PARAGRAPH 411-SURFACE-COATED PAPER.

But the wording is so explicit that the appraisers had no option but were compelled to apply the rate of 44 cents per pound on a 3-cent wrapping paper, a thing that domestic manufacturers never intended. We also ask that the clause "Provided, That paper wholly or partly covered with metal or its solutions and weighing less than 15 pounds per ream of 480 sheets, on a basis of 20 by 25 inches shall pay a duty of 5 cents per pound and 25 per centum ad valorem" be omitted. This clause is amply covered by changing the duty entirely to ad valorem; namely, by placing a duty of 30 per cent ad valorem on paper wholly or partly covered with metal or its solutions.

We wish at the outset to state that the papers which can be imported under the very general classification of "Paper with coated surface or surfaces" are practically all divided between surface-coated paper for box purposes and paper for lithographic transfer purposes. Lithographic transfer paper is very expensive and the present duty of 5 cents per pound is the equivalent of 25 per cent ad valorem. They sell in Germany at $20 per ream of 100 pounds, which at 5 cents per pound makes $5 duty or 25 per cent. This paper is not manufactured in the United States. For the purpose of revenue we believe all importers are willing to let the duty on this paper remain the same as at present, but prefer it to be expressed as an ad valorem duty of 25 per

cent.

The Bureau of Statistics of the Customs Department of the Government, does not separate the lithographic transfer paper from the ordinary surface-coated paper used for covering paper boxes. We, therefore, for the purpose of having accurate statistics, ask that the lithographic transfer paper be separately enumerated and that a duty of 25 per cent be made on this item."

The surface-coated papers for covering paper boxes under the present duty have a specific and a combination of specific and ad valorem duty. We ask that it all be made entirely ad valorem, so that it will be easily computed and that any one will know exactly what the duty means in relation to the value. The duties on these papers as paid under the present tariff in actual practice amount to an ad valorem duty of from 75 per cent to 127 per cent most of the items bearing a prohibitive duty. The Government figures by combining in the one total, lithographic transfer paper and glazed and other papers for paper boxes show an average of 58 per cent, but because of improper and inadequate classification, the Government figures regarding importations are misleading and not a correct guide for either classs of goods.

We estimate the total consumption of surface coated papers, domestic and foreign, for covering paper boxes and for lithographic transfer purposes in the United States at 60,000,000 pounds and for books, catalogues, and printing purposes 160,000,000 pounds. The importation for the year ending June 30, 1912, was only 4,549,328 pounds, and the duty collected on the same was only $277,585. We estimate the increase of the importations under the proposed duty will be 15,000,000 pounds upon which increase duty would be paid amounting to $1,120,000; thus not only increasing the income of the Government, but also at the same time reducing the cost of a raw material for making paper boxes over $1,000,000 and therefore the cost of living to the masses of the people and still protecting American capital and labor.

REASONS FOR REDUCTION.

Our reason for recommending a reduction of these tariff rates is to make the tariff competitive and not prohibitive and to provide more revenue for the Government. The tariff to be fair to everyone must be competitive; it must be reduced to a rate which will allow the importer to get his paper in open competition with the paper manufactured here. After reducing the duty as we propose, we have still remaining sufficient duty, much more than enough, to protect the difference between foreign and American labor.

Our further reason for recommending the change from a "specific rate" and a combination of a "specific and ad valorem rate" to a "flat ad valorem rate" is that the tariff may be clear, certain, and free from ambiguity. By combining the two, the domestic manufacturers have ingeniously contrived by means of the rates and the wording of the present tariff to prohibit from importation a large percentage of various kinds of paper formerly imported under the Dingley tariff.

Surface-coated papers are manufactured by two processes-a "flint" process and a "friction" process. The "flint" finish is produced by rubbing the paper after it is coated with a flint stone. The "friction" finish is produced by running the coated paper between two rollers, the one roller running faster than the other, thus producing a glazed surface.

The friction glazed surface coated paper, which amounts to about one-half of the paper used for paper-box coverings, are manufactured so cheaply in this country

PARAGRAPH 411-SURFACE-COATED PAPER.

by our greatly improved processes that the foreign mills can not possibly compete with our mills. (See attached sample marked No. 5.)

On the white flint glazed paper under the present law and under the Dingley law there have never been any importations of any consequence.

On the colored flint glazed, embossed, and metal-coated papers competition existed to a certain extent under the Dingley law. The average price of the papers was about 35 cents per ream; less to the consumer than at present, and at the same time, according to the reports of Dun and Bradstreet, the domestic manufacturers were in a very prosperous condition.

