the American producer. He is constantly harassed by the appearance on the market of cheaply made commodities, good imitations, day after day from Japan and Czechoslovakia and Germany and various other countries of the world. He is the fellow who is harassed. He does not know which way to turn. I think the American producer is the fellow that is harassed.

The CHAIRMAN. It is more a question of embarrassment rather than harassment, it seems to me.

Mr. CROWTHER. Harassed is a pretty strong term to use.

Mr. THURSTON. Do you not think it is quite unusual for men who are drawing salaries on the Government pay roll to impugn the motives of our own citizens in behalf of those from other parts of the world?

Mr. CROWTHER. Yes; I think it was unfortunate that that term was used.

The CHAIRMAN. You may proceed, Mr. Hester.

Mr. HESTER. Section 16 is the next section, and is to be found on page 20 of the bill.

At the present time collectors of customs are permitted to deposit in a special account of their own the proceeds of fines and penalties, forfeitures, and certain overcollections. In the past, sometimes they have inadvertently covered those funds into the Treasury, into the general fund as miscellaneous receipts. When the Secretary has remitted or mitigated certain fines or penalties or forfeitures, the Treasury could not make the refund. What we propose here is to establish a new procedure which will require all of these collections to be deposited into the general fund of the Treasury, and under a recent decision of the Comptroller General our regular appropriation for refunds for customs purposes will be available to make those refunds. This is merely in the interest of efficiency.

The CHAIRMAN. How much do you approximate those refunds will average each year?

Mr. HESTER. It is not a great amount.

Mr. THOMPSON. That would not entail additional appropriations? Mr. HESTER. Oh, no.

Mr. THOMPSON. It would not necessitate any additional action to be taken by the House Appropriations Committee to make these funds available after they had been covered into the Treasury?

Mr. HESTER. No; because the Comptroller General has held that the language of our present customs appropriation will permit refunds now to be made. The thing that we want to do is to dispense with this procedure which authorizes the collectors of customs to retain their own special accounts for these funds.

Mr. THOMPSON. You would put it all in this special account and take this question of refunds altogether away from the field?

Mr. HESTER. That is correct; the refunds would be made from the Treasury.

The CHAIRMAN. And it would not involve any additional expense on the Government?

Mr. HESTER. As a matter of fact, it will probably result in some. economies. It dispenses with a considerable amount of paper work in the field offices.

Mr. THURSTON. Mr. Chairman, at this time may I ask a There is a gentleman sitting over here with a blue shirt a who has been handing up notes to one of the Government atives. I think it would be well to have him state his en and his name. He has been handing notes up to one of th ment employees, and I think it would be well for us to name for the record.

The CHAIRMAN. He may state it.

Mr. WATSON. Mr. Chairman, my name is Robert Wats attorney for the importers of wool felt hat bodies. The of I presumed to hand a memorandum to Mr. Spingarn is th viously had discussed this case with him. There is an imp is on the calendar and who was to appear before the com week. He was here last week and is awaiting a call to and will explain in further detail the case that was menti I had no intention or desire of doing anything that was of course.

Mr. THURSTON. You are counsel for some importers, are Mr. WATSON. Yes.

Mr. WATSON. If you wish while I am here, I shall b tell you

The CHAIRMAN. I do not think we will go into that at Please proceed.

Mr. SPINGARN. Mr. Chairman, may I say this? The g handed me a message. I did not know what it was. I t might have been a telephone message. I simply stuck pocket.

The CHAIRMAN. You may proceed.

Mr. SPINGARN. No use has been made of it.

Mr. COOPER. Mr. Chairman, let the record show that nothing unusual here. It is frequently indulged in. We g mation from sources that have the information. Most of t rial used by the minority members of the committee is sup their clerks.

Mr. THURSTON. That is all right, but I thought that we know what the employment of the gentlemen was.

Mr. COOPER. You have endeavored to bring politics into as much as possible.

Mr. THURSTON. I thought that we ought to know what t of the gentleman is.

