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Settling It Out of Court

Condensed from System, The Magazine of Business (September, '26)

Will H. Hays

O matter what business you are in, every purchase or sale that you make may end up as an expensive lawsuit-expensive not only in lawyers' fees but in good-will. You may I win your case-and lose a customer.

About 75 per cent of the commercial lawsuits involve no questions of law, but only of fact. The point to be settled usually is as simple as: "Are I these goods as well made as the samples?" "What damages did this theater owner suffer through failure of a film to arrive when promised?"

It often takes weeks in court to E settle such simple questions. Why? Rules of practice, technicalities of admission of evidence, and also because it is necessary to educate a jury in the fine points of some exceedingly intricate and technical business before they can decide the case.

Were the same facts submitted to a group of men conversant with the business, this laborious and highly uncertain education would be unnecessary. They know the trade customs involved and can accurately determine how much if any damage has been suffered. In a few hours they can decide a case with full justice to both sides that might take weeks in a court and sometimes end, through the bewilderment of the jury, in an unjust verdict.

Delayed justice hampers commerce. Therefore, it is not surprising to find that since the earliest times men engaged in commerce have endeavored to set up tribunals composed of arbitrators to settle their disputes. Arbitration was recognized by the Roman law. During the Middle Ages the various guilds and market towns maintained informal arbitration courts where cases could be almost instantly tried by men familiar with each branch of business.

The laws of most other countries and many of our states have for many years recognized the legality and desirability of arbitrating commercial disputes. Arbitration has been widely used in foreign countries because their laws had "teeth." Until quite recently, however, our arbitration laws have been toothless. Men could agree to arbitrate, but when one party saw the arbitration going against him, he could withdraw and take his case to the court. As a result arbitration was little used and our courts became hopelessly congested.

In recent years a few states, and finally the Federal government, have passed laws which provide that once having agreed to arbitrate neither party can withdraw and that the award of the arbitrators is as enforceable and irrevocable as the decision of a court. Since then arbitration has been used by increasing thousands of business men each year.

When I became associated with the motion-picture industry I discovered that there was a tremendous amount of friction between the distributors of films and the theater owners. Much of this friction found its way to the courts. The amounts involved were often ridiculously small. Suits for breach of contract cluttered up the courts all over the country.

The nature of the disputes was exactly the same at bottom as those which arise between manufacturer, wholesaler, and retailer in any industry. And I believe that 90 per cent of all disputes start in honest differences of opinion. These men want a quick decision.

I knew how well arbitration had worked in other fields. The New York Chamber of Commerce, for instance, has been arbitrating disputes since 1768. Some trade associations had

maintained arbitration machinery for many years. Hence, about three years ago we organized arbitration tribunals in the principal distributing centers. Today we have 32 in the United States. Each tribunal is composed of three theater owners and three distributors. In every contract for a film there is a clause binding each party to submit any dispute that may arise under it to the nearest tribunal.

Out of more than 23,000 cases that have been arbitrated in the past two years there were tie votes, necessitating the appointment of a seventh arbitrator, in only 37 cases. That shows how easy it is for six men, all of whom are thoroughly conversant with the ins and outs of a business, to decide on questions of fact and to render just awards.

Often if there is not complete agreement we find a couple of exhibitor arbitrators upholding the distributɔr and vice versa. Partisanship is rare. The arbitrators, who are busy business men serving without pay, are as impartial and judicial in their findings as any judge can be-and they are better acquainted with the facts and conditions underlying the cases.

The tribunals have reported their activities for the two full years 1924 and 1925. Just about half of the disputes were settled between the parties after the complaint was made but before the actual arbitration started. That shows that the disputes were not so serious but that, knowing that a swift trial was coming in a few days in which exact justice would be done, the parties could get together and settle their troubles. How would you estimate the value of the good-will thus preserved? It is incalculable.

In exact figures, in two years 10,325 disputes were arbitrated and binding awards made, by these 32 informal courts. Where these cases were setItled within a few days after the complaint was made, it would in some of the cities have been necessary to wait two or three years before the cases could have been called on the court calendar.

Only 21 cases out of more than 23,000 were appealed to court. In every one of these the court upheld the awards. Out of 23,000 decisions of a lower court how many do you suppose are appealed? Consider the saving in that alone, then add to it the saving due to the fact that arbitration costs in cents what a lawsuit costs in dollars, then add the intangible but very real saving in the dollars-and-cents value of the good-will which arbitration has preserved. I am satisfied that, next to war, litigation is the largest single item of preventable waste in business.

Nearly 200 business organizations have endorsed arbitration. Charles Cheney, President, Cheney Brothers, said recently: "Arbitration has filled a real need; it has given great satisfaction; it has functioned smoothly. The silk industry is better off as a result of the wide use that has been made of arbitration."

J. W. Davis, President, American Fruit and Vegetable Shippers Assn., says: "Arbitration is not compromise. Juries, in their ignorance of technical business affairs, are more apt to render a compromise verdict than are arbitrators who are thoroughly familiar with the trade. In our industry, arbitration has been supremely successful."

