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FOREIGN CREDIT INSURANCE

FOREIGN CREDIT INSURANCE

FOREIGN
CREDIT
INSURANCE

The development of foreign trade by the American manufacturer requires, primarily, where foreign competition enters, that he exercise the same financial payment arrangement as that of the foreign competitor. The American manufacturer was considered, up until recent years, a novice in foreign trade. The economic condition of our country has justified American manufacturers in building up domestic trade. In recent years, in order to equalize production and cost, foreign fields had to be entered, and one of the most, if not the greatest obstacle, was that of foreign credits. After an extended study of foreign business, many prominent foreign traders believed that the American manufacturer should have close association with and greater assistance from American banks in the same manner as many foreign countries. However, this did not materialize to the extent that it gave any great assistance to the American manufacturers. Therefore a plan was formulated in the United States whereby the payment of accounts, or, in other words, the credit of the purchaser, could be insured and in this way eliminate any risk of loss to the American exporter.

INSURANCE
PLAN

This insurance plan embraces three distinct features: First, merchandise information must be published in a guide, the object being to present to the American manufacturer actual and potential markets, together with a list of responsible foreign merchants. The second feature is that of establishing a credit rating for the foreign merchant. Under the present plan of credit insurance it is necessary for the insurance company to investigate and establish a standing or rating for the individual foreign buyer. Under the new plan a credit rating is established for the foreign buyer, and such credit, on account of the possibility of fluctuation, must be under continual investigation in order to protect the insurance company against abnormal losses. The third feature is that of the insurance of the account, or the guarantee, with indemnity, of the financial responsibility of the foreign buyer. Based upon such credit ratings, the insurance company will guarantee the solvency of the foreign buyer, and under such guarantee the responsibility rests with the insurance company to determine the ability of the foreign buyer to pay for the goods purchased in the United States.

FOREIGN VS.
DOMESTIC
INSURANCE

The plan of foreign credit insurance is quite different from the accepted form of domestic insurance. First of all, there is no mass coverage, and, contrary to domestic credit insurance, the plan does not put a premium upon dealing with questiona risks. The foreign plan of insurance enables the insurance company to carry out the basic idea of encouraging dealings with responsible foreign houses, and discouraging dealings with those that are irresponsible. The domestic credit insurance compels the insured to bear normal losses himself. Under the foreign insurance plan the insured is paid in full. Furthermore, the terms relating to insolvency and other contingencies under which payment in full is made are more liberal than the coverage of the domestic credit

insurance policy.

FOREIGN CREDIT INSURANCE

INSURANCE
CHART

To provide for authentic and reliable information to the American r facturer, and to establish the constructiveness of the foreign insurance credit the insurance company maintains a chart on which is recorded the indiv transactions between the various American manufacturers and the foreign by After making this analysis of the foreign buyer, a guide is compiled for the b of the American manufacturer, under which the foreign buyer. is listed, tog with his line of business and the premium or rate of insurance that the insu company will charge for insuring the payment of the account of such foreign t Each foreign buyer is allotted a code number for matter of verification and che each country is shown separately, and the rate for each foreign buyer is indi The guide establishes for the American manufacturer a credit basis an insurance premium, and also affords the American manufacturer data ast responsibility of firms located in foreign fields. Under this plan of presentin information to the manufacturer, it eliminates many of the disputes between and seller that have occurred in the past. For specimen page of the guide, see foi

page 547.

INSURANCE
FORMS

As in the case of marine insurance, certificates or insurance policies are nece Form No. 45, page 529, shows the manner in which a specific shipment of from the American manufacturer going to a foreign buyer will be insured premium to be paid would be in accordance with the rating as shown in the insu guide. An open or blanket policy is also provided for insurance on credit si to the open policy in connection with the protection of goods while waterTo make a distinction between the marine policy and the credit policy, it : practice to specify that the credit policy will be termed a master policy.

As an example, the American manufacturers, John Doe & Company, des ship $10,000 worth of hardware to Guerrero y Cia., Santiago, Chile. Upon ring to credit guide (see page 547), the buyers guide No. D-835 has a basic r 1%per cent. Under the insurance company's arrangement, this account has paid for in sixty days or less, under sight or time draft, and will be insured at a pre rate of 198 per cent. of the amount, or $112.50. If John Doe & Company d to extend credit to this specific buyer under open account for 150 days, the pre rate would be 134 per cent., or $175.00, for which the insurance company assume the responsibility of having the account paid by the foreign buyer to Doe & Company. See page 529 for application form.

FOREIGN COMMERCE ORDERS OF THE I. C. C.

FOREIGN COMMERCE ORDERS

of the Interstate Commerce Commission. Pursuant to the authority and duties conferred upon it by Section 25 of the Interstate Commerce Act, the Interstate Commerce Commission has issued a series of Foreign Commerce Orders, in which are prescribed rules and regulations by which the carriers subject to the provisions of the Act shall be governed.

