PARAGRAPH 429-CORK. Spain and pay the present duty than to manufacture in the United States. The only effect of lowering the duty on these articles would be to lessen the revenue derived by the Government. The wages of skilled and unskilled workers in the United States are at least three times those paid in Spain, as can be seen from the rates given below. The impression prevails that American workers are much more efficient than Spanish or Portuguese. This is a mistake. We operate a factory in Seville, Spain, for the manufacture of cork commodities, such as disks, insoles, life-preserver blocks, seine floats, etc., and our experience is that the Spaniard is a very apt and intelligent workman in this industry, which had its origin in Spain, and is capable of producing as much product per man in the same number of hours as an American. We greatly prefer specific to ad valorem duties, and in our industry consider the specific rates absolutely necessary if the full duty is to be collected. Aside from cork disks, the importations of corks are made up of numerous sizes and qualities. It is practically impossible to find appraisers with the necessary technical knowledge of cork commodities, and our experience was that undervaluation was the rule rather than the exception under the ad valorem tariff preceding the McKinley bill, and the abuse, which made it impossible for an honest house to import corks and compete with unscrupulous ones that did not pay duty on the true value of their imports, stopped only when the ad valorem was superseded by a specific tariff. We believe that the same conditions would be reestablished if ad valorem were substituted for specific rates. The evasion of the duties means a serious loss in revenue to the Government and also works a hardship on the American manufacturer and the honest importer. In general, we state our conviction that the duties on corks and manufactures of cork, as provided in the present tariff, are not excessive and the equivalent ad valorem is low compared with most other articles on which duty is collected. There are engaged in the cork manufacturing industry in this country at least 20 firms and companies, employing not less than 2,000 men and 3,000 women, who have steady employment at good wages. Cork cutting is a close competitive business, absolutely free from any agreements or understandings between manufacturers. There are no patented processes or machines to afford any manufacturer a monopoly or any special advantage over his competitors. The margin of profit is not sufficient to enable the manufacturer to make any material reduction in his selling prices without first lessening the cost of production in some manner. Automatic corkcutting machinery has been pretty well developed, and it is difficult to see how any material lessening of cost can be brought about by machinery improvement. The American manufacturer formerly had some advantage over his foreign competitor in this respect, but during the last 10 years the foreign manufacturers have installed a great deal of modern up-to-date machinery and appliances, and they are, therefore, able to make keener competition. Spain imposes an export duty on all cork bark of 5 pesetas gold per 100 kilos, equivalent to 45 cents per 100 pounds. There is a strong agitation for higher export rates and a great probability that an increase will be made. Owing to the higher cost of production, the American manufacturer can not successfully compete with European houses for foreign trade. Our exports are insignificant, an occasional small shipment going to Canada, Mexico, Cuba, or Central America. Respectfully submitted. ARMSTRONG CORK Co., President. PARAGRAPH 429-CORK. THE CHICAGO CORK WORKS CO., CHICAGO, ILL., WRITE IN REGARD TO TARIFF ON CORK. Hon. OSCAR Underwood, CHICAGO, January 25, 1913. Chairman Ways and Means Committee, Washington, D. C. DEAR SIR: The total annual sales of manufactured corks in the United States is approximately $6,000,000. Of this amount there was imported in 1912 $2,178,085, on which duties were paid $437,991, making a total of $2,616,076, import value, the selling value of which would equal one-half the total sales. Practically all of the importations of corks are from Spain and Portugal. The present duties on an ad valorem basis are a trifle over 20 per cent, which is certainly not excessive when compared with the vast majority of articles imported on which duty is paid. Also consider that the labor in Spain in the manufacture of corks is not paid more than one-quarter to one-third as much as it is in the United States, and a man in Spain will produce as much in the same number of hours as in the United States; the fallacious notion to the contrary notwithstanding. The above are all facts which can be verified and you do not need to take the word of any manufacturer or importer. We would also call your attention to the fact that Government statistics do not show the value of corkwood (from which corks are