Chapter IV: Trading with the Enemy (2)

The Pennsylvania Milling and Export Company suggested that possibly their shipments had been confused with those of an English firm, Collier and Sons, of Bristol. It was alleged to be a notorious fact that this firm had made large shipments of flour to the Transvaal Government; that Arthur May and Company were the agents of the firm in the Republic, and that the Bristol firm had shipped on the same steamers on which American goods were carried. A.J. Toomey, President of the Pennsylvania firm, in alleging these facts pointed out that he mentioned only what was well known in shipping circles and did so merely to establish the fact that there had been no wrong intent with reference to his shipments. He urged that the question of the justice of indemnification should be settled, leaving the respective rights of consignors or consignees to the proceeds to be settled afterward.[48]

[Footnote 48: For. Rel., 1900, p. 589; Toomey to Hay, Feb. 12, 1900.]

Mr. Choate, in carrying out instructions received from Washington, insisted that where the ship was seized and taken into port on the charge of trading with the enemy, and where the flour was not held as contraband, and was not claimed to be contraband, and under the circumstances could not be involved in the specific charge against the ship, it was manifestly a great hardship for the owners of the flour to be compelled to go into the prize court at a port short of the original destination even for the purpose of proving their ownership, which he insisted would involve costs and damages for the detention and possible deterioration in value.[49] It was intimated that aside from the pecuniary features of the situation it was of primary importance to insist upon the principles involved, with a view to preventing an extension of belligerent rights to the detriment of all neutral commerce in time of war. Emphasis was therefore placed upon the point that evidence must be shown that the goods were really for the supply of the enemy's forces and that this was in fact their destination at the time of their seizure. The fact was pointed out that otherwise the action of the British authorities seemed to imply the right to exercise an embargo on the sale and delivery of non-contraband goods in the ordinary course of trade with the people of the Republics. It was intimated that this was inconsistent with the view of contraband expressed by the English Government, and wholly inadmissible from the point of view of the United States.[50]

[Footnote 49: For. Rel., 1900, p. 566; Choate to Salisbury, Jan. 13, 1900.]

[Footnote 50: For. Rel., 1900, p. 578; Choate to Salisbury, Jan. 29, 1900.]

The argument was presented that the British Government had seized flour shipped to buyers at Delagoa Bay and had prevented it from reaching that point in time to meet a good market. Consequently, in view of the fact that it was not sold for any purposes hostile to Great Britain, it was urged that the latter should not be allowed to consider herself relieved of any responsibility for indemnity or direct loss assumed by the shippers, or for any indirect loss for which the shippers might have to compensate the buyers on account of the diversion and detention. It was the opinion of the United States that the mere release of the flour to qualified owners did not meet the obligation in the case because the owners could not possibly take the delivery of the flour owing to the obstacles of war at the points where the goods lay. Even if they could do so they would naturally suffer considerable loss by the condition of the market and by any diminution in value that might have occurred to the flour through climatic deterioration.

The American State Department, therefore, suggested as the only equitable plan apparent under the circumstances that Great Britain buy the flour and other innocent goods at their invoice price and pay over the proceeds of the purchases to those persons who could prove a just claim for its value. An additional sum was also asked as "reasonable compensation" for loss of market and other losses that might have been suffered by American interests.[51] In other words, the English Government should use the flour, pay the costs and indemnify the owners reasonably, since the latter were entirely innocent and had depended upon the usual rights and immunities of neutral shippers in time of war. The fact was pointed out that the situation was causing an uncertainty and hesitancy in business circles which was detrimental to all American interests. Although a number of the consignments were being delivered at Delagoa Bay, presumably by English ships, it was alleged that the seizures and the unforeseen attitude of Great Britain had compelled all later shipments to go by way of Hamburg or Bordeaux when seeking the ports of South Africa in the way of ordinary neutral commerce in order to avoid using British bottoms as a means of transportation. Many of the drafts had been returned unpaid and others were expected in due course, and whether paid or not they would finally have to be lifted by the shippers from the United States, since they were the final recourse.[52] All delay tended to reduce the value of the goods, which were perishable, on account of the climate and because of Cape Colony duties and loss of market.

[Footnote 51: For. Rel., 1900, p. 582; Toomey to Hay, Jan. 23, 1900.]

[Footnote 52: For. Rel., 1900, p. 540; Hay to Choate, Jan. 10, 1900.]

The offer was made by several of the American shippers to sell to Great Britain for the value of the goods at the port of original destination at the time they would have arrived there had the voyage not been interrupted. And the American representative urged that it would be advisable for all American shippers who were interested to agree to sell upon the same terms with a view to securing an arrangement which would include all neutral American property. He suggested that where the title to property was doubtful both shipper and buyer might unite in the sale, since this course was preferable to incurring questions as between consignors and consignees in the prize courts.[53]

[Footnote 53: For. Rel., 1900, p. 551; Choate to Hay, Jan. 12, 1900.]

