GIFT OF 
 
 
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 I The ABOLISHMENT of \ 
 I GENERAL AVERAGE I 
 
 I B y M . 
 
 HARRISON! 
 
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THE ABOLISHMENT OF 
 GENERAL AVERAGE 
 
 By M. C. HARRISON 
 
 SAN FRANCISCO 
 
 COPYRIGHT. 1915. BY M. C. HARRISON 
 
 Copenhagen 1 9 1 6 A. Pauill 
 
San Francisco, Cal., October, 1915. 
 
 In view of the completion of the Panama Canal — the master- 
 piece of human constructive help to the Maritime Commerce of the 
 world, I deem it an auspicious moment to propose the abolishment 
 of general average. 
 
 Commerce by sea has been fettered by this growing land bar- 
 nacle for nearly three thousand years. It was useful prior to the 
 introduction of marine underwriting, but has served its time, and 
 should not be allowed to remain as a drag upon the interests of 
 mankind. 
 
 If my suggestions meet with favor, I shall be partly repaid by 
 the thought that the saving thus effected is constructive in its na- 
 ture, and that it may aid in the upbuilding of our maritime com- 
 merce, to which my whole life has been devoted. 
 
 '^/^ M. C. HARRISON 
 
 Page two 
 
IN presenting the following argument and plan for the abolish- 
 ment of general average I do so with a full appreciation of the 
 justice rendered to all parties in maritime ventures from the time 
 the custom began with the Phoenicians, up to the present, but I have 
 also come to believe that the requirements of modern commerce are 
 such as to demand the abolishment of the system completely. 
 
 There are three chief reasons for doing so: 
 
 First — The majority of the parties interested in maritime ven- 
 tures at the present day do not understand the system of general 
 average, and it is so intricate and cumbersome that, in the nature 
 of things, it is not possible for them to gain, in the ordinary chan- 
 nels of commerce, even a fair understanding of its workings. 
 
 Second — The amount of work required by various interested 
 parties is getting too great. 
 
 Third — The expense is too enormous. 
 
 826028 
 
 Pa^e three 
 
FIRST— LACK OF UNDERSTANDING 
 OF SUBJECT 
 
 The majority of shipowners and cargo owners who have some 
 understanding of the subject merely know that where a sacrifice is 
 made for the interests of all concerned, that a general average under- 
 takes to equalize the burden so that the property of no one party 
 shall, in the end, suffer more than the property of another party. 
 The broad, general basis of general average is the same throughout 
 the world, but the details of adjustments are quite different in the 
 various countries that have the majority of interests at sea. It is 
 not the same in all of the main particulars in any two countries 
 which have large interests. It has been the dream of people in- 
 terested in maritime commerce, including marine underwriters, 
 for many decades, of having the laws of the principal nations of 
 the world on the subject of general average, made to agree in all the 
 main particulars, and although many conferences between inter- 
 ested parties have been held, it never has been found possible to so 
 arrange it. 
 
 Hence, a ship bound from England to the United States, having 
 necessity for general average, is bound to have the adjustment 
 drawn according to the laws of the United States, but even in such 
 a case it is modified by the contract of affreightment, which may 
 provide for some special rule which must govern. When the same 
 ship starts with a return cargo from the United States to Great 
 Britain and a general average becomes necessary, the law of Great 
 Britain must rule, but even in this case the B/L issued in America 
 may contain special clauses which will modify the subject and such 
 must control, provided always, of course, they are not against public 
 policy. 
 
 One can then gather a fair idea of the amount of confusion that 
 might exist in a case where a ship starts from one country and is 
 intending to pass through two or three ports of different nationali- 
 ties with cargo for each, should a general average become necessary 
 before arrival at the first port. It often requires several different 
 adjustments. This is also the case when a ship starting from a port 
 in one country to a port in another country meets with disaster 
 and returns to the original port, and there ends the voyage with 
 regard to certain parts of the cargo, but sends forward the remain- 
 ing part; the adjustment for the part disposed of at the original 
 port will be adjusted according to the laws of that port while the 
 
 Page four 
 
part forwarded will be adjusted according to the laws of the port 
 of destination. Numerous instances can be mentioned of the diffi- 
 culties that are encountered in properly, legally, and equitably ad- 
 justing general averages under all circumstances. 
 
 Few countries have statutes on the subject; it is mostly governed 
 by precedent, custom, and sometimes rules made by underwriters. 
 It can be easily seen that a general average adjuster must be a man 
 of large experience and learning as well as judgment; and even then 
 adjustments are very often disputed because underwriters, them- 
 selves men versed in the subject, cannot always agree with the ad- 
 juster, nor in fact, with each other, and litigation often results; and 
 there being no special tribunal fixed in the chief countries of the 
 world to pass upon this particular subject, controversies come be- 
 fore courts who have even less learning than the adjusters and the 
 underwriters, on the subject, and as a result curious and unusual 
 decisions are added to the long list of confusing precedents, and it 
 is not to be wondered that less than one in a hundred of the ordi- 
 nary shippers of cargo can claim to know anything at all on the 
 subject of general average, a law by which they must abide, how- 
 ever; and it is perhaps safe to say that not one underwriter in ten 
 could form a correct conclusion upon the majority of the adjust- 
 ments put before him for settlement. The result is that in most 
 cases collections are made as requested, because neither shippers 
 nor underwriters understand it fully enough nor have large enough 
 individual interest to contest. 
 
 The system is further complicated by the constant addition of 
 new elements of expense, which in Ihe years gone by, were never 
 entered in general average, so that the man who yesterday may have 
 been well versed in the law, may be today behind the times. 
 
 I know of no commercial transaction so little understood or so 
 complicated. The abolishment of the system will save a grent waste 
 of time, especially to marine underwriters upon whom the loss falls 
 eventually, as there is no branch of their business wliich requires 
 so much study. 
 
