mind whether these rules improve our condition; so much so, that we would have to swallow something that the other people want, or leave it.

Mr. HEINEMANN. In this instance, there is nothing to prevent for instance, in our industry, our biggest competitor is in the United Kingdom, where we have to meet the competition of the producers of bacon of the Scandanavian countries in Europe and elsewhere. There is no reason why those shippers may not be accorded very favorable rules in that traffic from their countries to the United Kingdom.

Mr. EDMONDS. It is the American ships I am working for; I am not working for foreign ships.

Mr. HEINEMANN. I appreciate that.

Mr. EDMONDS. I am sure our ships, as far as possible, will try to follow out these rules, but these other fellows will endeavor to secure the traffic by their breaking of certain conditions. Now if this is going to be in their acceptance of this conference by all the other nations, we certainly should give our shipowners a little leeway there to meet their competition, if necessary. I would like to see it so that it was all a set traffic arrangement, just the same as the Interstate Commerce Commission for the railroads; but it can not be done and therefore if we were to leave this out-suppose we got up the American rules and we left that out-we would be placing our ships at a disadvantage and that is what we do not want to do.

Mr. HEINEMANN. So far as the traffic to and from this country is concerned, there will be both American ships and foreign ships and they would all be handling stuff on an equality, just as under the Harter Act.

Mr. EDMONDS. I would have liked to have seen an international agreement, but as long as they won't agree to it, isn't it advisable for us to have that in here; because certainly we do not want to place our own ships at a disadvantage over the other ships. Mr. HEINEMANN. I do not believe you would have them placed at a disadvantage. Mr. EDMONDS. If that were out altogether, I agree they would not be; but we can not get it out. I think our delegates and everybody else disliked this section; but if it is going to be in, we might just as well have it in here for our ships if they put it in for the other ships.

Mr. HEINEMANN. Then we never need expect to have uniformity. Of course, those fellows will trade you out of your boots.

Mr. EDMONDS. We are hoping we have grown some traders in this country in the last 8 or 10 years.

The CHAIRMAN. We are not going to haul down our flag for anybody.

Mr. BEECHER. The very thing of which you complain exists under the law to-day, does it not?

Mr. HEINEMANN. Yes; because the law does not seek to cover that.

Mr. BEECHER. As a matter of fact, aren't you afforded protection against unfair discrimination against you and in favor of some other shipper by the provisions of the shipping act of 1916, section 16 of which prescribed

That it shall be unlawful for any common carrier by water, or other person subject to this act, either alone or in conjunction with any other person, directly or indirectly"First. To make or give any undue or unreasonable preference or advantage to any particular person, locality, or description of traffic in any respect whatsoever, or to subject any particular person, locality, or description of traffic to any undue or unreasonable prejudice or disadvantage in any respect whatsoever."

Does not that give you fully all the protection which you seek?

Mr. HEINEMANN. No; it does not even start to. In the first place, a lot of these lines with which we do business deny that that act applies to them and, in the second place, it certainly has nothing to do with the competitors we have to meet in our selling countries. You do not think for a moment that applies on that business from the Scandanavian countries to the United Kingdom, and they will give their shippers anything they want to enable them to do business.

Mr. BEECHER. Of course not.

navia and the United Kingdom.

This bill does not apply to trade between Scanda

Mr. HEINEMANN. This bill does and it is hoped by the proponents of these rules that they will be applied to it.

Mr. BEECHER. You are making a point as to the value of international uniformity. Mr. HEINEMANN. I think that has been highly exaggerated.

Mr. BEECHER. I mean didn't you just emphasize the importance of that international uniformity?

Mr. HEINEMANN. Not necessarily. If we are going to hold our own people to uniformity, then you want to hold the other fellow in line. As a matter of fact, it does not matter a whit to the American exporter whether these rules apply in Hongkong or Singapore

Mr. BEECHER. But it does as between Scandanavia and the United Kingdom?

Mr. HEINEMANN. On business with which we compete in the United Kingdom, of

course.

