CHAPTER XIV.

THE EFFECT OF THE DECLARATION OF PARIS ON CARRYING TRADE.

ONE of the first effects of war would undoubtedly be the subjecting of all capturable property on the seas to "War Risk" premiums of insurance. Mr. Dawson, a recent writer on the subject, tells us that during the great wars with Napoleon the war risk premium rose on voyages from Russia, Norway, Sweden and the Baltic, in 1811, to 22 per cent. This, however, was unusually high, the average rate of premium during 1812 being 6.5 per cent., as compared with 0.339 per cent. during 1892. Mr. Dawson adds:

"An average all-round premium for our present trade would "be about 148. taking steam and sail together, and for steam "only about 10s. per cent."

And he proceeds to say:

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'In one respect we shall probably feel our war premiums, when they do come, more keenly than we did before. If they reach

only the actual level they reached in the latter years of the

last war, they will increase eight or tenfold the ordinary "marine rate before the war. It is true this might not make "the total premium so heavy as it was eighty years ago. But "it would handicap us in our competition for the carrying-trade of the world, where we have now hardly a rival, to a very

1 Our Next War in its Commercial Aspect. J. T. Dawson. London, 1894, pp. 91-92, 94, 96.

"serious extent. For five per cent. on the value carried, added "to our freight and insurance (percentages being counted as "they are in these days) would be very serious in its effect."

Before the Declaration of Paris, enemy's property was capturable under any flag, and therefore paid the war risk premium, whether shipped in a neutral or in a belligerent bottom. But under the Declaration of Paris, enemy's property is capturable only when in a belligerent, and not when in a neutral, bottom. The war risk premium, therefore, whether of 5 or of 22 per cent. would attach, in case Great Britain were at war, only to British property carried in British merchant vessels; and not to British property carried in neutral vessels-the same being, of course, equally true as regards the other belligerent. Under the old rule a British merchant vessel was as safe as any other for British property; under the new rule it would be less safe, and the difference of risk would be represented by what the war risk premium settled down to, whether 5 or 20 per cent-which would be an additional charge to that extent, on British commerce carried in British merchant vessels.

It seems impossible to doubt, neither has any competent person who has looked into the matter ever doubted, that the effect of this must be at once largely, if not wholly, to divert British trade into neutral bottoms. The British merchant vessel would be deserted for the neutral by the British merchant; it would, in addition, be unable to continue the carrying it formerly did in time of peace for the present enemy; and, not all indeed, but a large proportion of our tonnage must be laid up for want of employment. Meantime a new and great demand has sprung up for neutral carriage. The neutral has had laid open to him, first the whole carrying-trade of the other

belligerent, which can no longer use either its own ships, or the British ships which formerly carried for it; and, secondly, a considerable portion of the carrying-trade of Great Britain herself. The neutral, it is true, does not possess the necessary tonnage for carrying on this new trade. But the laid-up ships of Great Britain, as well as those of the other belligerent, will be for sale, and for sale cheap; and a proportion of these, added to those that can be built by the neutral at home, will drive a roaring trade, and pay for themselves over and over again. Meantime, the result is that a large part-or as some think the whole of the British carrying trade is lost, possibly never to be recovered.

This effect of war under the Declaration of Paris is ably set forth by the Select Committee of the House of Commons on Merchant Shipping, which sat in 1860, and which, appalled by the prospect it had itself set forth, hastily suggested as its own remedy the exemption of all private property from capture at sea-a suggestion dealt with elsewhere. The Committee, on page xiii of its Report, says:

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America was invited to be a party to this general international "agreement, but demurred, and coupled at first her assent to "the abolition of privateering with the condition that private "property at sea should no longer be subject to capture. Finally "she refused to be a party to a convention whereby she would 'be precluded from resorting to her merchant marine for privateering purposes in case she became a belligerent. But this "is not surprising, for the United States has obtained a recog"nition of the rights of neutrals for which she contended "throughout a former period of hostilities, and Great Britain "has surrendered her rights without any equivalent from the "United States. Our shipowners will thereby be placed at an "immense disadvantage in the event of a war breaking out with "any important European power. In fact, should the Declara"tion of Paris remain in force during a period of hostilities, the

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"whole of our carrying-trade would be inevitably transferred to "American and other neutral bottoms.

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"From the evidence given by various witnesses it appears "that at a recent period, upon a mere rumour of war in Europe, “in which it was apprehended that Great Britain might be involved, American and other neutral ships received a decided "preference in being selected to carry produce from distant "parts of the world to ports in Europe, whereby even in a "period of peace British shipowners were seriously prejudiced. "It seems, therefore, that the state of International law with "reference to belligerent rights affecting merchant shipping "cannot remain in its present state; for whilst England may "be involved in any great European war, the United States is "almost certain to be neutral; and thus our great maritime "rival would supplant us in the carrying trade.

"We must therefore either secure the general consent of all "nations to establish the immunity of merchant ships and their "cargoes from the depredations of both privateers and armed "national cruisers during hostilities; or we must resort to the "maintenance of our ancient rights, whereby, relying upon our "maritime superiority, we may not merely hope to guard un"molested our merchant shipping in the prosecution of their "business, but may capture enemies' goods in neutral ships, and thus prevent other nations from seizing the carrying trade "of the kingdom during a state of hostilities.

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"Your Committee consider it their duty to call the attention "of your Honourable House to the importance of this question, "which, if not solved during a period of peace, may cause "incalculable embarrassment at the outbreak of a war. It is "doubtless the prerogative of the Crown to initiate proper measures to maintain the honour and guard the interests of "the country in this respect. Your Committee, however, can"not but express their opinion that a compact like the Declara'tion of Paris, to which a great maritime power has refused to "be a party, may, in the event of hostilities, produce complica"tions highly disastrous to British interests. As matters stand,

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"England is under all the disadvantages of the want of reciprocal 'pledges on the part of the United States to refrain from privateering, or from the attempt to break a blockade, which, as "heretofore, a sense of self-preservation might compel Great "Britain to establish; while Powers so unpledged, urged by "every motive of self-interest, would be in a position to inflict

the deepest injury upon British interests, under the same "unjustifiable pretences as were put forth during the war at "the commencement of the present century."

Two years later (on 17th March, 1862) Mr. Lindsay, speaking in the House of Commons, said:

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"Let them suppose that unhappily we were at war with France. "In that case let us ask the question, would we require our large "ships to protect our ships and commerce on the seas? No! 'for the simple reason that all our commerce would be conveyed "from this country under neutral flags. No sane merchant "would ship in any other than American or other neutral 'bottoms, so long as there was a remote danger even of British 'ships being captured. The result would be that all British ships "would be laid up in port or sold to neutral nations."

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In the same debate Mr. John Bright said:

"The mercantile ships of England and France would then be "shut up, and the neutrals would be driving a trade more "flourishing than they had ever had before . . . we should have "the mercantile navy of both countries shut up, to the absolute “ruin, for a time and permanently, of some of the shipowners of "both countries. If anybody doubts this, I think they may take "the opinions of the Liverpool Chamber of Commerce" (Han"sard, 1862, vol. clxv, pp. 1362, 1601, 1615, 1629, 1659).

And seven years later (on 5th August, 1867) Mr. John Stuart Mill said:

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"Our whole export and import trade would pass to the neutral flags; most of our merchant shipping would be thrown out of employment and would be sold to neutral countries, as hap'pened to so much of the shipping of the United States from the presence of two or three, it might almost be said of one cruiser. "Our sailors would naturally follow our ships, and it is by no means certain that we should regain them even after the war "was over" (Hansard, 1867).

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