ENGLISH VERMILION [Par. 78] BRIEF OF THE GENERAL COLOR CO., NEWARK, N. J. COMMITTEE ON WAYS AND MEANS, House of Representatives, Washington, D. C. GENTLEMEN: We are manufacturers of English vermilion, a product containing 89 per cent of quicksilver, the remainder being sulphur. The tariff act of 1922 gives us a protection of 28 cents per pound, which sounds satisfactory, but in view of the fact that our principal raw material, quicksilver, carries a duty of 25 cents per pound, the only protection which we have is 5 cents per pound, as shown by the following facts: Three hundred pounds of quicksilver produces 330 pounds of vermilion. The duty on 300 pounds of quicksilver is 300X25 cents=$75. The duty on 330 pounds of vermilion is 330X28 cents=$92.40. The difference is $17.60 for 330 pounds, or 5 cents for 1 pound. Inasmuch as practically all the quicksilver comes from abroad, this tariff on quicksilver is actually paid by us, as the price of quicksilver abroad is less than that which we pay by an amount equal to the duty. This protection of 5 cents per pound on a product which sells for $1.80 is inadequate, and we are not making any profit at the present price. While it is true that not an excessive amount of vermilion has come into this country, this is due to the fact that we have been forced to meet the prices quoted by the importers. If there were no duty on quicksilver and we were paying the same price for quicksilver as prevails in Europe, the selling price of vermilion would then be approximately $1.55. In the absence of any provision for vermilion in the schedule we would come under paragraph 68, which gives us a duty of 25 per cent ad valorem. This would then give us a protection of 39 cents per pound. This, added to the 25 cents duty on quicksilver, would give a duty of 64 cents on vermilion. We are not asking for anywhere near that much protection, but we feel that the tariff on vermilion containing quicksilver should be raised to 45 cents per pound, or in the event that the duty on quicksilver should be changed, the duty on vermilion should be 20 cents plus the duty on quick: silver. The question may arise as to why this condition has existed for so many years without any relief being asked for. The answer may be found in the fact that out of six color firms who had made English vermilion in the past only three are producing it to-day. Two of these three are very large firms, who, if they sold all their colors on the same basis as English vermilion, probably would be operating at a loss. We are a small firm and English vermilion is our principal product. The discrepancy in the duty makes itself apparent sooner to us than to our competitors, who absorb the loss on English vermilion in the profits made on other colors. Respectfully submitted. GENERAL COLOR CO., LITHOPONE [Par. 79] BRIEF OF THE C. J. OSBORNE CO., NEW YORK CITY [Including zinc sulphide, par. 93] Ways and Means Committee of the House of Representatives: The undersigned, doing an importing business at 132 Nassau Street, New York City, respectfully submits data concerning a chemical compound known as "Lithopone," utilized in the manufacture of paints, varnishes, lacquers, textiles, and rubber, which is at present dutiable at 134 cents a pound under paragraph 79 of the tariff act of 1922. Your petitioner shows that such duty is too high and should be Laterially reduced, as will appear from the following facts: Lithopone was not mentioned by name in the 1909 or 1913 tariff acts, and first appears in the act of 1922. At that time its production was approaching 100,000 tons, while the importation was infinitesimal. At the present, with a production in the United States of almost 180,000 tons, more than 360,000,000 pounds, it is no longer to be classed as an "infant industry" requiring a high duty to protect it from the imported product of 16,000,000 pounds, or 8,000 tons, and which importation has steadily fallen off since 1922. Evidently the demand for lithopone has also increased enormously since with so stupendous a production the customhouse records show an export the past year of only 4,295,232 pounds, a trifle over 0.01 per cent of the quantity manufactured, thus definitely proving that "dumping" of surplus has not be neces sary. The importation of lithopone was about 22,000,000 pounds in 1922 and 1923, but since then has fallen until in 1927, only a little over 16,000,000 pounds were imported. In other words, the imports of this article are less than 5 per cent of the quantity manufactured in this country. The largest producer of lithopone in the United States sets forth in its advertising matter that: "Lithopone was first made in this country in 1906, has increased in popularity so that after 20 years it is being produced in practically as large quantities as zinc oxide and white lead. In 1925 about 150,000 tons of each of these pigments was made. This means more than 300,000,000 