PARAGRAPH 15-COAL-TAR DYES. on the other side. That is all we ask for. Even then, we would not realize that difference. Mr. PAYNE. Some of these gentlemen seem to be laboring under the delusion that the only difference in cost is the difference in cost of labor. In the brief you presented four years ago, you presented what was called Schedule D, in which you set out in detail the difference in cost here and in Germany, in labor and everything else. Mr. SCHOELLKOPF. Yes. Mr. PAYNE. Including capital, interest on capital, depreciation, taxes, insurance, and every other element that goes into it, as well as the difference in cost of material. Then you make this statement: By referring to Table D, it appears that taking the cost of colors in Germany at 100 per cent, the same colors cost to produce in America, under the present tariff, 144 1 per cent, and in case all coal-tar preparations should be admitted free the cost would still be over 134.4 per cent. That our figures are correct is positively proven by two highly significant facts: First. These same colors are now being imported from Germany and sold in this market for less than it costs us to produce them, even omitting charges for depreciation and interest on investments. That included, of course, the duty? Mr. SCHOELLKOPF. Yes, sir. Mr. PAYNE. That item included the duty? Mr. PAYNE. Is that fact true to-day? Mr. SCHOELLKOPF. It is. Mr. PAYNE (reading): Second. By the fact that German manufacturers do not manufacture in the United States, because, as people high in authority state openly, they can manufacture the colors in Germany and lay them down in the United States, with duty of 30 per cent and manufacturer's profit added, at a lower price than they could manufacture the same colors in America. Mr. SCHOELLKOPF. That is so. Mr. PAYNE. Is that true to-day? Mr. SCHOELLKOPF. Absolutely. Mr. PAYNE. So that the difference is not simply the element of labor; and when these gentlemen simply say the percentage is equal to that, they do not grasp the question. That is all. Mr. KITCHIN. But in spite of the fact that in 1909 and 1897 Germany was making this stuff, shipping it here, paying the tariff, and selling it cheaper than you people could produce it, the gentlemen on the other side did not increase the tariff at all, but allowed it to remain just the same. Mr. SCHOELLKOPF. You did increase it. It was increased in the House 35 per cent. Mr. KITCHIN. Thirty per cent; they are paying that. Mr. SCHOELLKOPF. The Payne bill was 35 per cent, and it was reduced in the Senate, but it also put raw materials on the free list. Mr. KITCHIN. I am talking about the act as it passed, because it could not have passed unless my Brother Payne had consented to it, you know. So you had the same tariff in 1897 and the same tariff in 1909. And you had a losing business just because they were bringing.it here-paying the tariff, and selling it to our people cheaper than you could produce it—and you have been losing ever since. PARAGRAPH 15-COAL-TAR DYES. Mr. SCHOELLKOPF. Oh, no; I am not saying that. Mr. KITCHIN. In the hope that somebody would come along and raise it for you? Mr. SCHOELLKOPF. I am not saying that. Mr. KITCHIN. I know you did not intend to say it, but he made you say it. Mr. SCHOELLKOPF. I am saying that we are not making 5 per cent on our investment, not taking anything off for depreciation. Mr. KITCHIN. I know you did not mean to say it, but Mr. Payne got you to say it. Mr. SCHOELLKOPF. It amounts to the same thing. We are really losing money, because if we take off 10 per cent for depreciation, as we should do and as they do on the other side, then we would be money out of pocket. Mr. KITCHIN. So you are really complaining against the Dingley and Payne bills because you have been losing? Mr. SCHOELLKOPF. We are asking now Mr. KITCHIN. Because you have lost ever since? Mr. SCHOELLKOPF. We are willing to have you appoint a committee of your own members, if you wish, and we will pay all the expenses of coming up to Buffalo and looking over our business and seeing what we are doing. Then we will abide by your decision. Mr. KITCHIN. Of course, if you are losing money and have been losing money since the Dingley Act, from a manufacturer's or merchant's standpoint, you would be perfectly satisfied with the law remaining as it is, would you not? Mr. SCHOELLKOPF. No; we are not satisfied. Mr. KITCHIN. You would like to have it increased somewhat, would you? Mr. SCHOELLKOPF. I think we are entitled to an increase, but we are perfectly willing to leave it to you to settle after investigation. Now, another thing. Assuming that we had adequate protectionthat is, the difference between the foreign cost and the domestic cost-then we could not realize the entire difference in cost. If the difference is 35 per cent, we can not get 35 per cent more here