What does this bill do? It destroys the anachronism in the law. The very first sentence says if a man signs a contract for arbitration, it shall be irrevocable. It changes the law. Why do we do that in the Federal courts? We have it in New York State; the chamber of commerce and the other commercial bodies got together and got it through in New York. You have got it in New Jersey. The New Jersey Bar Association and the business men there got together and had it passed last year. Why do you have to have it in the Federal law? There are several reasons.

First of all, it was held that a State statute was not binding in admiralty, even in the Federal courts. Judge Mack was most sympathetic, but he has had to follow the Federal law in admiralty. So in the case of the American Red Cross against the Fruit Co. he held-we filed a brief as amicus curiae-and he held that this statute did not help out when it came into the Federal court. And the Federal court will not be bound by any State statute. This is in three segments: The first is to get a State statute, and then to get a Federal law to cover interstate and foreign commerce and admiralty, and, third, to get a treaty with foreign countries. On that last score we have been encouraged tremendously, as the report of the committee will show, by what happened in the economic section of the League of Nations council. The most learned jurists and lawyers of France and England are at work on this matter, and it is believed that when we have this treaty we can make contracts between a merchant of that country and one in this country enforceable. Because, even though the statute says it is enforceable, as in the case of the Hongkong merchant, that it is enforceable, you can not go to China and enforce it; you can only enforce it against property you find in this country. But when we get the treaties between these countries, it will be like judgments; they will recognize our judgments and we will recognize theirs. And we will get it through.

But the great field of business-why are these merchants and these fruit shippers and those who are represented here, why are they for this? Because of interstate business. And you know that commerce is mostly interstate now. So that this is a great tonic that is needed to strengthen this patient in the field of commercial activity, because when business men know that they do not have to get a lawyer in California to enforce a case that does not involve more than four or five hundred dollars they will do more business. That is why the business men are behind this thing.

Now, in the next place, this statute involves very simple machinery by which you get two things. You get simple machinery by which you make it effective. Now, the machinery of the New York law was not machinery to make arbitration effective. It was a valid agreement in certain divisions of the law, but never followed, because the equity courts refused to specifically enforce an arbitration agreement. There are some decisions-I think by Lord Elden-that you could enforce it; but so far as equity is concerned our courts have refused it. Now, what is it your business man wants? He goes to his lawyer and he says, "If there is any dispute about this, it has got to go to the arbitration committee of the Silk Association." Now, what does he do about it? If this be the law in the Federal statutes, as it is in the New York statute and in the New Jersey

statute, you make a petition and ask the court to direct the parties to proceed with this matter and the court will direct it.

Now, there is one constitutional provision which we considered. Judge Cardoza, who had written an opinion on the previous statute in the case of Mecham against Jamestown, holding that the arbitration law was not a remedy, wrote an opinion in this matter clearly sustaining the constitutionality of the law. Now, how do we meet that? The one constitutional provision we have got is that you have a right of trial by jury. But you can waive that. And you can do that in advance. Ah, but the question whether you waive it or not depends on whether that is your signature to the paper, or whether you authorized that signature, or whether the paper is a valid paper or not, whether it was delivered properly. So there is a question there which you have not waived the right of trial by jury on.

The CHAIRMAN. The issue there is whether there is an agreement to arbitrate or not.

Mr. COHEN. Exactly. Now, if you come in there you can demand a trial by jury, right away, summarily, and that is the issue that is passed upon. Now, there is no question about that under the New York law, because we have had administration of it, and the result is that inside of three or four days arbitration proceeds. It is rarely there is any question about it. It proceeds.

