PARAGRAPH 474-PHOTOGRAPHIC PLATES. they advertised in their own trade journals that they sell 95 per cent of the paper used and manufactured in the United States. Mr. HULL. You say they have secured control of most of the rival concerns in Europe? Mr. GENNERT. I would not say that; no, sir. But they have control of the companies which bear the name "Kodak." They were incorporated by the Kodak Co., and they have a large company in each of the large European countries. Mr. HULL. They have established branch businesses in those countries? Mr. GENNERT. Yes, sir; although I understand the Kodak Co. (Ltd.) was once an independent English company. Mr. HULL. Do you know whether they have any agreement with the rival concerns of which they have no control in a financial way? Mr. GENNERT. That is rather difficult for me to answer. For instance, they have an agreement with the Moving Picture Patent Co. and its allied concerns, which are known as the Moving Picture Trust, that they would only sell films to persons who were pronounced as good and well behaved by the Moving Picture Trust. What changes have been made in that contract I can not tell, but I can say that the Moving Picture Patent Co. and its allied concerns have been sued by the United States Government, and action is now pending in the eastern district of Pennsylvania. I believe within the next few days the contracts with the Eastman Kodak Co. are going to be produced in court, and undoubtedly the Department of Justice can furnish all of that information. Mr. HULL. That concern virtually controls the output, controls the territory, and controls the prices? Mr. GENNERT. Exactly. Mr. HULL. Not only in this country but in a number of other countries? Mr. GENNERT. Exactly, although the control is not as strong in Europe as it is here. For instance, they sell in Europe film in retail quantity at 3 cents a foot, and they sell it in America in wholesale quantities at 3 cents a foot. I can not buy from them. They refuse to sell my firm. Mr. HULL. Has this concern been coming and asking for a tariff to protect the articles which it handles? Mr. GENNERT. If I may use information which is not my own, i will state that they endeavored at the time the Payne-Aldrich bill was being prepared, to have the tariff raised to 60 per cent on films. Mr. HULL. On the chief products it handles? Mr. GENNERT. Yes, sir; on films. I might say the statement has been made that it exported to Europe in one year 11,000 miles of films. Their exports for the 10 months ending October, 1912, are given in the report of the Bureau of Commerce and Labor at slightly over $5,000,000, which would be about 25,000 miles of film. Mr. HULL. Have you stated all you know about the improper methods that are used with respect to controlling outputs, the means by which it eliminates rival concerns and fixes prices arbitrarily? Mr.. GENNERT. I have not, sir. I have made merely a general statement. I have a sincere hope that action will be shortly started PARAGRAPH 474-PHOTOGRAPHIC PLATES. against the Eastman Kodak Co. by the Department of Justice. And I want it distinctly understood in making that statement that I speak entirely of my own belief and hope and am not directly or indirectly quoting anybody in any way connected with the Department of Justice. I would consider that improper. Mr. HULL. You do not care to detail any further facts about it? Mr. GENNERT. I do not, sir. I will read one or two letters. I have a large batch of letters here. Our complaints generally come in this form. Usually they will telephone to us or will come in to us and say, "I am sorry, I can not buy your goods, you will have to take them out. If you do not take them back, I can not sell them; Eastman won't let me.' But some of them, more courageous or more foolish, just as you may consider it, have written letters. I will read one from a small town in Pennsylvania. Unless you gentlemen insist on it, I will not give any names, because if the information is published at this time, they will simply be cut off. We have been driven to import films. We can not buy them in America, so naturally we have imported them, and we are compelled to pay an ad valorem duty of 25 per cent, and we can not make money on that. Mr. DIXON. Your time has expired, Mr. Gennert. Mr. GENNERT. May I just refer briefly to a question of plates, as to which some statements were made this morning? Mr. DIXON. Yes; you may proceed. Mr. GENNERT. I am afraid that those statements