Mr. READ. In both.

The CHAIRMAN. In both?

Mr. READ. In both. Now, what we do want is to throw around this bill of lading a decent amount of protection to the man who advances his money on it. It seems to me there can be no question in regard to the desirability of it.

Mr. ADAMSON. There are just two points of danger, as described by you gentlemen here, to the stability of that paper. One is that the paper is uttered without reception of the goods by the railroad, and at the other end the railroad delivers them to the wrong man.

Mr. READ. Why should you object to call that fraud?

Mr. ADAMSON. I never objected to that. I said that you ought to detect it and punish it, instead of coming here and begging us for the Government's aid.

Mr. READ. We have not law enough to do it.

Mr. ADAMSON. I doubt that very much; and even if we were going to do anything, it looks like the only natural thing to do would be to say that when an agent issues a bill in the line of his duty as agent it shall be binding, whether he had got the property or not, and at the other end to say that the railroad shall deliver to the holder of the bill of lading, and that he can collect damages if he does not get them.

The CHAIRMAN. As an evidence that the merchandise has been received, and as a contract that it shall be delivered at a given point to a certain person, is there not complete sufficiency in the instrument as it is now?

Mr. READ. That I should very much prefer that Mr. Williston should answer. I am not a lawyer, but a merchant and business man.

ADDITIONAL STATEMENT OF MR. SAMUEL WILLISTON.

Mr. WILLISTON. If I may answer that question, I would say that the question of the sufficiency of the instrument itself as a contract between the shipper and carrier is before the Interstate Commerce Commission, and I suppose they will recommend a form of bill of lading.

The CHAIRMAN. No, I am speaking of that which we have. Take this one that is here now.

Mr. WILLISTON. The particular forms of bills of lading in use I think are open to grave objection of various sorts as contracts between shipper and carrier.

The CHAIRMAN. Does this bill correct any of those defects?

Mr. WILLISTON. No, sir.

The CHAIRMAN. It does not. Then, in your estimate, as a receipt. acknowledging the presence of the merchandise to be shipped, and a contract to ship it, the present bill of lading is sufficient?

Mr. WILLISTON. No, I should not say that. I should say that to correct the errors in the present bill we have gone to the Interstate Commerce Commission rather than to this body to correct the errors as a contract between shipper and carrier.

The CHAIRMAN. What are some of those, if

you please?

Mr. WILLISTON. Of course the amount of risk that the carrier assumes, the amount that it is allowed to qualify by contract-the

common law liability-is the general question that is raised there. I said that in the present bill there was nothing in regard to the form. There is the question in regard to the words "not negotiable," and also there is the point of having the words "order of."

Mr. ADAMSON. They do not affect carriage and delivery, though. Mr. WILLISTON. That is true. That has relation to the use of the bill of lading as an instrument rather than as a contract between carrier and shipper.

The CHAIRMAN. We hear a great deal nowadays about the liquid character of collateral, the liquid character of assets. Is not this simply a proposition to give a liquid character to commodities during the period of shipment, where ordinarily they are inert and do not enter into the immediate activities of commerce?

Mr. WILLISTON. I think that is a fair proposition.

The CHAIRMAN. So they can be used over and over between the point of shipment and the point of destination during the three or four weeks they may be needed?

Mr. WILLISTON. That is a fair statement. Of course they are so used now, but the degree of safety in doing that now is not what we think it might be, without any serious hardship to anybody.

The CHAIRMAN. Do not understand from the fact that I am asking these questions that I am opposed to your proposition. I am trying to get a thorough understanding of it.

Mr. WILLISTON. I think you have exactly the idea as to the purpose of the bill; and I should stand behind Mr. Read's assertion that the bill of lading has been used in this way for three hundred years to a greater or less extent, and to an increasing extent as time has gone on, and the increase of the use of it has brought out the difficulties which were not at first apparent when it was not so much used. Mr. Escн. What do you think of Mr. Droste's amendment, including straight bills of lading?

Mr. WILLISTON. The parties whom I represent raise no objection to that. It seems to us entirely proper.

Mr. STEVENS. If that be done, then on page 8 of the bill, section 20 n, line 11, there would have to be an amendment also, would there not?

Mr. WILLISTON. No.

Mr. STEVENS. As to cancellation by replevin or liens?

