SECTION 15.

The CHAIRMAN. I think that if we applied it on the east coast we would get into very much more serious trouble there, and in a larger way, than we would out in Seattle. But I will state to you candidly, Mr. Humphrey, that some years ago we passed a law allowing foreign ships the right of our coastwise trade between this country and Hawaii, and I believe that is the law to-day in reference to the Philippines, by reason of the suspension of the coastwise trade laws, but if we were to allow a foreign ship the advantage of the coastwise trade laws between the Pacific and the Atlantic, just like we do between the Philippine Islands now, I believe your people would get more competition in the way of freight rates, and the whole question would be obviated, would it not?

Mr. FORDNEY. But our American ships would have to go out of business right away.

The CHAIRMAN. I do not think they would go out of business. As a matter of fact, very few American ships are engaged in the coastwise trade around the Horn now.

Mr. HUMPHREY. There are not very many; but I will say, for the information of the chairman, that there is a large number now being constructed for the trade through the canal. But there is just this one thing about it, gentlemen, that if this loophole in our coastwise law remains as it is to-day and the Panama Canal is opened it would be a great deal better for the Pacific Northwest if we had never constructed that canal, because you are going to throw the trade and the commerce of this country open to other countries; you are going to leave a loophole there and take the trade from this country and give it over to British Columbia. And regardless, as I said, of the coastwise laws-and I believe in their wisdom, although I will not take your time to argue about that, because you gentlemen do not want to go into it-I think we have a right to come here before this committee and ask that in the Pacific Northwest we be treated in the same way as the other portions of the country, and that simply because of our geographical situation Congress ought not to permit this condition to remain in our tariff law a condition which, I think, very few men on the committee realized would arise when they allowed the law to pass.

The CHAIRMAN. I do not think you have any standing in court with this committee. You are complaining against the condition in the coastwise trade laws, and I do not agree at all with what you are trying to do in making those coastwise trade laws still more prohibitive and more of a monopoly than they are now, but if you want that done it seems to me you have a clear case that is within the jurisdiction of the Committee on Merchant Marine and Fisheries. You can go and ask that committee to amend the law so that it may apply to your case, but if we were to attempt to do it by legislation in a taxation bill I think we would work a great deal more injury to other people than we would benefit you.

Mr. HUMPHREY. I do not want to argue that particular point, but I do insist that this would not be a discrimination and that any amendment of section 15 of the present tariff act is a proper amendment, and the bill which I have drawn would not discriminate, because it provides "that there shall be levied upon the goods, wares,

SECTION 15.

or merchandise manufactured, produced, or grown in the United States that is transported from any port or place in the United States by any vessel not of the United States to any foreign port or place, and from such foreign port or place transported to any port or place in the United States by rail, or otherwise, the same duty as if said goods, wares, or merchandise were the product, manufacture, or growth of of foreign country."

You see it is simply, in this particular case, as we did in the early years of the Government, making a discrimination against goods carried in foreign ships. That is the only way we ever did do any good for our merchant marine; we never built it up and never had a law, as I recall, but for two years upon the statute books but what was a discrimination against the foreign ships, and that is what I ask here. It is simply a discrimination. If a man wants to send his goods around to Spokane by the way of Vancouver in a foreign ship, let us make the duty heavy enough so he will not want to do it.

The CHAIRMAN. I do not think there is any question but that if you want to change these coastwise trade laws it should be done by the committee that has jurisdiction over it. While I do not agree with you, I think you have your court there, and I do not think a question of this kind could be put in a tariff law without bringing about all kinds of complications along the Canadian border north of the New England States.

Mr. HUMPHREY. Well, I do not want to insist on arguing with the chairman as to the policy, because I know that would be quite a job, but as to the right to amend this section of the law and as to the fact that it would not be a discrimination against other sections, I insist the chairman is wrong. I gave that considerable study, and I consulted yesterday, or, rather, the parliamentarian consulted with me, as to where this bill should go, and he thought as I did that it should come here, and I think you could make this change, if you want. to make it. But, as I said before, I do not want to argue with you about the matter of policy.

Mr. KITCHIN. How long has this condition existed?
Mr. HUMPHREY. It has always existed.

Mr. KITCHIN. Did you go before the committee in 1909 ? Mr. HUMPHREY. No; because as I said a moment ago, I do not presume anyone ever anticipated the situation would arise. It never occurred to me until I got to studying what would be the result when the Panama Canal was completed. I have no doubt in my own mind but that if the attention of the distinguished chairman, Mr. Payne, had been called to it he would have taken care of it, because he is not only familiar with the tariff laws but familiar with the navigation laws. But it is a situation that he did not discover; I did not discover it, and no one else, so far as I know, discovered it until recently, and I am coming here before this committee asking relief at a place where I know I can get it if the committee wants to do it.

