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SECTION 19.

The CHAIRMAN. I do not think it is necessary to read it to the committee, but you can explain what your objections are, Mr. Wickersham.

Mr. WICKERSHAM. I want to call attention to the geographical conditions in Alaska, which make it seem to me to be of importance to the Territory. It is a bill which proposes to levy a duty upon American goods carried from one port to another port by foreign bottoms, and we are in this situation, and especially with respect to the interior of Alaska, i. e., a great deal of our freight comes into the upper Yukon country via Skagway, over the railroad to White. Horse and down the Yukon River by way of Dawson into Alaska, and if this rate of duty were to be imposed upon all of those goods it would entirely close that route to the transportation of our supplies; and while I have not given this matter so much consideration that I am quite certain about my statements in reference to the matter, that is very important to us and I greatly fear the result.

The CHAIRMAN. I do not think you need be apprehensive at this moment, Mr. Wickersham. In other words, the proposition is if Mr. Humphrey's bill were to go through and a cargo was shipped out from New York through the canal and round into Vancouver, or one of the British ports, and then took the railway passage on into Alaska, really intending to go to Alaska, it would have to pay the tariff as if it came from a foreign country.

Mr. WICKERSHAM. Yes; but under this bill if it went from Seattle the situation will be the same.

The CHAIRMAN. I realize that, and I do not think it is necessary to present it to the committee.

Mr. WICKERSHAM. I would like to present it to the committee, because it is very serious.

The CHAIRMAN. If the committee decides to take the matter up, I will let you know, Mr. Wickersham.

SECTION 19.

STATEMENT OF NATIONAL WOOL GROWERS ASSOCIATION.

Hon. OSCAR W. UNDERWOOD,

SALT LAKE CITY, UTAH, January 25, 1913.

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

MY DEAR MR. UNDERWOOD: Recently we have noted reports in press that yourself and the committee of which you are chairman have under consideration suggestions for strengthening the administrative feature of our tariff laws. We desire to thank your committee for having taken this matter up, as it is of immediate importance to domestic industries.

Under the tariff law as now operated, many inequalities occur that tend to give imported merchandise a distinct advantage over domestic product. For instance, under the present law imported wool may go into a Government bonded warehouse where it can remain for three years without the payment of duty. There is always from 40,000,000 to 100,000,000 pounds of wool duty unpaid in these bonded warehouses. Even with the short supply of the present moment there is now 47,889,704 pounds of wool in bond. The only charge against this bonded wool is the storage charge, which certainly is not high enough. Wool in bond is not taxable; therefore, by dealing in foreign wool the importer escapes several charges that follow domestic wool. In the first place the duty of 11 cents per pound is not paid on bonded wool, thereby saving the importer interest charges. Domestic wool, however, is supposed to be enhanced

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by the duty which increases the investment and interest of the man who owns domestic wool, as would not be the case if he invested his money in foreign wool. The man who handles domestic wool is taxed for its value by the State, county, or city in which he resides; however, if he handles imported wool he may leave it in a bonded warehouse almost indefinitely and escape taxes. Again, it is the custom to carry immense stocks of wool in these bonded warehouses and when the wool market is quoted to quote this bonded wool as "available supplies." This, of course, tends to depress the market price of domestic wool, for it makes the supplies seem really greater by many million pounds than they actually are. The fact that this immense volume of bonded wool is in these warehouses prevents the domestic wool grower from enjoying the benefit of any rise in the foreign market. The wool importer, having an immense available supply already in bond, is not forced to take cognizance of rises in the foreign market. This bonded wool keeps our wool growers from holding their wool until they receive its full value. If the domestic wool grower does not sell his wool for what he can get, the manufacturer, having a big bonded supply, can draw on it, thus forcing the domestic grower to meet his price.

We, therefore, desire to suggest that the tariff laws be so modified that the duty on imports will be collected as soon as the goods are landed in this country regardless of whether they go into bonded warehouses or not.

Second. That the storage charges in all bonded warehouses be made higher than current charges in private warehouses.

Third. That merchandise shall only remain in bond 90 days, and after that period shall be taxed an equal amount to the total taxes paid on similar goods held in private warehouses.

Fourth. That where wool duties are levied on an ad valorem basis the London market price of such wool, plus the total handling and importing charges, shall be the value used in assessing the duty.

The London wool market is a rather stable institution, and if it could be used as the basis of wool values it would tend to prevent undervaluation. Also it appears to us that in collecting the duty the foreign cost plus all importing and handling charges make the value of the product, and therefore the duty should be levied upon these charges.

