$12.50, the cost of the bond and of brokerage services. The United States Government does not get any of that, however.

Mr. McCORMACK. Will the gentleman yield there?

Mr. LEWIS. I yield.

Mr. McCORMACK. An American cannot go into Canada and do even an hour's work without getting a permit, is that correct?

Mr. JOHNSON. I am not acquainted with Canadian immigration requirements.

Mr. McCORMACK. And they will not give any permits if there are any Canadians that can do the work, as I understand it.

Mr. JOHNSON. That is an immigration question.

Mr. McCORMACK. I know, but it is related to this in this way. They tell me that at Detroit, along the border, thousands and thousands of Canadians come over and work in our factories in America. They just go across the International Bridge, or whatever the boundary is. Here you say that professional equipment, tools of trade, camping equipment well, I can understand camping equipment, because we would get some benefit out of that; but if a person comes into the United States temporarily, on a temporary visa, they cannot do any business in here, can they?

Mr. JOHNSON. This professional-equipment matter has come up most frequently in connection with customs, with persons such as newspapermen who bring their cameras in and have to pay duty on the cameras. The duty cannot be refunded on exportation. They are here for only 3 months or so. I believe that the camera case has been the most frequent one and it is the particular one that we had in mind here.

Mr. TREADWAY. That is a condition that you expect to remedy by this?

Mr. JOHNSON. That is correct.

Mr. TREADWAY. In other words, take the duty off the cameras? Mr. JOHNSON. If a bond is posted for its exportation within 6 months.

Mr. REED. Will the gentleman from Massachusetts yield?

Mr. McCORMACK. Yes.

Mr. REED. Here is a case showing how strict other countries are. Last Christmas my son, in Detroit, wanted to come to our home town through Canada, which is a shorter way, coming down by Buffalo and then into our home town. He had purchased Christmas presents for the family. He went that way and was stopped, and if he had continued it would have meant he would have had to pay duty on all of those articles, just to pass through. He had no intention of leaving any articles in Canada. He was obliged to drive a hundred miles farther, go clear around the other way, to the other end of the lake, in order to avoid paying that duty. That is how strict they are with us. I am not in favor of relaxing these rules unless we get some concessions on our part.

Mr. McCORMACK. Only the other day they imposed a 35-percent tax on the gross business income of industries which were foreign. The net result was to affect certain American industries. That causes some of us to do a lot of thinking. The whole purpose of that is to compel American industries located through branch offices in Mexico to divorce themselves from that activity in order to avoid a destructive tax. That causes some of us to do a lot of wondering about whether we are not being a little too lenient; or whether the provisions

of these laws should not be reciprocal. In other words, we pass a law which is binding upon our people but is not elastic enough to take care of such an act of the Mexican Government, as I have just mentioned. The net result of which is aimed directly at American business.

It is morally wrong, in my opinion, for any government to do that. Mexico is doing it. We cannot stop it. But we can meet the situation, so far as legislation of this kind is concerned, which is within our own jurisdiction.

It opens up a broad field and I know, so far as I am concerned, that I am going to look into these recommendations very critically. It seems to me the language should be drafted so that it results in a reciprocal exchange of concessions, whereby American citizens will receive similar concessions abroad, and which we will extend to citizens of other countries when they come to the United States.

Mr. JOHNSON. Of course, we are interested in this primarily as an administrative matter. We find on these bridges and in these tunnels great lines of cars coming across with foreign licenses. For us to stop each car and find out where they are going and why they are coming in delays the clearance of traffic at the bridge or tunnel considerably; if you have to find out whether a man is selling goods or visiting his relatives.

It is the administrative feature of this exemption which primarily interests the Bureau of Customs, although I think it is entirely consistent with the present trend to relax some of these rigorous restrictions.

Mr. DINGELL. Mr. Chairman.

The CHAIRMAN. Mr. Dingell.

Mr. DINGELL. I did not mean to interrupt

Mr. JOHNSON. I just intended to say this on the question of reciprocity, that the United States usually leads the way and our neighbors have followed on these matters of personal travel between countries. Usually the customs' requirements are about the same as ours in Canada. I have no knowledge that there would be any reciprocity in this case, but that has been our past experience.

Mr. DINGELL. I want to ask the witness a few questions. For a number of years it was the practice between Canada and the United States for both Nations to permit the passage of automobiles to their respective countries, by going through a part of the other country; that is to say, Canada permitted American automobiles built in Detroit to be shipped through Ontario into Buffalo by merely furnishing bond which was canceled on delivery of the automobile at Buffalo. That was in order to permit the use of the shortest possible route. Canada from time to time would ship automobiles that way, by the drive-away method, we will say, from Toronto to Detroit, and then from Detroit over American territory to Winnipeg. That has been permitted by the Treasury for a number of years.

Here not so long ago the Treasury by regulation stopped that practice and there is no way now by which that can be done.

I am told by the International Bridge authorities at Detroit that Canada still allows that privilege to American manufacturers, but we do not allow Canadians that privilege. It is my purpose to correct that by legislation, if possible, by a change in the tariff law, by agreement, if that is possible. I should like to see that condition rectified, because it deprives us of considerable revenue.

The reason for that is this: Between Toronto and Winnipeg, that part of the country north of Lake Superior is almost impassable. There are no roads. These people have to come through Detroit or through Port Huron and then over through Chicago and through the Dakotas and back into Canada.

