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 Econ

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Econ. 6874.20

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 Ewn 6899,20

DEPARTMENT OF COMMERCE
BUREAU OF FOREIGN AND DOMESTIC COMMERCE
PHILIP B. KENNEDY, Director

MISCELLANEOUS SERIES No. 85

PAPER WORK IN EXPORT TRADE

( DOCUMENT TECHNIQUE )

By

GUY EDWARD SNIDER

Of the College of the City of New York
WARREN M. MAULE
Assistant Treasurer of the Federal Export Corporation
ROY S. MACELWEE
Assistant Director of the Bureau of Foreign
and Domestic Commerce

Issued in cooperation with the

FEDERAL BOARD FOR VOCATIONAL EDUCATION
T
EN
R TM COMME
PA OF RCE
DE
CA
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UN

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A
OF
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STATES

PRICE, WITH PORTFOLIO OF FORMS, $1.00

Sold by the Superintendent of Documents, Government Printing Office,
Washington, D. C.

WASHINGTON
GOVERNMENT PRINTING OFFICE
1920
 DEPARTMENT OF COMMERCE
BUREAU OF FOREIGN AND DOMESTIC COMMERCE
PHILIP B. KENNEDY, Director

MISCELLANEOUS SERIES- No . 85

PAPER WORK IN EXPORT TRADE

( DOCUMENT TECHNIQUE )

By

GUY EDWARD SNIDER

Of the College of the City of New York
WARREN M. MAULE
Assistant Treasurer of the Federal Export Corporation
ROY S. MACELWEE
Assistant Director of the Bureau of Foreign
and Domestic Commerce

Issued in cooperation with the

FEDERAL BOARD FOR VOCATIONAL EDUCATION
T
EN CO
R TM MM
ER
P A OF
E CE
D
CA
I
ER

UN
IT ST
AM

ED AT
OF

PRICE, WITH PORTFOLIO OF FORMS, $1.00

Sold by the Superintendent of Documents, Government Printing Office,
Washington, D. C.

WASHINGTON
GOVERNMENT PRINTING OFFICE
1920
Econ 689 9.2

HARVARD COLLEGE
SEP 13 1920
LIBRARY
Fiv mon
e ey

(Text + plate )

T
 CONTENTS.

Page.
Letter of submittal..
I. The inquiry.. 7
Nature of an inquiry.
A typical inquiry-- 8
Description of the goods__
The quantity. 10
The price----- 10
Time of delivery. 11
Terms of payment---- 12
Example of typical inquiries_ 13
Use of cable codes .. 14
II. The quotation _ -_- 16
Organization of an export house-- 16
Ascertaining customer's financial responsibility. 18
Purchase of goods for export__. 19
Computation of transportation charges_ 22
Determination of C. I. F. quotation_. 23
Forms of quotations --- 24
The manufacturer's records_ 28
III. The " firm " order___. 31
Conditions of the sale.. 32
Definition of terms.. 34
Confirmation of the order____ 37
Formal acknowledgment of orders ---- 38
Notes on form and contents of orders_- 41
IV. The purchase order___ 45
Placing the order with the supplier_. 45
Analysis of order 46
Shipping instructions___. 46
Description of the goods- 46
Packing 46
Marking--- 50
Time of delivery- 52
Invoices__. 53
Specimen orders in other transactions_ 53
Notes on manufacturer's records___ 56
V. Shipment to seaboard___. 58
Preparation of rail shipments_. 58
Form of bill of lading--. 60
Free lighterage___ 60
The bill of lading as a contract_. 62
The different bills of lading_ 65
Functions of a bill of lading. 66
VI. The foreign-freight forwarder____ 68
Operations of freight forwarders_- 68
Instructions to the forwarder___. 72
3
4 CONTENTS .

Page.
VII. Shipping procedure ---. 79
Outline of forwarding operations___. 79
Placing goods aboard vessel_ 81
66 84
Shipments on through " bills of lading..
Shipper's export declaration_. 85
VIII. Ocean bills of lading--- 89
Preparation of ocean bills of lading- 89
Payment of freight charges___. 90
Conditions of the transportation contract_- 91
IX. Marine insurance_ 100
Risks covered by marine insurance . 100
Terms and conditions of policies- 104
X. The consular invoice____ 111
Invoice regulations of Cuba_- 111
Invoice regulations of Brazil. 116
Invoice regulations of France-- 119
Invoice regulations of Japan_. 123
General rules for invoicing export goods_- 123
XI. The financial papers_. 126
Bill of exchange_ 126
Documents accompanying bill of exchange__ 127
Discounting drafts under Federal reserve act_. 128
Methods of handling drafts_- 129
Credits and letters of credit_ 131
Notes on the financing of foreign trade_. 136
Appendix : India House rules for F. O. B_ 147
Forms for practice work‒‒‒‒‒ 152
 LETTER OF SUBMITTAL.

DEPARTMENT OF COMMERCE ,
BUREAU OF FOREIGN AND DOMESTIC COMMERCE,
Washington, February 17, 1920.
SIR : There is submitted herewith a monograph on " Paper Work
in Export Trade," which aims to illustrate present practice in ex-
porting. During the past few years a large number of new concerns
have joined the ranks of exporters in the United States in order to
take advantage of the opportunities offered by the great increase in
trade which occurred during the war. This new accession of busi-
ness at a time when the world was disorganized by war conditions
resulted in frequent difficulties. At this time, when foreign trade is
again returning slowly to normal , it is important that an extra effort
be made to conduct our trade in the most acceptable and reliable man-
ner. This treatise on document technique, dwelling as it does on
different steps in an export trade transaction, should prove useful to
firms that are endeavoring to steadily improve and perfect their
methods of handling oversea shipments. Careful study devoted to
an export trade transaction will pay large returns in the good will
and confidence of foreign customers. That there is a desire on the
part of American exporters for just such information as is contained
here has been demonstrated constantly by inquiries coming into the
Bureau.
Dr. Snider prepared the main part of the text ; Mr. Maule supplied
the documents used in representative transactions and commented on
the practice followed in handling the forms ; and Dr. MacElwee con-
ceived the work, planned the method of presentation and arrange-
ment of the documents, and gave it much personal supervision.
Respectfully,
PHILIP B. KENNEDY, Director.
To Hon. J. W. ALEXANDER,
Secretary of Commerce.
5
 PAPER WORK IN EXPORT TRADE.

CHAPTER I.

THE INQUIRY .
NATURE OF AN INQUIRY .

An export order usually originates from an inquiry which comes

to the exporter either by mail or by cable, more frequently by mail.
This inquiry is a request from a prospective buyer or an agent of the
exporter for a quotation on the particular article or articles of mer-
chandise which he desires to purchase.
The inquiry may come from a general importer abroad, from a
specialized importer or jobber, from a retailer, from a contractor, a
manufacturer, a large user such as a public utility company, from a
Government department, or from the ultimate user. If the inquiry
is from an old customer it contains less detail than from a new cus-
tomer, as the position of the former in the trade is known . It is not
easy at the exporter's end to ascertain the exact position in the trade
of the prospective buyer. This is important, however, as the price
policy of many exporters is planned to protect the trade position of
the various distributers in the foreign markets. They would not ,
for example, quote the same price to a consumer or a retailer as to a
wholesale dealer. Consequently, to secure the best price the pros-
pective buyer should state his position in the trade.
The inquiry should contain, in addition to the specifications di-
rectly connected with the goods wanted , the trade name of the com-
pany ; the partners, if a partnership ; full address, street, post-office
box, city, province, state or department, and country ; cable name and
codes used ; location of branches and subagencies. Some importers
have what is known as inquiry sheets , specially printed , on which they
fill in the details of their wants. Export manufacturers often supply
inquiry or order forms to their customers. Usually, however, in-
quiries come in the form of letters.
The inquiry is usually the result of solicitation , either by advertise-
ment in one of its various forms, such as catalogues , circulars, news
and trade papers, and demonstrations, or by direct personal solicita-
tion . Solicitation may be carried on by one or all of the following
factors : By an export merchant who buys in the domestic market
and sells in the foreign market for his own account ; by a manufac-
7
8 PAPER WORK IN EXPORT TRADE.

turer's export agent who acts as a sales distributer for a manufac-

turer or group of manufacturers in selected foreign markets ; by a
commission house which acts as the buying agent for houses in the
foreign market ; or by a manufacturer who conducts his own foreign
distribution .
In the four illustrative cases in the succeeding chapters, the ex-
porter is a middleman who purchases the goods from the manufac-
turer for his own account. He resells them to the foreign buyer at
his own risk, the risk varying according to the terms of payment and
delivery. In each market the exporter has his agent. In some cases
the orders or the inquiries come through the agent and in other cases
directly from the foreign purchaser.

A TYPICAL INQUIRY .

In the introductory case (transaction A ) Jose Vuillifans Cie. , im-

porters located in Lisbon, Portugal , being in need of hard wire rods,
sent to a number of exporters in England and the United States
inquiries for price quotations. The following letter was received by
the Export Corporation, of New York, with whom Jose Vuillifans.
Cie. had had previous dealings.
Cable address : JOSE VUILLIFANS CIE. ,
Jovs, Lisbon.
Code used : Importers of Iron and Steel,
A. B. C., 5th ed. r. da Princeza, 106, Lisbon, Portugal.
OCTOBER 10 , 1918.
EXPORT CORPORATION,
42 Broadway, New York City, U. S. A.
DEAR SIRS : We are in need of No. 5 gauge hard wire rods, and
would thank you to let us have your best quotation on 500 gross
tons, C. I. F. Lisbon. We are very desirous of receiving these at
the earliest possible moment and would thank you to cable us your
price, stating time of delivery and your terms of payment.
Thanking you for your prompt attention to this request for us,
we are
Yours, very truly,
(Signed ) JOSE VUILLIFANS CIE.

DESCRIPTION OF THE GOODS.

The first task of the exporter is to determine the exact description

of the goods wanted . This is sometimes a difficult task because of
differences in nomenclature, in trade names, in trade grades or stand-
ards, in legal standards of weights and measures. Perhaps more dis-
putes between buyer and seller arise over inaccurate descriptions than
over any other cause.
Quality. The principal terms relating to quality are as follows :
Sample or pattern .— In this case the seller guarantees that the goods delivered
shall be fully equal to an agreed upon sample or pattern , which is frequently
 PAPER WORK IN EXPORT TRADE . 9

taken from and represents the bulk. The term " sample " is usually applied
to specimens of agricultural or raw products ( wool , cotton , mohair, silk,
wheat, seeds, etc. ) ; to foodstuffs (butter, lard , etc. ) ; to liquids ( wine, spirits,
oil, etc. ) ; to certain manufactured articles ( leather, sugar, etc. ) ; and to
semimanufactured articles (tops, noils, yarns, etc. ) . The term " pattern " is
applied chiefly to specimens of piece goods of silk, wool, cotton, etc. , and other
manufactured articles.
Standard or type.- A " standard " or " type is a sample or specimen repre-
senting a certain recognized and well-known quality ; for example, in the cot-
ton trade " Fine Broach " signifies cotton grown in the district of Broach
( India ) , of the quality or class known as " fine," sold on a standard fixed by
the Liverpool Cotton Brokers ' Association. Goods ( mostly agricultural products )
sold on these terms are usually for delivery at some future time. If, when the
goods are tendered, they are found to be inferior to the standard, an allow-
ance, settled by arbitration, is usually made.
Description or brand. —In this case the goods are sold under some well-known
brand, trade-mark, or description , a sample or standard being unnecessary ;
for example, “ Hennessy's Three Star Brandy,” “ Bannermill 2 fold 4 Os. Mule
Twist," etc.
On approval means that the person to whom the goods are offered has the
option of either accepting or refusing them after examination.¹

The inquiry from Jose Vuillifans Cie. requests a quotation on “ No.

5 gauge hard wire rods." This inquiry comes from Lisbon , Portugal,
a market which has depended to a great extent upon Great Britain
for its iron and steel products. This is significant in determining the
exact meaning of No. 5 gauge hard wire rods. The exporter, in
order to determine the meaning of No. 5 gauge turns to a technical
catalogue, such as MacRae's Blue Book. The examination of this
catalogue shows that there are several different standards of gauges ,
the gauge indicating the diameter of the wire. The numbers used
in the standards are 0000 ( sometimes written 4-0 ) , 000, 00, 0, 1 to 40,
inclusive. According to the Old London , the English, Stubbs', and
the Birmingham gauges , No. 5 has a diameter of 0.220 inch. Brown
& Sharpe's gauge No. 5 is different from the above , being 0.18194
inch ; Roebling's No. 5 is 0.207 ; Trenton Iron Co.'s, 0.205 ; American
Steel & Wire Co.'s music wire gauge, 0.0202 ; Stubbs ' steel wire,
0.204 inch.'
In addition to the confusion caused by a multiplicity of wire
gauges, several of them are known by various names.
Brown & Sharpe ( B. & S. ) = American wire gauge (A. W. G. ) .
Legal Standard and Standard Wire Gauge is variously abbreviated S. W. G.
and I. W. G.
Birmingham Gauge ( B. W. G. ) Stubbs ; Old English Standard ; and Iron
Wire Gauge.
Roebling Washburn Moen ; American Steel & Wire Co.'s Iron Wire Gauge.
London Old English (not Old English Standard ) .

1 Hooper and Graham : " Import and Export Trade."

2 Cf. Wire Gages, issued by Bureau of Standards.
10 PAPER WORK IN EXPORT TRADE.

Vuillifans Cie. have been purchasing wire rods during the period
of the war from the Export Corporation , and in a previous order
their specifications called for Brown & Sharpe, or the American wire-
gauge standards, and it is on the basis of these previous orders that
the Export Corporation makes its quotation . Both seller and buyer,
however, would have been better protected and the possibilities of
misunderstandings would have been eliminated if Jose Vuillifans
Cie. had indicated the standard B. & S. or A. W. G. in their letter
of inquiry.
THE QUANTITY.

The next problem is to determine the quantity, which in this case

is indicated by the word " gross." If Vuillifans Cie. had merely
stated 500 tons, it might have meant a metric ton of 2,204.6 pounds,
a long ton of 2,240 pounds, or a short ton of 2,000 pounds.
It is customary for the purchaser to state definitely the kind of
ton he refers to in his request for a quotation. In the illustrated
problem you will note the request is made for " gross " tons . In the
event that 2,000-pound tons were meant, the request would have
stated " short " or " net " tons , or perhaps 2,000- pound tons. In the
iron and steel industry heavy materials such as plates, shapes, sheets,
etc., and wire products such as galvanized and plain wire, wire nails,
etc., are usually sold on a 2,000- pound ton basis. Of course, there
are exceptions, and then the request will come in in the form of so
many gross tons. Very often the purchaser of materials will not
specify the tonnage desired, but will call for a certain quantity of
the material desired , similar to the following illustrations :
5,000 iron bars 1 " x 1" x 18'.
100 sheets 14-gauge 48 " x 96" .
150 gross shoes.
Another way in which purchases of iron and steel materials are
often made is on the basis of so many feet of the material desired ,
as : 5,000 feet of line pipe or 5,000 feet of iron bars.
THE PRICE.

The inquiry calls for a quotation C. I. F. Lisbon. This means that

the buyer wishes the price to cover the cost of the goods (C. ) , the
insurance of the goods while in the hands of the ocean carrier ( I. ) ,
and the freight paid to the port of destination ( F. ) . Other terms
used later in this chapter are C. & F. , F. A. S. , and F. O. B.
The terms " cost and freight " ( C. & F. ) mean cost of material and ocean
freight only, and do not include the cost of insurance. In other words, if an
exporter made a quotation C. & F. Kobe, Japan, it would only be necessary for
him to pay the cost of the material and the ocean freight to Kobe. This would
imply that the insurance must be taken out by the consignee, at his expense.
The term " free alongside steamer " ( F. A. S. ) means that the exporter must
pay only the cost of the material and delivery charges to seaboard port of his
 PAPERWORK IN EXPORT TRADE. 11

country. In other words, where a quotation is made F. A. S. New York, the

material would be delivered at the dock and it would be necessary for the con-
signee to arrange for and pay the cost of all ocean charges and insurance.
The terms " free on board " ( F. O. B. ) are not very frequently used in the
export business, except when the terms are 66' free on board steamer," which
imply that it is necessary for the exporter to place the material on board the
vessel designated by the consignee. These terms are very similar to F. A. S.,
and are therefore very rarely used.¹
The price, unless otherwise requested , is usually given in dollars
and cents, either per unit or total value. Where the quotation is
made in dollars ( American ) the fluctuations in the exchange rate
are for the account of the buyers. Much care should be taken in
making quotations to show whether or not the price is F. A. S. ,
C. I. F. , or C. & F. a given point or port, in order that no question
may come up on this score when shipment is eventualy made and
billed out.
It should be noted that these terms do not include the payment
of consular fees.

TIME OF DELIVERY .

The time of delivery depends upon market conditions, which the

Export Corporation ascertains from its sources of supply. " Prompt
delivery" means delivery within 10 days. Other terms may be
stated, such as 30 days, 60 days , etc. In all cases the time of de-
livery quoted by the Export Corporation means the latest date on
which the goods will be at the port of shipment for delivery to the
ocean carrier.
The principal terms relating to delivery are :
Ready, meaning that the goods are ready to be delivered.
Prompt delivery, meaning that the goods are to be delivered in a few days.
Forward delivery, meaning that the goods are to be delivered within a short
time.
To arrive, meaning that the goods are to be delivered on arrival of the
vessel by which they are being conveyed from the foreign port. This term is
used chiefly in the import trade. The name of the vessel is usually declared
when the contract is made or shortly afterwards.2

Other terms used ( in the import trade chiefly) are the following :
Spot means that the goods are actually "on the spot" and ready for delivery,
as distinguished from goods "to arrive."
Ex quay means that the buyer has to take delivery of the goods when landed
on the quay.
Prompt sale means that the goods sold are to be paid for and taken delivery
of on a specified date, known as the prompt day.
Shipment, coupled with the name of a month or a date, as "March shipment,"
means that the goods are to be shipped on board the vessel during the month
named ; "15 May shipment" means shipment on board not later than the 15th
1 For a fuller discussion of the significance of these terms, see Appendix.
2 Hooper and Graham : " Import and Export Trade."
12 PAPER WORK IN EXPORT TRADE.

of May ; "March-April shipment" means shipment any time from the 1st of
March to the 30th of April.
Prompt shipment and immediate shipment usually mean that the goods must
be shipped within 14 days after the date of the contract.
Sailing is used in the same manner as "shipment," but means that the vessel
carrying the goods must actually sail from the foreign port within the time
named.¹
TERMS OF PAYMENT.

Vuillifans asks for " your terms of payment ." The terms of pay-
ment on account of export shipment are many and varied , depending
wholly on the size of the houses doing business , their financial respon-
sibility, and the commodities being purchased . The terms most fre-
quently used are as follows :
(1 ) Payment in country of exporter upon presentation of full set of ocean
documents, confirmed irrevocable letter of credit established for full amount
of contract for duration of contract.
(2 ) Payment upon presentation of full set of ocean documents at office of
purchaser.
(3) Payment upon presentation of full set of ocean documents upon arrival
of material.
(4 ) Payment 30, 60, or 90 days after date of draft, documents to be delivered
upon acceptance of draft.
(5) Payment 30, 60, or 90 days after sight of draft, documents to be delivered
upon acceptance of draft.
(6 ) Payment upon arrival of material, subject to inspection and acceptance.

There are many other terms which may be used by the various
exporters of the world, but these are the ones mostly used.
Payment in country of exporter upon presentation of a full set of
ocean documents, confirmed irrevocable letter of credit established for
full amount of contract for duration of contract, are terms which were
employed very much during the war. Payment is effected upon
presenting to the bank a full set of ocean documents covering ship-
ment.
Payment upon presentation of a full set of ocean documents at
office of purchaser means that payment will be made at office of
consignee, when exporter's bank or agent presents draft together with
a full set of ocean documents.
Payment 30 , 60, or 90 days after date of draft, documents to be de-
livered upon acceptance of draft, means that payment will be made
in a specified time after date of draft. The usual procedure is : The
exporter's bank or agent presents draft, with documents attached,
to consignee, who writes across the face of the draft "Accepted," and
signs his name. This draft is payable at consignee's bank or office
within the specified time. The draft is then held until maturity date,
when payment is made and remitted to the drawee.
1 Hooper and Graham : " Import and Export Trade."
 PAPER WORK IN EXPORT TRADE. 13

Payment 30, 60, or 90 days after sight, documents to be delivered

upon acceptance of draft, means that payment will be made within
the time specified , after presentation of draft.
Payment upon arrival of material , subject to inspection and ac-
ceptance, means that payment will not be made until the material
has arrived at destination , been inspected, and is satisfactory in
every way to the consignee. More details in connection with terms
of payment will be given in a later chapter.
If this had been the first exchange of business between Vuillifans
Cie. and the Export Corporation , there would have been an exchange
of information in regard to the standing of each.¹
EXAMPLES OF TYPICAL INQUIRIES .

In order further to show the manner of handling the various

steps necessary in an export order, we shall illustrate with four
orders, having different terms of sale and payment, and for shipment
to different countries . References will be made to them throughout
the succeeding chapters as transactions "A," " B," " C," and " D."
TRANSACTION A-INQUIRY (MAIL) .
Cable address :
Thoms, Habana. W. A. THOMPSON & CO. ,
Code used :
Lieber's. San Ignacio, 75, Habana, Cuba.
JULY 15, 1918.
EXPORT CORPORATION,
New York City.
DEAR SIRS : Will you quote us C. I. F. Habana, Cuba, on the
following materials :
500 barrels Atlas Portland cement.
100 gross tons " soft steel bars, 20' long.
Kindly let us have your quotation at the earliest possible mo-
ment, at the same time giving us delivery date and terms of pay-
ment.
Awaiting your quotation , we are
Yours, very truly,
W. A. THOMPSON & Co.
TRANSACTION B-INQUIRY (MAIL) .
Cable address :
Texbro, Rio de Janeiro.
Code used :
Bentley's. TEIXERIO & BROGAS CO.,
20 Callo del Rean, Rio de Janeiro.
JULY 15, 1918.
EXPORT CORPORATION,
New York City.
DEAR SIRS : We would be pleased to have your quotation C. & F.
Rio de Janeiro on 500 cases Pratt's turpentine and 5 gross tons hops,
best grade. Will you kindly at the same time advise us your best
delivery, together with terms of payments, etc.
An early quotation will be appreciated.
Yours, very truly,
TEIXERIO & BROGAS Co.

For fuller treatment of credit and financing see Chap. XI.

14 PAPER WORK IN EXPORT TRADE.

TRANSACTION C-CABLE INQUIRY.

KOJI FUKUSHIMA,
Kobe, Japan.
SEPTEMBER 15, 1918.
EXPORT CORPORATION,
New York City.
Quote CIF Kobe five each gauge twelve thirteen fourteen fifteen
checkered head counter sunk wire nail machines set up stop state
best delivery terms payment.
KOJI FUKUSHIMA ,
Kobe, Japan.
TRANSACTION D-MAIL INQUIRY FROM BRANCH OFFICE.

Cable address :
Aljon, Paris. ALLEN B. JOHNSON,
Code used :
Lieber's . Rue Lafayette, 13, Paris, France.

OCTOBER 15, 1918.

EXPORT CORPORATION,
42 Broadway, New York City.
DEAR SIRS : We are in receipt of the following inquiry from
Messrs. Jacques Dussot & Co. , Nantes, France, on which we should
thank you to let us have your quotation at the earliest possible
moment :
1,000 cases, each case to contain 48 one-pound tins red Alaska
salmon.
1,000 cases, each case to contain 48 one-pound tins Canadian
lobster.
Price to be quoted C. I. F. Nantes, France.
Delivery from canneries within 10 days after placing of order.
Terms, sight draft drawn on them at Nantes, France.
We should thank you to do everything possible in order to hurry
your quotation on this inquiry for Dussot, as they are very large
users of this commodity.
Awaiting with interest receipt of your quotation, I am,
Yours, very truly,
ALLEN B. JOHNSON ,
Paris Office.
USE OF CABLE CODES.

The above-mentioned transaction C was a cable inquiry. The

cable is used extensively in international trade ; inquiries are made,
prices quoted, and contracts of sale made by cable. The heavy cost
of cabling has resulted in the development of cable codes.
Every large merchant has his own code, especially adapted to his own busi-
ness. These codes have been built up gradually and improved from time to
time so as to minimize the number of words required to be telegraphed. Owing
to the keen competition in business nowadays and the narrowing down of profits,
each merchant tries to keep the cost of telegraphing as low as possible. There-
fore any merchant who can devise a code by means of which he can conduct
his telegraphic correspondence in fewer words than his competitors has a
 PAPER WORK IN EXPORT TRADE. 15
99
"pull over these competitors . This is especially important in the Eastern
trade, where business is transacted almost entirely by telegraph .
In addition to these private codes there are a number of printed codes adapted
to special trades or businesses, such as bankers, shipowners, ship brokers,
wheat and flour merchants, etc. Some of these printed codes, such as the A1
and A B C codes, are adapted, or may with some slight alterations or additions
be adapted, to most businesses not of a special character. These printed codes
are usually arranged alphabetically. In private codes the arrangement is
generally by subjects.
In preparing foreign telegrams from a private code it is necessary, therefore,
to have the contents of the code at one's finger ends, so as to know exactly
where to look for the sentence or information one wishes to send. The trans-
lating of a telegram, however, is a much more simple matter, except when the
code is a complicated one, as all one has to do, as a rule, is to look in the code
for the word telegraphed and write the sentence attached . Both the prepara-
tion and the translating of foreign telegrams is generally done by the principals
of the firm or by experienced assistants ; it does not form part of the ordinary
routine of office work.
Despite the fact that the rules of the International Telegraph Convention
admit the use of words from eight languages, only about 320,000 words
can be safely used for code purposes, firstly, because for extra European
messages no code word can be employed which contains more than 10 letters, and
secondly, because of the large number of words which have to be rejected
owing to similarity and the consequent liability of a word being " mutilated ,"
as it is called, i. e., one letter being substituted for another and therefore con-
veying a wrong meaning. Practically only words containing not fewer than 7
letters and not more than 10 are available.
From what we have already said, it will be gathered that there are two kinds
of codes, viz, word codes and figure codes. Many codes are combinations of
both words and figures.
Word codes.- The word code is the simpler of the two. In this kind of code
a word stands for each sentence, price, numeral, etc., to be telegraphed. Of
course, the sentences, prices, numerals, etc., have all to be arranged beforehand
and the code words allotted to them, and both the sender and the receiver of
the telegram must possess a copy of the code.
The following example shows how a code would be used in a telegram re-
ceived from W. Stephens & Co., Calcutta ( registered telegraphic address,
" Hercules, Calcutta " ) , by Brown & Co., Manchester ( registered address,
" Menelaus, Manchester ") :
"Abattoir, balustrade, captivate, eagerness, garnet."
Meaning : " Buy 25 bales 45-inch grey shirtings, 15 by 12, 9 pounds, at Rs. 3.14
C. F. & I. Calcutta , shipment as soon as possible, gold heading."
In such a code provision would also have to be made for sterling prices and
for shipment in any month.'

NOTE. A quotation was made to Jose Vuillifans Cie., but no reply was re-
ceived. The transaction is therefore dropped at this point.

¹ Hooper and Graham : “ Import and Export Trade."

 CHAPTER II.

THE QUOTATION.

Now that the inquiry has been received by the exporter, it is neces-
sary for him to prepare a reply or quotation. He finds out where and
at what price he can secure the desired material, finds out from a
forwarder what are the railroad and ocean freight charges, and from
an insurance broker the cost of insurance. He then determines his
price and cables or sends by mail his quotation. It is necessary that
the utmost care be exercised in making this quotation . By this we
mean that he should state his price and terms very plainly, including
terms of payment and time of delivery.
The Export Corporation is not a manufacturer of Portland cement
or soft steel bars, and in order to quote a price C. I. F. Habana , Cuba ,
to W. A. Thompson & Co. (transaction A) , it must secure offers
from manufacturers or dealers in these products. It must also esti-
mate the freight space required and secure an option on that space at
a price ; it must estimate any handling, forwarding, and storage
charges ; it must ascertain the insurance rate ; it must calculate the
interest on the money that will be tied up in the 30-day sight draft
from the time its obligation is due the manufacturer until the draft
is paid and the funds received in New York ; and it must figure over-
head expenses and profits.

ORGANIZATION OF AN EXPORT HOUSE.

On the receipt of inquiries by the Export Corporation they move

through the various departments for consideration . Following is an
outline of a departmental organization of the Export Corporation.
Other companies divide along geographical lines, and sometimes sub-
divide according to lines of goods, such as foodstuffs, iron and steel ,
machinery, etc.
President or general manager in complete charge of all the following
departments :
Treasury, credit, and accounting department.
Sales department.
Advertising or sales promotion department.
Purchasing and order department.
Traffic department .
16
 PAPER WORK IN EXPORT TRADE. 17

Briefly, the duties of each department are outlined in the following

statement :
Treasury, credit, and accounting department.-This department takes care of
all the financial work in connection with the general routine business, including
the drawing of the drafts and the issuance of all checks covering the payments
for materials purchased, etc. This department decides to whom sales will be
made and on what terms ; takes care of all the accounting work of the company,
renders all financial statements, prepares invoices covering shipments made,
and looks after all consular papers. The man at the head of this department is
usually known as the comptroller or treasurer.
Sales department.-The duty of this department is to make sales and to
answer the inquiries which it may get either direct or through the efforts of
the advertising department. In order to do this it is necessary to secure in-
formation from the credit department as to the terms on which the prospective
clients may be sold, then secure a quotation from the purchasing department
covering the inland and ocean freight charges and the marine and war-risk
insurance cost. After receiving all these costs the salesman figures his quota-
tion either C. I. F. , C. & F., or F. A. S. , depending on the request of the
original tender or inquiry. It is the duty of this department to follow up
its quotations and , wherever possible, develop an inquiry into an order. The
sales department is usually managed by one of the vice presidents of a cor-
poration, and may be subdivided into a number of sections. The two best
divisions are according to commodities and according to countries. Under
the first plan one man would handle only one commodity or group of com-
modities ; under the second plan one man would handle all commodities for a
particular country or group of countries.
Advertising or sales promotion department.-This department is the one
which does the missionary work, the work of securing the inquiries, without
which no exporting concern can get along. It handles the advertising placed
in the different trade papers, initiates special selling campaigns, looks after
the circularizing according to the policy of the company, and in general takes
care of all the publicity work. Naturally this department works very closely
with the sales department, and it is particularly important to a new concern
entering the field . It is usually a policy of all companies to allot a certain
amount of money to be spent during the course of a year for sales promotion.
Purchasing and order department. -This department handles the purchasing
of all commodities for the sales department, and naturally must work very
closely with it. This department is also usually managed by one of the vice
presidents of a corporation , and each man under him handles either a single
commodity or a group of commodities. It is the duty of this department to see
that the orders are properly placed with the suppliers of the various products
purchased and that they are promptly and properly filled . This department
handles all correspondence with the suppliers in connection with the orders
and keeps the traffic department properly posted at all times as to the move-
ments of materials from inland points. This department is sometimes con-
solidated with the traffic department, and then the two departments are known
as the traffic and order department.
Traffic department.— This department handles the shipments from the time
they leave the point of original shipment to the time they arrive at final desti-
nation. It is its duty to book all the ocean freight and take care of the proper
insuring of all shipments . This department is usually in charge of one man,
1 By Warren M. Maule.
125740 ° -20-2
18 PAPER WORK IN EXPORT TRADE.

known as the traffic manager, with two main assistants, one handling rates,
known as the rate clerk, and the other a car clerk, who looks after the move-
ments and the tracing of all cars and the ordering of the material to the
ships for ocean shipment.

Immediately upon the receipt of the inquiry from W. A. Thomp-

son & Co., of Habana, Cuba, for 500 barrels of Atlas Portland
cement and 100 gross tons of -inch iron bars 20 feet long the in-
quiry is given to the sales department for entry upon its records.
The sales department communicates with the credit department to
ascertain whether Thompson is a good risk. If Thompson is an old
customer, the credit department has records of all transactions with
him and of his financial standing. If Thompson is a new customer,
the credit department may refer to a credit agency for his rating,
to banks doing an international business, or to other exporters who
may have done business with Thompson.

ASCERTAINING CUSTOMER'S FINANCIAL RESPONSIBILITY.

The request for credit information is made on the following

form :
EXPORT CORPORATION,
42 Broadway, New York, U. S. A.
CONFIDENTIAL INFORMATION.
Name___
Street No- City County
Partners : Name_. Age Nationality.
Name_ Age Nationality.
Name_. Age Nationality.
Line of business__
Year established_
Capital authorized. --Amount paid in
Value of stock__ Amount insured .
Sales annually.
Value of real estate_. Amount mortgaged_. Amount insured ..
Bank opinions___
Trade opinions_--
References (American ) .
References ( local ) .
Remarks
By
Date .

A reference inquiry form , prepared by the Export Managers' Club

of New York in conjunction with the National Association of Credit
Men, is shown below.
This inquiry from is used by manufacturers when asking other
manufacturers to give their experiences with foreign firms. A care-
ful analysis of the form will show that it calls for all the essential
information required regarding an account . Its use is advocated ,
 PAPER WORK IN EXPORT TRADE. 19

because many manufacturers and other houses , when merely asked

for a general opinion regarding a customer's reliability and responsi-
bility, sometimes furnish information which although in itself is
accurate is unintentionally misleading.
NEW YORK_. _191__
To--

GENTLEMEN :
Will you kindly favor us by giving below your experience with-
Name_
Address___
Yours truly ,

1. How long sold ?_

Ever declined ? If so, when and why.
2. Terms of sale_
--Open account payable_ ---days from__
_Draft at-_--_____days [sight to bank for collection, docu-
date (ments against acceptance.
sight to bank for collection, docu-
Draft at ----days
date (ments against acceptance.
Cash immediately upon receipt of documents sent directly
to customer.
Cash against documents under a confirmed letter of credit.
Voluntary remittance with order .
Sell for cash in advance only, reason .
-Account guaranteed. How?
3. Higher credit_
4. Date and amount of latest dealings_
5. Amount owing--- Past due__
6. Credit limit, if any .
7. Manner of payment_
Discounts or anticipates due dates of drafts ?-.
Prompt----
-Slow, but considered good___
Account closed because_-
Account collected by attorney-
8. Inclined to be technical or make unjustifiable claims ?_
9. Names of others who have inquired recently
10. Remarks__.
Would be glad to give you our experience if you desire, on receipt of this
sheet, or reciprocate in any way within our power.

PURCHASE OF GOODS FOR EXPORT.

The sales department, on receipt of Thompson's inquiry , sends to

the purchasing department requests for the commodities wanted ,
using a form filled out as follows :
20 PAPER WORK IN EXPORT TRADE.

EXPORT CORPORATION,
New York City.
Date : Sept. 7, 1918.
PURCHASING DIVISION :
We have accepted specification from W. A. Thompson & Co,
Habana, Cuba
Inquiry 1426 ---- Order A ___ Cost _ -_-per barrel f. o. b . New York---
Tonnage 500 barrels . Shipment at once_
Material Atlas Portland Cement_
Remarks :.
SALES DIVISION,
Per
Accepted___ Date_.

The purchasing department communicates with suppliers, either

by telephone or mail, requesting quotations on the materials desired .
If the purchasing department is unfamiliar with the sources of
supply it may consult the numerous trade directories, trade associa-
tions, or the usual organizations for the names of dealers and
manufacturers.¹
The purchasing department, after receipt of prices from suppliers,
replies to the sales department , giving the best price obtained.²
In transaction A the purchasing department telephoned to the
Atlas Portland Cement Co. and received a quotation F. A. S. steamer
New York of $8 per barrel. It then wrote to the Atlas Portland
Cement Co. on a form as follows :

EXPORT CORPORATION,
42 Broadway, New York, N. Y.
JULY 21, 1918.
ATLAS CEMENT CO.,
New York, N. Y.
DEAR SIRS : Will you kindly note your lowest export prices and
discounts opposite each item specified on the back of this sheet?
In addition please answer following in blank spaces opposite
each question :
Best cash discount..
Where are the goods delivered ( i. e., F. O. B. cars factory, F. O. B.
cars New York, or F. O. B. vessel New York ) _.
Cost, if any, of packages or cases is____
Time required to complete order is_ .
Folio_
Yours truly ,

Purchasing Department.
THIS IS NOT AN ORDER.
Please return this form with your quotations noted thereon.

1 The export department of a manufacturing plant may treat its own factory as an
independent source of supply insofar as this routine of the order is concerned.
2 This price is inserted on the form sent by the sales department.
 PAPER WORK IN EXPORT TRADE. 21

On the reverse side of this inquiry is the item " 500 barrels Atlas
Portland cement. "
NOTE.-" Portland cement 99 is a trade designation, but "Atlas Portland
cement " is a trade-marked product of The Atlas Portland Cement Co. This
company's catalogues guarantee the quality to pass all standard specifications
such as those of the American Society for Testing Materials. These specifica-
tions are easily ascertained by the trade, and thus the purchaser knows the
quality of the goods ordered. The advertisements of the Atlas Portland
Cement Co. state that "Atlas Portland cement " is shipped in barrels of 400
pounds gross weight, or 376 pounds net weight.
The Atlas Portland Cement Co. replies as follows :

THE ATLAS PORTLAND CEMENT CO.,

30 Broad Street, New York.
X-I&J-100 SEPTEMBER 8, 1918.
THE EXPORT CORPORATION,
42 Broadway, New York, N. Y.
Attention of Cuba Department.
GENTLEMEN : Confirming telephone conversation of to-day, we
quote you, subject to the terms and conditions on the reverse,
for export to Habana , Cuba :
Quantity : 500 barrels Atlas Portland Cement.
Price : $8 per barrel, delivered alongside steamer, New York
Harbor in one lot.
Package : Strong, paper-lined export barrels weighing approx-
imately 400 pounds gross, 376 pounds net.
Shipment : Any time upon reasonable advance notice within 60
days from date of your order.
Payment : On approved credit-payment in full in New York
City funds on presentation of shipping documents in New York,
less discount of two cents ( 2c. ) per barrel.
Acceptance : September 15 , 1918.
Yours, very truly,
THE ATLAS PORTLAND CEMENT CO. ,
By --9
D-E Manager Export Department.

The " Terms, conditions, and limitations " printed on the reverse
side of this form letter and made a part of the contract were as
follows :
Payment. On approved credit, payment in full in New York City funds on
presentation of shipping documents in New York, less discount of two cents (2c. )
per barrel.
Shipments and deliveries.-The purchaser shall give shipping instructions in
writing to the cement company a reasonable time before deliveries are to be
made, giving definite date for delivery, name of steamer , and loading pier.
Orders placed with the cement company for delivery on a specific date will if
possible be delivered on that date, but the cement company will not be liable
1 See Standard Specifications and Tests for Portland Cement, Industrial Standards
Series No. 1, Bureau of Foreign and Domestic Commerce.
22 PAPER WORK IN EXPORT TRADE.

for any charges or claims on account of delayed delivery. The responsibility

of the cement company as to package and contents ceases when shipments pass
out of the possession of the cement company. Shipments pass out of the pos-
session of the cement company when delivered in good condition at railroad
terminal, when delivered to steamship pier for loading, or when delivered along-
side ship for loading, according to delivery points specified on the face of this
quotation.
General. The cement company shall not be responsible for delays in manu-
facture, packing, or shipping cement, caused by strikes, accidents, fires, break-
downs, failure of machinery, car shortage, embargo, labor scarcity, labor agita-
tions, strikes in coal mines from which the cement company secures its supply
of coal, acts of God, or any public enemies, in the securing of cooperage or
materials required in the manufacture of export packages, or any other causes
beyond its control ; or for any delays in transportation whereby shipments are
curtailed or entirely suspended. The cement company reserves the right to
ship pro rata to all purchasers of record prior to the happening of any of the
causes mentioned or intended to be mentioned . In addition to this contract
the cement company has executed, and may from time to time further execute
such additional contracts as will furnish it with a market for its entire esti-
mated product, and that in the event the cement company shall at any time, for
any cause, be unable to deliver to its customers the entire number of barrels
called for by all of its contracts with them then in force, the total product of
cement of the cement company then available shall be applied on all of said
contracts in proportion to the amounts severally called for by them and the
amount deliverable under this and all of said contracts shall be reduced accord-
ingly, and there shall be no liability on the part of the cement company for the
reduction so made.
Where steamer space is to be arranged by the cement company, at the re-
quest of purchaser, such arrangement will be made on behalf of the purchaser
and will be subject to all the conditions stipulated by the United States Gov-
ernment and by steamship companies. The rules of the United States Govern-
ment must prevail in cases where there is a difference in instructions.
Contracts are subject to the cement company's or exporter's ability to secure
an export permit, and where such permit can not be obtained in time to make
shipment within the time specified in acknowledgment of order, the cement
company has the option of canceling the entire contract or any balance un-
shipped.
" Atlas " Portland cement furnished under this quotation is to conform, when
shipped, in every respect to the United States Government specifications for
Portland cement defined in Circular of the Bureau of Standards No. 33, issued
February 18, 1917, and to the Standard specifications and tests for Portland
cement of the American Society for Testing Materials, effective January 1, 1917.
Standard methods of testing indicated in the specifications, and recommended
by the American Society of Civil Engineers to be used . We can not be responsi-
ble for improper use of cement-therefore we will not guarantee finished work.
COMPUTATION OF TRANSPORTATION CHARGES.

In transaction A the sales department sent to the traffic department

for a quotation on ocean freight and on marine insurance . The re-
quest was made on the following form.
The gross and net weights and the measurements are necessary for
the estimation of the ocean freight. Freight rates are usually quoted
on weight or measurement tons. Weight in certain routes are tons
 PAPER WORK IN EXPORT TRADE. 23

of 2,240 pounds, in others 2,000 pounds, and in others 2,204.6 pounds ;

measurement tons are quoted in most cases as of 40 cubic feet and in
some trades 50 cubic feet. Sometimes the rates are quoted at so
much per 100 pounds and sometimes per hundredweight ( 112
pounds ) . Often the freight rate is quoted in price per cubic foot,
and sometimes per barrel, bale, or bushel.
In transaction A the traffic department secures from a freight for-
warder or a steamship company the ocean freight rate. In this case
the rate quoted is $1.50 per barrel. From an insurance broker is ob-
tained a quotation of one- fourth of 1 per cent for marine insurance
and one-eighth of 1 per cent for war-risk insurance. These rates are
filled in on the bottom of the form, which is then returned to the
sales department. The form properly filled out is shown below.¹

EXPORT CORPORATION.

NEW YORK, Sept. 7, 1918.

Inquiry No. 1426-
Customer : W. A. Thompson__
Destination : Habana, Cuba _- _-
Please quote ocean freight on the following :
Material : Cement__ Quantity -gross tons.
How put up : In barrels. Length : max..
Max. weight per piece or bundle :.
Marine insurance : Yes____ . War insurance : Yes___.
Mill : Time of shipment from mill :
Firm offer : For estimating purposes :
SALES DIVISION,
Per J. H. Smith.
RATE QUOTATION.
From: Ward Line_. Rate : $1.50. Per barrel_
Marine insurance_ .- 1/4 of 1 per cent___
War-risk insurance . --1/8 of 1 per cent_
A. F. Jones,
Traffic Manager.

DETERMINATION OF C. I. F. QUOTATION.

The sales department now figures its C. I. F. price to Habana on

its "Analysis of Quotation " blank. (This blank is for the office
records . ) The sales department has as a basis the cost of the mate-
rial delivered alongside the steamer ; that is , $8 per barrel, or $4,000,
and the cost of ocean freight, $1.50 per barrel , or $750 .
Marine insurance is taken for 100 per cent of the C. I. F. price at
one -fourth of 1 per cent premium, and war- risk insurance at one-
eighth of 1 per cent. The bank's collection charge is one- eighth of
1 per cent. It may take approximately 15 days for the bill of ex-
change to go to Cuba, 15 days for remittance of funds to New York,

1 The practice form is somewhat different than the one here shown, but accomplishes
the same end.
24 PAPER WORK IN EXPORT TRADE .

and 30 days after acceptance before payment . The Export Corpo-

ration will have its funds tied up in the shipment approximately 60
days. It figures interest at 6 per cent for this period , or 1 per cent of
the C. I. F. price ; overhead and profit is figured in this case at 31 per
cent. Adding these items, 4 per cent for insurance, } per cent for war
risk, per cent for collection , 1 per cent for interest , and 3 per cent
for profits, the total is 5 per cent , which is to be computed on the
C. I. F. price.
The C. I. F. cost is made up of the F. A. S. price , $4,000 , plus the
ocean freight , $ 750 ( total $4,750 ) , plus 5 per cent of the total C. I. F.
price, cost for insurance, collection, interest , and profits. Let the
C. I. F. price equal 100 per cent ; then the F. A. S. cost ( $4,000) , plus
the ocean freight ( $ 750 ) , is 95 per cent of the C. I. F. price. One per
cent of C. I. F. price is $4,750 ÷÷ 95 , or 50, and 100 per cent is $5,000 .
Date : 7/20/18. Inquiry No.‒‒‒‒
Order No.
ANALYSIS OF QUOTATION.
EXPORT CORPORATION.
Name : W. A. Thompson & Co.
Address : Habana, Cuba.
Material : 500 barrels of cement.
How packed : In barrels.
Per bbl. Per 500 bbls.
Price : F. A. S. New York, including all packing charges _---- $8.00 $4,000.00
Freight to seaboard. Weight : None___.
Lighterage, Cartage, Storage_ None. None.
Total F. A. S. cost_ 8.00 4, 000. 00
[ Gross weight ---- 1.50 750.00
Ocean freight Cubic measurement__
Marine insurance on $5,000 at 1/4 per cent__. 025 12.50
War risk insurance on $5,000 at 1/8 per cent. . 0125 6. 25
C. I. F. cost_____ 9. 5375 4,768. 75
Terms of sale : 30 days' sight.
Bank and collections on $5,000 at 1/8 per cent_ .0125 6. 25
Interest on $5,000 at 60 days_. .10 50.00
Agent's commission on $- None. None.
Profit on $5,000 at 3 1/2 per cent_. .35 175.00

Total C. I. F. 10.00 5,000.00

Amount quoted : $10.00 per bbl.
Based on quotation of $10.00 cost per barrel.
Made by : J. H. Smith. Checked by : A. B. Williams.
FORMS OF QUOTATIONS.

The Export Corporation figured in a similar manner its quota-

tion on 100 gross tons of 4 - inch soft steel bars 20 feet long, requested
by W. A. Thompson & Co. ( transaction A ) , and also quotations for
transactions B, C, and D. They then sent the following communi-
cations :
 PAPER WORK IN EXPORT TRADE . 25

TRANSACTION A-QUOTATION.
Cable address :
Excorp, New York.
Code used : EXPORT CORPORATION,
A. B. C., 5th ed. 42 Broadway, New York, N. Y.
AUGUST 1 , 1918.
Messrs. A. W. THOMPSON & Co. ,
San Ignacio, 75, Habana, Cuba.
DEAR SIRS : We have your valued inquiry of July 15th for cement
and steel bars, and are pleased to transmit to you herewith for
your consideration our quotation :
Material : 500 barrels Atlas Portland cement.
100 gross tons 1/2 " soft steel bars 20' long.
Price : $10.00 per barrel for cement.
$6.00 per hundred pounds for steel bars.
Both prices C. I. F. Habana, Cuba , including war- risk
insurance.
Terms : 30 day sight draft, documents on acceptance.
Delivery : From New York within sixty days from receipt of
order, subject to delays due to conditions beyond
our control, Government restrictions, etc.
This quotation is subject to acceptance within thirty days from)
date, said acceptance to be in our hands prior to that time, other-
wise quotation will be considered as withdrawn.
Yours, very truly,
EXPORT CORPORATION.
TRANSACTION B-INQUIRY (MAIL) .
Cable address :
Texbro, Rio de Janeiro.
Code used : TEIXERIO & BROGAS CO. ,
Bentley's. 20 Callo del Rean, Rio de Janeiro, Brazil.
JULY 15, 1918.
EXPORT CORPORATION ,
42 Broadway, New York, N. Y.
DEAR SIRS : We would be pleased to have your quotation C. & F.
Rio de Janeiro on 500 cases Pratt's turpentine and 5 gross tons
hops, best grade. Will you kindly at the same time advise us your
best delivery, together with terms of payment, etc.
An early quotation will be appreciated.
Yours very truly,
TEIXERIO & BROGAS Co.

