the problem. The proposed bill which is embodied in the report known as H. R. 20182 contains many salutary changes in the existing law and offers many changes in present classifications which would undoubtedly prove beneficial.

The bill H. R. 20182, however, is far from perfect. The changes in classification are hardly fundamental, and the revision of rates is distinctly illogical in that the relation of raw material to finished product is persistently ignored, the relation of one product to another is apparently in many instances misunderstood, and there are many other errors which would undoubtedly be eradicated in the light of expert consideration. The report contains a glossary on Schedule A, marked "Appendix C." This document is, however, little more than its name indicates, a mere glossary or translation of technical chemical terms into laymen's English. The information contained in this document is but the a b c to a chemical education, and it is submitted without a suggestion of disrespect that the glossary is of practically no avail to the lay mind without the constant interpretation of the chemical expert.

In thus freely criticizing the bill and the accompanying report on Schedule A, our association does not wish to adopt the attitude of superior wisdom. On the contrary, it is with the greatest respect for the enormous task before your committee that we venture to suggest that no adequate revision can be had under the ordinary methods of procedure which have characterized revisions in times past.

Regarding the question of adjustment of rates as between raw materials and finished product, our association has made a careful analysis of H. R. 20182 as compared with the act of 1909. For the purpose of this analysis the so-called "caucus print," which is Appendix B of your report, has been used. The "caucus print" gives definite data and an estimate of revenue, etc., for a 12-months' period regarding approximately 300 specific articles contained in the 76 paragraphs of the duitable list. Of these 300 articles, 97, or approximately one-third, may be classified as raw materials, and the rest, or approximately two-thirds, may be classified as finished product.

Of the 97 different raw materials made dutiable under the proposed bill (H. R. 20182), 80 were entered free under the Payne act of 1909. Of the remaining 17 articles, the duty in almost every instance was increased from the rates under the existing law.

The "caucus print" further shows that the total revenue derived from Schedule A under the Payne act for 1911 amounted to $12,966,545, while the estimated revenue for a 12-months' period under H. R. 20182 amounts to $16,170,157, or an increase in revenue of nearly $3,500,000. This increased revenue, however, results entirely from the increase of rates on raw materials, the revenue from the above-mentioned raw materials under the act of 1909 amounting to $1,826,955, while the estimate for a 12-months' period for the same raw materials under H. R. 20182 amounts to $6,081,060, or an increase of approximately $4,000,000. At the same time, under the proposed bill, the rates of duty on finished products are very materially decreased with the estimated result that the revenue for a 12-months' period on finished products would amount to $10,089,097 as against $11,139,590 revenue under the act of 1909, or an estimated decrease

in revenue by virtue of the decrease in rates on finished products of more than $1,000,000.

Thus it is apparent that the estimated increase in revenue under H. R. 20182 comes entirely from a most radical increase in rates on raw materials, an increase so great that a loss in revenue on finished products of approximately $1,000,000, owing to a drastic decrease in the average rate from about 25 per cent ad valorem to about 16 per cent ad valorem, is not only offset but a net increase in revenue is estimated of nearly $3,500,000.

A complete analysis, showing a comparison of the Payne Act and H. R. 20182 with respect to changes in duties on raw materials and finished products, may be found in a brief of this association printed in the Hearings and Statements before the Committee on Finance, United States Senate, March 14 to 22, 1912, at pages 438-454.

This means a double hardship to the manufacturer. It not only removes his protection against the more favorable conditions of manufacture existing in foreign countries, but it renders those conditions. even more difficult, if not prohibitive, by taxing the basic materials which enter into the finished product.

It is hardly conceivable that this result in its entirety was intended as a matter of policy by your committee, for such a policy, if pursued for all schedules, would inevitably bring disaster to many industries with the consequent hardship to labor unemployed. The result, in a large number of instances at least, must have been brought about by a misconception of the basic character of many commodities-a misconception which will inevitably occur in the absence of a thoroughly expert investigation.

The American manufacturers are not only in competition with each other, but they are also in competition with the great German syndicates, combinations which under the laws of this country would undoubtedly be declared illegal and void. These large German combinations effectually control the market, regulate prices, and are able to dump surplus product into this country at prices against which our domestic manufacturers can not compete. The existence of the German syndicates is recognized in the report of your committee.

