If one of the contracting parties should be engaged in war with any other Power, the free intercourse and commerce of the subjects or citizens of the party remaining neuter with the belligerent Powers shall not be interrupted. On the contrary, in that case, as in full peace, the vessels of the neutral party may navigate freely to and from the ports and on the coasts of the belligerent parties, free vessels making free goods, insomuch that all things shall be adjudged free which shall be on board any vessel belonging to the neutral party, although such things belong to an enemy of the other.

Adverting to the statement in the German note of June 7th that in the event the prize court should not grant indemnity in accordance with the treaty stipulations the German Government would nevertheless make compensation, the Secretary of State called attention to the fact that the Government of the United States might not be satisfied with the amount, and that even if the prize court awarded an indemnity it would not be binding on the United States. It seemed more appropriate, therefore, that the amount be determined then and not later, by diplomatic negotiation.

The German Government replied to this communication in a note of July 30th, declining to accept the American interpretation of the treaty and again insisting that the commander of the Eitel acted within his legal rights in sinking the Frye. It was not disputed by the American Government, said Herr von Jagow, that under the general principles of international law a belligerent is authorized to sink neutral vessels under almost any conditions for carrying contraband, and this right is recognized by Articles 49 and 50 of the Declaration of London, the ratification of which the American Government had proposed to the European belligerents at the beginning of the war. More than half the cargo was contraband; it was destined for the use of the armed forces of the enemy; and an attempt to take the ship into a German port would have imperiled the Eitel and defeated the success of its operations. Referring again to the treaty stipulations, he pointed out that the right of destruction was not mentioned and was therefore neither expressly permitted nor prohibited, and the treaty stipulations must be supplemented by the general rules of international law. The provisions relating to the delivering out of the cargo could have no application when the time required exposed the captor ship to danger or impeded the success of its

operations. In the case of the Frye, the commander had endeavored to throw the cargo overboard, but being convinced that it was impracticable owing to the danger to which he was exposed from the pursuit of enemy warships, he was obliged to destroy his prize. The question of legality, he concluded, had been submitted to a prize court on July 10th; the court had rendered a decision to the effect that the cargo was contraband, that the Frye could not be taken in and that in consequence the sinking was justified. At the same time the court had recognized the "validity" of the treaty stipulations, but was unable to fix the amount of indemnity itself since it did not have the necessary data before it. Thus it came to pass that while the negotiations were in progress the German Government was able to carry its point and have the question passed upon by a prize court, as it had all along insisted must be done. But the amount of indemnity remained to be determined. With this end. in view, the German Government suggested that each party select an expert and that the two acting jointly should determine the amount, which the German Government would promptly pay. But it was expressly declared that such payment was not to be understood as constituting a satisfaction for the violation of American treaty rights, but a duty or policy founded on existing treaty stipulations. Should this mode of settlement not be acceptable to the American Government, it was suggested that the question of the interpretation of the treaty provisions in dispute be submitted to the Hague Tribunal.

The American Government, regarding a further exchange of views on the question as unprofitable, accepted in principle the German suggestion, but proposed that the two alternative modes of settlement be combined, so that the question of the amount of the indemnity might be submitted to joint experts and the dispute regarding the interpretation of the treaty stipulations be arbitrated in accordance with Article 38 of the Hague Convention for the Pacific Settlement of International Disputes. Likewise, the German suggestion that payment made under the arrangement should not be considered as an admission that American treaty rights had been violated was accepted, subject to the understanding that acceptance of such payment should not be construed as an admission by the United States that the sinking of the Frye was legally justifiable.

These suggestions were promptly accepted by the German Government, which at the same time named the expert to act in its behalf. The American Government having inquired whether, pending the arbitral award, the Imperial Government would conduct its naval operations in accordance with its own interpretation of the treaty or that of the United States, the Imperial Government replied that, although Germany would suffer disadvantages from following the American interpretation, the government had as a mark of its conciliatory attitude instructed its naval commanders not to destroy in future American vessels laden with conditional contraband even when the "conditions of international law are present," but on the other hand, the right to destroy those carrying absolute contraband must be reserved.

In a note dated October 12, 1915, the Secretary of State agreed to the proposal of the German Government, but he suggested that there should be an understanding that in case the joint experts could not agree on the amount of the indemnity, or in case it could not be settled by diplomatic negotiations, the question should be referred to an umpire if the government of the United States should so desire. Regarding the suggestion of the German Government that it must reserve the right to destroy vessels carrying absolute contraband wherever such destruction is permissible according to the Declaration of London, the Secretary of State stated that the American Government, while unwilling to admit that the Declaration was in force, was willing to accept the provisions of the Declaration as governing, pending the arbitral award, subject to the understanding that Article 50, which provides that before destruction of a neutral vessel all persons on board must be placed in safety is not satisfied by merely giving them an opportunity to escape in life boats. It was also suggested that the arbitration should be by summary procedure, based upon Articles 86 to 90 of the Hague Convention, rather than the longer form of arbitration before the Permanent Court at the Hague.