for our goods than they get on the other side, because we must cut that price at least 10 per cent in order to get the bulk of trade. There are 20 importers here competing with us. We can only get our share of the trade unless we cut the price, because our good American consumers of aniline dyes, when we offer them American-made colors, the first question asked is, "What inducement can you offer?" We are obliged to offer an inducement. We must cut the price 10 per cent below the import price before we can get any more than a fair share of the business. Mr. KITCHIN. How much has the industry increased since 1909 ? Mr. SCHOELLKOPF. It has not increased, so far as we are concerned? Mr. KITCHIN. I mean the industry, the business. Mr. SCHOELLKOPF. I do not know that it has increased at all. I do not believe our sales are more now than they were then. Mr. KITCHIN. I know, but how about the industry in the United States? PARAGRAPH 15-COAL-TAR DYES. Mr. SCHOELLKOPF. Our volume of manufactures has increased, but the value has not increased. In other words, we are making less money to-day than before the enactment of the Payne bill. In other words, we are losing more through lower prices of our colors than we are saving on the duty on those raw materials. Mr. KITCHIN. How much more capital is invested to-day in your industry, not your private business, but in the industry in the United States, than there was in 1909 ? Mr. SCHOELLKOPF. I can not speak for other manufacturers. Mr. SCHOELLKOPF. No, sir; oh, no. Mr. KITCHIN. It has not? Mr. SCHOELLKOPF. Oh, no. I doubt whether it has increased at all. Our industry has not increased 10 per cent. Mr. KITCHIN. It has been one of the industries that has not prospered under the Dingley and Payne Acts? Mr. SHACKLEFORD. Is yours an industry that could profitably be carried on in this country without some bonus in the way of a tariff? Mr. SCHOELLKOPF. I do not look upon it as a bonus. All we are asking for is an equalization of cost. We can not pay our men $2 where they pay their men 90 cents, and produce these colors at the same price. Mr. SHACKLEFORD. I live out in Missouri, in the central part of the country, and in the hot-houses we grow lemons and figs. It is not profitable unless we can shut out other markets, so as to give us some artificial stimulus, to enable us to successfully grow figs. What I mean is this: Is yours a business in and of itself profitable without it gets some favors extended to it by law? I speak of yours individually, by itself. I am not referring to the lemon and fig business especially, but this particular coal-tar dye business. Can it be successfully carried on in this country without some sort of stimulus being given to it in the way of a tax in its behalf? Mr. SCHOELLKOPF. We have not had any stimulus. Mr. SHACKLEFORD. You have not had it? Mr. SCHOELLKOPF. I will say we can not manufacture in this country under free trade and pay the same wages we are paying now. Mr. SHACKLEFORD. That in and of itself it is not a prosperous business in this country? Is that what you mean to say? Mr. SCHOELLKOPF. It can not be prosperous. Mr. SHACKLEFORD. And it can only be made prosperous by levying a tax on the people who consume it? Mr. SCHOELLKOPF. No. It can be made prosperous if the difference in cost is equalized. If you take the duty off of colors altogether, the ultimate consumer will not profit one iota. Mr. SHACKLEFORD. That is a question of argument. Mr. SCHOELLKOPF. That is so. Here is a dye [indicating], if you reduce the duty 5 per cent on the dye (which is a heavy shade), it will make a difference of just two-twenty-fifths of a cent a yard, and it sells for $1.50 a yard. Mr. SHACKLEFORD. We differ as to who the ultimate consumer is. The ultimate consumer in your case is the manufacturer who buys your dyestuffs } PARAGRAPH 15-COAL-TAR DYES. Mr. SCHOELLKOPF. The ultimate consumer is you and all the rest of us who wear clothes. Mr. SHACKLEFORD. Then we look at it from a different standpoint. The ultimate consumer is the person to whom you sell. What I I want to know is, whether or not your business of manufacturing dyes in this country is in and of itself a prosperous business, in that it is profitable to engage American labor and capital-there being, as you know, a shortage in both capital and labor in this country. We have prosperous industries in this country that do not have either enough capital or enough labor. Do you think it is wise to turn capital and labor from prosperous enterprises and put them into unprofitable industries, which can exist only by levying a tax in their favor, upon the people who consume it? Mr. SCHOELLKOPF. If you carry that principle through absolutely, we would be satisfied. Mr. SHACKLEFORD. I am not talking about a principle. Mr. SCHOELLKOPF. If you take the duty off everything that needs