pounds. The same manufacturer shows that while less than 5,000 tons were produced in 1906, in 1916 there were produced 51,000 tons (102,000,000 pounds); in 1925 more than 145,000 tons (290,000,000 pounds). This production increased to more than 353,000,000 pounds in 1927, and has been further increased in 1928. The rate of increase has been more than 50,000,000 pounds annually, and the capacity of the 10 separate plants in this country is claimed to be upwards of 400,000,000 pounds; and provision is now being made to increase the present capacity. The great bulk of lithopone manufactured in the United States is classed as 30 per cent zinc sulphide, and not more than 10 per cent of the lithopone imported rates any higher in sulphide content. From investigation we believe that we with one other are the two largest importers of lithopone, and of the 16,000,000 pounds plus imported, less than 2,000,000 pounds is rated above 30 per cent zinc sulphide. The large percentage of the remainder is brought in by a paint manufacturer for his own use solely, and is a 30 per cent zinc sulphide. All of the lithopone entering into the manufacture of paint in the United States, more than 354,000,000 pounds is made in this country with the small exception of the 16,000,000 pounds imported. Of the quantity imported, aside from that imported by the paint manufacturer referred to above, is the small quantity, less than 2,000,000 pounds, of a higher zinc sulphide base which we import, upon this we pay a duty of 134 cents a pound, and are only able to market it at a gross profit less than 12 per cent. We have found it impossible to import the 30 per cent zinc sulphide product for merchandising, as the actual foreign cost plus the present duty of 134 cents stands us at 54 cents on the dock, duty paid; while the American product of 30 per cent zinc sulphide can be, and is sold profitably at a lower price. But we have developed a small market for a lithopone of 50 per cent zinc sulphide, and your petitioner is importing about 1,500,000 pounds for special customers. This quality costs landed, approximately 6.25 cents, C. I. F., a pound, and with duty added costs us, ex dock, 8 cents. We sell it at 9 cents to manufacturers requiring the higher zinc sulphide content for specific uses. This price is not below the 50 per cent sulphide manufactured in this country. HOW THE HIGH DUTY ON LITHOPONE AFFECTS THE FARMER AND THE SMALL HOME OWNER Eight pounds of lithopone is used in 1 gallon of paint suitable for interior or exterior use. One gallon of paint with lithopone pigment covers 200 square feet. Duty at 134 cents a pound on 8 pounds equals 14 cents paid on every gallon of paint with lithopone pigment. The average 8-room house has at least 200 square feet requiring paint in each room walls, window casings, doors, and baseboards, and at times floors. This therefore, requires 8 gallons of paint for the eight rooms upon which the duty on the lithopone in it amounts to $1.12. Additional thereto, the exterior of such a house will average 3,000 square feet, requiring 15 gallons of paint, upon which the duty amounts to $2.10. The present duty therefore adds to the cost of painting an average 8-room house the amount of $3.22. Barn. Taking an average small barn 25 feet wide by 45 feet deep and 20 feet high, making 3,000 square feet of surface requiring 15 gallons of paint, upon which the duty amounts to $2.10 on the lithopone contained therein. Therefore, a small house and barn will cost to paint, extra because of the present duty on lithopone, $5.32. Population of the United States, about 125,000,000. Estimated number of families, 25,000,000. Number of families on farms, 12,000,000. Number of families in small cities and towns in small houses, 6,000,000. Number of families in cities, 7,000,000. People in small houses and farmers paint once in 10 years at least. Cost of painting small house, with no out buildings, extra on account of tariff on lithopone, $3.22. Cost of painting small house and barn, extra on account of tariff on lithopone, $5.32. If one-tenth of the 12,000,000 farmers paint their buildings every year, it would mean 1,200,000 times $5.32, equals $6,384,000 extra cost on account of the present duty upon lithopone. If one-tenth of the 6,000,000 householders paint their buildings every year, it would mean 600,000 times $3.22,equalling $1,932,000 extra cost on account of the present duty upon lithopone. If the duty were reduced to 1 cent a pound, the cost would be reduced threesevenths of the above amounts, making the cost to the farmers $3,648,000, and to the householders $1,104,000, being a saving to the farmers of $2,736,000 and to the householders of $828,000. In 1927 more than 15,000,000 pounds of lithopone were used in rubber products in the United States; 90 per cent of it in auto tires; on everyone of which the farmer the laboring man, the merchant or the capitalist who bought a tire