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A tax of 5 cents a pound on all grades of rubber based on the importation figures 1910–11 would net only $7,287,191.
Examine the average value per pound figures 1910–11 and it will be seen that there are material differences in value between all grades of crude rubber, as follows: Rubber...
$1. 0582 Guayule. Pontianak.
.2374 Pontianak is a gum extracted from a tree grown in the East Indies, largely in Borneo, Sumatra, and the Straits Settlements. The tree is tapped in the same way as crude rubber is tapped, the milk flowing very freely. It has been and is now sold to rubber manufacturing concerns largely as an adulterant, being used in commection with higher grades of crude rubber more as a filler than anything else. In recent years, however, manufacturers in this country, as well as soine concerns in the East, have extracted the rubber content of this gum, which amounts to about 8 per cent of its total weight. To this extent pontianak, ii taxed at 5 cents per pound, would virtually be paying a tax of 60 cents per pound. Pontianak has been largely used as a filler in manufactured articles of public necessity, such as boots, shoes, rubber clothing, druggist's sundries; and mechanical rubber goods, such as belting, packing, rubber tiling, and other articles which are in general use, and it can not well be substituted by any other article which has rubber for its base. There being no substitute for pontianak at anything like its primal cost to manufacturers, a tax upon it would mean an increased cost to the public for all articles of necessity in which rubber is the base. These very articles in which it is used, such as boots, shoes, rubber clothing, druggist's sundries, and mechanical rubber goods and the like, are largely manufactured in England, Belgium, France, and Germany, where there is no tax on crude rubber.
The excess of wage hire in this country over that of England, Belgium, France, and Germany, coupled with a tax on pontianak, would mean that we could no longer compete in those countries with the manufacturers of these classes of merchandise. This export industry is but an infant, but it is growing to enormous proportions under our improved methods of manufacture, and every year shows an increased sale in these goods in these foreign countries. Pontianak costs now about 5 cents. Add a 5-cent a pound duty and you double the cost of raw material. The industries in this country using pontianak could not stand this sudden increase and in consequence would be driven out of business and their export trade would be entirely demolished.
It also follows when we consider 51,420,812 pounds of pontianak is annually imported and which would be driven out of our markets by the imposition of such tax that the total revenue from all importations would be one-third less. Furthermore, importations of all other grades of rubber would naturally show a falling off. As has been previously shown, pontianak is used as a filler to these other grades of rubber and with the practical elimination of pontianak from our markets the demand for all other grades of rubber would be materially lessened.
I now give you the figures on our export trade for the years 1909, 1910, and 1911, as shown in the Daily Consular Report, March 13, 1912:
From an average of $6,000,000 for 1905–1908, the average of the two years 1909–1911 shows an increase of about 50 per cent. Thus, we have entered upon a period of great export activity. Tiis is further illustrated by the separate returns of our trade with the United Kingdo n, Canada, and Germany, as follows:
Thus the average rate of increase in the aggregate exports to all countries is more than reflected in the development of trade with these principal outlets, which, in their combined form, take about one-half of the total exports of rubber manufacturers. In the United Kingdom and Germany we are selling our rubber goods side by side with the rubber goods of similar kinds made by the manufacturers of those countries. Those countries have no duty on the raw material. We have been giving the consumer better-made goods at the same price than the manufacturers of those countries are selling their articles.
We can not compete with them if our manufacturers have to pay this tax on rubber and their manufacturers do not. Manufacturers of all kinds of rubber goods require skilled labor, receiving in this country a high rate of compensation. Therefore the result will necessarily follow that foreign manufacturers who employ cheap skilled labor and pay no tax on the raw materials can send their manufactured goods into our market, even paying our duty thereon, and compete with our manufacturers. Indeed, if this were not so, we would not be building up a rapidly increasing export business and be driving out of our markets rubber goods made in foreign countries that were at one time prevalent here. The amount of capital that has been invested in these new industries, the infinite care and labor that has been expended in building up this large export trade, which adds its help to throwing a balance of trade to our country, the large number of laboring people dependent for their livelihood on these industries, are all threatened by this proposed imposition of tax.