This inquiry was received in due time by the Export Corporation ,

and the following quotation was made :
TRANSACTION B- QUOTATION.
Cable address :
Excorp, New York.
Code used : EXPORT CORPORATION,
A. B. C., 5th ed. 42 Broadway, New York, N. Y.
SEPTEMBER 10, 1918.
Messrs. TEIXERIO & BROGAS Co.,
20 Callo del Rean, Rio de Janeiro.
GENTLEMEN : We have your valued inquiry of July 15 requesting
that we quote you on turpentine and hops, and are pleased to quote
you as follows :
Material : 500 gross tons grade A hops.
500 cases Pratt's turpentine.
26 PAPER WORK IN EXPORT TRADE .

Price : $13.50 per 100 pounds for hops.

$8.50 per case for turpentine.
Both prices C. I. F. Rio de Janeiro, including war-
risk insurance.
Terms : 120 days' date draft, documents to be delivered upon
acceptance of draft.
Delivery : Four to six weeks from New York after receipt of
order, subject to delays due to conditions beyond
our control, Government actions, etc.
This quotation is subject to cable acceptance by November 10,
1918, otherwise quotation will be considered as having been with-
drawn on that date.
Yours, very truly, EXPORT CORPORATION.
TRANSACTION C-CABLE INQUIRY.
SEPTEMBER 15, 1918.
EXPORT CORPORATION ,
New York City.
Quote CIF Kobe five each gauge twelve thirteen fourteen fifteen
checkered head counter sunk wire nail machines set up stop state
best delivery terms payment.
KOJI FUKUSHIMA,
Kobe, Japan.

Cable received September 16 , and following cable quotation made

September 25, 1918.
TRANSACTION C-QUOTATION.
KOJI FUKUSHIMA,
Kobe, Japan.
We quote standard American Machine Company's checkered
head counter sunk wire nail machines set up CIF Kobe two thou-
sand dollars each delivery at once subject to prior sale terms pay-
ment cash on presentation ocean documents confirmed letter credit
irrevocable to be established our favor good for thirty days New
York.
EXPORT CORPORATION.

Which cable quotation was immediately confirmed by the following

letter :
SEPTEMBER 25, 1918.
KOJI FUKUSHIMA ,
Kobe, Japan.
DEAR SIR : We are pleased to confirm our cable to you of even
date, copy of which we are attaching herewith.
As you will note, we are quoting you these machines at $2,000
each, immediate delivery, subject to prior sale, and if you have not
already cabled us your reply prior to receiving this letter of con-
firmation, please permit us to urge you to buy these machines at
once. This is an exceptionally good offer, and from what we can
learn, this price is much under the present market.
Our terms are cash on presentation of ocean documents to New
York bank, order to be covered with a confirmed, irrevocable letter
of credit for full amount, to be established by cable immediately
upon your accepting this quotation.
 PAPER WORK IN EXPORT TRADE. 27

Kindly note this quotation is also subject to our receiving

favorable consideration on our application for export license.
Trusting to be favored with your valued order, we are,
Yours, very truly, EXPORT CORPORATION .
TRANSACTION D-QUOTATION.
Cable address :
Excorp, New York. EXPORT CORPORATION,
Code used :
A. B. C., 5th ed. 42 Broadway, New York, N. Y.
NOVEMBER 10, 1918.
Mr. ALLEN B. JOHNSON,
Export Corporation,
Rue Lafayette, 13, Paris, France.
DEAR MR. JOHNSON : We wish to acknowledge receipt, with
thanks, of inquiry which you forwarded us under date of October
15 from Messrs. Dussot & Co., and are pleased to give you here-
under our quotation, which is subject to immediate cable accept-
ance.
Material : 1,000 cases, each case containing 48 one-pound tins
red Alaska salmon.
1,000 cases, each case containing 48 one-pound tins
Canadian lobster.
Price : Salmon, $48.50 per case.
Lobster, $45.50 per case.
Both prices C. I. F. Nantes, including war-risk
insurance.
Delivery : Immediate delivery.
Terms : Sight draft with ocean documents attached.
Conditions : Subject to delays caused by conditions beyond our
control, also subject to our securing export license.
Will you kindly call on these people in person and give them
this quotation , which we trust will enable you to secure this
business ?
Yours, very truly, EXPORT CORPORATION .

Special attention is called to the fact that the direct representa-

tive of the home office is requested to call on the firm desiring to make
the purchase. This is the most advantageous manner of handling this
business, as it creates a feeling among the clients of the exporter
that they are receiving personal attention. It is therefore very likely
that a quotation made under these conditions will stand more chances
of getting the business than a quotation made through the mails.
NOTES ON MANUFACTURER'S REPLY.¹
In corresponding with a prospective customer in a foreign market, it should
be borne in mind that from 10 days to 3 months are required for a reply.
It is therefore desirable that all the necessary information be furnished to
enable the inquirer to place an order at once, if he so decides. Letters should
be concise, yet complete.
Courtesy should be evident throughout the letter. The personal signature
of the export manager or other person in charge of export transactions should
be attached to every letter going abroad.
1 From History of an Export Order, by National Association of Manufacturers.
28 PAPER WORK IN EXPORT TRADE.

Popularity of shipper's goods in near-by countries, special facilities for

handling foreign shipments, and similar details are impressive and should be
mentioned.
It is just as essential for the manufacturer to furnish the prospective cus-
tomer with bank references or other information regarding the manufacturer's
integrity as it is for the foreign inquirer to furnish information as to his re-
sponsibility for payment.
All letters should be written in the language used by the firm addressed.
Translations should always be made by an expert.
THE MANUFACTURER'S RECORDS.
The Atlas Portland Cement Co. , who received an order from the
Export Corporation for 500 barrels of Portland cement , indicate the
following as records and important points to be considered. These
do not form a part of the exporter's records and to some extent are
duplicates of material treated elsewhere. They are included at this
point to suggest the manufacturer's point of view. (See also
pp . 56 and 57. )
A. ISSUANCE OF QUOTATION.-Specifying—
(a ) Port of destination.
(b) Quantity and commodity.
(c ) Price and delivery point.
(d) Package, kind and weight (measurements not necessary, as
cement weighs more than it measures and is therefore taken
by steamship companies by weight ) .
(e ) Period during which shipment must be ordered out.
(f) Terms of payment.
(g) Period of refusal.
The quotation submitted is a filled-in standardized form. If inquiry con-
tains any conditions not covered by the standardized form , a special
letter covering such conditions accompanies the quotation. Likewise,
if inquiry from the Export Corporation was the first transaction with
that firm or that particular department, a separate letter emphasizing
quality, service, etc. , would be submitted.
The quotation is numbered and filed numerically, with a date on which
to follow. Quotation is recorded, which record is filed alphabetically
according to name of exporter.
A daily summary showing firms quoted, quantity, destination , mill price,
and shipping period is compiled for information of departments in-
terested.
B. RECEIPT OF ORDER CALLING FOR FUTURE SHIPMENT.
1. Recording order ( indexing alphabetically according to name of firm
and allotting reference number ) . Attaching previous quotation
correspondence.
2. Listing order ( setting up details of order on manufacturer's office
form ) .
3. Approval of order by credit department.
4. Distribution of copies of order form to departments interested .
( 1 ) One copy to accounting department for statistical purposes
and preparation of combination pro forma invoice and pack-
ing list in triplicate, specifying-
(a ) Manufacturer's reference number.
(b) Purchaser's reference number and marks.
 PAPER WORK IN EXPORT TRADE. 29

(c ) Quantity.
(d) Commodity.
(e) Price and delivery point.
(f) Foreign destination.
(g ) Package, kind and gross and net weights and tare.
(h) Terms of payment.
(Separate packing list not necessary, as all barrels are
of same size and weight and contain same commodity. )
Pro forma invoice used by exporters.
(a ) Preparation of application for export license.
(b ) Memo to shipping department to engage freight as soon
as license is granted .
(c) Memo to cashier for purpose of estimating prospective
requirements of funds.
(2 ) One copy to salesman traveling territory to which cement is
destined.
(3 ) One copy in file holding all papers in connection with a par-
ticular order ; this is filed numerically.
(4 ) One copy in alphabetical file for ready reference and compila-
tion of periodical statements showing commitments for
future shipments, etc.
5. Recording on a summary of orders received that day. This for statis-
tical department, which prepares composite reports for various
departments interested in figures showing volume of commitments
for future shipment, mill prices, etc.
6. Formal acceptance of order to exporter by letter. The acknowledg-
ment submitted is a filled-in standardized form, and if order specifies
any conditions not covered by the standardized form, a special letter
covering such conditions accompanies the acknowledgment.
C. ADVICE BY EXPORTER THAT LICENSE HAS BEEN GRANTED. Our reply advising
shipment is ready and soliciting shipping instructions.
D. RECEIPT OF SHIPPING INSTRUCTIONS FROM EXPORTER.- Specifying : ( a ) Name
of steamer ; ( b ) pier ; ( c ) delivery date.
Accompanied by : ( a ) Permit ; (b ) dock receipt ; ( c ) export
declaration .
1. Listing shipping instructions ( setting up details of order on manu-
facturer's office form ) .
2. Approval by credit department. ( This is again necessary, as consider-
able time may have elapsed between time order was received and
shipping date. )
3. Distribution of copies of order forms to departments interested.
(1 ) One copy to accounting department at New York for prepara-
tion of true invoice. (Invoice is sent to exporter as soon
as it is fairly certain that delivery as called for will be
effected. This gives exporter plenty of time in which to
make up necessary consular and clearance documents.
( 2 ) One copy to accounting department at mill for record and
statistical purposes.
(3 ) Two copies to mill shipping department ( 1 copy for preparing
shipment, 1 copy for preparing stencil ) .
(4) One copy to salesman traveling territory to which cement is
destined.
(5) One copy to inspector who inspects deliveries in New York
Harbor,
30 PAPER WORK IN EXPORT TRADE .

(6) One copy in file holding all papers referring to a particular

shipment.
(7 ) One copy to transportation department at New York, accom-
panied by : ( a ) Permit ; ( b ) dock receipt ; ( c ) export
declaration .
Transportation department traces cars through to tidewater
and arranges with literage company for lighterage
alongside steamer.
Transportation department issues delivery order ( in tripli-
cate ) on the railroad authorizing delivery to lighterage
company. ( Triplicate copy kept as record. )
Original and duplicate delivery order is sent to lighterage
company, accompanied by : ( a ) Permit ; (b ) dock re-
ceipt ; ( c ) export declaration.
Lighterage company keeps duplicate as a record and lodges
original delivery order with railroad, which releases cars ;
cement is loaded on barge ; barge is towed to steamship
pier, where barge captain reports to receiving clerk and
presents ( a ) permit ( b ) dock receipt, ( c ) export declara-
tion.
As soon as cement is loaded from parge into steamer, re-
ceiving clerk signs dock receipt, hands it to captain
of lighter, who takes it to office of lighterage company.
Signed dock receipt, together with expense bill for lighter-
age, is sent by lighterage company to transportation
department, which checks it as to quantity, and if in
order in all respects, approves and sends it to accounting
department, which charges exporter and delivers to ex-
porter by hand. As signed dock receipt is sole evidence
of delivery, a receipt therefore is taken when delivery is
made.
4. Acknowledgment of shipping instructions.
Where instructions are in order a standardized form of post-card
acknowledgment is used, otherwise acknowledgment is by letter
covering points not in order.
E. RECORDING OF SHIPMENT.
1. Posted to credit of New York City exporter.
2. Posted to credit of foreign importer.
GENERAL.-It will be noted in this transaction that the manufacturer arranges
lighterage delivery through other than railroad channels. This is advan-
tageous from the standpoint of lower rates in normal times and better
service in abnormal times.
In the event that use was made of railroad lighters, which is the procedure
of some companies in the cement industry, the procedure outlined would hold
in its essential details except that ( 1 ) exporter's shipping instructions would
1
be accompanied by a G. O. C. permit ; ( 2 ) upon receipt of arrival notice,
necessary delivery instructions and papers are lodged with lighterage de-
partment of railroad.

1A G. O. C. permit is issued by the General Operating Committee of the Railroad

Administration and allows goods to be shipped to the railroad terminal at seaboard for
export. This permit is issued on carload shipments only, and entitles the domestic
consignee to free lighterage to steamer, within certain limits, and 10 days' free storage.
 CHAPTER III.

99 ORDER.
THE 66' FIRM

The exporter is interested in securing from the prospective buyer

a " firm " order ; that is, a contract which binds the buyer to accept
the goods and pay the price in accordance with the terms of the
agreement. The Export Corporation has submitted to W. A.
Thompson & Co. its quotation and awaits the acceptance of this offer
either by mail or cable.
W. A. Thompson & Co. accept the quotation and place their order
in the following letter :
TRANSACTION A- FORMAL ORDER.
W. A. THOMPSON & CO.,
San Ignacio, 75, Habana, Cuba.
SEPTEMBER 1 , 1918.
EXPORT CORPORATION,
New York City.
DEAR SIRS : Acknowledging receipt of your kind quotation of
August 1, quoting us a price of $ 10.00 per barrel for Atlas Port-
land cement, and $6.00 per 100 pounds for steel bars, we are
pleased to advise you that this price is satisfactory to us, and we
would thank you to enter our order for
500 barrels of cement.
100 gross tons " steel ( soft ) bars 20' long.
For delivery as soon as possible. It is our understanding that your
quotation is C. I. F. Habana, Cuba, including war-risk insurance,
and subject to your securing export license.
Awaiting your official confirmation of this order, at the same
time your advices as to when we may expect delivery, we are,
Yours, very truly,
W. A. THOMPSON & Co.

The buyer has asked for a confirmation of this order by the Export
Corporation, and in order to complete the contract the Export Cor-
poration sends a confirmation of sale, or " Acknowledgment of
order," signed by an officer or employee of the corporation em-
powered to make such contracts. Confirmations are usual in the ex-
port trade in order to prevent misunderstandings.
On this form the material is plainly stated , quality, quantity , and
description of the same, price , terms, and shipment plainly indicated,
and space allowed for any special remarks governing the transaction.
On the reverse side of this form is printed the general conditions
governing sales made for export . Chief among these conditions are
the ones which point out to the purchaser or consumer that the order
31
32 PAPER WORK IN EXPORT TRADE.

is not cancelable and stating that Government conditions beyond the

control of the exporter shall not hold him responsible for nonde-
livery. It is also stated that the seller's responsibility ceases when
the material is loaded upon the carrier.

CONDITIONS OF THE SALE.

The general conditions of sale contained in the confirmation of the

order by the Export Corporation were as follows :
The seller referred to in these conditions of sale is understood to be the Ex-
port Corporation .
1. F. O. B., C. I. F., and C. & F. sales. —The seller accepts no responsibility
for the arrival of goods at destination or for loss or damage in transit. The
purchaser assumes all risks of transportation except such as are covered by
the legal responsibility of the carriers ( or, on C. I. F. sales, by the insurance ) ,
and accepts and agrees to all usual and customary clauses in the bills of lad-
ing, as well as such additional clauses and stipulations as may be lawfully im-
posed by the carriers as a condition of their accepting the goods for transporta-
tion. The tender to the purchaser or his authorized agent of shipping docu-
ments, consisting of proper bills of lading, and, in the case of C. I. F. sales,
negotiable insurance certificate, constitutes full and final delivery on the parf
of the seller, and entitles it to immediate payment in full for goods shipped,
without prejudice to the subsequent adjustment of just claims on the part of
the purchaser.
Unless otherwise agreed in writing, the purchaser will receive the goods at
destination ex ship's tackles as fast as vessel can discharge, and it is further
agreed that the seller is entitled to select the route, port of shipment, and ves-
sel, with privilege of stopping in transit at port or ports. Unless otherwise
agreed in writing, any charges at destination, including lighterage, wharfage,
or landing charges, dues, duties, etc. , are not included in seller's price.
2. Insurance.-Unless otherwise stated in quotation , the insurance on C. I.
F. sales is understood to be marine insurance only to destination covered by
sales price, free of particular average, English conditions, for a sum equal to
the amount of the invoice plus 10 per cent. Other forms of insurance, if obtain-
able, must be agreed upon in writing prior to acceptance of order, the addi-
tional cost to be for the account of the purchaser, but no form of insurance will
protect against rust or other damage unless caused by a peril of the sea.
3. Consular invoices.—All consular fees for legalizing invoices , stamping bills
of lading or other documents required by the laws of the countries of destina-
tion, are payable by the purchaser and are not included in the seller's prices.
If not otherwise arranged , the seller is authorized to pay same for purchaser's
account and add the cost to the invoice.
Seller will take out consular documents as agent for the purchaser, who must
state how the goods are to be declared , and , if the purchaser does not furnish
the necessary instructions, seller will make declarations according to its best
judgment, but will not in any case be responsible for any fines or other charges
due to errors or incorrect declarations.
4a. Execution of orders or shipment of goods.- The seller shall not be liable
for failure to perform this contract in whole or in part, if such failure is due
to fires, strikes, disputes with workmen, war, civil commotion, epidemics, floods,
accidents, delays in transportation , shortage of cars or other causes beyond the
reasonable control of the seller or of the manufacturer ; nor shall these exemp-
 PAPER WORK IN EXPORT TRADE . 33

tions be limited or waived by any other terms of this contract, whether printed
or written ; such contingencies shall not release the purchaser from his obliga-
tions to pay for the goods in accordance with the terms of sale. Provided,
however, That in the event of such unavoidable delay the purchaser may, sub-
ject to previously obtaining the consent of the seller, cancel such portion of the
goods already specified as is not manufactured nor in process of manufacture
at the time his request to cancel reaches the manufacturer's works.
4b. The seller may ship any portion of the goods as soon as completed at the
manufacturer's plant, and payment for that portion of the goods shipped shall
become due in accordance with the terms of payment herein specified . Insist-
ence upon suspension of manufacture or suspension of any shipment if not
acquiesced in by the seller may be treated by the seller as a wrongful termina-
tion of the contract on the part of the purchaser ; and the purchaser shall there-
upon be liable for all damages arising out of such termination.
5. Specifications and shipping instructions.--In the event of the purchaser's
failing to furnish complete specifications and instructions within the time speci-
fied in the contract, the seller shall be entitled, at its option, to cancel such
portion of the contract as may remain unexecuted, or to make shipments in
accordance with the specifications and instructions which the purchaser may
have furnished for previous shipments on account of the same or a previous
contract.
6. Inspection -If the purchaser requires inspection, it must be made at
manufacturer's plant, and such inspection and acceptance shall be final. Rea-
sonable facilities will be afforded to inspectors representing the purchaser. to
inspect material and to apply, previous to shipment from the manufacturer's
plant, tests to which the seller has previously agreed .
7. Claims.- Claims will be considered by the seller only when made promptly
after receipt of the goods and due opportunity has been given for investigation
by seller's own representatives. No claims for labor nor involving conse-
quential damages will be recognized . Goods must not be returned except by
permission of seller.
8. Damage in transit.—The seller agrees that the goods shall leave the manu-
facturer's plant in good condition , and the purchaser assumes all risks of rust
or other damage during transportation.
9. General.- The goods are to be exported to the destination stated by the
purchaser at the time the inquiry is made, and the purchaser guarantees that
the goods will be shipped to that destination, and agrees to furnish , if re-
quired by the seller, a landing certificate, duly signed by the customs authorities
at the port of destination , certifying that the goods have been landed and
entered at that port.
The seller reserves the right, even after partial payment on account of
any contract with the purchaser, to require from the purchaser satisfactory
security for the due performance of his obligations, and refusal to furnish
such satisfactory security or the failure of the purchaser to execute any of
his obligations under this or any other existing contract will entitle the seller,
upon notice to the purchaser, to suspend shipments or cancel the contract,
or so much of it as may remain unexecuted , without prejudice to any claim
for damages the seller may be entitled to make.
10. Terms.- Unless otherwise stated in quotation , seller's terms are under-
stood to be net cash in exchange for relative documents mentioned herein,
to be tendered to bankers approved by the seller, with whom irrevocable credit
is to be established when order is entered and before goods are manufactured.
125740°-20- 3
34 PAPER WORK IN EXPORT TRADE .

11. Every quotation is based on the understanding that if accepted , and the
seller should elect, formal contract satisfactory to the seller will be signed by
the purchaser.
12. Remarks. It is understood that all orders placed are irrevocable, and
no cancellation will be considered.
In the event of railroad embargoes, or other causes beyond the control of
the seller or of the manufacturer, preventing shipment of goods after manu-
factured, the goods shall be stored for buyer's account and risk, and de-
livery thereof F. O. B. cars or trucks at manufacturer's works for transporta-
tion to the warehouse or warehouses where they are to be stored shall be full
and final delivery.
DEFINITION OF TERMS .

In further explanation of the terms of sale the following, from

the Exporters' Encyclopedia ,¹ sets forth clearly and definitely the
rights of both parties to a sale :
A buyer should always determine promptly whether he has any preference
as to the route over which or the carrier by which the goods are to reach
him . If he has any such preference it is his right to have it respected. This
is true if the buyer is to accept delivery at the shipping point. It is equally
true if the seller is to pay freight, or even if he has undertaken actually to
make delivery at destination.
There is this material difference between the two cases, however : If the
seller is to pay freight, the buyer's right to name the carrier must be made
part of the contract of sale ; if the buyer is to accept delivery at the shipping
point, his right to choose the carrier may be exercised at any time before the
actual shipment of the goods.
The reason for the difference is this : A seller who is to pay freight, or be
responsible until the goods reach their destination, has a natural right to
choose the carrier, unless he has parted with that right by contract ; whereas
a buyer who is to pay freight and accept the risks attending transit has an
equally clear right to select the instrument of transportation. If the buyer
has selected the carrier, in any case in which it is his right to do so, the
seller should respect his choice.
The seller sometimes thinks that he can choose a carrier or route that the
buyer himself will find superior to that of his own selection. If he allows him-
self to yield to this temptation he is in the position of an agent who has
attempted to improve upon his principal's orders : If all goes well the agent
has small thanks, and if there is a loss it is the agent who must bear it.
The seller who disobeys the buyer's orders as to carrier or route not only
incurs all the risks of transportation, whether they were originally his or not,
but he also places it in the buyer's power to refuse the goods, though they
reach him as promptly and in as good condition as could possibly be by any other
route. If the market has gone against the buyer, or if he has repented of his
bargain for any reason, he may repudiate the contract, alleging no other cause
than that he bought goods to come by the A. B. route, while these have come
by another line. A seller is never safe in disregarding the buyer's shipping
instructions, when the latter has a right to give them and has given them.
If the buyer fails to make a timely selection of route and carrier , the seller
becomes the buyer's agent to make the selection. Then it is his duty to exer-
cise such care and diligence in the matter as a reasonably prudent man would
use if the goods were his own and the risk were his. He is not bound to choose
1 Published by Exporters' Encyclopedia Co. , 80 Broad Street, New York, N. Y.
 PAPER WORK IN EXPORT TRADE. 35

the very cheapest route, or the best, or the most direct ; no agent is bound
to the highest possible degree of skill. His duty is done if he ships the goods
by any line that ever is chosen , or would be chosen by a person of reasonable
caution dealing with his own goods of the like kind and value.
The terms of the contract are next to be looked after, especially as regards
the place of delivery and the cost and risk of transportation. If the contract
is silent on these points the buyer accepts his goods wherever they may be
at the time of sale. In a great majority of cases, however, the contract con-
tains some provision as to these matters. Most sales of goods to be taken to
a distance are now made upon what are known as F. O. B. or C. I. F. terms.
In an F. O. B. sale the seller undertakes to deliver the goods free on board.
The place of delivery may be either the shipping point or the destination. It
is always better to name the place in the contract. If it is not named, the
courts, unless there is some usage or some expression in the contract to lead
to a different conclusion, will hold that delivery is to be made at the shipping
point ; this because the expense of transporting goods is not to be placed upon
the seller unless he has agreed to bear it.
Suppose the contract, then, to be for delivery "F. O. B. ( free on board )
shipping point." This places upon the seller the duty of packing the goods
properly, placing them on board, addressing them to the buyer, securing such
shipping documents as will enable the buyer to take possession of the goods
when they reach him, and forwarding these documents to the buyer. So much
being attended to , the seller's whole duty is done. He is not concerned with
the time at which the goods may reach the buyer, the condition in which they
reach him, nor, in fact, with the question whether they ever reach him at
all. The carrier is the buyer's agent, and all questions arising after a proper
delivery to the carrier by the seller are to be settled between the carrier and
the buyer.
Two points of dispute have arisen out of contracts of this kind. About one of
them there may be some slight doubt, but about the other there is no doubt at
all. The contract compels the seller to deliver the groods free on board at the
shipping point, but it does not say on board what sort of vehicle they are to be
delivered. Suppose the goods have been sold for shipment to South America,
and suppose they have come to the New York seller, or are to come, on cars from
the west, or on a steamer from Europe. Now, it may occur to the seller, and
sometimes it has occurred to him, that the ambiguity of the contract is such as
to admit of his making a valid tender of the goods on board that vehicle which
has brought them to him, but which will not take them any farther. This is the
point about which there is no doubt. Such a tender will not do. The proviso
" free on board " is intended for the buyer's benefit, and it is of no possible ad-
vantage to him to have the goods on board a vehicle capable of moving if it is
not going to move in his direction. " Free on board " in and of itself means free
on board some vehicle that will take the goods to the buyer.
The doubtful point arises in this way. Suppose it is to be admitted , or to be
provided by contract, that the goods are to be delivered " free on board cars at
the shipping point." Suppose the seller has side tracks running into his own
yard or works, and suppose there is a switching charge for transferring the
cars to the main track. Is this charge to be borne by the seller or the buyer ?
This seems never to have been decided by any court of final resort. The writer
gives it as his opinion, however, that the seller must make a tender upon the
main line ; that the buyer has a right to rely upon the published schedule of
rates from shipping points to destination ; that he is not concerned with any ar-
rangement between the carrier and the seller allowing the latter to load his
goods elsewhere than upon the main lines of the carrier's system.
36 PAPER WORK IN EXPORT TRADE.

If the sale is F. O. B. shipping point, and inspection is to be made before

shipment, the contract being silent as to the payment of the cost of inspection,
the seller must pay it. Generally the cost of inspection falls upon the buyer ;
but in this case inspection must be made before delivery on board , and as the
seller must deliver free on board, this he can do only by having the inspection
made and paying for it, unless the buyer has expressly agreed to pay.
The complication that most frequently arises out of a sale F. O. B. shipping
point comes about in this way. No definite arrangement having been made for
payment, the seller may handle the shipping documents in such a way that
title to the goods remains in him until the buyer has paid a bill of exchange
drawn against them. There is often strong temptation on the seller's part to
follow such a course. He is hardly to be blamed for yielding to it, but there are
these facts that he should bear in mind : That the bill of lading represents the
goods while they are in transit ; that if the bill is taken out to the shipper's
order, and not indorsed to the buyer and sent to him unconditionally, or if it is
taken out to the buyer's order and not delivered to him promptly ; in short, if the
seller retains title in himself, he keeps upon himself also the risk of loss or dam-
age to the goods. His contract gave him a right to transfer this risk at the
shipping point ; but that is of no consequence so long as he has not actually
made the transfer. He can not take this position : " If these goods reach their
destination in safety, and the buyer does not pay for them, they are still my
goods ; but if they are lost or damaged on the way they are the buyer's goods
and the loss is his."
If the contract calls for delivery F. O. B. shipping point, and also provides
for payment against documents, the seller may take the shipping documents
in his own favor simply by way of preserving a lien upon the goods for payment.
Then the risk is with the buyer ; but if the contract does not give the seller a
right to hold the goods until payment is made, he holds them as owner, if he
holds them at all , and delivery is not made until destination is reached ; mean-
while the goods are at the seller's risk.
If the sale is F. O. B. destination the seller pays the freight, the goods are
his, and the risk of loss or damage is upon him, until the destination is reached.
Then and there a valid delivery can be made while the goods are still in the
hands of the carrier and not yet unloaded. If they do not reach their destina-
tion, or if they are too much damaged when they do reach it to constitute a
good delivery, the loss falls upon the seller and he is guilty of a breach of
contract besides ; he agreed to deliver certain merchandise in good order at
destination, and he has not done it.
When the terms of sale are C. I. F. ( cost, insurance, freight ) , delivery is
made at the shipping point and the carrier is the buyer's agent. The amount
of money named in the contract is all that the buyer is to be required to pay
for the goods themselves ( cost ) ; for insuring them during transportation ( in-
surance ) ; and for the carrier's freight charges ( freight ) . These expenses fall
upon the seller ; all others on the buyer. Delivery is not made on board, but
at the warehouse or wherever the goods may be when sold. The buyer pays
for taking them thence to the cars or vessel. He pays every expense not in-
cluded in the cost of the goods themselves or in their insurance and actual cost
of carriage. Established usage in certain lines has decreed that the seller
shall bear some minor expenses not falling strictly under any one of these three
heads ; but that is altogether exceptional.
The seller takes out an insurance policy and sends it to the buyer. In doing
so he is to use ordinary care and diligence. This refers both to the selection
of an insurer and the form of policy. Any company is sufficient that is not
 PAPER WORK IN EXPORT TRADE. 37

known to be insolvent or in danger of insolvency. Any policy is sufficient if

it is such as reasonably prudent owners take upon their own goods. If there
is any unusual danger to be insured against, or any special form of policy
sometimes employed , this is a matter to be made part of the contract of sale,
or to be attended to by the purchaser himself, if he wishes such a policy to
cover his goods. The seller is bound simply to take out the usual form of
policy with any solvent company.
It is well to name the destination in the contract, so that the seller may know
how much freight and insurance he is to be called upon to pay. A failure to
observe this precaution will generally do no harm, and a number of unfortunate
disputes have arisen, in exceptional cases, from a lack of it. If the negotiation
has been carried on by mail or telegraph, the destination of the goods is as-
sumed, in the absence of any indication to the contrary, to be the place from
which the buyer has addressed his communications. If the sale is made
through verbal negotiations with the buyer or his agent, and the buyer has a
well-known place of business, that is assumed to be the destination. But the
buyer may have more than one place of business, or he may need these goods
for some other use than in his ordinary line of trade, or in any one of vari-
ous other ways there may be an honest misunderstanding as to the place to
which the seller is bound to pay freight and insurance. A single word will
prevent such a misunderstanding, and a C. I. F. contract should read “ C. I. F.
Liverpool," or other destination.
The seller is not bound actually to pay the freight in advance unless the
carrier insists upon it. It is sufficient if he forward the shipping documents
to the buyer and credit him with the freight upon the invoice. This is worth
mentioning only because some buyers, dissatisfied with the contract upon other
grounds, not valid, have attempted to escape it because the seller, after agree-
ing to pay freight and insurance, had failed actually to pay the freight. That
is not a valid objection. All that the buyer can demand is that the cost to
him shall not be greater that it would have been if the seller had prepaid the
freight.
CONFIRMATION OF THE ORDER.

In transaction A the formal acknowledgment of the order was as

follows:
Cable address :
Excorp, New York.
Code used : EXPORT CORPORATION,
A. B. C., 5th ed. 42 Broadway, New York, N. Y.
SEPTEMBER 12, 1918.
Messrs. W. A. THOMPSON & Co.,
Habana, Cuba.
DEAR SIRS : We wish to acknowledge and thank you for the order
transmitted to us by you direct, which we will forward to the
mill for final approval and acceptance under conditions as stipu-
lated below and printed on the back hereof.
Description : 500 barrels Atlas Portland cement.
100 gross tonssoft steel bars 20 feet long.
Price : $10.00 per barrel for the cement.
$6.00 per 100 pounds for the steel bars.
Prices C. I. F. Habana, Cuba, including war-risk
insurance.
Terms : 30 days' sight, documents on acceptance.
38 PAPER WORK IN EXPORT TRADE .

Delivery : Within sixty days from mill, subject to delays due

to conditions beyond our control, it being under-
stood that we are not responsible for any delays
of the above nature, and subject to our being
able to secure Federal export license.
Assuring you that your order will receive our very best attention,
and awaiting your further commands, we are
Yours, very truly,
EXPORT CORPORATION.

One of the most important purposes of the confirmation as shown

above is to prevent misunderstanding as to any of the conditions of
the contract. In acknowledging receipt of an order particular care
should be taken to see that every condition is plainly stipulated.
The price of the material should be carefully stated alongside of each
particular quality or size, the terms should be distinctly stated ,
promised date of delivery should be given, and any special conditions
surrounding the sale should be enumerated. Much care should be
exercised in securing, if they are not already given, packing and
shipping instructions, as this is of vital importance to both the buyer
and the seller. These instructions should be very carefully trans-
mitted to the manufacturer of the material in order that they may
be followed to the letter before the shipment leaves the shipping
point . This may save the exporter a lot of trouble when the ma-
terial finally arrives at seaboard for ocean shipment. It is impos-
sible to overestimate the importance of this point in the export
business.

FORMAL ACKNOWLEDGMENT OF ORDERS.

It is customary for each exporting house to have its own form

for the acknowledgement of orders. Some authorities hold that,
" although the form of acknowledgement of orders may be identical,
it is best to have individually typewritten rather than printed form
letters for this purpose. An individual letter gives a personal touch
and often tends to assure the customer that his order will receive
prompt attention."
It is called especially to the attention that neither this order
(transaction A) nor confirmation of the order by the Export Cor-
poration calls for any special consular declarations or any special
packing. Therefore the Export Corporation should have the
material packed in the usual way for export and also make the usual
consular declarations. In the absence of any specific instructions ,
this is the practice. However, it would be a very good plan , in
acknowledging an order to state these facts accordingly.
The tenders in transaction B, C, and D, are accepted in formal
orders by the several buyers abroad , and the acknowledgment and
 PAPER WORK IN EXPORT TRADE . 39

acceptance of these orders on the part of the Export Corporation

are as follows :
TRANSACTION B.

In due course Teixerio & Brogas Co. received the quotation for-
warded to them under date of September 10, 1918, and this is their
reply, in the form of an order, received by cable :

MEXICAN CABLE CO.

NOVEMBER 12, 1918.
EXPORT CORPORATION,
New York City.
Accept Your Quotation September Tenth Hops and Turpentine
Stop Rush Shipment Confirm .
TEIXERIO & BROGAS Co.
The Export Corporation sends, on its printed form , a formal
confirmation as follows :

EXPORT CORPORATION,
42 Broadway, New York, N. Y.
NOVEMBER 12 , 1918.
Messrs. TEIXERIO & BROGAS CO. ,
Rio de Janeiro, Brazil.
DEAR SIRS : We wish to acknowledge receipt of your valued
cable order of even date, which we will forward to the mill for final
approval and acceptance under conditions as stipulated below and
printed on the back of this sheet.
Description : Hops and turpentine.
Quality : Grade "A" hops and Pratt's turpentine.
Price : $13.50 per 100 pounds for the hops.
$8.50 per case for the turpentine.
Both prices C. I. F. Rio, including war-risk
insurance.
Terms : 120 days date draft, documents to be delivered
upon acceptance of draft.
Delivery : Within four to six weeks from mill. We are not
responsible for any delays beyond our con-
trol, due to strikes, floods, or Government
actions. Also subject to our being able to
secure Federal export license.
Assuring you that your order will have our very best attention,
and awaiting your further commands, we are
Yours very truly,
EXPORT CORPORATION.
TRANSACTION C.

Cable order as follows was received from Koji Fukushima :

EXPORT CORPORATION,
New York City.
We place order for nail machines as per your cable fifteenth
credit being established stop rush delivery stop.
FUKUSHIMA.
40 PAPER WORK IN EXPORT TRADE.

Cable order was acknowledged in due course and confirmation sent

by mail in the following form :
EXPORT CORPORATION,
42 Broadway, New York, N. Y.
SEPTEMBER 26, 1918.
KOJI FUKUSHIMA,
Kobe, Japan.
DEAR SIR : We wish to acknowledge and thank you for the order
transmitted to us by cable, which we will forward to the mill for
final approval and acceptance, under conditions as stipulated below
and printed on the back of this sheet.
Quantity : 20 machines set up.
Description : 5 machines thirteen gauge.
5 machines fourteen gauge .
5 machines fifteen gauge.
5 machines twelve gauge.
Quality : Checkered head countersunk wire nail machines,
American Machine Company's make.
Price : $2,000.00 ( two thousand dollars American gold )
each C. I. F. Kobe, Japan, war-risk insurance for
your account.
Terms : Payment to be made in New York on presentation
of complete set of ocean documents ; confirmed
irrevocable letter of credit to be established to our
order for full amount of order, available for pay-
ment for thirty days from date ; said credit to be
established by you by cable.
Shipment : Shipment will be made at once from mill.
Remarks : This order is accepted with the understanding that we
will not be responsible for delays due to conditions beyond our con-
trol, and is subject to our receiving Federal export license within
specified time.
EXPORT CORPORATION .
TRANSACTION D.

The quotation on salmon and lobster, made to Mr. Johnson by the

main office in New York, under date of November 10 , was duly re-
ceived by him and transmitted to the ultimate buyer, who accepted
the quotation and confirmed the order to Mr. Johnson. The latter
transmitted the order to the New York office and it made official
acknowledgment direct to the customer, Messrs. Dussot & Co., send-
ing a carbon copy of the confirmation to Mr. Johnson.
The confirmation reads as follows :

EXPORT CORPORATION,
42 Broadway.
NEW YORK, September 30, 1918.
Messrs. JACQUES DUSSOT & Co.,
Nantes, France.
GENTLEMEN : We wish to acknowledge receipt and thank you
for your order transmitted to us by our Mr. A. B. Johnson, which
 PAPER WORK IN EXPORT TRADE . 41

we will forward to the mill for final approval and acceptance under
the conditions as stipulated below and printed on the back hereof.
Quantity : 1,000 cases, each case containing 48 one-pound tins
salmon.
1,000 cases, each case containing 48 one-pound tins
lobster.
Description : Red Alaska salmon and Canadian lobster.
Quality : Must be standard quality of this year's packing.
Price : $48.50 per case for the salmon.
$45.50 per case for the lobster.
Both prices C. I. F. Nantes, including war- risk
insurance.
Terms : Sight draft with ocean documents attached.
Shipment : Shipment within five days from New York.
Remarks : This sale is made to you with the understanding
that we will not be responsible for delays which
are due to conditions beyond our control.
EXPORT CORPORATION .

There are two things of first importance in confirming orders and

purchases. They are, first, getting from the consignee all the infor-
mation that is necessary in order properly to ship the material , and
second, giving the manufacturer or actual shipper of the material
instructions which are clear and unmistakable to him, in order that
the material may properly start on its long journey, sometimes many
thousand miles, to its final destination. These are the two vital
things which should be borne in mind by all exporters.
An exporter usually has his business divided into several depart-
ments. One department handles the sales of the goods and another
department handles their purchase and shipment. Under such an
organization mistakes should be reduced to a minimum, as all orders
are doubly checked . The sales department handles the acknowledg-
ment of an order, and the purchasing department, or order depart-
ment, handles the purchases and sees that correct instructions are
given to the suppliers to enable them to pack and ship the goods
properly and without undue delay.

NOTES ON FORM AND CONTENTS OF ORDERS.

CONTENTS OF A MODEL ORDER.¹

One of the greatest causes for delays in shipment of foreign orders in every
decade has been the very human failure of the foreign merchant to express his
needs and his desires so clearly that no point was without its adequate answer.
It is, of course, impossible by any form or set of instructions to eliminate the
human element and thus abolish at one swoop the real source of error. Never-
theless it is not only possible but highly advisable to encourage the use of forms
which provide for the essential factors in any order and at the same time supply
beyond cavil or doubt all data, even though a matter of record elsewhere.

National Association of Manufacturers : " An Export Order."

40 PAPER WORK IN EXPORT TRADE.

Cable order was acknowledged in due course and confirmation sent

by mail in the following form :
EXPORT CORPORATION,
42 Broadway, New York, N. Y.
SEPTEMBER 26, 1918.
KOJI FUKUSHIMA,
Kobe, Japan.
DEAR SIR : We wish to acknowledge and thank you for the order
transmitted to us by cable, which we will forward to the mill for
final approval and acceptance, under conditions as stipulated below
and printed on the back of this sheet.
Quantity : 20 machines set up.
Description : 5 machines thirteen gauge.
5 machines fourteen gauge.
5 machines fifteen gauge.
5 machines twelve gauge.
Quality : Checkered head countersunk wire nail machines,
American Machine Company's make.
Price : $2,000.00 (two thousand dollars American gold )
each C. I. F. Kobe, Japan, war-risk insurance for
your account.
Terms : Payment to be made in New York on presentation
of complete set of ocean documents ; confirmed
irrevocable letter of credit to be established to our
order for full amount of order, available for pay-
ment for thirty days from date ; said credit to be
established by you by cable.
Shipment : Shipment will be made at once from mill.
Remarks : This order is accepted with the understanding that we
will not be responsible for delays due to conditions beyond our con-
trol, and is subject to our receiving Federal export license within
specified time.
EXPORT CORPORATION .
TRANSACTION D.

The quotation on salmon and lobster, made to Mr. Johnson by the

main office in New York, under date of November 10 , was duly re-
ceived by him and transmitted to the ultimate buyer, who accepted
the quotation and confirmed the order to Mr. Johnson. The latter
transmitted the order to the New York office and it made official
acknowledgment direct to the customer , Messrs. Dussot & Co. , send-
ing a carbon copy of the confirmation to Mr. Johnson.
The confirmation reads as follows :

EXPORT CORPORATION,
42 Broadway.
NEW YORK, September 30, 1918.
Messrs. JACQUES DUSSOT & Co.,
Nantes, France.
GENTLEMEN : We wish to acknowledge receipt and thank you
for your order transmitted to us by our Mr. A. B. Johnson, which
 PAPER WORK IN EXPORT TRADE. 41

we will forward to the mill for final approval and acceptance under
the conditions as stipulated below and printed on the back hereof.
Quantity : 1,000 cases, each case containing 48 one-pound tins
salmon.
1,000 cases, each case containing 48 one-pound tins
lobster.
Description : Red Alaska salmon and Canadian lobster.
Quality : Must be standard quality of this year's packing.
Price : $48.50 per case for the salmon.
$45.50 per case for the lobster.
Both prices C. I. F. Nantes, including war- risk
insurance.
Terms : Sight draft with ocean documents attached.
Shipment : Shipment within five days from New York.
Remarks : This sale is made to you with the understanding
that we will not be responsible for delays which
are due to conditions beyond our control.
EXPORT CORPORATION.

There are two things of first importance in confirming orders and

purchases. They are, first, getting from the consignee all the infor-
mation that is necessary in order properly to ship the material , and
second, giving the manufacturer or actual shipper of the material
instructions which are clear and unmistakable to him, in order that
the material may properly start on its long journey, sometimes many
thousand miles, to its final destination. These are the two vital
things which should be borne in mind by all exporters.
An exporter usually has his business divided into several depart-
ments. One department handles the sales of the goods and another
department handles their purchase and shipment. Under such an
organization mistakes should be reduced to a minimum , as all orders
are doubly checked . The sales department handles the acknowledg-
ment of an order, and the purchasing department, or order depart-
ment, handles the purchases and sees that correct instructions are
given to the suppliers to enable them to pack and ship the goods
properly and without undue delay.

NOTES ON FORM AND CONTENTS OF ORDERS.

CONTENTS OF A MODEL ORDER.¹

One of the greatest causes for delays in shipment of foreign orders in every
decade has been the very human failure of the foreign merchant to express his
needs and his desires so clearly that no point was without its adequate answer.
It is, of course, impossible by any form or set of instructions to eliminate the
human element and thus abolish at one swoop the real source of error. Never-
theless it is not only possible but highly advisable to encourage the use of forms
which provide for the essential factors in any order and at the same time supply
beyond cavil or doubt all data, even though a matter of record elsewhere.
National Association of Manufacturers : " An Export Order."
42 PAPER WORK IN EXPORT TRADE.

While in this country many manufacturers feel that immediate shipment is

the best acknowledgment of an order, obviously with greater distances this
condition can not obtain.
There are certain things which the ideal order should show. These are as
follows :
Firm name, street number, post-office box, city, State or Province, and country.
Order number.
Cable word for entire order.
Cable address.
Codes used.
Date.
Marks.
Terms showing clearly style of draft and currency employed.
Draft bank.
Discount.
F. O. B. point.
Insurance.
Route.
Shipment or delivery date.
Packing instructions.
References, including banks, institutions, and firms, both in and outside of the
United States.
Individual number for each item.
Cable word for each item.
Columns to insure proper description , including quantity, quantity unit, cata-
logue number, capacity, packing within cases, article, and style.
List price if discount is used or otherwise net price of each item.

SALESMAN'S REPORT ON CUSTOMER.¹

When an order is sent in from the foreign market by the salesman, it should
contain the following information :

Full name of agent, agents, company, or partnership.

Trade name ( if any) .
Full street address.
Post-office box number ( if any ) .
City.
Province, State or department.
Country.
Branches, location.
Subagents, location.
Territory to be covered.
Date of contract.
Termination notice of contract.
Shipping instructions. State whether :
Shipment is to be made with bill of lading in name of representatives.
Shipment is to be made with bill of lading "to order."
Shipment is to be made with bill of lading in the name of forwarding
agent at port of entry. (It is important to secure the name of such
agent, as the documents not only go to him, but must be made out in his
name. )

¹ Business Training Corporation : " The Export Salesman."

 PAPER WORK IN EXPORT TRADE. 43

Shipment is to be consolidated with goods going forward from another

concern. (For this purpose secure the names of other houses which the
agent represents. )
Shipment is to be made through a commission house or forwarding agent.
Shipment is to be made by express.
Shipping marks and numbers.
Insurance, yes or no.
For what per cent above invoice value shall goods be insured ?
If none, state why.
Consular declarations.
Full information regarding the exact declarations should be given in what-
ever language necessary.
In view of the high tariff in many countries on advertising material, it is
also desirable to secure the proper declarations for the different kinds
of advertising material that may be forwarded to the dealer ; such, for
instance, as catalogues, folders, booklets, blotters, etc.
Invoicing :
Whether in dollars, pounds, francs, marks , etc.
Are invoices to be signed by a member of the firm making the shipments ?
Is any special stamping or notation required on the invoice?
Measurements and weights on invoices :
Whether in feet, pounds, kilos, gallons, etc.
Case markings :
Stencil or brush?
Gross and net weights in pounds and kilos.
Prices and discounts.
Special concessions.
Reimbursement. State whether :
By remittance with order.
By part remittance with order , balance on a sight or time draft sent with
documents to bank.
By sight draft with documents attached.
By time draft with documents attached.
By part sight and part time drafts with documents attached.
Through a commission house.
By letter of credit or letter of authority in possession of the shipper.
By open account.
By installments through a local bank, warehouse, or direct.
Advertising :
State in what language to be printed.
Imprint on advertising material.
Advertising allowance : For newspaper, magazine, circular, poster, etc.
Language of correspondence.
Local price of article.
Duties.
INDENTS.¹

The indent is a binding instruction to an authorized agent to buy a given arti-

cle or list of articles. The indent is elastic in degree of instructions. It may
instruct as to quantity, quality, pattern, brand, and price, or it may leave to
the purchasing agent the responsibility of exercising his judgment on any or
all of these factors.

