PARAGRAPH 427-BUTTONS. Hon. OSCAR UNDERWOOD, Chairman Ways and Means Committee, House of Representatives, Washington, D. C. UNITED BUTTON CO., New York, January 18, 1913. DEAR SIR: We understand that the question of the tariff rate on the importation of buttons made from vegetable ivory (par. 427, tariff of 1909, Schedule N) will be considered by your committee about the 29th instant, and we respectfully inquire whether it is the intention of the committee to change the existing tariff rate; because if it is not we do not desire to take up your time in listening to arguments as to why that rate should continue to be maintained. Vegetable ivory buttons are manufactured from ivory nuts produced by the tagua palm in Colombia, Ecuador, and Panama, South America, and come in duty free, and the industry is absolutely dependent for existence upon a protective tariff. Without such a tariff it could not exist, because the very low cost of labor in Germany, Austria, and Italy enables those countries to produce ivory buttons at such a price that we could not compete with the high labor cost we have to pay in this country. There is not the slightest trace of any monopoly in the ivory button industry in this country, and there never was. The tariff simply gives manufacturers the American market to a very large extent, but domestic competition now and always has regulated the selling price to the consumer, with the result that that domestic competition has made it difficult for the manufacturers to make even a fair profit on their output. If the tariff was taken off entirely or was reduced materially from the present sched ule, it would without question result in the admission of foreign-made buttons and would drive the American manufacturer out of business, and the people now employed in this industry would seek employment elsewhere and become competitors in other lines of employment to sustain themselves. The American standard of living unquestionably demands a higher rate of wages than is paid abroad, and the only way we could compete with the button makers of Germany, Austria, and Italy, without the protec tion of the tariff, would be by reducing the standard of living of the American button maker to that of the German, Austrian, or Italian, to attempt which would result in industrial upheaval and chaotic conditions the danger of which would be hard to forecast. The public has not suffered one iota as the result of any monopoly, combination, agreement, or understanding that has increased to price to the consumer, and as that price to the consumer has been regulated absolutely by domestic competition, we sincerely hope that no action in regard to the tariff rate on vegetable ivory buttons will be taken that will be injurious to an industry that is only surviving by strictest attention and the greatest economy in all matters relating thereto, and that can not possibly exist under any more adverse circumstar ces than obtain at the present time. It is essential to have a specific duty, or at least partially so, as at present, because of the difficulty in pricing this class of goods or getting at the proper valuation. It will be practically impossible for customhouse officials to put a proper valuation upon goods imported, no matter how efficient they may be for their business in general, and without a specific duty undervaluation will be made as formerly under a purely ad valorem tariff. Whether we differ or agree as to the theories of the working of the tariff, if we refer to the past history of this industry and get at the facts as they have transpired it will become evident that under the low tariff of 1885 the industry was practically put out of business, so that by 1887 the majority of the factories closed up or failed. Conditions following this were such that a great many of the employees of this industry and their families were for a considerable period on the verge of starvation-seeking employment in other industries at any wages they could obtain in order to eke out an existence. After the year 1889 there was somewhat of a revival, but the low tariff, again adopted in 1893 to 1897 (35 per cent ad valorem), practically ended the existence of the manufacturers, including those few who had survived the previous depression of 1885 to 1889. These facts are easily corroborated in the history of the business and it seems to us should have due consideration in connection with the question. We have not had time to obtain and compile reliable information as to the different rates of wages paid in the different countries of Europe, as the subject is very much complicated and it would be an immense amount of work to get up a statement that would be clear and conclusive. Our best information is that we pay from 200 per cent to 325 per cent (the latter in Italy) more than is paid in Europe, depending upon locality and the class of buttons produced. PARAGRAPH 427-BUTTONS. We do know, however, that under a 35 per cent ad valorem tariff in 1893 to 1897 the industry was absolutely destroyed and that under the present tariff we have a living chance, although about $100,000 worth of buttons were imported last year, showing that the present tariff is very near the danger point. We will endeavor within a few days to transmit to you information as to the total capital invested in the vegetable ivory button business, the net sales and the net profit or loss during the three years 1909, 1910, and 1911; and we say to you in all frankness that we are perfectly willing to have our books gone over by any expert you may name in order that