PARAGRAPH 451-BOOTS AND SHOES. abroad with $18,000,000 worth of this product and in many places pay adverse tariff rates at a greater cost, and meet them there and sell them at a little higher price to the consumer in their market than you do to the American consumer here? Don't you think you would be willing to take this tariff off and let those people come into your market place and sell in competition with you? Mr. RAND. I answered the first part of that question as to why the American has been able to sell shoes abroad, which has been because of the attractiveness of the styles. With regard to your last question as to whether we, as an industry, expect to be put out of business, I can not answer definitely. I do not want to attempt to take a pleading attitude here. I do not expect to be put out of business. We are trying to make a frank statement to you. We have met competition as keen and as hard as ever existed in any great industry among ourselves, and in some way and somehow we are going to try to continue in the business. I said in my previous statement that I am opposed to the calamity howling, and I do not want to go on record as saying that if any change is made a revolution is going to take place. We are not trying to make an artificial argument. This group of men is trying as hard as possible to impress your committee with the sincerity of their attitude and the fairness of their attitude and the justice of it in every respect, and we are going to abide by your decision gracefully, whether it be favorable or adverse. That expresses my personal position about the matter. Mr. JAMES. You not only met this sharp competition at home, but you met it abroad? Mr. RAND. We worked hard. Mr. JAMES. And you have met it successfully? Mr. RAND. Yes. I think if I were a failure I would be ashamed to come before this committee. Mr. JAMES. I appreciate your candor and courage, and I believe you will meet this situation even if boots and shoes are made free. The CHAIRMAN. May I interrupt just a moment? Gentlemen of the committee, there is a matter that requires my personal attention in the House until 2 o'clock, and I will ask the committee to excuse me until that time. I will ask Mr. Harrison to take the chair during my absence. The chairman retired from the hearing room, Mr. Harrison taking the chair. Mr. RAND. Mr. James, there is a deeper meaning to this situation than a clash of wits between you and myself. Mr. JAMES. I am not undertaking that. What countries are your chief competitors? Mr. RAND. The United States. Mr. JAMES. Outside of the United States? Mr. RAND. I can not answer that. I think Mr. McElwain will answer you in detail, because he has spent weeks on it, and I have. tried to touch the industry only in a general way. Mr. PAYNE. When was it that the shoe machinery company began to send machinery abroad and to send teachers over there to instruct them how to use their machinery and make shoes? 78959°-VOL 5-13-55 PARAGRAPH 451-BOOTS AND SHOES. Mr. RAND. I do not know when they commenced, Mr. Payne. Mr. PAYNE. Was it not along in 1909 or later that they commenced operation vigorously? Mr. RAND. In the absence of specific knowledge, I can not answer that question. Mr. PAYNE. You can not say whether it was or not? Mr. RAND. I can not say definitely. I know that progress has been made in the past four or five years along the lines mentioned. When it comes to specific dates I can not answer. Mr. PAYNE. Prior to 1909 none of these first-class shoes were made abroad that came in competition with ours. Since then the shoe machinery people have sent their machinery abroad and started the industry abroad, and have made pretty good shoes over there? Mr. RAND. I think my statement also was that the foreigners had been making, for a number of years, good shoes, but they were making shoes unattractive from the American standpoint of lines and pattern and last Mr. PAYNE (interposing). Absence of style? Mr. RAND. Yes; absence of style. Mr. PAYNE. But since then they have been making stylish shoes? Mr. RAND. I do not mean that has come from the United Shoe Machinery Co. I mean it has come from the best shoe manufacturers of the United States. Mr. PAYNE. I am afraid to talk about the United Shoe Machinery Co. Mr. RAND. I am not. Mr. PAYNE. The fact was stated publicly, in the public press, that they sent these teachers over there after 1909, and some of the manufacturers have stated that that changed the conditions somewhat. Some of them thought they could make shoes free in competition with the world. I do not know whether that is your idea or not. Mr. RAND. That is my idea as you have expressed it, and you probably expressed it more clearly than I did. Mr. JAMES. You spoke of the tariff you had to pay on machinery used in the manufacturing of shoes. What is the rate of tariff on that machinery? Mr. RAND. Forty-five per cent on machinery. Mr. LONGWORTH. Mr. Rand, I am going to read from an English trade paper called the Boot and Shoe Trade Journal. Are you familiar with it? Mr. RAND. No. Mr. LONGWORTH. It is the Boot and Shoe Trade Journal of London, and this was published in April or May of 1911. I just want to read one or two sentences from it and ask you if you agree with what they say: We are selling shoes to America, and the world knows it pretty well by