 Page five 
 
SECOND— AMOUNT OF WORK 
 
 The average successful ship nowadays is growing larger and, 
 therefore, increases the size of cargoes. The exchange of com- 
 modities between countries is getting greater all the while, as the de- 
 mand increases for luxuries and necessities. The number of ship- 
 pers in all directions, is getting greater, which is constantly drawing 
 into maritime commerce, people heretofore dealing only with inland 
 commerce. Therefore, when a large vessel gets in a situation re- 
 quiring sacrifice of either property or money for the preservation 
 of the ship and the cargo, it means the instant requirement of an 
 adjuster and a large force of clerical help to secure the necessary 
 data upon which the adjustment later on will be based. 
 
 The first step is to notify each and every shipper of cargo, that 
 a sacrifice or expenditure has been necessary in order to save the 
 venture, and to request from the shipper certain data as to his 
 cargo and the value thereof. 
 
 The second step is to draft and distribute to each owner of cargo 
 an average bond which must be signed by the proper party: Fol- 
 lowing this, the owner of the cargo is either required to make a de- 
 posit on such an estimate as the adjuster may think will cover the 
 assessment in the end, or he is required to furnish a satisfactory 
 guarantor that his proportion will be paid promptly when de- 
 manded. Security to the satisfaction of the adjuster having been 
 given, the next step is to receive the cargo and to ascertain its con- 
 dition. The character of the damage whether by a sacrifice or by 
 an accident, must be looked into in respect of every individual 
 package on board the ship, and the part damaged by a sacrifice 
 must be carefully noted and the amount of such damage agreed be- 
 tween the adjuster and the owner of the cargo, in order that the 
 owner may be credited with such allowance as will equal the value 
 sacrificed. 
 
 This requires the service of a great many experts in the multi- 
 tudinous lines of goods that are on board the ship. After the agree- 
 ment has been made in each individual case, the next step is to 
 ascertain the value of cargo which is not entitled to any allowance, 
 as well as the cargo which is entitled to an allowance. Each indi- 
 vidual package must be valued in order that a basis may be had for 
 charging the proportion payable by each partj' whose property has 
 been saved. The damages to the ship must be agreed upon or re- 
 paired and the cost ascertained and the valuation of the ship in 
 
 Page six 
 
the condition in which it was saved must be agreed; claims made 
 bj' cargo owners for the sacrifice to each of the various packages 
 of cargo must be figured, extended, verified and approved. In 
 the end, the adjuster has enough w^ork on hand in detail, as well as 
 in the decision of close points as to whether certain items are prop- 
 erly chargeable to general average or not — on the ordinary eiglit 
 or ten thousand-ton ship — to keep the case in process in his office 
 for a length of time usually two to five years. After the adjuster 
 has finished his decision and voluminous calculations, the printer 
 begins the tabulation and arrangement for publication — thereafter 
 the settlement with each of the thousands of consignees finishes the 
 shipowner's work and all that remains is for each assured to pre- 
 sent his claims to his underwriter and after each underwriter goes 
 through the adjustment, payment is made and the case is finished. 
 
 Any shipowner or cargo owner who has been obliged to furnish 
 all information required to adjust and settle a large loss of this na- 
 ture, can testify as to the enormous amount of time and labor nec- 
 essary and is sure to welcome any system which will make that 
 labor unnecessary. 
 
 Page seven 
 
THIRD— EXPENSES 
 
 •) 
 
 ITEMS OF EXPENSE, MERELY FOR THE PURPOSE OF DE- 
 TERMINING THE PART CHARGEABLE TO THE GENERAL 
 AVERAGE— THAT IS, TO ALL INTERESTS 
 
 First— Surveyors to determine which part of the damage is a 
 sacrifice and which is an accident. 
 
 Second — The cost of average bonds for which the adjuster makes 
 a liberal charge. 
 
 Third — The cost of circulars to cargo owners, asking for values 
 and for statement of damages to their cargo. 
 
 Fourth — The cost of telegrams to expedite the adjustment includ- 
 ing those to owners of various lots of cargo, on the subject of sign- 
 ing bonds, making deposits, giving guarantees, furnishing values, 
 furnishing claims for damages done which should be paid through 
 general average, and a very considerable amount of postage in com- 
 munications backward and forward between consignees and adjust- 
 ers, the number of which run into the thousands on a modern ship. 
 (The shipowner's and adjusters' expenses of this kind are repaid in 
 general average but the cargo owners usually do not get theirs back) . 
 
 Fifth — Cost of advancing funds. The shipowner makes a charge, 
 to which he is entitled by law of general average, of 2% per cent 
 when he has his freight money in hand from which to make ad- 
 vances, and 5 per cent on the money advanced w^hen he has no 
 freight money in hand from which to make the advances. 
 
 Sixth — Interest, which the shipowner gets, at the local rate in the 
 state in which the adjustment is settled (usually 6 to 7 per cent) on 
 all the funds which he has so advanced. Likewise every cargo owner 
 who is entitled to an allowance in general average gets the local rate 
 of interest on all the allowance, from the time the cargo is delivered 
 or would have been delivered until the adjustment is closed and the 
 balance paid to him. 
 
 If a cargo owner has made a deposit to cover his anticipated con- 
 tribution but has no allowance coming to him, his money is put in 
 the bank and he is generally allowed about 2 per cent for the use of 
 his money during the time he is waiting to know the exact amount 
 that he will have to pay. In other words, when his exact contribu- 
 tion is known, he pays that contribution, which includes the cost 
 to him of the legal rate of interest (usually 6 or 7 per cent) which 
 
 Page eight 
 
every one collects who is entitled to receive a balance, but on the 
 deposit which he has made, covering the same time, he only receives 
 about 2 per cent. 
 
 Seventh — The surveyors', adjusters' and their employes' traveling 
 expenses while pursuing the work in connection with general 
 average. 
 
 Eighth — The adjusters' fee, the most formidable expense in con- 
 nection with an adjustment. 
 
 Ninth — The cost of printing the adjustment itself, usually being 
 gotten up in book form. On the west coast of the United States the 
 cost is about 70 cents per page. 
 