To date, five of the Orders have been issued, of which three are now in effect. The effective Orders, which are self-explanatory, are reproduced on the following pages:

At a Session of the INTERSTATE COMMERCE COMMISSION, Division 2, held at its office in

Washington, D. C., on the 13th day of May, A. D. 1922. FOREIGN COMMERCE ORDER No. 3 (Cancels Foreign Commerce Order No. 1). Whereas, Section 25 of the Interstate Commerce Act, as added by Section 441 of the Transportation Act, 1920 requires:

Every common carrier by water in foreign commerce whose vessels are registered under the laws of the United States to file with the Commission within thirty days after the section becomes effective and regularly thereafter, as changes are made, a schedule or schedules showing for each of its steam vessels intended to load general cargo at ports in the United States for foreign destinations (a) the ports of loading, (b) the dates upon which such vessels will commence to receive freight and dates of sailing, (c) the route itinerary such vessels will follow and the ports of call for which cargo will be carried, and authorizes the Commission to make and publish regulations governing the manner and form in which such carriers are to comply with the foregoing requirements: It is ordered, That the following regulations be, and they hereby are, made and published:

REGULATIONS. 1. Such common carriers by water in foreign commerce shall furnish the information required in printed or typewritten schedules 8 x 1042 inches in size in the following form and order:

(a) Corporate name of carrier, or, if carrier is not a corporation, its official title. (b) Date.

(c) Foreign Commerce Number. (Each carrier shall number schedules consecutively, beginning with number 1, the number to be shown on the right-hand margin following the date.)

(d) Name and address of officer to whom inquiries shall be directed. (If more than one officer is designated, arrange alphabetically by ports.)

(e) Sailings of Steam Vessels.

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x Arrange ports alphabetically.

Arrange alphabetically opposite each U. S. port of loading.

2. Two copies of each schedule shall be addressed to "Interstate Commerce Commission, Section of Tariffs, Washington, D. C.”

3. Changes or modifications in the original schedules filed with the Commission by such carriers by water shall be made by a consecutively numbered amendment thereto or by a succeeding issue thereof which must cancel the preceding issue.

It is further ordered, That such common carriers by water in foreign commerce be, and they are hereby, notified to file, on or before July 1, 1922, with this Commission, schedules giving the information herein required and thereafter to amend or reissue such schedules as changes are made.

By the Commission, Division 2.

At a Session of the INTERSTATE COMMERCE COMMISSION, Division 2, held at its office in

Washington, D. C., on the 13th day of May, A. D. 1922.

FOREIGN COMMERCE ORDER No. 4. Whereas, Section 25 of the Interstate Commerce Act, as added by Section 441 of the Transportation Act, 1920, requires:

(1) Every common carrier by water in foreign commerce whose vessels are registered under the laws of the United States to file with the Commission schedules showing for each of its steam vessels intended to load general cargo at ports in the United States for foreign destinations: (a) the ports of loading, (b) the date upon which such FOREIGN COMMERCE ORDERS OF THE I. C. C.

vessels will commence to receive freight and dates of sailing, (c) the route itinerary such vessels will follow and the ports of call for which cargo will be carried.

(2) That the Commission shall cause to be published for the information of shippers throughout the country the substance of such schedules and furnish such publication to all railway carriers subject to the Act that they may supply to each of their agents in such cities and towns as may be specified by the Commission a copy of said publication.

(3) That the Commission shall specify the stations on railway carriers serving communities of sufficient importance from the standpoint of the export trade, at which stations information relative to the handling of export shipments by common carriers by water in foreign commerce shail be maintained and from which railway carriers shall issue through bills of lading to the points of foreign destination: It is ordered, That the following regulations be, and they hereby are, made and published:

REGULATIONS. (1) All carriers by rail subject to the Act shall file printed or typewritten lists 8 x 1042 inches in size containing the information required by the statute in the following form and order:

(a) Corporate name of carrier. (b) Date.

(c) Foreign commerce number. (Each list shall be numbered consecutively beginning with No. 1, the number to be shown on the right-hand margin following the date.)

(d) Points on each line arranged alphabetically which are of sufficient importance from the standpoint of export trade to be specified as points at which publications referred to in Section 25, Paragraph 3, shall be furnished.

(e) The name and address of an officer of each carrier to whom the Commission shall send the publication provided for in the third paragraph of Section 25, and to whom will be assigned the duty of distributing such publications to the various agents at stations which will hereafter be specified by the Commission.

(2) One copy of each list shall be addressed to "Interstate Commerce Commission, Section of Tariffs, Washington, D. C.

(3) Changes or modifications in the original lists filed with the Commission by such carriers by rail shall be made by a consecutively numbered amendment thereto or by a sucreeding issue thereof which must cancel the preceding issue.

It is further ordered, That such common carriers by rail subject to the Act be, and they are hereby, notified to file on or before July 1, 1922, with this Commission the information herein required; to promptly file thereafter any changes therein; and, until the further order of the Commission, to report semi-annually on January first and July first of each year all changes made for the preceding six-months period.

