PARAGRAPH 462-ASBESTOS.

Mr. RHETT. About 40 per cent.

Mr. KITCHIN. And the other, the 60 per cent, is labor and overhead charges?

Mr. RHETT. Labor and overhead charges. I think the labor constitutes 40 per cent and the overhead charges 20 per cent. Of course, the overhead charges abroad are a little less than our overhead charges. That includes superintendence and sales and all that sort of thing. Mr. FORDNEY. During the time that the importations have increased, what has been the increase of the home production?

Mr. RHETT. One hundred per cent, while there has been an increase of 125 per cent, so that the competition has been very active. Mr. FORDNEY. The evidence, then, is that the law is sufficiently low now to let in competition?

Mr. RHETT. It is. It has let competition in to the extent of its increasing 125 per cent, and they are now selling 25 per cent of the goods.

Mr. RAINEY. But our figures show that the production was over $12,000,000?

Mr. RHETT. But a large amount of that is not in the fiber business at all. Ten millions of that is in the shingles and paper.

Mr. RAINEY. The note indicates that it is in the same industry. Mr. RHETT. As far as I can understand, the sale value to our industry would hardly be $2,000,000. The rest of it is in other things; I do not know what.

Mr. HAMMOND. I suppose this steam business refers to the wrappings about steam pipes?

Mr. RHETT. Yes; but that does not pass through the factory at all.

Mr. HAMMOND. It is a paper?

Mr. RHETT. It is a kind of paper. It is a mixture, but it is not spun. What we are asking for is protection on the spinning.

Mr. HAMMOND. It is not asbestos paper?

Mr. RHETT. No; it is only in yarn and in cloth that the labor element enters so largely.

Mr. RAINEY. Do you not make the paper in this country?

Mr. RHETT. Yes; but none of us do. We are only asking this for the asbestos textile industry or the mills which produce about $1,500,000 to $2,000,000 worth of that in 12 months.

Mr. RAINEY. You just want protection for whatever your mill produces, and let everything else take care of itself?

Mr. RHETT. No; we do not know anything about their business. The only business we are interested in is this textile business, of which we know the labor element constitutes so large a part that unless our labor goes down, it is impossible to compete.

Mr. KITCHIN. Is this asbestos which is imported here going into the manufacture of products such as you make?

Mr. RHETT. Not one-third of it, hardly one-fifth of it. The balance of it goes into a product which is like steam wrapping and asbestos covering and shingles. That is another very large industry.

Mr. FORDNEY. You say the difference in cost between the yarns and the cloth would be compensated by 3 per cent?

Mr. RHETT. Three cents. They tell me that 3 cents is the average of the difference in the cost of labor to turn the yarn into the cloth.

PARAGRAPH 462-ASBESTOS.

Mr. FORDNEY. As the present law reads 25 per cent, as I have it, and 40 per cent, where would that 3 cents bring the raw material? How near would that bring the raw material up to the finished product?

Mr. RHETT. I will give you an illustration of the difference in yarn and cloth. Take this illustration which I first gave to you, of 10 cents for material in yarn, 10 cents for labor, and 5 cents for cloth. Add 40 per cent to that on the yarn product, which is 10 cents for material, 5 cents for labor, and 3 cents overhead cost, and 40 per cent would be 7.2; adding the 7.2 to the 18 would give 25.2. In this country the yarn would cost 10 cents for the material, 10 cents for the labor, and 5 cents for the overhead charges, or 25 cents. you add 40 per cent to the foreign product, it will be 25.2 and our product will be 25 per cent even.

Mr. FORDNEY. Then suppose the duty on the raw material were raised to bring it up to a proper basis of difference between the cost of production of the yarn and your cost, what point would that be brought to?

Mr. RHETT. If you put a duty on the raw material and the man on the other side has no duty on it

Mr. FORDNEY (interposing). I am supposing now that in order to get a revenue for this Government-because you say there is none of that asbestos produced in this country

Mr. RHETT (interposing). Not a bit.

Mr. FORDNEY (continuing). It must be imported, and therefore, in order to get revenue, suppose we raise the duty on raw material; how near would we have to bring it to this 40 per cent to get the proper difference in the manufacture of the cloth out of the yarn? Mr. RHETT. If they put what duty on the raw material?

Mr. FORDNEY. If they raise it up and bring it up to a proper difference between the cost of the yarn and the cloth?