In the next place, the enormous increase in the consumption of rubber is a change which may be officially noticed. The rubber industry throughout the entire country has grown tremendously, as evidenced by the great quantities of manufactured articles. It must also be officially noticed that crude rubber is not a product of the United States of America or of any of its outlying dependencies. The world has annually consumed over 65,000 tons of rubber for many years past. Of this, as has been shown, the United States for the fiscal year ending June 30, 1911, consumed 145,743,820 pounds exclusive of 26,948,000 scraps. Naturally the inquiry arises, what becomes of this huge quantity and into what articles is the raw product made? Consider for a moment the many electrical and surgical appliances in which rubber plays an essential part. Consider the part that it plays in the means of transport alone. Consider our dependence on it for articles of outdoor sports, travel, hvgiene, and business, and you will conclude that we have a substance without which the progress of civilization would have been materially checked. Reflect on the stability and international character of the businesses already established to promote the use of rubber. It may be said that the articles manufactured in the United States into which rubber enters go throughout the entire world. There is another consideration which further demonstrates the hold the rubber industry has on commerce generally. Progress in many mechanical, surgical, physical, and chemical industries is largely dependent upon the use of the raw product. While it can not be disputed that other industries are dependent on the use of rubber, the rubber industry in turn is dependent on still other industries. Rubber alone would be of very little use; it is the base
only. Many oils, minerals, etc., produced in this country are used in the manufacture of rubber goods. Rubber manufacture is very largely dependent upon these substances, so that if the industry was suddenly seriously affected by legislation there would be confusion in the linseed, cottonseed, and castor-oil markets. Merchants dealing with such dissimilar substances as wax, naphtha, sulphur, talc, turpentine, and even copper and cotton would also be affected hy any radical change in the rubber industry.
Of all grades of crude rubber, approximately 25 per cent thereof is devoted to the manufacture of mechanical goods, such as rubber hose, packing, and the like, 30 per cent for buggy, truck, and automobile tires, 30 per cent for rubber footwear, rubber clothing, and the like, and 15 per cent for druggists' sundries, surgical goods, etc. Thus 80 to 85 per cent of crude rubber is used in the manufacture of articles of utility, and any tax imposed falls not on luxuries but on necessities.
There are 275 rubber factories in the United States, divided as follows: Massachusetts, 55;, New Jersey, 58; Pennsylvania, 14; Washington, 1; New Hampshire, 1; Rhode Island, 10; Ohio, 35; California, 3; New York, 49; Connecticut, 17; Missouri, 2; Illinois, 9; Michigan, 2; Indiana, 2; Delaware, 1; Minnesota, 1; Wisconsin, 4: South Carolina, 1; Oregon, 1.
The Thirteenth Census of the United States shows that in 1909, 57,487 people were employed and engaged in the manufacture of rubber goods industry; that salaried employees were paid $8,205,000; that wages paid were $25,620,000; that cost of materials was $126,274,000, and that the total value of products was the sum of $202,886,000. These figures, however, while showing a very large industry affected by proposed legislation, by no manner are representative of the situation at the present time. The development of the rubber industry from the point of consumption alone is apparent to every observer. New stores where rubber goods of different kinds are sold are daily coming into existence. New kinds of goods where rubber is used are daily coming into consumption. The consumption of these goods is so different and so much larger to-day that the figures of two years ago are decidedly misleading. In the last two years the strides in this business have been enormous. My own judgment is that instead of 57,500 there is nearer 90,000 people employed; that instead of the salaries of salaried employees being $8,125,000 it is nearer $12,000,000; that instead of the wages being about $25,500,000 it is more than double that now. These figures, however, are but a surmise, and they are the best that I can submit. Accurate figures can not be given at this time. these are, however, but infant industries groping their way to a sale basis, interference with which by the imposition of a tax hitherto unimposed is calculated to be, if not disastrous, disconcerting, especially as you would, by imposing a tax on raw material used in these industries, place in competition with these new, struggling, and rapidly growing businesses the work of the cheap labor of foreign countries and the untaxed raw material of those countries.
