Mr. McCORMACK. I think you are absolutely right. You have called a very pertinent matter to the attention of the committee, because the question would arise, what did Congress mean, what was said on page 2 or what was said on page 5?

Mr. READING. The language on page 2 undoubtedly indicates clearly what is meant by container. But on page 5 the sky is the limit, as the word "container" is used there.

Mr. McCORMACK. Do you think the Secretary of the Treasury should be given complete discretionary power, as provided in this bill, with reference to marking?

Mr. READING. What I had in mind when I referred to the fact that there had been a marking provision in all tariff acts commencing in 1890 was this. From 1890 to 1922 the marking provision did not mean anything worth while. It was just a matter of kind words that were meaningless. We hope that will be avoided in this proposed act.

The Secretary of the Treasury, as we all understand, has not the time to look into these things himself. The only protection that the ultimate consumer has, apparently, is the right to protest; and a protest to the Secretary of the Treasury does not always get results. If we had recourse to the Customs Court we would have a chance of getting some results.

Furthermore, the Customs Court and the Court of Customs and Patent Appeals are composed of members who have had considerable experience on such things as the marking law, and they are well qualified to judge.

The Treasury Department, on the other hand, is made up largely of people whose tenure of office is not so long, and they are, perhaps, not so well qualified to judge these things.

If we can establish that the intent of Congress is to protect the ultimate purchaser, when any question arises before the court the public, the ultimate purchasers in the United States, will be protected.

Mr. MCCORMACK. My question is a simple one. Would you rather have the existing law, with its mandatory provisions, allowing exceptions, or would you rather have the terms of this bill proposing that the Secretary of the Treasury-and I do not care what Secretary of the Treasury it is; personally, I have a very high regard for Secretary Morgenthau, so my questions are not directed to him personally, because my opinion of him is very high; but on the question of these matters of arbitrary action, we are all human-would you rather have the mandatory provisions of the present law than the discretionary provisions provided for in this bill?

Mr. READING. I will try to answer that as best I can.

you

The ideal thing, it would seem to me, would be to have subsection (a), as given here, with the first few words deleted, namely, "under such regulations as the Secretary of the Treasury may prescribe." If eliminate those words and then put in the requirements as specified here in subsection (a) of section 304, I think that would be ideal, and I think that would protect the ultimate consumer or purchaser. Mr. CROWTHER. It gives him an opportunity to exercise his discretion, at least.

Mr. READING. That is true, but we think we should have the privilege of going beyond the Secretary, if necessary, to the court.

I want to say that Mr. Benjamin Gould of The National Federation of Textiles, Inc., of New York City, scheduled to follow me, has worked with me in this matter, our problems being identical. I

think I may say that the remarks that I have made may be considered as his too. Mr. Gould will therefore, I believe, not take up the time of the committee.

Mr. Buck (presiding). We thank you for your appearance and for the statement you have given to the committee.

Mr. Buck (presiding). The next witness is Mr. Arthur Besse. Mr. Besse, will you give the reporter your full name, and your address, and state whom you represent.

STATEMENT OF ARTHUR BESSE, NEW YORK, N. Y., REPRESENTING THE NATIONAL ASSOCIATION OF WOOL MANUFACTURERS

Mr. BESSE. Mr. Chairman, my name is Arthur Besse; 386 Fourth Avenue, New York City; representing the National Association of Wool Manufacturers.

I am appearing in connection with section 15 relating to section 510 (b) of the tariff act, and related matters. The provision I am referring to is on page 19.

It appears that the Treasury Department believes that there has been injustice in connection with the administration of section 516 (b), or have suggested that importers have been harassed by the action of domestic interests. As a matter of fact, I believe the converse is true, and that the domestic manufacturers have been harassed by the attempt of importers to find loopholes in the act, and technical constructions which will enable them to obtain a lower classification of specific articles. We have a case in point in our industry.

In our opinion the proposed remedy does not seem either fair or adequate. It seems to me you can easily overcome the present difficulty, if any, by preventing the type of delay that is alleged to have occurred.

As the act now stands, the classification from a date, 30 days following the Secretary of the Treasury's decision, is in accordance with the ultimate decision of the court. If any delay occurs, which is chargeable to domestic interests, it must occur between the time of the Treasury decision and the filing of the protest.

