long since) and much damage could be done to American labor, manufacturers, and merchants in the interim before action could be secured.

In summation, it would seem that if the level is raised to $10 the following results may undoubtedly be expected:

Loss of revenue:

(a) Duties to be collected would in most instances far exceed cost of clearance by customs;

(b) Loss of excise tax, where applicable, both at retail and manufacturers' level;

(c) Because of duty-free shipments, loss of business to American manufacturers and merchants would result in potential lessening of their income taxes to be paid.

Effect on employment: Many lines are presently facing unemployment problems, particularly soft goods and costume jewelry. These would be increased if duty-free items up to $10 were permitted.

In view of the above facts, on behalf of the thousands of jewelers throughout the country we earnestly plead that the present value of duty-free mail shipments be maintained at $1. In making this plea, we respectfully call your attention to the fact that to raise the level to $10 would create unfair competition to labor and to manufacturers and merchants throughout the country who deal in items up to $10. Furthermore, Congress has been asked to close tax loopholes; raising the level to $10 would result in loss of revenue to the Government instead of a saving in customs' cost of operation, since the amount of duty, plus excise taxes at the manufacturers' or retailers' level where applicable, and in addition the amount of income tax which would be paid by American manufacturers and merchants would far exceed the cost to the Treasury of clearance of these mail packages.

JEWELERS VIGILANCE COMMITTEE, INC.,
New York, N. Y., March 21, 1952.

COMMISSIONER OF CUSTOMS,

Treasury Department, Washington, D. C.

(Attention of Mr. D. B. Strubinger, Acting Commissioner of Customs.) SIR: Thanks for your letter of March 18, in which reference is made to our letter of February 11 in connection with our position relative to the proposed amendment to section 321 of the Tariff Act of 1930, which would authorize the Secretary of the Treasury to "permit importation by mail free of duty and internal-revenue tax of articles (not including alcoholic beverages, manufactured tobacco, snuffs, cigars, or cigarettes) when the aggregate value of all the articles in a shipment is not over $10, if the articles are intended for the personal or household use of the consignee and not for sale, or $5 in any other case." From additional information received since our letter of February 11, we believe even more firmly that the level of duty-free mail packages should be kept at $1.

Your statement that "the last estimate of the cost of processing of a mail importation was $1.59 per mail transaction" and that it "is undoubtedly higher now" is duly noted; also your comments on the duties applicable to alcoholic perfumes and handbags:

"With respect to the items of the kind mentioned in your communication, alcoholic perfumes are dutiable at the rate of 20 cents per pound and 1834 percent ad valorem under paragraph 61, Tariff Act of 1930, as modified. Handbags wholly or in chief value of leather (except reptile leather) are dutiable at the rate of 20 percent ad valorem under paragraph 1531, Tariff Act of 1930, as modified. Other leather goods subject to retail excise tax are dutiable at rates ranging from 121⁄2 to 25 percent ad valorem depending upon their nature."

It would seem that the duties would exceed the $1.59 cost of per package handling, and incidentally you make no mention of loss of the revenue which would accrue from collection of the 20-percent excise tax on these items if sold in the United States.

There are unlimited potentialities; and mail-order catalogs have recently been received in this country from abroad. We would specifically call your attention to two very recent advertisements taken from the New York Times magazine section.

Enclosed herewith is a full-page advertisement (which costs $2,337.50 for one insertion) of Richard Shops, 180 Regent Street, London, England, taken from the February 24, 1952 issue. You will note that they offer straight skirts for $7.95, flared skirts for $8.95, and matching stole capes for $4.95, and indicate

that customs duty of about $2.50 for the straight skirt, $2.75 for the flared skirt, and $2.50 for the stole cape is to be collected by the postman.

In the March 16, 1952, issue, Cherub (mail order), Ltd., 35 Hillside, London, England, offers a doll called the Royal Princess for $7 plus. "You pay postman around $3.15 duty."

Here are vivid illustrations of items where the duty alone far exceeds the cost of handling ($1.59) and are rather contrary to your statement:

"From the foregoing, it would appear that the collection of customs duties on shipments of these articles valued at not more than $10 per shipment would seldom result in the collection of a revenue greater than the cost of collecting the revenue."

When a firm spends $2,337.50 for a single advertisement, it must expect quite a volume of business.