now. The continental buyers of foreign shoes know it, too, and doubtless reason with themselves in this way: That if England is selling shoes to America it is because they are better, and that it is policy for them to buy English shoes instead. The interest displayed by both American and Canadian buyers in the British goods is a happy omen. It is now more readily granted that British boots are best; that they are all we claim for them; and that, money for money, they are, owing to our national economic conditions and cheaper methods of production, of exceedingly better value. PARAGRAPH 451-BOOTS AND SHOES. Are English shoes being sold in this country now? Mr. RAND. Yes; they are being sold in this country, and the man appointed by the Bureau of Commerce and Labor to get up the statístics of the foreign shoe industry strikes a note of warning in his introduction to the report that he made, that America had best look out for her shoe industry. Mr. LONGWORTH. Is it true that England is taking away our continental trade in shoes? Mr. RAND. If you will allow me, I will leave that to the speaker who will follow me, who is familiar with these matters, and has the information at his fingers' ends, and I think can answer you more intelligently. Mr. JAMES. On the contrary, is it not true that our exports of shoes are increasing year by year? Mr. RAND. You mean with regard to volume? Mr. JAMES. Yes. Mr. RAND. I do not know. We have the records, and they will be taken up by the next speaker. I know some of America's best shoe manufacturers are having difficulty selling shoes through their own private stores abroad, where they did not have difficulty several years ago. Mr. KITCHIN. In regard to the article which Mr. Longworth read from the English paper, stating that England is now exporting shoes to this country, is it not a fact that she exported less than $75,000 worth last year, and that you shoe manufacturers in the United States exported to England more than $1,500,000 worth? Mr. RAND. I think you have the figures of their exports and our imports. I think also we have those figures in our brief. I am trying to avoid those statistics, because we have them accurately, and I do not like to give them approximately. Mr. HARRISON. If there are no further questions, we will call the next witness. TESTIMONY OF J. FRANKLIN MCELWAIN, OF BOSTON, MASS. The witness was duly sworn by the chairman. Mr. MCELWAIN. Mr. Chairman, and members of the Ways and Means Committee, I have been requested to represent the National Boot and Shoe Manufacturers' Association, the National Shoe Wholesalers' Association, the National Shoe Retailers' Association, and the New England Shoe and Leather Association, to argue before you the retention of the present duty on boots and shoes. I will file a brief at this point, to be inserted in the record. The brief above referred to is as follows: BRIEF IN SUPPORT OF THE RETENTION OF THE PRESENT IMPORT DUTY ON BOOTS AND SHOES, By the NationaL BOOT AND Shoe ManufactURERS' ASSOCIATION, NATIONAL SHOE WHOLESALERS' ASSOCIATION, NATIONAL SHOE RETAILERS' ASSOCIATION, AND NEW ENGLAND SHOE AND LEATHER ASSOCIATION. Hon. OSCAR W. UNDERWOOD, M. C., Chairman Committee on Ways and Means, House of Representatives, Washington, D. C. DEAR SIR: On behalf of the National Association of Shoe Manufacturers, the National Shoe Wholesalers' Association, the New England Shoe & Leather Association, and the National Shoe Retailers' Association we hand you a brief in support PARAGRAPH 451-BOOTS AND SHOES. of the retention of the present import duty on boots and shoes provided for by Schedule N, sections 450 and 451. With specific reference to the recommendations of your committee regarding the outline of such a brief we beg to state: First. That we recommend no change in duties, but appear in support of the retention of existing duties on boots and shoes. The reasons upon which we base our support are specified in our printed brief. Second. Since no specific modification of the duties fixed by these sections is now before the committee, no estimate is possible of an increase or decrease in imports. Third. We have no suggestions to make regarding changes in the phraseology of the present tariff law or for the betterment of the administrative features thereof. Respectfully submitted. NATIONAL BOOT AND SHOE MANUFACTURERS' ASSOCIATION. OFFICE OF THE SECRETARY, INTRODUCTION. The Payne-Aldrich Tariff Act levied an import duty of 10 per cent ad valorem on (sec. 450) "boots and shoes made wholly or in chief value of leather made from cattle hides and cattle skins of whatever weight of cattle of the bovine species, including calf skins"; and an import duty of 15 per cent on (sec. 451) “boots and shoes made of leather.' The duty of 10 per cent applies in general to men's shoes; the duty of 15 per cent applies to women's shoes. The shoe industry as represented by associations of manufacturers, wholesalers, and retailers is in favor of scientific tariff revision. This brief is respectfully submitted in the confidence that a scientific examination of the facts will justify beyond question the retention of the present duties on boots and shoes. SUMMARY OF POINTS. I. The present tariff is a necessary protection to a great American industry, national in extent, highly competitive, working on a small and