It seems to me, therefore, that you can easily adjust the difficulty if you provide that importations 30 days after the filing of the protest are subject to the decision of the court, rather than as it reads now, 30 days after the decision of the Secretary of the Treasury, or as it reads in the proposed amendment in section 15, 30 days after the decision of the court itself.

The proposed amendment is unfair because the existing channels of trade are generally affected by the act of the importer and not the domestic manufacturer.

In our own industry, we have a situation where the classification has remained unchanged during the entire life of the act of 1922 and for 5 years under the act of 1930. The importer seeks to change the classification which some years of administrative practice did not change, and I think the burden of proof should be on him.

The actual proposal we have to make in that connection is this: To strike out in the fourth sentence of the paragraph, in section 516 (b) of the tariff act, all after the word "inform", and insert the word "complainant."

Mr. BUCK. That is the sentence beginning, "If the Secretary decides that the classification", and so forth.

Mr. BESSE. Yes; to strike out the words "such manufacturer, producer, or wholesaler", and everything that follows in that sentence, and insert the word "complainant." That is the same wording in the amended bill which you are considering.

And further, in the eighth sentence, to strike out the words after "publication of the Secretary's decision" and substitute the words "after a filing of such protest."

I would also like to protest the inclusion in this proposed bill of subsection (c) of section 15, on page 20.

It seems to me this arises from a misapprehension as to the purpose of section 516 (b).

This section does not enable a domestic manufacturer to protest a rate of duty, but merely a classification. I realize, of course, that this paragraph 516 (b) has been nullified as respects the foreign-trade agreements, by the enactment of section 350.

Let me give you an illustration. Supposing that firebrick is subject to a reciprocal trade treaty. A domestic manufacturer who files a protest is not asking for a different duty on the particular product which comes in as firebrick. He is asking whether a material that comes in is, in fact, firebrick, which has been subject to an agreement, or is something else.

I see no reason for putting in such a provision because section 516 (b) does not refer to a rate which is fixed by the agreement, but refers to the classification of material that seeks to come in under that agreement.

My particular remedy for that is this

Mr. CROWTHER (interposing). Ultimately the rate is in question, after that decision, because the reason for the protest of the classification is to have a different rate assessed, is it not?

Mr. BESSE. That is true, but it does not run contrary to the trade agreement with the foreign country because if the court determines that the article is not the article which was the subject of that agreement, the remedy is to strike out section (c) of section 15 of this act in toto, beginning with line 17 and ending with line 23, and insert the following: Subsection 2 of section 350 of the Tariff Act of 1930 is hereby amended by changing the word "sections" to "section" and by deleting in that same sentence the words "and 516 (b)”.

We also believe that for administrative purposes there should be another section added to this bill, dropping the phrase "made of blanketing" from paragraph 1111 of the Tariff Act of 1930.

For many years the tariff laws had a paragraph applying to blankets and flannels carrying a higher rate of duty than that which applied to cloths. Manufactures not specially provided for, wholly or in chief value of wool were assessed for duty under the paragraph pertaining to wool cloths at a higher rate of duty than blankets.

In framing the act of 1922 (the provision in this respect is the same as in the act of 1930) consideration was given to the inclusion of a basket clause to catch such items as upholstered furniture in chief value of wool, and other similar items in chief value of wool, or in which the wool is of such character that the amount of the wool could not be readily determined without destructive analysis.

Such a basket clause was provided in paragraph 1120 of the act, and because of the fact that the wool content could not be determined it carried an ad-valorem rate with no compensatory duty on the wool.

By that action, articles not specially provided for were put in this basket clause, paragraph 1120, at a lower rate of duty; so it seemed, therefore, appropriate to put steamer rugs and automobile robes in with blankets, even though that necessitated a lower rate of duty than that at which they had been assessed previously when they came in with articles not specially provided for. In writing paragraph 1111 the phrase "made of blanketing" was inserted. It was inserted to prevent piece goods from masquerading as steamer rugs, automobile robes, or couch covers, and so obtaining a lower rate of duty than provided in the paragraph referring to piece goods, which is paragraph 1109.

For the entire period of the life of the Tariff Act of 1922, and for 5 years under the Tariff Act of 1930, all automobile robes and steamer rugs have been assessed under paragraph 1111.

On March 25, 1935, the Government was defeated in a classification case before the Court of Customs and Patent Appeals, which sustained the importers' contention that steamer rugs which were not made of blanketing, and hence were not specially provided for, and were entitled to the ad valorem rate specified in the basket clause.