 Tenth — The shipowner's commission for collecting general aver- 
 age which, in San Francisco, is 5 per cent on the first $10,000, 2^ 
 per cent on the next $20,000 and 1 per cent on the excess. 
 
 Many cases could be cited, but it is enough to say that the cost 
 of adjusting generally will run from 15 to 25 per cent of the amount 
 of the original loss. 
 
 The work done by owners of cargo, partly on account of inex- 
 perience in connection with general average allowances in cargo 
 and securing rildwoiaonnof the same, all taken together is nearly as 
 great as that of the adjuster, but they get no compensation — if the 
 system is not abolished, perhaps in time they will get an allowance. 
 
 By abolishing the system this expense will be saved and in its 
 place we may substitute a system which will make it unnecessary to 
 study the subject. 
 
 Page nine 
 
I propose that all bills of lading be endorsed to the effect that 
 there shall be no claims by either party, for general average; that 
 they each agree by the contract between the shipowner and the 
 cargo owner, that there shall be no general average, and that all 
 other references in the bills of lading regarding general average shall 
 be eliminated or be null and void; and as a start in this direction 
 the following endorsement is suggested as one which would probably 
 cover most cases : 
 
 "ENDORSEMENT TO THE BILL OF LADING 
 
 "Notwithstanding the terms and conditions of this bill of lading, 
 it is hereby agreed between contracting parties (the shipowner 
 on the one hand and the cargo owner on the other) that the owners 
 of each and every interest hereby waive all claim for allowance or 
 contribution or expenses of any nature whatsoever by or through 
 general average or based upon the principles of general average or 
 any adjustment of such nature; the essence and chief object of this 
 agreement being to abolish the necessity and operation of general 
 average or the principles thereof, and to substitute therefor, through 
 the arranging of an all-interest marine insurance policy covering the 
 entire venture, a simple and expeditious ascertainment of the amount 
 of loss or damage to any interest insured, and the prompt payment 
 by the assurers, each his own proportion, as signed on the policy, 
 regardless of the interest to which the loss or damage has happened. 
 
 "A part of the consideration for this agreement is that the owner 
 and/or agent of the ship is hereby made the agent of the owner of 
 the cargo for the express purpose of placing marine insurance on the 
 cargo to be shipped under this bill of lading to which this endorse- 
 ment is attached, the said insurance to be in terms and on condi- 
 tions as may be agreed by the shipowner or his agent, the same being 
 placed for account of the owner of the cargo, the cost of which in- 
 surance is included in the freight charge under this bill of lading. 
 
 "It is further agreed that should any salvage services or any spe- 
 cial services chargeable direct to this cargo, be rendered for account 
 of cargo hereunder, that the shipowner is also hereby appointed the 
 agent for the express purpose of agreeing to the value of said serv- 
 ices and settling the same subject only to the direction of the under- 
 writers covering this cargo, it being understood that claim for such 
 salvage services, if any, shall be presented directly to the under- 
 writers for their approval and settlement. 
 
 "Should the owner of cargo have placed any insurance separately. 
 
 Page ten 
 
that is, independent of the above insurance, then the shipowner shall 
 be entitled to the benefit of any such insilrance on the goods and to 
 any payments made by or on behalf of the insurers theerof, whether 
 in the guise of advances, loans or otherwise. 
 
 "The value of cargo must be declared at time of shipment, and 
 same becomes the basis for any settlement in case of loss." 
 
 Pugc eleven 
 
THE PLAN 
 
 The plan for equalizing the loss is as follows: The shipowner 
 is to place the order for insurance on his vessel, freights, disburse- 
 ments and for every other interest of his own, in connection with 
 the vessel or the freights, and also on the cargo, advances thereon, 
 duties, profits, commissions or any other interest in connection 
 with the cargo, all under a single policy, or series of policies; all 
 being in the same general terms. Each underwriter must accept a 
 specified percentage of each interest, hull, freight, disbursements, 
 advances, cargoes, treasure, duties, commissions, profits, advances 
 on cargo and every other interest on board the vessel, that is subject 
 to general average, or could possibly claim a general average con- 
 tribution, every interest on board must be insured. For instance, 
 an underwriter has a capacity to carry $20,000 on a risk. 
 
 Example : 
 
 Hull, equipment, etc., valued at $ 500,000.00 
 
 Freight money, etc., valued at (open policy) 100,000.00 
 
 Disbursements, etc., valued at (open policy or valued) . 50,000.00 
 
 Treasure (not in the mails) valued at (open policy) . . 500,000.00 
 
 Cargo, valued at (open policy) 700,000.00 
 
 Advances on cargo, etc., valued at (open policy) 50,000.00 
 
 Duties, valued at (open policy) 100,000.00 
 
 $2,000,000.00 
 
 In such a case, the underwriter who can carry §20,000 subscribes 
 1 per cent on each particular interest. The policy on the hull and dis- 
 bursements will naturally be an annual policy. The policy on freight, 
 cargo and other like interests, will be open and subject to declara- 
 tion at the moment the voyage begins, and the premium will be 
 fixed according to cargo, voyage, etc. If cargo is taken on at 
 an intermediate port, the policy will provide the premium that 
 is to be charged from intermediate port to whatever other port the 
 insurance will run, and the underwriter's interest will likewise be 
 1 per cent of the new freights, cargoes, etc. And as each piece of 
 cargo is discharged the underwriter's interest is reduced propor- 
 tionately, and as each new piece of cargo is taken on board each 
 underwriter's interest attaches in proportion; the arrangement be- 
 ing that this underwriter's interest always is 1 per cent of the value 
 of the hull, 1 per cent of the freight, 1 per cent of the cargo, 1 per 
 cent of the advances, disbursements, duties, treasure, etc.; it there- 
 
 Page twelve 
 
fore matters not to him what part of the interest shall have been 
 sacrificed in order to save the remainder. No sort of an accounting 
 is necessary, except to ascertain the gross amount of the loss suf' 
 fered by all of the different interests together and make a debit note 
 for 1 per cent of the total of that loss, which is to be promptly paid ) 
 by the underwriter without the necessity of any other adjustment 
 It is immaterial to him whether a loss shall have occurred by fire, 
 or by water to extinguish the fire. It is immaterial to him whether 
 the ship's injuries shall have occurred by the stranding or by the 
 subsequent efforts to get the ship off the shore. It will be imma- 
 terial to him as to whether a certain item of expense has been in- 
 curred to avoid a possible loss to all interests or to any one interest, 
 or whether it was incurred to repair a loss by pure accident. The 
 shipowner goes to various underwriters, until he has 100 per cent of 
 the maximum risk on all interests fully subscribed and then the ar- 
 rangement begins. 
 
