Mr. CHINDBLOMм. They stand side by side.

Mr. CAMPBELL. Yes; and I am rather inclined to believe that a treaty of subsequent date, inconsistent with a statute of perhaps an earlier date, would possibly overrule the statute; but surely, to clear up that uncertainty, there should be legislation which would make the treaty effective law. That is the only suggestion I

would have to make about that.

Mr. EDMONDS. There is no possibility of passing this bill at this session of Congress; but the idea was to see whether the difficulties could not be smoothed out or, if we had an absolute objection to the results of the Brussels conference, to use whatever means we could to prevent the treaty from being approved.

Mr. CAMPBELL. I, of course, had no knowledge of what you had in mind when you called the meeting.

Mr. EDMONDS. This bill was put in with the idea of getting you folks down here to smooth out our difficulties. We want to smooth out our difficulties, tf there are any; or, if there are any objections that are basic, we want you folks here to say so, and then we will guide ourselves accordingly.

Mr. CAMPBELL. I am trying to say so, frankly.

Mr. EDMONDS. I agree with you, and I think this, that the acceptance of a conference is not altogether the same as the acceptance of a diplomatic treaty between nations. The question in my mind is whether it will not be necessary to pass legislation to amend or to modify the Harter Act to meet it-whether the McKellar bill or some other bill.

Mr. CAMPBELL. Mr. Edmonds, I have not gone into that question from a technical, legal, point of view; but unless the courts have clearly held that a treaty of subsequent date will override inconsistent legislation of an earlier date, then there certainly should be legislation passed to clear up that doubt, if you want the rules carried into effect.

Mr. EDMONDS. You see, this may be a treaty between nations, but it is not exactly on the same basis as a diplomatic treaty between nations that have been at war, or something like that, and when this treaty is submitted and accepted by the Senate there may be a question then raised in the courts as to a modification of the Harter Act in certain respects, to meet the agreement of the treaty, or there may not be. I agree with you, if it is looked upon as a treaty, then it becomes law without any question, right off. However, there is this further thing I want to tell you here and that is this, that if you have basic objections to raise as to our acceptance of the convention, I think you will find this committee has always been interested in merchant marine matters and would try to take all the steps it could to prevent the adoption of the treaty, and I think your point is a very good one that the convention should not take effect until at least, in the opinion of the President, a sufficient number of the maritime nations had accepted it along with us so that it would not work to our detriment.

Mr. HAIGHT. If it would help, Mr. Chairman, I might say I have discussed with the State Department the question as to whether legislation would be essential, and the counsel of the State Department said that the Department did not dare to claim that a treaty of this character would be self-executive. You see, it does provide clauses are illegal even though used by American citizens in American trade, and things like that. It is not quite the same as regulating the relations between two nations. Mr. EDMONDS. I agree with Mr. Haight; I think this legislation probably will be necessary, but it may be possible that you attorneys who know all about those things (I am not an attorney) will decide it is not necessary.

Mr. CAMPBELL. I should think legislation would be desirable; but certainly any legislation that will take effect before all of the nations have agreed to the convention should not be passed; and for the reason that everyone must admit that this bill increases the burdens of shipowners. That being true, certainly Congress, in its efforts to assist in the upbuilding of American shipping and foreign trade, does not want to add another burden to American shipping until, at least, it knows that England and its principal competitors are going to add like burdens to their shipping.

Mr. HAIGHT. I agree with you so far as England and our principal competitors are concerned, but I do not think it will be necessary to wait until we see whether all of the 24 nations come in or not.

Mr. CAMPBELL. Oh, no; I do not say that. Certainly, we should wait until Japan, which is our competitor on the west coast, England, which is our competitor on the Atlantic, and Germany, which is going to be, France, which is our competitor to some extent, Spain, which is our competitor in the West Indies and in South America, and Italy, our competitor to some extent, have agreed to the convention.

Mr. EDMONDS. Where the principal nations are in the convention, would we care whether the rest of them accepted or not?

