think, we had about 7,000 reappraisement cases. The secretary can tell you how many thousand invoices are received each year. But I tell you that 90 per cent of those 7,000 cases are on consignments; and you can make up your mind how many thousand of those invoices are never questioned.

Mr. SMITH. May I have an opportunity to reply briefly to some of the statements that have been made here?

The CHAIRMAN. Yes; but be as brief as possible.

ADDITIONAL STATEMENT OF WICKHAM SMITH.

[For further statement of Mr. Smith, see pp. 5, 70.]

Mr. SMITH. Mr. Chairman, the previous speakers have seen fit to allude to one or two cases in which I was counsel. I had not intended to intrude my private business upon this committee; but one or two of these cases are so instructive, as bearing upon this question, that I would like to take them up. There has been some reference here to the Worcestershire-sauce case. The facts of that case were that goods which had been coming here at a certain valuation for a great many years were suddenly raised by the appraisers at the port of New York 700 per cent. We called for a reappraisement, and obtained it before one general appraiser. He reduced the advance from 700 per cent to 180 per cent.

We then took an appeal from that one general appraiser to the board of three general appraisers, and they raised his advance from 180 per cent to 240 per cent. The Government then instituted suit for fraud under the statute, which has been referred to here. We went right into court and said that we were ready to go to trial immediately and that we had our witnesses there. The district attorney reported to the Secretary of the Treasury, and the correspondence is on file in his office, that he had not a scintilla of evidence to support any claim that these invoices were fraudulent, although the advance of the Board of General Appraisers was 240 per cent. The Government went into court and discontinued that fraud action without costs.

And yet, notwithstanding that, they brought a suit to recover 50 per cent penalty in additional duties, and under a decision of the Supreme Court of the United States, to which the learned Secretary and the Board of General Appraisers have referred, they had the right to it; and I was obliged to advise my client some weeks ago to pay to the United States $12,000 penalties on merchandise, as to which the district attorney had certified to the Secretary of the Treasury and the Attorney-General in writing, that they had not a scintilla of evidence upon which to claim there was any fraud in the importation of merchandise.

If that is not a beautiful illustration of the result of the penalty system, I do not know of one. Moreover, it is an excellent illustration of this accuracy of appraisement and this nice classification by experts on values. Here is a local appraiser who says goods are worth seven times their invoiced price. The first general appraiser says they are worth one and eight-tenths the invoice price, and the board of three general appraisers say they are worth two and four-tenths times their invoiced price.

The CHAIRMAN. Did any of them get high enough?

702A-A C L-06- 4

Mr. SMITH. I do not know that, Mr. Chairman, because after they had done this the importers concluded that they did not want to have any more experience with the customs officers, and they stopped importing the goods. They manufacture them in this country, and you have the consolation that they are affording employment to American labor and that the revenues of the Government, to this extent, are entirely cut off.

The CHAIRMAN. That was the result of an open hearing.

Mr. SMITH. There never was any open hearing in this case, and if Mr. De Vries says so he is mistaken. There was nothing open about it. I want to say that I have never seen an open hearing in my life, and I have been devoting myself exclusively to this business for sixteen years.

A case has been referred to by General Appraiser Fisher as an open hearing, and I want to give you an idea as to what kind of an open hearing that was. The Government got testimony abroad and examined witnesses here. The Secretary of the Treasury took the stenographic report of the transcript of the minutes of that hearing to edit it. They took the scissors and cut out pages. Every name was taken out from it, and he gave me a bare skeleton of what it originally was. Then the invoice was advanced, and he brings that up here as an indication of the proposition that open hearings do no good to the importer.

There was something said about these general appraisers being experts and not needing to take testimony. Are you gentlemen aware of the fact that every one of these general appraisers is a lawyer? One or two of them have not practiced extensively, but the others were practicing lawyers.

The CHAIRMAN. You and I will admit that even lawyers can learn. some things.

Mr. SMITH. It is only a few years ago since one or two of these gentlemen were occupying seats as members of Congress. And now, I ask you gentlemen if you consider that in four or five years a man can become an expert, so as to fix market values, without taking testimony, upon the value of diamonds from Amsterdam, silks from Lyon, and the other infinite variety of goods that come to the ports of this country? I say there is no man living who is able enough, or brilliant enough, or acute enough to become an expert in all these classes of goods whether he is a lawyer, or a merchant, or a manufacturer, or a member of Congress, or a private citizen. I say that the pretense that these men are experts or can become experts is nothing but a pretense; and if they decide these cases, the only way they can intelligently decide them is on the evidence. That evidence they get in the way we have described, and they keep it from us.