1 Calvert : " The Shipping Office."

44 PAPER WORK IN EXPORT TRADE.

(1 ) The indent may contain instructions to buy a certain class of goods,

leaving to the commission buyer the entire responsibility of buying when
and what he regards as most advantageous. The expert judgment of the
latter is relied upon in regard to the requirements of the purchaser's market.
(2 ) The indent may specify certain grades of goods in accordance with
66
standardized trade specifications, such as ' print cloth, 27 width, 64-60, 7.65
pounds per yard," leaving to the agent the selection of patterns and styles.
In this case the number of counts and the weight are specified, because tariff
classifications fall more heavily on finer goods and may make the price prohibi-
tive for the purchaser's trade. The pattern is not specified because patterns
in these lines change so constantly that they may not be on the market when
the indent arrives.
(3 ) The indent may instruct the agent to buy goods which can be sold in
the importer's market at a given price, in which case the agent must know
the total cost of delivery of the goods at the importer's warehouse. Or the
importer may instruct the purchasing agent as to the maximum price to be
paid for goods delivered to the steamship.
There is no set form for an indent. Every importing house follows its
own custom in preparing these documents. They range from a simple letter
to a detailed form with complete shipping instructions.
 CHAPTER IV.
THE PURCHASE ORDER.
PLACING THE ORDER WITH THE SUPPLIER.
Now that the order is in the hands of the exporter it is necessary
for him to purchase the material. In transaction A two orders
must be placed ; one is given to the Atlas Portland Cement Co. ,
through its New York office, for 500 barrels of Portland cement,
and the other to the Interstate Iron & Steel Co. , of Chicago, Ill . , for
100 gross tons of one-half-inch soft steel bars , 20 feet long.
It is customary for export houses to send orders to the manu-
facturer on their own printed forms, which contain detailed speci-
fications of the order and shipping directions. The Export Cor-
poration, using the form indicated , sent the following order to the
Atlas Portland Cement Co.:
EXPORT CORPORATION,
42 Broadway, New York City.
To : Atlas Portland Cement Co. ,
New York City.
Ship to : Ourselves. Order No. "A."
Notify : Ourselves at 42 Broadway, N. Y. C. Date : Sept. 10, 1918.
Route : Usual route to New York, for free lighter- Freight : Prepaid.
age.
Material : Atlas Portland cement. Inspection : Your usual.
Quality : Usual. For Export to : Cuba.
How put up : In barrels for export. Shipment promised : At once.
Shipment desired : As soon as possible. Terms : Net cash.
Prices : $8 per barrel.
F. O. B.: Steamer.
Special instructions :
This order is placed subject to our securing export license.
Bills of lading must be sent us immediately upon shipment of material and
must be marked plainly with our order number and marks of the material.
They must be sent us in triplicate.
Invoices must bear net, tare, and gross weight of each package or bundle, and
must be marked with the size of each case.
Packing must be usual for export.
All barrels must be plainly marked W A T CO.
EC
Habana
No. 1 up.

Quantity. Material. Description. Weight. Marks.

00 barrels.. Atlas Portland ce- Usual size barrels....

ment.

Must be marked as above.

EXPORT CORPORATION.
45
46 PAPER WORK IN EXPORT TRADE .

ANALYSIS OF ORDER.

SHIPPING INSTRUCTIONS.

The purchase order mailed to the Atlas Portland Cement Co. di-
rects that goods be consigned on the railroad bill of lading to the
Export Corporation (ship to ourselves ) and that the railroad com-
pany is to notify the Export Corporation on the arrival of the goods
at New York (notify ourselves ) . The Atlas Portland Cement Co.
is to ship over the best route to New York City and to mark the bill
of lading " for export " in order to secure free lighterage (usual
route to New York for free lighterage ) .¹ The freight is to be pre-
paid by the Atlas Co. , as its quotation was F. O. B. New York.²
DESCRIPTION OF THE GOODS.

The description of the material is the same as in the export order

(Atlas Portland cement) . The purchasers rely upon the sellers to
deliver their usual standard quality of cement and ask for no special
inspection or tests of the goods.
The Atlas Portland Cement Co. guarantees in its advertisements
that this cement will meet all standard specifications and tests, such
as those of the American Society for Testing Materials. These
specifications are easily ascertained by the trade from such publica-
tions as Industrial Standards No. 1 of the Bureau of Foreign and
Domestic Commerce and from trade catalogues. The matter of in-
spection by the foreign buyer was covered in the " General terms of
sale."3
The buyer, if he had so specified , might have employed a testing
laboratory or engineer to make tests of the cement before accepting
the goods .
PACKING.

The packing instructions specify that the cement shall be put up in

barrels for export to Cuba (usual size barrels ) . Advertisements of
the Atlas Portland Cement Co. (see Sweet's Architectural Catalogue )
give the size of its barrels as 400 pounds gross and 376 pounds net.
The instruction to pack for export throws the responsibility of pack-
ing upon the manufacturer. He must provide packing of the quality
usual for export of his products . If other or special packing is de-
sired the Export Corporation must specify this in its order.
The packing problem is one with which every exporter must con-
tend. It is to his interest and to the interest of the ultimate receiver
of the goods that they be packed to provide against the possibility
of damage. The exporter should use his imagination and follow.the

1 For discussion see Chap. V. 2 See Chap. II. 3 See Chap. III.
 PAPER WORK IN EXPORT TRADE . 47

goods over the shipping route to their destination . He can be aided

in this by the use of good transportation maps , on which he should
note each point where the goods must be handled . He can readily
picture his goods being lifted from the pier or lighter 20 or 30 feet in
the air by means of a derrick, subject to the stress of a ton or two of
other packages, and then lowered 40 feet or more into the hold of a
vessel with a bump. He should picture the goods in the hold subject
to the wear and tear of a poorly stowed cargo on a tossing and roll-
ing vessel.
The unloading process again subjects his goods to rough handling .
He must not forget the hooks used by longshoremen in handling
boxes and bales and must protect his goods against them. He must
provide against pilfering and against climate and damage by water.
Each manufacturer has a special problem in packing his product.
Some of the general conditions which must be provided against are
stated in "Packing for Export " 1 as follows :

Proper packing means careful consideration of the interests of the ulti-

mate receiver of the goods. Carrying companies may be responsible for a cer-
tain amount of damage to merchandise, but this does not relieve the shipper
of responsibility .
Inadequate packing is dear at any price. Importers in foreign countries
would rather pay for special packing than receive damaged goods, and when
they give definite instructions they expect such instructions to be followed.
It is not caprice that dictates these directions ; the importer knows what con-
ditions must be met and he knows what packing will prove satisfactory.
Every exporting manufacturer should aim to follow any and all instructions
given by the importer ; or, not receiving instructions, he should carefully con-
sider every condition affecting the shipment and provide for them in packing
the goods.
Another factor to be considered is the climate, both of the country of destina-
tion and of the route of transportation thereto. Goods which are destined for
countries of temperate climate, but which must pass through the Tropics en
route, should be protected against heat, if they are liable to injury thereby.
This fact again emphasizes the necessity of the exporting manufacturer know-
ing the shipping routes and modifying his packing to meet conditions . More
important, however, is a careful study of the climate of the country of destina-
tion. A few illustrations will suffice to show the need of more attention to
this matter. In Honduras the rainy season lasts for five or six months, during
which time it rains hard and frequently. Freight going from the coast to
the interior is covered with canvas, but this is not always in good condition ,
and articles badly packed are injured by the rain. In Colombia, machinery
destined for the interior is frequently exposed to the weather for many days,
with heavy rains, followed by intense heat, and the shipment may arrive,
after two or three weeks' exposure, covered with several inches of mud. In
sections of India, where the rainfall takes place within four or five months,
the heavy and continuous rains produce a dampness in the air quite unknown
in the United States. The moisture and heat combined set up fungoid
growths in goods that would be quite unaffected by climatic conditions of
1 Published by the Bureau of Foreign and Domestic Commerce, Miscellaneous Series
No. 5.
48 PAPER WORK IN EXPORT TRADE.

America. Even perishable goods packed in tin-lined cases are not safe if they
have been packed in the United States during wet weather. In Venezuela,
for example, food products, such as dried fruit and cereals, if packed in card-
board boxes, are soon spoiled by tropical moisture or by attacks of worms and
weevils.
Port conditions in foreign countries are a large factor in determining the
requirements of adequate packing. If lighterage is employed goods are usually
roughly handled . Most of the complaints from the west coast of South
America, for example, are due to the fact that the exporter fails to provide
against the rough handling to which goods are exposed in passing from ship to
shore.
Proper marking of export shipments is as important as proper packing. In
shipments to some foreign countries mistakes in marking are very costly to
the importer. For instance, in a country where it is prescribed that each
package of a shipment shall receive a serial number, all goods bearing duplicate
numbers may be subjected to a heavy fine in the form of an increase in duties.
The utility of such marks as " This side up " and " Handle with care " is
doubtful. Such instructions may be observed at the loading point in this
country, but they are useless at the other end of the route unless inscribed in
the language of the country to which the goods are shipped. Even then too
much faith should not be placed in their efficacy.
In some countries it is inadvisable to advertise on the exterior the contents
of the package, for such advertising indicates to the would -be pilferer his
opportunity.
The marks should be legible and ineffaceable under all conditions imposed in
handling, and their arrangement on the package should be such as to facilitate
rapid handling.
In packing goods for export the shipper must consider, not only the adequacy
of the packing to protect the merchandise in transit, but also its effect on the
amount of duty that will be imposed upon the arrival of the merchandise at the
place of destination. In the case of an article subject to a high rate of duty on
gross weights, the weight of the packing may prove a very important factor in
determining the cost of the merchandise to the importer, and in some cases
the duty on the packing may exceed that on the contents.
In most of the European countries the dutiable weight of the imported mer-
chandise is determined by the rate of duty ; that is, as a general rule, merchan-
dise subject to a rate of duty above a certain amount is dutiable on actual or
legal net weight, while merchandise subject to a lower rate is dutiable on gross
weight. In the Latin-American countries there is no such line of demarcation,
the basis for duty being indicated in the tariff for each item. By actual net
weight is meant the weight of the merchandise alone, without any packing ; by
legal net weight is understood the gross weight less a certain percentage for
tare, which differs in accordance with the container, and is fixed by a schedule
annexed to the tariff. If the importer is dissatisfied with the tare allowance in
the schedule he may usually have the merchandise weighed, at his expense, and
duty levied on the actual net weight. In some countries the weight of the im-
mediate containers, such as cardboard boxes, paper wrappers, etc., is sometimes
included in the dutiable weight of the article.
Articles of commercial value used as containers are, as a rule, dutiable sepa-
rately. In France such articles, imported as containers of merchandise dutiable
on gross weight, are dutiable separately only if the rate applicable to them ex-
ceeds by more than 10 per cent the rate applicable to the contents. Goods
packed in a manner to prevent inspection by the customs officers are subject in
 PAPER WORK IN EXPORT TRADE. 49

some countries, notably in Germany and Switzerland, to the highest rates pro-
vided for in the tariff.
By keeping the weight of the packing as low as is consistent with safety in
carriage, the duty may be reduced to the minimum, not only in the case of arti-
cles dutiable on gross weight, but also in the case of articles dutiable on
legal net weight, since the latter is ascertained by deducting a fixed percentage
from the gross weight. Resort to packing of an unusual charcater for this pur-
pose frequently defeats its own object, for in such cases the customs officers may
refuse to allow legal tare and insist on actual weighing. In some cases a saving
in duty may be effected by shipping the inner containers separately from the
merchandise for which they are intended. Thus in Mexico, for example, in the
case of goods duitable on legal net weight, imported without inner containers,
the weight of the goods alone is taken as a basis for duty, while the inner con-
tainers shipped separately may sometimes be admitted at a lower rate of duty.
Mixed packing, that is, the packing in the same receptacle of articles subject
to different rates of duty or different tare allowances, may subject the importer
in some Latin American countries to the payment of a fine, usually in the form
of a higher rate of duty. In most countries, however, mixed packing is allowed,
provided the merchandise is properly declared.

As one of our shipments is salmon , the following report from a

commercial agent of the Bureau of Foreign and Domestic Commerce
in Porto Rico has a direct bearing:
The writer witnessed at San Juan the unloading of a shipment of 2,500 cases
of canned salmon from Seattle. The gross weight of a case of salmon is about
60 pounds, there being 48 one-pound cans in each case. About 6,000 cases reach
Porto Rico annually from the United States. In unloading the consignment
mentioned, about 20 cases were placed at one time in a rope net for hoisting
from the ship's hold and swinging out over the dock. The goods, under the
supervision of the chief officer, were well handled and no fault could be found
with the method or care taken, yet in every net of cases three or four were
broken and the cans came out, running the risk of punctures from nails or dents
in the cases. The unbroken cases were removed and the others set aside to be
repaired, the dock hands having gathered up the loose cans and replaced them
in cases so far as possible, except a few that disappeared in the garments of the
roustabouts. Even with great care in handling the whole cases, after they were
docked more of them broke open and time was lost in renailing. An hour after
the unloading began the dock was strewn with canned salmon, loose and in
broken cases.
The cases in this shipment were made of good material, the tops, bottoms, and
sides being of half-inch clear stuff and the ends seven-eighths inch , nailed with
11-inch smooth, bright wire nails, probably fivepenny box nails. Herein lay the
fault. Such nails are driven through the tops and bottoms into the ends of the
cases, entered with the grain of the wood, and were unable to stand the strain
of the 48 cans against either top or bottom. Allowing 26,000 nails in a keg of
fivepenny box nails, 720 such boves could be nailed with this quantity, there
being 36 nails in each case. A fourpenny cement-coated nail should have been
used, with band iron. As a keg contains 45,000 fourpenny nails, 1,260 boxes
could be nailed with them, and with the strapping these cases would be much
stronger than if nailed with bright nails only, while the saving in nails would
pay for the iron. In any event, whether bright or cement-coated nails are used,
all such shipping cases should be strapped for oversea transportation.
125740°-204
50 PAPER WORK IN EXPORT TRADE.

The price agreed upon was $8 per barrel , delivered to the steamer in
New York ($8 per barrel F. O. B. steamer, New York) . The terms
were net, that is, no discount on price quoted , and payment was to be
made on the delivery of the goods (terms net cash ) .
The special instructions make this order subject to the Export Cor-
poration's ability to secure an export license. The railroad bills of
lading must be sent in triplicate, two for the corporation's files and
one to surrender to the carrier. These bills must be plainly marked
with the order number (order A ) and the shipping marks
WAT CO.
EC
Habana
No. 1-500.

MARKING.

The proper marking of packages for export is one which can not be
over emphasized. B. O. Hough explains the importance of this point
in his treatise on " Practical Exporting " (pp. 443–446 ) as follows :
Cases for foreign shipment are not addressed to customers by their names
in full. Symbols are used. Reasons for this practice include : Quicker iden-
tification of packages on docks, in the ship's cargo, in loading and unloading,
in shipping manifests ; abbreviation in the writing of documents, bills of lad-
ing, manifests , etc., and finally, secrecy, concealing the actual names of the
consignees, both from observers at this end and from competitors of consignees
at the other end.
In some foreign countries mistakes in marking are very costly to the im-
porter. For instance, in a country where it is prescribed that each package
of a shipment shall receive a serial number, all goods bearing duplicate num-
bers may be subject to a heavy fine in the form of increased duties.
Necessary marks.- None but the absolutely necessary marks should appear
on export cases. If secondhand cases are used, all old marks should be thor-
oughly erased. Anything save the essential particulars serves only to con-
fuse. Advertising matter on the exterior of cases for foreign shipment is
almost useless as advertising, gives a clue to thieves as to the contents
of the case and preferably should be omitted. The required marks should
not only be legible, but they should be prominent and ineffaceable under all
conditions. Their arrangement on the surface of the package should be such
as to facilitate rapid handling.
The essential marks are : The symbol or device of the consignee ; the name
of the port, usually placed underneath the symbol ; the serial number of the
case ; the gross and net weights in pounds or in kilos or in both, as may be re-
quired ; sometimes the measurement of length, breadth, and thickness of the
package in feet and inches.
The consignee's mark. The symbol, which represents the consignee and
which is often arranged by him, may be written in a great variety of forms.
It usually consists of one or several letters, either alone or in conjunction with
a diamond, a triangle, a square, a circle, a heart, or some similar design.
The following are typical examples of such symbols as employed in export
shipping :
 PAPER WORK IN EXPORT TRADE. 51

A B

со XYZ
B 489

MELBOURNE SHANGHAI VALPARAISO

Such symbols identify the consignee, and sometimes, as in the illustration

of the mark for Valparaiso, include a number which refers to the number of
the order or indent, or some other identification chosen by the consignee. The
letters used may be the initials of the firm name or others arbitrarily chosen ,
perhaps designed to give no clue to the consignee.
The port mark.-The port mark is really the most essential of all. By port,
however, is not necessarily meant the actual seaport. It is the term used to
indicate the ultimate point of destination. Goods intended for a customer in
Santiago, Chile, should not be marked Valparaiso ( in the absence of special
instructions so to mark ) simply because Valparaiso is the port and the termi-
nus of the ship's voyage. The port mark should be clear and distinct and
written in larger characters than any other marks. The whole symbol should,
when possible, measure from 12 to 15 inches across.
Package numbers. - Serial numbers are given to the cases of a shipment,
usually placed alongside of such symbols as those above illustrated. Instruc-
tions may be received, for example, to "number cases from 10 up." This means
that one case is to be numbered 10, another 11, and so on. There must be no
duplicates in these numbers, nor must any number be omitted. If two cases
arrive in a foreign customhouse bearing the same number immediate suspi-
cion is aroused of an attempt to defraud the customs. If one number in a
series has been passed over, the consignee is naturally fearful that a case has
been lost.
Exactness of all marks.-Extreme care must be taken in noting the gross
and net weights of cases, as has already been suggested. They must be as
accurate and exact as the most careful weighing can make them and like all
other marks must correspond letter for letter with marks given on invoices
and consular documents, otherwise heavy fines are likely to result with endless
inconvenience and great delay, because the contents then have to be taken out
and weighed separately in customhouse at port of destination.
Unless the shipper is in constant, continuous touch with a given market he
will do well, when ready to dispatch each separate shipment, to inquire as to
all the formalities required in marking, as well as in other regards, of the
nearest consul in the United States of the country in question. For example,
certain countries require that marks appear on more than one side of a case.
Warning marks useless . - Familiar phrases like " Handle with care," " This
side up," " Keep dry," " Fragile," " Stow away from boilers," may usually just
as well be omitted . They have no appreciable effect on longshoremen anywhere
and when cases go to a country where some other language is spoken such
instructions in English carry no weight whatever, unless it is " fragile," which
is much the same word in several languages. It is the shipper himself who
must provide against all contingencies and so pack goods that it will not matter
whether they are handled carefully, go right side up, or get wet.
52 PAPER WORK IN EXPORT TRADE.

In exceptional cases where it is thought that some effort must be made to

try to secure especially favorable treatment for goods, legends of this sort may
be used ; but if so, they should be written not only in English but in appropriate
foreign languages. As a rule, however, such instructions, like any other marks,
often serve to obscure the essential feature, that is, the symbol and the port
mark.
How marks are applied.-Crayon marks, tags, or cards should never be used
in export shipping. Marks should preferably be applied by a stencil ; in default
of stencil, painted on by a brush and indelible ink. They must not only be
prominent and recognizable at a glance, but they must be ineffaceable, not
likely to be washed away or blurred by rain or sea water, or rubbed off by
abrasion with other cases. The stencil insures clearness and legibility and
may be used even for the special symbols adopted by foreign customers. Some-
times a little ingenuity is required in devising satisfactory ways of marking.
For example, the question of how to paint marks on iron and steel girders, etc.,
to guard against smearing and to be waterproof is one that has puzzled many
shippers.
TIME OF DELIVERY.

In acknowledging the order of W. A. Thompson & Co. the Export

Corporation promised delivery within 60 days from the mill. The
Export Corporation asks the manufacturer for immediate shipment
(shipment desired as soon as possible ; shipment promised at once) .

The ATLAS PORTLAND CEMENT Co.

30 BROAD STREET, New York.
JOHN R. MORRON, Pres.
WORKS
Hudson, N. Y. Northampton, Pa. Hannibal, Mo.
R.R.STATION R.R. STATION R.R. STATION
Hudson, N. Y. Navarre, Pa Blasco, Mo.
Sold to THE EXPORT CORPORATION, Date SEPT. 1 , 1914.
42 BROADWAY,
NEW YORK, N. Y.
P-R-O- T-O-R-M-A
PACKING LIST

Cash va PapersNew York less discount ATLAS ORDER E-100-

Terms: of Two Cents perbarrel. New York City Funds YOUR ORDER A-9-10-18

500 BBLS. ATLAS PORTLAND CEMENT IN EXPORT

QOOPERAGE AT $8.00 PER BBL. $4,000.00
A/S STR. NEW YORK HARBOR, IN ONE LOT
FOR EXPORT TO HAVANA; CUBA.
MARKS:-
W. A. T. CO.
C 180 KILOS BRUTO
HAVANA
NO. 1/UP

GROSS WGT. 400 LBS. PER BBL, IN KILOS 180

NET WGT. 376 LBS. PER BBL, IN KILOS 170
28 IN. HIGH 17 IN. HEAD 20 IN. BILGE $4,000. 00

FIG. 1.-Supplier's invoice to exporter.

 PAPER WORK IN EXPORT TRADE . 53

INVOICES.

The purchase order says :

The invoice must show order number and marks, also number of packages
and weight per bundle or package. Invoices and packing sheets must be made
separately for each order number and each mark, must mention order number ,
and give gross and net weights of material in pounds and kilos and contents
and measurements of each package. Net weight means the weight of goods
alone ; gross weight means the weight of goods plus weight of packages.
Errors in weight or description, or a lack of any of the above information,
may entail heavy fines in foreign customhouses, which will be for your [ sup-
plier's ] account. Losses or damages from insufficient packing will be for your
[supplier's ] account. No catalogues or other printed matter or samples are
to be packed with the goods unless specifically instructed . No packing sheets
or invoices are to be packed with goods. All packages or pieces must be plainly
marked as per mark given and numbered consecutively, and no other mark to
be placed on packages or pieces.

SPECIMEN PURCHASE ORDERS IN OTHER TRANSACTIONS.

The other purchase orders go out to the different suppliers as

follows :

TRANSACTION B-PURCHASE ORDER.

EXPORT CORPORATION,
42 Broadway, New York, N. Y.

To : International Trading Co.,

New York City.
Ship to : Ourselves. Order No. “ B.”
Notify: Ourselves. Date : November 13, 1918.
Route : Usual route to New York for free Freight : Prepaid.
lighterage. Inspection : Usual mill.
Material : Grade " A " hops and Pratt's For export to : Brazil.
turpentine. Shipment promised : 30 days.
Quality : Usual grade " A " hops and Pratt's Terms : Sight draft dock receipt.
turpentine.
How put up : For export.
Shipment desired : Within 30 days.
Prices : $10.50 per 100 pounds for hops.
$6.50 per case for turpentine.
F. A. S.: Steamer, New York.

Special instructions :
Dock receipt must be turned over to us in time to enable us to have it
changed into ocean bill of lading so that documents will go forward on same
steamer as material.
54 PAPER WORK IN EXPORT TRADE.

Invoices must bear net, tare, and gross weights, also the size of each case.
Packing must be usual for export.
All cases must be plainly marked T. & B. Co.
EX
Rio.
Cases of turpentine must be numbered from 100 up and hops must be num-
bered from 1 up.

Quantity. Material. Description. Weight. Marks.

5 gross tons. Hops.... About 12,000 lbs ... No. 1 up .

500 cases.. Turpentine.. No. 100 up.

EXPORT CORPORATION.

TRANSACTION C-PURCHASE ORDER.

EXPORT CORPORATION,
42 Broadway, New York, N. Y.

66 C."
To : American Machine Co. , Sterling, Order No. "
Ill. Date : September 26, 1918.
Ship to : Your order. Freight : Prepaid.
Notify : Us at Seattle, Wash. Inspection : No special.
Route : Via Northern Pacific. For export to : Japan.
Material : 20 wire nail machines. Shipment promised : At once.
Quality : Standard checkered head Terms : Cash vs. railroad bill of
countersunk wire nail ma- lading.
chines set up ready for
operation.
How put up : In cases packed for ex-
port.
Shipment desired : At once as per your
quotation.
Prices : $1,200, each, F. A. S.: Seattle.
Special instructions :
Shipment must be made at once, on an order bill of lading. Export license
has been applied for and will probably be granted at once, at which time we
will forward you number, also permit number for shipment. All invoices and
packing lists must be properly marked with our order numbers and marks, and
must bear gross, tare, and net weight of each case, also measurement of each
case, and must be properly cased and strapped for export.

Quantity. Material. Description . Weight. Marks.

20 machines. Wire nail machines .. Standard machines Ex

set up ready for No. 1 up
operation. Kobe.

EXPORT CORPORATION .
 PAPER WORK IN EXPORT TRADE. 55

TRANSACTION D-PURCHASE ORDER.

EXPORT CORPORATION,
42 Broadway, New York, N. Y.
To: Portland Packing Co., Order No. " D.”
New York City.
Ship to : Order yourselves. Date : November 30, 1918.
Notify : Us, at 42 Broadway, N. Y.
Route : From your warehouse. Freight : None.
Material : Red Alaska salmon and Canadian lob-
ster put up in tin cans 1 pound each,
and packed in cases 48 to a case.
How put up : In cases strapped for export. For export to : France.
Shipment desired : At once. Shipment promised : At once.
Prices : $36.50 per case for salmon and $33.50 per
case for lobster.
F. O. B.: Warehouse, N. Y.
Special instructions :
Material must be very strongly packed for export. Invoices and packing lists
must contain gross tare and net weights, together with measurements of cases,
and must show our order number clearly, together with marks.
Do not have ready to ship for us until we advise you that export license
has been granted and we have arranged for ocean space.

Quantity. Material. Description. Weight. Marks.

1,000 cases.. Salmon .. Red Alaska brand.. Dussot

E. C.
No. 1 to 1000 inc.
1,000 cases.. Lobster. Canadian... Dussot
E. C.
No. 1001 to 2000 inc.

EXPORT CORPORATION .

TRANSACTION A-PURCHASE ORDER.

EXPORT CORPORATION,
42 Broadway, New York City.

To : Interstate Iron & Steel Co. , Chicago, Ill.

Ship to : Ourselves. Order No. "A."
Notify : Ourselves, 42 Broadway, N. Y. C. Date : Sept. 10, 1918.
Route : P. R. R. for free lighterage. Freight : Collect.
Material : Soft steel bars. Inspection : Usual mill.
Quality : Usual. For export to : Cuba.
How put up : In bundles securely tied for Shipment promised : 30 days.
export.
Shipment desired : Within 30 days. Terms : Sight draft less 1 per cent.
Prices $4.50 per 100 pounds.
F. 0. B.: Mill, Chicago, Ill.
Special instructions :
Bills of lading must be sent us immediately upon shipment of material and
must be plainly marked with our order number and marks of the material.
They must be sent us in triplicate, together with your invoices.
56 PAPER WORK IN EXPORT TRADE.

Invoices must bear net, tare, and gross weights of each package or bundle,
and must be marked for export.
Bars must be securely tied for export.
Bars should be marked on end with a dab of white paint.

Quantity. Material. Description. Weight. Marks.

100 gross tons . Softsteel bars...... 1/2'' x 20' long ..... 224,000 lbs ...... With white paint.

EXPORT CORPORATION.

NOTES ON MANUFACTURER'S RECORDS.

The records of the manufacturer vary according to the peculiar

problems connected with their products and their accounting systems.
The records and documents of the Atlas Portland Cement Co. used in
connection with the Export Corporation order for 500 barrels of
cement for shipment to Cuba are in part as follows :
THE ATLAS PORTLAND CEMENT COMPANY,
30 Broad Street.
NEW YORK, September 11, 1918.

Subject : Your order No. A-9/10/18. Atlas reference E-100.

THE EXPORT CORPORATION,
42 Broadway, New York City.
Attention of Cuba Department.
GENTLEMEN : Thank you very much for your order which has
been entered under above reference, subject to the terms and con-
ditions on the reverse,¹ for export to Habana, Cuba.
Quantity : 500 barrels Atlas Portland cement.
Price : $8 per barrel, delivered alongside steamer, New York
harbor, in one lot.
Package : Paper-lined export barrels weighing approximately
400 pounds gross, 376 pounds net.
Shipment : Any time upon reasonable advance notice prior to
November 10, 1919. Shipments originate less than
100 miles from New York tidewater. Cement will
not be brought to New York until you advise defi-
nite delivery date. Written instructions should
reach us a reasonable time in advance.
Payment : On approved credit. Payment in full in New York
City funds on presentation of shipping documents
in New York, less discount of two cents ( 24. ) per
barrel.
Your order is very much appreciated and will receive our best
attention.
Yours , very truly,
THE ATLAS PORTLAND CEMENT COMPANY,
By..
DE /F.O. Manager Export Department.
1 See p. 21.
 PAPER WORK IN EXPORT TRADE . 57

THE ATLAS PORTLAND CEMENT COMPANY,

30 Broad Street.
NEW YORK, September 20 , 1918.
Subject : Your order No. A-9/10/18. Atlas reference E-100.
THE EXPORT CORPORATION ,
42 Broadway, New York, N. Y.
Attention of Cuba Department .
GENTLEMEN : Thank you for the advice that you have been
granted export license to cover the above order.
We will be very glad to make shipment any time upon reasonable
advance notice subject to the price, terms, and conditions of our
acknowledgment of your order dated September 11, 1918.
Can you give us an approximate date as to when you want this
lot delivered ?
Yours, very truly,
THE ATLAS PORTLAND CEMENT COMPANY,
By-----
Manager Export Department.
THE ATLAS PORTLA TLAND CEMENT CO. ORDER
9/12/18 SHIP NORTHAMPTON AS ORDERED PRIOR TO 59725 FUTURE
FROM 8434 1-'18-33214
BUYERS ATLAS NO.
ORDER A- 9/10/18 E-100 X-1&J 18610/18
CONSIGNEE THE EXPORT CORPORATION, DATED 9/5/18
A NEW YORK WITHIN FREE LTGE LTS
DESTINATION HAVANA, CUBA. TERMS Cashva Papers New York logs discount

ACCOUNTING
of Two Cents perbarrel
CHARGE TO THE EXPORT CORPORATION
ADDRESS #115 BROADWAY, NEW YORK , N.Y. TRANSPORTATION CHOES FRT. per BBL.
.COPY

..COPY
DEPT

IN BAGS WOOD
DEPT
ING

W& C FAT PER NET TON $1.40 RAIL RATE .28

ROUTE CR R BARGE FGHT. CHGES. PREPAID LTGE P.PD .14
MARKS W. A. T. Co.
AND SPCL. FEC 180 KILOS BRUTO
INSTS HAVANA
NO. 1/ UP
TOTAL FRT PER BBL 42
CEMENT INTENTED FOR
PRODUCT PACKAGE PRICES
WOOD CLOTH PAPER TOTAL BULK PKG. FRT DEST. Chooked by
ATLAS 500 $5.58 2.00 .42 $8.00
EXPORT COOPERAGE PAS NY . HARBOR
400 LBS GROSS 376 LBS. NET 500
WHITE
Approved by
MIX. NO. 1
MIX. No. 2
MIX, No. 3
SALE
THROUGH
FIG. 2.- Manufacturer's record of the order.
 CHAPTER V.

SHIPMENT TO SEABOARD.

When the order is ready for shipment to the seaboard the manu-
facturer must exercise great care in complying with shipping instruc-
tions. If the route is not designated in the order the traffic depart-
ment of the manufacturer must ascertain the cheapest and best route.
Through rates are in effect on most commodities, especially from
points in the Official and Southern Classification territory to the
North Atlantic seaboard. Having selected the route, the shipper
must arrange with the railroad company for cars, if he is shipping
in carload lots.

PREPARATION OF RAIL SHIPMENTS.

On the delivery of the goods to the railroad three documents are

made out-the shipping order, memorandum, and the bill of lading.
These are identical in form and differ only in name. The shipping
order is retained by the railroad ; the memorandum is kept for filing
by the shipper ; the bill of lading is sent by the shipper to the con-
signee. The entries on these three documents are identical. These
documents are usually prepared by the shipper and signed , after
checking, by the agent of the carrier.
The entries on these documents include the place of shipment and
the date, the name of the shipper and destination, the route, the car
initial and number, the consignee , the number of packages , a correct
description of the articles, the weight, and name of person or firm
to whom the freight is charged if it is not prepaid. If the goods are
for export through the port of New York and are in carload lots the
66
bill of lading is marked “
" Shipment for export within free lighterage
limits."
It is also very important for the manufacturer to copy on the bill
of lading the special shipping marks which he placed on the boxes ,
bundles, packages, or barrels, as per instructions given by the ex-
porter, and also the order number of the exporter. This gives the
exporter, who may have a number of shipments of the same kind due
to arrive, the record necessary to readily identify any particular
order.
58
 PAPER WORK IN EXPORT TRADE. 59

In order to facilitate the movement of inland traffic, the Traffic

Bureau of the Merchants' Association has prepared a set of sugges-
tions to shippers as follows :
Freight offered for shipment on illegible bills of lading or shipping orders, put
in insecure or improper containers, indifferently packed and carelessly marked,
leads to loss of money, loss of time, and impaired freight service, and frequently
to loss of or dissatisfaction on the part of your customer.
With the purpose of securing improved shipping methods and cooperation on
the part of shippers, the Local Agents' Association of New York have made
the following appeal to the shippers, and the association urges upon its members
and shippers generally to note carefully the suggestions offered with the view
of having them observed by their shipping departments.
An illegible or improperly executed bill of lading frequently results in errone-
ous billing, causing loss, damage, and delay.
A properly executed and legible bill of lading, clearly and plainly showing the
name of the consignee, destination, route, number of packages, and package
numbers ( if the packages carry numbers ) , also payment when shipment is to
be prepaid, tends to insure correct delivery.
Superfluous marks on cases or packages should be removed and the packages
should show plainly all the information on the bill of lading and shipping
order.
Packages improperly marked, and not corresponding with the exact detail as
shown on the bill of lading and shipping order, cause shipments to be delayed ,
lost, or damaged in transit.
To the shipping clerk : We ask your cooperation for mutual benefit, believ-
ing the best interest of consignee, shipper, and carrier will thereby be con-
served. Start your shipments under legible, precise, and comprehensive condi-
tions, thereby avoiding expensive inconveniences. Begin right.
Each package when offered for shipment should be in proper condition , so
as to withstand ordinary handling during transit-cooperage ( or baling )
perfect.
Mark all 66 case 99 packages with a brush. Do not use a card ; it is liable
to be rubbed or torn off by contact with other packages.
On 66' bale " goods that will not distinctly carry a brush mark, firmly attach
a strong tag, having it sewn into the baling.
Have each package carry a " return " address ( shipper's name and place of
business ) , i. e., “ From,” etc. This will assure quicker return if a package
goes 66 astray" or is " refused or consignee's name is obliterated.
Make 66 Shipping order " the first document, the bill of lading the second
copy. The most legible document should be left with the carrier to assure
correct waybilling. It is handled many times. Typewriter is to be used
when possible.
Spell correctly and write clearly the full name of the consignee.
Distinctly show the destination so there will be no guesswork : ( a ) Name of
place in full ; ( b ) name of county (when not a prominent city ) ; ( c ) give full
name of State (Neb. and Nev.; Pa. and Va.; Col. and Cal.; N. D. and S. D.;
are some illustrations of a letter difference ) .
Show all 66 special marks,"99.66 case numbers," etc.; they are identifying factors
toward a correct delivery at terminal station.
Description of " Articles " is to be written in full ; never abbreviate ; rate
of freight is affected when station is uncertain as to commodity.
Use only commodity names as given in " Classification." Never use a
trade name.
60 PAPER WORK IN EXPORT TRADE.

See that regulations of the Inflammable and Explosive Bureau are fully
complied with ; also fiber board case rule.
Sign name of shipper ( with name of shipping clerk ) on Shipping order."
If you use fiber board, pulpboard, or double-faced corrugated strawboard
boxes, be sure that such containers conform with the classification require-
ments, for there are restrictions involving their use and penalties where the
classification requirements are not complied with.
If you use sacks, in order to avoid loss, damage, or waste, particularly of
foodstuffs, use sacks made of strong material and so woven that sifting may be
prevented ; see that the sacks are well sewed and free of holes.
Execute definite and legible bills of lading.
Pack goods in strong containers.
Mark packages plainly.
Have shipments in depot early, so they can be loaded and forwarded same
day.

FORM OF BILL OF LADING.

The Atlas Portland Cement Co. shipped from its factory at Mc-
Keesport, Pa., on September 12 , 1918, the 500 barrels of cement.
1
The bill of lading is shown on the opposite page.

FREE LIGHTERAGE.

The Export Corporation instructed the manufacturers to mark on

66
the bill of lading " For export within free lighterage limits. " This is
of special importance, as it protects the exporter from additional
charges for the delivery of his goods from the cars to the steamship .
The railroad freight rate on carload shipments of merchandise for
export includes lighterage within certain free-lighterage limits.
Less than carload shipments for export incur charges for cartage,
ferriage, lighterage, handling charges, and storage.
In New York carload shipments from the west are delivered to the vessel
lighterage free, excepting heavy articles and a few commodities taking low rates
which are seldom exported.
There is an extra lighterage charge on articles weighing more than 3 tons,
whether shipped in carloads or less than carloads, unless a consignment con-
taining or consisting of heavy articles amounts to 50 tons or more, in which
case there is no extra charge by the railroads. For articles weighing 3 to 20
tons each the extra lighterage charge paid by the shipper is 40 cents per ton ;
for articles weighing more than 20 tons the charge is higher.
The steamship companies also have a hoisting charge on heavy articles , which
may or may not be included in the contract ocean rate. This hoisting charge
begins, on some steamship lines, with articles weighing more than a ton and a
half (gross ton of 2,240 pounds ) , but other lines handle articles up to 5 tons
without extra charge. The shipper of heavy articles should keep this in mind,
when obtaining quotations, to avoid any misunderstanding.

1 There is one mistake on the bill of lading, which was evidently overlooked by the
carrier's agent. The mistake was copied in subsequent shipping documents and was not
discovered until the goods reached the customhouse in Cuba.
 PAPER WORK IN EXPORT TRADE. 61

Only a few foreign buyers take manufactured products in carloads, and

trouble arises in handling less than carload shipments. The steamship piers in
New York City are scattered along some 50 miles of water front and, with a few
exceptions, can not be reached by railroad, except by use of car floats or lighters.
Full cars are floated alongside the vessel and the contents hoisted on board.
F. D. 2684

The Pennsylvania Railroad Company

Shippers No...
ORDER BILL OF LADING-ORIGINAL. Agents,No....
RECEIVED, 'subject to the classifications and tariffs in effect on the date of issue of this Qriginal Bill of Lading the property described
below, in apparent good order, except asnoted (contents and condition of contents of packages unknown), marked, consigned and destined as
indicatedcarrier
another below,onwhich said Company
the route agrees to carryto
to said destination. its usualagreed,
It is mutually placeasoftodelivery at said
each carrier of alldestination, if onproberty
or any of said its road,
overotherwise
all or anyto portion
deliver to of
said route todestination, andasto each party at any time interested in all or any ofsaid property, that every service to be performed hereunder
shall be subject toallthe conditions, whether printed or written, herein contained (including conditions on back hereof) and which are agreed to
bythe shipper and accepted for himself and,bis assigns.
The surrender of this Original ORDER Bill of Lading property Indorsed shalt be required before the delivery of the
property. Inspection ofproperty covered by this bill of lading with not be permitted unless provided by law or unless permission:
is indorsed on this original bill of lading or given in writing by the shipper.
The Rute of Freight from.
is in Cents per 100 Lbs. IF Special IF Special
IF..Times 1st IF 1st Class IF 24 Class IF Rule 25 IF 3d Class IF Rule 26 IFRule 28 IF 4th Class IF 6th Class IF 6th Class per per...........

From McKeesport , Pennsylvania Date September12 191 8

Shipper Atlas Portland Cement Co. New York
Via Fraight Prepaid and Charge to us
(Mail Address-Not for purposes of Delivery:)
Consigned to ORDER OF………….Export Corporation.
Destination... New York City State of.... County of
Notify Export Corporation .
'At 42 Broadway, New York City State of.. N.Y. County of
Route. P.R.R. Car InitialC . & M.W. Car健 No...441556
C.R.I.P. " 375246
Me. WEIGHT Rateand FREIGHT ADVANCES PREPAID
PACKAGES DESCRIPTION OF ARTICLES AND SPECIAL MARKS (Subject to Correction) Authority CHARGES

500 Barrels Cem.nt... 160,000# To be charged

to shipper

Shipment for Export within Free Lighterage Limits

Export License 543657 Expiring December 31st, 19.18.
Permit 5423...

Marked
W.A.T. Co.
EC
Havana
No.1 Up
Your order No.A

ATLAS PORTLAND CEMENT CO. Shipper. Agent.

(signature) signature of
Per...... Per his representativo
(Thie Bill of Lading le to be signed by the shipper and agent of the carrier issuing same.) ,
FIG. 3.- Railway order bill of lading.
The railroads also reload at their terminals a large proportion of their L. C. L.
shipments into trap cars, which are floated alongside the steamer, but the pre-
vailing custom is to cart all small shipments to the piers.
Several shipments for different boats or piers may be loaded in one car by
the manufacturer, and the railroads allow three free " deliveries 99 by lighter
from the car, but charge a minimum of $6 for each delivery in excess of three.
62 PAPER WORK IN EXPORT TRADE.

A " delivery " is not identical with a lot of goods. There may be four or five
or an indefinite number of shipments in a car, but if they go to three piers or
dock companies they count as three deliveries. Some large shippers are able to
get their shipments through New York without paying lighterage or cartage on
their L. C. L. shipments by taking advantage of this rule.
One of the difficulties that arise on all L. C. L. shipments is that a boat will
not receive them, as a rule, until two or three days before sailing. The heavy
freight must be loaded first, to go in the bottom, and the light and small ship-
ments are put on top. The railroads must hold back small shipments for a par-
ticular boat until they receive orders to send them in ; and in a few hours
there may be a line of drays several blocks long waiting to get on the pier and
unload. Houses which make small shipments from stock in New York can not
send their goods to the boat until they get a " permit," and their drays help to
lengthen the line of waiting teams.
The eastbound billing books of the trunk lines contain the cartage tariffs
which apply to this business when it is handled by a railroad. On a single ship-
ment which has to cross North River to reach the boat there is usually a fer-
riage charge in addition to the cartage item.¹

THE BILL OF LADING AS A CONTRACT.

The bill of lading is a receipt for the goods given to the shipper
by the carrier and is also a contract for affreightment. It is signed
by the shipper and by the agent of the carrier.
As a receipt, the following is stated on the bill of lading : " Re-
ceived the property described below, in apparent good order, except
as noted ( contents and condition of packages unknown ) , marked , con-
signed, and described as indicated below." The carrier is bound only
to deliver what he received. He is not bound by the description of
the contents.
The contract of affreightment is as follows :
Received, subject to the classifications and tariffs in effect on the date of
issue of this original bill of lading the property described below, in apparent
good order, except as noted ( contents and condition of contents of packages
unknown ) , marked , consigned, and destined as indicated below, which said
company agrees to carry to its usual place of delivery at said destination, if on
its road, otherwise to deliver to another carrier on the route to said destination.
It is mutually agreed, as to each carrier of all or any of said property over all
or any portion of said route to destination, and to each party at any time inter-
ested in all or any of said property, that every service to be performed here-
under shall be subject to all the conditions, whether printed or written, herein
contained ( including conditions on back hereof ) and which are agreed to by
the shipper and accepted for himself and his assigns.
The conditions on the bills of lading forming part of the contract.
for affreightment are as follows :
SEC. 1. The carrier or party in possession of any of the property herein
described shall be liable for any loss thereof or damage thereto, except as here-
inafter provided .

