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Friday 30 November 2012

Ye Olde Bill of Lading - A Tale


Bill of Lading in History
This is the condensed, micro-definition...you are lucky:
4th century AD. Rome collapses, Europe is in chaos (well, not much new there), the barbarians approach...
By the 5th century, things were looking up. Coastal towns, which enjoyed high walls on one side and the sea on the other, survived barbarism and offered secure havens, a meeting place for traders to bring their ships and cargo to a protected market. Where east meets west and the coastal towns, south of Rome in particular, offered an excellent union for eastern traders to meet in safety to trade with western traders.
From the 6th century onwards the profitability of these towns spawned imitation and the Mediterranean and much of the coastal north-west continent of Europe grew. In the process these towns offered an informal law – the shipper travelled on the vessel to the port, discharged cargo, sold it, got paid, bought return cargo, re-loaded the ship and went home. The whole of mercantile contracts happened then in one place, in the port-city. Seller met buyer, shipper met carrier and buyer met cargo. If there was an argument at any point, the City acted as the judge and an even-handed uniform law developed (the lex mercatoria) which was also ‘exported’ between the towns to provide a standardised approach over a wide trading area.
From 8th century onwards – part of the City’s role was to provide an “honest clerk”. This lad would record the loading of the ship in a book (the book of loading – or ‘lading’ as the word was then written). What went on, how many, what weight and importantly, under what terms and conditions would carriage be undertaken – a list of liabilities and rights etc. The shipper signed the book, the carrier signed the book and the honest clerk got to travel with the ship to the discharge port. Once there, the clerk recorded what came off the ship...an independent third-party out-turn report: shortages, damages etc, then to be settled based on the terms and conditions in the book of lading.
Are you still there?
Right...
The vessel took many weeks, maybe a month, to discharge. So the shipper – who travelled with the cargo – clicked his heels for a few weeks waiting for his cargo to be brought into the city market. But, thought the shipper, everyone trusts the honest clerk, if he gave me a copy of what was written in the book I am sure I could sell the goods on the strength of his hand written notehis signature and his fine reputation for honesty. If so, if I could sell the goods against that paper, why, then I could buy the return load sooner.
By the 9th century, the shipper is getting the clerk to summarize the loading and the terms and conditions of carriage onto a separate piece of paper...a ‘bill’...(ooh, did you feel that? a light just went off in your head).
10th century– bills have become so popular, the ‘book of lading’ is never used again...
11th century– Europe has calmed down. Shipper have been travelling to safe havens for so long that trade routes are established, carriers run in a sort-of regular manner and the shipper thinks: if I appoint an agent in the destination port for me, I will consign the cargo to him - he knows who to sell to and what I want to buy as return cargo...why must I travel with the ship these days?
So, the vessel loads and the ‘seller’ watches the loading but does not travel with the ship – now only the record of what was loaded, the bill, travels with the ship to be used to verify off-loading and thereafter given over to the shipper’s consigned agent – but our seller wants a record also of what was loaded, for his records (later when the concept of insurance takes off he needs to prove what was on the vessel should the vessel sink...etc). What to do? Why, we will issue TWO identical records. One for the seller/shipper at home and one to travel with the ship for the consigned agent to use to on-sell the goods...
Ye olde ticky – ye olde tockie (that is tempus, fugiting its way through the Dark Ages)
Then some anonymous bright spark has an idea! Actually he/she/it had several but they relate to ‘negotiable’ bills and so on and I won’t bore you with that here.  The bright idea that was had was this:
For centuries now, the buyer in the city-market will buy on the strength of the “bill” i.e. on the integrity of the carrier’s record of loading. With this handover of paper, the sale of goods can be evidenced by the passage of the paper from one to the other party. So the only thing delaying the sale is the arrival of the vessel at the destination port and the handing over – by the master – of the bill to the seller’s agent.
So: what if we send the shipper’s copy of the bill with a fast horse (well, ok, we’d like to send a rider on the horse too: horses are fast, but not that bright). Then, there is a chance that the bill could arrive (holds breath) BEFORE the ship! Then we can sell the goods, get paid and buy a return load even sooner. (at that point another bright individual (but much better dressed) steps in and says “I’m a bank. If your buyer is not yet here in the City, I will buy the paper from you – at a discount, of course – and sell it onto the buyer when he finally arrives. If he never arrives...well that is my risk, hence the discount.” Nice chaps, bankers. This concept actually then provides the funds for research into telescopes, so the banker can ‘see’ the buyer on the horizon a day before arriving, a day before anyone else knows it, hence his willingness to buy the paper and take the ‘risk’ of non-arrival. Hmm, nice chaps, bankers.)
But there is still a problem; what if the ship sinks? Although we have insurance these days (we’re up to the 15th and 16th centuriesby now I think) we can only claim if we have proof of loading, and yet we intend sending that proof with the fast horse.
Bingo! (once again!) Then let us get THREE IDENTICAL copies of loading. One can stay with us in case the ship sinks, one can go with the fast horse to facilitate premature selling and one can go with the ship just in case the rider falls off the horse and the horse wanders off into the medieval distance, never to be seen again.
So, by the 17th century; we have a set of three identical pieces of paper, each of which records the loading of cargo and the terms and conditions of carriage and each of which may be sold in exchange for control of the goods evidenced as loaded on board by that very piece of paper.
Of course, they are not ALL originals. They are all only IDENTICAL. The one that is used to get the cargo from the vessel, that one is the ORIGINAL, the others becoming copies at that moment.
Roughly (wake up at the back) that is a potted history of the bill of lading – ok I missed out the bit about the three bears and the naked magician, but something had to go.
It is also my way of explaining why you have this bizarre concept of multiple ‘originals’.
Some of you may feel very comfortable with this reply as ultimately it describes what passes across your desk daily – and now you can draw comfort from the fact that if you are working with a set of three “original” bills, why you’re empowered to work in the 17th century – and should it ever come around again, you’ll get that job!
Silly you.
IF, and it is a big “IF”, a bill represents cargo, you only ever want ONE. If you have three and all three travel together then you may as well only have had ONE. If you have more than one and they are all identical and yet some simpleton marks them all “original” the one you are holding can turn into a ‘copy’ when the ‘true’ original i.e. the first one from the identical set, is handed in. Look at that for metamorphosis! It went from being a valuable original to a worthless copy, in your hands, without any outward evidence that it had changed. I hope you didn’t buy it?
So why do we still have three ‘original’ bills? Well, why do you have an appendix? You don’t need one, it can be cut out and nothing happens. Ah yes, it is left over from when we were hairy beasts with knuckles trailing along the ground (so, nothing changed there either) a throw-back to some prehistoric age. A totally unnecessary burden.
Bingo!
THREE ORIGINAL bills ? ...just another throw-back to some prehistoric age and a totally unnecessary burden.
I hope you are still with me...you may go and lie down now...
...thus: another step on the road to mercantile enlightenment...

1 comment:

  1. I may need to read that again. Although my eyes glazed over sometime in the 17th century, this is really interesting and informative stuff for history graduates, of whom I happen to be one!

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