packed, the size of the fish, the style of the tin container, and other factors affecting price and quality. Most of the domestic output is packed in cottonseed oil and only small quantities in olive oil. Practically all the imported product is packed in olive oil. Broadly speaking sardines fall into four general groups according to grade. Half or more of the sardines imported from Norway are of the two upper groups, whereas the domestic production of these groups is very small. About three fourths of the Maine pack is of the fourth or lowest group; there are no imports of this group.

Cost comparison is practicable only with regard to the third group. The representative domestic product of this group is sardines packed in cottonseed oil in no. 4 tins. The representative Norwegian product of this group is musse packed in olive oil in no. 4 tins, each containing 6 to 10 fish. This Norwegian product under normal conditions sells at a higher price in the United States than the specified Maine product, but recently it has sold as low as or lower than the American sardines. *

In its opinion, the Commission said:

The same difference exists now as at the earlier date between domestic sardines and the Norwegian product. They consist of different species of fish, the packing methods and processes are different, and so are the oils used in canning. The only "similarity" which was greater at the time of this investigation than in previous years was found in the price at which the products were sold. Ordinarily the Norwegian sardines of the type selected have sold at a substantially higher price than domestic sardines. During the period chosen by the Tariff Commission as "representative", however, the price in Norway was exceptionally low in terms of American money. The fall was due, in part, to the depreciation of the Norwegian currency and, in part, to the many forces of depression that affected prices everywhere.

As a result of the investigation by the Tariff Commission, the tariff on sardines of a value not in excess of 9 cents per pound was increased by a proclamation issued December 14, 1933, from 30 per cent, where it had stood since 1922, to 44 per cent. That rate continued in effect until after 1940.

In 1931, as a result of the nationwide depression, the Norwegian Government reduced the value of the krone to approximately 18 cents. The exchange rate had stood at about 26 cents since 1926. It reached a high of over 30 cents in 1917, but had fallen off to approximately 14 cents in 1924. This advantage in the rate of exchange resulted in a temporary reduction of prices and an increase in the imports of Norwegian sardines. The effect of the krone devaluation was partially offset by the devaluation of the dollar in 1934.

In 1937, the Norwegian Government sponsored the formation of a "central" (trade association) for the purpose of stabilizing the prices of Norwegian sardines and bettering the conditions of the industry. Many of the Norwegian packers were in financial difficulties and had been taken over by the banks. Under rules adopted by the central, sardines could not be exported for sale below fixed minimum prices and could not be shipped on consignment.

The following table shows the production of Maine sardines and the imports of Norwegian sardines for the calendar years 1922 to 1942, inclusive, and the rates of exchange for the krone, in cents, for the period 1915 to 1939, inclusive:

The average wholesale selling prices of the different grades of Maine and Norwegian sardines in dollars per case over the 1935–1939 period, as computed from the market quotations appearing each Monday in the Journal of Commerce and Commercial, were as follows:

The foregoing were market quotations and do not purport to show actual transactions in which sardines were sold by packers or jobbers during those years.

The average selling price per case of all grades of Maine sardines, as shown by the accounting records of a selected group of Maine sar

dine packers, and the average import value per case of all imported Norwegian sardines for the years 1924 to 1939, inclusive, are given in the following table:

"Import value" in the above table denotes the wholesale market in Norway plus import tax. It does not include ocean transportation, importers' charges, brokerage commissions, or other charges that might have been included in determining the actual domestic selling prices. The following reference to the sardine industry appears in a 1948 United States Tariff Commission publication, Summaries of Tariff Information, vol. 7, pt. 2, p. 52:

Competition of imports with domestic production.-Most imported sardines differ materially from the bulk of the domestic output in the method of preparation and packing, and they have an established prestige value. At most times the domestic and the imported sardines have been sold to substantially different groups of consumers, and price competition between them has at most times not been a major factor. An exception to this situation occurred during the depression of the early 1930's.

In terms of quality and price, sardines packed in oil may be divided into three broad classifications:

(1) High-priced sardines, the consumption of which in the United States is normally supplied chiefly by imports. Before the war high-priced sardines constituted from 75 to 90 percent of the total imports from all countries, and the proportion was not far different from this as regards the imports from each of the two principal sources, Norway and Portugal. Normally, sardines comparable with the better imported grades have comprised no more than 5 percent of the total domestic production of sardines packed in oil.

(2) Medium-priced sardines. Most of the lower grades produced in Norway and Portugal fall into this group, which before the war accounted for from 10 to 25 percent of total imports into the United States. From 10 to 20 percent of the domestic pack was of this group.

(3) Low-priced sardines. Relatively few of the sardines falling within this group are produced in the principal foreign sardine-canning countries, but it accounts for from 75 to 90 percent of the domestic pack.

Most of the domestic pack has usually sold at materially lower prices than most of the imports. However, during the depression of the early 1930's prices of both domestic and imported sardines fell sharply, with the imported product showing a relatively greater decline. Since the duty was then, as now, ad valorem rather than specific, the decline in prices had no tendency to increase the restrictive effect of the duty; it may even have tended to lessen it. After Norway

and Portugal went off the Gold Standard in 1931 and 1932, respectively, this action enabled them temporarily to lower their prices for sardines in terms of dollars, until shortly after the dollar itself was devalued. During this period prices of many of the sardines imported from those countries dropped to about the level of the better grades of domestic sardines packed in Maine.

It was under these circumstances that, on the application of domestic producers, the Tariff Commission in 1932 instituted a cost of production investigation under section 336 of the Tariff Act of 1930. As a result of this investigation the President, by proclamation effective January 1934, established two value brackets for sardines packed in oil, increasing the duty on sardines when valued (foreign value) at not more than 9 cents per pound, including the weight of the immediate container, to 44 percent ad valorem, but leaving the rate on sardines of a higher value unchanged at 30 percent ad valorem. The importance of this value bracket arrangement at that time is indicated by the fact that in 1933 the average foreign unit value of total imports from all sources was 8.4 cents per pound (including the weight of the immediate container), and that of those from Norway was 7.7 cents. The average for the total imports from Portugal in the same year was 10.5 cents per pound; but a considerable part of the imports from that country were probably valued at not more than 9 cents per pound.

As already stated, imports under the lower value bracket became insignificant soon after this change in the duty. This result, however, was probably only in small part due to the increase in the duty on the lower priced sardines. It was due to a greater extent to the upward trend in the prices of sardines after the depression, more or less parallel with the general increase in commodity prices.

The comparatively small production of Maine sardines in 1932 was due in part to the general business conditions and in part to the heavy importation of Norwegian sardines in 1931 and 1932. The low production in 1938 was due to failure of the supply of fish in that area. The fish did not come into the Maine waters in sufficient quantities to supply the canners. This scarcity of fish in 1938 resulted in an increase per unit cost of production to the Maine packers and a lower net profit ratio since their overhead remained about the same.

There are normally wide fluctuations in the size of the Maine sardine pack. During the entire 1931-1937 period the Maine sardine packers restricted their production because of the limited market for their product.

The following is a statement of petitioner's operations from the commencement of its business through the fiscal year ended March 31,

1940: