Surgical instruments-Rates of duty. Surgical instruments as such have never been provided for in tariff legislation. At first they came within the general provision for unenumerated articles. The duty was then 5 per cent ad valorem. Beginning in 1792 they have been uniformly provided for as manufactures of steel or other metals, at rates varying from 10 to 50 per cent ad valorem. As manufactures of steel not otherwise provided for they carried the 45 per cent rate for more than half a century, except from 1894 to 1897, when there was a reduction to 35 per cent, and under the act of 1913, when the rate was further reduced to 20 per cent. The highest rate of 50 per cent was imposed in the act of 1913 upon such instruments when made wholly or in part of precious metals, manufac tures of such metals being provided for separately from manufactures of base metals and at two and a hal times the duties. Tariff classification or description. Manufactures, articles, or wares, not specially enumerated or pro- manufactured. Manufactured articles or wares, not specially provided for in this Rates of duty, specific and ad valorem. 45 per cent ad valorem. Do. 35 per cent ad valorem. Articles or wares not specially provided for in this act, composed 45 per cent ad valorem. Articles or wares not specially provided for in this section, com- Articles or wares not specially provided for in this section, if com- Do. 50 per cent ad valorem. If composed wholly or in chief value of iron, steel, lead, copper, 20 per cent ad valorem. COURT AND TREASURY DECISIONS. Provisions for needles have been construed to include surgical needles. Under the tariff acts of 1890, 1894, 1897, surgical needles were excluded from free entry as hand-sewing needles and charged with duty as needles not specially provided for. (G. A. 582, T. D. 11233; Woodruff v. U. S., 138 Fed., 946; G. A. 6019, T. D. 26305; T. D. 26903, suit 4040; G. A. 6249, T. D. 26964; G. A. 4147, T. D. 19356.) But so-called hypodermic needles were held dutiable as manufactures of steel and not as needles. (G. A. 2669, T. D. 15143; T. D. 9526.) When scissors were provided for as cutlery (before 1890) surgical sissors were classified as manufactures of steel, unless commercially known as cutlery. (T. D. 4758, T. D. 7509.) The separate provision for scissors in the act of 1894 was construed to include those for surgical use. (G. A. 3781, T. D. 17847.) (G. A. Surgical forceps, classified by the collector of customs at New York as scissors, were held dutiable as manufactures of metal. 3781, T. D. 17847.) Such instruments were also held dutiable as manufactures of metal rather than as "nippers and pliers of all kinds wholly or partly manufactured" under the act of 1913. The rejection by Congress of an amendment to the provision to include surgical and dental instruments was considered by the court in reaching its conclusion. (Koch v. U. S., 6 Ct. Cust. Appls., 534; followed in Abstracts 40986, 41013, 41035, 41441, 41822, 41869.) Before the act of 1897 hospitals were held to be within the exemption accorded to religious, philosophical, educational, scientific, and literary institutions. (U. S. v. Presbyterian Hospital, 71 Fed., 866, 868; U. S. v. Hensel, 72 Fed., 41, 42; U. S. v. Massachusetts General Hospital, 100 Fed., 932, 939.) After the insertion of the word "solely" in the act of 1897 hospitals with incidental educational features, such as the training of nurses and the instruction of medical students, were held not to be institutions of the exempted class. (Massachusetts General Hospital v. U. S., 112 Fed., 670, 672.) The act of 1897 was unchanged in 1909. In the Senate and amendment was adopted for the exemption of "public hospitals or municipal laboratories," but this was stricken out in conference (Cong. Rec., 61st Cong., 1st sess., vol. 44, No. 83, p. 3953; No. 107, p. 4983.) A postgraduate medical school having as an adjunct a hospital for clinical cases was declared by the Court of Customs Appeals to be an educational institution for the purpose of the law and optical instruments imported therefor were held to be exempt from duty. (United States v. Rheinboldt, 6 Ct. Cust. Appls., 66, of 1915.) Three rules of construction have competed, each at times successfully, in litigation under the provision exempting philosophical and scientific instruments for various institutions: (1) Intrinsic character of article; (2) chief uses of article, and (3) intended or actual use of the particular importation. The last was held by the Court of Customs Appeals to be the proper rule. (United States v. Kastor & Bros., 6 Ct. Cust. Appls.. 52, of 1915, and cases therein examined.) DRAFTSMEN'S INSTRUMENTS. SUMMARY. Before the war draftsmen's or mechanical drawing instruments were produced in this country by only one firm, which supplied but little more than 1 per cent of domestic consumption. This firm produced instruments of a very high grade. The industry was not adapted to production on a large scale with the use of automatic machinery. Much skilled labor was required, and Germany, with its abundance of skilled labor at relatively low wages, could produce draftsmen's instruments more cheaply than American manufacturers and supplied a large part of the instruments used in the United States and in the world. After the United States entered the war domestic production was greatly increased our manufacturers being encouraged by the increased demand and the absence of serious foreign competition. Improved methods of production were introduced; by simplifying designs manufacturers have made possible the production of more parts by machinery. Output has grown from approximately 1,000 sets in 1913 to 70,000 sets or more in 1919, and the industry appears to be able to meet domestic requirements. 1 See General Information, Domestic Production and Consumption, for basis of these estimates. Domestic exports not specified. GENERAL INFORMATION. TARIFF PARAGRAPHS, ACT OF 1913. Paragraph 167.-Articles or wares not specially provided for in this section, if composed wholly or in part of platinum, gold, or silver, and articles or wares plated with gold or silver, and whether partly or wholly manufactured, 50 per cent ad valorem; if composed wholly or in chief value of iron, steel, lead, copper, brass, nickel, pewter, zinc, aluminum, or other metal, but not plated with gold or silver, and whether partly or wholly manufactured, 20 per cent ad valorem. Paragraph 573.