The naval might of Switzerland has prevailed. A country with all the maritime traditions of Outer Mongolia, Iowa and Chad has prevailed where 152 years of British endeavour have failed. The America’s Cup, a trophy given by Queen Victoria to promote yachting in the English Channel, and which has never been won by a British team has now changed hands from the USA (1851-1983 [No, that isn't a typo!], and 1988-1995), Australia (1983-1988), and New Zealand (1995-2003). And now Switzerland.
The main priviledge for the winner, apart from collecting a silver trophy named after its first winner, the schooner America is to get the right to host the next challenge, which is now expected to be in 2007. As this has to be on seawater, there is a little problem. Switzerland is about 450 miles from the nearest coastline. So the defence will probably take place in the Mediterranean or on the Altantic coastline of France.
It’s all very jolly for Ernesto Bertarelli the Swiss owner of the Alinghi team, for Russell Coutts the New Zealander skipper hired to beat his former team mates. So why no British success. Until the 1970s, no one else but the British even challenged the New York Yacht Club. The explanation I offer explains why Italian and now Swiss challengers have emerged, despite no obvious historical tradition for this sort of contest. In the first place, British ship design has been poor since the day that King Henry VIII watched his newly launched flagship the Mary Rose, capsize in Solent. Admiral Nelson is well known to have preferred a captured French frigate to the Admiralty’s own designs. At the battle of Jutland in 1916, inferior ship design was responsible for the destruction from one hit each of two British battle cruisers and only the desperate (and dying) actions of a crew member saved the flagship from suffering the same fate moments later. At the same battle the only German loss was a cruiser which had taken over one hundred hits and was scuttled. During the pursuit of the Bismark in 1942, the largest British ship ever built (later overtaken by the Vanguard) HMS Hood took one hit from the German battleship. Three out of 1,300 crew survived as the Hood simply blew up. During the Falkands war (1982) it was discovered that the British frigate hulls were so thin that one Exocet missile would melt a whole section of it, and the anti-aircraft missiles didn’t work.
Whenever a foreign government (Japan, Tsarist Russia etc.) has decided to build a navy, it has nearly always considered buying British. Yet having taken a look at what British shipyards had to offer, they almost invariably bought German, French or (before steam) Dutch. If the State Department will let them, they’ll buy American.
Second, status. If one country could combine public money and individual talent to produce a succesful America’s Cup challenge, it is France. Many of the yachting and long-distance windsufing records are held by French, especially Breton sailors. This is nothing new. Jean Cabot who landed in Newfoundland to secure the first English presence in the New World was French. Many of the place names hundreds of miles upstream in the US have curious names: Pierre, Des Moines, Boise to name but state capitals. The supreme British yachtswoman Ellen Macarthur is far better known in France than in the UK, indeed she seems to sail in French ships most of the time. When Macarthur completed a solo round the world trip a couple of years ago, the French president travelled 500 miles to welcome her ashore. I think the local British consul might have been on duty.
Third, taxes. Yachting is a rich man’s toy. To compete in an America’s Cup challenge, you need a cool $50 million to even think about taking part. You need a crew that’s incredibly strong and intelligent, neither feature being the sort of thing a comprehensive education is designed to produce. You also need to be able to hire the best at top rates, again more money and dynamic management. The result is that only big corporations, very big family businesses and governments have the money for this sort of enterprise.
Britain has plenty of corporations and government, but not a lot of family businesses in the billionaire bracket. The main blame for this is taxation. ‘Inheritance Tax’ or ‘Death Tax’ as I prefer to call it, whacks 40 per cent of capital from one generation to the next. One of Britain’s cutest institutions the National Trust was actually created to manage the property confiscated through taxation from Britain’s wealthy families, hence all the stately homes one can visit. Luxembourg has no Death Tax, I imagine that Switzerland’s can’t be very high and the Italian situation can’t be too harsh (one way or another).
Taxation also forces savings into distorted investment patterns, what the Austrian economists call “malinvestment”. In Britain we have wonderful private and corporate pension funds able to provide a far higher proportion of our old age needs than any other European country. Of course this means that there are virtually no family businesses of large scale in the UK, unlike France, Italy, Germany, Switzerland. everything is owned by the funds and administered by fund managers.
It is obvious that board-room politics and being the skipper of a racing yacht don’t mix, the best model on a ship is top-down autocracy. Politicians acting via bureaucrats also don’t make very good skippers either, except perhaps in wartime. But a family business that can throw a hundred million away from time to time has exactly the right focus to make a success of a racing team. Witness the Grand Prix Formula One racing dominated by the late Gianni Agnelli‘s Ferrari team. Yachting is the same. So too was aeronautics before the 1950s.
So for land-lubbers like myself – and most Swiss people – the America’s Cup has a curious function. It is a barometer of enterprise around the world. One of these years I expect to see a private challenge from Russia or China, now what an indicator of social change that would be.