The CHAIRMAN. I will say to the gentleman from Washington that if he cares to liberalize the coastwise trade laws, in order to remedy the trouble in that way, I will be very glad to act with him, but as far as I am personally concerned, I am not willing to lock the door tighter than we have it locked now.

SECTION 15.

Mr. HUMPHREY. When it comes to the question of this country against British Columbia, I am in favor of locking the door to the extent of putting us on the same footing with the rest of the American republic.

The CHAIRMAN. I am not talking about locking the door against British Columbia, but about locking the door in the case of coastwise trade. I think we ought to liberalize our coastwise trade laws, thereby giving us better chances of freer competition in our freight

rates.

Mr. HUMPHREY. Until that is done we would like at least to have a fair chance as against British Columbia. I ask leave to insert in the hearing a letter received from the Treasury Department upon this same question.

The CHAIRMAN. Hand it to the stenographer, Mr. Humphrey, and it will be printed in the record.

Hon. WILLIAM E. HUMPHREY,

House of Representatives, United States.

TREASURY DEPARTMENT,
OFFICE OF ASSISTANT SECRETARY,
Washington, January 22, 1913.

SIR: I have the honor to acknowledge the receipt of your letter of the 11th instant, submitting the following hypothetical question:

"Suppose that a merchant in Spokane, Wash., purchased a cargo of steel rails, or any other American-produced article, in New York City, and then used a foreign ship to transport such cargo to Vancouver, British Columbia, and there placed the cargo on the Great Northern Railroad and by that road carried his goods to Spokane, would such goods be subject to tariff duties; and if so, what amount?"

In reply I have to inform you that articles purchased and shipped in the manner described would be entitled to entry free of duty under the provisions of paragraph 500 of the tariff act as goods of American manufacture returned to the United States without having been advanced in value or improved in condition.

The case of the Southern Pacific Railroad, to which you refer, was decided by this department under date of September 24, 1909, the matter having first been submitted to the Secretary of Commerce and Labor for an expression of his views as to whether the provisions of section 4347 of the Revised Statutes would be violated by the transportation of railroad ties in the manner indicated. The collector at Nogales, Ariz., was advised by this department that the shipment of such merchandise in the manner stated was not prohibited by section 4347 of the Revised Statutes as amended by the act of February 17, 1898, and the rails in question were admitted to entry free of duty as American goods.

I desire to invite your attention also to an opinion of the Attorney General, dated January 5, 1913, addressed to the honorable the Secretary of Commerce and Labor, to the effect that the transportation of merchandise on through bills of lading from Seattle to Fairbanks, by way of Skagway, Alaska, and Whitehouse, Yukon Territory, is not a violation of section 1 of the act of February 17, 1898.

Respectfully,

J. F. CURTIS,
Assistant Secretary.

STATEMENT OF HON. JAMES WICKERSHAM, DELEGATE FROM

ALASKA.

Mr. WICKERSHAM. Mr. Chairman, I am here to call the attention of the committee to a proposed amendment to the act of August 5, I think it is to section 15 of that act, which I very greatly fear will have a very serious effect upon conditions in Alaska. It was proposed by Mr. Humphrey, and is H. R. 28503, and, as I understood, Mr. Humphrey was here before the committee a day or two ago. The bill itself was introduced January 29, and I wish to read it to the committee and to call attention to

SECTION 19.

The CHAIRMAN. I do not think it is necessary to read it to the committee, but you can explain what your objections are, Mr. Wickersham.

Mr. WICKERSHAM. I want to call attention to the geographical conditions in Alaska, which make it seem to me to be of importance to the Territory. It is a bill which proposes to levy a duty upon American goods carried from one port to another port by foreign bottoms, and we are in this situation, and especially with respect to the interior of Alaska, i. e., a great deal of our freight comes into the upper Yukon country via Skagway, over the railroad to White Horse and down the Yukon River by way of Dawson into Alaska, and if this rate of duty were to be imposed upon all of those goods it would entirely close that route to the transportation of our supplies; and while I have not given this matter so much consideration that I am quite certain about my statements in reference to the matter, that is very important to us and I greatly fear the result.

The CHAIRMAN. I do not think you need be apprehensive at this moment, Mr. Wickersham. In other words, the proposition is if Mr. Humphrey's bill were to go through and a cargo was shipped out from New York through the canal and round into Vancouver, or one of the British ports, and then took the railway passage on into Alaska, really intending to go to Alaska, it would have to pay the tariff as if it came from a foreign country.