Mr. RHETT. You mean raise the duty on yarn?

Mr. FORDNEY. No; on the raw material. The duty on the raw material is 25 per cent, and on your finished product

Mr. RHETT (interposing). There is no duty on the raw material. Mr. FORDNEY. On yarn, I meant to say.

Mr. RHETT. The duty on yarn brought here is 25 per cent, and 40 per cent would equalize that within two-tenths of 1 cent. It would make the cost in this country 25 cents, and give them a cost here of 25.2 cents.

Mr. FORDNEY. Suppose they brought the yarn up to make a proper difference, they would have to bring it up to 38 per cent?

Mr. RHETT. That is right.

Mr. HARRISON. Your time has expired, Mr. Rhett.

Mr. HILL. Just a moment, please.

This is a very good illustration of the Payne tariff law. You started your factory when?

Mr. RHETT. Three years ago.

Mr. HILL. That is the year after the Payne tariff law was enacted. As a matter of fact, are you doing well? I am not going to ask what your profits are-I do not think that is a proper inquiry. But are you doing fairly well in the industry?

Mr. RHETT. We think we are beginning to do well.

PARAGRAPH 462-ASBESTOS.

Mr. FORDNEY. You think there is a chance of doing well under the 40 per cent duty?

I

Mr. RHETT. I think there is a chance of our doing well; yes. think there is a chance of increasing our business under the present. duty.

Mr. HILL. What was the particular reason why you did not start this industry before the Payne tariff bill was passed?

Mr. RHETT. Simply because we had not learned the industry. We had been studying several years, and buying and selling yarns and calculating, but we found we could get hold of the raw material and we thought it best to go right to the bottom and we created a trade and took the article

Mr. HILL (interposing). You had given no consideration to that before the passage of the Payne tariff law?

Mr. RHETT. I do not think the passage of that bill, Mr. Hill, entered into the consideration of these people. I think they had been studying the question before.

Mr. HILL. If you will look at the Payne tariff bill and the Dingley tariff law you will find the protection which is on now and is given to you now in the manufacture of the cloth was put on there in the Payne tariff bill.

Mr. RHETT. Yes.

Mr. HILL. Prior to that it was counted as manufactures of asbestos, which included the yarn and cloth.

Mr. RHETT. Yes; and they had 25 per cent.

Mr. HILL. But at the instance of somebody, and on just as complete a showing of the lack of protection at 25 per cent on the finished cloth as you are making now, that committee, of which I was one, cheerfully voted for this proposition and gave a protection to you reaching 40 per cent on your particular product of woven fabric, and then you started in the business.

Mr. RHETT. No, Mr. Hill, I must correct that, for this reason: The importations of woven fabric in this country are not large, and that is not the main business. That protection of 40 per cent was not altogether what carried us forward in this business. The 25 per cent of protection that we had before was sufficient to cause us to go in and learn the business. We simply thought there was an opportunity to manufacture, and we thought so, to our cost, for two years. We think we have learned enough now to make something out of it. Mr. PAYNE. What are you for at this minute, 25 per cent or 40 per cent?

Mr. RHETT. I simply think the 40 per cent tariff which exists now ought to be maintained, and that the yarn ought to be placed with the cloth, simply because it is the same thing or practically the same thing. If you think there ought to be a difference of 3 or 4 per cent I will agree there is that slight difference.

Mr. PAYNE. Still you just said you thought 25 per cent then was sufficient in 1909. I can not understand your Democratic doctrine. Mr. RHETT. I am glad the country did not agree with you.

Mr. PAYNE. I think you are getting mixed up about it a little now. Mr. HILL. You stated before that the law was satisfactory at 25 per cent ad valorem.

PARAGRAPH 462-ASBESTOS.

Mr. RHETT. You must get this straight. If you put that rate of tariff at 40 per cent to-day, you will increase the revenue to the country, because I do not believe it will stop importations one way or the other. I think from a revenue standpoint this Government will benefit by making the whole tariff 40 per cent.

Mr. PAYNE. You forget that we get revenue from the prosperity of the country, and the prosperity of business when the people have money to spend, and the greatest income of the Government has always been under a protective tariff, under which the people could do work and manufacture goods and pay wages, and the people had something to buy with and import.

