SECTION 28. of an invoice, and no forfeiture or disability of any kind incurred under the provisions of this section shall be remitted or mitigated by the Secretary of the Treasury, except under the provisions of sections 5292 and 5293 of the Revised Statutes, and sections 17 and 18 of the act of June twenty-second, eighteen hundred and ninety-four. The duty shall not, however, be assessed in any case upon an amount less than the entered value: Provided, That where the owner, consignee, or agent shall at the time of entry make addition to the invoice value to conform to values heretofore fixed by the appraiser, general appraiser, or Board of General Appraisers on similar merchandise, and upon appeal to reappraisement called for by the importer the invoice value shall be sustained, duty in such cases shall be assessed upon said invoice value." Respectfully submitted. THE MERCHANTS' ASSOCIATION OF NEW YORK, Committee on Customs Service and Revenue Law. Hon. OSCAR W. UNDERWOOD, NEW YORK, February 3, 1913. Chairman Committee on Ways and Means, House of Representatives, Washington, D. C. SIR: Referring to my appearance before your committee on January 31 in relation to proposed changes in the administrative features of the customs tariff of August 5, 1909, I wish to confirm the statement I made at the time of my appearance to the effect that the present customs administrative law is very unsatisfactory. This original law, which went into effect on June 10, 1890, and to which various amendments have since been made, was drafted by a Government employee who had acted as a special agent of the United States Government for many years. Although a man of some ability, he was of a narrow mental caliber, an ultra high protectionist and very much prejudiced in favor of the Government, and naturally opposed to allowing the importing merchants the slightest latitude. The law as it stands at present contains many of the recommendations made by this man, and owing to the character of the phraseology and evident intention not to give the consignee or the importer the benefit of the slightest doubt, the existing provisions of the law are in many instances ultra harsh and their terms are so drastic that they really in some instances defeat the object of the drawer of the law. An For many years I have been firmly of the opinion that the whole administrative portion of the law should be redrafted by competent experts. The proposed recommendations should not be made by any one department of the Government. expert from the Treasury Department would be very useful in making recommendations, but the Treasury Department does not have the practical experience which the collector of customs in New York and the United States Board of Appraisers daily encounter. For this reason I suggest that if you think favorably of my suggestion, you should arrange that a committee be formed for the purpose of making revisions of the customs administrative act, the committee to consist of one representative each from the Treasury Department, the collector of customs in New York, and the United States Board of Appraisers. I think that this committee should also have the cooperation of the Customs Brokers' Association of New York, or the Merchants' Association of New York. I have been chairman for 13 years of the committee on customs service and revenue laws of the Merchants' Association of New York, and have devoted a great deal of attention to the operation of the customs administrative act. Seven of the changes which my committee recommended were incorporated in the present tariff act of August 5, 1909. I am engaged in the customhouse brokerage business in New York, and the firm of which I am the senior partner is universally recognized as one of the leaders among the customs brokers of this country. I am in daily touch with the administration of the law and feel that I am competent to say what I do in this connection. I am the editor and publisher of the United States Customs Tariff, arranged alphabetically. This publication has been issued by my firm for over 30 years and is recognized as the standard work of its kind throughout the world. It is exclusively used by the Treasury Department for distribution to the United States consuls and other Government officials. SECTION 28. It will give me much pleasure to cooperate and assist the committee in any way that I can. The interests of the Government are to me of equal importance to those of the importing merchants. Yours, faithfully, THOMAS H. DOWNING, Chairman Committee on Customs Service and Revenue Laws. BRIEF SUBMITTED BY KERN COMMERCIAL CO., NEW YORK, N. Y. NEW YORK, January 30, 1913. The COMMITTEE ON WAYS AND MEANS, Washington, D. C. ADMINISTRative featURES, SECTION 28, SUBSECTION 7. In justice to the importers, this section should contain a provision permitting an importer who has protested against an advanced valuation which has incurred a penalty, to enter subsequent shipments of the same material at what he considers the correct market value, pending the decision in the original case, without incurring the penalty of an additional duty of 1 per cent of the total appraised value thereof for each 1 per cent that such appraised value exceeds the value declared in the