Mr. COCKRAN. Then your object in asking for a protective rate is not to equalize the cost of wages, but to equalize a difference in the skill of production?

Mr. CLAUSE. I think that perhaps we have as good capacity as some of the Belgians.

Mr. COCKRAN. Then what are you trying to equalize?

Mr. CLAUSE. It is the difference in cost.

Mr. COCKRAN. What is the difference?

Mr. CLAUSE. It is the difference between 32 and 14.

Mr. COCKRAN. Then the difference is 18 cents.

Mr. CLAUSE. That makes 18 cents.

Mr. COCKRAN. The difference between 14 and 32 being 18, when you ask for a tariff rate of 22 cents you want a protection of over 125 per cent of that difference.

Mr. CLAUSE. We want enough to protect us now. If we get just barely enough to make up the difference of cost between here and there they could compete with us and drive us out of business.

Mr. COCKRAN. Well, why? If you get a tariff equal to the difference in the cost of production, including every element, you think they can still put you out of business?

Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. Why is that?

Mr. CLAUSE. Very easily.

Mr. COCKRAN. Please give us an explanation of that. That is

what I want.

Mr. CLAUSE. In the first place, the ocean lines and the railroads help them.

Mr. COCKRAN. Is it your idea by a tariff rate to equalize freight rates?

Mr. CLAUSE. We ought to have relief somewhere.

Mr. COCKRAN. Is it your idea, then, that the wrongs and inequalities of railroad rates in this country are to be balanced by a tariff? Mr. CLAUSE. No, sir; but we want to have a tariff sufficient to put us on a good competitive basis.

Mr. COCKRAN. I am trying to find out what that actual basis is. Mr. CLAUSE. If you will give me time I will endeavor to explain it. Mr. COCKRAN. Certainly, you can have the time. Before you proceed let me give you the propositions which I want to submit. You stated that the difference in the cost of production in your own business, including everything, is 18 cents, and you ask a tariff of 221 cents?

Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. What is it that you are trying to equalize by a tariff equal to over 125 per cent of the difference between cost of production here and abroad, including everything, which you think should enter into the calculation?

Mr. CLAUSE. We get a difference of 18 cents to start with.
Mr. COCKRAN. Is not that included?

Mr. CLAUSE. No, sir.

Mr. COCKRAN. I thought that was a part of the total.

Mr. CLAUSE. The railroads have helped to reduce the tariff, and have made discriminations which have compelled us to reduce prices in the West, in the inland points, about 2 cents a foot. Now, beyond that, the Belgian Government, as well as the German, encouraged

their enterprises to improve their several kinds of business and also to make trade arrangement that enabled them to get higher prices and to do a profitable business. That enables them to keep up prices where they have profitable markets and it enables them to dump their surplus product on the American market. I think that the Belgians as well as others would be delighted to sell glass at cost in the American market. The railroads help them on the freight rates, and frequently compel us to sell glass at cost or less than cost. Now, unless we have a margin above the price of the Belgian it puts us out of business.

Mr. COCKRAN. By these discriminations in freight rates you are taxed, you say, 2 cents per foot.

Mr. CLAUSE. In some markets.

Mr. COCKRAN. That would account for 2 cents of the 22 cents. That would still allow you a larger margin than the total difference, according to your figures. What are the agreements that you speak of which have been made by the Belgian producers which gives them an advantage-in what market do they sell cheaper than they sell here?

Mr. CLAUSE. There is no market in which they sell cheaper than they sell here. They have sold in other markets for more than they do here.

Mr. COCKRAN. Please give us the extent of that, because it is a serious matter.

Mr. CLAUSE. I will place before the committee the data showing some of the discriminations practiced, if you would like to have it. Mr. COCKRAN. You can do that.

Mr. CLAUSE. Then as to the French goods

Mr. COCKRAN. You were speaking of the Belgian.

Mr. CLAUSE. They are all in the same category over there.

Mr. COCKRAN. Do you mean to say that there is a combination of all of the producers, the German, the French

A BYSTANDER. And the Italian?

Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. Did you state that the European manufacturers had an association or an arrangement?

Mr. CLAUSE. I was not present at their meeting.

Mr. COCKRAN. You are a producer. Is your concern a party to that organization?

