t y and t h e Minister of S h i p p i n g ,
We h a v e d i s c u s s e d t o g e t h e r , i n t h e l i g h t b o t h of t h e
e x p e r i e n c e of t h e l a s t t h r e e months and of t h e p r e s e n t s i t u a t i o n ,
t h e problem of merchant s h i p b u i l d i n g , to which r e f e r e n c e h a s
b e e n made i n r e c e n t memoranda c i r c u l a t e d t o , t h e War. C a b i n e t .
2.
D u r i n g t h e f i r s t y e a r of t h e w a r , t h e l o s s e s o f B r i t i s h ,
a l l i e d and n e u t r a l s h i p p i n g i n c u r r e d t h r o u g h a l l forms of
enemy; a t t a c k was a l m o s t t h e same a s t h e a v e r a g e a n n u a l l o s s
d u r i n g t h e four years of the la S T , war., . , We m u s t , h o w e v e r ,
b e g u i d e d i n t h e m a i n by the accentuated r a t e of l o s s w h i c h
"H
h a s b e e n suffered during the "I a a 'h two
or t h r e e m o n t h s .
In that
p e r i o d , a t t a c k by submarine and from the a i r h a s b e e n ; i n t e n s i f i e d
a t s e a , t h e E b o a t has shown itself, and s h i p p i n g i s now b e i n g :
s u b j e c t e d to bombardment from the air while it lies in p o r t .
J _ S . S C
3o
F o r t h e p u r p o s e s of e s t i m a t i n g our i m p o r t i n g c a p a c i t y
d u r i n g . t h e s e c o n d year of the war, the M i n i s t r y of S h i p p i n g
e x p r e s s e d t h e . v i e w r e c e n t l y t h a t we s h o u l d assume t h a t ou*" t o t a l
l o s s e s i n c l u d i n g m a r i n e c a s u a l t i e s would, d u r i n g t h a t p e r i o d , b e
The N a v a l S t a f f h a v e
o f t h e o r d e r o f 5 m i l l i o n gross tons.
p o i n t e d o u t t h a t i f our losses, e x c l u s i v e of m a r i n e c a s u a l t i e s ,
w e r e t o c o n t i n u e a t the rate suffered in June and J u l y o v e r a
p e r i o d of a y e a r , t h e y would amount to between %\% and 6 m i l l i o n g r o s s
tons.
-ho
War l o s s e s alone during the last three months have, been
as follows % L o s s e s of Merchant
(including t a n k e r s , but
e x c l u d i n g mapifoe c a s u a l t x e s ) /opriofl' Tune
August, 1940.
(gross t o n s ) ^ ^ Calendar
A l l i e d and
Total
British
Month.
neutral
. 5 1 1 , 0 0 0
2au. .CGC
267 .000
June
111 \ 0 0 0
355,000
21+4,000
July
72,000
327 000
255,000
August
s
I n a d d i t i o n , during t h i s period 117?0.00 gross tons of m e r c h a n t
s h i p p i n g h a s b e e n l o s t while on commissioned s e r v i c e .
5o
We are informed, by the Controller of Merchant Shipbuilding that the present rate of m reliant shipbuilding is not likely to reach more than 1 million gross tons during the next year, as contrasted with the target of 1 -g- million gross tons to be attained by February next under the arrangements made when the responsibility for merchant shipbuilding was transferred from the Ministry of Shipping to the Admiralty in the early part This reduced rate of construction represents a of this year
reduction of no less than one-third and., even so, may make, insufficient allowance for adverse effects due to damage to the '/
shipyards or to prolonged Interruption of work as the result of enemy attacko 0
6
It is obviously a matter of grave consideration whether
this reduced rate of merchant shipbuilding can be accepted in
view of the increased rate of Xom which we are forced to envisage
as compared with that prevailing six months agoo
A
7o
The Ministry of Shipping has purchased, mainly from the
United States, some hO vessels and is in negotiation for 6
additional ships at the moment o
It is anticipated that the unexpended
portion of the sum already made available by the Treasury should
be sufficient to defray the cost of these vesselso
The opportunities
for purchase, however, are limited and the vessels acquired are 20
years old or more,
It would be unwise to buy vessels which have
not been in service as they might well prove not only very .
costly but extremely inefficient*
Purchase of tonnage of
this type is in any oase merely a stop-gap, war measure which
will, leave us after the war Kith oil .3 expensive, and inefficient .* ­
tonnage which will have to be rapidly scrapped.; and does, nothing .
to replace the British Mercantile Marine, of which the -average age
in all section is already too high,Notwithstanding these consideration
we think "that any opportunity of acquiring serviceable ships at
reasonable prices should continue to be taken,.
The tonnage hitherto
bought has cost on the average about I1.5 to 50 dollars a dead­
weight . t oho
:
:
8b
New construction in the United St-ateSo
Construct! on of
tonnage in the United States was put "rapidly in hand in the later .
stages of the last war and was brought to a high rate of output
We consider it essential that our programme of home construction
should be supplemented, by the immediate placing in the United
States of as substantial an order for new tonnage as can be laid ­
down in the near future * and preliminary inquiries have been made
as to the possibilities6
It may be practicable to place orders
for say? 60 ships of 10,000 tens deadweight with United States,
yards for delivery at the end of 19U1
The Controller of Merchant
Shipbuilding thinks that it would be unduly optimistic to look
for any earlier date of delivery.
