Mr. BOLTON. That is one of the most important things in any differential between different countries, is it not, in determining your tariff which should be applied?

Mr. MORGAN. I would hesitate to say whether it is the most important. It is one of the important factors; yes, sir; undoubtedly. Mr. BOLTON. How does that section compare in personnel to other sections?

Mr. MORGAN. Well, the size of the section is adequate to do the work that the Commission requires of it, I should say, except that we are in the status now of trying to determine what is the best organization and with which branch of our research group it had best be tied up. The death of Mr. Parater, who was probably one of the original appointees in that work with the Tariff Commission, raised the question of whether we should get a transportation economist added to the staff to head up that work, to be a recognized economist on transportation rates to handle the work, or whether we could combine it with one of our other research divisions and perhaps not require such high-grade work of the head of the section. We are endeavoring to discover that now by a test of it, having put it in under the accounting section.

Mr. BOLTON. I am trying to develop whether you have men there of practical experience; and by "practical" I do not mean theoretical or bookkeeping experience.

Mr. MOORE. Mr. Luce was formerly with the Interstate Commerce Commission.

Mr. BOLTON. Where was he before he went to the Interstate Commerce Commission?

Mr. MOORE. That I could not say. He had 2 years' experience in rate work in the Interstate Commerce Commission.

Mr. Waugh was formerly with a reailroad company for about 15 years, specializing in rate work.

Mr. BOLTON. That is the information I wanted.

Mr. MORGAN. I think it will be apparent to the members of the committee that all our economists, particularly those responsible for investigations, have to have, as a matter of their regular training, a very real appreciation of the significance of transportation rates and any other factors that enter into the cost of doing business. Whether they are men who know how to compute a water-and-rail rate from this point to another, and get it accurately, in all the detail, is another question. I would not want the committee to feel that even though we have the section of transportation temporarily placed under the chief accountant that the work of that section is not properly supervised and handled by men who know what to do with the information. Mr. BOLTON. I do not question it is being properly supervised and handled. I am just questioning whether they are getting the proper information, and that is the matter I question, frankly, today.

FUNCTION OF PLANNING AND REVIEWING COMMITTEE

Mr. WIGGLESWORTH. What is the planning and reviewing committee?

Mr. MORGAN. The planning and reviewing committee is composed of the directors of research, the secreatry of the Commission, and the head of the commodity division, or the section of the Commission dealing with a particular investigation.

Their job is to outline the plan of investigation and, when material has been prepared, to read it, check it, and, in a joint discussion, come to a conclusion as to what the factual report should say, or to order additional information secured and organized.

PUBLICATION SECTION

Mr. WIGGLESWORTH. What is the publication section?

Mr. MORGAN. The publication section handles all of the printed material gotten out by the Commission.

Mr. WIGGLESWORTH. What is the size of that section?
Mr. MORGAN. Two men.

STATUS OF OFFICE OF FOREIGN TRADE ADVISER

Mr. WIGGLESWORTH. What is the status of the office of the foreign trade adviser? Is that still functioning?

Mr. MORGAN. No, sir.

Mr. WIGGLESWORTH. That has ceased?

Mr. MORGAN. For all practical purposes they have ceased. I have not had any dealings with them myself for some time.

Mr. WIGGLESWORTH. If they exist, so far as you know, you are not furnishing them any information?

Mr. MORGAN. So far as I know, we are not furnishing them any information. The office of the foreign trade adviser was abolished, I think, following the decision in the Schechter case.

OPERATION OF COMMITTEE ON RECIPROCITY INFORMATION

Mr. WIGGLESWORTH. Now, the committee on reciprocity information, which you speak of as I understand it, when a trade agreement is in prospect, it is announced generally in the newspapers, and anybody who thinks he may be interested in that trade has a right to file a brief or to appear before this committee.

Mr. MORGAN. That is correct, sir.

Mr. WIGGLESWORTH. When that happens, I do not suppose there is any specific rate or any specific information under consideration. In fact, the person who may appear his commodity may not even be under consideration for revision. He just appears in the dark and makes a general statement that may be helpful to him in case that commodity is under consideration. Is that correct?

