PARAGRAPH 270-CAVIAR. it is not a specific duty but an ad valorem duty. The present tariff calls for a 30 per cent ad valorem duty, and the difficulty has been in fixing the value of caviar at the port of entry in New York. The examiner has really no way of fixing the value on which he can base his computation. Now, we buy our caviar in Russia, in a city called Astrakhan. We have our own representative there who buys caviar for us, and he is there practically all the year round. We are undoubtedly the largest importers of caviar in this country, but that is probably due to the fact that we make a specialty of it, while with the other importers it comprises simply one of many articles which they may import. Most of the importers buy their caviar at either London, Paris, Berlin, Hamburg, or even Bremen, and the caviar that they buy they preferably buy from middle men, paying an increased profit and paying the duty levied in that particular country where they buy it. Besides the profit of the other middle men they pay the charges against the property, such as insurance, etc., and also a large amount of caviar-a relatively large amountspoils in shipment from Russia to these European ports. Now, as I said, we buy our caviar at Astrakhan, and we claim that the duty should be fixed on the values at the place where we buy it, and not where some small importers buy it, in some place which is probably 3,000 or 4,000 miles from where it is really caught and where we buy it. Now, the examiner can not get any definite information as to the value of caviar. We are on one side of the fence and the United States is on the other. That is why we want to see a specific duty levied, and we would be satisfied, as a general statement, with any duty, providing it is specific. The ad valorem duty works a great injustice to us for that reason. Now, the consular invoice for goods bought at Astrakhan has to go out to Rostoff, a Russian town, where there is a vice consul, and which is a 24-hour journey from Astrakhan. Mr. PAYNE. In 1910 they collected a specific duty, didn't they, equivalent to 22 per cent ad valorem, and last year 30 per cent ad valorem? Mr. HANSEN. I believe you are not quite right about the specific duty. The old tariff had a specific duty of three-fourths of a cent per pound on caviar. It was three-fourths of a cent a few years ago ad valorem, and it was classified as salt fish. Of course caviar-the only preservative used is salt, and it is sold in Astrakhan about the same way that fish is in a fish market. If there happens to be a large number of buyers on some particular day and only a few fishermen, the prices go up. The next day there might be few buyers and a large number of fishermen and the prices would go down; therefore there is not any such thing as market value in Astrakhan, which is probably the principal place in Russia where sturgeon are caught. It just depends on the supply and demand on that particular day. It is a highly perishable article, and naturally Astrakhan has not the facilities for storing and taking care of it. We might pay the top price for Astrakhan caviar and the consular invoice might show the top price, the market at Astrakhan, but that does not satisfy the examiner in New York. He depends on the prices, to some extent, that he PARAGRAPH 270-CAVIAR. gets by comparison with the price paid by another merchant, by comparing that invoice with that of some other merchant, and that merchant may have bought his roe in Paris or Germany or England, and paid a much higher price than we did, because he had to pay the profit of one or more middle men besides the additional expense of freight, insurance, etc. The fact, however, that we pay less than others may does not show that we were making a larger profit, because after shipping our stuff about 4,000 miles to Hamburg and then over here we often lose considerable in shipment; but although our purchase prices may be lower than most every competitor, still the profits are not correspondingly higher. Mr. FORDNEY. Mr. Hansen, didn't you write a brief about a year ago on caviar? Mr. HANSEN. I wrote one about two and a half years ago. Mr. FORDNEY. I got a copy of it this last summer. You there describe very fully your purchase of caviar in Russia, from where it had been brought as far as Germany and put in cold storage, and when you took it out of cold storage the German Government then charged you a duty on that cost plus what it had cost you to keep it in Germany. Mr. HANSEN. Yes, sir. Mr. FORDNEY. And the duty paid in Germany was added to the value when it was entered at the port of New York, and that value you paid ad valorem on at 30 per cent? Mr. HANSEN. Exactly. Mr. FORDNEY. That was the statement in your brief. I know you paid duty in Germany on your Russian caviar, for the reason that the caviar was caught at an unseasonable time of the year. The season when caviar was caught in Russia did not permit you to ship it direct to New York, and therefore you brought it to Germany and put it in cold storage until the proper season of the year to bring it to this country. Mr. HANSEN. Yes, sir. Mr. FORDNEY. And you complained because our Government added to the price you paid in Russia the duty you paid in Germany. You went on and stated further that you pictured in the not long distant future Long Island being one continuous row of factories where, under a new system of permitting foreign goods to come here without paying the duty and thereby without the payment of any