The Secretary of the Treasury repeated here to-day a statement he made the other day at the White House that, in his opinion, there was not an instance on record where a man shipping goods to this country and consigned them here to sell them for dollars and cents in this country duty paid, instead of selling them in the factory abroad, where it was not done with the sole intent of defrauding the Government. Secretary SHAW. I beg your pardon. I did not say anything of the kind.

Mr. SMITH. I thought you stated that here to-day in substance. I want to say that what these people are doing, in consigning their goods

from Europe to America, is only the same system of business that is practiced in this country by most of the manufacturers in this country. There are hundreds of them in this country selling their goods in various States, where there is no tariff and no motive for undervaluation, who will not sell their goods at their factories to everybody who comes there, but insist upon selling their goods through commercial agents.

Secretary SHAW. Can you name one of them?

Mr. SMITH. I have no doubt there are gentlemen here who could name fifty of them.

Secretary SHAW. I do not think there is one.

Mr. SMITH. I say that the reason people consign their merchandise is not because they want to undervalue it. I do not deny that many of them do it for that purpose. I do not deny that there is a great deal of undervaluation. I do not deny that there are wicked men trying to defraud the Government in this business. I never did deny it; and I have helped to prosecute some of them. But what I do say is that the misdoings of these people afford no reason why you should do a great injustice to all others who are honest.

I will close what I have to say by repeating the suggestion with which I began, that when a man comes to you, whether you be a private citizen or a general appraiser, and says that he wants to tell you something disparaging or detrimental to another man, and he wants to tell it to you behind the door, under the promise of secrecy, there is a very strong presumption that he is going to lie about the other

man.

Now, Mr. Chairman, that is all I desire to say except this. That there has been some suggestion here, by the learned Secretary of the Treasury, that the people behind this movement are consignment houses, and not American houses; that we do not represent the merchants of this country. We have here some papers and petitions on that subject which I wish to ask Congressman Olcott, who is the sponsor of this bill, to read to the committee.

STATEMENT OF HON. J. VAN VECHTEN OLCOTT, REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK.

Mr. OLCOTT. Mr. Chairman, my statement will be very brief indeed. I was somewhat surprised to hear Secretary Shaw, this morning, speak as if the Merchants' Association was entirely irresponsible, and as though this committee had practically held no meeting at all, but that some one had merely conversed with some one else.

Secretary SHAW. I did not say anything like that. I would like to have you refer to the record.

Mr. OLCOTT. The inference I drew from your statement was that the Merchants' Association was merely an association of people who were giving the Treasury Department so much trouble and difficulty. Mr. COCKRAN. And was composed of people who were either abroad

or dead.

Mr. OLCOTT. There were two names mentioned, one that of Mr. North and another that of Mr. Gibb, Mr. Gibb being dead. The pamphlet published by the Merchants' Association, which has been before you, starts out by saying that a committee was appointed to make a careful analysis of the customs administration act of June 10, 1890, as amended

by the act of July 24, 1897, and to suggest such changes therein or amendments thereto as they might deem wise. That committee consisted of certain men, and, in 1900, at a meeting held at the rooms of the Merchants' Association of New York, in New York City, the report of that committee was submitted and approved.

Mr. Gibb, who is mentioned as dead, served upon that committee and took an active interest in the matter. The report was submitted to him and he signed it. Then he unfortunately died. That piece of carelessness on his part we really could not control. The present members of the firm of Mills & Gibb, which has been referred to this morning, I do not know. The original committee of merchants was selected in 1899 at the suggestion of President McKinley. This committee was composed of men of importance in the business community. They first had a general meeting, and then they appointed a subcommittee, and that subcommittee, after it had formulated a report, sent it to every member of the general committee with a letter of transmittal, and received letters from almost all of them approving of the report, or at any rate they all acquiesced in the report; and at a subsequent meeting it was submitted to the general committee and approved.

That is the same report as this one which is criticised, because it was signed by at least one dead man, and it contained the very provisions that this report does, with some others which were eliminated from this, because of the opposition that had been met from the General Appraisers and the Treasury Department. It distresses me to think that the bill I have introduced, at the request of the Merchants' Association, should be so criticised and a statement should be made about it as though it were a bill in the interest of some people who were trying to loot the Treasury of the United States.