 A form of policy is herewith submitted. It is subject to modii- 
 cation as occasion may arise. 
 
 Page thirteen 
 
AUL INTEREST POLICY 
 
 SECTION 1. — In respect. to the vessel, etc. 
 
 For account of 
 
 Loss, if any, payable to or order 
 
 Do Make Insurance and Cause 
 
 To be insured, Lost or not Lost, to the amount of Dollars 
 
 At and from the... Day of 19 
 
 Until the Day of 19 
 
 Standard Time, 
 
 and at pro rata premium, until the completion of the voyage, if the 
 vessel be on one with cargo at the last date, and until discharge of 
 the last item of cargo therefrom. 
 
 Upon the body, tackle, apparel, stores, ordnance, munitions, ar- 
 tillery, boats, and other furniture, boilers and machinery of the 
 
 Steamship called the 
 
 S. S. or by whatsoever name or names the said Vessel is or shall be 
 named or called; beginning the adventure upon the said Vessel, etc., 
 as above, and so shall continue and endure during the period afore- 
 said, as employment may offer, in port and at sea, in docks and 
 graving docks, and on ways, gridirons and pontoons, at all times, 
 in all places, and on all occasions, services and trades whatsoever 
 and wheresoever, under steam or sail; with leave to sail with or 
 without pilots, to tow and be towed, and to assist vessels and/or 
 craft in all situations and to any extent, and to go on trial trips. 
 With liberty to discharge, exchange and take on board goods, specie, 
 passengers and stores, wherever the Vessel may call at or proceed 
 to, and with liberty to carry goods, live cattle, etc., on deck or other- 
 wise, but warranted free of any claim in respect of deck cargo. In- 
 cluding all risks of docking, undocking, changing docks, or moving 
 in harbor and going on or off gridiron or graving docks as often as 
 may be done during the currency of this Policy. 
 
 The said Ship, etc., for so much as concerns the Assured, by 
 agreement between the Assured and Assurers in this Policy, are and 
 shall be valued at as follows : — 
 
 Hull, tackle, apparel, furniture, etc. $ 
 
 Boilers, machinery, etc., and every- 
 thing connected therewith. $ 
 
 $ 
 
 Donkey boilers, winches, cranes, windlasses, steering gear, and 
 electric light apparatus, shall be deemed to be part of the hull, and 
 not part of the machinery. Refrigerating machinery and insulation 
 appertaining thereto not covered unless expressly included in this 
 Policy, or unless the property of the owners of the Vessel. 
 
 Touching the Adventures and Perils which we, the said Assurers, 
 are contented to bear and take upon us, they are of the Seas, Men- 
 of-War, Fire, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters 
 of Mart and Counter-Mart, Surprisals, Taking at Sea, Arrests, Re- 
 
 Page fourteen 
 
straints and Detainments of all Kings, Princes, and Peoples, of what 
 Nation, Condition or Quality soever, Barratry of the Master and Ma- 
 riners, Explosions, Riots, or other causes of whatsoever nature aris- 
 ing either on shore or otherwise, causing Loss of or Injury to the 
 Property hereby insured, and of all other Perils, Losses, and Mis- 
 fortunes that have or shall come to the Hurt, Detriment, or Damage 
 of the said Ship, etc., or any part thereof. And in case of any Loss 
 or Misfortune, it shall be lawful for the Assured, their Factors, 
 Servants, and Assigns, to sue, labor, and travel for, in, and about the 
 Defense, Safeguard, and Recovery of the said Ship, etc., or any part 
 thereof, without prejudice to this Insurance to the Charges whereof 
 the Assurers will contribute according to the Rate and Quantity of 
 the sum herein assured. And it is expressly declared and agreed 
 that no act of the Insurer or Insured in recovering, saving or pre- 
 serving the property insured shall be considered as a waiver or ac- 
 ceptance of abandonment. 
 
 This Insurance also specially to cover (subject to the free of 
 average warranty) loss of, or damage to hull or machinery, through 
 the negligence of Master, Charterers, Mariners, Engineers, or Pilots, 
 or through explosions, bursting of boilers, breakage of shafts, or 
 through any latent defect in the machinery or hull, provided such 
 loss or damage has not resulted from want of due diligence by the 
 Owners of the Ship, or any of them, or by the Manager, Masters, 
 Mates, Engineers, Pilots, or Crew not to be considered as part own- 
 ers within the meaning of this clause should they hold shares in the 
 steamer. 
 
