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on the issue of these struggles.

But, even in the mighty conflicts at sea between
Russia and Japan, the effort to inflict financial
injury on the enemy by crippling his commerce
was, as Maltzahn says, merely subsidiary.^

Many writers, it is true, hold that one cannot
deduce the probabilities of the present from the
small effect of war on commerce in previous naval
wars, as nowadays quite other means would be
used.

In so far as war is waged with submarines, torpedo-
boats, and mine-laying ships I gladly agree to this.
But I cannot possibly see how, in as far as it is
waged by cruisers against the enemy's commerce,
it can differ markedly from what it was before, or
how the enemy will be more materially injured
now than formerly by the capture of his merchant
ships.

It may be contended, in a general way, as
General von Clausewitz argued in 1832, in his
famous work on " War," that " only the destruction
of the fighting navy can decide a war at sea."

This idea has obtained acceptance since the
great struggles of the Dutch with the English in
the seventeenth century, just after the mis-
calculation of the English in regard to a war of
pursuit had involved them in exceedingly eventful
experiences.

Any admiral of to-day who declared the crippling

1 P. 98.



142 CAPTURE IN WAR.

of the enemy's trade to be the first duty of naval
strategy would have to be relieved of his post.
Only in battles is the fate of nations determined at
sea to-day, and the best proof of this is the fact
that in all naval conflicts we hear of battles which
produce a rapid change in the respective positions.

Disregard of this fact robbed the Spaniards,
Portuguese, Dutch, and French of the sovereignty
of the sea in the eighteenth century, and permitted
England to rise in their stead : England, whose
gallant assumption of the offensive against the
prudent defensive of its opponents at the battle of
Trafalgar was rewarded by the greatest of triumphs,
lasting even to this day. V. Arnim ^ recently con-
tended, in excellent fashion, that the days are over
when the wealth of a country, Spain, for instance,
depended upon a couple of treasure-ships, and
when the sinews of war could be cut off at a single
stroke ; nowadays, only the defeat of his fighting
ships could be fatal to an enemy.

V. Halle ''^ is exactly of the same opinion. " It is
the prevalent view that the fate of war, and with it
the future of commerce and the mercantile marine,
must and will be decided in great battles. Not
war on commerce, but the victories of the central
fighting forces will determine it.

Broadly speaking, naval warfare is nowa-
days calculated for battle and not materially for

' " Marine Rundschau," 1907, p. 1404.
2 P. 59 ; so also (Prot. III., p. 762) Choate and (Prot. III.,
p. 783) Barbosa.



ABOLITION OF THE LAW. 143

attacks on commerce. This may be seen from the
fact that in the year of Trafalgar 556 British
men-of-war were in commission, whereas in 1906
the English Navy had only 177, excluding torpedo
craft. War on commerce, however, naturally de-
mands as many and as fast cruisers as possible, since
it necessitates a wide distribution of the ships, so
that, as V. Arnim ^ rightly argues, opinion has
turned markedly against attacks on commerce,
even if one counts torpedo craft, which are not
particularly suited to the purpose. It must not
be forgotten here that the capabilities of steamers
and sailing-ships are exceedingly different, and
hence the foregoing figures afford material for
only the vaguest conception on the point.

I should like to devote a few lines more to
this quite notorious state of things, because
French writers,^ such as Admiral Jurien de la
Graviere, Admiral Aube, and, above all recently,
Commandant Vignot,^ have advanced the view
that the sole possibility of successful tactics
against England lies in injuring her commerce,
and, therefore, such warfare would be decisive
in a conflict with that country. This ignores
the fact that almost the entire commerce of
England would be carried by neutrals, and that a
very large portion of her ships would remain in
harbour. Moreover, she would certainly be able



' Ibid.^ p. 1408.

^ The so-called " New School."

' La Marine Francaise, January, 1899.



144 CAPTURE IN WAR.

to give convoys to another portion of them. Again,
it is forgotten that simply in order to protect com-
merce the Enghsh fleet would force on a battle.^
If, in that event, the enemy's fleet should fall back
and quit the scene of operations in order to avoid an
encounter, how could it thereafter control so effec-
tively the situation as to English commerce ? But
if it came to a battle, the position of things would be
unaltered. Should England be worsted, her defeat
would be possible without war on commerce: but in
the opposite event England would be mistress of
the sea, and could from her numerous bases protect
her commerce, especially if the enemy's warships
avoided the theatre of war.