Of the surface-coated papers that can be imported in competition with the domestic goods, if this proposed change is adopted by your honorable body, all may be accurately classified as follows:

No. 1, white flint glazed paper.

No. 2, colored flint glazed paper.

No. 3, embossed surface-coated paper.

No. 4, metal-coated paper.

Samples of each variety are attached hereto and similarly marked.

We will illustrate the effect of the tariff on each of these items under three headings: (a) The present tariff, (b) the Dingley law, and (c) the duty we propose.

We place them in this order for the reason that we wish to make it clear that the present or Payne tariff is higher than the Dingley tariff, which was already excessively high, and our proposed rate is more just than the Dingley rates.

NO. 1. WHITE FLINT Glazed paper.

About 40 per cent of all the flint glazed paper used is white flint glazed. It weighs 30 per cent heavier than the colored flint glazed. It can not be made lighter. The present duty (5 cents per pound) is an equivalent of 127 per cent ad valorem, and is prohibitive. Even under the Dingley law which averaged 80 per cent the duty was prohibitive and practically none of this paper was even then imported.

To make the imported white flint competitive, we advocate the duty of 50 per cent ad valorem. White flint costs to manufacture here less than the colored flint, and the duty should therefore be less than the duty on the colored, whereas it is now 30 per cent higher. This shows the evil of the specific duty, which was purposely put in to absolutely shut out this class of paper.

(a) Present duty of 5 cents per pound.-Cost f. o. b. foreign port, $1.06 per ream (basis, 500 sheets, size 20 by 24 inches, weighing 27 pounds). Duty, $1.35 per ream, equal to 127 per cent ad valorem. Cost of cases, ocean freight, insurance, cartage, consular fees, customhouse brokerage, etc., 20 cents per ream. Total, $2.61 per ream. Domestic white flint sells at $1.90 to $2 per ream. The duty is plainly prohibitive.

(b) Dingley tariff of 24 cents per pound and 15 per cent ad valorem.-Cost f. o. b. port, $1.06 per ream. Duty, $0.84 per ream, equal to 80 per cent ad valorem. Cost of cases, ocean freight, etc., 20 cents per ream. Total, $2.10 per ream. Domestic flints sell at $1.90 to $2 per ream. This duty was also prohibitive.

(c) Proposed duty of 50 per cent ad valorem.-Cost f. o. b. foreign port, $1.06 per ream. Duty $0.53 per ream. Cost of cases, ocean freight, etc., 20 cents per ream. Total, $1.79 per ream. The importers after paying 10 per cent overhead expenses, comprising storage, selling, delivery, insurance and office maintenance, could just about meet domestic manufacturers' price on a competitive basis.

NO. 2. COLORED FLINT GLAZED PAPER.

This is the only flint glazed paper which is to-day imported on anything like a competitive basis, but on account of the high duty the quantity is fast diminishing to the vanishing point. The margin is now so narrow that importers can not afford to handle it.

(a) Present tariff of 5 cents per pound.-Cost f. o. b. foreign port, $1.06 per ream (basis 500 sheets size 20 by 24 inches weighing 20 pounds). Duty $1 equal to 94 per cent ad valorem. Cost of cases, ocean freight, insurance, cartage, consular fees, customhouse brokerage, etc., 15 cents per ream. (This cost is 5 cents less than on white flint as, because of its lighter weight, more reams of colored flint can be packed in each case). Total $2.21 per ream. Domestic flints sell at $2.25 per ream. The margin for importer's profit and expenses is not enough to pay to handle.

(b) Dingley tariff of 2 cents per pound and 15 per cent ad valorem.-Cost f. o. b. foreign port, $1.06 per ream. Duty $0.65 per ream, equal to 61 per cent ad valorem.

78959°-Vol 5-13-11

PARAGRAPH 411-SURFACE-COATED PAPER.

Cost of cases, ocean freight, etc., 15 cents per ream. Total, $1.86 per ream. Domestic flints sold under the Dingley law at $2 per ream, which left the importer not enough margin to pay his overhead expenses.

(c) Proposed duty of 50 per cent ad valorem.-Cost f. o. b. foreign port, $1.06 per ream. Duty $0.53 per ream. Cost of cases, ocean freight, etc., 15 cents per ream. Total, $1.74 per ream. Domestic flints were sold under the Dingley law at $2 per ream and on this basis the importers, after paying 10 per cent for overhead expenses, could just meet the domestic manufacturers on a competitive basis.

NO. 3. EMBOSSED SURFACE-COATED PAPERS.

