Mr. BEECHER. It changes it so as to give the shipper a very great advantage over the carrier as the law now stands.

Mr. PERLMAN. That one paragraph, or that one sentence, gives the carrier some advantage; it may be slight, but it gives him some advantage over the shipper, does it not?

Mr. BEECHER. Not over the existing law, but over what this radical change from the existing law would be if it were not for the paragraph to which you refer.

Mr. PERLMAN. The present law says the court shall take into consideration, by way of evidence, any receipt by the shipper as to the condition of the merchandise at the time of delivery. That is what the present law means, is it not?

Mr. BEECHER. Right. Of course, you have to read this in connection with the whole claims clause, and under existing law, under the claims clause now in use, the shipper is barred entirely. It is not a question of more prima facie, it is not a question of offering proof or having to prove, but his case is utterly wiped out. That is what this alters as a whole.

Then I call attention to the provision at the end of section 3, paragraph H, lines 1 and 2, page 6 of the bill:

"A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier from liability.

That wipes out, in connection with the balance of the paragraph, the elaborate system which has been devised to accomplish just this result and which in general has been successful, but which has led to a very great deal of trouble on the part of cargo underwriters and shippers. Is not that right?

Mr. BLAND. Devised by whom, Mr. Beecher; by the insurance companies?

Mr. BEECHER. It has been like the fight between armor plate and projectiles. First the carrier won; he got the benefit of the insurance. Then the insurance company devised a scheme for defeating him. Then the carrier came back with a scheme to defeat the insurance company. And so it has gone. And, when this matter was under consideration, my attention was called to a still further device of one carrier, the author of which pointed to it with pride as something which he thought at least would enable the carrier to beat the underwriter, and I think he was rather hurt when I said I was going to do everything I could to defeat his new invention. And this has done it, whether it is good or not.

Mr. BLAND. What do you mean by that, "A benefit of insurance or similar clause shall be deemed to be a clause relieving the carrier from liability"? Does that mean from all liability, or from what liability?

Mr. BEECHER. That must be read in conjunction with the balance of the preceding paragraph, which says that any such clause shall be null and void.

Mr. PERLMAN. That is like the old Harter Act, the first part of it?

Mr. BEECHER. Quite right, except this adds on. The Harter Act has not such a clause.

Mr. BLAND. In whose interest is that provision; is it in the interest of the insurance company, the carrier, or the shipper?

Mr. BEECHER. The benefit of insurance clause was for the benefit of the carrier. It is now wiped out.

Mr. CAMPBELL. This clause is in the interest of the insurance companies? Mr. BEECHER. Of course. This wipes out the benefit of insurance clause devised by the carrier for his own benefit, and the result of this is the shipper and the underwriter are no longer troubled by such clauses in bills of lading of the carriers. Mr. BLAND. It puts the liability on the insurance companies?

Mr. BEECHER. No; it leaves the liability upon the carrier and prevents the carrier from escaping that liability by asserting that the shipper has taken out insurance against this very risk and that he, the carrier, ought not to pay because he has provided that he shall have the benefit of that shipper's insurance. It is something which the shippers and the underwriters were both very anxious to have done and we have done it. We had some difficulty in getting our foreign friends to agree to it--not so much because they were in favor of such clauses, but they did not know what they were and they did not like to put something in which they did not know about. It was not an evil which existed abroad..

Mr. EDMONDS. I suppose you explained, Mr. Beecher, that the rules as promulgated in Brussels will be prepared as a treaty and will be sent over to the Senate for confirmation, possibly?

Mr. BEECHER. I merely said I supposed that would be done in due course. The State Department has taken no action as yet and, as I explained, I understand that did not have all the diplomatic documents yet from Brussels in regard to it. Diplomacy is rather a slow tool.

Next, I call attention on page 6, line 12

Mr. PERLMAN. That about section 4-A: Is that something new?

Mr. BEECHER. No.

Mr. PERLMAN. Is that in the old act?

