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ОглавлениеFlagging-Out in the U.S. Civil War
During the U.S. Civil War, hundreds of shipowners in the North decided to operate under a foreign flag because of the depredations of Confederate cruisers, including Sumter, Alabama, Florida, Shenandoah, and Georgia. Together the cruisers destroyed 237 ships registered under the U.S. flag, but more than a thousand other American merchant ships switched registry to foreign flags.1
These transfers-out reflected a reciprocal principle to the issue of attacks on, or infringement on the rights of, U.S. ships during the prior six decades. Instead of offering protection, the U.S. flag opened ships at war to capture or seizure by a declared enemy. Although the Lincoln administration refused to recognize the Confederacy as a national entity but insisted on referring to secession as an act of rebellion, the Union military in fact applied the rules of war to Confederate soldiers, sailors, and ships. That is, while the Union government officially regarded the Confederacy as simply an area in rebellion, it treated captured soldiers and officers not as traitors but as prisoners of war. Furthermore, although the United States had not ratified the 1856 Declaration of Paris, which set up rules regarding blockade, the nation announced in 1861 that it would abide by the terms of the declaration and instituted a blockade of Southern ports, as if the Confederacy were a foreign nation. By doing so, the Union was de facto recognizing the Confederacy as a belligerent, not an area in rebellion, for maritime purposes. Confederate officers, both army and navy, also applied the rules of war. The Confederate cruisers sought out and destroyed U.S. merchant ships, while at the same time being careful to preserve the lives of crews and passengers. U.S.-flagged ships were suddenly at risk of destruction or seizure by Confederate cruisers. So hundreds of U.S. shipowners decided to reregister their ships abroad to avoid seizure by the cruisers.2
In many articles and texts, the decline of the American merchant fleet in the 1860s has been attributed to the combined effect of cruiser sinking and flagging-out. Commentary during the war predicted such a result, and subsequent works repeated the claim. A scholarly treatment by George Dalzell in 1940 titled The Flight from the Flag made this argument.3 In a modern and well-researched treatment, historian Chester Hearn reiterated the claim that the cruisers destroyed Union commerce.4
During the Civil War, Confederate cruiser commanders, including Raphael Semmes and James Waddell, would always check the documentation of commercial ships they encountered, stopped, and boarded on the high seas. If the master of the detained merchant ship flew a British or other foreign flag, but the design of the ship and the New England accents of the officers and crew suggested the ship was actually American and simply flying false colors, the Confederate officers would carefully examine the merchant ship papers, including the ship’s log, and interrogate the crew to ensure that the vessel was legally entitled to fly the foreign flag. If all was in order, and the evidence proved the ship was not American, the Confederates would release the vessel; otherwise, if the ship was demonstrably Union-owned, the crew would be taken off the ship and the ship would be set afire and destroyed. In some cases, the ships were seized and operated with a prize crew. The application of the rules closely resembled the British practice of right of search a few years earlier. In time of war, the right of search, applied even to neutrals, was understood to be necessary to inspect documentation, uncover contraband, or detect false flag usage. In the light of the methods of later naval warfare, especially submarine sinking of merchant ships in World Wars I and II, it is remarkable that the Confederate cruisers destroyed so many private, commercial Union vessels without a fatality among any of their crews or passengers.
