appraiser's classification or finding of value was higher than the reappraisement sustained. The dividing line might come in between the two, and in that case it would change the rate of duty originally advised.

Senator PLATT, of Connecticut. Are controversies about the correct classification numerous?

Mr. COUCH. Yes, sir.

Senator PLATT, of Connecticut. New questions are arising all the while?

Mr. COUCH. Constantly. We are getting decisions of the courts to-day on classifications that were made under the act of 1883. We are to-day paying certified statements amounting to hundreds of thousands of dollars on those classifications.

Senator PLATT, of Connecticut. Does the Secretary's office at Washington direct the collector as to proper classifications? Mr. COUCH. It does, at times.

Senator PLATT, of Connecticut. The Secretary's office rules upon questions of classification?

Mr. COUCH. Yes, sir. Prior to the establishment of the Board of General Appraisers all appeals went to the Secretary direct.

Senator PLATT, of Connecticut. But the Secretary has no power over the Board of General Appraisers in that respect?

Mr. COUCH. No, sir.

Senator PLATT, of Connecticut. But merely over the collector? Mr COUCH. He can direct the collector to disregard their finding. Senator JONES, of Arkansas. The Secretary can direct the collector to disregard the action of the Board of General Appraisers? Mr. COUCH. Except as to that particular case. If the board should make a classification to which the Secretary did not agree, and the time for an appeal lapsed before the discovery was made, the Secretary might instruct the collector to disregard that finding and send up other cases. Then they would appeal those to the courts.

Senator PLATT, of Connecticut. The collector is always under the direction of the Secretary of the Treasury as to whether he shall take an appeal from the board upon classification or value?

Mr. COUCH. No; he may take an appeal of his own motion, but he would be responsive to a direction of the Secretary with reference to all matters of classification.

Senator PLATT, of Connecticut. The Secretary would not direct an appeal on a question of value?

Mr. COUCH. That is a question which is moot at the present time. It is one of the questions in dispute just now.

Senator PLATT, of Connecticut. Does it ever occur that, after the question of classification has been submitted to the appraiser and he has decided it, the matter goes to the collector for decision, with a hearing before the collector?

Mr. COUCH. That occurs frequently, particularly when a new law goes into effect.

Senator PLATT, of Connecticut. Is it the right of the importer to have a hearing before the collector?

Mr. COUCH. Yes; he has a right to present his case to the collector. The collector is the recognized classifying officer, and he is entitled to make such examinations as he deems necessary to satisfy himself with reference to the classification, either by calling together the experts of the appraiser's office or the naval office, or calling in the importers. Those examinations are of frequent occurrence when we are administering a new law.

Senator PLATT, of Connecticut. Do you understand that the appraiser and his assistants and the officials directly under him are a part of the custom-house, or are independent of it?

Mr. COUCH. They are a part of the customs service, but at this point they are independent of the collector's office, except that they can act only upon such matters as are referred to them by the collector.

Senator PLATT, of Connecticut. If the collector is satisfied that the board of appraisers has made a classification which subjects the importer to the payment of duties higher than he should be required to pay, what becomes of the case?

Mr. COUCH. If the appraiser should return a higher rate of duty than that judged by the collector, the collector would accept it, but the importer might challenge it and appeal to the courts. On the other hand, if he returns a lower classification-a lower rate of duty than the collector judged to be correct-the collector would take an appeal.

Senator PLATT, of Connecticut. Is the classification made up by the board of appraisers or by one appraiser?

Mr. COUCH. That is the Board of General Appraisers.

Senator PLATT, of Connecticut. Does one appraiser make the classification?

Mr. COUCH. No, sir; it is only the board. Bear in mind that there are two distinct functions in the general appraisers. One is the appraisement of values, which is made under section 13. All that work, covered by section 13, is done before liquidation. The other is under section 14, relative to classification and to excessive payments. All that work is done subsequent to liquidation. It is with reference to this subsequent work that we are now inquiring.

Senator PLATT, of Connecticut. Suppose the appraiser returns a classification of the goods which the collector thinks is incorrect and subjects the importer to too high duties, and the latter has a hearing in this office and the collector decides that the classification of the appraiser is wrong and that the goods should have been classified so that they would be subject to a lower duty. What may be done after he renders his decision in that case?

The

Mr. COUCH. We have a case of that kind which will illustrate. appraiser returned what is called synthetic indigo for duty. The tariff law provides for indigo eo nomine, without reference to its source. Indigo is in fact produced from the indigo plant, and it is also produced from coal tar. Indigo derived from coal tar is what is described as synthetic indigo.