 And it is further agreed, that if the Ship hereby insured shall 
 come into collision with any other Ship or Vessel, and the Assured 
 or Charterers shall in consequence thereof become liable to pay and 
 shall paj' by way of damages to any other person or persons any 
 sum or sums not exceeding in respect of any one such collision the 
 value of the Ship hereby Insured, we, the Assurers, will pay the 
 Assured or Charterers such proportion of such sum or sums so paid 
 as our subscriptions hereto bear to the value of the Ship hereby 
 Insured. And in cases where the liability of the Ship has been con- 
 tested with the consent in writing of a majority of the Underwriters 
 on the hull and/or machinery (in amount) we will also pay a like 
 proportion of the costs thereby incurred or paid; but when both 
 Vessels are to blame, then, unless the liability of the Owners or 
 Charterers of one or both of such Vessels becomes limited by law, 
 claims under the Collision Clause shall be settled on the principle of 
 Cross-Liabilities as if the Owners or Charterers of each Vessel had 
 been compelled to pay to the Owners or Charterers of the other of 
 such Vessels such one-half or other proportion of the latter's dam- 
 ages as may have been properly allowed in ascertaining the balance 
 or sum payable by or to the Assured or Charterers in consequence 
 of such collision; and it is further agreed that the principles in- 
 volved in this clause shall apply to the case where both Vessels are 
 the property, in part or in whole, of the same Owners or Charterers, 
 all questions of responsibility and amount of liability as between 
 the two Ships being left to the decision of a single Arbitrator, if 
 
 Page fifteen 
 
the parties can agree upon a single Arbitrator, or failing such agree- 
 ment, to the decision of Arbitrators, one to be appointed by the 
 Managing Owners or Charterers of both Vessels, and one to be 
 appointed by the majority (in amount) of Underwriters interested 
 :n each Vessel; the two Arbitrators chosen to choose a third Arbi- 
 trator before entering upon the reference, and the decision of such 
 single, or of any two of such three Arbitrators, appointed as above 
 to be final and binding. Provided always that this clause shall in no 
 case extend to any sum which the Assured or Charterers may become 
 liable to pay, or shall pay for removal of obstructions under stat- 
 utory powers, for injury to harbors, wharves, piers, stages, and sim- 
 ilar structures, consequent on such collisions, or in respect of the 
 cargo or engagements of the Insured Vessel, or for loss of life, or 
 personal injury. And provided also that in the event of any claim 
 being made by Charterers under this clause they shall not be entitled 
 to recover in respect of any liability to which the Owners of the 
 Ship, if interested in this Policy at the time of the collision in ques- 
 tion, would not be subject, nor to a greater extent than the Ship- 
 owners would be entitled in such event to recover. 
 
 And it is further agreed that in the event of salvage, towage, or 
 other assistance being rendered to the Vessel hereby insured by any 
 Vessel belonging in part or in whole to the same Owners or Charter- 
 ers, the value of such services (without regard to the common 
 ownership of the Vessels) shall be ascertained by arbitration in the 
 manner above provided for under the Collision Clause, and the 
 amount so awarded so far as applicable to the interest hereby 
 insured shall constitute a charge under this Policy. 
 
 Salvage charges payable in such proportion as this insurance 
 bears to the value herein. 
 
 Average payable on each valuation separately or on the whole, 
 without deduction of thirds, new for old. 
 
 In no case shall Underwriters be liable for unrepaired damage 
 in addition to a subsequent total loss sustained during the term 
 covered by this Policy. 
 
 In ascertaining whether the Vessel is a constructive total loss 
 the insured value shall be taken as the repaired value, and nothing 
 in respect of the damaged or break-up value of the vessel or wreck 
 shall be taken into account. 
 
 Notwithstanding anything herein contained to the contrary this 
 Policy is warranted free from particular average under 3 per cent, 
 
 or unless amounting to , but nevertheless when the Vessel 
 
 shall have been stranded, sunk, on fire, or in collision with any 
 other Ship or Vessel, Underwriters shall paj^ the damage occasioned 
 thereby, and the expense of sighting the bottom after stranding shall 
 be paid, if reasonably incurred, even if no damage be found. 
 
 The warranty and conditions as to average under 3 per cent to 
 be applicable to each voyage as if separately insured, and a voyage 
 shall be deemed to commence at one of the following periods to 
 be selected by the Assured when making up the claim, viz.: at any 
 time at which the Vessel (1) begins to load cargo or (2) sails in 
 ballast to a loading port. Such voyage shall be deemed to continue 
 
 Page sixteen 
 
during the ensuing period until either she has made one outward 
 and one homeward passage (including an intermediate ballast 
 passage, if made) or has carried and discharged two cargoes, which- 
 ever may first happen, and further, in either case, until she begins 
 to load a subsequent cargo or sails in ballast for a loading port. 
 When the Vessel sails in ballast to effect damage repair such sailing 
 shall not be deemed lo be a sailing for a loading port although she 
 loads at the repairing port. In calculating the 3 per cent above 
 referred to, particular average occurring outside the period covered 
 by this Policy may be added to particular average occurring within 
 such period provided it occur upon the same voyage (as above de- 
 fined), but only that portion of the claim arising within such period 
 shall be recoverable hereon. The commencement of a voyage shall 
 not be so fixed as to overlap another voyage on which a claim is 
 made on this or the preceding Policy. 
 
 Should the vessel at the expiration of this policy have com- 
 menced a voyage with cargo on board or be in distress or at a port 
 of refuge or of call, she shall be held covered at a pro rata daily 
 premium to her port of destination and until discharge of the last 
 item of cargo therefrom. 
 
 Should the Vessel be sold or transferred to other ownership, 
 then, unless the Underwriters agree in writing to such sale or trans- 
 fer, this Policy shall thereupon become cancelled from date of sale 
 or transfer, unless the Vessel has cargo on board or is at sea in bal- 
 last, in either of which cases such cancellation shall be suspended 
 until final discharge if with cargo, or at port of destination if in 
 ballast. A pro rata daily return of premium shall be made. 
 
 Warranted nevertheless free of capture, seizure, and detention, 
 and the consequences thereof, or any attempt thereat, piracy 
 excepted, and also from all consequences of hostilities, or warlike 
 operations, whether before or after declaration of war. 
 
 r per cent for each uncommenced month ^ 
 
 if it be mutually agreed to cancel this 
 To return < Policy. ^ and arrival 
 
 j per cent for each consecutive 
 
 L days the vessel may be laid up in port : 
 
 A period in port falling between two insurances to be allowed 
 pro rata on each, underwriters on each insurance agreeing to pay 
 their pro rata proportion of the Return due. 
 