Automobile robes and steamer rugs, although specifically mentioned in the Tariff Acts of 1930 and 1922, in paragraph 1111, are now assessed at a lower rate of duty if they are equipped with fringe. If they do not have fringe they are still assessed under paragraph 1111.

An unfair distinction and without merit. We believe the decision of the court against the Government was made partly because of the failure to introduce certain relevant testimony and information, and partly because of a misinterpretation of technical processes by the

court.

Congress obviously intended that the wool in steamer rugs and automobile robes should be assessed for duty. It also obviously intended that steamer rugs should be assessed under paragraph 1111, since they are specifically mentioned in that paragraph.

We therefore propose a new section, to immediately follow section 28, as follows:

"Paragraph 1111 of the Tariff Act of 1930 is hereby amended by deleting in the first sentence of said paragraph the words 'made of blanketing'." That will bring the paragraph into accord with the administrative practice in the last several years and will correct what appears to be an injustice, due to the fact that the Customs Court did not, I believe, properly apprehend the issues involved.

We have in our industry at the present time a proceeding under section 516 (b) in an endeavor to reopen the matter and get a proper classification, or a reversal of the opinion of the Court of Customs Appeals.

Mr. McCORMACK. What is the effect of that decision?

Mr. BESSE. Paragraph 1111 provides that articles valued at not more than $1 per pound shall be assessed a duty of 30 cents per pound and 36 percent ad valorem; if valued at over a dollar the duty is 33 cents per pound and 37% percent ad valorem.

Paragraph 1120, under which they are now being assessed, provides only for the ad valorem rate of 50 percent, which, in most cases, is less than the sum of the two rates which would be assessed under paragraph 1111.

Mr. McCORMACK. If they put a fringe on them they can get a lower rate?

Mr. BESSE. Practically all of them have fringes on them.

Mr. McCORMACK. Is there any doubt in your mind but what the purpose was to get a lower rate in most cases?

Mr. BESSE. No, I think not, because in the majority of cas es steamer rugs are made with fringe.

The entire case was based on the effort to get a lower rate on the rugs.

Mr. Buck. Do you not think your amendment goes rather to the question of rates than to the question of administration?

Mr. BESSE. It goes to the question raised in regard to section 516 (b). It is a matter of administration in that it is a case coming under section 516 (b), and it is a case of interpretation wherein the Government disagrees with the court.

Mr. BUCK. These proposed amendments go only to the administration, and this bill is not concerned with what results may be reached through such procedure, through the courts or elsewhere.

Mr. BESSE. That, I think, is not strictly true. You are considering here the question of paragraph 1101, which has to do with the duty on wool and noils, referred to in section 27 of this bill.

Of

We believe it is proper to consider this suggestion in connection with this bill. We would like to make the suggestion, in any case. course, it is for you to determine whether it should be included. It seems to me that section 516 (b) has to do with questions of classification.

Mr. CROWTHER. Did you mean to refer to paragraph 1101 or paragraph 1111?

Mr. BESSE. Paragraph 1101 is referred to in this proposed bill. I am speaking of paragraph 1111 and suggesting it be similarly included.

Mr. Buck. We thank you for your appearance and the statement you have given to the committee.

The next witness is Mr. Louis M. Cohn.

Will you give to the reporter your full name, your address, and state in what capacity you appear?

STATEMENT OF LOUIS MARBE COHN, IMPORTER STRAW GOODS, FELTS, 15 WEST THIRTY-SEVENTH STREET, NEW YORK, N. Y.

Mr. COHN. Mr. Chairman, my name is Louis Marbe Cohn, 15 West Thirty-seventh Street, New York City.

I am an importer of wool and felt hat bodies. I am here in behalf of importers of wool felt and straw hat bodies in New York City, as well as on my own behalf. I appear in behalf of a group of my colleagues who are engaged in the same business.

I am here particularly to indorse section 15 as proposed in the bill submitted by the Treasury Department.

We have been suffering, I and the group I represent have been suffering untold nuisances under the present provisions of section 516 (b) of the tariff act.

I will try to give you facts that will show you what we have been suffering. No group of importers, to my knowledge, has suffered the harassments and ceaseless uncertainty as has our group of wool felt body importers since the Tariff Act of 1930 was passed.

We were included under paragraph 1115 (b) of the act. The act was no sooner signed by the President in 1930 when, at the instance