R. I. Ardrey : " Export Manual," pp. 45-49.

 PAPER WORK IN EXPORT TRADE . 63

No carrier or party in possession of any of the property herein described shall

be liable for any loss thereof or damage thereto or delay caused by the act of
God, the public enemy, quarantine, the authority of law, or the act of default
of the shipper or owner, or for differences in the weights of grain, seed, or
other commodities caused by natural shrinkage or discrepancies in elevator
weights. For loss, damage, or delay caused by fire occurring after 48 hours
(exclusive of legal holidays ) after notice of the arrival of the property at
destination or at port of export ( if intended for export ) has been duly sent
or given, the carrier's liability shall be that of warehouseman only. Except in
case of negligence of the carrier or party in possession ( and the burden to
prove freedom from such negligence shall be on the carrier or party in posses-
sion) , the carrier or party in possession shall not be liable for loss, damage, or
delay occurring while the property is stopped and held in transit upon request
of the shipper, owner, or party entitled to make such request ; or resulting
from a defect or vice in the property or from riots or strikes. When in accord-
ance with general custom, on account of the nature of the property , or when
at the request of the shipper the property is transported in open cars, the car-
rier or party in possession ( except in case of loss or damage by fire, in which
case the liability shall be the same as though the property had been carried in
closed cars ) shall be liable only for negligence, and the burden to prove free-
dom from such negligence shall be on the carrier or party in possession.
SEC. 2. In issuing this bill of lading this company agrees to transport only
over its own line, and except as otherwise provided by law acts only as agent
with respect to the portion of the route beyond its own line.
No carrier shall be liable for loss, damage, or injury not occurring on its
own road or its portion of the through route, nor after said property has been
delivered to the next carrier, except as such liability is or may be imposed by
law, but nothing contained in this bill of lading shall be deemed to exempt the
initial carrier from any such liability so imposed.
SEC. 3. No carrier is bound to transport said property by any particular
train or vessel, or in time for any particular market, or otherwise than with
reasonable dispatch, unless by specific agreement indorsed hereon. Every
carrier shall have the right in case of physical necessity to forward said
property by any railroad or route between the point of shipment and the point
of destination ; but if such diversion shall be from a rail to a water route
the liability of the carrier shall be the same as though the entire carriage
were by rail.
The amount of any loss or damage for which any carrier is liable shall be
computed on the basis of the value of the property at the place and time of
shipment under this bill of lading, including the freight charges , if paid.
Except where the loss, damage, or injury complained of is due to delay or
damage while being loaded or unloaded, or damaged in transit by carelessness
or negligence, as conditions precedent to recovery, claims must be made in
writing to the originating or delivering carrier within six months after de-
livery of the property ( or in case of export traffic, within nine months after
delivery at port of export ) , or, in case of failure to make delivery , then
within six months ( or nine months in case of export traffic ) , after a reasonable
time for delivery has elapsed ; and suits for loss, damage, or delay shall be
instituted only within two years and one day after delivery of the property,
or, in case of failure to make delivery, then within two years and one day
after a reasonable time for delivery has elapsed.
Any carrier or party liable on account of loss of or damage to any of said
property shall have the full benefit of any insurance, that may have been
64 PAPER WORK IN EXPORT TRADE .

effected upon or on account of said property, so far as this shall not avoid
the policies or contracts of insurance.
SEC. 4. All property shall be subject to necessary cooperage and baling at
owner's cost. Each carrier over whose route cotton is to be transported here-
under shall have the privilege, at its own cost and risk, of compressing the
same for greater convenience in handling or forwarding, and shall not be held
responsible for deviation or unavoidable delays in procuring such compres-
sion. Grain in bulk consigned to a point where there is a railroad, public, or
licensed elevator, may ( unless otherwise expressly noted herein, and then if
it is not promptly unloaded ) be there delivered and placed with other grain
of the same kind and grade without respect to ownership, and if so delivered
shall be subject to a lien for elevator charges in addition to all other charges
hereunder.
SEC. 5. Property not removed by the party entitled to receive it within 48
hours (exclusive of legal holidays ) after notice of its arrival has been duly
sent or given may be kept in car, depot, or place of delivery of the carrier, or
warehouse, subject to a reasonable charge for storage and to carrier's re-
sponsibility as warehouseman only, or may be, at the option of the carrier,
removed to and stored in a public or licensed warehouse at the cost of the
owner and there held at the owner's risk and without liability on the part of
the carrier, and subject to a lien for all freight and other lawful charges, in-
cluding a reasonable charge for storage.
The carrier may make a reasonable charge for the detention of any vessel
or car ; or for the use of tracks after the car has been held 48 hours ( exclu-
sive of holidays ) for loading or unloading, and may add such charge to all
other charges hereunder and hold such property subject to a lien therefor.
Nothing in this section shall be construed as lessening the time allowed by
law or as setting aside any local rule affecting car service or storage.
Property destined to or taken from a station, wharf, or landing at which
there is no regularly appointed agent shall be entirely at risk of owner
after unloaded from cars or vessels or until loaded into cars or vessels, and
when received from or delivered on private or other sidings, wharves, or land-
ings shall be at owner's risk until the cars are attached to and after they are
detached from trains.
SEC. 6. No carrier will carry or be liable in any way for any documents,
specie, or for any articles of extraordinary value not specifically rated in the
published classification of tariffs, unless a special agreement to do so and a
stipulated value of the articles are indorsed hereon.
SEC. 7. Every party, whether principal or agent, shipping explosive or dan-
gerous goods, without previous full written disclosure to the carrier of their
nature, shall be liable for all loss or damage caused thereby, and such goods
may be warehoused at owner's risk and expense, or destroyed without com-
pensation.
SEC. 8. The owner or consignee shall pay the freight and all other lawful
charges accruing on said property , and , if required, shall pay the same before
delivery. If, upon inspection, it is ascertained that the articles shipped are
not those described in this bill of lading, the freight charges must be paid
upon the articles actually shipped.
SEC. 9. Except in case of diversion from rail to water route, which is pro-
vided for in section 3 hereof ; if all or any part of said property is carried by
water over any part of said route, such water carriage shall be performed
subject to the liabilities, limitations , and exemptions provided by statute and
to the conditions contained in this bill of lading not inconsistent with such
statutes of this section, and subject also to the condition that no carrier or
 PAPER WORK IN EXPORT TRADE . 65

party in possession shall be liable for any loss or damage resulting from the
peril of the lakes, sea, or other waters ; or from explosion, bursting of boil-
ers, breakage of shafts, or any latent defect in hull , machinery, or appurte-
nances ; or from collision, stranding, or other accidents of navigation , or from
prolongation of the voyage. And any vessel carrying any or all of the prop-
erty herein described shall have the liberty to call at intermediate ports,
to tow and be towed, and assist vessels in distress, and to deviate for the pur-
pose of saving life or property.
The term "water carriage" in this section shall not be construed as includ-
ing lighterage across rivers , or in lake or other harbors, and the liability for
such lighterage shall be governed by the other sections of this instrument.
If the property is being carried under a tariff which provides that any car-
rier or carriers party thereto shall be liable for loss from perils of the sea,
then as to such carrier or carriers the provisions of this section shall be modi-
fied in accordance with the provisions of the tariff, which shall be treated as
incorporated into the conditions of this bill of lading.
SEC. 10. Any alteration , addition, or erasure in this bill of lading which
shall be made without an indorsement thereof hereon, signed by the agent
of the carrier issuing this bill of lading, shall be without effect, and this bill
of lading shall be enforceable according to its original tenor.

THE DIFFERENT BILLS OF LADING.

The bill of lading on which shipment of the cement was made was
marked "Order bill of lading," while that used in making the ship-
ment of steel bars from Chicago was marked " Straight bill of lad-
ing." In addition to the contract conditions on the straight bill of
lading stated above, which appears in both, the order bill of lading
bore the following clause :

The surrender of this Original Order Bill of Lading, properly indorsed ,

shall be required before the delivery of the property. Inspection of property
covered by this bill of lading will not be permitted, unless provided by law, or
unless permission is indorsed on this original bill of lading, or given in writing
by the shipper.

This clause makes a great difference between the two documents .

Custom and law has made the order bill of lading a negotiable in-
strument, while the straight bill is only a receipt and a contract of
affreightment. Consequently, if shipment is made on an order bill of
lading, it is impossible for anyone to get possession of the material
without the surrender of the original bill of lading, properly in-
dorsed . The indorsement should only be made by some one who is
an officer of the company or corporation that is the actual consignee
of the material, or by some one who is duly authorized by either the
manager of a company or by the board of directors of a corpora-
tion.
On a straight bill of lading it is possible for anyone holding the
arrival notice and representing the consignee to obtain possession
of the material .
125740°-20-—-5
66 PAPER WORK IN EXPORT TRADE .

The principal difference between the straight bill of lading and

the order bill of lading is that, while the former is merely a receipt
on a contract of affreightment, the latter is an evidence of title to
the goods shipped , a symbolic representative of the goods described
therein, and it is, by usage and custom, an instrument of credit.
In international as well as in domestic commerce its chief purpose
is to serve as collateral security back of the bill of exchange. The
bill of exchange is the unit of value, the bill of lading is the unit
of quantity.
FUNCTIONS OF A BILL OF LADING.

The use and function of a bill of lading are described in the

following paragraphs :
The bill of lading is an instrument for facilitating commerce, the importance
of which is now generally known . It is not only a certificate that mer-
chandise is in transit, but a first lien upon that merchandise ; in a way a
title to ownership, and as fulfilling this function, negotiable. For example, a
grain dealer buying a carload of wheat at the western field may, and in the
vast majority of cases does, deposit the bill of lading covering that car in a
bank as security for a loan to its value. That car goes through a port where
it is sold for export ; the loan may not be paid and the bill of lading lifted
until such grain is transferred from the car to the vessel. There is a similar
procedure in the case of other commodities, with the bills of lading covering
raw material to the factory and finished product from the factory. The bill
of lading then contributes to that fluidity of the circulating medium, that
celerity in the transfer of merchandise, which are striking achievements
and the essential requirements of current civilization.¹
The order bill of lading is of great service to the small dealer as well as
to the large corporation . This is especially true in the use made of the order
bill in moving the crops ; the small dealer can not get money to conduct his
business. Many men are restricted in their financial responsibility to the
purchase of two or three carloads of grain. He must realize on his bills of
lading in order to keep his capital sufficient to conduct his business. He may
sell his grain in New England and it will be 15 or 20 days before he can
get returns on it, unless the bill of lading can be used as collateral. Eliminating
the negotiable element in the bill of lading and the products would remain
in the hands of the producer, or it would eliminate the small dealer as a
business element and confine the conduct of the business to those men who
had greater capital.2
No man can deny that custom has made the railroad bill of lading an
important and powerful factor of commerce. On it are moved all of our great
crops, on it are shipped millions of dollars worth of merchandise. In fact,
one of our greatest industries, namely the automobile industry, is almost
entirely financed on order bills of lading.3
In a hearing before the Interstate Commerce Commission in 1909
it was testified that there were annually issued in American com-
1 Logan McPherson : Railroad Rates in Relation to Industry and Commerce, p. 190.
2 Henry C. Barlow, traffic director of the Chicago Chamber of Commerce, in hearings
before the U. S. House of Representatives Committee on Interstate Commerce, 1919,
p. 676.
3 N. A. Adams, member of the American Bankers' Association committee on bills of
lading.
 PAPER WORK IN EXPORT TRADE. 67

merce bills of lading representing commodities of the value of

$25,000,000,000 , including both order and straight bills of lading. It
was then estimated that $5,000,000,000 in cash was advanced an-
nually by the banks on order bills of lading.
All the grain that is shipped from the interior to elevators or abroad, all
the cotton, the packing-house products, all the steel rails, and nearly all the
products of the country are shipped on " to order, notify " bills of lading, be-
cause it would be impossible to finance this tremendous volume of business
while the articles are in transit if negotiable instruments were not permitted
upon which money could be had in the interim. Foreign business is entirely
done upon " to order, notify " bills of lading. In cotton alone the exports
this year, 1912, will probably amount to $600,000,000. Every dollar of that
$600,000,000 is shipped upon a negotiable bill of lading, and somebody has put
out the money based upon the belief that the cotton was actually loaded.¹
There can be no doubt of the importance of the function which the bill
of lading performs in our commerce, but it is evident that the usage and
custom of merchandise and banks has tended to eliminate in their minds the
advantage between a bill of exchange and the bill of lading. Unwilling to
credit drafts drawn by unknown shippers, they have so laid the emphasis
upon collateral back of the draft that the bill of lading has become in their
minds the fundamental paper in financing the movement of goods. " The bill
of lading is made to serve the same purpose as the bill of exchange." 2
The time was when the contract of shipment was a mere contract of
affreightment, a mere matter between carrier and shipper. Therefore, if
there was anything in the bill of lading that was untrue, it was simply a
contract of affreightment and could not be enforced by anybody against the
carrier. But in the last 30 years or more a custom has grown up in this
country whereby the bill of lading is no longer a mere contract of affreight-
ment, no longer a mere contract between shipper and carrier, but a contract
in which two other parties enter, namely, the consignee who pays the draft
on the face of a bill of lading and the banker who loans money on the face
of a bill of lading. The contract is no longer a mere contract of affreight-
ment by the custom of the country, but it has become an instrument of credit
upon which enormous values are advanced on the fact and credit of the
statements contained in that bill.3
Bills of lading are used to an enormous extent in the commerce of the
country, not only as a basis for loans, but as a basis of purchase and sale,
and a basis for sending goods forward on commission.
The great staple crops are moved by bills of lading. They could not other-
wise be easily moved.
An order bill of lading is commodity currency, and is doubly so when
accompanied by a draft-the draft with its dollar mark representing a unit
of the value and the order bill of lading a unit of quantity.
NOTE. For leading decisions see Freidlander v. the Texas Pacific R. R. Co. ,
130 U. S., 416 ; Friedman v. Buckingham, 18 Howard, 182 ; The Lady Frank-
land , 8 Wall.; Pollard v. Vinton, 105 U. S.

1 Sol. Wexler, of New Orleans, vice president of the Whitney Central National Bank.
2 Hadley Railroad Transportation, p. 19.
3 Mr. Thomas B. Paton , of New York, counsel representing the American Bankers' Asso-
ciation, House of Representatives Committee on Interstate Commerce, hearings in 1910,
p. 660.
 CHAPTER VI.

THE FOREIGN-FREIGHT FORWARDER .

The preceding chapter discussed procedure and documents relating

to rail shipments from factory to seaboard. At the port the Export
Corporation employs a " forwarder " to attend to the details con-
nected with clearance through the customhouse , securing of cargo
space, delivery of the goods to the vessel , obtaining the ocean bill of
lading, and the formalities connected with the consular invoice or a
certificate of origin when required by the country of destination.

OPERATIONS OF FREIGHT FORWARDERS.

Hough, in describing the service of foreign- freight forwarders ,

says : 1
The organization and operations of a forwarding agent may be roughly epit-
omized as follows : An active campaign is made for the patronage of manu-
facturers who have regular or occasional foreign shipments to make. Such
clients are supplied with " Advice of shipment" forms, on which instructions are
given to the forwarders and mailed to them with the railway bill of lading.
These forms instruct the forwarding agents precisely what to do with the ship-
ments to which they refer.
Upon arrival of the goods in New York the forwarding agent follows one of
two courses, as may be necessary : He either takes the goods to his own ware-
house, there to combine them with other goods for the same foreign destination,
or he treats them precisely as would a manufacturer, or any other shipper lo-
cated in New York, in delivering direct to steamer and going through the usual
formalities and operations. It may be necessary for the forwarder to pack
together a number of small packages, which may even be paper-covered parcels,
into one large shipping case. When the forwarder has not collected a sufficient
quantity for any single destination, it may be necessary for him to make up
one combination shipment of packages intended for several different ports.
This he will send to some correspondent abroad at a centrally located point,
by whom the shipment will be broken up and distributed item by item to the
neighboring ports. Forwarding agents exist all over the world, and any con-
cern in this business is in more or less intimate touch with correspondents
equipped for the same sort of operations in the principal foreign markets to
which shipments are likely to be made from the United States. The agents at
foreign ports are continually making up their own combinations just as do the
Americans.
If a shipment handled by a forwarding agent for an American manufacturer
is sufficient in volume to warrant an individual steamship bill of lading, such
a document is procured. If, however, a small shipment has to be combined
with several other small shipments, then the forwarding agent takes out a bill
of lading in his own name covering the whole and issues his private receipts
or bills of lading to the individual shippers. The bills of lading which he so
1 B. Olney Hough : " Practical Exporting," pp. 477-483.
68
 PAPER WORK IN EXPORT TRADE . 69

issues show the name of the foreign correspondent to whom the combined ship-
ment has been dispatched and who will make the distribution of the several
items included in the whole shipment.
Needless to remark, all these operations applied in taking care and keeping
track of hundreds or thousands of packages every week involve an immense
amount of detail and clerical work. It must be remembered that all the for-
malities necessary in any foreign shipment have to be attended to, including
usually also the securing of adequate marine insurance and possibly the prep-
aration and certification of complicated consular invoices. In countries where
the latter documents are necessary the employment at seaport of an agency of
some description is really unavoidable by an inland manufacturer.
Forwarders' charges.-Charges made by these forwarders vary according to
circumstances. Some of them publish elaborate rate cards which purport to
show charges for packages of various weights to all of the principal ports of
the world, but such advertised rates are to be regarded as purely nominal and
are almost always susceptible of discount ranging from 10 per cent to 30 per
cent. In fact, a forwarder's charges depend so much on the port of destina-
tion, the volume of other shipments which may be going forward to the same
port, as well as the volume and character of the individual shipment, that
special rates are almost invariably quoted.
The profits of a foreign freight forwarder consist chiefly in the advanced
prices he may be able to obtain for the carriage of goods entrusted to him
through combined shipments which otherwise would be subject to steamship's
minimum charges. For example : Suppose that a forwarder has found 10
different manufacturers, each of whom has a small shipment for the same
destination . We will assume that these 10 shipments average half a ton each.
The ocean freight rate to the point of destination is 40 shillings freight. But
the forwarding agent has collected all 10 together, has a total of 5 tons to ship
on one bill of lading, and pays 40 shillings per ton, i. e., pro rata only 20 shil-
lings on each half-ton lot. He may charge each manufacturer 30 shillings.
Then he makes a profit of 333 per cent on the freight, while each manufacturer
saves 10 shillings for the benefit of his foreign customer, the difference be-
tween the forwarder's charge of 30 shillings and the steamship minimum of
40 shillings which he would otherwise have had to pay.
Undoubtedly forwarding agents have other means of adding to their profits,
and it may be doubtful if the charges they make for cartage, for insurance,
etc., are their actual out-of-pocket expenses for such items . The charge some-
times made, "$1 for bill of lading," is a fee pure and simple. Bill of lading
forms never cost a dollar. However, there is so much expense and so much
work involved in a forwarder's office that he may be thought to deserve any
reasonable profits that he can make, no matter how he attempts to cover them
up. On the other hand , it is to the shipper's great interest to keep charges as
low as possible.
Advantages offered by forwarders.--We have already noted how the serv-
ices of a forwarding agent are practically indispensable to the inland shipper
in the combination of small shipments and in the requisite attention to con-
sular invoices wherever they are required. Some of them sometimes offer
other facilities. For example, they will sometimes send goods forward
"freight collect" when steamship companies themselves require prepayment.
This means that the forwarding agent himself must prepay the steamship
charges, but he bills the charges forward to his correspondent abroad who
undertakes their collection from consignees. Undoubtedly in such cases remu-
neration in suitable proportion is obtained by the New York forwarder as
well as by his correspondent abroad .
70 PAPER WORK IN EXPORT TRADE.

Similarly, forwarding agents will sometimes dispatch goods on C. O. D.

terms, sending along to their foreign correspondents the manufacturer's in-
voices to be collected abroad, plus all charges that may have been involved,
proceeds ultimately to be returned to the American shippers. Operations of
this sort are not, however, to be generally commended. Returns of funds are
not always so prompt as might be expected.
Forwarders as bankers.— In much the same way forwarding agents are
rather fond of advertising that they discount manufacturer's foreign drafts.
What most of them really do is to take the draft bearing the manufacturer's
signature and discount it with some established foreign exchange banker on
the strength of the manufacturer's own rating in the agency books, making a
small charge to the manufacturer, usually in the rate of exchange, for their
trouble. In principle, forwarding agents are not bankers and few of them
outside of certain large and well-known companies have sufficient capital to
warrant them in undertaking banking relations. Operations of this sort are,
therefore, preferably to be undertaken directly with proper banks.
Forwarders' facilities in certain countries.-Some forwarding agents have
special facilities in certain markets, including, for example, delivery to domi-
cile in the principal towns of Great Britain. While most forwarding agents
dispatch shipments to all parts of the world, some of them confine their opera-
tions to certain limited territories, and almost any of them have better facili-
ties in some countries than in others. Because of the large volume of business
which a certain forwarder is accustomed to do in a given foreign market, or
because of peculiarly close and intimate relations with some local correspondent
in such market, it often happens that more favorable quotations are to be se-
cured from such a forwarder than from some of his competitors for the same
market. In general, it will be found advantageous to seek competing quotations
on a given shipment from several forwarding agents, on the foregoing account
as well as on others.
Abuses in the forwarding business.-The desirability of always following
shipments through to destination and ascertaining customers' satisfaction with
means employed and resulting expenses has already been remarked. For-
warding agents, in dispatching combination shipments to correspondents
abroad who are themselves forwarding agents, can only guarantee or prepay
charges known at this end of the line. When they send a shipment to a for-
eign correspondent they send him at the same time a "waybill," which in-
structs him as to the various packages consigned in his care, from whom they
come, how they are marked , what disposition is to be made of each, and they
give him instructions either to collect his own charges with other expenses
from consignees or to debit all back to the forwarder in New York. If ex-
penses are debited back to New York they are then usually charged to the
shipper and he ultimately knows all about them. If, however, they are col-
lected from the consignees , the shipper has no means of knowing, unless he
inquires about it, whether they are regarded by the consignees, the shipper's
customers, as fair and just or the contrary. The same is true when goods are
shipped freight collect.
Furthermore, the foreign correspondent of the forwarding agent often takes
it upon himself to clear goods through his customhouse and makes his own
charges for so doing, although the American manufacturer's customer, the con-
signee of the shipment, may have his own broker or other arrangements for
clearing goods at contract or more reasonable rates. On all of these accounts
every effort should be made to insure customers' satisfaction with the forward-
ing services chosen. Examples of grossly inflated charges are by no means un-
common. The author, in his personal experience, has found a small lot of
 PAPER WORK IN EXPORT TRADE. 71

samples worth $5 loaded with $15 charges by forwarding agents, and has seen
an effort made to collect a freight charge higher by 70 per cent than was indi-
cated by the original bill of lading.
Delayed shipments.—Another abuse sometimes experienced in operations
through forwarding agents is involved in the practice of some of them of hold-
ing back shipments for some unusual foreign destination until other shipments
for the same point can be collected. A shipment for Bangkok, for example, was
at one time held by a New York forwarding agent for two months before finally
sent forward, because the agent had no other goods going to that point and
therefore no opportunity of forwarding economically for the manufacturer or
making profits for himself. Usually, however, a shipment of this sort would
be combined with other shipments going forward, let us say, to London , and
the London correspondent of the New York agent relied upon to join it to
some other shipments from England to point of ultimate destination. Of
course the London agent might or might not be able to do so promptly.
A good deal of ingenuity is required in the forwarding business, and many
turns and twists have to be brought into play in an effort to satisfy shippers
and at the same time turn an honest penny. It is the part of the manufacturer
himself to make sure that the agency he employs delivers the goods to his cus-
tomers in the promptest and most economical fashion possible. If dissatisfac-
tion is experienced with the operations of one agency then another may be tried.

FORWARDING AGENCIES FOR SHIPMENTS TO LATIN AMERICA.

Filsinger, in discussing shipments to Latin America , says : ¹

Freight forwarding to the southern republics involves considerable detail,
and it can be handled in various ways. When the manufacturer is represented
in New York City or other port from which he can ship, his own employees can
attend to the papers. When he is not so represented it is necessary for him
to decide upon the best means of having his consignments forwarded. Follow-
ing is a brief list of the means to which he can resort, with a short outline of
each :
( a ) Foreign freight agents of railroad companies.—The growth of the foreign '
trade of the United States has compelled many transportation companies to
enlarge their facilities for attending to export details. It often happens that
no charge is made for the service, this condition having been brought about by
keen competition. In many instances, where a charge is made, it is nominal
only.
(b) Express companies with foreign freight departments. -Some of the ex-
press companies which are doing a large business abroad include freight for-
warding in their service. Their foreign departments are well organized and
able to render good service. With the express companies compete the truck-
ing or drayage concerns, who still further crowd the field , frequently looking
after every detail of forwarding, as well as drayage and transfer.
(c) Steamship lines.-These for some time have been following the policy
of forwarding shipments consigned to their care. This rule does not apply to
all lines, but certain companies which have sailings for Cuba, Porto Rico,
Central America, etc., are glad to attend to the necessary documents.
(d ) Foreign freight forwarders. -One of the chief factors in forwarding
freight from New York is the forwarding agent. The business of freight for-
warding has increased very rapidly, and many of the concerns are exceedingly
large. Reliable firms can be of material aid, not only in the prompt dispatch

1 E. B. Filsinger : " Trading with Latin America."

72 PAPER WORK IN EXPORT TRADE .

of shipments, but in obtaining and quoting rates for steamship space. For-
warding agents, like all who attend to dispatching shipments, make a small
charge.
Freight rates. — Steamships are not always available. As a result, freight
rates fluctuate greatly. There is no official means of supervising these, in-
asmuch as so many foreign companies are in competition. Because of this
fact freight agents (forwarding companies ) often are able to quote lower
than the tariff usually fixed . This is done by contracting with the steamship
line for a certain amount of space at a given figure, and then reletting it.
The difference, less expenses, is one of the profits of the forwarding company.
Miscellaneous aid.-The assistance given by freight forwarders includes the
following : ( a ) Locating shipment on arrival at port ; ( b ) transfer to steam-
ship line ; ( c ) obtaining Government permits for exports ; ( d ) attending to
necessary shipping details, including application for space, etc.; ( e ) con-
tracting for the freight rate ; ( f) arranging for necessary insurance ( risks
of war, pilferage, miscellaneous damage, marine loss, etc. ) ; preparation of
drafts and other documents ; (g ) forwarding of the papers to destination ;
(h ) arranging for discount of drafts ( either on own account or for that of
shipper) .
Caution required.— In choosing a freight forwarding agent much caution is
necessary because of the fact that there are so many unreliable agencies.
It is the practice of these concerns (which have no standing ) to take ad-
vantage of the ignorance of the manufacturer located in the interior for the
purpose of rendering invoices which are incorrect, etc. While the practices of
such concerns may eventually become public, they nevertheless are a source
of considerable annoyance and trouble to Latin American buyers while they
operate.
Express and parcel business.-This often is carried on by the freight for-
warding concern. This is due to the fact that the concern can use the space
for which it contracts in any way it sees fit. As a consequence, the charges
made by freight forwarders for small packages often are less than the rate
quoted by a steamship line for a minimum bill of lading. For the same reason
freight forwarding agencies are able to send on one bill of lading miscellaneous
small shipments as a combination lot which otherwise could not be forwarded,
except at excessive cost.
Fees charged.- The rates of freight forwarding agents differ somewhat.
It is the custom to make a small charge of from $1 to $2 for the prep-
aration of the invoice translation of the documents, etc. When forwarders
look after insurance there is a further charge and commission and likewise
one on the transfer charges, etc. In any event it is desirable to consult with
and obtain quotations from a number of agencies in order to be sure that
the proper rate is being paid.
INSTRUCTIONS TO THE FORWARDER.

Before the forwarder can obtain the goods shipped on order bills
of lading the Export Corporation must indorse these to the for-
warder.
In order to secure the original bills of lading and warehouse re-
ceipts covering the four representative shipments, it was necessary
for the Export Corporation to make payment for the various ship-
ments in accordance with the purchase terms of the different con-
tracts.
 PAPER WORK IN EXPORT TRADE . 73

The Export Corporation delivered to its forwarder, the Orient

Shipping Co. , the original railroad bills of lading for shipment
made under order A. The forwarder, as is usual, furnished a

ORIENT SHIPPING CO., Inc.

IMPORTANT
memorandum
measurement
FREIGHT CONTRACTORS & FORWARDING AGENTS

-Shippers
Lighterage
EXPORT
showing
packages.
numbers
carloads
railroad
contents
express
address
receipt
weight,
should
MARINE AND WAR INSURANCE

hereto:
marks
attach
clearly
length
width
inches.
marks,
Local
goods.
cubic
Show
depth
gross
Mark
state
Free.
and
and
for
or:,(;
42 BROADWAY

on
inifB"L/)"
New York
Please note following instructions for shipment sent to your care to be forwarded.
MARKS AND NUMBERS No, andkind
of Packages CONTENTS GROSS WEIGHT NETINWEIGHT
LBS. MEASUREMENT
IN LBS.
W.AT. Co
EC. 500 Barrels Cement 160000#
Havana#1 Wip

shipment
Part
Our Order A

POINT OF ORIGIN.. hekesho DELIVERING CARRIER- TRR

DATE OF SHIPMENT. Sept 12, Ives 1918
MAKE B/L in name of ourse
CONSIGN ........... our order
(State.
whether to"Order or in name ofconsignee)
CONSIGNEE'S FULL NAME AND ADDRESS notify Is AThompson Co
Starara,Cuba
Consignee's address IN FULL should always be given in order that same may be notified if shipment is consigned to "ORDER"
thus avoiding delay and extra changes.
CONSULAR fees charge to ... MARKING charge to..... hane COOPERAGE charge to--
TRANSLATION charge to none . .. -STORAGE charge to . hong.
INLAND freight to seaboard charge to CARTAGE to ship's side charge to...
OCEAN
THROUGH freight charge to ... YOUR SERVICES charge to.........
INSURE Marins, Break 5500.00
SHIPMENT AGAINST WarRiskF.P.A. for $4 PREMIUM charge to
(Shouldbesufficient
(State whether marinetocovervalue plus 10%tobe
or all Risksdesired andfreightcharges)
insured against)
VALUE FOR CUSTOM HOUSE CLEARANCE $ 3800 29
MAIL. 3Number ORIGINAL
COPY BILLS ofLadingto at uz Broadway
SPECIAL INSTRUCTIONS " This " Thipushet mustbe
-Consolidatedwrth shipment ofSteel Bars .
ENCLOSURE OriginalP R Bill of Stading &woor
REMARKS Acharya Iballs oflading ifsurance papers .
andconsularinvoice must bemade out
towcludethe shipmentandShipmentof
Stabbassapplying insandlordhment
Naphtha, Carbide, Ammunition, Petroleum, Turpentine, Dil of Vitrol, Unslacked Lime, Matches, Metal Polish, Shoe Polish,
Explosives and highly inflammable goods are accepted for shipment only when special arrangements are made in advance.
We guarantee all charges not prepaid.
(Signature of Shipper)---
Address-
FIG. 4.- Instruction sheet for freight forwarder.

blank " Instruction sheet ," on which the exporter entered all the
information regarding the shipment necessary to the forwarder for
the making out of the ocean shipping papers.
74 PAPER WORK IN EXPORT TRADE.

The details of the shipping instructions include " Marks and

numbers." This item refers to the shipping mark of the consignee,
by means of which he identifies his goods at the customhouse in
the port of destination, and the serial number of each separate
box, bale, barrel, or bundle. In the case of order A, the 500 bar-
rels of cement move on one bill of lading. The consignee's mark
W.A.T.CO.
is Frequently the mark is inclosed in a diamond or
E.C.
other geometrical mark, which makes identification easier. The
port of destination is Habana . If the shipment were for an in-
terior point in Cuba the port of unloading would be given, and
forwarders at that port would arrange for reshipment. The bar-
rels are numbered consecutively 1 , 2 , 3, up to and including 500 .
Each barrel, as it goes into and comes out of the ship , is checked
off by its number on a tally sheet by a clerk of the steamship com-
pany.
The next item in the shipping instructions is a description of the
contents. This is the general trade description and must conform in
general to the description made for clearance through the custom-
house. The description is made by the shipper and is not checked by
forwarder or carrier. The carrier does not guarantee that the barrels
contain cement. It is obliged only to deliver the barrels which it
receives. If the forwarder passes the goods through the United
States customhouse, or the consignee through the foreign custom-
house, on false descriptions , he is subject to a fine.
The gross weight of cement and barrels is stated in pounds ; the net
weight should in most cases be given. The gross weight is the basis
of both railroad and ocean freight rates on cement ; for this reason
the measurement is not given. The net weight is often used for va-
rious goods as the basis for calculation of customs duties. The origi-
nal inquiry from W. A. Thompson & Co., Habana, gave no instruc-
tions in regard to the details necessary to met the customs require-
ments . They assumed that the Export Corporation was entirely
familiar with these details, as it frequently shipped to that market.
The purchase order of the Export Corporation given to the Atlas
Portland Cement Co. shows that the latter company agreed to deliver
cement to the Export Corporation at New York. The railroad bill of
lading shows that the shipment left the factory at McKeesport, Pa.,
via Pennsylvania Railroad, on September 12, with freight prepaid ,
and marked for export within free lighterage limits. Consequently
there is no inland freight or cartage . The advice to the forwarder
gives point of origin, the carrier, and the date of shipment. The
railroad bill of lading gives the car number, so that the goods can be
located .
 PAPER WORK IN EXPORT TRADE. 75

The ocean bill of lading is to be made in the name of the Export

Corporation, and the goods consigned to the order of the Export Cor-
poration, as the terms of payment were a 30 -day sight draft , documents
upon acceptance. W. A. Thompson & Co. , Habana, Cuba , are to be
notified by the steamship company on arrival of the goods at Habana.
As the Export Corporation sold the goods C. I. F. Habana, ex-
penses for consular fees, forwarder's service, and insurance premium
are to be charged by the forwarding company to the Export Cor-
poration. It is indicated on the instructions to the forwarder that
the barrels are properly marked and packed, and that there will be
no charges for marking or cooperage. However, the marks may have
been effaced, in which case the forwarder would be expected to notify
the Export Corporation , or if this were not possible in time, to make
the necessary repairs and charge to the Export Corporation . In
case the barrels needed cooperage it would be the duty of the for-
warding company to put the goods in proper condition for ship-
ment. If the barrels were received in bad condition , the Export Cor-
poration could make a claim on the railroad company for damage.
It is of prime necessity that the Export Corporation offer them to
the steamship company in good condition ; otherwise it can not obtain
a “ clean ” bill of lading from the steamship company ; that is, a bill
of lading which receipts for the goods in good condition . If the
packing is poor or broken, the ocean carrier marks this on the bill of
lading. If the Export Corporation does not have a clean bill of
lading it will have difficulty in negotiating its 30- day sight draft with
a bank. If the shipment was made against a commercial letter of
credit the bank would not pay the draft. Furthermore, W. A..
Thompson & Co. might lodge a claim with the Export Corporation
for damaged goods, using the bill of lading as evidence that the de-
livery was not made in good condition.
The instructions to the forwarder indicate that the Export Cor-
poration expects delivery of the goods by the railroad company to the
steamship company within 15 days after their arrival at the port of
New York. For 15 days the goods are allowed free storage by the
railroad. If shipment is not made by the expiration of that time
storage charges will accumulate. In that case the forwarder will
notify the Export Corporation and await instructions as to ware-
housing the goods or paying demurrage to the carrier.
The value of the shipment is given for use in making out a ship-
per's export declaration ,¹ as required by the Government. To assist
in making out the declaration the commercial invoice is attached to
the " Instructions to shippers ."

1 See Chap. VII.

 76 PAPER WORK IN EXPORT TRADE.

No claims will be allowed for

EXPORT CORPORATION loss or damage to material
covered byis sothisreceiptedtode
property invoice unless
livering carrier as required in
rule3 ofuniform bill oflading
NEW YORK, N. Y., U. S. A.

Sold to W.A. Thompson & Co. Date October 15,1918 .

Havana , Cuba . Invoice No. No.1004
Shipped to Havana , Cuba . Agency New York
TERMS 30 Days Sight Draft
Documents on acceptance .
MARKS
Cement.
Car No. PRR 456702, PRR 464600Via S/S Mexico W. A. T Co.
C&MW 441556, CRIP 375246 EC
Havana No.1 Up
CONTRACT NO Letter
YOUR ORDER OUR CONTRACT
ORDER NO. Bars Ends with
White paint
Numberof DIMENSIONS AND SIZE Weight Price Amount
Pce. Bdla
4867 465 Soft Steel Bars 1/2 " 20 ' Long 224,000# $6.00 13,440.
Per 100#
500 Barrels Atlas Portland Cement 160,000# $10.00 5,000.
Per bbl
$18,440.

C.I.F. Havana, Cuba

FIG. 5.- Commercial invoice, transaction A, attached to instruction sheet for freight
forwarder.

No claims
loss will betoallowed
or damage for
material
EXPORT CORPORATION coveredby this invoice unless
property is so receiptedtode.
livering carrier as required.in,
rule3 ofuniformbilloflading
NEW YORK, N. Y., U. S. A.

Sold to Texeria & Brogas Co. , Date December 1,1918 .

Rio de Janeiro , Brazil . Invoice No. 1009-
Shipped to Rio de Janeiro . Agency N.Y.C.
TERMS 120
Documents Days Date Draft
on Acceptance
MARKS
T. & B. Co.
Car No. From Warehouse Via S/S Gant ock Rook Ex Rio .

YOUR CONTRACT
ORDER No... Letter CONTRACT NO B
OUR ORDER
Number of DIMENSIONS AND SIZE , Weight Price Amount
Pcs. Bdls.
150 Bales Choice Grade " A" Hops 11,400 $13.50
per 100# $1539 .
500 Cases Pratts Turpen ti ne 100,000# $8.50 4250 .
$5789.

C.I.F. Rio de Janeiro .

FIG. 6.- Commercial invoice, transaction B, attached to instruction sheet for freight
forwarder.
 PAPER WORK IN EXPORT TRADE . 77

Noclaims
loss will betoallowed
or damage for
material
EXPORT CORPORATION 'covered by this invoice unless
property is soreceiptedto de-
livering carrier asbilloflading.
required in
rule3ofuniform
NEW YORK, N. Y., U. S. A.

Sold to Kodi Fukushima , Date Ooto be r 15 , 1918 .

Kobe , Japan Invoice No. 1008
Shipped to Kobe , Japan. Agency N.Y.O.
TERMS Sight Draft · Letter
of credit.
MARKS
Car No. NP 86758 Ex No.1 Up
Via S/S Approved Japanese Steamer Kobe
YOUR CONTRACT
ORDER No... Cable CONTRACT No. C
OUR ORDER
Number of DIMENSIONS AND SIZE Weight Price Amount
Pca. Bdla.
20 Crates Machines , Checkered Head , Counter Sunk Wire
Nail packed as follows;
Cases Nos.1 to 5 inc . No.12 Guage Machine8
Measurements 98 x 48" x 44" 750# each 3,750
Cases Nos.6 to 10 inc . No.13 Guage machines
Measurements 98" x 48" x 44" 706 each 3,530#
Cases No.11 to 16 ino . No.14 Guage machines
Measurements 98" x 48" x 44" 728‡ each 3,640#
Cases Nos.16 to 20 inc . No.15 Guage Machines
Measurements 98" x 48" x 44" 728 each 3,640
14,560# $2000 .
Each $40,000 .
C.I.F. Kobe , Japan .
FIG. 7.- Commercial invoice, transaction C, attached to instruction sheet for freight
forwarder.

No claims will be allowed for

damage to material
loss or by
EXPORT CORPORATION covered this invoice unless
is so receiptedto
propertycarrier de.
required in
NEW YORK, N. Y. U. S. A., rule 3 ofuniformasbilloflading.
livering

Sold to Messrs . Dussot & Co .. Date . December 15 , 1918.

Paris, France Invoice No.1001
Shipped to Nantes , France Agency A.B. Johnson
TERMS Sight Draft with Ocean
Documents attached. MARKS
Car No. From Warehouso Via S/S Eastgate,
18 below
YOUR CONTRACT
ORDER No. Letter OUR CONTRACT
ORDER No. D
Number of DIMENSIONS AND SIZE Weight Price Amount
Pca. Bdls.
Brand
1000 Cases Red Alaska/Sulmon this years Packing each
case containing 48 one pound tins marked
E.C.
No.1 to 1000 54,000# $48.50 $48,500,
1000 cases Canadian Lobster this years packing each Per Case
case containing 48 one pound tins marked
Dussot
E.C. A
No.1001 to 2000 , 54,000# $45.50
per caso $45,500
$94,000.
C.1.F. Nantes, France

FIG. 8.- Commercial invoice, transaction D, attached to instruction sheet for freight
forwarder.
78 PAPER WORK IN EXPORT TRADE.

The number of bills of lading desired by the Export Corporation

is stated. They request three original ( signed and negotiable ) copies
to be used in financing the shipment¹ and six copies (not signed , not
negotiable ) for filing.
Original bills of lading and warehouse receipts in connection with
three of the other representative shipments were turned over to the
Orient Shipping Co. , the forwarding agents of the Export Corpora-
tion, with forwarder's instruction sheets properly filled out.

INTERNATIONAL TRADING COMPANY

New York City .

NEGOTIABLE WAREHOUSE
RECEIPT.

November 28,1918 .

Export Corporation ,
New York City .

Dear Sirs :
Please be advised that we are holding
in our warehouse subject to your further orders ,
fully covered with fire insurance , the following
material :
Marks
150 Bales Hops 11,400# T.& B.Co.
500 Cases Turpen-
tine , 100,000# Ex Rio
This material we will hold for you
without charge until you arrange your ocean.
freight on this shipment .
Yours very truly,
INTERNATIONAL TRADING COMPANY.
FIG. 9.- Negotiable warehouse receipt.

The fourth shipment (transaction C) is moving to the Pacific

coast on a " through bill of lading ; " that is, the railroad company has
agreed to perform the functions of the forwarder in securing cargo
space on a vessel and has issued a bill of lading contracting for the
shipment of the goods to Kobe, Japan.

1 See Chap. XI.

 CHAPTER VII.

SHIPPING PROCEDURE .

It is now the function of the forwarding agent, the Orient Ship-

ping Co. , to arrange for the ocean shipment of these various ma-
terials on the first available steamers. For shipment A, going to
Habana, Cuba , it succeeds in making arrangements for the material
to go forward on the Ward Line steamer Mexico, and accordingly

FREIGHT CONTRACT .

CONTRACT NO..406 October 10,19.18

ENGAGED FREIGHT ROOM FOR ACCOUNT OF Extort Cart

FOR SHIPMENT TO Наva
Ha таnaша ,Cu ba
, сива
PER STEAMER to arrive, expected to sail ba
Mexico
from on October 31 ** 1918
newyork
ward беше Agents,

0
at 250 and
10% primage, per 2240 # Weighton
This contract is made subject to conditions of Act of Congress Treasurement
governing Bills of Lading, approved Feb. 13th, 1893, and to terms
of Should
Bills ofsteamer
Lading not
in use
passby Steamer's Agents.
sailing day (astoreported
arrive known bySandy
be so disabled
HookExchange),
Maritime before 6 P.or M.
as to prevent
of expected
should
her sailing steamer
within ten
daysthis
ing afterher expected
contract on sailing
giving day, shippers
Agents notice have option
to thatday
effect of cancell-
the first business day following expected sailing or by noon of
announce- ORIENTAL SHIPPING CO., Inc.
ment of disability.
isterSteamer
tonnage.reserves right of taking grain in excess of her netreg.
Accepted 1917 /
(signed ) ( sign ed)
FREIGHT CONTRACTORS .
FIG. 10.- Ocean freight contract.

makes a freight contract covering this shipment. This is a contract

between the Export Corporation and the forwarder ; it states the
exact amount of the cargo, the ocean freight rate, and the approxi-
mate date of sailing. It will be noted that there is a line for the
signature of the steamship company, which indicates its acceptance
of the rate quoted. The forwarder gives this contract to the ex-
porter, that he may know just when and at what rate of freight the
goods will move forward . The freight contract is as follows :

OUTLINE OF FORWARDING OPERATIONS.¹

Ocean freight rates.- These, unlike rates on railroads, are quoted on the
basis of measurement. However, because of the character of certain freight
1 E. B. Filsinger : " Trading with Latin America."
73

79
80 PAPER WORK IN EXPORT TRADE.

which exceeds 56 pounds per cubic foot in weight, steamship lines assume the
privilege of forwarding on that basis. It is important to note the difference
between the ton of 2,000 pounds as used on land and the ocean ton, 2,240 pounds,
calculated to equal 40 cubic feet. Measurements always take into considera-
tion the absolute outside dimensions, and when strips of wood are attached
to cases or containers of any kind, the outside of these is the basis upon which
the freight is charged.
Primage.- Ocean rates include the word " primage." It should be considered
in every calculation. It is the survival of an old system which provided for a
percentage to be added to the rate.
Rates for ocean freight.—These may be secured from the following :
(a ) In the interior, from the railroad companies. The export agent, where
one exists, or the commercial agent can quote or wire for rates.
( b) Freight forwarding agencies and express companies in New York, or
through their branches in the interior, will gladly quote whenever in a posi-
tion to do so.
(c ) Steamship lines , either from their New York offices or from branches
in interior cities, will supply the data required.
Minimum charges.—These invariably are fixed by steamship lines, a specified
quantity in weight or measurement of freight being given. It is because of
this minimum bill of lading that application should be made to freight for-
warding agencies for rates on small shipments.
Dispatching documents.- The forwarding of documents promptly is a prime
essential. It is of utmost importance that papers covering shipments go by
the same steamer that carries the shipments. If this is not done the goods can
not be removed promptly from the warehouses at designation , and storage
charges accrue. Furthermore, consignees may need the goods badly, and the
delay in getting them may result disastrously for the shipper. When the manu-
facturer himself attends to forwarding the papers, not depending on forward-
ing agents, it is quite as vital that this matter be given attention.
Economical routing.—This should be sought in the case of every shipment.
The Latin-American importer appreciates the efforts of his correspondent to
route shipments properly in order to obtain the advantage of every effort and
economy ; the freight situation , in New York especially, is such that before
dispatching freight for Latin America a study should be made to ascertain the
dock or wharf at which the steamer (which will carry it ) is located . This
having been learned , the consignment should be placed in the hands of a rail-
road with terminals in proximity to the steamship line. By adopting this
course transfer and drayage charges may be minimized.
Freight prepayment.- Advance payment of freight charges invariably is
demanded. Shipments are not forwarded unless charges are fully covered.
Both steamship and railroad companies prefer to have the charges for the
freight from the interior city to the port fully paid at point of origin.
Forwarding routine.- The following outline of the manner in which goods
are dispatched from New York, and of the papers that are necessary for their
clearance, will prove of value :
( a ) Arrival of shipment on railroad at terminal. In case of very large
shipments in carload lots free lighterage is granted, provided the bill of lading
is marked very plainly " for export, lighterage free."
(b ) Shipping permits are requested from the steamship line that is to carry
the freight. If arrangements have been made for space, either direct or
through a forwarding agency, the permit is granted. This document shows
these details : Date on which the shipment can be received at the steamer ;
time ; place of delivery, etc.
 PAPER WORK IN EXPORT TRADE. 81

(c) The shipping permit is turned over to the truckman, who carries the
freight to the railroad terminal, where it is delivered at the place marked in
the permit.
(d ) In lieu of the dray ticket, also carried by the truckman, a receipt is
granted by the clerk of the steamship company. Necessarily, the dray ticket
must bear complete information regarding the marks, numbers, weights , etc.,
of the shipment, in addition to an accurate description thereof.
( e ) The steamship bill of lading is issued upon delivery of the receipt granted
at the dock. This is the final receipt and must be particularly well guarded,
because in it are vested all the rights to the shipment which it covers.
(f) United States customs clearance. Before a bill of lading is issued by a
steamship company it is necessary to furnish a customhouse clearance which
has been obtained from a collector of customs. This document is very important
because it is required by the customs officials and must be supplied with the
ship's manifests to obtain clearance papers. The need for such documents is
apparent when it is realized that their purpose is to prevent illegal shipments
of various kinds. These clearances are attended with considerable formality,
and strict regulations regarding them have been adopted by the Government.
Full information about these papers may be had of freight forwarders and of
forwarding agencies.
(g) Declaration and certificate of origin of merchandise. This document
furnishes proof of the origin of the merchandise.
PLACING GOODS ABOARD VESSEL.

If the material has not arrived at seaboard the forwarders have

the car or cars in which it is shipped traced, in order to expedite
delivery and to make sure that the material will arrive in time for
shipment on the steamer for which it is booked. They also im-
mediately communicate with the Ward Line agents and request
them to grant a shipping permit for the material. This permit is
usually on a small printed form and grants permission to lighter
the material to the ship or place it on deck. It is also called " light-
erage delivery order."
In normal times some lines do not issue " shipping permits," but
require that cargo space be arranged for before the goods are sent
to the pier or the vessel. The shipping permit is addressed to the
receiving clerk of the steamship line and instructs him to receive
from the shipper certain described goods to be delivered on a speci-
fied date. The receiving clerk issues a dock receipt when the goods are
delivered . The permit bears the export license number, shipper's
export declaration number, and, in the case of a country requiring
import license, the import license number. The permits usually
include clauses stating : " All risks of loss or damage while goods
are on the wharf, howsoever occurring, to be borne by the shipper,
subject also to the conditions expressed in the steamship company
form of bill of lading," and " Attention of shippers is called to
section 235 of the criminal code of the United States with regard
to the shipment of explosives or other dangerous articles." Some
125740° -206
82 PAPER WORK IN EXPORT TRADE .

of the permits contain clauses which more expressly limit the liability
of the carrier, as for example, the following :
NEW YORK, 191__.
To the Clerk of S. S..
or
Receive from___
the under-mentioned packages, subject to the conditions of steamer's bills of
lading
To be delivered on or before__.
This permit is issued upon the following terms and conditions, and accept-
ance of this permit and tender of the goods for shipment shall be deemed an
agreement by the shipper to the said terms and conditions :
It is hereby agreed that the value of the goods above mentioned does not ex-
ceed $500 per freight ton, upon which basis the rate of freight is adjusted. If
the value of the goods exceeds said amount the value must be declared, and a
rate of freight based thereon be arranged at the time of taking out this permit ;
otherwise the goods are received subject to the agreed valuation above stated.
The steamship company's regular bill of lading shall be issued for the ship-
men, and shippers are understood to have acquainted themselves therewith. The
steamship company shall not become responsible for the goods as carrier until
the goods are actually loaded on the steamer ; until such loading it shall be
liable only as an ordinary bailee, for loss or damage caused by its fault, and
subject also to all conditions, exceptions, and limitations of liability contained
in its regular bill of lading.
No demurrage shall be allowed on lighters or craft unless arriving within
permit time and their manifests are filed in the office of the clerk of the dock,
and the time of filing shall be deemed time of arrival. No goods received after
noon Saturdays or 5 p. m. other days, unless otherwise indorsed hereon. No
cargo received unless properly port marked. Cargo for different ports to be
kept separate on lighters.
In case the goods, or any part of them , are to be delivered to the steamship or
to the pier by lighters or other craft, the steamship company shall not be liable
for any delay of lighters or other craft resulting from riots, strikes, lockouts,
stoppage of labor and like disturbances, or from extraordinary weather condi-
tions, or from any other cause of whatever nature, beyond the control of the
company.
Lighterage deliveries subject to the lighterage rules of New York Produce
Exchange.
The goods or any part may be held by the steamship company for a follow-
ing steamer of the same line, and are received subject to delay, damage, or de-
fault from or consequences of riots, strikes, stoppage of labor, and like dis-
turbances.
Pier 1
Steamer at Pier 2 Bush Docks.

