PARAGRAPHS 92-94-POTTERY.

Mr. PAYNE. You know the language of that law did not embrace those words, do you not?

Mr. PITCAIRN. I know it has been so construed, but I did not know that was the intention when we put it up.

Mr. PAYNE. Did you so construe it?

Mr. PITCAIRN. I certainly did, originally.

Mr. PAYNE. Did the other importers with whom you do business agree with you? Did they agree with you?

Mr. PITCAIRN. Sure; of course, they did.

Mr. PAYNE. Did not some of them protest against putting in that clause and say that it was ridiculous?

Mr. PITCAIRN. No; you have the wrong idea.

Mr. PAYNE. You attempted it before the Board of Appraisers and went into the Customs Court and were heard on it?

Mr. PITCAIRN. Yes, sir; and we are still fighting.

Mr. PAYNE. Do you know of any association of French importers? Mr. PITCAIRN. No, sir.

Mr. PAYNE. You never heard of such a thing?

Mr. PITCAIRN. An association?

Mr. PAYNE. An association for the purpose of aiding the United States commission, who are trying to ferret out alleged customs frauds?

Mr. PITCAIRN. The only help I ever heard of the United States commission getting was from Mr. Burgess's visit in Paris.

Mr. PAYNE. The association that had for its object the alleged assistance of the United States in getting at the correct valuation of French china or any imported china?

Mr. PITCAIRN. You will have to kindly excuse me. I am only interested in English ware. I do not know anything about the other except in a general way.

Mr. PAYNE. You do not know anything about such an association? Mr. PITCAIRN. No, sir.

Mr. PAYNE. You do not know anything about whether an association or any importers of French china offered to open their books to the United States commission if they wanted to send people over there?

Mr. PITCAIRN. I wonder if England sent a commission over here, whether our people would open their books?

Mr. PAYNE. Will you answer my question?

Mr. PITCAIRN. That is all; I really do not know.

Mr. PAYNE. Why not say so?

Mr. PITCAIRN. I beg your pardon.

Mr. PAYNE. You do not know anything about it?

Mr. PITCAIRN. No, sir.

Mr. PAYNE. It may turn out you do. You do not know anything about undervalutaion, I suppose?

Mr. PITCAIRN. No, sir.

Mr. PAYNE. You have heard of it?

Mr. PITCAIRN. I have heard the word; yes, sir.

Mr. PAYNE. You have not even got as far as Mr. Jones in the matter of suspicion about it.

These English factories have advanced their goods recently, have they not?

PARAGRAPHS 92-94-POTTERY.

Mr. PITCAIRN. Yes, sir.

Mr. PAYNE. And are still selling them?

Mr. PITCAIRN. Yes, sir.

Mr. PAYNE. How much did they advance? It was about 10 per cent, was it not?

Mr. PITCAIRN. Two and one-half per cent on gross or 5 per cent on the net list.

Mr. PAYNE. If the advance is 5 per cent, how are they able to sell at American prices and still import and pay an honest duty?

Mr. PITCAIRN. They do not sell at the American prices by 40 per cent. Mr. PAYNE. They sell at how much more than the American price? Mr. PITCAIRN. Fifty per cent, average.

Mr. PAYNE. And still quality is substantially the same?

Mr. PITCAIRN. No; the products are better.

Mr. PAYNE. These presented here you said were the same, did you not?

Mr. PITCAIRN. No; I said they were substantially.

Mr. PAYNE. I did not say identically the same; I said substantially,

too.

Mr. PITCAIRN. All right.

Mr. PAYNE. They are substantially the same?

Mr. PITCAIRN. They are substantially the same.

Mr. PAYNE. How are you able to sell goods substantially the same as the American goods at 50 per cent more than their price?

Mr. PITCAIRN. I think we are better salesmen.

Mr. LONGWORTH. Are you an American citizen?

Mr. PITCAIRN. Yes, sir.

Mr. LONGWORTH. I am very glad to hear it.
Mr. PITCAIRN. I have been for 30 years.

I desire to submit a brief, Mr. Chairman.
The CHAIRMAN. You may do so.

The brief is as follows:

Hon. OSCAR W. UNDERWOOD,

WASHINGTON, D. C., January 9, 1913.