And it is further ordered, That carriers by water participating in interstate commerce may furnish the Commission with a list of stations of importance from the standpoint of export trade from which they handle shipments, in connection with railway carriers, subject to the Interstate Commerce Act, in order that such stations may be designated by the Interstate Commerce Commission as stations from which information relative to the handling of export shipments of common carriers by water in foreign commerce may be maintained for the information of the public, and from which through bills of lading to the points of foreign destination may be issued.

By the Commission, Division 2.

At a Session of the INTERSTATE COMMERCE COMMISSION, Division 2, held at its office in

Washington, D. C., on the 7th day of August, A. D. 1922.

FOREIGN COMMERCE ORDER No. 6.

Cancels Foreign Commerce Order No. 2, of January 12, 1922. Whereas, Section 441 of the Transportation Act, 1920, Section 25 of the Interstate Commerce Act, requires the Commission to specify the stations of railway carriers at which information relative to the handling of export shipments by common carriers by water in foreign commerce shall be maintained and from which railway carriers shall issue through bills of lading to the points of foreign destination:

It is ordered, That the following points on lines of railroads specified be, and they are hereby, designated as points at which this information shall be maintained and from which through bills of lading to foreign destinations in connection with ocean carriers whose vessels are registered under the laws of the United States to points in nonadjacent foreign countries shall be issued:

[NOTE.—The list of points are here omitted. It covers practically all important shipping points in the United States.)

It is further ordered, That railway carriers be, and they are hereby, authorized, when shipments for export are offered at points other than those hereinabove designated, to issue through bills of lading from such points to the points of foreign destination.

And it is further ordered, That if, and when, any point or points not hereinbefore named shall become sufficiently important, from the standpoint of export trade, to warrant inclusion thereof in the forgoing list, the railway carrier serving such point or points shall so report to the Commission.

By the Commission, Division 2.

HARTER ACT

THE HARTER ACT

Re lating to navigation of vessels, bills of lading, and to certain obligations, duties, and rights in connection with the

carriage of property.

Be it enacted, etc., That it shall not be lawful for the manager, agent, master, or owner of any vessel transporting merchandise or property from or between ports of the United States and foreign ports to insert in any bill of lading or shipping document any clause, covenant, or agreement whereby it, he, or they shall be relieved from liability for loss or damage arising from negligence, fault, or failure in proper loading, stowage, custody, care, or proper delivery of any and all lawful merchandise or property committed to its or their charge. Any and all words or clauses of such import inserted in bills of lading or shipping receipts shall be null and void and of no effect.

Sec. 2. That it shall not be lawful for any vessel transporting merchandise or property from or between ports of the United States of America and foreign ports, her owner, master, agent, or manager, to insert in any bill of lading or shipping document any covenant or agreement whereby the obligations of the owner or owners of said vessel to exercise due diligence, properly equip, man, provision, and outfit said vessel, and to make said vessel seaworthy and capable of performing her intended voyage, or whereby the obligations of the master, officers, agents, or servants to carefully handle and stow her cargo and to care for and properly deliver same shall in any wise be lessened, weakened, or avoided.

Sec. 3. 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, her owner or owners, agent, or charterers shall become or be held responsible for damage or loss resulting from faults or errors in navigation 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 defects, quality, or vice of the thing carried, or from nsufficiency 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.

Sec. 4. That it shall be the duty of the owner or owners, masters, or agent of any vessel transporting merchandise or property from or between ports of the United States and foreign ports to issue to shippers of any lawful merchandise a bill of lading, or shipping document, stating, among other things, the marks necessary for identification, number of packages, or quantity, stating whether it be carrier's or shipper's weight, and apparent order or condition of such merchandise or property delivered to and received by the owner, master or agent of the vessel for transportation, and such document shall be prima facie evidence of the receipt of the merchandise therein described.

Sec. 5. That for a violation of any of the provisions of this act the agent, owner or master of the vessel guilty of such violation, and who refuses to issue on demand the bill of lading herein provided for, shall be liable to a fine not exceeding two thousand dollars. The amount of the fine and costs for such violation shall be a lien upon the vessel, whose agent, owner or master is guilty of such violation, and such vessel may be libeled therefor in any district court in the United States, within whose jurisdiction the vessel may be found. One-half of such penalty shall go to the party injured by such violation and the remainder to the Government of the United States.

Sec. 6. That this act shall not be held to modify or repeal sections forty-two hundred and eighty-one, fortytwo hundred and eighty-two, and forty-two hundred and eighty-three of the Revised Statutes of the United States, or any other statutes defining the liability of vessels, their owners, or representatives.

Sec. 7. Sections one and four of this act shall not apply to the transportation of live animals.

SEC. 8. That this act shall take effect from and after the first day of July, eighteen hundred and ninety-three.

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