We therefore urge and recommend, in the interest of simplicity, that vanillin be transferred from paragraph 61 and mentioned eo comine in paragraph 28, after coumarin. This brief presents a technical recommendation and accomplishes only a precise statement, within the law, of what has been the necessary practice under the existing act. Respectfully submitted. We concur in the above recommendation. EDGAR M. QUEENY, President. MATHIESON ALKALI WORKS (INC.), VERONA CHEMICAL Co., Newark, N. J. BRIEF OF MORANA (INC.), NEW YORK CITY To the COMMITTEE ON WAYS AND MEANS, House of Representatives, Washington, D. C. GENTLEMEN: The brief submitted to your committee by the Synthetic Organic Chemical Manufacturers' Association of the United States recommends the restoration of the original ad valorem rate of duty on vanillin provided for in the tariff act of 1922 and a continuation of the specific rate as therein provided. The rate that the association recommends be restored is 60 per cent ad valorem, based upon the American selling price (as defined insubdivision (f) of section 402. Title IV) of any similar competitive article manufactured or produced in the United States, and 7 cents per pound. In accordance with paragraph 28 of the tariff act of 1922, the foregoing rate was in effect for a period of two years, beginning on the day following the passage of the act. At the end of the aforesaid 2-year period the following rate became efective: Forty-five per cent ad valorem, based upon the American selling of any similar competitive article manufactured or produced in the United States, and 7 cents per pound. Vanillin is used extensively as a flavoring material by the baking, beverage, confectionery, and ice cream industries. It is likewise used as an aromatic medium by the perfume and toilet articles industries. The American production of vanillin in 1928 was slightly in excess of 300,000 pounds. The importations of vanillin in 1928 amounted to 7,500 pounds. Inasmuch as the importations of vanillin amount to less than 22 per cent of the American production, it can not be claimed with justice that the American vanillin industry is being jeopardized by the foreign product. The cost, which includes freight and insurance, but exclusive of duty, of the vanillin that we buy from our principals, Haarmann & Reimer, of Holzminden, Germany, is $2.46 per pound. The duty is $3.06 per pound, making the laydown cost $5.52 per pound. To this cost there must be added our cost of handling, selling, packing, and shipping the product. Since American vanillin is sold for as low as $5.85 per pound, it is obvious that imported vanillin can not, under the prevailing rate of duty, have other than a very limited market in the United States. As a matter of fact, the prevailing rate of duty constitutes what is in effect an embargo on imported vanillin. To restore the original rate of duty would completely bar imported vanillin from the American market, and thus Patirely prevent the American consumer from buying that brand of vanillin which best suits his individual requirements. The selling price of imported vanillin to the importer is neither below the foreign manufacturer's cost of production, nor below the price at which the foreign manufacturer sells his product in the home market or in other markets than the Tnited States. Consequently, the American vanillin manufacturer cannot, with justice, claim that imported vanillin is being dumped into this market. The protection of $3.06 per pound that the American vanillin manufacturer is receiving 4 present is more than sufficient to cover any advantage that the foreign manufacturer may have in his cost of production. Judging by the uniform price-schedules that are issued by the American Vanillin manufacturers there appears to exist what is virtually an agreement among these manufacturers to control the price of their product. In the light of this condition and considering furthermore that imported vanillin is practieally embargoed under the present tariff, there is obviously no free market for vanillin. Therefore, the consumer is deprived of all protection against exorbitant prices. The American selling price on which the ad valorem duty of 45 per cent is assessed is $6.65 per pound, this being the most recent 100-pound price fixed by the American vanillin manufacturers. As a matter of fact, American vanillin is being offered freely in considerably less than 100-pound lots at prices much below $6.65 per pound. In view of the very adequate protection that the American vanillin manufacturers are now receiving under the prevailing rate of duty and, furthermore, their practically complete monopolization of the American vanillin market, we claim that the restoration of the original ad valorem duty that has been recommended can not but fail to work a further hardship upon the consumer of vanillin. While already deprived of all protection against the imposition of exorbitant prices, the consumer, in the event of the restoration of the original ad valorem duty, will likewise be completely prevented from exercising his privilege of buying that particular quality of vanillin that best answers his purposes. Respectfully, MORANA (INC.), WALTER MUELLER, Secretary. PHOSPHOR COPPER [Par. 65] STATEMENT OF FRANK A. LIDBURY, REPRESENTING THE OLDBURY ELECTRO-CHEMICAL CO., NIAGARA FALLS, N. Y. Mr. LIDBURY. Phosphor copper, on which we ask for a specific classification with a specific rate of duty, under article 65, will be the subject of a brief to be presented to you by the manufacturers of that article. We are not manufacturers of that article. It constitutes a compound of phosphorus and copper, and is a vehicle by which phosphorus is introduced, in the manufacture of various nonferrous alloys, principally phosphor bronzes. Owing to an appraiser's decision two or three years ago, classifying phosphor copper as "metals, unwrought," it has been introduced for the last two years into this