particular cases; second, a choice of representative samples of grade and varieties of products imported and sold by the importers selected and third, in some cases representative periods or seasons within the valuation period when it was not practicable to tabulate all of the day by-day transactions. REPRESENTATIVE IMPORTERS In selecting representative importers attention was given to such questions as the country of origin of various types of the products dutiable under a particular rate, the size or volume of the business of each importer, the completeness of the purchase and sales records during the valuation period, the various channels of trade through which he may have sold the products, and the varieties of articles which should be represented in the average. In a number of instances it was found that importers who normally would have been considered representative during the valuation period, and therefore would have been tabulated, had gone out of business prior to the date of the field work. Therefore, their records not being available, they are not represented in the tabulations. REPRESENTATIVE SAMPLES In selecting representative samples of imports by the representative importers care was exercised in determining the various grades of each commodity imported under a given name. High, low, and mediumpriced products were selected; special colors or designs were considered; and other factors which would give a cross section of the imports during the valuation period were examined in the process of selecting the representative samples. In the case of lace, for example, a distinction was made first between handmade and machinemade laces in selecting the representative samples. Of the machinemade laces the products of the Levers lace machine were considered separately from the Barmen lace. Of the Levers laces a distinction was made with respect to the material, whether of cotton, silk, or metal thread. Of the cotton Levers laces a number of styles were selected for tabulation, of which the more important were Alençon, Valenciennes, Binche, and filet. For each of these, variations in widths and designs were considered in the selection process. Chantilly was given special consideration in the selection of samples of silk Levers laces. Similar attention to detail was given in the cases of nets and nettings, and handmade laces. In addition to the technical specifications of lace it was found necessary to take into consideration colors and styles in selecting representative samples. It was found, for example, that of a group of laces identical in design and width, the colors, and even the shades within the colors, were important considerations in marketing the product. A blue color with a tinge of purple might sell in large volume as compared with a plain blue of the same design and width of which sales would be negligible. Because of the importance of the representative samples several days were sometimes spent on important products in selecting samples for tabulation purposes. All of these selections had reference, of course, to the valuation period, namely, the two fiscal years ended June 30, 1929. Time did not permit nor the law require an examination of the extent to which styles and designs have changed since the valuation period. 01 fo g S I In the selection of representative samples the various countries of origin of some of the varieties of the product were considered. Laces, for example, are imported from France, Switzerland, Germany, Belgium, England, and China. Ordinarily the particular style of laces, such as Chantilly from France, Barmen from Germany, and handmade laces from Belgium or China, sufficiently indicates the country of origin. REPRESENTATIVE PERIODS Because of the large volume of imports and sales of many products during the two years of the valuation period, it was not practicable to tabulate all of the daily transactions for the samples selected. This was especially true of sales. The purchase invoices of imports usually were found to cover large individual shipments, and in many cases all the imports for the 2-year period were tabulated for the samples selected. In other cases where imports were relatively constant throughout the 2-year period and averaged 8 or 10 large invoices per month, it was found that a detailed tabulation of approximately one invoice per month was representative of all imports. When all the purchase invoices during the valuation period for the samples selected were tabulated, the problem of representative periods was confined to sales records. In some cases the sales for 10 days out of each of the 24 months were tabulated. In other instances one or two months out of each of the two spring and two fall seasons of the valuation period were obtained. When the sales were seasonal, special effort was made to obtain tabulations for both the active and inactive seasons of the year. In many instances the sales price represented a relatively constant mark-up over foreign prices, or over the landed cost, duty paid, as the case might be. In such instances a smaller sales sample was more representative than when the sales prices were highly variable as compared with the purchase prices. In a few cases the sales price was so constant that the published list price was found, after checking back to the actual sales records, to be representative of the domestic value for the period. CHANNELS OF TRADE Another question kept constantly in mind in tabulating the purchase and sales data from importers' records was that of the possible difference in channels of trade through which domestic sales were made. A portion of the imports of a particular