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PARAGRAPH 15 COAL-TAR DYES.
equalize the difference in labor cost. That is merely a mathematical calculation.
Mr. KITCHIN. What I do not understand is his statement that he still would have about 10 per cent.
Mr. SCHOELL KOPF. Because the freight charges and the charges in bringing them through the customhouse will amount to 10 per cent of the cost of the raw materials.
Mr. KITCHIN. Do you mean to say it is 10 per cent on the raw mate rials you use--that the freight charges are 10 per cent?
Mr. SCHOELL KOPF. Exactly; we figure about a cent a pound.
Mr. SCHOELLKOPF. It does cost actually that much; it may be more on some and a little less on others.
Mr. KITCHiN. Do not the foreigners have to pay these freight charges too?
Mr. SCHOELLKOPF. If we get an article that costs 5 cents a pound the charges will be 20 per cent, and on a 10-cent article would be about 10 per cent.
Mr. Kitchen. Would not the foreigners who are competing with you have to pay that 10 per cent on the finished material too?
Mr. SCHOELL KOPF. But where they import a pound of color, we have to import two pounds of this raw material, and they pay the freight on the high-priced article where the percentage will probably be 2 or 3 per cent. The average price of our colors which we sold last year was 33 cents.
Mr. Kirchin. Would there be a higher freight rate on the finished articles ?
Mr. SCHOELLKOPF. Very little, if any.
Mr. Hill. The chairman has asked you what the difference in labor cost is, and you state 10 per cent, and that, according to your brief, is correct; that is, 10 per cent of the American cost, and he asks you the question whether 18 per cent would not cover it and more too. Is it not a fact, commonly overlooked, that the import duty is laid on the cost of the foreign product and not on the American product, and that therefore it would take 20 per cent to cover the difference in labor cost, if the difference was 10 per cent of the American cost, being about one-half as you stated ?
Mr. SCHOELLKOPF. Yes; I presume that would be so.
Mr. Hill. Of course, that is true, that the duty is laid on the foreign cost and not on the American cost. So that the duty to cover the difference in labor cost alone, according to your own showing here, would have to be more than 18.6 per cent, which you have said would be the difference under this new tariff. Now, I want to ask you another question on the general industry.
Mr. SHACKLEFORD. You do not wait to hear his answer to your other question.
Mr. Hill. I will wait. That is correct, is it not?
Mr. Hill. The difference is 10 per cent of the American cost of labor and that is twice as much as the foreign cost of labor ?
Mr. SCHOELLKOPF. Yes.
PARAGRAPH 15-COAL-TAR DYES.
Mr. Hill. Consequently, a compensating duty on a foreign product of half the American value would have to be twice 10 per cent to make up that difference. I think that is plain enough.
Mr. SHACKLEFORD. Not at all.
Mr. Hill. If I recollect rightly, you stated three years ago that the patents on these coal-tar dyes had largely expired, did you not?
Mr. SCHOELLKOPF. Yes.
Mr. Hill. Are there still a large number of patents in coal-tar dyes that are still held by the Germans ?
Mr. SCHOELLKOPF. There are quite a large number, but they are not as important as those that have expire
Mr. Hill. So that competition would not be complete, so far as the general range of coal-tar dyes is concerned, but only on those that are not covered by German patents held in this country?
Mr. SCHOELLKOPF. Yes; but at the same time if we could make the colors that are open to us to make that are not patented, and if we could make those and make them at a profit, we would be perfectly satisfied. That would be the bulk of the colors that are in use at the present time.
Mr. Hill. So far as the coal-tar dyes are concerned that are covered by patents, they are owned absolutely by a syndicate in Germany, are they not, so that it is a trust-controlled product absolutely?
Mr. SCHOELLKOPF. That is true.
Mr. SCHOELLKOPF. Yes. There are two combinations over there, but they work together, as I understand.