country free. We are not really aware exactly of the amounts introduced, as there has been no separate record kept, but a survey made by our company indicates it to be no less than 1,800,000 pounds of phosphor copper per year, of a value considerably over $300,000. As its only use is as a vehicle for the introduction of phosphorus into bronzes, its admission free constitutes a clear evasion of the duty on phosphorus. This has now been rectified by a recent decision of the Treasury Department which is not yet in effect, classifying it as a chemical compound, under paragraph 5, but it is asked, in the interest of the confidence of the manufacturers, not only of phosphorus but of this article, that Congress especially give a classification and assign a duty to the article. We shall feel a great deal more confident in proceeding with these manufactures if that is done. BRIEF OF THE OLDBURY ELECTRO-CHEMICAL CO. Phosphor copper, Schedule 1, paragraph 65 (par. 5, also Schedule 15, par. 1562). We urge that a specific duty be placed on phosphor copper equivalent to such a proportion of the present duty on phosphorus as may be compensatory for the amount of phosphorus required in its manufacture plus a sufficient additional amount to equalize the difference in the remaining costs of manufac ture in the United States and in Europe. Phosphor copper is, according to grade, a mixture of compounds of phos phorus and copper, principally Cu.P, or of the latter compound with a smalle amount of copper, and is used as a vehicle for the introduction of phosphorus, chiefly as a deoxidizing agent, in the manufacture of certain nonferrous metal alloys, e. g., phosphor bronze. The principal grade is known as 15 per cent phosphor copper and contains approximately 14 per cent phosphorus balance copper, this corresponding very closely to the definite compound CusP. Lower grades are used in considerably less extent down to 10 per cent phosphor copper, which is a mixture of CusP with about 30 per cent of copper. Prior to 1927 imports of phosphor copper were negligible in quantity, the requirements of the domestic market being supplied almost entirely by domestic manufacturers. For the last two years considerable imports of phosphor copper have entered the country duty free under an appraiser's ruling classifying the material under paragraph 1562 as "metals unwrought." This has resulted in sever inroads into the domestic manufacture of phosphor copper and consequently of phosphorus. No separate returns on these importations are available but a survey made by this company indicates the importations to be proceeding at the rate of at least 1,800,000 pounds per annum, the value of this quantity being considerably in excess of $300,000. This company protested this ruling before the Treasury Department, both on technical grounds, and as constituting an evasion of the duty on phosphorus inasmuch as the material is used for its phosphorus content and for no other purpose; T. D. 43070 recently issued and not yet in effect classifies the article under paragraph 5, dutiable at 25 per cent ad valorem. A copy of this decision is appended to this brief. Congressional specification of a definite duty on this material will make the manufacturer feel more secure of permanent protection, and it is therefore felt desirable and we request that phosphor copper should be specifically listed under paragraph 65, with a specific duty at any rate sufficient to proportionately compensate for the duty on the amount of phosphorus used in the manufacture and for the difference in other manufacturing costs in this Country and abroad. This company is not a manufacturer of phosphor copper and we are not in a position to submit data substantiating a specific suggestion, but it is our understanding that a brief is to be submitted by the manufacturers of phosphor-copper on this subject to the committee. (T. D. 43070.) Phosphor copper Phosphor copper dutiable as a chemical compound under paragraph 5, tariff act of 1922. COLLECTOR OF CUSTOMS, New York. TREASURY DEPARTMENT, SIR: The department refers to your letter of September 13, 1928, relative to the claim of certain domestic interests that phosphor copper which is now admitted free of duty as metal, unwrought, under paragraph 1562 of the tariff act of 1922, is properly dutiable at the rate of 25 per cent ad valorem under paragraph 5 of the said act. The department has given careful consideration to the briefs submitted by domestic interests in support of their position that the merchandise is dutiable under paragraph 5 as well as to the views expressed by the appraiser at your port that the merchandise is dutiable as a nonenumerated manufactured article at the rate of 20 per cent ad valorem under paragraph 1459 of the tariff act, his opinion that the merchandise is dutiable under pragraph 1459 being based upon the theory that phosphor copper would not be regarded as a chemical compound within the meaning of that term as used in paragraph 5. The statement of the domestic interests that phosphor copper is in fact a chemical compound is not disputed in the correspondence before the department. all that is said on this phase of the question being that phosphor copper of commerce is not properly termed a chemical compound. In this regard it should be noted that paragraph 5 is not limited to chemical compounds but includes "all combinations and mixtures of any of the foregoing". Merchandise is only subject to duty under paragraph 1459 when not provided for either directly or by virtue of the similitude clause in paragraph 1460 under some paragraph of the dutiable list, and inasmuch as it is not denied that this merchandise is in fact a definite chemical compound, CuзP or CuP2 or mixture of these two compounds, or a mixture of either or both of these compounds and the chemical element copper (Cu), the department is of the opinion that it falls within the provisions of paragraph 5 of the tariff act even