Well, the glib answer to this is that they weren't used because it's illegal. The Declaration of Paris in 1856 (full name, the Paris Declaration Respecting Maritime Law) outlawed privateering among its signatories. The United States was not an initial signatory, but after the Confederate government issued letters of marque during the American Civil War, the federal government declared that it would respect the treaty during hostilities (which it reaffirmed during the Spanish-American war).
During the Spanish-American war, both sides used naval auxiliaries (that is, armed or even unarmed merchant ships under the command of naval officers); and, indeed, the US Military Sealift Command has continued this practice up until 1996, where we need to stop.
ETA I forgot the part where you asked about the last letter of marque. As far as I remember, it was the letters of marque offered by Bolivia during the War of the Pacific in 1879 (and now we are hilariously outside my expertise so I'm going to stop).
As /u/jschooltiger writes, privateers had been outlawed by the 1856 Declaration of Paris. This position was further clarified by the 1907 Hague Convention. Article VII of the Hague Convention stated that any merchant ship converted to a warship must be 'placed under the direct authority, immediate control, and responsibility of the Power whose flag it flies.', and that its crew must 'be subject to military discipline'. However, such converted merchants were used by all powers in both WW1 and WW2, frequently for the sort of cruiser warfare that privateers carried out in the 19th Century. These ships aren't privateers in the technical sense, being operated by governments, but fill the same niche that privateers filled.
The typical British naval auxiliary cruiser in both world wars was a converted liner, armed with whatever guns were available, usually obsolete 6in guns from scrapped cruisers. They were given the title Armed Merchant Cruiser (AMC). Smaller, slower ships were used as armed boarding steamers. There were also merchant ships converted to operate as submarine traps, called Q-ships. The Germans had somewhat more of a variety, with some being converted liners, and others being armed cargo vessels. The Japanese and Americans also used auxiliary cruisers, with the Japanese making somewhat greater use. In many cases, these ships had been built for civilian companies to civilian standards, but with the necessary fittings and strengthening to take an armament in the event of war.
In the First World War, British AMCs had two main roles. Firstly, they were to patrol the open ocean for any German raiders. Secondly, they were to enforce the blockade of Germany, preventing any supplies from reaching the country through the North Sea. This released the RN's cruisers from this duty, allowing them to more effectively combat the German High Seas Fleet. In the first role, British AMCs fought in several major actions. HMS Carmania engaged the German auxiliary cruiser Cap Trafalgar off the Brazilian island of Trinidade on the 14th September 1914. Somewhat ironically, Cap Trafalgar was disguised as Carmania at the time. Carmania was heavily damaged by German shellfire, with heavy fires raging aboard, but Cap Trafalgar had the worst of the engagement, holed heavily below the waterline, and ultimately sinking. The AMC HMS Otranto joined the squadron of Admiral Cradock in the South Atlantic in late August 1914. She operated with his squadron during his hunt for Von Spee's East Asia Squadron, and fought with the squadron during its destruction at the Battle of Coronel, one of two British ships to escape the disaster. In the second role, the 10th Cruiser Squadron, composed entirely of AMCs, proved hugely successful. Supported by multiple armed boarding steamers, they were successful at preventing Germany from receiving shipments of food, munitions or raw materials. They also helped prevent any breakouts by German raiders, with several actions being fought. Q-ships were a response to the heavy losses of British merchants to submarines. Generally successful as long as the submarines were following Prize Rules, which required the submarine to remain surfaced, they faced difficulties when the Germans stopped.
