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for seven months ending October, $260,771. This does not look as if American factories were unable to take care of competition and get business in foreign countries.
Attached hereto, a Howard watch advertisement (on file) is another illustration of where an American manufacturer claims he is getting business abroad. This company, as you can see, advertises that the American tourist, instead of buying a Swiss watch in Europe, buys an American watch over there and brings it back home, further emphasizing the fact that Swiss watches can not compete with American watches even in Europe, according to their advertisements, so one or the other of the statements must be in error.
Illustrating what the proposed specific duty schedule really means in the way of increases, the table below shows the three averages, which are based on the average import cost value:
At a glance you can see how they are trying to hide the increased ad valorem rate through a specific duty and make the public believe there had been a reduction. One of their greatest claims is undervaluation. The average price of the watch imported is equal to the average manufacturing price of the American watch, if grade for grade is taken into consideration, which is about $6.50 apiece average for all watches made of Waltham quality, and 90 cents for such as come in class of Ingersoll and Standard watches. How, then, can there be any undervaluation?
We further submit, marked "A," price list of Hampden watches (on file), to show the unreasonableness of this specific schedule, and tabulate four grades of their watches, which correspond to the other leading makes, giving the wholesale price at which the jobber buys them and in another column the proposed duty they want placed on an equal grade foreign watch:
This shows what Dueber sells them for and that upon these prices they make a profit. At that, they want protection equal to the total cost to produce by their factory or a duty almost equal to their selling price on some grades. In other words, their assumption that that much protection is necessary means the foreign companies get their labor and materials gratis. This is trying to make the duty equal the total cost of what a jobber pays for the watches here, for American watches. It looks to us as if they asked a great deal in order to have these figures cut in half or three-quarters, so that the final bill which is passed will still be high and an increase over what it was.
It is true, as they say, that the Swiss excel in the art of making higher quality watches, with greater accuracy in the higher precision class. A large percentage of watches imported is of such a character that they can not be made in America, namely, very thin model and very small ladies' watches and complicated watches, which never enter into competition.
We wish to state most emphatically that the quality of a watch is not determined by the number of jewels or the markings engraved on the plates. This marking of a watch adjusted should be left entirely to the manufacturer. Any of the first-class
watch dealers or retail stores, such as Spaulding
& Co., Chicago; 'Tiffany & Co., New York; Bailey, Banks & Biddle, Philadelphia; Samuel Kirk & Sons Co., Baltimore, and many others, who have departments that buy watches of leading makes from all parts of the world, can verify the statement made above. No fine manufacturer in Europe judges a watch by its markings, nor does any first-class retail watch store. Their chief argument as to why they want markings is as they claim—to prevent undervaluations, but their real reason is to harass the foreign manufacturer.
Watch movements are not such mysterious articles that the average person can not tell the difference between grades. "On the other hand, it is comparatively easy for almost anyone to pick relative classes of watches. Of course, to determine close valuation requires some experience. Furthermore, with comparative ease, the Customs Department can find out in Switzerland the class of merchandise manufactured by various large concerns, as nearly all specialize on grades within close range of price, although there may be from 15 to 21 jowels, still are practically the same priced article, and only'in a very few factories, specializing on extra fine complicated watches, is there a great range of price. Cheap, medium, and high-class watches are pover made in the same factory. Swiss factories specialize either to make a cheap or high-grade watch; never the two classes in the same factory. That is one reason why they excel in certain specialties.
So it is really easier for the department to determine values than in many other lines, where one would really never consider specific duties; so to our minds undervaluation is prevented by customs official regulations.
Jewels do not make or truly indicate a grade. The value of the movement is made up of (1) quality of material used, (2) fineness of finish of same, (3) adjustments.
As to the first, one can put different qualities of material in any movement regardless whether 15 or 21 jewel.
As to the second, as example, a single finely finished balance wheel will cost as much to make as what a cheap 21-jewel complete movement does.
Last, adjustments where there can be spent a great deal of time and money-you can not regulate the value by engraving the number of positions, because any watch is adjusted to position as long as it does not stop when put in a different position. That is true of a seven jewel of the cheapest character. Of course, what is generally understood by adjustments is something entirely different, but it is impossible to control that by engraving. We know an attorney for the watch companies wanted a limit of position variations set. What he asked you to do is better than requirements to secure a new class A certificate, for which one American company gave testimony before you that only 30 out of 50 secured class A, although especially adjusted for the test, and this is a $400 article, and there is no company in America that can fulfill these specifications.
