PARAGRAPH 411-SURFACE-COATED PAPER. Mr. TOMPKINS. Not necessarily. Mr. LONGWORTH. What are you complaining for? Mr. TOMPKINS. When the Payne Act was put into effect and the price of raw material increased Mr. LONGWORTH (interposing). You would not be asking for a decrease on your raw material if you did not think it would increase your profits, would you? Mr. TOMPKINS. It will increase our profits to a certain extent, yes, and will help us to get back what the Payne Act took away. By that act the price of the raw material was increased, but the paperbox manufacturer was not able to increase his price to cover the difference represented by increased cost of paper. If this duty on raw material is now reduced the paper-box manufacturer will eventually get back what he lost. Mr. LONGWORTH. Are you losing money now? Mr. TOMPKINS. The paper-box makers, I believe, are not making any unreasonable profit, and some people are losing money while others are making some. Mr. LONGWORTH. What is your concern making? Mr. TOMPKINS. I am not in the paper-box business myself. I am secretary of this organization. Mr. LONGWORTH. You speak with the authority of the organization? Mr. TOMPKINS. Yes, sir. Mr. LONGWORTH. Do you not know whether the business is profitable or not? Mr. TOMPKINS. I know to a certain extent it is or they would not be in the business. Mr. LONGWORTH. Exactly. Mr. TOMPKINS. But there are no exorbitant profits. Mr. LONGWORTH. You say you are not making an unreasonable profit, and you are trying to increase that profit? Mr. TOMPKINS. I say there are no unreasonable profits being made by any of the paper-box manufacturers. They are manufactured on an ordinary margin. Mr. LONGWORTH. Is it not true that this is an immensely profitable business, and that a great deal of money has been made by those engaged in the paper-box business? Mr. TOMPKINS. No, sir; I do not think that is true. I would say as a rule that it would be the opposite. Mr. FORDNEY. You say you have no foreign competition? Mr. TOMPKINS. Practically none. There may be some few small Mr. PAYNE (interposing). The boxes are so bulky that it costs a great deal to transport them? Mr. TOMPKINS. Yes, sir. There may be some small high-price boxes where the value of the article would be such as to justify paying the freight to get them over here. However, it does not cut any figure. The CHAIRMAN. Your time is up. Mr. TOMPKINS. I believe I have practically covered our point. I want to sum up by saying, as I stated before, we are willing to con PARAGRAPH 411-SURFACE-COATED PAPER. sider a fair protection to the manufacturer, such as will equalize his cost. But we do not believe the tariff should be increased as it was in the Payne Act, to the extent that will enable the paper manufacturers to get unreasonable profits and increase their prices as they did, not only on the papers which come in the flint class but also on the friction papers, the cheap papers. The paper-box manufacturers have been, in some cases, obliged to substitute cheaper for the high price foreign papers on account of the increased price; their customers would not pay it. Mr. FORDNEY. Do you know that the profits of the manufacturers, as you represent, are excessive? You say the profits of the manufacturers of your raw material are excessive on account of the Payne tariff law. Mr. TOMPKINS. We know they must have been increased. Mr. FORDNEY. Oh, no. You say you do not know anything about importations because your product has no competition. What do you know about the profits of the manufacturers of paper? Mr. TOMPKINS. At the time the Payne Act was under consideration we took enough interest in the subject to investigate the financial standing of the American manufacturers of this paper, and it justified us in the conclusion that Mr. FORDNEY (interposing). Is it not true, when you state that manufacturers of paper have made excessive profits that it is a pure guess on your part, and that you do not know anything about what it costs to make it? Mr. TOMPKINS. I think we know this, that we have a right to take their own statements given to the Senate Finance Committee. From the cost of labor and operation and other items we can see that their profits are unreasonable. Mr. LONGWORTH. What are the dividends that these companies pay on their capital? Mr. TOMPKINS. I could not answer that. Mr. LONGWORTH. What rate of dividends does your company pay? Mr. TOMPKINS. I could not answer. Mr. LONGWORTH. What do you know about this if you do not know the labor cost or the rate of dividends paid by any of these corporations? You have come before this committee as an expert? Mr. TOMPKINS. I am not a