There is another consideration I desire to call to your and your committee's attention in regard to this proposed fixed tax of 5 cents per pound on crude rubber. The production of rubber is constantly fluctuating and it is impossible to control it. All that can be obtained can be readily used. Rubber does not follow the general economic laws of production for reasons too numerous to state. The reading of any book on rubber production will give these reasons. The course of market prices influences the production of crude rubber far less than the price of any other staple. The principal reason is largely geographical inasmuch as native rubber is almost in its entirety produced in localities so far distant from the centers of commerce that the course of the market is only known after the production has been accomplished. It is largely dependent, too, upon the native African negro and the native South American Indian, both of whom are not to be depended upon for any regular labor. Para rubber, the purest grade, has fluctuated within the past two years from 95 cents per pound to $2.85 per pound. That of itself tells the story and shows that the fluctuations are beyond the control of any interests in this country or of any other country. The manufacturer is now, because of these fluctuations, already bound to take considerable rieks in the purchase of his raw materials. Considering these violent fluctuations in value, the placing of a fixed duty on crude rubber would render it practically beyond the power of the manufacturer to calculate, within any reasonable degree of certainty, the cost of the production of his manufactured article. In this country, through our mechanical ingenuity, we are producing a better grade of goods than are made in countries where there is no tax on the crude rubber, and we are able, because of our superiority in manufacture in many lines, to meet the manufacturers of those countries at the same price and furnish a better quality of article. It is because of this that our export business is constantly growing. If this tax is imposed, the manufacturer will have to cut down the quality of his goods and he can not then meet the
PARAGRAPH 591-RUBBER. foreign manufacturer on his own ground. Finally, contrast the cost of material to the value of the product, as shown in the figures of the Thirteenth United States Census and you will conclude that there are few industries where the cost of material bears such a high proportion to the value of the manufactured product. The percentage is about 60 per cent. Impose a tax on the raw material and you will impose an additional burden that no other line of manufactured goods is bearing, so far as I know, and bear in mind that in doing so it is for no protective purpose, since crude rubber is not produced in this country. The tax does not return in any way to the inhabitants of this country. It is taken bodily out of the pockets of manufacturers who are already bearing in their line a disproportionate cost of material, who, in their tum, must naturally shift this increased burden on the consumer.
In conclusion, I desire to emphasize these points: (1) That the imposition of this proposed tax would not result in sufficient revenue to meet the deficit created by a reduction in the tariff on wool. (2) That the imposition of this proposed tax would not create more than a revenue of $5,000,000, which again is uncertain because the commercial elimination of pontianak would affect the importation of other grades of rubber. (3) That the ultimate effect of such tax would be to shift the burden from one commodity to another without resulting in any benefit to the public, but on the contrary impose immeasurable hardship on the manufacturer, the employee, and wage earner in this industry., (4) That the imposition of this tax would affect our large and growing export trade, coming in competition with various countries where no tax is imposed. (5) That it being a proposed tax on raw material not in any way produced in this country, it can not be for protective purposes. Respectfully submitted.
FREDERIC C. HOOD, President Rubber Club of America.
TELEGRAMS CONCERNING CRUDE RUBBER.
New Haven, Conn., February 23, 1912. Hon. FRANCIS BURTON HARRISON,
House of Representatives, Washington, D. C.: Referring to our conversation of February 14 regarding proposed import tax on crude rubber 100 per cent of my company's business is rubber footwear, which is a necessity. In 1911 40 per cent of output was exported. No European countries pay import duty on crude rubber, except Russia, where I understand tax is rebateri to Russian companies as outlined in section 25, tariff act of August 5, 1909; drawback system is expensive to manufacturer and would be particularly complicated; applied to manufacturer of rubber we can not expect to hold our foreign business with a tax on our crude material, and I respectfully urge that raw rubber be left on free list.