Under these circumstances, during which the ship’s papers would be subject to inspection, it was not sufficient for an American merchant shipmaster to avoid destruction by hoisting a foreign flag as a ruse de guerre. Obtaining the protection of a foreign flag required that the ship be legally transferred through re-registry abroad and carry the proper papers to prove the transfer. In the case of British registration, the transfer had to entail an actual sale to a British subject and had to include the issuance of registry documentation, which could be accomplished through a British consul abroad.5
The Civil War practice set a precedent for the later use of flags of convenience. The term “flag of convenience” did not come into common usage until 1949 and 1950, when U.S. labor leaders used it to describe the transfer of U.S.-owned ships to Panama and Liberia. However, even in 1863 at least one reporter described the practice as “transfer of ships to a foreign flag for convenience and safety,” anticipating by some eighty-six years the later common use of the term “convenience.”6
Early in 1861, in the months before the war, British observers noted the likelihood that ship transfers would take place, and the Liverpool press obligingly published accounts of the proper procedures required to seek shelter under the British flag. The Philadelphia North American and United States Gazette quoted from the Shipping and Mercantile Gazette of Liverpool:
The transfer of American shipping to the British flag can only be effected by vesting the property pro tempore in a British subject or subjects. To enable a ship to claim the protection of the British flag (supposing that protection to be sufficient during the impending hostilities) she must belong bona fide to natural born British subjects or to persons made denizens by letters of denization, or to be naturalized; and such persons must, moreover, during the whole period of their being owners, be resident within the Queen’s dominions, or members of a British factory or partners in a house actually carrying on business in the United Kingdom, or within the Queen’s dominions, and must have taken the oath of allegiance subsequently to the period of their being so made denizens or naturalized.7
The Philadelphia paper went on to editorialize:
It would seem therefore that the transfer of a foreign ship to British owners must be by absolute sale—a fact which probably, many American owners who may contemplate registering under the British flag would not be aware of. . . . It would be humiliating to have to resort to a foreign flag for protection in our own waters, though if such a thing must be, we doubt not that England who throughout this melancholy crisis, has maintained the noblest sympathy for the Union, would render us every assistance. She would do this as well for her own sake as for ours, for it is manifestly to her interest that her vast trade with this country should not be impeded.8
The editorial comment that “it would be humiliating to have to resort to a foreign flag” captured the contradiction between the business logic of such transfers and the traditional association of the maritime flag with national honor. In the code of honor, gentlemen studiously avoided humiliation.9
Within days of the firing on Fort Sumter, the practice of transfer began and was reported in both Britain and the United States. Some accounts noted quite openly that the transfers, entailing a sale for one dollar, were a “ruse.”10 In Britain, the practice had critics and supporters who engaged in publicly reported debates. Some shippers feared it would set a precedent harmful to Britain. In future wars, they argued, British ships might transfer out and thus diminish the British merchant marine.11
In Liverpool, those owners who had purchased U.S. ships defended the practice, claiming the sales were bona fide. Those British shipowners who had not engaged in the nominal purchase of U.S. vessels argued that most or all of the transfers were fraudulent and represented a corrupt usage of the British flag; they called the purported British owners “godfathers.” A correspondent to the Liverpool Chamber of Commerce provided a clipping of a U.S. ship broker advertisement as evidence. In the advertisement, the ship broker offered to make transfers to the British flag, while allowing American owners to retain their interest. Others denounced that particular practice as an atypical fraud, asserting that 90 percent of the transfers had been entirely legitimate. Even so, another correspondent to the Liverpool Chamber of Commerce warned that the transfers “involved a species of evasion of the law which could only be carried out through misrepresentations on the part of those making the declarations of ownership.” Of course, such “misrepresentations” would become the norm in twentieth- and twenty-first-century usages of flags of convenience by shadow corporations in Panama, in Liberia, and later, in small, mostly island countries around the world. The delicate language of 1863 suggesting “a species of evasion” reflects the underlying premise behind seeking a favorable foreign jurisdiction for legal, taxation, diplomatic, or other purposes.12 The modern establishment of tax-shelter states like Bermuda, Andorra, and Monaco is perfectly described as “a species of evasion,” and moving personal citizenship offshore reflects a similar underlying premise that an individual or business can seek the shelter of a foreign sovereignty. Thus, the British flagging of U.S. ships during the Civil War should be viewed as a clear precedent for the later practices, including those of corporations and individuals, as well as those of shipowners.
