§ MR. T. BRASSEY
, in rising to call attention to the evidence relating to Marine Insurance taken by the Royal Commission on Unseaworthy Ships; and to move—That an humble Address be presented to Her Majesty praying that She will be pleased to appoint a Royal Commission to inquire into the state of the Law, to report thereon, and to make recommendations with the view to establish the Law and practice of Insurance on the principle of indemnity for losses actually sustained,said, it was a somewhat hazardous enterprise for a layman to bring to the consideration of the House a subject of so much difficulty as the law relating to Marine Insurance. A knowledge of the law was not required in order to be convinced that where great facilities existed for insuring property in ships or goods at full, and in some cases at exaggerated value, such facilities had a tendency to produce carelessness in the management of shipping, with all the attendant evils which sometimes occurred of deplorable loss of life at sea. If he could show that there was a concurrence of opinion among competent authorities in favour of considerable amendment and alteration in the law of Marine Insurance, he thought he should have done enough to justify the Motion which he proposed to make for the appointment of a Royal Commission to inquire into the subject.
§ MR. SPEAKER
said, he wished to remind the hon. Member that he might call attention to the matter, but could not make a Motion, the House having already affirmed the Motion for going into Committee of Supply.
§ MR. T. BRASSEY
said that he could at all events show that the facility for 1728 insuring at the full, and sometimes at an exaggerated, value was a primary cause of carelessness and recklessness. For that purpose, he would quote some remarks made by Mr. Harper, the Secretary of Lloyd's Salvage Association, in his evidence before the Royal Commission on Unseaworthy Ships. Mr. Harper pointed out that the care of a ship was divided into a hundred particulars—care in the selection of a master, care in the selection of a crew, care in securing that the ship should be in a proper state of repair before leaving port; and that watch fulness was likely to be relaxed when the shipowner knew that if his vessel were lost, he would recover all the money he had invested in the ship, with, in some cases, a large profit in addition. In order to show the extent to which, under the various decisions which had been given in our Courts of Law, Marine Insurance had been allowed to exceed that strict indemnity for loss which it was originally intended to secure, it would be more convenient that he should refer to a case that had actually occurred, and which illustrated the working of the law of Marine Insurance. The case was that of the Sir William Eyre, which was brought under the notice of the Royal Commission by Mr. Cowen. That vessel sailed in 1863 from Glasgow to New Zealand. She was intended to discharge her cargo at Otago, then to proceed in ballast to Calcutta, and there to take in cargo for which a freight amounting to £4,000 was to be paid. The ship was stranded before she reached Otago, but she was temporarily repaired at the cost of the underwriters on the out-ward freight, and proceeded in ballast to Calcutta, where a further survey was made, and it was discovered that the ship was not worth repairing. She was lost shortly afterwards in the Cyclone of October, 1864. The damage which the vessel was found at Calcutta to have sustain-ed having been caused before she reached Otago, the underwriters on the policy to Otago were held liable to pay £6,000. The shipowner had insured in the sum of £4,000 the chartered freight home-wards from Calcutta; and as the ship had become a constructive total loss, the House of Lords held that the underwriters were bound to pay the £4,000. Finally, the shipowner, before he knew that his vessel had been seriously injured, had insured her in the sum of 1729 £8,000 by a time policy for three months after her arrival at Calcutta, and, although the ship, when insured, was a total loss, he recovered his insurance. The total sum thus recovered amounted to £18,000 on a ship valued at only £8,000 by the owners themselves. No doubt, that was an extreme case; but other cases in which underwriters were called upon to pay the shipowners a sum considerably in excess of that which was necessary to provide an indemnity were of frequent occurrence. He would now refer briefly to the various descriptions of marine policies, and point out the anomalies which arose under them. The first was the valued policy, in which the value of a ship or goods was stated on the face of the policy. It might be reasonably supposed that where the value stated was considerably in excess of the real value of the ship or goods, the Courts would refuse to sanction such over-valuation; but that was not the doctrine held in our Courts of Law. Underwriters were not allowed to set aside the value, as stated in the valued policy, except upon plea and proof of fraud. When they turned from the commercial aspect of the question to those larger considerations which had reference to the safety of life at sea, he thought hon. Members would be disposed to agree with the opinion of Mr. Justice Willes, in an able Memorandum which he had written upon the subject of Marine Insurance, in which he said—The system of valued policies, whatever its convenience, and it is great, does encourage fraudulently disposed people to put a high value on comparatively worthless vessels, and gives them an interest in the loss of their property.Mr. Justice Willes had suggested a remedy for this state of things, and it was approved by the late Mr. Lamport, Mr. Stephenson, some time secretary to Lloyd's, by Mr. Squarey, Mr. Farrer, and other authorities of equal eminence. These gentlemen agreed to adopt this recommendation—namely, that where an underwriter had reason to believe that the value in the policy was excessive, he should be allowed to plead such over-valuation as a defence to an action on the policy; and the late Mr. Lamport, a practical shipowner, gave it as his opinion that the change proposed would not lead to unnecessary litigation, and that in 99 cases out of 100 no dispute would arise; but that, on the other 1730 hand, shipowners when they knew that excessive valuations could not be recovered in the Courts of Law, would not be disposed to pay the premiums for insuring their vessels to excessive amounts. The next description of policy was the open policy, in which the value of the ship or goods was not stated on the face of the policy. The principal anomaly in this case arose in connection with the insurance on freight. The doctrine of our law was, that where a loss occurred the amount recoverable from the underwriter should be the gross freight payable by the shipper or merchant to the shipowner. To show how this worked in practice he would take a case put before the Commission by Mr. Farrer. A steamer of 1,200 tons bound for Calcutta and back through the Suez Canal, with a chartered freight on the outward and homeward voyage of £12,000, was insured in an open policy at the full value. Suppose the ship to be lost on the outward voyage, in the Bay of Biscay, the shipowner was entitled to recover the gross freight of £12,000, although by the loss of his ship at the commencement of her voyage he had avoided paying for Suez Canal dues both ways £1,200, for coals at Calcutta £1,600, as well as the expenses for provisions at Calcutta, wages to the crew, and port charges at Calcutta and London. The total saving by the loss of the vessel at the commencement of the voyage would thus amount to £4,500. Now, he asked whether a law could be considered satisfactory which permitted the shipowner to derive such an immense advantage, if his ship were lost almost immediately after leaving port, instead of completing the voyage for which she had been insured. The remedy suggested for removing this anomaly was this—that where a loss occurred, the underwriter should be entitled to deduct from the amount payable to the ship-owner those expenses which he had actually saved by the loss of his vessel. He knew that this rule might be defeated, if shipowners were to insist on the freight being paid by merchants in advance; for it was a rule of our law that if a ship were lost the merchant could not recover the freight he had paid in advance. But that was a doctrine peculiar to our law, and it had recently been disapproved of by the Lord Chief Justice and other Judges. It could not, 1731 however, be reversed in an inferior Court, until it was reversed by the House of Lords. The next class of policy was the voyage policy, in