So you can see that it is not practical to expect it out of the general run of movements imported, all grades-merely because it has a large number of jewels.
Regarding the difference between wages in Switzerland and America. This is by no means as great as they would make it appear. If each class of manufacture is taken into consideration, you will find the average very little less; in those Swiss factories, where the better class of goods is manufactured, the average is considerably higher than in the places where only cheap watches are made. The same thing applies to this country.
*In the Gruen factory we manufacture a grade equal to the better grade of American watches and from that up into a class of watches of higher grade, such as are not made in America. The underlying reason for our manufacturing abroad is to insure and control absolutely the continuance of uniform quality from year to year for this particular class of goods that can not be made here, although to do this costs us more money than if we simply imported and bought the goods elsewhere. Our average of wages is 11 francs a day ($2.20), with a minimum of 5 francs to a maximum of 18 francs, with far greater part men employed. They state the labor unions in Switzerland establish & wage of 5 francs a day. That is the minimum wage at which any one can start and not the maximum, or the average. One of their own men, who worked in Swiss factories, admits an average of $1.75 a day, which is about correct in factories where medium-grade goods are manufactured. So, by comparing the average of $2.40 in the Elgin factory with the average of $2.18 in the Illinois factory, with $2 for an average in a Swiss factory of a corresponding quality, shows that there is very little difference in labor cost in the two countries.
The house industry consists mainly in making the very cheapest class of goods, such as is seldom manufactured in this country, mostly cylinder watches, and not in competition with American factories. Statistics show that not more than 10 per cent of the total watches manufactured in Switzerland are made under this house industry,
Their claim that it is difficult for them to compete with Swiss watches does not quite coincide with their statement on page 780 (McCulloch brief), where they admit that the industry of Geneva, Chaux-de-Fonds, and Locle, which was once very prosperous, has suffered severely in late years from the competition of machine-made watches of the United States.
They further state that the payment of a great deal of duty is avoided by the impor.. tation of parts of watches being brought in “knocked down” at the 40 per cent ad valorem rate for materials. In another part they claim that 50 to 65 per cent of the materials used in their watches is imported by them. If that is the case, which we do not doubt, it proves that the greater part of the material imported is used by American factories and that not many watches are brought in in a "knocked down” condition, also that this material is not brought in on a very extensive scale to avoid payment of duties on movements.
În their brief they state that the American manufacturer pays large duties on this material. They consider a duty of 40 per cent on material very excessive and arranged to have the duty on jewels reduced in the last bill to 10 per cent, because they make no jewels. On the other hand, they do not think it excessive to ask a duty on foreign watches, which contain these 10 per cent ad valorem jewels, of 100 to 143 per cent ad valorem, through the proposed McCulloch specific duty brief, basing nearly all their arguments for increased rates on the number of jewels.
Under the title Capital investment and overhead expenses the difference in the cost of material, labor, working conditions, and working hours is not as great as they would like it to appear. We admit the plant investment and the working capital is far greater in the American factory than in the foreign, but for this a couple of American manufactures have only themselves to blame, because these two leading factories have followed out in the past a policy of, one might say, unwarranted building expansion, creating a producing capacity far beyond the demand for their watches.
The paragraph “Swiss watch industry prospers, American watch industry depressed," is partially true, but has to be analyzed. The Swiss industry has had its depression in the years 1908–1910, while the American industry has had its depression confined principally to two the large factories. On the other hand, several other large factories have been declaring 20 per cent to 30 per cent dividends every year, with, as we are informed, a good melon to slice of 100 per cent just prior to the sale of one of these companies about two years ago. The depressed condition of two of the companies is not due to the competition from Swiss watches, but to their capacity being larger than the demand ever warranted. We understand that they were very prosperous the past year-further proof, the old tariff good enough.
Because of efficient management and the manufacturing of goods wanted by the people, one company has been exceedingly prosperous from its inception, covering the past 12 years.
There are several others. In fact, all the medium-sized concerns have had all they could do and have been very prosperous, paying good dividends. The same can be said for the large factories of cheap watches, such as the Ingersoll, with which watch the Swiss can not compete.