Mr. COOPER. Your questions have indicated all the way that it is purely politics with you.

Mr. HESTER. Mr. Thurston, on the question of coaching ment representatives, as Mr. Spingarn has explained to thought that that might be a telephone message and you undoubtedly would have taken it had it been handed ac table to you.

Mr. THURSTON. I am not impugning the motives of the ment representatives.

Mr. HESTER. I have been coming up here for quite a lo since before you became a member of this committee, and always tried to play fair with this committee, and tried to b

with the committee. I really feel very deeply about the statement that you made just now.

Mr. THURSTON. Just wait a moment. I did not say anything to impugn the motives of you gentlemen. I just wondered who this outsider was who was handing notes up to you. I think we are entitled to know that.

Mr. HESTER. This is the first time that any member of this committee has ever made a statement like that in connection with anything that I have had to do with in this work up here; and the Republican members of this committee are just the finest friends that I have ever had.

Mr. THURSTON. That is all right.

Mr. COOPER. I think the record might show that type of procedure indulged in has made no impression on the majority members of the committee. They do not share in any insinuations that may be cast on you.

The CHAIRMAN. Please proceed, Mr. Hester.

Mr. HESTER. As to section 16, there is one other provision. The 1932 act contained a provision which placed a limitation of 1 year within which an erroneous assessment of duty on personal or household effects may be corrected without a formal protest having been filed. In the 1930 act that provision was repealed, and we are simply restoring the limitation on this class of transactions by this amendment.

Section 17, which appears on page 22 of the bill is the next section. At the present time, the Treasury Department is compelled to send customs employees who are skilled in the admeasurement of vessels from their regular stations of duty, sometimes considerable distances, to take the admeasurement of vessels.

For instance, a man will go from Pittsburgh to Wheeling, W. Va. At the present time, the Government has to pay the salary and expense of the Government employee when he has to leave his regular station of duty to render a service to an individual shipowner.

The purpose of this provision is to require the shipowner to pay this expense when it is performed at a station other than the regular station of the employee and merely makes it consistent with other provisions of law which require, under this bill, private interests— private owners of vessels or vehicles-to pay customs employees' expenses when they perform duties other than at their regular stations. Mr. JENKINS. This is in line with the law with reference to immigration officials or customs inspectors as it applies on the Atlantic coast?

Mr. HESTER. Yes, sir.

Mr. JENKINS. It also applies to American railroads; for instance, if a railroad wants an immigration officer or a customs officer to go up on the Canadian border for some special inspection of a train, they pay that extra expense.

Mr. HESTER. That is right.

This section further provides that all reimbursements of expenditures from customs appropriations shall be deposited to the credit of the appropriation from which they were paid. The law in this respect now covers only the reimbursements of expenses connected with the customs.

147979-37-8

The next section is section 18, which appears on page 23 of the bill. This section would provide that internal-revenue taxes on imports should be construed to be customs duties only if the law under which they are imposed provides that they shall be treated as customs duties.

Mr. CROWTHER. Would not that be a little plainer if the language was "excise taxes"? Would not that be a little more understandable? Mr. HESTER. Mr. Crowther, let us think about that. That may be a very good suggestion.

Mr. COOPER. Mr. Chairman, will the gentleman yield?

Mr. CROWTHER. Yes.

Mr. COOPER. They are levied as excise taxes.

Mr. HESTER. That is right.

Mr. COOPER. On imports?

Mr. HESTER. That is right.

Mr. COOPER. So I concur in the suggestion, because it reflects the truth.

Mr. HESTER. Yes.

Mr. DISNEY. Mr. Hester, down in our part of the country we are interested in the excise tax on oil imports. What would be the practical effect of this section, so far as the imports of oil are concerned?

Mr. HESTER. If you will let me proceed with this, I think the rest of our explanation may answer what you have in mind.