The Germans made use of auxiliary cruisers in the raiding role. These can typically be split into two groups: liners outside European waters when war began, and converted merchant ships that attempted to run the blockade. The first group included Cap Trafalgar, and the large liners Kaiser Wilhelm der Grosse and Kronprinz Wilhelm. Of the three, Kronprinz Wilhelm was the most successful. Cap Trafalgar's fate has already been covered, while Kaiser Wilhelm der Grosse sank two merchants before being sunk by HMS Highflyer. Kronprinz Wilhelm, armed by the cruiser Karlsruhe, sank or captured 15 merchant ships. However, following the capture of her tender, she was forced to seek internment in the USA by a lack of food and fuel. A similar fate befell the AMC Prinz Eitel Friedrich, which had cruised the Pacific starting from the German colony at Tsingtao. The second group consisted of ships specifically converted for the role. They were much less conspicuous than their predecessors, as the prestigious liners were well known in maritime circles. However, this didn't necessarily help. On the 29th February 1916, the raider Grief was engaged by the British AMC Alcantara, while trying to run the blockade. Alcantara had been forewarned, as a British submarine had sighted Grief as she left port, but ended up at close range with the German raider. Fire was opened at a range of 800 yards, with the German ship initially doing heavy damage. However, HMS Andes, another AMC, was close to the battle, and reinforced Alcantara. Grief was soon sunk, but Alcantara would join her, having been hit by a torpedo fired by Grief. Three German raiders successfully ran the blockade. The first, Mowe, escaped Germany in late 1915, and made several cruises. A minefield laid by her sank the pre-dreadnought HMS King Edward VII, and she sank or captured 40 merchants. One of these, the New Zealand merchant Otaki caused heavy damage to Mowe with her single 4.7in, but was ultimately sunk. SMS Wolf was the next to escape, and the most heavily armed of the three, (she was also carrying a seaplane in addition to her guns). Sailing from Germany in December 1916, she made a round-the-world voyage, returning to Germany in February 1918. On this voyage, she captured 14 ships, with a further 13 sinking on minefields she had laid. The sailing vessel Seeadler was the last to leave Germany, sailing in late December 1917. She made a relatively successful cruise to the Pacific, before grounding on a coral reef.
In the Second World War, AMCs were somewhat less important. The British made widespread use of them to support and supplement their regular cruisers. Once again, they were used to enforce a blockade of Germany. However, this was not without its risks, as the Germans made use of heavy surface raiders. On the 23rd November 1939, the AMC Rawalpindi, patrolling north of the Faroe Islands, encountered the German battlecruisers Scharnhorst and Gneisenau. While she was ridiculously outclassed, Rawalpindi's captain engaged the German ships, in the hope of delaying them sufficiently that heavier RN forces could be moved to respond. Rawalpindi was sunk in 40 minutes, doing only minor damage to the German ships. AMCs were also used to bolster convoy escorts to protect against surface raiders. When the convoy HX 84 was attacked by the German cruiser Admiral Scheer, HMS Jervis Bay engaged Scheer while the convoy scattered. Jervis Bay was sunk while doing little damage to the German ship. However, her sacrifice was not in vain, as she bought enough time for the convoy to scatter sufficiently that Admiral Scheer could only pick off a few ships. The AMCs used for this role could hope for little more - they were not armed or armoured well enough to successfully fight off the heavy German raiders. The British also experimented with MAC ships, grain carriers or tankers with a flight deck over their hull, allowing them to fly off ASW aircraft. These ships were operated by their civilian crews, with the flight crews and mechanics being provided by the Fleet Air Arm. This meant that they could, technically, be considered privateers.
The Germans and Japanese both used merchant raiders in WW2. The Germans converted 11 such ships, all to a reasonably standardized design. All were roughly 7000 tons, armed with six 5.9in guns, torpedo tubes and aircraft. Some were more successful than others. Coronel and Hansa never managed to leave German waters. Stier sank four merchants, but in turn was sunk by the last, SS Stephen Hopkins. Kormoran sank 10 merchants, captured another, and was sunk in a mutually destructive engagement with HMAS Sydney. The most successful, Pinguin, sank 32 ships, before being sunk by HMS Cornwall in the Indian Ocean. Thor had less success, but engaged three separate British AMCs, sinking one, HMS Voltaire. The Japanese saw less success with their raiders. One, Hokoku Maru, was sunk by a lucky hit from the Dutch tanker Ondina, and several were converted back to merchant ships due to a lack of targets they could effectively engage.
Well, if one were to give a simple answer to this question they could point to the banning of privateering in the Treaty of Paris after the Crimean War, which set a new standard for naval warfare. But I don't think it's enough to simplify this to a treaty- if the conditions were amenable to widespread privateering in the World Wars it's reasonable to assume it would have returned in force (it did occasionally happen, as with the HMS Seeadler, however you are correct that is was nothing like what we saw in, say, the Napoleonic Wars). But the conditions were not there.