entry. He will, however, pay on each invoice the duty on the advanced valuation, under protest. The working of the present rules is very often exceedingly unfair to an importer. He may, in perfectly good faith, enter an article at what he considers the market price, be raised by the appraiser, and pending investigation to determine the correct market price, he has penalties to pay on all subsequent shipments if he enters them at his valuation. It is often the case that an importer is perfectly justified in his contention that the appraiser's valuation is excessive, but while he may be right in his valuation, fearing that his case will not be sufficiently strong and that his shipments will be subjected to a penalty of 1 per cent for each 1 per cent of additional value assessed, he, rather than risk this, will enter subsequent shipments pending decision of the protest, at the appraiser's valuation, and in this way pay duties on a much higher valuation than is necessary or just. We can cite a recent experience of our own, where a certain material which we had been importing declined in price to the extent of over 30 per cent. The entry was made at an advance over the invoice value of 10 per cent, but the Government, having data of an old investigation on hand, maintained the old market price at this time. Our evidence of the home market value was not of sufficient strength to justify decision in our favor by the general board, and subsequently there have been entered thousands of dollars worth of material at a valuation at least one-third higher than it should have justly been. After some months we have been able to obtain sufficient proof to uphold our original valuation, but in the meantime we have been paying a duty of 45 per cent on a value one-third in excess of cost. Had a provision such as we now suggest been incorporated in the tariff act, these shipments would have been entered at the proper market value, and if advanced, additional duty paid under protest. As the appraisers of the port of New York can testify, the majority of importers are honest and have no intention to defraud the Government. The question of home market value is a most difficult one to decide; the importers generally do not know of any other prices, but what are given to them by the firm from whom they purchase. Usually the business is done on a cable basis, and when one has an order to place he does so at the lowest possible price, is not in a position to investigate in the European market as to whether the price that he is paying is the same as that which the local wholesaler pays. We have time and again attempted to obtain expression from the appraisers on the market value of material, but have been informed that it is against the regulations to give such information. The importer has to take his chance and enter at what he honestly believes is the correct value. Penalties in such cases are manifestly unjust. We trust you will give the matter the consideration which it deserves, and are, Yours, very respectfully, KERN COMMERCIAL CO., SECTION 28. STATEMENT BY S. M. HOHL, NEW YORK, N. Y. Hon. OSCAR W. UNDERWOOD, Chairman of the Committee on Ways and Means, Washington, D. C. SIR: The administrative part of the present tariff imposes considerable hardship on importers in such cases where a dispute arises regarding market value between the importer and the appraiser. There are instances where the appraiser claims that the market value is higher than the goods are invoiced, and the importer, rather than have the following shipments delayed, has advanced the price to appraiser's figure before entering invoice. This incurs additional duty to the importer which is not refunded under the present law, although the importer's original value may have been sustained later on upon reappraisement by the higher authority. It would therefore look only fair that the Government refund such duties that the importer has paid on the increased value "under duress." In connection with this practice by the customhouse authorities, importers have been trying to withhold goods from entering until the market value of the first shipment under dispute has been decided upon, and it was learned that the collector would not permit part of an arriving shipment entered and let the other part go on general order. The present law provides that the entire shipment must be entered or sent on general order, and a provision seems to be advisable that part of an incoming shipment can be entered for consumption or for bond and the balance be permitted to go on general order and treated as not having arrived in the United States, especially in such cases where market values are in dispute. Respectfully submitted. S. M. HOHL. I am inclosing a letter addressed to the Hon. Franklin MacVeagh, Secretary of the Treasury, dated May 8, 1911, through which a reply was received, through the collector of customs in New York, that no relief could be granted according to law. Hon. FRANKLIN MACVEAGH, [Inclosure.] Secretary of the Treasury, Washington, D. C. NEW YORK, May 8, 1911. DEAR SIR: I applied on Saturday, May 6, at the collector's office, where I met Mr. Stewart, deputy collector, in regard to a shipment of gloves which is on steamship Prinz Friederich Wilhelm, due