which the implied warranty of seaworthiness only existed at the commencement of the voyage. There was, therefore, in so far as the law of Marine Insurance was concerned, no motive acting upon the shipowners or the master to keep the ship in a seaworthy condition; and this anomaly seemed to him to be the more remarkable, because the voyage outward and homeward was treated as one voyage. Mr. Harper, in his evidence, stated that it had happened within his knowledge that a ship from London to Shanghai had received considerable damage on the outward voyage, had discharged her cargo at Shanghai, had not been repaired, had taken in cargo for the homeward voyage, and had set forth in such a condition that there was great risk of her foundering. She had foundered, and because there was no implied seaworthiness on the departure of the vessel from Shanghai, the underwriters had been held liable to pay the insurance to the shipowner. This anomaly of the law might be removed if there was, as he believed there was in the American law, a continued implied warranty of seaworthiness throughout the voyage. He came now to the last form of policy—a time policy. Upon that there was no implied warranty of seaworthiness. The hon. Member for Hull (Mr. Norwood), in his evidence, explained that it might frequently happen that when a shipowner was effecting an insurance on his ship he might not have obtained tidings of her for a considerable period, and, therefore, it would be unreasonable to ask him to give a warranty of seaworthiness. Mr. Butt, another of the witnesses who appeared before the Commission, suggested that the warranty of seaworthiness should commence at the time of the departure of the ship insured from the first port visited after the insurance was effected, where means existed for making repairs, should repairs be necessary. He would now point out the anomalous position the shipowners and the proprietors of goods respectively occupied under the operations of the rules of law relating to voyage policies and time policies. There being no implied warranty for seaworthiness under 1732 a time policy, the shipowner could recover even if the ship was not seaworthy. On the other hand, the proprietor of goods could only insure under a voyage policy, and therefore, although the vessel in which his goods were shipped might be unseaworthy, he could not recover. There was obvious inconsistency in this state of things. The shipowner, who had the real control over his ship, and was responsible for her equipment, could recover his insurance, even though he had neglected his duty: whereas the proprietor of goods, who was an innocent sufferer, could not recover, although he had no responsibility for the seaworthiness of the ship. The merchant had a remedy against the shipowners, but the bills of lading were so artfully contrived that the shipowner was enabled to contract himself entirely out of the obligation which would otherwise rest upon him to keep his ship in a seaworthy condition. It had been suggested, and it was well worthy of consideration, that no words introduced into the bill of lading should exonerate the shipowner from the obligation to keep his vessel in safe condition; and that the underwriter should not be held liable for loss, whether under the time or voyage policy, unless it were proved that the shipowner and shipmaster had used all reasonable efforts to make and keep the ship seaworthy. He hoped he had said enough to establish a case for inquiry, with a view to the amendment of the law. Underwriters and Insurance Companies who had the largest and most important business, conducted their affairs not so much in reliance upon the protection afforded by the law, as upon the character of those with whom they did business; and, on the other hand, underwriters in less fortunate positions were exposed to all the evil influences of excessive competition. Many of them, perhaps, were scarcely in a position to refuse to take a risk if a sufficiently tempting premium were offered. No partial measures would suffice to deal with this great question. Juries, as a rule, had been too partial to shipowners. The Royal Commission had recommended that a Judge and two Assessors should be substituted for the present tribunal for the trial of matters of this description; but what he wanted was a revision of the law by a small Commission composed 1733 of men eminent for their legal attainments, with whom should be associated persons conversant with the practice of Marine Insurance. The Commission also recommended a complete revision of the whole system of Insurance Law, and, in his opinion, if an international agreement could be arrived at on the subject, it would be for the advantage of the mercantile community. The law of Marine Insurance was composed of materials drawn from the custom of merchants, the Statutes of the Realm, and the decisions of able and impartial Judges, and should not be altered without the most careful consideration of the probable effect of the changes proposed in relation to the seaworthiness of our shipping. Because abuses had grown up in the law, Marine Insurance must not, on that account, be condemned. The Commissioners would have before them a task of great importance, difficulty, and delicacy. He did not urge any hasty action in this matter. He was well aware that a full inquiry was an essential preliminary to legislation, and he ventured to hope that the inquiry might be extended to other countries. He knew how unjust it was to draw up a severe indictment against shipowners as a class. Sometimes they were condemned as men who conducted their business on the most selfish principles. Shipowners, as a rule, made moderate profits, and they had passed through many dark periods of depression. In shipping, as in every profession and every industry in this country, the pressure of competition was keenly felt, and where unjustifiable risks were run, in most cases it would be found that the owners were struggling to make both ends meet. It would ill become the successor of a fortunate man of business to pass a harsh or ungenerous judgment on the conduct of men whose errors were chiefly due to an insufficiency of means. He understood the Government had in contemplation a Committee to prosecute an inquiry into the subject. But no mere Departmental Committee would have the authority which would attach to a Royal Commission, working under the presidency of an eminent Judge. If they could not succeed in compelling every shipowner to be to a certain extent his own insurer; or, if they could prevent excessive valuation, all other legislation with a view to the safety of life at sea would become superfluous. 1734 Those who were opposed to load-lines and surveys said truly that the commercial instinct of the shipowner, and the experience of the shipmaster, were the most reliable guarantee for the seaworthiness of shipping, and that Government surveyors could not have the same practical knowledge as persons actually engaged in the trade. But that commercial instinct must be less keen and less acute, when, by the over-valuation of the ship and freight, the owner stood to win and not to lose by the loss of his ship. The aim of future legislation must therefore be to confine Marine Insurance to a single contract of indemnity. Thus limited, it might justly be regarded—to use the language of Jeremy Bentham—as—One of the most beneficial inventions of civilized society. No one will neglect his actual possessions, a good certain and present, with the hope of recovering in case of loss only an equivalent for the thing lost, and even, at the most, an equivalent. To this, let it he added, that the recovery cannot be obtained without care and expense, and that there must be a transient privation.In conclusion, he would refer to some personal experience of his own. At the close of last year he spent a month afloat on the Bosphorus, watching day by day busy the traffic in those pleasant waters. The pride an Englishman must feel at seeing the flag of his own country displayed by so many ships; but that feeling was tempered by regret that, amid that fleet, on the whole so admirably adapted to its purpose, there were some vessels of a very different character, bad in design, or more often grossly over-laden. When he compared the buoyant trim which he thought necessary in his little vessel, with the heavily laden steamers in which he saw so many poor fellows starting for their homes, homes which, alas! they were destined never to reach, he made a vow that he would do his best to secure for the British seaman that care and protection which would never be secured until the law of Marine Insurance was reformed.
