To illustrate, we are admitting products from Japan and France in the way of canned foods at a very much lower rate of duty-and will continue to do so under the provisions of the pending bill-than those countries are charging us on like and similar products. The clause as it now reads in the bill as it comes from the Ways and Means Committee has the expression "like or similar products." We are asking to have that modified, for the reason that under the rulings of the Treasury Department that expression will have to be interpreted as meaning identical products. It is obvious that identical products are not likely to move in opposite directions.

So we are asking modifications to be made in the phraseology of that clause to fit in with the interpretations of the Treasury Department built up on the decisions of the Customs Court of Appeals during many years. In other words, instead of leaving the expression like or similar products," we are asking to have that changed to read "products of similar character, purpose, or use." Senator MCCUMBER. Now, give us an illustration.

Mr. BENTLEY. In the case of France, for example, she is shipping large quantities of canned sardines and peas; Spain is shipping canned pimentos; Italy is shipping canned olives and olive oil and tuna fish; Canada is shipping various kinds of canned fish and canned vegetables into the border towns; Latin-American countries, Argentina and Brazil, are shipping canned meats into this country under a much lower rate of duty than they charge us on our canned foods. We would like to be in a position to use this opportunity for securing reduced tariffs in those countries on the general line of canned foods.

Senator MCCUMBER. I want to know particularly what you want to set off as against what is similar, or whatever phraseology you use. Senator CURTIS. Give him an illustration.

Mr. BENTLEY. I want to ask, for example, that France reduce her tariff on canned vegetables and canned salmon coming from this country, and also canned milk, to meet the level of tariffs which exist in this country as against French exportations

Senator MCCUMBER (interposing). You desire that France should lower her tariffs on what, for example.

Mr. BENTLEY. Sardines and salmon.

Senator MCCUMBER. Take that for illustration, so you can send canned cherries to that country?

Mr. BENTLEY. Or canned salmon, any kind of canned foods, but particularly canned salmon.

Senator MCCUMBER. That is a pretty broad proposition; that covers the whole line, and if you have nothing of similar

Mr. BENTLEY (interposing). We have the general idea of canned foods, Senator.

Senator WATSON. How can we induce France to enact any other sort of a tariff law?

Mr. BENTLEY. France at the present time is exacting a much higher rate of duty on canned vegetables and canned salmon which go from this country than it is proposed to levy in this country against her canned sardines, vegetables, and fruits shipped to this country, and in this she is discriminating, because she admits canned salmon from British Columbia and Canada and from Siberia, where

Japan is operating, on a very much lower rate of duty than France charges the United States for canned salmon.

And we hope in this way, by indicating that unless she lowers her duty on canned salmon and canned milk and canned vegetables, which we naturally would ship to her, that we will ask our Government to raise the tariff on French canned foods to the level that she is charging against our foods.

Senator CURTIS. What you want, is it not, is a provision authorizing the President, if advised that any country discriminates against our products, to increase the duty upon the products of that country? Mr. BENTLEY. Products of "similar character, purpose, or use. Senator SMOOT. Mr. Bentley, you said that in the House provision the words were "like or similar articles"?

Mr. BENTLEY. Yes, sir.

1

Senator SMOOT. The words are "such or similar articles"; it is not "like or similar.' It says "such or similar articles." You will find it in section 302, page 207, in the bill, beginning on line 14 and ending on line 15.

Mr. BENTLEY. The expression "like or similar products" now under discussion occurs in lines 4 and 5, page 207, section 302. Senator McCUMBER. Similar articles would not mean that if France charged us a high duty on fish that we could then increase our duties on French olives, for instance.

Mr. BENTLEY. Well, that would be a question, of course.

Senator McCUMBER. That would neither be "such or similar." Mr. BENTLEY. We would hope that it would apply to the general line of canned foods.

Senator MCCUMBER. What you want to do is to make just the broad statement that we can change our tariffs on all of our canned goods to meet the prices on canned goods of all character coming from another country?

Mr. BENTLEY. Yes, sir.

Senator SMOOT. There has never been a ruling by the Treasury Department that the words "such or similar" means "identical." There never has been a ruling of that kind, and why now bring the question up? What must have happened now that you bring this question before the committee?