We recognise that the- cost- of
this tonnage must be high., but our wastage of shipping must be made
good.
An expenditure of 520 million of which not more than £5
million would be required before the 31st March would be necessary
for the. acquisition of this tonnagei
The Chancellor of the
Exchequer has definitely agreed to orders being placed for 30
ships-in order that the immediate negotiation? may be undertaken,,
i
i
3
s
0
1
9.
We are also of opinion that negotiations should he pursued v/ith a view, to ' securing the transfer- of vessels already under construction in the United States to ourselves. There may he at. the moment some political' -difficulties' in persuading'the United States -authorities .to agree to "such transfer of'contracts already placed "by the Maritime' Commission and special inquiries are "being made upon this point.
Insofar as-any such transactions could.he carried through, we should gain the advantage, of earlier delivery,'; though,., of course, we should have to undertake to meet -the cost of replacing at a latex" date the vessels ceded to us. 4
10
Let us assume that we shall he successful in securing some 1 5 months hence about -h.00,000 tons gross of shipping
constructed in the United Sta.tes, together with perhaps
another 1 0 0 , 0 0 0 tons gross of old ships purchased in the
marketo
On this "basis, if our own programme remains at the
level of 1 million gross tons per annum and if the rate of
loss over the period amounts to something of the order of
5 million tons gross from all sources, we shall he replacing
only 5 0 per cent., of our losses.
This we consider quite
inadequate. B
1
11o
The only other way of making good the wastage in
tonnage is to increase our home programme.
The Admiralty
a r e o f the opinion that, in existing conditions, any increase in the rate of merchant shipbuilding above about 1 million
gross tons could only be secured, at the expense of the naval
programme or by .some allocations of steel and other- light
materials in excess-of the amounts allotted to the merchant
shipbuilding programme tinder existing- priority decisions, 12.
. There are further difficulties in securing suitable
labour for the necessary marine engineering output for
merchant shipbuilding purposes?
13.
: So far as steel is concerned, -we would remind the
War Cabinet .that every ton of steel employed In shipbuilding
yields a .return in deadweight carrying capacity equivalent
to an importing power of 12 -cons, of goods per annum.
We
think that every effort should be made to increase the home
production sxibstantially above the level of 1 million tons
and to bring the rate ox" construction at least to the rate
of
million tons gross per annum by the early part of next
year, and that the necessary requirements which the Controller
of Merchant Shipbuilding puts forward should receive the
most favourable consideration,,
1h..o
If further inquiry, as to the possibilities of construc­
tion In the United States prove disappointing, the whole
situation of our home production will obviously have to be
further considered as a matter of the roost vital importance.
15,'
We do not overlook the possibility that under the
system of Navicerts and-Ships Warrants we may yet be able to induce or force into our service additional neutral shipping, but there are many difficulties in the use of neutral and even allied shipping which cannot be ignored, We need only refer to the recent action of the Greek Government in withdrawing, under German pressure j all o f f i c i a l '
support from G-rSeK shipowners in enforcing the'observance
o f existing agreements concerning war "bonus for Greek crews - a
step which may lead to substantial delays in the sailing
o f these ships, and to reluctance to charter except at
extravagant rates.
We have also in mind the probability
o f increasing demands upon merchant shipping for the mamn­
tenahce of theferbes in the Middle East and other essential . naval and military operations^
We think it essential to restore, as far as possible, our actual losses by the creation of hew tonnage over which we have absolute control rather than to rely upon bringing into our service tonnage over which we have no such absolute control, and which in present circumstances we can only secure b y negotiation and pressure. j^unmarv^
1 6 .
We recommend:­
(a)
that our programme for the building of
merchant shipping in this country should
if possible be raised at least to the rate
of 1^ million gross tons per annum;
(b)
that immediate steps be taken to increase our merchant tonnage; (i) b y p l a c i n g
o r d e r s a t once i n t h e
United States for the construction
o f a n o t h e r 30 s h i p s e a c h of 10,000
d e a d w e i g h t t o n s ( a t o t a l of, s a y ,
200 000 g r o s s t o n s ) ; '
f
(ii) b y
s e c u r i n g ( i f no p o l i t i c a l o b j e c t i o n s
prevent i t ) ships already p a r t l y
completed for the United S t a t e s
M a r i t i m e Commission;
these, t o be
replaced by ships to be constructed
u n d e r (j.) a b o v e ;
(iii) b y t h e p u r c h a s e b y t h e M i n i s t r y
of
Shipping, as opportunity o f f e r s ,
of s e r v i c e a b l e s e c o n d hand s h i p s
so l o n g a s t h e s e a r e o b t a i n a b l e
at reasonable prices;
( c )
t h a t t h e c o n s t r u c t i o n of a f u r t h e r 30 s h i p s
a d d i t i o n a l t o those referee! to i n (b) ( i )
above s h a l l be c o n s i d e r e d n o t l a t e r t h a n
N o v e m b e r , 1940 i n t h e l i g h t o f t h e c i r c u m ­
stances then e x i s t i n g , or a t an e a r l i e r d a t e ,
i f i n t h e o p i n i o n of t h e A d m i r a l t y and t h e
M i n i s t r y of Shipping e i t h e r i n c r e a s e d l o s s e s
o r i n c r e a s e d demands f o r s h i p p i n g make t h i s
necessary.
I II n t d
/
(
Treasury Chambers, S . W . 1 . ,
9th September, 1940.
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