PARAGRAPH 410-BOX BOARD.

This rate of duty would increase importations, insuring a larger revenue than is now obtained, and would at the same time be only competitive with domestic manufacturers and protect honest importers and the Government from frauds that could easily be perpetrated.

ROSE & FRANK Co.

ALFRED FRANK, President.
JAPAN PAPER Co.

RICHARD T. STEVENS, President.

STEREOTYPE PAPER.

STATEMENT OF THE WOOD FLONG CO., NEW YORK, N. Y.

Hon. OSCAR W. UNDERWOOD,
Chairman Committee Ways and Means,

House of Representatives, Washington, D. C.

NEW YORK, January 25, 1913.

DEAR SIR: We respectfully request that the consideration of the present existing tariff on stereotype paper matrices receive the earnest consideration of your committee. This company imports from Germany a prepared paper and pulp flong which is used by newspapers for the making of stereotype molds from which printing plates

are cast.

These flongs have been classified by the customs authorities as "cardboard," and we have been compelled to pay a duty amounting to 35 per cent. This excessive duty has made it impossible for us to derive any revenue from the sale of these flongs, since it has compelled us to make a selling price that newspapers can not afford to pay. These flongs are made by secret process in Germany and can not be made in this country. There are no successful dry flongs made in this country, and therefore by placing them on the free list no home industry could be in the least injured. These dry flongs fill a long-felt want with all American newspapers which use the stereotype process, and these papers would be greatly benefited if they could purchase the flongs at a reasonable price.

We further submit that these flongs are neither cardboard or pasteboard. They are stereotype molds made from wood pulp. They are not laminated, and are therefore not pasteboard.

We hope that this matter will have your favorable consideration, and if further light on the subject is wanted by your committee, we respectfully refer you to Mr. John Norris, chairman committee on paper, American Newspaper Publishers' Association. Mr. Norris can tell you of the great benefit that American newspapers would derive from the use of the dry flong if the excessive tariff did not make its use commercially impossible.

Yours, very truly,

WOOD FLONg Co.

B. WOOD, General Manager.

BOX BOARD.

BRIEF OF THE BOX BOARD MANUFACTURERS' ASSOCIATION.

THE INDUSTRY.

Manufacturers of all kinds of paper boards for boxes and shipping con

tainers.

THE ORGANIZATION.

West of the Allegheny Mountains the Box Board Manufacturers' Association, which comprises 18 mills, producing 1,000 tons daily, out of a total production in the West of 1,700 tons per day. There are about 20 western mills not affiliated with our association.

The production east of the Alleghenies is of about the same volume. These mills are not connected with our organization. The conditions of manufacturing, etc., are practically the same, with the exception that the board, known as strawboard, is not manufactured in the East to any extent.

PARAGRAPH 410-BOX BOARD.

THE RAW MATERIAL.

The raw materials used in manufacturing this product are: Waste paper, straw, sulphite, and ground wood, chemicals.

The most important raw material in use is waste paper, which is collected in all of the larger cities and in many of the smaller ones by junk dealers, and is baled in packages of from 200 to 1,000 pounds each and shipped usually to some near-by mill.

The straw in use by the western mills comes from the farms in the territory usually within a radius of 150 miles of the mill. The sulphite, ground wood, and chemicals form a comparatively small item of expense in the cost of a ton of this product.

LABOR.

The labor in box-board mills is very largely common labor. There is not to exceed in any of the mills more than 20 per cent of what might be called skilled labor.

INVESTMENT.

The investment in these mills in the West will aggregate about $15,000,000 and in the East of about $12,000,000, a total of $27,000,000.

The annual output of a given board mill will just about equal the capital invested.

The cost of the finished product varies but little in any part of the country. There are some advantages, of course, obtaining to the very large mills, but the volume of tonnage produced by the larger mills is not greatest; the greater part of the tonnage being produced by mills ranging from 30 to 50 tons each per day.

THE ELEMENTS OF COST.

The chief items of cost in producing paper board may be roughly classified as follows and in about the proportions given:

Under the present tariff schedules there is practically no competition from Europe with this product in this country. The rate is about high enough to prevent the selling by foreign mills in our markets.

Mills located in Holland chiefly are able to produce a strawboard which meets the needs of European markets at a cost very much below our own, due to the fact that raw material and labor is considerably cheaper. The present price of their product in the London market is $22.50 per ton. Our western mills, which produce all of our strawboard, can not deliver this product on the eastern seaboard at less than a cost of $24.50 to the mill and, in some instances, their cost will run much higher than this.

The rate of freight of the foreign mills would enable them to compete with our mills in the eastern markets of this country if the existing tariff is changed to any extent. Our mills have some advantage in the fact that they can render the service more promptly and in the most of the weights, produce a better article, but if the tariff were changed to any extent the foreign mills manufacturing strawboard would be enabled to take a good part of our eastern business.

