Declaration of War are concerned) and running blockades, and that this protection shall continue from year to year, so far as hostilities are concerned in which Great Britain is not a belligerent. "(2) As freights would increase by leaps and bounds, according to the extent to which British tonnage is withdrawn from the carrying trade of the world, one member of the Association should not be able to benefit at the expense of another, and as we cannot foresee the extent or whereabouts of War Risks, or the important issues likely to be raised if Great Britain be a belligerent, it appears impossible to fix, in advance, an equitable rate of contribution on a mutual basis to meet such a contingency. "(3) I, therefore, submit that, so far as War Risks are concerned, when Great Britain is one of the belligerents, the protection afforded by this Third Class should only extend to the completion of voyages or contracts (with certain limits to be afterwards defined) commenced before the Declaration of War. "(4) That immediately war is declared by, or against, Great Britain, the rules shall provide for calling a meeting to extend or define the protection to be thereafter afforded by this Class, or to stipulate for such safeguards as to sailing with convoy, etc., as may be necessary for placing the risk on an equitable and mutual basis. "The alternatives appear to be :-(a) To cover War Risks as, when, and where they arise; all members contributing on the same basis. (b) To fix a nominal premium for each ship and each voyage. (c) To fix a basis of contribution for each trade on the past system. "As these risks vary to such an enormous extent, alternative (a) is unfair, and therefore impracticable from a mutual insurance point of view, unless combined with a warranty of sailing under convoy, with an adequate return for vessels whilst in safe port; alternative (b) is unworkable, as these rates vary from day to day, and from hour to hour; alternative (c) is open to a similar objection; but if the extent to which each trade should be handicapped for extra hazardous risks were agreed to by the members after war had been declared and the belligerents were known, a fairly equitable basis might be arrived at. "This Third Class would provide against the consequences of war between foreign nations. It would also protect members until the termination of contracts entered into before a declaration of war by or against Great Britain and when something is known of the whereabouts, the nation and probable extent of the war risks, shipowners after conferring with the Government can then decide on the best means of mutual protection, instead of now rushing into an unknown liability, the ruinous extent of which they cannot even estimate." This scheme was adopted by the Directors of the North of England Protecting and Indemnity Association, and in November 1898 a Third Class of this Association was formed, the capital of which in 1900 was upwards of £18,000,000, the following being the principal rule by which it was governed : "When, in the opinion of the Directors, war between Great Britain and another maritime Power is imminent, or when war shall break out between Great Britain and another maritime Power, the Directors shall at once, if possible, consult the Ministers of the Crown, and shall also immediately summon a general meeting of the members for the purpose of submitting to them such additional rules, or such alterations or repeal of the existing rules, as may be necessary, or desirable, in the interests of the members, or of the Empire. The members at such general meeting may adopt the additional rules, or alterations, or repeal, with such amendments or additional rules as they may think fit, whether defining, enlarging, or restricting in any way whatsoever the protection and indemnity thereafter to be afforded to members of this class, or making any differences between the steamships entered by forming additional sections, or by varying the rates of contribution payable by members, according to any circumstance affecting, or which may be considered to affect, the war risks to which they are, or may be, exposed. Unless, and until, such general meeting is summoned, and unless, and until, the members at such general meeting alter, or add to, or repeal, the rules, and until the date or dates fixed by the members at such general meeting for the altered or additional rules or repeal to come into force and take effect, and except as provided by such altered or additional rules or repeal, the protection and indemnity afforded by this class shall be, and continue to be, as provided by the rules existing at the time." The effect of this, so far as British shipowners were concerned, Mr. Metcalfe contended, was to afford complete indemnification for capture at sea. The question of National Indemnity and National Insurance was revived later on before the "Royal Commission on Supply of Food and Raw Material in Time of War." The alternative suggestions made were: (a) that the cost of insuring against war risks be reimbursed to the shipowner or merchant by Government; or (b) that Government itself undertake the insurance of shipowners and shippers; or (c) that Government make good to shipowners and shippers all or part of their losses by capture. The last of these alternatives was the one which received most support from the witnesses heard.2 The chief arguments in favour of national indemnification were that it would be more economical than private insurance, because the country would only have to pay for actual losses; there being no premium, nothing would have to be paid on ships and goods which came safely to port; that premiums contain a large scare element both before and during war; that it was more equitable to charge the risks to the taxpayer generally than to the consumer; that abnormal rise in the price of imported