Inter-Allied Chartering Committee

On 6 January 1917 Britain, France and Italy concluded an agreement to set up a joint office in London for chartering and allocating the ships of neutral countries. Each of the three governments undertook to forbid its nationals to hire any foreign ship other than through this office. This was how the Inter-Allied Chartering Committee came into being. It carried out a provision of the Clémentel agreement of 3 December 1916, under which all chartering of neutral ships was to be conducted by a joint office in London. The British official history of seaborne trade (Fayle, Seaborne Trade) stresses that no time was lost: little more than a month passed between the December arrangement and the January agreement.

The Allies needed neutral ships, because they had too few of their own and German submarines were sinking more and more of them. Yet they paid market rates for them and for two years of war had driven those rates up themselves, because every government and every importer chartered (PL) on its own account, often from the same owners. The idea of eliminating this competition and concentrating all chartering (PL) of foreign tonnage in one pair of hands had been put to the Board of Trade, the British ministry of commerce, as early as the beginning of 1916 by O. G. Holmden of the London shipbroking firm H. Clarkson & Co., an expert on the Scandinavian market. In the summer of 1916, at the conference at Pallanza, the Italians asked the British to extend joint chartering and to share the ships so obtained among the Allies according to need. Progress, however, was slow. Meanwhile neutral shipowners, especially after their losses in the coal and ore trades, were increasingly willing to send their ships on safer and better-paid routes far from Europe.

How it worked

On 7 January, the day after the agreement was concluded, the British issued Regulation 39D under the Defence of the Realm Act. It forbade all firms and private persons to negotiate, without the consent of the Board of Trade, the charter, on time or for a voyage, of any non-British ship that was to carry goods to or from British or Allied ports. Similar regulations were issued in France and Italy. In practice the Board of Trade’s powers were taken over by a committee of representatives of the three countries, chaired by C. Hipwood of the Board of Trade. It met for the first time on 15 January. It was to lay down a common Allied policy towards neutral shipping and to divide the tonnage obtained among the governments and the Wheat Executive, the joint grain-purchasing body set up in November 1916. The day-to-day work, that is assessing the ships offered, concluding contracts and supervising their execution, was carried out by a small office in the City, the Inter-Allied Chartering Executive, headed by Holmden himself. Ships taken on time charter were hired to Furness, Withy & Co., which passed them on to the firms nominated by the governments.

At its first meeting the committee decided not to interfere for the time being with sailing vessels, small steamers under 1,000 tons deadweight and ships on short routes. They could continue to sail on the usual terms, provided the rates were approved and every contract was reported. The committee shared out the large ships in a simple way: about half the tonnage went to the Wheat Executive for the joint grain programme, and the rest roughly equally to France and Italy. The British reserved the right to a share but waived it for the time being. They knew that if they took some of the neutral ships, France and Italy would demand even more British ships in return.

Greek ships

The committee at once began to obtain ships faster than expected. Fayle explains that this was due to a new policy towards Greek shipping. Greece was still officially neutral but at odds with the Allies, and its shipowners sent their ships wherever the pay was best. In December 1916 the British detained all Greek ships in ports under their control until they were chartered to the British government. In January a system began to be introduced under which Greek ships were hired to Furness, Withy & Co. for the duration of the war and six months after it. The rates were markedly lower than for Norwegian ships, but in return the British government bore the war-insurance risk and gave the owners guarantees in the event of war with royalist Greece. Of the 48 steamers chartered by the Inter-Allied Chartering Executive in January, no fewer than 34 sailed under the Greek flag.

Consequences

Arthur Salter, one of the architects of inter-Allied shipping control, judged in his history of that control (Allied Shipping Control, 1921) that the joint office, appearing on the market as a single customer, halted the rapid rise in freight rates and, as ships grew ever scarcer, at least slowed it. It could not bring them down. The system was also incomplete: some neutral ships were still hired without going through the committee, and the tonnage obtained in this way was not used according to a common plan. In 1918 the committee was placed under the Allied Maritime Transport Council, and the ships it chartered, about 500,000 tons, became the only truly common pool of Allied tonnage. Meanwhile, after 1 February 1917, when Germany began unrestricted submarine warfare, many neutral shipowners preferred to keep their ships in their own ports rather than take the risk, and the Allies had to resort to new means of pressure.