Liquor Barred On Ships (1922)

Upsetting the decision made by Elmer Schlegtuger, formerly chief counsel of the Shipping Board, that sale of liquor on Shipping Board vessels was legal, Attorney-General Daugherty late October 6 submitted an opinion to the Secretary of the Treasury that the practice of selling liquor on American ships outside the three mile limit is not permissible, under the law, and that the eighteenth amendment and the Volstead act prohibit as unlawful the possession and transportation of liquor even on foreign ships while in American territorial waters, whether such liquor be sealed or open.

President Harding immediately directed Chairman Lasker to stop the sale of liquor on all Shipping Board boats and requested Secretary Mellon to formulate regulations for the enforcement of the law.

The Attorney-General said be understood foreign owners were prepared to bring a test suit and that the Department of Justice would cooperate to have the question decisively settled by the courts.

American territorial waters are construed by the ruling to include the use not only within the three-mile limit of continental United States, but also those within the same limit of Porto Rico, the Philippines, the Hawaiian Islands, Alaska, and the Virgin islands. The statute specifically exempts the Panama Canal Zone.

Chairman Lasker of the Shipping Board, commenting on Attorney General Duughtcry’s decision pointed out disadvantages that will result to the American merchant marine. He said:

The attorney general’s decision is, of course, one that I accept and will co-operate with. I want to point out, however, the effect of the inclusion in the decision, of foreign flag ships. It will take experts of the treasury department many weeks to work out the rulings necessary to keep within the international laws involved. During those weeks, of course, foreign ships will have the advantage over American ships.

I have no doubt that the foreign flag companies will immediately go into court. We will assume that they will and a court that will grant them an injunction. We will presume that the injunction will be continued until the Supreme Court decides the Issue. That will mean a year or two, during which the foreign flagships will have the Advantage over American ships.

If the Supreme Court should decide that the law cannot apply to foreign ships on the ground that the territory of a nation follows its flag, then, of course, the advantage to the foreign ships will be permanent.

Let us suppose that the Supreme Court concurs in the decision.

There Is nothing that could prevent the foreign flag ships on the waters bound for America from carrying liquor and throwing overboard the little that will remain at the beginning of the three-mile limit.

We all know that the backbone of the passenger ship trade is the Immigrant. The Immigrant, we all know, uses wine and beer as the American uses butter. The Immigrant trade In the future will entirely go to the foreign ships. Without the Immigrant no passenger ship can pay.

It is certain that under this ruling Montreal trans-Atlantic business will be vastly increased. Let us consider ships from South America. The South Americans will come on their ships because they can come with liquor. Or, even they could go to Montreal.

Effect on the Pacific Ports

In the Pacific, this ruling may mean a severe blow to some of our port cities, Seattle and Portland. Today the oriental trade is flowing largely Into Vancouver. Vancouver has the drop no us now and if this decision stands, it will continue to.

I am not discussing this from the standpoint of prohibition. I am simply discussing the facts. The class of Americans who travel abroad are those who like a drink occasionally and that foreign travel has Increased vastly since the enactment of prohibition in this country.

I also want to emphasize the fact that we cannot have a merchant marine of cargo ships alone.

Without a well-balanced merchant marine, we will have no naval support and no assurance of commercial communication with other nations in time of peace. We must have a merchant marine. The decision makes immediate passage of the subsidy bill more necessary than ever.

Lasker Issues Orders

Chairman Lasker, of the Shipping Board, issued an order October 7 directing masters of Shipping Board vessels to remove therefrom and to surrender to Treasury Department officials all Intoxicating liquor aboard the ships.

This action was In compliance with the orders of President Harding following the announcement of the opinion of the Attorney-General. Under the order, any officer or member of a crew of a passenger or freight Shipping Board vessel found to possess intoxicating liquor on hoard ship will be dismissed from the service.

The ruling by the Attorney-General was not unexpected. The uproar which followed disclosure that the Shipping Board was selling liquor on Its boats and the ruling of Chief Counsel Schlesinger that such sales were legal, was such that, from a political point of view and also from the point of view of not putting obstacles in the way of the Administration's ship subsidy program, it could not be revived by a holding that the Eighteenth amendment and the Volstead law were meaningless so far as ships were concerned.

President Harding, in a letter to Secretary Mellon, a similar letter having been sent also to Chairman Lasker, said:

I have asked the Attorney General to place in your hands his ruling relating to the application of the Eighteenth amendment and the Volstead act to the service and the transportation of intoxicating liquors on American ships at sea and the transportation of Intoxicating liquors on all vessels within American waters.

The ruling, you will note, holds all transportation In American waters to be contrary to a recent decision of the Supreme Court, and transportation and traffic on American vessels to be wholly contrary to law. I have directed the chairman of the United States Shipping Board to order Immediate observance of the law on all government vessels, and desire you to give like notice to the masters of all privately-owned ships operating under the American flag.

You will note that the ruling holds the possession or transportation of all Intoxicating liquor* by foreign ships In American waters to be contrary to the decision of the court. You will, therefore proceed to the formulation of regulations for the enforcement of the law, and such notice to the agents of foreign shipping lines touching American port* or docking therein as becomes the circumstances and commits us to full enforcement of the law.

