Mr. MCGOWAN. He is traffic manager. There is a little difference. Mr. GUINANE. This letter refers to both ports:

Confirming your telephone call this morning we understand you wish to pay duty on some of the bonded Canadian wheat shipped to both ports New Orleans, La., and Houston, Tex.

This letter applies equally to both ports.

Tariff Act of 1930 reads as follows:

Paragraph 729, described as "Wheat," rate of duty, 21 cents per bushel, 60 pounds.

Paragraph 729, described as "Wheat, unfit for human consumption," rate of duty 5 percent ad valorem.

Wheat, 21 cents per bushel, is subject to import quota from Canada of an absolute maximum of 795,000 bushels in any one year.

Wheat unfit for human consumption may be imported in unlimited quantities. The terminology is incorrect. And is applicable only to wheat which has 30 percent or more damaged kernels by weight.

The Federal Department of Agriculture is the supervisory power on this subject and they determine and advise the United States customs as to the percent of damage, and basis that decision, the United States customs grants 5 percent ad valorem duty if 30 percent or more damaged kernels.

All wheat shipped you was passed by the United States Department of Agriculture as 30 percent or more damaged kernels by weight-and United States Department of Agriculture Federal appeal certificates are on file at the office of the United States customs in Minneapolis as an authority for them to pass their wheat from Minneapolis on W. D. E. X. entries in the following language.

Mr. GUINANE. Does that mean warehouse?

Mr. HORAN. That means withdrawal for transportation and exportation.

Senator YOUNG. We want to hear you, Mr. Horan; will you please repeat that.

Mr. HORAN. That means withdrawal for transportation and exportation.

Mr. GUINANE (reading):

666

Mr. MOSKOVITZ. Didn't they give the description there?
Mr. GUINANE (reading):

"666,666 bushels bulk wheat, excess 30 percent damage for exportation purposes only."

On each entry is the statement "T. D. 44791 (11)" this is Treasury Decision covering the ruling of the Commissioner of Customs in Washington, D. C., that wheat containing 30 percent or more damaged kernel by weight may be imported into the U. S. A.-duty paid thereon-and the jurisdiction of the customs ceases and is exhausted when so entered.

After 5 percent ad valorem paid and wheat released, it is subject to the laws of the United States as applicable to any wheat of any kind. It may be bought, sold, used in domestic channels for feed, and if not declared by the Federal grain supervisor D. L. Q.—it is, we understand, used to some extent in milling. After duty paid there can be no objection to its exportation.

The Duluth customs insists term "Wheat unfit for human consumption" must be on customs papers. We warehoused in boxcar constructively at Minneapolis

and then withdrew under term:

"So many bushels, bulk wheat, excess 30 percent damage for exportation purposes only" T. D. 44791 (11).

This was a concession by the customs office at Minneapolis to allow business to operate freely. The Commissioner of Customs (Washington, D. C.) stated sometime back that description must be sufficient to identify the commodity. The description used out of Minneapolis-does identify.

Duty should be paid at New Orleans and at Houston, Tex. Customs entries will read in the language demanded or insisted upon required by the port of Houston, or port of New Orleans. Each is supreme in its own territory.

The entry (WD EX) out of Minneapolis-those papers that went from United States customs Minneapolis to United States customs at Houston or New Orleans show car numbers, bushels, pounds, value, rate of duty, and the duty basis 5 per cent ad valorem, under the second block (first page of this letter).

Basis the files and records at the customs offices New Orleans and Houstonthe customs brokers have sufficient information on which to make consumption entries to pay duty-then the wheat becomes free in every sense of the wordthe same as would be wheat out of Texas.

It has always been our policy never to make entry on ad valorem duty without filing "request for information as to value." Values are subject to customs appraisement and the above suggestion saves penalties if overvalued or undervalued.

After duty paid and release of wheat from customs custody-the wheat is free for any domestic purpose (unless D. L. Q.). It may also be exported.

Yours very truly,

WALT VOSIKA.

Mr. GUINANE. Does this letter carry out your statement that your company was very careful to warn purchasers of this wheat not to get it into the export program under the International Wheat Agreement?

Mr. KELLOGG. In every case when I sell any mix, as I have said before, I have told the buyer that that wheat could not be used for that purpose.

Mr. GUINANE. I would like to read this letter of August 28, 1951, from the Bunge Corp. written by Walt Vosika to Julian Scott of the Transit Grain Co., of Fort Worth, Tex.

DEAR MR. SCOTT: Replying to your letter of August 24, 21-cent wheat can't be brought in except subject to quota of 795,000 bushels maximum a year. That leaves the only possible wheat to bring in from Canada as 5 percent wheat with 30 percent or more damaged kernels and classified in Tariff Act of 1930 as "Wheat unfit for human consumption.'