Mr. JOHNSON. I think that matter is pertienent to another provision in this bill.

Mr. DINGELL. What I want to get on the record is this: I am aiming to correct that situation.

Mr. JOHNSON. This bill proposes to take care of that situation, if no common-carrier facilities are readily available for the transportation of the merchandise.

Mr. DINGELL. I would not want to compromise on that basis, because I certainly think that these people ought not to be compelled to ship by common carrier, if they chose some other method. They should be privileged to drive away, if they want to, and not be forced to ship by common carrier. The customs laws should not be used as railroad leverage unless Congress so directs.

Mr. JOHNSON. The present law limits the carriage of goods in transit through the United States to common carriers.

Mr. CULLEN. Mr. Chairman, the House is about to convene. There is a very important bill up for consideration, and I move a recess until 10 o'clock tomorrow morning.

The CHAIRMAN. The question is on the motion.

(The question was taken and the motion carried.)

The CHAIRMAN. The committee will recess until 10 o'clock tomorrow morning.

(Whereupon a recess was taken until 10 a. m., Thursday, May 20, 1937.)

CUSTOMS ADMINISTRATIVE ACT OF 1937

THURSDAY, MAY 20, 1937

HOUSE OF REPRESENTATIVES,
COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

The committee met at 10:30 a. m., Hon. Robert L. Doughton (chairman) presiding.

The CHAIRMAN. The committee will be in order. We will proceed with the hearings on H. R. 6738.

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-Resumed

Mr. REED. Mr. Chairman, I hope that before the hearings are concluded a representative of the dairy industry will be allowed a few minutes on a matter that is touched on by this legislation.

The CHAIRMAN. I do not think there will be any difficulty about that.

Mr. Hester, will you proceed?

Mr. HESTER. The next section is section 5, and Mr. Johnson will explain that section.

Mr. JOHNSON. Section 5, appearing on page 8 of the bill, is entitled "Effective Date of Rates of Duty."

The purpose of this provision is to make the law read as the courts and administrative officers have construed it. The law now pro'vides that when goods the duty on which is governed by "weight" are deposited in warehouses, duties on such goods shall be assessed according to the weight at the time of "entry." This provision states only a fraction of the law, since the courts and administrative officers have since time immemorial held that, regardless of whether merchandise is entered for warehouse or consumption, which means for immediate clearance through customs, duties on such merchandise, if governed by weight, size, volume, or other quantitative criteria, shall be assessed according to the weight, and so forth, at the time of importation. The statement of a small portion of the law contained in the present provision has led to some confusion, and the present amendment is designed to state the law in its entirety and thus clarify the situation. It provides that insofar as duties. are based upon the "quantity" of any merchandise, such duties shall be levied and collected upon the quantity of such merchandise "at

the time of its importation", whether deposited in a warehouse or entered for immediate clearance through customs. It will be noted that the word "quantity" has been substituted for the word "weight" in the original statute, since it is a broader word, more accurately describing what the law is; that is, it covers volume, size, and other similar measurements, as well as weight. "Time of importation" has also been substituted for "time of entry", since there is ambiguity in the phrase "time of entry", because "entry" may mean either importation or the subsequent act of clearing the goods through customs. The courts have construed it to mean the former in the present provision, and it is desirable to codify this construction in the statute.

Mr. McCORMACK. What is the present law? Is it based on weight or quantity at the present time?

Mr. JOHNSON. The present law is that the goods are dutiable according to their quantity at the time of importation, with no allowance for any subsequent shrinkage, except under specific provisions under which goods can be cleaned or repacked or otherwise changed in condition but not manufactured.

There is also another exception where no allowance is made in certain cases for any loss of liquor on the voyage of importation.

Mr. McCORMACK. You say that the present law relates to quantity at the time of import, or weight?

Mr. JOHNSON. The courts have applied the rule as relating to quantity, including weight.

Mr. McCORMACK. You said, in response to my previous question, that it related only to quantity. Now you say that it relates to quantity, including weight.

Mr. JOHNSON. Yes, sir.

Mr. McCORMACK. Which is it?

Mr. JOHNSON. Quantity, including weight.

Mr. McCORMACK. Quantity and weight are two entirely different matters, are they not?

Mr. JOHNSON. By quantity we understand weight, gallonage, yardage, dozens—any measure of quantity, including weight. We chose the word "quantity" to express all bases upon which specific duties, or duties dependent upon any measure other than value, are assessed. Mr. MCCORMACK. Which is the determining factor, the quantity or the weight? I can see that in one case the quantity and the weight might be the same. But I can also see where in other cases there would be a marked difference. For example, take tobacco imported into the United States.

Mr. JOHNSON. Yes, sir.

Mr. McCORMACK. Suppose it has been here for a year or a year and a half and it is then reexported. There would be quite a marked difference in the weight, would there not?

Mr. JOHNSON. Yes, sir.

Mr. McCORMACK. Between the time of import and the time of export?

Mr. JOHNSON. Yes, sir.

Mr. McCORMACK. The purpose of this is to apply to the tobacco at the time of export, is it not?

Mr. JOHNSON. If the entire package of tobacco is withdrawn for exportation, there would be no duties at all.