The English Government had naturally been unwilling to buy at current prices for the reason that prices were doubled at Delagoa Bay after the seizures, but it was considered that the price there on the day of the seizures was not unreasonable. Great Britain was willing to buy, but emphasized the point that the alleged owners must prove their title to ownership beyond a doubt as an essential condition of the arrangement, since the Government could not incur the risk of paying one man only to have another appear later and prove that he was the real owner. Fears were expressed that the question of ownership would cause trouble, although the regular shipping documents by which the goods had gotten into the ships, it was thought, should be sufficient proof provided the joint consent of consignors and consignees could be secured.[54]

[Footnote 54: For. Rel., 1900, pp. 553, 554, 579]

The English view had been that the whole cargo was included in the libel for trading with the enemy declared against the ship, but the plea of the American owners was heard, that the rules of prize procedure should not be so rigorously enforced in the present instances, since such an interpretation would have led to obvious injustice by requiring innocent American owners to appear before the court to prove the title to their property.[55] Such a requirement, it was realized, would have led to difficulties of an almost unsurmountable character under the circumstances. Claimants would have had to submit evidence showing a _bona fide_ American citizenship and an actual title to the ownership of the goods at the time they were seized. Within the rules of prize jurisdiction the consignee on whose account and at whose expense the goods were shipped is considered the owner of such goods during the voyage. And as a corollary the further rule is suggested that the right to claim damages caused for an illegal seizure would be in the owner. In the prize court the delay caused by all such questions as between consignor and consignee would have been almost endless.

[Footnote 55: For. Rel., 1900, p. 579; Choate to Hay, Feb. 2, 1900.]

The question might naturally have arisen whether there could be any basis for a claim for indirect loss sustained by an American shipper growing out of the sale on credit to citizens of the Transvaal. It might be a question, too, whether the consignor might, notwithstanding the seizures, be able to recover at law the full contract price of the goods shipped prepaid to the consignee, and if so, whether the seizure could be considered legally as a wrong against the American consignor. And even granting that the latter were unable to recover at law from the consignee, the question would still remain whether under all the circumstances such inability on the part of the American consignor could be legally imputable to the act of the British Government in making the seizure. The question might also have arisen where an agent had bought for the Transvaal Government on credit, so that the title passed when the goods went on board and the goods were discovered to have been contraband, whether an American shipper might not appear to have been privy to the real character of the purchases. In such a case the United States Government could hardly have championed the cause of a party who had shipped contraband. A prize court is filled with pitfalls of the kind, but the diplomacy of Secretary Hay, backed by the prestige of the United States and a reciprocal feeling of friendship between the two nations, was able to avoid all such questions by inducing Great Britain to agree upon a settlement without compelling the claimants to go into the prize court. Although it was pretty well ascertained that no actual contraband in the usual sense of the term had been carried from America by the ships which were seized, difficult questions were thus avoided as between liens and general ownerships which might have arisen had American shippers been compelled to go into court.

It is not a universal rule where the shipper has not been paid for his goods that the property is still in him, so as to constitute him the owner in a prize court, or for the purposes of sale. By the terms of sale and shipment he may not have retained a lien on the goods. But in any case as a rule the title of the absolute owner prevails in a prize court over the interests of a lien holder, whatever the equities between consignor and consignee may be.[56] Consequently the policy adopted by Secretary Hay in demanding that Great Britain should settle with all American shippers on an equitable basis without forcing them to take their chances in a prize court was the wisest course that could have been pursued.

[Footnote 56: The _Winnifred_, Blatch. Prize Cases, 2, cited 2 Halleck, International Law, Engl. Ed. (1893), 392.]

In the final arrangement Great Britain admitted that the American goods had not been liable to seizure except as a result of the libel attaching to the ships. But any claims for damages due to the owners of the cargoes on account of the failure of the vessels to deliver at the port mentioned in the freight contract, it was asserted, should be made against those who entered into or became responsible for the execution of the contract for the delivery which they failed to perform, and the assumption that such damages could be sustained at law would depend on the terms of the contract of carriage. The English Government, however, did not admit that it was in any way liable for damages to the owners of the flour and other goods, since their detention was due entirely to the circumstance that the ships were not able to complete their voyages, and the fact that they could not complete their voyages was due to the circumstance that such voyages were illegal by the law of the flag under which they were sailing.[57]

[Footnote 57: For. Rel., 1900, pp. 604-605; Salisbury to Choate, March 3, 1900.]

