PARAGRAPH 412-DECALCOMANIAS. BRIEF SUBMITTED BY THE TARIFF SERVICE BUREAU (INCORPORATED) WASHINGTON, D. C., CONCERNING DECALCOMANIAS. Hon. OSCAR W. UNDERWOOD, TARIFF SERVICE BUREAU (INCORPORATED), Chairman of the Committee on Ways and Means, House of Representatives, Washington, D. C. DEAR SIR: We have the honor to hand you herewith brief in relation to decalcomanias, which is submitted on behalf of Rudolph Gaertner, 200 Fifth Avenue, New York, and East Liverpool, Ohio; Ceramic Transfer Co., by Alfred Munich, 47 West Thirty-fourth Street, New York, and East Liverpool, Ohio; and Translucent Window Sign Co., by Peter May, vice president, 118 West Twenty-third Street, New York. Very respectfully, TARIFF SERVICE BUREAU. Vice President. BRIEF IN RELATION TO DECALCOMANIAS, SCHEDULE M, PARAGRAPH 412, OF THE TARIFF ACT APPROVED AUGUST 5, 1909. The COMMITTEE ON WAYS AND MEANS, House of Representatives, Washington, D. C.: The undersigned respectfully request a reduction of the duty on decalcomanias, and in support thereof beg to submit the following statement: There are two distinct kinds of decalcomanias. First. Those used for lettering, trade-marks on furniture, machinery, etc., and window signs, commonly called "cold decalcomanias." Of this there is a total annual consumption of at least $750,000, of which the value of importations annually is about $60,000. Second. "Ceramic decalcomanias." These are used exclusively by the domestic potters for decorating their ware, and the consumption of this kind does not exceed annually $400,000, of which the yearly imports amount to about $140,000. There has been a disposition on the part of certain domestic lithographing interests to confuse the mind of the committee as regards the character and use of decalcomanias, and put them on the same plane as other lithographic goods. The committee should not be misled by such arguments, Decalcomanias stand absolutely alone and apart from any other lithographic productions, and any information submitted to the committee as to cost, production, consumption, or importation of lithographic products in general should not be applied in any sense to decalcomanias. We shall now discuss ceramic decalcomanias for pottery use. These are printed from lithographic stones, in ceramic colors, on a special, called "Duplex," paper, and used exclusively for decorating pottery, by the pottery manufacturers of Ohio, New Jersey, Pennsylvania, and Indiana. The first ceramic decalcomanias were manufactured in France, Germany, and England about 25 years ago and the importation into this country began in small quantities about 15 years ago. At that time the domestic pottery manufacturers sold two-thirds of their output in white ware. Comparatively little decorating was done, and that by more or less crude printing from copper plates or hand painting. Meanwhile the European potters were turning out decalcomania decorated ware, which instantly grew in demand in this country. The domestic potter immediately recognized the great advantages of decalcomania decoration, namely, lower cost of decoration and a greater variety of artistic designs-the creation of the best talents of Europe-to select from. The use of decalcomania decoration gave the domestic pottery product the appearance of imported china or earthen ware, and put the American manufacturer in position to compete, on an artistic basis, with imported crockery. The demand created by the imported decorations induced domestic manufacturers of lithographs to produce decalcomanias, but they confined themselves to copies and imitations of the European designs, and consequently were compelled to market their product at a much lower price. Prior to the present tariff act there was no eo nomine provision for decalcomanias as such. For a long period of years they had been uniformly assessed as lithographic PARAGRAPH 412-DECALCOMANIAS. prints. Such was their official classification under paragraph 400 of the Dingley Act, paying 20 cents per pound as lithographed prints not exceeding eight one-thousandths of 1 inch in thickness. Domestic interests importuned the Treasury Department to shift this classification to some paragraph carrying a higher rate of duty, and when this program failed they resorted to the Board of General Appraisers and the courts. The enlightening history of this persistent effort (during the continuance of which importers were compelled to pay illegal rates of duty under protest) is exposed and laid bare in the case of United States v. Borgfeldt, decided in October, 1911, by the United States Court of Customs Appeals (2 Ct. Cust. Appls., 197). An extract from this decision is attached to this brief without further comment. (Exhibit A.) When the present tariff act was framed the domestic interests asked for a duty of $2.50 per pound, which would have been equal to about 90 per cent ad valorem upon the majority of the sheets imported. The House bill contained the rate of 80 cents per pound. We thereupon offered to prove to the Finance Committee of the Senate that such a duty was neither necessary nor justified. In this we were ably seconded by the domestic potters, who appeared with us before the Senate Finance Committee, and candidly stated that they needed the great variety of artistic designs to be found only among the imported decalcomanias in order to compete with imported chinaware. Notwithstanding this showing, the tariff act of August 5, 1909, imposed the rate of 70 cents per pound and 15 per cent ad valorem on decalcomanias in ceramic colors, weighing not over 100 pounds per 1,000 sheets, and the rate of 22 cents per pound and 15 per cent ad valorem upon such decalcomanias weighing over 100 pounds per 1,000 sheets. The duty as finally arranged was equivalent to an average of 42 and 47 per cent on the majority of the sheets imported. It meant, moreover, as above stated, an increase of 100 per cent over the rate provided for them in the Dingley bill. THE NEW AND HIGHER RATE HAS OPERATED MOST OPPRESSIVELY AND HARSHLY. In the hearings before the Ways and Means Committee four years ago (T. H., 60th Cong., Schedule M, p. 6155) Mr. Otto Palm, who is both an importer and manufacturer, stated that the imports of decalcomanias of all kinds-i. e., decalcomanias for pottery and for other uses as window signs, letters, etc.