Mr. BEECHER. Section 4-A is merely a codification of the Harter Act and I call attention to that clause in lines 12 to 15, which was inserted at the request of the shippers and cargo underwriters to make it clear that the burden of proving the exercise of due diligence whenever loss or damages has resulted from unseaworthiness, is to be on the carrier. Without discussing whether that changes the law, it certainly is a very valuable provision from the point of view of the shipper.

Now, when we come to the next paragraph, paragraph (B), section 4, line 16, we come to probably the only provision of the rules which can be said to afford any real advantage to the shipowner, who must, in reality, look for the principal benefit under these rules in having a happy and contented customer rather than any direct benefit which he derives; because there can be no doubt, I think, that the burdens of the carrier are very considerably increased by these rules.

This section constitutes a modification of the Harter Act, in that it does not make it a condition precedent to the carrier receiving the benefit of these exceptions that he shall have exercised due diligence to make the ship in all respects seaworthy-properly manned, equipped, and so forth. It is true that the shipowner is under that obligation just as fully as before. It is an affirmative duty resting upon him, and the shipper may always recover where the damage or loss is the result of a failure on the part of the shipowner to comply with the affirmative obligation placed upon him of exercising due diligence with respect to the seaworthiness of the ship and, in addition, as I have just pointed out, the carrier himself is under the obligation, contrary to the ordinary principles of American law, of proving affirmatively that he has exercised due diligence.

The change, in reality, would affect but few cases. It presents such a situation as this: Suppose a ship sails from New York and, in going down the harbor, owing to an error of the master, she comes into collision with another ship. The compass has not even had the cover taken off: the navigation is all in full view and it is simply an error of navigation on the part of the master, but it is found that the compass is out of order. Now, as that unseaworthiness had not the slightest cause in connection with the disaster, as no one ever looked at the compass, even, it would seem that the shipowner should not be liable, should not be deprived of the Harter Act exemption from liability, as a result of the error of navigation, but probably under existing law that would be the case. Now, this changes that. It says, in effect, that the carrier, whenever there is unseaworthiness, whenever he has failed in the duty of due diligence, to have the ship seaworthy and whenever that has resulted in a damage or loss, he must pay for it; but it does not deprive him of the benefit of these exceptions where that failure on his part has had nothing whatever to do with the disaster.

Mr. PERLMAN. A good master would look at that compass, would he not?
Mr. BEECHER. It would depend on the situation.

Mr. PERLMAN. Aren't you putting a premium on negligence there?

Mr. BEECHER. Oh, no: under the circumstances I gave, where he was navigating right there leaving his dock in the North River, in full view of the conditions, he would not navigate with the compass. At least, I do not suppose he would, although I am not a nautical expert.

Mr. PERLMAN. But you do not limit it to that sort of a case.

You say

"Neither the carrier nor the ship shall be responsible for loss or damage arising or resulting from:

"1. Act, neglect, or default of the master, mariner, pilot, or the servants of the carrier in the navigation or in the management of the ship."

Mr. BEECHER. I was really giving that as an illustration. That is merely repeating the present provision of the Harter Act.

Mr. PERLMAN. Is that the Harter Act?

Mr. BEECHER. Yes. We are not attempting to change the Harter Act. This is substantially the Harter Act; but when you come to subparagraph 17, page 7, we come to a very important provision inserted for the benefit of the shippers, making a very important change in the law. This covers cases of pilferage, sweat, decay and all of the various 57 varieties of exceptions which are familiar in bills of lading of the present day; and instead, as under existing law, of compelling the shipper to prove that that excepted cause, which has caused him damage, was a result of the ship owner's negligence, this throws upon the ship owner the burden of proving that he was free from negligence with respect to that excepted cause.

The importance of that from the point of view of the shipper, and primarily, perhaps, the shipper in the interior who has not the remotest idea of how to proceed to attempt to prove anything against a ship, is apparent.