paid an extra cost because of the present high duty upon lithopone, at least equal to 50 cents on every tire purchased, and he naturally bought one tire a year at least. If we add the saving resulting from a reduction of the duty to 1 cent on this product, it is reasonable to estimate that 10 per cent of the farmers in the United States, who paint their buildings at least once in 10 years, and renew the tires on their cars once in four years, will save $13.68 on the painting costs, and approximately 50 cents on each tire, being an annual saving to each such farmer, laboring man, merchant, or capitalist who thus improves his property, of $14.68, with no injury to the home producer. The diminution of duty collected by the Government, which would be less than $200,000, would be infinitesimal in comparison to the benefit to the great mass of the citizens, which benefit would amount to approximately $3,000,000 annually to the farmers and $1,000,000 to the small home owners. The high duty is not required to protect either the home producer nor home labor. Lithopone is largely created through chemcial combinations, and with the use of machinery. To produce the entire quantity imported to the United States, less than 50 men would be required, notwithstanding which, present conditions impose the burden of a 42 per cent duty upon every American resident or citizen who uses paint, varnish, laquer, or who buys a tire for his car. And the proof that a lower duty would not affect the American manufacturers of lithopone, is seen at once when we note the increase of output of this product in this country from 1925 to 1927 was over 150,000,000 pounds-about 50 per cent and that one of the largest manufacturers in the United States producing fully one-third of the 353,988,193 pounds of this chemical product (lithopone) in 1927 shows a net income of $14.34 per share for the last two years, and authorizes a dividend of $8 regularly, and $4 extra, while in the past there have been stock distributions of from 20 to 200 per cent, and its stock is quoted to-day at $228. This information is taken from the Standard Trade and Securities Service, issue of November 2, 1928, published at 200 Varick Street, New York City. Reducing the present 134 cents per pound duty would in some degree produce the following results: A. A benefit to the ultimate consumer, farmers, and house owners, of whom there are millions; B. No detrimental effect upon American labor; C. Will lower the cost of building construction, and harmonize with the tariff provisions upon other building materials which have been so instrumental in creating our present building boom. We respectfully submit these facts and figures in the firm belief that they sustain the proposal that the present duty upon lithopone should be reduced. Very respectfully, C. J. OSBORN Co. JOHN HENRY JAHN, President. ADDENDA, JANUARY 9, 1929 Up to the present time we have been able to import 50 per cent zinc sulphide lithopone, costing us 8 cents to land, duty paid, and sell same at 9 cents. This day our domestic competitors have offered and sold the same quality lithopone at 8 cents. Facing this condition, if the duty is not reduced we can not continue business, but are driven entirely from the American market. When this eventuates no one can prophesy what the future price of lithopone may be to the farmer and the public generally. SUPPLEMENTARY BRIEF OF THE C. J. OSBORN Co. The present duty on lithopone is 134 cents per pound. The present home production of this pigment is more than 20 times the total importations, which in itself negatives any claim that the imported article competes with the home product, in addition to which the Government figures show the imports of lithopone to be steadily decreasing, while home production is advancing at the rate or 50,000,000 pounds annually. Theoretically this imported lithopone contains 30 per cent of zinc sulphide, the active element, and it is true that all importations are of that strength, except about 1,500,000 pounds of 50 per cent and 60 per cent zinc sulphide content; in other words the quantity of such lithopone imported in 1927-the last official figures available-was one-quarter of one per cent (0.25) of the quantity produced in this country. What reason exists under such circumstances to impose the very severe rates of duty upon lithopone that have been suggested by home manufacturers? One is impressed with the thought that if such prohibitive rates of duty were imposed, the result would be to stifle all importations of this product, and enable the price of that produced in the United States to be advanced from 35 per cent to 60 per cent, to the increased profits of the home manufacturers, and the increased cost to the great mass of ultimate consumers. Why increase the duty? The facts are as follows: Under the present rate of 134 cents per pound, lithopone of 50 per cent zinc sulphide content