This change would serve to bring Federal Reserve bank certified rates into play if market rates, despite the obligations of the fund articles, diverge from parity. Moreover, it would also avoid requiring the Secretary of the Treasury to make a definitive pronouncement as to the consistency or inconsistency of a multiple-rate system with the fund articles, at a time, for example, when the issue may be under discussion in the fund.

As an incidental change to the elimination of proclaimed value, section 20 (b) of the bill (appearing on p. 37, lines 12 to 15) would delete the statutory requirement that invoices shall state "the kind of currency, whether gold, silver or paper." Under present monetary conditions a statutory requirement of this kind is unnecessary and largely meaningless. Such currency information as is necessary on the invoice for customs purposes can be obtained without resort to this statutory provision.

EXHIBIT A

Par values of foreign currencies published and kept current by the Secretary of the Treasury pursuant to sec. 522 (a) and (d), Tariff Act of 1930, as amended [Currencies to which sec. 522 (d) of the Tariff Act is applicable are indicated by asterisks]

EXHIBIT B

IMF member countries currencies (IMF par values and rates certified by Federal Reserve bank of New York during fiscal year 1951)

The list does not include countries having a par value and an additional rate or rates of exchange. No certification given during fiscal year 1951.

The par value of the Finnish markka was not established by the IMF until June 28, 1951. There have been no published Federal Reserve Board New York certifications of rates for the Finnish markka for the remainder of fiscal year 1951 since that date.

AMENDMENT PROPOSED BY THE TREASURY DEPARTMENT-VERIFICATION OF
DOCUMENTS

SEC. Section 486 of the Tariff Act of 1930 (U. S. C., 1946 ed., title 19, sec. 1486) is amended by changing the caption to read "Administration of OathsVerification of Documents" and by adding at the end thereof the following new subsection:

"(d) The Secretary of the Treasury may by regulation prescribe that any document required by any law administered by the Customs Service to be under oath may be verified by a written declaration in such form as he shall prescribe, such declaration to be in lieu of the oath otherwise required."

The proposed amendment to section 486 of the Tariff Act of 1930 (U. S. C., 1946 ed., title 19, sec. 1486) would authorize the Secretary of the Treasury to permit by regulation all documents required in the administration of laws by the Customs Service to be verified by a written declaration in lieu of the oath now required by law. The requirement of an oath on many documents sometimes amounts to an unnecessary burden on importers and the written declaration under penalty of perjury would provide an adequate safeguard. The Secretary of the Treasury already has such authority with reference to documents required under any provision of the internal revenue laws. See United States Code, 1946 edition, supplement IV, title 26, section 3809(c).

The CHAIRMAN. As I indicated, it is my understanding, this bill relates solely to the simplification of certain procedures in administering the customs laws, and does not contemplate a change in tariff

rates.

Mr. REED. Wait just a moment; I am not so sure about that. I think I would like to ask, with your permission, one or two short questions of Mr. Graham.

STATEMENTS OF JOHN S. GRAHAM, ASSISTANT SECRETARY OF THE TREASURY; PHILIP NICHOLS, JR., ASSISTANT GENERAL COUNSEL; DAVID B. STRUBINGER, ACTING COMMISSIONER OF CUSTOMS, AND WILLIAM R. JOHNSON, ASSISTANT TO THE COMMISSIONER OF CUSTOMS, TREASURY DEPARTMENT

The CHAIRMAN. Yes, Mr. Reed.

Mr. REED. Mr. Graham, does this in any way in any particular affect the tariff laws?

Mr. GRAHAM. Mr. Reed, the main purpose of this bill is to simplify the administrative provisions of the customs laws.

Mr. REED. I understand that, Mr. Graham, but I was asking if in the bill it does change the tariff laws at all.

Mr. GRAHAM. I think it is only fair to say that one of the provisions that we point out in the statement, which I will read, does refer to the distilled spirits, and if they were changed in the law that that would affect the amount of duty that would be collected on the imports of distilled spirits. And if I may cover that in my statement, I think that will be made clear.

Mr. REED. Those rates are on liquors imported?

Mr. GRAHAM. Yes.

Mr. REED. Now they lower them again in this bill?

Mr. GRAHAM. The effect of this would be to reduce the rates of duties and taxes on them; I will touch upon that, and I believe▬▬ Mr. REED. It does not go beyond that?

Mr. GRAHAM. I believe that my statement will touch on that.
Mr. REED. Very well.

The CHAIRMAN. Do you prefer to make your main statement without interruption by questions, Mr. Secretary?

