CUBAN PARCEL POST BILL

HOUSE OF REPRESENTATIVES,

COMMITTEE ON RULES, Monday, February 20, 1928.

The committee met at 10.30 o'clock a. m., Hon. Bertrand H. Snell (chairman) presiding.

The CHAIRMAN. Mr. Green of Iowa desires to be heard in regard to H. R. 9195, commonly referred to as the Cuban parcel post bill. (The bill reads as follows:)

[H. R. 9195, Seventieth Congress, first session]

A BILL To amend sections 2804 and 3402 of the Revised Statutes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 2804 of the Revised Statutes, as amended by section 26 of the Act of August 28, 1894, be further amended, and section 3402 of the Revised Statutes be amended to read as follows:⚫

"SEC. 2804. No cigars, cheroots, or cigarettes shall be imported unless the same are packed in boxes or packages containing quantities as prescribed by law for like articles manufactured in the United States, and all cigars, cheroots, or cigarettes on importations shall be placed in public stores or bonded warehouses and shall not be removed therefrom until the same shall have been inspected and a stamp affixed to each box indicating such inspection: Provided, That cigars, cheroots, and cigarettes imported by mail or parcel post may be inspected and stamped without removing to public stores or bonded warehouses, And the Secretary of the Treasury is hereby authorized to provide the requisite stamps and to make all necessary regulations for carrying the above provisions of law into effect."

"SEC. 3402. All cigars, cheroots, or cigarettes imported from foreign countries shall pay, in addition to the import duties imposed thereon, the tax prescribed by law for cigars, cheroots, or cigarettes manufactured in the United States and shall have the same stamps affixed. The stamps shall be affixed and canceled by the owner or importer of the cigars, cheroots, or cigarettes while they are in the custody of the proper customhouse officers, and the cigars, cheroots, or cigarettes shall not pass out of the custody of usch officers until the stamps have been so affixed and canceled, but shall be put up in boxes containing quantities prescribed by law for cigars, cheroots, or cigarettes manufactured in the United States before the stamps are affixed. And the owner or importer of such cigars, cheroots, or cigarettes shall be liable to all the penal provisions of law prescribed for manufacturers of cigars, cheroots, or cigarettes manufactured in the United States. Whenever it is necessary to take any cigars, cheroots, or cigarettes so imported to any place. other than the public stores of the United States for the purpose of affixing and canceling such stamps, the collector of customs of the port where such cigars, cheroots, or cigarettes are entered shall designate a bonded warehouse to which they shall be taken, under the control of such customs officer as such collector may direct. And every officer of customs, who permits any such cigars, cheroots, or cigarettes to pass out of his custody or control without compliance by the owner or importer thereof with the provisions of this section relating thereto, shall be deemed guilty of a misdemeanor and shall be fined not less than $1,000 nor more than $5,000 and imprisoned not less than six months nor more than three years: Provided, That cigars, cheroots, or cigarettes brought into the United States by mail or parcel post may be inspected, stamped, and delivered to the owner or

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imported thereof without removing to public stores or bonded warehouses, under such regulations as may be prescribed by the Commissioner of Internal Reenue and approved by the Secretary of the Treasury and the Postmaster General."

[House Report No. 636, Seventieth Congress, first session]

The Committee on Ways and Means, to whom was referred the bill (H. R. 9195) to amend sections 2804 and 3402 of the Revised Statutes, having had the same under consideration, report it back to the House without amendment, and recommend that the bill do pass.

The legislation herein proposed amends sections 2804 and 3402 of the Revised Statutes to permit the importation of cigars, cheroots, and cigarettes in quantities of less than 3,000 in a single shipping package or consignment and was recommended by the President in his annual message to Congress, December 6, 1927, for the purpose of concluding a permanent parcel-post convention between the United States and Cuba.

In his message to Congress Mr. Coolidge said:

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66 CUBAN PARCEL POST

We have a temporary parcel-post convention with Cuba. The advantage of it is all on our side. During 1926 we shipped twelve times as many parcels, weighing twenty-four times as much, as we received. This convention was made on the understanding that we would repeal an old law prohibiting the importation of cigars and cigarettes in quantities less than 3,000 enacted in 1866 to discourage smuggling, for which it has long been unnecessary. This law unjustly discriminates against an important industry of Cuba. Its repeal has been recommended by the Treasury and Post Office Departments. Unless this is done our merchants and railroads will find themselves deprived of this large parcel-post business after the 1st of next March, the date of the expiration of the convention, which has been extended upon the specific understanding that it would expire at that time unless this legislation was enacted. We purchase large quantities of tobacco made in Cuba. It is not probable that our purchases would be any larger if this law was repealed, while it would be an advantage to many other industries in the United States."

The present limitation on the importation of cigars, in force since 1866, makes an exception which is advantageous to only one class of imported commod ties, and, because of the peculiar economic conditions,, discriminates almost entirely against the Republic of Cuba.

