per dozen, foreign valuation,
represents a fair breaking point for customs purposes between
lower-grade hats competing on a price basis and hats of superior
material and workmanship competing on a quality basis.

Under section 315 of the tariff act of 1922 there is an undetermined
legal question with respect to including transportation expense in
estimating foreign production costs. Commissioners Costigan, Dennis, and
Baldwin agree that under subdivision (c) of section 315 a fair estimate
of foreign costs should include the expense of transporting the foreign
product to the principal competitive market or markets in this country.
For hats whose foreign value is not in excess of $9.50 per dozen the
rate of 88 per cent ad valorem is indicated as the correct duty for
equalizing costs, with transportation included.

Chairman Marvin and Commissioner Glassie agree that under the law costs
of production do not include transportation costs on either side. If
transportation costs be not included in the foreign costs of production
shown by this investigation, the rate indicated by the cost data would
be 105 per cent on foreign valuation. This rate being in excess of the
maximum permissible under subdivision (a) of section 315, resort must be
had under subdivision (b) of section 315 to the American selling price
basis of valuation in order to equalize the differences in production
costs. For hats whose foreign valuation is not in excess of $9.50 per
dozen the rate of duty thus indicated by the cost difference is 50 per
cent on the American selling price.

As to hats with a foreign valuation above $9.50 per dozen, if foreign
transportation be included, the present duty of 60 per cent on the
basis of foreign valuation is in excess of the difference in cost of
production and the rate of duty indicated is 55 per cent on the basis of
foreign valuation. If foreign transportation be not included, the rate
of duty indicated is 69 per cent on the basis of foreign valuation.
The figures are shown in detail in Table 9, on page 10.

In the accompanying report the above conclusions will be found more
formally stated for the purposes of a proclamation.

Respectfully submitted.

THOMAS O. MARVIN,
_Chairman_.
EDWARD P. COSTIGAN,
HENRY H. GLASSIE,
ALFRED P. DENNIS,
A. H. BALDWIN,
_Commissioners_.

SEPARATE STATEMENT OF COMMISSIONER COSTIGAN, IN PART CONCURRING AND
IN PART DISSENTIN