2. REPORTS OF REFUNDS TO CONGRESS.

I would also suggest that section 28, subsection 23, of the tariff act of August 5, 1909, should in the future be complied with by the Treasury Department. This provision of the law directs the Secretary of the Treasury each year, in his annual report, to transmit to Congress a detailed statement of all customs duties refunded to importers, together with copies of the rulings under which said refunds were made. This law was first enacted in the act of March 3, 1875, and was reenacted in the customs administrative act of 1890 and appears in the tariff act of 1909, herein before quoted.

The Secretary of the Treasury, in a letter to the Speaker of the House, dated March 7, 1912 (Doc. No. 610), stated that the annual statements under this provision of law have not in the past been complete, for the reason that at ports having separate accounting officers, known as naval officers-at which ports 90 per cent of the customs duties is collected only refunds based upon court decisions are reported to the Treasury, and that refunds based upon decisions of the Board of General Appraisers, upon rulings of the Treasury Department, and upon rulings of collectors under article 1072 of the Customs Regulations of 1908, authorizing collectors to reliquidate entries where satisfied that protests are well taken, without referring the same for decision to the Board of General Appraisers, are not reported.

Inasmuch as the Secretary further points out that the refunds made under court decisions are almost negligible as compared with the total amount of refunds, it would seem to follow, as the Secretary expressly states, that these reports to Congress are misleading, as they include only a very small portion of the total refunds actually made.

The Secretary also calls attention to the fact that it has been the practice since 1875 under the before-mentioned law, to omit reference to decisions made by the Treasury, the Board of General Appraisers, and by the courts which have been already reported to Congress in previous reports, and that this omission is a failure to comply with the

letter of the law.

The Secretary finally, in said letter, expresses the opinion that-in view of the cost involved of making a complete report as called for by the law, and of the fact that the information is all contained in the records at the respective ports, and of the further fact that all decisions of the Board of General Appraisers and of the courts are published by the Treasury-a separate report to Congress of the refunds and decisions under which they were made is unnecessary, and he recommends the repeal of the law requiring such reports.

With the greatest respect for the Secretary of the Treasury, and fully appreciating his earnest desire for and successful accomplishment of many valuable reforms, I venture to express the opinion that it is vitally important for Congress to have at hand in a simple, concise form an annual statement showing all refunds made and distinguishing clearly between refunds based upon court decisions, decisions of the Board of General Appraisers, rulings of the department, and rulings of collectors, and that, while the existing law may well be modified along the lines of simplicity and brevity, these reports should not be discontinued but should be transmitted annually to Congress, so that the various items may be published and not left buried in the archives of the various ports.

3. AD VALOREM DUTIES.

It must be apparent that one important change in existing law will be made by Congress, and that is a general substitution of ad valorem duties for the specific and compound duties of the present tariff act. This change is a radical one and will require most careful treatment both from the legislative and administrative side.

I believe that a change from specific and compound duties to purely ad valorem duties is both advisable and practicable-advisable, because tending to uniformly and simplicity and at the same time showing exactly what the tax is which is being imposed; practicable in that such duties can be honestly and efficiently collected. The objection will at once be raised that such a system, if extended greatly, will break down because of undervaluation. If, however, a complete history of the frauds upon the revenue could be written, we should witness, in my opinion, a close race for supremacy between those frauds which have grown out of evasion of specific duties at home and those arising from undervaluations abroad.

Be that as it may, however, it must be apparent that a tariff act substituting generally ad valorem for specific duties will call for extraordinary and increased vigilance of administrative officers, for vigorous and relentless war upon undervaluations of every kind, and perhaps for some changes in the existing administrative laws.

In the administration of the customs laws, no question either of policy or expediency can ever properly arise. While in the determination of a tariff act many such questions have been in the past and perhaps always will be involved, yet when the rates

of duty are finally fixed, they should be enforced by the administrative officers absolutely and exactly in compliance with the law as enacted by Congress. We should welcome, therefore, the most careful investigation into the workings of the present administrative act with a view to securing any changes needed to enable the administrative officers to collect duties upon the full market value of imported products. Such effective administration will be absolutely necessary to secure the large revenue needed for the support of the Government and a material portion of which must be raised by customs taxation.

