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contribution, there is revealed a more severe reflection of his intentional incorrectness than any that I could make. This manufacture of false evidence to be used against an innocent person in holding him up to the medical profession of the United States as an object of ignominy and contempt and to discredit the manufacturers of medicines possessing unsurpassed curative virtues and of known composition may be right in the minds of those $100,000,000 corporations of Germany but not in the interest of the innocent sick.

Detailed replies to those seeking the destruction of competition in medicines have been prepared in pamphlet form, much of which is contained in my monograph on How Special Interests Patented Control of Opportunity with the Delivery of Noble Sentiments for the Welfare of the Afflicted.

STATEMENT OF FRANCIS E. HAMILTON, ESQ., REPRESENTING THE HEYDEN CHEMICAL WORKS, OF NEW YORK.

The CHAIRMAN. We will now hear Mr. F. E. Hamilton. Mr. HAMILTON. Mr. Chairman and gentlemen, I wish to be heard through my client, the president of the Heyden Chemical Works, who knows a great deal more about the subject than I do; and I call the attention of the committee to the fact that I am a lawyer making such an admission. The subject to be discussed is salicylic acid, which I believe, if not at the present moment of personal interest to every member of the committee, may at some time become of some interest to every member, because it is the most universal remedy for rheumatism I know of.

The CHAIRMAN. The committee will now hear Mr. George Simon.

STATEMENT OF GEORGE SIMON, OF GARFIELD, N. J., PRESIDENT OF THE HEYDEN CHEMICAL WORKS, OF NEW YORK.

Mr. SIMON. Gentlemen, this bill which passed the House of Representative last summer affects our company in about 50 different preparations. Some of our raw materials have been made subject to a duty, and all of our finished products have been reduced in duty. I will confine myself only to salicylic acid, not because it is in quantity or in value the most important of our products, but because it is a basic product which is used in the manufacture of fine chemicals in various ways, and it is very important that the source of supply of this product should not become wholly foreign.

In a brief which I have already submitted, and which I will not read again unless I am asked to, I have tried to prove that a duty of 2 cents per pound, as this bill proposes, would put the American manufacturers and the American consumers entirely at the mercy of a foreign trust called the "Salicylic Acid Syndicate." The Dingley tariff put a duty of 10 cents per pound on salicylic acid; the PayneAldrich bill reduced this to 5 cents per pound. Now, a further cut of 2 cents per pound would be disastrous. The amount of money which we have invested in our factory alone, in the manufacture of salicylic acid, in buildings and machinery, amounts to a little more than $190,000. Our pay roll is $28,000 per year. Those are comparatively small figures, but the total quantity of salicylic acid which

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would be imported here if the manufacture in the United States should entirely cease would not exceed, probably, 500,000 pounds, and with a duty of 24 cents per pound this would make a revenue of $12,500 per year. The question may be asked, Is it worth while to destroy this industry, which, as I have stated, is important, and to deprive a considerable number of workmen who are employed in the manufacture of this product of their living, for the sake of getting a revenue of $12,500?

But I understand that these are minor questions, that this is going to be a tariff for the consumer. What would be the result as far as the consumer is concerned? We would have to stop making the salicylic acid here, and then the consumer would be dictated to as to his price by the European syndicate. He would be forced to buy from a combination which, under the laws of our country, would be illegal. I do not believe that it has been intended to bring about such conditions, and in trying to find the reason for it, I notice that there are certain conditions which must have misled the framers of this bill. The tariff rates in Schedule A have been reduced in this bill from an average of 25 per cent ad valorem to 16 per cent ad valorem. On salicylic acid the duty has already been 19 per cent ad valorem, but the new bill, No. 2182, reduces it to 24 per cent, or an equivalent of 9 per cent ad valorem.

The CHAIRMAN. I think you are mistaken about that.

Mr. SIMON. I will explain that in one minute. That is just the point I want to make clear to you.

Mr. LONGWORTH. What paragraph is that?

Mr. SIMON. Salicylic acid, Schedule A, paragraph 1, I think.

The value given in the import list which you have before you does not represent the correct European value for pure salicylic acid, and consequently the duty of 5 cents per pound does not equal the ad valorem rate of 31 per cent, as you have it in these lists, but equals only 19 per cent.

The CHAIRMAN. Let me state there, of course you understand that this equivalent ad valorem rate of 31.04 per cent is the rate that is estimated by the Treasury Department; those are not our figures.

