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PARAGRAPHS 101-102-PLATE GLASS.
The duties levied under this paragraph are not only higher than the cost of production, which is about 2 cents per square foot for glass | inch in thickness, but are in many cases higher than the manufacturers' selling prices. The table hereunder shows the American manufacturers' selling prices for a long period, in fact for several years prior to the fall of 1912, and also the duty on the imported glass.
3.06 Above 24 by 30.
Above 24 by 30.
All the above prices are for original stock sheets and comparison should, of course, be made with the highest duty rates which apply to these sizes.
The manufacturers' present selling prices are a cent or two higher than the above, which apparently does not amount to much but is the equivalent of 20 per cent to 35 per cent, figured on a percentage basis.
As a matter of fact, this glass is probably made cheaper in the United States than anywhere else in the world. The manufacturers have been for years exporting considerable quantities to Canada, where they are able to compete successfully not only with European manufacturers in general, but even with the English manufacturers, who enjoy a preferential tariff in Canada.
The importation into this country is trilling and consists almost entirely of special ornamental patterns. Occasionally when a European manufacturer gets out a desirable and unique design of ornamental glass there is a little importation for a short time, but the design is usually copied promptly and the importation ceases forthwith.
In short, the situation is about the same as in other varieties of American glass, the tariff rates being in many cases higher than the manufacturers' selling prices and higher than the foreign cost of the same variety of glass. Usually there is sufficient competition among the American manufacturers to keep the selling price down to a reasonable figure; in fact to the best of our recollection they have never taken full advantage of the protection they enjoy. A radical reduction in the present rates should be made, however, in order to make foreign competition at least possible. It is also probable that with lower rates in effect the occasional importation of European designs of ornamental glass would become more frequent and the Government revenues benefited accordingly. Respectfully submitted.
SEMON BACHE & Co.,
New YORK, January 13, 1913. The COMMITTEE ON WAYS AND MEANS,
House of Representatives, Washington, D. C. GENTLEMEN: We beg to confirm our statement of December 1, 1911 (copy attached), as an accurate representation of existing conditions excepting regarding the selling price of American plate glass. Beginning in April, 1912, a gradual advance in the manufacturers' selling prices has taken place. To-day's prices approximate those of August 19, 1909 (see attached pamphlet). These, however, may be described as official
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PARAGRAPHS 101-102-PLATE GLASS.
rather than actual prices. A large proportion of the glass now being shipped by the manufacturers is against old contracts at the prices existing in the fall of 1911.
We also insert statistics of domestic production and importation for the fiscal year ending July 1, 1912. It will be observed that the importations are only 2 per cent of the domestic production.
The statement of the manufacturers submitted by Mr. Auerbach on January 8 last also deserves mention on two or three points. All references are to print No. 3, tariff hearings, January 8, 1913.
The American production to-day is given as 60,000,000 square feet annually. In 1909 it was 47,000,000 square feet. An increase of over 25 per cent in three years is not bad for an industry which is described by its members as being almost on the rocks through inadequate protection.
Freights. Please see page of the attached pamphlet, which gives the actual facts. New Orleans is almost the only point in the United States to which foreign plate glass can be shipped cheaper than the domestic article; that is, while it is true that low rates are obtainable from Antwerp to the Pacific coast, they are by all-water routes, the time required for transportation being from three to six months, and are not available for the average buyer.
The manufacturers' statement confirms ours as to the average cost of the American production of polished plate. The report of the Audit Co. (p. 458) is based upon the examination of “certain” factories. As the Audit Co.'s report was secured for the purpose of fortifying an argument based on the alleged high cost of American plato glass, it is a reasonable conclusion that the factories selected for the examination the least efficient factories—those showing the highest costs.
The result of the examination is a maximum cost of 23.98 cents per square foot, about 5 cents higher than the average cost as stated by us. But this cost of 23.98 cents includes everything except depreciation and interest on investment. It included general office expense, selling expense, packing charges, etc., all of which are not included in our statement and which amount to 2 or 3 cents per square foot.
Boiled down, the manufacturers' statement means that there are “certain" inefficient plants whose costs are about 10 or 15 per cent higher than our statement of the general average cost.
This Audit Co.'s statement yields further remarkable results. It shows that these factories sold their product in 1912 at the following average prices: Sizes up to 384 square inches, 13.43 cents per square foot; sizes exceeding 384 and not exceeding 720 inches, 21.45 cents per square foot; sizes over 720 square inches, 28.64 cents per square foot.