It must, however, be frankly conceded that in extending the ad valorem principle we must be prepared to grapple with attempted undervaluation, and, moreover, that as to certain commodities it is often very difficult to ascertain just what the foreign values are even with the best intent on the part of the vast majority of the importers and of all of the administrative officers. The efficiency of our appraising system, however, has been greatly increased in past years, and I believe that the problem can be satisfactorily solved with perhaps some changes in the administrative law.

Among possible changes in, or rather additions to, said law, I would suggest that the President be requested to open negotiations with foreign countries to obtain legislation abroad authorizing our consuls to administer oaths to consular invoices and making false statements under oaths, so administered, punishable as perjury by the laws of said foreign nations. This is now provided for by the laws of some countries.

4. UNIFORM AD VALOREM DUTIES.

I would also respectfully suggest that a law be enacted dividing all imports into a small number of classes, with a uniform ad valorem duty for each class, following the general lines of the Walker tariff of 1846, with the addition of a free list. Such a classification would not only avoid the many legal questions arising from varying specific duties based upon values, but would also make the tariff law simple and concise in place of present intricacies and voluminousness.

If such a classification be established as a final goal of customs taxation, Congress could then determine whether, in its judgment, that goal should be reached by one or by several successive reductions.

I feel, however, that it is of the highest importance in making these reductions to adopt the policy of a short postponement of the date of reduction, in order to protect existing stocks of goods which have been imported at the higher duties prevailing under the present act. A precedent for such a course will be found in the Wilson Tariff Act, which provided that the reductions therein made on manufactures of wool should not take effect until January 1, 1895, some four months after the date on which the act became effective.

5. NECESSITY FOR AMPLE REVENUE.

In framing a new tariff act I would also impress upon your committee the necessity of providing for ample revenue, inasmuch as it is almost a certainty that, pending the discussion of any new act, customs duties will fall off largely, and, furthermore, that a considerable period of time will probably elapse before the revenue-producing qualities of the new bill may be clearly demonstrated. To this end I would suggest that authority be given to the President to reimpose the so-called stamp duties if the occasion arises for increased revenue. It would seem to me much more satisfactory to obtain a temporary increase of revenue from taxation rather than from the issue of bonds under the act of June 13, 1898.

The necessity for some source of temporary income to tide over a temporary falling off of revenue will be realized when it is considered that customs duties declined from $199,000,000 in the year 1893, to $149,000,000 in the year 1895. I firmly believe, however, that the Wilson Tariff Act, even apart from the income tax, under normal conditions, would ultimately have yielded its proportionate share of the revenues of the

United States.

If the proposed amendment to the Constitution of the United States, authorizing an income tax without apportionment, be ratified in time to provide the necessary revenue, the imposition of stamp duties would not be needed, but I would suggest the advisability of giving the power to impose them, even if that power never has to be exercised.

The necessity of raising a large amount of revenue from customs taxation will probably always be with us even with an income tax and stamp taxes. This will be realized when it is considered that the annual ordinary expenses of the Government have increased from an average of $357,000,000 during the operation of the tariff of 1894, to an average of $655,000,000 during the operation of the tariff of 1909, the expense per capita increasing in those periods from $5.09 to $7.13.

I must apoligize for the length of this letter, but I send it to your committee for what it is worth, feeling sure that you will welcome expressions of opinion on the vital question of reduction of customs taxation and will give them such consideration as they may seem to you to deserve.

Very respectfully, yours,

CHARLES S. HAMLIN.

UNDERVALUATIONS AND DUMPING DUTY.

BOSTON, January 15, 1913.

To the Committee on Ways and Means, House of Representatives, Washington, D. C. GENTLEMEN: On behalf of American manufacturers engaged in many different lines of business and representing a total investment of many millions of dollars, and in the interest of all American manufacturers and producers, I wish to call the attention of the committee to a matter of the greatest importance, both from a revenue standpoint and from the standpoint of such manufacturers and producers as receive incidental protection from the tariff, whether as a protective or as a revenue measure. I ask that an amendment be made to the administrative act of the tariff for the purpose of preventing undervaluations and in order to prevent the unloading by foreign manufacturers and producers from time to time of large quantities of articles of foreign manufacture or production at prices far below the normal prices of such articles for home consumption in the foreign countries.

ALL AMERICAN MANUFACTURERS ARE INTERESTED.

Such a duty, otherwise known as a dumping duty, has been referred to from time to time during the hearings by manufacturers and producers representing a wide variety of interests, and many of them have requested the committee to adopt such an amendment. It is a matter in which all are interested who make or produce goods in which there is any foreign competition, and the effect of such a duty is not to increase the incidental protection intended to be afforded to the American manufacturer or producer, but merely to insure to him the exact amount deemed fair for the time being.