Your committee is advised that this restriction has for years been the obstacle to the conclusion of a permanent parcel-post convention with Cuba, and unless the law is modified in the manner herein proposed, the Cuban Government has given notice that it will be compelled to abrogate the present temporary parcelpost agreement (negotiated November 2, 1925), pursuant to the option contained therein. This notice was first given about a year ago, and had Cuba exercised the option in accordance with the notice given and as stated in Article XIII (within 18 months from January 1, 1926), the agreement would have been abrogated approximately June 30, 1927, but by special arrangement the effective date of the notice of abrogation was postponed by Cuba to March 1, 1928, in order to permit a further opportunity to secure the removal of the objectionable restriction. However, the Cuban Government has now given further notice that unless the amendment is passed on or before March 1, the temporary parcel-post agreement will then be abrogated and the exchange of parcel post thereunder between the United States and Cuba will cease.

Should this convention (which provides for parcel-post shipments weighing up to 11 pounds) be abrogated, it will carry with it, in the opinion of the postal authorities, the abrogation of the parcel-post clause of the convention of 1903, which provided a limitation of 4 pounds 6 ounces, and there will be no parcelpost communication between the two countries. The postal as well as the customs revenues would be seriously affected thereby, and this legislation, therefore, becomes emergency in character. This loss in revenues may not be measured entirely by the service at present in operation when considerat on is given to probable improvements in the service (should the agreement remain in force) such as the increase of the maximum weight limit and the introduction` of the insurance and C. O. D. features.

The United States enjoys an enviable position in the commerce of Cuba. The average annual imports of Cuba are valued at $282,660,000, of which $179,615,000 worth, or 63.5 per cent is supplied by the United States.

During the calendar year 1926, the first full year of operation of the 1925 temporary convention, 253,000 packages, in excess of 8 ounces in weight, were shipped to Cuba via parcel post. The postal receipts therefrom approximated $248,000, of which $58,000 was paid to Cuba in the form of terminal charges, leaving net receipts of about $190,000. In 1927 there were dispatched to Cuba under this convention 218,000 parcels in excess of 8 ounces in weight, yielding postal receipts of approximately $230,000, of which almost $50,000 was paid to Cuba as terminal charges, leaving net receipts of about $180,000. The decrease in the number of parcels dispatched to Cuba in 1927 as compared to 1926 is due, to a considerable extent, to a gradual increase in the average weight of the parcels and probably to some extent, to the diminished purchasing power of the Cubans.

On the other hand, Cuba shipped to the United States approximately 21,000 packages of parcel post in 1926 and approximately 19,000 in 1927 containing merchandise other than cigars because of the present limitation that prevents their being shipped in packages containing less than 3,000. (The weight of 3,000 ordinary cigars varies from 20 to 60 pounds.)

The average total importation of cigars by the United States is valued at $8,637,000 (exclusive of Porto Rico), of which $3,654,000 worth, or 42.3 per cent, comes from Cuba. The balance, except for a small item of about $20,000 worth, comes from the Philippines and pays no duty. Cigars shipped from Porto Rico, which are not included in our foreign-trade statistics because it is a possession of the United States, average in value about $6,254,000 annually. In other words, 99.4 per cent of all dutiable imports of cigars and cheroots come from Cuba. According to the Commerce Department, the United States purchased about one-third of the cigars exported from Cuba. one-third is purchased by the United Kingdom, and the balance is exported by Cuba to other countries of the world. The annual production of cigars in the United States of all classes is approximately 7,000,000,000, so that the imports from Cuba of about 31,000,000 cigars are about one-half of 1 per cent of our total production.

Cuban manufacturers of cigars insist that it is unfair to be denied the opportunity to attempt to sell the products of their second largest staple crop by mail, which opportunity is denied them because of the existing limitations. For this reason, every effort to conclude a permanent arrangement for the exchange of merchandise by parcel post has failed, although successful arrangements have been made with practically every other Pan American Republic for accepting parcel-post packages varying in weight from 11 to 50 pounds. Since our trade with Cuba has been going forward by leaps and bounds in the last 20 years, there has been a growing demand for improved parcel-post service between the two countries. The Cuban Government, however, feels that in justice to its citizens it can not allow the United States to come into its markets via the parcel-post route without discrimination while the United States denies the same method of communication to one of its largest industries. No other country imposes such a restriction against the Cuban manufacturers of cigars.

It is declared that American investments in Cuba represent more than $1,250,000,000; that interrupted communication of the shipping of goods to Cuba by parcel post will seriously affect this investment, as well as American commerce. Representatives of the United States Chamber of Commerce and virtually every commercial organization in the United States, exclusive of the tobacco manufacturers, as well as the Secretary of the Treasury and the Postmaster General, advocate the adoption of this legislation, and your committee is of the opinion that in fairness and justice to Cuba it should pass. The interruption of the parcel-post shipments to Cuba would directly cause an enormous amount of damage to the new business of American producers and manufacturers and indiretly would curtail the present business. One of the principal reasons Cuban producers prefer American machinery, for example, is because of the ease with which small but vital replacment parts may be quickly obtained. Many such vital parts, bearings, cogs, etc., are shipped by parcel post, which express service would be cut off should the treaty be abrogated.

Cuba recently negotiated a parcel-post convention with Great Britain, providing for the exchange of parcel-post packages up to a weight limit of 11 pounds, and through this agreement, together with agreements made several