This satin was sold prior to the new tariff at a rate of about 30 cents a yard, 36 inches wide. This new tariff forced us to put the price up to about 34 cents or 35 cents and kills the article. Here [indicating] is entry 354,815. This is a silk and schappe goods, used for lining ladies' hats. We used to sell these goods at around 37.5 to 40 cents. Now we would have to sell them at 45 to 47.5 cents, the duty on these goods being 86 cents, which we paid. These are all cases which I can prove. They were actually paid. This duty was actually paid. It is not a theoretical case. Mr. LONGWORTH. What takes the place of that material in the market? Mr. STREULI. Gentlemen, that is not made here. They make something similar, but not the same article. This is an article that is used to line French hats, and we have had a few milliners who, notwithstanding that we have to get 45 cents to 47.5 cents, insist on getting the imported article, but there are only a very few left. Mr. LONGWORTH. What American goods answers that same purpose for lining women's hats? Mr. STREULI. They use American taffetas. Mr. LONGWORTH. How much do those sell for? Mr. STREULI. All the way from 35 cents to 50 cents, according to quality. Mr. LONGWORTH. They are cheaper than this? Mr. STREULI. It is a different article. It comes in cheaper than this. Mr. LONGWORTH. So that nobody is hurt at all by that? Mr. STREULI. They are not exactly hurt. If you want to buy a hat with satin lining and you are forced to buy a hat with taffeta lining you are not hurt, but at the same time you do not get what you want. Mr. FORDNEY. It answers your purpose just as well, does it? Mr. STREULI. Yes; and a cotton dress answers the same purpose as a silk dress. Mr. FORDNEY. Then the consumer is not very badly damaged, is he? Mr. STREULI. He does not get what he wants. I will show you where the consumer is in a way damaged. A lot of small manufacturers who are not organized and who do not come down here, such fellows as manufacture ladies' hats and such articles, they get hurt, inasmuch as it results in a great many more ready-made hats being imported, lined with this stuff, because they look Frenchy, and ladies want something that looks Frenchy, while if they could buy this stuff here and make their hats and make them look like the Parisian hats, the consumer would buy them, and he is indirectly hurt that way. Now, I want to say, just as Mr. Kridel said, that I consider that the duty of ad valorem is the only right duty, because everybody. can understand what it means. It takes an expert to figure out these specific duties, and I dare say that this House and the Senate would not have made, possibly, some of these rates if they had known what they were. I do not think it was the intention to put a duty of 259 per cent on any one article. Mr. FORDNEY. It has been proven to this committee time and time again that under the ad valorem rates undervaluations have frequently occurred in this tariff, robbing the Government of their just rate of duty, which can not be done under specific rates. Mr. STREULI. Excuse me. I want to tell you this, the greatest fraud committed in the customhouse was committed under the specific rates, while Mr. Brown was sent up to Sing Sing or some State's prison somewhere for a number of years. That was underweight of Chinese silks, where the Government was robbed, some people say, of $2,000,000 and others say of a million dollars. Mr. FORDNEY. The sugar importers also went up. Mr. FORDNEY. There was always opportunity for fraud, but the greater fraud consisted of undervaluation under the ad valorem rates. There was always a greater fraud under undervaluation under the ad valorem rates than there are under specific rates. Mr. STREULI. I do not think so; not under the present administration of the customhouse, which is excellent. I believe you have, owing to the activity of Mr. Loeb, a splendid force, and if that force is kept up I do not think there will be much opportunity for frauds. Of course if you have a crooked examiner there, they might be dangerous, but under the specific rates it would be the same way. There is something else which makes it very difficult to make a correct specific rate. Silk is an article which in the manufacture of goods in which the raw material enters comes up to a high amount in the manufactured article. In a piece of silk on an average the raw material amounts to from 50 per cent to 75 per cent against labor. If we pay a specific tariff, it would amount, on raw silk, to $4 a pound, the way it is now. If the raw silk goes down to $3 a pound, which has frequently happened, the thing is out of gear. If it goes up to $6 a pound, it is out of gear in the other direction, whilst the ad valorem duty automatically follows the market. The CHAIRMAN. You want an ad valorem duty? Mr. STREULI. I advocate an ad valorem duty. Thirty-five per cent I believe is enough, or you can make it 40 per cent, but I believe we should have an adequate duty to protect the domestic manufacturer. The way these specific rates are now, nobody knows what they really are. If it should be decided that specific rates should be kept, in order to prevent such occurrences like 259 per cent or 100 per cent or something like this, there should