commodities would be avoided; that a larger number of ships would be kept at sea; and that the greater their number, the smaller would be the percentage of losses, consequently the larger would be the supplies which would arrive in safety; that war insurance, which would otherwise have to be paid on exported goods, and cause British manufacturers to lose foreign markets, would be avoided, etc. On the other hand, it was contended that a system of national indemnification was not the most economical way of meeting war losses; that competition among underwriters was so great that there was little chance of premiums becoming very high; that such a system would lead shipowners to run risks which they could not otherwise afford to do; that frauds, such as profiting by the indemnity to get rid of inferior ships, would be made possible; that there would be difficulty in separating the war risk from sea risks, and in checking valuations, etc. ... The Commission, discriminating between the views in favour of and those against the proposed systems, decided as follows: "We are . . . of opinion that a system of national indemnity against loss from capture by the enemy would operate both as an additional security to the maintenance of our over-sea trade and as an important steadying influence upon prices. .. We wish to place distinctly on record our opinion that the advantages to be gained from some well-considered scheme of the kind seem to us largely to outweigh any objections which have been stated to us. We do not feel ourselves competent to draw out the precise terms of such a scheme, but we look rather in the direction of a National Indemnity than in that of National Insurance. We recognise that National Insurance may at first sight appear more attractive, since the amount received by the State in premiums would be something to set against what might have to be paid out on account of losses. But this economy seems to us to be more apparent than real, when it is remembered that the amount paid in premiums, both on 1 Report, with Minutes of Evidence and Appendices, 3 vols., 1995. 2 Different schemes were put forward by Mr. Wilding, manager of the Leyland and Dominion Line; Mr. Douglas Owen, secretary of the Alliance Marine and General Assurance Company; Capt. Inglefield, R.N.; Mr. Booth, manager of the Booth Line; Sir John Glover, chairman of Lloyds' Register of British and Foreign Shipping; and Mr. Leverton Harris, M.P. Evidence was also given by Sir H. Hozier, K.C.B., then secretary of Lloyds; Admiral Sir C. Bridge, G.C.B.; Mr. Gow, secretary of the Union Marine Insurance Company; Mr. Haslam, manager of the Indemnity Mutual Marine Insurance Company, etc. the goods carried and the ships in which they come, is almost certain to be paid eventually by the consumer. Similarly, it has been suggested that National Insurance, owing to the payment of a premium by the shipowner, does not, to the same extent as National Indemnity, imply preferential treatment of a single industry; but, even granting that some preference would accrue to the shipowner, the importance of maintaining efficient means of transport in time of war and of keeping rates of freight, so far as possible, at a normal level, is so great as to outweigh this objection. Moreover, it appears to us that a scheme of National Indemnity will leave it more open to the Government, acting through the Admiralty or otherwise, to impose conditions, to prescribe rules, and to keep greater control of the risks that, in some form or another, will undoubtedly have to be run." The Commission in conclusion recommended the appointment of a small expert Committee to investigate the subject and frame a scheme, after consultation with underwriters and others interested in the British mercantile marine. 1 At a general meeting of the Liverpool Steamship Owners' Association on October 13, 1905, a statement strongly supporting the Royal Commission's recommendations was laid before the meeting by its chairman, and a resolution adopted in favour of communicating with the other Shipowning Associations, and, through the Liverpool Chamber of Commerce, with the Chambers of Commerce throughout the country, with a view to the necessary representations being made to the Government to secure the appointment, at an early date, of the proposed Expert Committee. The Liverpool Shipowners' Association supported the Steamship Owners' resolution, adding a rider to the effect that private property should be altogether exempt from capture in time of war. On October 31 the Council of The Incorporated Chamber of Commerce of Liverpool adopted a similar resolution, also adding that they were of opinion that the Expert Committee, if appointed by the Government, "should be instructed to consider also the desirability of effecting an international agreement that private property should be altogether exempt from capture in time of war." In their replies to the Liverpool Chamber's circular to other Chambers, the Aberdeen, Leith, Blackburn, Birmingham, Grimsby, Bradford, Newport, Bristol, Plymouth, Birstall, Belfast, and Limerick Chambers promised to support the resolution; the Walsall, Guernsey, Coventry, Dudley, Newcastle, and Glasgow Chambers, to give the matter consideration; the South of Scotland and Wakefield Chambers were opposed to the resolution. Eventually in July 1906 a Committee 2 was appointed by the Treasury to investigate the question, and report on the following points : "(1) Whether it is desirable that the State should undertake to make good to shipowners and traders losses incurred through the capture of shipping by the enemy in time of war; "(2) If so, whether such indemnity should be granted gratuitously, or should be coupled with the payment of premiums calculated to recoup the State-either wholly or in part-for the cost to be incurred; and "(3) What conditions should be attached to the grant of the indemnity, and what arrangements should be made for the proper working of the scheme." 