At the outset, it should be stated that our industry is wholeheartedly in favor of any measures which will simplify customs procedures and also of any steps affecting all Government departments which would result in true economy. The memorandum before you, however, indicates that it is questionable whether or not any appreciable net savings would result by raising the value of duty-free mail packages from the present $1 level.

It should also be stated that no request is being made to place barriers on importations, but rather that the present competitive position of American importers, manufacturers, merchants, and labor on items under $3, be retained. It is respectfully suggested that all of the results which would accrue were the level of duty-free mail shipments to be increased to $3 should be considered--not only the savings in the administration of the Customs department.

Quoting from a letter received from Mr. D. B. Strubinger, Acting Commissioner of Customs, dated March 18, 1952:

The last estimate of the cost of processing of a mail importation was $1.59 per mail transaction.

Does this mean all mail imports, regardless of value since none is stated? Mr. Strubinger indicated that this estimate was made approximately 4 years ago and that the cost today is undoubtedly higher. Mr. JENKINS. Will you yield for a moment? What position do you take with reference to the $3.

Mr. GRINBERG. We are opposed to any change in the present level of $1.

Mr. JENKINS. You want it to stay at $1.

Mr. GRINBERG. We want to see it retained as it is at $1.

Mr. JENKINS. Your argument is that if it was $3 the cost of bringing it in was not more than $1.59, and the importer would have the advantage of between $1.59 and $3?

Mr. GRINBERG. That is right.

While it may well be expected that on mail shipments up to $3 the amount of duty would be less than the approximately $1.59 cost of clearance. It might well be that in many cases the loss of duty and other losses in revenue would exceed this cost. From the report on hearings before your committee on H. R. 5505 before the 82d Congress, customs duties were the only revenues considered by the Treasury Department in presenting the case for raising the level of duty free mail shipments. It might also be appropriate at this time to call your attention to the possible effect on employment in our industry. Among them, soft goods and costume jewelry would undoubtedly be lowered if the value of duty-free mail shipments were to be raised. May we respectfully request that all of these results be considered, in addition to statements by the Treasury Department.

I also understood from Mr. Rose's statement yesterday the change from $1 to $3 in section 321 was to take care of "sporadic and spot transactions."

It is interesting to note that after the passage of H. R. 5505 by the House of the 82d Congress, a number of advertisements appeared in American publications offering foreign merchandise under $10 and in addition catalogs of foreign mail-order houses were also received in this country offering foreign merchandise under $10.

Among them was a full page advertisement of Richard Shops, 180 Regent Street, London, England, in the February 24, 1952,

issue of the magazine section of the Sunday New York Times. The cost of one insertion was $3,370. This ad of an English firm offered straight skirts for $7.95, indicated approximate duty $2.50; flared skirts, for $8.95, indicated duty about $2.75; and matching stole capes for $4.95, indicated approximate duty $2.50. In connection with this advertisement, your attention is called to a question asked by Congressman John W. Byrnes at the House Ways and Means Committee hearing, page 122 of the report:

Mr. BYRNES. Is that going to lead to mail-order business on items that run under $10?

Mr. Phillip Nichols, Jr., Assistant General Counsel of the Treasury Department, replied:

Mr. NICHOLS. That is a question I am glad you asked. It is one that I have given a good deal of thought to and mind searching to. If the maximum ceiling of $10 is permitted, we believe that there might be a mail-order business that will spring up in some items. There are items that are dutiable at a fairly high rate that are produced in Europe that are in demand by our citizens here, such as woolens, and it might be profitable to set up a business along those lines.

The above-mentioned advertisement indicates that soon after the bill was passed by the House, we were faced with this very woolen situation. Note that the bill provided a raise to $10 in duty-free mail packages, and that the advertisement in question covered items from $4.95 to $8.95 with duties running from $2.50 to $2.75 per garment. From this example, it would seem reasonably certain were the duty-free level to be raised from $3 (foreign value) that such firms as the Richards Shops would immediately produce a line of merchandise which could be offered at $3 foreign value, such as scarves, blouses, skirts, etc.

The second illustration presented last year before the Senate Finance Committee was an advertisement which appeared in the magazine section of the New York Times, Sunday, March 16, 1952, and again on April 6. Cherub (Mail Order), Ltd., 35 Hillside, London, England, offered a doll called the Royal Princess for $7 plus, as stated, "you pay the postman around $3.15 duty." A single insertion cost $385. Here it would appear, were the value to be raised to $3, this concern and other firms would offer dolls, toys, etc. at a $3 figure (foreign value).