Mr. CAMPBELL. I do not say all nations; I say the principal maritime nations. Now the Ship Owners' Association takes this position: We feel that we have gone a long, long ways in an endeavor to meet those who have been such strong proponents of The Hague rules, but we have vigorously sought to oppose greater burdens on the shipowners. However, in view of the fact that you have a bill pending before you, in which you have already deviated from the principle of uniformity, I think that I should take advantage of the opportunity to point out to you what the shipowners consider the unfair provisions of the Brussels convention and of the bill as it is drawn.

Mr. EDMONDS. Will you show the deviations also, where the bill deviates from the Brussels convention? It was presumed this was drafted to carry out the Brussels convention.

Mr. CAMPBELL. Yes.

Mr. EDMONDS. Show the deviations there also.

Mr. CAMPBELL. I shall, as far as I can. The first deviation or change, of course, was explained this morning by Mr. Beecher, when we were discussing the first two lines at the top of page 2, or the very last part of subsection B of section 1, where the words "is negotiated," in the copy of the convention as it came from abroad, were changed to the words "governs the rights of the carrier and of the holder of the bill of lading.' Whatever is the official translation of the French original should be carried into the bill.

Mr. PAUL. Have you seen the French original?

Mr. CAMPBELL. No; I do not know anything about it.

Mr. PAUL. Does it not mean exactly that?

Mr. CAMPBELL. Well, I do not know whether it does or not; I am not enough of a French student to say, but I suggest that whatever is the official translation should be carried into the act, so that the courts of England will not be interpreting one word and the American courts another word.

* *

*

The principal complaint we have to make against the rules is in respect to the burden of proof as regards concealed losses. By Article III, section 3, of the convention, which is section 3 of the bill, there is only required to be inserted in the bill of lading "the leading marks necessary for identification; the number of packages or pieces, or the quantity, or weight;" and "the apparent order and condition of the goods." That is an improvement, in our judgment, over the original Hague rules, in that it deletes from the rules the provision as to description.

Section 4 of Article III of the convention, or the proviso under subsection (d), section 3 of the bill, at the top of page 4, makes the bill of lading prima facie evidence of the leading marks, the number of packages or pieces, or the quantity, or weight, and the apparent order and condition. That proviso adds nothing to what the law would be otherwise without it. Certainly, if the carrier issued a bill of lading with the marks and number of packages, or weight, and a statement of the apparent order and condition, that would be prima facie evidence against it.

In a practical working of the business it will not be possible for a carrier to confine the bill of lading simply to the designation of the marks, weight, number of packages, and apparent order and condition of the goods, but there will have to be inserted a description of the goods; for instance, 1 box, weighing 200 pounds, said to contain 24 dozen silk hose. And if the bill of lading does contain that recital, then the bill of lading will constitute prima facie evidence of the receipt of silk hose by the carrier for transportation. That is important when you come to consider the burden of proof that results from subsection 6 of Article III of the convention, being paragraph Ê, on page 4 of the bill.

The injustice from the point of view of the shipowner of that provision is thisit reads:

"Unless notice of loss or damage and the general nature of such loss or damage be given in writing to the carrier or his agent at the port of discharge before or at the time of the removal of the goods into the custody of the person entitled to delivery thereof under the contract of carriage, such removal shall be prima facie evidence of the delivery by the carrier of the goods as described in the bill of lading.”

Now, the underwriters and the shippers and the carriers have had a vast exeprience with the many ports of discharge, particularly the South American and Central American ports, where the goods have to go through the customhouse. The moment they are discharged from the ship they pass into the custody of the customs officials, are put into warehouses, and then, at some subsequent time, they are delivered into the hands of the consignee. Under this section notice is required to be given at the time of removal into the custody of the person entitled to delivery, which I take to be the consignee, and in the case of damage which is not apparent within three days after delivery. It is unfair from the point of view of the shipowner to impose upon him liability for an unexplainable loss or damage or theft that may occur to the goods

while in the custody of third parties, namely, in the customhouse. The shipowner has no more control over the customhouse officials as respects the care and custody of the goods than has the shipper or the consignee. The delivery into the customhouse is no part of the transportation for which the shipowner is responsible. It is purely an incident of the business. To impose, therefore, a liability upon the shipownerMr. EDMONDS. But the burden of proof is on the shipper?