The question of the dumping of surplus product into this country by foreign manufacturers is a matter of most serious concern to the chemical industry. The Manufacturing Chemists' Association strongly recommends to your committee a thorough consideration of this important subject, and in this regard calls attention to section 6 of the Canadian customs tariff act of 1907, which provides as follows:

In the case of articles exported to Canada of a class or kind made or produced in Canada, if the export or actual selling price to an importer in Canada is less than the fair market value of the same article when sold for home consumption in the usual and ordinary course in the country whence exported to Canada at the time of its exportation to Canada, there shall, in addition to the duties otherwise established, be levied, collected, and paid on such article, on its importation into Canada, a special duty (or dumping duty) equal to the difference between the said selling price of the article for export and the said fair market value thereof for home consumption; and such special duty (or dumping duty) shall be levied, collected, and paid on such article, although it is not otherwise dutiable.

Provided, That the said special duty shall not exceed fifteen per cent ad valorem in any case.

The higher cost of labor in this country, as compared with foreign countries, is a disadvantage which daily confronts our domestic manufacturer. On pages 305 and 370 of your report statistics are

given which throw much light on the difference between this country and Germany. From this authority it appears that for 1910 there were employed in this country in the chemical industry 311,537 officials and employees, at a total salary or wage of $197,251,000, or an average of $633.12 per man. The statistics given for Germany show the average salary or wage in 172 different establishments to be from $291.55 to $318.44.

These and many other disadvantages are all factors in drafting any revision of the tariff which shall be adequate and just.

It is submitted, in conclusion, that if the interests of the manufacturer are to be considered and the high standard of the American wage earner to be maintained, your committee should at the very outset take under most careful consideration the best method of conducting its investigations, to the end that, whatever the theory of revision may be, the revision, when made, shall contain a readjustment of classifications and rates which shall be economically and scientifically just.

The Manufacturing Chemists' Association of the United States comprises the following members:

Barrett Manufacturing Co., 17 Battery Place, New York City; Baugh & Sons Co., 20 South Delaware Avenue, Philadelphia, Pa.; Butterworth & Judson Co., 60 Wall Street, New York City; Henry Bower Chemical Manufacturing Co., 2185 Grays Ferry Road, Philadelphia, Pa.; The Cassella Color Co., 182 Front Street, New York City; B. P. Clapp Ammonia Co., 257 Broadway, New York City; Cochrane Chemical Co., 55 Kilby Street, Boston, Mass.; Columbia Chemical Co., 1618 Frick Building, Pittsburgh, Pa.; Columbia Chemical Works, 11 Broadway, New York City; Consolidated Color & Chemical Co., 122 Hudson Street, New York City; Contact Process Co., Buffalo, N. Y.; Davison Chemical Co., 601 Keyser Building, Baltimore, Md.; Detroit Chemical Co., 190 Junction Avenue, Detroit, Mich.; General Chemical Co., 25 Broad Street, New York City; Grasselli Chemical Co., Cleveland, Ohio; Harrison Bros. & Co. (Inc.), Thirty-fifth Street and Grays Ferry Road, Philadelphia, Pa.; The Heyden Chemical Works, 135 William Street, New York City; Hooker Electro Chemical Co., New York City; Hudson River Aniline Color Works, Albany, N. Y.; Heller & Merz Co., Newark, N. J.; Charles Lennig & Co. (Inc.), 112 South Front Street, Philadelphia, Pa.; Thomas Leland & Co., Boston, Mass.; Mallinckrodt Chemical Works, 3600 North Second Street, St. Louis, Mo.; Merrimac Chemical Co., 33 Broad Street, Boston, Mass.; Merck & Co., New York City; Monsanto Chemical Works, St. Louis, Mo.; Mutual Chemical Co. of America, West Side and Fulton Avenues, Jersey City, N. J.; National Ammonia Co., Philadelphia, Pa.; Naugatuck Chemical Co., Naugatuck, Conn.; New England Gas & Coke Co., 40 Water Street, Boston, Mass.; New York Quinine & Chemical Co., 114 William Street, New York City; Nichols Cooper Co., 25 Broad Street, New York City; Pennsylvania Salt Manufacturing Co., 115 Chestnut Street, Philadelphia, Pa.; Charles Pfizer & Co. (Ltd.), 81 Maiden Lane, New York City; Philadelphia Quartz Co., Philadelphia, Pa.; Powers-Weightman-Rosengarten Co., Philadelphia, Pa.; Roessler & Hasslacher Chemical Co., 100 William Street, New York City; Rumford Chemical Works, Providence, R. I.; Solvay Process Co., Syracuse, N. Y.;

Schoellkopf, Hartford & Hanna Co., Buffalo, N. Y.; Tartar Chemical Co., 135 William Street, New York City.