 In the event of accident whereby loss or damage may result in 
 ft claim under this Policy, notice shall be given to the Underwriters, 
 prior lo survey, so that they may appoint their own surveyor if 
 they do so desire; and wrhenever the extent of the damage is ascer- 
 tainable the majority (in amount) of the Underwriters may take or 
 may require the Assured to take tenders for the repair of such 
 damage. In cases where a tender is accepted by or with the ap- 
 proval of Underwriters, the Underwriters will make an allowance 
 at the rate of 30 per cent per annum on the insured value for the 
 lime actually lost in waiting for tenders. In the event of the Assured 
 failing to comply with the conditions of this clause 15 per cent shall 
 be deducted from the amount of the ascertained claim. 
 
 Page seventeen 
 
Held covered in case of any breach of warranty as to cargo, 
 trade, locality or date of sailing, provided notice be given and any 
 additional premium required be agreed immediately after receipt 
 of advices of breach or proposed breach by Owners. 
 
 It is agreed that no interest in or about the vessel or her equip- 
 ment, freights, profits, disbursements, passage money, or any other 
 thing in connection therewith shall be insured except with these 
 Assurers and in the same identical proportion. 
 
 SECTION 2. — In respect to the cargo, advances, freights, etc. 
 
 WHEUEAS, It has been proposed to the 
 
 by 
 
 as well in his or their own name as for and in the name and names 
 of all and every other person or persons to whom the subject matter 
 of this Policy does, may or shall appertain in part or in all, to make 
 with the said company the insurance hereinafter mentioned and 
 described. 
 
 NOW THIS POLICY WITNESSETH, That in consideration of the 
 said person or persons effecting this Policy, promising to pay to 
 the said Company a Premium on each and every item of cargo to 
 be transported and the advances and/or freights thereon, at and 
 after the rate agreed for such insurance, the said Company take 
 upon themselves the burden of such insurance to the amount of 
 such values as may be agreed herein and declared before attach- 
 ment of risks and promise and agree with the Insured, their Exec- 
 utors, Administrators and Assigns in all respects truly to perform 
 and fuljQU the Contract contained in this policy, AND it is hereby 
 agreed and declared that the said Insurance shall be and is an In- 
 surance (lost or not lost) at and from the time of delivery into the 
 custody of the carrier at the usual places of acceptance and until 
 redelivered by the carrier to consignee or his agent at the usual 
 places of delivery, AND it is also agreed and declared that the sub- 
 ject matter of this Policy as between the Insured and the said Com- 
 pany so far as concerns this Policy shall be and is as follows upon 
 each and all such cargoes, advances and freights under and/or on 
 
 deck as customary, laden in the Ship or Vessel called 
 
 whereof is at present Master or whoever 
 
 shall go for Master in the said Ship or Vessel. 
 
 AND these Assurers promise and agree that the Insurance afore- 
 said shall commence upon the said Freight Goods, Merchandise, etc., 
 from the time when the Goods or Merchandise shall be laden on 
 board the said Ship or Vessel, Craft or Boat, as above, and until 
 the said Goods and Merchandise be discharged and safely landed at, 
 as above AND that it shall be lawful for the said Ship or Vessel in 
 the Voyage so insured as aforesaid to proceed and sail to and touch 
 and stay at any Ports or Places whatsoever w^ithout prejudice to 
 this insurance, AND touching the Adventures and Perils which these 
 Assurers are contented to bear, and do take upon themselves in the 
 Voyage so insured as aforesaid, they are of the seas, Men-of-War, 
 Fire, Enemies, Pirates, Rovers, Thieves, Jettisons, Letters of Mart 
 
 Page eighteen 
 
and Counter-Mart, Surprisals, Takings at Sea, Arrests, Restraints 
 and Detainments of all Kings, Princes and People of what Nation, 
 Condition or Quality soever. Barratry of the Master and Mariners 
 and of all other Perils, Losses and Misfortunes that have or shall 
 come to the Hurt, Detriment or Damage of the aforesaid subject 
 matter of this insurance, or any part thereof, AND in case of any 
 Loss or Misfortune, it shall be lawful to the Insured, their Factors, 
 Servants and Assigns, to sue, labor and travel for, in and about the 
 Defense, Safeguard and Recovery of the aforesaid subject matter 
 of this insurance, or any part thereof, without prejudice to this In- 
 surance, the charges whereof these Assurers will bear in proportion 
 to the sum hereby insured; AND it is expressly declared and agreed 
 that the acts of Insurer or Insured in Recovering, Saving or Preserv- 
 ing the Property insured shall not be considered a waiver or accept- 
 ance of abandonment; AND it is declared and agreed that Corn, 
 Fish, Saltpetre, Fruit, Flour, Rice, Seeds, Hides, Skins and Molasses 
 shall be and are warranted free from average, unless the Ship be 
 stranded, sunk or burnt or unless caused by collision with any 
 other Ship or Vessel, and that Sugar, Tobacco, Hemp and Flax shall 
 be and are warranted free from average, under Five Pounds per 
 centum, and that all other Goods and also Ship and Freight shall 
 be and are warranted free from average under Three Pounds per 
 centum, unless the Ship be stranded, sunk or burnt. 
 
 [The clauses in italic shall control other printed conditions in- 
 consistent with the same.] 
 
 Warranted free of capture, seizure and detention and the conse- 
 quences thereof or any attempt thereat, piracy excepted, and also 
 from all consequences of hostilities or warlike operations, whether 
 before or after declaration of war. 
 
 Warranted free of loss or damage caused by strikers, locked out 
 workmen or persons taking part in labor disturbances or riots or 
 civil commotions. 
 
 Salvage charges payable in such proportion as this insurance 
 bears to the valuation herein. 
 
 Held covered, at a premium to be arranged, in case of deviation 
 or change of voyage or of any omission or error in the description 
 of interest, vessel or voyage. 
 
 Including risk of craft, raft and/or lighter to and from the ves- 
 sel. Each craft, raft and/or lighter to be deemed a separate insur- 
 ance. The assured are not to be prejudiced by any agreement 
 exempting lightermen from liability. 
 