Mr. BEECHER. As between the United States and foreign ports, the provision of the Harter Act, to which I referred, does cure the evil to which you called attention, does it not?

Mr. HEINEMANN. If the thing is applicable to all lines and all boats; but I think you are familiar with the argument we heard there before the Interstate Commerce Commission, wherein some of them claimed they were not governed by that.

Mr. BEECHER. Have you any doubt yourself that the provision referred to does apply to every common carrier engaged in the transportation by water of passengers or property between the United States or any of its districts, territories, or possessions, and all foreign countries, whether in the import or export trade?

Mr. HEINEMANN. I have no doubt as to the intent of the act, but I would hesitate to say that it did actually apply, because I have heard men, more learned in the law than I claim to be, argue the other way.

Mr. EDMONDS. What section is that you are reading?

Mr. BEECHER. Section 16 of the shipping act of 1916, and I confess it was a new thing to me

Mr. EDMONDS. Section 14 and section 14a in that act as it was amended (section A was the amendment which places the penalty of not being allowed to trade at our ports any longer by any ship or line that makes an understanding or agreement abroad which is detrimental to our shipping), if put into effect and carried out, would accomplish just what you are trying to do. Section 14a, which was passed by the Jones bill in 1920 as an amendment to this, reads:

"Is a party to any combination, agreement, or understanding, express or implied, that involves in respect to transportation of passengers or property between foreign ports, deferred rebates or any other unfair practice designated in section 14, and that excludes from admission upon equal terms with all other parties thereto, a common carrier by water which is a citizen of the United States and which has applied for such admission.

"If the board determines that any such person has violated any such procision or is a party to any such combination, agreement, or understanding, the board shall thereupon certify such fact to the Secretary of Commerce. The Secretary shall thereafter refuse such person the right of entry for any ship owned or operated by him or by any carrier directly or indirectly controlled by him, into any port of the United States, or any Territory, District, or possession thereof.

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*

We had a case in the Caribbean Sea where Cuban sugars were being carried to Europe under a conference agreement, with deferred rebates, and the conference arrangement was gotten up by the French Trans-Atlantic line, on ships which did not ply at all to any ports of the United States, but they had other ships coming to New York, of course, and the Lamport & Holt people, I believe, were riunning from New Orleans to Cuba, and they were in the agreement. The Ward Line were making a triangular voyage to Europe, from New York to Habana and Europe and around, and they complained about the matter and we put that section in, and the conference was broken up in a few days-deferred rebates were abolished. It was a conference or deferred rebate agreement by which five or six lines controlled that trade (I have all the inside papers up in my desk showing their agreement and their arrangements, deferred rebates and everything else) and the whole thing was broken up and they stopped giving deferred rebates. We felt, when we passed that act, with the additional section (a) that we had covered that ground pretty well, and I know very well there is no large steamship owner in the world who can stand for having his ships kept out of the ports of the United States.

Mr. HEINEMANN. Would it not be well, then, to connect up this clause with the clause which Judge Beecher and you have read?

Mr. EDMONDS. It might be well to call attention to it; I do not know just exactly how you could connect it up in the bill. I feel this, that the Shipping Board originally was intended to take the place of the Interstate Commerce Commission with ships as that commission does with the railroads and we tried, after a very thorough investigation which covered years, to give the Shipping Board the power to prevent these discriminations and we are endeavoring to do so. Unfortunately, just when the act was passed, in 1916, we got into the war and the Shipping Board became more of an operating company than a supervisory board and I do not believe to-day that a good many of the powers we have given them have been put into effect. But I believe as they get out of the ship-operating business and get back to what it was really intended they should be, they are going to be a very valuable adjunct to the American trade. Their position is a little hard to-day, because they are shipowners themselves.

Mr. HEINEMANN. We find them increasingly of greater value to us as the time passes. In fact, they have been our life-savers on several occasions in the past two years.

