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PARAGRAPH 536-COAL-TAR PRODUCTS. Section 11 of this act refers to the method of ascertaining the cost of an article offered for import on which the actual market value can not be ascertained, and provides for an addition of not less than 8 and not more than 50 per cent upon the total cost as thus ascertained. I would suggest that the minimum addition be raised to 50 per cent and the maximum addition be raised to 100 per cent.
I would also suggest that a provision be inserted in this act requiring the importer to state whether the merchandise imported was protected by United States patent, and providing further that if after making due allowance by deduction for estimated duties, such patented products are sold at higher prices in the United States than in the exporting markets, then the American prices shall be taken as a basis for the import duty. If, on the other hand, American prices on such patented products, after making due allowance by deduction for estimated duties, are the same or lower than in the exporting markets, then the ad valorem duty shall be paid on the foreign valuation.
It frequently happens that the American patents remain in force after the foreign patents have expired, and it seems only fair that in such cases the United States Government should profit to some extent in return for the protection granted such patented products. Respectfully,
SCHOELL KOPF, HARTFORD & Hanna Co., By J. F. SCHOELLKOPF, President.
TESTIMONY OF A. H. WASHBURN, OF COMSTOCK & WASHBURN,
12 BROADWAY, NEW YORK.
The witness was duly sworn by the chairman.
Mr. WASHBURN. Very briefly I want, first of all, to direct attention to paragraph 536 of the other law, which, among other things, provides for products of coal tar known as dead or creosote oil. Creosote oil for many years has been on the free list. It is a very important article in the preservation of timber. That importance has increased of late years very much indeed. Aside from a minor use as a material in manufacturing disinfectants, creosote oil is almost exclusively employed as a wood preservative. The importance of keeping it on the free list in view of our rapid forest denudation, I shall not dwell upon myself. Others will touch upon that phase of the matter.
What I do want to direct the attention of this committee to is that there are various grades of creosote oil. That arises from the fact that creosote oil, as commonly made now, is a coal-tar derivative. Since the introduction of what is known as the cokeoven industry, creosote oil is made in this manner very largely. As a matter of fact, the domestic production can not begin--and that is admitted by the domestic producers themselves-to keep pace with the domestic consumption. Various kinds of coal are used in the coke-oven industries, with the result that you get creosotes of what is called high-boiling properties and creosotes of low-boiling properties. Formerly the kind of creosote coming into the market was almost exclusively a low-boiling oil. It was supposed at one time that the tar acids, which are found in the low-boiling oils, were desirable ingredients in wood preservation. That theory has been exploded. The Department of Agriculture has conducted some very important investigations in the last few years. They have embodied these investigations in various brochures, to which I have referred in my brief, and the experts in charge of the investigations have reached the conclusion that oils of high-boiling proper
PARAGRAPH 536–COAL-TAR PRODUCTS.
ties—that is to say, oils which are less volatile—are more desirable as wood-preserving agencies, for the very natural reason that they stay longer in the wood than the more volatile oils.
Now, what I want to say is this: There has been a controversy going on within the last few years between the classifying officials and some of the dealers in creosote oils as to what the term creosote embraces, and my proposition is that whatever disposition this committee makes of creosote oil, the high boiling oils, provided they are direet derivatives of coal tar, just as creosote oil is, be provided for the same as the low boiling oils, either free of duty as it now is, or at the rate that this committee in its wisdom desires to propose.
Mr. HARRISON. Before you leave that point will you explain to the committee just exactly what is the controversy by which it was made to appear that creosote oil, which some claimed was entitled to be taxed at 20 per cent, and by Executive decision it was transferred to the free list
Jr. WASHBURN. Yes; creosote oil, as you will see from the same paragraph, is under the eo nomine provision for “products of coal tar, known as dead or creosote oil.” There was one faction which said that that was limited to a variety of distillates which were low boiling in character. I mean by this those oils, the vapors of which distill over at certain temperatures, and formerly, many years ago, creosote oil distilled over at between 240° to 270°C Now that has been changed. As a matter of fact the consumers of creosote oil now impose a minimum limit on the amount of oil which will distill over at the low-boiling fractions. They want the high-boiling oil, and the department, I think, at one time stated that everything that distills over-the most of which distills over at 320° C.-should be regarded as creosote oil, and everything distilling over beyond that point eliminated from classification as creosote oil. That was a mere arbitrary provision. Now, these oils are all derived in the same way. I mean they are derivatives of coal tar.
Mr. HARRISON. Now allow me to ask you the language which we meant in paragraph 23 was coal-tar products known as dead and creosote oil. Now, that is what you refer to as primary, positive derivatives; not boiling?
Mr. WASHBURN. No; high-boiling as well as low-boiling are direct derivatives.
Mr. HARRISON. And you think we ought not to tax them at 5 per cent ?
Mr. WASHBURN. That is my opinion. The theory was at one time that these high-boiling oils were anthracene oils, because anthracene oil is a derivative of coal tar, and therefore a high-boiling oil.
