STATEMENT OF A. M. LOOMIS, WASHINGTON, D. C., SECRETARY, NATIONAL DAIRY UNION Mr. LOOMIS. Mr. Chairman, my name is A. M. Loomis, Washington, D. C., representing the National Dairy Union. I am appearing, Mr. Chairman, asking for an amendment to paragraph 1730 of the Tariff Act of 1930. That paragraph reads: All products of American fisheries (including fish, shellfish, and other marine animals, and spermaceti, whale, fish, and other marine-animal oils) which have not been landed in a foreign country, or which, if so landed, have been landed solely for transshipment without change in condition And so forth. This is the provision which permits the products of American fisheries to be on the free list. Mr. COOPER. Mr. Chairman, it would be appropriate to inquire of Mr. Loomis, does that relate to the bill now under consideration? Mr. LOOMIS. I think so. I think it can easily be considered as in line with what this bill does. This amendment which I want to offer is in line with one of the sections of this bill which I think I can call your attention to. I am not asking for any change in rates in any way. I am simply asking for an administrative section to define the status of the American whale fisheries. That is with respect to whaling. You have one or two places in the bill where that sort of thing is done. You cannot affect the administrative provisions without affecting the rates. This is not a proposed amendment to put something on the dutiable list, except by a definition. Here are the facts, gentlemen. Since Congress undertook to do those things which are necessary to bring about reasonable prices in the fats and oils industries in the United States, in 1934, 1935, and 1936, this has become the most desirable market in the world for oils and fats. As the result, American whaling has been resumed, and there are now two whaling ships of the modern type operating in the whaling industry. The owners and operators of these ships have found that under existing regulations of the Treasury Department they do not have to employ American ships to follow, catch, and capture their whales. They can employ foreign vessels. This is what has happened in the whaling industry. The Frango, which is the first ship put into this business, is operating in the South Indian Ocean. Mr. COOPER. Mr. Loomis, I think it would be helpful if you would read your proposed amendment and let us see whether it is directly within the scope of the bill, because it it is not, it is a matter that should be treated separately. Mr. LOOMIS. Here is the amendment. This is my own language; it will accomplish the thing aimed at, and it can be put into proper shape by the experts of the drafting service. Here is the language in our proposed amendment to the tariff act, proposed as an amendment to H. R. 6738 now pending before you. This would follow section 30 of the pending bill: Paragraph 1730 of the Tariff Act of 1930 is hereby amended by striking out the period at the end thereof and inserting a colon and the following words: Provided further, That products of whale fisheries shall not be exempt from duty unless all vessels engaged in such a fishing unit, including the factory ship, the killer ships, and auxiliary vessels are of American registry. Mr. COOPER. Where do you propose to offer that amendment to the pending bill? Mr. LOOMIS. As section 30 (a). Mr. COOPER. Where is section 30? Mr. LOOMIS. That is on page 38 of the bill, beginning at line 12. I would like to add the amendment I read as section 30 (a). Section 30 deletes a paragraph from the free list. Mr. Buck. Section 30 has been withdrawn by the proponents of the bill. Mr. LOOMIS. Then this proposed amendment would be numbered section 30. Mr. Buck. How would that affect your idea of germaneness? Mr. COOPER. That would clearly make it not germane to this bill, Mr. Loomis. Mr. LOOMIS. That does not affect the necessity for this amendment. Mr. COOPER. It may be very proper to consider it as a separate measure, but it does not have any proper place in this bill, as I see it. Mr. LOOMIS. I would like to submit three or four facts for the record, because this matter is in the jurisdiction of this committee, particularly as this committee has had in the past an extremely satisfactory and friendly attitude toward this effort to protect the domestic fats and oils industry. In just one season, last year, one whaling ship sent into this country over 23 million pounds of whale oil. That is a ship of eight or nine thousand tons. There is a new ship, the Ulysses, which has just been fitted out, going into the same territory, a ship of 12,000 tons, which has already sought and secured Department of Commerce registry for eight killer ships and one observer and killer ship, all of foreign registry. In other words, the only American boat