Mr. CLAUSE. We are not members of that syndicate.

Mr. COCKRAN. Then, so far as that is concerned, you are speaking from hearsay. You do not give those facts as a positive statement. Mr. CLAUSE. I was not present when the arrangement was made. The facts can be put before you.

Mr. COCKRAN. You say the Belgians have an organization as well? Mr. DALZELL (to Mr. Cockran). Why do you not let him finish his answers?

Mr. COCKRAN (to the witness). I thought you had finished. I have no desire to interrupt you if you have anything further to say upon that particular point.

Mr. CLAUSE. Well, I have lost the thread of what I was saying, so it does not matter.

Mr. BOUTELL. You did not answer about the question of combination.

Mr. CLAUSE. Here is a document which has been handed to me. It is in French. It explains the arrangement there.

Mr. COCKRAN. If you will hand it to me, I will read it. This document is issued by the Belgian Government, ministry (or department, as we would say) of industry and labor, office of the labor and inspection of industry, Group IV, manufacture and working of glass. Mr. LONGWORTH. I ask that it be read and let it go into the record. Mr. Cockran read from the French as follows:

Glass.-The glass industry has passed during these last years through diverse phases of crises and of prosperity. In 1900 there existed a syndicate of sales embracing the Belgian, the German, the French, and the Italian factories; this syndicate lasted only ten months. From 1901 to 1904 the constant augmentation of production and the competition which the establishments carried on against each other led to a decrease in prices which reached as far as 3 francs upon the average value of the square meter.

There resulted from this a situation which became more and more critical to which an end was put by the new international convention brought about during the month of August, 1904, and which was still in force in 1907

Mr. CLAUSE. It has been extended to 1914.
Mr. COCKRAN (continuing to read):

Following this understanding, prices have advanced, and, thanks to a slight monthly suspension, production has maintained itself in normal conditions. Actually the glass industry finds itself in a very prosperous situation. Mr. COCKRAN. This does not say anything about 1914. Has there been a further agreement? There is an additional paragraph which you have marked. Shall I read it?

The CHAIRMAN. It might be important to have it all, since the stenographer has taken what you have read.

Mr. GAINES (to Mr. Cockran). Might you not hand it to the witness and let him read it?

Mr. COCKRAN. I am reading from the French. [To the witness.] Will you read it?

Mr. CLAUSE. I am unfortunately not a French scholar.

Mr. COCKRAN. Do you care to have it read farther?

Mr. CLAUSE. I am not anxious to have it read.

The CHAIRMAN. To save time you can read the other paragraph since you are doing so nicely.

Mr. COCKRAN (continuing to read):

Our factories have rivaled each other in activity to place their product on a level with the very last methods of progress introduced in this branch of industry. Almost everywhere there have been installed perfected ovens, electrical engines for removing leakages from the plate-glass factories and the mechanical workshops, contrivances for softening and polishing to a high degree. These improvements have had for result a work more intense and more economical. Mr. COCKRAN. I have given a literal translation.

The CHAIRMAN. It is a very creditable performance.

Mr. COCKRAN. That is your explanation. You are interfered with by the European corporation?

Mr. CLAUSE. That substantiates the fact.

Mr. COCKRAN. Does that complete your answer? I have no desire to interrupt you if you have a further explanation. The Belgian producers can not sell without a profit.

Mr. CLAUSE. Shall I make a further explanation?

Mr. COCKRAN. Yes, sir.

Mr. CLAUSE. Any gentleman who has been in the manufacturing business knows the necessity of operating his plant as fully as possible.

Your overhead charges are fixed irrespective of whether or not you are running 50 per cent or 100 per cent of your capacity, and it frequently occurs with regard to certain lines of business. In some lines of business you must take up other auxiliary branches without regard to the overhead charges, the general charges or depreciations, and sell goods without regard to the cost, against the foreign manufacturer, who has his home market which takes 90 per cent of his product at a good profit. If he sells as much as 10 per cent somewhere else at cost or less, it enables him to reduce the cost of the product for his whole 90 per cent home consumption. It increases the profit on his home article by sacrificing or dumping 10 per cent. That is a practice in which we must all indulge in business, according to cir

cumstances.

Mr. COCKRAN. That is, under a certain condition.