-Philosophical and scientific apparatus, utensils, instruments, and preparations, including bottles and boxes containing the same, specially imported in good faith for the use and by order of any society or institution incorporated or established solely for religious, philosophical, educational, scientific, or literary purposes, or for the encouragement of the fine arts, or for the use and by order of any college, academy, school, or seminary of learning in the United States, or any State or public library, and not for sale, and articles solely for experimental purposes, when imported by any society or institution of the character herein described, subject to such regulations as the Secretary of the Treasury shall prescribe. (Free.) DESCRIPTION. This survey deals with certain instruments used in mechanical drawing, i. e., in the preparation of working drawings and plans for engineering and construction work. These instruments include compasses for drawing circles, dividers for laying off exact distances, ruling pens and pencils, planimeters, and integraters (instruments for measuring the area of plain surfaces). They are largely used by students of mechanical drawing in schools and colleges, as well as by engineers and professional draftsmen. Drawing instruments, such as "T" squares, triangles, curves, and rules, which are usually made of wood or zylonite or celluloid, and not of metal, are not dutiable under paragraph 167 and are not included in this survey. DOMESTIC PRODUCTION. Material. The material that has generally been used in the manufacture of drawing instruments is Liberty silver or nickel silver, formerly called German silver. One manufacturer writes that Monel metal is used, being noncorrosive and lighter and stronger than nickel silver. Steel, silver, brass, copper, enamels, and chemicals are also enumerated by manufacturers as raw materials. In addition to the materials entering into the instruments proper may be mentioned leads, lead boxes, kraft paper, wax paper, and leather cases. The leather case for a set of instruments may cost more than the material in the instruments. Equipment and methods of production. Most drawing instruments have movable joints which must work accurately, and must be finished and fitted by hand labor. This has restricted the use of automatic machinery in production. In the industry as it has developed in the United States since 1916, however, considerable progress has been made in substituting machine processes for hand processes, and some automatic machinery has been installed, thus reducing labor costs but increasing overhead expense. Nevertheless, much skilled labor is still required for finishing and assembling the parts, and labor costs represent a large part of total cost of production. Detailed factory cost statistics submitted by one manufacturer for a set of six drawing instruments showed direct labor costs to represent 45.6 per cent and material, including purchased leather case, to represent 19.4 per cent of total costs. Another manufacturer says on this point: If labor and material only are considered, the percentage for labor, 60 per cent, and for material 40 per cent. If factory manufacturing overhead is considered, then the percentages are labor 47 per cent, material 30 per cent, and manufacturing overhead 23 per cent. Organization. Production on a very large scale is impossible because of the limited demand for the product. Nine out of eleven concerns reported to be producing drawing instruments have submitted statistics of production to the Tariff Commission. They report an investment in plant and equipment of $668,000. This does not include the value of some parts of plants formerly representing idle space or used for other purposes and temporarily devoted to the new industry. The largest investment in plant reported by any one concern is $200,000. Geographical distribution. Of the nine producers reporting to the Tariff Commission, three are in Pennsylvania, two in Illinois, and one each in New York, New Jersey, Wisconsin, and Washington. History of the industry.-In 1914 there was but one firm in this country-Theo. Alteneder & Sons, of Philadelphia-engaged in the production of draftsmen's instruments. This firm was founded about 1850 by Theodore Alteneder, a political emigrant from Germany, and has been conducted as a family affair, being now in the hands of the two sons of the founder. Before the war about 75 per cent of our drawing instruments came from Germany. Others of high grade came from Switzerland. During the war the European supply was cut off. As a consequence of the increased demand in the face of greatly diminished supply after the United States entered the war, the one established domestic firm producing drawing instruments greatly expanded its capacity and other firms entered the business. The draftsmen's instruments industry thus practically grew up during the war period in the absence of any considerable foreign competition. Domestic production and consumption. The capacity of the only successful domestic producer in 1914 was about 1,000 sets' annually. During 1916 and 1917 other firms began to produce. The Tariff Commission obtained the addresses of 11 firms reported as producing drawing instruments. Nine of these replied to questionnaires sent them by the commission and gave statistics on quantity and value of production. On the basis of these statistics and interviews with two leading manufacturers the total production of drawing instruments in 1918 was estimated at about 40,000 sets, valued at $440,000, and in 1919 at about 70,000 sets, valued at $750,000. Letters from various firms indicate that the total production in 1920 was larger than that in 1919. Since official import statistics are lacking it is possible to make only a rough estimate of domestic consumption before the war. The largest producer estimates consumption in 1914 at 70,000 sets and in 1915 at 75,000 sets. Other producers make much higher estimates. The lower estimate may be roughly confirmed by calculations based on German export statistics, as follows: (1) German exports of mathematical and drawing instruments to the United States in 1913 were valued at $176,600. (2) It is stated by one concern that more than 75 per cent of our imports of drawing instruments came from Germany. (3) The average price of 15,000 sets of drawing instruments imported from Germany in 1913 by one American firm was $3 per set. (4) At $3 per set, $176,600 worth of drawing instruments would represent 58,867 sets. (This would probably be a maximum figure for imports from Germany, since some instruments other than drawing may have been included in the $176,600 worth of exports.) (5) These 58,867 sets would represent more than 75 per cent of our imports in 1913. (6) Total imports therefore would not exceed 1 times 58,867 or 78,489 sets. (7) Total imports plus domestic production (1,000 sets) would be less than 80,000 sets. If these various estimates of production and consumption are approximately correct, then domestic production in 1919 had ex 1 A set is a group of instruments varying in number. In the student's set there are usually six or eight pieces. |