PARAGRAPH 650-SURGICAL INSTRUMENTS, ETC. scientific instruments and apparatus come from Germany, and some forms are exclusively manufactured there. It is respectfully submitted that the construction and wording of the act, paragraph 650, does not make the meaning clear in respect to the intentions of the Congress in so writing it. The paragraph provides that the material in question shall be "specially imported in good faith for the use and by the order of any society or institution incorporated or established solely for religious, philosophical, educational, scientific, or literary purposes, or for the encouragement of the fine arts or for the use of or by order of any college, academy, school or seminary of learning in the United States, or any State or public library, and not for sale, subject to such regulations as the Secretary of the Treasury shall prescribe." The principal obscurity in this language appears to lie in the interpretation of the word solely. For instance, a municipal corporation has been held not to be a society or institution within the meaning of said paragraph (T. D. 16230), and a hospital having a school of instruction attached has also been denied the right of free entry thereunder, upon the ground that such institution is not established solely for educational purposes or for any of the other purposes therein mentioned (T. D. 14637, T. D. 16355, T. D. 18708, and T. D. 18767). A municipal corporation maintaining a board of health and laboratories for the control of the milk, water, and food supply or for the grading and examination of paving materials, might be considered, in so far as laboratory investigation was concerned, as being solely occupied with scientific and educational work in the interest of the whole community, for a preventable epidemic disease in any one municipal corporation constitutes a menace to the whole country at large by possible spread of contagion from one State to another. Again, as shown, a hospital having a school of instruction attached has been denied the right of free entry, upon the ground that such an institution is not established solely for educational purposes. As all hospitals are, or ought to be, engaged in applying the science and art of medicine and surgery to the alleviation of human suffering as well as in the education of physicians and nurses, it would appear to involve a nice distinction to rule that their work is not solely scientific and educational within the meaning of the terms of the act. From the wording of the act, paragraph 650, it would appear that the intention of the Congress had been to adopt a generous policy toward philosophical, scientific, and educational investigation. The writer is the president and director of the Institute of Industrial Research, an institution duly incorporated under the laws of the District of Columbia for the purposes of carrying on investigation and research applied to the improvement and development of industrial processes and products. The work of the institute is carried on almost exclusively in physical, chemical, and mechanical laboratories, and involves an order of work which is solely philosophical and scientific. The objects of the Institute of Industrial Research are embodied in the articles of incorporation and are appended to this brief as Exhibit A. The laboratories of the institute have been housed in a handsome building at the corner of Nineteenth and B Streets NW., in Washington, facing on Potomac Park, and have found a wide sphere of usefulness in investigating new uses for by-products and waste materials, as well as problems looking toward the institution of economies and improvements in the manufacture of many articles and products of general use. The institute also trains and instructs graduates of scientific and technical schools and other qualified persons in industrial research, and aids them in obtaining work for which they are particularly fitted. The Institute of Industrial Research might be considered as operating exclusively and solely in philosophical, scientific, and educational work. Under a ruling of the Treasury Department, however, the institute has been denied the right of free entry of scientific instruments and apparatus, on the ground that its charter enables it to make suitable charges in the form of fees and retainers for its work, and in case its business is profitably carried out to make distribution of earnings to its stockholders, in the same manner as any other incorporated business, although the instruments and apparatus for the carrying out of these investigations are necessary to its work and are used in good faith in the work and not under any circumstance for sale. The right and propriety of the Treasury Department in so ruling is not here questioned in this brief, and yet we desire to point out that the institute stands in no different relation to the act as it reads than any college or school in the United States which charges fees for carrying out the special purposes for which such institutions may be incorporated. Furthermore, it is a well-known fact that many college professors, assistants, and instructors who enjoy the benefits of free entry of scientific instruments and apparatus carry on scientific and philosophical investigations for clients, for which PARAGRAPH 650-SURGICAL INSTRUMENTS, ETC. they