Another illustration which was presented was a copy of one-half of the cover page of the spring 1952 catalog of Joyce Wells, Ltd., 6a Mount Street, London, England, which had just been received by a consumer-purchaser in New York, and undoubtedly sent to many others in this country. This catalog contained 12 pages (8%1⁄2 by 11 inches) and all but 7 of the items (6 clothing) were priced under $10 each.

Below the cover page there was a copy of an order slip accompanying the catalog which depicted 2 pieces of plated silverware, 1 piece offered for $8.59, indicated duty $2.04, and the other for $5.28, indicated duty $1.21. There are many items of silver, both sterling and plated, flat and hollowware, which could be imported for $3 foreign value. Were these pieces to be sold in the United States, 20-percent excise tax would be collected on many of them, in addition to the duty. It may be presumed that considerable expense was involved in the printing and mailing of these catalogs. Were the value to be raised

to $3, it could be expected that new catalogs would be prepared offering items up to this foreign value.

The fourth exhibit presented last year illustrated how displays of merchandise priced at less than $10 could be made in the United States by foreign firms through traveling salesmen and by other means, and orders taken for shipment from abroad. The ad, a full page presentation, was inserted by Stanley Home Products, Inc., of Westfield, Mass., and Stanley Home Products of Canada, Ltd., of London, Ontario, and appeared in Life Magazine, American Edition, January 28, 1952, issue; cost $28,900 per single insertion. This ad stated that-

Stanley leads with more than 150 quality plus products featured exclusively at Stanley hostess parties such as the one pictured on this page: Waxes, polishes, cleaning chemicals, brushes, dusters, mops, brooms, etc., toilette articles, cosmetics, bath accessories, many other aids to improve personal grooming.

All of the items illustrated were of a value of $3 or less. The advertisement was sponsored by both Stanley Home Products of Westfield, Mass., and Stanley Home Products of Canada, Ltd.

We do not know how many products were made here or how many in Canada. There was no designation.

Some American mail order and retail firms have offices abroad and presently import many items in bulk. The thought comes to mind that if the value of duty-free mail shipments were raised, these concerns could readily ship items to their customers direct from abroad duty and tax free.

Here is a copy of the back cover of the May 2, 1953, issue of the Saturday Review. The advertisement is entitled "Around the World Shoppers Club" and "sends gifts like these from foreign lands for only $2 each, post paid duty free." It illustrates three "gifts". 1. Six silver plated English pastry forks.

2. A "Delft's Blue" ceramics lamp and shade from Holland.

3. A dainty perfume flacon of etched metal and gleaming glass from Paris.

This certainly is an example of a mail order business with items under a $3 foreign value and is indicative of a potential in mail order shipments which could reach serious proportions. The advertisement in question cost $1,030 for a single insertion and the volume of business necessary in order to make the venture a profitable one is readily calculable.

You may remember that Mr. Jones yesterday showed you a full page ad taken from the Detroit Free Press of the same concern offering these same items. That ad cost $2,304.

Some of the effects of the tremendous potential growth in this type of business must have been recognized when section 321 of H. R. 5106 was being discussed, since under paragraph (c) of that section the Secretary of the Treasury was given the following power:

(c) The purpose of this section is to avoid expense and inconvenience to the Government disproportionate to the amount of revenue that would otherwise be collected. Therefore, the Secretary of the Treasury is authorized by regulations to diminish any dollar amount specified heretofore in this section and to prescribe exceptions to any exemptions provided for in this section whenever he finds that such diminutions or exceptions are consistent with the purpose above stated, or are for any reason necessary to protect the revenue or to prevent unlawful importations.

While the Secretary of the Treasury could take appropriate action, much time would undoubtedly elapse (the horses would have run out of the stable long since) and much damage would have been done to American importers, manufacturers, merchants and labor in the interim before action could be secured. It certainly would be better to prevent this situation instead of seeking relief after the door has been opened to an inevitable increase in foreign mail order business. As a practical matter, how could proof be presented that importations were getting out of hand unless all packages containing such importations were opened and examined and proof secured in that way? Furthermore, certainly a spot check of packages valued under $3 would of necessity have to be made without any recompense to the Government.

