to be. Under this term "specific instruction" the importer may not be confronted with a condition that he must subscribe to when he gives a bond until his merchandise arrives and he is called upon to furnish a bond.

Subdivision (d) provides that no condition in any bond taken to assure compliance with any law, regulation, or instruction which the Secretary of the Treasury or the Customs Service is authorized to enforce, shall be held invalid on the ground that such condition is not specified in the law, regulation, or instruction authorizing or requiring the taking of such bond.

If an importer is required to give a bond containing a condition which is not specified in the law, or under any regulation or specific instruction required by the Secretary of the Treasury, who would be responsible for such condition? Obviously if it is not in the law or any regulation or specific instruction of the Secretary of the Treasury, it must be some condition thought of by a subordinate official at the port where the bond is taken.

We believe that this provision is entirely too broad and that it should be modified to follow the language in the existing statute, which provides that "no condition in any such bond shall be held invalid on the ground that such condition is not specified in the law authorizing or requiring the taking of such bond," with the possible addition after the word "law" of the words "or regulation."

Section 30 (par. 1811 and sec. 489 of the Tariff Act of 1930): It has been the policy of the National Council not to make recommendations to committees of Congress concerning rates of duty but to confine itself to administrative law and practice. The proposed amendment removes from the free list and, therefore, makes dutiable "works of art (except rugs and carpets made after the year 1700), collections in illustration of the progress of the arts, works in bronze, marble, terra cotta, parian, pottery, or porcelain, artistic antiquities, and objects of art of ornamental character or educational value which shall have been produced prior to the year 1830."

There will undoubtedly appear before this committee importers and representatives of institutions interested in the articles made dutiable by the proposed amendment, who will fully cover the subject. Therefore, we will not make any comment on this proposed change.

Section 31 (act of March 3, 1927): Subdivision (d) provides:

"Section 3 (a) of the act of March 3, 1927 (U. S. C., 1934 edition, title 5, sec. 281b), is hereby amended by deleting therefrom the words 'officers of the Bureau of Customs' and inserting in lieu thereof the words 'officers or employees of the Treasury Department.''

The purpose of this amendment is not clear. The section of the act which it is intended to amend provides as follows:

"The Secretary of the Treasury is authorized to confer or impose upon the Commissioner of Customs or any of the officers of the Bureau of Customs any of the rights, privileges, powers, or duties in respect of the importation or entry of merchandise into, or exportation of merchandise from, the United States, vested in or imposed upon the Secretary of the Treasury by the Tariff Act of 1922 or any other law."

Is it the purpose of this amendment to abolish the Bureau of Customs and confer the duties of the Commissioner and the other officers of the present Bureau upon some other officers or employees of the Treasury Department? Within the last few years apparently many of the functions of the Bureau of Customs have been transferred to the Treasury Department proper through the medium of creating in 1934 a General Counsel for the Treasury Department. The chief counsel has control over the personnel of the Bureau of Customs who are styled "counsel, attorneys, or law clerks." Inasmuch as this group in the Bureau of Customs constitutes the major portion of those in the Bureau handling cases arising under our customs laws, the supervision and control of the Bureau is now practically in the hands of the General Counsel.

This amendment would give congressional authority not only for what has been done but would permit every vestige of authority and activity to be removed from the Commission of Customs and the Bureau, and locate it elsewhere in the Treasury Department. As a matter of fact, customs officers at the port of New York are officers and employees of the Treasury Department and the functions of the Bureau of Customs might be transferred to New York. If it is desired to again bring the customs administration under the direct control of the Secretary of the Treasury to an extent not possible with the Bureau, which is in the nature of a semi-independent part of the Treasury Department, why not abolish the Bureau and recreate the old Divi

sion of Customs? This would certainly result in a considerable saving in the expense of administration if the Bureau is to be relieved of its functions and will continue as a sort of empty shell.

We believe that the extensive amendment of the customs administrative laws is a matter that should be given the most careful consideration and should not be done hastily. We have in the United States Customs Service many men who have participated in the actual administration of customs laws for many years. We also have men who were connected with the service for years and have been in contact with the customs practice (out of the service) likewise for many years. We believe that customs laws that are the result of more than 100 years of consideration by committees of this Congress and by experts in and out of the Government service, cannot possibly be satisfactorily changed by the consideration and recommendation alone of men who have had a comparatively short contact with customs matters, no matter how efficient and capable these men may be in the practice of other branches of the law.

There would seem to be no reason why these proposed changes should be submitted to Congress without an opportunity for the interests affected to consider and discuss them. In March 1937 this association, after considerable work on the part of its customs committee, submitted to the Treasury Department suggested changes in the special and administrative provisions of the Tariff Act of 1930. Apparently no consideration was given to any of the suggestions made, with the exception of section 516 and the amendment to that section had already been embodied in a bill submitted to Congress during the last session, although there are several members of that committee whose experience in connection with customs (both in and out of the Government service) extends for more than 30 years.

