My next question:

Mr. CANFIELD. I assume from what you say, Captain, that you would like to do something.

Captain RICHMOND. We would, but of course I don't think there is any secret in the sense that the Budget Bureau has requested each agency to submit its estimates and then in effect set a ceiling, if you want to put it that way, and within that ceiling we have not been able operationally to divert any funds. We have been told not to submit any request for additional funds over our ceiling.

And then if you will go back, I think you will find that we adduced in the record some years ago that the Coast Guard had asked the President and the Bureau of the Budget for funds for this specific purpose, and they had been denied.

As the chairman well states, this is the first time this subcommittee has been requested to provide funds for this purpose.

Mr. GARY. We are very much obliged to you, Mr. Theus.

Mr. THEUS. I certainly appreciate the opportunity of appearing before you.

THURSDAY, JANUARY 12, 1950.

BUREAU OF CUSTOMS

WITNESSES

FRANK DOW, COMMISSIONER OF CUSTOMS

DAVID B. STRUBINGER, ASSISTANT COMMISSIONER OF CUSTOMS WILBUR H. ZIEHL, ACTING DEPUTY COMMISSIONER OF CUSTOMS WILLIAM E. HIGMAN, CHIEF, DIVISION OF CLASSIFICATION, ENTRY AND VALUE

FRANK B. GATCHELL, JR., BUDGET OFFICER

Mr. GARY. It appears that the Bureau requested $35,600,000 for 1950. The Congress allowed $35,150,000. The request for 1951 is $36,973,300, which includes $4,400 for activities previously carried under "Miscellaneous expenses, Treasury Department."

In connection with these requests, we will insert at this point in the record the program and performance information beginning at page 47 and extending through page 48, which contains a summary of the work-load data of the Bureau.

(The material referred to follows:)

PROGRAM AND PERFORMANCE

This appropriation finances all the operations of the Bureau of Customs, including the appraisement and classification of imported merchandise, the assessment

and collection of duties, the entrance and clearance of vessels, the inspection of all traffic entering the United States, and other related functions. The program for 1951 is based generally upon a projection of the rate of increase in work load experienced during the past and current fiscal years.

1. Assessment and collection of duties, taxes, and fees.-The principal funetions performed under this activity are to classify imported merchandise; assess and collect duties; inspect all traffic entering the United States; administer certain marine statutes concerning the registry, licensing, etc., of vessels; and other related functions.

2. Appraisal of imported merchandise.-The Customs appraisers of merchandise determine the dutiable value of imported merchandise, and establish that such merchandise has been properly invoiced.

3. Investigations of violations of customs and related laws and regulations.— The Customs Agency Service is the investigative arm of the Bureau of Customs. Its principal investigations concern (a) smuggling and other violations of Customs and related laws and regulations; (b) valuation, classification, and invoicing of imported merchandise; (c) draw-back; (d) thefts from Customs custody; and (e) alleged derelictions of Customs personnel. In the fiscal year 1949 a total of 16,640 investigations were made. The estimates for 1950 and 1951 are 17,000 and 18,000, respectively.

4. Audit of collection and merchandise accounts.-The comptrollers of customs are responsible for (1) establishing the accountability of collectors for the proper and complete collection of duties, taxes, and fees, and (2) accounting for the final disposition of all imported merchandise. Verification of collectors' liquidations of entries is the only measurable item of comptrollers' work load and represents approximately 50 percent of the total operation. The remaining 50 percent consists of audits of schedules, manifests, and accounts.

5. Analysis and identification of merchandise for tariff purposes.-The Customs laboratories primarily serve the Customs Service by providing scientific analysis and identification of merchandise which is not susceptible to analysis by inspection. Samples tested in 1949 numbered 73,251 and it is estimated will increase to 80,000 in each of the fiscal years 1950 and 1951.

6. Executive direction.-This activity includes over-all management and direction of the Customs Service in Washington and the field and includes those operations in Washington concerned with budget, management, personnel, fiscal, and administrative services.

Mr. GARY. In addition to that we will insert page 123 of the justifications.

(The material referred to follows:)

Analysis of appropriation base for fiscal year 1951

Regular appropriation, 1950 act_
Supplemental appropriation for 1950----

$35, 150, 000

Net increase from base for 1951___

35, 025, 694 4, 400

1 35, 030, 094 36, 973, 300

1, 943, 206

1 Does not include anticipated deficiency for 1950 to cover cost of authorized pay increases.

Comparison of estimate of appropriation for fiscal year 1951 with appropriation

Mr. GARY. Mr. Dow, would you like to make a general statement at this time?

Mr. Dow. Yes, Mr. Chairman.

Mr. GARY. We shall be very glad to hear from you.

Mr. Dow. Mr. Chairman and members of the committee, the estimate of appropriation for the Customs Service for the next fiscal year is $36,973,300. Excluding the amount of $973,300 required to

meet costs of the recent Classification Act, this represents an increase of $850,000 over the current appropriation. This increase is made up as follows:

You will note that of the total increase requested, less than one-third, or $314,400, represents costs of new employment. The other increased costs must be paid if our current staff is to be maintained.

The records show during the past few years that customs transactions have been increasing while the number of customs employees has been decreasing. On July 1, 1946, the number of field regular full-time employees was 8,413. On last July 1 the number was 7,485, and on November 30, 1949, the number was 7,503.

I would like to draw your particular attention to those figures there. They show the big decrease in personnel during the last 3 or 4 years. Every major component of customs work load increased in the fiscal year 1949 over 1948, and this rise is continuing in 1950. We obviously do not know what 1951 will bring, although we have, in our justification, shown our best estimates based on trends. It does seem clear, however, in view of the highly intensified efforts which this Nation and foreign governments are making to expand world trade, that the upward trend in customs business, which has been marked ever since the war's end, will continue into 1951.

The details of this estimate and its distribution by activity are given in our justification. My staff and I shall be glad to elaborate on and clarify any points which may need further discussion.

Mr. GARY. What are your expenditures up to December 31, of this year, Mr. Dow?

Mr. Dow. The latest figures we have are as of November 30, 1949. I do not have the expenditures, but I have the obligations. The obligations to the end of November 1949 were $14,585,176.

ANALYSIS OF APPROPRIATION

Mr. GARY. Mr. Dow, the following appears in your statement: You will note that of the total increase requested, less than one-third, or $314,400, represents costs of new employment.

whereas, in the table of analysis at the beginning of your justifications, in the first two items, of assessment and collection of duties, taxes, and fees, you show an increase of 54.5 in average positions, and then an appraisal of imported merchandise with an increase of 37.5 average positions; and you show the increase there at close to a million dollars. What have you included in those figures besides that increase that would run that up?

Mr. Dow. May I have my budget officer, Mr. Gatchell, answer that? Mr. GARY. Yes, sir.

Mr. GATCHELL. The increase includes $314,000 for new positions, $605,600 for automatic within-grade promotion costs, and $50,000 for