made) imported, for the reason that they have made no distinction between corkwood and cork waste, and there are vast quantities of waste imported for insulation purposes, to say nothing of that used for linoleum. If duties are lowered some of the larger people will doubtless manufacture in Spain, but small factories like ourselves can not do so, and the lowering of the duty further on corks will work a hardship on the small manufacturer and the labor which is thrown out of employment thereby. Moreover it is practically certain that the revenue now produced by this industry will, in that event, be less than at present. Some years ago, when the duty was ad valorem, there was a great deal of undervaluation which puts the honest importer at a great disadvantage, and the duty should by all means be specific. We pray that the duty be not lowered. CHICAGO CORK WORKS Co., BRIEF OF THE INTERNATIONAL CORK CO., BROOKLYN, N. Y., IN RE CORKS AND CORK PRODUCTS. Hon. OSCAR W. UNDERWOOD, Chairman Committee on Ways and Means, BROOKLYN, N. Y., January 28, 1913. House of Representatives, Washington, D. C. HONORABLE SIR: Your attention is respectfully referred to the following facts relating to the present import duties on corks and cork products. We shall practically confine ourselves to a discussion of the following, which are the kinds that we manufacture: Cork bark squares or cubes; manufactured corks, three-fourths inch or less in diameter, of large end; manufactured corks, larger than three-fourths inch in diameter of large end; cork disks, one-eighth inch or less in thickness. Existing conditions are not any too favorable for the American manufacturers of corks, and after you have made a thorough investigation we know you will not find it advisable to suggest any appreciable reduction in duties. None of the evils which it is your purpose to remedy exist in our line. Competition among the various manufacturers is very keen, and the result is that the price the consumer pays for corks is much less than ever before. Even at the extremely low prices prevailing, the foreign manufacturers can compete successfully. You will find that there were practically no corks exported from the United States, and the records will also show that there has been no decrease in importations. Importers, who have an interest in a change, may contend that a reduction is needed. They may point to different classes on which the importation has dimin ished. While these arguments may seem plausible enough, the fact is that the American manufacturers have also lost business in many kinds of corks. This is due principally to the continued introduction of patent stoppers, which take the place of corks. PARAGRAPH 429-CORK. During the year 1912 importations amounted to $2,178,085. When you consider that the entire consumption in the United States amounts to only $6,000,000 to $6,500,000, you can see that the manufacturers here are really in direct competition with foreign producers. The price of corks has now reached the very bottom, and the importers would naturally gauge their selling price by the lowest figure at which the American manufacturers can compete. The only possible saving would be in a slight reduction intended to make manufacturing here impossible. The result would be that the manufacturers would lose the business, with no ultimate benefit to the consumer. As a large part of our capital is invested in plant and machinery you can readily see that such a reduction would be the cause of a great economic loss, as well as the loss of employment to several thousand people. We employ from three to four hundred, the number varying according to the season of the year. Both Spain and Portugal, from where most of our raw material is shipped, place an export duty on corkwood. This together with the freight charges places a burden on manufacturers here. Even though the export charge is not large, it amounts to considerable on the finished product, because about 70 per cent of the corkwood becomes waste after manufacturing, and the original charge when considered on the finished product has been greatly multiplied. We also have to contend with the low wages prevailing in both Spain and Portugal. Of late years we have felt this more keenly, because of the introduction of modern machinery in these countries. Cork disks one-eighth inch or less in thickness. We refer principally to the size about 1 inches in diameter and one-eighth inch in thickness. These disks are used to line tin caps commonly known as crown corks. They are now entered under the classification of manufactured corks, larger than three-fourths inch in diameter, and they rightfully belong with the small corks that is, the kind designated as threefourths inch in diameter or less. Although these cork disks are large in diameter, they are very thin, and therefore light in weight. When the present duties on corks were fixed, only small quantities of such disks were imported, and on this account they did not receive the