Let's think of a few conditions you need if a nation-state is going to engage in widespread privateering during wartime. You need:
Withstanding the risk of sounding speculative, let's look at a few of these.
Got this one covered.
This is my weakest area of knowledge so I would welcome someone to chime in. British shipping was indeed harassed by the Germans incessantly throughout both world wars. However if I am unsure to what degree profits were damaged by this, and I am also unsure to what degree merchant ships were controlled by large concerns or by individual owners. The latter would fit in better with what we traditionally understand as a privateer.
I'm on stronger ground here. Let's think about what you want as a privateer. First, you need the blessing of your government. Secondly, you need a ship capable of boarding merchant ships. If you're a reasonably wealthy merchant in, say, the early 1800s, you could take one of your faster ships and outfit it with 4-9 pound cannons, stock a large crew (only paid if they seize a prize) and prey on slower vessels. Even more importantly, the way naval warfare was conducted during the time period allowed the possibility of seizing a prize. The ideal scenario would be to simply fire a warning shot, display your superior crew and guns, and lay alongside the merchant ship with no loss of life or cargo. If a slower, less well armed ship resisted, graping and boarding was an option that would minimize the chances of actually sinking your prize.
What changes in the mid 1800s to make this more difficult? A few things. The advent of steam power ended the stereotype of rich, fat, slow merchant ships. More importantly, ships increasingly had metal hulls as opposed to wood. As a result, the weapons for defeating the armor of these ships got more powerful and penetrative, designed for sinking as opposed to damaging in preparation to board. The kind of naval guns we would see in the 20th century would also not be easily retrofitted into what was once a merchant ship- they required ships built around them.
4.. Let's first look at this from the perspective of the British and then the Germans during WWI. For the British, harrying trade around the North and Baltic seas was certainly an objective, however the British already had a fleet more than capable of accomplishing this. Not only did they have a superior dreadnought fleet but an antiquated fleet in mothball before the war, which while not up to the task of going up against German dreadnoughts was more than capable of commercial raiding.
The Germans are more interesting. The Germans were certainly motivated to destroy British shipping, it was a primary concern throughout the war. However, a new technology had been developed to do this: the U-Boat. One could argue that the German U-Boat effectively replaced the role traditionally filled by privateers in naval warfare, capable of destroying merchant shipping with comparatively little risk.
I hope this answer helps you rather than just muddying the waters. Once again, I would welcome someone with more knowledge to chime in or even rip apart (nicely) my answer.
In 1856 most sea-going nations, with the exception of the USA and Bolivia and Venezuela, signed a treaty in Paris that forbade the signatories to give letters of marque/hire privateers.
Then in 1907, at the 2nd Hague Conference (where more international law on war was established, they expanded on the Paris Declaration of 1856, relevant passage here.
Merchant vessels converted for war must be commanded by a military officer, must visibily be marked under a nation, and the crew is under military discipline. At this point the vessel and its crew seize to be private and is instead a military vessel.
Besides international law outlawing the practice, it is also questionable how effective it would be to send a barely armed private vessel out onto the ocean to find and attack enemy merchant ships often protected by military vessels.
As for when the last privateers were employed, the US did not issue any letters of marque during the Spanish-American war or the Civil War and most other large powers had signed a treaty to outlaw it. The Confederates did use privateers and that seems to be the last time the practice was used. were used.
In 1856 most sea-going nations, with the exception of the USA and Bolivia and Venezuela, signed a treaty in Paris that forbade the signatories to give letters of marque/hire privateers.
Then in 1907, at the 2nd Hague Conference (where more international law on war was established, they expanded on the Paris Declaration of 1856, relevant passage here.
Merchant vessels converted for war must be commanded by a military officer, must visibily be marked under a nation, and the crew is under military discipline. At this point the vessel and its crew seize to be private and is instead a military vessel.
Besides international law outlawing the practice, it is also questionable how effective it would be to send a barely armed private vessel out onto the ocean to find and attack enemy merchant ships often protected by military vessels.
As for when the last privateers were employed, the US did not issue any letters of marque during the Spanish-American war or the Civil War and most other large powers had signed a treaty to outlaw it. The Confederates did use privateers and that seems to be the last time the practice was used. were used.
Follow up question: were the private ships that helped during the Dunkirk evacuation privateers and we're they compensated for their service or any damage to their ships?