Mr. GRAHAM. If it is the pleasure of the committee, I think it would be a little more helpful in carrying through the continuity of the statement.

The CHAIRMAN. The Chair feels that it would be more helpful to the committee for you to make your principal statement without interruption, and then answer any questions later. Without objection, that will be the procedure.

Mr. GRAHAM. Thank you.

The CHAIRMAN. You may proceed, Mr. Secretary.

Mr. GRAHAM. Thank you, Mr. Chairman, and members of the committee.

I appreciate the opportunity which you have afforded the Treasury to present its views on H. R. 1535, the proposed Customs Simplification Act of 1951.

H. R. 1535 is sponsored by the Treasury Department. It has to do with procedure in administering the customs laws and not with rates of duty, and it is not intended to effect any substantial change in customs revenue. We believe that its enactment will enable Customs to render improved service to the public and to reduce its own operating costs. We further believe that the net effect of the enactment of H. R. 1535 would be to remove many unnecessary restrictions on imports.

Most of the provisions of H. R. 1535 relate to the commercial importation of merchandise from foreign countries. Therefore, I should like to mention, in layman's language, the process which is involved in a commercial importation. This not only will help to identify the steps which must be taken by the importer and by Customs but also will clarify some of the terminology which is used in Customs commercial transactions.

Let us assume that the importer has purchased merchandise in Europe which will require the payment of duties after it has been landed in the United States. Let us further assume that the merchandise is on a ship arriving at the port of New York. The master of the vessel has already prepared a manifest, which is a list of the articles of merchandise. This serves as the first paper control of the merchandise coming into the United States.

After the vessel arrives at New York, the importer, or a customhouse broker acting for him, files an entry at the customhouse. This entry is a list of the merchandise which the importer wants to clear through Customs. It contains detailed information concerning quantities, value, country of exportation and other information which will be needed by Customs. This entry also has the importer's estimate of the amount of customs duties which will have to be paid on the merchandise. The entry clerk examines these computations and, if the estimated amount appears to be correct, that amount of money is collected from the importer. If obvious errors have been made in estimating the amount of duty due, the entry clerk requires the form to be revised and the correct estimated amount of duty is collected. On the basis of this entry, a permit is issued which tells the Customs employees on the dock which merchandise may be immediately released to the

importer and which packages are to be held for opening and detailed physical examination. Generally speaking, the numbers of packages to be retained for physical opening and inspection would be no more than 1 package out of each 10 of a similar lot. The Customs employees check to see whether the number of packages landed from the vessel agrees with the number shown on the manifest and listed by the importer on the entry. Those packages which have not been selected for examination are usually immediately released to the importer, after their number has been verified, and go immediately into the course of trade.

The packages selected for examination are, in most cases, carted to the appraisers' stores. This is a building which has both office space and warehouse space in which the packages are opened and the contents are counted to see that the quantity and kind of items indicated to be contained in a particular package are actually in it. Many rates of duty are stated as a percentage of value, and we call them ad valorem duties. To assess an ad valorem duty, Customs must appraise, or value, the merchandise. Records have been carefully kept of previous shipments of the same or similar articles. Through an information exchange, value information has also been secured from the other ports throughout the United States as to the values declared by importers at those ports for like items.

In connection with the present shipment, the importer has arranged, through his feign representative or the company from which he procured the merchandise, for an invoice. This means that the merchandise being exported from the foreign country has been described and listed and information concerning the value of the articles being exported is contained on the invoice. In many cases, this invoice is a consular invoice, which is required to be certified by an American consul, who makes such verification of the information as he considers necessary. These certified consular invoices are then sent to the American importer, who supplies this value information and any other information he has concerning value to the appraiser, who, in this example, is in New York.

The valuation of merchandise is not, however, a simple process. Under the present law, which provisions of this bill would amend, there are several methods of valuing merchandise, depending on a large number of factors. The principal methods of valuation, however, are foreign value, or export value, whichever is higher. This means that, at the present time, not only must the foreign shipper and the American importer furnish information concerning both values of merchandise, but Customs must make both determinations in order to value the importations at the higher of the two figures. Oversimplified, foreign value is the price at which the specific commodity is offered for sale in wholesale quantities on the home market, that is, in the country from which it is shipped. Similarly, the export value is the price at which this commodity is offered for sale in wholesale quantities for export to the United States. In cases where there is a doubt as to the correctness or sufficiency of the information available, a detailed investigation by Customs representatives in the foreign country is required.

The appraiser reports his findings to the collector who uses them, together with information on quantities, weights, et cetera, to make a final determination of the duties owed by the importer. If, at the