I close my contention as to the slender results of
a war of pursuit by quoting, in support of my views,
that most prominent writer, Vice-Admiral Galster
(retired), who for years has advocated in Germany
the value of the guerrilla method of warfare.
Though he greatly magnifies such warfare in as far
as it is waged with submarines, torpedo-boats and
mine-layers as the most outstanding resource
in a naval war against England, to the same method
employed with cruisers against the enemy's com-
merce he can only accord the dignity of an operation
of the second order. I maintain that such a dictum
is highly significant.

The arguments up tonoware all the weightier from
the expert's point of view, if one remembers that

^ Cf. the apt arguments in Fitger, pp. 14 and 15; also
" Marine-Rundschau," 1903, p. 318.



ABOLITION OF THE LAW. 145

the retention of the right of prize constantly con-
tributes to the augmentation of the various fighting
navies. Yet we will not enter more closely here
into this view, which is integrally connected with
the question of disarmament.^

From all that has been said it results that the
use of the right of prize in a naval war has never
had, nor can have, a decisive, i.e.^ crushing, effect.
One must not, therefore, deny to the right of prize
all effect in a war at sea. In many cases it will,
doubtless, evoke minor subsidiary results. But is
such effect so valuable as to justify the grave injury
to the world's economy which must necessarily
follow in the wake of that right ? The question
can only be answered in the negative if one sums
up the actual effects of the right.

^ Cf. particularly Barbosa's and Satow's speeches in
1907 (Prot. III., p. 786; do., p. 788).



C.W.



CHAPTER X.

INDIRECT EFFECTS OF THE LAW UPON

NEUTRALS.

Special emphasis must next be laid on the
striking fact that, thanks to the law of prize, neutral
shipping companies extraordinarily extend their
commercial relations at the expense of belligerent
Powers, as Hagerup ^ in particular insisted at the
Hague in 1907. Instances will best demonstrate
this. Between the years 1794 and 1800 the share
of neutrals in English commercial traffic rose from
thirteen to thirty-four per cent. Haek ^ mentions
that the American Civil War and the Russo-
Japanese War had a favourable influence on the
development of the Hamburg-America Line. The
North German Lloyd even received a magnificent
impulse from the War of Secession.^ In the wars
of 1848-9 Great Britain had to record an
increased share in Prussian harbour traffic of 702
ships with 120,000 tons register.* In the War of
Secession there passed over to the British flag in

1 Prot. III., p. 790 ; so also Choate, ibid., 758 et seq.

2 Pp. 20, 46.
8 Ibid., p. 76.

' FetQvs, ibid., II., p. 181.



INDIRECT EFFECT UPON NEUTRALS. 147

1 86 1, 126 ships belonging to the Union, with
72,000 tons burden ; in 1862, 35 ships, with 75,000
tons ; in 1863, 348 ships, with 253,000 tons, and in
1864, 106 ships, with 92,000 tons. The Spanish-
American War brought many profits to the whole
of the German shipping interest.-"^ As Rathgen ^
insists, in the Russo-Japanese War the neutral
mercantile marines took over a considerable portion
of the traffic previously served by the Japanese
flag.

In many instances neutral Insurance Companies
also profit by war at sea. Thus Manes, ^ mentions
that the war between Holland and England brought
into the Hamburg market insurances which in
peaceful times used to fall to the lot of exchanges
abroad.

Nay, even the possibility of a war has often
had a very favourable effect on the trade of nations
not endangered by the threatened struggle. The
impending possibility that England would be
involved in the Austro-French War brought about,
in 1859, a most extraordinary rise in the rates of
insurance for all English ships. For this reason it
was found necessary in England to confine freights
almost exclusively to neutral ships. As Geffcken*
mentions, at that time, at Calcutta and Canton,

' ''The Hamburg- America Line in the sixth decade of
its development," p. 17.

2 " Marine Rundschau," 1907, p. 329.

* "The Insurance System," p. 303; also Kiessclbach,
pp. 25, 41, 55.

* H. H., IV., p. 597.

L 2



148 CAPTURE IN WAR.

American ships of the second rate received fifty
per cent, higher freightage than British first-rates.
Similar consequences attached in 1878 to the
possibility of a conflict between Russia and
England. Very eloquent, moreover, is the fact
that, after Gladstone's warlike speech in 1885, the
rate for coal from Cardiff to the Baltic rose from
5^. 6d. a ton to %s. ()d.

