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Mr. MOSKOVITZ. I don't know what was in the mind of the collector. I know Mr. Vosika for Hallet & Carey, and I know he quoted the telegram, and it is in the record, and I would like to read it in the record again.

Mr. GUINANE. We are in Minneapolis to get firsthand information, and we have the deputy collector here from Duluth.

Mr. MOSKOVITZ. I think in fairness to all concerned it should be read. It is two paragraphs long, about two-thirds of a page on this document.

Senator THYE. You may read it.

Mr. MOSKOVITZ. This is a telegram dated Duluth, Minn., April 26, 1951:

COMMISSIONER OF CUSTOMS,

Washington, D. C.:

Boatloads of frost-damaged Canadian wheat are arriving this port, from which representative samples taken at time of unloading and determination made that wheat contains more than 30 percent by weight of damaged or frosted kernels, classifiable for tariff purposes as wheat unfit for human consumption under paragraph 729. Large quantities this wheat being forwarded under transportation entries for exportation at Texas ports. In view specific provisions section 18.11 (i), Customs Regulations, this office has required that merchandise be described in transportation entries as wheat unfit for human consumption. Importers represent that terminology "unfit for human consumption" is misunderstood by all who see it except those in customs and grain business, and difficulties occurred on arrival last shipments in Texas by reason of such description on conductor's copy of car manifests. Importers desire to describe this wheat in future transportation entries by the term "wheat" only, and request permission so to do. This office would approve of such request provided it is limited to wheat intended solely for export; that the transportation entry be prepared in complete tariff terms, but permit the individual car manifests to describe the commodity only as wheat. Advice by wire collect is requested.

Night letter.

SARVELA, Collector.

Charge: Hallet & Carey Co., Board of Trade, Duluth, Minn.

Mr. W. VOSIKA,
Traffic Manager, Hallet & Carey Co.,

2635 Grain Exchange, Minneapolis 15, Minn.

APRIL 30, 1951.

DEAR SIR: There is quoted below for your information and guidance copy of Bureau telegram of April 27 in answer to our inquiry as to the preparation of transportation and exportation entries covering wheat classified by this service as unfit for human consumption.

"Retel 26 wheat classifiable as unfit for human consumption entered for transportation and exportation.

"Description must suffice to permit collector to estimate duties if necessary. No objection preparation individual car transportation and exportation manifests to show commodity as 'Wheat.' Relative statistics, Bureau Census advises schedule A detail not required for transportation and exportation entries but schedule T permissible, citing Census circular letter 125 of February 6, 1951. Notify collect applicant."

In view of the foregoing this office will accept entries prepared on the above basis. You will note that the above authority is limited to transportation and exportation entries only, and this office will require that immediate transportation without appraisement entries and manifests be prepared as in the past. The above telegram has been charged to your local office.

Very truly yours,

COLLECTOR OF CUSTOMS.

Cc: Hallet & Carey Co., Board of Trade Building, Duluth 2, Minn.

Senator YOUNG. Now, I would like to ask Mr. Kellogg a question. How much was the additional cost per bushel for wheat that went to

the gulf, the coast, by Minneapolis, rather than direct from Duluth to Houston?

Mr. KELLOGG. Just the inspection fee, Your Honor.
Senator YOUNG. Isn't the freight rate higher?

Mr. KELLOGG. It will be stopped here and go through the gulf ports. You pay the rate from Duluth to the gulf.

Senator YOUNG. Is it cheaper to stop here?

Mr. GUINANE. Senator, while we are speaking about the customs, the decisions made on this, I would like to read one part of the recommendations that the committee made in its report in connection with that.

Senator THYE. You may read it. However, after what we have discovered, it has no particular weight upon the decision made by the customs collector's office here in Minneapolis, and the same question still is in my mind, why had it not been acted on in Duluth, at which time it came off the vessel to be loaded into cars. I cannot understand why the inspection and the transaction had not been made there rather than to come down here and stop the grain and make the inspection here, and the change in the classification of the grain when it was reassigned to Houston, Tex. I cannot get that straight in my mind, and I can't find an explanation for it.

Now, you may go ahead and read it, but I don't think it is of any great importance. It does not correct what took place. It only takes care of the future.

Mr. GUINANE. Mr. Horan, the only purpose of bringing those in transit cars, which were not unloaded, and placed in constructive warehouses, was to get rid of this phrase, "unfit for human consumption"? Mr. HORAN. I don't know.