Mr. MORGAN. If I may make an answer without saying whether that is correct, Mr. Wigglesworth, it is like this: The State Department announces negotiations with a given foreign country; and, simultaneously, the Department of Commerce and the Department of State publish a list of the imports and exports that are significant in our trade with that country, so that all parties interested in such trade, together with any other parties who may be interested for any cause, have information that an agreement is under negotiation and may file their briefs with the committee.

There is, of course, no way of announcing in advance the commodities on which concessions are to be given, or even considered except it be to publish the entire list and say all of these may be considered, and from this some may be selected.

The negotiators themselves, I dare say, do not know up to the last minute which commodity will remain in an agreement.

Mr. WIGGLESWORTH. Do you think those briefs or appearances have been helpful to those who filed them or appeared?

Mr. MORGAN. Very much so. Just before I came up here I was speaking to a member of the staff and he made considerable of a point of the fact that he thought that never before had the information secured from industry received such careful consideration in connection with tariff matters as it had under this arrangement.

The information furnished by all parties interested has been voluminous, of course. It has been highly useful and it has received the careful attention of not only the Tariff Commission, who takes it and analyzes it, but all of the members of the interdepartmental committee who are dealing with the actual negotiations. It certainly has been useful.

Mr. WIGGLESWORTH. You do not agree with the view that has been advanced that the invitation to appear is equivalent to an invitation to appear and hear your own death sentence?

Mr. MORGAN. No, Mr. Wigglesworth; I should not say that. Mr. WIGGLESWORTH. What changes in rates have been made, of, either up or down, in the last fiscal year under the flexible clause? Mr. MORGAN. The rate of duty on beer, I believe, was reduced. I do not know that I can recall any other.

We have three investigations pending, the outcome of which I have no means of knowing.

Mr. WIGGLESWORTH. There has only been one change in rate under the flexible clause, as far as you know?

Mr. MORGAN. In the past fiscal year. If I may have the privilege of correcting that statement in the record; I am not quite sure of the facts.

Mr. WIGGLESWORTH. Certainly.

Mr. MORAN. When was the sardine rate changed? Was that not last year or the year before. Was not that under that particular provision?

Mr. MORGAN. Fish packed in oil?

Mr. MORAN. Yes.

Mr. MORGAN. That was in December 1933. The rates on sardines and tuna were raised, effective January 13, 1934.

RECIPROCAL TRADE AGREEMENTS CONCLUDED AND PENDING

Mr. WIGGLESWORTH. How many reciprocal trade agreements have been concluded now?

Mr. MORGAN. There have been seven concluded. I want to point out that the act of concluding them has been the responsibility of the State Department and not of the Tariff Commission.

Mr. WIGGLESWORTH. And, is it in order to state how many more are in contemplation at this time?

Mr. MORGAN. I think I can tell you, sir. Negotiations are pending with France, Spain, Switzerland, Finland, Netherlands, Italy, Honduras, Guatemala, Nicaragua, Costa Rica, and Salvador.

REPORT ON POTTERY IMPORTATION

Mr. BOLTON. Referring again to the matter of pottery importation, I think your report shows that of all importations Japan furnished about half, back in 1929, and has now worked up to about 85 percent, something of that kind, for 1934, we will say; have any specific steps been taken or recommendations with a view to meeting that situation, as far as you know?

Mr. MORGAN. The report to the President contained some recommendations but what they are specifically I do not recall.

The facts about the increase in Japanese imports which you cite seem to be in line with my own impression, received down at the Commission, that there has been a material increase in the amount of Japanese imports and the proportion of the pottery imports trade that they have taken over.

Mr. BOLTON. But no definite action taken by those to whom you reported.

Mr. MORGAN. The decision of the Supreme Court on the validity of certain sections of the National Recovery Act interdicted any action under the import control clause.

Mr. BOLTON. Not under the control of the President; however, under his right under the tariff laws, changes could have been recommended.

Mr. MORGAN. Under section 336?

Mr. BOLTON. Yes.

Mr. MORGAN. There might be an investigation undertaken under that clause.

Mr. BOLTON. As I understand it, the recommendation came under 3-E of the National Recovery Act?

Mr. MORGAN. Yes, sir.