certainly be a catch clause upward, not only downward, not only of 45 per cent minimum, but there should be a maximum clause of, say, 60 per cent maximum. Then the worst features of the specific duty would be all eliminated. Mr. FORDNEY. Do you know of any domestic manufacturers who have advanced prices on that class of goods since the adoption of the present tariff law on these goods that you have exhibited, where the duty is now prohibitive? Do you know of any domestic manufacturer who has advanced the price of that commodity? Mr. STREULI. I do not know, sir. I will tell you why. Because domestic manufacturers do not make this exact article or any like it. Mr. FORDNEY. But they do make an article which the people use with the same amount of satisfaction? Mr. STREULI. We had to stop the importation of these goods. We used to import $40,000 to $50,000 worth a year, and after we had made such a big loss on these goods we stopped. Then the people who used this article either did not use any linings for their hats or they used an all-cotton article, which is entirely different. In most instances they use all cotton, and they would have to pay for such an article so much more, if they wanted the same article, but if they preferred to pay a larger price for a better article they paid that price; so you can not say that this very article or something very similar to it was made here. The CHAIRMAN. The effect of your argument is that by reason of this very high duty poor people are required to wear cotton linings in their hats, and the richer people, instead of paying the tax, wear silk? Mr. FORDNEY. That would apply on champagne. We have increased the duty on champagne, but that has not prevented any American from using champagne. Mr. STREULI. No, sir; but champaigne is a luxury, and this is not. Mr. LONGWORTH. The chairman of the committee stated a few moments ago that silks come under the head of luxuries. The CHAIRMAN. As a rule. I think the committee understands what you want to present to them. We have got another witness. Is that all? Mr. STREULI. I think, gentlemen, that is all. STATEMENT OF MR. F. E. KIP. The CHAIRMAN. The next witness is Mr. F. E. Kip. We will yield you 10 minutes. Mr. KIP. I represent the silk velvet and plush manufacturers of the United States, and beg to hand the committee our signed brief, which I desire to have printed as part of my remarks. As in the time alloted I can not read all of this brief, I wish to emphasize a few cardinal points. It is absolutely essential in this particular industry that the duties thereon be specific and not ad valorem, for the principal reason that the duties intended could not otherwise be properly collected, and the revenue to the Government would be materially decreased by any ad valorem rate of duty, owing to the immense amount of seconds produced and the utter inability to properly judge the values thereof. The framers of the Wilson bill realized this and made silk velvets and plushes specific, or rather compound, although few, if any, of their other schedules were so made; and, furthermore, for this very reason in all subsequent bills these rates of duties have been made either compound or specific. Our raw materials are spun and schappe silk yarns. The total duty collected thereon in the fiscal year 1911 was $2,115,088. Over onehalf of this, or approximately $1,163,250, was paid by our industry alone. We as importers and payers to the Government of over one-half of the total of all the duties collected thereon request that the duties on spun and schappe silk yarns be left specific, and emphatically insist that any ad valorem duty would be incapable of proper collection owing to the heavy weighting of the dyed yarns and the positive inability of any one, including the Government experts, to determine their values, full particulars of which are given in our brief. We wish to call the committee's particular attention also to the fact that silk velvets and plushes and the spun and schappe silk yarns to make them are strictly articles of luxury and the rates of duties as they now stand are highly competitive, collecting the highest possible amount of revenue for the Government. The importation of silk velvets and plushes and of spun and schappe silk yarns have steadily increased year by year. Any reduction of said duties will positively decrease the Government's revenues, for the reason that the decrease in rate will not be compensated by sufficiently increased importations to make up the loss of revenues. I will give proof of this if the committee so desires. Recapitulating, I would say: First. There are peculiar conditions in this industry which make it imperative that the duties should be specific, for this reason: The duties in the Wilson bill and all subsequent bills on silk velvets and plushes have been specific or compound. Second. We desire the committee to take cognizance of the significant fact that notwithstanding our industry imports and pays over one-half of all the duties collected on spun and schappe silk yarns we desire said duties to be specific. Third. Our industry-both the finished product and our raw materials are luxuries, and, furthermore, are highly competitive, importations of both having materially increased year