As stated in the beginning, we regret that we feel compelled to mention these facts, but think, and in fact know, that the interests of the American public would be best served through a 20 per cent ad valorem duty and that the Government will derive thereby a good revenue and protect the American industries—such as are properly managed and not overcapitalized.
This ad valorem duty will fully equalize the difference in the cost of production of watch movements in the United States and in foreign countries. Respectfully submitted.
Gruen Watch MANUFACTURING CO., By FRED G. GRUEN, President.
BRIEF OF ITALIAN CHAMBER OF COMMERCE REGARDING
The Italian Chamber of Commerce in New York respectfully submits to this honorable committee the following recommendations and arguments for the revision of the duties on the articles hereafter stated, hoping that the recommendations made will receive favorable consideration.
Briar root or wood. --This article, which was on the free list prior to 1909, was made dutiable under paragraph 202 of the present tariff at 15 per cent ad valorem.
Briar wood is a raw material, necessary in the manufacture of smokers' articles (pipes), in fact, to quote an important manufacturer of New York, “the only wood in existence which is practical for a useful pipe, and nothing has been found in this country which could be applied as a substitute.”
This material, which is not, as erroneously stated by some interested competitor, the laurel or spoonwood (Kalmia latifolia) of the United States, is not produced in this country, and is wholly imported either from France, French North Africa, or Italy. It is the root of the “Erica arborea” of Southern Europe, found on lands too poor and unsuitable for cultivation, covered with shrubs and all kinds of coarse growth.
The rooting out and sawing into crude blocks of this wood, in which shape it is sold to those who collect it for shipment, is what would be called in this country, poor man's business, as it is very tedious and hard work, affording, however, the means of livelihood to a deserving class of poor but industrious people, who prefer this kind of work to falling upon the charity of the community.
Those who go out among the briary thickets to make a living by their labor deserve more sympathy than is extended to them by taxing of the product of their labor with a 15 per cent duty as the present tariff does, which, by the inevitable reaction of the duty in the price paid to the gatherers of this article, make their lot harder. The poet may sing:
“Oh beautiful those wastes of heath
Stretching for miles to lure the bee,” but the “human bee” who is lured there by the imperious stimulus of an empty stomach and a numerous family to provide for, is apt to take a less poetical view of his lot, when, after a day of hard work and torn hands and clothes, he finds the measure of his already scant reward reduced of a further tithe, as a consequence of the duty placed on this merchandise.
His appeal, substantiated by humanitarian reasons, for the return of this article to the free list, will, this chamber hopes, receive the consideration of this honorable committee, all the more as the exemption from duty of this article will not injure any American production, which does not exist, nor the revenue, which did not derive from it, in the fiscal year 1911, more than $46,646.
Bores containing oranges and lemons. - Paragraph 211 of the present tariff subjects to a duty of 30 per cent the wood of boxes containing lemons, oranges, and other citrus fruit, if the wood of which said boxes are made is of foreign growth and manufacture, and to a duty of 15 per cent the wood of such boxes, when the growth and manufacture of the United States, exported as orange and lemon box shooks, upon satisfactory proof of its identity to the Secretary of the Treasury.
The present duty on lemons of 14 cents per pound, equal to about 68 per cent ad valorem, upon an article which is a necessity, and which most countries admit free of duty, is already exorbitant. The United States subjects lemons to a duty that, by reason of the insufficient domestic production, deprives the consumer in the West and Middle West of the benefit of competition, decreases importation and therefore revenue, and maintains a privileged protection, securing large dividends to a limited number of producers of a small section of southern California at the expense of the consumers of the whole country, who are thus compelled to pay a high price for a commodity which is indispensable. As if this were not sufficient, an additional duty on the container, which is necessary to convey the merchandise to market, and has absolutely no commercial value, is a burden so unfair that it is difficult to understand how it ever came to be enacted, save as one of the many evidences of the artful way in which fiscal legislation for privileged classes, irrespective of reasonable protection to domestic industry, was placed upon the statutes.
Lemons, as well as any other commodity, have to be conveyed to market in some sort of container. In this case the container is a wooden box that, when empty, has absolutely no commercial value and no other use even as firewood. No one would ever think of charging duty on burlap bags used, for instance, in shipping potatoes or similar merchandise. Yet comparison is in this case identical, and even to the advantage of lemon boxes, because the burlap bag, provided, as it seldom happens, it were in good condition, could be utilized for further use, which is not the case with the lemon box that is practically destroyed by the opening and repeated handling.