Mr. SIMON. Yes. We wish to state that the salicylic acid which has been imported, and on which this figure has been calculated, has not been commercial salicylic acid; it has been crude salicylic acid, a product from which the commercial salicylic acid is manufactured, and the value of this crude salicylic acid is away below the value of the regular salicylic acid. Of course, we do not manufacture it from crude salicylic acid. Certain quantities of that crude product have been imported at a very low value, but the actual value all over Europe, in every country except the United States, is 26 cents a pound. Anybody who sells in Europe at 1 cent below this figure will be subject to a heavy fine.

Mr. HILL. Why?

Mr. SIMON. Because it is a syndicate. It is a salicylic syndicate, or trust.

Mr. KITCHIN. In fact, all these concerns in Europe, or across the waters, which come in competition on this chemical schedule are in syndicates or monopolies, are they not?

Mr. SIMON. I know of this one.

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Mr. KITCHIN. I know all I have heard of to-day have been in syndicates.

Mr. SIMON. I do not know about the others, but I know about this. Mr. HARRISON. What do you suppose is the American consumption of salicylic acid?

Mr. ŠIMON. All that could be sold here would probably not exceed 500,000 pounds. I have shown that in detail in the brief which I have submitted.

Mr. HARRISON. And about 30,000 pounds are the imports now?

Mr. SIMON. I believe they have been considerably more in 1912, because the trust over there has made great efforts to invade our market. I will read a few words from our brief, which will be of interest in connection with it:

Salicylic acid is manufactured on a large scale in the United States since about 1893 to 1895. Prior to that time practically all salicylic acid consumed here was supplied by the German manufacturers, who were then, the same as they are to-day, combined to control the prices all over the world. The price was $1.25 per pound when the first salicylic-acid factory was erected in St. Louis. The American manufacturers cut the price far below the European prices and forced the agents of the trust to reduce their prices in the United States to 56 cents per pound for quantities of more than 100 pounds.

Under the severe competition which followed, the price of salicylic acid in this country went gradually down to about 30 cents per pound and less in wholesale quantities. About 10 years ago there existed five manufacturers of salicylic acid in the United States, three of which have since failed.

The American manufacturers are to-day the only opponents of the European trust. All other countries in the world are controlled by this trust and uniform prices are fixed in every country, except the United States, which is left open as a dumping ground for any surplus that may exist. The prices at which the European manufacturers ship their salicylic acid into this country are much lower than those at which they sell in their home markets.

Mr. KITCHIN. How much did foreign countries dump on us of the salicylic acid last year?

Mr. SIMON. I estimated it at 50,000 pounds.

Mr. KITCHIN. Less than $6,000 worth, was it not?

Mr. SIMON. Yes.

Mr. KITCHIN. Is $6,000 worth going to destroy you folks? Mr. SIMON. Yes; and I will tell you why. This was a 5 cents per pound duty. I did not base my remarks on the present duty; I based them on the duty of 2 cents per pound, which will be in effect under this, and I have submitted here a statement to you, a calculation, showing why we will be at the mercy of the Europeans if this duty is reduced, because our cost of manufacture is 2 cents per pound more than in Germany.

Mr. KITCHIN. In 1909, when the tariff was up for discussion, you salicylic acid gentlemen appeared here, did you not?

Mr. SIMON. No; we did not.

Mr. KITCHIN. Did you not protest against a reduction of 50 per cent, from 10 cents a pound down to 5?

Mr. SIMON. In 1909 we did not appear before this committee.

Mr. KITCHIN. The Dingley Act was 10 cents a pound, and the Payne Act reduced it to 5 cents.

Mr. SIMON. The manufacturers who protested at that time, when the Dingley Act was made, have gone out of business. We have manufactured since 1900.

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Mr. KITCHIN. I say, in 1909, when it was reduced from 10 to 5 cents a pound, did you people not think it would ruin you?

Mr. SIMON. I did not appear here then.

Mr. KITCHIN. You did not find out when they reduced it?

Mr. SIMON. Oh, yes, we found it out.

Mr. KITCHIN. It did not hurt you, did it?

The

Mr. SIMON. I do not say that a duty of 5 cents will hurt us. duty of 5 cents is just sufficient to equal the difference, as I have tried to figure out here.

Mr. KITCHIN. How much of the product of the salicylic acid for 1912 was manufactured; what was the total amount of manufacture? Mr. SIMON. About $150,000.

Mr. KITCHIN. So this little six thousand that came in did not bother you much, did it?

