Mr. HIGMAN. That is true. But the Secretary's regulations, which were promulgated under this paragraph 1101

Mr. CROWTHER. We raised that penalty from the 1922 act where it was 20 cents a pound, to 50 cents a pound in the 1930 act, so as to be sure that there would be no diversion.

Mr. HIGMAN. Article 499 (d) of the Customs Regulations of 1931, which corresponds to the similar regulation in the Customs Regulations of 1923, promulgated under paragraph 1101 of the Tariff Act of 1922, provides:

In crediting bonds with the quantity of imported wool or hair used, all wastes, except noils, whether valuable or not, shall be considered as having been used in the manufacture of the enumerated articles and due allowance shall be made therefor.

It is believed that indicates that the theory behind the regulation is that wastes are necessarily incurred in manufacturing carpets and the other enumerated articles, and that those wastes therefore constitute imported wool used in the manufacture of such articles.

Mr. CROWTHER. That is certainly beating the Devil around the stump. That is part of the original wool that comes in, a valuable byproduct, capable of being used for several other purposes. The intention was not that that waste, or any other valuable waste that was connected with it, should be used for any other purpose than was designated in the act.

Did not the Treasury Department realize that in writing those regulations?

Mr. HIGMAN. Of course, I cannot answer, not having had a part in the preparation of the original regulations. But does not the same condition obtain with respect to certain other of the free or reduced rate of duty provisions where in the use of the imported material, which is accorded that privilege, residues result which are considered to have been used for the purpose which Congress specified in the act? For instance, leather is accorded the privilege of a 10-percent rate of duty if used in the manufacture of shoes. Necessarily there must be some leather trimmings that result from the use of that leather in manufacturing shoes.

Mr. CROWTHER. That is not a parallel case.

Mr. HIGMAN. I do not believe those trimmings are subjected to any further assessment of duty.

Mr. Buck. How old are these customs regulations?

Mr. HIGMAN. This particular regulation I am speaking of appeared shortly after the Tariff Act of 1922 was enacted.

Mr. BUCK, Has it remained in effect in the same language and has it been interpreted the same way continuously since then?

Mr. HIGMAN. I believe there has been no material change in language. When the regulation was repromulgated under the act of 1930, there was no change except such immaterial changes as the use of the phrase "enumerated articles" instead of "floor coverings", in order to include the additional articles which Congress had provided for in the law. I do not have the 1923 regulations here.

Mr. McCORMACK. When was it repromulgated after the act of 1930? Mr. HIGMAN. The regulation that I am now reading was signed by the Secretary on January 6, 1932.

Mr. Buck. It seems to have been pretty generally accepted for a long period.

Mr. MARSHALL. The growers were not aware that there had been any such regulation or any such practice established. I am informed that it was worked out by agreement between the importers and the Treasury.

We feel, as growers, entitled to protection from the uses to which the wool goes, that we should at least have been made aware of such a proposition. But it was not until Tuesday that I was informed that these carpet wool noils are going in at a lesser rate than prescribed by paragraph 1105 and not until the gentleman read the regulation just now did I know that they were exempting waste from duty altogether.

We still maintain that the Congress plainly intended that they should be dutiable under 1105, when used for other than the uses enumerated in paragraph 1101.

Mr. CROWTHER. Under the head of designated wastes given in 1105?

Mr. MARSHALL. Yes, sir. That is still our position. I feel, Mr. Chairman, that perhaps we have been remiss, but we do feel we are entitled to the protection from use of these materials, which will be further explained by the next witness. We had naturally, and I think not unreasonably, assumed that the paragraph 1105 rates were being applied to the materials diverted.

I was also informed by the Treasury on Tuesday that it was not until 1928 that the agreement was reached regarding the lesser duty on carpet wool noils and that it was then established at 12 cents, and after the Act of 1930 became law it was raised to 14 cents.

Mr. Buck. Mr. Chairman, may I ask a question? In 1928 the rate of 12 cents was established?

Mr. MARSHALL. On carpet wool noils.

Mr. Buck. By a ruling of the Treasury Department?

Mr. MARSHALL. Yes, sir.

Mr. BUCK. And this was raised to 14 cents in 1930?

Mr. MARSHALL. 1931 or 1932; after the act of 1930.

Mr. Buck. After the act of 1930. Now, were not those regulations promulgated publicly in some way so that you gentlemen could have been aware of them and could have protested?