Other flags besides the British drew some Union-owned ships. When the Alabama cruised into the Indian Ocean, U.S. shipowners found that insurance companies refused to write policies for any U.S. ships trading in the region. As a consequence, the New York Times reported, American owners sought transfers to “Peru, Prussia, and Portugal.”13 With less hyperbole, the U.S. consul in Curaçao, in the Dutch West Indies, reported that the U.S. bark Venus reflagged under the Dutch flag to avoid capture by Confederate cruisers, and the consul expected many other U.S. ships plying between that port and New York to do the same.14
Statistics demonstrated, even in the war, that the cruiser attacks were diminishing the size of the U.S. fleet, not just by attacks but by the process of flagging-out. In 1863 a Journal of Commerce editorialist suggested that shipowners and others should petition the Navy for better protection.15
After having reviewed statistics, a large group of New York shipowners and insurance company officers did in fact protest to the Navy Department that the process of flagging-out was destroying the U.S. merchant marine. The group respectfully asked the Navy for greater efforts in tracking down the Confederate cruisers in order to protect the U.S. flag. In addition to shipowners, a number of others signed the petition, including bankers, New York mayor George Opdyke, and U.S. senator from New York E. D. Morgan, who was also a shipowner and chair of the Republican National Committee.16
Little noticed in the Union press at the time, an unknown number of ships in the South also flagged out. Indeed, that aspect of the topic has not been widely discussed in the voluminous historical literature regarding the Civil War and life in the Confederacy. In New Orleans, a cooperative marketing arrangement led by Texas shipowner Charles Morgan established a scheme in which ships would sail halfway to France under the Confederate flag and then would be reflagged and enter French ports under the FrenchTricolor.17 Thereafter, they remained under the French flag. The blockade-running steamer Tennessee, when captured in the New Orleans harbor, “had a French flag flying.”18
When Union forces took New Orleans, they discovered a number of French-flagged ships at the dock. Some were no doubt legitimately French-owned and -registered ships, but an unknown number may have been reflagged Confederate-owned ships. Moving up the Mississippi River, Union forces often found French flags flying on ships, which “from build and register they were not entitled to.” From the scattered accounts, it was unclear how many of the schooners and other vessels flying French flags on the river had been officially transferred to French registry and how many were simply flying the flag in hopes that their vessel might escape destruction or confiscation.19
In Louisiana, along the Mississippi River, Union officers sometimes reported French flags even over churches and homes along the shore. Although Union officers thought such flags might have been intended for protection, it is possible that the Tricolor was adopted by some Confederates as an emblem of their rebellion, echoing the French revolutionary flag, or that local French-descended families sought to stress their continuing affiliation with their ancestral home.
The French Tricolor’s resemblance when furled to the three-striped Confederate flag led to several episodes in which Union officers ordered their men to fire on a locale and then later apologized for the action upon discovering the flag was French, not Confederate. One officer noted that it was inappropriate to fly a foreign national flag over private property on land, although he admitted that had he known the flag was French, he would have refrained from attack.20
Many blockade-runner ships owned by Confederate entrepreneurs, mostly built in Britain, were legitimately and originally flagged in the United Kingdom and thus were not part of the flagging-out story. However, when U.S.-registered ships sought to engage in blockade-running into the Confederacy, they would sometimes adopt new flags. Even though records are fragmentary, it appears that some, perhaps numerous, Confederate ships reflagged under the British flag to avoid capture on the high seas.
However, whatever their flag, all ships would be subject to detention at the blockade line. In July 1863 a Union officer detained four “secession vessels,” three of which had been reflagged through the British consul in Galveston. The ships were the three-masted Ponchartrain and the Joseph Buckhart, Cecilia, and Lena. According to another report, a Charleston shipowner reflagged his whole fleet in Britain.21
Lasting Effect of Civil War Transfers
In 1866 Secretary of the Treasury Hugh McCulloch clearly did not include the flagging-out of numerous ships from the South to French and British flags in his tally of 1,061 ships transferred to other registries.22 Not only was the information from the Confederacy difficult to obtain, but in the immediate postwar period, Congress and the administration were more concerned with the decline in U.S. shipping engaged in international commerce than in the coastwise vessels that had previously dominated Southern fleets. Before the war began, the vast majority of sailing ships and steamers engaged in transatlantic trade were home-ported in the North, while the numerous shallow-draft steamers and small schooners based in Southern ports most often engaged in riverine and coastal transport. Thus, many of the transfers of Southern vessels to French or British registry probably had little impact on the postwar position of the United States in the competition for the international carrying trade.