The officers of the National Wool Growers' Association feel that a good deal of discrimination takes place under the present law, and therefore we have submitted these suggestions for your consideration, with a hope that they may meet with the favor of yourself and your committee. Respectfully submitted.

NATIONAL WOOL GROWERS' ASSOCIATION,
F. J. HAGEN BARTH, President.
S. W. MCCLURE, Secretary.

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[See also B. A. Levett, p. 5913; Comstock & Washburn, p. 5812; James F. Curtis, p. 6304.]

TESTIMONY OF WILLIAM J. GIBSON.

The witness was duly sworn by the chairman.

Mr. GIBSON. I appear here on the administrative features of the tariff bill, and I was going to ask you whether, after I read this letter which I have here, you think I ought to be sworn.

The CHAIRMAN. The committee has instructed me to swear all witnesses; but so far as the administrative features of the law are concerned, if there is no objection, the witnesses on that feature will not be sworn. [After a pause.] There is no objection, and you may proceed, Mr. Gibson.

Mr. GIBSON. Mr. Chairman and gentlemen of the committee, it will be proper for me, I think, to explain why I am here on the administrative features of the law. Mr. Redfield wrote this letter

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which I have here to the president of the Reform Club, and I think I had probably better read it, and it will explain why I am here and show that I am not assuming to inform this committee as to the administrative features of the law. This letter is dated December 12, 1912:

HOUSE OF REPRESENTATIVES,

COMMITTEE ON EXPENDITURES IN THE POST OFFICE DEPARTMENT,
Washington, D. C., December 12, 1912.

The PRESIDENT OF THE REFORM CLUB,

9 South William Street, New York, N. Y.

MY DEAR SIR: On the evening when I had the pleasure of speaking at the dinner of the tariff reform committee of the club shortly before election I recall that a gentleman (I think it was Mr. Gibson) spoke during the general discussion of the administrative details in which the customshouse service needed correction. The subject has long interested me, and I have already taken it up with Mr. Underwood, the chairman of the Ways and Means Committee, as one of the matters that need correction under the coming administration. Mr. Underwood said to me that he would welcome a written statement to be furnished the Ways and Means Committee at convenience during January. I find that the calendar of hearings of the Ways and Means Committee on the proposed tariff revision calls for a hearing on the administrative features on Friday, January 31. It occurs to me that Mr. Gibson or some one else whom your club may select should submit a full and carefully prepared statement at that time, and I shall myself be glad, if it will assist, to attend and see that the same is carefully presented.

I suggest also that your tariff reform committee obtain from the clerk of the Committee on Ways and Means, House of Representatives, the calendar of the hearings and take such measures as they may wish to be presented at If in any way I can assist the committee during these hearings, I shall be glad to do so. I beg to remain, Yours, very truly,

same.

WILLIAM C. REDFIELD.

That is the letter, and it accounts for my being here on this subject, to address the committee on the subject of the administrative features of the tariff bill.

The administration of the customs of this country is a very important subject. It employs about 8,000 men, and it costs the Government from ten to eleven million dollars annually. It extends all over the country, including Alaska and our insular possessions. All these cases, all matters of dissatisfaction of the importer with the classification of his goods and with the value placed on them, all go to New York in the first instance, as the law requires, on a protest being filed, that there be a notice of appeal, that the collector must transmit all the papers to the Board of General Appraisers at New York.

I was going to speak first in regard to one thing that concerns me a great deal, the subject of the increase of litigation in these customs matters. In the three years 1894, 1895, and 1896 the average number of protests filed in each year was 21,364. In the three years of 1910, 1911, and 1912 the average number filed in a year was 94,472; each protest was an appeal from the rate and amount of duty assessed by the collector to the Board of General Appraisers, and each was a case to be decided. You will thus see that there were more than four times as many in the latter three years as in the former three years. It was about the same proportion in regard to reappraise

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I do not have the figures as far back as the former three years, I could not get the records of that time, but in the year 1900 there were 2,561 appeals from appraisement to a general appraiser, of which 2,080 were from the port of New York and 481 from all other ports. In the year 1912 there were 5,796 appeals from appraisement, of which 4,543 were from the port of New York and 1,253 from all other ports. So you will see that in the time mentioned the number of reappraisements have more than doubled. These figures show an unwarrantable increase in the number of protests and appraisement cases, and that importers in at least this number of cases believed that they had not been fairly and justly dealt with in the administration of the customs laws.