This provision will not remove controversies concerning such taxes from the jurisdiction of the customs courts where such courts now have such jurisdiction-now, here is the point-but will preclude any court or administrative officer from holding that provisions of law, particularly exemptions and preferences, applying only to duties are applicable also to internal-revenue taxes accruing on imports.

Here is the situation, gentlemen: At the present time we have a case where, under the Cuban trade agreement, they are entitled to a 20percent preferential duty. They are claiming that that preference includes internal-revenue taxes. The purpose of this provision is to make it clear that when Congress intends exemptions and preferences to extend to internal-revenue taxes, Congress will say so in the statute. That is the sole purpose of this provision.

Mr. CROWTHER. What does that apply to particularly-some commodity with respect to which some question has been raised? Does it apply to liquor?

Mr. JOHNSON. This would prevent the internal-revenue taxes imposed on imported liquors from being construed as customs duties and subject to preferences applicable to customs duties. And, Mr. Disney, the import taxes on vegetable oils which were imposed under the Revenue Acts of 1934 and 1936 by amendment to the Revenue Act of 1932 are imposed under a law containing a specific provision that those taxes shall be treated, for the purposes of all laws relating to the customs revenues, as duties. It is that type of case that is intended to be covered by the words [reading]:

unless the law imposing such tax or charge designates it as a customs duty or contains a provision to the effect that it shall be treated as a duty imposed under the customs laws.

Mr. DISNEY. I had particular reference to petroleum oil.

Mr. JOHNSON. The petroleum-oil duty is levied under the same provision of law but was imposed in 1932.

Mr. THOMPSON. And therefore subject to the preferences?
Mr. JOHNSON. Yes, sir; if it is a product of Cuba.

Mr. THOMPSON. Or any other country with whom there is a preference agreement.

Mr. JOHNSON. The only special duty preference at the present time is the Cuban preference, unless you refer to trade-agreement rates, none of which affect petroleum products.

Mr. COOPER. To clear up that point for my benefit, by "preference", you mean some preference provided by treaty, do you not?

Mr. JOHNSON. Those are the only preferences at the present time of which I have any knowledge. The exemptions are provided for by

statute.

Mr. CROWTHER. As a matter of fact, Cuba is the only nation we have that type of agreement with. We give them a preferential rate of 20 percent, do we not?

Mr. JOHNSON. Yes.

Mr. HESTER. Section 19, on page 23 of the bill, is designed to take care of a situation like this.

It will authorize the Secretary of the Treasury to permit merchandise in transit through the United States now required to be carried by a common carrier to be carried otherwise than by a common carrier, if no common-carrier facilities are reasonably available.

The situation is this-along the Canadian border a road may wind around a mountain, and as it winds down the mountain it may come into United States territory.

If no common carrier is available there, it simply means that the Canadian would have to ship his merchandise far north to get around there, or far south into the United States.

So the purpose of this is to permit the transportation, under a bond to the Secretary of the Treasury, and this would all be done under regulations. The goods would be permitted to go around that road and back into Canada.

Canada has extended to Americans a similar privilege, and you will recall that last year a bill was introduced, and I appeared at the request of the committee in connection with the port of Newark bill last year, where the situation there was such that they could not transport by a bonded common carrier.

Mr. CROWTHER. That bill was introduced by Mr. Kenney, was it not?

Mr. HESTER. Yes; and you permitted them to transport by private carriers, and that cleared up that situation.

Mr. THOMPSON. Is that an element of the bill that our colleague, Mr. Dingell, interrogated you about at the beginning of the hearings? Mr. Dingell is not present at the moment.

Mr. HESTER. Mr. Johnson has written me a note in which he says Congressman Dingell wanted to discuss this provision. We can return to this.

Mr. THOMPSON. I wish to make that request, in connection with Mr. Dingell's interest in the matter.

Mr. JENKINS. I think Mr. Reed is familiar with a very striking illustration of that.

Mr. HESTER. We will talk to Mr. Reed and Mr. Dingell about that. and if they want to come back to this later on we will do it.