It is, however, to be remembered that this profit
to neutral shipping companies grows smaller as the
years go on. While formerly the shipping enter-
prises of the various countries stood isolated, the
tremendous progress of communication has brought
about a connection between almost all the great
companies of the world.^ It is generally known
that since January ist, 1903, the Morgan Trust,
composed of English-American vessels, has entered
into a community of interests with the Hamburg-
America Line and the North German Lloyd, and
that these combinations have mutually insured each
other a share of the profits. The German com-
panies ^ pay the Trust annually an amount corre-
sponding to the dividend of a share capital of a
million sterling. On the other hand the Trust pays
the German companies annually six per cent, on



^ The private insurance joint-stock companies of the
various countries have also banded together since 1874, in
the " International Transit Insurance Union," with head
office at Berlin.

^ For the figures see Baumgarten-Meszleny, " Kartelle
und Trusts," p. 179 et seq.



INDIRECT EFFECT UPON NEUTRALS. 149

the same sum. It is worth noticing also that the
fares of the third-class passengers are divided
between them.

Since 1885 there have existed what are called
the Cologne Continental Conferences, which re-
ceived their final shape in 1892 in the "North
Atlantic Steam Liner Union," which was at once
joined by the Hamburg-America Line, the North
German Lloyd, the Holland-America Line, at
Rotterdam, and the Red Star Line, at Antwerp.
In 1903, the Compagnie Generale Transatlantique
at Havre joined this combination. This alliance
has pledged itself to the fullest co-operation,
and excluded competition by enacting that every
member of the pool must present his voucher of
traffic to the central accountant's office at Jena.
Should a member have carried more passengers
than by fixed percentage belongs to his share, the
excess is put into the chest of the pool, and thence
it is passed on to those whose share in the
relative percentage is less.

The famous rivalry between the North Atlantic
Liner Union and the old Cunard Line brought
about later the entrance of that line, together
with that of the allied Hungarian and Austrian
lines into the aforesaid union. These great
shipping companies form together a union of
interests. The influence which the great German
companies exercise on the foreign may be seen
from a remark in the report of the general meeting
of the Hamburg- America Line in 1904, " Our



I50 CAPTURE IN WAR.

company exercises a controlling influence over six
foreign lines."

Moreover, the great lines often have shares
in each other, for instance the North German
Lloyd at the beginning of 1909 had shares in the
Holland-America Line of a face value of nearly
;^ 1 20,000.

But even apart from the members of the North
Atlantic Liners Union, combinations in the form of
pools are nothing unusual in the domain of ocean
traffic. As Baumgarten and Meszleny insist*
undertakings concerned in certain relations with
brisker traffic often form a pool for the transport
of merchandise or passengers, and fix the share of
each member in the same manner as has been
already depicted above for the North Atlantic
Union.

Whether these regulations would undergo any
modification in time of war I cannot say, because
the companies concerned keep the pool conditions
a special secret. If any Power to which one
of the companies belongs were engaged in a war,
undoubtedly the share or profit would be different,
and probably the regulations as to the sharing of
profit as regards the line concerned would be sus-
pended during the war. But after the war the
neutral companies also would have to suffer from
the smaller profit returned at the time by the
excluded line.

If the great companies are thus mutually inter-
ested in their receipts, it stands to reason that the



INDIRECT EFFECT UPON NEUTRALS. 151

advantage accruing from the taking over of alien
traffic must be correspondingly less tlian in earlier
times, when each Company was independent.
While, then, the disadvantages that fall on the whole
country — which will be considered below — would
be permanent, the advantage described would last
only during the course of the war. For the com-
mercial relations of the greater merchants have
become much more stable than they were, and
would revive when the war was over. With sea-
borne commerce what matters is not the command
of the sea, but that of the markets beyond the sea.
It is also to be remembered that in the case of a
blockade the profit is at once nil. Hence, while it
should not be forgotten that neutral shipping com-
panies still draw some advantage from a naval war,
we must at the same time beware of over estimating
these advantages.

