CUSTOMS ADMINISTRATIVE ACT OF 1937

TUESDAY, JUNE 1, 1937

HOUSE OF REPRESENTATIVES,

COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

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

The CHAIRMAN. The committee will be in order. We will continue the hearings on H. R. 6738, a bill to amend certain administrative provisions of the Tariff Act of 1930, and for other purposes.

At the request of Representative McCormack, we will first hear Hon. James C. Oliver, a Representative in Congress from the State of Maine.

Mr. Oliver, you may proceed.

STATEMENT OF HON. JAMES C. OLIVER, A REPRESENTATIVE IN CONGRESS FOR THE STATE OF MAINE

Mr. OLIVER. Mr. Chairman, I appreciate this opportunity of coming before you to make a brief statement concerning a situation which is rather important to my particular district as well as the entire State of Maine, and which I believe also is equally important to the city of Buffalo, N. Y., and to some other points where there may be located grain elevators which are available for the storage of wheat, as the need may arise, from time to time.

It will not take me very long to discuss this matter and show you why this particular bill, H. R. 6738, is a means whereby this situation can be ironed out to the satisfaction of those of us who are trying to find a means by which the people of our particular districts may have an opportunity to make a living.

In my district we have a port which has always been used in the past for trans-Atlantic shipping, and has always enjoyed a very healthy and prosperous condition up until the past 10 or 12 years.

I can tell you in a few words how this particular maritime activity has been of great importance to the people of our city of Portland and to the people of the entire State.

In the past, longshoremen handling trans-Atlantic commodities coming from the dominions and the possessions of Great Britain, coming into Canada through the port of Portland, have found a productive method of making a living for themselves, and as a result the local merchants in the city of Portland and throughout the State of Maine have felt the favorable effects of this shipping activity.

About 15 years ago there was a situation that arose where Canada, through her long-term policies with regard to transportation and nationalized railroads, and ports, stepped into the picture, said that

the port of Portland should not be used any more to handle Canadian commodities, and as a result this healthy condition which then existed on our water front became impregnated with decay and rot and inactivity until now we have the men who were working on our water front on the relief roll.

I cite this somewhat in detail because to me it is vitally important that this situation be remedied. I think that through the operation of this bill there is an opportunity to remedy it.

We have been the victims of international discrimination, victims of socialized railroads and ports on the part of Canada, and this situation has been further aggravated by a ruling in connection with the Tariff Act of 1930, sections 557, 559, and 563, which limited the time in which grain could be stored in these elevators, which are located in the city of Portland and in the city of Buffalo, N. Y., and so far as my information goes, those are the only elevators which are affected by this ruling.

Unless the duties are paid on this grain stored in these elevators within 10 months from the time the grain is first placed there, the grain is subject to confiscation.

The practical effect is that the grain is not stored in the elevators at all, and as the result the wharves in Portland are quiet and there is no activity in trans-Atlantic shipping, and productive activity is practically at a standstill, so far as maritime activity is concerned. The elevators are practically abandoned, and there is no activity whatsoever.

The Canadians tells us and I am speaking now of the Canadian National Railroad officials and other officials of Canada who are spokesmen for the Government-they tell us that if this restriction were removed, which now limits only grains, and no other commodity, so far as the payment of customs duties is concerned, within 10 months, then there will be no question in their minds but that they may possibly use these elevators once again.

So I am appearing this morning to ask that this committee in considering the bill pending before you, H. R. 6738, will make further provisions to amend the tariff act of 1930, to the effect that this 10 months' limitation on grain stored be eliminated, and that the 3-year period in effect with regard to other commodities shall be placed into effect concerning grain.

If that is done, Mr. Chairman, I am of the opinion that any further excuse for the continued discrimination against us by the Canadian transportation systems will be removed, and you, as members of this committee, will not place the citizens of this country on record as being a party to a proposition of international discrimination.

This will be the practical effect, that renewed activity at these elevators will result in placing the men back to work and taking them off of the relief rolls, and put the retail stores and the wholesale establishments in the position where they can participate in the dollars which will come from this activity, that are now going to Canada, as the result of this ruling.