Pro Agents.
All risk of fire or flood while goods are on the dock to be borne by shippers.
An important clause in the above is that which states that the
freight space is contracted for on a limitation of the value of the
goods to not more than $500 per freight ton.
The original railroad bill of lading (the material having arrived
at seaboard) , the export declaration ( see p . 85 ) , and a form which
 PAPER WORK IN EXPORT TRADE. 83

is known as a lighterage order, authorizing the railroad to deliver

the goods, are then surrendered to the lighterage agent of the rail-
road company, who orders the material alongside the vessel or along-

EXPORT CORPORATION
NEW YORK
20.251918
J. Fuller Agt ..
Penn R.R.CO.
N.Y. ORDER NO.
GENTLEMEN:
PLEASE DELIVER MATERIAL SHOWN BELOW
TO & S. Maxio...... LOADING ‘AT PIER 14. Brooklyn.
TO BEALONGSIDE in forty eight hours
SHIPPING POINT
DATE AND CAR NO. MATERIAL WEIGH MARKS
McKeesport , Pa. 500 Barrels Cement 160000+ W.A.T.CO.
EC
Sept.12,1918
Havana
Car #C & MW 441556 #1 Up
Chicago , Ill . 465 Bundles Steel
Bars (4867 Pieces ) 224000+ Ends painted
Sept.15,1918
P.R.R.456702 with white paint .

REMARKS: Bills of Lading , Export Declaration and Dook receipt attached .

YOURS TRULY.
EXPORT CORPORATION
PER (signature )
FIG. 11.- Delivery order from exporter to railroad or warehouse.

side the pier on a specified date. The material on account of this

shipment duly arrives at seaboard and is lightered to the steamship
Mexico. The material is then loaded on board the ship, and the
captain of the lighter which carried the material to the ship is given
as his receipt for the material, a " dock receipt. " This is forwarded
to the exporter, in this particular case the Export Corporation , and
acts as its receipt from the steamship company for the material, pend-
84 PAPER WORK IN EXPORT TRADE.

ing the issuance of an ocean bill of lading. The material is now in the
ship and the next that we shall hear of it is when it arrives at its
final destination.
Before explaining the other specimen transactions, it should be
stated that the forms referred to above are very simple and the in-
formation to be placed thereon is very easily gotten from the other
papers in connection with the shipment. It might be added that
many export houses have their own traffic departments, which take
care of the booking of the shipments and the handling and making up
PORTLAND

of ocean transportation documents, and they do not at any time use

CEMENT

the services of a forwarding agent.

ATLAS
THE
co

THE ATLAS PORTLAND CEMENT co.

.

Order No.. L 8999 New York, October 10,. 19 18.

FREIGHT AGENT, C. R. R. OF N. J.,
Jersey City, N. J.
Dear Sir:-Please deliver On demand the following Cementfor deliveryto
M Wright & Cobb Lighterage Company,
Asst. The Export Corporation,
500 Bbls. in wood,. Bags in Duck.
RECEIVED from C. R. R. of N. J. the number of barrels or bags specified
hereon in good condition
Date. 19
By

Per
FIG. 12 - Supplier's delivery order to lighterage company.

Shipment B is already at seaboard and it is therefore unneces-

sary for the forwarders to trace this shipment. As this material is
to be shipped to Brazil, they make arrangements with the Commer-
cial South American Shipping Co. for shipment on the steamer
Gantock Rock, leaving about December 1. A shipping permit is
obtained from the steamship company and instructions are then
given to the suppliers to have the material carted from their ware-
house to the pier. An export declaration is duly made out, certified
to , and lodged with the steamship company, together with a dock
receipt filled out and ready for signature. After the material is
placed on the dock the dock receipt is signed by the agent of the
Commercial Line and given to the exporter or his agent as a receipt
for the material pending the issuance of the ocean bill of lading.
On this particular shipment, since the material was already in New
York, it was not necessary to have the material lightered to the
steamer.
SHIPMENTS ON " THROUGH " BILLS OF LADING.
Shipment C is going overland to the Pacific coast and from there
to Japan on a " through " bill of lading, which covers both inland
 PAPER WORK IN EXPORT TRADE . 85

and water shipment. The forwarding agents on this shipment have

made a freight contract with the Shosen Kaisha Ka to carry this
material to Japan.
On this particular shipment the Orient Shipping Co. presented the
machinery, together with the export declaration, to the Northern
Pacific Railway Co. , which has a working agreement with the Shosen
Kaisha Ka , and the railway company issued a through bill of
lading. The ocean freight must be paid before the railroad company
will deliver a through bill of lading to the shipper.
As the goods in transaction D are warehoused in New York, the
only thing necessary for the forwarders to do is to arrange for ocean
shipment.
SHIPPER'S EXPORT DECLARATION.

Before the railroad company will accept orders to deliver any

material to any vessel for export, it is necessary for it to have a copy
of the original " Shipper's export declaration," which has been prop-
erly filled out and filed with the United States collector of customs
at the port.
The shipper's export declaration is used for three purposes. From
it are compiled the statistics of exports from the United States ;
consequently the descriptions of goods must be accurately stated in
specific and not general terms ; for example, " fruit " does not specifi-
cally describe a shipment of apples, nor does " canned goods " de-
scribe canned beef or canned salmon ; the quantity must be stated ,
not only as so many boxes or bales , but also in standard units of
weight or measurement , such as gallons, yards, or pounds. The value
at the time and place of shipment must also be given.
The steamship company must file with the collector of the port a
copy of each shipper's export declaration with the ship's manifest
(the record of the ship's cargo ) before the vessel can leave the port.
The exporter retains one copy of the declaration in his own files. If
it should become necessary to reimport the goods, which sometimes
happens when they are refused by the foreign purchaser, the ship-
per's export declaration must be produced to identify the goods ;
otherwise duty will have to be paid on them. If the document is
not accurate in statement of quantities, description , and values , it is
probable that the import duty will have to be paid.
The shipper's export declaration form contains the following in-
structions :

This form must be prepared in quadruplicate¹ for all merchandise shipped to a

foreign destination, except shipments in transit through the United States from
one foreign country to another, and in duplicate for merchandise shipped be-

1 The number of copies of the shippers' export declaration was reduced to three by
amendment to the regulations adopted May 29, 1919, and a later amendment reduced the
number to two.
86 PAPER WORK IN EXPORT TRADE .

tween the United States and its noncontiguous territory. When merchandise
is shipped foreign, four copies of this form must be presented to the collector
of customs for each consignment. The collector will retain the original and
one copy, and deliver the other two copies to the shipper. The shipper will
present one copy to the steamship company and deliver the other copy with the
goods to the inspector of customs on the dock, without which no goods will be
received. The copy delivered to the steamship company must accompany the
goods on their voyage and be delivered by the master to the American consular
officer with the manifest at the port of discharge. The copy delivered to the
inspector of customs upon which he will make his notifications of short ship-
ment, etc., must be delivered to the vessel to be attached to the manifest de-
livered to the collector upon clearance.
Export license number and date of expiration must appear immediately above
goods shipped thereunder.
The War Trade Board code number of the article given on the export license
must be inserted after each commodity in the column following the description
on the face of this form.
If goods are to be delivered to other vessels in port or transshipped on the
high seas, the articles, quantities, and values, and name and address of person,
corporation, vessel, Government, etc., to whom transferred or delivered, must be
stated on this form.
1. Shipments from interior points for exportation. — If shipped on a through
bill of lading, the shipper must prepare the original export declaration in
quadruplicate for foreign shipments and in duplicate for shipments between the
United States and its noncontiguous territories and deliver forms to the carrier
to accompany the shipping papers to the port of exportation. If shipped on a
local bill of lading, the declarations may be attached thereto or mailed sepa-
rately to the consignee at the seaboard.
(a ) If the shipper prefers he may place the original declaration, but not the
carrier's extract, in a sealed envelope addressed to the collector of customs with
his name indorsed thereon and the fact of sealing noted on the declaration and
deliver it with the extract to the carrier. If goods are consigned to an agent at
the seaboard for transshipment and exportation the shipper may mail the
declaration and extract properly prepared direct to the agent.
( b) Upon arrival of the goods at the port of exportation, the carrier must
immediately deliver the original declarations, sealed and unsealed , and the
carrier's extracts to the collector of customs, who will retain the original and
certify the extract and return it to the carrier, vessel, or party named to attend
to exportation.
2. Exporting vessel or carrier.-Care should be exercised in receiving goods
destined for foreign countries or noncontiguous territories not accompanied by
certified extracts or original declarations , as clearance will not be granted until
the export declarations have been filed with the collector. The copy must be
attached to the vessel's manifest or car manifest or copy of waybill when
presented for clearance.
3. Before a clearance shall be granted for any vessel bound to a foreign port,
the owners, shippers, or consignors of the cargo of such vessel shall deliver to
the collector manifests ( or declarations ) of the cargo or the parts thereof
shipped by them, respectively, and shall verify the same by oath . Such manifest
(or declarations ) shall specify the kinds, quantities, and values of the articles
and the foreign port or country of destination. ( See sec. 4200, Rev. Stats., U. S. )
 PAPER WORK IN EXPORT TRADE . 87

If any vessel bound to a foreign port departs on her voyage without deliver-
ing manifest and obtaining clearance the master or other person in charge
shall be liable to a penalty of $500 for every such offense. ( See sec. 4197, Rev.
Stats. , U. S. )
Similar provisions apply to exportations by rail, vehicle, or ferry. (See sec.
1, act Mar. 3, 1893. )
4. The shipper must prepare this export declaration and sign the four copies
and the oath be taken on the original before a customs officer, notary, or other
authorized officer. The declaration must be signed by the shipper, but the oath
may be omitted on shipments to Canada or Mexico by car, vehicle, or ferry. If
the declaration is executed by an agent for the shipper the authority must be
in writing on this declaration or other document filed with the collector. The
values and names of shippers may be omitted from the copies to be delivered
to transportation company, but must always appear on the original and the
copy for use of War Trade Board. The original is delivered to transportation
company, but must always appear on the original and the copy for use of War
Trade Board. The original is for the use of customs officers and will be treated
as confidential, and information not disclosed without written authority of the
shipper or his agent. Export statistics are compiled from these declarations
and all data required on the prescribed form must be furnished.
5. Domestic articles exported.—The value of all articles grown, produced , or
manufactured in whole or part in the United States must be stated in the col-
umn of " U. S. products."
6. Foreign articles exported. The value of articles of foreign origin shipped
out of the United States in the same condition as imported must be stated in
the column of " Foreign products." If foreign articles are subjected to any
process of manufacture or alteration in the United States they become United
States products and must be reported as such. Thus : Imported raw sugar
refined in the United States should be reported as a domestic product.
7. The value of articles to be stated is the selling price or the true market
value at the time and place of shipment for exportation.
8. Description of articles exported must be accurate and complete. General
terms such as dry goods, groceries, meats, machinery, millinery, etc., will not
be accepted. In the case of cheese the declaration must state whether filled
or unfilled ; oleomargarine, whether colored or uncolored ; butter, whether pure,
adulterated, or renovated.
9. The kind of packages as boxes, barrels, etc., and the net weight exclusive
of outer coverings must be specified .
10. The total quantity of each article expressed in the usual measure of
pounds, tons of 2,240 pounds, yards, gallons, etc., must be stated . Domestic
spirits exported must be stated in gallons of 50 per cent alcoholic strength.
11. The country of final destination of goods —that is, the country to which
goods are sold-must be shown. Special care should be exercised to state the
final destination of goods shipped through Canada to Europe, and of goods to
be transshipped in the United Kingdom, the Netherlands, Germany, and France
en route to other countries.
12. Inspection certificates.-Process butter or butter adulterated or reno-
vated must be accompanied by certificate of purity issued by the United States
inspector of dairy products. Certificate of inspection must be presented to the
collector for meat and meat food products exported when required by the regu-
lations of the Department of Agriculture.
13. Export Schedule B may be obtained free of charge from the Bureau of
Foreign and Domestic Commerce, Department of Commerce, Washington, D. C. ,
and will be of much assistance to exporters.
88 PAPER WORK IN EXPORT TRADE .

14. Sale and printing of blanks.- Shippers' export declarations may be ob-
tained from collectors of customs at the price of 25 cents per block of 100. The
export declarations may be printed by private parties providing they conform
strictly to the official form in width, wording, color, and arrangement.

To the Collector : I hereby authorize___

address_ ___to act as my.
agent for customs purposes in the exportation of the within-described goods.
Please deliver the certified duplicate accordingly.

Shipper.

U. 3.Customs
TREASURY Cat.DEPARTMENT.
No.WTB7525. (For United States Customs and War Trade Board.) ThisspaceforuseofCustoms
T. D. 35909.-FOEM 105.
SHIPPER'S EXPORT DECLARATION No.
OF MERCHANDISE SHIPPED TO FOREIGN COUNTRIES OR NONCONTIGUOUS TERRITORIES OF THE U. S.
Clearance willnot be granted
U. 8. Government export untilshipper's declaration
statistics are compiled fromhasthisbeen filed withandtheitCollector
declaration ofCustoms.
must be correct. (Code No. Dist.) (Port.)
Goods shipped by Export Corporation
(Name ofactual shipper.)
Address.......42 Broadway, NY.. From
(Number.) (Street.) (City.) (State.) (Place oforiginalshipment.)
Via For shipment on the S.S. Mexico
(Carrierfrominterlurpoint, if any.) (Nameofcarrier. Ifvessel, give name,motivepower, and flagifknown.)
From New York. To ultimate foreign destination Havana, Cuba
(U. S. Customs port ofexportation.) (City.) (Country.)
Number and COMMODITY. (net Quantityonly). Value attimeand place ofshipment.
weight
kind ofpackages,
e. g.,17 crates, cotton
Marks and numbers. 40boxes,60cases, Describe the articles fully, as canned pork, printed Board
cloth,as meats,
printing presses, apples, etc. General
WarTrade Code Stateinstandardor U. S. Products,
port units, aslbs., including Foreign Products
90 barrels willnot
75 bags,eto. beaccepted. dry goods, machinery, fruits etc , number. tons(of3,240lbs.),
terms such gallons, barrels, foreign
goods altered
yards, remanufactured orin in same
Read instructions on back. bushels,
etc. theUnited States. imported.as
condition
DOLLARS ONLY.
W.T. B. EXPORT LICENSE NO. 543657 ---, DATE OF EXPIRATION Dec. 31 1, 191..8
..W.A.T.CO.....
EC
Havana
#1 Up 500 Barrels Cement 160000# 3890.00

White Paint 465 Bundles Steel Bars (4867 pcs . ) 224000# 9800.00

Waybill or manifest I CERTIFY that above-described goods were shipped as stated herein except as otherwise noted,
No. 191 191 Inspector ofCustoms.
1 the undersigned,solemnly and truly declare that the above statement is a complete, just, and true account of all merchandise shipped bythe party
named; on board the vessel,car, or vehicle; and to the place or countryatnamed above; and that the description and quantity of each article is truly stated
and that the values thereof are the actual costs or true market values the time and place ofshipment for exportation; Iseasfurther declarethat noneabove;
ofthe
merchandise described above is tobe laden on any othervessel in port than that named above or transshipped onthehigh except as fully stated
I further declare that none of said merchandise is shipped or to be delivered in violation of any of the provisions of the "Trading with the Enemy" act,.
approved October 6, 1917; that W.A. Thompson & Co. of Havana Cuba
is the actual consignee ofthe said merchandise, and that ifthe shipment is made to a bank or other broker, factor, or agent, that
8ame is the actual consignee on
whose account the shipment is made.(Name.) (Address.)
Sworn and subscribed to before me (Signature).. Export Corp.
оп 191 (Capacity)... (Member offirm, secretary, agent, etc.)
signed.
(Deputy Collector, notary public,etc.) (Address)...

FIG. 13.- Shipper's export declaration.

 CHAPTER VIII.

OCEAN BILLS OF LADING.

On delivery of the goods to the wharf of the ocean carrier the re-
ceiving clerk of the steamship company issues a " dock receipt. "
This is made out in the office of the shipper and contains a record of
(1 ) the marks and numbers , ( 2 ) the number of packages, ( 3 ) the
kind of packages, ( 4) a description of contents, ( 5 ) the value, (6)
the measurement, and ( 7 ) the weights.
The dock receipt is not a contract of affreightment, although its
terms may become part of such contract. A bill of lading is the
only document recognized as representing goods in transit from seller
to buyer. A mere dock receipt is not such a document. The buyer
is entitled to a proper bill of lading, which, for some purposes , he
can use as effectually as the goods themselves. If the carrier fails
to transport the goods at the time agreed upon the seller is not re-
sponsible, provided he made delivery to the carrier within the speci-
fied time and received from the latter a bill of lading.
The dock receipt must be surrendered to the carrier in exchange
for the bill of lading. The ocean bill of lading is issued only after
the goods are on the vessel.

PREPARATION OF OCEAN BILLS OF LADING.

Transactions A, B, and D have been followed until the goods are

either on board ship or are being loaded thereon. Attention is
now diverted to the ocean bills of lading. These are made out by
either the exporter or his forwarding agent and presented to the
steamship companies prior to the time of sailing of the vessels.
There are usually three original bills of lading . One copy is sent,
together with a copy of each of the other shipping documents, at
the time the shipment goes forward ; the other copies are forwarded
about a week later by different routes, to guard against loss.
It is not necessary to present all three copies of the bills of lading
in order to obtain possession of the material. All that is necessary
for the importer or consignee to obtain the material is to present
any one of the three original copies properly indorsed , and the
steamship company or its agents will deliver the material . This
is the meaning of the sentence on the bottom of the form reading as
follows : " In witness whereof, the master or agent of the said vessel
hath affirmed to [ number filled in by exporter] bills of lading (ex-
89
90 PAPER WORK IN EXPORT TRADE .

cluding nonnegotiable copies ) , all of this tenor and date, one of which
being accomplished, the others to stand void." In order to make
these bills of lading binding they must be signed in full by the
master or his authorized agent.
An ocean bill of lading may be an " order " bill or a " straight "
bill, similar to inland bills of lading. An " order " ocean bill of
lading is one in which the material is consigned to order of the
shipper, with instructions to notify the actual consignee, whose full
name and address must be plainly stated. The steamship company
will not accept an order bill of lading unless the name of the actual
consignee is placed very plainly thereon, together with his full
street address. A " straight " ocean bill of lading is one in which
the material is not consigned to order of anyone other than the con-
signee. Material shipped on a straight bill of lading will be turned
over to consignee upon his surrendering properly indorsed notice
of arrival, which is sent to all consignees upon arrival of the vessel
at destination, whereas material shipped on an order bill of lading
will be delivered only to the person or persons presenting a properly
indorsed original ocean bill of lading. Any of the original copies
will be accepted.
The information to be filled in on an ocean bill of lading is ap-
proximately as follows : ( 1 ) Shipper, ( 2 ) consignee, (3 ) name of
vessel, ( 4) port of destination, ( 5 ) description of material , ( 6 )
marks, ( 7) net weight, ( 8 ) gross weight, ( 9 ) measurement, and
( 10) number of original bills of lading desired .

PAYMENT OF FREIGHT CHARGES.

As stated in a preceding chapter, quotations covering ocean freight

made by the steamship companies are based on a ton of 40 cubic
feet, it being understood that shipments will be accepted on a weight
or measurement basis, at the ship's option. It may be stated here
that the steamship companies charge on whichever basis will bring
them the most money. As an illustration of this, let us take a
shipment of hops on which a quotation of $30 per gross ton of 40
cubic feet, weight or measurement , ship's option, has been made.
Hops usually occupy about 200 cubic feet to a gross ton ; therefore
the freight rate would be $ 150 per measurement ton. This rate is
arrived at by taking the cost of 1 cubic foot ( one- fortieth of $30) , or
$0.75 , and multiplying it by 200, the number of cubic feet which this
material requires per ton.
If ocean freight is prepaid , the amount paid is not returned to the
shipper in the event that either the ship or the cargo does not arrive
at destination. Irrespective of what happens to the ship, ocean
freight which has been paid is not returnable.
 PAPER WORK IN EXPORT TRADE . 91

CONDITIONS OF THE TRANSPORTATION CONTRACT.

If material is not properly marked and packed to withstand the

strain of an ocean voyage , the steamship company may refuse to
accept it, and the company will not be responsible for any damage to
insufficiently packed goods. However, if any damage is done to
the material on account of negligence of the ship's owners or
operators, the shipper has a just claim against the carrier for the
value of the damage done.
Steamship companies do not insure material for account of ship-
pers and their responsibility for losses is limited by the Harter Act.
It is necessary for the exporters to take out marine insurance to
cover them in the event of any losses. In war-time conditions, the
steamship companies do not guarantee delivery of any commodities
and are not responsible for any losses incurred on account of their
vessels being attacked by enemy war craft. It is therefore necessary
for the exporter to cover his shipments with war-risk insurance.
The ocean carrier is not subject to the " law of common carriers,”
and consequently limits his liability at every possible point . Each
company issues its own bills of lading, and the clauses on them dif-
fer. The following, used in shipping order A. is a typical bill of
lading :
New York to Habana, Cuba.

NEW YORK AND CUBA MAIL STEAMSHIP COMPANY.

(Ward Line) .
BILL OF LADING.

RECEIVED at New York, by the New York and Cuba Mail Steamship Company
(the term carrier hereinafter used being intended to include said company and
any substitute or continuing carrier ) , from the shipper named on the back
hereof, the packages described on the back hereof (hereinafter called the
goods, the carrier's responsibility in respect of description thereof being limited
as hereinafter provided ) , in apparent good order and condition ; to be trans-
ported by steamship named on the back hereof ( subject as to said steamship to`
substitution and other liberties as hereinafter provided, the term vessel here-
inafter used being intended to include said steamship and any substituted or
continuing vessel ) to the destination named on the back hereof, or as near
thereto as the vessel can safely get, and there delivered in like good order and
condition, in manner as hereinafter provided, upon payment of any unpaid
freight and other sums payable by shipper, consignee, and/or assigns hereunder,
to the consignee named on the back hereof, or order if so provided, subject
always to the terms of this contract which are hereby mutually agreed upon
as follows :
1. The freight is adjusted in consideration of all the terms and provisions of
this contract, whether written, printed, or stamped.
2. All particulars herein mentioned of the goods, except only the number of
the packages with the marks thereon, are those declared by the shipper, and the
same (including anything as to size, weight, quantity, or the like imported by
92 PAPER WORK IN EXPORT TRADE .

the character of packages designated ) are unknown to the carrier and shall
not constitute, as against the carrier, any part of the carrier's description of
the goods as hereby receipted for, but shall be deemed only representations of
the shipper.
3. The goods are accepted by the carrier subject to delays or default in
shipment, transportation , delivery, or otherwise, occasioned by riots, strikes,
stoppage of labor, lockouts, or labor troubles of carrier's employees or other-
wise ; shortage of labor, fuel, conveyances, or room ; lack of facilities of any
sort, accumulation of cargo, and the like ; and notice to shipper or others of
any danger of such delay or default is hereby waived ; and the carrier shall
not be responsible for any such delay or default.
4. The carrier's responsibility in respect of the goods as a carrier shall not
attach until the goods are actually loaded for transportation upon the vessel,
and shall terminate, without notice, as soon as the goods leave the vessel's
tackles at destination or other place where the carrier is authorized to make
delivery or end its responsibility. Any responsibility of the carrier in respect
of the goods attaching prior to such loading or continuing after leaving the
vessel's tackles as aforesaid, whether the goods are in course of lighterage by
the carrier or however else the same may be situated, shall be the same as
that only of a warehouseman without liability on the part of the carrier,
except for want of ordinary care ; and all conditions, exemptions, exceptions,
and limitations of the liability of the carrier contained in this contract shall
be deemed to apply also to such warehouseman's liability as well as to liability
as a carrier. The carrier may place the goods in store while awaiting loading,
transshipment, forwarding, or delivery, and thereupon be discharged of all
responsibility for loss of or damage to the goods while so stored.
5. Full freight to destination and all advance charges against the goods
are due and payable to the New York and Cuba Mail Steamship Company
upon receipt of the goods by the latter ; and the same and any further sums
becoming payable to the carrier hereunder and extra compensation, demurrage,
forwarding charges, general average claims, and any payments made and
liability incurred by the carrier in respect of the goods (not required hereunder
to be borne by the carrier ) shall be deemed fully earned and due and payable
to the carrier at any stage, before or after loading, of the service hereunder,
without deduction ( if unpaid ) or refund in whole or in part ( if paid ) , goods or
vessel lost or not lost ; and the same shall be payable in United States cur-
rency and in New York funds ; and the carrier shall have lien on the goods
or any part or proceeds for the whole thereof ; and the shipper, consignee,
and/or assigns shall be jointly and severally liable therefor, and notwith-
standing any lien therefor has been surrendered. Full freight shall be payable
on damaged and unsound goods. The carrier may collect freight on bill of
lading weight, measurement, or quantity, and, if gross weight, measurement,
or quantity delivered exceeds weight, measure, or quantity on which freight
may be computed , the carrier may collect freight on such excess, unless shown
to have been caused by absorption of water during the voyage. Any error in
freight or other charges or in the classification herein of the goods is subject
to correction, and if on correction the freight or charges are higher, the
carrier may collect the additional amount. Should a package consist of
several parcels for more than one person, full freight shall be paid on the
parcels for each person as if shipped and consigned as a separate package.
If there be an enforced interruption or abandonment of the voyage at a
port of distress or elsewhere and the goods or any part be forwarded , the cost
thereof, including extra compensation if performed by vessels in the service of
the carrier, shall be paid by shipper, consignee, and/or assigns.
 PAPER WORK IN EXPORT TRADE. 93

6. The shipper , consignee, and/or assigns shall pay any duty, tax, impost,
fee, or the like for which the carrier may be charged upon account of the
goods, not due to the carrier's fault, and also any fine or penalty incurred
by, or loss or expense occasioned to, the carrier by reason of illegal, incorrect,
or insufficient documents or marking or numbering of packages or goods, or
description of contents or weight or other particulars, or by reason of any
other act or omission of shipper, consignee, and/or assigns.
7. In case of a single article or package exceeding 2 tons in weight the
true weight thereof shall be declared at time of delivery to the carrier ; in
case the weight declared is incorrect and in consequence of reliance thereon
any loss or damage arises, either to the article or package or to the carrier
or to others, or any increased charges or expenses are incurred by the carrier
in handling or caring for any such article or package, the same shall be
borne and paid solely by the shipper, consignee, and/or assigns.
8. The vessel shall have liberty hereunder, either before or after proceed-
ing to or toward any port of discharge or transshipment, to proceed to or
toward, call, enter, or stay at any port or ports, although not upon the usual
or any route to, and although in a contrary direction to or beyond the port
of discharge or transshipment once or oftener, backward or forward, in any
order or rotation, for any purposes whatsoever, and the same shall not be
deemed a deviation , but be deemed within the voyage hereby intended as fully
as if specifically described herein ; and the vessel shall have liberty also to
sail in or out of ports and to proceed with or without pilots, to tow or assist
vessels in any situation, and to deviate for the purpose of saving life or prop-
erty ; and in case of salvage services rendered to the goods during the voyage
by another vessel belonging to or in the service of the same carrier , such serv-
ices shall be paid for as fully as if the salving vessel belonged to or was in
the service of strangers.
9. The carrier shall have liberty, in its discretion, before or after shipment
or loading, to substitute, or ship the whole or any portion of the goods by any
other steamship or steamships, although prior or subsequent ; and shall have
liberty in its discretion, at any port or place, to transship, land , and trans-
ship or forward the goods, put into store, craft, or other available place, and
thence transship and forward the same to or on route to destination , by any
ship or ships, carrier or carriers, by land and/or water, subject as to such
continuing carrier to the provisions of the usual bill of lading of such carrier
whether issued or not, and upon the delivery of the goods into the custody
of a continuing carrier or representative, shall thereupon be relieved of all
further responsibility for the goods, and the clean receipt of the continuing
carrier or representative shall be evidence as against shipper, consignee, and/or
assigns of delivery of the goods to the continuing carrier in good order and
condition. The vessel shall have liberty, if she puts into a port of refuge
or is prevented from any cause from proceeding in the ordinary course of her
voyage to proceed under sail or in tow.
10. If the vessel is prevented by quarantine from reaching her destination,
or from making due delivery of the goods, or is detained at quarantine, the
goods may be forthwith, without notice, discharged into lazarettos, craft, or
other places immediately available, at the risk and expense of shipper, con-
signee, and/or assigns, and such discharge shall be a complete delivery of
the goods hereunder and all responsibility of the carrier therefor, as car-
rier or otherwise, shall end without notice as soon as the goods leave the ves-
sel's tackle. If, by reason of quarantine, blockade, hostile act of any power,
conditions of surf or weather, shortage of lighters, riots, or of strikes, lock-
94 PAPER WORK IN EXPORT TRADE .

outs, stoppage or shortage of labor of the carrier's employees or other-

wise, or other conditions, existing at the port of transshipment or dis-
charge of the goods or elsewhere, or by reason of any of the excepted
causes mentioned elsewhere in this bill of lading, the vessel is, or in the
master's opinion is likely to be prevented from reaching, or from entering,
or from making due delivery of the goods at the port of transshipment or
discharge, or it is, or in the master's opinion is likely to be delayed at said
port or in discharging there beyond the usual time, then, either with or
without proceeding to or toward or entering or attempting to enter said port,
the goods may be retained on board until the return trip or the next voy-
age, or may be discharged at any other port, according to the convenience of
the vessel, to which the vessel may be bound or proceed, and thence forward-
ed to the original port of transshipment, or discharge, all at the risk and ex-
pense of the shipper, consignee, and/or assigns, who shall pay also a reason-
able freight charge for any additional transportation by the carrier occa-
sioned thereby. If the goods can not be found during the vessel's usual stay
at the port of transshipment or discharge, they may be retained on board
till the return trip or the next voyage or discharged at any port to which
the vessel is bound or may proceed and sent back, at vessel's expense but risk
of shipper, consignee, and/or assigns, and the carrier shall not be liable for
any loss or damage to or delay of the goods occasioned thereby.
11. The carrier shall not be liable, as carrier or otherwise, for any loss, dam-
age, delay, or default, whether occurring during transit or before, or after or
during or while awaiting loading transshipment, discharge, delivery, or other
disposition of the goods or on board, or in lighters or craft, or on wharf or in
warehouse, at any port or place, occasioned by any of the following excepted
causes, throughout this contract always excepted : By causes beyond the car-
rier's reasonable control ; by dangers or accidents of the sea or other waters and
navigation or transportation of whatsever nature or kind ; by fire or explosion
from any cause wheresoever occurring ; by barratry, theft, or embezzlement of
mast or crew ; by act of God ; by enemies, pirates, robbers, or thieves ; by arrest
or restraint of Governments, princes, rulers, or peoples ; by prolongation of the
voyage ; by legal process or stoppage in transit ; by fumigation or other treat-
ment required by quarantine or sanitary authorities ; by pestilence, riots, wars,
rebellions ; by strikes or stoppage of labor, or labor troubles , of carrier's em-
ployees or others ; by explosion or bursting of boilers, damage from steam ,
breakage of shafts, accidents to or from machinery or breakage or derangement
thereof ; by any latent or other defect in hull, machinery, or breakage or de-
rangement thereof ; by any latent or other defect in hull, machinery, or appur-
tenances of the vessel or any craft or unseaworthiness thereof, although exist-
ing at time of shipment or transshipment or at the beginning of the voyage,
provided due diligence shall have been exercised to make the same seaworthy ;
by collision or standing ; by heating ; heat of holds, or effects of climate ; by ice,
earthquake, rain, or spray, frost, decay, putrefaction, ferment, rust, sweat, floods
or freshets ; by giving away, falling, or destruction of wharf, shed, or ware-
house ; by damage incident to transportation ; by change of character, loss of
weight or contents, drainage, leakage, breakage, shrinkage, or wastage ; by
cooperage or mending ; by vermin or rat damage, by stowage or contact with, or
smell, evaporation, leakage, or taint from other goods, the vessel being privileged
to carry any other articles, whether hazardous or not, and live stock, as cargo
or otherwise, on and/or under deck ; by nature of the goods or cargo, or insuffi-
ciency of packages ; by explosion of any cargo, whether shipped with or without
disclosure of its nature or condition ; by obliteration , error, insufficiency or
absence of marks, numbers, address , or deschription ; by land damage, risk of
 PAPER WORK IN EXPORT TRADE . 95

craft, hulk, or transshipment ; by faults or errors in navigation or management

of the vessel, provided due diligence shall have been exercised to make the
vessel in all respects seaworthy and properly manned, equipped, and sup-
plied ; by any act or omission of shipper or owner of the goods, or of his agent
or representative.
12. The shipper shall be liable for any loss or damage to the carrier or to
others caused by inflammable, explosive, noxious, hazardous, or dangerous goods
or articles shipped without full disclosure of their nature at the time of lading
and entering hereon, whether shipper be principal or agent, or aware of the
nature of the goods or articles or not ; and such goods or articles may be thrown
overboard or destroyed at any time by the carrier without compensation to any
person ; and extra charges and expenses, if any, for discharging, lightering,
handling, or caring for, or otherwise occasioned by such goods or articles, or
those declared or considered noxious or hazardous by the civil or military
authorities of any port, shall be borne by the shipper, consignee, and/or assigns.
Goods or articles of such character may be carried on deck, as well as any
others whose nature or bulk requires them to be so carried, and the same shall
be at the risk of the owner thereof of all loss or damage thereto occurring while
so situated nor shown due to the carrier's fault.
13. General average shall be payable according to York-Antwerp Rules of
1890, and as to matters not therein provided for, according to the law and usage
at the port of New York. If the shipowner shall have exercised due diligence
to make the vessel in all respects seaworthy and properly manned, equipped,
and supplied, it is hereby agreed that in case of danger, damage, or disaster re-
sulting from faults or errors in navigation or in the management of the vessel
or from any latent or other defects in the vessel, her machinery or appurten-
ances, or from unseaworthiness, although existing at time of shipment, or at
the beginning of the voyage (provided the defect or unseaworthiness was not
discoverable by the exercise of due diligence ) , the shippers, consignees, or
owners of the cargo shall nevertheless pay salvage and any special charges in-
curred in respect of the cargo and shall contribute with the shipowners in gen-
erl average to the payment of any sacrifices, losses, or expenses of a general
average nature that may be made or incurred for the common benefit or to
relieve the adventure from any common peril.
14. This shipment is subject to all the terms and provisions of the act of Con-
gress of the United States, approved February 13, 1893, enitled “ An act relating
to the navigation of vessels," etc. and of sections 4282 to 4287, each inclusive,
of the United States Revised Statutes. The carrier shall not be liable for gold
or other precious metals, precious stones, bills, notes or securities, document, pic-
tures, glass , china, silk, furs , lace, or any of the articles enumerated in section
4281 of the United States Revised Statutes, except in accordance with such
statute, and after written notice of the character and value thereof at the time
of loading and entry thereof.
15. The carrier shall not be responsible for specie, bullion, jewelry, plate,
precious stones or metals, bank notes, bonds, or other negotiable documents
until actually delivered on board the vessel to the master or other officer in
charge of the deck at the time and signed for by him. Delivery must be taken
on the vessel's deck at port of discharge, and the carrier's responsibility shall
thereupon cease. Such articles are received and the rate of freight has been
specially adjusted upon the condition and understanding that the value thereof
has been insured by the shipper or others for account of the carrier in respect
of its liability, under usual form of Lloyd's policy or other equivalent, and that
the shipper by accepting this bill of lading represents that such insurance has
96 PAPER WORK IN EXPORT TRADE.

been effected, and undertakes that the policy shall be available for the carrier's
protection in case of need.
16. The carrier does not undertake that the vessel is equipped with refriger-
ated or specially cooled or ventilated compartments or otherwise equipped for
transportation of goods or articles of a perishable nature, nor whether so
equipped or not, to transport such or any other goods or articles in any such
compartment or otherwise than as ordinary cargo, and shall not be liable for any
loss or damage from failure so to do, unless such transportation is expressly
stipulated for herein. Fresh fruits, vegetables, and meats and any goods or
articles of a perishable nature, however carried, are received and carried at
the sole risk of the owner thereof. The carrier shall not be responsible for
any loss or damage to such goods or articles from temperature or atmospheric
conditions, risks of refrigeration, cooling, or ventilation, accident to, or latent
or other defect in, or explosion, breakage, derangement, insufficiency, shortage,
or failure in any respect, or unseaworthiness of, or in respect of any refrigerator
or refrigerated or specially cooled or ventilated compartment or plant, or ap-
paratus, boiler, engine, machinery, appliances, materials, or supplies therefor, or
any part thereof, although existing at time of shipment or transshipment, or at
the beginning of the voyage, provided due diligence shall have been exercised
to make the vessel seaworthy ; and if any such goods or article shall at any
stage be, or in the opinion of the master or carrier's representative be decayed,
injurious, or offensive, the same may be thrown overboard or destroyed and
the carrier shall not be responsible therefor. The provisions of this article are
in addition to and not in substitution for the other provisions of this bill of
lading, and all goods of such nature as mentioned herein or to be carried in
refrigerated or specially cooled or ventilated compartment are received and
are subject also to all other terms, conditions, exceptions, and limitations as
to liability contained in this bill of lading.
17. The vessel may commence discharging upon arrival immediately she is
ready, without notice, at any hour of day or night, and discharge with or with-
out intermission, any custom of the port to the contrary notwithstanding, and
the collector of the port is hereby authorized to grant an order for the dis-
charge of the cargo immediately after entry of the vessel. Delivery of the
goods shall be received , without notice, from the vessel's. tackles as the goods
come to hand in unloading. If not so received, the master or agent of the
vessel is hereby authorized at the risk and expense and for account of the
shipper, consignee, and/or assigns, without notice, to enter and discharge the
goods, depositing them in hulk or craft or in or upon wharf, warehouse, public
stores, or customhouse, or permitting them to lie where landed , or making such
disposition thereof as the authorities of the port may direct, subject at all
times to any lien of the carrier, including storage charges by the carrier, and
to that end to employ such lightermen, truckmen, warehousemen, wharfingers,
or other agencies as may be requisite, customary, or proper, who shall be
deemed the agents solely of shipper, consignee, and/or assigns and not of the
carrier, the latter being hereby relieved of all responsibility for, or in
respect of the goods, without notice to any person whatsoever, as soon as the
same leave the vessel's tackles. If the shipper, consignees, or assigns entitled
to the goods shall not within 48 hours after unloading, without notice, pay the
freight and all other sums payable to the carrier by shipper, consignee, and/or
assigns and relieve the carrier from all further responsibility and expense for
storage charges or otherwise in respect to the goods, the carrier is hereby
authorized at any time on 48 hours' notice by mail to consignee or assigns or
other person named for notice in the bill of lading, or if such consignee or
 PAPER WORK IN EXPORT TRADE. 97

assigns or other person is unknown or can not be found in port, then, without
notice, to sell the goods and retain and pay from the proceeds the expenses
hereunder and all sums due the carrier in respect of the goods from shipper,
consignee, and/or assigns and all other charges on the goods, and the carrier
shall upon sale be discharged of all liability in respect of the goods except to
account for the proceeds.
18. The carrier shall not owe any duty to notify consignee or others of the
arrival or disposition of the goods, nor be liable for any loss or damage arising
from not doing so, except where otherwise expressly required herein. If the
consignment herein be to order with provision for notice to a person named,
notice to such person shall be required only when notice to a named consignee
would be required hereunder.
19. If it is necessary or usual to land the goods on a Government wharf to
be taken charge of, handled, or moved by any concessionaire or Government
agent, or nominee or for the performance of any duty in respect thereof by
the customs or other authorities, or to deliver the same into the custody of
such authorities, any responsibility of the carrier shall be ended , without.no-
tice to the consignee, authorities, wharfingers, concessionaires, or others, as
soon as the goods are so landed or delivered ; and the goods shall be deemed
thereupon in the sole custody of the wharfingers and/or of such concessionaire,
agent, or nominee and the customs and other authorities who shall be deemed
the agents solely of the consignee or other person entitled to the goods ; but
the goods shall continue subject to any lien of the carrier.
20. The goods shall be subject to charges for mending and repair of packages,
which shall be a lien thereon and paid by shipper, consignee, and/or assigns ;
sweepings, if any, and unclaimed goods not otherwise accounted for shall at
carrier's option be apportioned to the different consignees of like goods accord-
ing to the shortages and be accepted as good delivery to the extent thereof ;
and if any consignee has a shortage in marks or numbers called for herein ,
unclaimed goods of like kind but of different marks or numbers, shall, at car-
rier's option, be deemed to constitute a part of the goods and be accepted by
consignee and/or assigns as good delivery hereunder.
21. Unless a higher value be stated herein the value of the goods does not
exceed $100 per package nor $8 per cubic foot, and the freight thereon has been
adjusted on such valuation, and no oral declaration or agreement shall be evi-
dence of a different valuation . In computing any liability of the carrier in
respect of the goods, no value shall be placed thereon higher than the invoice
cost (including freight prepaid hereunder ) not exceeding $ 100 per package
nor $8 per cubic foot ( or such other value as may be stated herein ) , nor shall
the carrier be held liable for any profits or increase of price or value over
such cost not exceeding said value, nor for any special or consequential dam-
age, and the carrier shall always have the option of replacing any lost or
damaged goods.
22. If there is opportunity to discover by examination, before removal of
the goods, that loss of contents or shortage of, or damage to the goods exists
or may exist the carrier shall not be liable for any such loss , shortage, or dam-
age, unless notice of claim therefor be presented in writing to the carrier or
to the master or agent of the vessel before removal of the goods. If there is
no opportunity to discover, before removal, that such loss, shortage, or damage
exists of may exist, then the carrier shall not be liable therefor, unless such
notice of claim be so presented within 48 hours after removal of the goods.
The carrier shall not, in any event, be liable for any claim or demand arising
125740° -20-7
98 PAPER WORK IN EXPORT TRADE.

hereunder or in respect of the goods, unless notice of the claim be presented

in writing to the carrier within 30 days after delivery of the goods to the car-
rier. No suit or proceeding to recover for or upon any claim or demand shall
be maintained against the carrier or vessel or owners thereof, unless com-
menced within six months after delivery of the goods to the carrier, and the
lapse of such period shall be deemed a complete bar to recovery in any such
suit or proceeding not sooner commenced , notwithstanding the carrier may
be a nonresident or a foreign corporation. Nothing shall be deemed a waiver
of the provisions of this article except a written express waiver signed by the
carrier.
23. In case of any loss or damage for which the carrier shall be liable, the
carrier shall to the extent of such liability have the full benefit of any insur-
ance that may have been effected upon the goods or against said loss or damage.
24. This bill of lading, duly indorsed, shall, if required, be given up to the
carrier in exchange for a delivery order.
25. The shipper, vessel, consignee, destination, and goods referred to over
page as mentioned or described on this side (back ) hereof are as follows :
Shipper : Export Corporation. Destination of goods : Habana.
Expected to sail : October 31 , 1918. Notify ( if consigned to shipper's
Consignee order of : Export Corporation. order ) : W. A. Thompson & Co. ,
Vessel : Mexico. Habana.

Weight in pounds.
Marks. No. of packages. Kind and contents.
Gross. Net.

WAT Co.. 500 barrels...…… Cement . 160,000 ..

EC
Habana
No. 1 up
White paint....... 465 bundles ... Said to contain 4,867 224,000 .
steel bars.

It is mutually agreed that in addition to the other terms and conditions

of the bill of lading, which shall be deemed affected only in so far as incon-
sistent herewith, this shipment is at the sole risk of the owners thereof, of
all risks of war, arrest, restraint, capture, seizure, detention, sinking, interfer-
ences, or hostilities on the part of any Power and of all consequences thereof;
and the vessel shall have liberty in the discretion of the master, owner,
charterer, or any agent thereof to proceed notwithstanding any such risks
and armed or unarmed ; also, if deemed advisable in the judgment of such
master, owner, charterer, or agent, in order to avoid loss, damage, delay, ex-
pense, or other disadvantage or danger to vessel, cargo, passengers, or other
interest, to wait at the port of shipment or elsewhere, and/or, either with or
without proceeding to or toward the port of discharge or entering or attempt-
ing to enter or discharge the goods there and, whether such proceeding,
entry, or discharge be permitted or not, to proceed to or toward any other
port or ports in or not in any route to destination, and/or return to the
port of shipment once or oftener backward or forward in or not in any
order or rotation , retaining the goods on board or discharging the same at
risk and expense of the owners thereof at port of shipment or elsewhere at
the first or any subsequent call, and shall thereupon be relieved of all re-
sponsibility in respect thereof, and full bill of lading, freight, extra comper-
 PAPER WORK IN EXPORT TRADE . 99

sation for any additional service and any extra expense occasioned thereby
shall be paid by shipper, consignee, and/or assigns, and shall constitute a
lien on the goods ; and the vessel is privileged to carry any cargo not except-
ing contraband ; and the vessel shall have liberty in any circumstances to
comply with any orders or requests of the Government of the United States
or of Great Britain or its allies or any insurance or other department or
bureau or agency thereof or of any person purporting to act with the authority
of any such Government or department, bureau, or agency.
26. And finally that in accepting this bill of lading the shipper, owner, and
consignee of the goods and holder of the bill of lading agree to be bound by
all its provisions, on this page and overpage, whether written, printed , or
stamped, as fully as if signed by all of them.
In witness whereof, the New York and Cuba Mail Steamship Company, by its
agent, hath signed 3 bills of lading, all of this tenor and date, one whereof be-
ing accomplished the others to stand void.
Dated at New York, October 31, 1918.
---, Agent.
 CHAPTER IX.

MARINE INSURANCE.