Mr. HARRISON. You state that that would be eliminated ?
Mr. WASHBURN. Well, it has been shown that anthracene, which is a constituent of anthracene oil, has been eliminated. So now the department in its contention for duty on this high-boiling oil says that it is a high-boiling oil. It does not say that it is anthracene.
Mr. Hill. Is that correct? Don't they say they base their theory on the fact that there was less than 1 per cent of the product left in the oil? It said that if it was less than 1 per cent it should be free, and if it was more than that it should not be free?
PARAGRAPH 536–COAL-TAR PRODUCTS. Mr. WASHBURN. Yes, Mr. Hill, that was one ground on which they based their decision.
Mr. Hill. But the claim they made was that if there was any of it left in, it should be dutiable; but the Treasury Department took the position that it could not be extracted.
Mr. WASHBURN. I think the Treasury Department made this ruling. It said when chlorine is present that this oil has been manipulated with certain foreign agents, such as zinc chloride, and therefore the presence of chlorine is determinative of that fact. Now, as to this particular oil that I am talking about here, the testimony showed that it was a direct derivative and there was perhaps 0.004 of 1 per cent of chlorine found in the oil, due to its mineral properties. I agree that if 1 per cent of chlorine is found in the oil it should be excluded from the free list.
I am talking about something that is a direct derivative of coal tar, and that is, as a matter of fact, a high-boiling oil, and the only suggestion I make is that under the provision as you have framed it up in the chemical schedule, “Coal-tar products known as dead and creosote oil,” you add these words “and other oils derived from coal tar used chiefly as wood preservatives.”
Now, that would eliminate all possible controversy.
Mr. Hill. Would that eliminate, say, creosote oil which had been subsequently treated with chlorine?
Mr. WASHBURN. I think it would, because they would say that was a manufactured oil. It is something beyond this thing that is directly derived from coal tar. I think it would, Mr. Hill.
Now, I want to say just a word about one or two other things, administrative features of the law, and one of them is the treatment of samples. There is a controversy between the Treasury Department and the Board of General Appraisers about that. The Treasury Department is perfectly willing now, as I read their T. D.'s, that commercial samples shall be admitted under certain restrictions, on the theory that samples are incidents of commerce rather preliminary to importations than actual importations in the strict sense. Now, the Board of General Appraisers has taken the view that when a man brings in some commercial samples he exposes himself to the penal provisions of the administrative law unless he declares the actual value that was paid for these samples, notwithstanding the fact that they have no commercial value except for illustrating purposes; and the suggestion I make is—it is elaborated somewhat in the brief, I think it has the concurrence of the Treasury Department—that this committee legislate as to samples in such a way as to enable them to come in free, under the supervision of the Secretary of the Treasury say, in bond for six months-let the department have supervision over the matter. That, I think will check all improper practices.
Just one other thing. I have here another suggestion which goes to a modification of the present provision under which the Secretary of the Treasury may not under any circumstances remit penalties upon entry. Now, that is something which, if it is to be modified at all, I quite concede ought to be done under strict departmental supervision. For example, a merchant will contract for goods abroad and covering a certain period, and he enters those goods at that figure, that is
PARAGRAPH 536–COAL-TAR PRODUCTS. the price which he actually paid, extending over a certain period. It is possible that the market value may have increased between the date of purchase and the date of shipment. It is possible, too, that the appraising officer may have another theory about it. He thinks he has got some evidence- he may not have it, but he thinks he has got some evidence—that the entered value is incorrect; that it is too low, and therefore he raises that value upon entry. Now, before that controversy can be determined—the merits actually ascertained by the Board of General Appraisers--some weeks or some months may ensue. In the meantime he is receiving other importations, and practically under duress to avoid the penalties he adds to the declared value upon entry to meet the appraisers' views. Now, in a case of that sort, what I am trying to suggest is that some provision be enacted under which he could add upon entering under protest, and if his contention is ultimately sustained only in that event as to valuation, then he could eventually get his money back and not be subject to the penalty.
Now, it may be provided for in some way, as, for instance, that the Secretary should remit; put it into the hands of the administrative officers.
Mr. HARRISON. Is not there some such law under the internal revenue ?
Mr. WASHBURN. The internal revenue is a little different. You do not have questions of valuation as you have here.
Mr. HARRISON. But there is discretion, and in one of the sections of the internal-revenue act it gives to the Secretary some discretion as to compromising or withdrawing suit.
Mr. WASHBURN. Yes; that is so. The law is now so drastic that it says that the Secretary of the Treasury can not remit any penalties; and there is another provision of the statutes which says that the importer must pay upon his entered value. So he has no remedy as the law now provides. The Secretary may now remit in that class of cases where there is what is called a manifest clerical error, but only that, and if his discretion were enlarged somewhat in this respect I think it would be a wise amendment to the statute.