But what is the effect of the increased receipts of
the shipping companies on the whole trade of a
country } Do the national finances of all neutral
Powers profit thereby .^

The international quality of maritime commerce
is shown above all by the fact that all great Powers
participate in the joint external traffic of the others.
The financial interests, once wholly separate, of the
various States have become welded in a union of
world-wide finance. I quote here only the share of
the British flag in the total external traffic of the
European Powers : —



152



CAPTURE IN WAR.





Total External






Traffic by Sea in


Country.


Reg. Tons net.


Germany


•• 35>5i7,584 •••


Finland


.. 3,836,280




Sweden


.-. i5>373,o9i




Norway


2,297,396




England


■• 9o,963>966




Netherlands


.. 17,308,328




Belgium


.. 16,517,610




Hungary


4,029,429




Greece


7.674,994




France


•• 33,563,852




Denmark


.. 11,271,707




Spain


• • 26,843,144 .




Portugal


.. 17,854,563




Italy


20,222,404




Austria


4,677,861




Russia


.. 14,924,346





Share of the
British Flag.

9,229,742

487,935
1,880,801

739,967
64.216,728

5,229,401

7,843,977

425,444
254,940

15,647,037
1,148,390

9,293,477
9,665,576

5,598,765
500,068

6,515,057



These are only the figures for the States of
Europe : not to be too exhaustive, I omit the
statistics for the non-European States, and only
mention that these would quite as plainly indicate
the international nature of commercial traffic. In
view of such a reciprocity of interests between the
particular States, it can at once be seen that injury
to a single mercantile marine adversely affects the
interests of all countries in the world. True,
the neutral companies can take over the most im-
portant traffic, but the maintenance of communica-
tions with the smaller States will not be insured if
only because of the briefness of most wars. For
commerce cannot be so readily organised by
neutrals.



INDIRECT EFFECT UPON NEUTRALS. 153

Hagerup^very rightly recognised in 1907 the great
connection between navigation and the whole of
commerce, when, in the debates upon an Interna-
tional Prize Court, he declared, " I think I ought to
remind the Commission that in the matter under
discussion it is not only the interests of navigation
but those of neutral trade in general that are to be
protected."

A very interesting instance of how greatly the
injury of a single marine affects the trade of neutral
States is afforded by the boycott of Austrian goods
by the Turks in the winter of 1908- 1909. For, in as
far as it was aimed at the steamers of the Austrian
Lloyd it greatly injured not only Austrian but
German trade. The Lloyd company was for months
unable to unload its cargoes in the Levant ports,
and its vessels had to return to Trieste, after a
fruitless trip, with their cargoes still on board. The
company thus saw itself forced to advise German
traders to have their goods unloaded there, and
to reship them via Venice by Italian lines.
That meant, of course, an immeasurable loss to
German trade, as the Eastern consignees either
would not take the goods at all, arriving so late
and with two or threefold freightage, or demanded
a longer credit for them.

It is a known fact that the trade of particular

countries is so far dependent upon others that each

country needs the produces of numerous other

peoples, and somewhere must find sale for its own.

» Prot. II., p. 805.



154- CAPTURE IN WAR.

Probably there Is no country but Thibet independent
of the world's trade. Choate,^ in his memorial to
the Second Hague Conference, very rightly points
to commerce as the institution " in which the
community of interests of all nations is finally
established." From the taking over of commerce
by neutrals, such a rise in the price of goods is
brought about that throughout the world the
produce of the belligerent countries — except such
as is produced by other countries in sufficient
quantity — grows dearer. But that is only the case
to a slight extent. Add to this that with the
briefness and rapidity of present wars the enhance-
ment of prices is so sudden that no competition
has time to arise. Hence numerous crises are the
inevitable result of the law of prize. " The whole
world feels the shock," said White in 1899, ^t the
Hague. Stoerk^ also very properly insists that
" The whole range of the injury which our German
industry undergoes through every naval war,
whether Englishmen are opposed to Boers or
Americans to Spaniards, is vastly greater than can
be estimated from figures in the shape of a few
ships kept from continuing their voyage and
unloading. What do the few thousand pounds
sterling amount to in face of the far larger sums
which German trade lost by the total warping of

1 Prot. III., p. 771-

2 "The Protection of German Trade in War at Sea,"
p. 4. Cf. also the apt contentions of Wiegner, pp. 344, 345,
as also Voelcker's book, " German Finance in Case of
War."