will mislead the committee. Mr. Cramer, when he appeared here this morning, stated that he desired the duty on photographic dry plates to be raised from the present duty of 25 per cent to 40 per cent ad valorem, because a certain English house exported plates to New York at 50 cents, and it cost them 53 cents to manufacture plates in America. One point that I would ask from this committee is that we want a chance to live, and if something is not done to reduce these duties I am going to prophesy that within five years there will not be anybody in the photographic business in America except the Eastman Kodak Co. They are even going after the photograph galleries, and when they get them, that will be the end of the rest of us. Mr. HALL. Where is the place of business of the Eastman Kodak Co. ? Mr. GENNERT. In Rochester, N. Y. BRIEF OF G. C. GENNERT, NEW YORK, N. Y. NEW YORK, N. Y., January 30, 1913. To the Chairman and Members of the Ways and Means Committee: I appear before this committee for the purpose of requesting a sweeping reduction in the tariff on photographic dry plates and films, now taxed at 25 per cent ad valorem under section 474 of Schedule N, Sundries. My firm, G. Gennert, of New York City, which has been in the general photographic business since 1854, has previously filed a brief with this committee on the subject of photographic cameras, classified by the Board of General Appraisers as "optical instruments" at 45 per cent duty under section 108 of the present tariff law, a section to which cameras do not properly belong. (See Schedule B, Jan. 9, 1913, p. 889.) PARAGRAPH 474-PHOTOGRAPHIC PLATES. PHOTOGRAPHIC FILMS, NOT Developed or EXPOSED. Two classes of photographic films are now imported into this country, both of which are covered by section 474 of the present tariff act. They are: (1) Photographic films in the raw; that is to say, films in a condition ready to have a picture taken upon them. Technically speaking, these films are well described in the act (sec. 474) as "not developed or exposed.' (2) Films already exposed and developed and therefore having a picture thereon: these are almost exclusively moving picture films and are again divided into two classes called film negatives and film positives. Film negatives are films in the raw, exposed in the camera and developed and in a condition that prints or positives may be made therefrom. These pay a duty of 25 per cent ad valorem. Film positives are positive copies made from a film negative and represent the form in which films are sold to the moving-picture theaters. Our request for a reduction in duty is restricted to films "not developed or exposed" or raw films, as we have called them, which excludes film negatives and film positives carrying a finished picture. Films in the raw state-that is to say, films not exposed and not developed now paying a duty of 25 per cent ad valorem should be placed upon the free list, and for the following reasons: (1) Their sale in America is practically monopolized by the Eastman Kodak Co., a corporation of New York, which has secured this monopoly by the use of unfair trade restrictions and agreements, which have practically smothered all competition. (2) They can be and are produced at less cost in America than abroad. As proof of this assertion, we point out the fact that the Eastman Kodak Co., manufactures at Rochester, N. Y., all the films that it exports to Europe, which amounts to 80 per cent of all films used there, and this, despite the fact that its parent corporation, the Eastman Kodak Co. of New Jersey, owns the control of the extensive works manufacturing photographic supplies at Harrow, England. Its yearly production of film is so vast that no other manufacturer in the world can expect to compete with it on the cost of production. (3) The question of the difference in the cost of labor abroad and in the United States need not be considered. The basic film is manufactured and coated with film emulsion by machinery at a very low cost. The item of labor is a negligible proportion of the whole cost. As proof of this we repeat that the Eastman Kodak Co. manufactures no films at its Harrow, England, plant, nor does it import any films into the United States, while it exports them in vast quantities. (4) The Eastman Kodak Co. sells moving-picture films cheaper in Europe in retail quantities than it does in America in wholesale quantities. Thus the Kodak (Ltd.), the English Eastman subsidiary, sells films in