-amounted to $400,000 and the consumption about $800,000, and the figures given by the domestic interests (Mr. Meyercord) were even larger, and Mr. Meyercord even then admitted (T. H., Schedule M, p. 6148) that he had almost a monopoly of the market and was not at a disadvantage. In decalcomanias other than ceramic, as metnioned above, the domestic manufacturers do 95 per cent of the business, as the official figures show that only $60,000 worth were imported from June 30, 1911, to June 30, 1912, and they are now doing one-half of the business in ceramic decalcomanias. The official statistics prior to August 5, 1909, do not show separately the imports of ceramic decalcomanias, only the whole imports of lithographs, but we, the undersigned, the largest importers of this line, know from our own books that the imports were never less than $250,000, and they fell off (according to the official figures compiled since 1909) to $140,000. In other words, the imports have fallen off at least 40 per cent, relatively an enormous shrinkage. The domestic decalcomania factories did not gain anything by this procedure. Their output has hardly increased, and the potters have been compelled to use gold stencils or other means of decorating, with a consequent loss, as they are deprived of cheap decalcomania sheets to decorate the cheaper lines which their trade demands. We operate a small factory in Trenton, N. J., where we print some varieties of decalcomanias, and we have therefore knowledge of the cost of production here as well as abroad. With all this in mind, we respectfully insist that, with the ceramic decalcomanias, it is not the difference in the price, but the artistic value of the designs which the domestic pottery industry must have, and which must be given due consideration. We claim-and we court the fullest investigation upon this point-that we are in fact an indispensable part of the domestic pottery industry, since we create their decorations, and we are considered as such by the leading manufacturers. We spend every year thousands of dollars for the production of artistic designs, and we are in a position to avail ourselves of the best ideas flowing from the combined efforts of the best talent of Europe, all of which by opening the market to the imported product is of benefit to domestic potters. PARAGRAPH 412-DECALCOMANIAS. Furthermore, we have no protection whatever under the United States copyrights laws, and in the years past the domestic manufacturers have consistently and persistently copied and offered for sale to the potters designs brought over by importers at a reduction in price from 10 to 40 per cent below that which the importers must receive after paying the present duty. During the past year the importers submitted to the potters probably 250 new designs, and it is very doubtful whether in the same period the domestic decalcomania manufacturers brought out more than 10 designs owing to their inability to create them. It has been stated to the committee that the product of the lithographic industry is a luxury. It can easily be seen that ceramic decalcomanias are not a luxury, but a most important necessity. In a brief submitted to the Committee on Ways and Means by Mr. W. E. Wells on behalf of the American potters there appears the following statement by Mr. William Burgess: "The difference in cost of decorating is becoming more and more important, because of the fact that from 75 to 80 per cent of the output of the American factory is now decorated." (P. 373, Hearings on Earths, Earthenware, and Glassware, Jan. 8, 1913.) When it is considered that 80 per cent of American and 90 per cent of imported chinaware is decorated, and that the American potter can not compete with the imported decorated chinaware, without having available for his use at reasonable prices the same decoration as the manufacturers abroad, it is evident that decalcomania decoration for chinaware is not a luxury, but a necessity. We submit that the change in duty from 20 cents per pound in the Dingley bill to the high rates of the tariff act of August 5, 1909, has resulted: First. In a reduced consumption of decalcomanias from imports of $250,000 to $140,000, while the domestic production has not increased at all. Second. In a disadvantage to the domestic potters, and ultimately the consumer, because the increase in price on a diminished supply has made it impracticable for the domestic potter to use this particular class of artistic decoration to the same extent as under the 20-cent rate, and therefore he has been less able to compete with imported china and crockery ware. Third. The present law has not given employment to more people. Fourth. The new and higher rates on decalcomanias has produced no greater revenue than under the lower rare of 20 cents per pound. We respectfully urge that the old rate of 20 cents per pound for decalcomanias in ceramic colors be restored, and