revenue, this country would become a great manufacturing country. Didn't you know that everything you predicted would come to pass in the future is in the law right now? Mr. HANSEN. I think that some one else in our office prepared that at the time. I did prepare one, but my brief was about three years ago, and I do not believe I could have written a brief quite as flowery as the one you mention. Mr. FORDNEY. This one said that he would like to see the time when raw material could come from foreign countries and be manufactured and be exported without the payment of duty, and that is the law now. Mr. HANSEN. In this particular item there is no question of protecting the industry of American workmen. The catch in the United States the total catch of roe-is now about 40,000 pound a year. PARAGRAPH 270-CAVIAR. Twenty-five years ago we caught annually on the Delaware River 200,000 pounds of roe. On the Delaware River 25 years ago American fishermen caught 500,000 pounds of sturgeon roe, and the output now per year is only between 20,000 and 30,000 pounds. So practically we do not come into competition with the American industry nor with any American workman at all. The brief of the Russian Caviar Co. is as follows: In re paragraph 270, Schedule G, "Caviar and other preserved roe of fish, 30 per cent ad valorem." THE WAYS AND MEANS COMMITTEE, House of Representatives, Washington, D. C. GENTLEMEN: The following brief is respectfully submitted to your consideration in behalf of the Russian Caviar Co., for the purpose of furnishing your committee with information which, the undersigned trusts, will bring about a change in the duty on caviar. Whatever opinion we may have as to the advisability or equity of any duty on caviar we do not advance on this application. This brief is directed solely toward the present duty, an ad valorem instead of a specific duty, and it is our contention that such ad valorem duty is unsatisfactory, inequitable, and an improper measure of taxation. The Russian Caviar Co. is a corporation organized and existing under the laws of the State of New York, and is, and for some years past has been, engaged in buying American caviar and importing Russian caviar, principally the latter. The stockholders and officers are all American citizens, and its main office is in the city of New York. We are the largest dealers in this article of commerce in America, and three-fourths of all imported caviar sold in America is imported by us. Our interest, therefore, in the existing tariff as it affects this product is apparent, and the burden of an unjust duty falls most heavily upon us. The vital objection to the present duty on caviar of 30 per cent ad valorem is the difficulty of fixing the value of this product, and if the value is improperly fixed we are the sufferers thereby. It is an acknowledged fact in the trade, and it need not be considered embarrassing to our Government officials, that the customhouse appraisers or examiners formerly knew nothing whatsoever about caviar, except that it was made from the roe of the sturgeon. Of its value and price in the market places of Europe, where the supply and demand fixed the same, nothing whatsoever was known. Of the present board of examiners in the city of New York there is but one who has any knowledge on this article, and we do not hesitate to state, modestly, yet decidedly, that his transactions and relationship with our company were the main sources from which he obtained his knowledge on the subject. Nor is this at all strange, as caviar, its uses, care, and consumption is distinctly European, and only now is it slowly taking its rightful place in America among food products, due to our increasing catholicism in taste and an appreciation of its value as an article of food. To place an ad valorem duty on caviar, the appraiser must know its value, i. e., he must be an expert on the subject. An expert, of necessity, must have knowledge of his subject; but our examiners have none, for the very good reason that it is impossible for them to obtain the same to a degree sufficient to qualify them as experts. The caviar imported by us is purchased at Astrakhan and vicinity, in Russia, where the sturgeon fisheries are situated. The fishermen bring their roe to the local market place, where it is sold to the one who bids the highest price therefor. In other words, the law of supply and demand regulates and fixes the price. The roe in its prepared state is naturally a perishable commodity, and is much more so in its unprepared condition, and, like all fresh fish, must be sold immediately. The method of selling the roe is mainly like that existing in the Fulton Fish Market in the city of New York. If a greater number of fishermen than usual offer their wares on a particular day, or if the catch is a larger one than usual or fewer buyers are present, the price goes down; if a larger number of purchasers happen to be present or if the catch for the day is smaller, the fishermen's price advances. It is apparent that the price and value under these conditions must vary considerably and change continually, and such, indeed, is the fact. During the closed season of the year, and particularly in the summer, there is no market therefor whatever at Astrakhan, excepting a small retail PARAGRAPH 270-CAVIAR. market, and during this period alone does the price remain fixed; but this is a retail, not a wholesale, price and would be no guide whatsoever. We buy our caviar, every grain thereof, at Astrakhan and