The CHAIRMAN. Just one minute. I will say to the members of the committee that the clerk and chairman have tried to divide the time among these witnesses, and I will be very glad if the witnesses may be allowed to consume their portion of the time, and then if the committee desire to cross-examine the witness, let that time come out of the time of the committee, and not out of the witness's time. Mr. Howard has used up all of his time now, but if any member of the committee desires to ask him any questions they may do so; if not, we will call the next witness.

VIEWS OF JOHNSON & JOHNSON, NEW BRUNSWICK, N. J., ON THE CHEMICAL SCHEDULE.

NEW BRUNSWICK, N. J., January 28, 1913.

Hon. OSCAR W. UNDERWOOD,

Chairman Ways and Means Committee,

House of Representatives, Washington, D. C.

DEAR SIR: In consideration of the tariff schedules, especially Schedule A, which applies to chemical and pharmaceutical preparations, etc., we desire to present the following facts for your consideration:

While we do not contend that the manufacturers of these products need a high protective tariff, they should have a certain amount of consideration. Taking our own line as a basis it is a fact that nearly all of the goods which we manufacture originated and have been developed by American industry. The manufacture of these products has been followed and in some instances grossly imitated by foreign manufacturers. In many countries when we attempt to compete with European manufacturers in their home market we are met not only with conditions of lower cost of labor and lower cost of raw materials but a high protective tariff. For example, in Germany, where there are a large number of manufacturers of goods in our line, and which manufacturers have followed our methods and our goods, there is a tariff ranging from 25 to 60 per cent on manufactured products. Should manufactured products be admitted free of duty, in our line we would be met with a peculiar condition of an almost prohibitive tariff in Germany, with German products admitted to this country either free or at a normal rate.

Further, we believe that manufacturers in this line should be encouraged from the fact that in the case of great disasters, wars, and the like, experience has shown that our people must depend on American manufacturers. For instance, in such late disasters as the Galveston flood, the Johnstown flood, the San Francisco earthquake, the Spanish-American War, and the like, it was imperative that there should be a source of supply immediately accessible. This can only obtain where there is sufficient encouragement for home manufacture of these products. Our suggestions would be as follows:

The duty on finished products should be of such a rate as to enable home manufacturers to compete with European manufacturers in the American market. This would encourage the home manufacture of these products.

It would insure a revenue to the Government from continued importations.

It would enlarge the demand for crude materials and encourage the manufacture of such other raw material and intermediate products as are now imported.

If, as we understand is proposed in the bill now being considered, raw materials are taxed it will place home manufacture at a disadvantage.

Should it be advisable to levy duties on crude materials for revenue. purposes, then an increase of duty should also be made on the finished products for the encouragement and development of home manufacture.

Respectfully submitted.

JOHNSON & JOHNSON.
F. B. KELME.

DR. J. BEBIE, ST. LOUIS, MO., WRITES CONCERNING THE CHEMICAL SCHEDULE.

Mr. OSCAR W. UNDERWOOD,

ST. LOUIS, MO., February 1, 1913.

Chairman Ways and Means Committee, Washington, D. C.

DEAR SIR: The chemical schedule being now under discussion by the Ways and Means Committee. I am taking the liberty of submitting my views on the subject, an action to which I am prompted by my 12 years' experience as chemical engineer.

H. R. 20182 as passed by the House of Representatives last fall contains the extraordinary feature of proposing to levy import duty on chemical raw materials, and lowering or removing the duties on finished products made from these very raw materials.

While I can not conceive that it be the deliberate intention or purpose of a legislative body to cripple or destroy a hitherto flourishing and growing industry, it is certain in my mind that a tariff bill such as H. R. 20182, if it becomes law, is bound to so affect the now existing chemical industry of this country. The following few arguments should, I believe, substantiate my views.

A great number of drug and chemical products can not be manufactured in this country in competition with European products, unless duty is levied as to offset the difference in cost of manufacture here and abroad. As is generally known, the higher cost of manufacture in this country over the cost in Europe is due to several causes-high wages paid to skilled and unskilled labor; higher salaries paid to chemists, engineers, and all other professionals; higher first and maintenance cost of machinery, buildings, and general fixtures.

The crude materials for many drugs and chemical products are not available in this country, therefore these products should remain on the free list in order to enable the American manufacturer using these raw materials to meet foreign competition with the finished products, in the manufacture of which these raw materials have been used.

Only on that basis will it be possible for many branches of the American chemical industry to continue and to develop. To encourage such a development is not only in the interest of the many thousands connected directly or indirectly with these industries but it is