St. Louis, Mo., January 27, 1913. The COMMITTEE ON Ways and Means,
House of Representatives, Washington, D. C. GENTLEMEN: We are importers and dealers in creosote oil, which has specifically been provided for on the free list for many years past either as creosote oil or as a product of coal tar, which it is in point of fact according to the modern methods of production. Originally creosote was a name applied to a product obtained from petroleum or wood about 1840. Since the introduction of the coke-oven tar industry, distillates from coke-oven tar have been denominated creosote. Aside from a minor use in the manufacture of disinfectants the exclusive use of creosote oil is as a wood preservative. The economic aspect of wood preservation is universally recognized and has attracted widespread attention. The Forest Service, United States Department of Agriculture, has devoted much research to this important work. A reference to the tariff hearings of four years ago will show the overwhelming demand for the retention of creosote oil upon the free list and the reasons for it. There is every reason to believe that the same demand and reasons exist to-day-they are if possible geographically more distributed than ever before and we have no doubt they will be voiced here. We will not, therefore, dwell upon the desirability of retaining creosote oil upon the free list.
What we do desire especially to call attention to is the importance of employing language in the new act which will embrace without question all grades of creosote oils. There are in fact many different grades, because creosote oil, like the sub
PARAGRAPH 536–COAL-TAR PRODUCTS.
stance coal tar from which it is derived, is a very complex body without any definite chemical formula. The result is an article not with constant constituents but with varying constituents. Some creosotes contain heavy oils with what the chemists call high boiling points and others contain the lighter and more volatile oils with much lower boiling points. Some years ago the lower-boiling creosotes were most generally found. But of late years it has come to be recognized, as a result of more careful scientific investigation, that the heavier-boiling oils, not being so volatile, impregnate the wood for a longer period and are therefore more desirable as woodpreserving agents.
Because creosote oil has no definite chemical formula more or less controversy has arisen as to its classification. An effort has been made to exclude the higherboiling oils from classification as creosotes. A reference to Circular No. 80 on the “Fractional Distillation of Coal-Tar Creosote" and No. 112, “The Analysis and Grading of Creosote,
," United States Department of Agriculture, Forest Service, will show, however, that the experts who have conducted elaborate investigations for the Government have long since recognized that the term “ creosote oil” embraces the higher as well as the lower boiling oils as long as they are direct derivatives of coal tar. Indeed, Mr. T. H. Davis, one of the leading manufacturers of American creosote oil-a producer, it should be said, of the lower-boiling creosotes which are heavy in tar-acid contents as opposed to the high-boiling creosotes which are practically free of tar-acid contents-in an article written for the Philippine Bureau of Forestry and printed in the Oil, Paint, and Drug Reporter of February 14, 1910, frankly concedes much that the Government investigators have long known. He says:
*Coke-oven creosote is of high specific gravity, contains considerable naphthalin and anthracene oils and low content of tar acids.
"A precise definition of creosote, such as used commercially for the preservation of timbers and such like purposes, is by no means easy; in fact, it seems an impossible task because of the varied opinions consumers hold as to the value of its use, which result in so much difference in specifications. That which one may characterize as creosote would not beʼtolerated by another.
“A normal specific gravity will not do, for in only five specifications there is a range from 1.015 to 1.120. (The latter, from observation, is evidently creosote mixed with coal tar.)
“Tar acid contents is not applicable because of the varied opinions of consumers as to the value of the presence of these bodies.
"Naphthalin content is equally misleading, for while some consumers require naphthalin free creosote, others require 20 per cent to 40 per cent to be present.
"Heavy oil and residue percentages vary much, according to the character of the wood to be treated and its intended location, so that these can not be used as a basis for definition. It seems as if consumers look upon it as impossible to accept a standard for creosote that distillers will have to do their best to meet the varied requirements."
In the same article Mr. Davis also concedes that domestic tar distillers can not begin to supply the domestic demand. He says:
“In this connection it must be remembered that American tar distillers can not even approach the needed supply of creosote from coal tar, as required for preserving processes in this country, it being conservatively estimated that not more than 30 per cent of that required can be furnished by American distillers direct from coal tar. This means that very large quantities must be imported or supplied from other
For the year ending June 30, 1912, 50,319,735.50 gallons, having a value of $2,284,844.96, were imported, which shows the widespread domestic consumption of this important article of commerce. In the present tariff act, paragraph 536, it is provided for as “products of coal tar known as dead or creosote oil,” together with various other coal-tar derivatives, some of them possessing very scientific names and being in fact secondary derivatives obtained as the result of elaborate manipulation. We note in a recent House bill covering the chemical schedule this provision:
"23. Coal-tar products known as dead and creosote oil, soluble and sulphonated dead and creosote oil, anthracene and anthracene oil, benzol, naphthol, resorcin, toluol, xylol; all the foregoing not medicinal and not colors or dyes, 5 per cent ad valorem."
The present free-list provision, 536, does not provide for the coal-tar product known as anthracene oil, which is also a high-boiling oil, and our article was at one time assessed for duty upon the theory that it was an anthracene oil. This particular theory has now, however, been abandoned. We would suggest language in the new