COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

HOUSE OF REPRESENTATIVES.

JAMES R. MANN, ILLINOIS, Chairman.

BILLS AFFECTING INTERSTATE COMMERCE.

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, HOUSE OF REPRESENTATIVES, Washington, D. C., Monday, February 7, 1910. The committee met this day at 10 o'clock a. m., Hon. James R. Mann (chairman) presiding.

The CHAIRMAN. The committee will be in order. We are now ready to hear the bankers.

STATEMENT OF MR. G. W. NEVILLE, OF NEW YORK, CHAIRMAN OF THE COTTON EXCHANGE COMMITTEE ON BILLS OF LADING, CHAIRMAN OF THE JOINT COMMITTEE OF THE NEW YORK TRADE ORGANIZATIONS, AND OF THE BILLS OF LADING COMMITTEE OF THE NATIONAL TRAFFIC LEAGUE.

Mr. NEVILLE. Mr. Chairman and gentlemen, we had a meeting of the attorneys of the Eastern railroads and the grand trunk lines, and Mr. McCain, the chairman of that committee, was present, and we went over the bill of lading bill as introduced by Mr. Stevens, and we agreed to some changes in the law.

The CHAIRMAN. You refer to House bill 17267?

Mr. NEVILLE. Yes, sir; and the changes have been left with Mr. Stevens, and he was to have been here by this time.

The CHAIRMAN. Mr. Stevens is here.

Mr. NEVILLE. I beg your pardon. Judge Farnham, of the New York and New Haven road, representing the Eastern attorneys, will make that same statement. So far as I am concerned, if you gentlemen are satisfied with the testimony and statements laid before you in the former hearing before this committee at the last session of Congress, we have nothing more to say as to the agreement between ourselves and the representatives of the Eastern roads.

The CHAIRMAN. I think you had better state what you have to say before the committee now.

Mr. NEVILLE. Very well, sir; just as you prefer.

Gentlemen, all we ask to be done in this bill is to have the railroads made responsible for the quantity of commodities mentioned in their bills of lading on which drafts are paid. The losses that happen in those transactions in proportion to the total amount of commerce is small, and if they were distributed they would not amount to a great deal. But when the losses do occur, they fall upon one individual shipper or consignee or one individual banker or bank. The bankers are not interested in this question until all the capital of the merchants is exhausted. The merchants use the bill of lading as collateral against a loan, and consequently when the goods do not show

up the bankers do not stand to lose a cent until the merchant's capital is gone. It is for this reason that the merchants are interested in this bill and seek this legislation.

I thought until three years ago that the railroads were responsible for bills of lading signed by their agents, but I suddenly realized. that they were not when I came face to face with a prospective loss of $79,000 on a shipment of cotton.

The incident was this: We had been buying cotton at a place called Belton, Tex., for a number of years from the same local buyer. The cotton was being signed for by an agent in the employ of the Gulf, Colorado and Santa Fe Railroad under the same conditions that he had signed bills of lading for five years previously. In 1906, beginning about October 11, and extending to about December 12, he had signed bills of lading for cotton representing a value of $79,000. On the evening of the 24th of December we were notified by the agent of the Gulf, Colorado and Santa Fe Railroad that there would be no cotton delivered on those bills of lading because the cotton had been taken off the platform by the banks of Belton. had started tracers for this cotton in the usual course of business, and on about the 28th of December we received a letter from the transportation department of the Gulf, Colorado and Santa Fe Railroad, advising us that the bills of lading that we had started tracers for had been noted, and advising us that all that cotton was on that platform at Belton, Tex., and would be moved as soon as they could get cars to move it. That letter fortunately relieved us from the necessity of going into court, and the Gulf, Colorado and Santa Fe Railroad paid us that money on the basis of that letter.

The feature of special importance in connection with the commerce of this country has never been touched upon by Congress in the legislation affecting railroads, namely, the bill of lading that carries the goods. By far the majority of the commerce of this country is handled on bills of lading, and the people who move the crops never see a pound of the goods. It is done on the confidence that lies in the bill of lading. We therefore ask this legislation

The CHAIRMAN. Let me ask you. In section 4 of the bill is the provision that carriers shall not issue a bill of lading before the whole of the property as described therein shall have been actually received and is at the time under the actual control of the carrier. What do you understand that that is intended to mean?

Mr. NEVILLE. Well, if I were to take my own particular line of goods, the line of business I am in myself, I would say that there are various grades of cotton, and the bill of lading never states the quality at all. It will say merely "100 bales of cotton marked

"H. A. M.,'" for instance.

The CHAIRMAN. Suppose you should ask the railroad company to state the quality in the bill of lading. Then what?

Mr. NEVILLE. They would not do it. They would not be required to do it.

The CHAIRMAN. I am not so sure about that. We have now provided for official standards by the Government as to cotton. There is a grade shipment in that cotton. When you ask a railroad to give you a bill of lading and you describe the highest grade of cotton. would they not be obliged to do it?

Mr. NEVILLE. No, sir. I can not conceive of a road that would do it.

