(b) Up to 5 percent upon wood constructions where wood represents at least one-half of the work.

(c) Up to 5 percent upon rolling stock of railroads, also marine equipment and machinery; if in operation.

(d) Up to 5 percent upon any other fixed asset not included in the sections of this article; if in use.

(e) Up to 10 percent upon furniture and vehicles of animal traction; if in use.

(f) Up to 15 percent upon motor vehicles and agricultural imple ments; if in use.

(g) Up to 25 percent upon air transportation machines in operation, and films.

Article 39. No depreciation will be allowed upon railroad tracks, telephone, telegraph and electric power lines; however, amounts invested in repairs or replacements will be accepted as deductible expenses.

No depreciation will be admitted upon hand tools and working utensils, nor upon animals. However, there will be accepted as losses those which are verified when taking the annual inventory of such tools and utensils.

No depreciation will be accepted upon rural estates or land. However, the corresponding depreciation will be admitted upon any buildings on such estates or lands.

Article 40.

Amounts invested in enlargement, improvement, or acquisition of property which cause an increase in the assets will not be accepted as expenses; but their depreciation, in balances covering years subsequent to that in which the increase in assets is made, will be admitted.

Special rules and provisions are established for depreciation of properties of mining companies, including oil companies which hold development concessions.

Article 47. All individuals or companies engaged in mercantile or industrial operations in Cuba shall execute in Spanish the books exacted by the Code of Commerce, and all their operations in money of legal tender. Such books must be kept in Cuba, at the disposal of the Government for investigations in connection with the tax, either in the domicile of the taxpayer or in the corresponding

industrial establishment.

VERIFICATIONS AND ADDITIONAL ASSESSMENTS

Article 51. The Section in charge of fiscalization and collection of these taxes, will order inspections, verifications and investigations deemed necessary or convenient, by means of the books and documents of the taxpayers as well as those of other persons who have commercial relations with the taxpayer, in order to ascertain the exact amount of profits, dividends and interest subject to the tax. Article 52. Taxpayers and other persons mentioned in the preceding article shall present to the inspector, or inspectors, designated for verification, all accounting books, minute books, documents, and records which relate to their business, and shall give explanations

and clarifications exacted in order to verify the operations subject to the tax.

Other articles of this Chapter deal with additional assessments.

Article 60. If the tax is not paid within the 2 months following termination of the calendar or fiscal year, or within 1 month after termination of the quarter (in the case of the tax of 3 percent on gross incomes), a surcharge of 5 percent will be applied for the first 60 days of delinquency, and 1 percent for each additional month, until final payment. These fines and surcharges are irrespective of collection proceedings which may be initiated by the Treasury Depart

ment.

Whenever an additional assessment is ordered in the case of a taxpayer who has concealed his income, or deducted nondeductible expenses, etc., a surcharge of 15 percent upon the amount claimed will be imposed.

First. The provisions contained in the fifth paragraph of Article 31 (claims against the government by taxpayers for amounts due the latter and their treatment in profits tax assessments) applicable to all balances closed after December 31, 1932.

will be

Second. The Treasury Department will accept as deductible all bad accounts canceled by the taxpayer in balances pending inspection or pending resolution of administrative appeal, whether or not amounts claimed by the Treasury Department have been deposited, even when the taxpayer, in deducting such accounts, has not complied with the requirements established in section (l) of Article 74 of Decree 690 of May 14, 1931, always provided such accounts have actually been lost by the taxpayer and it is so proved to the satisfaction of the Treasury Department.

Third. Notwithstanding the provisions of section (i) of Article 33 (deductibility of interest on loans contracted for current and ordinary operations), the Treasury Department will accept as legitimate expenses for the corresponding period only the interest which the debtor is compelled to pay under the existing Moratorium Laws. Fourth. The provisions of section (s) of Article 33 (deductibility of donations made to the Cuban Government or public institutions) will be applied to balances already presented, provided the portion of the tax corresponding to the donation has not been paid.

Fifth. Notwithstanding the provisions of section (i) of Article 33 (deductibility of interest on loans) and section (f) of Article 35 (nondeductibility of interest on operating capital), the Treasury Department will apply the provisions of sections (i) and (j) of Article 74 of Decree 690 of May 14, 1931 (deductibility of interest on loans, etc.), to loans in force at the time of promulgation of this Decree as long as they continue in force, but it will limit the amount which the taxpayer may deduct, by reason of interest on this class of loan, to 4 percent per annum, even in case the interest agreed is higher. However, the deduction shall never exceed the amount of interest which the taxpayer is compelled to pay to the creditor in accordance with existing Moratorium Laws.

The provisions of the preceding paragraph will be applied also in case of extensions, modifications or substitutions of obligations to which they refer; however, any increase in the principal of these obligations and the total interest upon such increase will be subject to the general rules established in this decree.

FINAL PROVISIONS

This decree will become effective 5 days after publication in the Official Gazette and will be applied to balances closed after enforcement of Decree 1451 of July 16, 1938. However, its application will never entail return of amounts already paid to the Treasury. Balances closed prior to enforcement of Decree 1451 will be liquidated in accordance with provisions in force at that time; however, the procedure to be followed by the Treasury will conform to these new regulations, but will not provide retroactive proceedings in any instance.