In view of this particular ruling, I hope I have made this situation clear.

Congressman Mead, of New York, at the last session of Congress and in this session introduced a bill (H. R. 38) which had for its purpose the ironing out of this language in connection with the 10

months' provision in the case of grain, which appears in sections 557, 559, and 563 of the Tariff Act of 1930.

That is a specific proposition, and the reason I am appearing this morning is to ask that in this bill (H. R. 6738) which is now pending before you for consideration, that this same language which is in Mr. Mead's bill be included, for the purpose of striking out this language and giving back an American activity involving business interests and labor to the American people.

Mr. McCORMACK. How long was this limitation been in effect? Mr. OLIVER. Since 1930.

Mr. McCORMACK. This is a part of the law?

Mr. OLIVER. That is right.

Mr. McCORMACK. I am rather interested to know why that was written into the law, if you know the history of it.

Mr. OLIVER. I have no actual knowledge concerning it, but my information is that when the Farm Board was accumulating grain they found these elevators perhaps not available, because of the storage of foreign grain in the elevators, and they wanted the grain to move quickly so that they would have that port for the further storage of grain accumulated by the United States Government.

So far as any benefit to the American public of this law is concerned, I cannot see anything, so far as my knowledge goes, but that the law has worked to the disadvantage of the citizens of this country.

Mr. McCORMACK. Section 557 provides that—

Any merchandise subject to duty, with the exception of perishable articles and explosive substances other than firecrackers, may be entered for warehousing and be deposited in a bonded warehouse at the expense and risk of the owner, importer, or consignee. Such merchandise may be withdrawn, at any time within three years (or ten months, in the case of grain)

Mr. OLIVER (interposing). That is the language we have reference to.

Mr. McCORMACK. The section continues:

from the date of importation, for consumption upon the payment of duties and charges accruing thereon at the rate of duty imposed by law upon such merchandise at the date of withdrawal.

Why did they pick out grain? I am curious to find that out, if you can give us any information about that.

This is the Tariff Act of 1930?

Mr. OLIVER. That is right.

Mr. McCORMACK. We on this side-and I do not say this for political reasons were not in control of the Congress. I was wondering why grain was singled out.

Mr. TREADWAY. I have here-and with Mr. Oliver's permission, I would like to read them-the remarks of Senator Nye, who offered this amendement on the floor of the Senate. This statement appears. in the Congressional Record of October 18, 1929, volume 71, part 4, pages 4653-4661.

This is what Senator Nye said:

Senator NYE. It relates only to grain brought in primarily from Canada to store in bonded warehouses, to be exported as grain at the will of the owner.

The sole and the whole purpose of the amendment is to afford to the American producers of wheat storage capacity that is available to them and would be available to them but for the fact that it is now possible for Canadian wheat to be brought into America and to glut our eastern terminals. The design of the amendment is to furnish an opportunity to the American farmer to store his grain during such seasons as the present one.

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The CHAIRMAN. Where was that statement made?

Mr. TREADWAY. On the floor of the Senate. I think this will answer Mr. McCormack's question.

That is in entire harmony with your information, is it not?

Mr. OLIVER. I would say it appears to correspond to the information I had.

Mr. McCORMACK. In other words, there was an amendment put on in the Senate?

Mr. TREADWAY. On the Senate floor.

Mr. McCORMACK. Senator Nye would not have offered the amendment unless he sincerely believed that the situation required it. What has been the experience since that time?

Mr. OLIVER. The experience since then, so far as the records of grain activities are concerned, has been this:

In Portland, where grain elevators and six or seven wharves in connection with grain elevators, were used for trans-Atlantic shipments, owned by the Canadian National Railroad, they have, through their discriminatory practices, practically eliminated all activity from our water front.

This particular phase of the law, in my opinion, gives them a further reason for not sending us any commodities for shipment.