product might be sold directly to wholesalers or jobbers at one margin above landed cost, another portion to large retail establishments or chain stores at a different margin, and still a third portion might be sold directly to the small retail establishments at the highest margin. In actual practice the number of cases in which a particular product was sold through several channels of trade at various margins was relatively small. ་ Another distinction made in the tabulations, from the point of view of channels of trade, was between sales from stock and sales on import order. This distinction becomes quite important for fragile products such as pottery and glassware or articles of fashion in which market prices change rapidly. If a shipment of pottery or glassware can go forward to the ultimate wholesale purchaser in unbroken packages, the business may be done profitably on a small margin, whereas, if the product must be unpacked, placed upon shelves for indefinite periods, and then repacked for sale in small lots, a relatively high margin for overhead and profit is necessary to cover all the losses and expenses involved. The same is true with respect to fashion articles in which the market price may greatly change while the products are in the importers' warehouses. Here again the cases in which sales from stock and on import order were important were not frequent as compared with the total number of products covered in the tabulation. In the summary tables the distinctions among channels of trade and methods of sales are set forth when important. METHODS OF TABULATING THE FIELD DATA The previous discussion has indicated in a general way the nature of the basic information obtained from importers' records in the valua tion study. There are outlined below, somewhat more specifically, the methods used in tabulating these basic data. After the selection of samples, which involved the description of each product for purposes of identity between the purchase and sales records, the dutiable value of the product was tabulated, usually from the liquidated consumption entry and the accompanying invoice which show the notations of deductions and additions to make appraised value. The primary purpose was not to determine the price paid in a foreign country by each importer for particular shipments of merchandise, but the dutiable value. The dutiable value, as actually found by customs officials or the Customs Court during the period of the valuation study, was accepted as the basis of the commission's calculations in accordance with the provisions of section 340 of the act of 1930 which refers to "The basis of value defined in section 402 of the tariff act of 1922." The figures given in the summary tables of the report under dutiable value, therefore, do not necessarily represent the actual purchase prices to the importers in the foreign country, and for this reason the difference between the dutiable value and the sales price is not necessarily the spread or mark-up, including duty and other expenses, between the foreign purchase price and the domestic sales price. For some articles dutiable on the basis of United States value or upon the American selling price, such as articles dutiable under paragraphs 27 and 28, the distinction between dutiable. value and foreign purchase price becomes quite important. In a preceding section reference was made to the necessity for partial tabulations of the sales data because of the large number of transactions during the 2-year period for many of the products. In selecting the sales to be tabulated it was found that a distinction could be made between what may be called "traced" sales; i. e., identical articles purchased and sold, and "sample" sales; i. e., the sales of the same kinds of articles as those covered in the purchase data although not necessarily the identical ones. In the case of so-called "traced" sales a particular shipment of merchandise usually had an import order number and a corresponding sales number which could be traced through the records. In such instances there could be no question of the identity of the products purchased and sold. Therefore, the calculations of equivalent duties based upon the domestic selling price were exact for the particular products. In the case of "sample" sales more care had to be exercised in determining similarity of products in comparing purchase and sales prices. An for a particprices were though the of each gra noncompar is a "weigh Briefly sta report are tive quan column of The da coincide. sented by many we prices. An obvious error would be involved if the purchase prices for a particular product covered grades A, B, and C, whereas the sales prices were for grades B, C, and D of the same product. Even though the same grades were involved, different relative quantities of each grade in the purchases as compared with the sales would give noncomparable average purchase and sales prices. This, however, is a "weighting" problem which will be discussed in more detail later. Briefly stated, the domestic values shown in the summary tables of the report are for the same or comparable products and for the same relative quantities of these products as the purchase data shown in the column of dutiable value. The dates of purchase and sale of identical commodities did not coincide. In some cases the difference was only a few days, represented by the period of shipment, whereas in other cases it was many weeks. This is especially true of seasonal articles imported during the slack season and sold during the following active season. In all instances, however, the date of purchase and sale was recorded