BUREAU OF FOREIGN AND DOMESTIC COMMERCE

Analysis of Functions and Services XX

METALS AND MINERALS DIVISION

At the outset it might be appropriate to generalize regarding the services of the Metals and Minerals Division. There is available for any and all who write or call economic, technical and scientific data, as well as abundant trade data for those trading in, or contemplating trading in iron and steel products, hardware, heating and ventilating equipment, firearms and ammunition, cutlery, abrasives, nonferrous metal and their manufacturers, minerals and mineral products, building materials and specialties (except lumber and glass), gas (natural and manufactured), coal, charcoal, petroleum and its products, precious and semiprecious stones, and structural clay products.

The Division publishes Construction Abroad, for the benefit of those whose interests run to the furnishing of materials or services in connection with construction of all kinds; The Iron and Steel Fortnightly, to keep subscribers informed with regard to the iron and steel industry in foreign countries (this bulletin has an intermediate issue each month giving a full account of foreign trade in iron and steel products); The Hardware Trade Bulletin which caters to the hardware trade in particular; and Foreign Metals and Minerals which is well received by firms engaged in trading in minerals (metallic and nonmetallic) and nonferrous metals. Statistical information on foreign trade in our extensive list of commodities is published in the Division's twenty-seven monthly statements.

COMMERCIAL LAW FORUM

The Export Trade Act (Webb-Pomerene Law) was examined thoroughly in the Jung COMPARATIVE LAW SERIES, and fine letters of appreciation have been received from lawyers and business men. Mr. Axel Oxholm, Managing Director of Pacific Forest Products, writes: "You might have added the following advantages to those listed:"

(a) Insurance: Through making one contract for the total shipments, much better terms can usually be secured than by

individual mills

(b) Contracts: Foreign buyers are often strongly organized. Unless exporters have the same advantage through Webb associations, they cannot take a stand against organized efforts on the part of buyers in sales contracts, grading rules, etc.

(c) Trade Agreements; Shipping; Etc.: Joint action by an industry is of great advantage in dealing with Governmental agencies, particularly in matters of trade agreements, shipping policy, etc. This also applies to negotiations shipping conferences, regarding freight rates.

with

(d) Agreement with foreign competitors: Webb associations have at times effected agreements with foreign competitors which cannot be easily done unless the industry is organized.

(e) Distribution of orders: Perhaps one of the greatest advantages is that export orders may be distributed among member mills in such manner as to conform with each mill's manufacturing facilities. This increases the profitableness of the business. It also gives a greater guarantee in regard to the complying with contracts through the solidaric position of member mills in regard to export orders.

(f) Equalization of price: They usually operate on the basis of paying the same price to all members. This enables the association to maintain a strong position in foreign markets, retaining its hold on temporarily unprofitable markets, and, in short, to stabilize the export business.

(g) Dumping: Individual exporters cannot in most instances devote the necessary time to a study of foreign markets. Their exports are often in the character of dumping. The Webb association can minimize the unfavorable effects of dumping by selecting the proper outlets without disturbing the foreign market as a whole. Frequently they can assist members in disposing of goods unavoidably produced but not conforming to the U. S. standards.

(h) Distribution: On the strength of their position, they can and should develop an efficient distribution system in foreign countries in conformity with local recognized channels of trade and trade ethics.

AUSTRALIA

FOREIGN LAW COMMENT

Northern Territory, Mining Ordinance.

The Mining Ordinance, 1939 of the Northern Territory of Australia provides detailed regulations relating to the mining for gold and other minerals. Section 107 provides that gold, silver and all other minerals and metals on or below the surface of any land in the Territory, whether alienated or not alienated from the Crown, shall be and be deemed to be the property of the Crown: Provided that this section shall not apply in the case of land granted by the Crow in fee simple, in which case the ownership of gold and minerals shall depend on the terms of any reservation, if any, of gold or other minerals. There are no nationality restrictions with respect to miners' rights and leases, other than that they may not be issued or held by any Asiatic alien without authority in writing of the Administrator.

The many efforts which have been made in recent years to relieve the depressed condition of the Lancashire cotton industry and restore some semblance of its former prosperity have culminated in the Cotton Industry (Reorganization) Bill, which has had its second reading and is now before a committee of the British Parliament.

According to the American Consulate, London, the three principal reasons assigned locally for the urgent adoption of this legislation are as follows:

1. Restrictions of many kinds upon foreign trade; some of which may be attributed to financial measures, others to political reasons.

2. The growth and development of local industries in many parts of the world under the protection of higher tariff barriers; and 3. Highly organized foreign competition including favorable local conditions such as longer hours and lower wages, frequently supported by State assistance.

In any consideration of Lancashire's competitive position in relation to the cotton industries of other countries, the cost of production assumes a major role.

The present high rate of taxation in the Lancashire cotton industry is a source of frequent complaint. While the general principles of taxation are the same for all United Kingdom manufacturing industries, it is believed that an illustration of taxation of a typical cotton spinning mill will be of interest.

Income Tax. Under "Schedule A" (fixed property) on the Income Tax form, a manufacturer is assessed 5s. 6d. in the pound on the net annual value of the property in question, that is, buildings and land. (The annual value is based on a hypothetical rent.)

As an example, take the case of a typical mill containing 120,000 spindles, of a capital of £120,000. The net annual value of the

roperty is estimated to be £2,000.

At 5s. 6d. in the pound, the

rm's tax under "Schedule A" would be £550.