Mr. EDMONDS. The reason for that is that that endeavor of the committee to produce a supervisory board that could, in international trade, have some powers, was not utilized at all during the war, on account of the unusual conditions and, as a matter of fact, I take it it was on account of not having the men to study the subject, because they wanted to use those men in other lines. But now as they are getting back to their original purpose, my idea is that eventually the Shipping Board will-become the English Board of Trade of American shipping; in other words, they are going to take the place of the English board of trade in this country. It is the only kind of a body we can create to take the place of that and I believe they can be used in a way that will keep our ships on the sea and probably we won't have to pay a subsidy for so very long in order to keep them operating.

Mr. CAMPBELL. Don't you think that the Congress in its legislation ought to place the American ships as nearly on a parity with the foreign ships as possible?

Mr. HEINEMANN. They certainly ought not to seek to place them at a disadvantage. Mr. CAMPBELL. All right. Now take this situation: A British ship running from England to Argentina and an American ship running to Argentina

Mr. HEINEMANN. From England.

Mr. CAMPBELL. No; from the United States. That ship is carrying general merchandise and the English ship is carrying general merchandise-they are competing. Now the English shipowner has the freedom of contract as respects his liabilities. and will have the freedom of contract as respects his liabilities beyond the point of discharge of the cargo from the ship, if these rules go into effect. Now don't you think the American shipowner ought to have that freedom of contract from the point of discharge?

Mr. HEINEMANN. No.

Mr. CAMPBELL. Why not?

Mr. HEINEMANN. He has not had it for 30 years, if the Harter Act has been effective. Mr. CAMPBELL. All right; but if you are going to put him on an equality so that the American shipowner can compete with the foreign shipowner, why should you not give him that freedom of contract?

Mr. HEINEMANN. For the reason we pioneered, when we enacted the Harter Act, 30 years ago, and our ships have been able to struggle along and managed to make a go of it.

Mr. BEECHER. They have?

Mr. CAMPBELL. That is news to me.

Mr. HEINEMANN. But we have led the world, so far as legislative enactment is concerned and they have followed, and they are going to follow here. You may not think it, but they are going to follow the progressive nation and why in the name of common sense shouldn't we again take the lead; why shouldn't we take the Harter Act as the basis for these negotiations for this legislation and not take a step backwards?

Mr. EDMONDS. You think, then, if we keep hammering at the thing long enough they will have to come in with us?

Mr. HEINEMANN. You bet your life, they will have to come in with us.
Mr. EDMONDS. You and Andrew Furuseth agree exactly, then.

Mr. HEINEMANN. I am sorry. [Laughter.]

Mr. BEECHER. While you are on these generalities, may I ask you one question? A good deal of your criticism of these rules has been based upon a criticism, in reality, of the Harter Act; you dislike the rules because they do not go further than the Harter Act does. Now, may I ask you for a comparison between the rules and the Harter Act. Would you prefer to have the Harter Act and the existing state of law continued, or would you prefer, that being the only other alternative, to have these rules adopted?

Mr. HEINEMANN. I will tell you very frankly that if I thought it impossible to get a modification of either, I would rather have the Harter Act.

Mr. BEECHER. You think that these rules actually do not constitute, so far as the shipper is concerned, an advance over the provisions of the Harter Act?

Mr. HEINEMANN. As a matter of fact in some respects they do advance the conditions of the Harter Act; in others they would cut under them.

Mr. HAIGHT. In what respects?

Mr. HEINEMANN. I hope you followed me; I would not want to repeat it.

Mr. BEECHER. I would be interested if you could just indicate briefly where, from the point of view of the shipper, the rules deprive the shipper of any benefits which he now possesses under the Harter Act. In my testimony-were you here when I gave my testimony?

Mr. HEINEMANN. Yes, sir.

Mr. BEECHER. In my testimony I think I was able to find but one single and very trifling case where the shipper was deprived by these rules of any benefit that he possessed under the Harter Act. If you have found more than that one very minor instance, perhaps you could, without discussing them, just briefly name them.