§ SIR JOHN LUBBOCK
said, he was sure that every one would admit the great importance of the question before the House. It was a melancholy subject to reflect upon, for the Report of the recent Commission on Unseaworthy Ships showed that in three years 3,300 vessels, representing 1,000,000 tons of shipping, and involving a very large loss of life, 1735 had been wrecked. Even, however, as far as the mere destruction of property was concerned, it would he a great mistake to look upon this as essentially either an underwriter's or a shipowner's question. The underwriter covered himself by increase of premium, the ship-owner covered himself by raising freights, and the real loss fell upon the consumer, who had to pay more for the goods he required. That this immense loss was to a certain extent due to preventable causes was generally admitted, and Her Majesty's Government had brought in a Bill upon the subject, which he hoped might do good; but which, after all, did not go to the root of the question. He had not much confidence in Government inspection, as he feared that it would tend to become a form which would give little security to the public, and would tend to relieve the shipowners from responsibility, while inflicting on them unnecessary annoyance and vexatious interference. The only real mode of checking the evil was, in his opinion, to act upon the motives of the shipowner. The House knew what had been done by shipowning companies which took the sole care of their own vessels. One great company had, indeed, landed more passengers than they took on board. They also knew how seldom vessels from Australia with gold cargoes went to the bottom and took the gold with them. It was very far from his wish, however, to make any attack on shipowners. On the contrary, it was certainly their interest that the law should not only be clear and consistent, but such as to offer all possible encouragement to care and prudence. In the present state of the law, however, it was actually in some cases better for the shipowner, in a pecuniary point of view, that his ship should be lost. Surely, such a state of things was entirely contrary to public policy, and the true principles of insurance. Insurance ought to be a contract of indemnity. The present state of the law, however, in regard to it was most inconsistent. A person could not over-insure against fire, and it was contrary to law to insure a life in which the insurer had no pecuniary interest. The compensation awarded to sufferers by railway accidents had a tendency to render the companies more careful. Supposing, however, that a railway company could actually make a profit out of a bad accident, would the 1736 public stand such a state of the law, which would be most injurious to the public interest? Even this, however, was hardly a parallel case, but suppose the stationmaster and pointsmen could make a large profit out of a fatal accident, was it not obvious that this would add one more to the terrors of railway travelling, and would certainly not conduce to the safety of passengers? There seemed to be three points which specially required attention—namely over-insurance, insurance of gross freight, and the law as regarded seaworthiness on time policies—that it, when a ship is insured for, say, six months or a year. As regarded the first, Mr. Harper called the attention of the Commission to a case in which a shipowner had insured his vessel for £36,000. She was abandoned by her crew, but subsequently picked up and brought into port. It was found that it would take £16,000 to repair her thoroughly. On that, the shipowner claimed for a constructive total loss, swearing that the ship, though insured for £36,000, was really only worth £15,000. He proved, in fact, that this was the case, and the underwriters actually had to pay £36,000, on the express ground that the vessel was really only worth £15,000. In the case of "Barker v. Janson" a vessel was insured for £8,000, she being at that time, though unknown to the owners, a mere wreck and, in fact, valueless. Yet the Court held that, under the existing state of the law, the insurers were bound to pay. Mr. Stevenson, then Secretary to Lloyd's, truly pointed out that if a vessel worth £20,000 is insured for £30,000, the shipowner virtually insures for £20,000, and then bets £10,000 that she will go to the bottom. Again, in the case of freight, the over-insurance of freight was surely very objectionable. Last year, for instance, a vessel sailed from Quebec for Liverpool. The freight, as per charter party, amounted to £3,500, but was insured and valued for £6,000. The ship was lost in the River St. Lawrence. Now, if she had completed her voyage prosperously, the owner would have earned £3,500, less, at least, £1,000 for wages, &c, so that his net receipt would not have exceeded £2,500, while because the voyage was not successful, because the ship was wrecked, he got £6,000. Another markable anomaly in the present state 1737 of the law was, that while the question of seaworthiness could be raised in the case of a policy on goods, or on a ship if insured for a voyage, it could not be opened on an insurance for time. As regarded the sailors, the law only allowed them their wages up to the time a vessel was lost, and had always held that a seaman could not insure his wages, for it was obvious that if he could, you would weaken his motives for bringing the voyage to a successful termination. It was stated in evidence that all the mutual insurance clubs forbade over-insurance. Surely that was a very remarkable fact? The present state of the law was condemned by the highest authorities. Benecke, in his great work on Insurance, said—The consequences of over valuation are so dangerous that they deserve the attention not only of underwriters, but even of the Legislature.Arnould, another standard authority, truly said that—The very essence of the contract of Marine Insurance is that it is a contract of indemnity.… And its whole spirit is violated if the insurer can make the occurrence of such casualties a means of gain, for this would give him an interest in procuring sea losses, which would be opposed to every principle of commercial policy.The Committee of Lloyd's also unanimously passed a resolution, calling the attention of the Commission to the anomalous state of the law in reference to unseaworthiness of ships as applicable to policies of insurance for time, compared with policies of insurance on voyages. Chief Justice Best said, in the case of "Murphy v. Bell," the temptation to fraudulent insurances thus given was very great. Chief Justice Cockburn, in the case of "Byrne v. Schiller" said our Marine Insurance law was founded on principles which were erroneous and directly opposite to those on which the laws of America and of every country in Europe but England was founded. Mr. Cohen, one of our highest legal authorities, and Mr. Justice Keating entertained the same view. From this it appeared that the unsatisfactory state of the existing law on the subject had been pointed out over and over again by the Judges in our Courts; and the Duke of Somerset, as Chairman of the Commission on Unseaworthy Ships, had summed up the matter by saying that, in the opinion of the Judges, not only did our law 1738 differ from that of every other country, but that the law of other countries was right, and ours was wrong. It was true that the Commission did not feel itself able to recommend any particular changes in the law; but they expressed themselves strongly in favour of extended examination, such as was recommended by the hon. Member for Hastings (Mr. T. Brassey). Of course, he (Sir John Lubbock) did not deny that in some respects the present state of the law had its advantages. For instance, it was convenient to settle the value beforehand in the case of freights; but if the insurance were to be on the real value, he believed there would be no practical difficulty in arriving at the amount, and it must be remembered that the Admiralty Court constantly had to do so in cases where one ship had been run down by another. It was alleged that such a change would increase litigation, but both Mr. Hollams and Mr. Walton, the two solicitors selected by the Commission to give evdence on that part of the subject, believed that, on the contrary, it would actually have a tendency to diminish law suits. In tire insurance there was very seldom any litigation about the value of the property insured. Moreover, in Marine Insurances, the value had to be considered in all cases of average—that was of damage—but, practically, that rarely led to litigation. Moreover, though it would of course be very undesirable to do any thing which would tend to increase litigation, still they must remember that they were here dealing with a case involving not only property, but life; and a state of the law which tended to diminish the motives for prudence on the part of shipowners, which made carelessness in some cases advantageous, and wrecks profitable, could not conduce to safety at sea, or to the public advantage. That was really not an underwriters question. It was a question not only for honest ship-owners, who suffered from the law as it now stood, because they had to pay higher premiums than would otherwise be necessary; but also for the public, on whom, in reality, these losses ultimately fell in the shape of increased prices. "When there had been so decided an expression of opinion on the subject from those best qualified to judge, he could not help thinking that there was a strong case at any rate for inquiry. 1739 The question was, no doubt, one of much difficulty. But he thought there were strong grounds for considering that the law with regard to ships should be assimilated to the law with regard to fire and life; as anything which enabled persons to make a profit out of the losses of others, though it might not lead to conscious fraud, tended to weaken the incentives to care and caution, on which safety at sea so much depended.
