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PARAGRAPH 79-SPONGES.

able business. It is a business that if anything can be done to help it expand, its benefits can be very clearly seen at a glance.

We shall appreciate it very much if you can see your way clear to accomplish that end.

The CHAIRMAN. All right, sir.
Mr. Hart. Thank you very much.
The witness filed the following papers with the committee:

BRIEF OF LEOUSI, CLONNEY & CO. ET AL, ADVOCATING THE REPEAL OF THE DUTY

ON SPONGES.

PRESENT RATE.

The present duty on sponges is found in paragraph 79 of the Payne law, and is 20 per cent ad valorem, which is the same rate as under the act of 1897.

GENERAL INFORMATION.

Until 1852 nearly all the sponges used in the United States were imported from the Mediterranean. In that year Florida commenced to supply sponges. The Florida supply is largely made up of what is known as the sheep's wool sponge, which is as high priced as any sponge in the market. The industry has been a variable one, as the sponge is an animal of a low order, and a system of sponge culture capable of extending the industry has not yet been devised, although the Bureau of Fisheries believes that it has a system to perpetuate the induetry, which is commercially feasible and profitable.

From 1900 to 1905 the sponge fishery seemed on the whole to be on the decline. It was revived in 1905 by resorting to diving, which was done by Greeks, who before that had been engaged in the sponge fisheries in the Mediterranean. In 1906 these Greeks took four or five times the normal quantity of sponges. This large crop was felt to be destructive and was followed by legislation in Congress restricting the use of the diving machines and forbidding the use of spongea less than 4 inches in diameter. (Stat. L., vol. 34, p. 313.) As a result of these measures, the product of the fishery has fallen to about normal. The Bureau of Fisheries figures from May 1, 1911, to April 30, 1912, are $631,032.74 (partly estimated).

The price of these American sponges is fixed by demand and supply and without any reference whatever to the tariff, because the imported sponges do not compete.

During the fiscal year 1912 the import of sponges from the Mediterranean was valued at $218,954, dutiable at 20 per cent, while the imports from Cuba were $92,535, dutiable at 20 per cent less 20 per cent, making a total duty collected of $58,596.40. The importations other than from the Mediterranean are almost entirely of a grade not equal to the Florida sheep's wool, and therefore do not compete with that American product.

There is never enough of the American product to supply the demand for it.

Sponges are imported into the United States in two forms, absolutely raw material and chemically bleached, and the manufacture of sponges in this country consists in their chemical bleaching, which is necessary for their use for bath and toilet purposes. The Government makes an annual appropriation to patrol and protect the fisheries. For this year the appropriation is $3,500.

ARGUMENT.

There is no justification for the duty on sponges from any point of view. It is not needed to protect American industry, as a sponge is an animal, though of a low organism, and no way has as yet been found to increase its production. The imported sponges do not compete with the American sponges, because the American sponge, being of a high quality, is in great demand for carriage and auto purposes and, being concededly superior to the imported sponges, the use of the latter is also eliminated in the particular lines of manufacture and sale where the American sheep's wool is in demand.

The duty can not be justified as a revenue measure, as the rate is low, the foreign importation small, and the resulting duty inconsiderable.

The duty can not be justified as one imposed upon luxuries. The sponges used in connections with carriages and automobiles are the American sheeps wool, while the

PARAGRAPH 79-SPONGES.

distinctive use of the Mediterranean and Cuban sponges is for bath and toilet purposes, which are not luxuries.

The duty is indefeasible in that it is concededly a tax paid by the consumer. The price of the imported article is not kept down at all by the compettition of the domestic production, because the domestic production, being almost entirely of a higher grade, does not compete. Less than 25 per cent in value of the American product is other than sheep's wool.

EXPORT TRADE.

The imposition of the duty hampers an American manufacturing industry in its export branches. The principal competitor of the United States in the manufacture of sponges is Great Britain. There is no import duty on sponges in Great Britain; consequently the British manufacturer gets his raw material at least 20 per cent less than his American competitor, besides usually having the advantage of a lower freight rate, and on exportations to Canada and the Colonies the added advantage of a preferential tariff in those British Colonies. The American manufacturers of sponges are willing to have the tariff entirely taken off manufactured sponges if at the same time it is taken off raw sponges, as they know the result of that will be to permit them to increase their trade with South America, Australia, and other places. But they can not compete while they have to pay a 20 per cent duty, and their British competitor pays none.

DRAWBACK IN EFFECTIVE.

The drawback provisions in the tariff act are impracticable so far as the sponge industry is concerned for the following reasons:

1. It is difficult and almost impossible to identify a chemically bleached sponge with the raw material from which it was made, owing to changes in size and apparent structure.

2. Even if this could be done, the process would be so difficult as to increase the labor cost 300 per cent.

3. It is impossible to establish a standard of loss of weight as each and every sponge varies in loss of weight, depending upon the manner in which the fisherman cleans each sponge at the fishery. Many different degrees of cleanness are found in one boatload of sponges, also some sponges are naturally heavier than others even of the same grade. These and other difficulties make the drawback system inoperative so far as the industry of chemically bleached sponges is concerned.