you may have any information you require to arrive at a result that shall be just to this industry and allow it to live and continue to employ thousands of men, women, and children at wages they can live on upon the basis of the American standard of living. Hearing Gov. Wilson on various occasions, we were led to believe that no industry doing business upon legitimate lines would be injured, and fully relying upon his statements we confidently expect that conditions will not be made any harder for us than they now are. Very truly, yours, UNITED BUTTON Co., W. A. PORTER, President. The witness at a later date filed the following documents: Mr. DANIEL C. ROPER, Washington, D. C. GERMAN-AMERICAN BUTTON Co., MY DEAR MR. ROPER: I am in receipt of the authoritative statements regarding wages in Europe paid by vegetable ivory button factories there located, which I left with you last week. It seems to me we have presented to you a perfect case against change in our duty. We have proven that, first, labor is of more importance relatively in our industry than perhaps in any other in this country; second, we face the cheapest labor in Europe, with wages 25 per cent of ours; third, importations are very substantial, and three times what they were during first years of present tariff; fourth, through excessive competition, foreign and domestic, the industry is on the very "breaking point," 2.73 per cent profit per annum for past two years on actual capital invested. We have also proven much more, and I can not conceive how a member of your committee can suggest reducing our duty. I am, however, writing you this letter because when I spoke to you last week you did not see why we needed a specific duty more than any other industry. Will you not do me the very great favor to read over the brief herewith inclosed? (See brief of Rochester Button Co.) It seems to me we have given you therein 27 reasons for a "combination specific" duty on ivory buttons which can not be answered. We want, moreover, to deny that any one can absolutely translate specific duties into ad valorem equivalents, and the least undervaluation now will truly "swamp" our industry. Assuming, however, that your committee is absolutely opposed to specific duties, you can still give us what we want. Our present duty is in two parts, (a) three-fourths of 1 cent per line per gross, and (b) 15 per cent ad valorem. Now, then, the "specific" portion is not a straight specific like so much per pound. It is in a real way "ad valorem" in its nature. To the extent that price is regulated by size, to that extent the present specific of three-fourths cent per line per gross is levied on the value of the various sizes, and to this extent it differs from any other "specific." Our "specific" may fairly be said to be between a straight specific and an ad valorem for this reason. Since our public hearing we have not called on a single Democratic member of your committee, and I do therefore beg to urge you strongly to help us to secure for our industry the present duty which we have just as it is. Very truly, yours, HENRY T. NOYES. PARAGRAPH 427-BUTTONS. BRIEFS SUBMITTED BY IVORY BUTTON MANUFACTURERS. ROCHESTER BUTTON Co.-VEGETABLE IVORY BUTTONS. COMMITTEE ON WAYS AND MEANS, House of Representatives. GENTLEMEN: We exceedingly desire that the present tariff on vegetable ivory buttons, which is three-quarters of a cent per line per gross specific and 15 per cent ad valorem, be maintained. We manufacture ivory buttons which are used on the better grades of clothing. On the cheaper clothing are used buttons made from horn, bone, composition, and metal. In this brief we shall confine our arguments to that which in our opinion is the most important subject in connection therewith, the retention of a specífic duty. EXHIBIT. We desire to submit for your inspection and guidance an exhibit of ivory buttons, which shows a wide range of prices at which these various styles are being marketed this season. You will easily observe that to your own eyes (those of a layman) there is not sufficient difference in the appearance to warrant the wide difference in prices. We beg to state that if these prices were not attached to the card and the card was presented to a manufacturer of buttons, he would find it difficult, without knowing the facts and conditions controlling, to accurately determine their real value. We desire to bring this matter conspicuously before you for the reason that these are the actual prices at which the five manufacturers who produced these goods are selling them. These prices, moreover, are based strictly on the cost of manufacturing and selling. The difference in prices is not at all one of profit, but is due to the "conditions" under which these goods are manufactured and sold. 'We therefore feel that if an expert button manufacturer finds it difficult to properly appraise apparently similar buttons, that a public appraiser would find it utterly impossible. Therefore, to prevent undervaluation and similar abuses, with their consequent injury to both the Government and manufacturers, it is in our opinion absolutely essential that the present specific duty be retained. OTHER REASONS FOR A SPECIFIC DUTY. 1. The difference in value between the various kinds of ivory buttons made is really small. The big difference is between the various goods made in the same kind, depending on conditions, many of which can not be known to the appraiser. 