IMPORTANT FROM A REVENUE STANDPOINT.

It is likewise a matter of particular interest to the Government from a revenue standpoint, for calculations of revenue to be produced can not be accurate if foreign shippers are permitted to send in their goods at figures far below the normal valuations. This is particularly important in connection with the present revision, if the committee intends, as I understand it does, to reduce most of the rates to an ad valorem basis.

THE PURPOSE OF SUCH SHIPMENTS.

That such undervalued shipments are made constantly is well known to all manufacturers, and their purpose is obvious. It is of vital importance for a manufacturer to keep down his costs by keeping his factory in constant operation; it is likewise necessary to keep his labor together, whether skilled or unskilled, but of particular importance with skilled labor, for once sent afield by a shutdown it is expensive and often impossible to get such labor back; furthermore, the home market must be sustained, if possible, at a figure that will yield at least a working profit on the capital invested. As a result, if the home market is supplied, it is a positive necessity and a real economy to keep the factory operating and send the surplus goods over and above the amount sufficient to supply the home market to other countries and at such prices as can be obtained. If the home market can thereby be preserved, the goods can be sold at a figure no greater than the actual cost of materials and labor in the particular goods and oftentimes it is an economy to sell them if necessary for an even lower figure.

THE EFFECT OF SUCH SHIPMENTS.

The United States offers a splendid dumping ground for such surplus production, and the practice of making such shipments is becoming more and more common. It is clear that by reason of this the Government is deprived of the revenue contemplated by the framers of the tariff act, whose figures and estimates are based on the revenue to be produced by the rates as assessed on the normal foreign value of the goods, and that the American producers are deprived of the incidental protection that would normally be afforded them by the rates of duty established and which it was contemplated they should have.

WOULD PREVENT UNDERVALUATIONS.

Furthermore, the introduction of such a provision would help to prevent fraudulent undervaluations, the prevalence of which has been all too common in recent years, for it would make the fair market value for home consumption in the country of shipment the test and destroy the efficacy of fraudulent invoices.

IN OPERATION IN CANADA.

As the committee undoubtedly well knows, such a provision has been operative in Canada for many years and has worked most satisfactorily, and I understand that similar provisions are in force in certain European countries as well.

SUGGESTED AMENDMENT.

I would suggest that a new section be added to the administrative act, modeled upon the provision now in force in Canada and somewhat in the following form:

(1) "That whenever articles are exported to the United States of a class or kind made or produced in the United States, if the export or actual selling price to an importer in the United States, or the price at which such goods are consigned, is less than the fair market value of the same article when sold for home consumption in the usual and ordinary course in the country whence exported to the United States at the time of its exportation to the United States, there shall, in addition to the duties otherwise established, be levied, collected, and paid on such article, on its importation into the United States, a special duty (or dumping duty) equal to the difference between the said export or actual selling price of the article for export or the price at which such goods are consigned and the said fair market value thereof for home consumption: Provided, That the said special duty shall not exceed 15 per cent ad valorem in any case and that goods whereon the duties otherwise established are equal to 50 per cent ad valorem shall be exempt from such special duty."

(2) "Export price" or "selling price" or "price at which such goods are consigned " in this section shall be held to mean and include the exporter's price for the goods, exclusive of all charges thereon after their shipment from the place whence exported directly to the United States.

(3) The Secretary of the Treasury shall make such regulations as are necessary for the carrying out of the provisions of this section and for the enforcement thereof.

SUCH SHIPMENTS ARE NOW BEING MADE.

I urge the adoption of this amendment because from time to time I have been advised of shipments of articles to this country invoiced at far below their market value for home consumption in the countries of export, and in such instances duty has, of course, been paid only on the invoice price. The effect of such transaction both upon the revenue of the Government and upon the American manufacturer is exactly the same whether or not the goods were fraudulently undervalued. Such shipments would not be prevented by the adoption of a dumping duty, but the Government would thereafter receive the proper revenue and the American manufacturer would receive the incidental protection intended to be afforded him. Respectfully submitted.

JOSEPH O. PROCTER, Jr.

MANUFACTURING CHEMISTS' ASSOCIATION OF THE UNITED STATES,
January 31, 1913.