by year. Fourth. The present duties will collect the highest amount of revenue, and any possible reduction will act to decrease the revenue. We think from the facts submitted we have fully proven that the Government should be interested, from a revenué standpoint only, in maintaining the present specific rates of duties on paragraphs 396, 397, and 399-399 as far as it applies to silk velvets and plushesof Schedule L. I have stated why if you should make an ad valorem rate on silk velvets and plushes the revenue would be decidedly decreased. I wish to state now that if you make a specific rate and reduce said rate from the present one you will also get a decreased revenue for the following reasons: There is no trust or combination in our United States industry; on the other hand it is intensely competitive, so much so that not only are the lowest grades sold at actual cost but they are sold-in order to get business on better grades-at an actual loss; therefore, any ordinary reduction in the specific rates would not get importations and added revenues on those lowest grades. On the other hand the domestic manufacturers can not under the present rates successfully compete on the very highest grades, where the labor cost is very high, and requiring also the very highest class of expert help obtainable only in limited quantities in this country. The consequence is that importations on these finest grades are increasing and will continue to increase under the present specific rates. I can prove this by a few facts far better than by any statements of my own. Our company being large pile-fabric manufacturers, and realizing the fact that we could not manufacture here under the present duties these grades of silk velvets and plushes and compete with France and Germany, decided to open a branch factory in France and make there and import said fine grades which we were unable to compete on in the United States; therefore, in 1911 we hired a factory build ing in Lyon, France, equipped it with the latest new machinery and ran it about a year to prove the proposition. In 1912 we bought a very large tract of land in the best manufacturing district of Lyon, France, and have built and equipped this new factory for the purpose of making there and importing to the United States these fine grades, and therefore we shall still add additional revenues in duties to the Government on our importations from France. The gentleman before me raised a question. He stated that there was no trust in Europe on silk velvets and plushes. Now, I want to say that there is a trust in Europe; furthermore, that he knew that there was a trust in Europe. Everybody knows that. He may not have been the recipient of the rebates given by those people, but that he did not know that there was a trust in Europe is quite inconceivable, because everybody knows that. It has been existing for about four or five years. I wish to read you a letter dated December 17, 1912, from my representative in Lyon: Mr. F. E. KIP, New York. LYON, FRANCE, December 17, 1912. DEAR SIR: We have just come back from Paris and wish to give you a report which will thoroughly post you about the situation there. The syndicate of velvet manufacturers has done so much pressing on the Paris buyers and has offered them so many advantages, according to what they, the buyers, say, that they, the buyers, have accepted to sign a contract binding them for three years with the syndicate of velvet and plush manufacturers. During this time they can not buy from anybody outside of the syndicate, excepting one manufacturer, Montelier, who is tolerated for the same amount of business done with him in 1910. He is the only manufacturer that they can deal with outside of the trust. If they buy from anybody else, they lose the return rebate, which is fixed this year at 10 per cent. Then it follows on with a lot of other matter which is not germane to this subject. I would be glad to leave this letter in the record if you want the whole thing. The CHAIRMAN. Very well. Mr. FORDNEY. I think it is better that that be put in the record, Mr. Chairman. Mr. KIP. There are other things in there, but there is nothing so confidential that it can not be put in the record. The CHAIRMAN. All right; it may go in the record. The letter referred to is in the words and figures following, to wit: LYON, December 17, 1912. Mr. F. E. KIP, New York. DEAR SIR: We are just coming back from Paris, where we spent a few days together with Mr. Rhodes, Mr. Rubff, and Mr. Williams, looking round the trade. You have probably been already informed by Mr. Rhodes of the result of a few visits we made with him, but now we are still more thoroughly posted about the situation in Paris. The syndicate of velvet manufacturers has been so much pressing on the Paris buyers and has offered them so many advantages (according to what they say) that they have (the buyers) accepted to sign a contract binding them for three years with the syndicate of velvet manufacturers. During the time they can not buy from anybody outside the syndicate, except one manufacturer, Montelier, who is tolerated for the same amount of business done with him in 1910. If they buy from anybody else they lose the return which is fixed this year at 10 per cent. |