Mr. HEINEMANN. I referred to the receipt and delivery, and if you people add the suggestions made there to connect up your Harter Act with your rules; that would cover that. Did you hear Mr. Laws testimony yesterday, wherein he pointed out several inconsistences?

Mr. BEECHER. No. I take it in my question it is assumed that the Harter Act is not in any way affected as to any period of time not covered by these rules.

Mr. HEINEMANN. Well, your assumption and the rules would present a difficult thing to reconcile in actual application.

Mr. BEECHER. I may assume that the committee, if it reaches the conclusion that the rules do not do what I say on that point, will amend the bill so as to make them do it; because I do not think it was ever the intention of Mr. Edmonds, who introduced it, or of the committee, so far as I am aware, and certainly not of any of the proponents of the bill or the delegates, to in any way affect the Harter Act as to any period of time not covered by the rules. So that I do not think it is a very difficult assumption, before we are through, if it does not do it, that the bill will have the effect which I have stated before it is passed.

Mr. HEINEMANN. I do not need to repeat all that Mr. Laws stated yesterday, and he certainly stated it very clearly and made a splendid presentation of it and pointed out severeal places wherein the rules conflicted with the Harter Act and with one or two other statutes existing at the present time and suggested a modification of them in that respect.

Mr. BEECHER. Do you consider, really, those conflicts, which you do not stop to enumerate, are so unfavorable to the shipper that, despite the very great advantages gained by the shipper under these rules with respect to limitation, the shifting of the burden of proof, the destruction of excess clauses, and the like despite all of those very material advantages, do you still feel that the shipper would be better off if we left the Harter Act as it stands to-day, with no changes whatever, and abandoned the rules completely? Am I right in assuming that?

Mr. HEINEMANN. You certainly are.

Mr. BEECHER. I think that clears up your position.

Mr. HEINEMANN. Summarizing the specific and principal objections to these rules: First, is the fact that they have not covered the period of receipt and delivery; second, is the impossibility of complying with their claim provisions; third, is the deviation clause, against which the shipper has no protection and which is certainly something that is going to work disaster on us if they continue as they are and have been in the past; fourth, is the granting to the carrier of the right to alter these rules so far as liberality is concerned to favorite shippers. Now, you can not expect to accomplish that which these rules seek to accomplish if those provisions are left unimproved or unchanged.

I believe that is all, Mr. Chairman.

Mr. ENGLAR. Mr. Heinemann, in your last few words you mentioned three or four objections to the rules. Do you mean those to be the particulars in which the rules are less favorable to the shippers than the Harter Act?

Mr. HEINEMANN. I did not so state; no, sir.

Mr. ENGLAR. You do not so state, or I would not have asked you the question. What I wanted to know was whether that was intended as a statement of the particulars in which these rules are less favorable to the shipper than the Harter Act. Mr. HEINEMANN. Why, of course, that is not.

Mr. ENGLAR. No; I assume not. Apart from the question of whether the Harter Act applies before and after the rules apply, assuming, as Mr. Beecher does, there is any doubt that it will be cleared up, could you, without great inconvenience and very briefly, state any particular-just mention any particular in which the rules would be less advantageous to the shipper than the Harter Act?

Mr. HEIN EMANN. You mean aside from that through movement?

Mr. ENGLAR. Aside from the question of what happens before and after the rules apply and assuming that is still governed by the Harter Act.

Mr. HEINEMANN. Do you want me to repeat all I have said? I would have to go back over this whole thing. The Harter Act is not a perfect law; the bill of lading is not perfect. The Hague rules are anything but a perfect document.

Mr. ENGLAR. I do not want you to repeat your testimony, but, if you can, to mention offhand any one particular in which the rules would be less favorable to the shipper. Mr. HEINEMANN. I can mention it; I can go back and read those particular cases to which I have referred. I thought you were present.

Mr. ENGLAR. I was present; I have been present throughout your testimony. Mr. HEINEMANN. I am sorry you neglected to listen to that. I recited repeatedly clauses which differed from the Harter Act-some more favorable and some less favorable.