protection, then we probably will be able to get labor at half price. We are one of many industries that need protection. Mr. SHACKLEFORD. What do you mean by that term, "need protection"? Mr. SCHOELLKOPF. We need enough protection, enough duty, to equalize the difference in cost here and abroad, thus giving us chance to compete. Mr. SHACKLEFORD. What you mean is that the industry will not sustain itself unless it is propped up by a tax upon the consumer, to make it go? Mr. SCHOELLKOPF. Put it that way if you like, although there is a great deal more to it than that. Mr. SHACKLEFORD. Now, is it profitable to invest American capital and labor in that industry, if there is a well-known shortage in capital and labor to carry on the industries of this country, which are profitable in and of themselves? You do not pay your labor now as much as we pay carpenters, bricklayers, stonemasons, and farm hands in our country. Mr. SCHOELLKOPF. Of course, the present time is exceptional anyway, because there are a great many times when labor is not as scarce as it is now, but the competition which it creates is surely for the benefit of all our citizens, who thereby get their goods cheaper. Mr. SHACKLEFORD. But is not your labor lower paid than the unprotected labor of this country?" Mr. SCHOELLKOPF. Possibly that is so. That is simply because we can not compete with the people on the other side and pay more wages. We pay as much as we can. But an unprotected industry, such as those you mention, those goods would not be imported anyway. You can not import a house or a road. Mr. SHACKLEFORD. There is such a shortage of those profitable enterprises that it would be better, would it not, for us to invest our capital and employ our labor in American industries that are profitable within themselves, rather than to put exorbitant taxes on the consumer in order to sustain Mr. SCHOELLKOPF (interposing). I do not think so. You might be able to get more labor for what you call the unprotected industries, PARAGRAPH 15-COAL-TAR DYES. but I think if you took the duty off all the industries that do need and now have protection you would have labor down pretty low and men walking the streets looking for work. I will say now that if we can be put on the same basis as the Germans, if we can get our labor at the same price as the Germans, we are perfectly willing to have no duty at all. If you want absolute free trade, we are satisfied. But under present conditions we must have that protection, because we have to pay double for our labor and have to pay a good deal more for other things that make up the cost of our goods. Anyway, we are not asking exorbitant taxes, because under the present tax, which we ask to be left as it is, over 80 per cent of the total consumption in the United States is imported. If we have absolute free trade and take the tariff off of everything and put it on coffee, tea, whisky, and do as the English do, then we will be perfectly satisfied. Then things will equalize themselves. Mr. SHACKLEFORD. One other question: Is the raw material of which these dyes are manufactured more available to other countries than to us? Mr. SCHOELLKOPF. I think it is more available here. Mr. SHACKLEFORD. It is more available here? Mr. SCHOELLKOPF. Yes, sir. Mr. SHACKLEFORD. But it must come from foreign sources? Mr. SCHOELLKOPF. Well, it comes from foreign sources, because it is not made here at the present time. Mr. SHACKLEFORD. Could it be made here? Mr. SCHOELLKOPF. It could be made here; certainly. Mr. LONGWORTH. You were speaking a moment ago about the price to the ultimate consumer if these raw materials were put on the free list. Do you think that if the German manufacturers were no longer forced to compete with American manufacturers it would lower the price to the American consumer? Mr. SCHOELLKOPF. I do not think it would. Mr. SCHOELLKOPF. I do not think so; no. Mr. HILL. Do you know whether the German Government itself is interested in these syndicates, or any of them, and which it has legalized, as it is interested in the phosphate syndicate? Mr. SCHOELLKOPF. Not to my knowledge in anilines. Mr. HILL. You have no reason to suppose they are? Mr. SCHOELLKOPF. No, sir. The CHAIRMAN. If the committee are through, I would like to have you complete your statement. Mr. SCHOELLKOPF. There is one aniline plant in this country that is controlled by a German plant, and that is the only plant that has not increased its line of colors since they obtained control. In other words, they find they can import the colors cheaper under the present rate than they can manufacture them here. The CHAIRMAN. What is the name of that concern? Mr. SCHOELLKOPF. The Hudson River Aniline Color Works, controlled by Farbenfabriken, of Elberfeld. They have increased their production of pharmaceutical products, but have not increased the |