The forwarders were instructed by the Export Corporation to ar-

range for marine and war-risk insurance. No insurance was necessary
while the goods were in the hands of the railroads, as under the law
common carriers are liable for damage or loss of goods. The oper-
ators of a vessel are not subject to the same rules. The Harter Act¹
specifies that " if the owner of any vessel transporting merchandise
or property to or from any port in the United States of America
shall exercise due diligence to make the said vessel in all respects
seaworthy and properly manned, equipped , and supplied , neither
the vessel, or owners , agent, or charterers shall become or be held re-
sponsible for damage or loss resulting from faults or errors in navi-
gation or in the management of said vessel, nor shall the vessel, her
owner or owners, charterers, agent, or master, be held liable for losses
arising from dangers of the sea or other navigable waters , acts of
God, or public enemies, or the inherent defect, quality, or vice of the
thing carried, or from insufficiency of package , or seizure under
legal process, or for loss resulting from any act or omission of the
shipper or owner of the goods, his agent or representative, or from
saving or attempting to save life or property at sea, or from any
deviation in rendering such service."

RISKS COVERED BY MARINE INSURANCE.

The ocean bill of lading invariably exempts the issuing company

from every liability possible under the law. Consequently the ship-
per, if he wishes protection from loss due to destruction or damage
to his goods while in the hands of the ocean carrier, transfers the
risk to an insurance company. Moreover, under maritime law he
may have to bear not only the loss or damage to his own goods,
but may also be liable for loss or damage to the goods of others
carried in the same vessel , or for loss or expenses incurred by the
vessel itself. The conditions under which this is true give rise to
what is termed " general average."

The practice of general average far antedates the practice of marine insur-
ance and goes back to a time long before the Christian era, and to a time
when every merchant who had an adventure at sea either followed his goods
himself, or sent his representative in the ship which carried his goods to oversee
their handling and sale.
It would frequently occur during the course of such a voyage along the
shores, let us say, of the Mediterranean, or the shores of Africa , that a storm
1 An act of Congress, approved Feb. 13, 1893.
100
 PAPER WORK IN EXPORT TRADE. 101

would arise and the small ships of those days would be in serious peril, only
to be relieved by the throwing overboard of a portion of the goods carried by
them in order to lighten the ship . Naturally every merchant would want his
neighbor's goods thrown overboard in order that his own might be saved, and
in order to avoid the disputes and loss incident to such an unfortunate condi-
tion of affairs, we find recorded in the laws of Rhodes, long prior to the
Christian era, a law stating that " that which was sacrificed for the benefit of
all in a sea adventure, should be made good by the contribution of all," and
that if one or more merchants had their goods thrown overboard for the
general safety, all the other merchants and the shipowner should contribute
to make good the loss sustained through the aforesaid jettison.
This law has been accepted and adopted by all maritime powers, with many
changes of form , and has been amplified to cover practically every sacrifice
of value for the common benefit. It is peculiar to commerce of the sea, as
nothing like it exists on land.
It is still in effect to -day among all maritime nations, and the only effect
of the practice of insurance upon it has been to transfer from the shoulder
of the assured to the shoulder of his underwriter the cost of making good
that contribution which all the interested parties in a sea adventure are
obliged to pay to the unfortunate member of their company whose property
has been sacrificed to secure the common safety.¹

The shipper invariably takes out insurance to protect himself

from general average. Even though he might be willing to carry
the risks, the technicalities involved in securing his goods in case
a " general average " loss is encountered makes it necessary for him
to secure protection . Also , if he is financing his shipment through
documentary bills 2 he must carry insurance against general average
and against total loss due to perils of the sea. Such marine insurance
is called " free from particular average," abbreviated F. P. A. The
word " average " used in marine insurance signifies a loss less than
total resulting from what may be termed sea damage. Many goods
are insured F. P. A. less than 3 per cent, or 5 per cent , or any
other per cent stated . This means that loss or damage to specified
goods of less than the stated per cent is not insured , but loss above
that figure to the particular goods is insured against the stated
risks.
When the shipper desires marine insurance to cover only general
average, his insurance policy has the F. P. A. or a T. F. A. clause
(free from all loss except total ) . When it is desired to cover
particular average , the term " against all risks , A. A. R., or all
risks , A. R. , or sometimes W. A. (with average ) is used. All risks ,
however, apply only to perils of the sea such as :
1. Perils of nature or of the elements-seas, fire.
2. Perils arising from the actions of persons on board the vessel- jettison,
barratry.
3. Perils arising from action of persons not on board the vessel-men-of-war,
enemies, pirates, rovers, thieves , etc.
1 H. P. Dunham : " The Business of Insurance," Vol. I, pp. 260 , 261.
2 See Chap. XI.
102 PAPER WORK IN EXPORT TRADE,

There is nothing except the cost to prevent the shipper from secur-
ing insurance against any contingency or damage that may arise.
The underwriters will stipulate on their policies such special pro-
visions as may be agreed upon.
Filsinger¹ says the possibilities of loss are the following :
(a) Destruction by sinking of vessel.
(b) Damage to contents either before or after loading on vessel. This may
be caused by leakage, by bilge water, or fire.
(c) Robbery on board, while loading or unloading, in customhouse, or in
transit to the interior.
(d) Breakage due to carelessness in handling.
(e) Loss by sinking of vessel because of attacks by enemy ships.
Responsibility important.-A policy for marine insurance is very explicit in
its limitations. Only when a shipment is damaged as the result of an accident
to the ship or loss caused by sinking of the vessel can payment be enforced.
If a ship takes fire or is damaged in collision , policies also are payable. A
clear understanding of the provisions in a marine insurance policy should be
had by the beginner.
Pilferage or damage. One of the causes of frequent complaint, chiefly on
account of bad packing, is from robbery. A study of the conditions of trans-
portation makes this clear. Although cases are securely protected with iron
strapping, or even sealed , losses nevertheless are possible. Insurance policies
may be obtained covering this eventuality. A small additional cost ( almost
without exception paid by the consignee ) is fully justified.
Miscellaneous damage.—In addition to the possible losses already mentioned
there are others. Damage while shipment is en route ; breakage of cases and
injury of contents because cargo has not been properly stowed ; the too rapid
descent of a sling into a lighter with its consequent scattering of contents ; a
sudden tropical rain before shipments can be placed in warehouse ; a fall from
the back of a cargador ( freight handler ) ; heavy dews or sudden rains while
shipments are being carried into the interior.
War risks.- Insurance against the risks of war is ordinarily unknown.
When, however, consignments are made to a region in which war is raging,
insurance is necessary. The risks vary and the rates fluctuate in accordance
therewith.
Various policies. -There are various policies under which insurance may be
written. Frequently, the foreign buyer gives instructions that shipments are
to be insured under his open policy. In that event notification is sent to
agents of the company. Under other circumstances shipments may be insured
under a separate policy for each. This, however, is not common.
Open policies . One of the simplest methods of providing insurance is by
this method. The procedure consists in furnishing to the company with whom
the insurance is placed the details relating to each shipment. Forms are
generally supplied by the company and settlement for the sums due in each
instance is made at regular intervals.
Handling certificates.-This is a matter of some importance. As the papers
covering many shipments are negotiable, it is indispensable that the owner-
ship, in case of loss of the shipment, be vested in the holder of the papers.
For this reason the indorsement on certificates is made in blank and is for-
warded with the other documents. This procedure simplifies matters in the
event that a claim is necessary.

1 E. B. Filsinger : " Trading with Latin America," 141-144.

 PAPER WORK IN EXPORT TRADE. 103

Obtaining rates.-The far-seeing manufacturer will endeavor to minimize

every possible expense to his customer. A saving in marine insurance, or of the
other kinds referred to, often may be made by obtaining quotations from a
number of brokers or companies. Experience proves that the time and energy
necessary are well expended.
Placing insurance. —Insurance is sometimes placed by freight forwarders.
In other cases and under certain conditions, a manufacturer may become a
subagent of a company by making arrangements with a general agency. Still
other rates may be obtained through the list of insurance companies and brokers
who are listed in the classified section of the New York Telephone Directory or
business directory. Rates also may be obtained by correspondence between
insurance agents in interior cities and those located in New York.
Claims.-There are two ways of making a claim in case of loss. One is to
forward the necessary documents to the shipper. The second is for the holder
of the papers to attend to the matter. In the latter case the documents are
sent to the home office of the company, or through the nearest local agency.
The papers required are the following : (a ) The insurance certificate ; this i
must be properly indorsed ; ( b ) the original and any negotiable copies of the
bill of lading ; these also must be indorsed ; ( c ) a memorandum of survey made
by the local representative of Lloyd's, London ; ( d ) a properly executed instru-
ment definitely transferring the ownership of the goods to the underwriting .
company.
Now that the various materials are loaded on board the vessels,
it is necessary for the forwarder to cover the shipments with marine
and war-risk insurance in accordance with instructions from the
Export Corporation.
On transaction A, shipment of steel bars and cement to Habana,
the forwarder was instructed to take out marine and war-risk in-
surance for 110 per cent of invoice value of the material. He ac-
cordingly takes out, with the United States Lloyd's (Inc. ) , marine
insurance, free of particular average, and war-risk insurance. Cer-
tificates of insurance are always issued in duplicate, in order that
two sets may be sent abroad at different times.
On transaction B, shipment of hops and turpentine, the instruc-
tions are to cover shipment with marine and war-risk insurance for
100 per cent of the invoice value. The forwarder accordingly takes
out insurance with the United States Lloyd's ( Inc. ) , covering ma-
rine risk, the hops with 3 per cent F. P. A. and the turpentine
F. P. A., and war-risk insurance on both commodities .
On transaction C, shipment of machinery to Japan, marine and
war-risk insurance is to be taken out for invoice value of material
only, and accordingly the forwarding company arranges for this in-
surance, taking out a policy with a special machinery clause therein .
This insurance was also placed with the United States Lloyd's (Inc. ) .
On transaction D, shipment of salmon and lobster to France ,
marine and war- risk insurance was ordered for 110 per cent of the
invoice value, and accordingly was taken out by the forwarders.
104 PAPER WORK IN EXPORT TRADE.

This insurance was placed with the United States Lloyd's ( Inc.) ,
and the marine insurance provided for 3 per cent F. P. A.
The Export Corporation , instead of taking out a separate policy
for each shipment, has an " open " or " floating " policy. This policy
remains in force for a given length of time . As shipments are made
the Export Corporation, through its forwarders, notifies the insur-
ance company of the value, the date of shipment, the vessel , and the
insurance required . The risk covered is indorsed on the open policy
and a certificate of insurance is given to the shipper.

TERMS AND CONDITIONS OF POLICIES.

The certificate covering transaction A is as follows :

CERTIFICATE OF INSURANCE .

AT UNITED STATES " LLOYD'S,"

Home Office, 3 South William Street, New York.
$20,284.00.
NEW YORK, October 10, 1918.
We hereby certify, that on the 10th day of October, 1918, we, the under-
signed, insured under policy No. 8523, made for Export Corporation , twenty
thousand two hundred eighty-four and 00/100 dollars on 465 bundles steel bars
and 500 barrels cement, valued at $20,284, per steamship Mexico, at and from
New York to Habana, Cuba.
Loss, if any, payable to the order of assured or order indorsed on this certifi-
cate, which, upon said payment, is to be surrendered and assigned without
recourse. It is understood and agreed that this certificate represents and takes
the place of the policy, and conveys all the rights of the original policyholder
(for collecting any loss or claim ) as fully as if the property were covered by a
special policy, of the form in use by the undersigned , direct to the holder of this
certificate, and free from any liability for unpaid premiums. This certificate is
not valid unless countersigned by
EXPORT CORPORATION,
New York.

Countersigned by- Free of particular average unless

the vessel, craft, or lighter be stranded,
(Marks and numbers. ) sunk, burned, or in collision.
To cover while at the risk of the assured and in due course of shipment, from
the moment the goods leave the store or warehouse at place of shipment, and
until delivered at store or warehouse at place of destination ; including risk in
appraiser's stores, but this policy does not cover in any storage store or ware-
house wherever situated. Warranted by the assured that the place of shipment
and place of destination named when making reports hereunder shall be
deemed the initial place of shipment and final place of destination, so far as
concerns this policy.
Covering while on railroads or other land conveyances only against the risks
of fire, collision, and derailment and flood (meaning rising of navigable waters )
and when elsewhere on land only against the risks of fire and flood ( meaning
rising of navigable waters ) .
 PAPER WORK IN EXPORT TRADE . 105

Machinery clause.- In case of loss or injury to any part of a machine con-

sisting, when complete for sale or use, of several parts , the insurers shall only
be liable for the insured value of the part lost or damaged.
Including risk of lighterage to and from the vessel, each craft or lighter to be
considered as if separately insured.
This policy shall not be vitiated by any unintentional error in description of
voyage or interest, or by deviation of the vessel from the voyage described, pro-
vided the same be communicated to assurers as soon as known to the assured
and an additional premium paid if required.

PREMIUM AND LOSS PAYABLE IN GOLD.

The condition of payment under this certificate is that all claims shall be
reported to the subscriber's agents at Liverpool, or to any other agent accord-
ing to the list on the back of this certificate, as soon as the goods are landed,
or the loss known, to be adjusted according to usages of British Lloyd's and
the special conditions of the contract of insurance.
The revenue laws of Great Britain require that this certificate be stamped
within 10 days after receipt in the United Kingdom , otherwise loss can not be
collected there. Such stamps to be at expense of assured.

WAR RISKS .

This certificate also covers the risk of war as per following clauses :
It is agreed that this insurance includes the risk of capture, seizure, or
destruction or damage by men-of-war, by letters of mart, by takings at sea,
arrests, restraints, detainments, and acts of kings, princes, and people, author-
ized by and in prosecution of hostilities between belligerent nations ; but ex-
cluding claims for delay, deterioration , and/or loss of market and warranted
not to abandon in case of capture, seizure, or detention until after condemna-
tion of the property insured , nor until 90 days after notice of said con-
demnation is given to these assurers. Also warranted not to abandon in case
of blockade, and free from any claim for loss or expense in consequence of
blockade, or of any attempt to evade blockade ; but in event of blockade to be
at liberty to proceed to an open port and there end the voyage.
Foregoing clause does not cover any war risk on shore.
Warranted free from any claim arising from capture, seizure, arrests, re-
straints, preemption , detainments, or confiscation by the British Government or
their allies, or by the Government of the United States of America.
Also warranted free of claim for loss, damage, or expense in consequence
of any prohibition , restriction, or embargo of or by the Government of the
United States of America , or of any violation or attempted violation thereof.
Warranted not to cover the interest of any partnership, corporation , associa-
tion, or person , insurance for whose account would be contrary to the trading
with the enemy acts or other statutes or prohibitions of the United States
and/ or British Governments.
Attached to and forming part of certificate No.--‒‒‒‒‒‒‒‒of the----
106 PAPER WORK IN EXPORT TRADE.

OPEN INSURANCE POLICY.

No. 50276.
UNITED STATES " LLOYD'S ,"
New York.
Founded 1792.
Cargo.

EXPORT CORPORATION on account of whom it may concern.

In case of loss to be paid in funds current in the United States, to : As per
indorsement hereof.
Do make insurance, and cause themselves to be insured, lost or not lost, at
and from :
As per indorsement hereof,
Upon all kinds of lawful goods and merchandise, laden or to be laden on board
the good : As per indorsement hereof, whereof is master for this present voyage
or whoever else shall go as master in the said vessel, or by whatever
other name or names the said vessel, or the master thereof, is or shall be named
or called.
Beginning the adventure upon the said goods and merchandises, from and
immediately following the loading thereof on board of the said vessel as
aforesaid, and so shall continue and endure until the said goods and mer-
chandises shall be safely landed as aforesaid. And it shall and may be lawful
for the said vessel, in her voyage, to proceed and sail to , touch, and stay at
any ports or places, if thereunto obliged by stress of weather, or other unavoid-
able accident, without prejudice to this insurance. The said goods and mer-
chandises, hereby insured, are valued (premium included ) at not more than
$75,000 by any one vessel.
Touching the adventures and perils which the said United States " Lloyd's "
is contented to bear, and takes upon itself in this voyage, they are of the seas,
fires, jettisons, barratry of the master and mariners, unless the assured on
cargo be in part owner of the vessel, and all other perils, losses, and mis-
fortunes ( illicit or contraband trade excepted in all cases ) that have or shall
come to the hurt, detriment, or damage of the said goods and merchandises,
or any part thereof. And in case of any loss or misfortune, it shall be lawful
and necessary to and for the assured, his or their factors, servants, and as-
signs, to sue, labor, and travel for, in and about the defense, safeguard, and
recovery of the said goods and merchandises or any part thereof, without
prejudice to this insurance ; nor shall the acts of the assured or insurers, in
recovering, saving, and preserving the property insured, in case of disaster,
be considered a waiver or an acceptance of abandonment ; to the charges where-
of the said insurance company will contribute according to the rate and quan-
tity of the sum herein insured ; having been paid the consideration for this
insurance by the assured, or his or their assigns, at and after the rate of :
As per indorsement hereof.
And in case of loss, such loss to be paid in 30 days after proof of loss,
proof of interest, and adjustment, exhibited to the insurers (the amount of
the note given for the premium, if unpaid, and all sums due to the company
from the assured when such loss becomes due being first deducted , and all
sums coming due being first paid or secured to the satisfaction of the insurers) ,
but no partial loss or particular average shall in any case be paid, unless
amounting to 5 per cent : Provided always, And it is hereby further agreed ,
that if the said assured shall have made any other insurance upon the property
aforesaid, prior, in day of date to this policy, then the said United States
" Lloyd's " shall be answerable only for so much as the amount of such prior
 PAPER WORK IN EXPORT TRADE . 107

insurance may be deficient toward fully covering the property hereby insured.
And the said United States " Lloyd's " shall return the premium upon so
much of the sum by them insured as they shall be by such prior insurance
exonerated from. And in case of any insurance upon the said property
99
subsequent in day of date.to this policy, the said United States " Lloyd's '
shall nevertheless be answerable for the full extent of the sum by them sub-
scribed hereunto without right to claim contribution from such subsequent
insurers, and shall accordingly be entitled to retain the premium by them
received in the same manner as if no such subsequent insurance had been made.
Other insurance upon the property aforesaid of date the same day as this
policy shall be deemed simultaneous herewith ; and the said United States
" Lloyd's " shall not be liable for more than a ratable contribution in the
proportion of the sum by them insured to the aggregate of such simultaneous
insurance. It is also agreed that the subject matter of this insurance be
warranted by the assured free from loss or damage arising from riot, civil
commotion, capture, seizure, or detention, or from any attempt thereat, or the
consequences of any hostilities, arising from the acts of any Government,
people, or persons whatsoever ( ordinary piracy excepted ) , whether on account
of any illicit or prohibited trade, or any trade in articles contraband of war,
or the violation of any port regulation, or otherwise. Also free from loss or
damage resulting from measures or operations incident to war, whether before
or after the declaration thereof.
In the event of risk of war being assumed by indorsement under this policy,
the assured warrant not to abandon in case of capture, seizure, or detention,
until after the condemnation of the property insured ; nor until 90 days
after notice of said condemnation is given to this company. Also warranted
not to abandon in case of blockade, and free from any expense in consequence
of detention or blockade ; but in the event of blockade, to be at liberty to
proceed to an open port and there end the voyage.
Memorandum.-It is also agreed that bar, bundle, rod, hoop, and sheet iron,
wire of all kinds, tin plates, steel, madder, sumac, brooms, wicker ware and wil-
low (manufactured or otherwise ) , straw goods, salt, grain of all kinds, rice,
tobacco, Indian meal, fruits (whether preserved or otherwise ) , cheese, dry fish,
hay, vegetables and roots, paper, rags, hempen yarn, bags, cotton bagging, and
other articles used for bags or bagging, pleasure carriages, household furniture,
skins and hides, musical instruments, looking glasses, and all other articles that
are perishable in their own nature, are warranted by the assured free from aver-
age, unless general ; hemp, tobacco stems, matting, and cassia, except in boxes,
free from average under 20 per cen, unless general ; and coffee in bags or bulk,
pepper, in bags or bulk, free from average under 10 per cent, unless general .
Profits warranted free from claim for general average, but subject to the same
per cent of partial loss as if the insurance were on goods. In case a total
loss of profits be claimed, the underwriters to be entitled to a credit of the
same per cent of salvage as if the insurance were on goods, and in case of
contribution in general average for any portion of the goods at the customary
sound value, this company to be free from claim for loss on such portion. Not
liable for loss arising from wet, breakage, leakage, or exposure of goods shipped
on deck.
Warranted by the assured free from damage or injury from dampness, change
of flavor, or being spotted, discolored, musty, or moldy, unless caused by actual
contact of sea water with the articles damaged, occasioned by sea perils. In
case of partial loss by sea damage to dry goods , cutlery, or other hardware, the
loss shall be ascertained by a separation and sale of the portion only of the
108 PAPER WORK IN EXPORT TRADE.

contents of the packages so damaged , and not otherwise ; and the same practice
shall obtain as to all other merchandise, as far as practicable. Not liable for
leakage on molasses or other liquids, unless occasioned by stranding or collision
with another vessel.
Warranted by the assured that this insurance shall not enure directly or indi-
rectly to the benefit of the carrier or other bailee, by stipulation in bill of lad-
ing or otherwise, and any breach of this warranty, and any act of agreement by
the assured, prior or subsequent hereto, whereby any carrier or party liable for
or on acount of loss of or damage to any property insured hereunder is given
the benefit of any insurance effected thereon , shall render this policy of insur-
ance null and void.
In case of any agrement by the assured , prior or subsequent hereto, whereby
any right of recovery of the assured for loss of or damage to any property in-
sured hereunder, against any person or corporation, is released , impaired, or
lost, which would, on aceptance of abandonment or payment of a loss by this
company, have enured to its benefit, but for such agreement or act, this com-
pany shall not be bound to pay any loss, but its right to retain or recover the
premium shall not be affected.
" Waranted by the assured that the assignment of this policy or of any in-
surable interest therein, as also that the subrogation of any right thereunder to
any party, without the consent of this company, shall render the insurance af-
fected by such assignment or subrogation void.
f In witness whereof, the president or vice president of the said United States
" Lloyd's " hath hereunto subscribed his name, and this policy is made and ac-
cepted upon the above express condition, the thirteenth day of August, A. D.
one thousand nine hundred and eighteen.
-" President.

EXPORT CORPORATION .

For account of whom it, may concern.

Loss , if any, payable to them or order.
To cover all shipments, their own property or that of others made by them
or by others for their account or control, or which prior to inception of the
risk or prior to any known or reported loss or accident, they have agreed or
received instructions to insure, excluding, however, all shipments which they
have instructions not to insure or which are covered under open policies with
this or other companies in force at this date, unless canceled or expired.
To attach as regards all shipments by steamers sailing, or scheduled to sail,
on or after date hereof.
On merchandise, including prepaid and/or guaranteed freight and/or charges,
under and/or on deck.
Under-deck shipments, unless otherwise specified or unless otherwise declared
at the assured's option, as provided within , or unless otherwise agreed upon at
time of declaration, are insured F. P. A. E. C. as follows :
Free of particular average unless the vessel, lighter, or craft or the interest
insured be stranded , sunk, burned, on fire, or in collision, or in contact with ice,
in which latter case the contact to be of such a nature as may reasonably be
supposed to have caused or led to the damage claimed ; or unless caused by
forced discharge in a port of distress, also to pay landing, warehousing, for-
warding, and/or special charges, if incurred, also partial loss arising from
transshipment.
Dry goods, hardware, machinery, canned goods, leather, boots and shoes, and
other approved general merchandise are insured : Free of particular average
 PAPER WORK IN EXPORT TRADE. 109

unless amounting to 3 per cent, each case or shipping package separately in-
sured.
It is also understood and agreed that in all cases where goods have been
insured at other than F. P. A. E. C. conditions this company agrees to pay,
without regard to the particular average franchise, any loss which would be
recoverable under the F. P. A. E. C. conditions as provided within.
On-deck shipments are insured : Free of particular average unless caused by
sinking, stranding, burning, or collision , but to cover the risk of jettison
and/or washing overboard.
It is hereby understood and agreed that all shipments of shoes, boots, and
sandals shall be insured at " with average " conditions , including the risk of
theft, pilferage , and/or robbery, unless otherwise stated on the declaration.
It is hereby understood and agreed that, unless otherwise applied for at time
of declaration, shipments of automobiles shall be insured at the conditions :
This insurance attaches from the time the goods are shipped from the office
or warehouse of the assured and/or from the time of delivery to their packers
for export, until delivered to the consignees at final destination , and covers
against total loss, general average and salvage charges and all damage and/or
breakage to the goods themselves sustained during the continuance of this in-
surance however arising, but the assurers not to pay for any claim unless
amounting to twenty-five ( $25 ) dollars , each automobile being separately in-
sured.
The rate of insurance for shipments of automobiles insured at the above
conditions, from New York via London to New Zealand, by owned steamers
of the Atlantic Transport Line and connections , will be per cent net.
It is hereby understood and agreed that the rates of premium on shipments
of merchandise as provided within under deck are fixed as follows :
From places in the United States and/or Canada, by railroad to New York
and at and thence to ports and places in Australia, Tasmania, New Zealand—
Via ports in the United Kingdom
and the continent of Europe , F. P. A. E. C. W. A.
B/H, by class " A" lines ---‒‒‒ $0.50 per cent $0.60 per cent net.
Via Cape of Good Hope or Suez,
by approved steamers . .65 per cent .75 per cent net.
Via ports on the Pacific coast of
North America, by approved
steamers of regular lines____ .35 per cent .45 per cent net.
For theft and/or pilferage, add per cent.
Rates on shipments of merchandise " on deck," three times the under deck
F. P. A. E. C. rates.
Other risks held covered at rates to be agreed at time of indorsement of
risk.
Valued, premium included , at invoice cost, including prepaid freight and/or
charges and 10 per cent added, unless otherwise declared prior to shipment
or prior to known or reported loss or accident, and then at amount insured ;
it being, however, understood and agreed that in case of loss prior to declara-
tion the assured shall be entitled to declare and recover on whatever basis
they have written instructions, issued prior to known loss, to insure or have
made it a practice to insure for account of their respective clients.
Per steamer and/or steamers and connecting conveyances.
To be insured, lost or not lost, at and from ports and places in the United
States and/or Canada to ports and places in the world and vice versa, direct or
via port or ports, including risk of transshipment by land and/or water.
110 PAPER WORK IN EXPORT TRADE .

This policy shall not be vitiated by any uninitentional error in description of

voyage or interest or by deviation of the vessel from the voyage described,
provided the same be communicated to assurers as soon as known to the
assured, and an additional premium paid if required.
1. Warranted that no claim shall be made in general average arising from
the loss or jettison of merchandise from on deck.
2. Warranted that in case of partial loss on merchandise this company
shall have notice of such damage within 80 days after the landing of such
merchandise.
3. All risks to be reported as soon as known and amounts declared as soon
as ascertained.
4. This policy shall be deemed continuous, but it is understood that either
party is at liberty to cancel this policy at any time, on giving 30 days'
written notice to that effect, which is not, however, to prejudice any risk then
pending.
5. Proofs of loss to be authenticated by the agent of this company, if there
be one where such proofs are taken ; otherwise by a correspondent of the
National Board of Marine Underwriters, if there be one where such proofs
are taken ; but if neither is represented, then by some other recognized insur-
ance authority.
6. The sound value at the port or place of destination outward is to be
deemed not to exceed the purchasing price at the shipping port and 10 per
cent added thereto, exclusive of duty and freight.
7. The company to be entitled to premium on all shipments covered hereby,
whether reported or not ; but should assured fail to report any such ship-
ments, or to pay premium or premium note when due, then the policy as to all
subsequent shipments shall, at the option of the company, become null and
void.
All risks hereunder to be reported to this company within seventy-two (72)
hours after sailing of the steamer ( Sundays and holidays not counting) .
This policy attaches from the time the goods leave the store, warehouse, or
factory at original place of shipment, but not before the Export Corporation
have agreed or received instructions to insure them, and covers continuously
until the goods are safely delivered at store, warehouse, or factory at final
place of destination, but only at and between the places as reported to this com-
pany, including risk on docks and while in charge of customs authorities for
examination.
Including risk of lighterage to and from the vessel, each craft or lighter to
be considered as if separately insured.
This policy also covers the customs duties chargeable upon the merchandise
insured hereunder upon arrival and entry ; and in case of particular average
to the charge of the company the same percentage of damage will be made good
upon the amount of duties so insured as on the amount of goods, for which in-
surance a premium as agreed upon is to be charged, a case of total loss, or of
any other accident by which the duties will not become due at destination, the
amount of the duties so insured and the premium thereon will be canceled.
Privileged to ship under usual restricted or limited bills of lading, without
prejudice to this insurance.
 CHAPTER X.

THE CONSULAR INVOICE.

Consular invoices , certificates of origin, certificates of inspection,

sworn declarations of value on the invoice, and import licenses are
frequently required by foreign countries. The import license must
be obtained by the importer ; the exporter must provide the other
documents when required. The tariff publications of the Bureau of
Foreign and Domestic Commerce and the daily Commerce Reports
keep the exporter informed on the changes in the custom adminis-
tration requirements. Similar service is also performed by private
institutions. The regulations can also be obtained from the consul
of the country involved.
The consular invoice is used in securing the entry of the goods
into the foreign country ; from it are calculated the duties to be paid,
and it is also used for statistical purposes. Fees are collected by the
consul for signing this invoice and these are often a considerable
source of revenue for the Government or the consul. There is no
standard form or charge for all countries , as each country makes its
own laws and regulations. The invoices generally call for the fol-
lowing information : Name of the shipper, vessel, captain, consignee ,
and port of destination ; mark , number, and weight of each package ;
character of package employed ; contents and value in detail.

INVOICE REGULATIONS OF CUBA.

A consular invoice must be made for the Export Corporation's

order A, which goes to W. A. Thompson & Co. , Habana , Cuba . The
Cuban requirements 1 are as follows:
Invoices must be made on firm and durable paper, in a legible manner and in
indelible ink, and may be written in English or Spanish. If written in English
they must be translated into Spanish by the consignee or his agent before pre-
sentation at the customhouse in Cuba. Five copies of each invoice are required

1 From " Consular Regulations of Foreign Countries," Tariff Series No. 24, Bureau of
Foreign and Domestic Commerce.
111
112 PAPER WORK IN EXPORT TRADE.

for Habana and four for all other ports. If typewritten, the original copy must
be presented ; duplicates, etc. , may be carbon copies. When more than one sheet
is necessary, all should be clasped together, and the declaration written on the
last sheet. Invoices must contain name of shipper and consignee, name of
vessel, marks and numbers, description of merchandise, specifying the compo-
nent materials, gross and net weight ( in kilos ) of each article, detailed price
and total value, including a statement of the expenses incurred on account of
the merchandise up to the time it is packed and ready for shipment. Prices
should not be added up, but the price of each article or class of goods should be
given separately. If there are no expenses this must be noted.
In describing the merchandise, particular care must be taken to make a thor-
ough statement of the materials of which it is composed ; for example, if knives,
state knives of steel with wooden handles or bone handles, as the case may be ;
if shoes made of leather with tops of cloth, canvas, etc. , if machinery, of steel
or steel and brass, or any other metals ; if furniture, made of oak, mahogany or
pine.
Besides the marks, numbers, kinds , quantity, and gross weight of packages,
the following particulars will be required on invoices covering shipments of
fabrics to Cuba :
1. Nature of fiber ( cotton, linen, wool, silk, etc. )
2. Kind of fabric ( plain, smooth, twilled, damasked , and whether embroid
ered or not. )
3. Bleached, half bleached , printed , dyed in the piece, or colored.
4. Number of threads in a square of 6 millimeters ( 1 inch ) .
5. Length and width in meters and centimeters.
6. Weight of 100 square meters.
7. Price per unit, value of each kind , and nature of same.
At the bottom of the invoice, the manufacturer, producer, seller, owner, or
shipper must write ( in Spanish ) and sign one of the following declarations :
If the article shipped is a product of the soil or industry of the United States :
" Declaro que soy el ( fabricante, productor, vendedor, dueño o embarcador ) de
las mercancías relacionadas en la presente factura y que son ciertos los precios
y demás particulares que en sella se consignan y que las mercancías contenidas
en dicha factura son productos del suelo o de la industria de los Estados
Unidos de América."
If a product of the soil or industry of any other country than the United
States : " Declaro que soy el ( fabricante, productor, vendedor, dueño o embarca-
dor ) de las mercancías relacionadas en la presente factura y que son ciertos los
precios y demás particulares que en ella se consignan. "
If the manufacturer, producer, seller, owner, or shipper is not a resident of the
place where the consulate is located , a local agent must be appointed to present
the invoice, such appointment to be in writing. In this case, as well as when
the shipment is made through an agent, in addition to any of the foregoing
declarations signed by the said manufacturer, producer, seller, owner or shipper,
a second declaration must be written in Spanish and signed by the agent as
follows : " Declaro que soy el agent, autorizado por la persona que ha suscrito
la anterior declaración , para presenter esta factura en la oficina consular de
Cuba en esta plaza, a fin de que sea certificada." 1

1 Translation : " I declare that I am the agent authorized by the person signing the
preceding declaration to present this invoice at the consular office of Cuba in this city for
the purpose of certification.
 PAPER WORK IN EXPORT TRADE. 113

When the declaration is signed by an individual having power of attorney it

must be signed as John Doe & Co., per or by Richard Roe, attorney ; if by a
member of the firm , John Doe, of John Doe & Co.
Invoices, as well as the declarations above referred to, must be written on one
side of the paper only. No corrections, erasures, additions, or alterations are
allowed unless indicated in a signed statement in Spanish, or English, preced-
ing the declaration.
Except in the case of shipments of less than $5 in value, consisting of mer-
chandise produced in other countries than the United States, the Cuban customs
authorities require certified invoices and viséed bills of lading for the clearance
of shipments ; in exceptional cases a guaranty of the subsequent production of
such documents will be accepted.
Goods other than the product of the soil or industry of the United States
should be placed on a separate consular and commercial invoice, as only such
goods as are the product of the United States are entitled to the benefit of the
reciprocity treaty between Cuba and the United States.
In the case of merchandise of no commercial value, the invoice must show the
net weight and contain a statement to the effect that the articles have no com-
mercial value. An estimated value should be given.
The Cuban custom authorities will impose a fine amounting to twice the
consular fees if invoices and bills of lading are certified on a date later than
the arrival of the corresponding ship at the first Cuban port of entry.
The Cuban customs authorities will also impose a fine of twice the difference
in the consular fees in the case of invoices whose values upon appraisal of the
merchandise, are found to exceed the declared values.
The above-mentioned fines will not be imposed when invoices and bills of
lading cover merchandise shipped from countries and through ports where
there is no Cuban consular office.
When merchandise is shipped from a port where there is no Cuban consul,
invoices need not be certified . But if such merchandise is shipped via a port
where there is a Cuban consul, invoices must be presented there for certifi
cation by an agent of the shipper.
Household goods, if shipped to Cuba as freight, must be accompanied by a
certified invoice. If the effects are shipped as personal baggage, no invoice is
required ; but a declaration must be made before the customs authorities in
Cuba to the effect that the household goods are for personal use.
Two copies of the bill of lading must be submitted for viséing, one copy being
retained by the consul. In order to avoid delay in forwarding the negotiable
bills of lading shippers are authorized to present for viséing, instead of a set
of bills of lading signed by the steamship company, two exact copies thereof,
bearing upon the face, in indelible letters, following statement : " Este cono-
cimiento consular no es negociable, y son válidos, sus efectors solamente para
la Aduana." (Translation : ".This consular bill of lading is not negotiable
and is valid only for customs purposes." ) The importers, however, must pre-
sent, along with the copy of the bill of lading, certified by the consul, the
original which they receive as consignees, or which is indorsed to them by the
consignees named on the face of the bill of lading, or which is duly indorsed
in case of consignment " to order."
Five days only are allowed after arrival of the vessel in Cuba for presenta-
tion of the customs documents, including consular invoice and bill of lading ;
125740 °-20-8
114 PAPER WORK IN EXPORT TRADE .

if not presented within that time, heavy storage charges are placed on the
goods.
Shipments may be consigned either direct or 66 to order."
Packages should show gross weight, and may be marked with either stencil
or brush.

CONSULAR FEES.

Certification of set of invoices :

Less than $5 in value.. No charge.
From $5 to $49.99. $0.50
From $50 to $200- 2.00
Over $200, $2 plus an additional charge of $0.10 for each $100 or
fraction thereof in excess of $200.
Extra copies of invoice, each_. .50
Visé of set of bills of lading-- 1.00
Invoice blanks, per set .. .10

[Copy ofconsular invoice of Cuba.]

Factura de mercancías embarcadas por " a bordo de con destino
Invoice of merchandise shipped by on board destined
a -, por cuenta y riesgo de -, y a la consignación de
for for account and risk of and consigned to

Marcas y Número de Descripción. Pesobruto. Peso neto. Precio.

números. bultos. Description. Gross Net weight. Price. Valor.
Marks and Number of (Detailed contents and compo- Value.
numbers. packages. nent material . ) weight.

Kilos. Kilos.

[Declaration of shipper.]

Declaro que soy el fabricante (o productor, vendedor, dueño, o embarcador)

I declare that I am the manufacturer (or producer, seller, owner, or shipper)
de las mercancías relacionadas en la presente factura , y que son ciertos los precios
of the merchandise described in the present invoice, and that the prices
y demás particulares que en ella se consignan, y que las mercancias contenidas
and other particulars given therein are correct, and that the merchandise mentioned
en dicha factura son productos del suelo o de la industria de los Estados Unidos
in said invoice is the product of the soil or industry of the United States
de America.
of America.
[Declaration of agent.]
Declaro que soy el agente autorizado por Don que ha suscrito
I declare that I am the agent authorized by Mr. who has signed
la anterior declaración, para presentar esta factura en la oficina consular de Cuba
the preceding declaration, to present this invoice at the consular office of Cuba
en esta plaza, a fin de que sea certificada.
in this city in order that it may be certified.
 PAPER WORK IN EXPORT TRADE . 115

[Certification of consul.]
Certifico: Que la presente factura, compuesta de hojas, selladas con el
I certify that the present invoice, composed of sheets, sealed with the
sello de este consulado, me ha sido exhibida por el firmante de la declaración
seal of this consulate, has been presented to me by the signer of the preceding declaration,
que antecede, quien me ha hecho entrega de tres copias de la misma, de las
who has delivered to me three copies, one of which remains on file
cuales una queda archivada en esta oficina.
in this office.
Lo que firmo y sello con el sello de este consulado en
Signed and sealed with the seal of this consulate in on
Derechos
Fees

REQUIREMENTS.¹

Invoices, as well as the declarations above referred to, must be written on

one side of paper only. No corrections, erasures, additions, or alterations are
allowed unless stated in a signed acknowledgment in Spanish or English pre-
ceding the declaration.
Consular invoices must also show the amount of freight paid from the start-
ing point of the shipment to the port of exportation, except when the goods
are sold f. o. b. port of exportation , in which case a statement to that effect
must be made on the invoices . If the shipment has been insured , the cost of
the same must also appear on the consular invoices. The freight from the
port of exportation to destination need not be shown.

PENALTIES.¹

The Cuban customhouses will impose a fine amounting to double the consular
fees if invoices and bills of lading are certified on a date later than the arrival
of the corresponding ship at the first Cuban port of entry.
The Cuban customhouses will also impose a fine of double the fees failed to
have been paid at the consulates, on invoices whose values upon appraisal of
the merchandise are found to be more than the value consigned.
The above-mentioned fines will not be imposed when invoices and bills of
lading cover merchandise shipped from countries and through ports where
there is no Cuban consular office.

PACKING AS RELATED TO IMPORT DUTIES.¹

Articles imported into Cuba are dutiable on gross weight, actual net weight,
or ad valorem, as indicated in the tariff for each item. The legal net weight
is calculated in accordance with a schedule of tare allowances annexed to the
tariff. Where goods are dutiable on gross weight with a specified tare allow-
ance for receptacles, such deduction is only made in the case of articles packed
in regular receptacles, such as boxes, crates , barrels, etc. In the case of some
articles, a tare allowance is specifically provided for lighter forms of packing,
such as bales.

1 From Exporters' Encyclopedia.

116 PAPER WORK IN EXPORT TRADE.

The consular invoice for the shipment ¹ to W. A. Thompson & Co.,

Habana , Cuba, was made out as follows :
Fartura Consular de las mercancias embarcadas por Export Corporation
(Consignor or Shipper)
con destino a Havana por. Mexico por cuenta y riesgo de
(Destination) (NameofVessel. Mail orExpress)
Same
(For whoseaccountand risk shipmentismade.) y a la consignacion de W.A. Thompson & Co.
(Consignee)
NUMERO DE CLASE DE MARCAS Y PESO EN KILOGS

88
BULTOS BULTOS. NUMEROS. (WEIGHTIN KILOS CONTENIDO PRECIO IMPORTE
PACKAGES)OF
(NUMBER (KIND OF (MARKS
PACKAGES) AND BRUTO
NUMBERS) (GROSS NETO
(KET) (DETAILED CONTENTS COMPONENT MATERIALS) (PRICE) (TOTALS)
$ [$
500 Barrels W. A.T.Co. 160,000 Pounds Atlas Portland Cement 5000 00
EC
Havana
#1 to 500
465 Bundles White Paint 224,000 Pounds Soft Steel Bara 1344 00
$ 18446
L
A
N
I
G
I
R
O

Declaramos que somos los... Export Corporation de las mercancias relacionadas en la presente factura y
que son ciertos los precios y demás particulares que en ella se consignan, y que las mercancias contenidas en dicha factura son productos
del suelo ó de la industria de los Estados Unidos de América. f
Ifmerchandise shipped is from any country other than the New York, October (Date) 15,1918.
United States, remainder of above declaration shouldbecancelled.
Export Corporation
(Name ofthe Firm)
by (Signature)
FIG. 14.- Consular invoice for Cuba.

INVOICE REGULATIONS OF BRAZIL.

The shipment in transaction B goes to Brazil. The Brazilian re-

2
quirements are as follows :
A consular invoice in triplicate is required for shipments to Brazil. The
invoice may be made out in English or Portuguese, but invoices in English are
subject to a charge for translation, payable by the consignee. Invoice blanks
are not sold by the consular officers, but may be obtained from stationers at
slight cost. Shipments valued at not more than $48.67, including freight,
1 Compare the declared weight with the records of the Atlas Cement Co. The importer
must pay the fines if the discrepancy is discovered.
2 From " Consular Regulations of Foreign Countries, " Tariff Series No. 24, Bureau of
Foreign and Domestic Commerce.
 PAPER WORK IN EXPORT TRADE. 117

packing, commission , etc., do not require invoices. Shipments may be con-

signed direct or " to order," and packages may be marked with a stencil or
brush. A separate invoice is required for each mark, even when belonging to
one consignment.
The following extract from the decree No. 1103, of November 21, 1903, con-
tains detailed regulations in regard to consular invoices :
CHAPTER 1.
ARTICLE 1. The consular invoices referred to in article 1 of law No. 651 of
November 22, 1899, shall be drawn up in accordance with the instructions given
in chapter 4, article 13, and with the general requirements of these regulations.
CHAPTER 2.
ART. 9. Consular invoices may be legalized by any Braizlian consular agent
at the port of shipment or at the point from which the goods are dispatched.
CHAPTER 3.-Consular fees.
ART. 10. Fees for legalization of consular invoices shall continue to be charged
in accordance with decree No. 741 of December 26 , 1900 ( 3$000 gold , equal to
$1.65 United States currency ) . [ The steamship companies collect $1.10 on
each set of bills of lading, this sum being eventually turned over to the consul. ]
ART. 12. Documents in proof of the origin of merchandise shall be legalized
by consuls free of cost.
CHAPTER 4.
ART. 13. Consular invoices must comply with the following requirements :
(a ) Number of invoice.- This must be filled in exclusively by the consular
authority legalizing the invoice. Numeration shall recommence every year at
No. 1.
(b ) The affidavit or declaration certifying to the accuracy of the contents
of the consular invoice shall be signed by the exporter, shipper, or his agent.
(c ) The name and nationality of the vessel must be stated, as also whether
steamship or sailing vessel.
( d ) The port of shipment is that at which the merchandise is finally em-
barked for Brazil.
(e ) The destination of the merchandise is the last customs port to which the
merchandise is consigned. In case of option this must be clearly stated in the
proper place on the invoice.
(f) The total declared value includes cost and approximate freight and ex-
penses.
(g) Freight and expenses include freight and other expenses incurred subse-
quent to purchase.
(h ) Premium or agio of the currency.— When the merchandise proceeds from
countries where the currency has no fixed value, or on which exchange is not
quoted on the Rio market, the premium on gold or the sight rate of exchange on
London must be declared. At present exchange is quoted at Rio on Great
Britain, France, Germany, United States, Portugal, and Italy.
(i ) Marks and numbers of the packages.-These must be stated in order in
the respective columns.
(j) The quantity and nature of packages must also be stated in order,
whether cases, barrels, casks, crates, bales, etc.
(k ) Specification of the goods.-Goods may be described either in accordance
with the official nomenclature accompanying these regulations, approved by the
Minister of Finance in Circular No. 1 of January 10, 1899, or in accordance
with commercial usage, but with separate specification of each article according
to its material,
118 PAPER WORK IN EXPORT TRADE .

(1) Weight in kilograms . In the column headed " Gross weight of packages "
must be shown the total gross weight of the packages ; in that headed " Net
weight of the articles," the separate weight of the goods specified , exclusive of
every kind of packing ; in that headed " Gross weight of the merchandise," the
weight, inclusive of receptacles, such as tins, bags, cases, cardboard boxes, etc.-
that are included for payment of duty in accordance with the customs tariff.
Thus, when duties are payable on the actual net weight, it will be sufficient to
state the gross weight of the package and the actual net weight of the goods,
separately, exclusive of all packing or wrappers. In the same manner when
duties are payable on the gross weight of the merchandise, this must be stated
in the corresponding column. For essential oils, essences, or volatile oils sub-
ject to the tare stipulated in the customs tariff, it is sufficient to state the
weight, inclusive of the immediate packing or wrapper.
(m ) Declared value.-In this column must be stated separately the value of
each article specified in the invoice.
(n) Country of origin.- For raw materials the place of production shall be
regarded as that of origin, and for improved or manufactured articles, the
country in which they underwent their final treatment previous to shipment.
(0) Quantity of the merchandise.- For all articles on which duties are
assessed by units other than that of weight ; i. e., per dozen, hundred , thousand,
cubic meter, etc.—the quantities must be stated in the respective unit in this
column. When the goods included in a single invoice are of different origins,
the place of origin in each instance must be separately stated in the correspond-
ing column.
ART. 14. Description of the merchandise may be in the language of the ex-
porting country, the consignee being obliged in this case to present a translation
of same in order to dispatch the goods at the customs. This translation may be
made by private or public translator.
CHAPTER 5 .
ART. 19. In case of omission of any of the declarations required by these
regulations the consul shall invite the exporter or shipper to rectify same on
the invoice itself, and in case of refusal shall make a declaration to that effect
and be thereby freed from any further responsibility in the matter.
ART. 20. Such declarations will cause the responsibility for failure to supply
the necessary data to fall upon the shipper or exporter in the person of the owner
or consignee of the goods.
ART. 22. Any of the following documents shall be accepted by consuls as suffi-
cient proof of origin : ( a ) A certified invoice from the manufacturer of the
goods ; (b ) a certificate from the customhouse authorities or chambers of com-
merce at the point of dispatch declaring their true origin. Failing these, any
other documents proving the origin of the goods may be presented and viséed.
[Copy of Brazilian consular invoice.]
FACTURA CONSULAR BRAZILEIRA.
Brazilian consular invoice.
No. CONSULADO EM
No. CONSULATE IN
DECLARAÇÃO .
DECLARATION.
Declaramos solemnemente que somos exportadores ou carregadores das mercadorias
We solemnly declare that we are the exporters or shippers of the merchandise
mencionadas nesta factura contidas nos - volumes indicados a qual é exacta e
specified in this invoice, contained in the packages indicated, which is in all
 PAPER WORK IN EXPORT TRADE . 119

verdadeira a todos os effeitos , sendo essas mercadorias destinadas ao porto de

respects true and exact, this merchandise being destined to the port of
do Brazil e consignadas aos Sres. de
Brazil and consigned to Messrs. of
9 de de 19-.
(Place.), of 19-.

