Mr. JENKINS. You should have the synopsis, Mr. Treadway. That is a very fine statement.

Mr. TREADWAY. That I have seen. But this [indicating memorandum] I have seen for the first time here today. It is entitled "Changes in existing law made by H. R. 6738." That is necessary under the Ramseyer rule. That is what I asked be put in the record. There is another explanatory document aside from this synopsis that you have just referred to.

The CHAIRMAN. We will now hear the representative from the Treasury Department. Mr. Hester, will you come forward and proceed in your own way to explain the bill?

STATEMENTS OF CLINTON M. HESTER, ASSISTANT GENERAL COUNSEL; WILLIAM R. JOHNSON, CHIEF COUNSEL, BUREAU OF CUSTOMS; AND STEPHEN J. SPINGARN, OFFICE OF GENERAL COUNSEL, TREASURY DEPARTMENT

The CHAIRMAN. You might first answer the question just asked by Mr. Treadway.

Mr. HESTER. We have that synopsis. It is very long and a very technical synopsis. We were going to put it in the record when we conclude our testimony.

Mr. TREADWAY. You say you are going to put it in the record? Mr. HESTER. We were going to ask leave to put it in the record. But this other synopsis is the one that Mr. Reed has asked to be put in. Mr. TREADWAY. That is not this comparison that I referred to? Mr. HESTER. We simply made that for the benefit of the committee. It would have to be made anyway, and we thought

Mr. VINSON. Mr. Chairman, I think Mr. Hester should be congratulated on bringing to us this memorandum headed "Changes in existing law made by H. R. 6738." As usual, the gentleman knows his way around.

Mr. CROWTHER. Mr. Chairman, I agree with the gentleman. If we are going to have ready-made legislation, it ought to come in a first-class package.

Mr. VINSON. At least it is out in the open.

Mr. JENKINS. That is some improvement.

Mr. HESTER. Thank you, Mr. Vinson and Mr. Crowther, for your statements. Incidentally, Mr. Crowther, you will remember last year, you were interested in customs legislation. We told you then we had a bill to recommend to you. Well, this is the bill.

This bill really parallels the Liquor Tax Administration Act, which was introduced by Mr. Doughton in the first session of the Seventyfourth Congress. That bill merely amended the administrative provisions of the liquor laws, the laws relating to taxes on liquor.

The primary purpose of this bill is to amend administrative provisions of the customs laws.

I have with me this morning Mr. Johnson of the Customs Bureau and Mr. Spingarn, with whom you gentlemen are acquainted, of the General Counsel's office. With the permission of the committee I will take up a section-by-section analysis of the bill, and when I find it impossible to answer your questions, I hope I may refer them to my associates here.

Mr. VINSON. Mr. Chairman, do I understand that Hester makes his general statement on a particular sectio are in order upon that section? And then when he passes section, after he has concluded, questions are in order? we will have a record section by section of the bill?

The CHAIRMAN. If there is no objection and the com abide by that agreement, that is all right.

Mr. COOPER. Mr. Chairman, I ask unanimous conse proceed in that way. It will be in the interest of all of us interest of orderly proceedings here and a clear record if might be allowed to take the bill up section by section, a completes the explanation of one section, it will then be any member to ask questions on that one section. When h that section, he will proceed to the next section.

The CHAIRMAN. Is there objection to the unanimous quest of Mr. Cooper?

(There was no objection.)

The CHAIRMAN. The witness will proceed.

Mr. HESTER. I would like to say this. Whereas the Administration Act was a very difficult and technical bill, bill is simple compared to it. And so far as we know, ou tions in this bill, there are only five or six that are controv will point out those sections as we go along so that you very severely on them, if you care to do so.

The first section of the bill gives it its title, "Customs tive Act of 1937."

The second section of this bill is a very simple one. small islands in the Pacific Ocean which at the present t cluded within Customs administration. That is, if it w the fact that these islands have been inhabited only just r would have to station officers there or we would have to ser officers there on various occasions.

Recently the China clipper service stationed ground cre care of their airplanes on these islands. They are the o tants, the members of these ground crews. The Treasu ment does not believe it is necessary for us to have any cust vision of these ground crews.