2. A specific duty gives us knowledge and assurance that a certain definite amount of duty has been paid on a button of a given class. An ad valorem leaves the American manufacturer in doubt as to whether the duty has been paid or only half of it paid. This is demoralizing and very harmful to the American manufacturer. It does not necessarily increase importations. It probably lowers them, because it leads the American manufacturer in his demoralization to do foolish things. A specific, benefits manufacturer, consumer, and laborer. It means a steady market. 3. The value of an ivory button in a given class, such as "pressed blacks," is to a certain extent dependent on the expense of tools, equipment, etc., made necessary in getting out that particular "style." An appraiser can have no means of determining this expense on one style as against another. 4. The value is also very largely dependent on the total quantity produced of a given "novelty" or "style." No single invoice will reveal this to an appraiser. 5. Our business is a business of novelties and styles, all "luxuries.' The styles change absolutely every six months. A button to-day worth $1 per gross may be worth to-morrow 40 or 50 cents per gross. Many of the manufacturers have to sell their "out of style" goods at 50 per cent or more below manufacturing cost. An ivory button is a very small article, usually a half to three-fourths of an inch in diameter. Among other things, a slight difference in the contour of the face may make the button either "in style" or "out of style." This is literally and absolutely true. No appraiser can ever be able to follow the "styles" in ivory buttons and intelligently determine values. 6. A middleman in Europe can obviously buy goods "out of style" there and perhaps, unknown to himself, at, say, one-half of the manufacturing cost. He may offer PARAGRAPH 427-BUTTONS. them for import under an ad valorem duty at a real profit to himself and yet do us a serious injustice. Incidentally, "out of style" buttons in Europe go largely into the hands of the middleman. Our only protection lies in a duty at least in part specific. 7. The value of ivory buttons is very largely determined by the "color effects" produced on the buttons, the suitability of the "effect" to the prevailing weaves of cloth, etc. How an appraiser could ever be trained to use judgment on this matter is beyond us. 8. Obviously, the value of an ivory button depends on its color being just right for the "novelty" shades of woolens being sold at a given moment. Ivory buttons have a market largely because these "novelty" shades can be made in ivory buttons. Can appraisers be supposed to keep posted on the subject of prevailing shades? 9. Europe, in many cases, sets styles in cloths and in shades. It takes, however, time for these styles to travel from Europe here. Ivory buttons are produced to suit certain cloths and in the prevailing shades. Now, then, it frequently happens that by the time certain styles and shades in cloths reach this country, the buttons made therefor in Europe are "out of style" in Europe, but strictly "in style" in America. Their value in Europe is low. Their cost to a dealer would be low. He could thus honestly bring them into this country under an ad valorem at a price below possible competition. It don't take many goods to "break" a market. 10. The value of an ivory button, an article of "style," is dependent, to an extent, on the cost involved in the design and development of that given button. The trade will pay therefor, but no appraiser is able to establish the amount of such value. 11. An exclusive ad valorem duty in connection with the business like ours, where goods go out of style so quickly and where they lose their value to such a large extent, would make it possible for the foreign manufacturers to use our market as a dumping ground and seriously disturb conditions in this country. 12. Assuming that it were possible to appraise ivory buttons on the basis of intrinsic value, which we seriously question, we still affirm that you can not appraise the value of "style." 13. The value of an ivory button is dependent, to an extent, on the quality of raw material from which it is made. Raw-material prices to-day vary according to grades from 2 cents per pound to 6 cents per pound. No appraiser on earth can determine the quality and kind of raw material used in a given button. 14. Above all, we want to emphasize to you that perhaps the greatest difference in cost between one ivory button and another is in the particular shade produced on the button. In making certain shades we frequently have to throw out 30 and even 40 gross out of every 100 as imperfect, due to the nature of the color. Another shade in the same design, made in identically the same manner, the only difference being the shade, may give 98 gross perfect out of a hundred. No appraisers will ever be able to give an intelligent judgment as to the relative values of given shades, yet this very difference is well understood and recognized by the manufacturers and consumers of ivory buttons. 15. New shades are continuously being produced in cloths. It requires much experimenting to secure these shades in ivory buttons. The time of expensive labor is given to this and much material is wasted in the process of experimentation. The manufacturers make the consumers pay for this cost when they buy these shades. No appraiser, however, could ever begin to estimate such cost. He would probably not know of its existence. 16. There is considerable difference in the skill of dyers in various plants, and dyers are paid from $10 to $60 per week, involving differences in cost. The product of certain dyers is worth on the market more than others. This can not be apparent to an appraiser. 