are paid suitable fees, and that in this respect such college professors and instructors have the opportunity to avail themselves of imported instruments and apparatus at something less than half the cost which has to be met by the Institute of Industrial Research and similar foundations in the United States. It is a well-known fact that many scientific and philosophical instruments and apparatus are exclusively manufactured in Europe and imported into this country for the use of scientists, and that the broadening of the act in respect to paragraph 650 is not calculated either to materially reduce the income of the Government under the tariff act or to do great damage to American manufacturers. The philosophical and scientific apparatus which represents the equipment of our own laboratories is supplied to us by American dealers, but is almost exclusively manufactured in and imported for our uses from Germany. What is true of our laboratory is true of almost every other scientific research laboratory in this country at the present time. If the extension of the benefits of duty-free scientific apparatus were granted, as we request, it is apparent that little or no damage could be done to American manufacturers, while dealers who supply this class of apparatus would probably be called upon for added supplies, as a given amount of money could be made to purchase about twice as much equipment to carry on the work of any given institution or laboratory. It is further set forth that the scientific and philosophical work done in the independent laboratories in this country is doing great good in many directions and that if the law can be so written and interpreted as to give the benefits of free entry of scientific apparatus, it will be to the great advantage of almost all branches of medical, scientific, and industrial development and operate to the general good. In view of the invitation of your committee to those who prepare briefs to submit suggestions as to changes in the phraseology of the present tariff act and suggestions as to the betterment of the administrative features of the present law, we respectfully beg to make the following suggestion: That paragraph 650 be changed to read: "Philosophical and scientific apparatus, utensils, instruments, and preparations, including bottles and boxes containing the same, specially imported in good faith for the use and by the order of any society or institution incorporated or established mainly for religious, philosophical, educational, scientific, or literary purposes, or for the encouragement of the fine arts, or for the use and by the order of any college, academy, school, or seminary of learning, or for any municipal corporation maintaining investigation laboratories, hospitals maintaining schools of instruction, or institutions engaged in industrial or agricultural research in the United States, or any State or public library, and not for sale, subject to such regulations as the Secretary of the Treasury shall prescribe." It is further suggested that as a betterment of the administrative features of the present law it should be understood that the benefits of duty-free importation of scientific and philosophical instruments and apparatus are extended only to those institutions and foundations that can convince the Secretary of the Treasury that they are engaged in work the results of which apply mainly to the general good, and that the source of income under which such institutions are supported shall not operate as a prejudice against their enjoying the benefits of free importation. This object could be brought about by the addition of the words: "Provided, That if the Secretary of the Treasury is convinced that any incorporated society or institution within the meaning of this act is engaged in work the results of which apply mainly to the general good, the means of support of such institution shall not operate as a restriction." Respectfully submitted. EXHIBIT A. ALLERTON S. CUSHMAN, Director. The articles of incorporation setting forth the purpose and scope of the Institute of Industrial Research read as follows: "1. To investigate and improve processes of manufacture and to educate and instruct manufacturers in the reduction of costs and the utilization of by-products and waste. "2. To investigate and improve general metallurgical, mining, and agricultural operations, so as to improve their efficiency and to disseminate information in regard to such improvements. PARAGRAPH 650-SURGICAL INSTRUMENTS, ETC. "3. To study the problems of paint technology, electrical engineering, and electrochemistry, and to institute economies and improvements in the manufacture of fertilizers and general chemicals. "4. To train and instruct graduates of scientific and technical schools and other qualified persons in industrial research, and to aid them in obtaining work for which they are particularly fitted; and in general to do and perform every lawful act and thing necessary or expedient to be done or performed for the efficient and profitable conducting of said business, as authorized by the laws of Congress, and to have and exercise all powers conferred by the laws of the District of Columbia upon said corporation.' TESTIMONY OF HENRY C. LOVIS, NEW YORK, N. Y. The witness was duly sworn by Mr. Harrison. Mr. Lovis. Mr. Chairman