PARAGRAPH 412-LITHOGRAPHIC PRINTS.

in readiness to furnish any member of the Ways and Means Committee, or any Member of Congress, a copy of this brief which we submitted in favor of the abolishment or reduction of this tax on books.

The great majority of books imported from England consists of scientific books, books of travel, books of biography, books of history, or books dealing with some peculiar specialty where the American sale is likely to prove entirely too small to defray the cost of publication on this side.

It is a fact that Americans are able to manufacture more cheaply than the English what is termed in the trade as "cheap books." We believe it to be true that most of the machinery used in the manufacture of cheap books is made in America and exported to Europe.

In closing, we can not well overstate the fact that this protection of 25 per cent as levied on books is of little value as a revenue producer to the Government, is a heavy and unjust burden on those who should not be asked to stand it, and its benefits, if there be any, accrue to only a very limited number of publishers and manufacturers as against the interests of literally hundreds of thousands of students and educators and the national pride of millions of Americans who feel that as an enlightened people we should give books free entry into our country.

Mr. FORDNEY. Mr. Macrae, you are an importer and not a manufacturer?

Mr. MACRAE. Yes, sir; the E. P. Dutton & Co. Paper Co. are both importers and manufacturers.

Mr. FORDNEY. Did you say, "and manufacturers?"

Mr. MACRAE. Yes, sir; I said "and manufacturers," but I will correct myself and say we are publishers.

Mr. FORDNEY. Mr. Macrae, what you want as publishers is to get the raw material at a cheaper price?

Mr. MACRAE. Yes, sir; that is it. Business men

Mr. FORDNEY (interposing). By lowering the tariff you believe there would be an increase in your raw material from abroad and thereby give you greater opportunity to get cheaper raw material?

Mr. MACRAE. No, sir; I think for the time being there might be a few more books imported. But as I have stated here, and it is a fact, that the kind of books imported are those which appeal to a very small number of people-it may be for a doctor or some specialist in medicine or surgery; or it may be for the clergy, or a specialist in some particular line.

Mr. FORDNEY. But it is really raw material that you are deeply interested in?

Mr. MACRAE. Well, as to the matter of free books I am more interested as an American citizen than as a publisher. As a publisher I think we should be better off with a little dutv. from the standpoint of profit.

Mr. FORDNEY. And you just want a little protection?

Mr. MACRAE. Yes, sir.

Mr. FORDNEY. So as to encourage importation?

Mr. MACRAE. Yes, sir. We have stood 25 per cent all these years, and we are prepared to stand 25 per cent for the future, if it is to be

PARAGRAPH 412-LITHOGRAPHIC PRINTS.

the policy of the Government to exact a duty. But my contention is that the duty is not needed; that the question of labor cost in the matter of books and all lithographic prints is not stated correctly by the witnesses from the American standpoint. They overlook entirely this one and important matter that the cost of lithographs, or the cost of a book, depends upon the size of the edition printed. Mr. HULL. Depends on what?

Mr. MACRAE. Depends upon the size of the edition printed. The cost of a book or a novel of ordinary size of 400 pages and set by the best typesetters and plate makers would be about $300. If that cost of $300 is divided over an edition of 1,000 you can readily see what the cost is, but if it be divided over an edition of 10,000 you can see that a great reduction ensues. When it comes to the question of printing books and the paper, we produce books more cheaply, that is, our issues cost us less actually than they cost the English publisher in London or Edinburgh.

Mr. PALMER. You say it is a matter of small importance to the Government as far as revenue is concerned?

Mr. MACRAE. Yes, sir.

Mr. PALMER. I think the tariff on lithographic prints produced a revenue to the Government of $460,000, and books $720,000

Mr. MACRAE (interposing). I think my brief calls for a reduction of the rate on lithographic prints, and for the abolition or a reduction of the duty on books, and that amount which you refer to covers certain kinds of paper and manufactures of paper charts, and maps, engravings, etc.

Mr. PALMER. It covers maps and charts and books?

Mr. MACRAE. Yes, sir.

Mr. PALMER. What proportion of the total imports of $2,880,000 is books?

Mr. MACRAE. Well, sir, I have been unable to get at that. I have tried to get that information from the Bureau of Statistics.

Mr. PALMER. You do not know how much revenue we would be giving up by putting books on the free list?

Mr. MACRAE. No, sir; but a comparatively small amount as compared with the total.

Mr. PALMER. $1,000,000 or $2,000,000 is a good deal of revenue to the Government on one item.

Mr. MACRAE. Yes, sir. But do you wish to put $2,000,000 on prints? Do you wish to nut an embargo on the advancement of art? Mr. PALMER. I do not went to argue with you, but wanted to find out what you knew about the amount of revenue we would lose. Mr. MACRAE. Yes, sir.

The CHAIRMAN. Is that all?

Mr. MACRAE. Yes, sir.