Mr. MARSHALL. I think we are reasonably diligent, as far as we can be. But we are located away out in Salt Lake City. I am quite well acquainted with the present Commissioner of Customs and some of his assistants, and I see them frequently, not always every year. I never had knowledge of this situation until this morning, and I have been secretary of the association since 1920.

But

Mr. Buck. But these matters have been in print in Treasury Department decisions or elsewhere, have they not?

Mr. MARSHALL. I presume so. But I am not surprised that it is now sought to have them given the sanction of Congress and an establishment in law, because I maintain that they are at least, to put it mildly, of very doubtful validity.

Mr. DINGELL. May I ask just one question? As I understand, the bill before us is for the purpose of making changes purely administrative. Some of these matters brought up here affect possible tariff changes. What I would like to know is whether there can be a corrective change by reversal of previous administrative rulings or a reinterpretation of some of these rulings affecting the rights of wool growers, by the Secretary of the Treasury. Is that possible?

Mr. HESTER. I think, Mr. Dingell, that is a question for your parliamentarian and the members of your committee to decide rather than the Treasury Department.

Mr. DINGELL. I imagine possibly some of the experts here could inform us whether reinterpretations have been made by the Secretary of the Treasury in similar instances, or whether there have been reversals of previous interpretations, when such instances were brought to the attention of the Secretary of the Treasury, and when they proved their case that the existing rulings are contrary to the intent and purpose of Congress.

You certainly can give me that information, whether there have been any reversals or reinterpretations in the past, and if there have been I am certain that there would be a positive answer that this would not need any legislative correction, because personally I think we might be led into the consideration of a complete new tariff bill.

Mr. HESTER. If you will permit me there, I would like to ascertain more about it and discuss it with the officials of the Treasury Department and submit some information to you on that, but not at this time.

Mr. MARSHALL. May we also have the privilege to see the information submitted, in that connection?

Mr. COOPER. I am not prepared to say about that; I do not know what it would be.

Mr. Buck. The gentleman has the privilege of consulting with the Treasury officials without our authorization, has he not?

Mr. COOPER. Certainly.

Mr. MARSHALL. I think the commissioner will be willing to give me everything they have.

Mr. Buck. We have heretofore made suggestions to witnesses, in fact, have asked them whether they have taken up their suggested amendments with the Treasury officials.

Mr. COOPER. Undoubtedly, it is entirely proper for you to do that. But my understanding was you asked the question whether certain information presented to the committee, which, I assume, would be in executive session, would be made public. I could not pass upon that until I see the nature of it.

Mr. MARSHALL. I think they will be glad to furnish it to us.

Mr. DINGELL. I presume if there is a ruling of any kind made by the Treasury Department, or a reversal, certainly your association will be notified, because they would be affected by such a ruling. Mr. MARSHALL. Well, that has not been the practice.

Mr. REED. How long have you been secretary of the National Wool Growers' Association?

Mr. MARSHALL. Since 1920.

Mr. REED. When they are promulgating these rules and regulations, do they not give you notice, or call you in?

Mr. MARSHALL. No, sir.

Mr. REED. How many members are in your association?

Mr. MARSHALL. Our organization primarily consists of 12 affiliated State associations. They have a combined membership of between six and seven thousand wool growers.

Mr. REED. How much wool do they produce?

Mr. MARSHALL. The bona-fide members of the association through that arrangement produce at least 25 percent of the wool grown, or around 100,000,000 pounds.

Mr. REED. Do you not think when a question of this kind comes up in connection with administration, which affects one of our domestic industries, where the protection of the revenue is concerned, that it would be rather helpful when these rulings are bing promulgated that they should call you in and at least talk with you about them? Mr. MARSHALL. I think we should have been notified. Mr. REED. You are quite positive you never were?

Mr. MARSHALL. I am quite positive. Prior to going with the National Wool Growers' Association, I was in the Government's service.

Mr. REED, This particular regulation was issued in 1932?
Mr. MARSHALL. You mean the one that was recently read?
Mr. REED. Yes. Was that issued in 1932?

Mr. HIGMAN. The regulation I read was article 499 (d), of the Customs Regulations of 1931, signed by the Secretary on January 6,

1932.

Mr. REED. Was a part of that regulation changed to some extent? Mr. HIGMAN. That regulation

Mr. COOPER (interposing). He stated this entire regulation was brought forward from 1923.

Mr. REED. That is what I understood.

Mr. HESTER. It is in book form, and most of the people who do customs business with the Government have copies of the book.