 Including all liberties as per contract of affreightment. The 
 assured are not to be prejudiced by the presence of the negligence 
 clause and/or latent defect clause in the bills of lading and/or char- 
 ter-party. The seaworthiness of the vessel as between the assured 
 and the assurers is hereby admitted. 
 
 Warranted free from particular average as per separate rale 
 schedule herein unless the vessel or craft be stranded, sunk or 
 burnt, but the assurers are to pay the insured value of any package 
 
 Page nineteen 
 
•r packages which may be totally lost in loading, transshipment 
 or discharge, also any loss of or damage to the interest insured 
 which may reasonably be attributed to fire, collision or contact of 
 the vessel and/or craft and/or conveyance with any external sub- 
 stance (ice included) other than water, or to discharge of cargo at 
 port of distress, also to pay landing, warehousing, forwarding and 
 special charges if incurred. 
 
 Grounding in the Panama Canal, Suez Canal, Manchester Ship 
 Canal or its connections, in the River Mersey above Rock Ferry Slip, 
 the Columbia River and/or Willamette Rivers and/or Yukon Rivers 
 or tributaries and/or Yukon Flats or Fraser River, not to be deemed 
 a strand, but underwriters to pay any damage or loss which may be 
 proved to have directly resulted therefrom. 
 
 It is agreed that no other interest in or about the freights or 
 cargo, increased values, profits, advances, duties, or any other thing 
 in connection therewith shall be insured except with these assurers 
 and in the same identical proportion. 
 
 Rates of premium attaching to the cargo to be paid to the As- 
 surers hereof shall be for the separate voyages as per schedule 
 hereto attached. The values of the separate items of cargo shall be 
 subject to such agreement as may be made between the carrier and 
 the owner or shipper of each item of cargo, but in no case is to be 
 less than the invoice value nor in any case without first having the 
 consent of the Assurers hereof, more than invoice plus 25 per cent. 
 Such values shall be agreed upon before the commencement of the 
 risks. 
 
 The risks shall commence as soon as the carrier has received 
 into his custody at the usual dock, warehouse, quay, landing place 
 or on lighters as is usual and customary in his business, and shall 
 continue until the carrier has delivered each item of cargo to its 
 consignee or his agent in the usual place of such delivery. The in- 
 tent of this insurance being to protect such cargo during all the times 
 that it is in the custody of the carrier, whether in warehouse, on 
 dock, quay, landing place, lighter or the vessel. The character of 
 risk assumed on each particular item of cargo is as may be agreed 
 between the carrier and the owner or shipper, subject to the schedule 
 herein under which such explanations of risks may be made, at- 
 tached hereto. 
 
 It is the essence of this insurance that every item of cargo 
 shipped on board the vessel shall pay a premium according to this 
 agreement to these Assurers. Should there be any other insurance 
 placed by the owner or shipper of the goods, such policies or claim 
 thereunder as may accrue in the event of a loss claimable from such 
 other underwriters, shall be promptly handed to or assigned to the 
 carrier for account of its Assurers. 
 
 SECTION 3. 
 
 In addition to the interest in the foregoing sections one and two, 
 for which provision is made, this policy is also to cover all addi- 
 
 Page twenty 
 
tional interests such as profits, disbursements, passage money and 
 all other interests at the risk of the vessel and/or her owners, under 
 either a time or voyage risk, as may be agreed at the inception of 
 this policy at rates and on conditions as per specifications herein. 
 AND also shall cover all additional interests such as increased 
 values, profits, advances, duties and all other interests at the risk 
 of the cargo and/or owners thereof as may be agreed at the incep- 
 tion of this policy at rates and on conditions as per specifications 
 herein. 
 
 It is agreed that the contract of affreightment issued to owners 
 or shippers of cargo shall contain the essentials of this agreement. 
 It is further agreed that in case of any loss or damage to the ship, 
 cargo, advances and/or freight covered hereunder, that the ship- 
 owner or carrier will give immediate notice to these Assurers, where- 
 upon if the damage be to the ship, a surveyor will at once be ap- 
 pointed by the Assurers to ascertain the damage and recommend 
 the repairs, and such repairs shall be made entirely under the su- 
 pervision of such surveyor. If the damage be to the cargo, prompt 
 notice shall be given to these Assurers, whereupon they will appoint 
 a surveyor or appraiser, whose duty it will be to ascertain and 
 agree with owners, shippers or consignees as to the amount of dam- 
 age, or to repair the damage, or failing in this, to make such prompt 
 disposition of the damaged goods as will be for the best interests of 
 all concerned. 
 
 The owners of each and every interest hereby insured waive all 
 claim for allowance or contribution of any nature whatsoever by or 
 through general average or based upon the principles of general 
 average or any adjustment of such nature, the essence and chief ob- 
 ject of this joint policy being to abolish the necessity and operation 
 of general average or the principles thereof and to substitute there- 
 for the simple and expeditious ascertainment of the amount of loss 
 or damage to either interest insured and the prompt payment by the 
 Assurers, each his own proportion, as signed hereon, regardless of 
 the interest to which the loss or damage has happened. 
 
 It is agreed that the following clause is to be inserted on each B/L: 
 
 "Should the owner of cargo have placed any insurance separate, 
 that is, independent of the above insurance, then the shipowner 
 shall be entitled to the benefit of any such insurance on the goods 
 and to any payments made by or on behalf of the Insurers thereof, 
 whether in the guise of advances, loans or otherwise." And that 
 such clause in the B/L for the benefit of the shipowner shall revert 
 to the benefit of these Insurers and that such collections made from 
 such other underwriters by the shipowner shall be promptly paid 
 over to the Assurers hereeon. 
 