Mr. BENTLEY. Because, Senator, the matter was taken up with the Treasury Department, and we were informed by the bureau which has this interpretation in hand that the expression "such or similar" would have to be interpreted as "identical."

Senator SMOOT. It has not been interpreted that way in the past, and why should it be now? Those very words have been used before, and they have never been interpreted as you say they now contemplate.

Mr. BENTLEY. We have been so informed by the Treasury Department under the rulings.

Senator SMOOT. Who was it that told you that?

Mr. BENTLEY. I was told that by Mr. Ashworth, to whom we were referred by members of the Ways and Means Committee. He stated that on the decisions of the Court of Customs Appeals they had built up what they called a table of "similitudes" or definitions, I presume they are, and that under the expression "such or similar

products" they would feel compelled to interpret that to mean identical products.

Senator SMOOT. I think that ruling, however, was on the classification of goods rather than interpreted in the words that have been in the law so long. But when did you see Mr. Ashworth?

Mr. BENTLEY. Within the past 10 days. I should say about a week ago.

Senator WATSON. Well, we have his viewpoint, anyhow.

Mr. BENTLEY. Mr. Chairman, might I distribute these? They will show exactly what we have in mind.

(The document is as follows:)

[The words and phrases canceled are the words in the special section 302 of the new tariff bill as it now reads. The words and phrases in italics are the suggested substitutions.]

TITLE III.

SPECIAL PROVISIONS.

SEC. 302. That with a view to securing reciprocal trade and regulating the commerce of the United States with countries, dependencies, colonies, Provinces, or other political subdivisions of government, producing and exporting to the United States any article or merchandise upon which a duty is imposed by the laws thereof and for these purposes, whenever and so often as the President shall be satisfied that the government of any country, dependency, colony, Province, or other political subdivision thereof, imposes duties or other exactions, limitations, or embargoes upon like or similar products of the United States products of the United States similar in character, quality, or use which, in view of the duties imposed thereupon when imported into the United States, he may deem to be higher and reciprocally unequal and unreasonable, he shall have the power, and it shall be his duty, to suspend by proclamation said provisions of the laws of the United States imposing the duties upon such articles or merchandise products of such country, dependency, colony, Province, or other political subdivision of government, when and for such time as he shall deem just and in such cases and during such suspension, upon the importation of any such-or similar article or merchandise such products into the United States whether the same is are imported in the same condition and when exported from the country of exportation or has have been changed in condition by manufacture or otherwise and whether same has been imported directly from the country of production or otherwise, duties shall be levied, collected. and paid upon such article or merchandise or products of such designated country which shall by the President be ascertained and proclaimed to be equal to the duties or other exactions, limitations, or embargoes imposed thereupon when exported from the United States to such country, dependency, colony, Province, or other political subdivision of government.

Senator SMOOT. Mr. Bentley, you brought this to my attention the other day?

Mr. BENTLEY. Yes, sir.

Senator SMOOT. And I looked it up after you were in the office, and I found these identical words have been used, and I believe they have never been construed by the department, and the department advises me they will not be construed, as meaning "identical" goods.

Mr. BENTLEY. Mr. Ashworth's opinion was apparently based upon the decisions of the Customs Court of Appeals, and we concluded that it might be permitted to suggest wording that would be clear and comprehensive.

DRAWBACK AND BONDING.

[Title III, Sections 314 and 316.]

STATEMENT OF JAMES F. BELL, REPRESENTING THE WASHBURNCROSBY CO., MINNEAPOLIS, MINN.

Mr. BELL. I represent the Washburn-Crosby Co. and bear the indorsement of a number of northwestern mills, some Illinois mills, and the New York Millers' Association.

Senator McCUMBER. You are to speak on the drawback proposition, are you not?

Mr. BELL. Drawback and bonding.

Senator MCCUMBER. In other words, milling in bond?
Mr. BELL. Yes, sir.

