Mr. HEINEMANN. All right. In section 3, you require the carrier before and at the beginning of the voyage to exercise due diligence to make his ship seaworthy. Now, the Harter Act first requires him to make his vessel seaworthy and capable of performing the intended voyage. That may seem a small thing, but it is not a small thing; there is a distinct difference between the two.

I explained the difference so far as the issuance of the bill of lading is concerned, between the forms. That question of unseaworthiness, of course, I have already discussed, the owner being required to exercise due diligence to make the vessel in all respects seaworthy.

The matter of the fire clauses was discussed by Mr. Laws.

Those, so far as the existing Harter Act is concerned, seem to be the principal points.

Mr. EDMONDS. Mr. Heinemann, let me ask you something: Suppose the Harter Act was not on the statute books and we were only taking up the question of from tackle to tackle, so far as the ship is concerned, and you were presented with the Harter Act and you were presented with these rules and told you had to take either the one or the other, which would you take?

Mr. HEINEMANN. I believe I would take my chance under the Harter Act.

Mr. EDMONDS. You do not think, then, these rules are an improvement over the Harter Act?

Mr. HEINEMANN. In some respects; yes.

Mr. EDMONDS. You do not think the improvement is enough?

Mr. HEINEMANN. No; I do not, Mr. Edmonds, and especially they would not be enough unless you are going to have some interpretive clauses in here. It is all right to have these attorneys tell you what the intent is, but it is another thing when you are arguing with your steamship claim man.

Mr. EDMONDS. I should think, in enacting this legislation, if they could possibly be gotten in there, you should have those interpretive clauses.

Mr. HEINEMANN. I agree with you absolutely, and without them you are in for endless trouble.

Mr. EDMONDS. Of course, my idea here always has been in drafting an act to prevent, as far as possible, going to law and going into the courts, and I have tried to do that with every act with which I have had anything to do. Unfortunately, I suppose that the courts make so many decisions that you have to write an act almost like a book in order to keep away from the courts, if you want to keep away from them.

Mr. HEINEMANN. I think a writer some time ago referred to international conventions and stated "an ambiguous phrase is introduced which leaves both contentions open, or some qualifying words are used which rob the statement in the main provisions of all effectiveness. These devices of ingenious draftsmen facilitate the acceptance of conventions, but they solder no difficulties and are certain to fall to pieces the moment they are tested in practice.'

Mr. EDMONDS. We had a case of that kind in the Panama Canal treaty, where we had a clause in there that you could read either way. Unfortunately for us, it was misread, of course.

Mr. CAMPBELL. I take it the people whom you represent are indifferent to the principle of uniformity?

Mr. HEINEMANN. No, sir. We recognize it would be nice if we could reach this Eutopian state and have uniformity, but for Heaven's sake, get it.

Mr. CAMPBELL. You do not think uniformity can be reached by each nation, the United States, England, France, Germany, and Japan, attaching to these rules interpretive reservations, do you?

Mr. HEINEMANN. I have grave doubts you will ever reach uniformity. I think the best thing we can do is to look out for ourselves first.

Mr. CAMPBELL. Look out for No. 1 and cast aside the principle of uniformity, is what would guide you?

Mr. HEINEMANN. No; if there is any hope of attaining uniformity, well and good. Mr. CAMPBELL. You do not think it can be attained by attaching reservations, do you?

Mr. HEINEMANN. I doubt if it will ever be attained in one document.

Mr. CAMPBELL. But at least it can not be attained in that way?

Mr. HEINEMANN. If the reservations are material ones and are followed in each country, perhaps you would not; but, as I say, they are going to follow you-whatever you set out in there they are going to follow.

Mr. CAMPBELL. If they are going to follow us, why did we go over and have this convention?

Mr. HEINEMANN. I have often wondered the same thing, but have never found any

answer.

Mr. CAMPBELL. The fact it was necessary to call this convention shows the only way to reach uniformity is through a conference.

Mr. HEINEMANN. When you say reach uniformity, so far as our people are concerned that is just what we did on the inland carriage; we got the people concerned in it in a room and let them talk it out.

Mr. CAMPBELL. You can not compare inland carriage with high-seas carriage. Your inland carriage is regulated by the Federal Government; the United States is in a position where it can absolutely dominate and control the inland carriage. I can not control the high seas trade. That is the difference in the situation.

Mr. HEINEMANN. It is not a question of controlling the high seas trade. You are the people who control the shipping act; if that is good law, it will control the conditions therein described.

Mr. CAMPBELL. But it won't control competition, whatever the necessity or emergency, between the shipowners of England and the shipowners of the United States. Mr. HEINEMANN. Probably not. But we in this country, who are interested in this problem, could reach an agreement; but they have never sought to reach an agree

ment.