Mr. BOLTON. And, was dropped when that was declared unconstitutional.

Mr. WIGGLESWORTH. Is it a fact that certain importers of Japanese pottery, prior to the issuing of this report, stated under oath that they had actually paid a less price for the pottery than the invoice indicated?

Mr. MORGAN. Mr. Wigglesworth, I cannot answer that of my own knowledge. I am not thoroughly familiar with the detailed facts in each of these reports.

Mr. WIGGLESWORTH. Can you obtain the answer and insert it? Mr. MORGAN. I shall be very glad to do so.

(Supplementary information in regard to Japanese prices on pottery is as follows:)

Subsequent to the completion of the report on pottery under sec. 3(e), the Commission received information that importers were purchasing certain articles at prices lower than the minimum prices for export to the United States fixed by the Federation of Japan Pottery Exporters' Associations, and shown in consular invoices. Inquiry was made in New York concerning this matter, and the evidence obtained indicated that only a few of the New York importers have up to the present time actually purchased Japanese pottery articles subject to price control, at prices below those fixed for export to the United States, and practically none of these importers is engaged primarily in importation of pottery. In quantity the most important articles imported at prices below those shown in consular invoices (the values on which duties were paid) were the cheapest grades of decorated cups and saucers.

It is known that where the Federation in Japan has been advised that this practice is being followed, it has refused to give shipping agents in Japan the necessary export permits for subsequent shipment to the purchasers.

As far as the Commission has information, buying in Japan at less than the established prices for export to the United States did not occur until the latter part of 1934, which was subsequent to the period covered in the Commission's report.

Mr. WIGGLESWORTH. And, can you also inform the committee if that is a fact, what action, if any, the Commission has taken with a view to the prevention of the importation on a false basis.

Mr. MORGAN. Yes, sir.

(NOTE.-Under the law such practices are for the attention of and action by the Treasury Department. That Department has the matter under consideration at this time.)

Mr. WIGGLESWORTH. Is it also a fact that the importations of pottery from Japan are headed up through a manufacturers' association out there which is in effect subsidized by the Japanese Government?

Mr. MORGAN. Let me obtain that information for you also, please. (NOTE. This question of subsidies was called to the attention of the Commission at the pottery hearing but no evidence has been obtained to support this contention.)

Mr. WIGGLESWORTH. Also, whether or not through the consular service it has been agreed that only such importations shall receive a visa as may be approved of by that organization.

Mr. MORGAN. I will look that up for you sir.

(NOTE. The Japanese Export Association will not issue a permit for export to the United States for any article invoiced at a value less than the minimum price fixed by the association. The American consul has no jurisdiction concerning issuance of such export permits.)

Mr. WIGGLESWORTH. I am simply asking two or three specific questions.

Mr. WOODRUM. Get the information, if you can, Mr. Morgan and put it in the record.

Mr. MORGAN. Yes, sir.

Mr. WOODRUM. Do you want it sent to you to put in the record, Mr. Wigglesworth?

Mr. WIGGLESWORTH. Yes; and what recommendations, if any, the Tariff Commission has taken in the light of those facts, if they are facts.

Mr. MORGAN. Yes, sir; I will endeavor to answer those questions as completely as our information permits.

(The information requested follows:)

The remedies for certain situations apparently existing in the imported pottery trade were found not to lie with the Tariff Commission but with another agency of the Government. That agency is fully advised and is actively at work on the improper practices alleged.

Apparently one indirect but very important result of the initiation of an investigation of pottery by the Tariff Commission was the adoption of measures on the part of the Japanese to correct and regulate the pressures caused by imports of Japanese pottery in the American market.

The Federation of Japan Pottery Exporters Association was formed in 1934 for the purpose of controlling prices for Japanese pottery exported to the United States. Complaints had been made by the American industry concerning the low prices at which competitive Japanese articles were being sold in American markets, and the Federation attempted to relieve the situation by fixing minimum prices for export to the United States of articles considered most competitive with domestic articles. As a result prices in Japan for certain articles, par-, ticularly the cheaper grades of cups and saucers (the most competitive articles) were appreciably increased. These increases, together with an increase in the