Mr. Hill. I have a list of them here in the committee's report, a list of five concerns in Germany that were the owners of the patents on coal-tar dye products in the United States. Is not the effect of this legislation, 'if carried into effect, to give absolute control to a foreign trust, å syndicate authorized and legalized by the German Government, and to give them the benefit of the American trade rather than give the advantage to American manufacturers ?
Mr. SCHOELLKOPF. That is well known.
Mr. SHACKLEFORD. Other things being arranged by Congress, as you think they ought to be, the question of patents would not interfere with your successful manufacture of these articles ?
Mr. SCHOELLKOPF. No; I do not think so.
Mr. SHACKLEFORD. There are no patents that would interfere with your manufacturing as cheaply as other nations if you could get other matters arranged to your liking?
Mr. SCHOELLKOPF. There are some colors that we could not manufacture at the present time.
Mr. SHACKLEFORD. But you do not regard that as materially interfering?
PARAGRAPH 16–COAL-TAR DYES.
any of it?
Mr. SCHOELLKOPF. But the more important colors are open to competition.
Mr. HULL. The cost of machinery, tools, and so forth, constitute more than a third, in the neighborhood of a half, of the total cost of one of these plants, does it not?
Mr. SCHOELLKOPF. Yes; just about.
Mr. Hull. Do you know what effect the present rate on the machinery you use has on the prices ?
Mr. SCHOELLKOPF. In our statement we show that the interest on the investment was $61,800 for a certain sized plant, against $32,400 in Germany.
Mr. Hull. What I was getting at is, what is the present effect of the existing tariff on the prices of the machinery you use?
Mr. SCHOELLKOPF. I do not know that it would have very much effect, because the things that we use are largely cast iron and it is doubtful whether we could import that, pay the freight on the stuff, and get it out much cheaper, even if the present duty was lowered. Of course, it costs us quíte a little more here than it does on the other side, but it is doubtful in my mind whether it would help us very much if the duty was reduced on those goods.
Mr. Kitchin. If we keep the tariff like you want it on your products, you are willing to keep the tariff on machinery and others like they want it?
Mr. SCHOELLKOPF. We have not interested ourselves by any study along those lines; we have not looked into it for that feature; but I do not see how that would help us very much.
Mr. Kirchin. That is a sort of general understanding?
Mr. SCHOELLKOPF. A good deal of that machinery is made after our own plan, and we would never think of going to Germany or France and have the machinery made and wait probably three or four months for it, particularly if we could have it made here.
Mr. KITCHIN. In other words, your interests are not asking for any reduction in the tariff on machinery and such apparatus or anything of that kind ?
Mr. SCHOELLKOPF. We are not asking, at this hearing, for anything of that kind. We are simply asking that the rates on these products of our manufacture be let alone until some committee can satisfy itself as to what is needed.
Mr. KITCHIN. To be left alone, and if touched at all, to be increased a little ?
Mr. SCHOELLKOPF. We are not asking for that. We are simply asking the committee to look carefully and properly into the thing. We are willing to open our books, and if we can satisfy them we are entitled to more, then give us more; and if after they have looked into
PARAGRAPH 16COAL-TAR DYES.
the matter they do not think we should have it, or they think it should be lowered, let them put it down.
Mr. JAMES. In this brief that you have filed here you make the statement that the machinery here costs you more than the machinery costs your competitors in Germany?
Mr. SCHOELLKOPF. That is true.
Mr. JAMES. Is that caused by reason of the fact that you have a better class of machinery, or by reason of the tariff ?
Mr. SCHOELLKOPF. No; it is by reason of cheaper labor on the other side. Of course they can produce machinery on the other side cheaper than we can here.
Mr. JAMES. Then, there is a tariff on that machinery, or else you would buy it instead of American machinery, if you could buy it cheaper ?
Mr. SCHOELLKOPF. I doubt whether we could import it.
Mr. James. I say, if you could buy machinery manufactured in Germany cheaper than American machinery, you would buy it as a matter of economy?