A duty on the containers when the contents are already dutiable at a high rate is also to be excepted as an unjust discrimination against the commodity, the more so in comparison with other dutiable merchandise, which is not charged for containers even when the container might represent a value. The dilemma appears inevitable, out of consistency, either to charge duty on containers of all kinds of merchandise or exempt them in all cases. It is evident that the containers of merchandise already subject to duty should be exempted from duty, when such containers are indispensable to the conservation and to the presentation of the merchandise in a marketable condition, provided that the containers are not by themselves an article possessing an unusually high or well-established value, in which case only a duty on containers might be justified if necessary for revenue purposes.
It is the opinion of this chamber, for the above-stated considerations, that the duty on the wood of the boxes containing lemons should be abolished whether the wood of which the boxes are made is the product or not of the United States. But the recommendation for exemption of duty is all the more apparent in the case of boxes made from shooks, the growth and manufacture of the United States, when returned to this country filled with fruit, because to maintain as at present a duty of 15 per cent on such wood is placing a tax on and discriminating against the use of a United States product.
In fact, notwithstanding the differential treatment between boxes manufactured from American wood and boxes manufactured from foreign wood the importations of the former in fiscal year 1911 only amounted to a value of $35,408, against $275,138 for the latter. This proves that the difference of 15 per cent in the duty between American and foreign shooks is not sufficient to encourage the shipper to use American shooks, this requiring the keeping of two classes of wood for an insignificant compensation.
This chamber, therefore, respectfully recommends that the present duty of 15 per cent on American shooks for the manufacture of boxes imported filled with lemons be repealed, and that if for reasons of revenue it is not possible to abolish the duty on lemon and orange containers made of foreign wood the rate at least be reduced from 30 to 15 per cent.
SUPPLEMENTAL BRIEF ON SPICES SUBMITTED BY W. J.
JANUARY 29, 1913. Hon. OSCAR W. UNDERWOOD, Chairman Committee on Ways and Means,
House of Representatives, Washington, D. C. DEAR SIR: I wish to add the following to the brief submitted to your committee by the undersigned “on spices, unground," on January 7, 1913, and printed in your hearings No. 2, on pages 279–281, in reply to some statements made to your committee by those advocating that spices be left as they are in the present act and as they have been ever since the tariff act of 1883, i. e., “the ground spices” dutiable at 3 cents a pound and “the whole or unground spices” free.
Of course the spice grinders and the manufacturers of oils, perfumeries, and fancy soaps in which spices are used want this condition to remain. Why do they want a duty of 3 cents a pound on the ground spices and no duty on the whole or unground? They want to collect a duty of 3 cents a pound and put it in their pockets instead of any revenue going to the Government from spices.
It is surprising to see how tenaciously “the interests" contend for keeping the tariff on spices as it is. They say that the spices—cassia, cinnamon, cloves, nutmegs, allspice, or pimento-are not luxuries. How absurd such a statement. They have always been known as luxuries in trade and commerce. Our tariff acts have always treated them as luxuries and have often grouped them with tobacco and wines. For instance, the tariff act of August 10, 1790, section 1,
“Pepper, per pound, six cents; pimento, per pound, four cents; manufactured tobacco, per pound, six cents; snuff, per pound, ten cents;" and also in the Democratic low-tariff act of 1846 spices were put in the same schedule, B, and at the same rate of duty as segars, snuff, and all other mapufactures of tobacco; wines, burgundy, champagne, claret, madeira, port, sherry, and all other wines and imitations of wines."
The Standard Dictionary defines luxuries as follows: “ That which gratifies a nice or fastidious appetitie; specifically, any article that ministers to comfort or pleasure and yet is not necessary to life." Do not spices come within this category? If we are to have a duty for revenue it ought to first and foremost be put on luxuries and not on the necessities of life, and to be put on luxuries in the form in which they are imported. For revenue purposes you might as well put a duty on “jack-o'-lanterns" as on ground spices and leave unground or whole spices on the free list.
Some of the witnesses had great fear if a duty was put on unground spices it would have the effect of adulterated ground spices coming in from abroad. This is another unreasonable fear. If unground spices are made dutiable, a commensurate or corresponding duty will be put on ground spices, of course. Ground spices never have been imported and it is not likely they ever will. The