tariff expert. Mr. LONGWORTH. I am asking you a plain question. You say your profits are reasonable and that the profits of the paper manufacturers are unreasonable? Mr. TOMPKINS. That is a conclusion from their labor cost. Mr. LONGWORTH. What dividends do you pay? Mr. TOMPKINS. I do not know. Mr. LONGWORTH. Do you know the dividend paid by any corporation you represent? Mr. TOMPKINS. No, sir; I do not. Mr. LONGWORTH. Do you know the dividend paid by any manufacturer about whom you are talking? Mr. TOMPKINS. No, sir; not at present. Mr. LONGWORTH. What do you know about the business? PARAGRAPH 411-SURFACE-COATED PAPER. Mr. TOMPKINS. I am taking their statements of their labor cost, the American manufacturers' statement, and I do not think it necessary to go back of them. Mr. LONGWORTH. You have stated positively to this committee, on oath, that these paper manufacturers are making unreasonable profits. On what do you base that charge? Mr. TOMPKINS. I said we did not believe they should be allowed to make unreasonble profits such as we believe they are making. Mr. LONGWORTH. Are they? Mr. TOMPKINS. I do not know whether they are, but believe they are. Mr. LONGWORTH. Why do you say they are, on oath? Mr. TOMPKINS. For the reason that their reports showed they had made good profits on their business, and the financial reports of Dun and Bradstreet and things of that kind, when this matter was up, and they got an increase in protection. Mr. LONGWORTH. What dividends were they paying then? Mr. TOMPKINS. I do not remember any reports of any dividends any of the companies paid, but from the different reports they had and from Dun and Bradstreet's reports. Mr. LONGWORTH. Are you a stockholder in any paper-box manufactory? Mr. TOMPKINS. No, sir. Mr. LONGWORTH. Do you know anything about the manufacture of paper boxes? Mr. TOMPKINS. Somewhat. Mr. LONGWORTH. How did you get your experience? Mr. TOMPKINS. From the association business, and acting as secretary of the companies in this line of work for a number of years. Mr. LONGWORTH. Do you mean to say, on oath, that you do not know the dividend rate of any concern or corporation in the association of which you are secretary? Mr. TOMPKINS. Yes, sir; I do not know. Mr. LONGWORTH. Very well, that is all. BRIEF OF MANUFACTURERS OF SURFACE-COATED PAPERS. Schedule M, paragraph 411, act of 1909. The manufacturers of surface-coated papers respectfully show that their products are affected by part of paragraph 411, customs tariff act of August 5, 1909, as follows: "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 cents per centum ad valorem." This class of paper is known and sold as surface-coated, glazed, plated, and fancy papers, and is principally used for covering paper boxes. PARAGRAPH 411-SURFACE-COATED PAPER. The industry in this country is very small, especially when compared with Germany and Belgium, where establishments larger than any in this country are located, which manufacture under the most favorable conditions as to cost of materials and labor. This present paragraph 411 replaces paragraph 398 of the act of 1897. Owing to the many different grades of papers imported there had arisen, under former acts, much confusion as to proper classification, the determining of proper values and the elimination of undervaluation. The phraseology of paragraph 411 is far in advance of that of any previous corresponding paragraph on account of its definite, specific provisions as to the various grades and rates of duty applicable thereto. On the hearings before the Committee on Ways and Means at the time of the last tariff revision we submitted a brief, and also a supplementary brief containing matter called for by the committee. These communications contained statements as to the nature and conditions of the industry; facts as to the average cost of surface-coated papers at home and abroad; schedules showing the different varieties of papers imported and also manufactured here, with samples; tables of comparative wages paid in Germany and the United States; classified pay rolls of domestic manufactures, and other matters. We would respectfully refer to these briefs for such detailed information as may be required by your committee. (See Tariff Hearings, 60th Cong., pp. 1085 to 1098.) The specific duties and rates asked for at the time of last revision were granted in part only, and we state as an indisputable fact that under the provisions of the present act the domestic manufacturers are barely able to compete with the foreign manufacturers on the general line of surface-coated papers imported, and on some lines we are through this foreign competition unable to compete