The domestic manufacturers slipped into the present tariff under the same duty as the metal-coated papers the words or if embossed or printed," thus throwing this class of goods, which were imported in limited quantities under the Dingley law, into the prohibitive class. The present high duty has absolutely prohibited the importation of embossed papers, for the reason that a surface-coated paper suitable for embossing must weigh 50 per cent heavier than the surface-coated paper which is not embossed.

(a) Present tariff of 5 cents per pound and 20 per cent ad valorem.-Cost f. o. b. foreign port $2.75 per ream (basis 480 sheets, size 20 by 24 inches, weighing 31 pounds). Duty $2.10 per ream, equal to 76 per cent. Cost of cases, ocean freight, insurance, cartage, consular fees, customhouse brokerage, etc., 20 cents per ream. Total, $5.05 per ream. Domestic manufacturers sell embossed papers at from $3 to $5 per ream. Foreign importation is prohibited.

(b) Dingley tariff of 2 cents per pound and 15 per cent ad valorem.-Cost f. o. b. foreign port $2.75 per ream. Duty $1.19 per ream, equal to 50 per cent. Cost of cases, ocean freight, etc., 20 cents per ream. Total, $4.14 per ream. Domestic manufacturers sold embossed papers at from $3 to $5 per ream. Competition existed only on the highest grades.

(c) Proposed tariff of 30 per cent ad valorem.-Cost f. o. b. port $2.75 per ream. Duty $0.83 per ream. Cost of cases, ocean freight, etc., 20 cents per ream. Total, $3.78 per ream. On this basis the importers, after paying overhead expenses amounting to 10 per cent, could meet the domestic manufacturers on a competitive basis, and then only on the higher grades. On the lower grades of embossed papers the importers could not compete even if the duty was entirely removed.

NO. 4. METAL-COATED PAPERS.

The great bulk of the paper imported under this heading is imitation copper and imitation tin-foil, used for edging paper boxes. Under the Dingley tariff there was some competition between the domestic and foreign goods, but since 1909 the domestic manufacturers have reduced their prices, so that the importers can not now compete with them, even if the duty was reduced to the Dingley tariff rate. It can very easily be seen, therefore, that the importation of these goods is prohibited, and in consequence it has practically ceased.

(a) Present duty of 5 cents per pound and 20 per cent ad valorem.-Cost of goods f. o. b. foreign port, $1.65 per ream (basis 480 sheets, size 20 by 24 inches, weighing 19 pounds); duty, $1.28 per ream, equal to 77 per cent; cost of cases, ocean freight, insurance, cartage, consular fees, customhouse brokerage, etc., 15 cents per ream; total, $3.08 per ream. Domestic manufacturers are selling these goods to-day at from $2.67 to $2.81 net per ream. Foreign goods are excluded.

(b) Dingley tariff of 3 cents per pound and 20 per cent ad valorem.-Cost of goods f. o. b. foreign port, $1.65 per ream; duty, $0.90 per ream, equal to 54 per cent; cost of cases, ocean freight, etc., 15 cents per ream; total, $2.70 per ream. Domestic goods were sold at $2.67 to $2.81. The importer could not handle these goods and pay his overhead expenses.

(c) Proposed tariff of 30 per cent ad valorem.-Cost of goods f. o. b. foreign port, $1.65 per ream; duty, $0.50 per ream; cost of cases, ocean freight, etc., 15 cents per ream; total, $2.30 per ream. Domestic goods are selling to-day at $2.67 to $2.81 net per ream. Adding 10 per cent (which is a conservative estimate-it is actually about 20 per cent) for overhead expenses, leaves the importers a chance to meet domestic manufacturers on a competitive basis.

The surface-coated paper which is used most largely in what is called enameled book or wood-cut paper. These goods are not imported, for the reason that they can be made cheaper in this country than in foreign countries, and there would need be no duty at all on this class of goods. However, we are putting it on the ad valorem

PARAGRAPH 411-SURFACE-COATED PAPER.

basis of 50 per cent, which certainly need cause no worry to any American manufacturer.

According to the decennial census taken in 1910 there was manufactured in this country during the year 1909 coated paper of all kinds aggregating 104,200 tons. During that same year there was imported, according to the statistics of the customhouse, 3,098 tons. The importation under the most favorable year of the Dingley law, namely, year ending June 30, 1907, was 4,132 tons, and at least 690 tons of this was a class of paper which is not made in this country at all, so that it will be seen that under the worst possible view that can be taken of the Dingley tariff out of 107,298 tons consumed here there were 104,200 tons manufactured in this country, and only 3,098 tons imported in the year 1909.

Under a tariff law made wholly ad valorem, as we propose, we estimate a consumption of 110,000 tons, of which 100,000 tons would be manufactured in this country, and 10,000 tons, or one-tenth of the consumption, imported, and all domestic manufacturers would still do a good business, over $1,000,000 added to the income of the Government and another $1,000,000 saved to the great consuming public.