and gentlemen of the committee, my appearance is with reference to paragraph 650, and the addition thereto to permit hospitals generally to import goods for their use free of duty. We are manufacturers of medicinal and surgical plasters, absorbent cotton and surgical dressings, bandages and articles in that line, and a large proportion of our trade is with hospitals. In the cost of our goods labor forms 25 per cent of the cost of the finished goods at the factory. To permit foreign goods to enter, we would have to compete with labor cost of 50 per cent under American cost, and as to the merchandise elements in these costs, foreign merchandise is not less than 12 per cent cheaper than we have it here in America. That would together make a rate of 25 per cent, which is the present rate of duty assessed on our class of preparations. And from those figures it is perfectly evident that it is necessary to have 25 per cent duty to begin to equalize the difference in cost between home and foreign production. We therefore feel that under a free rate of duty we should promptly lose our hospital business, and we don't see why we should when the largest proportion of those institutions are private institutions, charging fees. It is only a minor proportion that can be called charitable, but all of those are not entirely so. They have some proportion of patients which pay. And municipal hospitals, which are generally regarded as free institutions, if I am not misinformed, many of them have a definite rate per week, and as a matter of fact a patient, unless he makes a statement that he is a pauper, does not get treatment absolutely free of charge. We therefore feel that the hospitals generally should not have the privilege of that free rate of duty, to the great detriment of home industry. Mr. HARRISON. Of course it is true, is it not, that even in those hospitals which make a charge for such patients as are able to pay, none of it is diverted to anybody's profit; it is only used to run the institution; there are no profits made out of these charges, are there? Mr. Lovis. In some I believe there are. Mr. HARRISON. Well, in private hospitals, of course they are immensely profitable, but these are not comprised within the class of institutions in which these witnesses have desired us to give free entry for surgical instruments. Mr. Lovis. We have no objection whatever to the entry free of duty of the articles for hospital use, provided those hospitals are de PARAGRAPH 650-SURGICAL INSTRUMENTS, ETC. voted solely to charitable work and without pay from patients, on articles that are not produced in this country. Mr. HARRISON. How many hospital institutions are devoted solely to charity, and no pay patients? Mr. Lovis. There is a minor proportion; I am not prepared on the exact number. That is all I think of; thank you. BRIEF PRESENTED BY MESSRS. SEABURY & JOHNSON, OF EAST ORANGE, N. J. Protest against any amendment of paragraph 650 or any other provision by which hospitals and similar institutions are to be permitted to import, directly or indirectly, medical and surgical apparatus, appliances, utensils, instruments, preparations, and pharmaceutical products, free of duty. COMMITTEE ON WAYS AND MEANS, House of Representatives, Washington, D. C. GENTLEMEN: We are manufacturers of medicinal and surgical apparatus and preparations, supplying our wares to hospitals, who consume a very large percentage of the output of our factory; to surgeons, physicians, and afflicted people; to the medical and surgical departments of the United States Army, Navy, and Marine-Hospital services, etc. This trade with the hospitals (municipal, public, or private) is a valuable one, and its loss through a successful competition by foreign goods through their being admitted duty free would very seriously affect this industry, which has taken many years of exploitation to build up. We prepare for and sell to these interests millions of yards of aseptic and antiseptic gauze, vast quantities of absorbent cotton and medicated cottons, splints, and other dressings and appliances used in hospitals and medical and surgical practice. We therefore beg leave respectfully to protest against medical and surgical apparatus, appliances, utensils, instruments, and preparations and pharmaceutical products, imported by or for hospitals and other institutions being admitted to the United States free of duty. We also respectfully protest against any reduction in the duty existing in the present tariff law covering those items, our protests being based as follows: First. The rate at which these goods are sold by us to municipal, public, or private hospitals and similar institutions returns only an exceedingly small profit, as competition amongst the various American manufacturers is very keen and prices to hospitals are made with the knowledge that considerable of their work is done on a philanthropic basis, which therefore demands the closest possible prices. Second. That such goods admitted free of duty to the United States would probably most largely come from England, Germany, and Austria, where labor is but 40 per cent to 50 per cent of American wages and the cost of materials much less than here. Were these foreign goods to enter duty free the trade of the various American manufacturers with these hospitals would be substantially