constantly decreasing margin of profit, in which trusts, combinations, and pools are unknown. Its reduction would result in a serious blow to the industry and in the importation of large quantities of boots and shoes manufactured abroad under conditions with which Americans can not and should not compete. II. The present tariff is a necessary protection to a vast number of highly skilled, well-paid American workmen. Its reduction would necessitate radical readjustment of wages and of standards of living to compete with European wages and standards. III. The present tariff is already low and has but recently been reduced. Its further reduction would not benefit the consumer. IV. Opposition to any reduction is national in extent. East and West, North and South join in unanimous protest. Shoe manufacturers, shoe merchants, and shoe workers alike oppose any reduction in the present reasonable rate. POINT I. The present tariff is a necessary protection to a great American industry, national in extent, highly competitive, working on a small and constantly decreasing margin of profit, in which trusts, combinations, and pools are unknown. Its reduction would result in a serious blow to the industry and in the importation of large quantities of boots and shoes manufactured abroad under conditions with which Americans can not and should not compete. SIZE OF INDUSTRY. The boot and shoe business ranks among the greatest manufacturing industries of the continent. The capital employed amounts to over $220,000,000. The annual product is valued in excess of $500,000,000, or greater than that of the woolen, sugar, or paper and pulp industries. PARAGRAPH 451-BOOTS AND SHOES. NO TRUSTS. It is one of the few great staple lines of industry in which the trust form of organization has made no headway. There are to-day over 1,300 separate and independent shoe manufacturing concerns in the United States. No pool, pooling agreement, or combination in any form has ever existed in the industry. The largest single concern to-day manufactures not over 4 per cent of the total product of the country. NATIONAL SCOPE. The industry is national in extent, stretching from Lewiston, Auburn, and Gardiner, Me., to San Francisco, and from St. Paul and Minneapolis to Atlanta and New Orleans. Shoe manufacturing forms an important industry in Maine, New Hampshire, Massachusetts, Connecticut, New York, Pennsylvania, New Jersey, Maryland, Virginia, Georgia, Louisiana, Ohio, Illinois, Missouri, Michigan, Wisconsin, Minnesota, California, Oregon, and Washington. MARGIN OF PROFIT. Competition in the shoe industry has resulted in the consumer receiving the maximum value possible. The margin of profit, never large, has decreased to from 5 per cent to 3 per cent on the turnover, or lower than most, and as low as any important manufacturing enterprise. No more than healthy profits are made by shoe manufacturers, and it is a significant fact that no large fortunes have ever arisen from this industry. Competition, on the other hand, has resulted in progressive manufacturing policies and in the scientific study of the problems of manufacture and distri bution. ANALYSIS OF COSTS. In considering the effect of any tariff reduction we must first analyze the costs that enter into the manufacture of shoes, namely, merchandise, machinery, labor, and overhead charges. MERCHANDISE. The merchandise items in a shoe which make up the major part of the cost are sole leather, upper leather, cloth, hooks, eyelets, buttons, laces, thread, nails, and tacks. Other merchandise items entering into the cost of this production are lumber for wooden cases, carton boards for cartons, tissue paper for packing, last blocks for lasts, dyes and chemicals for stains and finishes. Every item above without exception, is itself subject to import duty, ranging in amount from 4 per cent to 60 per cent. Such vitally important items as cut soles, calfskins, sheepskins, and goatskins pay a rate of 15 per cent; cotton lining pays 31 per cent; calfskins, japanned or patented, 25 per cent; carton boards, 35 per cent; hooks and eyelets, 45 per cent; cotton webbing, 60 per cent; linen thread, 38 per cent; and buttons, 57 per cent. A reduction of the present tariff on boots and shoes will place the American shoe manufacturer in competition with the markets of the world in the sale of his products while not allowing him the advantages of the markets of the world in the purchase of his raw materials. It in effect offers a subsidy to competing foreign manufacturers who are able to purchase their merchandise at lower prices than American manufacturers of boots and shoes. MACHINERY. While the merchandise items are heavily protected, machinery is no less so. Shoe machinery carries a rate of 45 per cent import duty; needles, 47 per cent; brushes, 40 per cent; and last blocks, 20 per cent. The American shoe manufacturer is no longer at an advantage in competing with his European rivals because of his American inventive skill in developing and applying machinery to the process of manufacture. The European manufacturer can now secure the same machines used by the American manufacturer from the same machinery company. This company supplies the European manufacturer with trained instructors to teach his operators and with equal service in caring for his machines. |