The importations for the year ending June 30, 1909, were 6,195,302 pounds, and for the year ending June 30, 1912, were 4,549,317 pounds, a decrease of 1,645,985 pounds. The customhouse statistics are as follows:

According to the figures of the eight domestic manufacturers (see tariff hearings, 60th Cong., vol. 6, p. 6099), the item of labor in America is 21.8 per cent of the total cost, and the item of labor in Europe is 9 per cent of the cost. A cablegram January 13, 1913, sent us from the largest mill in Europe, states that their labor cost on a ream of flint paper is 15 per cent, and on embossed papers and metal-coated papers it is 10 per cent. However, taking the domestic manufacturer's own figures, the result is as follows on one ream of paper:

To get the above table we have taken the American flint papers at $2.25 per ream, 21.8 per cent of which is 49 cents, and subtracted the European labor cost, namely, 9 per cent of their price, which equals 10 cents per ream, and the result is 39 cents excess per ream paid American labor on flint papers. On embossed papers we take an average cost of $4 per ream, 21.8 per cent of which equals 87 cents per ream, the American labor cost. Subtracting the European labor cost, namely, 9 per cent on $2.75, equaling 25 cents per ream, and we have 62 cents per ream excess paid American labor. On metal-coated paper, take the American cost at $2.50 per ream, 21.8 per cent equals 55 cents labor cost. Subtracting ($1.65 at 9 per cent) 15 cents European labor cost, we have 40 cents per ream excess labor cost per ream.

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SUMMARY.

We ask that all duties on surface-coated papers be placed on an ad valorem basis. We ask that surface-coated papers be separately classified as herein before enumerated, so that hereafter the statistics regarding importations may be of value in adjusting

rates.

We ask that we, as importers, may have a fair opportunity to compete with domestic manufacturers after allowing for the cheaper labor cost of Europe.

We ask, if the duty on the raw materials used by the domestic manufacturers is reduced by this proposed new tariff act, that a corresponding reduction be made from the ad valorem rates we have suggested, so that the basis of competition may be maintained.

We ask that the duty on surface-coated paper for covering paper boxes, which is raw material for 2,000 paper-box manufacturers in this country, be taken out of the prohibitive class and placed on a competitive basis, thus saving over $2,000,000 annually to the American consumer, namely, $1,000,000 direct in the lower price of his goods, at the same time adding $1,000,000 to the income of the Government.

We ask for an immediate downward revision so that the American public may have the choice of purchasing either foreign or domestic papers without being penalized by an excessively high price in the event that it may wish to purchase any foreign

DEAR SIR: We wish to supplement our brief of January 17, 1913, by stating that we fail, after looking through the brief submitted by the 10 domestic manufacturers of glazed papers to find any facts controverting our figures.

In looking over their figures for selling expense, namely, 54 cents per ream for domestic manufacturers to 34 cents for the foreign manufacturer, they do not include the large selling expense incurred by foreign manufacturers when selling in this country. In fact, the figures should read the other way round, as it takes 8 to 10 weeks after an order is taken for foreign goods before they can be delivered; also the importer is obliged to carry enormous stocks, whereas the domestic manufacturer can fill an order in one to two weeks.

Also, the figures as regards wages are incorrect, as they put down excessive wages for themselves and put down the wages of the foreign labor at 34, 43, and 48 cents, etc., whereas the facts are that the domestic mills employ considerable female help, hereas the foreign mills do not employ female help at any price, and the male help receives at the lowest 90 cents per day.

Lest, however, the domestic manufacturers in some subsequent brief may, through more exaggerated statements, try to pursuade you to keep up this present prohibitive duty, we trust you will call upon us to substantiate our figures, which we hold ourselves in readiness to do, and will show bills upon bills to prove every word and figure already given you.

We do not agree with the nine importers who signed Mr. Herman Staber's brief that papers with coated surface or surfaces, n. s. p. f., should go as low as 35 per cent; we want to see the domestic manufacturers compete. If this duty is 50 per cent it will be about right, but if higher than 50 per cent importers can not compete.

Neither do we agree with the Charles Beck Co. that paper coated with metal or its solutions should go as low as 20 per cent, but it should not be more than 30 per

cent.

We want to see this Democratic administration a success and do not want to see too radical a change. We have tried in our figures to be absolutely fair and impartial to both foreign and domestic manufacturers. If too low a duty is assessed, the domestic manufacturers can not compete, and if too high a figure is named the foreign manufacturer can not compete. Give us a competitive duty and thus benefit the con

sumer.