Agente do Exportador.
Agent of Exporter.
Nome e nacionalidade do navio á vela,
Name and nationality of sailing vessel
Nome e nacionalidade do navio á vapor,
Name and nationality of steamer
Porto do embarque da mercadoria,
Port of shipment of the merchandise
Porto do destino da mercadoria,
Port of destination of the merchandise
Porto do destino da mercadoria, com opção para
Port of destination of the merchandise with option for
Porto do destino de mercadoria, em transito para
Port of destination of the merchandise in transit for
Valor total de factura inclusive frete e despezas approximadas, $-
Total value of the invoice inclusive of approximate freight and charges
Frete e despezas approximadas, $-
Approximate freight and shipping charges
Agio da moeda do paiz de procedencia,
Exchange of the country whence exported
Observações do consul:
Remarks of the consul
VISTO. CONSULADO DOS E. U. DO BRASIL.
VISE. CONSULATE OF BRAZIL..
de de 19- .
of 19- .
Recebi $1.65.
Received
FACTURA.
Invoice.

Volumes. Especificação da Peso em kilogrammos . Valor parcial

Packages. mercadoria de Weight in kilos. declarado
comformidade Outras por artigo,
com a letra K do uni- inclusive ou Paiz de
Quantidade

Marcas e art. 13 do decreto Bruto dades exclusive origem de

Numeros. No. 1103 de 21 de Bruto da da frete e cada artigo.
Marks Novembrode 1903. dos merca- Liqui- tarifa. despezas. Country of
Quantity

and Specification ofthe volu- doria. do dos Other Declared origin of

mes. value of each each
e

numbers. merchandise, in Gross artigos. units

Especi

conformity with Gross ofthe Net of of the article , in- article.

.

letter K, art.13 of ofthe mer- the ar- clusive or

Kind

law No. 1103, pack- ticles. tariff. exclusive of

.

chan-
.

dated Nov. 21, ages. dise. freight and

.

1903. charges..

INVOICE REGULATIONS OF FRANCE .

1
The French consular regulations are as stated below :
CONSULAR CHARGES.
For visé of consular invoice_ $2.50
For visé of certificate of origin__. 2. 40

1 From " Exporters' Encyclopedia," pp. 713-717.

120 PAPER WORK IN EXPORT TRADE .

CONSULAR REGULATIONS.
During the war, no goods whatever can be loaded on board any vessel bound
to France without the approval of the High Commissioner of the French Re-
public in the United States. This regulation applies to all vessels of all nations.
Steamship companies who intend loading vessels bound for French ports must,
previous to commencing loading, submit a detailed statement of the intended
composition of the entire cargo, with names of shippers and consignees to the
manager of the shipping department of the French Commissioner, at 65 Broad-
way, New York. The loading can only be ordered after the said composition
of cargo has been so approved, as all goods shipped in contravention of the
regulations will be seized upon their arrival in France and stored for a period
of two months, at the expiration of which, unless a special authority has been
granted, the said goods will be sold for the benefit of the French Government.
French vessels and vessels chartered by French subjects, transporting goods
liable to seizure, will be requisitioned immediately upon their arrival in France.
The same measure is applicable to British or vessels chartered by British sub-
jects, in conformity with an agreement entered into between the British and
French Governments.
Trade with Austrians or Germans in any country is forbidden. All com-
merce coming under this heading will be amenable to the customs regulations
and penalties applicable in the case of merchandise the importation of which is
prohibited.
In shipping the following goods to France it is necessary, in order to avoid
the maximum rate of duty, to make out a certificate of origin, showing the
identity of the merchandise, numbers, marks, quantity of shipment, name of
consignee, and of the steamer on which the goods are shipped. The certificate
of origin must be sworn to before a notary whose signature has been certified
by the county clerk, or whose signature and appointment have been registered
at the consulate, and must be viséed by the French consul. On shipments of
meat products a United States inspection certificate is required.
Delicatessen, canned meat, most extracts (paste or otherwise ) , fresh or pre-
served tripe, feathers, animal fat, other than fish, honey, untrimmed sponges,
wheat, barley, corn, fruits and seeds, sirups, candies, preserves, chocolate, rice,
oils of all kinds, common woods, unpolished, etc., wooden pavement in pieces,
stave wood, hops , lupuline of hops, bran, oil cake, coal, copper, nickel, oxide of
zinc, glue, typewriter ribbons, photographic paper albuminous nonsensitized,
carbon paper, paper sensitized with salts of iron , skins prepared by a vegetable
tanning, but not otherwise prepared , top shoes with hand-sewed soles, meters
for electricity, gas , and generally all meters regulated like clocks, steam en-
gines separated from their boilers, gas, petroleum, compressed air, and all other
kinds of motors, tenders for steam engines, printing presses, agricultural ma-
chinery not comprising the motor, agricultural implements, typewriting ma-
chines, figuring machines, cash registers and their detached pieces, machinery
to wash, cork, fill and cap bottles, uncovered boilers, gasometers, steam radia-
tors, gas and oil stoves, detached pieces of machinery of iron or steel, detached
pieces of copper or mixed metal such as taps for water and gas , etc., imple-
ments with handles of iron or steel, carriage hardware, locks and padlocks , all
household articles of steel or iron, wooden furniture, upholstered furniture,
upright pianos, piano players independent of the instrument they are to actuate,
perforated cardboard, piano strings, railroad cars, automobiles, rubber sheets,
pure, nonvulcanized, vulcanized rubber thread .
On shipments of most kinds of mechanics' tools, synthetic perfumes, ferro-
metallic alloys, tanning material, salts of lead, chemical products , etc., a consular
 PAPER WORK IN EXPORT TRADE. 121

invoice (which is a document similar to the " Certificate of origin," except that
the value of the merchandise is shown instead of the weight ) must be taken out.
Consular invoices must be viséed by the consul and sworn to before a notary
whose signature has been certified by the county clerk, or whose signature and
appointment have been registered at the consulate.
The French customs authorities require that bills of lading must indicate
the number of cases, boxes, etc. , contained in each crate ; the number of pack-
ages, pieces, etc. , contained in each bundle, and an exact description of the
character of each package, such as case, box, barrel, piece, the last mentioned
applying to pieces of machinery, casting, etc., unpacked . A failure to comply
with the above instructions will result in the imposition of a fine.
The importation of articles bearing a label or indication suggesting French
origin is prohibited , unless such label or indicaton is followed by the words
" importe " or frabiquee ," and then by the country of origin.
On shipments of tobacco it is necessary to state on the bills of lading the
gross and net weights and value. Gross and net weights must also appear
on the packages. Tobacco can only be shipped to the French Government
through an authorized agent.
The laws governing the importation of medicines into France are very
strict. Medicines not authorized by the " Ecole de Pharmacie " of Paris are
not admitted. To obtain this authorization a full description of the composi-
tion of the medicine must be given and a sample sent for analysis.
SURTAX ON GOODS INDIRECTLY IMPORTED INTO FRANCE.
In explanation of the above, we quote from the consular reports of the
United States Government as follows :
66
Except in cases of superior force or acts of God , which do not constitute an
interruption to direct transportation , merchandise transshipped in the course
of its journey by sea is regarded as having arrived from the place where such
transshipment has occurred. It results from this that the surtax is applicable
to products of extra-European origin brought into France by a ship which
has received them in a European port, whatever may have been the com-
mercial reasons and particulars respecting the transshipment.
" This surtax is applicable to nearly all classes of merchandise, and the
exceptions to the rule are very rare, indeed. These exceptions in general arise
from geographical or economic considerations, and it suffices to cite a few examples
to design their character. Thus, for example, it is possible to import by way
of Denmark the products of Iceland and the Faroe Islands ; from European
Russia, the products of Asiatic Russia ; from Constantinople and the European
ports of Turkey upon the Black Sea , the products of the Asiatic possessions
of the Ottoman Empire ; from Spain, the products of the Canary Islands and
of the Spanish possessions of the Morocco coast, etc.
66
Shippers should guard against the possibility of the application of this
surtax by forwarding their goods on board steamers sailing directly from
American to French ports. It is not necessary, however, that shipments be
made by steamers flying the French flag, but, only that there is no transship-
ment at a foreign port."
PACKING AS RELATED TO IMPORT DUTIES .
Articles subject to a rate of less than 10 francs per 100 kilos ( 87.5 cents per
100 pounds ) imported into France are, with few exceptions, dutiable on gross
weight ; articles subject to higher rates, except in a few cases, dutiable either
on actual or legal net weight. The following definitions of weight are adopted
for the application of the import tariff : By gross weight is meant the
weight ascertained by weighing the contents and the containers , i . e ., the
122 PAPER WORK IN EXPORT TRADE.

combined weight of the contents and the packing, both outer and inner. By
actual net weight is meant the weight of the goods separated from the packing,
both outer and inner. By legal net weight is meant the weight obtained by
deducting from the gross weight the so-called legal tare, i. e., the tare
determined by law or decree in accordance with the character of the packing
and the nature of the goods, to be applied in cases where the importer de-
mands liquidation on that basis or fails to request, at the proper time,
liquidation on the basis of actual net weight. By semigross weight is meant
the combined weight of the contents and the inner packing in the case of the
following articles : Ox jowl, cooked or pickled ; canned meats, preserved game,
in cans, jars, or pastry, pâté de foie gras, in cans, jars, pastry, or in any
other form ; meat extracts, in loaves, or in any other form ; fish, preserved
in a natural state, pickled , or otherwise prepared ; pickled oysters ; lobsters,
preserved in a natural state or prepared ; candied or preserved fruits , not
specified (general tariff) ; volatile oils and essences in small receptacles ;
preserved vegetables ; gold and silver leaf ; bandages for surgical dressing
and plastered splints ; and all articles included under tariff No. 546bis , when
attached to cards.
The cerificate of origin used with transaction C was as follows :
CERTIFICAT D'ORIGINE
Certificate of Origin
Export Corporation
The soussignés..
Nous undersigned (Owner or Agent, or &c.) (for)
Export Corporation Declarons
(Name and Address of Owner or Shipper) / Declare
que les
that the Marchandises
following mentioned désignées,"
ci-après goods
NOMBRE
PAQUETS POIDS
COLIS OU
OU MARQUES NOMBRES Weight
CAISSES Marks Numbers DESCRIPTION
Number
Packages BRUT NET
Boxes or Cases Gross

1000 DUSSOT 1 to 1000

EC 54000 48000 Salmon

1000 DUSSOT 1001 to

EC 2000 54000 48000 Lobster

et embarquées sur le S S. Eastgate

And shipped on the S. S (Name of Ship)
à la date du December 15 adressées à M. M. Dussot & Co.
on the date of (date) consignedto (Name and address of consignee)
Paris , France
Prêté serment devant moi,
Sworn to before me sont
are thele produit des United
product ofthe Etats States
Unis d'Amerique.
ofAmerica.
jour Fail a New York le..... December 15, 1918
this day of Dated at New York on the (date)
Export Corporation
(Signature)
FIG. 15.- Certificate of origin required in addition to French consular invoice for
transaction D.
 PAPER WORK IN EXPORT TRADE. 123

INVOICE REGULATIONS OF JAPAN.

For the shipment to Japan no certificate of origin or consular

invoice was required . It is necessary to take out a certificate of
origin on shipments of certain kinds of goods to Japan, in order to
obtain the advantage of the conventional tariff (which differs from
the general tariff) , duties invariably being less. The charge for
visé of the certificate of origin is $2 ; visé of extra certificates of
origin, $1 each. The Japanese consul can always advise whether a
certificate of origin is required .
There are no Government restrictions as to marks, weights, etc.
Opium, tobacco, salt, and firearms must not be shipped to Japan.
The net weight of goods, unless otherwise indicated , is taken as a
basis for the collection of duty on imports dutiable by weight.

GENERAL RULES FOR INVOICING EXPORT GOODS.

Hough,¹ in discussing commercial invoices, says :

Ordinary domestic invoice forms may do for export business at the start,
but with the development of that branch of trade to large proportions, in-
volving many shipments, it will very likely become desirable to print special
export forms. Appropriate places may be provided for several necessary fea-
tures in such invoices that are not required in the home trade.
Every export invoice should be prepared in triplicate, at least, and possibly
more than three copies will be required in some cases. If invoices are cashed
by banks, those institutions will require two copies of the invoice, while a
third should be forwarded direct to foreign customer.
It may here be noted that the contents of the invoice should also be epito-
mized in an accompanying letter, or, better still, in a letter sent in advance
of shipment. Such letter should give any necessary information on points
that are not elaborately explained in the invoice itself, and should invariably
repeat such essential details as the name of the steamer and the date of its
sailing, if possible, with expected, approximate, arrival date at destination,
if the boat is a tramp or irregular liner, or if there is to be transshipment.
In some instances, owing to financial and other arrangements, the documents
such as bill of lading and invoice can not be sent forward at the same time
as the goods, and possibly the next following steamer may not sail for some
time. In such cases it is better to arrange to send even an incomplete in-
voice, i. e., an invoice with charges to follow, accompanied by copy of the bill
of lading, by the steamer which takes the goods and to subordinate the finan-
cial arrangements to this plan. The essential features of an export invoice
should be memorized by the export manager. On no account should an in-
voice be dispatched until it has been checked by a person other than the one
who first wrote it.
Clearness in export invoices.-Once more, absolute unvarying exactness must
here be emphasized. Errors of omission or commission in the export invoice
may be far worse than annoying or perplexing to one's foreign customer. They
may involve him in heavy fines. Moreover, here again, simple, clear language
is positively essential. The descriptions of the goods invoiced must be full and
explicit, without abbreviations or trade terms. They must leave nothing to

1 B. Olney Hough : Practical Exporting, pp. 447-452.

124 PAPER WORK IN EXPORT TRADE.

guesswork or the imagination. The mere fact that the printed part of a manu-
facturer's invoice declares him to be a maker of hosiery should not be assumed
to be sufficient to identify the goods invoiced as hosiery. For aught foreigners
in customhouses or other positions may know the hosiery manufacturer may
be shipping chairs, or hardware, or livestock.
The dollar mark ( $ ) should precede all prices, extensions and footings.
Importers and foreign customhouses receive invoices in many different cur-
rencies ; no room for doubt should be given as to that in which goods are priced.
The abbreviations so often used by bookkeepers in making out invoices for
the home trade are frequently enigmas to the trade in our own country and
absolutely unintelligible to anyone outside the trade. One's foreign customers
can not be expected to guess what even the commonest abbreviations used in
the trade of the United States may represent. No harm certainly is done if it
is necessary to fill two lines of an invoice with a full description of the article
shipped instead of condensing it by means of abbreviations into half a line.
Foreign customers will be thankful for the fuller expression .
Exactness in invoice details.-Invoice descriptions must be honest and exact.
All widths, lengths, weights, etc., stated on invoices, stamped on the goods, or
printed on cartons or labels, must be actual and not nominal, no matter what
" trade custom 99 may be, or how customary exaggerations or euphenisms may
be discounted or understood in this country. Moreover, the whole invoice
must be in one handwriting or, if written on the typewriter, must be uniform
throughout. Corrections, interlineations, and additions must conform to the
style of the whole.
Manufacturers will often be approached by some foreign customers with a
request that special invoices be supplied for customhouse purposes on which
values or totals will appear in greatly reduced form, or sometimes customers
will request blank invoice forms from the manufacturer in order that they
themselves may make out special invoices to be presented to the customhouse.
No self-respecting exporter should accede to requests of this nature. He ought
not to become a partner in such an operation , and he ought not to lend the
appearance of his name to such an attempt. Yet he should not necessarily re-
gard the customer making such a request as a scamp. Undervaluations in a
good many countries are so much the established rule that they are locally
looked upon as entirely moral, if not praiseworthy.
Necessary particulars in invoices.-All foreign invoices should include among
other details the following : The number or date of indent or order ; the mode
and route by which the goods are forwarded ; the marks, numbers , and nature
of packages ( case, box, crate, barrel, bag, sack, bale, etc. ) ; the terms of car-
riage, F. O. B. ( free on board ) , C. I. F. ( cost, insurance, freight ) , etc. Refer-
ence is often made to other particulars such as insurance, arbitration in case
of dispute, etc.
In addition to a number or other means of identifying a given invoice, it
will often prove useful to give each a distinctive code word. This facilitates
cable references to it, as do code words often assigned each item of an invoice.
With such code words repeat orders by cable are easy. Of course, all must
be duly and permanently registered in some appropriate record, both to avoid
duplication of the words and to enable quick reference and identification.
Every item included in a shipment must be invoiced. Even if no charge is
made by the shippers, still customhouses at ports of destination may impose
duties. Quantities of catalogues should appear on the face of the invoice with
statement of their weight ; so should advertising electrotypes. Spare or extra
parts or accessories , not properly forming part of a whole, even if no charge
is made for them, must appear in the invoice with statement of their weight
 PAPER WORK IN EXPORT TRADE. 125

and value-although the latter is not carried into the extensions when pay-
ment is not expected.
All marks, numbers , etc. , repeated on the invoices must correspond letter for
letter with marks on cases. The gross and net weights of each package must
be given. Opposite each item there should be indicated the number of the case
in which it is packed. Usually it is desirable, sometimes necessary, to invoice
together all goods packed in a certain case, with note of its gross and net
weights and the value of the package as a whole, besides, of course, the value of
each article.
When several packages or boxes are strapped or bound together so as to form
one package ( e. g. , small cases of codfish ) in addition to the gross weight of the
whole package, the gross and net weight of each smaller package should also be
stated. This does not apply to articles shipped in bulk customarily bound into
bundles like staves or handles.
Invoice details for special markets.—In the case of goods shipped to Australia,
New Zealand, or South Africa , it is necessary to show on the invoice the cost of
boxing or crating, of cartage from factory to railway station and the freight
from local station to port of shipment. This, no matter whether manufacturers'
quoted prices include all these particulars and cover delivery at port. Under
the laws of these colonies these several component parts of the cost of the goods
must appear on the invoice ; the actual factory cost of the goods must be shown,
plus these several other items. Customs authorities of the colonies named are
empowered to refuse entry of goods which are not accompanied by such proper
documents. Special details are also required for some other markets, particu-
larly in conenction with 66 consular invoices," which will be considered in
another chapter.
Totals and signatures.—All discounts should be deducted on the face of the
invoice, even the cash discount if any has been quoted ; but no discount must be
called 66 cash " or 66 export." It is a good plan in shipping to many countries to
make the extensions of the value of contents of each case net-that is, deduct
the apropriate discounts in each extension covering items packed into one case,
so that the exact value of that particular case will be shown.
If necessary to convert the value of an invoice into some foreign currency,
that conversion is usually made at the foot of the invoice where the total in
dollars and cents is turned into foreign money at a rate of exchange which is
stated.
All foreign invoices should invariably be signed by some one connected with
the house in an official capacity and having authority to affix the firm or com-
pany signature. In many countries invoices have no legal force unless so
signed.
It is customary to sign invoices at the foot, preceded with the expression " E.
and O. E." ( errors and omissions excepted ) . This is purely a matter of form,
intended to reserve to the shippers the right to rectify any errors or omissions.
Legally it is of no effect whatever, as every invoice or statement of account is
only presumptive evidence and in case of dispute must be proven. None the
less, following accepted and long-established custom, so signing invoices will be
an indication of the shipper's familiarity with export practice.
 CHAPTER XI.

THE FINANCIAL PAPERS.

The terms of payment stated in the Export Corporation's contract

with W. A. Thompson & Co. , Habana, Cuba , for the delivery of
500 barrels of cement and 100 gross tons of soft steel bars were “ 30
days' sight, documents on acceptance." The " 30 days' sight " refers
to the negotiable instrument used by the Export Corporation in col-
lecting the amount due from Thompson & Co. This negotiable in-
strument is a bill of exchange or foreign draft. A bill of exchange
is an unconditional written order from one person to another to
pay to a specified person or to his order a given sum of money. It
may be payable on demand or on sight, or at a fixed or determinable
future time.
BILL OF EXCHANGE.

Thompson is indebted to the Export Corporation for the amount

of the invoice $ 18,440. In order to collect this amount from Thomp-
son at his place of business, the Export Corporation draws on him
by means of a bill of exchange. The bill of exchange is universally
used for this purpose in international commerce. The Export Cor-
poration drew a bill of exchange as follows :
Exchange for $18,440.
42 BROADWAY, NEW YORK, U. S. A.,
October 6, 1918.
Thirty days after sight of this first of exchange, second unpaid,
pay to the order of ourselves eighteen thousand four hundred forty
dollars ( $18,440 ) , value received, and charge the same to the
account of
( Signed ) EXPORT CORPORATION,
-9 Treas.
To W. A. Thompson & Co.
Habana, Cuba.

As Thompson is to pay this bill 30 days after sight, one of the

problems is to present it to him for acceptance. By " acceptance " is
meant that Thompson acknowledges his indebtedness to the Export
Corporation and promises to pay the bill in 30 days. This he does
by writing "Accepted " across the face of the bill and dating it.
126
 PAPER WORK IN EXPORT TRADE. 127

Exchangefor October 618

BROADWAY
.CORP T

Thirty Days After Sight

EXPOR

ofthis FIRST
YORK
,UNEW
S.A.
.
42

Second unpaid)paytotheorder of
ofExchange (

Value received and chargethesametoaccount of

EXPORT CORPORATION
To W.A. Thompson & Company
(signed )
No. Havana , Cuba TREASURER

Lachangefor EverBOSURE October 6.—1918

BROADWAY
EXPORT

Thirty Days After Sight AthisSECOND

CORP
YORK
Š.A,UNEW
..
42
.

ofExchange(First unpaid)
paytotheorder of

Valuereceived andchargethesametoaccount of
EXPORT CORPORATION
TWA. Thompson & Company
(signed) TREASURER
To. 339 Havana , Cuba.

FIG. 16.- Bill of exchange, original and duplicate, for transaction A.

DOCUMENTS ACCOMPANYING BILL OF EXCHANGE.

The second clause in the terms of payment was " documents upon
acceptance. " The principal document which is surrendered to
Thompson upon acceptance is the negotiable, or order, bill of lading.
As mentioned in a preceding chapter, the goods can not be obtained
from the carrier, or the customhouse in most countries, until the
order bill of lading is surrendered. The possessor of the order bill
of lading, if held in due course, can secure the goods if Thompson
refuses to accept the draft. Consequently, after drawing the bill
of exchange on Thompson, the Export Corporation attaches the
negotiable bill of lading to the draft and writes across the face of
the document, usually in red ink, " Documents upon acceptance."
The Export Corporation, or its forwarder, turns the bill of lading
over to a bank, who will send it to its corresponding bank or branch
in Habana to present to Thompson for acceptance. Thompson also
needs the consular invoices in order to get his goods through the
customhouse. Consequently, where consular invoices or other Gov-
ernment documents are required , such as certificates of origin , they
also are attached to the draft and the bill of lading.
128 PAPER WORK IN EXPORT TRADE .

The Export Corporation has taken out insurance on this ship-

ment for the benefit of the buyer and it also attaches the insurance
certificate, indorsed in blank, to the other documents.
The Export Corporation may not wish to wait for its money until
the bill of exchange with attached documents has reached Cuba ,
which would take about 5 days, 30 days after sight before the bill
is paid, and 5 days for the return of the funds to New York. In the
bill of exchange and shipping papers the Export Corporation has
credit instruments on which its bank will make advances. The bank
has as security, before the acceptance of the bill of exchange, the
credit of the Export Corporation , which, as drawer of the bill, is
liable for it until it is paid by Thompson. The bank also has as
collateral the negotiable bill of lading , which gives it title to the
goods. Upon acceptance, Thompson also becomes liable for the bill
of exchange.
To summarize, the following documents are attached to the draft,
which is indorsed in blank and forwarded to the bank for collec-
tion :
Three original ocean bills of lading, indorsed in blank on the back
by the Export Corporation .
Two original marine and war-risk insurance certificates, indorsed in
blank on the back by the Export Corporation.
Consular invoice.
Three copies of commercial invoice.
Draft payable to the order of ourselves ( Export Corporation ) .

These documents are to be delivered to the consignee upon his

properly accepting the draft , due for payment at his bank.
In remitting the proceeds of this draft, after collected , the bank
will deduct its charges for making the collection, which, for Cuba,
are usually one -eighth of 1 per cent.

DISCOUNTING DRAFTS UNDER FEDERAL RESERVE ACTS.

Under the Federal reserve act, instead of securing advance in

the manner above indicated , the Export Corporation might have
found it to its advantage to use bankers' acceptances. In this case
the corporation would arrange with a member bank to permit it to
draw a bill of exchange on the bank. The Export Corporation
would have turned over to the bank its bill on Thompson, with the
shipping documents ; this bill would have been sent by the bank to
Habana for collection . In the meantime, the bank accepts the bill
drawn on it by the Export Corporation . This places in the hands
of the Export Corporation a bill on which it has the bank's prom-
ise to pay, and this bankers' acceptance , as such a bill is called , can
be readily disposed of in the local discount market. When the funds
have been received from Thompson, the bank uses these funds to
pay its acceptance on maturity.
 PAPER WORK IN EXPORT TRADE. 129

NOTES ON BANK ACCEPTANCES.¹

Any Federal reserve bank may discount acceptances which are based on the
importation or exportation of goods , which have a maturity at time of dis-
count of not more than three months, and are indorsed by at least one member
bank. The amount of acceptances so discounted shall at no time exceed one-half
of the paid-up capital stock and surplus of the bank for which the rediscounts
are made.
The aggregate of such notes and bills bearing the signature or indorsement of
any one person, company, firm, or corporation, rediscounted for any one bank,
shall at no time exceed 10 per cent of the unimpaired capital and surplus of
said bank ; but this restriction shall not apply to the discount of bills of ex-
change drawn in good faith against actually existing values.
Any member bank may accept drafts or bills of exchange drawn upon it and
growing out of transactions involving the importation or exportation of goods
having not more than six months' sight to run ; but no bank shall accept such
bills to an amount equal at any time in the aggregate to more than one-half its
paid-up capital stock and surplus.
The rediscount by any Federal reserve bank of any bills receivable and of
domestic and foreign bills of exchange and of acceptances authorized by this
act shall be subject to such restriction , limitations, and regulations as may be
imposed by the Federal Reserve Board.
Any Federal reserve bank may, under rules and regulations prescribed by
the Federal Reserve Board, purchase and sell in the open market, at home or
abroad, either from or to domestic or foreign banks, firms, corporations, or in-
dividuals, cable transfers and bankers' acceptances, and bills of exchange of the
kinds and maturities by this act made eligible for rediscount, with or without
the indorsement of a member bank.
Every Federal reserve bank shall have the power :
(c) To purchase from member banks and to sell, with or without its indorse-
ment, bills of exchange arising out of commercial transactions as hereinbefore
defined ;
(d) To establish from time to time, subject to review and determination of
the Federal Reserve Board, rates of discount to be charged by the Federal re-
serve bank for each class of paper, which shall be fixed with a view to accom-
modating commerce and business ;
(e) To establish accounts with other Federal reserve banks for exchange pur-
poses, and, with the consent of the Federal Reserve Board, to open and main-
tain banking accounts in foreign countries, appoint correspondents, and estab-
lish agencies in such countries wheresoever it may deem best for the purpose
of purchasing, selling, and collecting bills of exchange, and to buy and sell, with
or without its indorsement, through such correspondents or agencies, bills of
exchange arising out of actual commercial transactions which have not more
than 90 days to run and which bear the signature of two or more responsible
parties.
METHODS OF HANDLING DRAFTS .
2
Filsinger says, in discussing the financing of exports :
In the great majority of instances drafts covering " to order " shipments are
discounted . American banks do not as a rule like to discount drafts running
over three months sight. In the case of goods sold on longer terms, draft may

1 "Acceptances," published by American Exchange National Bank, of New York.

2 E. B. Filsinger : " Trading with Latin America."
125740°-20-9
130 PAPER WORK IN EXPORT TRADE.

be sent forward for acceptance and return . The shipper will hold the draft
until within three or four months from maturity and then discount it.
Forwarding drafts.— In forwarding drafts, several methods may be used, de-
pending upon conditions. The drafts with attached documents may be handled
through the shippers' local bank ; through a bank in a central city ; or may be
forwarded direct to a bank in Latin America. In the first instance the local
bank would be apt to forward the draft to a bank in a central city , having
extensive foreign connections, which in turn would forward it to a bank in a
prominent city in the Latin-American country, which in turn would relay it to
its correspondent or branch in the smaller town or city on which it might be
drawn. Each link in the above chain would pass on definite instructions as to
the procedure to be followed with reference to acceptance, delivery of docu-
ments, holding or returning after acceptance, etc., as previously outlined.
Instructions with drafts.-In the matter of such documents, clarity is as
essential as in all other details involved in foreign trade. Nothing should be
left to the imagination . All those who have anything to do with the papers
should be able to determine definitely what action to take under given circum-
stances. The chief points to make clear are the following : ( a ) Whether a
draft drawn " D. A." after its acceptance should be held until maturity, or
returned to the American bank ; ( b ) whether the documents, including the bill
of lading, etc. , shall be turned over upon acceptance or held until payment ; (c)
what action should be taken by the bank in case of nonacceptance : ( d ) in-
structions should be very clear as to turning over the documents to an agent of
the manufacturer in the event of nonpayment or nonacceptance. Responsi-
bility will not be assumed by any bank in such a matter. When perishable
goods are involved this is highly important. Instructions covering eventualities
are drawn as " in case of need " and should be explicit.
Nonpayment. It is highly advisable, particularly in the case of shipments
involving perishable goods, to note on the draft who shall be notified in the
event payment is refused. By taking this precaution and arranging to be
notified promptly, it is possible to materially reduce losses caused by non-
acceptance. It also is well that arrangements be made in advance for notifica-
tion by cable ; this precaution is to guard against delays resulting from loss of
time required for correspondence.
Special clauses.- One of the causes for dissension between American shippers
and Latin-American merchants is in reference to collection charges and ex-
change rates. To obviate this difficulty and depending upon the arrangements
that have been made with the buyer by the salesman, certain words should be
used. These are ( a ) “ Payable at the bank's selling rate for sight draft on New
66
York," or (b) For ninety days drafts on New York."
Interest charge.-A European custom that frequently is observed in the
United States is the charging of interest for the period during which a draft
runs. This may be either from its date to maturity, or from acceptance at a
certain number of days sight until paid. It may even include the time that a
remittance requires to reach the United States. When transactions reach a
large volume, this is an important item. Export commission houses generally
charge interest for the entire period.
Exchange. One of the factors which frequently has been a detriment in
doing business with Latin America is the wide fluctuation in exchange. Mer-
chants often have been unable to figure definitely the cost of their goods , not
knowing at what rate they would have to pay. Because of this difficulty, mis-
understandings frequently have arisen. At maturity, the exchange having risen
or fallen (to the advantage or disadvantage of the importer ) payment may be
 PAPER WORK IN EXPORT TRADE. 131

delayed. It is to the shipper's advantage to guard against this practice. By

having it clearly understood that all drafts must be paid promptly, many diffi-
culties can be avoided.
Commission charges.-Bank charges for collecting, as already indicated,
vary greatly, but salesmen should be instructed to make this point clear so
that there will be no misunderstanding. Duplicate order blanks should bear
the notation that the drafts drawn in payment of the invoice are to include in-
terest, and that the cost of making the collection ( exchange ) is to be paid by
the importer. Drafts on prominent cities in Latin America may be collected
at a cost of toper cent. For the reasons stated, however, they may reach
1 per cent to 2 per cent and occasionally higher ; the latter charge is extremely
infrequent and usually obtains only in the case of some place very difficult of
access.
CREDITS AND LETTERS OF CREDITS.

In transaction C the terms are " cash on presentation ocean

documents, confirmed letter of credit, irrevocable, to be established
our favor, good for 30 days, New York."
DEFINITIONS AND OBJECTS.

A credit is the contract of a banker to place a specified sum at the disposal

of a client, subject to certain requirements stated therein. When the con-
tract is made, the banker is said to have opened a credit for account of
his client.
This contract may require the banker to make the credit available by drafts
on himself or on another banker ( called the accepting banker ) . If the latter ,
then the credit has not been properly opened until the opening banker has
advised the accepting banker of the terms and conditions of the credit and
of the name of the drawer of the drafts ( called the accredited party ) . The
evidences of the contract are a guaranty given by the client, and usually,
though not always, a letter of credit issued by the banker.
A letter of credit is a letter issued by a banker authorizing a specified
person, firm, or association, known as the accredited party, to value ( draw )
on one or more bankers for an amount or for amounts not exceeding in all
a stated sum, and guaranteeing the acceptance and payment of those drafts
if drawn in compliance with the term specified in the letter.
The object for which credits are opened and letters of credit are issued
by bankers is to facilitate the financing of commerce and travel, by providing
merchants, travelers, and others with the means by which to obtain funds.

COMMERCIAL CREDITS.

There are two classes of credits , known as commercial credits and travelers'
credits, the name of each class indicating its particular object.
Commercial credits are opened by mail or cable. A letter of credit is
usually issued for a credit that is opened by mail, but rarely for one that is
opened by cable.
A commercial letter of credit is a letter issued and addressed to the ac-
credited party by the bank that opens the credit. It authorizes the party to
draw on that bank or on another bank under certain specified terms and con-
ditions, and guarantees the acceptance and payment of all drafts that are
drawn in compliance with those terms.
132 PAPER WORK IN EXPORT TRADE.

When a letter of credit is issued, it is delivered to the importer or the

client for whose account the credit has been opened, and he in turn sends
it to the accredited party as evidence of his authority to draw against the
credit.
A cable credit, also a mail credit for which no letter of credit is issued , is
generally advised by the opening bank to the accepting bank only ; and the
accredited party is then merely informed by his customer that a credit has
been opened with a certain bank. Banks that do an extensive commercial
credit business, however, frequently arrange special cable words, for the
advice of credits, with banks in cities where the accredited parties will nego-
tiate their drafts. By this means, they cable the advices of credits direct to
those banks, which is practically equivalent to issuing letters of credit to the
accredited parties.
Commercial credits are described as confirmed or unconfirmed credits, a
confirmed credit being one that has also been guaranteed by the accepting
bank, and an unconfirmed credit one that has no such additional guaranty.
Although a letter of credit is the issuing bank's confirmation of the opening
of a credit, it is not regarded by commercial houses generally as a confirmed
credit until the accepting bank has also guaranteed the acceptance and pay-
ment of drafts drawn under it.
A confirmed credit, like a certified check, is not revocable, while an un-
confirmed credit may be revoked unless otherwise provided , or the accept-
ance or payment of drafts drawn under it may be refused by the accepting
bank of its own will. Both the revocation of credits and the refusal of
drafts are rare occurrences ; but to avoid this possibility, some shippers re-
quire confirmed credits.
Essential parts of a commercial credit.-
1. The four principal parties to a commercial credit ; the bank that opens
the credit ; the paying or accepting bank ( drawee ) on which the exporter or
shipper is authorized to draw ; the exporter or shipper in whose favor it is
opened ; and the importer for whose account it is opened. In the case of issu-
ing banks in interior cities like Chicago or St. Louis, the forwarding agents
at ports like New York, Boston, or Philadelphia, may also be named.
2. The terms on which the bills are to be drawn against the latter ; namely,
whether at sight, or at a given number of days or months after sight or date.
3. The amount of the credit.
4. The amount for which each bill may be drawn ; that is, whether for full
invoice value, or for , say, 75 to 90 per cent of it, and whether freight and
insurance are to be included.
5. The destination of goods and how they are to be shipped.
6. To whose order the bills of lading are to be drawn, generally to the order
of the issuing bank.
7. Where the insurance is to be placed .
8. When the credit expires.
9. The disposition of the invoice and all other documents.
10. The reference in the bill to the particular letter of credit against which
it is drawn.
Each banker prepares a form of letter to suit his own ideas as to wording
and order, hence there are slight differences in them ; but the general plan is
the same in all. The instructions given by the importer and stated in the
letter also vary considerably. For example, in paragraph 4, the space might
be filled in to read . "invoice cost only," or "invoice cost, freight, and insur-
ance," or "three-fourths cost and insurance," or some other form.
 PAPER WORK IN EXPORT TRADE. 133

There are differences also in the forms used for the guaranty. Some bank-
ers, however, use a receipt and contract attached to a copy of the letter instead
of a guaranty.
ADVANTAGES OF COMMERCIAL CREDITS .

In many countries, because of their advantages, commercial credits are

required by exporters as a condition to the shipment of goods ordered, but
they also afford advantages to the importer.
Advantages to the exporter.- 1. The exporter has practically made a cash
sale ; that is, he will receive cash immediately on fulfilling the conditions of
the credit, either for the full amount of his invoice or for so much of it,
indicated in the credit, as he has agreed with the importer to accept.
2. The responsibility and guaranty of payment of the issuing bank gives a
standing to the exporter's bill that documentary bills ordinarily do not
possess. For this reason, he can readily negotiate his bill at any banker's
(unless restricted by the letter to a particular bank ) , and should therefore
obtain the most favorable rates of exchange.
3. As soon as the exporter has negotiated his bill, the financial responsibility
is at once shifted to the issuing bank. This is not the case with ordinary
documentary bills, the drawer of which is responsible for their nonacceptance
and/or nonpayment .
Advantages to the importer.-1. The importer can generally obtain more
favorable prices from the exporter than he otherwise could.
2. He can place advance orders and thus afford the exporter ample time
to obtain the goods or to manufacture them, and at the same time he can
restrict the time of their shipment by making the credit expire at a reasonable
time.
3. He can protect himself, on agreement with the exporter, by limiting the
amount for which bills may be drawn to a certain percentage of the invoice
value of the merchandise.
4. By arrangement with the issuing bank, he may have the bills drawn
payable at such a time, after sight or date, as will enable him, on arrival of
the goods and on signing a trust receipt, to obtain possession of the whole
or part of each invoice (as he requires ) to prepare them for market, and
even to dispose of them before the maturity of the bill.
Trust receipts. -The purpose of the trust receipt is to make the importer
morally as well as legally accountable for all goods delivered to him until
they are paid for. Goods that have been warehoused in the bank's name may
be withdrawn by the importer as needed, on the order of the bank and against
a further trust receipt. If a banker can identify the goods surrendered to
an importer under a trust receipt, he can regain possession of them ( replevy
them ) if necessary .
To whom credits are issued.-A bank may issue credits to those importers
only of whose integrity and responsibility it is fully satisfied , and should re-
quire financial statements from them, from time to time, as is done in the case
of those to whom ordinary loans are made.
In issuing such a letter of credit, a bank assumes a risk similar to that
assumed in the loaning of money, for the following reasons : (1 ) It has
loaned its credit to the importer, as the basis on which the exporter executes
his order for goods ; ( 2 ) after the arrival of the goods, shipped on a time
credit, by delivering all or part of them to the importer against a trust
receipt, it has loaned him the value of the merchandise, for it has guaranteed
and become liable for the acceptance and payment of the relative drafts.
134 PAPER WORK IN EXPORT TRADE.

COST OF COMMERCIAL CREDITS.

Cost to the importers.- For issuing a commercial credit, the bank charges
a commission varying from to 1 per cent, according to its terms, the
amount, the time, and the risk involved. The cost of a sight credit is the
least, for it involves a minimum of risk to the banker, being taken up by the
importer at sight ; that is, on receipt of the documents with or without the
draft. The cost of a time credit is higher, increasing with the time and the
consequent risk, and an extra commission is charged for a confirmed credit.
A six months' credit, for example, that costs the importer a commission of
from 1 to 1 per cent is equivalent to a loan at from 2 to 3 per cent per
annum, plus the rate of discount at which the bills drawn against the latter
are negotiated.
Cost to the issuing bank.-Out of the commission charged to the importer
the issuing bank must pay the drawee a commission upon all payments and
acceptances under ordinary credits. An additional commission is generally
charged for confirming a credit.
THE WORKING OF A COMMERCIAL LETTER OF CREDIT.
The importer: Obtaining the letter.- Having made a financial statement satis-
factory to the bank from which he wishes to obtain credits, or otherwise satis-
fied its officers as to his responsibility, the importer arranges with the bank for
the issue of letters of credit when needed. Having completed his purchase with
the exporter in the foreign country, the importer fills out an application to the
bank for a letter. This application contains the information necessary to the
drawing of the letter, as already shown. When the original has been drawn
and signed and the copy made, the importer signs the guaranty as shown, or a
receipt attached to the copy, and receives the original letter. This original the
importer then forwards to the exporter.
The exporter: Using the letter.—On receipt of the letter, the exporter prepares
the goods and ships them as instructed . Having obtained all documents as
specified in the letter, he then draws a bill of exchange on the drawee named in
the letter, following instructions as to terms, amount, and wording. He then
attaches certain documents to the bill as required by the letter, and negotiates
it through some local bank. The instructions indicate what is to be done with
the remaining documents. They are forwarded-generally by the exporter,
sometimes by the negotiating bank-direct to the issuing bank or, in the case
of an interior issuing bank, to its agents at the seaport. Some letters require
that a certificate be attached to the bill, stating to whom these documents have
been forwarded. The documents are divided, as a safeguard against delays
that might result in transmission , if all were attached to the bill. By their
division, also, the importer receives some documents before, or as soon as, the
goods reach their destination . This enables him either to obtain the goods
under trust receipt or to have them warehoused in the name of the bank im-
mediately on their arrival, thus avoiding their removal by the customs authori-
ties to what are called the public stores.
The negotiating bank.- The negotiating bank examines and compares the
letter of credit, the bill, and the documents. If it is found that all requirements
of the letter have been met, the bill is purchased. The amount of each bill,
together with the date of its negotiation, is entered by the bank on the back
of the letter. If it has not expired and is not exhausted, the letter is returned
to the exporter. If exhausted or expired, it is kept by the negotiating bank
and attached to the bill. The bill and attached documents are then forwarded
by the bank direct or through some other bank to the drawee, according to the
terms of the letter. The bank that negotiates a bill drawn against a credit is
 PAPER WORK IN EXPORT TRADE . 135

responsible for the identity of the drawer ; that is, it must know that he is
the person in whose favor the letter has been issued. Beyond this it is only
responsible for a critical examination of the bill and of the documents, to see
that they are properly drawn and signed and comply in every respect with the
requirements of the letter.
The accepting or paying bank. —On receipt of the bill and attached documents,
the drawee examines and compares them with his letter of advice or duplicate
copy of the letter. He then accepts or pays the bill and charges it to the issu-
ing bank. He advises that bank of the date and amount of the charge, and,
in the case of time credits, forwards only the documents. In the case of sight
credits, he may forward the bill also. A credit that has expired before it is
used or exhausted is valueless, unless its time is extended by an order of the
issuing bank sent to the drawee.
Bankers not responsible for goods described. - Bankers concerned in issuing a
commercial credit, or in negotiating, accepting, and paying bills drawn under it,
do not assume responsibility for the quality or quantity of the goods shipped
under it. Therefore, before placing his order and taking out his credit, the
importer satisfies himself of the integrity and responsibility of the exporter and
of his ability to fulfill his part of their contract ; and the exporter, if he agrees
to draw for a part of the invoice only, satisfies himself that the importer will
settle for the difference according to agreement, without making unjust claims
on him.¹

In transaction C, as the terms are cash on presentation of ocean

documents to bank in New York, where letter of credit has been
established, the draft is drawn accordingly. We might state that
credit on this transaction was duly established by the consignee with
the Yokohama Specie Bank, 120 Broadway, New York, and its
notification of the opening of this credit was somewhat as follows :
SEPTEMBER 27, 1918.
EXPORT CORPORATION,
New York City.
DEAR SIRS : We are advised by our correspondents to open for
your account, and available to you against your drafts together
with full set of ocean-shipping documents, a confirmed irrevocable
letter of credit in amount $40,000 U. S. gold, covering your sale of
20 wire nail machines to Koji Fukushima , Kobe, Japan .
This credit expires on November 15, 1918, and your draft or
drafts must be drawn prior to that date.
YOKOHAMA SPECIE BANK.
Credit No. 5476 J.

A full set of ocean documents were accordingly prepared and

forwarded together with the draft to the Yokohama Specie Bank,
which made immediate payment in accordance with the terms of
the credit. The following documents were forwarded to the bank
by the Export Corporation :
Three original ocean bills of lading, blank indorsed.
Two original marine and war-risk insurance certificates, blank indorsed.
Three commercial invoices.
Draft properly indorsed in blank.
1 Foreign Exchange (part 4 ) , pp. 1 to 16.
136 PAPER WORK IN EXPORT TRADE.

On this particular transaction the exporter did not have to assume

any collection charges, as they were borne by the consignee in the
form of the charges on the opening of his letter of credit.
In transaction D the terms are sight draft with ocean documents
attached, and accordingly the Export Corporation drew a sight
draft on the consignee, forwarding it to its bank for collection, with
instructions to remit proceeds, less bank's charges by cable. The
documents forwarded to the bank with the draft were as follows :
Three original ocean bills of lading, blank indorsed.
"wo original marine and war-risk insurance certificates, blank indorsed
Three commercial invoices.
Certificate of origin.
Draft properly indorsed in blank.

Collection was made accordingly by the bank and the proceeds

of the collection cabled to the Export Corporation, less the bank
charges, which amounted to one- fourth per cent plus cable charges.
Documents may be indorsed either by a direct indorsement or by
a blank indorsement. A blank indorsement is one in which the
name of the corporation only is shown with the name of the signer
and his title, for example :
EXPORT CORPORATION ,
JOHN SMITH, Treasurer.
This is the form of indorsement which the bank prefers, as it en-
titles the last indorser to the material.
A direct indorsement is one in which the indorsement is made as
follows :

Deliver only to John Smith & Co.

EXPORT CORPORATION .
JOHN SMITH, Treasurer.
As stated above, the most practicable indorsement is the one
known as a blank indorsement.
In summing up the conditions which surround the making up of
ocean documents there is one thing most vital and important : No
matter what papers are being made out , the utmost care should be
taken to see that the material, weight, and marks on each document
are exactly alike. This will save considerable confusion and trouble
for the consignee in the foreign country.

NOTES ON THE FINANCING OF FOREIGN TRADE.