E. T. Barrows, Chairman of the New Arbitration Committee, York Produce Exchange, states: "The ma chinery of arbitration is so simple and inexpensive that one familiar with it continually wonders why all differences involving moderate financial claims not complicated with intricate ques. tions of law are not arbitrated.

Business men who have ultimate profits rather than revenge in mind would do well to arbitrate. As a great Chief Justice said to a friend after years of experience, "I advise you by all means to submit your difference to arbitration. I have always considered every man a lunatic, or worse, who goes to law when he can possibly avoid it."


Commander Byrd's Story

Condensed from The National Geographic Magazine (September, '26)

Lieut. Commander Richard E. Byrd, U. 8. Navy (Ret.)

N May 9, 1926, Floyd Bennett and I looked down upon the North Pole from our monoplane, completely verifying Peary's observations, and demonstrating the feasibility of using airplanes in any part of the globe.

We observed thousands of square miles of the Polar Sea never before seen by man. We did not suffer any extraordinary hardships, nor can we claim any great personal achievement. We simply took advantage of the know:ledge gained by three centuries of Arctic heroes and applied our Navy training to aviation, and so added a short paragraph to the story of man's conquest of the globe on which we live.

Seventeen years ago Peary's trip to the North Pole and back kept him out of touch with civilization for more than 400 days. Bennett and I left civilization early one morning, and returned on the afternoon of the same day.

In aerial exploration great attention to detail must be the order of the day. To the Expedition's flight engineer, Lt. G. O. Noville, goes the credit for so efficiently assembling the material that we lacked nothing after we reached Kings Bay.

Here we come to a very interesting thing about Arctic exploration by air. Hundreds of people, men and women, volunteered to go. We could have recruited an army of assistants. Civiliz ation may have a softening influence, but the spirit of adventure is far from dormant in America today. We received many letters also from people who had no chance to go with us. One letter from a lady was typical. "Little do you realize," she wrote, "that thousands of people who have до chance of adventure live your adventure with you. Probably you have no idea what pleasure you give us.”

We selected for our flight a Fokker three-engine monoplane. One was available that had already flown 20,000 miles. It had 200-horsepower Wright air-cooled motors, any two of which would keep it up. It was 43 feet long in body, with a wing spread of 63 feet. Two 100-gallon gasoline tanks were set in the center of each wing; and two others, each holding 110 gallons, were carried in the fuselage. The additional gasoline we might need was carried in five-gallon cans. The plane's fuel consumption at cruising speed was 28 gallons per hour. It was capable of a speed as high as 117 miles an hour.

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The members of the Expedition were of the volunteer type, and all young. Their spirit is still a matter of wonder to me.

After arduous labor on the part of all hands, we left New York on April 5 with 50 men, six months' food, and 15,000 miles of coal on board. Captain M. J. Brennan and his three mates of our Merchant Marine did a fine job in taking that Shipping Board steamer Chantier, which had been laid up for years, to Spitsbergen and back, 10,000 miles, with a largely landlubber crew.

We arrived at Kings Bay on April 29, and found the Amundsen-EllsworthNobile Expedition members well under way in their preparation to receive the great Italian dirigible Norge. This revelation of the energy of another air expedition had a tonic effect on the eager young American spirit of our


Fate lost no time in placing serious obstacles in our path. The little harbor of Kings Bay was choked with ice, but skillful work by Captain Brennan brought the Chantier to anchor within 300 yards of the shore.

By laying heavy planks across the

gunwales of our whaleboats we constructed a big raft. A change in tide began to close the lane we had opened among the heavy cakes of ice that blocked our course ashore. Yet by tireless work and unswerving determination, our men managed to prop that awkward body of the plane on its frail support, and ferried it in safety to the rugged beach. We were taking a tremendous chance in doing this, for had a wind sprung up, the pontoon would have been crushed blown out to sea. As we had only one plane for our polar flight, a serious accident at this juncture would have been fatal to the whole project.


The plane's first attempt to take off for a trial flight ended in a snowdrift and nearly upset-which would have upset the Expedition as well! A ski was broken to bits and the landing gear bent. Things then looked black, but the men refused to lose heart. A repair gang worked all night installing new skis, while the rest of the crew worked at the muscle-tearing task of leveling off the mile-long slide of snow down which we had to run for the take-off.

Final preparations were completed on May 8. W. C. Haines, a meteorologist loaned us by the U. S. Weather Bureau, told us that the weather was right. We warmed the motors; put the last bit of fuel and food aboard; examined our instruments with care. We were off, but alas, not up!

Our load proved too great, the snow too "humpy," the friction of the skis too strong a drag. The plane simply would not get into the air. We got off the end of the runway at a terrific speed, jolted roughly over several snow hummocks and landed in a snowdrift, coming within an ace of upsetting, which, of course, would have smashed the plane.

We took off hundreds of pounds of fuel to lighten the load, and concluded to work through the night lengthening and smoothing the runway. the same time we would take out of the plane as much equipment as we could spare.


