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PARAGRAPH 650_SURGICAL INSTRUMENTS, ETC.

BRIEF OF H. CARSTENS MANUFACTURING CO., CHICAGO., ILL.

CHICAGO, January 30, 1913. Hon. OSCAR UNDERWOOD,

Ways and Means Committee, Washington, D. C. HONORABLE SIB: Referring to the free clause No. 650 we, as manufacturers of surgical instruments, most respectfully and seriously beg to enter our protest against including the hospitals in this clause, for the following reasons:

First. If the tariff on manufactured metal goods, including surgical instruments, is to be lowered, we think it ought to be the same for everybody interested in the manufacture, sale, or buying of surgical instruments.

Second. To give hospitals the preference by including them in the free clause would inevitably result in the hospitals becoming dealers by importing direct and selling surgical instruments to the doctors on their staff, without corresponding benefit to the patients, who are not likely to be charged lower fees on account of this preference.

Third. With few exceptions, hospitals are conducted for profit, bringing good returns on the investment and, compared with their yearly v lume of business, the amount of charity work done is insignificant. Hospitals devoted to charity work exclusively rarely pay much, if anything, for their instruments or equipment, but obtain such mostly through donations from manufacturers and dealers.

Fourth. While the lowering of the tariff from 45 per cent to the proposed 25 per cent would be a very hard blow, the including of the hospitals in clause No. 650 would mean total ruin to every manufacturer and dealer in surgical instruments and thereby destroy a very useful and, we feel free to say, very necessary industry. This would drive out of employment several thousand people now engaged in this work, without corresponding benefit to be derived, a fact which we can not conceive to be the object of any administration. Very respectfully,

H. CARSTENS MANUFACTURING Co., Per H. CARSTENS, President.

BRIEF OF THE SCIENTIFIC MATERIALS CO., PITTSBURGH, PA.

PITTSBURGH, Pa., January 30, 1913. Hon. Oscar UNDERWOOD, Chairman Ways and Means Committee,

House of Representatives, Washington, D. C. Dear Sir: It has come to our attention that your committee is to be asked to put all scientific instruments and materials for use in research laboratories on the free list.

We make such supplies our sole business, and are unable to see any good reason for bringing in any such materials free of duty. As the matter now stands, educational institutions have this privilege, and practically all other laboratories are conducted for profit in one way or another. The majority of our sales are made to the large corporations, whose laboratories are just as much a part of their manufacturing operations as any other part of their business. It would be impossible to satisfactorily carry out any provision which would attempt to make any distinction between laboratories conducted for research and those doing regular analytical work, because practically every laboratory does or could do something which might be called research, and thereby take advantage of the benefits.

We are under the impression that paragraph No. 650 of the tariff, now in force, will permit any institution incorporated solely for scientific purposes to import apparatus free of duty. This seems to amply guard against the tariđ interfering with the advancement of science where not conducted for profit. Very truly, yours,

SCIENTIFIC MATERIALS Co.,

CHESTER G. FISHER,
Vice President and General Manager.

PARAGRAPH 650_SURGICAL INSTRUMENTS, ETC.

BRIEF OF THE AMERICAN STERILIZER CO., ERIE, PA.

ERIE, Pa., February 1, 1913. Hon. ARTHUR L. Bates, M. C.

Dear MR. BATES: We note report in the morning paper of plea made by Dr. Clover, of St. Luke's Hospital, New York, in behalf of certain hospitals, before the House Committee on Ways and Means, for the free list to be amended to include free importation of apparatus, utensils, etc., for medical and surgical purposes.

In this connection, while we are entirely agreeable to a liberal reduction in duty on this class of apparatus-personally we would not object to having the present 45 per cent cut to 25 per cent-we want to register a most emphatic protest against duty free, and this for very vital reasons, one or two of which we will endeavor to give you briefly:

(1) These same hospitals and charitable institutions throughout the country are being supported, very largely, from surplus earnings of American manufacturers, some of whom would be practically wiped out of business if the proposition went through.

(2) The institutional purchases of this class of apparatus forms so small a part of their annual budget of expenses (and their records will prove this) as to make it a matter of little importance to the life of the institutions, but of vital importance to manufacturers in this line.