Finally, in a memorandum delivered to the Secretary of State on November 30, 1915, the German Government expressed regret that it could not agree at that time to the American suggestion regarding the appointment of an umpire, and that its ultimate decision would depend

upon whether the differences of opinion between the experts, in case they failed to reach an agreement, related to principles, or merely to the appraisement of the value of the ship. In the latter event, the German Government could not agree to the appointment of an umpire. As to the conditions under which the German naval forces might sink American vessels laden with absolute contraband, pending the decision of the arbitral tribunal, the memorandum stated that the German Government was prepared to give guarantees that due provision would be made for the safety of all persons on board before sinking the ship.

The sinking by the Karlsruhe of the Dutch steamer Maria carrying a cargo of grain from an American port to Dublin and Belfast, was a case similar to that of the Frye, but the German prize court refused to allow compensation to the owners. Apparently there are no treaty stipulations between Germany and the Netherlands such as governed the Frye case, and the right of destruction was upheld by the prize court under the Declaration of London and the general principles of international law. The claimants stated that the cargo was intended for private mills which operate for private persons, but the prize court held that inasmuch as Belfast had been declared a base for the British fleet in August, 1914, and Dublin had likewise been declared a naval base on November 25, 1914, foodstuffs destined thereto might be destroyed on account of inability of the captor to take the prize into a home port. The plea that since the Maria was destroyed on September 21st, before Dublin, to which more than half the cargo was consigned, had been officially declared a naval base, was not admitted by the prize court. Likewise, the plea that the grain was destined for the use of private mills was disallowed on the ground that the British Government was free at any moment to confiscate privately owned grain. It will be remembered that the British Government defended the confiscation of the cargo of the Wilhelmina, consisting of foodstuffs consigned to a private individual at Hamburg, on the ground that Hamburg was a fortified place and that the German Government had taken over the control of the grain and flour supply of the country. The two cases were therefore similar, except that in the one case the ship and cargo were destroyed, whereas in the other case they were taken into a prize court for adjudication.

In the case of the destruction of the Norwegian steamer Svien Jarl, with the loss of twelve members of the crew, by a submarine, the German Government at first declined to allow an indemnity, on the ground that the steamer was not sufficiently marked by neutral signs, but it appears from the press dispatches that the government subsequently agreed to make reparation. Like action was taken in the case of the Danish steamer Betty, which was torpedoed on May 26th because of the alleged inability of the commander of the submarine to distinguish its markings. Only in a few cases, as, for example, where the act was due to failure to distinguish the markings of the vessels or where, as in the case of the Frye, destruction was forbidden by treaty, has the German Government apparently shown a willingness to make compensation.73 It is clear that the German Government maintains that the right to destroy neutral vessels carrying contraband, conditional as well as absolute, is a lawful belligerent right, and, as has been pointed out above, this right is recognized by the Declaration of London in cases where more than half the cargo consists of contraband goods (Art. 40), provided the cargo is liable to condemnation by a prize court, and where the taking of the ship in would involve danger to the captor ship or to the success of the operations in which it is at the moment engaged (Art. 49). It is well to remember, however, that conditional contraband is not liable, under the Declaration of London, to capture, except where it is destined for the use of the armed forces or the government of the enemy (Art. 33), and therefore it is not liable, according to Art. 49, to destruction. To justify the destruction of a neutral cargo carrying conditional contraband, it is not sufficient, according to the Declaration of London, for the captor to show that it is destined to enemy territory; he must show that it is intended for the use of the armed forces or government of the enemy. According to Art. 34, however, such use is presumed where the goods are consigned to enemy authorities, to a government contractor, to an

73 On the 8th of April, 1915, a German submarine torpedoed the steamer Harplyce, which flew the flag of the American Relief Commission, and which had painted on its sides in large letters the words Commisson du Secours belge. It bore a safe conduct furnished by the German minister at The Hague. But the commander of the submarine did not take the trouble to verify the character of the ship and sank it. Fifteen persons on board lost their lives. Perrinjaquet, La Guerre Européenne, Rev. Gén. de Droit Int. Pub., Jan.-June, 1915, p. 207.