On the other hand, even as the flagging-out of Northern commercial ships to avoid cruiser depredation flourished, some Northern observers feared that the practice would result in a lasting decline in the U.S. merchant marine, removing U.S. ships from the lucrative transatlantic trade and the commercial carrying trade between foreign ports. Even before the war ended, some maritime writers had predicted that the effect would be lasting and deleterious. One Journal of Commerce commentator noted, “It must be evident that the fear of depredations on our commerce, by the Confederates and privateers, has driven a large part of our foreign trade to neutral vessels.”23
Some accused the British of perfidious conduct. After all, several of the Confederate cruisers, in particular the Alabama, Rappahanock, Shenandoah, and Georgia, had been built in British yards, and most of the merchant ships transferred out were transferred to British registry. If it had not been for U.S. representatives, including U.S. minister to Britain Charles Francis Adams, still other, more powerful British-built ships, the Laird Rams, would have entered Confederate service. These ships were planned not to be blockade-runners or high-seas cruisers but rather to provide the weaponry to break the blockade. The British maritime support of the Confederacy via provision of warships and a thriving trade with blockade-runners only heightened the Union government’s resentment of the British. In this context, the permanent transfer of numerous previously U.S.-registered merchant ships could readily be viewed as part of a British scheme to dominate the world’s ocean trade.
In the war’s immediate aftermath, some Republican leaders saw the British construction of raiders and the transfer of American merchant ships to British flags as part of a larger British plan to destroy the U.S. fleet in the long term. President Andrew Johnson, Lincoln’s successor, who was noted for making impolitic remarks, made such an accusation in his 1865 State of the Union address:
The materials of war for the insurgent States were furnished, in a great measure, from the workshops of Great Britain, and British ships, manned by British subjects and prepared for receiving British armaments, sallied from the ports of Great Britain to make war on American commerce under the shelter of a commission from the insurgent States. These ships, having once escaped from British ports, ever afterwards entered them in every part of the world to refit, and so to renew their depredations. The consequences of this conduct were most disastrous to the States then in rebellion, increasing their desolation and misery by the prolongation of our civil contest. It had, moreover, the effect, to a great extent, to drive the American flag from the sea, and to transfer much of our shipping and our commerce to the very power whose subjects had created the necessity for such a change.24
In the immediate postwar period, the matter of interpretation soon surfaced. On the one hand, some political leaders, like Andrew Johnson, continued to blame the American merchant fleet’s decline on both the British outfitting of cruisers and the practice of flagging-out. Under the law, a U.S. ship that had transferred to another flag was ineligible to reregister under the U.S. flag. When individual shipowners sought permission to reflag their vessels in the United States by special act of Congress, opponents voted down such measures. For example, in 1869, when the owners of the Agra sought congressional dispensation, Senator James Warren Nye of Nevada strongly opposed the measure. The Boston Daily Advertiser, however, thought such re-registry would be a good idea, even though transfer-out had “a bad taste.” After all, the editorialist opined, the problem grew out of the Union’s failure to protect its shipping.25
Together with the restriction on reflagging in the United States once registered abroad, only U.S.-built ships could register in the United States. Both of these legal factors—the prohibition on return from foreign registry and the requirement of U.S. construction—no doubt contributed to U.S. shipping’s inability to recover after the Civil War.26 The raw statistics suggested that something had happened in the 1860s to reverse the growth of the U.S. merchant marine and send it into decline, as shown in Table 1.
TABLE 1. RISE AND DECLINE OF THE AMERICAN MERCHANT FLEET IN FOREIGN TRADE, 1830–90
Even as this point was being made at the end of the war, some analysts doubted whether this diminution could account for the long-term decline of U.S. shipping that set in during the postwar period and continued into the 1880s. Close analysis of the statistics in 1866 by Secretary of the Treasury McCulloch suggested that the loss to flagging-out during the war was about 800,000 tons. Destruction and transfer of commercial vessels to the government for use as warships and transports accounted for the additional decline. Some small fraction of the decline was also due to “natural causes,” such as the retirement or scrapping of older vessels, loss to the hazards of the sea, and other events unrelated to the war. However, the overall immediate decline was certainly a consequence of both the losses to the Confederate raiders and the transfers to foreign flags. U.S. shipping in foreign trade had been reduced from about 5.35 million gross tons to about 4.24 million gross tons.27
However, from the 1870s into the 1880s, the size of the U.S. fleet continued to decline. The failure to rebound and to again challenge Britain for a major share of oceangoing trade was a separate issue, although many writers of the period blurred together the issue of wartime decline and postwar failure to recover. The popular and iconoclastic Frank Leslie’s Illustrated Newspaper joined the discussion, suggesting that the long-term decline was due to the failure of U.S. shipbuilders to remain competitive in the cost of building new ships. The paper estimated that it cost $100 per ton to build a ship in the United States but only $40 per ton to build one in Canada. Furthermore, the paper argued, the decline in U.S. shipping was already evident several years before the war began.28 Similar arguments were presented at the same time by others, such as San Francisco’s Daily Evening Bulletin.29 This position, based on a clearheaded analysis of costs, however, was not shared by others, who continued to blame the decline of U.S. shipping on British support of Confederate cruisers and the British flagging of U.S.-owned ships during the war.
