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(3) set forth policies, procedures, techniques, and methods with respect to preparation for, and conduct

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of, exhibition of the items, and any transportation re

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5 (c) Upon receipt of an application under this section, 6 the Council shall, if such application conforms with the re7 quirements of this part, approve the application; and when 8 so approved, the application shall constitute a contract be9 tween the Council and the applicant pledging the full faith

10 and credit of the United States to pay any amount for

11 which the Council becomes liable under such agreement.

12 SEC. 225. (a) Upon receipt of an application meeting 13 the requirements of subsections (a) and (b) of section 224,

14 the Council shall review the estimated value of the items for

15 which the indemnity is sought. If the Council agrees with 16 such estimated value, for the purposes of this part, the Coun17 cil shall, after approval of the application as provided in 18 subsection (c) of section 224, issue a certificate evidencing

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an indemnity as provided in subsection (b).

(b) Coverage under this part shall only extend to loss

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or damage in excess of the first $25,000 of loss or damage

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(c) There shall be no premium rates on any indemnity issued under this section.

SEC. 226. (a) The Council shall issue regulations providing for prompt adjustment of valid claims for losses which

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1 are eligible for indemnification under this part, including 2 provision for arbitration of questions of the dollar value of 3 damages involving less than total loss or destruction of cov

4 ered objects for which a certificate of indemnity has been

5 issued.

6 (b) In the case of a claim of loss with respect to an 7 item which is the subject of a certificate of indemnity under 8 section 225, the Council shall certify the validity of the claim 9 and the amount of the loss to the Speaker of the House of 10 Representatives and the President of the Senate.

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SEC. 227. There are hereby authorized to be appro

12 priated such sums as may be necessary (a) to enable the 13 Council to carry out its functions under this part, and (b) 14 to pay claims certified pursuant to subsection 226 (b).

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SEC. 228. The Council shall report annually to the

16 Congress (a) all claims actually paid pursuant to this part

17 during the preceding fiscal year, (b) pending claims against 18 the Council under this part as of the close of that fiscal year, , 19 and (c) the aggregate face value of contracts entered into

20 by the Council which are outstanding at the close of that

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Senator PELL. I would like to dwell on this point of our ongoing international cultural activities for a minute, for we are not here discussing a Federal insurance bill for museums. What we are talking about here is the creation of a mechanism, the utilization of which would allow our country to more fully participate in international cultural activities.

Indemnity programs such as this are available in other countries, the British model perhaps being the most well-known. In studying these various existing programs and the experience of museums in this country, it was recognized that, depending upon the art material to be made available, up to two-thirds of the cost of an exhibition can be taken up by insurance expenses.

It is understandable why those expenses are so high, in that a major loss would be catastrophic in nature. Yet, what is most interesting is that claims under this type of insurance have been minimal, with 90 percent of losses being less than $1,000, such as chipped glass and broken frames.

With this in mind, and, again, because we are not creating an insurance bill, this Federal program would carry with it a deductible of $25,000, which would be covered by private insurance or be selfinsured.

There is a precedent for this type of legislation. Last year, the Congress enacted legislation to cover both the exhibition of Chinese material at the National Gallary and the exchange exhibit of Scythian gold from the USSR and paintings from the Metropolitan Museum of Art.

As I see this legislation functioning, the Federal Government would, for this purpose, become an agency under the Federal Government, with the authority to hire personnel. I would expect that the staff itself would be a very small one, whose initial function would simply be to issue the regulations necessary for implementation of the program. The legislation has been broadly drafted to give the agency as wide a scope as possible within which to issue those regulations.

This legislation is being introduced by Senator Javits and myself in conjunction with Congressman Brademas because I do believe that there should be a Federal program which would pledge the full faith and credit of the United States so that another nation would be assured that, upon lending its national treasure to our country, it could do so with the understanding that any loss would be reimbursed.

Congressman Brademas.
Representative BRADEMAS. Thank you, Mr. Chairman.

At the outset, let me say how pleased we of the House Subcommittee on Select Education are this morning to join our Senate colleagues in opening these hearings on part B. title II of the Arts, Humanities and Cultural Affairs Act of 1975, H.R. 7216, and its companion Senate bill, S. 1800.

The distinguished chairman of the Special Subcommittee for Arts and Humanities and my good friend Senator Claiborne Pell, has been an outstanding advocate of the arts throughout his Senate career. I want also to pay tribute to the distinguished ranking minority member of the subcommittee, Jacob Javits, another Senator who has long been recognized as a champion of the arts.

Although we do not often hold joint hearings on Capitol Hill, our experience with the joint hearings on arts legislation has proven to be most productive and I trust that the close cooperation between these two subcommittees will continue.

The subject that we meet here today to consider, referred to as the Arts and Artifacts Indemnity Act, is aimed at increasing the opportunities for all Americans to view and enjoy international exhibitions of art and artifacts.