Mr. CAMPBELL. Not necessarily. To impose upon the shipowner a burden of proof which he can not sustain will result in injustice. We believe that that is the kind of a loss which is purely an insurable loss and is one that the cargo underwriter ought to carry. It is one that the shipper certainly will insure against; it is one that the insurer will be paid a premium for, and so it is a risk the insurer ought to carry.

Mr. EDMONDS. The bill only covers between the loading and discharge of the steamer. Now, if the stealing or the theft occurs in the customhouse, by custom officials, the customer does not find it out until he gets the goods and he gives notice all along the line that he is short some goods and he has to prove where that shortage occurred. The shipowner does not have to prove it.

Mr. CAMPBELL. Let us see. Under subsection (q), section 2 of Article IV of the convention, which is paragraph 17 on page 7 of the bill, the shipowner is exonerated from liability for loss arising from

"Any other cause arising without the actual fault or privity of the carrier, or without the fault or neglect of the agents or servants of the carrier, but the burden of proof shall be on the person claiming the benefit of this exception to show that neither the actual fault or privity of the carrier nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage.'

Certainly, under that section, which is the section covering loss by theft, the ship owner can not escape liability unless he shows that the loss did not occur by the act of one of his agents or servants. Now what opportunity has the shipowner to examine a case of alleged hosiery that starts from an interior point and comes by rail to New York; is delivered by the railroad company to a lighter, brought to the ship and loaded onto the ship, put into the ship's hold, taken to Havana, Cuba, discharged onto a lighter and put into the customhouse where the shipowner has no control over it whatsoever? It comes out of the customhouse and two days after the consignee removes it to his place of business he gives notice that it contains bricks and not hosiery. Now what chance has the shipowner of ever showing that that theft was not caused by the negligence of his servants or agents?

Mr. EDMONDS. What chance has the other man to show that it was?

Mr. CAMPBELL. I doubt, in those cases, whether you can show where the theft took place. Certainly, experience has shown, in the last few years, that you could not show where those losses took place.

Therefore, I say it is a loss which should be borne by cargo underwriters, and the moment you place a burden of proof on the shipowner to explain the loss, which he can not sustain, you put the shipowner in a position where the shipper collects his loss from the cargo underwriter, and the cargo underwriter sues the shipowner and reimburses himself for the loss which he is paid to insure.

Mr. EDMONDS. Tries to reimburse himself.

Mr. CAMPBELL. Under this bill, he will succeed in doing it.

Mr. HAIGHT. No.

Mr. PAUL. What provision is that, specifically, to which you are referring in the bill?

Mr. CAMPBELL. Page 7, clause 17. It is the practical working out of clause F on page 4 and clause 17 on page 7.

Mr. PERLMAN. Could not the shipowner get insurance to cover that?

Mr. CAMPBELL. Certainly, and that is what he will do; but who is going to pay for the insurance? If the shipowner operates his vessel and is able to pay his expenses of operation, he is going to get his money out of the shipper, is he not?

Mr. PERLMAN. Yes.

Mr. CAMPBELL. Now, if he can not operate his vessel and pay his expenses, his ship will lay up. That is the reason you have about eleven hundred of them laid up now. Mr. PERLMAN. That is not the only reason?