 Loss, if any, payable in 
 
 In witness whereof the undersigned assurers have hereunto set 
 their hands in this — day of 
 
 Page twenty-one 
 
It is to be expected that difficulties will be met in the substitu- 
 tion of a new system for one so long in vogue. A few have occurred 
 to me and I mention them in order: 
 
 FIliST: Marine underwriters are often in the habit of insuring 
 the hull of a vessel based on a value much less than her actual value. 
 The reason for this is that the shipowner seeks to get his ship fully 
 *) insured so far as partial losses are concerned, without paying a 
 ' premium on the full valuation of his vessel. The form of policy put 
 forward will prevent the shipowner from insuring against all risks 
 with one underwriter and insuring with another underwriter with- 
 out the knowledge of the first, a further value on disbursements, 
 profits, commissions, earnings, etc., as is now being done. Such a 
 move will appeal to underwriters as being good business. It cer- 
 tainly will appeal to the well-meaning shipowner as being thoroughly 
 fair and straightforward, and when he knows that his neighbor is 
 not getting any other advantage, he will have no objection whatever. 
 
 SECOND. Cargo owners very often place their insurances to 
 cover their cargo from points in the interior long before they reach 
 the ship, oftentimes for a period when in a warehouse in the in- 
 terior, prior to shipment by rail, before reaching the ship. Such 
 insurance should be the subject of separate covers; the form of 
 policy herewith proposed only undertakes to cover the cargo from 
 the moment it is put in the shipowner's hands, because it is only 
 at that time that it really becomes more or less involved with the 
 fortunes of the ship itself. There are many shippers of cargo who 
 are in the habit of insuring very large profits, some who insure only 
 a moderate profit, some who insure no profit at all and other ship- 
 pers who do not insure at all. It will be necessary for the ship- 
 owner to force all to insure practically alike. The policy herewith 
 provides for that. Everything must be insured. The cost of the 
 insurance should become a part of the charge in the B/L. In other 
 words, shipowners should name a rate of freight which includes 
 the insurance, and if the shipper of cargo shall persist in insuring 
 his cargo separately, that will be his own matter; but he will not be 
 permitted to recover twice. The B/L will prevent the possibility of 
 an outside underwriter who insured for a shipper demanding an 
 adjustment of a general average. 
 
 The practice of the insurance all being placed as a single risk 
 and premium paid by shipowner, will have a far-reaching effect in 
 maritime commerce in general from the standpoint of the shipper. 
 It enables him at a moment to calculate the advantages as between 
 
 Page twenty-two 
 
rail lines and water lines, as the shipowner by his broad policy of 
 insurance, arranged with a large body of underwriters, is able to 
 guarantee the fullest possible protection to cargo and to practically 
 take cargo at one end of the voyage and deliver it in good condition 
 at the other, or else pay the damage. It relieves the shipper of cargo 
 of the burden of carefully inspecting and selecting his marine in- 
 surance from so many kinds of policies in vogue; he could, with the 
 above arrangement, make sure that his insurance was the very best 
 obtainable, and thereby reduce his risk to the minimum and not find 
 himself with a loss which is not claimable from his underwriter. 
 
 THIRD. An objection will be raised that although one ship or 
 one line of ships shall have introduced the system, that cargo may 
 be delivered to this line from other vessels or other lines that do 
 not have the system, or vice versa. I think, however, that this will 
 simplify itself because the line adopting the new system will insure 
 all the cargo, no matter whether coming from the shipper direct or 
 whether coming from other lines, from the moment it comes within 
 its custody until it is redelivered from its custody. Hence, a shipper 
 who has occasion to employ two lines in the transportation of his 
 cargo, one of which uses the new system and the other of which 
 does not, will only be required to arrange for his insurance in the 
 ordinary way on the line which does not adopt the new system, and 
 it is safe to say that if no greater objections than I have foreseen 
 come forward in the actual working of this new arrangement, that 
 as lines adopt it and the advantages become apparent it will be only 
 a short time until every important steamship company in the world 
 will be using the same method. 
 
 f 
 
 Page twenty-three 
 
 \ 
 
It will, I think, be apparent that the adoption of my system will 
 have the following results: 
 
 Centralize the placing of insurances. 
 
 Reduce the commissions paid by the underwriters, or reduce 
 the cost to the assured, or both. 
 
 Make a community of interest among the various underwriters, 
 thereby producing unity of action and avoiding confusion. 
 
 Furnish such a report and record of shipment as will give the 
 underwriters their premium on every item insured, which they do 
 not now get owing to carelessness and other reasons. 
 
 Every vessel or line of vessels will be rated on their merit, ac- 
 cording to results. 
 
 Losses that now take years to adjust will be settled in as many 
 months or maybe weeks. 
 
 Underwriters will not require to carry reserves for old losses 
 (guesswork) for years, but will be able to dispose of them immedi- 
 ately and divide the profits or know th« loss. 
 
 Shipowners will not have to run the risk of bankruptcy of 
 guarantors during the years in which a general average is being 
 adjusted. 
 
 Cargo owners will not have to run the risk of bankruptcy of 
 their underwriters during the years in which an adjustment is in 
 process. 
 
 Vast amounts of capital now customarily tied up for years, such 
 as deposits, advances for disbursing general average expenses, al- 
 lowances due to shippers and underwriters and other funds will be 
 released for employment in productive channels. 
 
 For forms suitable for the inauguration of this plan of insurance, 
 and for further particulars, address : 
 
 M. C. HARRISON, 
 
 318 Merchants Exchange, 
 ^ San Francisco, Cal., U. S. A. 
 
 ' Paae twenty- four 
 
 Copenhagen iaj6 A. PauHl 
 
Gaylord Bros. 
 
 Makers 
 
 Syracuse, N. Y. 
 PAT. JAN. 2M908 
 
 UNIVERSITY OF CALIFORNIA UBRARY 
 
 UNIVERSITY OF CALIFORNIA LIBRARY 
 BERKELEY 
 
 THIS BOOK IS DUE ON THE LAST DATE 
 
 STAMPED BELOW 
 
 Books not returned on time are subject to a fine of 
 50c per volume after the third day overdue, increasing 
 to $1.00 per volume after the sixth day. Books not in 
 demand may be renewed if application is made before 
 expiration of ^(MlAtf eriod. 
 
 ^pr 
 
 MA.; 
 
 2 1920