It being shown by this brief statement that the tariff on sponges does not protect any American industry, but, on the contrary, hampers the manufacturing end of the industry, that it is not justified as a revenue measure because of the low duty, the smallness of the importations and the consequently inconsiderable sums collected, and it being further shown that the duty is a tax payable by the consumer of a necessity, to wit, bath and toilet sponges, there is no justification for the duty remaining, and it ought to be entirely removed. Respectfully submitted.

ALBERT Hart,
Of LEOUSI, CLONNEY & Co.

OPONGES SHOULD BE ADMITTED INTO THE UNITED STATES FREE OF DUTY FOR THE

REASONS STATED.

First. The coast of Florida is the only sponge-producing center in the United States. Its average yearly yield being under $300,000, and the past and present output has been and is now inadequate to supply the demand.

Second. The chief American sponge, i. e., sheep's wool, differs so materially from the imported grades—in that its quality and strength are vastly superior--that its staple value is assured.

Third. Inasmuch as there is not enough American sheep's wool ever to supply the demands, and as it always commands a very high price, almost equal to some grades of Mediterranean honeycomb sponges, it does not require any protection.

Fourth. The American sheep's wool for carriage and auto purposes, and for other lines of manufacture, is generally conceded to be so far superior to the imported sponge that the latter's use in those particular lines is almost eliminated.

Fifth. The value of sponges is determined wholly and solely by supply and demand, and sponges being a product of nature short crops invariably occur from time to time,

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PARAGRAPH 79—SPONGES. due largely to weather conditions during the fishing season; but also to the using up of former fishing grounds. It will thus be seen that the American sheep's wool, by reason of its superiority to any other grade, is purely a distinctive article and needs no tariff protection.

Sixth. The Florida market is controlled by the fishermen, who refuse to sell their wares unless a satisfactory price is obtained; and as the market can not withhold from buying, due to the inadequacy of supply to demand, prices are always held to a profitable basis.

Seventh. Sheep's wool sponges from the West Indies, being of inferior quality and shape, have distinctive uses apart from American sheep's wool.

Eighth. Mediterranean sponges have a distinctive use, mainly for bath and toilet purposes.

Ninth. The annual importation of sponges for the past six years averages only $442,000; therefore the revenue derived by the Government is of little importance.

Tenth. The duty on foreign goods retards commercial progress in that it prevents the free use of the article by the multitude.

Eleventh. The import trade could be largely increased by the removal of the duty, without in the least degree interfering with the product of the United States. Respectfully submitted.

BLUMAUER FRANK DRUG Co.

(And 58 others).

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For the attention of Mr. Acker.

JANUARY 7, 1913. GENERAL APPRAISER,

Washington Street, New York City. Dear Sir: The writer appeared yesterday before the Ways and Means Committee with reference to the tariff on sponges. During the course of his examination before that body the honorable chairman, Congressman Underwood, read into the record paragraph 79 of the tariff act of 1909, which has reference to sponges, and he interpreted same that manufactured sponges referred to chemically bleached products used for bath and toilet, and that the duty levied on them was 30 per cent; also that Government statistics showed that but $69 worth of manufactured sponges were imported into the United States during the past year.

These statements the writer at once refuted, claiming that the $69 worth of goods referred to were medicated sponges and similar products used by the medical profession, and that chemically bleached sponges used for bath and toilet purposes were entered under the 20 per cent duty, as sponges in general, and not as manufactured.

The honorable chairman accorded the writer permission to submit proof of these facts. I shall therefore esteem it a favor if you would kindly inform me on these points in order that I may be able to transmit your reply to Congressman Underwood.

If possible, will you kindly give an approximate value of chemically bleached sponges annually imported into the United States, and which are used for bath and toilet purposes. Also kindly state the duty that is levied on same, so that I may have the matter entered as a record on the minutes of the committee. Appreciating an early reply, I remain, with thanks for your courtesy, Very truly, yours,

ALBERT HART.

JANUARY 10, 1913. The COLLECTOR OF CUSTOMS,

New York, N. Y. Sir: The accompanying letter from Messrs. Leousi, Clonney & Co. (Albert Hart), dated January 7, 1913, concerning a question of statistics connected with manufactured sponges is referred to you for reply direct, the following being stated for your fnformation:

It is the opinion of this office that the item of $69 for manufactured sponges quoted from the statistical record of imports for the United States refers to sponge tents or fancy figures, which are occasionally made from sponges, and not to bleached or cleaned sponges, as all sponges, whether natural, cleaned, or bleached, are returned as sponges at 20 per cent ad valorem under paragraph 79, and would probably be included in the same item for statistical purposes. "Regarding the request for an

PARAGRAPH 79-SPONGES.

"approximate value of chemically bleached sponges annually imported,” it is impossible for this office to give the information desired. The rate of duty on these would also be 20 per cent ad valorem under paragraph 79. Respectfully,

(Signed) F. A. HIGGINS,

Appraiser.