Senator PLATT, of Connecticut. Or artificial indigo.

Mr. COUCH. It is no more artificial than the other. The appraiser returned that for duty. When it came before the collector we recalled the fact that a similar question had been passed upon in the courts with reference to synthetic alizarine way back under previous laws, where the law provided that alizarine should be free. Alizarine is produced from the madder plant. Synthetic alizarine is produced from coal tar. The two cases stood precisely alike. We got out the court case and went through it, and the collector decided that under that court case this article should be admitted free. It was indigo. All the experts declared that it was indigo. The appraiser himself declared that it was indigo, and the chemist was unable to distinguish the difference between the two indigoes unless he had the history of the case.

The matter was brought to the attention of the Department,

and they instructed us to take the synthetic indigo for duty, which we are doing to-day.

Senator JONES, of Arkansas. That is a matter of classification?
Mr. COUCH. It is a matter of classification.

Senator PLATT, of Connecticut. If the collector disagrees with the appraiser, the matter may be and is submitted to the Secretary of the Treasury?

Mr. COUCH. Yes.

Senator PLATT, of Connecticut. And it is ruled upon by him?
Mr. COUCH. Yes, sir.

Senator PLATT, of Connecticut. And the collector follows the ruling of the Secretary of the Treasury?

Mr. COUCH. He follows the Secretary's instructions.

Senator JONES, of Arkansas. If the importer is dissatisfied with that, his remedy is to appeal to the Board of General Appraisers?

Mr. COUCH. Yes, sir. The importer, of course, would not be dissatisfied with a lower rate of duty as a rule, but I have known importers to protest against a lower rate of duty and go to the courts to sustain a higher rate.

Senator PLATT, of Connecticut. After the collector acts on the direction of the Secretary and classifies it as what-as a preparation of coal tar?

Mr. COUCH. I think that was it.

Senator PLATT, of Connecticut. After the collector acts on the instructions of the Secretary of the Treasury, then the importer still has the right of appeal to the courts, or to the board of appraisers and from them to the courts?

Mr. COUCH. Yes, sir.

Senator PLATT, of Connecticut. So the question of indigo is now on the way to determination by the courts?

Mr. COUCH. Yes, sir.

Senator JONES, of Arkansas. Has it been passed upon by the Board of General Appraisers?

Mr. COUCH. I think not. I think it is waiting there.

Mr. BIDWELL. It is before them now.

Mr. COUCH. Yes.

Senator PLATT, of Connecticut. Is the fact that the opinion of the collector on classification differs sometimes from that of the appraiser a matter which creates any friction between the collector's office and the appraiser's office?

Mr. COUCH. Oh, not necessarily. There may be a little bantering sometimes between the clerks.

Senator PLATT, of Connecticut. To recur to the bond, which is called the ten-day bond, all packages not ordered into general stores are upon that bond delivered to the importer?

Mr COUCH. The bond is practically a string tied to the packages. Senator PLATT, of Connecticut. If it should be found in the package sent to the appraiser's stores that there has been an undervaluation, and a consequent advancement of value is made, and the importer declines to deliver the rest of the packages when called upon, how can the Government be assured that the undervaluation does not run through the packages in the hands of the importer?

Mr. COUCH. If the packages delivered to the importer contained the same description of goods as those sent to the public stores, the examination of the goods in the public stores would cover the advance on all goods of the same grade in packages not sent. The necessity

for ordering in packages would ordinarily be in cases where the packages not ordered in contain some descriptions of goods not included in the goods examined by the appraiser; or they might be ordered in for other reasons. It sometimes happens that the goods ordered into the public stores do not tally with the invoice. Then we would ordinarily order the other cases in to see if there had been a mismarking of cases, a matter which occurs every once in a while.

Senator PLATT, of Connecticut. Suppose there are ten packages of stockings in the invoice. One package is ordered to the public stores. It is found that the stockings in that package are undervalued 20 per cent. Does the appraiser advance the goods in all the packages?

Mr. COUCH. In all the packages, if the description of the stockings be the same in all; but if there should be a different description or a different grade, or stockings of a different price, then he would probably order them in before he would make the advance. Senator PLATT, of Connecticut.

not get them, as the practice goes?

If he ordered them in, he would

Mr. COUCH. He might, and he might not.