Mr. CAMPBELL. You could not reach an agreement with the shipowners, I do not believe.

Mr. HEINEMANN. We could not reach an agreement with the shipowners? We came very near doing it over in the Interstate Commerce Commission. The whole trouble has been, just as was explained by Mr. Haight at the London Conference, as one of the proponents. He said:

"The shipper will practically agree to any form, because he is doing it to-day in a multitude of varieties. He will be devoutly thankful if anyone will present him with a form written in language he can understand."

In other words, the shipper will accept anything they come along and offer him; he does not need a voice in the making of it.

(The committee thereupon took a recess until 2 o'clock p. m.)

AFTER RECESS.

The committee reconvened, pursuant to the taking of the recess, Hon. William S. Greene (chairman) presiding.

The CHAIRMAN. We will now hear from Mr. Paton. Just give your name, address, occupation, etc.

Mr. PATON. My name is James B. Paton; address, 5 Nassau Street, New York.

STATEMENT OF MR. JAMES B. PATON, GENERAL COUNSEL OF THE AMERICAN BANKERS' ASSOCIATION.

Mr. PATON. Mr. Chairman, I expect to take but a few brief minutes. I am general counsel of the American Bankers' Association and secretary of its committee on Federal legislation.

The American Bankers' Association is an association composed of upward of 22,000 members-National banks, State banks, trust companies, and savings banks in every State of the Union. On this subject, these Hague rules, we left them to the consideration of and they were only considered by the committee or commission on commerce and marine of the association.

The CHAIRMAN. Where is that commission located?

Mr. PATON. That commission's chairman is Mr. Fred I. Kent, vice president of the Bankers Trust Co. of New York, and that commission, with authority from the association, adopted this resolution which I will read and leave on file:

"Resolved, That the commission (that is the commerce and marine commission) reaffirms its support of the principle of the Hague rules, 1921, providing for uniform ocean bills of lading, and recommends that the committee on Federal legislation of the American Bankers Association take up the matter immediately and that Congress be urged to enact appropriate legislation legalizing documents in conformity with those rules, any due and proper interpretation of the rules being specifically given in such legislation."

Now I understand this bill, H. R. 14166, is virtually an enactment of the rules. It is not my purpose to go into any detailed discussion of the points of difference that have been brought out this morning, but simply to say a few brief words, if I may be able to express myself, on the tremendous importance, not only to the bankers, but to the commercial world, of uniformity in the laws governing commercial documents and in the documents themselves; for it is really the banker whose money goes into the financ

ing of these documents and without that money trade and commerce would be seriously clogged and hampered.

Now, it won't take long, and I think it might be illustrative just to go back a little with regard to this movement for uniformity. It originated in this country some 20 or 25 years ago in a need that was felt for uniformity in the laws of the different States governing bills and notes, virtually the instruments of commerce, used in payment of commercial transactions. Our country,. while commercially one, nevertheless had 48 States whose legislatures and courts were enacting separate and differential rules governing the validity and negotiability of promissory notes and bills of exchange and checks, which the banker was called upon to finance and to pay. Such a condition greatly clogged commercial transactions and the subject was taken up by the American Bar Association and, through their initiative, legislation was enacted in the various States creating a commission on uniform laws, four or five representative commissioners being appointed by the governor of each State, and these commissioners met in annual conference to consider the subject of uniformity of commercial laws. The first production of that commission was a uniform negotiable instruments act and that act has now been enacted in every State of the Union except Georgia. It demonstrates the great need of uniformity. It has been of immeasurable benefit to the commercial world. The bankers got behind that act and, in the different State legislatures, cooperated with the commissioners in procuring its enactment.

Likewise, on the subject of warehouse receipts, the commissioners on uniform laws, recognizing the difference in the laws of the different States with regard to warehouse receipts and the need for uniformity and laws which would make the warehouse receipt a bankable document, good as secureity to the banker, provided and recommended a uniform warehouse act and that act has now been enacted in all but, I think, four States of the Union. I can not, from memory, state that four.

Then came the subject of bills of lading. The farmer, for example, needs a cash market at his own door. He can not wait until his grain is sold and the money is collected from the ultimate purchaser at a distance. In order to have that cash market, there must be a buyer found him and a shipper, and in order that that shipper may get the cash to pay the farmer, he must have a document which will be good. He gets the money from the banker on a bill of lading, and in order that he may get that money it must be a bankable document; it must be relied upon by the banker at security for the money. That underlying thought led to the drafting and recommendation of the uniform bills of lading act, and that uniform bills of lading act has now been enacted in about half of the States of the Union.

Following that, and by virtue of certain decisions of the courts which restricted the uniform bills of lading act to intrastate shipments, shippers in the same State, necessity was felt for a Federal bills of lading act, and for some 9 or 10 successive years such an act was down here before the Congress, and finally was enacted in 1916, based upon and containing many of the provisions of the State uniform act.