Mr. SCHOELLKOPF. Probably so, as a matter of economy; but most of our machinery is in the nature of replacements, where we must be in touch with the foundry or the machine shop, right in our own town, so that if anything comes up where any slight change must be made, we can go right there and attend to it. I do not think we could do that with the special machinery required in our business if we bought it at long range.
Mr. JAMES. There is a tariff, then, on your own machinery, you say? Mr. SCHOELLKOPF. I presume there is.
Mr. JAMES. And for that reason it costs you more to run your busi- . ness ?
Mr. SCHOELLKOPF. It costs us more for our plant.
Mr. James. And you want this committee, in arranging the tariff, to allow you a duty that will equalize that charge which is made upon you by the tariff on the article you use?
Mr. SCHOELLKOPF. As I said before, I do not know whether that would make much difference, or whether there is any duty on the machinery or not.
Mr. JAMES. But you do state it in here as a fact-
Mr. James. And your reason in doing that was to call it to our attention.
Mr. KITCHIN. If we reduce the tariff on the articles that you buy you could stand a little reduction ?
Mr. SCHOELLKOPF. Reduce what article? On machinery?
Mr. KITCHIN. We import about $6,000,000; about what per cent comes from Germany?
Mr. SCHOELLKOPF. Of those intermediate products ?
PARAGRAPH 10-COAL-TAR DYES.
Mr. KITCHIN. Yes; the coal-tar dyes.
Mr. SCHOELLKOPF. I presume over 80 per cent of that comes from Germany.
Mr. KITCHIN. Where does the other 20 per cent come from?
Mr. SCHOELLKOPF. Quite a little comes from Switzerland and a little from England and France.
The CHAIRMAN. Is there anything further you wish to say?
Mr. SCHOELLKOPF. I would like to make a few remarks to show the difference between the 30 per cent duty away back in 1883 and now. Our colors in 1883 sold for about five times what they are selling for to-day, so that a color that sold for a dollar, with a 30 per cent duty, would mean a protection of 30 cents. If that same color were selling to-day for 20 cents our protection would be only 6 cents.
Mr. Hill. Has that been caused by American competition or by competition between foreign establishments ?
Mr. SCHOELLKOPF. Both by competition and by lowering the cost of the raw materials.
Mr. Kirchin. That high price was correspondingly high in foreign countries, too, at that time?
Mr. SCHOELLKOPF. That is true.
Mr. SCHOELLKOPF. What I am trying to get at is that we actually had a protection then of 30 cents a pound. Now, 30 cents a pound is a lot more than 6 cents a pound, because the other charges are about the same to-day, if not higher, than they were then, such as our labor, replacements, and so on.
Mr. KITCHIN. But one man produces three or four times more now, by improved machinery and methods, than he did then.
Mr. SCHOELLKOPF. That applies to the other side as well as to this side.
Mr. KITCHIN. I know that.
Mr. SCHOELLKOPF. Take our raw material, for instance. The bill puts 10 per cent on the raw material. That is 6 cents a pound. So that we have a net protection there of 24 cents. That is reduced now to about—60 per cent of 20 cents would amount to 12, and 10 per cent of that would be 1.2, so that we have a net protection now of only about 44 cents. That is entirely inadequate. This is further cut by the import charges on the present cheap raw material, which amount to another 10 per cent, which charges on the same article in 1880 amounted to only about 2 per cent. So that in those days we actually paid when importing the raw material carrying a 10 per cent import duty about, say, 12 per cent. Now we are paying about 20 per cent, because we pay 10 per cent duty and 10 per cent more for charges.
The CHAIRMAN. If we equalized the difference in cost, in labor cost and other costs, between you and your foreign competitors, would you be satisfied ?
Mr. SCHOELLKOPF. No; that does not make all the difference in cost.
The CHAIRMAN. I say, if we equalized the difference in labor cost and other costs, would you be satisfied ?
Mr. SCHOELLKOPF. Yes; we would be perfectly satisfied if you equalized the difference in cost of producing those goods here and