though it may not be known commercially as a chemical compound or a chemical mixture, and you are, accordingly, authorized to classify phosphor-copper imported 30 days after the date of this letter appears in the weekly Treasury Decisions under the said paragraph at the rate of 25 per cent ad valorem. Respectfully, E. W. CAMP, Commissioner of Customs. A. W. MELLON, Secretary of the Treasury. ARTISTS' COLORS [Par. 67] STATEMENT OF CAREY W. HORD, SANDUSKY, OHIO, REPRESENTING THE ARTISTS' PAINT INDUSTRY Mr. HORD. Paragraph 67 refers to artists' colors. In order to enable you to quickly visualize it, if you are not all familiar with artists' colors, the form in which they are sold, I prepared this little exhibit, which I shall leave on file with the clerk. Artists' colors are sold, practically all of them-I think I am safe in saying that 98 per cent are sold in either tubes or pans. The price ranges at retail from 30 cents to that larger sized pan of $10 per unit each. The average price of a small tube is 68 cents each, and the average price for the whole tube is $1.27 each-that is the large tube. The Treasury decision on artists' colors now classify all kinds of water and oil colors, whether designed for professional artists, academic or toy use, as artists' colors. Artists' colors in the tariff act of 1922 and the Underwood bill proceeding have carried a rate just about one-half that of toy colors, so it has been advantageous to those importing all kinds of the cheaper grades to establish decisions definitely classifying all these colors as artists' colors. Artists have testified in the Customs Court that they sometimes use toy colors, so it is impossible to write a definition differentiating between the different types and grades. Probably not over 5 or 10 per cent of the total volume of imports are on the real artists' colors such as professional artists regularly use. When this paragraph was passed by your committee in 1922, fixing a 40 per cent duty on artists' colors and providing no other classification, we took the matter up with one of our Ohio Congressmen who was then a member of the Committee on Ways and Means. We were advised there would be hearings in the Senate on all paragraphs and that we should arrange to take this matter up over there. In due course this was done and the Finance Committee apparently did not know what they wanted to do with it. This paragraph was one of the last to be dealt with by the committee. It was rushed through a jam in the hopper during the last few hours. At 1 o'clock in the morning, on the very day the bill was reported on the floor of the Senate, this paragraph was adopted and was the best compromise we could think of to recommend at that time. This paragraph was framed on the theory that artists' colors are almost always sold in separate units-by the pan or tube-while the imitation artists' colors and toy colors are assembled in sets, kits, and color outfits. The Finance Committee did not want to place a 70 per cent duty, such as carried by other toys on the real artists' colors. Being unable to prepare a definition, it was decided to try the plan of differentiating between the different grades according to packing, allowing 40 per cent when imported in bulk and 70 per cent when assembled in sets, kits, or color outfits. This plan has been defeated, for in actual practice 92.6 per cent of the colors have been imported in bulk and assembled in sets, kits, and color outfits in this country. It is our desire to capitalize on the background of the Treasury decisions. Our recommendation of the rearrangement of this paragraph is planned to accomplish this purpose. We believe we have found a very simple and happy solution of the problem by dropping the 70 per cent duty on assembled goods and providing a small specific duty in addition to the 40 per cent ad valorem on all goods. As shown in the brief, which we have filed, this specific duty translated into an ad valorem duty as applying to real artists' colors amounts to an increase of only 4.1 per cent to the consumer. This recommendation is not based on theory, it is a sound, practical tariff, worked out on the tables of business experience to place a rate of duty that will protect the American manufacturers on the types and class of merchandise that is coming into this country and causing injury to the American producers. There are three different and distinct types or grades of colors, such as are under discussion-the real artists' colors, the cheaper sets and kits that might be called imitation artists' colors, and the toy colors. The importations that are seriously affecting or injuring the American manufacturers is the middle grade which is packed in metal boxes and is what we have referred to as imitation artists' colors. The specific duty recommended is designed to properly assess this type of merchandise. This is the type that is being imported in large quantities. Under this paragraph the importations during the past four years have been 92.6 per cent of the unassembled, or the merchandise that came in in bulk. A large portion of that which was imported was assembled in color kits and sets over here. The value increase in four years was 90.9 per cent. The weight increase in four years was 151.8 per cent. You can readily see the advantage of importing separately, bringing the colors in unassembled. They come in at a duty of 40 per cent instead of 70 per cent. The brushes came in at a duty of 45 per cent. They would otherwise pay 70 per cent if assembled in the sets. I am not sure of the exact meaning of the Treasury decision on metal boxes, but my interpretation of the tariff as I read it would be that they would have to pay one-quarter of 1 cent per pound. These boxes weigh only a lew ounces, so the duty on the boxes is practically nil. In our brief we are recommending an additional clause providing for the packing of these colors in bulk, and filling the tubes and pans over here. |