(3) As an illustration of what this would mean, we have in our employ a German to whom we pay $3 per day., He has been with us approximately seven years. Prior to that he had only been in this country working a little less than six months. He was a mechanic (coppersmith) in the old country, a man of family, and he told us that in American money he never received in excess of $1.25 per day; his family could never have more than the barest necessities, and was obliged to live in a rented cottage. During the seven years he has been with us, he has saved enough to buy and

pay

for a little home, is educating his children, and laying by a little for old age. This is only an illustration, and the difference of $1.75 per day that we are paying him might be multiplied many, many times to cover similar cases, and I am confident if the good Dr. Clover under the circu tances of this case alone, the American in him would plead for a continuation of American conditions. German ships can land our class of goods in New York City at as low rate as we can from Erie, and, as a practical man, you can readily see where the 100 per cent in advanced wages over German and other competitors would place us.

We do not ask for any undue protection, but we do beg of you to throw your influence in favor of a sufficient protection to cover the difference in cost between American and foreign labor. In anticipation of your favorable reply, we beg to remain, with best wishes, Very respectfully,

AMERICAN STERILIZER Co., By Geo. F. Hall, President.

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STATEMENT SUBMITTED BY BECTON, DICKINSON & Co.,

RUTHERFORD, N. J.

RUTHERFORD, N. J., January 27, 1913. OSCAR W. UNDERWOOD,

Chairman Ways and Means Committee, Washington, D. C. HONORABLE SIB: As manufacturers of surgical instruments, we protest most vigorously against including hospitals in free clause No. 650.

With few exceptions, all reputable physicians are connected in one way or another with some hospital, and would feel entitled to claim any benefits that might come to them through said institutions.

Free instruments to hospitals would mean free instruments to from 60 to 75 per cent of the surgeans of the United States. This would mean death to the surgical-instrument industry in this country. The present rate of duty is already too low to permit of a healthy growth of the surgical-instrument business. This being true, how could it be expected to survive if the majority of instruments were admitted free of duty.

For the same reason we protest against a reduction of the present rate of duty on surgical instruments. Forty-five per cent is inadequate to offset the PARAGRAPH 650_SURGICAL INSTRUMENTS, ETC.

difference in wages in this country and that of Germany. The greatest item
of cost in the finished surgical instrument is represented by labor.
Trusting this will have the serious consideration of the committee, we are,
Very truly, yours,

BECTON, DICKINSON & Co.,
M. W. BECTON, Treasurer.

BRIEF SUBMITTED ON BEHALF OF THE GREATER NEW YORK

SURGICAL TRADE ASSOCIATION.

In opposition to the application of hospitals for amending section 650 in such a manner

that hospitals may import surgical instruments and hospital supplies free of duty. Hon. OSCAR W. UNDERWOOD, Chairman.

DEAR SIR: The Greater New York Surgical Trade Association is composed of manufacturers and dealers, both wholesale and retail, of surgical instruments and allied lines used in hospitals and by the medical profession in general. It has come to their notice that the hospitals have made preparations to have their representatives appear before your committee on January 31, 1913, to present their petition requesting you to amend section 650 of the present law, so as to include hospitals with “any society or institution incorporated or established solely for religious, philosophical, educational, scientific, or literary purposes," etc., so that the hospitals may import free of duty all apparatus, utensils, instruments, and preparations used by them.

As manufacturers and dealers, we do most emphatically protest against any such proposed amendment, and assign the following reasons for our opposition:

1. Such an amendment would seriously endanger and probably ruin the surgicalinstrument industry in this country. Under a duty of 45 per cent, surgical instruments being included in section 199, “Articles or wares not specially provided for in this section, composed wholly or in part of iron, steel, etc.," which duty is scarcely sufficient to protect the American manufacturer against the keen competition of the Germans, we have built up in this country, with considerable difficulty, a surgical-instrument industry which is now fairly well established. While exact statistics are not available, it is safe to say that over $2,000,000 is invested in this business in the metropolitan district of New York, and that at least 1,000 men are employed. Probably not less than 30 per cent of the quantity of instruments and apparatus handled by the manufacturers and dealers are consumed by hospitals. If hospitals are allowed to import free of duty, it will mean not only the loss of this 30 per cent of business, but it will mean a further loss of the business of all such physicians as are in a position to import their own personal supplies through the hospitals with which they may be respectively connected. It is a matter of common knowledge that a large percentage of the practicing physicians maintain a connection of some kind with hospitals. Those who have no direct connection are in many cases on terms of friendship with physicians who have. If the hospitals are allowed to import instruments and apparatus free of duty, what a great temptation is held out to the entire body of practicing physicians to obtain all their instruments and other imported supplies directly through the hospitals?