The British finally agreed in 1872, after a process of arbitration, to pay $15.5 million in claims for the losses inflicted on U.S. shipping by British-built cruisers in the Alabama claims case. As that case was being debated, the scale of the British damage to U.S. shipping was magnified by linking the flagging-out to the cruisers’ activities, an argument first made during the war and reiterated after by both Secretary of State William Seward and President Andrew Johnson. If the long-term decline of U.S. shipping could be attributed, even in part, to the practice of flagging-out, that enhanced the legitimacy of the claims against Britain and escalated the scale of the British damage. The arbitration decision, however, rejected such claims for “indirect losses.”30
Thus, in 1865–1872 the claim that a long-term decline had been inflicted by British practices and by flagging-out in particular was seen as a propaganda position of the United States as it sought to press the Alabama claims for a larger amount. Senator Charles Sumner argued that Britain’s liability for prolonging the war and destroying U.S. maritime commerce cost the United States $2.125 billion. The neutral arbiters from Switzerland, Brazil, and Italy, however, limited the compensation to the demonstrated loss of particular ships and cargoes.
Certainly, the decline of U.S. shipping in sheer tonnage persisted for decades after the war. More significant, U.S. shipping continued to decline as a percentage of the world trade; in absolute numbers, the tonnage of the British fleet began to far outdistance the tonnage of the U.S. fleet. One recent study shows the percentage of U.S. tonnage in world trade declining from about 10 percent in 1870 to just over 3 percent in 1890. Over the same period, the British proportion of tonnage in world trade climbed from 44 percent to more than 47 percent.31
The United States did not compete in transoceanic steam lines for decades, and the cost of construction of both wooden ships and iron or steel ships in the United States remained high. As previously noted, because the United States still employed sailing vessels for transatlantic trade, U.S. steamships were not present to engage in port-to-port European trade in competition with steam-powered European vessels, all on shorter-leg voyages that allowed recoaling. U.S. schooners and larger sailing vessels continued in transoceanic trade even into World War I. So the development of steam-powered ships, at first most efficient and economical in coastal and riverine trades but not economic on transoceanic voyages, was an additional factor in preventing a resurgence of U.S. shipping in these years.
With the westward expansion of the United States, labor costs stayed high, attracting an increasing flow of immigrants from Europe and Asia and driving up the cost of ship construction. Import duties on foreign-manufactured machinery and rigging that had been passed in Congress in a vain attempt to protect those U.S. industries also increased the cost of U.S.-built ships, a classic case of unintended consequences.
For shipbuilders and other advocates of the U.S. merchant marine, the issue of flagging-out receded into the past, and suggestions for reform of the present conditions required an analysis of those conditions. However, for writers who reflected on the Civil War itself, on the depredations of the cruisers, and for those who retained suspicions of British motives, the flagging-out during the war years still loomed large as an issue. An 1870 congressional report supported the claim that British wartime acts were responsible for the decline.32
Pro-British critics saw that position as strictly political, and some Republicans falsely blamed the British without addressing the current policy problems. “It is so much easier,” wrote an editorialist for the avowedly pro-British Albion, “to bring a railing accusation against a nation which may for the time be unpopular than to study the causes of any social or commercial phenomenon, that we are not surprised to find both the Congressional Committee on Navigation and President Grant adopting this facile method of explaining the recent decline in American ship-building, and charging the conduct of Great Britain during the late Civil War with many of the results now witnessed.” The article went on to blame the protective tariff for the decline in U.S. shipbuilding.33
Because the two different analyses arose in different forums, two interpretations of the significance of the flagging-out process flourished, each with a different focus, a different point of departure, and a different audience. One might put the viewpoints in two camps: those with a presentist outlook on economic conditions and those with a historical focus. Those concerned with present policy and considering different methods of addressing the decline of shipping saw the flagging-out issue as dead, no longer pertinent in the 1870s, 1880s, and 1890s. Rather, they saw the problem as deriving from U.S. shipbuilders’ inability to compete with Canadian and British labor costs. Editorialists, essayists, and economists hoping to influence Congress remained focused on contemporary aspects of the shipping decline, especially the issue of shipbuilding costs. However, the other group, seeking to unite avid anti-British voters with essentially historical arguments, continued to perceive the decline of U.S. shipping as the result of intentional British action. Both groups saw the decline as reflecting poorly on the status and honor of the nation.