Prior to payment of duty at 5 percent and release by customs-this wheat is under customs jurisdiction. After payment of duty and release it is-free wheat. Special handling at Minneapolis was to change description on customs papers to eliminate undesirable phraseology and had nothing to do at all with payment of duty. Jurisdiction of customs ceases when entered for consumption with payment of duty-and not before that.

In reference to phone call yesterday you, Webber, Smith, Self, and Bob's call to you.

I talked to both Webber and Smith

Mr. GUINANE. Who is Webber now?

Mr. MOSKOVITZ. He is with the Stone Forwarding Co.

Mr. GUINANE. Who is Mr. Smith? Do you happen to know Mr. Vosika? You are not familiar with Mr. Smith who handled this grain, are you, Mr. Kellogg?

Mr. KELLOGG. No; I am not.

Mr. GUINANE (reading):

I talked to both Webber and Smith same time 10 a. m. this morning and furnished them information as to Public Laws 211 and 272 of 1943 and 1944 which granted right to import Canadian grain and feed free upon proof in affidavit form of ultimate use as feed. This law has expired 5 years ago.

But the point is, there are no policing provisions requiring customs to secure any information of any kind as to use that is made of wheat classified as 5 percent under paragraph 729.

It is possible Smith and Webber can use this and make a little progress. Attached is copy of wire sent Mr. Webber noon today as fast telegram as our suggestion for wire from collector to Bureau in Washington if can't settle at Houston.

Our people (basis our experience) and our customs people in Minneapolis feel it would be a mistake to have any wires go to Washington except from the collector at Houston after conference and possible joint drawal of the wire as being satisfactory to both.

Now does that sound like the Bunge Corp. and the Kellogg Milling Co. and its officers were advising people to be very careful and not to violate the law and get in under the international wheat subsidy program or send this to ECA, or was it advising of export companies just how to get around these things?

Mr. KELLOGG. Mr. Vosika isn't a grain trader. He is a traffic man. Mr. GUINANE. He seems to be advising them what to do, doesn't he? Mr. MOSKOVITZ. I think you are entitled to draw any inferences that you may wish, but I don't think it is in good practice. Senator THYE. What about it?

Mr. MOSKOVITZ. I want to make this point, Senator Thye. This is only fast talk about Canadian wheat. When you sign an affidavit saying that it is home grown, obviously you can't sign such an affidavit. Senator YOUNG. This letter would imply that the customs office here in Minneapolis may have been engaged in a little skullduggery. Mr. MOSKOVITZ. Excuse me, I am not here to defend the customs office, but as it has been read in the record that we received 30 percent damaged kernels, that is, Canadian

Senator YOUNG. The custom's boy back there may laugh if he wants to. You will have a chance to answer later.

Senator THYE. Was that a customs official, did I understand you to say T. D. Canadian Government?

Mr. MOSKOVITZ. No; T. D. was the United States Government, but it was a description of Canadian grain.

Senator THYE. T. D. P. F. F. 30 percent damaged, or otherwise Canadian. The whole or entire terminology is bad. The law is to keep that wheat from coming in here and competing with our own wheat here in the United States, to safeguard your own wheat to keep it from being used for human consumption. And in the course of 3 years they have been trying to get around that question and we are going to try to unravel that thread and see where the string leads

us.

Senator YOUNG. It seems to me the customs officials were going beyond their duty to help them evade the law rather than to help keep them from evading the law or helping them to keep within the law.

Mr. MOSKOVITZ. I won't say any more at this time, because obviously it is just the beginning and we have a lot more to get before us. I don't think it is fair to put the blame in Minneapolis or Duluth. This rule was a rule that this wheat could be brought in even though for milling purposes because it came under this "in excess of 30 percent damage outside of the quota."

Senator YOUNG. Will you read that part of your letter in which the customs officials here state that they should not contact the Washington office?

Mr. GUINANE. In this one letter here of August 24, 1951, from Scott to Bunge.

I have your letter of August 23, and see we were absolutely within our rights and also on the wheat that duty hasn't been paid on so far, we can insist on the customs at both New Orieans and Houston to accept the duty inasmuch as a concession was made between the customs office at Minneapolis to allow business to operate freely.

Mr. GUINANE. Is that the part you wanted, sir?

Senator YOUNG. And later he advises the Washington office not to be contacted. Am I correct on that?

Mr. MOSKOVITZ. I think what is meant is the quota between the collector of customs and the one with whom the transaction takes place. The idea is not to let anyone go over the head of the customs collector, if the duty is paid in Houston the collector advises Washington, not the local concern.

Senator YOUNG. To me, it looks like more than protocol.

Mr. MOSKOVITZ. That is the way I understood it.