The purpose of this section, therefore, is to exclude fro administration, these two small islands, Wake Island an Islands, from the territory in which our general tariff laws cable.

Mr. REED. Are you referring now to section 1?

Mr. HESTER. I am referring to section 2 of the bill. section of this bill simply titles the bill the Customs Adm Act of 1937.

Mr. JENKINS. Will the gentleman yield?

Mr. JENKINS. With reference to those two islands, abou or so ago that same clipper service landed on a new isla Kingsman Island, I believe, which is only about 400 feet 1,000 feet long.

Mr. HESTER. What is the name of it?
Mr. JENKINS. Kingsman Island.

Mr. THOMPSON. Will the gentleman yield? Is that the island that Amelia Earhart was supposed to land on?

Mr. JENKINS. Yes, she was to be followed by this Clipper ship. Mr. HESTER. It may be one of the Midway islands. There are several islands included in this Midway group.

Mr. JENKINS. The reason I bring it up is that there was a very interesting magazine article on that flight, which I just read a day or two ago.

Mr. HESTER. I am glad that you bring it to our attention, Mr. Jenkins. We will check on that.

Section 3 of this bill-I might say this is a controversial section to some extent is a revision of the law requiring imports to be marked to indicate the country of their origin. It requires each imported article, or its container, to be marked to inform the ultimate purchaser as to the origin of the article, eliminating the present requirement that the article and the immediate container and the outer package be marked. At the present time you have triplicate markings. This section would eliminate that.

It provides exceptions for marking requirements where such exceptions can be justified on the basis of administrative experience. It provides that the 10 percent additional marking duty shall not apply if goods are marked after importation but before entry into the commerce of this country.

This would permit an importer to bring his goods in, mark them under customs supervision, after they have come into this country. This revision retains the penal provisions against defacing or obliterating marking to indicate the origin of the imports.

Mr. REED. Is that the explanation?

Mr. HESTER. That is the explanation of this.

Mr. REED. Will you be a little more specific as to just why you

offer this change?

Mr. HESTER. It is for administrative purposes.

Johnson, you explain this somewhat in detail.

Mr. REED. Give us a practical example.

Suppose, Mr.

The CHAIRMAN. We shall be glad to hear Mr. Johnson.

Mr. JOHNSON. Gentlemen, I think a practical illustration would be a recent case we had, in which some wool came from the Argentine to be used in a certain factory in Massachusetts. This wool was packed in bales, with a fabric covering, and was marked with the names of certain ranches on which the wool was produced.

Mr. TREADWAY. Will you repeat that?

Mr. JOHNSON. It was marked with the names of ranches. Mr. TREADWAY. Thank you. That is what I did not hear. Mr. JOHNSON. But there was no marking to indicate the country of origin, Argentina. That wool had been sold prior to importation, to a particular factory. It was not to be used by the importer but was sold before importation. It cost that man about $12,000 because we required the bales to be marked as coming from Argentina before they could be released from customs custody. That served absolutely no purpose to inform anyone as to what the origin of the merchandise was. Everyone concerned knew where the goods came from. The $12,000 was just a trade hindrance which did not affect any of the purposes of the tariff act. We have never believed that the marking provisions were designed to raise revenue.

Mr. THOMPSON. Does the gentleman mean that it cost $12,000 to put that additional label on?

Mr. JOHNSON. No, sir; there was an additional duty assessed under the law of 10 percent of the value of the merchandise.

Is

Mr. KNUTSON. Mr. Chairman, I would like to ask a question. there some provision in this bill requiring importers of lumber to mark each piece

Mr. VINSON. Mr. Chairman, I make the point of order that the subject matter is not germane to the section that we are discussing. Mr. KNUTSON. I came in late and I thought that this had to do with marking imports.

Mr. THOMPSON. It does.

Mr. KNUTSON. Then I do not think the gentleman's point of order lies.

Mr. VINSON. Did you not ask about the tariff upon lumber?

Mr. KNUTSON. No. I am asking about the requirement of the Customs Bureau, as I understand it now-I understand they have under consideration the matter of the requirement that each piece of lumber imported be marked with the name of the country of origin. Mr. VINSON. I did not understand the question.