§ MR. J. W. BARCLAY
, who had given Notice of an Amendment to the Motion to leave out all the words after the word "law," and insert—And to consider and report whether Marine Insurance on ships and freights should be established on the principle of indemnity for loss, or whether the amount covered should not be limited, so that the shipowner should have in every case to bear some portion of the loss arising from any disaster to his vessel,said,: I think I ought to explain to the House that, as member for some years of a Local Marine Board, and engaged to a limited extent in underwriting and shipowning, I have had some experience on the subject now before the House. I may add that I have devoted some consideration and inquiry to the question. In giving Notice of the Amendment, I did so in no spirit of hostility to the Motion of the hon. Member, but because I thought that the Committee which he intended to move for should embrace a somewhat wider scope, and, instead of confining itself to the question of indemnity, should inquire whether it would not be advantageous and also practicable to establish Marine Insurance on such a basis that the ship-owner would in every case have a pecuniary interest in the safety of his vessel. So far as Marine Insurance concerns underwriters and shipowners, the principle on which it is based may be that of indemnity for loss; but as between the shipowner and the public, a broad question of public policy is involved. The shipowner is engaged in a hazardous business, in which not only his property is concerned, but also the property, and, above all, the lives of others. He undertakes to convey the lives and property of others safety through the perils and dangers of a voyage, except only such as cannot be avoided or over come by human ingenuity, forethought, and care. The public are entitled to assume that a shipowner exercises 1740 all possible precaution and forethought to accomplish the contract which he has undertaken—that is, to carry, so far as humanly possible, the lives and property entrusted to him safely to their destination. But, Sir, shipowners, it is admitted, do not exercise all the diligence and care which the public have a right to expect. It is unnecessary for me to argue in support of this, because all our legislation referring to the Mercantile Marine is based upon that assumption, and the question now really before us is—How can we best ensure that the shipowner shall take all the forethought and all the diligence which the public are entitled to expect of him? Parliament has attempted to accomplish this hitherto by legislation; but it is admitted that the legislation, while very harassing to the business of the shipowners, has failed in its objects. Casualties on our coasts seem to be rather fewer than they were some years ago, but those in the over-sea trade are considerably more numerous. It is unnecessary for me to refer to the enormous loss of life which from year to year takes place, because that has been very ably and persistently brought before the public by the hon. Member for Derby (Mr. Plimsoll). But, in a national point of view, these losses are a subject for grave consideration. During the last two years the value of the ships and property lost at sea has probably been considerably over £10,000,000; and although, in the first instance, this loss is a question between the ship-owners and the underwriters, the £10,000,000 are nevertheless so much loss to the wealth of the nation. Now, Sir, our legislation being admitted to have been so far unsuccessful, it is to be considered whether some other means cannot be devised to ensure that the shipowners shall exercise all the care and attention humanly possible to prevent this great loss of life and property. It will be generally admitted that the most certain way of ensuring the discharge of duty is to make it the interest of the individual that the duty be well and faithfully performed. Now, the Amendment of which I gave Notice indicates how this interest is to be secured. If the shipowner in every case had to bear a certain proportion of the loss arising from any casualty to his vessel, and that proportion were of such an adequate 1741 amount that it would be greater than any saving he could make by improperly conducting his business, it would ensure the shipowners' necessary care and attention to do his best in securing the safety of his vessel, and to carry on his business in as efficient and proper a manner as the public can expect. But what is the present state of matters? The shipowner may not only insure his ship to the full value, but even over that amount. He may insure not only the freight which is in the ship's bottom, but also the amount of all the prospective freight which he is to earn for the coming 12 months; and, beyond that, he may insure outfits. The consequence is, that under the existing law there is the anomaly that everyone interested in the adventure may have a risk except the shipowner himself. Now, can a shipowner who has already perfectly secured himself of the success of the adventure, whether his vessel accomplish her voyage in safety or not, be expected to take the same care to make the adventure successful as if he had money at stake on the issue? So long as such a state of matters is allowed to exist, can other results be expected than what have actually taken place? I do not think that many vessels are wilfully lost. Such cases are rare; but I do think that many losses occur which increased care on the part of the shipbuilder, the shipowner, the captain, or the crew might have prevented, and what we want is some mainspring or motive which will exert a wholesome influence, either directly or indirectly, on all engaged in the construction, management, or navigation of a vessel. In support of these views, I shall refer only to one paragraph of the Report of the Royal Commission, though the same view was supported by many witnesses. The Commissioners say—The system of Marine Insurance, while it protects the shipowners against losses which would otherwise he ruinous, tends to render them less careful in the management of their ships.But, Sir, I have made certain inquiries in order to satisfy myself how far it might be practicable to carry out the view indicated, and what results might be expected. As I had the opportunity of making myself best acquainted with matters in Aberdeen, I investigated the state of the shipping at that port in regard 1742 to insurance. The tonnage belonging to the port consists of about 195 ships, of together over 100,000 tons. Now, 38 of these ships, altogether 37,000 tons, more than two-thirds of the whole belong to three firms, and are practically uninsured. Well, the result of their experience of maritine casualties, extending over a period of 10 years, and in some cases very much longer, has been that the loss arising from casualties to their vessels did not exceed one-third or one-fourth of the premium which would have been charged for insuring these vessels in the open market. I might refer also to eases of a similar character which are well known in Glasgow, Leith, Liverpool, and London. One of the witnesses told the Commission that he had only lost 2 out of 21 vessels in 20 years, and that was by collision. The case of one firm largely engaged in shipping in the East has been specially brought to my notice. This firm own vessels to the value of nearly £250,000, trading in the India and China seas. These vessels are only partially insured. The premium for what is insured is about £7 7s., but the portion uninsured has cost the company only about 4½per cent. In this case I am informed the captains are highly paid, that they never leave the service, and that they are unrestricted as to the number and quality of their crew. To this last more particularly the owners ascribe their freedom from casualty. Two years ago they sold one of their steamers, and that vessel has since been once ashore, once put into port in distress, and has since been abandoned. Other two steamers which they sold were lost shortly afterwards. Now, these cases indicate that more than three-fourths of the casualties for which underwriters are called upon to pay are casualties which it is possible to avoid. I do not see that there are exceptional circumstances in the cases to which I have referred beyond due care and diligence which could have reduced the loss so much. But, assuming that only one-half of the casualties could be avoided, we see to how great an extent the loss of life and property would be avoided if the same care and diligence were exercised by all as are exercised in the cases of which I have spoken. I think that the probability of accomplishing so great a result fully justifies the 1743 appointment of a Royal Commission, as it is proposed by the intended Motion of my hon. Friend. Sir, it will doubtless be admitted by many that the principle which is recommended would have the effect which I anticipate, provided it could be carried out; and I may be expected to indicate how the plan may be put in operation. I propose that insurance both of ships and freight should be so limited as to bring on the owner himself what may be considered an adequate portion of the risk. As regards freight, there does not appear to be much difficulty. There is always the evidence of the charter-parties and the bills of lading of the vessels; but as regards the value of the ship, there is doubtless considerable difficulty. If it was necessary to determine the value of the vessel as closely as if she were passing from one owner to another, I think the proposal would be impracticable; but it is to be observed that any error in the value of the vessel by estimating her too high or too low merely makes a difference in the amount which the owner will have to risk. I think the value of the vessel may be ascertained with