It is respectfully suggested that to change the present limit would in effect be a change in tariffs, rather than a simplification of customs procedure, notwithstanding the fact that no specific items are mentioned. Consequently, it would seem that such a proposal should be considered as a tariff measure since it affects the duties to be collected. To include changes in duties in legislation dealing with other than tariff matters might in time prove dangerous and troublesome. May we call your attention to a statement made by Senator George W. Malone at the conclusion of his appearance before the House Ways and Means Committee on September 15, 1951 (reported on p. 593 of the hearings) wherein he indicated that a customs simplification bill should not be used to change tariffs.

In summation, it would seem that if the level is raised to $3, then the following results may be expected.

Potential growth of foreign mail-order business: With any raise of the duty-free level, it may be that foreign concerns and possibly some American firms would undoubtedly take advantage of duty-free provisions giving them a competitive advantage, not alone in relation to American products but also over those firms who import similar foreign merchandise and pay the duty thereon. From past experience, it can be expected that mail-order houses would offer lines of merchandise to be shipped from abroad especially attractive to American buyers, emphasizing that these goods are duty free and, where applicable, no excise taxes must be paid;

Possible net loss of revenue instead of saving:

(a) Loss of duties on mail-order shipments under $3. There would have to be a spot check of packages marked $3 and under, which would entail the cost of examination without any return.

(b) Because of these duty-free mail shipments, loss of business to American importers, manufacturers, and merchants would result in potential lessening of their income taxes.

(c) Loss of excise taxes where applicable, both at the manufacturer's and retailer's level.

And in addition to that there would be a loss to the local communities of their sales taxes, both city and State.

Then there is a possible effect on employment.

Unemployment might well result in many lines, particularly soft goods and costume jewelry were the value of duty-free mail packages raised to $3.

In addition to presentation which has just been made, I should like to state for the record that the Jewelers Vigilance Committee did not

learn until Jaunary 1952 (after the bill had been passed by the House, of the proposal contained in H. R. 5505 to raise the level from $1 to $10 on duty-free mail shipments. Otherwise, arguments would certainly have been presented to the Ways and Means Committee when that bill was being considered.

Issue is taken with the statement of Mr. Joseph A. Sinclair, secretary of the Commerce and Industry Association and director of its world trade department, contained in a letter addressed to Chairman Reed and published in the Journal of Commerce of May 22, 1953. In that letter he said:

The more controversial provisions of the legislation in the form adopted by the House in 1951 have been removed.

As you will recall, the former bill, H. R. 5505, was pigeonholed by the Senate Finance Committee, possibly because of some of the controversial proposals contained therein, facts pertaining thereto having been presented before that committee. It is to be regretted that the matter of raising the level of duty-free mail shipments is once more an issue, since it again revives controversy in connection with the present bill.

In view of the above facts and on behalf of the thousands of jewelers throughout the country, the plea is earnestly made that the present value of the duty-free mail shipments be retained at $1.

Thank you very much for your consideration.

Mr. JENKINS. You made a very fine statement and we appreciate your coming.

Mr. GRINBERG. Thank you.

Mr. JENKINS. Are there any questions?

Mr. KEAN. Mr. Grinberg, this $1 limitation has been in the law for a long time, has it not?

Mr. GRINBERG. Yes, sir.

Mr. KEAN. Previous to 1940 when the world inflation started and certainly the cost of goods throughout the world has doubled, did you have these troubles that you are expecting now?

Mr. GRINBERG. No, we did not have the trouble because whether the inflationary spiral has caused a change in the basic evaluation or not, I think it can readily be understood that the merchant entering into a mail order business and having to limit his duty free shipments to a dollar value-shall I say that the merchant would not enter into a business of that level. But there are thousands of items made outside of this country which could be imported at the $3 foreign value, which would, as I indicated before, be possibly 6, 8 or 10 or even 12 dollars American value. The potential in appoach to the American buying public is much stronger on that level than it would be at the dollar level, because for the merchant to bring in the item at the $1, there are the incidental costs to production, handling and shipping and a spread from a dollar down even though the values have increased which is not comparable with the $3 level. We feel very keenly as we indicated in this one advertisement we submitted today, the range of things which can be picked up and which can be produced abroad to cost no more than a dollar. So you can readily see that a great many more items would be able to be sent in were the value to be raised at all. Mr. KEAN. I was interested in the advertisement you put in from the Saturday Review which represents an organization which has its headquarters in Newark.