Referrring to your further statement:

"However, if a mail-order business should spring up seriously reducing revenue collections on items ordinarily dutiable, action could be taken under the provisions of section 11 to diminish the exemptions or provide exceptions to the general rule"

it was my privilege to spend some time recently in the office of Mr. Charles R. McNeill, Assistant General Counsel of the Treasury when among other things we discussed the above. It was agreed that while the Secretary of Treasury could take such action, much time would undoubtedly elapse (the horses would have run out of the stable long since) and much damage could be done in the interim before action could be secured.

In summation as we see it-if the level is raised to $10, the following results may be expected:

Loss of revenue: In most cases the cost of clearance would be exceeded by (a) the duties to be collected; (b) loss of excise tax, where applicable, both at retail and manufacturers' level; and (c) because of duty-free shipments, loss of business to American manufacturers and merchants resulting in potential lessening of income taxes to be paid.

Effect on employment: Many lines are presently facing unemployment problems, particularly soft goods. These would be increased if duty-free items up to $10 were permitted.

I am frequently in Washington and shall take the liberty of telephoning to your office in the hope that I may call upon you.

P. S.-The fact that foreign houses find it profitable to advertise their mailorder business stating duties to be paid, would indicate a tremendous increase in this type of business, which could be expected if the level were raised from $1 to $10 on duty-free mail shipments. Visualize the effect on the buying public if the present statement "Duty to be collected by postman $were to be replaced by the words "Duty free."

The CHAIRMAN. The next witness is Mr. Wellman. All right, Mr. Wellman.

STATEMENT OF ARTHUR 0. WELLMAN, PRESIDENT,

NICHOLS & CO., INC.

Mr. WELLMAN. Good morning, Senator.

The CHAIRMAN. Good morning. You may identify yourself, Mr. Wellman, for the record.

Mr. WELLMAN. My name is Arthur O. Wellman, Senator; I am president of Nichols & Co., Inc., of Boston, Mass., worsted-top manufacturers, and I am a director of the National Association of Wool Manufacturers.

Wool tops are a recognized commercial item. Fully two-thirds of all the apparel wool consumed in the United States is manufactured into top before it is spun into yarn for use in weaving or knitting.

Topmakers buy wool all over the world, wherever it is sold at the lowest price, and they bring that wool to a combing plant where it

is sorted to grade, scoured, carded, and combed into balls of top weighing about 10 pounds, ready for processing into yarn. In the foregoing operations, defective and short-wool fibers are removed so that the spinner has an organized and highly uniform strand of wool fibers with which to work.

During recent past years the Treasury Department has announced frequently that wool imports were the largest single source of customs revenue, and for many of those years Nichols & Co., Inc., in the capacity of wool importers, has paid more duty than any other concern. For example, for the 12-month period ending August 31, 1951, we paid the United States Government over $6,000,000 in customs duty. The topmakers in this country are deeply disturbed by the circumvention of congressional intent, as represented in the Tariff Act of 1930. This has become apparent in the growing importation of wool top from foreign countries, particularly the Argentine and Uruguay. These countries maintain multiple rates of exchange favoring the export of this processed wool to this country. For example, in the Argentine the rate of exchange for wool exports is 5 pesos to the American dollar. On processed wools the rate of exchange is 72 pesos to the dollar. Thus there is a bounty on the export of the top equal to 50 percent of the value of the raw wool from which the top is made.

Evidence of the effect of these subsidies is shown in table 1 attached to this statement which may be summarized by saying that from zero in 1947 Argentine top entered here for consumption soared to 3,791,000 pounds in 1951. Likewise, top entering from Uruguay mushroomed from zero in 1947 to 3,773,000 in 1951. In total, the inroad amounts to 7,564,000 pounds in the short span of 5 years, or 4 years of actual imports.

This committee has been told by Frank A. Southard, Jr., special assistant to Secretary John Snyder that

Movement of wool tops into this country in the past few months has stopped completely or been exceedingly small.

Perhaps Mr. Southard has been too occupied on other important matters to realize that textile activity in this country for some time has been badly depressed; that Congress and various Government agencies are being urged to take unusual measures to stem this recession in activity and increase in unemployment-especially in textiles. But as to this matter of tops imports on which Mr. Southard spoke, let us look at the record.

Official figures on arrivals of wool tops in this country (table II) show that in only 3 of the last 6 months of 1951 have tops imports fallen below 1 million pounds a month. In January 1952, the latest month published, they were back up over that million mark. The great bulk is from Argentina and Uruguay, with the latter showing the greatest strength from April of last year onward.

