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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 adrantage 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

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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.

CHARLES R. WHITE,

For the Box Board Manufacturers' Association. PARAGRAPH 411.

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

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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 this

Mr. 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

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PARAGRAPH 411-SURFACE-COATED PAPER. least, and they put the duty back, or amended it, so as to put it back again to the Dingley schedule. But in the conference committee between the Senate and House, through means we do not know about, as to why or how, the duty was put through at the increased duty of from 65 per cent to about 100 per cent. We think that the committee were imposed upon, and we wish to explain our reason for thisMr. LONGWORTH. Now, pardon me, right there.

The Treasury reports show that during last year there was imported $555,000 worth of this paper, at an average ad valorem of 50 per cent.

Mr. WILLIAMS. Fifty-eight per cent; yes, sir; I would like to explain that.

Mr. LONGWORTH. But you explained a moment ago that the duty was 150 per cent.

Mr. WILLIAMS. I stated that the duty averaged on our class of goods from 75 per cent to 127 per cent. The reason that that classification is unfair and wrong is that it includes in that general classification of paper not otherwise specified a large quantity of lithographic transfer paper, which is a valuable paper, and the duty on that figures 25 per cent. Our duty is from 75 per cent to 127 per cent. By combining both of them it brings the general average down to 58 per cent, which the Congressmen can not see. And that is why this is, but it is a general average; therefore we ask that the lithographic transfer paper be separately enumerated. The importers of that class of paper are satisfied with the duty of 5 cents a pound; it means 25 per cent to them; but if it is separately enumerated the classification of the customhouse statistics will show just exactly what we import and what they import. Their duty is 25 per cent and our duty is a little over 100 per cent, and the average duty is about 58 per cent.

Mr. LONGWORTH. You mean that that class of paper is worth about three times as much as yours?

Mr. WILLIAMS. Yes, sir.
Mr. LONGWORTH. Although it is listed in the same paragraph ?

Mr. Williams. Yes; although it is listed in the same paragraph; there is injustice, and the statistics do not do us justice; they do not give either our percentage nor their percentage; their per centums is low, ours is high, and the average is 58 per cent. As a matter of fact, three-fourths of the different items we used to import have been absolutely shut out and there are no importations in them.

The statistics, or the census of the Government of 1910, for surfacecoated paper manufactured in this country show that there were manufactured here 104,200 tons. During that same year there were imported 3,098 tons, showing a total consumption of 107,298 tons of surface-coated paper. We estimate that the consumption in this country for the year ending June 30, 1912, is 110,000 tons. There were imported for the year ending June 30, 1912, 2,275 tons, about 2 per cent. It was very small under the Dingley law, about 4 per cent; but the domestic manufacturers were very loath to see any of it coming in and they persuaded you to raise the duty. The importations during the most favorable years of the Dingley saw were 8,263,848 pounds. For the year ending June 30, 1912, they were 4,549,317 pounds, showing a reduction in the importations of 3,714,531 pounds. We estimate, gentlemen, that if you will adopt the schedule we propose the

PARAGRAPH 411-SURFACE-COATED PAPER.

importations will increase from 2,275 tons to about 10,000 tons, or about one-tenth of the consumption in this country, and that the revenue

The CHAIRMAN (interposing). What do you fix the consumption of that particular paper in this country at?

Mr. WILLIAMS. The consumption is about 110,000 tons; and that the revenue that will be produced will be about $1,500,000, whereas during the year ending June 30, 1912, the revenue was $277,585.

I have distributed this brief amongst the members of the committee for the reason that I have some samples in the back of the paper which will illustrate to you very clearly the kind of papers we are talking about, and if you will look at sample No. 5 you will see that there is a domestic friction glazed paper. This paper is produced after it is coated by running between two rolls, the upper roll running faster than the lower one, producing that glazed finish. More than half of the paper that is consumed is this friction glazed paper, that can not be imported, for the reason that they do not make it on the other side; it is a cheap paper, and it is sold in this country from $1 to $1.50 a ream for the white paper and $1.75 a ream

Mr. FORDNEY (interposing). You say that because of its cheapness it can not be imported from abroad?

Mr. WILLIAMS. It can not be imported, because the foreign mills do not make it; they make a better article at the same price, or a little higher price. More than half of the paper that is used in covering paper boxes is this cheap friction glazed paper.

Now, I would like to refer the committee to sample No. 1 in my brief. There is what we call the flint glazed paper.

We have figured out the exact labor cost on a ream of this paper, viz, we have taken the figures of the domestic manufacturers which they submitted in their brief of September 21, 1908, and published in public hearings of the Sixtieth Congress, volume 6, page 6099. We are taking their figures, to be absolutely fair with them. They give the percentage of labor cost in a ream of paper as 21.8 per cent. Taking their own figures, $2.25 for flint paper makes the labor cost on a ream of that flint paper 49 cents.

Mr. HAMMOND. Thirty-nine per cent, is it not?
Mr. WILLIAMS. Well

, 39 cents is the excess of labor cost. The actual labor cost is 49 cents, and their own figures of the foreign labor cost are 10 cents; deducting the foreign cost from the domestic cost gives an excess of cost of the domestic labor over foreign labor of 39 cents per ream. And we are asked to pay a duty of $1.35 a ream to protect that 39 cents. It is useless to say to you gentlemen that there is absolutely none of it imported.

Mr. FORDNEY. Has the high tariff which you speak of, which has prohibited the importation, caused the value of that class of paper to increase to the consumers in this country?

Mr. WILLIAMS. Yes, sir.
Mr. FORDNEY. How much has
Mr. WILLIAMS (interposing). About 35 cents a ream.

Mr. FORDNEY. How much has the value of that paper to the consumer increased since the adoption of the Payne tariff law?

Mr. WILLIAMS. About 35 cents a ream; from 25 cents to 35 cents.

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