costs the importer 6.25 cents per pound C. I. F. New York, and with duty of 134 cents per pound added, the cost is 8 cents per pound on the dock. Within the past month the home producer has been able to offer and to sell 50 per cent zinc sulphide lithopone in the American market at 8 cents per pound. This simply demonstrates the impossibility of continuing to import lithopone of 50 per cent or any higher zinc sulphide content, even under the present duty rate, and compete for the market. In the face of these facts, the suggestion presented to the Ways and Means Committee that a 40 per cent zinc sulphide content should pay a duty of 3 cents per pound; and a 50 per cent zinc sulphide content should pay 3 cents per pound, coupled with the further suggestions that the duty be increased to 4 cents; 42 cents; 5 cents; 51⁄2 cents; and finally to 6 cents upon grades of lithopone carrying increasing zinc sulphide content-means prohibition of any importation of this product, with the result that the entire citizenry of the United States would be at the mercy of home producers, who would be enabled to increase their prices per pound for the better grades of lithopone equally to the proposed increased duties. EXAMPLES Forty per cent zinc sulphide content lithopone.—This product is not produced nor sold in this market. Fifty per cent zinc sulphide content lithopone.-This product costs 6.25 cents c. i. f. to import. Add suggested duty of 3.5 cents, would make it cost 9.75 cents on the dock. The home producer now selling this grade at 8 cents, could and doubtless would add the duty to his price, and the customer would pay 11.5 cents, an advance of almost 44 per cent. Sixty per cent zinc sulphide content lithopone.-The suggested increased duty of 4 cents per pound on this grade, which now costs 7.25 cents c. i. f., would cost 11.25 cents on the dock. The consumer would doubtless again have to pay the home producer an advance of more than 55 per cent upon the former price because of the higher duty. The same is true of all the higher grades of lithopone. The suggested duties would in every case absolutely prohibit any importations, since the cost would be so great that the imported article could not compete with the home product in the American market, and as the higher grades of lithopone, having from 40 per cent to 60 per cent zinc sulphide content, are now used in the paint, varnish, linoleum, lacquer, and rubber industries, and the suggested higher duties on these grades will doubtless result in the manufacturers in these industries necessarily increasing the cost of their product, thereby benefiting a small group of home manufacturers at the expense of the mass of the citizens of the United States. PARAGRAPH 93. ZINC SULPHIDE This material, so far as we know, is produced only by one manufacturer, who recently reduced their price to 19 cents per pound, whereas we were importing and offering a similar product at 22 cents per pound, and were compelled to reduce our selling price in order to compete with this home producer. The present cost of this material would not warrant a 6-cent duty, which would absolutely prohibit all importations and force a very much higher price to the public, to the benefit only of the home manufacturer. We strongly advocate retaining the present duty, for to increase it, as suggested, will positively result in prohibiting all importations of this product, and the revenue collected would be lost. In conclusion we wish to say that the domestic manufacturers of these products have enjoyed a tremendous prosperity, which is reflected by their generous dividends and stock distributions. When the insignificant amount imported since 1922 is considered, as statistical records show that even this small quantity has decreased in the last seven years, it surely does not imply any menacing threat to the home industry. There would be no further demand from labor to manufacture the small quantity now imported. No reduction in the selling price could be expected to be made to the consuming public. Who, then, would receive the benefit of the increased rate of duty? C. J. OSBORN Co., BRIEF OF THE NEW JERSEY ZINC CO., NEW YORK CITY [Including zinc sulphide, par. 93] The above-named company, a corporation of the State of New Jersey, which is engaged in carrying on the business of zinc mining and manufacturing, established in 1848, recommends, first, an elaboration of paragraph 79, of Schedule 1 of the tariff act of 1922 so far as such paragraph relates to lithopone; and second, an increase in the duty on the item zinc sulphide mentioned in paragraph 93 of the same schedule. Lithopone and zinc sulphide may be commonly described as paint pigments although they are also used in the manufacture of a variety of products other than paint. Both are produced by somewhat elaborate chemical processes and both have attained commercial importance in comparatively recent years. |