Chairman Ways and Means Committee, House of Representatives.

DEAR SIR: I represent the importers of English china and earthenware in the city of New York.

Earthenware, with the present duty of 55 per cent and 60 per cent, is one of the highest protected industries on which ad valorem rates are imposed.

Under the present tariff, American earthenware is protected by a nominal duty of 55 per cent on white and 60 per cent on decorated ware, which does not represent the full burden levied upon this commodity. The outside packages, which are costly in themselves abroad, costing $4 each, are dutiable at the same rate as the contents, and this cost, with the items of shipping charges and ocean freight, amounts to 82 per cent on decorated, and from 90 to 94 per cent on white ware.

The exorbitant character of the present tariff on earthenware can be best illustrated by a comparison of the selling prices of the English and domestic products. The comparison is simplified by the fact that the American factories adopted the English sterling scale at an established ratio of $8 per pound sterling. In the following illustrations quotations are those of the best makers in each country, standard brands of ware, in usual wholesale quantities. The figures represent actual transactions at current prices, 1912.

Take, for example, an importation of white granite tableware. The plain white ware is daily used by millions of consumers.

Exhibit A is Johnson Bros., English.

Exhibit B is Knowles, Taylor & Knowles, American.

Same assortment K. T. K. American, £160 in bulk at factory, $8 per pound,

sterling..

Discount 663 per cent..

Discount 5 per cent.....

Discount 1 per cent..

(100-piece dinner set, $3.36.)

577. 20

$1, 280.00 853.33

426. 67 21.33

405.34 4. 05

401.29

This shows that the English ware costs 40 per cent more than the American selling price.

ENGLISH No. 2.

Taking the same 10-crate lot and comparing the prices without any duty the result is as follows:

From which it is easily demonstrated that a duty of 4 per cent would equalize the cost of English white granite with the selling price of American ware of the same grade.

ENGLISH No. 3.

It will be both illuminating and interesting to carry this example a step further, using the same 10-crate lot as specified, and compare the percentage of labor, material, etc., between the foreign and domestic costs. The percentages quoted for England

PARAGRAPHS 92-94-POTTERY.

are those claimed and conceded by the most prominent English potters. Those for American are the official figures quoted by Mr. Burgess, the United States potters' representative. (Tariff hearing, Sixtieth Congress. First Print, No. 28, December 7, 1908, pp. 4008, Table X.)

The total difference in labor cost is $56, the duty paid at present tariff is $187, which is about 233 per cent more than the difference in labor costs, as above proved. The conclusion is irresistible, the tariff on earthenware is exorbitant, excessive, and unjustifiable. As stated at the beginning, it is practically prohibitive. English imports in 1892 were 100,000 crates. In 1912, 35,000 crates.

The difference in cost of production at home and in England (from which country 90 per cent of the earthenware coming into the United States is imported) can not be fairly shown by the weekly wage scale paid to labor, and such reckoning is without value, for the unit cost of ware made by potters earning $20 per week may be less than that produced by workmen making the same article and earning $10 per week. Labor cost of an article depends on the relation between labor and output. Undoubtedly the inequalities in the wages of the English and domestic operatives are more than equaled by the increased production by, and greater efficiency of, the latter.

DECORATION

It is to be specially noted that the characteristic of decoration in earthenware to-day is the gold treatment finishing each article. The gold used by potters is the same value in the United States and England, so that on this preponderating item of all decoration 60 per cent duty on gold is a terrific tax. Here is a white granite plate from Johnson Bros., England, and this other is white ware from Knowles, Taylor & Knowles, East Liverpool. The English ware cost at the port of entry, duty paid, $4.80 for a 100-piece dinner set. The domestic factory sells the same set at $3.36. Here is a white and gold decoration from the factory of W. H. Gridley & Co., England. It cost, duty paid, at the port of entry $8.48 for a 100-piece dinner set. The same identical decoration was reproduced by Homer Laughlin Co., as shown in this illustration, and is sold by that firm for $6 for a 100-piece set of the same composition.

In both these examples-the white and the decorated-the English costs on the dock, duty paid, 40 per cent more than the domestic selling price at factory. And yet this committee was informed yesterday morning by Mr. Burgess and Mr. Wells of the American potters that their profits were restrained to about 7 per cent by virtue of the competition of the foreign wares.