I will not refer to all of these suggestions, but inasmuch as H. R. 6738 deals with proposed amendments to the value sections and methods of appraisement, I would like to refer to sections 500 and 501 of the Tariff Act of 1930, which deal, respectively, with duties of appraising officers and notice of appraisement.

Section 500. Duties of appraising officers: We believe that the following amendment should be made:

Amend paragraph (5) of subdivision (a), to read as follows:

"(5) To report his decisions to the collector within one hundred and twenty days after the date of entry."

Delays in returning invoices by the appraiser to the collector in the past few years have been so frequent and have caused such disturbance to the business of the importer as to require that there be some time limit specified in the law within which such returns must be made. Returns of invoices have been withheld for as long a period as 3 years, and it is not uncommon for such returns to be delayed for 6 or 8 months or a year.

If the examiner has no information that would lead him to believe that the value in the invoice is incorrect, he should return the invoice promptly. If he believes that he should have information as to values from the Treasury agent located in the foreign country from which the merchandise came, he can ask for a report. If this report is received within a reasonable time and shows a value higher than that shown in the invoice and approved, the collector can be informed, and in most cases there would be ample time for the collector to call for reappraisement under section 501.

If, as proposed in this amendment, the appraiser has 4 months to make a return on the invoice, and the collector has 60 days thereafter to call for reappraisement, the Government has full protection for a period of 6 months and certainly that should be ample time to obtain a report from a Treasury agent abroad.

While the Government is entitled to proper protection, it must also be borne in mind that the importer is likewise entitled to some consideration. It is obvious that an importer, entering his merchandise at what he believes to be market value, and guilty of no fraudulent act, should not be put in the position of having to pay duty on a value far in excess of that on which he entered his goods for a period of 2 or 3 years. It makes importing too precarious. It cannot be urged that it is a reasonable procedure to withhold the appraisement of merchandise for periods of 1 to 3 years.

Section 501. Notice of apparisement-Reappraisement: If the appraiser is required to make returns within 120 days, and in the absence of such return the entered value is to become the final appraised value, the collector should be

given an opportunity to file an appeal for reappraisement and, therefore, section 501 should be amended by inserting the following:

"If the appraiser fails to report the value to the collector within the period prescribed by section 500, and the entered value shall become the appraised value, the period within which the collector may file a written appeal for reappraisement shall be extended to 180 days from the date of entry."

MAY 27, 1937.

NATIONAL COUNCIL OF AMERICAN IMPORTERS & TRADES, INC.

The CHAIRMAN. At the request of Dr. Crowther, we will call, out of order, Mr. John G. Lerch, representing the American Tariff League.

STATEMENT OF JOHN G. LERCH, REPRESENTING THE AMERICAN TARIFF LEAGUE, NEW YORK CITY

Mr. CROWTHER. Mr. Chairman, I would like to have Mr. Lerch state in a few words what his past connections have been in Government service and what his present activities are.

The CHAIRMAN. Very well.

Mr. LERCH. I entered the Customs Service in 1912 as private secretary to Judge Hay, of the Customs Court, remaining there until 1920. I then joined the staff of the Assistant Attorney General in charge of customs, acted as chief of the Reappraisement Division in that office for about 5 years. In that capacity I was a member of a committee consisting of Mr. Lawrence, former Assistant Attorney General, and myself, that advised with this committee when the act of 1922 was passed.

I left the Government service in 1925 and since have practiced law for myself.

The CHAIRMAN. How much time do you think you will need, Mr. Lerch?

Mr. LERCH. About 15 minutes. I will just touch the high spots. The CHAIRMAN. Do you prefer to proceed without interruption to make your main statement?

Mr. LERCH. No, sir.

The CHAIRMAN. It is easier to keep track of the time that way, if there is no objection on the part of the committee.

Mr. LERCH. I do not mind interruptions, Mr. Chairman, as I go along. Possibly it is easier to do it that way.

The CHAIRMAN. You may proceed.

Mr. LERCH. On the whole, I agree with Mr. Bevans. I represent this Association of Domestic Manufacturers.

I agree with Mr. Bevans and some former witnesses that this bill, insofar as it corrects a lot of administrative features, is a good one. There are certain phases of it, however, to which we take exception. The first one is the first paragraph on marking. As one of the members of the committee asked Government counsel: What is the reason for the substitution of the provision for regulations of the Secretary, from where it now appears in the law, to the first line in the paragraph? That member of the committee said that it removed the mandatory provision of the act and placed everything within the discretion of the Secretary. We believe that to be true and I think that that virtually voids the marking law.