PARAGRAPH 410-BOX BOARD.

STRAW.

There has been a large advance in the price of straw, the raw material used in this board. Our farmers, since they are receiving higher prices for all their other products, are insisting on getting much higher prices for a waste product like straw, and last winter many of our people were unable to buy straw at all, the farmers refusing to handle it at prices the mills could pay.

When the present tariff was enacted, the price of raw straw at the mill ranged around $4.50 to $5 per ton. The present price is considerably above $7 and last winter it ranged as high as $9 and $10 per ton.

On all of the other classes of box board, which is manufactured almost entirely of waste paper, there would not be immediate danger or competition to our mills, as the European mills have not at present the equipment, the skill, or the knowledge of conditions, etc., which would enable them to displace our product; but if the tariff were changed to any extent there is no doubt but what they would begin to calculate on the great American markets, and mills would be built at or near all of the ports in Europe. If foreigners did not build these mills, our own people-or, rather, people who had a knowledge of the businessin one way or another here, would immediately begin the promotion and building of mills in foreign countries, thereby jeopardizing the investment of every mill in America.

OUR CONTENTION.

The argument which we beg to submit to the committee is based chiefly upon the difference in the cost of their raw material and labor, the difference being greater in the raw material than on the labor; and, in this respect, this is one of the very few commodities which could be successfully manufactured in any of the European centers where the raw material would be cheaper by 50 per cent than it is in our own country.

The raw material, as said before, in the manufacturing of this product, consists of waste paper of all varieties. It is collected and handled by junk dealers and the mills have no control whatever of their source of supply. It could not under any circumstances be monopolized or controlled in this country, and we would face conditions in Europe where a producer there would have an advantage to begin with in the raw material alone of over $5 per ton-a handicap which we could not possibly overcome without the protection of the present tariff. There would, of course, be a wide difference in the labor cost, as common labor chiefly is used, and this difference would amount to perhaps $2.50 to $4 per ton. I would say, speaking broadly, that the other items of expense would not vary to any great extent.

As illustrating the conditions in reference to raw material it may surprise those who are not informed to know that at present mills as far west as Rockford, Ill., and St. Paul, Minn., have been importing common waste paper in bales from markets like Liverpool, Glasgow, Manchester, etc. This is due to the fact that there has been a scarcity of this waste paper in our markets, and the prices asked were exorbitant, and the mills found it practicable to buy the material though agents in foreign markets, to pay the freight on it across the ocean, then 1,500 miles into the interior, at a cost lower than they could purchase their local product. It is, of course, obvious that the original cost of raw material was exceedingly low. This is true now and always has been and always will be until mills are built in Europe consuming the large quantities of waste material which at present they ship to this and other countries. We respectfully submit that the committee need not go further than discover the truth as to the above assertions in regard to raw material and they are bound to be led to the conclusion immediately that it would not be fair to an industry which is characteristically American and in which there is so much money invested in this country to place it on a competitive basis against foreign concerns who could buy their raw material for one-half the price which it is necessary to pay in America.

We beg further to cite the rather anamolous condition that of the investment of $30,000,000 in this industry there is not one dollar of watered stock and there are no interests or no monopolistic combinations which control any branch of it. The mills are located in all the Eastern, Middle Northern, and Western States up to the Mississippi River and are in nearly all instances owned by local

PARAGRAPH 411-SURFACE-COATED PAPER.

capital by people who have spent their lives in the industry and to whom the loss of even one season's business would be a serious menace.

Of the mills in the West there have been during the last five years a very large number of receiverships, due to the fact that there was an overproduction of this commodity and the prices went down to figures much below the cost of inanufacturing the product, and many of the mills were not able to stand this strain.

EARNING POWER OF THE MILLS.

We wish to go on record and can furnish proofs if asked that during the past five years the capital invested in this business in this country has not paid an average of 5 per cent to the stockholders and owners. There have been a few of the larger mills that have earned as much as 10 per cent, but there have been no such things as bonanza profits or bonanza years in this business and never will be. The depreciation in the mills is very great, as the machinery is operated continuously and the emergency losses are also very great, due to the fact of the uncertain market conditions which are affected by all branches of trade.

Very respectfully submitted.

PARAGRAPH 411.

CHARLES R. WHITE,

For the Box Board Manufacturers' Association.