Mr. GUINANE. Another paragraph:

Our people and our customs people in Minneapolis feel it would be a mistake to have any wires to go to Washington except from the collector at Houston after conference and possible joint drawal of the wire as being satisfactory to both.

Senator YOUNG. That doesn't look like a business transaction of people who are trying to stay within the law.

Mr. MOSKOVITZ. If you recall, this entry that is made in Minneapolis, the collector in Minneapolis doesn't want the wire to go out from Houston. The fact is that he had nothing to hide and was showing that he was quite willing to let it go out from Houston.

Senator THYE. Nevertheless, there had to be a joint knowledge. Don't you draw that from that paragraph? I would draw that conclusion. However, read the paragraph over again.

Mr. GUINANE (reading):

Our people and our customs people in Minneapolis feel it would be a mistake to have any wires to go to Washington except from the collector at Houston after conference and possible joint drawal of the wire as being satisfactory to both.

And I believe we will show later that the Kellogg Milling or Bunge people sent a suggestive wire down South for them to follow.

Senator YOUNG. I would think the Washington office should be fully informed because I think that is where the policy was determined in the first place.

Mr. NICHOLS. It appears to me, Senator, that either with Treasury or any of these governmental bodies questions are sometimes asked by lawyers to get a ruling that the nature and the form of the question is of the utmost importance in order to get a ruling that will fit the type of thing that you are considering and therefore the lawyers representing the interested litigants frequently consult with Government attorneys to frame a question that will answer precisely the thing that they are trying to resolve. I don't say that that is the answer here but it might well be.

Senator YOUNG. Don't you believe that if the public had knowledge that this wheat was being imported on a feed-wheat basis "unfit for human consumption" and was being allowed to be mixed with wheat for human consumption that the customs offices would be in trouble? It seems to me that the whole purpose was to try to keep it covered up. Not to let the people know what was going on.

Mr. McGowAN. As I see it Washington had already been informed and it got to the highest authority in Washington and no opinion had been rendered and there was no cover up at all. To me some of these things may be odd but I don't say they tried to cover them up.

Senator YOUNG. Why didn't they want that form to be known in Washington? Why did they want to evade and not contact the Washington officials?

Mr. NICHOLS. Without having the right phraseology in the letter they would know in Washington; not to contact Washington but to do it with the right phraseology in the telegram.

Senator THYE. I think we are stretching the question somewhat, and as to the gentlemen needing a Federal agent to frame a question, that question seems relatively simple to me. It seems strange to me that here it landed in Minneapolis and then it went on down to another city in the United States. The customs officials want to collect duty and then they want to be certain that all concerned just have knowledge of what the words are going to be in that telegram that is sent to Washington. For that reason it is not the legal mind of an attorney trying to phrase a question.

It is much more than plain certainty that we know what is being wired here because that grain has passed through our port of entry and going on down through another port of entry where it comes under the jurisdiction of another customs official.

The thing just doesn't seem to ring true in my mind. I am familiar with the type of language that you will put in a question for a legal opinion and I am familiar with the type of language that you are going to put in a telegram to send down to the parent office.

Mr. MOSKOVITZ. I just want to amplify what you are saying. I think we have to keep in mind the document which the customs official sent in Houston contains, the official which the customs official passes in Minneapolis and that is wheat exceeding 30 percent damaged kernals. That is exactly the expression.

Senator THYE. But the man in Minneapolis had nothing to do with it, because only when you direct the customs do you have to examine the wheat. Therefore the Minneapolis official had nothing to do with that because he let it go by. It came out of a port here. This official let it go by and it went down to another port.

Mr. MOSKOVITZ. No, Senator. You are about 90 percent right. But the fact is that the document that the customs officials make out, the T. and E., the transportation entry, which is the in-bond entry, this thing goes by rail down to a port. It is the duty of the customs official to determine what that duty is. Now in the customs official's description, indirectly he will put the customs duty official on the spot.

Senator THYE. Now where did this wheat come in?

Mr. MOSKOVITZ. Duluth.

Senator THYE. It was the responsibility of customs officials in Duluth?

Mr. KELLOGG. Yes, sir.

Senator THYE. Why did it come to Minneapolis?

Mr. KELLOGG. It came

Mr. MOSKOVITZ. It came to Minneapolis to get a new customs warehouse and had to have a new T. and E.

Senator THYE. But the Minneapolis Customs Office had nothing to do with determining the official quality because that was handled when it was checked out of Duluth.

Mr. KELLOGG. It went by Minneapolis and when it went by Minneapolis they were responsible for determining the quality and grade; were they not?

Mr. MOSKOVITZ. I think the quality is determined when the in-bond entry is made at Duluth.

Senator THYE. Then it should have been a transaction. That is what I am trying to establish. The transaction should have been

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