TESTIMONY OF W. A. LIVINGSTONE, MANAGER OF THE DETROIT PUBLISHING CO.

The witness was duly sworn by the chairman.

Mr. LIVINGSTONE. My name is W. A. Livingstone. I wish first, Mr. Chairman, to indorse the brief and also the statements made by Mr. Meyercord earlier in the day.

PARAGRAPH 412-LITHOGRAPHIC PRINTS.

The statement was made this afternoon that in the matter of lithographs and also post cards as good quality work was not done in this country as abroad. In view of that statement I desire to pass up to you some post cards made in Detroit, Mich., which are samples of many others, and I challenge any importer or other person to produce cards of better quality than these, and I doubt if those imported into this country at any time will equal them. Not only that, I will send you later general prints whose quality I know is not surpassed by any factory abroad.

The second point I wish to allude to is also a statement made this afternoon to the effect that the imports under the lithographic and post-card schedule were rather negligible. During the last fiscal year the imports in this line equaled, at foreign value, about $2,500,000, and when you add to that value, the import duties and transport and other expenses connected with delivery here, those imports displace competitive production here of well on to $5,000,000 of goods at American value.

At the same time it was stated that the duties collected from this source were negligible. The duties collected during the last fiscal year on those articles were $739,000.

As to the percentage of materials that enter into some of these products, I will give the last year's percentages in the factory I represent in Detroit, divided for four classes of goods which happen to represent the major part of our product that comes within that field. In one class, the materials averaged 12.6 per cent of the total unit shop cost. Another class 26 per cent, another class 15 per cent, and another class 18 per cent. Of the total production (in dollars and cents), the average for that year was 17 per cent, total cost of the materials computed on the shop cost of the article, which of course did not include any selling expense. That was merely shop cost. The balance, 83 per cent, was all labor and overhead.

Another matter alluded to in connection with post cards was present selling prices. The retail price was already covered, but I wish to add that since the present tariff has been in effect there has been a considerable lowering of the wholesale price also. As a matter of fact, variation of import duties in the wholesale price does not affect the retail price, because the whole duty imposed on that particular article does not amount to more than one-fifth of 1 cent per card.

Another statement that was made this afternoon was that the American lithographer would not bother with short editions, and consequently those who wished short editions had to go to the foreign lithographer. Now, that is absurd for the reason that with the exception of the United States the German lithographer has the whole world as a market. The United States lithographer has simply the United States market. He can not go outside on account of the prohibitive differential in wages. There is a very good reason why the German lithographer does take certain short-edition work from the American lithographer. The wage scale here is three times that abroad. A shorter edition means a higher percentage cost of labor on the same class of work. That is to say, on one class of goods manufactured by us, the initial plate cost happens to be 38 per cent on a 6,000 edition. On a 3,000 edition, the cost exceeds 50

PARAGRAPH 412-LITHOGRAPHIC PRINTS.

per cent, and of course as the edition shortens still further, the percentage of labor continues to rise and the ad valorem equivalent falls on the general scale of duties. That is why certain shorteditions go abroad instead of staying in this country.

I wish, Mr. Chairman, to ask permission to file a supplemental brief next week, because some figures I wish to secure from the Department of Commerce and Labor I have not here now.

The CHAIRMAN. You can have up to the last of the month to file your brief, and it will be printed in the hearings. The only advantage you get by filing now is that it goes into the hearings along with the paper schedule. If it comes later, it is printed with some other schedule. The committee, of course, will look it up, but after it gets into the House, or if other people are hunting for it, they may not find it. But you will have an opportunity until January 30 to file it if you wish to take that long.

Mr. LIVINGSTONE. Thank you.

BRIEF OF W. A. LIVINGSTONE, Manager of the DETROIT PUBLISHING CO. 99 "VIEW POST CARDS.

[Paragraph 416.]

We respectfully urge that no change be made in the existing duty on "view" post cards and the phraseology relating to same as contained in

PAR. 416. "Views of any landscape, scene, building, place, or locality in the United States, on cardboard or paper, by whatever process printed or produced, including those wholly or in part produced by either lithographic or photogelatin process (except show cards), occupying thirty-five square inches or less of surface per view, bound or unbound, or in any other form, fifteen cents per pound and twenty-five per centum ad valorem; thinner than eight one-thousandths of one inch, two dollars per thousand."

SYNOPSIS OF ARGUMENT.

Importation. The present rate does not stop importation. While the domestic manufacture of this article is known to have decreased during the last 12 months, the percentage of imports to total consumption has increased.

Costs.-The domestic card in average editions of equal quality must be sold at about double the foreign price. Costs have risen in the last two years, and any reduc tion in volume produced here will increase the cost. Transport to New York is from 5 to 10 per cent of the foreign price.

Necessity for special rate.-Because of the excessively small editions generally used, labor is from 60 to 80 per cent of the total cost. With wages three times those abroad, a much higher differential is required than when editions are large and initial preparation small. Preliminary plates (which are all labor) gross as much for small editions as for very large ones and the result is an abnormally high unit cost.