Now, what is the other difficulty? The provision here is that you name one arbitrator, and the other party names one, and those two name the third. Now, you do your job, and I do not do mine. What can we do about it? There can be no arbitration until the tribunal is provided. The legislation in New York provides, and this bill here provides, that if you do not name your arbitrator we go into the court and ask the court, and the court names the arbitrator. Or if one dies the court names another. There is the provision which gives protection to this thing. And if there has been fraud or real arbitrary action on the part of an arbitrator, the courts can set aside the award, or they can confirm it; and when it is confirmed it becomes a judgment. So what we have done, gentlemen, is that we have taken these defects which might have become a criticism and we have made it a part of our judicial machinery. That is what we have done. But it can not be done under our constitutional form of government and cover the great fields of commerce until you gentlemen do it, in the exercise of your power to confer jurisdiction on the Federal courts. The theory on which you do this is that you have the right to tell the Federal courts how to proceed. And you say to the judge, "You used to hold that these things were not good; now they are good. You used to say you did not have jurisdiction; now you have jurisdiction." That is all there is to it. The language is such as to make it clear. That polishing work has been done for two years. The bill has been approved twice by the American Bar Association; not a word of dissension anywhere. Just as you hold hearings here-Mr. Piatt did a great injustice to the Bar Association, by saying that we are so impoverished that they could not even pay his fare here-but we hold hearings in the committee on commerce, trade, and commercial law of the American Bar Association, and the lawyers were called in when those hearings were held, and the business men came in, and never once has there been

a word of criticism of the principles of this legislation, but constructive suggestions in the way of improvement of the legislation. I thank you, gentlemen.

Representative HICKEY. Without a written agreement, Mr. Cohen, where would an arbitration be held?

Mr. COHEN. It would be held in accordance with the direction of the court; by direction of the court to which you apply.

Representative HICKEY. And the application would be made to the court where the party asking for the arbitration resides?

Mr. COHEN. You would have to get jurisdiction just as you do now in a Federal court; by personal service.

Representative HICKEY. Where the defendant lives?

Mr. COHEN. Where the defendant lives. That would mean practically that you have to go to the jurisdiction where the defendant is, or wait until he comes into your jurisdiction so that process may be served upon him. The process is exactly the same as in civil procedure in the Federal courts.

Representative DYER. Mr. Cohen, has your committee estimated what would be the approximate saving? We admit, I think, all of us, that it would be a saving to the commercial and business interests to have such a law; but what would be the saving in court work? Mr. COHEN. Who could estimate that in dollars and cents? Representative DYER. You could not.

Mr. COHEN. No; you can not, but you can say this: that if you could get rid, in the New York calendars, both in the Federal courts and in the State courts, and in the congested centers through the country-if you could get rid of the litigation that these business concerns can prevent by their arbitration committees you and I would be able to get along with our important litigation without waiting for a year or two for it to be reached. In other words, you would take out all these matters of business and leave the courts free to handle the business that ought to be handled with dispatch.

Representative DYER. Which is taking a considerable part of the time now.

Mr. COHEN. Undoubtedly it is taking a considerable part of the time now.

Representative KURTZ. How far are they behind?

Mr. COHEN. Something like three years in the civil courts; on the civil side. Are there any questions?

The CHAIRMAN. I think not, Mr. Cohen.

Mr. COHEN. I could go on interminably on this matter, Mr. Chairman.

The CHAIRMAN. We thank you for your statement.

Here is the provision relating to that.

Representative HICKEY. The fourth section?

The CHAIRMAN. This is on page 7, section 10, beginning with line 8 [reading]:

If no court is specified in the agreement of the parties, then such application may be made to the United States court in and for the district within which such award was made. Notice of the application shall be served upon the adverse party.

Then this [continuing reading]:

If the adverse party is a resident of the district within which the award was made, such service shall be made upon the adverse party or his attorney

as prescribed by law for service of notice of motion in an action in the same court.

That makes it very clear.

Whom will you have next, Mr. Bernheimer?

Mr. BERNHEIMER. Commissioner James.

STATEMENT OF MR. FRANCIS B. JAMES, WESTORY BUILDING, WASHINGTON, D. C.

Mr. JAMES. Mr. Chairman, I am a resident of Cincinnati, Ohio, with offices in Washington, D. C., and for a dozen or more years I have made a specialty of interstate commerce matters; and for about the same length of time I was a member of the committee on commerce, trade, and commercial law of the American Bar Association.

This matter came before this committee by proper resolution of the American Bar Association in the summer of 1920. The committee held a public meeting in the rooms of the Merchant's Association in New York, at which they had present a tentative print of the first draft of this bill, and the bill was thoroughly discussed before the committee. The committee reported the bill to the American Bar Association in the summer of 1921, with the recommendation that the matter go over for three years for further consideration. I ceased to be a member of that committee after

1921.