retail quantities at 3 cents a foot, against the wholesale price in America of 34 cents foot, a difference of approximately 15 per cent. (5) Substantially all the raw material used in the manufacture of films in the United States is produced here and therefore pays no duty. (6) The films we import are made upon celluloid manufactured in the United States and exported to Europe, where it is coated with sensitive emulsion and then returned to the United States, where the finished article must, under the present tariff law, pay an ad valorem duty of 25 per cent. In addition, the importer must pay the high freight rate of 36 shillings per ton and 1 per cent ad valorem. The same abnormal freight rate applies to the celluloid on its shipment to Europe for coating. (7) The exports are enormous, while the imports are almost negligible and produce a minimum of revenue. (8) The present tariff enables the Eastman Kodak Co. to exact an enormous tribute in swollen profits from the American people, as its dividend record shows. This dividend record demonstrates that the American industry needs no protection. (9) The present duty should be removed in order that competition may be made possible. In support of the foregoing we state the following facts: The Eastman Kodak Co. of New Jersey not alone controls the entire photographic business of America, but it has acquired the Kodak (Ltd.) of London, the Eastman S. A. F. of Paris, and the Kodak Gesellschaft m. b. H. of Berlin, and is the leading factor in the photographic business of the world. PARAGRAPH 474-PHOTOGRAPHIC PLATES. The import of films in the raw state is negligible at the present time, my firm being one of the largest importers; the imports for the year ending June 30, 1912, were $75,328, while the exports for the 10 months ending October, 1912, were $5,106,756. The Eastman Kodak Co. has $6,165,700 preferred 6 per cent cumulative stock, regularly paying dividends, and outstanding common stock in the amount of $19,512,300. On December 31, 1911, it had a surplus of $12,186,288, an increase of almost $2,000,000 over 1910, and a reserve for depreciation, etc., of $6,413,102, an increase of about one-half million over 1910; both figures are now on the increase. It had total assets on December 31, 1911, of $46,556,920, an increase of about $4,000,000 over 1910. Its dividends on the common stock started at the rate of 21 per cent per annum in 1902, the first year of its present organization, increasing each year up to the panic year of 1907, when 20 per cent was paid. They reached their climax in 1911, when 424 per cent was paid, and thus far in 1913 121 per cent has been declared; in 1912 approximately 40 per cent was paid. We import photographic and moving-picture films for the reason that we can not buy them in America. The Eastman Kodak Co. refuses point blank to sell us anything, because we will not carry their goods exclusively. Shall this powerful corporation be aided in the substantial monopoly of the photographic business of this country, which it now has, by a continuation of a tariff of 25 per cent on its principal product, furnishing in 1911 at least 50 per cent of its net profits of $11,649,263 (57.81 per cent applicable to dividends upon its common stock), out of which it paid in that year dividends of $8, 174,847, or 424 per cent on its common stock? Even in the panic year of 1907, when its control of the entire business was not as complete as it now is, its earnings showed 34.95 per cent applicable to the common stock of about $20,000,000. PHOTOGRAPHIC PLATES. The present duty of 25 per cent ad valorem on photographic plates under section 474 should be reduced to 10 per cent ad valorem. The situation in dry plates is very similar to that in films in this country, although the control of the Eastman Kodak Co. over plates is not as complete as over films, nor is their restrictive policy enforced as ruthlessly. There are two independent American factories making dry plates, the Cramer Dry Plate Co. and the Hammer Dry Plate Co., both of St. Louis, Mo., who together manufacture, estimatedly, about 20 per cent of the American output, the balance going to Eastman. We estimate the sale of the American-made dry plates in this country at $5,000,000 and the imports at less than $100,000; the Department of Commerce and Labor gives no separate figures as to the imports of dry plates. We append hereto a calculation based on 240 dozen 8 by 10 dry plates, which we use as a unit. From