TREASURY DEPARTMENT,
UNITED STATES CUSTOMS SERVICE,

New York, January 19, 1913. Messrs. LEOUSI, CLONNEY & Co.,

39-41 Walker Street, New York City. SIRs: Your letter of the 7th instant (Albert Hart), addressed to the General Appraiser, relative to the classification of chemically bleached sponges for duty, and the annual importations of such sponges into the United States, has been referred to my office by the United States appraiser, accompanied with a letter from his department covering all the points of your inquiry excepting the statistics of chemically bleached sponges imported.

I take pleasure in forwarding to you herewith a copy of the appraiser's letter referred to, and in relation to the statistics of chemically bleached sponges, I have to report that no distinction is made of the character or condition in the statistics of sponges dutiable at 20 per cent ad valorem under paragraph 79. All sponges dutiable at the said rate and under the said paragraph, whether natural, cleaned, or bleached, are grouped in a single class, and it is impossible for me to furnish the statistics of any particular class of sponges thus imported. Respectfully,

H. C. STUART, Special Deputy Collector.

BRIEF OF ALBERT DAVIS, NEW YORK, N. Y., CONCERNING

SPONGES.

The MEMBERS OF THE WAYS AND MEANS COMMITTEE.

GENTLEMEN: Having been unavoidably prevented from appearing before you, I desire to submit the following sworn affidavit relative to paragraph 79, which I think should be included in the free list.

Present rate. The present duty on sponges is found in paragraph 79 of the Payne law, and is 20 per cent ad valorem, which is the same rate as under the act of 1897.

First. Because the American waters are totally unable to produce sufficient sponges to supply even domestic demands.

Second. "The American product being superior to the imported grades for automobile, carriage, and all other washing purposes, is not affected by foreign products, which are mainly used (the better grades) for bath and toilet purposes, and the inferior ones by painters, glassworkers, and general lines of manufacturers, who can not afford to pay the high prices of the domestic sheep's wool.

Third. The Florida fishermen regulate their prices by supply and demand, without respect to the imported article. And they have adopted the method of withdrawing their goods from the market whenever the prices bid are not satisfactory: The present prices

; average about $4 per pound, and this means about $5 per pound for the most desirable sizes, packed and landed in New York.

Fourth. Due to the inadequacy of supply and consequent high prices at the fisheries many dealers resort to the pernicious practice of adulterating sponges by means of washing them in a solution of glucose, salt, salts, sand, and other substances, thus increasing the

PARAGRAPH 79-SPONGES.

weight and consequently reducing the cost. This enables sponges to be apparently sold to the general trade at from 50 to 75 per cent below the regular market quotations. As for instance: An unadulterated sponge that is worth from $5.50 to $6.50 per pound in New York (representing an advance of 50 per cent within the last three years) is sold adulterated all over the country at from $3 to $4.50 per pound, the price depending upon the quantity of loaded substance injected into the sponge.

Fifth. The American sponge-fishing industry needs no protection, neither does the manufacturing or bleaching industry, provided the raw sponges are admitted free. But with a duty on the raw material, we can not compete with the foreign houses in export trade.

Sixth. It is manifestly against Democratic and Republican principles to allow a manufactured article to be admitted into the United States at one and the same rate as raw material, when an American industry employs laborers at a good wage to turn the raw material into a manufactured article.

Seventh. Thirty per cent duty on chemically bleached sponges will protect our American industry and at the same time produce a revenue almost equal to that proposed by a duty of 15 per cent on all grades of sponges as provided in the Underwood bill.

In conclusion, we trust that we have clearly shown that nature already protects the Florida industry, enabling the Florida fishermen to obtain high prices for their products without respect to imports, therefore we hope you will favorably consider our plea, either by admitting all sponges free of duty or by placing a 30 per cent duty on chemically bleached sponges and admitting unbleached sponges free, as outlined herein. Either provision will afford us an opportunity to successfully compete for the export trade, expand the home industry, and enable us to reap a benefit from the opening of the Panama Canal. Respectfully submitted.

ALBERT Davis, (Of D. Davis & Sons, 45 Warren Street, New York City, N. Y.)

PARAGRAPH 80.

Strychnia, or strychnine, and all salts thereof, fifteen cents per ounce. For strychnia, etc., see Mallinckrodt Chemical Works et al., page 51. PARAGRAPH 81.

Sulphur, refined or sublimed, or flowers of, four dollars per ton. For refined sulphur, see Italian Chamber of Commerce, page 110. PARAGRAPH 82.

Sumac, ground, three-tenths of one cent per pound. See Italian Chamber of Commerce, page 104. PARAGRAPH 83.

Vanillin, twenty cents per ounce. See Mallinckrodt Chemical Works et al., page 51; John F. Queeny, page 82; and Verona Chemical Co., page 72.

The CHAIRMAN, This completes the hearing on Schedule A, and the committee will stand adjourned until to-morrow morning.

Thereupon the committee adjourned until Wednesday, January 8, 1913, at 10 o'clock a. m.

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