Through the later 1870s and 1880s, proponents of various reforms to address the decline of U.S. shipping continued to focus on causes that went far beyond the Civil War flagging-out issue. The rise of steam propulsion and iron hulls that prevented U.S. competition in the European markets figured prominently in an analysis presented in the Banker’s Magazine and Statistical Register.34 A long analysis presented in the International Review in 1879 also attributed the decline of the U.S. fleet to the rise of steamers and the lack of U.S. focus on steamship construction.35
Book-length treatises arguing for improvements in protective tariffs or subsidies for the shipbuilding and merchant marine industries continued to be published through the era. These included books by Hamilton Hill (1869), Henry Hall (1878), Charles Marshall (1878), and Henry Peabody (1901).36 Many journalists, essayists, and editorialists contributed further observations on the lack of government support for the maritime industries.37
As policy makers and policy writers sought to address the persistent decline in U.S. shipping even after the Alabama claims case was settled, the more immediate question was what to do about present conditions in the late nineteenth century. Clearly, the U.S. fleet continued to atrophy for reasons that went far beyond the dip in registry figures during the war. Rehashing of complaints about British aid to the Confederacy, the cruiser attacks, and the question of flag transfer no longer seemed pertinent to the economic problems and technological developments of the 1870s and 1880s, and gradually, more contemporary concerns with cost and government policy eclipsed the wartime issues.
The proliferation of articles, books, editorials, and reports agonizing over the decline of U.S. shipping in the post–Civil War period is significant in itself. The tone of many articles, even those examining economic and technological factors, showed that the reduction in number and proportion of U.S. shipping continued to be an emotionally charged issue. The statistics, the authors all claimed, reflected “decline,” “depression,” and “disease,” and measures to address the concerns were seen as “remedies.” Rather than simply addressing the decline of U.S. shipping as a dry economic development, the various writers all saw the dip as reflecting poorly on the status, honor, and international standing of the United States.
Because fewer American merchant ships were flying the U.S. flag, the presence of the U.S. flag overseas had diminished. To the extent that the nation’s power was reflected by its merchant fleet, the decline was a matter of national honor and international respect. At the same time, the remaining but diminished fleet of merchant ships plying the waters of the Caribbean, the Pacific, and beyond continued to encounter challenges at sea. Even as the nation entered the age of enterprise—with railroad expansion; development of agriculture, mining, and timber resources; and a burgeoning industrial base—the issue of the respect shown for the merchant flag abroad remained very much alive.
Persistence of the Maritime Honor Code
The issue of national honor, evoked by editorialists and other writers critical of the practice of flagging-out to Britain during the Civil War, continued to shape debates over shipping in the years following the Civil War. During and after the war, naval officers in both the Confederate and Union navies conducted themselves in accord with the maritime code duello and honor code that had characterized the conduct of, and accounts of, ship-on-ship encounters during the War of 1812.
When the Confederate raider Alabama was finally destroyed by the U.S. naval ship Kearsage off Cherbourg, France, on June 11, 1864, Capt. Raphael Semmes of the Alabama specifically complained that Capt. John Winslow of the Kearsage had violated the maritime code duello by protecting his ship with concealed chain armor. Research shows that Semmes himself had been lured into the battle by French officers who appealed to his sense of honor. Another indication of the persistence of the code duello was the immediate labeling of the battle between the Monitor and the Virginia (formerly, Merrimack), by the popular press, as the “duel of the ironclads.”38
The issues of personal and national honor in shaping thinking about the international encounters of ships carrying the U.S. flag in the post–Civil War decades is further explored in the following chapter.
Portions of this chapter, reproduced here with permission, appeared in “Flagging-Out in the American Civil War,” Northern Mariner 22, no. 1 (2012): 53–65.