Mr. WICKERSHAM. Yes; but under this bill if it went from Seattle the situation will be the same.

The CHAIRMAN. I realize that, and I do not think it is necessary to present it to the committee.

Mr. WICKERSHAM. I would like to present it to the committee, because it is very serious.

The CHAIRMAN. If the committee decides to take the matter up, I will let you know, Mr. Wickersham.

SECTION 19.

STATEMENT OF NATIONAL WOOL GROWERS ASSOCIATION.

Hon. OSCAR W. UNDERWOOD,

SALT LAKE CITY, UTAH, January 25, 1913.

Chairman Committee on Ways and Means, Washington, D. C.

MY DEAR MR. UNDERWOOD: Recently we have noted reports in press that yourself and the committee of which you are chairman have under consideration suggestions for strengthening the administrative feature of our tariff laws. We desire to thank your committee for having taken this matter up, as it is of immediate importance to domestic industries.

Under the tariff law as now operated, many inequalities occur that tend to give imported merchandise a distinct advantage over domestic product. For instance, under the present law imported wool may go into a Government bonded warehouse where it can remain for three years without the payment of duty. There is always from 40,000,000 to 100,000,000 pounds of wool duty unpaid in these bonded warehouses. Even with the short supply of the present moment there is now 47,889,704 pounds of wool in bond. The only charge against this bonded wool is the storage charge, which certainly is not high enough. Wool in bond is not taxable; therefore, by dealing in foreign wool the importer escapes several charges that follow domestic wool. In the first place the duty of 11 cents per pound is not paid on bonded wool, thereby saving the importer interest charges. Domestic wool, however, is supposed to be enhanced

SECTION 28.

by the duty which increases the investment and interest of the man who owns domestic wool, as would not be the case if he invested his money in foreign wool. The man who handles domestic wool is taxed for its value by the State, county, or city in which he resides; however, if he handles imported wool he may leave it in a bonded warehouse almost indefinitely and escape taxes. Again, it is the custom to carry immense stocks of wool in these bonded warehouses and when the wool market is quoted to quote this bonded wool as "available supplies.' This, of course, tends to depress the market price of domestic wool, for it makes the supplies seem really greater by many million pounds than they actually are. The fact that this immense volume of bonded wool is in these warehouses prevents the domestic wool grower from enjoying the benefit of any rise in the foreign market. The wool importer, having an immense available supply already in bond, is not forced to take cognizance of rises in the foreign market. This bonded wool keeps our wool growers from holding their wool until they receive its full value. If the domestic wool grower does not sell his wool for what he can get, the manufacturer, having a big bonded supply, can draw on it, thus forcing the domestic grower to meet his price.

We, therefore, desire to suggest that the tariff laws be so modified that the duty on imports will be collected as soon as the goods are landed in this country regardless of whether they go into bonded warehouses or not.

Second. That the storage charges in all bonded warehouses be made higher than current charges in private warehouses.

Third. That merchandise shall only remain in bond 90 days, and after that period shall be taxed an equal amount to the total taxes paid on similar goods held in private warehouses.

Fourth. That where wool duties are levied on an ad valorem basis the London market price of such wool, plus the total handling and importing charges, shall be the value used in assessing the duty.

The London wool market is a rather stable institution, and if it could be used as the basis of wool values it would tend to prevent undervaluation. Also it appears to us that in collecting the duty the foreign cost plus all importing and handling charges make the value of the product, and therefore the duty should be levied upon these charges.

The officers of the National Wool Growers' Association feel that a good deal of discrimination takes place under the present law, and therefore we have submitted these suggestions for your consideration, with a hope that they may meet with the favor of yourself and your committee. Respectfully submitted.

NATIONAL WOOL GROWERS' ASSOCIATION,
F. J. HAGENBARTH, President.
S. W. MCCLURE, Secretary.

SECTION 28.

[See also B. A. Levett, p. 5913; Comstock & Washburn, p. 5812; James F. Curtis, p. 6304.]

TESTIMONY OF WILLIAM J. GIBSON.

The witness was duly sworn by the chairman.

Mr. GIBSON. I appear here on the administrative features of the tariff bill, and I was going to ask you whether, after I read this letter which I have here, you think I ought to be sworn.

The CHAIRMAN. The committee has instructed me to swear all witnesses; but so far as the administrative features of the law are concerned, if there is no objection, the witnesses on that feature will not be sworn. [After a pause.] There is no objection, and you may proceed, Mr. Gibson.

Mr. GIBSON. Mr. Chairman and gentlemen of the committee, it will be proper for me, I think, to explain why I am here on the administrative features of the law. Mr. Redfield wrote this letter