at all. It is also a fact that, notwithstanding the general increased cost of production, domestic prices are lower to-day than they were prior to the act of 1909. Any lower rates would certainly cause serious injury to the business in this country. We earnestly request and urge that the present provisions and rates of paragraph 411 be retained in the forthcoming tariff law. Respectfully submitted. January, 1913. Committee: Doty & Scrimgeour (Inc.), New York, N. Y.; Louis ADDENDA. The information contained in briefs submitted on the hearings before the Committee on Ways and Means of 1909, heretofore referred to, will be found in those briefs as follows: 1. Facts as to average cost of production in this country and Germany, our principal competitor: Cost of manufacturing a ream of flinted paper. Paper.. Labor.. Manufacturing and selling expense.. Total... (See p. 1095, Tariff Hearings, 60th Cong., Nos. 1–12.) PARAGRAPH 411-SURFACE-COATED PAPER. 2. Table of comparative wages paid in Germany and the United States in the surface-coated paper industry: (See p. 1098, Tariff Hearings, 60th Cong., Nos. 1-12.) NOTE. This table shows over 250 per cent higher wages paid at that time in this country than in Germany. SUPPLEMENTARY BRIEF SUBMITTED BY THE MANUFACTURERS OF SURFACE-COATED PAPERS. RELATING TO SCHEDULE M, PARAGRAPH 411. TARIFF ACT OF 1909. [William H. Shuart, Springfield, Mass., Chairman of Committee of Manufacturers.] We must, in consideration of the welfare of our employees and laborers, and in the proper protection of our capital and vested rights, offer in this brief refutations to the exaggerated and misleading statements as to facts, proposed drastic changes in phraseology and reductions of duties, asked for in the briefs presented and testimony offered, · at the hearing before the Committee on Ways and Means, Schedule M, pulp paper and books, January 17, 1913, by Chas. W. Williams, testimony and brief, Herman Staber, Geo. H. Tompkins, and H. A. Crafts, as follows: In the act of 1909, after years of our protesting on the question of undervaluation and misleading, indistinct classification, Congress provided an explicit, comprehensive, and scientific phraseology, determining positively surface-coated papers and their varieties and substitutes, and eliminating any chance of error in their proper classification, much to the disadvantage of some unscrupulous importers. We have seen from the testimony offered that the common objection is made to specific or pound-rate duties, whereas it is a well-known fact that all materials used in the production of surface-coated papers are purchased by the pound or weight, and weight is therefore the accepted basis of the cost of production. Under these conditions, the specific duty is rational, easily and surely assessed, and collected, and eliminates any advantage that might be gained by undervaluations, or on consigned goods, wherein the foreign manufacturer profits unduly. Attention was called to the variation of duty of from 75 to 127 per cent for obvious reasons. To gain this end and show 127 per cent, unfair selection is made of white flint glazed, on account of its excessive weight. Domestic white flint weighs 27 pounds, sells at $1.90 to $2 per ream.) This paper has never been imported in any quantity (unless for experimental or tariff purposes). It is a well-known fact to the trade here and abroad that the white clay coating is inexpensive (clay dutiable at $2 per ton), and the raw paper stock produced here, is better adapted for white coating than the foreign, which has given the domestic producer the advantage on white surface-coated papers, while the foreign raw paper stock is better adapted to dark, rich colors. These colors used for coating are much cheaper abroad than here, and thus allow the importation of the fine, luxurious colored papers. Stress is laid on lithgraphic transfer paper and positive testimony given to the effect that it is not made in this country, and a separate classification is asked for on this article. We have direct information from the largest consumers in New York City that they did not use the imported article, but produced their own satisfactorily at a very small expense. It is easily prepared and used only for transferring the engraving from the original stone to the printing stone. It is not used for printing, is imported only in limited quantities, and consequently can not show any appreciable effect on the average rate of duty on surface-coated papers n. s. p. f. Question by Mr. Longworth): "What proportion of your product is imported"? (Answer by Mr. Williams): "In the year ending June 30, 1912, 2 per cent." This |