this calculation it will appear that, taking into consideration all the factors confronting the American producer (excluding the item of difference in cost of labor between here and abroad, which is a negligible percentage of the total cost), a duty not to exceed 6 per cent will equalize the duties paid by the American manufacturer upon the imported raw material used in the process of manufacture. We submit that a duty of 10 per cent ad valorem is amply sufficient to protect the American manufacturer and will compensate him for any difference in the cost of labor that may exist between the United States and abroad. In point of fact, the American manufacturer requires no protection, as photographic dry plates of American manufacture are sold at lower prices in the United States than those at which the European manufacturer sells them abroad. F. Ernest Cramer, an American manufacturer, on January 30, 1913, stated before this committee (Schedule N., Book No. 23, p. 4447) that it cost 53 cents a dozen to make a 5 by 7 plate in America, while English plates are sold in this country at 50 cents a dozen. Both of these statements are incorrect; all of the plates made in this country can be manufactured at less than 50 cents for a 5 by 7 size; they cost from 40 to 45 cents to manufacture; the ordinary net wholesale prices of plates in this country are approximately as follows for a 5 by 7 size: Stanley plate, $0.49; Standard, $0.58; Hammer, $0.55; Cramer plate, $0.56. My firm is the principal importer of English plates and our price is 58 cents a dozen for 5 by 7. No English plates are sold in this country at 50 cents a dozen for the 5 by 7 PARAGRAPH 474-PHOTOGRAPHIC PLATES. As soon as Mr. Cramer finished testifying, I went out to a retail store in Washington and bought a dozen American-made 5 by 7 plates for 55 cents and annex receipted bill. How could they be sold retail for 55 cents if the American cost of production were 53 cents? The statements of Mr. Cramer as to lantern-slide plates are likewise erroneous. He says, at page 4447 of the record: “The 34 by 4 lantern-slide plates, English make, are sold at 22 cents a dozen in this country, whereas it costs us about 27 cents a dozen to manufacture. This is not true. The English lantern-slide plate mentioned by Mr. Cramer is sold by us in America to large consumers for 27 cents a dozen, whereas Mr. Cramer sells the same plates for 25 cents a dozen and other American manufacturers sell them as low as 21 cents. Mr. Cramer and his family have been in the dry-plate business for over 30 years and were the pioneers in this country; it is ridiculous to suppose (as he stated before this committee) that the English makers can sell plates in this country at 6 per cent below Mr. Cramer's manufacturing cost, without putting him and the other manufacturing companies out of business. Yet Mr. Cramer has done a large and profitable business for over 30 years and is prospering to-day. We respectfully ask that the duty on dry plates be reduced from 25 per cent ad valorem to 10 per cent ad valorem, and that photographic films "not developed or exposed" be placed on the free list. Respectfully submitted. G. C. GENNERT. Calculation of the percentage of excess cost of production to American manufacturer due to duty and freight of imported materials, based upon a batch of 240 dozen 8 by 10 dry plates, a quantity formerly used as a unit and called an “emulsion." 240 dozen plates at $2.40 per dozen, list, are worth.... Less 45 per cent discount..... Net selling price...... $576.00 259.20 316.80 This quantity requires 8 pounds of imported gelatin and 16 cases of 100 square feet each of imported glass, as there are 15 dozen 8 by 10 sheets of glass in a box of 100 square feet. The duty on 8 pounds of gelatin at 60 cents per pound, cost in Europe, at 15 cents per pound and 20 per cent ad valorem, is as follows: 8X15 cents $1.20+20 per cent of $4.80=96 cents, total.... $2.16 The duty on 16 cases of glass-1,600 square feet at 13 cents per pound (1,664 pounds net weight)....... 22.88 Total duty on imported material... 25.04 Less saving to American manufacturer in freight as follows (freight on glass being much cheaper than freight on dry plates): Pounds. A 100-foot case of glass (15 dozen 8 by 10 sheets) weighs packed Resulting in a saving of freight to the American manufacturer of...... 5. 18 And making his duties, less his saving in freight, which is equal to about 6 per cent on the net selling price.. 19.86 |