17. One of the serious problems of the button business is the fact of certain goods "fading color" when exposed to the light and to wear. Goods made under more expensive processes and conditions are much better in this particular than others. They cost more and are worth more. We defy an appraiser from mere examination, and without a full, intimate knowledge of these conditions, to properly value such goods. Even the best informed buyers can not tell the value in this particular, except from wear. They can, however, buy so as to be guaranteed results. 18. Many "effects" produced in ivory buttons are obtained by dyeing buttons, not once but two and three different times. We affirm that this frequently increases the total cost 10, 15, and 25 per cent. Even the best buyers can not tell how the effects are produced; they are buying for effect and for style. There is not a single appraiser in the employ of the Government that can determine in connection with ivory buttons this element of cost and value. Even manufacturers themselves can not, in many PARAGRAPH 427-BUTTONS. instances, tell how other manufacturers have produced certain effects or even estimate the extra cost involved. 19. Effects are produced in many other ways than by dyeing. Sometimes by double and triple pressing and by many other various methods, involving expenses that make, not infrequently, one button of the same general kind cost perhaps double the other although both are made from the same nut. This is positively true, and yet no appraiser could be expected to have adequate knowledge of the subject or ability to discriminate. 20. One of the chief differences in the cost, as between ivory buttons, is the case with which they are shaded and inspected before being boxed. Our material is imperfect. At the last final step we always have to shade and throw out a certain percentage. Assume the same shade, the same grade of raw material, the same finish, etc. One manufacturer may throw out 1 per cent and another 20 per cent. It frequently happens that in making certain styles and certain colors we shade or throw out not only 20 per cent, but 30 per cent and even 40 per cent. Please figure the difference in cost as between buttons that "go through" and are sold in the one case as against the other. No appraiser could be expected to determine the extent to which given goods have been "shaded." 21. The necessity of confining patterns to a buyer curtails the possibility of selling it to the general public and restricts its sale to the requirements of that buyer alone. This is an element of cost an appraiser can not estimate. 22. Under conditions appertaining to our business and understood by those in the business, when large buttons are in great demand the waste involved in our processes increases the cost of the coat and vest sizes. No appraiser would be likely to know this. 23. One big point is that for the reasons set forth an exclusive ad valorem duty would make it possible for a middleman to bring goods into this country, honestly perhaps, at figures entirely at variance with actual manufacturing costs; it would place a tremendous incentive on foreign manufacturers not to tell the "whole" truth, and, above all, the Government appraisers would be hopelessly unable to protect us. 24. The same variation in prices of goods made abroad prevails there as here. All based on the "conditions" attending the manufacture and sale of the goods. It is not necessarily so much a question of difference in kind, but difference in conditions, etc., as set forth by us. You will find by reports from our American consuls that prices for the same kinds vary abroad from 75 to 100 per cent. This is due to the conditions which we have emphasized, but how can any appraiser know them? Frankly, is the foreign manufacturer, who is handling buttons made under these more expensive conditions, and who is anxious for business, going to represent the cost or value of his goods at the real cost or at his "average" cost? And yet, if we have to compete with him under an ad valorem, he can easily escape part of the duty. Under a specific we at least know just "where we are at." 25. Under an ad valorem duty the actual duty would become uncertain and subject the American manufacturer to the uncertainties and fluctuations of the foreign market. We would also be at the mercy of that foreign country which is at the particular time the most depressed. 26. The difficulties confronting us as to the values and costs of vegetable-ivory buttons obtain just as much abroad as in this country This is evidenced by a quotation from a letter written by the American consul at Odessa, Russia, under date of May 3, 1911, wherein he states: As regards the wholesale and retail prices of the many grades and classes of buttons, they are so complicated that to one outside the business they are bewildering. Apparently similar buttons are often very dissimilar in price." 27. Foreign governments have recognized the peculiar conditions connected with vegetable ivory buttons, and Germany, Italy, Austria, Russia, and France have established specific duties against ivory buttons and not ad valorem. We believe that we have demonstrated to you that the fair determination of an ad valorem duty in the case of ivory buttons is a very difficult, if not impossible, process. We sincerely hope that we have convinced you of the need of a specific duty. We earnestly ask you to leave the duty on buttons as it is. Yours, respectfully, ROCHESTER BUTTON CO. |