to-day. The gentleman in question was unable to give relief in the matter stated to him and I therefore take the liberty of putting same before you, believing that it is not the intention of the Government to inflict hardship upon honest merchants, while there are several ways of avoiding controversy and friction without depriving the Government of just duties. The appraiser of this port has advanced a shipment of gloves in case marked "S. M. H. No. 5547," call No. 328-200 dozen, from 3.90 marks (invoice value) to 4.50 marks. We have protested against this advance and the reappraisement will no doubt take place in due course. In the meantime, I have some more goods of the same description coming in. One case marked "S. M. H. No. 5564" is on steamship Prinz Friederich Wilhelm, as stated above, with five other cases on the same bill of lading, and it now seems that I am forced (1) to raise the invoice value of these goods from 3.90 marks to 4.50 marks, without having the difference of duty refunded should later decision by the proper authorities not confirm the appraiser's arbitrary value of 4.50 marks; (2) to let the entire shipment of six cases go in general order, which would deprive me of the goods in five cases of which we are much in need for immediate consumption, while the sixth case, the market value of which is under dispute, contains winter goods, and of which we are not in immediate need. Your reply may come too late to be of avail for goods on steamship Prinz Friederich Wilhelm, due to-day, but it can be applied to shipments arriving on the following steamer, and no doubt it would be considered a great service rendered to the business community at large having dealings with the custom house, if your honor will bring about a ruling whereby (1) merchants could enter part of a shipment and let balance go in general order in cases where controversies of market value exist, such as the prevailing one; (2) that the Treasury permit merchants to enter under protest values 78959°-Vol 6-13- -33 SECTION 28. marked up under stress and refund the difference between the appraisers' arbitrary price and the price later to be determined upon in the reappraisement. Trusting that you will give this matter your early attention, I remain, Yours, very truly, PROPOSED AMENDMENTS TO SECTION 28. S. M. HOHL. Provided, That whenever any merchandise is imported and there exists no actual market value or wholesale price as defined in subsection 3, inspection of the said merchandise shall be permitted before making entry thereof; and there shall be collected upon the appraised value of such imported merchandise only the regular duties fixed under the various paragraphs of this act, unless the entry is presumptively fraudulent as herein defined. The COMMITTEE ON WAYS AND MEANS, FRANCIS E. HAMILTON, Counsel, 32 Broadway, New York. W. STURSBERG, SCHELL & Co., House of Representatives, Washington, D. C. GENTLEMEN: I would respectfully suggest the following changes in the administrative sections of the present tariff law, viz: Section 7. That additional duties be levied in cases where the appraised value exceeds the declared value by 5 per cent or more instead of 1 per cent as at present. Section 11. To strike out entirely the last half of this section, which authorizes the appraiser to base the appraised value on the selling price in the United States. This is manifestly unfair, as it practically dictates the selling price and is particularly so in the case of fancy articles. It also limits the commission to be paid to 6 per cent. Formerly the examiners used to appraise the value of the merchandise, being helped in their decisions by comparisons with competing goods, and in that way putting all importers on the same basis, but now the examiner obtains from the importer the selling price and making the deductions as prescribed in this section arrives at the invoice value, which may or may not be foreign market value. Provision should also be made for the refund of any additional duties paid where importers have added to their invoices to make market value, in order to secure goods that have to be delivered at certain periods, in case the importer is upheld in the final reappraisement. Respectfully submitted. W. A. SCHNEIDER. BRIEF REGARDING SUBSECTIONS 7, 11, 13, AND 25. Hon. OSCAR W. UNDERWOOD, Chairman Ways and Means Committee, House of Representatives, Washington, D. C. NEW YORK, January 29, 1913. DEAR SIR: Herewith I hand you suggestions as to changes in sections 7, 11, 13, and 25 of the administrative bill, which embodies the ideas of the importers of earthenware and china in New York. Yours, very truly, (Inclosure.] EDWD. F. ANDERSON, Chairman. SECTION 7.