2. The development of compressed-air portable tools.

3. The extension of the application of the power press and the use and development of electrical driving.

4. The growth of the system of heavy portable machine tools in conjunction with a massive floor plate.

5. The origin and development of high-speed steel for cutting tools a feature which has given a great impetus to machine-tool manufacture during the present century.

6. The growth and increased manufacture of combination and universal tools.

An additional feature which should be mentioned in connection. with machine-tool manufacture is the use of traveling cranes for the movement of machinery.

Consumption and domestic exports.-The consumption of machine tools in the United States is less than the production. Of the metalworking machinery produced in 1914 and valued at $48,866,186, about 30 per cent was exported. The greater part of these exports consisted of machine tools. The value of the machine tools imported in 1914 was only about 1 per cent of the domestic production. Since 1914 the value of the domestic exports of machine tools and other metal-working machinery has increased. In the fiscal year 1917 it was $84,935,410 and in 1918, $58,327,668. The value of imports was much less in 1915, 1916, and 1917. The figures for 1918 showed an increase over the three previous years, but was less than for 1914.

14

Machine tools find their principal market in countries of great industrial development, or where the process of industrial growth is rapid. In the four fiscal years immediately preceding the war the United Kingdom and Germany took from a third to over a half of the domestic exports of metal-working machinery. Other important countries to which exports were sent were France, Canada, and Russia. Since 1914 the United Kingdom and France have taken considerably over half the domestic exports of the United States. Canada, Italy, Russia, and Japan have also been important markets for American machine tools during this period.

FOREIGN PRODUCTION.

The first machine tools were made in England, but they were developed more rapidly in the United States and Germany. The total value of machine tools exported from the United Kingdom in 1913 was nearly $5,000,000 as compared with $16,097,315 from Germany and $1,813,000 from France. Belgium was also a fairly large exporter in that year. Next to the United States, Germany was by far the largest producer of machine tools before the war, having developed a flourishing home trade in addition to the large exports. By means of special tariff treaties arranged with several continental countries, Germany was the chief source of supply for several European countries.15 German manufacturers, however, have not yet (June, 1920) regained any considerable volume of output since the war, although the value of the output in 1917 was officially reported as $100,000,000, as compared with $82,500,000 in 1914.

14 In Commerce and Navigation the exports of machine tools are not separated from those of other metalworking machinery. 15 American Machinist, June 20, 1918, p. 1047.

The production of the United Kingdom before the war was fairly large and English manufacturers have progressed rapidly during the reconstruction period. The value of the output in 1919 is estimated at £10,000,000 (approximately $45,000,000) while the volume of the output has increased from 20 to 25 per cent since 1914. British manufacturers since the war have developed a higher degree of standardization and through cooperative associations are developing a better specialization of output. There are about 300 firms engaged in the manufacture of machine tools in various parts of Great Britain, but fully one-half the output comes from relatively few large establishments employing from 500 to 2,500 men. Three or four of the largest firms are now turning out large numbers of the highest class of automatic tools, including turret and capstan lathes which were not made at all in England until recently.18

Machine tools are also made in France, Canada, Switzerland, and Sweden. Japan during the war period was increasing her machinery output. Before the war there were only six or seven firms specializing on machine tools. By 1917 there were about 40, most of which were employing 50 to 100 men each.17 Japanese machine shops, however, are usually small and their products are seldom as good as those imported from western countries.18

In general, as has already been indicated, the manufacture of machine tools in foreign countries is not so highly specialized or the product as efficient as in the United States. Even with high prices the American machine will make headway in some European markets against the lower priced, but less efficient article from home or neighboring countries. 19

IMPORTS.

The imports of machine tools form a small fraction of the total number or tonnage used in this country. In 1911 (fiscal year) the value of the imports for consumption amounted to $191,082; in 1914, it was $306,096. During the first three years after the outbreak of the war, importation was much smaller, but in 1918 it had increased to $274,756.

In 1915 20 over half the total value of the imports of machine tools. represented the products coming from Germany, Belgium, England, and Canada supplied the bulk of the remainder. During the years 1916-1918 the war had cut off imports from Germany and Belgium, and greatly curtailed imports from England. In 1917 over two-thirds of the imported machines came from Canada, and in 1918 over nine-tenths.