sufficient approximation for this purpose. I do not think it would be practicable to carry on the business of underwriting under policies which could be opened, and therefore the value of a vessel ought to be determined at the time or before the insurance is effected. In order to carry out this view, as well as to exercise such control over the shipping as may be found necessary, our Local Marine Boards ought to be reconstructed on a wider basis. If at the various ports where such Boards are necessary they were of a representative character, representing all the interests concerned—the public, the shipbuilder, shipowner, and the crew—if these Boards were authorized to employ a surveyor and legal assessor, and if their meetings were open to the public, I should expect to see them exercise in the best manner possible what supervision may be necessary and advisable for our Mercantile Marine. When a shipowner desired to insure his ship he would apply to the Local Marine Board to value her. That valuation would go before a committee of the Board, at which the shipowner should be allowed to express his views, and so the value of the ship would be ascertained with sufficient 1744 closeness for the purpose required. When a casualty occurred to the vessel the surveyor of the Local Marine Board would give a certificate of her value and of the ownership, which would be presented along with the average statement to the underwriters, and they would mark on the certificate the amount which they had respectively paid to the various owners. It may be objected that this system would be evaded by what is known as honour policies; but I think a simple provision might obviate this difficulty. In the first place I think, if the amount of risk which the owner would have to bear was a reasonable and fair amount, the underwriters and others interested would support the laws, and not insure beyond the legal proportion; but if honour policies were still attempted, they should be made illegal, and provision made that the ordinary policies should have the benefit of any amount which was covered by honour policies. For instance, if £5,000 were the proper amount to insure upon a vessel, and the shipowner endeavoured to cover £6,000—£5,000 by an ordinary policy and £1,000 by an honour policy—the lawful underwriters could be called on to pay only £4,000, leaving the honour policy underwriter and the shipowner to settle the remaining £1,000 as they pleased outside the law. I may say in passing that I would not interfere with these associations which at present exist for covering risks outside those covered by ordinary policies, because I should consider it sufficient to have the certain definite risk I propose. The principle I recommend is not altogether exceptional. According to the law, the sailor cannot insure his wages for the voyage, on the ground that he would have no interest in doing his duty and completing the voyage. But I do not see any material difference in principle between the position of the sailor and that of the shipowner. I shall only notice some of the objections which may be urged to this proposal, because I consider it unnecessary to establish the whole case, but simply to bring forward sufficient evidence to justify inquiry by a Royal Commission. It is unnecessary to reply to the argument that it is an interference with freedom of contract, because the same argument applies to all our shipping legislation. This proposal is recommended on the ground that under 1745 it a great deal of legislative interference at present existing might be dispensed with. I shall doubtless be told that it will seriously affect the small shipowners. That was the view which occurred to myself at the first aspect of the proposal, and in order to satisfy myself as to this, I made inquiry as to the insurance effected by the small shipowners in Aberdeen. There are belonging to Aberdeen 37 vessels under 200 tons register, and I made special inquiry of the managing owners as to the proportion of insurance upon each vessel. The result of the inquiry was, that 9 were totally uninsured, 19 insured not exceeding half their value, 8 insured to a higher amount, and 1 fully insured. This last belonged to a wealthy company. It may also be objected that this proposal would drive some shipowners out of the business; but, Sir, I do not consider that any objection. It will be admitted, I think, that if the class of shipowners who do cause the enormous losses of which I speak were excluded from the business, it would be a great benefit not only to the Mercantile Marine, but also to the nation. The advantages which I should expect to arise to the shipowner apart from those to the nation are that he would be relieved of much vexatious and harassing legislation which presently exists, for we might very safely trust to the selfinterest of individuals if that selfinterest could be fully secured. In addition to that advantage the portion of the vessel which is insured would be insured at a cheaper rate. At present I am informed that underwriters will take vessels at 1 or 2 per cent less if they know the shipowner runs part of the risk. The great recommendation to the proposal which I have submitted is, that it would influence the conduct of the shipowner from the beginning to the end of his business. If the owner knew that he could not cover all his risk in the vessel he would be more careful to see that the framing of the ship was sufficiently strong, that she was well built, well manned, and fully equipped for the voyage on which she was entering. Were this motive acted on from first to last it would do more to insure the safety of our Mercantile Marine than all the legislation which it is possible to devise.
§ LORD ESLINGTON
said, he was aware that they could not come to any 1746 decision that night on that most difficult and delicate subject, and the only result of the conversation would be some suggestions, which he hoped the Government would take into their careful consideration. He must begin by explaining that the gentleman to whom reference had been made (Mr. Cohen) was a Royal Commissioner, and not a witness, and the evidence which had been attributed to him, was elicited in answer to questions put by him to witnesses. The first suggestion he would offer to the House was the necessity of the greatest possible caution in dealing with or legislating upon this subject. The Royal Commissioners themselves had proceeded with very great caution. They felt that Insurance was the basis of the vast mercantile fabric which had been built upon it in this country, and there was danger in touching any of its great foundation stones. He therefore hoped the House would also show, not timidity, but reserve in forcing on the Government any specific propositions. The Commission felt that before that difficult question could be solved, a further investigation was absolutely necessary, and that it should be conducted by one or more Judges and by the ablest lawyers in London, assisted by a person practically conversant with Insurance. He was not there to say that what was the theory should not be the practice of Insurance—namely, that it should be an indemnity only against loss; but the question what was the value of a ship was more easily asked than answered. There were peculiar circumstances of time and locality attending the sending to sea of every ship known, only to the owner at the particular time, and which when taken fully into consideration, made a material difference, and put a special value on a ship. If they limited the insurance to three-fourths of the value, what was to prevent the owner from making a contract to protect him in respect of the margin uninsured? Many ships had undoubtedly been overvalued; but he had come to the conclusion that over-valuation was the small exception to the general rule. The reckless and improvident shipowner undoubtedly gained from over-valuation by the loss of the ship; but the prudent ship-owner gained in the lower premium he had to pay by under-valuation; and in his case the amount of premium was a consideration as to whether he should 1747 insure his vessel or not. He entirely agreed in the opinion expressed by the late Mr. Justice Willes, that any change in the law would be abortive, unless underwriters were seriously disposed to aid in giving it effect. If serious obstacles were imposed on Insurance, the business would inevitably be driven out of the country into the hands of foreigners. One of the greatest dangers to be apprehended was over-competition. Competition tended to relax surveys, and the rules of construction as to the strength of the vessels. Before he sat down, he should like to make one observation. He did not know whether "coming events cast their shadows before" in the announcement made by an hon. Member opposite of an intention on the part of the Government to appoint a Departmental Commission to inquire into this question, but he trusted the Government had not formed such a determination. As representing a mercantile community, he said such a Commission would not give satisfaction. The subject was full of difficulties which the greatest lawyers might hesitate to confront, and if a Departmental Commission were appointed, it would be known perfectly well that the persons forming it went into the inquiry with biased minds and a foregone conclusion. He wished the field to be perfectly clear, and the inquiry to be conducted by the ablest and most experienced men in the country, because they would have to perform a difficult and delicate task, on the execution of which would depend the attainment of a just and equitable solution, uninfluenced by sentimental considerations. He hoped the Government, if they had formed any such conclusion, would reconsider it, because a Departmental Commission could not carry on the inquiry satisfactorily to the country.