H. STUART HOTCHKISS.
Boston, Mass., February 23, 1912. Hon. John A. THAYER,
House of Representatives, Washington, D. C.: We are the largest single rubber footwear manufacturers in this country. We do a considerable export business, especially in England. The proposed import duty on our principal raw material, namely, rubber, would be a serious blow to us. It would ruin our export trade and would necessitate raising prices on our product, which is consumed mostly by those people of this country who can least afford to pay the increased price. May we ask you to help against this proposed duty.
FREDERIC C. Hood, Treasurer of Hood Rubber Co.
Boston, Mass., February 23, 1912. Hon. JAMES M. CURLEY,
House of Representatives, Washington, D. C. The Rubber Club of America learns with dismay that an import duty is proposed on crude rubber. On behalf of the Rubber Club vi America representing in its membership the entire rubber industry of the country, I beg most respectfully to protest against such proposed duty on our raw material. Rubber goods to-day are an essential for all classes of people, especially the poorer classes, and the proposed duty
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PARAGRAPH 591-RUBBER. would be a great hardship in the increased cost to the consumer throughout this country and would also ruin our export trade on manufactured goods. The club would like to send its representatives to Washington to be heard on this subject.
FREDERIC C. Hood, President of Rubber Club of America.
SUGGESTIONS REGARDING SCRAP RUBBER.
AKRON, Ohio, February 12, 1913. Hon. Oscar W. UNDERWOOD,
House of Representatives, Washington, D. C DEAR Sır: We have had brought to our attention paragraph 591 of the present law, in which appears the words: “Scrap rubber, fit only for remanufacture and which has been worn out by use, to be admitted free of duty.” The words: “Worn out by use,” in our opinion should be eliminated, as there is a great deal of scrap rubber, fit only for reclaiming purposes, consisting of trimmings, mold rinds, and that kind of scrap, accruing every day in a rubber factory that are dutiable under the present law.
It is just as logical to assume that scrap rubber which has been worn is dutiable as it is that which has not been worn is dutiable.
We use approximately 40,000,000 pounds of scrap rubber per year, a percentage of which is imported. This is used for nothing but for the purpose of making reclaimed rubber, and is distinctly raw material to be used for manufacturing purposes and, in our opinion, all scrap rubber should be admitted absolutely free of duty.
The amount of this material that could be diverted to other uses is so immaterial when compared with the total volume that it is too much the case of the great number of legitimate users being penalized on account of a possible_although not probable--abuse of free entry. Very truly, yours,
THE PHILADELPHIA RUBBER Works Co.,
TRENTON, N. J., February 12, 1913. Hon. Oscar W. UNDERWOOD,
Washington. D. C. Dear Sir: In your paragraph 591 of the present law a provision is made for scrap rubber, whereas all scrap rubber that is worn out by use and fit only for remanufacturing purposes is admitted free of duty.
Such scrap rubber referred to consists mostly of old rubber shoes, rubber hose, etc., which of course is only scrap waste, and is admitted free of duty.
The phrase “which has been worn out by use excludes from the paragraph such scrap waste as overflow from molds and other new scrap waste which can not be used as a new product and is only fit to be ground up and used for remanufacturing purposes.
According to the wording of the law, which has been in effect for more than 25 years, all scrap rubber, whether worn out by use or otherwise, is admitted free of duty.
The appraisers are now appraising such material that is not worn out by use as unenumerated waste, and accordingly assess a 10 per cent duty on same.
In view of the fact that new waste rubber and old waste rubber are the same and can only be ground up for remanufacturing purposes, we think that the assessment of 10 per cent duty is unfair, and we would be pleased to have you remove the words “which has been worn out by use" from paragraph 591, and any assistance which you can render us in this respect will be greatly appreciated. Yours, respectfully,
TRENTON SCRAP RUBBER SUPPLY CO.,
UNITED STATES RUBBER Co.,
Naugatuck, Conn., January 29, 1913. Hon. E. J. HILL, M. C.,
House of Representatives, Washington, D. C. My Dear Mr. Hill: I have this day signed a petition addressed to the Ways and Means Committee of the House of Representatives praying for a change in the wording