Since this report has been made I will say that I have another petition, signed by a number of American merchants, notwithstanding the statement has been made that the American merchants do not desire open hearings in reappraisement proceedings. The petition states:

We, the undersigned American merchants, understanding that the statement has been made that the American merchants do not desire reappraisement proceedings before the Board of Appraisers upon imported goods to be conducted in the form of open hearings, hereby assert that it is our unqualified conviction that the present methods of secret hearings should be abolished, and that a proper method of open hearings should be instituted forthwith, under which a merchant directly accused or under the implication of undervaluation should have an opportunity to know, examine, and, if possible, refute the evidence against him. We therefore most earnestly urge upon the Treasury Department and upon the Congress of the United States that proper provision be made for open hearings in reappraisement cases.

These are not the people who import goods and seek to raid the Treasury. There must be something in this that is worthy of your serious consideration, I take it, in order to entitle it to receive the signatures of these gentlemen.

It is signed by the following New York merchants: Fred Butterfield & Co., The H. B. Claflin Company, Tofft, Weller Company, E. C. Hazard & Co., Austin Nichols & Co., Calhoun, Robbins & Co., James H. Dunham & Co., Schieffelin & Co., F. W. Devoe & C. T. Reynolds Company, Dodge, Olcott Company, Robert Crooks & Co., Francis H. Leggett & Co., Whitall, Tatum & Co., Butler Brothers, James G. Johnson & Co., Sullivan, Drew & Co., Schoverling, Daly & Gales,

A. G. Spalding & Bros., Henry Bainbridge & Co., The Hatters Fur Exchange, N. O'Neill & Co., Adams Dry Goods Company, Higgins & Seiter, R. H. Macy & Co., D. B. Bedell & Co., The Mauser Manufacturing Company, A. D. Matthews & Sons, Jones Bros.

It is signed by the following merchants of Boston: Brown, Durrell & Co., Shepard, Norwell & Co., Houghton & Dutton, Bigelow, Dows & Co., H. G. Woolworth & Co., Walker Stetson Company, Jacob Whitcomb & Co., Dowd, Blake & Co., Samuel Ward & Co., Smith, Patterson & Co.

It is signed by the following from Chicago: The Fair, Pitkins & Brooks, Butler Bros., A. C. McClurg & Co., Montgomery Ward & Co., Sears, Roebuck & Co., W. Wrigley, jr., & Co., Hibbard Bartlett Spencer Company, Orr & Lockett Hardware Company, Thayer & Chandler, Public Drug Company.

It is signed by the following from St. Louis: Meyer Bros. Drug Company, Ely-Walker Dry Goods Company, Rice, Stix & Company, Ed. Westen Tea and Spice Company, Hargadine-McKittrick Dry Goods Company, J. S. Merrell Drug Company, John L. Boland Drug and Stationery Company, Moffitt-West Drug Company, Blackwell & Wielandy Book and Stationery Company, Carleton Dry Goods Company, Missouri Glass Company, B. Nugent & Bro. Dry Goods Company, St. Louis Glass and Queensware Company.

There was a special letter written to the Secretary of the Treasury under date of February the 14th by the Silk Association of America, signed by Frederick Allen, secretary.

Secretary SHAW. Will you give that letter in full?

Mr. OLCOTT. This is a copy of a telegram which was addressed to Hon. Leslie M. Shaw, Secretary of the Treasury, and it is dated February the 14th, 1906. It reads:

The Silk Association of America recommends by unanimous vote of the board of managers to-day that a trial for six months be given to so-called open hearings before the United States Board of General Appraisers, as favored in the report of the Merchants' Association of New York.

It is signed Frederick Allen, secretary.

Secretary SHAW. They do not want the law changed.

Mr. OLCOTT. Perhaps that is so, but the point is that they think this matter is of sufficient importance to justify a six months' trial. It does seem to me that there are two sides to this question, and that it should not be suggested here that we are merely representing the people who consign goods to themselves, in order to make undervalution possible, and to defraud the Treasury. That is the only position I take in regard to this matter. I know nothing about it as a technical matter.

Mr. COCKRAN. Your Merchants' Association would be quite satisfied, I suppose, if an experiment was made with this for six months?

Mr. OLCOTT. I presume the Merchants' Association would be satisfied, and I should think that would be a happy solution of the difficulty. Mr. COCKRAN. I merely mentioned that in view of the suggestion of the Secretary of the Treasury that they do not demand in this telegram a change in the law. I understand that nobody demands a change in the law.

Mr. OLCOTT. The telegram I read to you was from the Silk Association of America, and it was in convention assembled at the time the telegram was sent.