The price of neutrality: ocean freight rates and shipping policy towards the Northern Neutrals during the First World War

ABSTRACT In 1915 and 1916, nearly one half of the total tonnage engaged in the trade of the UK was flying foreign flags. The Northern Neutrals, comprising the three Scandinavian countries, accounted for a large share of the neutral merchant fleet. A new set of detailed regional freight rate indices covering the period 1910–1920 provides the basis for comparing earnings from different trades during the First World War. This article shows that the UK authorities directed neutral tonnage into routes that were more hazardous but also much less remunerative than alternative trade routes in Asia and America. Thus, the price of neutrality comprised both loss of tonnage and foregone freight earnings for Scandinavian shipping. The new data series also form the basis of a discussion of how the wartime shipping controls created economic inefficiencies by distorting the shipping trade.