Mr. RHETT. I am sorry I do not agree with your protective views. Mr. HARRISON. Mr. Rhett, I think the committee understands your position, and as we have about 100 more witnesses on the calendar, I hope you will not proceed further.

Mr. RHETT. Thank you, Mr. Chairman; I will suspend.
The brief of the General Asbestos & Rubber Co. follows:

Hon. WYATT AIKEN,

GENERAL ASBESTOS & RUBBER CO.,
Charleston, S. C., February 17, 1913.

House of Representatives, Washington, D. C.

DEAR SIR: We are taking the liberty of requesting you to kindly look carefully over the brief filed by the manufacturers of asbestos textiles; said brief was filed with the Ways and Means Committee and comes under heading of Schedule N. The hearing of said schedule was on January 29. We trust that after reading the brief, as well as the statements made by parties interested, that you will see the reasonableness of our claim. You will find this data under paragraph 462.

We are the only Southern manufacturers of this article, there being only about eight in the United States, but we are now having active competition from abroad and in several instances of recent date our prices have been underbid by foreign manufacturers. We need the 40 per cent ad valorem on asbestos yarns, as well as on the woven materials. Woven materials it is, of course, understood include everything in the textile line of this particular business, but yarns; and yarns being the first principle in textile manufacture, you can readily see the position we are in. We inclose a list of the names of the manufacturers, their location, money invested, and number of employees, who are engaged in this business.

We trust that you will get in touch with the members of the Ways and Means Committee in advance of their making up their recommendations for the next Congress. Thanking you in advance for your cooperation in behalf of these manufacturers, as well as ourselves, we are, GENERAL ASBESTOS & RUBBER CO., C. B. JENKINS, President.

Very truly, yours,

PARAGRAPH 462-ASBESTOS.

TESTIMONY OF C. HUBER, OF THE ASBESTOS FIBRE & SPINNING CO., NORTH WALES, PA.

The witness was duly sworn by the chairman.

The CHAIRMAN. Gentlemen, we have two more asbestos men following Mr. Huber, and if we do not progress faster than we have been this morning we will not get through with this list of witnesses at all. I hope the members of the committee will assist in confining the witnesses to 10 minutes each.

You may proceed, Mr. Huber.

Mr. HUBER. I simply came to ask this committee to place the duty on yarn the same as it is now on woven fabrics, for the simple reason that the cost of labor in this country is so much greater than the cost of labor abroad, and we can not compete unless we have the duty; we can not manufacture the goods and sell them in this country against the foreign manufacturer.

The cost of labor in producing a yarn out of asbestos is very different from any other manufacture of textile goods. It has to be worked very much slower, and consequently consumes very much more labor, and labor is the principal portion of the expense in the manufacturing of the yarn, as well as the woven fabric. Therefore, we would ask you to place the duty on both, and not have it 25 per cent on one and 40 per cent on the other.

Mr. HULL. A representative of your industry did not appear before the Ways and Means Committee when the bill was drafted?

Mr. HUBER. Yes, sir.

Mr. HULL. Did they ask for an increase of the rate on both the yarn and the cloth at that time?

Mr. HUBER. The increase was asked for; yes, sir. The same increase was asked for. Why it was not put on the same way I can not understand and can not tell you. We asked for an increase on the asbestos textile goods.

In the importation of this raw material I would wish to inform you that there are not 100 tons of asbestos produced in this country that can be used to manufacture textile goods. All the asbestos that has been found in this country is either used in paints, as powder, or in pipe covering, or in paper. I have never found but one mine that produced goods that were used or that we could use in spinning. I have seen them all. I have examined goods out of pretty nearly every mine in the country. The best I have found is out in Wyoming, but it was not worth one cent for spinning purposes.

Thank you, Mr. Chairman.

To the chairman and members of the Ways and Means Committee.

GENTLEMEN: Section 462 of the present tariff act of 1909 is as follows:

"Manufactures of amber, asbestos, bladders, catgut, or whip gut or worm gut, or wax, or of which these substances or any of them is the component material of chief value, not specially provided for in this section, twenty-five per centum ad valorem; woven fabrics composed wholly or in chief value of asbestos, forty per centum ad valorem."

The manufacture of asbestos is an industry which was begun in this country about 20 years ago. Prices then were considerably higher than they have ever been since, this reduction being brought about and maintained by active competition amongst domestic manufacturers and with foreign importers. The product is divided into two classes: Yarns and cloth.