These amendments will bring the Internal Revenue Code into harmony with article III of the general agreement, but except for section 2800, they are not of importance to the revenue or to trade.

SECTION 25. SAVING CLAUSE

This section is intended to maintain the status quo on rights and liabilities already accrued under acts which would be repealed or modified by the proposed new law

AMENDMENT PROPOSED BY THE TREASURY DEPARTMENT IN SECTION 20 OF H. R. 1535

Section 20 of the above bill shall be amended by deleting the first sentence of subsection (d), page 36, lines 19 to 23, and substituting the following:

"When, apart from normal variation between buying and selling rates, there are one or more rates of exchange in addition to the par value for any foreign currency listed pursuant to subsection (a), the list shall so indicate."

SUPPLEMENTAL ANALYSIS OF SECTION 20 AS PROPOSED TO BE AMENDED Section 20 would make substantial changes in the procedure dealing with the conversion of foreign currencies for customs purposes, but the result aimed at is the same as under present law. The section is designed to get rid of an archaic statutory provision which is almost entirely useless today, to restate the rules for conversion in terms of international financial relationships as they exist in the world today, and to simplify the day-to-day computations of customs duties. But it maintains the principle, now well established, that commercial rates of exchange should govern the calculation of customs duties.

Since 1894, the Secretary of the Treasury has been required to proclaim quarterly "the values of the standard coins in circulation of the various nations of the world," based upon estimates of the Director of the Mint. These proclamations now serve little function. Customs duties are rarely based upon these values, because alternative statutory provisions come into play. In 1894, when most countries of the world were on a gold coin standard, it made sense to calculate rates of exchange on the basis of the metallic content of standard coins. Today, this exercise makes no sense. because the gold coin standard has been generally abandoned. This proclaimed list has shrunk from year to year as foreign countries do not even bother to reply to the Bureau of the Mint's routine questionnaires on the legal metallic content of their coins. Section 20 would repeal this archaic requirement.

The statutory provision which, in fact, has governed currency conversions in recent years is section 522 of the Tariff Act of 1930, which provides, in substance, that the Federal Reserve Bank of New York shall make daily certifications of commercial rates of exchange based upon market rates in New York, and that currency conversions for customs purposes shall be made in accordance with these certifications whenever the certified rates vary by 5 percent or more from the metallic rates proclaimed by the Secretary of the Treasury. Since in almost all cases the rates certified by the bank do vary by more than 5 percent (generally by very much more), the effective rates used have been, for all practical purposes, the certified rates. Even in the few instances where the proclaimed values may ultimately be applied, it is still necessary to have daily certifications so that a comparison may be made under the 5-percent rule. Rates for foreign exchange in the New York market vary from day to day by very smell fractions, usually out in the third or fourth decimal place. As a result, customs officials must check their lists every day, and their computations from day to day must vary by these minor fractions, in order to comply with the letter of the law. We propose to eliminate the requirement that these trivial variations be employed in most cases. The proposed new text of section 522 begins at the top of page 35 of the bill. Subsection (a) requires the Secretary of the Treasury to keep current a published list of par values of foreign currencies maintained pursuant to the articles of agreement of the International Monetary Fund. As an example of the sort of list contemplated, there is attached as exhibit A a list of such par values for August 1, 1951, as we contemplate it would be issued under this provision if enacted. This

1 As Chairman of the National Advisory Council on International Monetary and Financial Problems, established pursuant to the Bretton Woods Agreements Act (approved July 31, 1945), the Secretary of the Treasury has primary responsibility in the Government for relationships with the fund.

蹰

list would be amended, from time to time, as changes occur. Under these articles, each member country is required to maintain exchange rates within its territories within 1 percent of parity, in the case of spot exchange transactions. Thus, the members of the Monetary Fund are required by their international obligations to maintain their accepted par values, and the use of such parities would therefore be entirely consistent with the objective of securing true commercial values. In fact, commercial rates of exchange are maintained in accordance with the fund articles for most of the countries. However, some countries maintain multiple rates of exchange. These cases are dealt with specially by subsection (d) of the proposed section 522, and will be discussed later in this presentation. However, if we take the countries which maintain accepted par values under the I. M. F., and which do not have multiple rates of exchange, and compare their par values with the commercial rates of exchange certified by the Federal Reserve Bank of New York under the existing provisions of section 522 during the past fiscal year, we see that in every case the Federal Reserve bank certifications have been within the permissible range of 1 percent either way from the fund par values. Exhibit B is a table showing these par values and the range of Federal Reserve bank certifications during the past fiscal year. By comparing the par value column of the table with the other columns, it can be seen that the effect of the proposed amendment would be to simplify the computation of customs duties on imports from this list of countries covering a major share of United States imports, and no computation would be affected by more than 1 percent.

Subsection (b) deals with currencies for which there is no fund par value, i. e., the currencies of countries which are not members of the fund, and of countries which, while members of the fund, do not maintain a par value pursuant to the fund agreement. For these currencies, subsection (b) would maintain the present arrangement. Subsection (b) is very much the same as United States Code, title 31, section 372 (c). The changes made are in such matters of detail as taking account of the fact that banks may close generally on Saturdays as well as Sundays and holidays, and recognizing that the Federal Reserve Bank of New York may at times find it necessary to calculate rates of exchange from transactions in foreign markets, such as Zurich, when there are no quotations for the day available for New York. Basically, this subsection maintains the present arrangements for currencies for which we cannot look to an accepted par value, Subsection (c) makes explicit a practice which has been followed for many years, as a result of the decision of the Supreme Court in Barr v. United States (1945), (324 U. S. 83). It recognizes that certain foreign currencies are subject to multiple rates of exchange, and permits multiple certification and the application of the rate among those certified which reflects the commercial value of the foreign currency as related to the import in question. Subsection (c) is applicable only to the currencies covered by subsection (b), i. e., those for which there is no accepted fund par value.

Subsection (d) deals with the case of multiple rates of exchange for currencies which have an established fund par value. In such cases, the subsection would require the Secretary of the Treasury, in publishing the list of par values pursuant to subsection (a), to identify the currencies in the list which also have one or more other rates of exchange applicable to exports. In the list attached as exhibit A, certain of the currencies are marked with asterisks. These are the currencies for which additional rates of exchange are maintained. The second sentence authorizes the Secretary to issue regulations in conformity with any future international agreements relating to multiple-rate currencies. Under the third sentence, the currencies which are so designated by an asterisk would be handled in exactly the same way as multiple-rate currencies under subsection (c), except that the Federal Reserve bank would be relieved of the necessity of certifying the trivial decimal variations of the par value itself. The bank would continue to certify the additional rates of exchange, and they would continue to be applied as they are today in accordance with subsection (c).

In the discussion of subsection (a), we pointed out that, in fact, fund par values are maintained in international trade, and that Federal Reserve bank certified rates have been within the permitted 1 percent range of parity, except where multiple rates are involved. Nevertheless, as multiple rates do exist in a number of cases, we should not bind ourselves to a rigid provision which does not permit taking account of situations which exist or may arise. With this in mind, we propose to the committee that the first sentence of subsection (d) be revised to read:

When, apart from normal variation between buying and selling rates, there are one or more rates of exchange in addition to the par value for any foreign currency listed pursuant to subsection (a), the list shall so indicate.

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 currencies1 (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., 1916 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

Fates.

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?