Mr. REED. That may be, but they were not called in before the rules were promulgated.

Mr. HESTER. When Congress desires an agency of the Government to consult with industry in connection with rules and regulations, they require that to be done in a statute. Take, for instance, the F. A. A. Act in connection with the issuance of permits.

Mr. REED. I personally think it is high time that we took some steps to give our local industries a little chance for their life.

I do not think we should pass a statute establishing a certain condition and certain principles for the protection of our industries, to obtain revenue, and then proceed to carry that into effect by regulations unknown to the industry and unknown to Congress.

Mr. DINGELL. On the other hand, is it not logical to assume that the Association of Wool Growers has a legal staff and a research organization who prepare data for them, and that they should know what affects them? Here is a provision that is 15 year old, published in book form, and yet they did not know until today that it affects them.

Mr. COOPER. It is in a published book, available to the public. Mr. REED. But not published until these rules have been promulgated.

Mr. DINGELL, I assume it might be a possible reflection on their own staff.

Mr. REED. I still believe the Congress represents the people of the United States and not the importers.

Mr. MARSHALL. I would like to say that the wool growers do not actually employ legal help.

Mr. McCORMACK. Who was Secretary of the Treasury when the first promulgation was made in 1920?

Mr. HESTER. I believe Mr. Mellon was Secretary of the Treasury. Mr. McCORMACK. Who was Secretary when these other promulgations took place?

Mr. HESTER. I think that was Mr. Mills.

(The following amendments and statements in support of such amendments were submitted by Mr. Marshall:)

AMENDMENT PROPOSED ON H. R. 6738 BY F. R. MARSHALL, WITNESS FOR NATIONAL WOOL GROWERS ASSOCIATION, SALT LAKE CITY, UTAH

To strike out, commencing at page 32, line 9, after the semicolon and commencing with the words "but such" down to "enumerated articles" in line 21 and to substitute therefor the following:

"All products of wools which are admissible free of duty under this paragraph for the uses enumerated, when diverted to be used for use in the manufacture of any article not so enumerated shall be subject to the same duty as would have been required to be paid if such product had been imported in the same form as when diverted to other use."

STATEMENT TO SUPPORT AMENDMENT PROPOSED ON BEHALF OF THE NATIONAL WOOL GROWERS' ASSOCIATION

The language which we propose to delete, if retained in the bill, would, in our opinion, authorize the Secretary of the Treasury to decide as to whether products of imported carpet wools used for purposes not exempted from duty under the law should be free or dutiable. We raise the question as to the propriety or desirabily of delegation of such power by the Congress.

The language proposed to be substituted is similar to, but not identical with, a statement included in the testimony for the Treasury Department by Mr. Johnson before this committee on May 26.

Duty on noils.-We have been unable to obtain data relating to the amount of carpet wool noils that have been diverted into dutiable classifications for clothing use in any recent year.

The report of the Treasury Department states that the language of the bill which proposes the legalizing of a duty of 14 cents per pound on carpet wool noils diverted from their supposed use, 'Authorizes continuance of administrative practice of assessing a special duty of 14 cents per pound on noils diverted from carpet manufacture."

Wool growers, until this hearing opened, were under the impression that carpet wool noils, when diverted to clothing uses, were paying the rate of duty prescribed in paragraph 1105 of the act of 1930.

We are of the opinion that a lesser rate than the one prescribed in paragraph 1105 is not legal even though it has been assessed for several years by administrative ruling.

We ask that the Congress should not sanction and establish what has been done improperly and in contravention of the law.

We acknowledge that as wool growers we have been remiss in not taking action under section 516 to obtain the protection to which we were entitled and to secure to the Government the full amount of revenue which we believe the act of 1930 contemplated should be collected upon noils of foreign origin diverted for use under dutiable classifications.

Mr. COOPER. The next witness is Mr. C. J. Fawcett.

Will you give your name to the reporter, and state whom you represent?

STATEMENT OF CHARLES J. FAWCETT, GENERAL MANAGER, NATIONAL WOOL MARKETING CORPORATION, 281 SUMMER STREET, BOSTON, MASS.

Mr. FAWCETT. Mr. Chairman, my name is C. J. Fawcett; I am general manager of the National Wool Marketing Corporation, 281 Summer Street, Boston, Mass.

It has been my duty to sell wool of practically every type grown in the United States during a period of 15 years.

Mr. Chairman and members of the committee, the organization which I serve as general manager is a national cooperative wool selling