-The changes suggested in this paragraph can not fail to appeal to the fairness of Congress. There are thousands of cases in which advances have to be made to the invoice and entered value of merchandise to conform to the law, which, by establishing a uniform wholesale value in the same country of exportation for identical goods, permits no one importer to pay less duty to the United States than another. Such advances, if attributable to exceptional advantages enjoyed by importers and the undervaluation resulting therefrom is free from the taint of fraud, should not impose upon the person deriving such legitimate advantage the enormous penalty prescribed SECTION 28. as a punishment for undervaluation, thus placing many reputable firms on the same plane with common malefactors. The higher the standing of the importing firm the more anxious is the foreign seller to secure its custom. As an inducement to procure its orders, reductions from regular prices are made. The importer in most cases having no knowledge of what his competitors paid for similar goods, all they can know is that the purchase was made in good faith and that the price actually paid for the goods was the price at which they were invoiced and entered. It is common knowledge that the practice is general for salesmen to offer as a bait certain items of merchandise at a valuation far below their regular selling price. It follows that importers are not aware of the special advantage they enjoy with regard to such items. The appraiser, however, whose duty it is to compare the invoice prices of the importers in the cases suggested, finds that as to particular items the invoice value is less than that paid for similar goods by other importers, and he is compelled to add to make market value, notwithstanding the fact that other items may be correspondingly above market value. The general appraisers, if appeal is taken, subpoena other importers, who confirm the correctness of the appraiser's advance. That officer's action is consequently affirmed, and the importer is compelled to pay not only the same amount of duty as his competitors, but a heavy penalty in addition for a technical undervaluation involved in an unusual and honest transaction. The importers may be persons of sterling integrity, having unusual business qualifications, and yet be powerless to guess just which one of the numerous values the local appraiser will adopt as representing market value. Anxious to comply with the law's requirements, the examiner or local appraiser is asked for information on this point, but under instructions from the Secretary of the Treasury those officers are forbidden to give importers the desired information, and they, having no other guide, enter their goods at the price actually paid therefor. If their entry is below the value fixed by the local appraiser, they are branded as undervaluers and pay a heavy penalty for guessing wrong. We think those importers who are actuated by dishonest motives should be differentiated from those whose business rectitude is unimpeached. It is in the interest of honest importers that those guilty of wrongdoing should be punished, and we command the imposition of additional duties on the importation of merchandise undervalued with fraudulent intent, but when the undervaluation is free from such taint and is due to legitimate trade conditions, there should be some tribunal vested with power to relieve honest importers from the payment of penalties under the name of additional duties, thus removing the stigma that attaches to them as intentional violators of the law, when such is not the fact. PROPOSED AMENDMENT. SEC. 7. That the owner, consignee, or agent of any imported merchandise may, at the time when he shall make and verify his written entry of such merchandise, but not afterwards, make such addition in the entry to or such deduction from the cost or value given in the invoice or pro forma invoice or statement in form of an invoice, which he shall produce with his entry, as in his opinion may raise or lower the same to the actual market value or wholesale price of such merchandise at the time of exportation to the United States, in the principal markets of the country from which the same has been imported; and the collector within whose district any merchandise may be imported or entered, whether the same has been actually purchased or procured otherwise than by purchase, shall cause the actual market value or wholesale price of such merchandise to be appraised; and if the appraised value of any article of imported merchandise subject to an ad valorem duty or to a duty based upon or regulated in any manner by the value thereof shall exceed the value declared in the entry, there shall be levied, collected, and paid, in addition to the duties imposed by law on such merchandise, an additional duty of one per centum of the total appraised value thereof for each one per centum that such appraised value exceeds the value declared in the entry: Provided, That the additional duties shall only apply to the particular article or articles in each invoice that are so undervalued and shall not be imposed upon any article upon which the amount of duty imposed by law on account of the appraised value does not exceed the amount of duty that would be imposed if the appraised value did not exceed the entered value, and shall be limited to seventy-five per centum of the appraised value of such article or articles. Such additional duties shall not be construed to be penal, and shall not be remitted nor payment thereof in any way avoided except in cases arising from a manifest clerical error, or unless an appeal taken in accordance with section thirteen if this act shall have been filed and the general appraiser reappraising the merchandise and from whose de |