The manufacturers claim (p. 456) that the low prices of the first two classifications (small sizes) are due to inadequate protection. But the duty on these two classifications is 10 and 124 cents per square foot, respectively; and the foreign glass imported into the United States, nearly all in small sizes under 720 inches, is of an average value of over 20 cents per square foot; that is, foreign value, before duty is paid. It was 24 cents per square foot in 1912.
This means a duty paid cost in the United States of around 33 to 35 cents per square foot on these brackets, respectively,
So, in order to meet this competition, they sold these two classifications of sizes at 134 and 21} cents per foot, respectively. The smallest sizes, those most inadequately protected,” were sold at an average only 3} cents per square foot higher than the duty alone on the imported gl ss and for about 7 cents per square foot less than the foreign cost of the Belgian plate glass, and for less than half of the laid-down cost of the foreign glass.
This doesn't seem to be reasonable, no more reasonable than the explanation (p. 457) that the reson that small gliss is sold for less than cost is on account of the tremendous demand for it. We have here the anomaly of a tremendous demand reducing prices to 50 per cent below the importation point, insted of raising them to the importation point, which should follow by ordinary rules of logic.
Incidentally the Audit Co.'s statement also shows that the selling prices in 1909 under the Dingley tariff were higher than in 1912 under the Payne tariff, especially in the smaller sizes, although the Payne tariff is 25 per cent higher in these sizes than the Dingley tariff. In short, when the manufacturers secured additional protection in these sizes by the tariff of 1909, they not only did not take advantage of it, but on the contrary reduced their selling prices.
As for the convention of foreign plate glass manufacturers upon which so much stress is laid in the manufacturers' statement, this is an arrangement of a sort that is common in all European industries but which is not a trust at all, in our sense of the
PARAGRAPHS 101-102-PLATE GLASS.
term. The international convention is not a corporation, but merely a trade association. Each factory retains its own autonomy and deals direct with its customers. The primary function of the association is the adjustment of the production to the probable demand, and, incidentally, the fixing of prices, but as a matter of fact the regulation of the production creates a stable market in which prices take care of themselves. Present selling prices were established shortly after the organization of the convention in 1904 and have remained practically unchanged since; in fact, as far as the prices for the American market are concerned, there have not been any changes at all except of a minor fractional nature.
An arrangement of this sort would be of great benefit to the trade in this country, but of course would be dangerous, working behind the protection of the present mountainous tariff wall.
In the prices given for the English market (p. 455) it is carefully omitted to state that the Ènglish prices are freight paid to destination, while the American prices are f. o. b. Antwerp. It is also carefully omitted that these English prices are for glass cut to exact measurements, whereas most Belgian plate glass sold in England is in the original stock sheets and on these the prices for the English market average lower than prices for the United States. In fact it is obvious that as there is no duty on plate glass entering England. The prices for that market can never be more than a fraction higher than those for this country, as there would be no difficulty whatever in shipping to New York in bond and reexporting to Great Britain.
Summed up, the situation is that 30 years ago we imported 65 per cent of our plate glass. During that period the American production has increased about sixty-fold, and we are to-day importing only 2 per cent of the total consumption. Furthermore, the manufacturers can not under competitive conditions take advantage of their present protection, their selling prices usually being way below the importation point.
There isn't any real reason, however, why the manufacturers should not get together and take advantage of their present protection. They have effected combinations in the past, and if the present tariff is allowed to stand there is every reason to expect the organization of such a combination in the future. There are abundant trade precedents for it, and a premium of 10 or 15 cents per square foot on a production of 60,000,000 square feet per year is a prize worth working for. Respectfully submitted."
SEMON BACHE & Co.,
NEW YORK, December 1, 1911. To the Committee on Ways and Means of the House of Representatives,
Washington, D. C. GENTLEMEN: We beg to request your consideration of paragraph No. 102 of the tariff act of 1909 (polished plate glass).
From a protective point of view the duties now imposed are far out of reason. Attached hereto is an itemized statement showing that the cost of production in this country does not exceed the European cost by more than 3 or 4 cents per square foot at the outside whereas the duties run from 10 to 22} cents.
Although this is a statement of average costs it is much more accurate than such calculations usually are. No plate-glass factory makes anything to speak of except plate glass, and the operations are unusually free from complexity. Verification of the details of the cost of American production will be found in the pages immediately following the statement itself.