vicinity, and we should be subjected to a duty based on a value as evidenced by the price we pay for it in Russia. The appraiser can not inform himself as to the prices paid at Astrakhan, as there is no consular agent of the United States at that place, the nearest consular agent being stationed at Rostoff on the river Don, a 24-hour journey from Astrakhan. At the present time the duty is computed on a value fixed by the examiner, and in making his computation he bases his value on the color and size of the roe and the prices paid as set forth in the consular invoices of the importers in the city of New York. Now, as to the first requisite, the color and size of the roe alone is not a proper measure. A far greater consideration is the condition of the finished product, whether its consistency is thin or not, whether or not it is salty and whether it is mushy or firm. The second requisite is wrong because the appraiser compares the price we pay with that paid by the other importers. Now, the other importers, mostly hotel and restaurant proprietors, buy their wares, some in Germany in the cities of Hamburg or Berlin, and a few in Russia in the cities of Moscow and St. Petersburg. They buy at second or third hand, paying two and three profits. The total of these purchases is less than one-third of the amount we import, and buying in such small quantities and paying the profits of a number of middlemen the prices they pay are practically retail compared to those that we pay. Another important reason why they must pay more than we do is that caviar is a perishable article and must either be stored at Astrakhan to await shipment in cold weather or be shipped during warm weather by railroad over a distance of about 4,000 miles, a risk almost prohibitive, yet accepted by some dealers. Naturally a considerable part of what is so shipped spoils by reason of the warm temperature it is subjected to and becomes unfit for consumption. On that account the dealers at Hamburg, Berlin, and other places demand proportionately large profits on the wares that arrive in good condition. The prices so paid are taken into consideration by the appraiser and we are thus subjected to an ad valorem duty of 30 per cent on not the actual value of the merchandise, as evidenced by the price of over three-fourths thereof, but a duty of 30 per cent on what various dealers pay, in different parts of Europe, for small quantities whose aggregate amount does not equal one-third of our purchases. The necessary and evident want of equity in fixing the duty leads to constant disputes as to the value on which the duty is to be based. The following is a statement showing our imports for the years 1911 and 1912, set forth in weight by the pound and value and the amount of duty we were compelled to pay thereon. This caviar costs us from $1 to $3 per pound at the market in Astrakhan. Your committee will note that the duty paid by us in the year 1912 is within $300 as much as in the year 1911 although we imported 28,000 pounds less than during the earlier year. This was due to the fact that the caviar imported in 1912 was, to a considerable extent, of a higher grade than that of the year before on account of the scarcity of the cheaper grade of roe. On the foregoing facts, therefore, we submit that if a tax must be levied on this article of commerce, then, in all fairness to us, it should be a specific duty per pound as in the case of wines, etc., the amount of such specific duty to be left to the tariff commissions and committees. This would be absolutely fair to all importers and with one stroke do away with endless disputes with appraisers and the persistent complaints against a duty fixed by the present method of computation, which is based on unfairness and inequality in fixing values. As stated above we imported 97,490 pounds during the year 1911 on which duty in the sum of $32,905 was paid, averaging thus about 33 cents duty per pound. In the year 1912, $32,660 duty was paid on 69,452 pounds imported, an average duty of 45 cents per pound. This, however, was occasioned as we stated by the smaller imports of cheaper grades of caviar because of their scarcity, and this probably will not happen again in years. Should it therefore be decided not to lower the duty on caviar, but to retain it at about its present average, then we respectfully suggest that a specific duty of 35 cents per pound would be a fair average duty, which would fall as an equal burden on all importers. We may here appropriately remark that the sturgeon is a fish that less than 30 years ago abounded in the lakes and rivers of the United States and was found in large numbers even in the Hudson River. It is now almost extinct in our country, and the cheaper the imported roe the more protection the American sturgeon is afforded, ticularly as the roe of the latter is får inferior to that of the European fish. par For this reason a duty of 20 cents, or even lower, would be a positive benefit to the people of the United States, as it would encourage the consumption and a consequent greater import of this merchandise, and incidentally would tend to protect the domestic fish to some extent and afford a possible means of increasing the numbers of a fish now almost extinct. We shall consider it a privilege, if your honorable committee so desires, to attend before you in person or to furnish you with any further information you may desire. Dated New York, January 10, 1913. Respectfully submitted. RUSSIAN CAVIAR CO., |