Mr. BEECHER. I want to say I have been listening very attentively during most of your testimony, but I have been unable to understand wherein, if at all, you consider the rules are less favorable to the shipper than the Harter Act, and I would like very much if you could tell Mr. Englar and the committee one or two particulars in which you feel that they are less favorable than the Harter Act.

Mr. HEINEMANN. Well, you first have your receipt and delivery, and that is a thing I am going to keep harping on, because it is of the utmost importance. Mr. BEECHER. I do not know what you mean by receipt and delivery.

Mr. HEINEMANN. That is the period after receipt and before delivery.

Mr. BEECHER. That has been assumed would be covered by the Harter Act.

Mr. BEECHER. Then you have an exception clause which in your Harter Act is predicated upon the fact that the carrier shall have made the ship seaworthy and in your rules that condition does not apply.

Mr. BEECHER. That is the one point to which I called attention in my testimony. Mr. HEINEMANN. And it is a very important point.

Mr. ENGLAR. We all agree there is that difference. Is there any other difference? Mr. HEINEMANN. So far as your Harter Act is concerned now, of course, you have no provision in there now on the filing of claims. That is a defect of the Harter Act which will be cured. You have no provision in there to protect against deviation and certainly you have none in these rules.

Mr. BEECHER. Then the rules are no worse in that respect than the Harter Act? Mr. HEINEMANN. You have no protection there, as I say. The Harter Act is a definite thing, whereas section 5 in your rules gives the shipowner the right to alter this to suit his own idea and convenience, so far as liberality is concerned.

Mr. BEECHER. But he must be more liberal with the shipper.

Mr. HEINEMANN. You state he must be more liberal with the shipper, but there is

no reason why he should give all shippers the same.

Mr. ENGLAR. He can not waive any of his rights under the Harter Act.

Mr. HEINEMANN. That is what I say. Why should he?

Mr. ENGLAR. What I am trying to get at is the respect in which the rules are less favorable to the shipper than the Harter Act.

Mr. HEINEMANN. Do I have to go back and read this over again?

Mr. ENGLAR. No; you have not told us any except receipt and delivery, and we all agree on that, and Mr. Beecher does.

Mr. HEINEMANN. I will go back. Are we all satisfied you understood the receipt and delivery provision?

Mr. ENGLAR. Yes.

Mr. HEINEMANN. Are we all satisfied your exemption clause must be predicated upon the fact that the ship shall have been made seaworthy?

Mr. ENGLAR. That is not quite correct-on the fact that the owner must have used due diligence to make the ship seaworthy.

Mr. HEINEMANN. That is another way of putting it; put it that way, then. Shall I read each of those exemption clauses?

Mr. ENGLAR. If you think they are particulars in which the rules are less favorable to the shipper than the Harter Act, I would like to hear them, yes; one or two of them, anyway.

Mr. HEINEMANN. Can we argue to the contrary if that condition precedent is omitted?

Mr. ENGLAR. If you will name them, I am perfectly willing to let Mr. Beecher pass on them, if he holds the rules are less favorable than the Harter Act.

Mr. BEECHER. We are only trying to get your suggestions, because I am inclined to think that the rules are subject to some criticism and necessarily must be, but then I have never thought, with the exception of the particular in which I pointed out, they are less favorable to the shipper than the Harter Act. I can understand your position, which I think you made entirely clear as you went along, namely, that the Harter Act is defective; it is not sufficiently favorable to the shipper and ought to be made more favorable to the shipper, and that the rules do not improve the Harter Act as we think the Harter Act ought to be improved; but until I asked you definitely, at the conclusion of your remaks, whether or not you preferred to have the Harter Act unamended, or the rules as they stand, I would have supposed you would immediately have said, "Why the rules, of course; but we ought to have better rules and a better Harter Act." And therefore I do think the present inquiry brings out a brand new thought on which it would be very helpful if you would point out whe Mr. Englar has suggested.