We suggest that inasmuch as there has been no valid reason shown for change of the present language, the Secretary being possessed of all the discretionary power he needs-and as Mr. Bevans showed by

illustration, he has used that sometimes to excess-we are unable to see any reason for a change in the marking law.

However, if this amendment is to be considered, we suggest that the mandatory provision be reinstated and the discretionary power left as it is in the present law.

I listened to Government counsel testifying on this provision of the law and he referred to the permanent indelible "marking in a conspicuous" place. That is not in this law, and we propose, as Mr. Bevans did, that that be reinstated. That was in the law a long time. It has been judicially construed and has caused no trouble.

On page 3, line 14, paragraph F: "Such article is imported for use by the importer and not intended for sale in its imported or any other form."

That discretionary power given to the Secretary would prevent the marking, for instance, of a number of articles like containers, bottles, what have you, that are imported for further use in perfumery or what other articles, and we propose that discretion should not be allowed the Secretary.

On page 3, line 17, paragraph G: That gives to the Secretary certain discretion as to merchandise which is processed after importation.

We propose, like in all other legislation that I know of, when such a privilege is granted to an importer, that it be done under proper proof and under bond. For instance, processing merchandise in warehouse today, a bond is exacted so that the merchandise under Government supervision will be properly processed under the law or the penalty of the bond exacted.

On page 4, line 7, paragraph J: That paragraph purports to perpetuate decisions made, such as those Mr. Bevans gave the committee and I will not enlarge on them-by the Secretary, under his present discretion, simply because they have been in existence for 2 years prior to July 1, 1937, and because someone has not taken up the litigation to test their validity.

We can see no reason why, because the Secretary has made a decision, and it has lasted for 2 years, it should be perpetuated by

statute.

So we suggest that paragraph J be eliminated.

On page 5, line 4, we suggest the deletion of "or the article or its container marked after importation"; and on line 7 the two words, the third and fourth words, "or marking"; and again on the same page in line 21 delete "or marking."

In other words, that gives to the importer the right to mark, without the additional duty, merchandise which has gone into consumption. We know of no such right given to importers in the history of tariff legislation. Once merchandise goes out of Government custody, he is divested of a number of rights that he might have availed himself of had it remained there. We can see no reason why this right should be extended to him after he has had his merchandise, because it has gone into consumption and he cannot possibly get it back. The inconsistency of that provision is that on such merchandise as he has taken possession of, 9 out of the 10 packages, he can mark it without the additional penalty, but the 1 package that remains in Government custody he must mark under

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Government supervision and pay the additional duty. That is wholly inconsistent, in our view.

I am skipping a number of minor changes which I will call to the attention of the committee in a memorandum which I will file with the committee.

Mr. JENKINS. As I understand it, all of these corrections or amendments that you are suggesting you are going to incorporate in a brief?

Mr. LERCH. I will submit a memorandum to the committee in detail calling attention to line and amendment.

On page 16, treating section 501 of the present law, which is the reappraisement section: That section we appreciate attempts to correct a situation which has bothered the Government a great many years; it bothered me when I was in the Government service. However, the language of this proposed bill, I feel, is not sufficient to accomplish the purpose for which this section was intended. So I suggest at line 15 on page 16, where it permits appraising and examining officers to testify at a hearing before the Customs Court, where they have no samples, and permits them to give their conclusions and certain facts which they may have knowledge of, to strike out the words "kept by them" and insert in lieu thereof "in the custody of such officials and made under their supervision or conclusions reached by them in the course of their official duties."

In other words, this limits the appraising officers to testimony as to facts of their own knowledge or testimony as to records kept by them.

Very few of the examining or appraising officers have had actual experience in the line of merchandise that they are handling and they do not have facts legally within their own knowledge. An objection made in court would probably keep out their testimony. Also, at a large port like that of New York, the business is so heavy that they could not possibly keep records of every shipment that came in. Hence, they would not have, after an appraisal had been declared void, as contemplated by this amendment, they would not have the facts or the records kept by them. Therefore, I think, in order to make this effective, that change is necessary.

Mr. COOPER. Will you permit a question there?

Mr. LERCH. Yes.

Mr. COOPER. How is a man going to testify about something if it does not come within his knowledge?

Mr. LERCH. This examiner, of course-well, let us say that he is handling wool every day in the year. He knows wool as one would know it handling it every day, but he has never bought and sold wool. He has never dealt with it in that way so as to commercially know the fact of values and the classification within his own knowledge legally.

Mr. COOPER. Is it not reasonable to assume that he is not going to undertake to testify about something that he does not know anything about?

Mr. LERCH. But he knows from conclusions reached, after years of experience of handling this merchandise, probably as well as the importer, all the necessary facts to testify to it.

Mr. COOPER. If he knows about them, he can testify to them, can he not?