Mr. WILLISTON. No, I think not. Section 20 n is a qualification of section 20 h. Now, section 20 h applies only to order bills, and it is intended that it shall apply only to order bills. Mr. Droste does not suggest that railroads shall be forbidden to deliver goods for which straight bills are issued, without the surrender of the bill of lading.

Mr. STEVENS. Oh, yes; I see.

The CHAIRMAN. Will you not explain section 20 k?

Mr. WILLISTON. It was a rule of the common law that the material alteration of a document made it absolutely void; not that the alteration was void, but the material alteration of the document made the whole document void. Now, we do not want that result, and the railroads do not care for it, for there is in the bill of lading a condition which is very like this, but we are not perfectly sure what the effect of the contract between shipper and carrier merely may be on the

rights of a holder who is not the shipper. Now, section 20 k provides that instead of the document being void, the alteration shall be void, and the document shall be of the same force and effect that it was when it was originally issued. That sort of alteration of bills of lading is sometimes made by fraudulent shippers or fraudulent merchants in order to increase the credit and get more money from a commission merchant or from a bank than the bill of lading in its proper form would warrant. For instance, take the case that Mr. Droste put, of a bill of lading for 300 tubs of butter. A fraudulent shipper might raise that to 350 tubs. Under the rule of the common law that document becomes absolutely void by that fraudulent alteration. Under section 20 k it remains a good document for 300 tubs of butter, the amount for which it was originally issued.

The CHAIRMAN. Here are two sections; the one you have been speaking of and the one immediately preceding it, which seem to me to authorize the defenses to be made by the carrier against the verity of the bill of lading. The general purpose of the bill is to give it absolutely verity, so that any person may for value take it free from all equities. Yet here in these two sections you provide for defenses. Does not the presence of those two sections in your bill destroy the effect of the other two?

Mr. WILLISTON. No; they limit it, but do not destroy it.

The CHAIRMAN. Under the other provisions of this act the bill of lading would have implied and absolute verity and any man would be justifiable in taking it for value and relying upon it; but here you have two sections drawn to take away that absolute verity, and it seems to me that as those questions might arise in any one of the entire series, therefore you affect them all by the insertion of those two

sections.

Mr. WILLISTON. Of course it would please a bank, for instance, to have given to a bill of lading the absolute verity you speak of, but we can not come here and ask the committee to report a bill that is manifestly unjust to the carrier, and we do not. Now, it is unjust to a carrier in the case of an alteration of a bill of lading (say, for 300 tubs of butter, so as to make it for 350 tubs of butter), to say that that imports absolute verity, and that you can go to the carrier and say, "You must stand behind this bill to its extent as altered, 350 tubs." That would be imposing an improper penalty on the carrier, and we do not seek to do it, and we are willing to say expressly in the bill that we do not seek to do it; and so in section 20 j. If 300 tubs of butter are shipped-closed tubs of butter-and they turn out to be lard with a little bit of butter on top, somebody is defrauded who pays a draft on that. It would be better for Mr. Droste and for the banker if we could say to the railroad," You issued a bill of lading for 300 tubs of butter, and butter must come under that bill of lading or you are liable," but it would not be just to the railroad; and there again we do not ask this committee to go beyond what we believe to be just.

The CHAIRMAN. Then that argument would apply to every shipment that is not subject to the inspection of the carrier?

Mr. WILLISTON. Yes; unless there is collusion or want of reasonable care on the part of the carrier or its agents. If that has met the question of the committee I will permit Mr. Read to continue.

STATEMENT OF MR. ALBERT M. READ-(Continued).

Mr. READ. The only thing further that I wish to say is in regard to these warehouse receipts, that the States of New York, Illinois, Massachusetts, New Jersey, Connecticut, Iowa, and Virginia, have within the last year accepted the same degree of negotiability for warehouse receipts that is asked for in this bill for uniform bills of lading. The bills have been taken up in those States by local interests. They have gone into action in the States without objection except in one case, in New York State, and that was not a vital one. went before Governor Hughes and he overruled it and signed the bill. In Virginia it has been passed in the last ten days, and the governor has signed the bill, giving the same degree of negotiability to the warehouse receipt, a kindred paper, that we ask for this uniform bill of lading.

It

The CHAIRMAN. Let me ask you, if you please, is this bill in any way the joint product of these various associations and any considerable number of carriers of the country?