I call your attention next to paragraph (d), of section 4, on page 8, lines 5 and following, of the bill. This has been changed in an effort to meet the criticisms of certain shippers with respect to the previous deviation clauses. Apart from deviations in saving or attempting to save life or property at sea, it now requires that every deviation shall be reasonalbe in order that the carrier may escape liability therefor. It again imposes a rather heavy burden upon the shipowner, who must assume all the risk and serious results that flow from an unauthorized deviation in every case. He is compelled to submit to the court, if there be litigation, the question of whether or not the deviation of which he was guilty was or was not reasonable.

Now, I understand that, in its present form, is still unacceptable to certain shippers. At the hearing before the Shipping Board I asked those shippers if they would submit a suggested form which would carry out what they desired. I do not know whether they tried to, but they did not submit any to me and this is the best thing which our combined wisdom abroad was able to devise to afford sufficient protection to the shipper and at the same time not to interfere with the necessary conduct of a shipowner's business.

The next clause (e), on the same page, is the £100 valuation clause. So much has been said in regard to that clause and it has stood up against so many attacks, and is still standing in the rules, that I shall not discuss it further. I think there again that the shipowners can make a pretty good argument against the clause as being excessive in amount, but the shipowners abroad, the representatives abroad, were willing and have been willing to concede the £100 limitation and it is here, and I do not think the rules ought to be thrown over because it is here. From the viewpoint of the shippers, of course, it is a tremendous advance.

Mr. PAUL. What is meant by these lines 17, 18, and 19, where it says-

"This declaration, if embodied in the bill of lading, shall be prima facie evidence but shall not be binding or conclusive, on the carrier?"

Mr. BEECHER. That is a clause which I sought to have eliminated at Brussels without success. It compels, and the justification for it is, that the carrier is to become, in effect, the underwriter of the shipper under the valued-policy for the amount of the shipper's excess declaration.

Mr. PAUL. It says that the declaration shall be prima facie evidence. That is plain enough. It might be prima facie evidence, but not conclusive evidence; but then you say "shall not be binding on the carrier." That would imply it had no effect on the carrier at all, that the carrier was not affected one way or the other, and would be perfectly idle.

Mr. EDMONDS. Does not the declaration there apply to a change in the valuation that may be noted in the bill of lading?

Mr. BEECHER. Of course. It applies to declaring a value of over £100.

Mr. EDMONDS. In other words, the £100 valuation would remain as against the package if nothing was said in the bill of lading; but it says, further, "unless the nature and value of such goods have been declared by the shipper before the goods are shipped and have been inserted in the bill of lading.”

Mr. PAUL. Unless he has declared it: Suppose he has declared £500 instead of £100? Mr. EDMONDS. Suppose he declares $1,000 instead of $500.

Mr. PAUL. All right.

Mr. EDMONDS. It says the declaration, if embodied in the bill of lading, shall be prima facie evidence.

Mr. PAUL. Yes; but shall not be binding on the carrier.

Mr. BEECHER. Do you want it to be binding on the carrier; do you want it to be binding on the carrier if a man says "My goods are worth $100," although the carrier proves it to be simply a "gold brick"?

Mr. PAUL. No; but the words "shall be prima facie evidence" are entirely antagonistic to "shall not be binding on the carrier.' It might be prima facie evidence and not conclusive on the carrier; but I do not see what the words "binding" has to do with it.

Mr. LAWS. I do not see what the words "or binding" have to do with it. If you leave out the words "or binding," then it is all right.

Mr. EDMONDS. That wording is in your agreement at Brussels, is it not?

Mr. BEECHER. Yes. But what I am at a loss to see is

Mr. PAUL. If it is aprima facie evidence, then it is binding until it is rebutted.

Mr. BEECHER. Of course the itention is simply to say that the carrier

Mr. PAUL. May show that it is not the fact.

Mr. BEECHER (Continuing). Is to be free to prove the actual value and that no recovery shall be had against him beyond the actual value as so proven. That is that the desire is. I confess it seems to me a little fine reasoning which gets a different eaning out of "binding," but you may be right.