We also quote the selling prices of the American manufacturers, showing that they are selling the great bulk of their product at prices only a trifle above the duty on the imported article. It is obvious that a manufacturer does not need a protection of 10 cents per foot on glass that he sells for 11 cents, nor does he need 12 cents protection on glass sold at 14 or 15 cents, nor 224 cents protection on glass sold at from 22 to 32 cents per foot.
As for the revenue point of view, to get the revenue we must have importations, These, in the case of plate glass, are steadily dwindling, and amount to-day to about 5 per cent of the American consumption.
At the present moment the American consumer is not suffering to any extent from the high tariff. As stated above, the manufacturers are selling the product at only a cent or 2 per foot above the duty alone on the imported glass. In fact, there is a good deal of glass being sold for less than the duty.
PARAGRAPHS 101-102-PLATE GLASS.
In times past, however, the American public has paid heavily for the excessive protection given to the plate-glass industry.
In fact, the public has paid handsomely during the brief period since the passag. of the Payne-Aldrich bill. The ink was hardly dry on that document when new prices were issued simultaneously by the American manufacturers. They repre sented an advance of about 20 per cent over the previous prices. The upward move ment continued, reaching its highest point in the prices of April 24 of this year, and represent an advance of about 40 per cent over the prices of 1908-9. Since then beginning early this summer, prices have dropped to the 1908–9 level.
It is only a question of time before the plate-glass manufacturers get together again They can do about anything they like behind the present tariff wall without fear of competition from abroad. It is simply a question of reaching a good understand. ing among themselves. So far the combinations that have been formed have col lapsed after an existence of a year or two, but there isn't any real reason why prices could not be put up to the importation point and kept there indefinitely..
We respectfully submit that it is dangerous to leave this high protection hanging up as a premium for the formation of trade combinations. Prices could be raised an average of 12 to 15 cents per square foot above to-day's level without increasing the importations by more than a trifle. American production of plate glass is to-day about 50,000,000 square feet annually. There is a prize of from five to seven million dollars of annual income waiting as a reward for the plan that will get together the American plate-glass factories and keep them together. There are only 12 manu facturing companies, all told. Many more difficult combinations have been effected
The subject uppermost in the public mind to-day is the regulation of all trade combinations and the prevention of oppressive combinations. It in only through the operation of the tariff that an oppressive trust” in the plate-glass business could be formed. The present schedule of duties is a standing invitation to create one.
The present duties could be cut, at least in half, without injuring the America, manufacturer and affording to the American consumer the protection of possible competition from abroad. Respectfully,
SEMON BACHE & Co.,
1880. 1890. 1894. 1895 1896. 1897 1898 1899 1900. 1901 1902. 1903. 1004 1905 1906. 1907 1908. 1909 1910. 1911 1912
1,906, 617 2,823,965 1,902, 146 3,103, 813 3,303, 227 1, 201, 189
927,692 1,061, 638 3, 240, 316 4, 209, 979 6,326,553 4,580, 207 6,087,481 7,330,327 6,761, 526 3,883, 684 2, 294, 448 3, 209, 392 3,957,934 11,200,000
884, 722 1,084,575 1,529, 773 1, 421, 300
864, 756 507,851 726, 224 893, 436
PARAGRAPHS 101-102_PLATE GLASS.
The figures in parentheses on the cost calculation in the table refer to the succeeding pages which contain verifications of the individual items. In most cases the proof of the accuracy of the figures is taken from the Government records and in all cases the authority is stated.
Verification of the foreign cost is not necessary, as it is practically admitted by the American plate-glass manufacturers. (See p. 1142, Tariff Hearings, Schedule B, 60th Cong.)
The Belgian cost is used as the basis of comparison, as the Belgian production is the cheapest in Europe and the importations of plate glass into the United States are mostly from that country.
Cost of production in Belgium and in the United States of polished plate glass.
. 12 .06
. 96 .70 .26 .03 1.30
5.84 pounds (2).. $0.89 per ton.... $2 per ton (7)....
per pot (15).. 0.451 pounds. $0.096 per pound $0.09 per pound. 0.01 pounds. $0.0144
.73 .23 .06 . 15
18.06 pounds.... $3.14 per ton....
$1 per ton (16)... 6.46 pounds.. $3.65 per ton....
Coal for melting furnaces
and for power. Coal for annealing kilns. Maintenance, including fur
nace repairs. General expenditure and
This calculation covers average shop cost only and does not include interest on investment, general office expense, selling expense, nor the cost of packing material or of labor for packing. It is impossible to make an accurate average statement of these items which may run anywhere from 2 to 3} cents per square foot, either in Belgium or in the United States, according to the individual factory. See note (17) following.