engaged in this is the factory boat, and the whaler-killers operate with foreign crews, without any reference to the laws of the United States. Mr. McCORMACK. What would be the effect from a dutiable angle? Mr. LOOMIS. I cannot answer that because I do not know whether these ships can secure American killer ships. Mr. McCORMACK. I mean these foreign ships. Mr. LOOMIS. If these ships continue to operate as they are now licensed to operate the entire outfit the smaller ship Frango made over 20 million pounds last year. That would be subject to a duty of 6 cents per gallon and an import tax of 3 cents per pound. That runs about seven or eight hundred thousand dollars a year. Mr. McCORMACK. Is that an excise tax? Mr. LOOMIS. No; it is an import tax. Mr. McCORMACK. Then what is the duty? Mr. LOOMIS. That is a duty in the name of a tax. It is assessed at the customhouse. Mr. McCORMACK. Was that imposed by the 1930 Tariff Act? Mr. McCORMACK. The tax of 3 cents was in a separate bill? Mr. LOOMIS. There was a general bill in 1934 which provided a 3-cent excise tax on certain oils, and a 3-cent import tax on certain other oils. Mr. McCORMACK. An indirect tariff? Mr. LOOMIS. It served that purpose. Mr. McCORMACK. But it is an indirect tariff. Mr. LOOMIS. That is right. Mr. McCORMACK. And in addition to that the tariff law of 1936 provides what? Mr. Looмis. Six cents per gallon. Mr. McCORMACK. For what? Mr. LOOMIS. For whale-oil duty. Mr. McCORMACK. Under what circumstances does this duty apply? If it is not a product of American fisheries, how do these vessels bring their product in duty-free, if they are not American vessels? Mr. LOOMIS. The factory ship upon which the oil is produced is an American ship. Mr. McCORMACK. In other words, the factory ship Mr. LOOMIS (interposing). The factory ship receives the whales which are killed by the killer ships. Mr. McCORMACK. In other words, the fleet that goes out consists of various ships utilized for particular purposes. Mr. LOOMIS. That is right. Mr. McCORMACK. And one of them is a factory ship? Mr. LOOMIS. Yes; one of them is a factory ship. Mr. McCORMACK. And that is American? Mr. LOOMIS. That is American; yes. Mr. McCORMACK. And because that is an American product produced on an American factory ship, that product is considered to have come within the purview of the law that applies to an American product. Mr. LOOMIS. Representatives of the Customs Bureau here will tell you about certain other regulations they have governing that. Mr. McCORMACK. Whom do you represent? Mr. LOOMIS. I represent the National Dairy Union, which is a cross-section of dairy manufacturers and dairy farmers generally; and generally but not for this particular case the American Association of Creamery Butter Manufacturers, and the Association of Producers of Inedible Fats. On this particular occasion I appear as secretary of the National Dairy Union. Mr. McCORMACK. You represent them because whale oil comes in competition with dairy products? Mr. LOOMIS. It becomes an edible oil or inedible, depending on how it is handled. If it is an edible oil it competes with these inedible oils. The CHAIRMAN. It seems to me that Mr. Cooper's suggestion is proper, that if your amendment should come in at all it should come through a separate bill. Mr. LOOMIS. This is the first opportunity we have had to present a matter of this sort. Mr. TREADWAY. It seems to me that your proposition is quite difficult to completely understand, as you have explained it, and if you will file with your amendment a general explanation in more detail, it will be available to the committee, and I think it would help us to understand it. Mr. COOPER. We do not want that in this record. This record is made up on this bill. Mr. CROWTHER. I am not inclined to be argumentative, but I fail to see why this is not germane. We referred to section 1101 which distinctly applies to rates, and the title of the bill is "To amend certain administrative provisions of the Tariff Act of 1930", and then the all-inclusive phrase, "and for other purposes." I cannot see why there is any objection, or any question as to the germaneness of this proposition, especially as section 1101 is here, which carries a direct rate, a rate recommended by the Treasury Department. And, of course, there are many provisions of the bill that will affect rates indirectly. As soon as you get into classification you get into rates. You find. yourself involved in rates when you begin to discuss classification. Mr. LOOMIS. My brief is short, Mr. Chairman, and I will be very glad to file it. The CHAIRMAN. Mr. Hester, have you any further testimony to present to the committee? Mr. HESTER. No, sir. The CHAIRMAN. I understand that Mr. Kendig desires to make a statement to the committee. Will you give the reporter