II. The amendment asked for by the hospitals is not at all vital to their existence and welfare. An examination of the report of any large hospital will disclose the fact that the amount of instruments and apparatus purchased during the course of a year bears a small ratio to the actual running expenses of the institution. The benefit, therefore, to the hospitals is, at the most, comparatively slight, whereas the injury done to the surgical-instrument industry in this country is most serious and endangers its very existence.

III. The plea that the amendment should be granted because hospitals are engaged in charitable work, and that therefore such action by Congress would be in aid of charity, is not fair nor made in good faith, and should not be seriously considered. As a matter of fact, hospitals are not, strictly speaking, charitable institutions, because they derive a very large revenue from the patients themselves and also from the municipalities or counties where they are located for the patients whom they are compelled to treat free of charge. Speaking more particularly of the hospitals in and around New York City, it is well known that patients, occupying private rooms, pay from $5 to $10 per day for room and board and ordinary nurse attendance, and that even the patients in the wards, many of them in one room, pay from $7 to $15 per week, according to their ability. If private patients, occupying rooms, pay PARAGRAPH 650 SURGICAL INSTRUMENTS, ETC. exactly the same rates as are charged in private hospitals, which are undoubtedly run for profit and not for charity, and if private hospitals and institutions can make a profit at the prices charged, then it is certain that our public hospitals, charging similar prices for their private rooms, must also make a profit on this part of the hospital's business.

It is sometimes urged that the hospitals furnish medical services without charge, which is true, but such services are rendered by the physicians without expense to the hospital, so that the hospital should not, so far as this argument is concerned, receive the credit for the benevolent services donated by the physicians.

Such a part of the hospital's activity as may be said to properly come under the head of charity is supported by the public through its city officials and by individual public-spirited citizens. We do not believe that the public, a portion of whose taxes is thus devoted to charitable work, or these public-spirited citizens, would wish to effect the comparatively slight saving which the hospitals would gain by the proposed amendment, if thereby the surgical-instrument industry is threatened with ruin. Furthermore, the whole spirit of our tariff legislation has been to foster and protect domestic industry, and it would surely be a paradox to destroy industry under the misguided intention of aiding charity.

IV. A further objection to the amendment is that it will be impracticable to administer the law so that the hospitals will receive the benefit intended and that, at the same time, no fraud or deception take place. The hospitals, we understand, may take the position that they do not wish to destroy the instrument business or to deprive the importers of the profits which they now make on importing goods sold to the hospitals. The fact still remains that the manufacturer is injured and that he is hopelessly out of the competition for the hospital's business. With the 45 per cent duty removed, he has absolutely no chance against the importing dealer to secure hospital orders. Moreover, it will be highly impractical for the hospital to import through a dealer. For instance, there are many dealers who do not import directly, but purchase the foreign goods from the houses which do a large importing business. The dealer, however, does a large business with the hospitals. In such cases the hospital would order through the dealer and the dealer in turn would place the order with the importing houses. The hospital frequently orders in very small quantities, two or three pieces at a time, whereas the large importer imports in lots of 50 or 100 dozens; therefore it is apparent that much confusion will arise, and the hospital's small import order will cause an amount of trouble to the customs officials and to the importing houses out of all proportion to the small amount of importing business done by the hospitals.

Again, the hospital is compelled or is accustomed to buy instruments and similar articles as they need them, and immediate delivery is a necessity. The importer, however, imports only in large lots and at more or less long intervals. The result would be that either the dealer would be compelled to carry a separate stock for the account of the several hospitals whom he supplies, which would be awkward so far as the administration of the tariff act is concerned, or eventually the large hospitals would alone do the importing, because the needs of the smaller ones are such that it would scarcely pay them, or anybody acting for them, to import the small quantity which they would order. If this results, then the whole object of the proposed amendment is, to a large extent, defeated, because only the very large institutions, which are usually so well endowed that they do not need this comparatively small assistance, would enjoy the benefit of the amendment.