In 1915 about two-thirds of the imports entered the United States by the customs districts of New York and New Orleans. Other customs districts figuring prominently in this import trade were Michigan, Wisconsin, Massachusetts, and San Francisco. In 1918 nearly two-thirds of the total imports came into the country by way of Buffalo.

19 A fairly comprehen iye report on the British machine-tool industry has been prepared by the United States Tarif Commission as a result of field work in the United Kingdom, and is available in the commission's files.

E. F. Crowe, British commercial attaché, Tokyo, report on iron and steel in Japan.

Is Commerce Reports, July 5, 1916.

American Machinist, Apr. 11, 1918, p. 610, also Apr. 4, 1918, p. 584.

Prior to 1915 the imports of machine tools by countries and customs districts were not separately reported.

PRICES.

The product of the machine-tool industry is not one of even price. Its selling value is determined not by weight or volume, but by an ever changing intangible unit regulated by the work going into its manufacture and by the utility of the machine. Consequently it is almost impossible to establish standards for production and comparison of prices as can be done in many other industries. Only approximative conclusions can be drawn from price statistics.

Prices are usually quoted f. o. b. factory or shop, and vary with the kind and size of the machine and accessories. An example of a well-known kind of machine taken from the price list of a New England manufacturer shows the variations for three different sizes and the extra charges for accessories:

Prices showed a marked tendency to increase during the war period. Many tools doubled in price and heavy lathes for which there was a great demand more than quadrupled in value." Between the summer of 1917 and that of 1918, the average rise in the prices of several well-known makes was about 15 per cent.22 In May, 1919, it was reported that machine-tool prices were being reduced on account of increasing competition.23

Foreign prices (except perhaps in the United Kingdom) apparently have run lower than American prices, although comparisons must be made with great reserve. Owing to superior durability and productive efficiency the American product is often preferred to cheaper foreign makes. Since 1914, however, the unprecedented demand for equipment in foreign shops and the increased cost of production has brought European prices to much higher levels than those in the United States.

24

TARIFF HISTORY.

Prior to the act of 1909 machine tools were classified with metal articles or wares not specially provided for. In 1894 the duty on such articles was 35 per cent ad valorem, and in 1897 it was raised to 45 per cent.

21 Iron Tra le Review, Jan. 10, 1918, p. 164. It has been maintained, however, that "machine-tool prices have, with few exceptions, Feen maintained at more nearly prewar standards than those of most com modities, few of the large uilders having increased prices since June, 1917." American Machini t, Dec. 12, 1918, p. 1024.

22 Average based upon price lits of a num er of machine-tool uilders for 1917 and 1918. There were, however, everal machines which howed no increase in price, and some manufacturers pulli.hed no

increases.

23 Iron Age May 15, 1919, p. 1290

24 American Machini t, Apr. 4, 1918, p. 584, and Iron and Coal Trades Review (London), Mar. 14, 1919, p. 321.

In 1908 the machine-tool manufacturers petitioned Congress for the establishment of a maximum and a minimum rate of 45 per cent and 30 per cent, respectively, for the purpose of securing from foreign countries tariff consideration on exports from the United States. It was stated in the petition that "inasmuch as an average of 30 per cent of our output is sold to foreign countries, some of which have been continuously raising their tariff against us, and to-day threaten such a further advance as will be practically prohibitive (as, for instance, in the proposed French tariff advance), therefore we desire to place ourselves on record as favoring a reduction in the present domestic tariff on our product (machine tools) wherever such reduction will secure for us a corresponding consideration in the tariffs levied against American machine tools by foreign countries."25 Machine tools received special mention, and the duty was reduced to 30 per cent ad valorem, in the act of 1909.

A further reduction to 15 per cent ad valorem was made in the law of 1913. This law defined machine tools as meaning "any machine operated by other than hand power which employs a tool for working on metal."

In the foreign tariffs of France, Germany, Sweden, Switzerland, and Japan machine tools are graded by weight, the duty diminishing per unit of weight with increase in weight. In Germany the duties under the general tariff range from $0.432 per 100 pounds, in the case of machines weighing more than 22,046 pounds to $2.159 per 100 pounds, in the case of machines weighing 551.15 pounds or less. The corresponding rates in France are much higher, namely, $1.312 and $6.566, respectively.