INDIRECT EFFECT UPON NEUTRALS. 155

favourable conjunctures, by the natural caution
with regard to export, by the impossibility of
delivering certain kinds of goods according to
contract, by the enhancing of the rates of freight
and the like? " Owing to war with America and
other countries during 1 801-2, the price of wheat
per quarter rose to £"] ioj., whereas in 1892 it had
not exceeded 43^". The War of Secession was
especially disadvantageous to England. That
country was then the chief consumer of raw cotton,
which was obtained from the Southern States
alone. Hence the war brought nearly all the
cotton factories in England to a standstill. In
1862, out of 350,000 workers in the trade only
92,000 were in full work, 200,000 in partial work,
and 58,000 wholly out of work. The Russo-Japanese
War also sorely troubled the neutrals, and probably
but for their influence Japan would not have signed
the Peace of Portsmouth with Russia. Of course
makers of arms and ammunition and certain other
manufacturers draw their greatest profit particularly
from war. But what does all that signify,
or the profit above mentioned to neutral shipping
enterprises, as against the vast injury to the
world's finance in other directions ? The fact that
the Chambers of Commerce of almost all the great
countries of the world have already addressed
numerous memorials to their respective Govern-
ments, is a proof of the great extent to which
international trading circles have long been con-
vinced of the harmfulness of the law of prize.



156 CAPTURE IN WAR.

Recently also the inter-parliamentary Peace Con-
ferences^ have set on foot a keen propaganda in
favour of abolition, and Dr. Pachnicke, of the
German Imperial Parliament, was able at the
Berlin Conference, in September, 1908, amidst the
applause of the most prominent politicians of
numerous countries, to demonstrate that the law was
at variance with the modern conception of justice.

It is also to be remembered that the damage to
be expected from the law of prize increases from
year to year.^ The maritime trade of the various
Powers grows much more quickly than their
exchange of products by land. Owing to the
greater cheapness of water routes, it is natural
that there should be increasing efforts to import
goods by sea. It must also be considered that the
population of many countries, particularly Germany,
Austria, England, and North America, are turning
more and more from agriculture to industry, and
therefore are increasingly dependent upon the
importation of foreign food-stuffs.

In the same way it must be insisted upon
that trade becomes from year to year more inter-
national. To what an enhanced degree German
finance has become dependent on the market of

1 Q.{.mteralia, the proceedings of the X I th Meeting at
Vienna (" Compte rendu, etc.") and the XlVth Conference
in London.

2 Cf. Paschen, pp. 22, 23 ; also Niemeyer in "Tag" of
March 6th, 1909, in the same way the First Lord of the
Admiralty, on April 21st, 1909, in the House of Commons,
in a debate on a resolution introduced by the Labour Party
to abolish the law of prize.



INDIRECT EFFECT UPON NEUTRALS. 157

the world is shown by the fact that foreign trade
amounted in 1872 to 23,400,000 tons, and in 1904
to 87,700,000 tons. Imports rose from 13,000,000
to 49,000,000 tons, and exports from 10,000,000
to 39,000,000. While the population has increased
only 50 per cent., Germany's external trade has
multiplied fourfold.

The ever-increasing international character of
trade is further manifest from the fact that of late
international combines and trusts, especially the
so-called rail and sleeper combines, controlled by
the Diisseldorf Steel Union, have been constantly
springing into being.^

Barbosa, in 1907, in order to show the inter-
national character of commercial traffic, pointed to
the fact that the great earthquake at San Francisco
chiefly affected English and German Insurance
Companies.

The arguments hitherto adduced were in no way
meant to show that the right of prize must be
abolished on account of its pernicious effect on the
trade of neutrals. It was only my wish to point
out how doubly senseless the retention of the right
must be, in view of the fact that it not only has no
decisive effect on war, but also grievously disturbs
the harmony of the world.

As the Declaration of Paris was, according to
the pronouncement ofSatow^at the Second Hague

» Prot. III., p. 784.

^ Prot. III., p. 832 ; so also Kriege in London in 1909.
("Actes," p. 169).



158 CAPTURE IN WAR.

Peace Conference, intended above all to afford
protection to neutral Powers, it is to be hoped also
that regard for neutrals will at least not be wholly
ignored in future negotiations as to prize. The
Chinese delegate Foster^ very rightly protested in
1907, " It is perfectly proper to insist that nations
which do not wish to follow the dictates of reason,
but to obey the impulse of war, should molest as
little as possible the trade and industries of the


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