Although the financial settlement which Great Britain was willing to make was accepted by the United States, this acceptance did not imply an acquiescence in the view expressed by the English Government with reference to the conditions under which flour and other foodstuffs might become contraband of war, nor in the doctrine of continuous voyages as applied by Great Britain to trading with the enemy. It was preferred at Washington to follow the usual rule and avoid passing upon hypothetical cases until occasion had called them into actual existence. The problem which had been before the Department of State was, not to force Great Britain to declare herself finally upon broad questions of international law, nor to express the final attitude of the United States upon questions which were not immediately at issue, but to meet the demands of American shippers and secure their immediate interests by some equitable agreement with Great Britain. The arrangement agreed upon, therefore, met only the necessity of the case immediately in view. The United States Consul-General at Cape Town was to arrange with Sir Alfred Milner, the British High Commissioner in South Africa, for the release or purchase by the British Government of any goods owned by citizens of the United States, which, if purchased, were to be paid for at the price they would have brought at the port of destination at the time they would have arrived there had the voyage not been interrupted.

Against certain articles, especially the oil consigned to the Netherlands South African Railway, an allegation of enemy's property was justly made and the oil confiscated.

In the end most of the American claims were withdrawn or paid in full. In the former event the American owners threw the burden of proof of ownership upon the consignees, who were instructed to present their claims through their respective governments. But it should be noted that in acceding to the American demands by purchasing the goods, the British Government emphasized the fact that the act was purely _ex gratia_ on the part of England. The British representative clearly stated that the goods had been legally detained and that it was open for the owners to come and take them upon proof of ownership before the prize court. It was pointed out that the fact that none but British ships ran between Cape Colony and Delagoa Bay, although an unfortunate circumstance, was one which could hardly be held to be a fault of the English Government. The enforcement of the English law was the right of Great Britain no matter upon whom the inconvenience might happen to fall. Lord Salisbury said: "It must be distinctly understood that these payments are made purely _ex gratia_ and having regard to the special circumstances of this particular case. No liability is admitted by Her Majesty's Government either to purchase the goods or to compensate ... for the losses or for the expenses ... incurred."[58] The view held by the English statesman was that Great Britain's concession in these cases should not serve as a precedent in the future.

[Footnote 58: For. Rel., 1900, p. 618; Salisbury to Choate, July 20, 1900, with reference to the _Beatrice_.]

The attitude which Great Britain had assumed with reference to the different seizures was generally considered a menace to neutral commercial interests should the British position be accepted as a precedent for similar cases that might occur. The danger of such a precedent had been realized by Secretary Hay and throughout the negotiations he had dwelt upon the fact that while the protection of American interests was the end immediately sought, the principles which underlay the disposition of the particular cases were of the greater importance.

Lord Roseberry, too, called attention to the danger of the precedent should England determine to treat foodstuffs in general as contraband of war. It was pointed out, however, that in the seizures of foodstuffs near Delagoa Bay the question of contraband did not necessarily arise, since all trade with the enemy, even in articles the most innocent, was forbidden under heavy penalty. The seizure of certain classes of foodstuffs as of a contraband character did not of necessity involve the principle of treating all foodstuffs as contraband of war. The English view was that it had long been recognized that a belligerent might discriminate between foodstuffs obviously intended for the commissariat of an army in the field and foodstuffs which might be properly imported for the use of the non-combatant population.

The consensus of opinion, however, seems to be that while there may be reasonable ground for including tinned or canned meats and the like in the former category, flour naturally belongs to the latter class, and it has been pointed out that neither the British Government nor any other has the power of treating what it pleases as contraband without reference to the prize court, with which alone the decision rests. The prize courts of all countries have held at different times that foodstuffs under certain circumstances are contraband, as, for instance, where they are intended for the supply of a belligerent garrison as well as in less obvious cases, but any decision which considered foodstuffs generally as contraband would be disquieting to all neutral interests.

One writer has asserted that such an innovation would not be alarming to Great Britain as long as she remained predominant at sea, since the more effectual her sea power were declared to be in preventing sustenance from going over sea to her enemy the better it would be for English predominance. It is believed by this writer that during the existence of this supremacy at sea she would be able to protect the passage of general foodstuffs from foreign countries to her own ports. He concludes, however: "Of course if we lose our predominance at sea it is another matter. But then, è finita la Musica."[59]

[Footnote 59: Thos. Gibson Bowles, Jan. 4, 1900. For. Rel., 1900, p. 546.]

The acceptance of the principle that foodstuffs are contraband of war, it need hardly be said, is not even a remote probability except under very exceptional circumstances where they are for the immediate supply of the enemy's army or navy, and in most cases of this kind they can usually be confiscated as enemy's property without a direct implication of a distinctly contraband character. In other words, the use for which they are intended may give reasonable ground for the conclusive presumption that they are for the enemy's immediate supply, whether the title to property in them vests in the enemy or in some other agency, and the last question is always to be decided by the prize court of the particular country which has made the seizure. The decision should be based upon a careful examination of the evidence which is submitted to the court, and not presumed from the fact that the political power has exercised the belligerent right of visit, search and detention. The final decision of confiscation rests with the prize court.