Senator PLATT, of Connecticut. Is it not a fact

Mr. COUCH. The fact of the case, when you get right down to it, is that you can no more hold the goods here for ten days after they are landed in a busy season than you can hold the ship forty-eight hours before you allow her to discharge. You passed a law allowing them to discharge a vessel as soon as she comes up here. She pours her cargo onto the dock. Just the same pressure of business that compels that condition is compelling the rapid distribution of goods throughout the country. In other words, you have a Niagara to deal with. Senator PLATT, of Connecticut. Is it not a fact, then, that the importer does not deliver the packages which have already passed into his hands if demand is made upon him?

Mr. COUCH. Very frequently that is true.

of cases, but not in all.

It is true in the majority

Senator PLATT, of Connecticut. Is it not almost always so? Is it not a rare thing that the importer produces the package?

Mr. COUCH. On consumption entries I should say it was the exception. On warehouse entries they frequently produce them.

Senator PLATT, of Connecticut. "On consumption entries."

Mr. COUCH. Consumption entries indicate the goods that are in immediate demand. Warehouse entries indicate goods that are expected to be required within a few weeks or months.

Senator PLATT, of Connecticut. If, then, the goods in the nine packages which have passed into the hands of the importer are undervalued, how can the Government collect the proper duty on those goods?

Mr. COUCH. Probably in that individual case there would be some difficulty, because there would be difficulty in proving the undervaluation. I am speaking of cases where the goods are not covered by the goods examined. The practical working of that would be this: If we found that the party did not respond, and there was a question of undervaluation in it, on the next importation he had the whole of his importation would go into the stores. He would not get any free delivery until the goods were examined. That is the way we practically meet the difficulty.

Senator PLATT, of Connecticut. Have any of those bonds ever been put in suit?

Mr. COUCH. There is a case in suit now. It has been in suit for the last four years, not having been reached yet.

Senator PLATT, of Connecticut. Has there been any decision of the Secretary of the Treasury or any opinion by the Secretary of the Treasury or the Attorney-General to the effect that unless the goods are produced the Government can not recover on the bond?

Mr. COUCH. I do not know of any decision or opinion just in that form. There have been decisions that appraisements can not be made except in the presence of the goods.

Senator PLATT, of Connecticut. The bond is a penal bond?
Mr. COUCH. The bond is a penal bond.

Senator PLATT, of Connecticut. The rule of law is that the plaintiff in a suit on a penal bond can only recover for the damage he can show. Mr. COUCH. There is where the difficulty comes in-to show the damage.

Senator PLATT, of Connecticut. The Government can not show the damage unless the goods are produced, so that it can be determined that they are undervalued.

Mr. COUCH. There is where the difficulty comes in.

Senator PLATT, of Connecticut. Do you not think that in fact a good deal of undervaluation escapes in this way?

Mr. COUCH. It may escape in that way, possibly, but not very much if the appraisers are up to date.

Mr. BIDWELL. The package which goes to the public stores represents the invoice. Undervaluation is discovered through competition more than in any other way; that is, if a merchant in Chicago is underselling everybody else on a line of hosiery, immediately the special agent makes an investigation, or the Department does through special agents. That is usually started on the other side and followed up.

Mr. COUCH. A great deal of investigation is made as the result of information furnished by rivals, frequently anonymously.

Senator PLATT, of Connecticut. If the appraiser finds that goods in the packages sent to the public stores are undervalued, you say he advances all goods of a similar description on the invoice contained in the other packages?

Mr. COUCH. Yes, sir.

Senator PLATT, of Connecticut. How does the Government collect the duties upon those goods thus advanced?

Mr. COUCH. The law requires 10 per cent to be sent in, and that is held to be a valid appraisement for all the goods covered by the invoice. You will notice in the make-up of the laws-if you will pardon me for a little digression-that they are all made as if every invoice covered a particular item of goods of one description and one grade. In point of fact, when you come to the case goods, dry goods, chemicals, and various other case goods, an invoice may cover fifteen or twenty descriptions of goods with as many different rates of duties, but the law simply requires that one package in ten shall be sent to the appraiser's stores to make the appraisement of value.

Senator PLATT, of Connecticut. Suppose that from the fact of undervaluation in the package in the public stores all goods of a similar description in the invoice are advanced, and the importer says he will not pay the advanced rate except upon the goods found in the package; what then?

Mr. COUCH. Then we should report the case to the district attorney for suit. If he does not pay the liquidated duty within ten days or