ORDER BILL OF LADING 203 It may be placed in an envelope, sealed or unsealed, and attached to the draft. The invoice is often sent direct to the purchaser or packed with the goods. 143. The order bill of lading. The order bill is to be sharply distinguished from the straight bill of lading. This is the written acknowledgment of the transportation company that the goods have been received; it describes the shipment and specifies the terms of carriage; it, unlike the straight bill, guarantees that the goods will not be delivered except to the holder of the bill of lading. It is made out to the order of the shipper and he indorses it. An export order bill of lading can be got from the railway company at some interior points, and provides for the through shipment both by rail and water; but for certain goods and on certain routes it is necessary to tranship at the port of export. An ocean bill of lading is then obtained from the owners of the vessel, their recognized agent, or the master of the vessel. The representative of the exporter must be at the port to attend to this. When a draft is secured by a shipment, the bill of lading is always attached, otherwise there is no evidence of shipment. A few Latin-American countries do not allow an order bill of lading. (See 30, 31.) 144. The insurance certificate. The railway is liable for most risks of the land haul, but no water carrier is liable except for its own negligence, unless it expressly assumes more. To render sound any security based on water shipments, marine insurance is necessary. It is secured through a broker, or from a company, after the bill of lading has been issued. Insurance should cover all expenses and a margin of profit. The insurance certificate is made out to the order of the shipper, who indorses it when he sells the draft. Large shippers obtain blanket policies under which they are allowed to write out their own certificates for each shipment, provided they at once send notice thereof to the insurance company, settlement being made at intervals. In case of loss the insurance is paid to the holder of the certificate. The shipper must be certain that he buys insurance that satisfactorily protects him. Generally a marine policy, without special clauses, covers the risk from the loading to the unloading of the vessel. That excludes the risk of lighterage and storage at both ports. If a time policy is taken it may expire before the goods are unloaded. It is often cheaper to effect insurance abroad, in which case it is necessary to accompany the draft with a statement to that effect. 145. The hypothecation certificate. — The shipper may formally pledge the property shipped as security for the payment of the draft. It is customary for frequent shippers to make to their banks general letters of hypothecation which cover every shipment for a certain period. Some 146. Consular invoice and other certificates. countries require the shipper to make out one to seven copies of the invoice on a prescribed form, sometimes under oath, to be certified by the consul of the country to which the shipment is to go. Sometimes these must be in the language of the country of destination. Often only the shipper's invoice needs to be certified. Sometimes it is required that the consul certify the bill of lading. If certain goods are consigned to a country like France or Japan which gives the exporting nation a minimum tariff rate on such goods, the shipper makes out a declaration of the country of origin and has it certified by the consul. A special form of invoice is required on shipments of a value of over $100 from the United States to the Philippines. In case of national embargoes it may be necessary to get a consul's permission to ship firearms, explosives, or other articles. Certificates of origin, as DRAWING OF A BILL 205 well as of destination, are frequently required in times of war. When meats are shipped a government certificate of inspection is usually necessary. The purchaser also frequently requires a certificate of inspection, or weight, for goods which have been warehoused or sold through exchanges. Goods to some countries must be accompanied by the shipper's declaration on the invoice of what his home price is; as to prevent dumping, the two prices must fairly agree. Other certificates which may be demanded by law or by the custom of the trade are a certificate of analysis and a guaranty of conformance with regulatory laws as in the case of food products. 147. The drawing of a bill. —Bills on foreign countries are drawn in duplicate or in triplicate. Each part of a set must be numbered and refer to the other parts. This permits the first of exchange with the original documents to be forwarded for acceptance, or payment, by one steamer, and the second of exchange with any duplicate documents to be mailed by the next steamer, as security against loss, or undue delay. When either set is accomplished, the other sets become void. The money in which a bill is to be drawn is determined by the convenience and profit of those who are to use it. Bills on European countries are usually drawn in the currency of the country. Drafts upon the Far East, South America, or South Africa are mostly drawn in English sterling, or gold dollars, except that bills upon a country's colonies are likely to be drawn in the money of the mother country. Local currency is also frequently used in Asiatic trade. It is good practice to note on a documentary bill a memorandum of the goods against which it is drawn as "100 cases of shoes by S. S. Van Dyck," "Receipts for 100 bales of cotton attached." Bills drawn under a letter of credit must read "Drawn under blank's letter of credit number blank." If a draft is not to be presented until after goods arrive it should so read. It may save considerable trouble to write the street address of the drawer after his name. A shipper should have every draft, every bill of lading, and the insurance certificate made out to his own order. If he desires to sell the draft through a broker to the highest bidder, he indorses each paper in blank; if he wants to sell it or collect it through a certain bank, he indorses in blank rather than payable to the order of the bank. If two or more parts are indorsed to different persons, the indorser is liable on each separate part. The shipper should consult freely with his banker so that he may draw his bill according to the law and custom of the country where it is to be accepted and paid. In England, France, and some other countries a drawee bank is relieved by law from requiring identification. If the drawer wants protection of identification he must cross his bill, or check, i.e., draw two parallel transverse lines and between them write "and Co." or some particular bank. Such a check can be collected only through some other bank which will require identification. Bills to be sent abroad must be indorsed in writing, or if a corporation stamp is used the signature of the responsible officer must be written with his own hand. In indorsing bills payable in Great Britain all prefixes like "Mr." and "Miss" must be omitted. On Australia and South Africa it is customary to incorporate in the drafts that all charges must be paid by the drawee; in some countries law or custom do not permit the holder to collect more than the face of the draft. In one case, as in that of a sterling bill on Argentina, custom dictates that it is to be "payable in legal currency at the bank's drawing rate on the day of payment for ninety-day sight bills on London"; and in INSTRUCTIONS AS TO BILLS 207 another case as that of dollar exchange on Brazil, "payable in Brazilian currency at the banker's rates for sight drafts on New York." Checks in certain countries are free from taxes only if drawn in a certain manner. Unless the drawee already knows that a bill is being drawn upon him, it is well to send him a letter of advice so that he may be expecting it; and except in the case of "dunning bills" so often used in the United States, it is proper to get the drawee's consent before drawing a bill. 148. Instructions as to bills. Instructions as to the delivery of documents must accompany every documentary bill. They may be "Surrender documents upon acceptance" (D.A.), or "Surrender documents upon payment " (D.P.). When the documents are surrendered at acceptance, the bill becomes "clean." Bills presented by manufacturers of the United States for discount or collection are for the most part "documents against acceptance." Documents to South America are usually for acceptance in contrast to those to South Africa, Australia, and India, which are mainly for payment. Bills on bankers are always for acceptance. That gives the accepting bank possession of the security, and the credit of the bank is all that the holder of the bill desires. If a sixty-day trade bill is "D.P." and the buyer wants his goods at once, he can get them by paying the draft. Since he pays before maturity, he gets a rebate. Instructions are often necessary as to how much this shall be. In England he gets the retirement rate of discount which is usually 1% under the Bank of England rate. In the Far East he gets whatever rate is agreed upon by the local banks. In Central and South America, in North, East, and West Africa, he gets 6% a year. Most documentary bills sell for much less than bankers' bills, but because a prime sixty-day, D.P., flour, or grain bill on England is practically certain to be paid before maturity at almost its face value, these |