The CHAIRMAN. Please answer the question.

Mr. JOHNSON. Yes, sir.

Mr. KNUTSON. Have I the gentleman's permission to ask the question now?

Mr. VINSON. Yes.

Mr. KNUTSON. Thank you.

Mr. JOHNSON. In the present law there are exceptions to the marking requirements. For instance, if it is impossible to mark the goods, they do not have to be marked. This bill proposes to extend those exceptions and one of the items of extension is that if goods have been imported in substantial quantities for at least 5 years prior to January 1, 1937, and there has been no requirement by the administrative officers that these goods be marked, they will thereafter be exempt. Lumber, under all the history of the marking law, has not been required to be marked, and therefore, under that exception, upon publication of the fact within 2 years after July 1, 1937, that lumber has been imported in substantial quantities without being marked, the exception will continue in force as a matter of law. Mr. KNUTSON. Automatically?

Mr. JOHNSON. Automatically, after publication by the Secretary. Mr. KNUTSON. Then the Customs Bureau would not have the power to insist that lumber be marked? The matter is now receiving consideration in the Customs Bureau, as I understand it?

Mr. JOHNSON. Yes, sir; it is.

Mr. JENKINS. Does this proposed change in the marking provision have anything to do with the articles imported from Japan that are sold individually, already manufactured? It is required that they be marked. This provision will not change that?

Mr. JOHNSON. They will be required to be marked with sufficient markings to inform the ultimate purchaser in the United States of their origin.

Mr. JENKINS. There must be a difference, then, between that kind of a product and lumber and wool. Lumber and wool are not finished

articles. There is no change, so far as the finished articles are concerned?

Mr. JOHNSON. No change, except that containers which are taken off and thrown away by the importer would not be required to be marked, such as the outer shipping cases.

Mr. DINGELL. What about milk bottles?

Mr. JOHNSON. Milk bottles would be required to be marked to indicate their origin, if they are produced abroad. I wonder if you are referring now to the free return of milk bottles?

Mr. DINGELL. Yes.

Mr. JOHNSON. That comes under another part of this bill that will be taken up later.

Mr. DINGELL. There is a question of Canadian milk coming into the States at the present time.

Mr. TREADWAY. There are two thoughts that come to me. Mr. Hester suggested that there is now a triplicate marking under the existing law.

Mr. JOHNSON. Yes, sir.

Mr. TREADWAY. This proposed amendment will allow the omission of the marking on the outside container; is that right?

Mr. JOHNSON. Unless it is a container that reaches the ultimate purchaser in the normal course of business.

Mr. TREADWAY. Let us assume that a bundle of goods comes here from Japan. It is very apparent that it is a Japanese shipment. It is required that the outer container should be marked. When that package reaches the man who conducts a retail store, it would have to be removed anyway, would it not, in order to display the goods?

Mr. JOHNSON. And frequently before it reaches the retail vendor. Mr. TREADWAY. Then what is the gain in this particular provision in the way of administration? You have two other markings, one on the package itself, and one on the article itself. For instance, almost constantly you see on small articles "Made in Japan." Sometimes you cannot find the words, but they are somewhere on the article. Now, what is the object of this legislation, if the outside container is to be removed anyway, and must be in order to sell the goods.

Mr. JOHNSON. The articles themselves will be required to be marked permanently, indelibly, and in a conspicuous place.

Mr. TREADWAY. And the package in which they are contained? Mr. JOHNSON. It will not be required to be marked.

Mr. TREADWAY. Then where do you get your third marking? Mr. JOHNSON. The present law requires the marking of the article, its immediate container, and the outer package. Now, take a foreign doll. It comes in a little pasteboard carton and a hundred of those cartons are packed in an outer case. Each doll must be marked; each carton must be marked; and the outer case must be marked.

Mr. TREADWAY. Now you are proposing to eliminate the marking from the outer case?

Mr. JOHNSON. And from the carton, leaving the marking required on the doll.

Mr. TREADWAY. Only on the doll?

Mr. JOHNSON. Yes, sir.

Mr. TREADWAY. If you went into a store and asked for a pair of rubber-soled shoes, which is a better illustration than yours of the doll-they make quantities of them in Japan, do they not?