§ MR. A. W. PEEL
said, he was well aware of the great difficulties of the question, and that it was possible for underwriters and insurers to evade any legislation, unless it met with their approval; and unless Parliament gained the assent of the underwriters to legislation, it was liable to become waste legislation. The subject was so full of intricacies and delicacies that it was extremely difficult for an Act of Parliament to follow them through all their labyrinthine windings. In his evidence before the Commission, Mr. Harper 1748 spoke strongly on the question, for he said that if insurance were done away with, the business of the country would be at an end. That might be an exaggerated way of putting it; but, at all events, it showed the feelings which actuated him. The Motion asked the House to assert the principle of "indemnity" as the principle of the contract of insurance, and the hon. Mover of the Amendment suggested a limitation insurance to two-thirds of the value; but that only shifted the difficulty, for the same conditions applied to the two-thirds as to the full value. While he would urge the granting of a Commission, he would say it would not be wise to limit it or shackle it in any way by assuming any principle, for the Commission ought to go into the whole question fully determined to see how it bore on all points. Indemnity might be an excellent principle to arrive at; but, judging from the Report of the Royal Commission, they were not yet in a position to say that indemnity and nothing more nor less, should be the principle of our legislation. Several witnesses before the Royal Commissioners were emphatic on this question. Mr. Stephenson, late secretary to Lloyd's, was asked by Mr. Cohen whether he would allow overvaluation—whether, if a policy were filled up at five times the real value of the ship, he would allow it to hold good—and he said—No, certainly not; if £20,000, for instance, is the absolute settled value of the ship, and if she is insured for £30,000, what practically happens is that you make two contracts; one is to pay £20,000 if the ship is lost, and the other is a bet of £10,000 she will not get home.Mr. Stephenson, therefore, argued that no over-valuation should be allowed. Then a difficulty arose as to what overvaluation was, for what was over-valuation to one man was not over-valuation to another. The man who had embarked his whole on one vessel was entitled to say she was worth more to him than was a vessel of the same intrinsic value to a firm, who had a line of vessels employed in an established trade, because the loss of one of those vessels would be a far less serious matter to the firm than would the loss of one vessel to the single owner, who would suffer incalculable injury as compared with his more wealthy rivals. Therefore such a man was entitled to say that the vessel 1749 was worth to him more than the market price, and that, if he could effect an over-valuation on that account, he did not see why anybody should interfere with him so long as he paid the premium. It must not be supposed he was arguing that any amount of overvaluation should be allowed as between insurer and insured. Under the French law, while valuation was allowed, valuation was presumptive evidence of the value of a ship, which was liable to be rebutted by extrinsic evidence. So, under our law, everything might be vitiated by fraud. He would give the underwriter, if he supposed an excessive value was put on a ship, the opportunity to try the question in a Court of Law. Another reason why he would ask that the scope of the proposed Commission might be enlarged was, that other matters were involved; there were absurdities existing in our laws which it would be well worth the while of a Commission to inquire into if they bore on this question of indemnity. One of these related to the differences between time and voyage policies. In the case of a voyage policy seaworthiness was implied at the commencement of the voyage; but if the vessel, two days after sailing, put into another port and there became unseaworthy, she might leave that port with-out any obligation or responsibility attaching to the owner, although the un-seaworthiness of the vessel might be notorious. In time policies there was no warranty of seaworthiness at all, and the reason of the law was, that on insuring a vessel in a distant part of the world it would not be right to the owner to make him responsible for that which he could not know. Could not these things be put on a proper footing, and seaworthiness implied both in time and voyage policies? Following the lead of the Royal Commission, he had sketched out clauses which he thought might be considered, providing—(1) That whether in a time policy or in a voyage policy there shall be an implied warranty on the part of the shipowners that the ship be and continue seaworthy; and (2) that in the case of any valued policy it shall be competent to the underwriter to plead that the sum claimed is in excess of the loss suffered, and that in open policies there shall be deducted from the value of freight claimed to be earned at the due termination of the voyage, such expenses as by reason of the loss of the ship have not been incurred.1750 These points might be discussed in Committee. He hoped it was not true that the Government would be satisfied with a Departmental inquiry. The subject was beyond the capacity of the Department to master, and required the services of practical men and of lawyers able to take a survey of the whole legal bearings of the question. Last year he opposed the Bill introduced by the hon. Member (Mr. Plimsoll), on the ground that the Royal Commission had not yet reported, and that it was unfair to prejudge the question. Although the question stood now in a different position, he was still strongly of opinion that it was not by a universal survey, or by legislation of the nature indicated by the hon. Member, that you would touch the acknowledged evil of the unseaworthy ships. He looked to other causes for the correction of this evil, and if the question of Insurance could only be probed to the bottom, he believed that more would be done to put our Mercantile Marine on a sound footing than by any other remedy that could be applied. If a Commission were appointed, he believed that evils would be exposed which would show we were at last on the right track in dealing with this question; but it must not be a Departmental inquiry.