There is still another outcome possible. All the hospitals might combine and form a buying or purchasing trust. The danger of this result coming about is real, because a number of the hospitals have already established a body in the nature of a buying agency, through which they are now purchasing a considerable part of their supplies. If such a buying trust were organized on a large scale so as to take in a greater number of the hospitals of the United States, or of any large part thereof, then the ruin of the instrument business in this country would be absolutely assured. In the first place, even if such a central purchasing agency or trust should purchase through an established house, it would nevertheless mean the loss of that business to all the other dealers who are not fortunate enough to receive the order or orders, and while a few houses might thus be saved, many of the rest would be obliged to discontinue their business. Again, if such a purchasing body had its headquarters in New York, then it is almost certain that the houses in such cities as Boston, Philadelphia, and Baltimore, which have heretofore been supplying the hospitals in their respective cities and localities, would suffer a tremendous loss of business and eventually be crushed out altogether.

PARAGRAPH 650_SURGICAL INSTRUMENTS, ETC. Another danger growing out of the formation of such a purchasing trust would be the ease with which private physicians could include orders for private supplies with the hospital order. There is no practical means of placing any check on any hospital and preventing the inclusion of private orders from physicians when ordered through a central purchasing body, which imports the goods in bulk and keeps a stock on hand out of which to supply the hospitals quickly when they need any particular instrument or anything else.

V. A further objection to the proposed amendment is that it is a species of class legislation which is contrary to the spirit of the American Government. It is respectfully submitted that hospitals doing a part of their work for profit should be placed in the same class with the public in general so far as the payment of the duty on instruments and allied lines is concerned. If it were a fact that all hospitals were operated entirely as purely charitable institutions, then they might be placed in a class by themselves for the purposes of taxation; but where such a large part of their work is conducted in the same manner as a private enterprise for profit, then we can see no reason or justification for such classification.

VI. This association strongly urges your committee not to recommend any reduction in the present duty on surgical instruments. As stated above, this industry was built up slowly and with great difficulty. It is one which requires a particular kind of skilled labor of which there was little or no supply in this country when the first beginnings of the industry were made, and it has taken many years to develop the corps of skilled workmen now engaged therein. The present duty of 45 per cent is scarcely sufficient protection against the cheaper labor prevailing in Germany. It is a serious question as to whether the American manufacturer can stand any reduction whatever, however slight it may be. The consensus of opinion of those inembers of this association who are manufacturers is that they should have more protection than they enjoy at present. One of the members, doing a larger business than most of the others, began as a manufacturer but has gradually been compelled to abandon the manufacture of one article after another and import them for his trade, instead of making them himself. His experience has been that as soon as any specific instrument became standardized so that it could be marketed in large quantities, then the German manufacturer would so cheapen the cost of such particular instrument that the American maker could not possibly compete. The result of this process has been that the manufacturer above mentioned now makes only 30 per cent of the goods in which he deals and imports the other 70 per cent, whereas with more suitable protection, the ratio might be reversed. While this association, in deference to the wellknown policy of the Democratic Party to reduce the tariff wherever possible, does not ask your committee to raise the duty on instruments, we do nevertheless earnestly beseech you at least not to lower the duty affecting our industry.

Dated New York, January 29, 1913.
Respectfully submitted.

Greater New York SURGICAL TRADE ASSOCIATION,

By J. T. DOUGHERTY, President. ERNEST W. STRATMANN,

Counsel, 2 Rector Street, New York.

BRIEF OF GEORGE P. PILLING & SON CO., PHILADELPHIA, PA.

PHILADELPHIA, Pa., February 17, 1913. Hon. Oscar W. Underwood,

House of Representatives, Washington, D. C. Dear Sir: Your letter of the 15th instant received. We think that you probably misunderstood our letter, because all of our arguments have been with the idea that hospitals should not be included in paragraph 650.

We very much prefer that paragraph 650 remain as printed in the old schedule, but if it must be changed, would suggest rewriting as per the inclosed.

The hospitals base their argument, first, charity; second, that certain instruments can not be purchased in this country.

If you write the new clause like the inclosed copy you will notice that both of these
reasons are taken care of in this rewritten paragraph.
Yours, very truly,

G. P. PILLING & Son Co.,
Chas. J. PILLING, President.

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