Mr. Burgess took occasion to mention that a very important English competitorJohnson Bros.-declared a few years ago a dividend of £66,000. He carefully omitted to mention that Johnsons are the largest sanitary manufacturers in England, and the bulk of their large profit came from the sale of that product, which is excluded absolutely from the American market by the prevailing tariff.

GEOGRAPHICAL PROTECTION IS NOT A MYTH-THE DISADVANTAGE OF DISTANCE.

In addition to the present tax of 55 and 60 per cent, we wish to emphasize the substantial protection afforded by the heavy expense of bringing earthenware to this country from England. The freights from Staffordshire to Liverpool and sea freight to an American port amount to approximately 15 per cent in the value of the cheaper grades of ware and 10 per cent on the best grades. The Atlantic sea freights alone have been increased in the last four years over 200 per cent, and the sea freight on a crate has advanced from 80 cents to $2. Mr. Burgess stated yesterday that sea freight from Liverpool to Baltimore was 8 cents per 100 pounds. The fact is the rate is 25 cents per 100 pounds quite a difference. These transportation charges alone constitute a big protection against foreign goods. Under such conditions a duty of 03 per cent on earthenware would be more than generous protection.

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SELLING PRICES.

During the past few years the conditions of manufacture in England (the chief country exporting earthenware here) have changed tremendously, owing to increased cost of coal and materials and to industrial legislation. The English factories have been compelled to advance their prices very substantially, varying on the different classes of ware from 12 per cent to 22 per cent, as follows:

During the same period American prices have remained practically unchanged, so that this increased cost of foreign ware, with 60 per cent duty added, constitutes a very heavy extra burden on the imported products.

OUTSIDE PACKAGES.

We earnestly protest against the unfair and onerous tax of 55 and 60 per cent on the crates, casks, and packages in which earthenware is packed and shipped. To insure safe transportation these packages have to be very substantial and are very expensive. The ordinary crate costs at the factory 16/9 net ($4.10), and plus the 60 per cent duty, $6.55. It is readily seen that this item is a very heavy burden on the common grades of ware, a crate containing (duty paid) $60, and is inequitable because it rests most heavily on the cheaper ware which goes to the mass of the consumers. Crates and casks are produced in America fully as cheaply as in England and are not entitled to duty at the same rate as the contents. We urge the abolition of any tax on outside packages.

I will not attempt to go into details on the various costs of production further than to note that when Mr. Burgess claims to put 66 per cent of the selling price in the pay envelope his figures do not agree with his own table of production and wages, which show only 52 per cent in the pay envelope.

I might also refer to the discrepancy in his claim that in the United States pottery industry 100 males are employed to 19 females. Mr. Wells, in his statement before this committee in 1908, stated that his factory employed 794 people, namely, 508 males and 288 females, which is a very different ratio-100 to 57.

DIVISION OF SCHEDULE OF EARTHENWARE AND CHINA.

We strongly advocate rates of duty separating these classes of ware and favoring the earthenware products for many forcible reasons.

First. The sale of earthenware has been almost eliminated by reason of the high prohibitive rates of 55 and 60 per cent duty in force. English earthenware imports have decreased from $4,500,000 in 1892 to $2,000,000 in 1912. In the same period domestic production increased from $8,800,000 to approximately $17,000,000.

Second. The domestic industry would be helped rather than injured by the competition with good English ware, and without this stimulus and incentive would deteriorate both in quality and efficiency. The American potters themselves strongly advocate this division of this schedule as being in the interest of the industry. Mr. Wells, representing the United States Potters' Association, said (tariff hearing, 60th Cong., first print, No. 15, Nov. 24, 1908, p. 1748): "There is as much reason why China and earthenware should be assessed in separate paragraphs, and at separate rates as there is that plate glass and window glass should be assessed separately, or that silks, woolens, and linens should be covered by separate paragraphs." Mr. Burgess representing the domestic potters (first print, No. 28, pp. 3999-4000): "We believe the time has arrived when these classes of merchandise should be separately classified and different rates fixed on China and earthenwares. They differ in many particulars as greatly as do cotton and silk.