Hon. OSCAR W. UNDERWOOD,

Chairman Ways and Means Committee, Washington, D. C. DEAR SIR: The Manufacturing Chemists' Association of the United States has already called to the attention of your committee the question of the so-called "dumping duty" as a part of its brief filed under Schedule A.

The association believes the subject to be of such vital importance that it again desires to raise the question for your consideration in connection with the administrative features of the tariff act.

Although it is a subject which affects all American manufacturers in some degree, it is of peculiar concern to the chemical industry. It is generally known that the surplus product of foreign chemical manufacturers is unloaded or dumped into this country at prices far below the foreign market price and far below any price at which domestic producers can possibly compete. This fact is recognized in the "Report on Schedule A" filed by your committee at the last session of Congress.

SECTION 2—MAXIMUM AND MINIMUM.

It is further generally known that articles imported into this country and subject to an ad valorem duty are oftentimes invoiced at much less than their real or market value in the country of export. This, again, is peculiarly true of the chemical industry. A direct effect of the imposition of an adequate dumping duty would be to prevent fraudulent undervaluations, as the test of value would be the fair market price for home consumption in the country of export.

In brief, the effect of the insertion of a "dumping" clause into our tariff laws would be:

(1) To insure the collection of revenue on the basis of the rates fixed by Congress as adequate.

(2) To prevent unfair competition on the part of foreign manufacturers.

(3) To give American manufacturers equal opportunity of competition with manufacturers in those countries which already maintain "dumping" duties.

(4) To prevent fraudulent undervaluations and consequent loss of revenue to the Government.

In this connection the association calls attention to section 6 of the Canadian customs tariff act of 1907, which provides as follows:

"In the case of articles exported to Canada of a class or kind made or produced in Canada, if the export or actual selling price to an importer in Canada is less than the fair market value of the same article when sold for home consumption in the usual and ordinary course in the country whence exported to Canada at the time of its exportation to Canada, there shall, in addition to the duties otherwise established, be levied, collected, and paid on such article, on its importation into Canada, a special duty (or dumping duty) equal to the difference between the said selling price of the article for export and the said fair market value thereof for home consumption; and such special duty (or dumping duty) shall be levied, collected, and paid on such article, although it is not otherwise dutiable: Provided, That the said special duty shall not exceed 15 per cent ad valorem in any case."

Respectfully submitted.

HENRY HOWARD, Chairman Executive Committee.

MAXIMUM AND MINIMUM.

STATEMENT SUBMITTED BY LOUISVILLE COTTON OIL CO.

Hon. OSCAR W. UNDERWOOD,

LOUISVILLE, Ky., April 26, 1912.

Chairman Ways and Means Committee, Washington, D. C.

SIR: We wish to solicit your particular interest and valuable assistance in a matter of vital importance to the cottonseed oil industry of the United States.

As you are undoubtedly aware, the Department of State has been in negotiation with the Austro-Hungarian Government for the past six years to endeavor to secure a compatible reduction in the Austrian tariff governing import duties on cottonseedoil products, which, upon revision of that tariff, effective in March, 1906, was raised from 9.52 kronen to 40 kronen per 100 kilos, thereby closing entirely one of the most important outlets for American cottonseed oils. In order to judge of the importance of the Austrian markets for this industry, would state that in a single year the exports from the United States to Austria fell from 150,000 to a few hundred barrels. It is to be emphasized that not a single barrel will be imported, neither in Austria nor in Hungary, for the above reasons explained, while during the year 1905 the year previous to the increase, the port of Trieste itself had imported 23,087,800 kilos of cottonseed oil, worth about $2,500,000. Other comestible oils, which compete with cottonseed oil, and which are manufactured in Europe, enter Austria at duties ranging from 4 to 15 kronen per 100 kilos. Olive oil, imported from Italy, Turkey, Greece, Spain, and other countries, is paying a duty of only 4 kronen per 100 kilos. The duty imposed on cottonseed oil, therefore, must be considered prohibitive, and the entire action discriminating.

While we have no doubt that the Department of State, through its negotiations with the Austro-Hungarian Government, and also Ambassador Kerens, are using their best endeavors to secure the desired result, the fact remains that in the course of six long years no definite progress in the matter has been made, and although we understand that the Parliaments of Austria and Hungary would consent to a reduction in this arbitrary rate of duty from 40 kronen to 24 kronen per 100 kilos, such a reduction would be just as ineffective as the present exorbitant rate of 40 kronen, as on that