Mr. PAUL. In other words, I think it would be all right to let it read "shall be prima facie evidence, but not conclusive against the carrier.

Mr. BEECHER. I do not see that it alters the receipt one iota and, unlike this other suggestion which did not occur to any of the learned delegates present, although this one did not, I can see no objection to it.

Mr. PERLMAN. Is the whole paragraph necessary?

Mr. BEECHER. I think, personally, it is an iniquitous paragraph, because it makes the carrier prima facie liable for an amount which may not exist at all.

Mr. PERLMAN. Correct.

Mr. BEECHER. On the mere unsworn declaration of the shipper.

Mr. PERLMAN. And sometimes the carrier can not disprove the declaration.

Mr. BEECHER. You are right. I think from the viewpoint of the carrier it is a very harsh provision and I fought against it, but I could not win. It was a concession made to the shippers. They apparently stuck to it and the theory is this, upon which it is justified, that you are making the carrier, with respect to an excess declard value, in effect an underwriter under the valued policy. It that right, Mr. Huebner? Am I using the right term?

Mr. HUEBNER. I think you are using the right term.

Mr. PERLMAN. Under an insurance policy that would apply?

Mr. BEECHER. Yes; under a valued-policy, as I understand it, you can insure a "gold brick" and collect for its insured value; but I really never thought it was desirable to compel the carrier to go into the insurance business to that extent. Mr. PAUL. Are the rates of carriage at all based on values?

Mr. BEECHER. Oh, yes.

Mr. PAUL. That would be the occasion for it, would it not?

Mr. BEECHER. What?

Mr. PAUL. If a man had to pay a higher rate of transportation for goods of more value, then there would be a reason for declaring the value.

Mr. BEECHER. Yes; a reason for declaring the fact; but no reason for allowing him to recover his unsworn declaration of value. However, I think the carriers can reasonably protect themselves against it.

Mr. PERLMAN. How?

Mr. BEECHER. By an examination of the goods that are. presented with high or unreasonable values and by charging a rate of freight commensurate with the risk. Mr. PERLMAN. Would not the United States shipper have to stand the burden of a higher rate because of this?

Mr. BEECHER. No.

Mr. PERLMAN. Would not the carrier have to charge a little more because of taking the chance that the declaration was prima facie evidence?

Mr. BEECHER. I think there is some force in that point, but apparently it never appealed to any shipper.

Mr. PERLMAN. Just think of the carrier: Wouldn't it be necessary for him to have a man with knowledge of every character of merchandise in order to properly appraise the value when it is declared, to allow them to do it; and, if they do, that burden is going to be a burden on all the shippers, because it is an expense of the business.

Mr. BEECHER. The general impression abroad, at least, was that although it was bad, it would not in practice prove to be a very heavy burden and that, for the sake of peace and to secure the unanimous support of all interests, it was a concession worth making. Mr. PERLMAN. Were the carriers satisfied with that provision?

Mr. BEECHER. No; I would not say they are satified; but, just as I explained, they are not satisfied with the £100 provision or limitation or many of the added burdens which these rules place upon them, but I think the carriers, in general, are perhaps willing to swallow the bitter pill in order to stop controversy and to have happy and contented customers who have at least gotten what they wanted. I am not speaking for the carriers, though; the carriers would rather speak for themselves, I imagine, but that is the general impression.

Now I call your attention next to section 5, at the bottom of page 9. This section permits a carrier to issue a bill of lading as much more favorable to the shipper as he sees fit to do. He can never issue a bill of lading any less favorable to the shipper; but, if he wants to, he could even revert to the bill of lading of a century ago, which assumed all liability except for the acts of God and the king's enemies. Now, there is one thing I want to call the committee's attention to in that connection and which I think possibly should be considered here, whether it is desirable or whether it is sufficiently covered by existing law to provide that the carrier shall not issue a more favorable bill of lading unless he issues it generally to all shippers alike.