I may say that the bill received consideration by the committee from three points of view: First, from the point of view of the public interest; second, from an economic point of view; third, as a technical piece of Federal legislation.

It was the judgment of the committee that it was in the public interest; it was the judgment of the committee that from an economic point of view the measure was a sound one. With the exception of the amendments, which were suggested by two members of the Senate subcommittee, Mr. Sterling and Mr. Walsh, I believe the bill, from a technical point of view, is as perfect as a human being can make a piece of human legislation. Mr. Cohen, upon whom the burden fell of drafting the bill, devoted much time to it. He has explained the same in detail. There is nothing I can add to what he has said upon that subject.

The CHAIRMAN. At this point I think I will submit for the record some letters I have received.

The first to which I call attention is a letter addressed to the chairman of the Judiciary Committee of the Senate, Senator Brandegee, and it is from the Secretary of Commerce, Herbert Hoover, heartily indorsing the bill, and speaking of it as an emergency

measure.

The second one is a letter addressed to myself, in which he calls attention to the New York Arbitration Act, on which this Federal legislation is based.

And I also submit a list of commercial organizations indorsing the United States Arbitration Act, the list being submitted by Mr. Charles L. Bernheimer.

Also a telegram from the secretary of the National Wholesale Grocers Association of the United States, heartily indorsing the bill.

Also a telegram from J. W. Davis, chairman of the legislative committee of the American Fruit and Vegetable Shippers' Association, indorsing the bill.

Representative DYER. Where are they located, Mr. Chairman? The CHAIRMAN. They are located at Chicago, Ill.

And a second telegram from the same association, the American Fruit and Vegetable Shippers' Association. The reason I offer both of them is that they are somewhat different in their terms.

And a letter, with a resolution accompanying it, from the general secretary of the executive committee of the Philadelphia Chamber of Commerce. The resolution is short and I will read it [reading]:

Resolved, That the executive committee of the Philadelphia Chamber of Commerce approves the amended draft of the Federal arbitration law, S. 1005. H. R. 646, and the draft of the commercial arbitration treaty adopted by the Chamber of Commerce of the State of New York, both of which have been unanimously approved by the American Bar Association.

Also a letter from Thomas B. Paton, general counsel of the American Bankers' Association.

And also a letter from the Converters' Association of New York, signed by the secretary of that association.

Representative CLEARY. May I add to that list, Mr. Chairman? The CHAIRMAN. Yes.

Representative CLEARY. A letter from the New York Board of Trade and Transportation, and also one from the Brooklyn Chamber of Commerce, written to me.

The CHAIRMAN. Yes.

(The letters and telegrams referred to are as follows:)

Hon. FRANK B. BRANDEGEE,

DEPARTMENT OF COMMERCE,

OFFICE OF THE SECRETARY,
Washington, January 7, 1924.

Chairman Judiciary Committee, United States Senate, Washington, D. C. MY DEAR SENATOR: On January 31, 1923, I addressed a letter to Senator Sterling, of which I inclose a copy. Senator Sterling headed a subcommittee of the Judiciary Committee, which held hearings in connection with the United States arbitration act.

The chairman of the arbitration committee of the Chamber of Commerce of the State of New York, who is in Washington to-day, has handed me a list of the commercial organizations which have by formal vote expressed their support of the Federal arbitration bills which have been introduced by Senator Sterling as S. 1005 and Representative Mills as H. R. 646.

The bills were drafted and approved by the American Bar Association and introduced by the same Senator and Representative last year, but did not reach the floor. The present text contains some changes suggested by the judiciary subcommittee, which was last year composed of Senators Sterling, Walsh, and Ernst.

The emergency to which I referred in my letter to Senator Sterling and which prompted so many important commercial bodies to ask for the prompt congressional relief of a very serious situation still exists, and I again express the earnest hope that this Congress may be given an opportunity to act promptly, and that to this end the Judiciary Committee will do what it can to speed it along.

I am also addressing a similar letter to Congressman Graham, chairman of the Judiciary Committee of the House.

Yours faithfully,

HERBERT HOOVER, Secretary of Commerce.