Now, under the Federal bills of lading act, the bill of lading means something to the banker. He knows the liability of the carrier under it; he knows his rights under it; he can advance money under it. Now it seems to me that the same reasons which required uniformity of the laws throughout the different States apply to the uniformity. 01 laws in commercial transactions in the different countries, and that this attempt to make uniform the laws governing contracts of carriage by sea or ocean bills of lading is very vital and important to the successful carrying on of commerce. Those are the general ideas of the bankers on this subject.

With regard to the specific clauses in this bill, those are primarily matters between the shipper and the carrier and the insurance men. The banker simply desires to see that they are fair and adequate and uniform, that he may know what laws govern the document upon which he advances money and what the contract rights are in that document. With regard to the specific provisions, there is just one clause in this bill to which I desire to direct attention. The bill requires that, after receiving the goods, the carrier shall, on demand, issue to the shipper a bill of lading and it provides, paragraph (d), at the top of page 4, that such a bill of lading shall be prima facie evidence of the receipt by the carrier of the goods as therein described, in accordance with paragraph (c), 1, 2, and 3 of this section.

The question arises whether that weakens the obligation of the carrier as provided in section 22 of the Federal bills of lading act. One of the chief or vital elements of that bills of lading act was the liability of a carrier to the bona fide holder of a bill for the goods as recited in the bill; that is to say, if the carrier's agent, by collusion with the shipper, or, as a matter of accommodation, issued a bill of lading for which there were no goods, section 22 of the Federal bills of lading act provided that the carrier should be liable to the holder for value of the bill for the goods recited therein. Now this particular provision says that the bill shall only be prima facie evidence of the

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receipt by the carrier of the goods and it would seem that if it was only prima facie evidence that the banker who held a bill of lading which has been issued by an authorized agent of the carrier, without receipt of any goods-that the carrier could show that fact. In other words, it would detract from the obligation of the carrier as provided in section 22 of the Federal bills of lading act which, as I understand, covers bills of lading issued for shipments to foreign countries as well as interstate shipments. I just leave that thought and would make the suggestion that if the committee thinks or feels that it would exempt the carrier in such a case, that there might possibly be added to subdivision (d) the words

Provided, that paragraph D shall not be construed to exempt the carrier from liability to the bona fide holder for value of a bill of lading, as provided by section 22 of the Federal bills of lading act.

That is about all I care to say, Mr. Chairman.

STATEMENT OF MR. HARRY CHAPIN PLUMMER ON BEHALF OF THE NEW YORK BOARD OF TRADE AND TRANSPORTATION.

The CHAIRMAN. State your name and who you represent.

Mr. PLUMMER. Harry Chapin Plummer. I represent the New York Board of Trade and Transportation, 41 Park Row, New York City. Perhaps I should state that I make this statement on behalf of the chairman of the traffic committee of the New York Board of Trade and Transportation, whose name is E. J. Tarof.

Mr. Chairman and gentlemen of the committee, the organization which I have the honor to represent, the New York Board of Trade and Transportation, comprises more than 700 hundred executives of major manufacturing and mercantile units of the metropolitan district, very many of them exporters and importers on a large scale, and includes the principal banks and trust companies, insurance companies, and the chief railway and American steamship lines serving the port, with a good representation of British navigation interests.

The traffic committee of the board, for which I am here to say these few words? is composed of principals and traffic heads of large corporate interests of many years experience in ocean and overseas trade. By the peculiar principle of government of our organization, the findings even of a body manifestly so competent to consider a question of the nature of the Hague rules, or Brussels rules, are required to be sub mitted to a regular plenary session of the Board of Trade. In the case of the earlier drafts of these rules, the action of our traffic committee in emphatically rejecting the rules and in unreservedly protesting Article VI, now incorporated, with contradictory, evasive, and beclouding changes, in section 6 of House bill 14166, was unanimously upheld and approved by the organization as a whole in regular meetings immediately precedent to the filing of a formal protest with the Committee on the Merchant Marine and Fisheries, under date of September 19, last.

Our traffic committee has had an opportunity to study both the unofficial translation of draft of the Brussels convention, as supplied by the maritime law committee of the International Law Association and the text of House bill 14166. I am instructed by the chairman of our traffic committee to register the most emphatic opposition to both the spirit and the letter of section 6 of the bill. This does not mean that our traffic committee by any means approves of the other features of the bill. Yesterday's and to-day's hearings before your honorable committee have pretty well demonstrated that the objections to the other errors, omissions or commissions, of the bill are in ably qualified hands; indeed, it is a toss up, so to say, whether they have suffered the most harm from the direct attacks of the opponents of the rules or the naive admissions of the rules' supporters.