Papers with coated surface or surfaces, not specially provided for in this section, five cents per pound; if wholly or partly covered with metal or its solutions (except as hereinafter provided), or with gelatin or flock, or if embossed or printed, five cents per pound and twenty per centum ad valorem; papers, including wrapping paper, with the surface decorated or covered with a design, fancy effect, pattern, or character, whether produced in the pulp or otherwise, but not by lithographic process, four and one-half cents per pound; if embossed, or wholly or partly covered with metal or its solutions, or with gelatin or flock, five cents per pound and twenty per centum ad valorem: Provided, That paper wholly or partly covered with metal or its solutions, and weighing less than fifteen pounds per ream of four hundred and eighty sheets, on a basis of twenty by twenty-five inches, shall pay a duty of five cents per pound and twenty-five per centum ad valorem; parchment papers, and greaseproof and imitation parchment papers which have been supercalendered and rendered transparent, or partially so, by whatever name known, two cents per pound and ten per centum ad valorem; all other grease-proof and imitation parchment papers, not specially provided for in this section, by whatever name known, two cents per pound and ten per centum ad valorem; bags, envelopes, printed matter other than lithographic, and all other articles composed wholly or in chief value of any of the foregoing papers, not specially provided for in this section, and all boxes of paper or wood covered with any of the foregoing paper, five cents a pound and thirty per centum ad valorem; albumenized or sensitized paper or paper otherwise surface coated for photographic purposes, thirty per centum ad valorem; plain basic papers for albumenizing, sensitizing, baryta coating, or for photographic or solar printing processes, three cents per pound and ten per centum ad valorem.

SURFACE-COATED PAPER.

TESTIMONY OF CHARLES W. WILLIAMS, OF NEW YORK CITY.

The witness was duly sworn by the chairman.

Mr. WILLIAMS. Mr. Chairman and gentlemen of the Ways and Means Committee, I represent Charles W. Williams & Co., who are general paper jobbers in surface-coated papers, for the purpose of covering paper boxes. We buy these papers from nearly all of the domestic mills. We also buy them from some of the foreign mills. We ask that the present tariff law be changed-section 411, providing that paper with coated surface or surfaces, not specially provided for, be

PARAGRAPH 411-SURFACE-COATED PAPER.

changed from a specific duty of 5 cents per pound-which is a very innocent looking statement, but which really means a duty of from 75 per cent to 127 per cent, shall be changed to an ad valorem duty of 50 per cent. If wholly or partly covered with metal, or its solutions, or with gelatin or flock, or if embossed or printed-be changed from the combination of specific duty and ad valorem duty, viz, 5 cents per pound and 20 per cent ad valorem, to a wholly ad valorem duty of 30 per cent. If suitable for lithographic transfers, that the duty be changed from the classification in which it now is, viz, paper with coated surfaces, not otherwise provided for, to a specification by itself, and that a duty be assessed on that article of 25 per cent.

I might state that the lithographic transfer paper is an article which is not made in this country; that the duty which is on it to-day of 5 cents per pound is equivalent to 25 per cent; but for special reasons we would prefer to have that enumerated by itself and a duty laid ad valorem instead of specifically.

Mr. LONGWORTH. Excuse me, I did not catch what your business

was?

Mr. WILLIAMS. We are paper jobbers.

Mr. LONGWORTH. You are not manufacturers?

Mr. WILLIAMS. We are not manufacturers.

Mr. LONGWORTH. You are importers?

Mr. WILLIAMS. We are importers to a certain extent, and also we are jobbers of the domestic goods; we are good friends of the domestic manufacturers. We are also friends of 2,000 paper box manufacturers, who have to pay the bill, and we are here to protest against a prohibitive duty.

Mr. LONGWORTH. What proportion of your product is imported?

Mr. WILLIAMS. In the year ending June 30, 1912, 2 per cent was imported. There was formerly 4 per cent imported; it has been reduced to 2 per cent, and is gradually being reduced to a vanishing point.

Mr. FORDNEY. Reduced under the Payne tariff law?

Mr. WILLIAMS. Under the Payne tariff law; yes, sir. I might state, gentlemen, that in 1908 we were promised a revision of the tariff downward; and to our surprise the domestic manufacturers, who were already getting an average of about 65 per cent on our class of goods, surface-coated papers, came here and, through some very exaggerated statements, induced this committee to raise that average of 65 per cent to over 100 per cent. On hearing of thisMr. PAYNE (interposing). What paper is that on?

Mr. WILLIAMS. Surface-coated paper-paragraph 411; paper with

coated surface or surfaces.

Mr. PAYNE. The Treasury reports do not seem to bear out that statement.

Mr. FORDNEY. Grease-proof paper, you are speaking of?

Mr. WILLIAMS. No, sir; surface-coated paper for paper boxes, not grease-proof paper; paragraph 411. When we found that the Ways and Means Committee had raised this duty or revised it upward, from 65 to 100 per cent, we appeared before the Finance Committee of the Senate and we proved to them that these statements made to them by the domestic manufacturers were grossly exaggerated, to say the