They say because of the 10 months' period provision, if we send grain here and put it in the elevators for transshipment within 10 months, if we do not pay the duty, that grain is subject to confiscation by the United States Government.

As a result they use this particular situation to further take our business away from us.

Then, so far as Buffalo is concerned, my understanding is that this has had the effect of closing five of the grain elevators in Buffalo, with a consequent loss of employment and business volume in that locality. Mr. McCORMACK. My concern is not so much with the Canadian aspect. I think the important thing is, if it is a fact, to show that as the result of this certain cities have suffered, and if it is a fact I think the record should show that the very thing that Senator Nye feared has not materialized, but on the contrary, if it is a fact, that it has caused tremendous damage to both Portland and Buffalo, and certainly it has affected those who have made millions of dollars of investment of capital in the establishment of grain elevators.

What has been the effect of this provision on Portland?

Mr. OLIVER. It would be difficult for me to say, beyond this particular fact

Mr. McCORMACK (interposing). What effect has it had on the employment of men?

Mr. OLIVER. So far as the employment of men is concerned, as a general thing, in this particular industry

Mr. McCORMACK (interposing). How has it affected the business of Portland?

Mr. OLIVER. I would say this in reference to employment, that previously there had been engaged in that work at least a thousand longshoremen at wages running about $50 a week on the average, and they have been placed on relief, and for the limited amount of work they have been doing their weekly pay has been cut to about $5 a week, on the average.

Mr. McCORMACK. It has taken away other activities from Portland?

Mr. OLIVER. As the result of less pay rolls it has affected the retail -establishments of Portland; it has caused the loss of locally owned stores, and it has brought in their place chain organizations, which are taking away the dollars and turning them over, away from the local ownership to the chain organizations, and it has decreased the assessed valuation of our city and increased the debt of our city.

Mr. McCORMACK. Have you any empty warehouses there, too? Mr. OLIVER. We have empty warehouses in addition to the grain elevators.

Mr. McCORMACK. Did you have that condition before this particular provision was inserted in the act?

Mr. OLIVER. Not to the extent that we have it today.

Mr. McCORMACK. In other words, do you say that in your opinion, as the result of this limitation, in addition to what you have already stated, that there are empty warehouses there which would be engaged in business activity it it was not for this limitation?

Mr. OLIVER. I think that is a fair statement of the facts.

Mr. McCORMACK. You know that of your own personal knowledge? Mr. OLIVER. Absolutely.

Mr. DUNCAN. May I inquire, is the wheat storage solely for the purpose of exportation, or does part of it find its way into the domestic market?

Mr. OLIVER. The wheat stored there in the past has been practically 100 percent for the purpose of exportation, also for use as a base cargo for the transshipment of other commodities. For trans-Atlantic -cargoes they use wheat as a base.

Mr. DUNCAN. Then, such wheat as might be stored there did not affect the supply in this country?

Mr. OLIVER. None whatever.

Mr. TREADWAY. In view of the facts you have given us and the views you are expressing, it would seem to me perfectly practical and feasible to suggest that we ask the representative of the Treasury Department present as to his views on the suggested amendment that you are asking to be incorporated in the bill.

I think it would be proper to ask Mr. Hester for his views about that.

Mr. Buck. Mr. Oliver, under the existing rail situation so far as the Maine ports are concerned, is there any real possibility of those elevators being utilized for grain storage for export?

Mr. OLIVER. It would depend entirely on the attitude of the Canadian National Government which is operating the Canadian National Railway as to whether or not they were going to take grain out of particular areas of the United States in preference to particular areas of Canada.

Mr. Buck. Your experience since the passage of the limitation has been that they do not?

Mr. OLIVER. Absolutely.

Mr. Buck. No American grain?

Mr. OLIVER. That is right.

Mr. Buck. In other words, the expectation that Senator Nye might have had has never come to pass in reference to the storage of American grain at these terminals?

Mr. OLIVER. That would be my thought in the matter entirely. Mr. CROWTHER. Do you think this might provoke any new situation between us and the Canadian Government in regard to the trade agreement?