your name and address and state in what capacity you appear? STATEMENT OF C. M. KENDIG, TREASURER, HAMILTON WATCH CO., LANCASTER, PA. Mr. KENDIG. Mr. Chairman, my name is C. M. Kendig; I am treasurer of the Hamilton Watch Co., Lancaster, Pa. The CHAIRMAN. Do you appear in support of the bill or in opposition to it? Mr. KENDIG. We could suggest several changes in the bill. The attorney for our industry is present and will be able to give you facts and figures, which I will not deal with. Mr. Chairman, we have been bothered with the smuggling business since 1930. It has been on the increase because since that time watches have been made smaller and smaller. This is a story which this committee has heard before. Watches have been made so small that 20 of them could be put into a match box which is carried in your pocket. Congress has considered this problem favorably. A former measure passed the House and the Senate unanimously, only to be vetoed by the President because he said the Treasury Department was studying the problem and it was hoped that a more effective method could be devised than the one provided for in the bill. At the hearing Mr. Hester said "The Treasury has already reported to Chairman Doughton of the Ways and Means Committee, and made a formal report in favor of the bill." While Assistant Secretary Gibbons, in a letter to you, Mr. Chairman, said: It is the considered judgment of this Department that the provisions of H. R. 8921 will provide an effective deterrent to the watch-smuggling traffic which in recent years has assumed such vast proportions and has constituted a menace to the domestic manufacturers and legitimate importers, and the customs revenue of the United States. At that time the bill included a licensing provision. In the layman's language it was stopped in the Senate because it was found to interfere with the reciprocal treaties then being considered with Switzerland. So, from a layman's standpoint, we are impressed with what appears to be a lack of cooperation, the Treasury Department representatives coming here before your very committee approving this measure, and the State Department going around some other way and saying "We do not want this passed", so it is not passed. Now, Mr. Chairman, this bill requires the sale of these smuggled watches. Mr. McCoRMACK. The House passed the bill? Mr. KENDIG. The House passed the bill and the Senate passed it, but the first bill was vetoed, and the second bill was stopped. Mr. McCORMACK. H. R. 8921 was passed by the House? Mr. KENDIG. Yes. We are operating under a bill, as Mr. Hester says, from 1790 to date, and Congress has consistently required all forfeited merchandise to be sold at public auction. May I refresh your memory as I did mine, in that connection. I think the capital of the Nation was at Philadelphia. It was before you had a Ways and Means Committee that this bill was passed, simultaneously with the appointment of Alexander Hamilton, the first Secretary of the Treasury, and Thomas Jefferson, the first Secretary of State. What is disappointing to me is this. Here are these young gentlemen from the Treasury Department, and the younger generation are not inclined to stick as much to tradition. Why should we continue to operate under a bill passed in 1790, which may have applied back there at that time, for instance, in Philadelphia, when today watches are smaller and smuggling is increasing. I am not going to give you any facts. I have appeared before the committee before and there have always been questions asked. I am going to confine myself to the principle. General Johnson said this is unfair competition by the Government itself. Mr. McCORMACK. You are talking about the sale by the Government of smuggled watches? Mr. KENDIG. Exactly. Mr. McCoRMACK. What would you like to have in this bill? Would you like to have a provision that watches smuggled and confiscated should not be sold by the Government in competition Mr. KENDIG. With the American industry as well as the importing industry. It is a type of unfair competition to sell things for $2 or $3 that the retail jeweler can offer for $5, that we cannot make and sell for less than $30, and the importing industry can sell for $15 or $25. During the first administration they held up these watches because it was unfair competition. Now they are selling them Mr.McCormack (interposing). Have they been selling them lately? Mr. KENDIG. Every 2 weeks. Mr. McCoRMACK. The Government has? Mr. KENDIG. The Government has. Mr. McCORMACK. Recently? Mr. KENDIG. I think Mr. Barnes has a transcript of all the sales. Mr. BARNES. In March and April 1937. Mr. McCORMACK. I thought we had held that up. I am surprised to hear that. Mr. TREADWAY. Do I understand that, contrary to existing law, smuggling has been carried on? |