Under the language of section 5, as it stands, there is no prohibition against the carrier issuing a much more favorable bill of lading to the large and favored shipper

than he issues to the ordinary run of shippers in the trade. Perhaps the provisions of the Harter Act will be considered sufficient protection against such a practice; but I suggest the wisdom of perhaps providing in this act along the lines I have indicated.

Mr. EDMONDS. Don't you think it would be just as well to cut that out about general average, at the end?

Mr. BEECHER. I think not, because, of course, no one wants to interfere, as I understand, with general average and probably the rules would have no effect upon it. But in view of the importance

Mr. EDMONDS. Don't say no one wants to interfere with it. I would like to see it abolished altogether.

Mr. BEECHER. I think general average has been subjected to much attack, but it was inserted in order to make it entirely clear that general average provisions were not affected by the act, and as long as there are those who do still believe in general average, I think it important that it should remain.

I next call attention to section 8, on page 11, prescribing to what the act is applicable: "This act shall apply to all contracts of carriage of goods by sea to, from, or between ports of the United States and its possessions and between any such ports and foreign ports.'

There is no mention there of the Great Lakes, unless they are covered by the expression "carriage of goods by sea." I think it desirable that that question be not left for the courts but be determined now and proper provision made in the bill. Whether the act ought to apply to the Great Lakes or not is a matter for the committee to consider. I do not believe that, under the international agreement, which we have signed, we are obligated to make it apply to the Great Lakes if we see fit to eliminate them.

Section 9, page 11, is intended to meet the very real objection of many shippers that the bills of lading contain innumerable provisions which may be utterly illegal, known to the carrier to be illegal, but which are deliberately inserted for the purpose of bluffing, if you please, the ignorant and unsuspecting shipper, and they have undoubtedly been successful to a very great extent in doing it. Now the purpose of this section is to impose a penalty upon a carrier if he issues a contract of carriage containing these illegal provisions and void provisions, so that not only will they not be effective in law but won't be effective in fact, in enabling the carrier to enforce settlements or permit him, on the strength of them, to decline claims to those who have not the advantage of being represented by such attorneys as I see here.

The CHAIRMAN. Is that all, Mr. Beecher?

Mr. BEECHER. I think so; I think that is probably enough, anyhow.

Mr. CAMPBELL. May I ask you a question? In section 1, subsection (b), you delete the words at the top of page 2, "is negotiated," as they appear in the convention, and the words "governs the rights of the carrier and the holder of the bill of lading" have been substituted. What was the object in doing that?

Mr. BEECHER. You say as they appear in the convention. You are referreing to the copy of the convention, I suppose, published by the maritime law committee of the International Law Association?

Mr. CAMPBELL. I am referring to a copy that was sent by British friends to this country. That is the only copy we seem to be able to get hold of.

Mr. BEECHER. All right. The British publication of the draft of the convention with respect to these rules, as has been officially stated in Great Britain, is an unofficial translation. The official translation of the convention, which was signed in French, but of which there will be an official translation, has not yet been adopted, and the language used in this bill, to which you refer, is the translation of the original French, which seems to me to be more accurate than the unofficial British version. I may say I am told that the effect is substantially the same as the version you adopted.

Mr. CAMPBELL. Do you think so?

Mr. BEECHER. I do not want to discuss such intricate questions of law.

Mr. LISSNER. Whose translation of the original French was it, Mr. Beecher?

Mr. BEECHER. Whose translation is here?

Mr. LISSNER. Yes.

Mr. BEECHER. Mine.

Mr. CAMPBELL. I understood you to say that the intention was to permit the charte party to stand unaffected by the bill of lading until the bill of lading was negotiated Mr. BEECHER. No. I said as long as the bill of lading was in the hands of the original charterer.

Mr. CAMPBELL. I take it, when he passed it, it would be a negotiation in the sense in which you stated?