Mr. GUINANE. Was there any other possible purpose?

Mr. HORAN. None that I know of. Yes, it might have been withdrawn for consumption in Minneapolis.

Mr. GUINANE. But they were withdrawn from here for transporta

tion.

Mr. HORAN. I believe they all were, all of the wheat was lodged in constructive warehouses.

Mr. GUINANE. How much time was involved in your men clearing all the papers on this 500 cars-did it involve considerable work? Mr. HORAN. It is considerable work.

Mr. GUINANE. Do you get paid for that by the importers?

Mr. HORAN. No.

Mr. GUINANE. That is all charged to Government time?

Mr. HORAN. That is right.

Mr. GUINANE. And do you think you were working in the interest of the Government in permitting this warehousing, this entry and withdrawal just for the purpose of getting rid of this phrase, do you think you were paying any attention to Government business in doing that?

Mr. HORAN. We were entirely within the scope of the customs laws and regulations, entirely within the scope.

Mr. GUINANE. Even spending the Government's money, just to permit them to do this, and there was no good reason for it?

Mr. HORAN. If that was the only reason, it appears like a waste of Government money, but I am not to ask why. If an importer asks for permission, if it is within the law, we permit it.

Senator THYE. Normally you would assume that. You would have the right to collect the duties, the customs duty thereon?

Mr. HORAN. No, Senators.

Senator THYE. It seems strange that you would strike open this car, and then proceed to change the name and the quality, and bill it out under a different name, under a different label, and get no money for it.

Mr. HORAN. Not "we." We don't get money for anything that moves inbound in the United States.

Senator THYE. You were handling something-send it back out, but under a different technical name—it is a very strange transaction. Senator YOUNG. You made your ruling where it was possible for certain companies to defraud the Government.

Mr. HORAN. I don't believe it did.

Senator YOUNG. As a result, some companies did export and received subsidies from the Government.

Mr. HORAN. I don't see how it can be because of the change. Senator YOUNG. If you had not made the change, it would not. Mr. HORAN. The customs officials classification "Wheat, 30 percent or more damaged," means exactly the same thing, only in more general term than "Wheat, unfit for human consumption." It may be wheat that is full of animal excretion. This told exactly what kind of wheat it was.

Senator YOUNG. An exporter, down there, if he was buying this wheat, labeled "Wheat, unfit for human consumption," he would have known better than to export it, wouldn't he?

Mr. HORAN. I imagine people in India would be glad to get that wheat.

Senator YOUNG. Even if it was illegal?

Mr. HORAN. No.

Senator YOUNG. The fact that the label was changed on this wheat certainly confuses the exporters. They got themselves in trouble, and paid money back to the Federal Government.

Mr. MOSKOVITZ. Anyone in customs knows that that term, 30 percent damage, knows it is Canadian wheat, there is no such American grade, no such American description.

Senator YOUNG. It couldn't be American-we have had years when we had damaged kernels, up to 40 percent.

A VOICE. Three, four, five, or sample grade?
Senator YOUNG. As a result of damaged kernels.
A VOICE. It is described differently.

Senator YOUNG. Don't you think it was confusing? Mr. NICHOLS. Not to anybody in the business. You or I, or some private citizen could have been fooled, but not anybody in the busi

ness.

Senator YOUNG. If the ruling is that, there would be far less importing of wheat.

Mr. MOSKOVITZ. No. It only covered in bond shipments as far as Bunge Co. is concerned, 400,000 bushels, more or less.

Senator YOUNG. What type of a hearing is this? Is everyone permitted to make statements?

Senator THYE. Senator Young may proceed to ask the question he desires to have answered specifically, and if Mr. Horan is unable to answer that question, if somebody wishes to volunteer, Senator Young is willing to accept that. You have interrupted not only

Senator Young, but you also interrupted the question that was asked
Mr. Horan.

Mr. MOSKOVITZ. I wish to apologize to the Senator.
Senator YOUNG. Are you an attorney for Mr. Horan?

Mr. MOSKOVITZ. For the Bunge Corp. May I ask the Senator for the question, because I think I missed it.

Senator YOUNG. Do you have anything to say, Senator?

Senator THYE. May I make this inquiry-Why did you interrupt the Senator when he was asking the question?

Mr. MOSKOVITZ. I didn't realize I was interrupting, and I apolo

gize.

Senator YOUNG. You are not his counsel?

Mr. MOSKOVITZ. I certainly apologize.

