Ownership structures and the state intervention

MT Front Ardenne. Photo: Frontline.
MT Front Ardenne. Photo: Frontline.

The shipping industry was also partly built up from below. During the sailing ships’ age of expansion 1850–1880 the joint-owned shipping company was the most important form of ownership. Because a new company was created for each ship and the amount of shares offered could reach up to 100, a large number of independent contributors could participate in the investments – just about “everyone” could own a share. This increased the mobilization of local resources.

Shipping companies owning several ships and having a small number of partners did not appear until the transition to steamships around 1900. The new form of shipping company made it easier to think long term and to build up larger fleets of ships, while also providing the economic resources to be able to cope with the even more expensive transition from steam to diesel after 1910.
But even during the interwar years, when many new, expansive tanker companies based on diesel-powered ships started up along the Olso Fjord and in certain towns along the south coast, their beginnings were often comparatively modest. Competent businessmen gathered enough small investors to begin their first ship, preferably with as much as 80 per cent credit advanced by the shipyard.

Even the build-up in the last 3-4 years of the offshore fleet – at present the most valuable segment of the Norwegian merchant fleet – has very largely developed out of fishing boat shipping companies in the pelagic sector, with a large part of ownership based in small coastal communities such as Herøy, Austevoll, Bømlo, and Skudeneshavn.

We have seen that agriculture in the coastal region was long closely linked with fishing. As well the partitioning of farms was practiced over a longer time in districts with particularly good opportunities for seasonal fishing. The nineteenth-century system of crofting or tenant farming had also had another “milder” version along the coast than in the straight agricultural or forestry districts and was in any case less widespread here.

To keep things in perspective we must remember that Norwegian agriculture, both along the coast and inland, had early on a much higher proportion of freeholders than found in the rest of Europe, with certain reservations regarding the relative size of tenant farming there 1800–1850. Norway’s allodial law (odelslov) strictly regulating the ownership of freeholds contributed to this situation. The law functioned as a legal brake on exploiting land as a commercial investment item.

Today it is a Norwegian exception and is a remnant of the distant past when it was the family that owned the land rather than the individual. Hydroelectric heavy industry was a pronounced resource-based industry, but its economic foundation was completely different from that of the traditional coastal industries. It was established after 1900 where sufficiently large waterfalls met navigable fjords. But the scale of these power-generating and industrial projects far exceeded the financial capacity of the Norwegian banking system.

Since the export economy was geographically widely dispersed in the many small and medium-sized coastal towns, the banking system was also split up in many more numerous and smaller units than in neighbouring countries. The expansion of heavy industry, therefore, needed investment from foreign capital: Swedish, German, French, and British. The state intervened early on also here in the national economy’s most dynamic area when it appeared that society’s vital interests were threatened.

Around 1905 many feared that foreign capital had bought up most of the country’s water power. A provisional Concession Law was passed in 1906 – the so-called “Panic Law” – and extended and tightened up in 1909 and 1917. Its terms applied to water power as well as to forests and ores/minerals. After 50–60 years ownership concession of the waterfall and electrical generating station reverted to the State free of charge (right of escheat), regardless of whether the owner was a foreign or a Norwegian private company.

In 1917 demands pertaining to welfare and district politics were added: developers must contribute financially to a meeting house for the workers, pay for the organization of teaching, health services, and the services of priests and police in the new industrial area as well as give a discount on sales of electricity to local activities, both public and private. While the “Panic Law” would secure the national right of disposition over vital natural resources (one year after the dissolution of the union with Sweden in 1905), in 1917 it was important to secure a certain social guiding of the process of industrialization.

The problem of monopolies had become a new worry. This involved truly big industry: some of Europe’s biggest companies had been amongst the purchasers of waterfalls. The answer to this concern was the Trust Law of 1926, which was supposed to prevent mergers and agreements that inhibited competition and were thus unfavourable for consumers. Neither the Concession Law nor the Trust Law was peculiar to Norway. However, the latter was one of the world’s most ambitious in its day, and was considered controversial economic policy right up till the 1950s. And the Concession Law was regarded as very dramatic in Norway itself because of the unusually great importance of water power for both the establishment of industry and for infrastructure.

It was a useful frame of reference when the state acquired national control over the development of the new oil industry in the North Sea. It was in line with the “participatory democratic” trend in Norwegian business history that the state-owned company Statoil gradually became the dominating developer and operator on the Norwegian continental shelf and that the state kept proprietary rights over the petroleum resources, administered by the state company Petoro.

Picture: A globalized business: MT “Front Ardenne”, a “Suezmax” crude oil tanker of 153,000 dwt. This is one of the few ships owned by Frontline Ltd. that sails under the Norwegian flag. The company is registered in Bermuda and the norwegian-born main owner has taken Cypriot citizenship. Photo: Frontline.
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