Mr. CLAUSE. It is a condition in which, if you were a manufacturer and your business reached 90 per cent of your capacity and for the additional 10 per cent you could get cost, you would be glad to do it, provided you could not find some other place at which you could sell at a profit.

Mr. COCKRAN. Would you not make it an object to sell elsewhere if you could?

Mr. CLAUSE. Yes; if I could. If I could not do one thing, I would do the other.

Mr. COCKRAN. This 10 per cent you speak of is a possible surplus? Mr. CLAUSE. That is what we have got at present.

Mr. COCKRAN. No man will have a surplus if he can help it.

Mr. CLAUSE. No man can help it always. He can not always make his product equal to his demand. As a manufacturer I can say that I can not always tell what my demand will be, because there are conditions arising which I can not foresee.

Mr. COCKRAN. Is your surplus generally so much ahead of your capacity to sell?

Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. Would you say it is usually so?

Mr. CLAUSE. It is very usual for a manufacturer to have a surplus of 10 per cent.

Mr. COCKRAN. During the years from 1904 to 1908 has that been true in your business?

Mr. CLAUSE. No, sir; during intervals of four years the demand might be a little ahead at times.

Mr. COCKRAN. Did you have 10 per cent surplus last year?

Mr. CLAUSE. It has run as high as 10 per cent.

Mr. COCKRAN. Have you had a surplus of 10 per cent at any time during the last ten years?

Mr. CLAUSE. At times during the interval of the Dingley bill we have had a surplus of 33 per cent.

Mr. COCKRAN. What did you do with it?

Mr. CLAUSE. We let it rust.

Mr. COCKRAN. Did you not sell it?

Mr. CLAUSE. The plant was not operating; the machinery was rusting.

Mr. COCKRAN. You mean that you did not produce within 33 per cent of your capacity?

Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. Have you actually had a 10 per cent surplus at any time?

Mr. CLAUSE. Many times we have had a large surplus of stock, due to the conditions of business.

Mr. COCKRAN. Did you have a 10 per cent surplus that you had to dispose of at cost or less at any time during the last year?"

Mr. CLAUSE. Not during this year. We have not had a surplus, but we have sold at very low figures. All of us have to dump our

goods at times below cost.

Mr. COCKRAN. Even at a loss?

Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. Has this condition been exceptional prior to this Since the passage of the Dingley bill in 1897 have you had a surplus equal to 10 per cent to dispose of at a loss in any one year? Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. What year?

Mr. CLAUSE. During the years 1898 and 1899 we disposed of our surplus at a low price.

Mr. COCKRAN. Showing a loss?

Mr. CLAUSE. Yes, sir.

Mr. COCKRAN. Can you recall any other year?

Mr. CLAUSE. There has been no time during the history of the industry in this country in which there has not been a large percentage of the product sold in that way, and it has grown bigger and bigger all the time. The product has often been sold below the cost of production.

That leads me up to one or two questions spoken of by one gentleman who appeared to-day. I wanted to find out whether one gentleman who spoke had ever been in a glass factory in his life. I was sorry that some gentleman of the committee did not ask him that question, because he made a statement which made it quite conclusive to my mind that he had never been in a glass factory. Most glass factories will produce 25 per cent of its product in sizes of less than 10 square feet. That is due to breakage, and to an extent it is due to the process of manufacture before getting it into the warehouses. That 25 per cent has always been sold at a loss. So long as we were only compelled to sell 25 per cent in that way it was not a commanding factor. The demand or consumption of glass under 10 square feet has been growing all the time, until now it is above 60, and perhaps it is 663 per cent of the product. That is very material. A large part of that 663 per cent is the glass that is used for mirrors, and this glass being imported is practically all for that purpose. The gentleman said that that glass is not produced in this country. I do not see why it is not. The larger part of what is sold is made in this country. The only reason that it is not made and sold to a larger extent is because the small glass has to be sold at a loss. We would proceed to make it in a moment where there is a profit in it, but it is made and sold at a loss, and that is the reason why we do not make it. When two-thirds of your business has to be supplied at a loss it comes to be a pretty critical question, and that is the condition to-day.

Mr. CLARK. Mr. Clause, if this scheme of yours proposed should be adopted it would have the general effect of leaving the prices of