§ MR. MACIVER
said, he differed from the conclusions which had been arrived at by the noble Lord below him the Member for South Northumberland (Lord Eslington). The Royal Commissioners had issued two Reports, the conclusions of which were timid and diffident—the first gave no opinion whatever on the subject, and the second merely reechoed the evidence of the officers of the Board of Trade. These officers were most able men, but the duties thrown upon the Department had increased so much that they could no longer be satisfactorily discharged. The question before the House was not, however, in reference to that Board. It was one of insurance. Several hon. Members had referred to the disasters which took place at sea, and he considered that they had in no degree exaggerated the evils arising from over-facilities in regard to marine insurance. There was no doubt that preventible disasters existed to a very considerable extent; and if the hon. Member for Derby (Mr. Plimsoll) had made some mistakes, and exhibited indiscretion in making charges he could 1751 not substantiate, yet the general scope of Ms allegations was perfectly true. He (Mr. Maclver) was no advocate for relieving shipowners of proper responsibility; but he thought that the responsibilities recommended by the Board of Trade and by the Royal Commissioners were a mere shadow that never had been, or could be, enforced. Under Clause 11 of the existing Act, it was already a misdemeanour intentionally to send unseaworthy ships to sea, and he (Mr. Maclver) asked the right hon. Gentleman the President of the Board of Trade how many prosecutions had taken place under the Act? The man who sent ships to sea intending to lose them, deserved to be hung; but, in truth, legislation failed because it aimed to remedy that which was not the disease. Ships were not, unless in the rarest instances, lost intentionally, or from anything that could constitute misdemeanour; but rather because it was nobody's interest in particular to make sure that they would go safely. The right hon. Gentleman the President of the Board of Trade had told the House that there had been four or five prosecutions, but with what result? Substantially none, and why? Not merely for the reasons stated, but because such legislation must nearly always necessarily fail. Dead men told no tales, and when ships went to the bottom, nothing could be proved. The only case he knew in which any real result had come of such a prosecution was one instituted against a Belfast firm, which despatched a miserable little coaster called the Nimrod from Belfast to the Clyde. If the Nimrod had foundered, the firm would have got free; but the vessel reached a port where the Board of Trade managed to stop her under their survey clauses, and the owners were now in gaol. The law, however, could be evaded, if owners took good care not to know that their ships were unseaworthy; and so it was not of the slightest use. The best passenger vessels in the country sailed under a very stringent survey, and that survey, though not as good as it might be, was a great source of safety to travellers. The question before the House, as he had said, was one of insurance. If it could be arranged that disasters at sea should be made unprofitable, a large class of preventive losses would practically cease. He could tell the House that over insurance 1752 at Liverpool was exceedingly rare; indeed, so far as the great towns on the banks of the Mersey were concerned, it was utterly unknown, and underwriters there would look very coldly upon any owner who wanted deliberately to insure vessels for more than they were worth. There was certainly nothing in the nature of habitual or intentional over insurance amongst shipowners in his part of the country; but there might sometimes be reasonable difference of opinion in regard to the value of a vessel, and even, in his own experience, he had seen builders of equal reputation tendering to build at figures varying as much as £10,000 or £12,000 from each other for the same article. He referred to passenger steamers; but even in regard to sailing vessels the varying value was in a different way almost equally marked. Vessels which were worth £7 per ton some years ago had since become worth £17, and at present were valued at £14 per ton. It would be seen, therefore, that it was very difficult to fix any definite and exact proportion in regard to value. There was, however, no such difficulty in the case of cargo; and over insurance in regard to cargo happened to be the rule rather than the exception. The custom of trade, and especially in regard to bulk cargoes such as grain, coals, or iron, was for owners of cargo to insure a 10 per cent profit. Vessels so laden were those which most frequently went to the bottom. The merchant, broker, or character, were all insured, and their profits in each case were safe to them, provided only the vessel was lost: and it was not a question of only one, but frequently even of two profits, because if one cargo was lost there was another to replace it. The shipowner was, no doubt, also insured. Nobody meant the vessel to be lost; but, practically, it was not the interest of those persons to see that the vessel was not over-laden. It would certainly occur to them to do so, if the loss of the vessel meant a loss of money to them. Something might be done in the way of remedying the evil in the direction of controlling insurances; but he did not think the appointment of another Royal Commission was the right way to set about it. Whilst giving all credit to the recent Commission for their honesty of purpose, he thought that the results of 1753 their enquiry offered little encouragement in regard to the appointment of a second Royal Commission upon what was practically a branch of the same subject; but in justification of the eminent men who composed the late Royal Commission, he would point out that they had many formidable difficulties to contend with. How could they get at the truth? Was it reasonable that the owners or builders of unseaworthy vessels, or any other interested persons, would voluntarily come before the Commissioners and give them information, or that the men who were obliged to make their living by going to sea in such vessels would tell them what they knew? The Commissioners sat in London; they had no power, so far as he was aware, to compel the attendance of witnesses, and there was no cross-examination of witnesses before them by counsel. No doubt, many valuable witnesses, who were anxious to tell the truth, appeared before the Commissioners; but others, he believed, attended for no other purpose than to throw dust in their eyes. On the second reading of the Merchant Shipping Bill, he hoped to give his reasons why the House should heartily support the President of the Board of Trade in his honest endeavour to bring about a better state of things, which, however, could only be done by referring the Government measure to a Committee of earnest men possessing such technical knowledge as would enable them to make its clauses effectual for the purposes intended.
§ SIR CHARLES ADDERLEY
thought the hon. Gentleman who spoke last had somewhat wandered from the question before them, and had accused the Board of Trade of not prosecuting in cases in which, unfortunately, there was no evidence available to enable them to do so. He (Sir Charles Adderley) thought the question a very narrow one. It was not so much whether the House was satisfied with the existing state of the law, as of the mode in which reform should be made. He took a deep interest in the subject of Marine Insurance, because he believed it lay at the foundation of the amendment of the law which he had in hand at that moment, relating to the safety of our merchant ships, and the prevention of recklessness in our Mercantile Marine. The House could come, on the present occasion, to no issue upon 1754 the Motion; but he was very glad that it had been raised by the hon. Member for Hastings (Mr. T. Brassey), who was in every way most qualified to bring the subject before the House, not merely by reason of his own practical acquaintance with it, or the weight he had in that House, but also because he was a Member of the Royal Commission on Unseaworthy Ships which had lately reported. Every one would agree that the state of the law of Marine Insurance was not satisfactory, and that preparation should be made to deal with such an unsatisfactory state of the law. It could hardly be satisfactory that a law of any kind should be absolutely conflicting with its own avowed principle; and yet that was the case here, because the principle of Marine Insurance, as laid down by all recognized authorities, was the principle of indemnity for loss, and yet the decisions of the Judges had from time to time widely departed from that principle to meet the case of contracts voluntarily entered into. The practice of the law was such as to make it in many instances a gain to the shipowner to lose his ships; there were cases of actual intentional over insurance; and he maintained that over-insurance differed only in name from a wagering policy, which was distinctly illegal under the Act of George II. Not only might shipowners gain by the loss of their ships, but others might recover less than they ought to do under the Principle of indemnity for actual loss, for there were cases in which the underwriter was discharged from his liability owing to some latent defect for which the shipowner was not responsible, and of which he knew nothing. In every way, therefore, the law in practice contradicted its theory. Against a revision of the law it had been argued, in the first place, that it was dangerous to disturb the commercial usages of a country like this. But the marine laws of the country must, of necessity, be in perpetual change more or less to meet the many