Mr. BARTLETT. It would be in effect, under this section of this bill, an estoppel when a railroad company, if it issued this bill of lading before it got the description of the goods-an estoppel of a denial on their part that it had received the goods, and the railroad would be compelled to pay for them as if they had received them under this bill. Then in court to recover damages the only question would be the value or the quality of the cotton that you would attempt to secure recovery of good, middling, or fair, as the case might be. Mr. NEVILLE. You mean on the basis of the bill of lading attached to the draft?

Mr. BARTLETT. It would be so much for the particular grade-fair, or middling, or good-that the price of the cotton would be fixed by the court?

Mr. NEVILLE. Yes, sir.

Mr. BARTLETT. Then you propose to make the railroad liable, and to estop the denial of liability by giving the bill of lading, and when you say you will not expect the railroad to state the quality, you

mean

Mr. NEVILLE. Not if they receive the goods before they sign for them.

The CHAIRMAN. Suppose they do not deliver the goods. Then what is the basis of the value of the goods?

Mr. NEVILLE. Then the burden of proof will be upon us to show what the quality of that cotton was.

The CHAIRMAN. So that it would be impossible for the railroad company to know what the value of the goods is.

Mr. NEVILLE. Only in case of a loss or a failure to deliver, and then the burden of proof is on us.

The CHAIRMAN. It is impossible when a railroad accepts goods to know what the value is?

Mr. NEVILLE. Yes; it is impossible.

Mr. RICHARDSON. Is it not a fact that the necessity for this bill of lading from a commercial standpoint is to obviate the trouble and difficulty that often occurs of a railroad agent issuing a bill of lading for an amount of property that is not delivered to him at all? Is not that the purpose of it?

Mr. NEVILLE. Yes, sir.

Mr. RICHARDSON. You are trying to correct dishonesty in the interior of railroad offices?

Mr. NEVILLE. No, sir; we are trying to protect the bills of lading that are put in circulation to move commerce; to make them what they purport to be.

Mr. RICHARDSON. But the real evil that your bill strikes at is dishonesty on the part of the railroad agent. It is intended to obviate and get rid of that imposition that is put upon banks and other institutions by a dishonest railroad agent issuing bills of lading for an amount of property that did not come into his hands, and therefore the bank paying that bill of lading is caught by it to that extent? Mr. NEVILLE. Judge, I am not speaking of the banks. I am speaking of the merchants. This bill, as I construe it, is more to protect

the merchants than the banks. The bank does not lose a cent until after it has gone through the merchant.

Mr. RICHARDSON. This bill is to meet liability of dishonesty on the part of an inferior railroad agent who issues a bill of lading that is not true and which binds the railroad. That is what you want to secure?

Mr. NEVILLE. Yes; and I want to secure it in a way to create the least disturbance.

Mr. RICHARDSON. Don't you think it ought to be cured by having honest agents as common carriers, to put honest men there who will tell the truth, and who will not issue false bills of lading?

Mr. NEVILLE. When you make the railroad responsible, Judge, it seems to me that will cure it. With this law in effect, I never expect to see another fraudulent bill of lading.

Mr. RICHARDSON. But I would rather go after it in a shorter and more feasible way, and make the railroad responsible in the first place. In the first instance the roads should have honest men there, with whom the public could deal. I do not see why this demand is made for this sanctity to be given to bills of lading.

Mr. NEVILLE. The merchants who handle these goods never see a pound of the goods.

Mr. RICHARDSON. This kind of legislation is to give the same commercial character of sanctity to bills of lading that is given to negotiable commercial paper?

Mr. NEVILLE. Not altogether, Judge. I am not a lawyer, but I should think that this proposed law is not as strong as the law you have got in the State of Alabama on the same subject.

Mr. RICHARDSON. That is no answer to it. I am not responsible, and am not supposed to stand responsible for the law of Alabama any more than for this.

Mr. BARTLETT. You speak in section 4 of not permitting the railroads to give a receipt until after the property is received. You are familiar with the shipment of cotton, are you not?

Mr. NEVILLE. Yes, sir.

Mr. BARTLETT. Now a man that had 1,000 bales of cotton to ship probably could not deliver it all in one day. I happen to live in a cotton town, where a large number of bales of cotton are handled each day by the warehousemen and the draymen. You say you are not a lawyer?

Mr. NEVILLE. I am not; no, sir.

Mr. BARTLETT. It would seem that you seek to compel the party to deliver this all at once. In that case, who becomes responsible? Suppose the shipper should deliver 100 bales at a time?

Mr. NEVILLE. He could take a bill of lading for 100 bales.

Mr. BARTLETT. But that is not all of that shipment?

Mr. NEVILLE. The shipment is only the quantity mentioned in the bill of lading. A man can take 100 bales to-day and 100 to-morrow, and so on. The law does not say that the man has to ship 1,000 bales at once. That is my business. I handle cotton.

Mr. BARTLETT. Then this section is intended to make a change in

Mr. NEVILLE. May I ask you, Mr. Chairman, if you have the changes agreed upon by the Trunk Line Association and by our association last year?