Summing up his findings, Attorney-General Daugherty said:

1 am of the opinion that under the rules of fair Intendment American ships, wherever they may be are Included in the terms of the Eighteenth amendment, "territory subject to the jurisdiction" of the United States, so that manufacture, transportation or sale of Intoxicating liquors for beverage purposes is prohibited thereon. To construe otherwise would. In my opinion, violate the unmistakable Intent in US adoption, such intent clearly adduced from a study of the circumstances out of which it grew, and voiced by the Supreme Court in the Walker and Anchor Line cases.

This interpretation Is further supported by the many authorities that have held ships to be "constructive territory" of the country whose flag they fly. Such decisions undoubtedly extend the protection as well as the inhibitions of the country's laws.

The national prohibition act is an act of general Jurisdiction In force wherever the Eighteenth amendment applies; and the courts of the United States have Jurisdiction to punish its violations on the high seas.

I am forced to the opinion, under the ruling of the Walker and Anchor Line decisions that foreign ships carrying Intoxicating beverage liquors as ship stores or otherwise, within the three-mile limit of our shores, is violating the provisions of the national prohibition act, prohibiting possession or transportation of intoxicating liquor for beverage purposes.

The Supreme Court therein has held that It Is not material that the liquors may not be Intended for beverage uses within the United States, because the court emphasized that the Eighteenth amendment marks a revolution in our former national policy toward Intoxicating liquor and does not confine Its prohibition In any meticulous way within the United States but. on the contrary, its intent was as far as possible to "stop the whole business."

President Harding, in a letter to Secretary Mellon, issued the following instructions with regard to enforcing the law against liquor on vessels:

Supplementing my letter of Instruction of October 6, relating to the enforcement of the Eighteenth amendment and the prohibition enforcement act, as applied to carriers at sea, you will please direct United States customs officials to give notice to all shipping tines that pending the formulation of regulations, the enforcement of the prohibition of transportation of cargoes or ship stores will not be practicable in the case of foreign vessels leaving their home ports or American vessels leaving foreign ports on or before October 14, 1922.

Any earlier attempt at enforcement. In absence of due notice and ample regulations, would be inconsistent with Just dealing and have a tendency to disrupt needlessly the ways of commerce.

This delay in full enforcement does not apply to the sale of intoxicating liquor on vessels sailing under the American Flag.

Foreign Lines Contest Ruling

On October 11, officials of the Cunard and Anchor Steamship companies in New York Instituted proceedings in the United States District Court to restrain government officials from seizing either their ships or the liquor aboard on the high seas. The application for the injunction, after it had been opposed by Assistant United States Attorney Clarke, was refused by Judge Hand, who, however, ordered the federal authorities to show cause why the order should not be granted. Argument will be heard on October 18.

The Anchor Line is a subsidiary of the Cunard Company. Ships of both concerns are under British registry.

The complaint of the steamship companies attacked the legality of the Attorney General’s decision on the ground that it was in contravention of the general commerce treaty of 1815 and a misinterpretation of the Volstead act.

The eighteenth amendment, the complaint set forth, had been misinterpreted as to its clause covering the transportation of liquor. While the act declared It illegal to transport liquor, the complaint pointed out, it did not decree possession of liquor aboard ships as a violation of the law.

Attorneys who appeared for the government said a temporary stay would not be necessary, as the Treasury Department would not attempt to force the ruling until October 14.

Seek to Trade for Subsidy

The plan of the American Steamship Owners’ Association, however, expressed in an official statement October 11, is to abide peacefully by the Daugherty ruling if the prohibitionists will, In return, lend their support to the ship subsidy bill now before Congress.

Enumerating the disadvantages, which private American vessels running dry will suffer in competition with foreign ships, the association says:

There is but one way in which this disadvantage can be met, and that la by national aid along the lines now provided for In the national shipping bill.

The association believes that the friend* of prohibition appreciate the situation and will be among the strongest advocates of giving to American ships every assistance that is necessary to maintain and up build the merchant marine.

The association's stand is against any concerted effort to retain liquor on passenger ships. "However, it Is a foregone conclusion that if the Attorney-General is ultimately sustained American ships will be placed at a great disadvantage," the statement says, continuing as follows:

The loss in profits to American ships from the sale of liquors will be Inconsequential. The serious loss will come from the driving of passengers to foreign passenger ships, not only in the transatlantic trades, but more particularly In the transpacific. South add Central American and West Indian trades, where all ships customarily touch at Intermediate foreign polls.

Driving the passengers to foreign ships will make those ships the instruments by which the trade of our competitor# will be advanced and developed.

Judge Hand, in New York, October 12, granted a temporary restraining order enjoining local enforcement authorities from molesting liquor on board the American steamers Finland and St. Paul and another order directing the government agents to show cause why an injunction should not be Issued restraining them from interference with twenty-four ships of the British-owned Cunard and Anchor lines.

The injunction was issued on application of the International Mercantile Marine Corporation, which controls the American Line, operating the Finland and St. Paul.

The Cunard complaint pointed out that the carrying into effect of the Daugherty opinion would cause the steamship companies great pecuniary loss by reason of difficulty in obtaining crews and by the diversion of passenger business to Canadian ports. It further stated that it would be impossible to comply with foreign laws, notably an Italian law requiring wine of 12 percent alcoholic content be supplied to officers, members of the crew, and third class passengers.

The ruling, the complaint continues, would also violate existing treaties between the United States and Great Britain. It further alleges that the interpretation on the national prohibition act renders the act unconstitutional and void.

"Liquor Barred on Ships," in The Traffic World, Volume 30, No. 16, Saturday, 14 October 1922, Chicago: The Traffic Service Corporation (1922), P. 809-810