changing requirements of the times; and when he considered that what was under consideration was not a change, but simply a restoration of the principle of the law, he could not admit the objection to be valid. Another objection was, that the market value of a ship might not be the virtual value to its owner. It was perfectly true that its value might be greater 1755 to one man than to another, or greater at one time than at another, but no principle of law could meet such accidental circumstances. There must be some definite and fixed principle. There could be no insurance of fancy value, no insurance of adventitious advantages or of an indefinite or accidental proprietary stake. If there was to be a clear principle of insurance, there must be a definite test of value. It had been argued, further, that Parliament had nothing to do with the matter—that it was a question between the underwriters and the shipowners. But surely the fact that the public safety was concerned gave Parliament a right and obligation to interfere. As long as a total loss might be more lucrative than a partial loss, or than actual safety, it was not in human nature for the shipowner to take as much care in the selection of master and crew and in attending to the general condition of his ship as he would do if he felt that he incurred a risk by any casualty. In the interest of the public safety, therefore, Parliament had not only a right, but was under a duty to interfere. It was not to be expected, considering the keen competition that existed between insurance offices, that the underwriters would take it upon themselves to keep down policies to strict indemnity, and there was a diversity of interest among the shipowners also, which made it unlikely that the needed reform would come from them. The Royal Commission to whose Report so much reference had been made entered vary fully into this question of Marine Insurance. They regarded it as of great importance in connection with the subject they had in hand. They declared that it ought to be dealt with, and that it called for careful consideration. He deferred very much to that Report, and the only point on which he differed from the hon. Member for Hastings was as to the mode of dealing with the subject. Unless it was desired to postpone a settlement of the matter, there was no need for another Royal Commission. The evidence of the men best acquainted with the subject in this country had been obtained. It was no longer a question of facts, but a question of policy; and, that being the case, he thought the Government ought to take it up themselves. He did not mean to say that 1756 the Government was ready to propose a measure at once. Had he when introducing the Merchant Shipping Bill brought in a measure with it on Marine Insurance he should have been precipitate. Consultation, and important information from men eminent in the law and others, as well at home as from foreign countries, was essential to sound and durable legislation on the subject. He did not propose, however, to wait for an international measure, although it would be advantageous to get other maritime nations to agree with us. In passing, he would say that he did not fear legislating separately for this country as likely to drive men to foreign insurance—he did not think English ship owners were likely to show an excessive desire to insure abroad. The fear that they would was only a bugbear in the discussion, for Englishmen knew their advantages in insuring here, and how difficult it was in some cases to recover foreign insurances. What he wanted was, to ascertain the experience of other maritime countries as to the different systems prevailing among them; and with that object he had ventured, in conjunction with the noble Lord at the head of the Foreign Office, to circulate a list of questions which would serve to elicit the desired information. These questions had been forwarded to the Governments of maritime countries some weeks ago, and he would place a copy of them forthwith on the Table of the House. He hoped the House would share the views he had expressed, and be of opinion that no second Commission was required; but that the Government should take the subject into their own hands, and collect such further information as they thought necessary to enable them to deal with it. In that way, he believed the views put forward by the hon. Member for Hastings would be more effectually met than by the adoption of any Resolution such as the one which had been placed upon the Paper.
§ MR. T. E. SMITH
said, the subject had been too often treated as a shipowners' question, whereas not one-tenth part of the insurances applied to ships. The great bulk of the insurance business was done on cargoes, and thus it materially affected the whole trade of the country. He must assert, in opposition to a remark of the right hon. Gentleman 1757 who had just spoken, that a very large proportion of the insurance of this country was at this moment done with foreign insurance companies. He was inclined to think that there ought to be some limitation placed upon the amount the shipowner should receive in the event of the loss of his ship, which would prevent him receiving more than the actual amount of damage he had sustained. Shipping property was very different from other kinds of property. Its market value was subject to fluctuations of various kinds. It was not bought for the purpose of sale; it resembled real property. A ship contracted for when the average cost of iron was £9 a-ton would increase in value when the average cost of iron was £ 16 or £ 17 a-ton, while the original cost of insurance would remain the same. The value of a ship at the time of her sale might greatly differ from what it was at the time of her construction; and care must, therefore, be taken that in regulating the insurance of vessels a premium was not offered upon cheap and bad ships to the discouragement of good and honestly built vessels. He trusted, therefore, that this subject would not be legislated upon in a hasty manner without taking the advice of practical and experienced men.
§ MR. PLIMSOLL
said, he wished to point out that a distinction ought to be drawn between insurance proper and underwriting. He should have no objection to the shipowner insuring his vessel for any amount he could procure, provided the person who took the responsibility retained it in all its integrity; but he did object to large policies being underwritten for small amounts, which did not give the parties sufficient interest to make the necessary preliminary inquiries. Such a course would not induce them to prosecute in the event of manifest fraud having been committed.
§ MR. MACGREGOR
said, the port he had the honour to represent contained a large number of seamen and of boys who went to sea, and he felt persuaded that the House was moving in the wrong direction on the present occasion. The hon. Member for Derby (Mr. Plimsoll) had spoken of the evil effects of having a large number of underwriters for small amounts. As a shipowner, he might inform the House that he had had no trouble whatever with the large companies, 1758 but he had had a great deal of trouble with the small underwriters. He appealed to the shipowners throughout the country to say whether this was not their experience, and whether they would not pay more to the large companies to avoid them. Take, as an illustration, a vessel built in 1872, when iron and wages were very moderate. The vessel would be insured for 12 months at 8 per cent. and underwritten at 4 per cent. that would be a sum of £4,000. By 1873, through the advance of wages and material, the vessel could not have been replaced for £20,000. If insured again at the expiration of 12 months at a cost of 8 per cent. it would amount to a sum of £5,600; but during the currency of that policy the price of labour and material went down again, and if lost, the underwriters would only have to pay the original sum for which the vessel was built. He was perfectly sure that any disinterested Commission or Committee which sat upon the question would come to the conclusion that the proper time to value a ship was not after the vessel had become a loss, and could not be seen by anybody, as in the case of an insurance of a man's life, they might just as well hold an inquest after he was dead to ascertain whether he had ever been worth that money to anybody. He hoped great care would be taken in regard to this matter. He did not shrink from the fullest inquiry, and if it was to be held, he hoped it would be with a full determination to do right and justice to everybody, and that nothing would be done to injure the great Mercantile Marine of this country.
§ MR. MACDONALD
said, if he understood the hon. Member for Hastings (Mr. T. Brassey) rightly, he had brought the matter forward not so much in regard to the value of the ship, as with a view to promote the safety of human life. That being the case, the House ought to view the question not so much as one between underwriter and owner, as one affecting a large portion, and perhaps the least cared for portion, of the community—namely, the seamen of the Mercantile Marine. The time for legislation had undoubtedly arrived, and the Government was the proper party to deal with it. He was glad, therefore, that the right hon. Gentleman had spoken out in the manner he had done to-night. They had had the red rag of foreign 1759 competition put before them once more; but they had heard the same thing in respect to factories and agricultural fields, when Bills in relation to them were before the House of Commons, and the fears entertained with regard to it had proved groundless. At the present moment what was our position in the world as a Maritime Power? Our flag was upon every sea and in every bay, the silly cry of foreign competition was absurd in these circumstances.