by doing so produce the following results: First. Decalcomania, an article of necessity, would be placed on a competitive basis. Second. By such competition there would be a benefit to the manufacturer of pottery and ultimately the consumer. Third. By increasing the importations there would be an increase in the revenue to the Government. We will now discuss decalcomanias other than ceramic. As already indicated in the opening paragraph of this brief, in addition to ceramic decalcomanias there is to be considered still another product known to the trade as cold decalcomanias. Cold decalcomanias are printed in vegetable colors, and are used as trade-marks on typewriters, sewing machines, agricultural implements, and pianos, and for window signs, and generally for decorative purposes. In some instances such decorations must have a metal backing to bring out the figures, which otherwise would be indistinct upon the dark background. The existing tariff law thus distinguishes between these two varieties: "Decalcomanias in ceramic colors, weighing not over one hundred pounds per thousand sheets on the basis of twenty by thirty inches in dimensions, seventy cents per pound and fifteen per centum ad valorem; weighing over one hundred pounds per thousand sheets on the basis of twenty by thirty inches in dimensions, twenty-two cents per pound and fifteen per centum ad valorem; if backed with metal leaf, sixtyfive cents per pound; all other decalcomanias, except toy decalcomanias, forty cents per pound.' Under the official construction adopted by the customs authorities cold decalcomanias have been assessed at 65 cents per pound and at 40 cents per pound, according as they were or were not backed with metal leaf. We submit that an investigation of the cold decalcomania market conditions prevailing under the act of 1897 demonstrates conclusively the existence of healthy com PARAGRAPH 412-DECALCOMANIAS. petitive conditions at that time, and the entire absence of all reason to increase the duty on the plea of needed protection to the American industry. During the lifetime of the Dingley law the lithographic rate imposed upon our goods was 20 cents per pound, the rate provided under paragraph 400 of the act of 1897 for lithographic prints not exceeding eight-one-thousandths of one inch in thickness, and this was the classification upheld by the Federal courts. With this rate of duty-20 cents per pound-American manufacturers had every incentive to build factories, and they found no difficulty whatever in appropriating even then the lion's share of the cold decalcomania trade. They underbid the importers at all times, and the limited sale of the imported goods was based chiefly on superior quality and design. In a word, American manufacturers gave every evidence of prosperity. It should be said that the bulk of this domestic trade is in large lots, and in this respect American manufacturers have had an advantage which amounts to monopoly. The trade in the imported decalcomanias, especially under present conditions, is chiefly limited to orders for small lots. Official statistics showing the volume of importation of cold decalcomanias under the Dingley law are not available, because such goods were classified under the head of lithographic prints generally. In statements by manufacturers of this line, made to the Committee on Ways and Means in 1908, it was shown that the annual consumption of decalcomanias in this country was then about $800,000 in value, and that the annual importation amounted to approximately $300,000. Official statistics do show, however, that since August 5, 1909, under the existing law, the importation of cold decalcomanias has scarcely averaged in value $62,000 per year for the past three years. In other words, under the prevailing high and almost prohibitive rate, importations have so dwindled as to be relatively petty and insignificant. It is obvious then that only by materially reducing the present rate can competition in this line be restored and the American consumer exercise his choice of purchase upon a scale of prices based upon live competitive conditions. Briefly stated, we ask this honorable committee at least not to impose rates in excess of the Dingley law rate, under which our domestic competitors were not injured as the factories erected and maintained under that law conclusively show. There is every probability that a return to this rate would, moreover, produce additional revenue to the Government by reason of the increased volume of importations. The distinction existing in the present law between decalcomanias with metal leaf backing and those without should be eliminated. It is, of course, apparent that the metal leaf backing substantially increases the weight, thereby enhancing considerably the amount of duty. By way of summary, then, in view of the fact that importations have dwindled, as shown above; that the American manufacturers did thrive under the old rate; that a greater revenue must result from a return to that rate; and finally that the consumer in the end will be the beneficiary, we feel that we have made out a case which amply justifies us in requesting your committee to wipe out the present decalcomania duty, which is almost prohibitive, and to restore the 20 cents per pound rate with no discrimination as to metal backing. Finally, we wish to emphasize that we are not asking to have the duty removed. We are quite content to contribute to the revenue of the Government. We are asking, however, for what we have not had under the present law a fair chance to exist under normal competitive conditions. [Extract