One of the major costs of international exhibitions lies in the insurance that must be provided for these priceless objects. For example, the exhibit of Russian impressionist paintings viewed by almost 600,000 people in Washington, New York, Los Angeles, and Chicago cost $50,000 to insure in 1973.

Before Congress moved to indemnify the exhibition of Chinese archaeological treasures, the Kansas City Museum discovered that the costs of insurance would have been $100,000-$400,000.

The exchange between the Metropolitan Museum of Art in New York and the Soviet Union—the Metropolitan sent 100 paintings to the Soviet Union in exchange for the Scythian gold artifacts now on exhibition—would have been prohibitively expensive to insure privately, Estimates of the costs of insuring the Metropolitan paintings ranged as high as half a million dollars.

Because of the enormous cost of insurance, these two exhibits were indemnified by the Government of the United States through legislation initiated in Congress last year by Senators Pell and Javits and Congressman Wayne Hays of Ohio and me. This action by Congress allowed over two-thirds of a million people to view the Chinese exhibition in Washington, D.C., during the 31/2-month period that it was here.

And the Scythian gold exhibition, which opened to the public on April 19 of this year, has, as of June 1, 1975, been viewed by over 200,000 people.

With the legislation we are considering here today, we hope to broaden our program of international exhibitions and thereby to enrich the lives of all our American citizens.

I would like to take a moment to welcome the distinguished witnesses who will appear before us this morning. It is always a pleasure to see and hear Douglas Dillon, George Seybolt, and, of course, our friends, Nancy Hanks and Ronald Berman.

So I hope very much we will be able to move ahead on this legislation. I may, Mr. Chairman, have to depart because of a majority caucus in the House, but I will try to stay as long as possible.

Senator PELL. Senator Javits.
Senator Javits. Thank you very much, Mr. Chairman.

I join my colleagues in expressing satisfaction with this joint hearing and the advancement of a needed indemnity authority. I was stimulated in the original legislation by Mr. Dillon and the Metropolitan Museum of Art in my home city, and I am grateful for this rather intelligent approach.

Mr. Chairman, I wish to add only one fact:

Indemnity is a well-known and universal practice among the major nations of the world, including the Soviet Union. Of course, because they own everything, they guarantee everything. However, in our case, it has to be done through law and through an established agency.

Mr. Dillon, please include in your testimony or comments a response to a question will undoubtedly arise. Should the museums be asked to pay a premium on this indemnity, and if not, why not?

Thank you.

Senator PELL. The leadoff witness will be Mr. Dillon, and it is a great pleasure to welcome him here. His work in the area of the arts is as well known as his very able Government service.

STATEMENT OF DOUGLAS DILLON, PRESIDENT, BOARD OF

TRUSTEES, METROPOLITAN MUSEUM OF ART, NEW YORK, N.Y.; AND GEORGE C. SEYBOLT, PRESIDENT EMERITIS, MUSEUM OF FINE ARTS, BOSTON, MASS.

Mr. Dillon. Thank you.

Mr. Chairman, Mr. Brademas, Senator Javits, members of the committee, I am grateful for the opportunity to testify before this joint Senate-House Committee as it considers legislation designed to encourage international exchanges of major art exhibitions.

The trustees and staff of The Metropolitan Museum of Art heartily endorse the idea of providing a Governmental indemnity for objects of art contained in such exhibitions, and we are anxious to be helpful in the course of your deliberations.

I would like, if I may, to make some general comments before proceeding to some specific suggestions with reference to the proposed legislation as it is presently drafted.

First of all, it seems to me beyond argument that cultural exchanges between nations promote international understanding and good will. They serve the national interest, not only in providing other peoples with a better understanding of our American values, but also in the way that they contribute to the American citizens' understanding and appreciation of the artistic heritage of other countries.

That being so, it appears only fitting that the U.S. Government should adopt policies and procedures which will facilitate the sharing of the art treasures held in institutions of this country with those of other countries through international exchanges.

The Metropolitan Museum has, over the last few years, acted as something of a pioneer in promoting the exchange of major exhibitions with museums in other nations.

As I am sure the members of this committee are aware, we are currently staging a truly remarkable exhibition of ancient gold and silver objects from the museums of the Soviet Union, in particular, the Hermitage in Leningrad and the Lavra State Museum in Kiev.

This exhibition of Scythian objects will subsequently go to the west coast and be shown at the Los Angeles County Museum. It was, I might add, due in some measure to the urging of the Metropolitan that the Soviet Ministry of Culture agreed to the further exhibition of this priceless and delicate material in Los Angeles.

For the American part of the exchange, the Metropolitan has sent 100 of its best European and American paintings to the U.S.S.R. This exhibition-composed also of masterpieces which are, in truth, priceless-opened on May 22, in Leningrad where it will be seen for 8

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