special attention they deserve. A pound of cork disks contains from 10 to 12 gross, making the duty of 15 cents per pound of small consequence to the foreign manufacturers. We think these disks should be listed separately, and charged at the rate of 25 cents per pound, which is the present rate on all small corks. At least 75 per cent of the cork disks used in this country are now imported. Above all, we recommend that the specific duty remain in force. On account of the peculiar nature of the material we manufacture it is extremely difficult to standardize qualities, and the ad valorem duty is unfair to the honest importer. Years ago, corks were listed on the ad valorem basis. Undervaluation became very general, and this led to a change to the present system. We do not manufacture any of the following articles, known in the trade as "cork specialties." We can only say that on investigation, with a view to manufacturing some of these cork products, we find that the importation of all these articles, especially cork paper, cork insoles, and life-preserver blocks, is continually increasing, and that it is practically impossible for American manufacturers to compete. Artificial cork and products, cork paper and split cork, cork floats for nets, cork insoles, cork for life preservers and life buoys. All the above is respectfully submitted, in full confidence that it will have your best attention. Yours, most respectfully, BRIEF OF TRUSLOW & FULLE (INC.) IN RE CORK INDUSTRY. DEAR SIRS: We beg leave to submit herewith the facts and figures pertinent to this industry in its relation to the tariff. RAW CORKWOOD. Is imported chiefly from Spain and Portugal in "slabs" of varying dimensions and weights, and in addition to its cost, averaging about 10 cents per pound, an export duty of one-half cent per pound is levied by and paid to the exporting countries. PARAGRAPH 429-CORK. All "slabs" are put into the machines and pass through the process of manufacture and yield about the following result: Twenty-five per cent of weight of "slabs" are finished corks; 75 per cent of weight of "slabs" is waste. The finished corks are composed of various grades, denominated in the trade as A, B, and C, and differ in price accordingly. The yield of each of these respective grades can not be determined beforehand, but can only be definitely ascertained after the finished cork is assorted into the grades above mentioned. The waste is sold at about 1 cents per pound. FINISHED CORKS. Total consumption in United States about $7,000,000. Imports in 1912 to United States.... Total value of imports to United States....... $2, 178, 085 437, 991 2,616, 076 The specific duty paid as above is equivalent to an ad valorem duty of 20.11 per cent. There are two kinds of finished corks known in the trade as "straights" and "tapers. Also a thin, flat piece called a "disk." The greatest part of the "straights" consumed in the United States are imported, for the reason that they can not be made here as cheaply as is done by means of manual labor exclusively, performed at their foreign homes, by men, women, and children, specially trained for this work. The largest portion of the "disks," though made by machinery, are also imported. Of the "tapers" only a small portion are imported and these are of the higher grades, which the specific duty favors. The balance of the high grades and all the lower grades of the "tapers" are manufactured in the United States. The bulk of the "straights" and "disks" and a small portion of the "tapers" make up the sum total of the imports above stated. EQUALITY BETWEEN FOREIGN AND HOME MANUFACTURERS. Is confined to the following factors entering into cost of manufacturing the finished corks: Both get their corkwood from the same sources of supply, and presumably at about the same prices. Both get from the slabs a yield of 25 per cent in weight of finished corks and 75 per cent in weight of waste. Both are unable to determine beforehand the percentage obtainable of each of the respective grades of finished corks, but can definitely ascertain this only after the assortment into the grades mentioned. Both use the same character of machinery in their respective factories. INEQUALITIES FAVORING FOREIGN AS AGAINST HOME MANUFACTURERS. (A) Export duty on raw corkwood of one-half cent per pound is paid by the United States manufacturer which the foreign manufacturer does not pay. The price obtained for waste by the foreign manufacturer is about the same as the manufacturer in the United States obtains. (B) Labor.-Wages paid in United States per day to men, $2.50; wages paid in United States per day to women, $1.50; total, $4; wages paid in foreign country per day for men and women, one-half, $2. Equal to 100 per cent excess in United States paid for labor. About 50 per cent of cost of finished corks is for labor. About an equal number of men and women are employed in the factories. (C) Freight.