2 The Committee was composed of the following gentlemen :-The Right Hon. Austen Chamberlain, M.P.; the Right Hon. Sir R. B. Finlay, K.C., G.C.M.G.; Sir Thomas Glen Coates, Bart., M.P.; Sir J. L. Mackay, G.C.M.G.; Sir George Sydenham Clarke, G.C.M.G.; Sir George H. Murray, K.C.B.; Mr. H. Llewellyn Smith, C. B.; Captain C. L. Ottley, R.N., M.V.O.; Mr. Edward Beauchamp, M.P.; Mr. Henry Neville Gladstone; Mr. Frederick Huth Jackson, and Mr. Arthur Lindley; Mr. George H. Duckworth to act as secretary. XVA MERCHANT VESSELS AS CRUISERS AMONG the subjects which, it is announced, will be included in the Russian programme of the subjects submitted for discussion at the second Hague Conference, is the question of the rules which should govern the transformation of merchant ships into vessels of war. Usage has already practically solved the only question of principle which seems to arise in connection with it, namely, as to whether using merchant ships as cruisers is within the operation of the clause of the Declaration of Paris abolishing privateering. It seems generally admitted that a privateer is a private vessel, the captain of which receives a commission (letters of marque) to carry on war and effect captures at his own risk and expense; and that a merchant vessel transformed into a cruiser with a naval officer in command, flying the official naval colours and acting under the direct orders and at the risk and expense of the official naval department, is not a privateer. In the Spanish-American War, neither belligerent being a party to the Declaration of Paris, both were free to employ privateers against each other, and, as a fact, the Spanish Government reserved the right to issue letters of marque, though it made no use of it. It declared, at the same time, that for the purpose of cruising, it would organise a service of "auxiliary cruisers of the Navy," composed of "ships of the Spanish mercantile navy," and "subject to the statutes and jurisdiction of the navy." Such a force was organised by the United States under the command of officers of the Navy. One of these was the City of Paris,1 one of a class of steamers which, under the provisions of the United States mail-subsidy Act of March 3, 1891, were subject to be taken over by the United States Government as cruisers or transports. By a charter-party, entered into April 30, 1898, between the owning company 2 and the Secretary of the Navy, possession of the ship was transferred to the U.S. Government. She was then heavily armed, and converted into an auxiliary cruiser. The charter-party provided that the ship should be "manned, victualled, and supplied at the expense of the charterer." The charterer was also to pay all other expenses, and at the termination of the charter, which was to be at charterer's 1 She was known as the Yale while acting as a cruiser, and is now known as the Philadelphia. 2 The American Line. will, the ship was to be returned to the owner in good repair, less ordinary wear and tear. A supplementary agreement provided that the ship was "to be manned by regular officers and crew, and in addition thereto was to take on board two naval officers, a marine officer, and a guard of thirty marines, and was to be victualled and supplied with two months' provisions and about four thousand tons of coal; the actual cost to the owner of such additional equipment and services to be reimbursed by the charterer upon bills to be certified by the senior naval officer on board." There were also stipulations protecting the owner against all expenses and liability, and a provision that, during the continuation of the supplementary agreement, the steamship was to be "under the entire control of the senior naval officer on board." Under these agreements the Government of the United States placed on board the ship a captain and a lieutenant of the Navy and a marine guard of 25 enlisted men. "There were also on board 269 other persons, not commissioned by or regularly enlisted in the service of the United States, but comprising the ship's company, both officers and men, who were doing duty on board and were borne on the books of the ship." On a question which arose as to the distribution of prize money, it was held 1 that she was neither a vessel of the Navy" nor a privateer, but came within the statutory class of vessels "not of the Navy, but controlled by either executive department," and was, as an "armed vessel in the service of the United States," "entitled," in the words of the statute, "to an award of prize money in the same manner as if such vessel belonged to the Navy." 2 1 The Rita, 89 Fed. Rep. 763. 2 Most of these particulars are taken from Bassett Mcore's Digest of International Law, 1907, vii. p. 542. The que stion had already been raised in connection with the proposal of Prussia to create a "volunteer navy" in 1870. The French Government protested against it as contrary to the Declaration of Paris, but the then British Secretary for Foreign Affairs, Lord Granville, whose attention was drawn to the proposal, did not find that the conditions in which Prussia contemplated using the volunteer navy fell within the scope of the Declaration. Probably this was to some extent because Prussia had announced that she would not capture private property at France would not agree to observe a like exemption, and Prussia then abandoned it also. Prussia, at the same time, abandoned also her scheme of forming a "volunteer navy." As the Prussian officers, though wearing naval uniform, were to be the ordinary merchant officers and the crew, and were to be furnished by the owners of the ships, the difference between such a cruiser and a privateer would have been less marked than in the case of the United States cruisers. sea. |