Mr. NEVILLE. The carriers knew that this bill was being considered, and why they have not had some one here is something that I can not explain. This bill was submitted to one of the members of the executive committee of the Union Pacific Railroad on the 6th of March, and they were told that the hearing would take place in Washington on the 20th of March. I happened to see in the New York Sun that morning the dates that your committee had set for hearings; and why the railroads are not represented here I do not know.

Mr. READ. The railroads and the people that are interested on this side of the case have been before the Interstate Commerce Commission a number of times, and have discussed this matter very thoroughly, and we had hoped, up to December last, that we could get from the Interstate Commerce Commission the relief sought. The Interstate Commerce Commission, as has been stated here today, is very much in doubt as to whether they have the power to give that relief. I feel that I can say, in bounds, that they were not only willing if they had the power, in December, to give a separate order bill of lading, but to require that it should be made upon a different colored paper so that it should be distinctive in every way; but they do question now their power to do it, and they are not taking the steps that were urged upon them at that time. The associations that I represent, in the hope that we would get the relief through the Interstate Commerce Commission, passed resolutions, not in favor of this bill, because it was not before you at that time, but passed resolutions in favor of a very strong uniform bill of lading, and instructed me as their delegate to present it and urge it before the Interstate Commerce Commission, and I would like to submit to your committee copies of those resolutions.

Mr. Escн. Did not the Interstate Commerce Commission last summer practically agree upon a form for a uniform bill of lading?

Mr. READ. The form was made out by the Eastern Classification Association of Railroads and a certain number of shippers and submitted to the Interstate Commerce Commission, and on October 15th, I believe, the railroads and the people interested were cited to appear before the Interstate Commerce Commission in regard to that mat

ter. That meeting was held, and nothing has been done. In regard to the request for delay presented here by Mr. Cook from the Philadelphia Board of Trade, I think that the Philadelphia Board of Trade took that action with the distinct impression that the Interstate Commerce Commission was to take such action as had been indicated by them would be taken some time since; and that knowledge has come to us in the last ten days, that the Interstate Commerce Commission are feeling at the present time that they have no authority, and probably will not take the action requested. I think that explains the request of the Philadelphia Board of Trade for delay.

Mr. Escн. In that connection, let me read a statement from the Interstate Commerce Commission's report, dated December 23, 1907. Under the title "Uniform bills of lading," they close as follows, and this was after the hearing of October 15 to which you refer.

Mr. READ. Yes, sir.

Mr. ESCH. They say:

The entire record in this proceeding is now under consideration by the Commission, and a report in connection therewith will be made at the earliest practicable date. It is believed that carriers generally will adopt and put into use the bill of lading recommended by the Commission and that much practical benefit will thereby result to the shipping interests of the country.

Now, since that report you understand that the Commission has taken a different view of its powers?

Mr. READ. I do not know in regard to their powers, but I do say that they are not at the present time convinced that they have the power to do what they wanted to do after the meeting of October 15.

Mr. ADAMSON. That is, that they have the power to go outside of the questions of transportation and consult the ideas that the interests. represented here want them to consult?

Mr. READ. It was indicated both to us and to the railroad people at that time that they were not only in favor of a separate order bill of lading, but that they were in favor of making it a separate, entirely distinct paper.

STATEMENT OF MR. SAMUEL WILLISTON-(Resumed).

The CHAIRMAN. Do not they regard it as practical, coming under the definition of the word "practical?"

Mr. WILLISTON. I spoke of this yesterday. The passage you read yourself indicates their belief in their lack of power. They feel that their power is confined to recommending. Of course, if it is a question of recommending and not prescribing, they can not recommend anything which the railroads are bitterly opposed to or seriously opposed to, and Chairman Knapp and the Commission have been trying since that was published to put it in this way, to see how good a bill of lading they can get railroad attorneys to agree to; and as to this matter of a separate, absolutely distinct form for bills of lading on separate colored paper and separate sheets, just why it is I do not know, but it is true that the railroads are strenuously opposed to it, and the Commission, therefore, I take it as certain, will not recommend that.

The CHAIRMAN. Would it be satisfactory to you and to the interests that you represent, in view of the possible fact that the Commission has not the power to prescribe a uniform bill of lading, that the legislation should go to the extent of giving them that power?