-Paid by foreigner on finished corks only 25 per cent of weight. Paid by home manufacturers on finished corks and waste 75 per cent of weight. Equal to 75 per cent excess in United States for freight. (D) Overhead charges.-Salaries paid officers of corporations, salesmen, bookkeepers, clerks, stenographers. Excess paid for these items in United States. (Living expenses of individual owners of business would be in same ratio of excess as salaries of corporation officers.) 78959°-VOL 5-13-34 PARAGRAPH 429-CORK. (E) Value of factory land and building or rental value of same.-Although factories in foreign countries and in the United States are generally located outside of cities near to adequate transportation facilities, there is nevertheless an excess of value and consequently higher rental in the United States. Where factories are located in cities of foreign countries and the United States there is even a greater excess of value and consequently higher rental in the United States. (F) Insurance.-On factory building, raw and manufactured merchandise, excess in United States, both on valuations and rates. (G) Taxes.-Corporation, real and personal property. Excess in United States both on valuations and rates. (H) Interest.-On money borrowed. Excess of rate in United States. We have given exact figures and percentages of excess in cost in the United States over the foreign countries on such items as we could with accuracy and have been conservative and careful not to overstate them. We have purposely abstained from giving either figures or percentages of excess in cost in the United States over the foreign countries on the foregoing items C, D, E, F, G, and H-as your committee is undoubtedly aware of their existence and will consider and weigh the same before reaching a conclusion. Furthermore, your committee may possess or have access to exact data and figures covering these items and add the same or the percentages to those we have given. EXPORTS OF RAW CORKWOOD OR FINISHED CORKS. There are none of either from the United States to any foreign countries, but Spain and Portugal are the main producers of the raw corkwood and finished corks, who distribute both in all countries of the world besides supplying their home users. AD VALOREM AND SPECIFIC DUTIES. Raw corkwood.-Under both the Dingley and Payne-Aldrich tariffs, free of duty. Finished corks.-Under both the Dingley and Payne-Aldrich tariffs, a specific duty was imposed as follows: Twenty-five cents per pound up to three-fourths inch diameter inclusive; 15 cents per pound for all sizes over three-fourths inch diameter. The relative merits of ad valorem and specific duties in their general application need not be discussed. In this industry also the ad valorem duty, while it prevailed, fostered undervaluations and expert appraisers had to contend with the difficulty of discriminating as to qualities and fixing values for each, and it is largely owing to these reasons that the specific duty was adopted and is now in force. In addition to these considerations there are others, peculiarly applicable to this industry, why the specific duty should be maintained. There is no principal open market in Spain or Portugal for the sale of finished corks in wholesale quantities, the various manufacturers selling their product directly from their factories to the users at home and in other countries. Therefore no uniform wholesale market price could be obtained and the basis of value, on which duty is payable, would vary with the cost of production in different factories situated in different localities, instead of there being a uniform market value for the same qualities as the customs laws prescribe. The factory producing at the lowest cost would not only have that advantage over its competitors, but would be further aided by also paying less duty. Mixed shipments of straights, tapers, and disks, of all qualities and grades, invoiced at an average price, even if at bona fide cost, would make it impossible almost and entail great labor to ascertain the exact percentages of each quality in order to determine whether such average cost should not have been greater than stated in the invoice. Even if such average invoice cost is not less than average value after separating the various kinds and grades of finished corks, the entire or the largest part of the duty paid could be put on the straights and disks and the high-grade tapers, leaving practically no duty or only an insignificant portion thereof to be added to the foreign cost of tapers. The result of this would be that the manufacture of the only kind of finished corks now produced to the largest extent in the United States would pass to the foreign manufacturer, who would then control the entire industry instead of about 37 per cent of it as at present. This danger is avoided by continuing in force the prevailing specific duty. Notwithstanding the specific duties now in force during two administrations the United States has been able to manufacture only about 62 per cent of the entire product |