Of course, gentlemen, I do not know what your committee has arranged for in the way of a duty. These administrative features are based upon the existence of a duty. While I may have to refer from time to time to a duty, I want to make my position clear and to say that we are not interested in a duty on flour, except that it should be equal to the duty on wheat. If wheat is free, then flour should be free. If, on the other hand, there is a duty on wheat, then the rate on flour should be the wheat rate applied to the number of bushels used in making the flour imported.

Senator SMOOT. I think we all agree to that.

Senator MCCUMBER. There was a witness here a short time ago who, I think, spoke for the eastern millers. In addition to having the countervailing duty which we intend to allow, and which would be equivalent to 4 bushels of wheat to 1 barrel of flour, he wanted 50 cents a barrel. Do you see the necessity for that?

Mr. BELL. The compensatory duty, Senator, as I say, is based upon the application of the wheat rate to the number of bushels it would take to make the barrel of flour so imported. That assumes, of course, that the cost of production in the countries of export and import is the same. When you make a comparison between Canada and the United States, you find that the costs in Canada are lower than they are in the United States to begin with.

Senator MCCUMBER. Now, why is the cost lower? Wages are about the same, are they not?

Mr. BELL. Yes; but upon investigation we find that a dollar of Canadian money will go as far as a dollar of American money in the production of flour. Of course, the American dollar is at a premium, so that if you take our money and invest it in Canada-—

Senator MCCUMBER (interposing). Leave out the question of exchange.

Mr. BELL. Unfortunately, we can not leave it out.

Senator MCCUMBER. Let us suppose for the sake of argument that the exchange would be normal. Would it not then cost practically

the same?

Mr. BELL. I think so.

Senator MCCUMBER. The cost of production by Canadian mills and the cost of production by American mills would be practically the same?

Mr. BELL I think it would be practically the same.

Senator MCCUMBER. Then, outside of the 4.5 measure, in your own opinion the difference is in the exchange.

Mr. BELL. No. Oh, the difference in the cost is the difference in exchange; yes, sir. The difference in grades is, of course, another

matter.

This question, by the way, is simply a matter of arithmetic. It takes 4.5 bushels to make 196 pounds of 100 per cent flour. That, however, is not the flour that is imported into this country and used in this country. It takes five, six, or seven bushels to make the kind of flour_that_you, Senator McCumber, are accustomed to use. Of course, I realize that it is almost impossible to incorporate into a tariff schedule a schedule that will make up for these inequalities in grades and costs.

I think you are as much interested in the compensatory feature as we are, because if the duty is not compensatory then the Canadian manufacturer and the Canadian laborer are going to benefit. They are given preference as regards the American manufacturer and the American laborer. Furthermore, that tends to neutralize the very benefits that you hope to secure through the enactment of a duty on wheat.

Senator MCCUMBER. I think there is no question but that those who want protection on wheat will be ready to give an equivalent protection on flour.

Mr. BELL. I want to make it very clear that we do not want a duty on flour other than that. We are not interested in a duty. If you want free wheat, flour should not be subjected to a duty. We can compete with these people. There is no trouble about that. We can compete if we can do so on an equal basis. And that is what we ask. Senator SMOOT. What change do you want in section 314?

Mr. BELL. May I make a remark with regard to the duty as it stands, Senator Smoot?

Senator SMOOт. Yes.

Mr. BELL. To-day there is included in the emergency tariff act a duty which amounts to about 58 cents in favor of the Canadian miller, and there would be 52 cents, at least, in the proposed House bill. I have prepared schedules on those which I should be very glad to file if you care to see them. As I have said, this is a simple case of arithmetic.

Senator SMOOT. You had better put them in the record.

Mr. BELL. If we can have a flour rate five times the wheat rate it would come very close to ironing out the inequalities. Four and a half times has been suggested. While it may sound unreasonable, yet if you apply it to particular grades that find entry you will find that it would not be far out of the way. It would be reasonably protective. I do not think it would be prohibitive. I think you could justify a rate of five or six times better than you could four and one-half plus 50 cents. That is my personal opinion; that is merely my personal judgment.

As to the administrative features, we have no objection to a duty on wheat, because if it will make a better price and thereby encourage production, we shall be very happy. We have all that we have invested in the production of flour. If we have a duty on wheat, however, we are anxious that it should be as constructive as possible and