So

Mr. CAMPBELL. That is one reason, because you can not pay expenses. If you can pay expenses, so that they do operate, the earnings come out of the shippers, and that means that the cost of insurance to the shipowner is going to come out of the shipper; and the cost of his cargo insurance will also be paid by the shipper. what will you have in the practical working out of the business? A shipper insured against this kind of a loss will collect his insurance from the cargo underwriter; the cargo underwriter will libel the ship, and the shipowner will immediately refer the claim to his P. and I. underwriter, and the two underwriters will get together and

determine which one is to bear the loss. Both underwriters will be paid premiums for the one risk, but the shipper will, in the end, pay the cost of both insurances. The argument is made, in all sincerity, by the strong advocates of the rules as drawn, that they will not work any injustice to the American shipowner, because all shipowners will be in the same position, and the cost will be passed on to the shippers. Well, that would be true if freight rates were regulated arbitrarily or by agreement amongst the shipowners, so that they could say, "We will just figure out approximately what this cost is and add so much to our freight charges and pass it along." But the shipping business is not carried on that way to-day. I asked Mr. Price whether he shipped by the line from which he got the cheaper rate. Of course he does; that is business. If the British ship has the cheaper rate, he will take the British ship in preference to the American ship at a higher rate. Competition is regulating the rates for ocean transportation, particularly in the North Atlantic, and it is regulating the rates to a very large degree to South American countries. So that the American shipowner is not going to be in a position where he can get together with all other shipowners and say, We will boost the rate just so much to take care of this increased cost to us."

The shipowner does not ask to be excused entirely from responsibility. If the shipowners' servants are guilty of negligence. I do not think the shipowner should come and say, "Why, we ought to be excused from our negligence in the care and custody of the goods." From our point of view, we suggest that a fair distribution of the responsibility would be to impose upon the shipowner the burden of showing that he has exercised due diligence properly to load, care for and preserve the cargo, and to deliver the cargo; but, having exercised such due diligence, and having the burden upon him of showing it as a condition prededent to exemption from liability, then he ought to be excused from any loss that does not arise from a lack of due diligence. That was the suggestion we made to Judge Hough and to Mr. Beecher when they went abroad. This was the provision we submitted:

"Neither the carrier and/or its agent, nor the ship and/or its master, shall be liable for any loss or damage arising from any other cause whatsoever to the contents of any package the nature and/or condition whereof is described on the bill of lading with qualified designation as authorized by section 4 of Article III"

As, for instance, said to contain, or contents unknown.

66* * * provided that the carrier shall have exercised due diligence properly and carefully to load, stow, carry, keep, care for, unload and deliver the cargo.' Mr. CHINDBLOM. Would that include he would have to show delivery to the custom officers?

Mr. CAMPBELL. That he should show delivery of the cargo to the custom officers, and that there his liability should cease. I believe that this rule is fair.

Mr. EDMONDS. When a gentleman comes here and he makes a statement that this uniform law will prevent a great deal of legal conflict, it is not a good thing for the lawyer; so that we put this in to help you folks out. [Laughter.]

Mr. CAMPBELL. It is going to help us out to a great degree.

Mr. PERLMAN. But your burden under subsection 17 is simply the burden of showing that neither the actual fault or privity of the carrier, nor the fault or neglect of the agents or servants of the carrier contributed to the loss or damage. What Isthe objection to that?

Mr. CAMPBELL. Because the shipowner can not show it.

Mr. PERLMAN. You can not show there was no fault of yours?

Mr. CAMPBELL. No; in the practical working out of it, you can not show the cause of the loss. It is impossible for the shipowner to show that the package was not opened on board ship. It is a physical impossibility for him to do it. He can show the appointment of the best kind of a crew he can obtain, the best of officers, the maintenance of the best kind of watch, and the exercise of due diligence in caring for the goods; but the burden upon him is to show the absence of negligence. He will have to prove a negative, which is very difficult.

Mr. PAUL. It is always true.

Mr. CAMPBELL. You will have to prove a negative.

Mr. EDMONDS. That is the conference word for word, though.

Mr. CAMPBELL. I appreciate that. I am criticizing the convention, and I am doing it for this reason: If you are going to break away from it, if Congress is now about to pass legislation which will deviate from the principle of uniformity, and you are not simply going to put into effect the results of the Brussels convention, then we feel that there are burdens and injustices in the rules, from the point of view of the shipowner, that should have consideration. On the other hand, and I want to make my position clear, while we believe that these injustices exist, nevertheless, uniformity in shipping documents is desirable and, if this convention will be adopted by the principal

maritime nations, the American Steamship Owners' Association is not going to stand against that coming about.