on the commission's work sheets, and if there were important distinctions to be made because of the time factor alone, the matter was taken into consideration in preparing the summary tables. C In the summary tables there is a column showing the equivalent of the ad valorem duty under the tariff act of 1930. These calculated figures may not be the duties actually paid, but they are the ad valorem rates in the tariff act of 1930 applied to the dutiable value during the valuation period as required by the law. The commission had no occasion to tabulate the duties actually paid under the tariff act of 1922. The amount of duties in the summary tables, therefore, is a calculated figure, and was not obtained from the importers' records. OFFICE TABULATION After the purchase and sales data for imports during the valuation period were tabulated in the offices of the importers, or purchase data obtained from liquidated entries at the customhouse, the working papers were all assembled in the commission's New York office for the purpose of checking and summarization. Realizing that it was neither practicable nor desirable to attempt the publication of all of the detailed tabulations made in the field, a middle course was chosen by which the information was summarized into a form brief enough for a usable report, and at the same time comprehensive enough to show the important variables in the basic data. The underlying purpose of the summarization was to reflect conditions approximately as they were in the import trade during the valuation period without introducing either undue simplicity or undue complexity into the summarized figures. The first step in the summarization process was to draw all the data together by individual companies for each of the products imported under a single rate of duty or under a value bracket as the case might be. If, for example, there were imported 10 major items under a particular rate of duty by 15 companies chosen as representative of the entire trade, these statistics for each product imported by each company were summarized on standard-form tables. After the company summaries were prepared, the information was grouped into what may be called item summaries; that is to say, the purchase and sales data for each company handling the same product were thrown together in order to get average figures for the particular item. In actual practice it was found that all the companies rarely imported all the items under a rate. In connection with the item summaries it was often desirable to segregate the data by four 6-month periods within the valuation period corresponding roughly with the spring and fall seasons of trade. This was done in the working papers in harmony with the principle that important variations in the conversion of rates should be reflected in the final summary. In most instances the seasonal factor did not seem to be important in the conversion of rates, therefore it was not usually necessary to carry forward into the published report the summaries based upon the four 6-month periods. Attention is called to the fact that similarity of converted rates as between seasons is not equivalent to similarity of prices. Prices may be high or low in one season as compared with another, but the converted rates will be the same if the percentage of margin or spread between dutiable value and domestic value is constant. After the item summaries were completed, all the tabular information under a particular rate of duty was drawn together into a soIn the "stub" or left-hand column of the called final summary. summary are shown the names of the various items covered by the At the tabulation, with the purchase and sales data after each item. end of each summary there is shown a weighted average of the data which represents the final rate converted on the basis of domestic value. In the published report many of the intermediate steps in preparing the final summary are omitted, such as the details of quantities and prices by companies, many of the item summaries, and most of the period or seasonal summaries. PERSONNEL The completion of valuation work in the detail outlined above required a large field staff. The field work began in February, 1931, with approximately 15 men, and the force was gradually expanded by the addition, largely of temporary employees, until by October, 1931, it had reached a maximum of 140 persons. This staff held approximately constant until about the 1st of March, 1932, after which time the work gradually diminished, and the valuation section of the New York office was closed about the middle of June, 1932. The field staff was subdivided approximately as follows: A director and assistant director, 6 or 8 coordinators and reviewers, about 40 commodity men, approximately 75 accounting tabulators, and, somewhat later, a staff of 25 or 30 office calculators and typists. The commodity men were further segregated among the various schedules of the tariff act, and each had assigned to him from two to five accounting tabulators to assist in compiling and summarizing the field data. The time required in the field was approximately 16 months, during which period tabulations were made, from the records of about 1,700 importers, for about 900 separate rates of duty and value brackets, covering three to four thousand major products. The total cost of the investigation was approximately $250,000. The commission was able to economize in the investigation to a considerable extent because of the opportunity to employ high-grade accountants residing in or near New York City at relatively low salaries, and without subsistence and travel expenses. |