Senator YOUNG. I think the question was, the grain arrived and was subjected to an inspection by the Department of Agriculture Why?

I don't know whether or not it was. There was no reason why it should be. Under any circumstances I would have felt duty bound to follow through and get a positive report as to what happened to the grain, because it was inbound, going across this country, and as such this country permitted this grain to be shipped by a Canadian, and by an exporter coming in here to this country, and going across the United States to a port where it was to be exported from, it was supposed to be exported as a product unfit for human consumption, and, therefore, you were the customs collector that was responsible to make certain this grain did not change from the time it entered, while it was inbound, until such time as you know it left the country.

Mr. HORAN. Do you mean the collector of customs at Minneapolis? Senator YOUNG. You assumed the responsibility when you permitted it to go there, to go through here, and to go back out again. You accepted it here, and you asked for samples, and you took it and put another label on it, which you were responsible for.

Mr. HORAN. Senator, my answer has to be "No". We are not responsible for the disposition of anything that leaves our customs office inbound to another collector of customs.

Senator THYE. The man who received it would certainly want to know what he was receiving, and it was disposed of, you did know he received it?

Mr. HORAN. Yes, sir.

Senator THYE. And you did know a telegram was going to be prepared?

Mr. HORAN. No.

Senator THYE. You didn't, but somebody else's testimony will show you did.

Mr. HORAN. I understand that.

Senator THYE. And somebody else's testimony shows you were going to know what type of language was on the telegram being sent. Mr. HORAN. I was not mentioned by name in that letter, and I don't know who the writer had reference to.

Senator THYE. It was the Minneapolis customs office, and the Houston customs office, and the customs collectors, they never referred to any of you by name.

Mr. HORAN. In my 31 years I can't recall where we had an agreement with any other collector of customs as to what type of inquiry or message would be sent.

Senator THYE. That is what is so strange in this entire transaction, and what happens, was that the grain was purchased cheap in Canada, and that grain was changed, and a very handsome profit could have been made, it could have been sold in certain channels, and for that reason it is a strange transaction, and we find ourselves trying to investigate, and you, yourself, as you look back over it, I am quite certain will find it is a very strange transaction.

Mr. HORAN. No, Senator.

Senator THYE. You don't.
Mr. HORAN. No.

Senator THYE. I am surprized.

Mr. HORAN. We were following what the Acting Commissioner of Customs told us, what he told us in a letter, dated July 14, 1953. This letter is over the signature of C. A. Emerick, Acting Commissioner of Customs.

Senator THYE. Washington, D. C.?

Mr. HORAN. And it is to the Commissioner in New Orleans, the Commissioner sent us a copy.

Senator YOUNG. Does he hold that office now.

Mr. HORAN. He is still Acting Commissioner.

Senator THYE. Was that his reply to the telegram?

Mr. HORAN. That was sent to the comptroller in New Orleans. Senator THYE. Relating to this shipment?

Mr. HORAN. It is relating to the entire movement of grain.

Senator THYE. What brought such a letter from the Acting Commissioner of Customs?

Mr. HORAN. That, Senator, I can't say.
Senator THYE. What is the date of that?
Mr. HORAN. June 24, 1953.

Senator THYE. 1953?

Well, it had no relationship to the transaction of 1950, 1951, or 1952.

Mr. HORAN. It did.

Senator THYE. Beg your pardon.

Mr. HORAN. He had reference to all these transactions, these entry transactions on wheat that moved in bond through the United States. That came along to us with the letter of the Commissioner of Customs, of June 24, 1953. One, two, three, almost four pages, all in regard to the movement of this in bond wheat, Minneapolis to Houston and New Orleans, as far as the Commission, in Washington, he knew everything absolutely in the way of the transaction from Minneapolis, to Houston, and it was in accordance with customs regulations.

Senator THYE. Will you read it into the record?
Mr. GUINANE (reading):

BUREAU OF CUSTOMS, CIRCULAR LETTER No. 2852

Subject: Terms in which merchandise classifiable as "Wheat" or "Wheat, unfit for human consumption" under paragraph 729, Tariff Act of 1930, shall be described on all copies of consumption, warehouse, transportation, or export entries, warehouse withdrawals, and applications to manipulate.

Section 10.106, Customs Regulations of 1943, added by Treasury Decision 53249 provides for the filing of a declaration of intended use in connection with each entry covering wheat entered under paragraph 729, Tariff Act of 1930, as modified, as wheat, unfit for human consumption.

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