COMPETITIVE CONDITIONS.

In machine manufacture it is impossible to gauge competitive conditions by only determining relative costs. The value of a machine is fixed largely by its utility to those who intend to use it, and this may depend more upon its peculiar make than upon the price of the material and labor entering into its composition. Furthermore a successful machine in one country may be copied by the producers of another unless it is protected in that country by patent. The country supplying the ingenuity necessary in the development of such new contrivance, would be at a disadvantage compared with one which simply imitated the device of its rival, as it is usually less expensive to copy than to invent.

Costs, however, are important in estimating the advantages and disadvantages of different countries. No reliable figures from an unprejudiced source are published with reference to the cost of manufacturing machine tools. The census of 1910 gives figures for the cost of materials, wages, and salaries, and value of products of foundry and machine shops. According to these figures the value of all foundry and machine-shop products in 1909 was $1,228,475,000. Materials entering into their manufacture were estimated at $540,011,000; the wages of employees, at $321,521,000; and salaries at $93,795,000. In other words of the estimated value of all foundry Tariff hearings before Committee on Ways and Means 1908-9, p. 2819.

and machine-shop products manufactured in the United States in 1909, about 43.96 per cent consisted of the cost of materials and 33.80 per cent of the price of labor, including salaries, leaving between 22 and 23 per cent for overhead expenses, profits, etc. A similar computation made by the American Machinist from the census figures for 1914, shows that on every $100 of machines sold by the United States machine building industry, $41 represented the cost of materials and $28 the wages of labor 26 The iron, steel, and coal utilized in machine manufacture and embracing the bulk of what comes under the head of materials are as cheap in the United States as in any other part of the world. The wages of labor are higher here than in Europe, but as the use of machinery has progressed farther in this country than elsewhere and machines are turned out in large lots on what is called a manufacturing basis (see above, Method of production) higher wages do not necessarily mean greater labor cost. The figures given above are those for machinery in general. Machine tools constitute an important class of machines and the main conditions with reference to their manufacture are probably not unlike those of machinery in general. An observer, however, of machine-tool manufacture in foreign countries states that labor "is quite as productive as similar labor in the United States" while the wages abroad are much lower.28 Prior to the war, machine tools of German manufacture were sold in this country at prices considerably below those for corresponding makes by American producers. In some cases these low prices seem to have been due to inferior quality or unfair methods of competition.20 There was also the complaint that American machines were copied by German producers and sold on this side of the Atlantic in competition with the regular domestic product which must bear the cost of the creative ingenuity which has developed the industry.30 Nevertheless, the value of the domestic exports of machine tools to Germany in the fiscal year immediately preceding the outbreak of war was between 6 and 7 times as great as the value of the entire imports from all countries the same year, and more than 10 times as great in 1913.

31

British manufacturers assert that their post-war costs of production are higher than those in the United States in spite of the fact that the wages of skilled machinists in England are approximately 48, cents (standard exchange) an hour as compared with 70 to 90 cents per hour in the United States (June, 1920). It is purely a question of output and the British manufacturers have not as yet attained the degree of standardization and the quantity production found in many American plants, although they are making rapid progress in these directions. A few British machines are coming on the American market, but they are specialties and sell for 50 to 100 per cent more than somewhat similar machines of American make.

26 See discussion in American Machinist, Aug. 1, 1918, pp. 209 and 210. The figure for labor includes only wages. The corresponding figure for 1909 (i. e, excluding salaries, amounting to $7.63) was $26.17. It should be remembered that in the census figures materials embrace "supplies of every description whether raw or partly manufactured, or whether entering in the products used as containers, or consumed in process of manufacture, and all fuel used for heat or power or in process of manufacture.”

2 American Machinist, Aug. 1, 1918, pp. 209 and 210.

28 Letter from the Geometric Tool Co., Sept. 16, 1918.

29 Letters of Union Twist Drill Co., Aug. 20, 1918; Cleveland Planer Co., Aug. 19, 1918; William Sellers & Co. (Inc.). Aug. 21, 1918.

30 Letter from Gould & Eberhardt, Aug. 22, 1918.

In January, 1921, British wages are about 35 cents (2 shillings) an hour, while German wages range from 5 to 8 marks, equivalent on the average to less than 10 cents an hour.