A compound duty is necessary because of the wide range of cost. A specific rate alone is too high on the low grades and much too low on the high grades.

One rate should apply to all processes because the basic conditions are the same. If one process is protected and another not, it merely means shifting the importation into the lower medium.

The price to the consumer is not affected by the duty.-Retail prices for similar cards have in no case exceeded the prices obtained when there was practically no duty. Further, in most cases they have reduced since this article was separately classed in the present paragraph.

ARGUMENT.

History of trade.-Prior to 1898 the view-card trade did not exist in this country, and this company, which commenced manufacturing then, is probably the oldest maker and distributor of the article in the United States. American firms created the market before foreign cards were imported. When they had made the market large enough for foreign houses to invade the field, importation commenced, with the result that the American manufacture was almost destroyed when the present rate

PARAGRAPH 412-LITHOGRAPHIC PRINTS.

went into effect. The heavy importations made before that rate took effect anticipated a large proportion of the consumption for a considerable period thereafter. For the past 18 months there has been a large reduction in the manufacture of view cards in this country due to general trade conditions, but the percentage of imports to total consumption has increased, and the tendency of the trade now existing toward a better quality of article involving higher costs will further increase that importation. The ad valorem equivalent reduces as price increases. We attach samples of Germanmade cards recently imported.

Costs. All comparisons of costs are absolutely valueless and misleading unless they compare cases of equal quality, equal editions, and also discriminate between original editions and "reprints." While there are variations, as a rule American made view cards can not be sold for less than double the foreign price in equal edition and quality. Costs vary greatly according to edition and quality, but the proportion for equivalents remains about the same except in the case of abnormally large editions. This difference in cost is due to (a) a wage scale three times that abroad; (b) higher cost of materials; (c) higher cost of factory equipment and overhead; (d) the close rate at which the foreign maker takes export orders to reduce his unit cost on his home market.

Example: We pay for one class of labor an average of $24 per week, for which an average of $8 per week is paid for similar work in Germany. Other grades in like proportion.

Necessity for special rate.—“View cards" are usually made in editions of 1,000, 2,000, 3,000, 6,000, and occasionally 12,000; very rarely over that. Many more subjects are made in 3,000 editions or less than over that. The intial cost of preparation, including plates, designs, etc., is all labor of the highest order of skill. This expense is independent of the edition, and it therefore results that from 60 to 80 per cent of the total cost of the card is labor. Consequently, the differential against the American manufacturer is much higher than on other articles in the same processes whose edi tions are either normal or large, or in which the initial preparation requires little skill. A compound duty is necessary. The article has a range of cost abroad varying from under $2 per 1,000 to more than 10 times that rate. The same subject varies widely in cost, dependent upon edition and other factors. A specific rate alone would be too high for low grades and much too low for high grades.

One rate should apply to all processes.-Experience in the graphic arts has shown that when the basic conditions of manufacture are the same in all the processes as they are in this instance that variations in the rates merely shift both the manufacture and importation of the article into the less protected medium. Note the change in importation in the so-called autochrom cards when they were reclassed as engraved cards instead of lithographic cards.

The price to the consumer is not affected by the duty.-Convention fixes certain retail prices for the card, independent of the fluctuations of the dealers' rate. When the dealer paid a much higher rate than he does now, he charged no higher retail price. His margin in the card varies from 50 to 90 per cent of the total retail price, and averages 70 per cent. The total duty does not exceed 10 to 20 per cent of the retail, and in many cases less. Independent of that, however, it is a fact that the dealer buys his cards as cheaply as he did when there was practically no duty, and often less.

Wholesale prices.-"View cards," made by lithography, three-color half tone, and photogelatin processes vary in wholesale foreign price from $1.60 to $15 per 1,000 cards. The bulk of them cost the dealer from $2.50 to $10 per 1,000. Bromide and solio cards cost him from $8 to $30 per 1,000.

Hand-colored cards from $5 to $50 per 1,000.

Presswork. It may be asserted that more economical presswork can be done here than abroad. This is questionable but even if true it has no point in this case, because the press runs are so short as to nullify any advantage derived from such a condition. The preliminary preparation and "make ready," which is so high a percentage of the total, is not affected by press speed.

Measurements (Postal Regulations)."Post cards" must not exceed 19 square inches in size and must be approximately the same width and thickness as the Government “postal card." In practice, they are eight to fourteen one-thousandths of an inch in thickness and weigh from 8 to 10 pounds per 1,000.

Necessity for the form of definition.—If the term "post cards" only were used, it is possible to make the cards larger than the specification for private mailing cards, and then trim them down for importation. If the qualification as to printed matter were not included, it would be possible to bind the cards with a stub, putting on top some printed matter in a foreign language, in which case they might come in duty

free.