from decision in case of United States v. Borgfeldt.] Decided in October, 1911, by the United States Court of Customs Appeals (2 Ct. Customs Appeals, 197). If we had any doubt as to whether the decalcomanias under discussion are properly dutiable as lithographic prints, that doubt would be dispelled by what seems to have been a very long-continued departmental practice. The tariff provision for lithographic prints appeared for the first time in the tariff act of 1890. From the date of the passage of that act until the year 1907, a period of 17 years, decalcomanias were assessed for duty as lithographic prints. Their classification as such prints seems to have been SCHEDULE M. PARAGRAPH 412-DECALCOMANIAS. questioned for the first time about the year 1903 by the firm of Wakem & McLaughlin, of Chicago. This firm, representing Meyercord & Co., imported certain decalcomanias, which were classified by the collector as lithographic prints and accordingly assessed for duty of 20 cents per pound under paragraph 400 of the tariff act of 1897. The importers, frankly admitting that they represented domestic manufacturers of decalcomanias and desired a higher rate of duty, protested that the goods were labels printed in whole or in part of metal leaf and therefore dutiable at 50 cents a pound. The Board of General Appraisers overruled the protest, but its decision was subsequently reversed by the Circuit Court for the Northern District of Illinois, Kohlsaat, judge, no opposition being presented by the Government. The decision of the circuit court, however, was not followed by the Treasury Department, which, after taking the opinion of the Attorney General, announced that it was not incumbent upon the department to accept the ruling of the court and instructed customs officers to continue to impose the rate of 20 cents per pound on such merchandise as lithographic prints. (T. D. 25848.) The practice of classifying decalcomanias as lithographic prints was not again disputed until the year 1907. In that year Hempstead & Sons, representing, it seems, the same Meyercord Co., imported decalcomanias at Philadelphia, which were returned by the local appraiser as "surface-coated paper, printed," and assessed for duty at the rate of 3 cents per pound and 20 per cent ad valorem under the provisions of paragraph 398. The importers claimed that the merchandise was properly dutiable at 20 cents per pound as lithographic prints under the provisions of paragraph 400. On the hearing before the board the importers offered no evidence or testimony to sustain their contention or to support their protest. Special counsel, representing the Meyercord It was Co., appeared, however, at the hearing and contended that neither the rate of duty assessed by the collector nor the rate claimed by the importers was correct. argued that mineral colors were used in printing the articles and that they should be assessed at the rate of 45 per cent ad valorem as articles in chief value of metal under the provisions of paragraph 193. The board declared the claim of special counsel to be without merit, and deciding that the decalcomanias were lithographic prints, susFrom this decision an appeal was taken to the United States tained the protest. Circuit Court, Eastern District of Pennsylvania, and in February, 1908, the court, after taking evidence in what was really an ex parte proceeding, found that the decalcomanias were surface-coated paper wholly or partly covered with metal, dutiable under paragraph 398, and a distinct article of commerce different for lithographic prints and printed matter both in manufacture and use. A reading of the decision in that case in the light of the very complete record in this case leads us to the conclusion that the learned district judge was deprived of the advantage of a bona fide contest and that his findings of fact were based on a one-sided presentation of issues involved. We can not, therefore, give to his decision the weight which it certainly would have been entitled to receive had there been a genuine litigation of the matter. For the same reason that decision can not be considered as neutralizing the legal effect of the long-continued, uninterrupted, and well-established departmental practice which had theretofore existed. BRIEF OF NEUMANN & HADLEY, NEW YORK, N. Y. The COMMITTEE ON WAYS AND MEANS, Washington, D. C. GENTLEMEN: As dealers in surface-coated paper and making a specialty of decalcomania paper, we desire to confirm that the statements made by Mr. George Meyercord, on behalf of the National Association of Employing Lithographers, are absolutely correct. On pages 2222 and 2223 Mr. Meyercord presents the situation as it exists with regard to decalcomania paper. The decalcomania paper-for ceramic printingis a patented article abroad, and we know for a fact that the foreign makers would not consider for a moment the establishment of a plant in America for the manuWe endeavored to induce the manufacturers (whom we now facture of this paper. represent) to make this paper in America, but they refused to consider the establishment of a plant in America for the manufacture of this paper, and as the duty on the size sheets the American manufacturer use is equivalent to almost a cent a sheet, and as this is a direct charge to the American decalcomania manufacturers to such an extent that it wipes out one-third of the protection they enjoy, and as the duties on color, which is a large item in their manufacture, is one that practically wipes out the rest of the protection, it practically, to our certain knowledge, puts this labor almost on the free list. |