There must be some reason for this. People do not go into litigation unless there is something which occasions it. I do not know exactly what it is, but presumably it must be in the administration or because they are not satisfied. That is one of the features that I wanted to impress upon you the amount of this litigation. It is entirely out of proportion. It seems to me that of late years the amount of litigation in these customs matters has been increasing unreasonably; certainly it has increased over the amount that fellowed the passage of the law of 1890; the law of 1909 has not been in force very long, and it is difficult to use that as a basis of comparison. I will go over some of the things to which I have called attention in my brief. The largest proportion of our duties are specific and the next largest are ad valorem, and next we have the compound, and I wish to speak to the committee on the compound duty. There is a matter where I daresay Congress is often misled as to the extent of compound of duty. In regard to that, I wish to give you an instance.

There was an importation of mica from Canada, made up of small sheets or pieces of mica. That was returned by the appraiser as "mica unmanufactured" and appraised at $3 a ton, and duty was assesed thereon at 6 cents per pound and 20 per cent ad valorem, thus making a duty on an article that was appraised at $3 a ton of $120.60 a short ton, over forty times the appraised value of the article per ton or 4020 per cent ad valorem. This rate and amount of duty was sustained by the Board of General Appraisers and also by the circuit court on appeal in the case of Myers v. United States (110 Fed. Rep., p. 940). Congress in the tariff act of 1909, paragraph 91, reduced this duty to 5 cents per pound and 20 per cent ad valorem. This still leaves a duty on a similar article of the same value of over thirty-three times its value or 3350 per cent ad valorem.

Mr. HILL. The Treasury Department has overruled that in one of its decisions and decided that that was not the proper construction of the law and that Congress did not so intend it.

Mr. GIBSON. I am not aware of that decision.

Mr. HILL. I think you will find that they overruled the Board of Appraisers.

Mr. GIBSON. They would have to overrule the court; they can not nullify a decision of the court; certainly the decisions of the circuit court can not be overruled by a decision of the Treasury Department.

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Mr. HILL. The Treasury Department did that before the court acted on the matter. I took the case there, so that I happen to know about it.

Mr. GIBSON. I am only showing the committee what a compound duty may lead to. I am discussing that question in cases where there are articles having a wide scope of value; some of this mica is extremely valuable and some of it is comparatively valueless.

At the suggestion of Mr. Redfield I have gone over this matter and have prepared this brief with some care, to show every step in the administration of the customs laws from the time the importer receives his invoice up to the time of his presenting it and his entry at the collector's office and the process there. It is all here in this brief, and if the committee desires the full information they can read it at their leisure.

I will now refer to the appraisement. When due entry of goods has been made by the importer, the next step is the appraisement if the duty depends on the value. This is done at the port of New York and the larger ports by examiners under the general direction of the local appraiser and assistant appraisers at the port of entry. These examiners are persons who practically appraise the dutiable value of goods and classify them. At the port of New York hundreds of thousands of dollars in duties depend upon the judgment of one man. The assistant appraiser and the appraiser accept the return of the examiner and the collector accepts the return as made by the appraiser as a rule. At the smaller ports, where there is no appraiser, the person acting as such makes the appraisement. The examiner has before him the consular invoice of the goods, the collector's notation thereon, and has also a package or packages of the goods retained for examination, or a greater proportion if he considers he needs them and calls for them.

It is required that the entered value of the goods shall be a true statement of their foreign market value or wholesale price in the country from whence exported and at the date of shipment.

The law presumes that the importer knows the market value of his ewn goods. If he fixes the values too high, the excessive duty can not be refunded to him, as duty can not be assessed upon a lower valuation than is expressed in the entry. If he places it too low and the appraiser's officers appraise the goods at a higher value, the law imposes an additional or penal duty of 1 per cent upon the appraised value for each 1 per cent that such value exceeds that declared in the entry.

Here is a feature which I wish to present to this committee, and which I think is very important, and it is this: As the law now stands if the appraiser on the appraisement of the merchandise advances it 1 per cent above the entered value, a penalty attaches for each 1 per cent the appraiser advances the goods above the entered value, and they are penalized 1 per cent upon the appraised value, which increases the amount to be paid up to an enormous amount in some cases. The statutes prior to 1890 allowed the importer a leeway of 10 per cent, and I submit that the importer ought to have a lee

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