The Institute may be steeped in history and tradition but the very existence of this web site, the fact that we tutor many of our students via e-mail and that globally ICS have members in more than 50 countries, perhaps proves that we are no strangers to the 21st Century.
The Institute’s function is to set the highest standards of professional service to the shipping industry worldwide through education, example and discipline – and it has been doing that since the first decade of the last century.
But the history of shipbroking and the foundations of today’s Institute go back much further than that – three centuries further in fact.
In the early part of the 17th century, the City of London was already a hive of international business activity and brokers engineered many of the deals between buyers and sellers or between traders and shipowners. These brokers tended to be “jacks of all trades and masters of none” and inevitably they were not always highly regarded.
It thus became the duty of the City authorities to curb the more nefarious activities being undertaken. In this endeavour they limited the number of brokers to one hundred, mainly Englishmen but also a few London-domiciled foreigners. Those admitted to this exclusive group were obliged to swear an oath before the City Council that they would “deal justly and fairly on behalf of their respective principals” hence the expression “Sworn Broker”.
As might be expected, specialisation developed and it is recorded that, in 1674, the Common Council of the City of London made a declaration that no person was permitted “to make any manner of bargain or bargains, contract or contracts in or relating to the art of trade, of merchandising by exchange or the letting of ships for freight or hire, or otherwise, howsoever between any manner of persons” unless he had been admitted and sworn as a Broker before the City Council.
This system continued for more than two hundred years and it is not clear when or why the practice died out. It is generally believed to have been overtaken by the self-regulation imposed by membership of the Baltic Club, the 19th century coffee house from which today’s Baltic Exchange evolved.
Of course we now have today’s equivalent of the Sworn Shipbroker because a Fellow of our Institute by the authority of Her Majesty’s Privy Council may call him or her self a Chartered Shipbroker.
Our Institute’s own history developed out of the Baltic Exchange but because the Baltic’s terms of reference were (and always have been) “to provide a market” shipbrokers wanted more – and not just in the City of London. Although London was then as it is today the main centre of the world’s dry cargo chartering, a great deal of chartering was also taking place in ports all around the British coast. The pattern was that a ship would arrive in, say, Cardiff to discharge a cargo of iron ore and the agent appointed to look after that ship’s affairs whilst she was in port, would traditionally have the task – and the right – to find outward employment, almost certainly with a coal cargo. Except for the major ports like London, Liverpool and Southampton, almost all Britain’s ports owed their existence at that time to the coal trade.
Thus, parallel to the situation in the City of London, there were Shipbrokers Associations established in many UK ports; several of our branches today have archives relating to when they were local associations.
By 1910, members of these local associations and those from London were getting together to talk about strengthening their position and by 1911 the Institute of Shipbrokers was formed; its stated aims were:
- To protect and promote by cooperation the general welfare and interest of shipbrokers.
- To discuss, consider and report upon subjects of interest to shipbrokers and to communicate with chambers of commerce and other public bodies.
- To promote or oppose legislative and other measures affecting the business of shipbrokers and to consider, originate and support improvements in maritime and commercial law.
- To consider all questions affecting the interest of persons engaged in the business of shipbrokers.
- To provide for better definition and protection of the profession or business of shipbrokers by a system of examination and the issue of certificates.
It was this last activity which convinced the Privy Council that the Institute was a serious professional body and so on 21st January 1920 it was announced that “by the special grace and certain knowledge of His Majesty King George V” it was incorporated by Royal Charter and would henceforth be known as the Institute of Chartered Shipbrokers.
The President in that momentous year was William Joseph Noble and his collection of Vice-Presidents read like pages from Burke’s Peerage, Lord Cowdray, Sir John R Ellerman, Lord Inchcape, Lord Inverforth, Sir Walter Runciman and Sir E. Shadforth Watts. The Council Chairman was Marmaduke Lawther.
The Royal Charter required the Institute not only to provide a proper education for its members and set examinations, it also insists upon a system of discipline so that any member acting in a discreditable manner would be censured, suspended or even expelled; in the latter case details may be published without any fear of legal action. That is, of course, still the case and although action by the Discipline Committee is infrequently needed, the committee members never shrink from their duty.
Much of Britain’s trade was with member countries of the Commonwealth and these distant places attracted many expatriates to emigrate and continue their shipbroking in such places as Hong Kong, South Africa, British Columbia in Canada. Their desire to maintain their membership of the Institute prompted them to open local branches. Fortunately this had been foreseen when the Charter was drafted so that membership was open to anyone in the British Commonwealth as well as the United Kingdom. A happy paradox was that Ireland was then the Irish Free State, which can best be described as half in and half out of the UK and so it was included in those countries covered by the Charter. A happy paradox because when Ireland became an independent republic, no one had the heart to change their Institute status.
One popular Institute activity at until the 1970s was the publishing, every year, of a Scale of Minimum Agency Charges. These were mandatory upon members and were agreed annually with the Chamber of Shipping. Shipowners were happy to have such a scale because, when calculating the income from a voyage, anything that reduced the number of imponderables was welcome. Although fees were fixed, there was healthy competition on service and so everyone was happy – except the Government and the European Commission who cannot tolerate any such control on prices, and one useful Institute service to the shipping industry had to be dropped.
The rapid development in trade and shipping following the end of the Second World War resulted in shipbrokers becoming specialised. No longer “jacks of all trades” but masters of dry cargo chartering, or tanker chartering or ship sale& purchase or port agency. Many companies which previously only handled tramps or tankers, responded to the demands for agents made by the rapidly expanding number of national shipping lines, many of which were owned by recently independent members of the British Commonwealth, thus Liner Agency became an important branch of shipbroking.
It was in order to cope with the high degree of specialisation in shipping business that the Institute eventually modularised its examination syllabus and sub-divided shipbroking into six “disciplines”; the sixth was added because of the demand to extend our activities to take in ship operation and management.
Evolution was proceeding rapidly in another area. Our programme of education, examination and eventual qualification was and still is unique so that shipping personnel in countries outside the Commonwealth were asking why they could not take our examinations and become members. This prompted a series of discussions with the Privy Council for whom it posed something of a problem. In the same way as the Institute is obliged to exercise discipline over its members, so the Privy Council exercises its discipline over chartered bodies. It is a noteworthy but not often publicised, that the authority of the Privy Council is even higher than that of the elected government, but sadly not higher than that of the European Commission.
The solution to the Institute’s problem was for the Privy Council to impose the stricture that the Controlling Council must always have a majority of British subjects. With this clarified, a Supplemental Charter was granted in 1984 which permits membership to be offered to citizens of any country in the world.
The same Supplemental Charter enabled the Institute to offer a new class of membership – Company Membership. Many official bodies, whilst recognising and respecting individual professional membership, are geared to working only with firms or companies. By creating this new class of membership, various initiatives have become possible, including having representation on official committees such as H.M.Customs and various port authorities. Perhaps the most significant appointment for Company Members has been the collection of Light Dues on behalf of Trinity House.
The Institute now has 24 branches of which 8 are in the United Kingdom. Every year, in over 100 centres throughout the world, over 1000 candidates sit its examinations. Membership of the Institute is accepted in universities as a first degree for any person wishing to participate in a Masters Degree programme. The Institute’s qualification remains the unique hallmark of professionalism in the world of shipping business.