PRACTICE IN ENGLAND.¹

Exports to the United States are most frequently financed by the establish-
ment of a banker's credit by the importer, against which the exporter draws
a bill of exchange. Very often remittances are made by check, and also

1 Robert P. Skinner, United States consul general at London , in Daily Commerce Reports
for Mar. 12, 1919.
 PAPER WORK IN EXPORT TRADE. 137

frequently there are open credits with periodical settlements. The credits
are almost invariably opened in London, against which the exporter draws
on terms " cash against documents," these documents being the bill of lading,
the consular invoice, and perhaps other special papers.
The market for sterling bills payable in London is freer than that for
dollar bills , hence local exporters naturally draw chiefly in terms of sterling.
The American importer ordinarily deals with his American banker who, in
turn, arranges with his London correspondent to pay the exporter against
the presentation of the bill drawn on the American firm accompanied by the
usual documents. Most bills of American importers are drawn at 60 days after
sight.
The negotiation of bills of exchange in London, except as provided for in
special contracts, is accomplished through brokers. Exchange rates are quoted
in London in dollars per pound sterling. All financial transactions in the
United Kingdom naturally center at London.
Quotations of New York exchange.— New York rates of exchange and dis-
count are quoted daily in all the newspapers of any standing, and are made
public in this country during practically every business hour of the day.
Local banks receive direct quotations from many exchange centers and are
provided with tape machines. In fact, the system is about as it is in New
York. The New York discount rate is always taken as a basis when pur-
chasing the bill in the United States. No discrimination exists against Ameri-
can bills of exchange.
Collection charges.- Consul Ingram, of Bradford, states, on the authority of
the Bradford Bankers' Clearing House, that there is no agreement in Brad-
ford upon a tariff for collecting clean and documentary items, the circumstances
governing the charge in each particular case. The commission for clean col-
lections is usually lower than that for documentary collections, the charges
probably ranging from 6d. per cent to 2s. 6d. per cent, according to the labor
and other details involved. It is equally impossible to give the cost of col-
lecting clean and documentary items in various cities, this being governed by
complex arrangements which exist between the banks and their agents at
various centers, and also affected by the terms of the account with the persons
for whom the collections are made. However, the usual charge for collecting
clean items would be 1s. ( $0.24 ) per bill unless a yearly charge for services
rendered had previously been arranged.
Stamp duties.-No distinction is made in the stamp duty on clean and docu-
mentary items. On bills payable on demand or at sight or presentation , or at a
period not exceeding three days after date or sight, the duty is 1d. This duty
also prevails on any other bill or note drawn for an amount not in excess of 5
pounds. When the amount exceeds 5 pounds but does not exceed 10 pounds, the
charge is 2d. and 3d. on amounts over 10 pounds but not exceeding 25 pounds.
For bills drawn for higher amounts the additional charge is 3d. for each 25
pounds or fraction thereof. By the finance act of 1899 the duty on a bill of ex-
change drawn and express to be payable out of the United Kingdom when
actually paid or indorsed or in any manner negotiated in the United Kingdom,
shall when the amount for which the bill is drawn exceed 50 pounds, be reduced
to 6d. for each 100 pounds or fraction thereof.
It is not the custom for the drawee to pay these charges directly, but it is
possible that an adjustment as to bill stamps may be made in the trading ac-
count of the persons drawing and accepting the bills. Deductions for stamp
charges are made by local banks from remittances in payment of collections.
There is no charge made for stamps on checks remitted in payment of collec-
tions.
138 PAPER WORK IN EXPORT TRADE.

Rules regarding protest.- In case of protest the amount of charges is 7s. 6d.
($1.82 ) , plus mileage. In the event of the item being paid after protest, the
charges are collected from the drawee.
With respect to the protest of items, foreign bills, which have not been ac-
cepted and/or paid should be noted on the day of dishonor cost, 1s. 6d. ($0.363)
London, 2s. 6d. ( $0.606 ) Bradford. Subsequently protest can be extended, and
it should accompany the bill if returned abroad . If the bill remains in town it
is not necessary to extend protest at once, as this may be done late if required.
The collection and banking charges on bills drawn upon merchants should be
borne by the person for whom item is collected . Collection and banking charges
may, as in the case of stamp duties, be dealt with in the account between the
drawer and drawee of the bill.
Banks in Bradford only guarantee payment when the drafts are drawn under
credit opened by local banks. There is no set charge for opening credits, and
they vary probably from one-fourth to one-half per cent, and in some special
cases they are as little as one-eighth per cent.
Banks accept shipping documents against payment.-The facts stated
in the succeeding paragraphs embody procedure obtaining at Liverpool, but
except when otherwise stated they hold good , in the main, for all English ports.
This information was furnished by Consul Horace Lee Washington.
Banks do not act as consignee of the goods shipped , but parcels may be sent to
them by banking correspondents in America. In this case the shipping docu-
ments are sent to the bank to be delivered to a specified consignee against pay-
ment of an amount indicated. The London City & Midland Bank ( Ltd. ) makes
no charge for these services, but the Bank of Liverpool ( Ltd. ) states that the
charge is 2s. per cent ( $0.486 per $486.65 ) for isolated transactions. When the
transactions are for substantial amounts and the aggregate turnover is con-
siderable the charge would not exceed half this rate.
Customhouse and port regulations.— The customs law of England requires
that the entry of goods must be made within 21 days after the arrival of the
ship, but the regulations of the port authority at Liverpool require goods to
be removed from the quay in 72 hours. Otherwise, penalty rent is incurred
amount to 5s. ( $1.21 ) per hour for the first 24 hours and 10s. ( $2.43 ) per hour
thereafter. Penalty rent is often reduced by the dock board , however, to special
rent and fixed according to the circumstances of the case. These penalties
are not paid by the consignee unless due to his own negligence, but are charged
by him against the goods when he renders his account to the consignor.
If the goods are not claimed, the shipowner passes the necessary customs en-
tries and causes the goods to be stored, and all expenses thus incurred are
claimed before delivery is obtained.
Banks will arrange storage and insurance.-When requested to do so by Ameri-
can banking correspondents, the banks in England will arrange for the storage
of goods and otherwise take steps to protect the American banking house
against loss to its clients through the failure or neglect of the consignee to take
up bill of lading. Rates for draying and storage in such cases vary with the
goods.
Whenever the bank attends to storage it will ordinarily attend also to fire
insurance, but otherwise this is left to the consignee. The premium in such
instances is entered as a charge against the goods. The premium varies
greatly, according to the kind of policy -floating or specific-the character
of the goods, and the location of the warehouse. The Liverpool & London
& Globe Insurance Co. ( Ltd. ) , 1 Dale Street, Liverpool, publish in card or
pamphlet form the complete schedule of rates for various ports. It is customary
 PAPER WORK IN EXPORT TRADE. 139

for the consignee to pay the insurance charges and to recoup himself out of the
proceeds of sale of the goods.
In the event of the goods arriving in advance of the related documents, they
may be obtained from the shipping company against an indemnity and letter of
undertaking which is signed jointly by the consignee and his own banker.
Liverpool bank's make no charge for this service, but some London banks
charge one-sixteenth per cent.
Documents needed .- There is no statutory requirement specifying what docu-
ments are needed in shipments to England. Commercial practice requires in
addition to the bill or bills of lading a marine insurance policy or certificate.
It is not usual except under extraordinary circumstances and for satisfactory
reasons to permit examination of goods without specific instructions to that
effect from the consignor.
How bills of lading should be made out. The consignee can not obtain the
goods without producing the bills of lading, except by a banker's indemnity,
whether the bills are made out " to order " or to the order of the consignee. To
give the exporter absolute control of the goods the bills of lading should be
made out " to order," and then indorsed in blank by the party in whose favor
they are made out.
Sale or return of goods.- The information which follows was furnished by
Consul Calvin M. Hitch, of Nottingham.
In case the client of the American bank desires to sell goods shipped, it is
exceptional for banks here to attend to such sales. If requested to do so they
would employ a broker. If requested to have the goods returned they would
hand the documents to a shippng company with proper instructions. Inward
freight and charges, and possibly return freight and insurance, would have to
be paid before the shipping company would act. The goods would not need to
be cleared through the customhouse nor duty paid ; and refund could be ob-
tained on duty already paid.
Phraseology of drafts. - To enable the British bank to remit the face amount
of the bill the draft should include the phrase, " Payable at the selling rate for
demand drafts." This phrase would also cover any collection or interest
charges, since these should be included in the amount of the bill.
If a bill is drawn on this country in a foreign currency the drawee some-
times pays with a draft purchased from another bank in this country ; but this
is not an established custom .
Acceptors retiring drafts before maturity are, by commercial custom, allowed
a rate of interest one-half per cent above the ruling deposit rate of interest
fixed by the London joint-stock banks ; that is, if the drafts are drawn with
documents against maturity. The interest for retiring clean items is a matter
of arrangement between the acceptor and the collecting bank.
Any charges connected with the return of dishonored items, over the protest
fees, are a matter of arrangement, and would be debited in account.

PRACTICE IN FRANCE.¹

Exports to the United States are financed by credits opened through the
Paris correspondent of the American banking institution. The drafts or the
documents are likely to be drawn " to order " and indorsed in blank, or simply
drawn to the order of the financing institution . They may be at sight or at
30 or 60 days' sight.
1 Alexander M. Thackara, United States consul general at Paris, in Daily Commerce
Reports for Mar. 12, 1919.
140 PAPER WORK IN EXPORT TRADE.

Banking institutions in Paris doing a fairly large American business natur-

ally keep themselves fully informed as to New York discount rates. The
exchange rates are quoted regularly and published daily, and local banks keep
themselves posted by cable on fluctations of exchange throughout the world.
As regards margin of profit, there is no fixed rule, and there are practically
no bills on the member banks of the Federal reserve system in the market,
although the rediscount rate of the Federal reserve bank unquestionably
would be a ruling factor in determining the rate on such bills.
In the past all the bills on other countries have been drawn on London be-
cause of the negotiability and stability of the pound sterling. But the dollar
market has now assumed such importance that with the full normal resumption
of international business bills drawn in dollars will find a good market.
Commissions for collections. -The commission for collecting documentary
items in this city never exceeds one-half mill ; clean items collected free.
For collecting clean items on various other cities : If large centers, free, with
one to five days' interest collected ; documentary items, up to 1 mill on big
centers, and from one-half to 2 per cent on long banking places. No commission
is usually charged for obtaining acceptance of bills not left with the bank for
collection .
The bill stamp charges for clean and documentary items drawn on this coun-
try are one-half mill. It is customary to charge this to the drawer of the
bill, the charge being debited to the account of the institution for which the
collection is made.
The charge in case of protest is five-eighths per cent, and generally when
the item is paid after protest this is collected from the drawee.
As a rule merchants here will not pay collection and banking charges on
bills drawn against them nor assume any other supplementary charges. Any
such arrangement must be the result of special agreement between buyer and
seller.
Docking, warehouse, and insurance fees .-Local banks will indorse drafts,
accepted by approved firms, taking a commission. In general, banks do not
accept consignments nor handle parcels to be delivered to consignee against
payment. Such transactions could doubtless be handled through transporta-
tion companies.
Clearance of goods may be made as soon as the captain has entered his ship
and the goods are landed . There is no maximum time limit in which to
make entry. The only expenses are watching, dock, and warehousing dues.
When goods are not promptly cleared through the customs they are sent to
the Government bonded warehouse, and all costs for cartage, warehousing, and
insurance are for account of goods, the consignee eventually paying these
charges.
After goods have been cleared through customs a transportation company
will arrange storage, if desired. The rates are not fixed , even among the dif-
ferent companies operating in the same town, and no schedule of charges can
be given.
In Government warehouses the insurance is imposed and covered by a
Government insurance contractor, the value being estimated by the ware-
house people. But if the consignee orders goods to the Government warehouse
he may also indicate the correct value for insurance. The charge is usually
50 centimes ( $0.0865 ) per 1,000 francs ( $193 ) per month.
Documents needed.- In the event of the goods arriving before the related
documents, they may be obtained by presenting a banker's guaranty. The
cost of this does not exceed one-fourth per cent.
Consular invoices are not required on shipments to France.
 PAPER WORK IN EXPORT TRADE. 141

Consignee may examine the goods in the customs only when instructions
have been given by the shipper to that effect.
The consignee can not obtain possession of the goods without the bill of
lading, if it is made out " to order " or to the order of the consignee, unless
he produces a banker's guaranty. To obtain absolute control, bills should be
made out or indorsed to the order of the collecting bank, although, generally
speaking, bills come through made out " to order " and indorsed in blank.
Return of goods.- It is unusual for banks to attend to the sale of goods.
If goods are to be returned to shipper, the procedure is quite similar to that
in the United States for a like transaction. A regular customs entry is neces-
sary, and the goods are reforwarded in bond to port. Goods in bond need
not be cleared through the customhouse, hence there is no duty. But if duty
has already been paid there is no refund, unless duty was paid on draw-
back or on " Consignation de droits " ( deposit of customs duty ) , which is
only allowed on certain classes of goods.
Phraseology of drafts.— The customary phrase to be included in drafts to
enable a remittance of the full face amount of the bill without any deduction
is : 66 Payable for this amount plus all charges." This phrase must be embodied
in the bill.
If the remittance is also to include collection charges these charges are
usually indicated in the amount of the bill, and the phrase is : " Payable for
the face amount , plus collection charges, as indicated above, and any
other bank charges."
If interest is also to be paid, add to the above phrase : " And interest at the
rate of from to 99
On bills drawn on France in other than French currency the drawee is at
liberty to purchase his cover where he chooses. There is no legal provision
governing the rate of exchange on drafts drawn in foreign currency. Nor
is there a rate fixed either by law or custom governing the interest allowed
to acceptors for retiring drafts before maturity. Cedents should be consulted.
In addition to the protest fees connected with the return of dishonored
items, a commission of one-half mill, plus 6 francs ( $1.16 ) per protest is made.
This is usually debited in account.

MODIFYING CLAUSES IN BILLS OF EXCHANGE.¹

A variety of clauses may be included in the text of foreign bills of exchange

as required by custom or local conditions in countries where payable. The most
usual of these clauses are the following : That known as the colonial clause, in-
cluded in drafts drawn on South African and Australasian points. This reads,
66
' Payable with exchange ( English and colonial stamps added ) at the current
rate in London for negotiating bills on the colonies." This clause makes such
drafts subject to the ruling rates of exchange as between New York and Lon-
don, eliminating all other considerations for local charges, interest, etc. These
bills are passed by New York bankers to London, not to Australian or South
African banks. The exchange ( i . e. , interest, etc. ) between London and the
colonies is, with other incidentals, charged to drawees. In New York the ex-
change between New York and London only is calculated . When thus drawn
these bills have usually been prime favorites among New York foreign-exchange
bankers.
Drafts drawn on most parts of South America ( practically all of South
America south of the Equator ) are usually in one of two forms : ( 1 ) Drawn
1 B. Olney Hough : " Practical Exporting."
142 PAPER WORK IN EXPORT TRADE .

66
in dollars, United States currency, reading Payable in legal currency at the
bank's drawing rate on day of payment for sight bills on New York " ; or ( 2 )
drawn in pounds sterling, reading " Payable in legal currency at the bank's
drawing rate on day of payment for 90 days ' sight bills on London." In
the first instance drafts drawn in dollars-interest charges , bank commis-
sions , etc., should be included in the face amount of the draft if the drawer
expects to recover the amount of his invoice in full without deduction. In the
second instance-bills drawn in sterling-interest, commissions, etc., are in-
cluded in the rate of exchange named by bankers for the bills in question, and
payment by bill on London is arranged by drawees with their local banks as
ruling conditions may make possible.
Another clause sometimes included in drafts may read after the following
fashion : " Payable with interest at 6 per cent per annum from date of draft
to approximate date of receipt of proceeds in ( New York ) . " This is sometimes
employed in drafts on the Far East, the British West Indies, and other markets
where it is impossible to calculate the exact term for which interest ought to
be figured. There is an element of great uncertainty about it, and a great many
foreign houses object to this practice ; in fact, object to paying more than
charges specifically named by invoices. The clause in question, therefore,
should not be included except by previous agreement with the customers.
It should be noted that what has above been called the colonial clause, used
in transactions with South African and Australasian houses, should not be ex-
tended to other markets. In some countries, for example, in the Argentine
Republic, it is understood that it is illegal to require payment of a draft in
larger amount than the sum indicated on its face.
For the sake of definiteness as identifying a foreign draft with a given trans-
action, it is often desirable to modify the customary phrase 66 Value received "
by making it read 66 Value received in goods per S. S. -," or it may be made
still more specific by indicating, for example, "500 bales of cotton ex
S. S. 99 1
Exchange payable by drawee.-Reference to the customary terms of payment
by drawees in case of South American drafts prompts an explanation of what
is expected of drawees when drafts are drawn against them payable in some
other currency than their own. A drawee in Brazil or in Russia, for example,
can not always, of course, tender to the presenting bank the amount of his
indebtedness, as presented by the draft, in American gold dollars or in British
pounds sterling. He has to pay in his own currency such an amount as the
banker will accept as the equivalent of the amount named in dollars or pounds.
Unless specifically indicated by such expressions as those above noted as cus-
tomary in South American bills , the rates at which drawees must pay are usually
dictated by the presenting bankers, based on locally ruling rates of such
foreign exchange. This has hitherto been one advantage in drawing in sterling—
the most common, stable, and economical exchange. A rate of exchange may,
however, sometimes be indicated in the draft itself, always by prearrangement
with drawee. The privilege of paying in the currency in which the draft is
drawn is sometimes granted—i. e., of paying by approved counterdraft in such
currency .
When a fixed rate of exchange is indicated in the draft, bankers themselves
are relieved from any uncertainty, and the customer knows that on the due
date of the bill in question he will be required to pay in gold ( not paper, or,
if in paper, at an enhanced rate to cover the difference between gold and paper
money ) the cost of the bill at the rate of exchange indicated.
1 Because of frauds brought to light in connection with certain fictitious cotton bills of
lading, some New York bankers object to notation on drafts above indicated.
 PAPER WORK IN EXPORT TRADE. 143

CREDIT TERMS IN LATIN AMERICA.

Argentina.-A considerable amount of business is done with the big houses

for 66 spot cash," payment being made through the purchasers' bank or ship-
ping broker against documents either at works or at port of shipment. On
the other hand, bills at 60 and 90 days are quite common. In some cases
interest, usually at 6 per cent is added. Bills may be drawn for payment in
Argentine dollars ( gold ) or pounds sterling either in London or Buenos Aires.
The Government usually pays for goods by warrants, maturing in 6, 9 and 12
months. In Rosario and district merchants generally require 90 days' credit
after receipt of goods. In Mendoza and upcountry 90 to 120 days are required ;
for heavy machinery as much as 120 to 150 days may be demanded. Local
bank rates range from 8 to 12 per cent.
Bolivia.- Terms range from 90 to 120 and 150 days, it being sometimes
stipulated that the date should only run from the receipt of the goods. The
law provides that a renewal is not valid unless the renewed acceptance bears
the signature of both drawer and drawee. As a rule, drafts are accepted only
on the arrival of goods at the customhouse. Instructions should be given as
to protest in case of nonacceptance or nonpayment ; whether documents are
to be handed over on acceptance or only after payment (the latter being
unusual ) ; whether the shipper's agent or bank is to be allowed the power
to extend credit ; the interest charged on renewals and rebate on prepayment.
Collection commission at La Paz and Oruro is one-half of 1 per cent, and in
other centers 1 per cent.
Brazil. Many of the larger Brazilian firms have their buying agents in
Europe. With the first-rate houses open credit at 90 days' sight is asked for
and granted . In outports 90 to 120 days' credit is not uncommon ; and for
heavy machinery six to nine months. Banking rates rule from 9 to 12 per
cent. It is usual to stipulate for payment in pounds sterling. Collection
rates are, for Rio de Janeiro, Santos, and Sao Paulo, three-eights of 1 per
cent ; for Pernambuco and Bahia one-half of 1 per cent ; and for other out-
ports often five-eights of 1 per cent ; in each case plus 3d. for postage.
Chile.-Bills maturing 90 days after arrival of goods at Valparaiso and up
to 120 days after arrival at Iquique, are customary, importers paying cost of
exchange, occasionally discount, and rate for collection. The collecting rate
for Valparaiso is one-fourth of 1 per cent, and for other banking centers
one-half. Chilean customs regulations do not permit of bills of lading being
made out " to order."
Colombia.- Very little business is done on open credit. Usually buyers
require credit for from 30 to 60 days after the goods have passed through
the customhouse, but six to nine months bills are common, cost of discount
plus interest at 6 per cent being generally added. Local banks charge 12 per
cent. Discount for cash or prepayment is allowed for at the rate of 5 per
cent per annum. Collection rates average from one-half to five-eights of 1
per cent. It should be stated that many wholesalers allow retailers and
agriculturists six months ' credit, so that manufacturers who take this into
consideration naturally have the best chance.
Costa Rica .- Many importers are prepared to pay cash against liberal dis-
counts. Otherwise bills are taken for three or six months, carrying interest at 6
per cent.
Cuba. Credit is granted for 3, 6, and 12 months, with 6 per cent interest
added. Discounts for cash or anticipated payments range from 5 to 6 per cent.
Dominica. From four to six months' credit is general, plus interest at 6 per
cent. Local banks charge 1 per cent per month.
144 PAPER WORK IN EXPORT TRADE .

Guatemala.- Importers ask for three to six months' credit, but six months
from arrival of goods at port is quite usual, plus interest at 6 per cent. The
local bank rate is about 12 per cent.
Haiti. Six months' credit from date of invoice is the rule, but six months
after receipt of goods in warehouse is also given, interest being charged at 6
per cent.
Honduras. Six months' credit is general, but many leading firms buy on dis-
count terms. At Puerto Cortez, 30, 60, or 90 days, plus 6 per cent, or 5 per cent
discount, are the prevailing terms.
Ecuador.- Open accounts are not general, 30, 60, and 90 days' sight bills being
the rule. For upcountry trade, 3, 6, and as much as 12 months' credit after
receipt of goods is often granted , plus 6 per cent interest, as against the 7 to 9
per cent of the local bank rate to merchants. Bank collecting rate, paid by the
buyers, at Guayaquil and Quito is 11 per cent.
Mexico. Recent military and political events have greatly disturbed busi-
ness, but normally the commercial world of Mexico stands well in repute. A
considerable amount of open credit is granted to known firms. Generally speak-
ing, merchants desire credit for at least as long as will enable them to get the
goods through the customs, arranged in stock, and catalogued. Terms vary
much according to locality and also the class of merchandise. In Mexico City
the customary terms are 2 to 24 per cent off for cash in 10 to 30 days, 60 days
net, and 90 days plus 6 per cent. Here, as in Monterey and a few other big
places textiles, haberdashery, and millinery are invoiced at 1 per cent off for
cash, or credit allowed at 30 or 60 days, exceptionally 90 days ; drugs and
chemicals, 60 to 90 days, with one-half of 1 per cent interest, and an equal
rebate for cash within 30 days ; groceries, including preserved goods, 30 to 60
days, with varying discount for cash ; furniture, 30 days less 2 per cent, or
60 to 90 days net ; printing paper 30 to 60 days, and 120 for big amounts.
For machinery and hardware, 60 to 90 days, and 120 for big amounts , may be
expected. Indeed, four to six or nine months' bills, with interest at 6 per cent,
are quite usual for the retailers. Local bank rates range from 10 to 12 per
cent. At Acapulco three to six months' bills are the rule, interest charged at 6
per cent per annum, with a similar discount. Many houses, however, prefer
cash for good discounts.
British manufacturers in the past have shown themselves quite unwilling to
grant the long-term credits often expected , if not demanded , by business men
in Latin America. There can be no doubt that there was some truth in this, and
that, on the other hand, the Hamburg and Bremen merchant shippers were
ready to give the accommodation desired . That the position taken up was justi-
fied, it is contended on behalf of purchasers , was shown by the readiness with
which banks discounted approved bills, thus obviating any question of credit
on the part of manufacturers. Others hold that the credit expected by buyers
was a little unduly lengthened. There appear to be grounds for this belief in
the fact that since the Germans have been shut out of commerce shorter-term
settlements have been acceded to without much demur. It is both fair and wise,
however, to give consideration to the importer's point of view. At Aguascali-
entes many of the leading firms have running open accounts, which are balanced
every six months. A good deal of business is done on the following terms :
Three per cent discount for cash in 10 days , 2 per cent for cash in 30 days, 60
or 120 days, net. At Chihuahua bills are made for four to six months from
invoicing. At Nogales the prevailing terms are sight bills at 90 days, six or
nine months, with a stipulation of 1 per cent per month after they become due.
At San Luis Potosi, three to six months ; at Saltillo, six months' bills are usual,
 PAPER WORK IN EXPORT TRADE. 145

with interest at 6 per cent for renewals. At Vera Cruz, British bills are gener-
ally 90 days' sight, while German houses granted six months' paper. A preva-
lent method in Mexico is to pay for mining, heavy agricultural, and industrial
machinery one-third of price with order, one-third on receipt of documents, and
balance one, two, three, or even six months after delivery. Another custom is
for manufacturers' agents in Mexico City or one of the larger ports of entry
to hold stock, which is sent out to retailers on consignment. This applies to
cycles, motors, small machinery, and tools, some classes of hardware, and even
watches and jewelry.
Nicaragua.- Bills are drawn payable in London at six or nine months, with
interest at 5 to 6 per cent. Bills are noted before the bills of lading are de-
livered up.
Panama.- Usual terms, six months. Bill of lading and consular certificate
are attached to the bill, which is accepted and noted at the bank or shipper's
broker before delivery of documents. The bulk of business , certainly in Colon,
is done through commission houses, who ship c. i . f. to port.
Paraguay.- Six months' bills are the rule, but the date commences only after
the goods have passed through the customs. This is a drawback, as with most
merchandise the officials allow quite long warehousing in bond. Consequently a
stipulation should be made for clearance within a given time of acceptance.
Peru.-Shipping documents are delivered against acceptance of bills payable
in 60, 90, or 180 days in London. Interest is charged at 6 per cent, and up
to 8 per cent for extension. With machinery, payment of one-third on receipt
of invoice is usual. Six months' credit is quite common, and some sugar- ma-
chinery makers have granted three years' deferred payment, with interest at 6
per cent on balances. Protest has to be made within eight days, and protested
bills are valid for only four months. Collecting charges in Lima and Callao
are three-eighths of 1 per cent, in other banking centers one-half of 1 per cent.
Salvador.- Much of the business with Europe has hitherto been carried on
through commission houses. When credit is granted, bills are usually drawn
at six months or at six and nine months, documents against acceptance. In-
terest is charged at from 5 to 7 per cent, which compares with the local banks'
interest on loans of 10 to 12 per cent. A growing number of importing houses
prefer to obtain cash terms, with 2 to 3 per cent of invoiced prices.
Uruguay.- Montevidean credit stands high. Many houses have open ac-
counts with their European correspondents. Otherwise accepted bills against
shipping documents are the rule. Such bills may run from 30 to 60 days, but
six months are commonly asked for and granted when wholesale houses travel
the country to distribute textile goods, hardware, drugs, and miscellaneous
articles. In ordinary routine these up-country journeys are undertaken every
three, four, or five months, the travelers also acting as collectors. Hence the
need for credit by the importers. For expensive machinery quite long credits
are sometimes granted. Only moderate interest is charged.
Venezuela.—A heavy percentage of business is done on open credit with
known houses in La Guaira, Puerto Cabello, and Maracaibo, interest being
charged when payment is delayed beyond the specified time. Usually payment
is by means of bills, with from three to six months to run, a small interest
being charged, which rises to 6 or 8 per cent for renewals. Local banks charge
8 to 12 per cent. Many firms take up their acceptances before maturity, ob-
taining a discount. It should be pointed out that retention of shipping docu-
ments affords no safeguard to the shipper, for the Venezuelan customs regula-
125740°-20-10
146 PAPER WORK IN EXPORT TRADE.
66
tions permit the consignee to clear on a customhouse copy," procurable on
payment of a fee.
While an endeavor has been made to give in the above notes a comprehensive
survey of credit terms in Latin America, it should be understood that variations
occur not only as between different trades but between given trades in the
several countries. Much depends, of course, on the standing of importers and
their relations with the shippers. Certainly, wherever possible it is desirable
for the manufacturers to get into as close personal touch with the importers
as is possible. Preliminary inquiries are always desirable and litigation is to
be avoided. It is not because law is expensive or specially uncertain, but it
must be remembered that action has often to be taken in local courts, and
when a republic consists of some form of confederation of States difficulties
are added, as usually great variations are found to exist, especially as regards
procedure in general, and in particular the important item of time limits. With
reasonable precautions, litigation should rarely be necessary in ordinary com-
mercial transactions, as Central and South American business houses of stand-
ing are jealous of their good repute.
 APPENDIX.

INDIA HOUSE RULES FOR F. O. B.

General recommendations for standard American export practice

were adopted as follows at a conference held in India House , New
York, on December 16 , 1919, by the National Foreign Trade Council,
Chamber of Commerce of the United States of America , National
Association of Manufacturers, American Manufacturers ' Export
Association, Philadelphia Commercial Museum, American Export-
ers' and Importers' Association, Chamber of Commerce of the State
of New York, New York Produce Exchange, and New York Mer-
chants' Association :
As the most certain means of insuring unmistakable clarity in terms and
conditions of sale, the conference voted to recommend to manufacturers and
exporters that all use of abbreviated forms of export price quotations be aban-
doned, and that such terms be written out in full.
The conference recognized , however, that this recommendation is not likely
to be accepted generally at once ; and therefore, in the hope of effecting a
simplification and standardization of American practice, it adopted the follow-
ing statement of definitions of the abbreviated forms in more common and gen-
eral use in the export trade. The conference strongly recommends to manu-
facturers and exporters that wherever abbreviated forms of export quotations
are employed, the forms herein defined be used, as far as possible, to the ex-
clusion of other forms.
These are, in their order, the normal situations on which an export manu-
facturer or shipper may desire to quote prices. It is understood that unless a
particular railroad is specified, the property will be delivered to the carrier
most conveniently located to the shipper. If the buyer, for the purpose of de-
livery, or in order to obtain lower transportation charges, desires that the
goods be delivered to a carrier farther removed from the shipper and entailing
a greater cost than delivery to the carrier most favorably situated, the carrier
to which the buyer desires delivery of the goods should be named in the quota-
tion. The term " cars or lighters," as used herein, is intended to include river,
lake, or coastwise ships, canal boats, barges, or other means of transportation,
when so specified in the quotation.

PROPER TERMS IN ROUTING.

1. When the price quoted applies only at inland shipping point and the seller
merely undertakes to load the goods on or in cars or lighters furnished by the
railroad company serving the industry, or most conveniently located to the in-
dustry, without other designation as to routing, the proper term is : " F. O. B.
(named point ) ." Under this quotation :
(a ) Seller must (1 ) place goods on or in cars or lighters, ( 2 ) secure railroad
bill of lading, ( 3 ) be responsible for loss and/or damage until goods have been
placed in or on cars or lighters at forwarding point, and clean bill of lading
has been furnished by the railroad company.
( b ) Buyers must ( 1 ) be responsible for loss and/or damage incurred there-
after, ( 2 ) pay all transportation charges, including taxes, if any , ( 3 ) handle all
subsequent movement of the goods.
2. When the seller quotes a price including transportation charges to the
port of exportation without assuming responsibility for the goods after obtain-
ing a clean bill of lading at point of origin, the proper term is : " F. O. B.
(named point ) freight prepaid to ( named point on the seaboard ) ." Under
this quotation :
147
148 PAPER WORK IN EXPORT TRADE.

(a ) Seller must (1 ) place goods on or in cars or lighters, ( 2 ) secure rail-

road bill of lading, (3) pay freight to named port, (4 ) be responsible for loss
and/or damage until goods have been placed in or on cars or lighters at
forwarding point, and clean bill of lading has been furnished by the railroad
company.
(b ) Buyer must ( 1 ) be responsible for loss and/or damage incurred there-
after, ( 2 ) handle all subsequent movement of the goods, ( 3 ) unload goods
from cars, ( 4 ) transport goods to vessels, ( 5 ) pay all demurrage and/or stor-
age charges, ( 6 ) arrange for storage in warehouse or on wharf where necessary.
3. Where the seller wishes to quote a price, from which the buyer may de-
duct the cost of transportation to a given point on the seaboard, without the
seller assuming responsibility for the goods after obtaining a clean bill of lad-
ing at point of origin, the proper term is : " F. O. B. (named point ) freight
allowed to (named point on the seaboard ) . ” Under this quotation :
(a ) Seller must (1 ) place goods on or in cars or lighters, ( 2 ) secure rail-
road bill of lading, ( 3 ) be responsible for loss and/or damage until goods have
been placed in or on cars or lighters at forwarding point, and clean bill of
lading has been furnished by the railroad company.
(b ) Buyer must (1 ) be responsible for loss and/or damage incurred there-
after, (2 ) pay all transportation charges (buyer is then entitled to deduct
from the amount of the invoice the freight paid from primary point to named
port ) , ( 3 ) handle all subsequent movement of the goods, ( 4 ) unload goods from
cars, ( 5 ) transport goods to vessel, ( 6 ) pay all demurrage and/or storage
charges, ( 7 ) arrange for storage in warehouse or on wharf where necessary.
4. The seller may desire to quote a price covering the transportation of the
goods to seaboard, assuming responsibility for loss and/or damage up to that
point. In this case, the proper term is : " F. O. B. cars ( naming point on sea-
board ) ." Under this quotation :
(a ) Seller must (1 ) place goods on or in cars, (2 ) secure railroad bill of
lading (3 ) pay all freight charges from forwarding point to port on seaboard,
(4 ) be responsible for loss and/or damage until goods have arrived in or on
cars at the named port.
(b ) Buyer must ( 1 ) be responsible for loss and/or damage incurred there-
after, ( 2 ) unload goods from cars, ( 3 ) handle all subsequent movement of the
goods, (4 ) transport goods to vessel, (5 ) pay all demurrage and/or storage
charges, ( 6 ) arrange for storage in warehouse or on wharf where necessary.
5. It may be that the goods, on which a price is quoted covering the trans-
portation of the goods to the seaboard, constitute less than a carload lot. In
this case, the proper term is : " F. O. B. cars (named port ) L. C. L. " Under
this quotation :
(a ) Seller must ( 1 ) deliver goods to the initial carrier, ( 2 ) secure railroad
bill of lading, ( 3 ) pay all freight charges from forwarding point to port on
seaboard, ( 4 ) be responsible for loss and/or damage until goods have arrived
on cars at the named port.
(b ) Buyer must (1 ) be responsible for loss and/or damage incurred there-
after, ( 2 ) handle all subsequent movement of the goods ( 3 ) accept goods
from the carrier, ( 4 ) transport goods to vessel, ( 5 ) pay all storage charges,
(6 ) arrange for storage in warehouse or on wharf where necessary.
6. Seller may quote a price which will include the expense of transportation
of the goods by rail to the seaboard, including lighterage. In this case the
proper term is : " F. O. B. cars ( named port ) lighterage free." Under this
quotation :
(a ) Seller must (1 ) place goods on or in cars, ( 2 ) secure railroad bill of
lading, ( 3 ) pay all transportation charges to, including lighterage at, the
port named, ( 4 ) be responsible for loss and/or damage until goods have ar-
rived on cars at the named port.
(b ) Buyer must (1 ) be responsible for loss and/or damage incurred there-
after. ( 2 ) handle all subsequent movement of the goods, ( 3 ) take out the
insurance necessary to the safety of the goods after arrival on the cars, ( 4 )
pay the cost of hoisting goods into vessel where weight of goods is too great
for ship's tackle, ( 5 ) pay all demurrage and other charges, except lighterage
charges.
7. The seller may desire to quote a price covering delivery of the goods along-
side overseas vessel and within reach of its loading tackle. In this case the
proper term is : " F. A. S. vessel ( named port ) ." Under this quotation :
 PAPER WORK IN EXPORT TRADE. 149

(a ) Seller must ( 1 ) transport goods to seaboard, ( 2 ) store goods in warehouse

or on wharf if necessary, unless buyer's obligation includes provision of ship-
ping facilities, ( 3 ) place goods alongside vessel either in a lighter or on the
wharf, ( 4 ) be responsible for loss and/or damage until goods have been deliv-
ered alongside the ship or on wharf.
( b ) Buyer must ( 1 ) be responsible for loss and/or damage thereafter, and
for insurance, ( 2 ) handle all subsequent movement of the goods, ( 3 ) pay cost
of hoisting goods into vessel where weight of goods is too great for ship's
tackle.
8. The seller may desire to quote a price covering all expenses up to and
including delivery of the goods upon the overseas vessel at a named port. In
this case the proper term is : " F. O. B. vessel ( named port ) ." Under this
quotation :
(a ) Seller must (1 ) meet all charges incurred in placing goods actually
on board the vessel, ( 2 ) be responsible for all loss and/or damage until goods
have been placed on board the vessel.
( b) Buyer must ( 1 ) be responsible for loss and/or damage thereafter, ( 2 )
handle all subsequent movement of the goods.
9. The seller may be ready to go further than the delivery of his goods
upon the overseas vessel and be willing to pay transportation to a foreign point
of delivery. In this case the proper term is : " C. & F. ( named foreign port ) ."
Under this quotation :
(a ) Seller must (1 ) make freight contract and pay transportation charges
sufficient to carry goods to agreed destination, ( 2 ) delivery to buyer or his
agent proper bills of lading to the agreed destination, ( 3 ) be responsible for
loss and/or damage until goods have been delivered alongside the ship and clean
ocean bill of lading obtained ( seller is not responsible for delivery of goods at
destination ) .
(b ) Buyer must ( 1 ) be responsible for loss and/or damage thereafter and
must take out all necessary insurance, ( 2 ) handle all subsequent movement of
the goods, (3 ) take delivery and pay costs of discharge, lighterage, and landing
at foreign port of destination in accordance with bill of lading clauses, (4)
pay foreign customs duties and wharfage charges, if any.
10. The seller may desire to quote a price covering the cost of the goods,
the marine insurance on the goods, and all transportation charges to the foreign
point of delivery. In this case, the proper term is : " C. I. F. ( named foreign
port." Under this quotation :
(a ) Seller must ( 1 ) make freight contract and pay freight charges sufficient
to carry goods to agreed destination, ( 2 ) take out and pay for necessary marine
insurance, ( 3 ) be responsible for loss and/or damage until goods have been
delivered alongside the ship, and clean ocean bill of lading and insurance policy
have been delivered to the buyer or his agent. ( Seller is not responsible for the
delivery of goods at destination, nor for payment by the underwriters of
insurance claims ) , ( 4 ) provide war-risk insurance where necessary for buyer's
account.
( b ) Buyer must ( 1 ) be responsible for loss and/or damage thereafter, and
must make all claims to which he may be entitled under the insurance directly
on the underwriters, ( 2 ) take delivery and pay costs of discharge, lighterage,
and landing at foreign ports of destination in accordance with bill of lading
clauses, ( 3 ) pay foreign customs duties and wharfage charges , if any.
Explanations of abbreviations are given below :
F. O. B Free on board
F. A. S. Free alongside ship
C. & F. Cost and freight
C. I. F. Cost, insurance, and freight
L. C. L____ . Less than carload lot

GENERAL RECOMMENDATIONS.

In reaching the conclusions set forth in this statement the conference con-
sidered the fact that there are, in more or less common use by manufacturers
in different parts of the United States, numerous variations of these abbrevia-
tions, practically all of which are employed to convey meaning substantially
synonymous with those here 66 defined . For instance, there are manufacturers
who quote " F. O. B. cars," F. O. B. works," " F. O. B. mill," or " F. O. B. fac-
tory," meaning that the seller and buyer have the same responsibilities as those
set forth in section 1. The conference considered all those variations and de-
150 PAPER WORK IN EXPORT TRADE .

termined to recommend the use of " F. O. B. (named point ) ," as "F. O. B.

Detroit," " F. O. B. Pittsburgh," etc. Of the considerable number of these
abbreviations which are used in the United States, the conference felt that
the form " F. O. B. ( named point ) " is most widely used and understood, and,
therefore, should be adopted as the standard of practice.
The chief purpose of the conference is to simplify and standardize American
practice, and to that end it urges manufacturers and exporters to cease the
use of synonymous abbreviations and quote habitually in the terms here recom-
mended, just as far as these terms will cover the price conditions which it is
desired to arrange with the buyer.
Variations of the abbreviations recommended in other sections also are in
more or less common use throughout the United States. The recommendations
of the conference set forth above apply to them with the same force as to those
cited under section 1.
Manufacturers and exporters are urged to bear in mind that the confusion
and controversies which have arisen have sprung in part from the use of an
excessive number of abbreviated forms with substantially similar meanings,
as well as from the use of abbreviations in a sense different from their original
meanings, or in an application not originally given them and different from the
sense or application understood by foreign buyers.
In simplified and standardized practice lies the best hope of reducing con-
fusion and avoiding controversy.
The conference urges upon manufacturers and exporters the very great
importance at all times of making their intention in whatever quotations they
employ so thoroughly clear as to be impossible of misunderstanding or mis-
interpretation. It is much better to take the time and space at the outset to
make the quotation clearly understood, than to be compelled in the end to go
through vexatious controversy, or litigation , which costs not only time and
expense but customers as well. Misunderstandings can best be avoided if the
seller will formulate a written statement of the general conditions under which
his sales are to be made, and will see that the foreign buyer possesses these
terms of sale when considering a quotation . The items which may be included
in such a statement deal with delivery, delays, partial shipments, shipping in-
structions, inspection , claims, damage, and payment. If all contingencies are
thus covered by carefully considered conditions of sale, disputes will largely
be prevented .
CONFUSION RESULTING FROM CERTAIN PRACTICES.

The quotation " F. O. B. ( named port ) ," as " F. O. B. New York ,” “ F. O. B.

New Orleans," " F. O. B. San Francisco," is often used by inland producers
and distributors to mean merely delivery of the goods at railway terminal at
the port named . This abbreviation originated as an export quotation and had
no application to inland shipments. It was used only to mean delivery of the
goods upon an overseas vessel at the port named. That, in fact, is the mean-
ing universally given to the phrase among foreigners, and is the meaning
which the best practice among exporters requires it invariably to have. But
because of the confusion which has arisen through the use of that form with
a different meaning by inland producers and distributors, and in the interest
of unmistakable clarity, the conference most strongly urges the invariable use
by American manufacturers and exporters of the form " F. O. B. vessel ( named
port ) ." This adds only one word to the abbreviated form and has the great
advantage that it can not be misunderstood . It also avoids the difficulty which
might arise among foreigners not always well versed in American geography,
through confusing an inland forwarding point with a shipping port at sea-
board.
99
The conference calls attention to the fact that in selling “ F. A. S. vessel
manufacturers and exporters should be careful to have their agreements with
buyers cover explicitly the question of responsibility for loss after goods have
been delivered on the wharf or alongside the vessel and before they are actu-
ally loaded on the ship. There is no generally established practice on this
point. The recommendation of the conference in the definitions of respon-
sibility under section 7 sets up a rule which it is hoped will lead to the estab-
lishment of a standard practice.
It is understood that the provision of lighterage covered in several of these
recommendations is only within the usual free lighterage limits of the port,
and that where lighterage outside such limits is required, it is for buyer's
account.
 PAPER WORK IN EXPORT TRADE. 151

IMPORTANCE OF WEIGHT QUOTATIONS.

In order to avoid confusion in another particular, attention is called to the

care which must be exercised in all cases in making weight quotations. The
net ton, the gross ton, and the metric ton all differ in weight. Similarly there
is a variation in the use of the term " hundredweight " to mean either 100 99
pounds 66or 112 pounds. It is, therefore, not sufficient to quote a price per " ton
or per hundredweight." Instead the conference recommends the use of the
terms " ton of 2,000 pounds," " ton of 2,240 pounds,” or “ ton of 2,204 pounds,"
etc., whichever is intended.
It is also important to note that a carload lot in the United States means
the quantity of the particular commodity in question necessary to obtain the
carload freight rate for transportation on American railways. This quantity
varies according to the commodity and also varies in different parts of the
country. Certain commodities being more bulky than others , the minimum
carload for them is less than for heavier products occupying less space. The
load required may range anywhere from 12,000 to 90,000 pounds. Conse-
quently, it is important, when quoting prices applicable to carload lots, to so
state and to specify the minimum weight necessary to make a carload lot of
the particular commodity for the particular shipment in question.
The conference points out that in quoting " C. & F." or " C. I. F." manufac-
turers and exporters moving large quantities of material by one vessel should
be careful to ascertain in advance the buyer's capacity to take delivery. This
because, under these terms and as a condition of making the freight rate, trans-
portation companies may require a certain rate of discharge per day , and that
rate of discharge might be in excess of the buyer's capacity to take delivery.
In such event an adjustment with the transportation company would be neces-
sary, which might affect the freight rate and consequently the price to be
quoted.
SPECIAL PROVISIONS AND RECOMMENDATIONS.

The conference also strongly urges shippers clearly to understand the pro-
visions of their insurance protection on all foreign sales, irrespective of the
general terms used thereon. In almost all cases it should be possible, when
making shipments by steamer, to obtain insurance cover giving full protection
from primary shipping point to designated seaport delivery , and/or foreign
port delivery. As ordinary marine insurance under F. P. A. conditions, i. e.,
free of particular average, gives no protection against deterioration and/or
damage to the merchandise itself while in transit, when caused by the recog-
nized hazards attending such risks, shippers should endeavor in all cases to
obtain insurance under W. P. A. ( S. P. A. ) conditions, i. e., with particular
average ( subject to particular average ) , when in excess of the customary
franchise of 3 per cent to 5 per cent. Under such form of insurance, under-
writers will be called upon to pay claims for damages when these exceed the
stipulated franchise.
The conference points out that, inasmuch as fees for consular invoices and
similar items are arbitrary charges fixed by foreign Governments, they are
not included in the terms of C. & F. or C. I. F. quotations, and it is part of the
duty of the buyer to meet them.
Finally, the conference strongly recommends, as a most effective measure of
simplification, the general practice of quoting for export, as far as possible,
either " F. A. S. vessel," " F. O. B. vessel," or " C. I. F." Concentration on this
small list, all of which terms are readily understood abroad and are difficult
of misinterpretation, will, it is felt, be markedly influential in avoiding con-
fusion and controversy.
The conclusions and definitions set forth above are the recommendations
of a conference which was composed of representatives of nine of the great
commercial organizations of the United States interested in foreign trade. Not
all have as yet the force of law or long-established practice ; but it is the hope
and expectation of the conference that these recommendations will receive
such adherence on the part of American producers and distributors as to make
them in fact the standard American practice. And it is, therefore, expected
that in due time they will receive the sanction of legal authority.
 FORMS FOR PRACTICE WORK .

A portfolio containing forms for practice work is issued with this

publication. A sufficient number of the forms has been included to
provide a complete set of documents for each of the four model trans-
actions discussed in the text. The titles of the forms and the number
of copies in each portfolio are given in the following list :
Form No. Copies.
1. Letterheads___ 12
2. Credit information inquiry blank. 4
3. Sales division inquiry of purchase division . 8
4. Freight memorandum sheet_. 8
5. Analysis of quotation_. 7
6. Acknowledgment of order. 8
7. Purchase order blank_. 14
8. Instructions to freight forwarders_ 14
9. Commercial invoice__ 24
10. Ocean freight contract_ 8
11. Shipper's export declaration 16
12. Lighterage delivery order_ 16
13A. Dock receipt, New York & Cuba Mail Steamship Co-- 3
13B. Dock receipt, Commercial South American Line, original. 1
13B.1. Same, duplicate_-_-
13B.2. Same, triplicate_.
13C. Dock receipt, French Line_. 1
14A. Bill of lading, New York & Cuba Mail Steamship Co- 5
14B. Bill of lading, Commercial South American Line_ 5
14C. Bill of lading, Northern Pacific Ry. Co .. 5
14D. Bill of lading, French Line_. 5
15. Application for marine insurance_ 16
15.1. Stickers for No. 15__ 16
16. Certificate of insurance_. 8
17A. Consular invoice, Cuba , original.
17A.1. Same, copies--.
17B. Consular invoice, Brazil . 4
24

17C. Certificate of origin, France_ 2

18. Bill of exchange_
152
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