The CHAIRMAN. That is, if they are going to be honest, we are not going to try to make them dishonest; but if they are going to be dishonest, we have no use for them. Mr. CHINDBLOM. Suppose the bill does not operate against you, would you still say if the legislation is enacted you should not have the opportunity to correct such injustices as may exist in the convention?

Mr. CAMPBELL. I do not quite catch your point.

Mr. CHINDBLOм. Are there other particulars in which the bill varies from the Brussels convention to your disadvantage?

Mr. CAMPBELL. Yes. You have deleted entirely Article VII of the rules "Nothing herein contained shall prevent a carrier or a shipper from entering into any agreement, stipulation, condition, reservation, or exemption as to the responsibility and liability of the carrier or the ship for the loss or damage to, or in connection with, the custody and care and handling of goods prior to the loading on, and subsequent to, the discharge from the ship on which the goods are carried by sea.

You delete that entirely and you say, "We will leave you with the Harter Act governing.' I am inclined to agree with Mr. Haight that that is the effect of it. All right. What about the British shipowner? He is going to put that provision in, because England is going to adopt these rules as they came out of the conference. Therefore the British shipowner will be given this freedom of contract which you are to deny to the American shipowner. And what is the result? England will get the benefits of the act and you are going to impose an additional burden on the American shipowner.

Mr. CHINDBLOM. In other words, with the convention in full force, you can contract against this liability, can you?

Mr. CAMPBELL. Well, you raise a question there that will propably engage the attention of the lawyers in litigation--whether or not, if it is carried into law, it will override the Harter Act? I can not tell how the courts will interpret it.

Doctor HUEBNER. Do you believe that should be restored in the bill?

Mr. CAMPBELL. Article VII?

Doctor HUEBNER. Yes.

Mr. CAMPBELL. Yes; I do.

Mr. HAIGHT. So do I.

Mr. CAMPBELL. Now, there is another thing. I think that the penalty which you have carried into the bill is wrong. In section 9 of the bill you impose a penalty of $2,000. That is not in the convention. You propose to impose a penalty of $2,000 upon a shipowner who inserts a void clause in his bill of lading. And what is a void clause? It is a clause under paragraph H of the bill, page 5:

Any clause, covenant, or agreement in a contract of carriage relieving the carrier or the ship from liability for loss or damage to or in connection with goods, arising from negligence, fault, or failure in the duties and obligations provided in this section, or lessening such liability otherwise than as provided in this act, shall be null and void and of no effect."

Any clause within the scope of paragraph H is null and void. That is a very broad section. We can not tell just what clauses would be condemned under paragraph H; but, with the penalty of $2,000, no shipowner would dare to try out one of these clauses, to have determined whether it is void or not, because he would be subjecting himself to liability of the penalty; whereas, your British shipowner, without the penalty, will insert the clause and, if it is a good clause, and not in violation of the convention, it will be valid and binding, and one to which he is entitled. If it is invalid, or in contravention of paragraph H, it will not be binding; it will be void. Thus by inserting in your act a penalty of that kind, and not having it in the convention, you are simply placing that much more of a handicap on the American shipowner, as against the British shipowner.

Mr. PERLMAN. Would not you advise one of your clients, if it is just a matter of testing a clause, that the court would take that into consideration in determining whether to assess a nominal fine or the full fine? It says "not to exceed."

Mr. CAMPBELL. No; as a lawyer, I should say, "If you put it in, you take your chance on being fined $2,000."

Mr. CHINDBLOM. There would be no real advantage in having a small fine. Mr. EDMONDS. Still, it is the same provision that is carried in the Harter Act, and you must confess in a great many instances this is a modification of the Harter Act. Mr. CAMPBELL. No, it is not a modification of the Harter Act. This is an international convention, and the only reason we are here at all is because it is an international convention.

Mr. EDMONDS. The only reason for the legislation would be it is a modification of the Harter Act.