The weather was still perfect. We decided to try to get off as near mid

night as possible, when the night cold would make the snow harder and therefore easier to take off from. Finally, at a half hour past midnight Greenwich time, all was in readiness to go. Bennett and I had almost no sleep for 36 hours, but that did not bother us.

There lay the sun in the general direction of our goal, beckoning us on. We decided to stake all on getting away to give the Josephine Ford full power and full speed. A few handclasps from our comrades and we set our faces toward the midnight sun. We raced down that runway. The rough snow ahead loomed near but we never reached it. We were off for our great adventure!

Beneath us were our shipmatesevery one anxious to go along, but unselfishly wild with delight that we were at last off-running in our wake, waving their arms, and throwing their hats in the air.

We had a short-wave radio set operated by a hand dynamo, should we be forced down on the ice. A handmade sledge was also stowed in the fuselage, on which to carry our food and clothing should we be compelled to walk to Greenland. We had food for ten weeks. Our main staple, pemmican, consisting of chopped-up dried meat, fat, sugar and raisins, was supplemented by chocolate, pilot-bread, tea, malted milk, powdered chocolate, but. ter, sugar and cream cheese.

Other articles of equipment were a rubber boat for crossing open leads if forced down, reindeer-skin, polarbear and seal fur clothes, boots and gloves, primus stove, rifle, pistol, shotgun and ammunition; tent, knives, ax, medical kit and smoke bombs.

Within an hour of taking the air we passed the rugged and glacierladen land and crossed the edge of the polar ice pack. We looked ahead at the ice pack, gleaming in the rays of the midnight sun-a fascinating scene whose lure had drawn famous men into its clutches, never to return. It was with a feeling of exhilaration that we felt that for the very first time in history two mites of men could gaze upon her charms, and discover her

secrets, out of reach of those sharp claws. Perhaps!

No one had ever navigated an aircraft with accuracy to a distant point in the Polar Sea, and we naturally wondered if we could do it. Though it was important to hit the Pole from the standpoint of achievement, it was more important to do so from that of our lives, so that we could get back to Spitsbergen, a target none too big. We could not fly back to land from an unknown position. We must put every possible second of time and our best concentration on the job of navigating, of flying a straight course.

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There was only one thing to do-to depend upon the sun. We had to use a sun-compass. This instrument was invented for our use by A. H. Bumstead, chief cartographer of the National Geographic Society. I do not hesitate to say that without it we could not have reached the Pole; it is even doubtful if we could have hit Spitsbergen on our return flight.

The principle of this instrument is a kind of reversal of that of the sundial. In the latter, the direction of north is known and the shadow of the sun gives the time of day. With the sun-compass, the time of day is known, and the shadow of the sun, when it bisects the hand of the 24-hour clock, indicates the direction of north (or any other desired).

Then there was the influence of the wind that had to be allowed for. lf, for example, a 30-mile-an-hour wind is blowing at right angles to the course, the plane will be taken 30 miles an hour to one side of its course. This "drift" can be corrected by an instrument called the drift-indicator, which we had developed for the first naval transatlantic flight.

Exact Greenwich time was necessary, So we carried two chronometers that I had kept in my room for weeks. I knew their error to within a second. There seems to be a tendency for chronometers to slow up when exposed to the cold, so we had taken their cold-weather error.

As we sped along over the white field below I spent the busiest and most concentrated moments of my life. Ben

nett was steering, and every minute or two he would look to me, to be checked if necessary, on the course by the suncompass. Once every three minutes I checked the wind drift and ground speed, so that in case of a change in wind I could detect it immediately and allow for it.

We had three sets of gloves which I constantly changed to fit the job in hand, and sometimes removed entirely for short periods to write or figure on the chart. I froze my face and one of my hands in taking sights with the instruments from the trapdoors. Ordinarily a frostbite need not be dangerous if detected in time and if the blood is rubbed back immediately into the affected parts.

When I felt certain we were on our course, I turned my attention to the great ice pack, which I had wondered about ever since I was a youngster. We were flying at about 2000 feet, and I could see at least 50 miles in every direction. There was no sign of land. If there had been any within 100 miles' radius, we could have seen its mountain peaks, so good was the visibility.

I noted that the temperature was 8 degrees above zero-only 24 below freezing. That was not so low as might be expected, but it was getting colder as we sped north.

The ice pack beneath was crisscrossed with pressure ridges, varying from a few feet to 50 or 60 feet in height, while the average thickness of the ice was about 40 feet. A flash of sympathy came over me for the brave men who had struggled northward over that cruel mass... We passed leads of water recently opened by the movements of the ice, and so dangerous to the foot traveler, who never knows when the ice will open up beneath and swallow him in the black waters of the Polar Sea.

There were no bumps in the air. This was as we had anticipated, for the flatness of the ice and the Arctic temperature are not conducive to air currents. Had we struck an Arctic gale, I cannot say what the result would have been. Another advantage of spring and summer flying would be the 24hour daylight.

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