wiped out, as the American manufacturers could not compete against the lower foreign cost of production and a reduction in wage scale in American factories to the foreign level would be impractical. Third. The greater number of hospitals throughout the country are private or semiprivate institutions, charging fees for treatment given, though some of these have departments wherein free treatment is accorded. A minor number only give treatment without pay, but this latter class usually are municipal or State institutions, supported by city or State from funds derived from the American taxpayer. The foreigner contributes nothing thereto. Fourth. It would be impossible to separate hospital supplies used for patients who pay for treatment from hospital supplies used in the same institutions for charity patients. Any such attempt would be open and prone to gross abuse. Fifth. Many physicians and surgeons obtain their medical and surgical supplies for use in their private practice from hospitals with which they are connected, thus securing supplies at the low prices made to hospitals, and should foreign goods for hospital use secure entry free of duty, further serious effects to the American industry would result through the practice here mentioned. Sixth. Many millions of dollars are invested in the United States in various American factories devoted to the preparation of medical and surgical apparatus, utensils, in PARAGRAPH 650-SURGICAL INSTRUMENTS, ETC. struments, and preparations, including our own, and these have been built up by these large investments supplemented by the devotion to scientific study and the use of expert knowledge-mechanical and chemical skill-by specializing in these lines, so to speak, to the end that we and they should attain highest development in the art of preparing these medical and surgical supplies. The importance of these home industries is appreciated by the professional and lay people throughout the land. Their importance to the municipal, State, and Federal Governments in times of peace as well as in times of war should not be underestimated. Seventh. Apart from the absolute necessity that the duty on this class of goods shall be maintained in order that such American industries shall continue to live, we further protest against favoritism to foreign interests of free entry, which foreign interests neither pay our taxes in times of peace nor fight our battles in times of war. Eighth. Any amendment sought which introduces the terms "apparatus, appliances, and preparations," can be interpreted to include all the medical and surgical manufactures heretofore mentioned. We would, however, offer no objections to such amendment of paragraph 650 of th present tariff law as would permit the entry free of duty of philosophical and scientific apparatus, utensils, instruments, and preparations not made in this country for hospitals devoted to giving treatment free to those patients unable to pay therefor. Respectfully submitted. New York, January 29, 1913. SEABURY & JOHNSON, FRANCIS D. DONOGHUE, M. D., EOSTON, MASS., SUBMITS BRIEF. Hon. OSCAR UNDERWOOD, BOSTON, MASS., February 1, 1913. Chairman Ways and Means Committee, Washington, D. C. DEAR SIR: Owing to the lack of Government and State endowment, such limited medical laboratory investigations as are being made are being made by groups of men picked out by special interests or those who have acquired special opportunities. So that until such time as more liberal appropriations are made and expended under Government supervision the physician of the United States, both inside and outside of institutions, should be encouraged to utilize the work and discoveries of the great European laboratories without penalty. There can be no reason advanced for favoring institutions which does not apply with more force toward the treatment of the medical profession as a whole. The ordinary practitioners of medicine are already handicapped in cities by hospita! competition, and the number who can afford to get and use the most up-to-date equipment are becoming fewer in proportion. The standard of the medical profession is, and will continue to be, the standard of the average practitioner. The discoveries of great laboratories are only of importance if they can be applied by the average practitioner to the conditions of the average men. The discovery of some great truth is entitled to fame and distinction, but unless it is available for the average man it does not fulfill its highest good. The necessity of aiding the physician practicing away from medical centers is obvious. The number of medical men who, from the desire to advance their profession, make study trips to the medical centers of Europe is a considerable number. On their travels they see new means for the relief or cure of suffering. They should have at the very least an opportunity to bring in free of duty for their own use such instruments or materials that they have been willing to purchase for use in their work and not for sale. Conclusion: In the interest of the working medical practitioner paragraph 650 should be amended to permit not only hospitals but physicians in general practice to import surgical and scientific appliances and medicines for their own use and not for sale free of duty. Respectfully submitted. FRANCIS D. DONOGHUE, M. D. |