With all the emphasis at its command, the traffic committee of the New York Board of Trade and Transportation respectfully urges upon the Committee of the Merchant Marine and Fisheries that, with its time-honored sense of democracy and fair play, it insist upon a postponement and ultimate amplification of the scope of this hearing, so that there may be effected a vastly wider representation of the manifold interests within these United States to be permanently affected by the provisions of this bill. The interval from February 2d, the date of introduction of the bill, and February 13 and 14, has been not at all sufficient for a marshaling of the diverse interests from one end to another of the land that will wish to voice their position, in one or the other way. The more remote interior centers and sections of the country and the Pacific Coast and Gulf port cities have had neither time nor opportunity for gathering together facts and figures and arguments, either to support or to oppose the measure. In substance, we have not had the benefit of any official report from the American delegates who attended the conference at London and Brussels in October. We have been supplied with a copy of the so-called unofficial draft of the international

convention as printed in London, purporting to be the amendments made and approved by the diplomatic conference held at Brussels in October, which, by comparison with House bill 14166, shows that the action of the Brussels conference has been transferred more or less bodily into this bill.

The bill purports to enact into law the decisions of this foreign conference. Some amendments have been made that really admittedly would be of value provided that section 6 of the act, which is article 6 of the amended Hague rules, did not exist. But this, as it exists, permits the making of contracts and agreements in any terms which may be agreeable to the carrier and the shipper, as to any particular goods. The act does not attempt to define what are particular goods and it remains with the carrier and the shipper to themselves determine what are particular goods that warrant them in making any special agreement that they may see fit. The proviso at the end of the section does not help out that situation in the least, because, while it is intended to, it is left entirely to the carrier and the shipper to determine what are such conditions as reasonably to justify the making of a special agreement. There is no body, no court, no board, no commission, of any kind to which this is to be referred, which shall have the say or determination as to what are particular goods with reference to which special agreements may be made.

Then the first proviso in section 6 that in this case no bill of lading shall be issued, but shall be covered by an agreement and that that document shall not be negotiable, is not of any help, because the big shippers, who would be looking for special agreements and special arrangements of advantage, of preferential advantage, to themselves, except as to ordinary shipments of such commodities as grain and cotton, are able to finance their shipments themselves and they care nothing about the negotiability of that bill of lading and receipt. It leaves it open, so that a great majority of those people can do their own financing of their transactions, and the negotiability of their bill of lading, receipt, or other document is of no consequence to them whatso

ever.

The result is that this act, as proposed, is in the interest exclusively of the world's shippers of unlimited resources, because they handle their business under the conditions which are imposed here: while the little fellow may not do so and must depend upon the so-called uniform bill of lading. The fundamental object of this legislation, from the shipper's point of view, is to get his goods carried at reasonable cost with the absolute assurance that they will be delivered to the consignee or that the consignee or the shipper will recover the value of those goods which are lost or stolen under all ordinary conditions. There are certain liabilities which the carrier can not be asked to assume. These, and many more than should be given them in the way of immunities, are accorded them under this code, as prescribed by the Brussels rules.

We firmly believe that if we should forget the Brussels rules entirely and put them out of consideration and go back to the old principle that a carrier is responsible to the shipper or the consignee for the goods, the custody of which he assumes, we would solve the problem. We would give the carrier the right to charge rates upon a scale commensurate with the adequate safeguarding of goods while in his custody. The carrier would then get more money out of his business and the shipper would be a satisfied man, as would also be the consignee, the underwriter, and the banker. An immediate effect of this would be lower insurance rates and the cessation of thefts and pilferage. In short, the increased overhead thus allowed the carrier would be a guarantee of safety in transit.

In conclusion, Mr. Chairman, the traffic committee of the New York Board of Trade and Transportation has asked me to protest the element of secrecy and mystery which has entered into the consideration of these rules since they became subject to diplomatic parleys abroad. The banks, the insurance companies, the carriers, the shippers, the consumers, the tax payers indeed, the public at large in these United States have a right to know just what influences lie behind the promulgation of these rules as a bill of lading codification under international convention. We have had some unfortunate and extremely costly experiences with secret diplomacy in world politics of late years. Let us not now, Mr. Chairman, subject to the dark labyrinth of influences in Europe, that have arrested civilization for the last nine years, an instrument so vital and so fundamental to world commerce and world finance as the ocean bill of lading.

The organization for which I am authorized to speak earnestly desires to see the consummation of a standard, uniform, ocean bill of lading. It respectfully submits that the Brussels rules, as embodied in H. R. 14166 and as contradicted and nullified by section 6, make the released bill of lading of recent years seem, by comparison, to be the acme of consistency, and again, by comparison, to afford the carrier, banker, underwriter, and shipper relative safety.

That is all I have to say, Mr. Chairman.