This fact takes on added importance when we examine the official registration of bales sold to export from Montevideo. For the first 6 months of the current season, from October 1, 1951, to March 29, 1952, 13,296 bales of tops had been registered for export to the United

States. As a bale of tops weighs about 550 pounds this means that registrations are at the rate of over 1,000,000 pounds a month from Uruguay alone. This is greater than the 1951 rate of imports of Uruguayan tops for consumption. There are many wool-textile operators in this country without jobs who would welcome this work and be better American consumers for it.

It may be asked, why do we buy these foreign tops if their importation has undesired effects on textile operations here. In answer to that I submit the case that Senator O'Mahoney has reported to you and Government agencies concerned. Fifty thousand pounds of wool were offered at a clean-basis price of $1.42 a pound or the buyer could purchase an equal weight of wool tops at $1.41 per pound. The cost of converting wool tops was then about 48 cents a pound. Gentlemen, if you were operating in a highly competitive market which would you buy?

I have shown you the impressive extent to which our markets are being invaded by foreign products subsidized in their export by multiple-exchange rates. I have given you an illustration of the distortion of values resulting from such bounties. These place it beyond the power of one operating in a competitive market to ignore. In closing, I would like to show how you, the Congress, can reassert its original intent and proper authority in this matter.

The bill before you, H. R. 5505, in section 2 (c) contains two proposed amendments to section 303 of the Tariff Act of 1930. We respectfully urge that you accept the first amendment-page 2, lines 11 through "imposed on the merchandise." on page 3, line 2-and reject the second commencing on line 2 of page 3 with the words "Such countervailing duty shall" through line 15 of that page.

The effect of this action would be to make unequivocally clear congressional intent respecting the use of countervailing duties to offset bounties or grants directly or indirectly bestowed by foreign interests upon their exports which are subject to duty as United States imports. There is strong indication that this relatively simple scheme of multiple exchange rates, in the light of the Treasury Department's reluctance to act, is proving a contagious method of circumventing, if not negating, our tariff. This action would also eliminate the insertion of the policy of "locking the barn after the horse is stolen." If it takes Treasury years to find a "bounty" in multiple rates of exchange, how dangerously long will it require to determine that an American industry is "injured" or "retarded"?

Finally, if the above suggestion does not win your approval, we urge you strike out section 2 (c) of H. R. 5505 in its entirety.

That part of section 2 (c) which would be deleted reads as follows: Such countervailing duty shall be imposed only if the Secretary of the Treasury shall determine, after such investigation as he deems necessary, that an industry in the United States is being or is likely to be injured, or is prevented or retarded from being established, by reason of the importation into the United States of articles or merchandise of the class or kind in respect of which the bounty or grant is paid or bestowed. The exemption of any exported article or merchandise from a duty or tax imposed on like articles or merchandise when destined for consumption in the country of origin or exportation, or the refunding of such a duty or tax, shall not be deemed to constitute a payment or bestowal of a bounty or grant within the meaning of this section.

(The tables referred to are as follows:)

TABLE I.-Imports into United States for consumption of wool and hair tops from Argentina, Uruguay, and all countries

TABLE II.-General imports into United States of wool and hair tops

Source: Boston Wool Trade Association, special Bureau of Census tabulations.

Mr. WELLMAN. Mr. Chairman, you probably wonder why I am appearing here today, since I have probably been the largest buyer of these tops in South America. I have made some money on them, but I think the currency manipulation should be eliminated because it is throwing our employees out of work.

These tops are coming in in such a big way that it has depressed the textile business terribly. I think it is more to blame for the depression in the textile business than anything today, and should be stopped if there is any possible way of doing so.

The CHAIRMAN. Thank you very much, sir.

Senator BUTLER. Mr. Wellman, evidently you read the testimony that was given by a representative of the Treasury Department the other day?

Mr. WELLMAN. Yes, sir.

Senator BUTLER. I questioned him about how long it was going to take them to establish a countervailing duty.

Mr. WELLMAN. Yes, sir. We are very much upset about it. Certainly, for your information, I do not believe this has been brought out anywhere, but Uruguay can make 50,000,000 pounds of tops a year, and Argentina can make another 50,000,000. The total of these two is half the amount that is made in this country. In other words, they could throw half of our employees out of the combing business in the textile industry in America if this is not stopped.

Senator BUTLER. Thank you.

The CHAIRMAN. Thank you very much, Mr. Wellman.

Mr. WELLMAN. Thank you, sir.

The CHAIRMAN. Mr. Altschuler. You may be seated and identify yourself for the record.