By way of recapitulation it may be pointed out that the goods seized or detained by the English authorities in South African waters were shipped by American merchants and manufacturers, many of them on regular monthly orders to alleged reputable merchants in Lorenzo Marques, Delagoa Bay, in Portuguese territory. Certain consignments were intended for alleged reputable firms in Johannesburg, South African Republic. The articles composing the cargoes of the ships were of the general character of foodstuffs, chiefly flour, canned meats, and other food materials. Lumber, hardware and various miscellaneous articles generally considered innocent in character were also included. There was a consignment of lubricating oil to the Netherlands South African Railway, the latter company held to be the property of the Transvaal Government, and a like consignment to the Lorenzo Marques Railway, a Portuguese concern. At first the seizures which occurred at points between Cape Colony and Delagoa Bay were supposed to have been made on account of contraband. Later Great Britain declared that the ships had been seized because of the violation of a municipal ordinance forbidding British subjects to trade with the enemy. The _Mashona, Beatrice_ and _Sabine_ were British ships sailing under the English flag. The _Maria_ was a Dutch vessel sailing under the flag of Holland, but was supposed by the English authorities to have been under charter to an English firm. In the latter case the ship would have been liable to the English law, but for the mistake the owners of the ship as well as the owners of the cargo were indemnified by the English Government. The seizure of the cargoes of the British ships was declared to have been merely an unavoidable incident of the seizure of the alleged guilty ships. Compensation was made to American shippers by the purchase of the goods. The consignment of oil to the Netherlands South African Railway was confiscated as enemy's property.

The views of Great Britain and the United States were divergent with reference to the principle of treating foodstuffs as contraband. Rather as an _obiter dictum_ the former declared: "Foodstuffs with a hostile destination can be considered contraband of war only if they are supplies for the enemy's forces. It is not sufficient that they are capable of being so used; it must be shown that this was in fact their destination at the time of the seizure."[60]

[Footnote 60: For. Rel., 1900, p. 555.]

The United States declared that the validity of the right to seize goods on the ground of contraband could not be recognized "under any belligerent right of capture of provisions and other goods shipped by American citizens in the ordinary course of trade to a neutral port."[61]

[Footnote 61: For. Rel., 1900, p. 540.]

England declared: "Her Majesty's Government have not admitted liability in respect of any claims for loss or damage sustained ... in consequence of the delay in the delivery of the ... goods. But they have offered to purchase the flour on board by United States citizens. Claims for redress for the non-delivery of the cargo appear to be a matter for settlement between such claimants and the ship which undertook to deliver. British subjects who owned goods on board, having no right to trade with the enemy, are not in the same position as foreign owners. The latter are not guilty of any offense in trading with the enemy from a neutral country unless the goods are contraband and are found on board a British ship in British territorial waters or on the high seas, _and are destined for the enemy's countries_."[62]

[Footnote 62: Mr. Broderick, Under-Secretary for Foreign Affairs, speaking in House of Commons in regard to the _Mashona_ on March 19, 1900.]

With reference to trading with the enemy Great Britain attempted to extend the accepted doctrine of continuous voyages. She expressed herself as follows: "An ultimate destination to citizens of the Transvaal even of goods consigned to British ports on the way thither, might, if viewed as one "continuous voyage" be held to constitute in a British vessel such a "trading with the enemy" as to bring the vessel within the provisions of the municipal law."[63]

[Footnote 63: For. Rel., 1900, p. 609.]

The United States held that "the destination of the vessel being only such [British] ports ... the port authorities may presumably, and are assumed to be bound to, prevent transshipment through British territory of contraband destined for the Boers."[64]

[Footnote 64: For. Rel., 1900, p. 594.]

No contraband was shown, and the attempt which Great Britain made to extend the ruling of the Supreme Court of the United States in 1863 so as to apply to trading with the enemy cannot be considered to have been successful. The questions of international law involved in the seizures of flour and foodstuffs generally were not answered by the final arrangement between the Governments concerned. In his Message to Congress in 1900 President McKinley deplored the fact that while the war had introduced important questions the result had not been a "broad settlement of the question of a neutral's right to send goods not contraband _per se_ to a neutral port adjacent to a belligerent area."

Two things, however, were apparently admitted: (1) that a belligerent may declare flour contraband _pro hac vice_; (2) that a belligerent may detain neutral goods and divert them from their destination on a reasonable suspicion that they are intended for the enemy, subject to a claim for compensation including damage by detention.