Mr. SIMON. It did not bother us, because it was not so much; but it will be a great deal more under the new bill.

Mr. KITCHIN. A reduction from 10 cents to 5 cents, in 1909, did not seem to hurt you gentlemen, did it?

Mr. SIMON. It did not. Our price was already very low. The competition in this country prevented us from adding the duty of 10 cents to our price.

Mr. KITCHIN. You were selling our consumers here at a low price, because you got competition among American producers?

Mr. SIMON. Certainly.

Mr. KITCHIN. Our consumers were getting it about as cheaply as any other consumers in the world, were they not?

Mr. SIMON. They were.

Mr. HARRISON. What is the price of salicylic acid in this country? Mr. SIMON. There are different qualities. There is the pharmaceutical, which is worth about 30 cents a pound. On the average, we do not realize more than 25 cents per pound.

The CHAIRMAN. Is that all you desire to say?

Mr. HILL. Just one moment. Salicylic acid is made from oil of wintergreen as well as from coal-tar products?

Mr. SIMON. Yes.

Mr. HILL. As a matter of fact, this last chemical bill cut the duty on salicylic acid in two and puts a duty of 10 to 20 per cent on the raw material.

Mr. SIMON. Up to the present time carbolic acid has been the chief raw material for salicylic acid, but the price has become so high it is not to-day considered the raw material. Our competitors in Germany have in recent years installed plants to produce salicylic acid by synthetic process, starting from benzol, and this is to-day to be considered the most important raw material.

The natural carbolic acid has up to last year been used in our factory as the chief raw material for the manufacture of salicylic acid. The price of this product, however, has become so high that the German salicylic acid manufacturers have installed large plants to make their carbolic acid synthetically from benzol. The product which they obtain by this process is not only considerably cheaper than the natural carbolic acid at its present price, but also considerably purer. We obtain from 5 to 6 per cent higher yields by

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employing the carbolic acid derived from benzol, and are therefore now buying this product from our competitors in Germany, to whom we have to pay a profit of at least 15 to 20 per cent.

We have worked out a process which will enable us within a short time to start from benzol in our manufacture of salicylic acid, if the rate of duty of this product will enable us to continue to make it here on a competitive basis.

Benzol is a product of the United States. We do not object to a duty of 5 per cent on this product, if it is deemed wise to impose it, but we respectfully request that this duty be also considered in fixing the duty on salicylic acid, which is a so-called fine chemical, requiring a very large amount of labor. The other raw materials, of which salicylic acid is made are also subject to duty or produced here under conditions which make the price considerably higher than in Europe.

To make 100 pounds salicylic acid we require: 75 pounds synthetic carbolic acid made from benzol (proposed ad valorem duty 5 per cent); 40 pounds caustic soda (proposed duty, cent per pound equals 10 per cent ad valorem); 50 pounds carbonic acid (proposed ad valorem duty 15 per cent); 75 pounds sulphuric acid, and 2 pounds muriatic acid (free, but price here 50 per cent higher than in Germany).

I do not wish to appear as opposing the duties on these materials, if it is deemed wise to have them for the sake of revenue or for other reasons, but I respectfully submit that, in view of the resulting higher cost of our raw materials for salicylic acid and the higher cost of labor and machinery, with resulting higher cost of tear and wear, a duty of 2 cents per pound on salicylic acid is inadequate.

This rate of 2 cents per pound as proposed in H. R. 20182 corresponds to an ad valorem rate of 9 per cent, figured on the lowest selling price for pure salicylic acid anywhere in Europe, which is 26 cents per pound. The present duty on salicylic acid is 5 cents per pound, or equal to 19 per cent, which, as I have shown in the statement printed, is just sufficient to put the American manufacturers of salicylic acid on a competitive basis with their European opponents.

Mr. HILL. Taking the coal-tar products by and large, and adding from 10 to 20 per cent duty on them, and cutting your products, as an example, can you make salicylic acid at a reduction of duty of 50 per cent and an addition of duty of 20 per cent on your raw material without cutting your labor cost?

Mr. SIMON. No; we would not cut our labor cost; I think we would have to stop.

Mr. HILL. That would cut it, would it not? It would cut it out entirely?

Mr. SIMON. Yes.

Mr. HILL. Then you say it is impossible for you to make salicylic acid under this schedule as proposed in the chemical bill passed at the last session of Congress?

Mr. SIMON. I Say it just depends on the price at which the Europeans ship it over here.

Mr. HILL. Could you have made it during the last year under this schedule, taking the prices as they are now?