PARAGRAPH 427-BUTTONS. BRIEF OF DUMarest Bros. anD ISAAC BRANDON & BROS., New York. The WAYS AND MEANS COMMITTEE, Washington, D. C. NEW YORK, February 8, 1913. GENTLEMEN: We understand the Treasury Department has recently decided importations by United States ivory-button manufacturers of ivory-nut slabs from Italy as free of duty. Your committee last week gave a hearing to a deputation of ivory-button manufacturers who, we think, made out a good case for retention of present duties on ivory buttons, an article very largely, indeed, of labor when finished. To be consistent in demonstrating necessity of protection from the cheap labor of Italy, Japan, and Austria, hardly see why the United States manufacturers should benefit, as they are beginning to do, of the cheap labor of Italy, etc., on a portion of the process of button manufacture. A concession has lately been granted by Ecuador to parties who will put up a plant for drying, shucking, and cutting ivory nuts into slabs. Among other reasons against permitting these slabs to come free or duty: The putting of ivory nuts into slab form reduces their bulk to nearly one-half, and to that extent would reduce freight earnings by steamship and railroad lines. Amount of labor now employed in United States in the bringing of ivory nuts along as far as slabs is of considerable item, and who could not exist against foreigners doing this amount of manufacture, the mere freight on slabs to United States would be a bagatelle compared to labor discrimination involved. Trade with South America would be injured, as, naturally, ivory nuts would go to a greater extent to countries of cheap labor, if such countries could send the slabs free into the United States. And inward goods usually mean outward goods of like amount for our merchants with South America. Ivory nuts and ivory-nut slabs are used wholly and solely in the manufacture of buttons. It is important to this trade that a duty be placed on slabs or pieces of ivory nuts in tariff bill now forming, for if not now recognized by your committee it may be a long time before it can again be brought up, and by then irreparable harm will have been done to a trade of long and satisfactory existence. The duty on ivory-nut slabs or pieces should, in our estimation, be at least 35 per cent. Yours, respectfully, DUMAREST BROS., TESTIMONY OF ADOLPH KELLER, OF NEW YORK CITY. The witness was duly sworn by the chairman. The CHAIRMAN. You may proceed, Mr. Keller. Mr. KELLER. Mr. Chairman and gentlemen of the committee, I appear here for two purposes, first, on agate buttons, paragraph 427, and on trouser buckles, paragraph 425, of Schedule N. Speaking of agate buttons. I represent Messrs. Strauss Bros. & Co., J. Porter & Co., and ourselves, Dieckerhoff, Raffler & Co., all of New York City, in whose behalf I respectfully request a reduction of duty on buttons commercially known as agate buttons. The rate of duty assessed under the present tariff act, paragraph 427, is one-twelfth of a cent per line gross and 15 per cent ad valorem. Although it may seem that there were $200,000 worth of those goods imported last year, the agate buttons that were imported predominating were the agate shoe buttons. Seventy-five per cent of the agate buttons that came in the country last year were shoe buttons. PARAGRAPH 427-BUTTONS. The other 25 per cent was the agate button, and these are buttons that are not manufactured in this country at all. They are absolutely a foreign production, and there is no possible chance within the near future of them ever being manufactured in this country, for the simple reason that the raw material has never been found in this country to produce these goods. Mr. HARRISON. Where do they come from? Mr. KELLER. From Paris, Germany, and there is an Italian factory. Mr. HARRISON. Where do they get the material out of which they make them? Mr. KELLER. From China. Mr. HARRISON. So Paris and Germany import agate from China and manufacture the buttons and ship them over here? Mr. KELLER. Although the button is known as an agate button, it is not agate. Mr. HARRISON. What is it? Mr. KELLER. It is an earth. It is only commerically known as an agate button. It is the cheapest kind of button manufactured. It is used principally on the garments such as children's clothing, cheap shirts, and in fact on the cheapest kind of clothing that is made. Mr. HARRISON. It is not actually the cheapest button that comes in? That is a nickel-bar button, which is cheaper still? Mr. KELLER. No; there are agate buttons cheaper than this. Mr. HARRISON. The unit of value of agate buttons is three-tenths of a cent, and the unit value of the nickel-bar buttons, of which there is a very small importation, is one-tenth of a cent? Mr. KELLER. I think they are absolutely prohibitive as to the nickelbar button. Mr. HARRISON. Practically, yes. But the bulk of the imports of buttons are of these agate buttons you are now testifying about? Mr. KELLER. Yes, sir; when the domestic manufacturers put the price of buttons under the McKinley tariff, in making the various schedules as they appear in the tariff now, I think there are about eight different rates of duty, and when they made that they made a high enough rate that they even prohibited their own manufacture of certain classes of buttons, and they can not even sell them. Mr. HARRISON. So far as this very high tariff of 45 per cent on agate buttons is concerned, it is purely a revenue tariff, and there is no protection in it? Mr. KELLER. There is a protection. Mr. HARRISON. Because it protects other kinds of buttons? Mr. KELLER. Not necessarily. It does not protect other buttons, for this reason: The usual button, for instance, is one where 75 per cent come in and are protected at one-twelfth of a cent a line and 15 per cent, the same as the agate button, but the differential duty on those only runs 25 to 40 per cent; so there is really no protection there. If they were specific under the same paragraph as shoe buttons, where they are only providing for paper, and on the same rate, I believe, of 1 cent a gross, it would be impossible to import those shoe buttons. Mr. HARRISON. Suppose we put a 25 per cent ad valorem duty on agate buttons, would there be more imported? Mr. KELLER. There certainly would. PARAGRAPH 427-BUTTONS. Mr. HARRISON. Would there be more than enough imported to make up for the loss of revenue by cutting the duty from 45 to 25 per cent? Mr. KELLER. Yes, sir. Mr. HARRISON. So you believe we would increase the revenue by cutting the duty? Mr. KELLER. You surely will, because on this button shown on this card [indicating], the top button on that card is the same quality and the same grade as the button that pays the 115 per cent duty. The bottom one is 38 per cent. Mr. HARRISON. The top one does not come in at all, but is prohibited by this rate? Mr. KELLER. No; there are only certain numbers that come in, although we get the same styles and the same quality and the same grade, only a different size; and so it is with all buttons. In fact, any button you can take in the schedule, if it is a cheap button used on clothing, bears 115 to 125 per cent, and when it gets down to the better class of buttons, higher in value and larger in size, there is the cheaper rate. Mr. HARRISON. That is generally the effect of specific duties. Mr. KELLER. That is the effect of all specific duties. They differentiate, and it is always on the same class of merchandise. Mr. HARRISON. What do you recommend? Mr. KELLER. I recommend we have a flat rate on all classes of buttons. There is no reason why the small button should not pay as much as the larger button on a rate of duty, because there are a great many garments where you have to have two sizes of buttons. You will take one size of button that will pay 115 per cent and it graduates down until it gets down to 40 per cent or 63 per cent. As the value goes up, they run from 93 to 57 per cent. The smaller button is the one most used; and that is true until it goes down to the large ones, that differentiate down to 57 per cent. When you get to the shoe button, they merely provide for a paper button in the shoe-button question, and there is one button there, which is the highest-priced one, that only pays 23 per cent duty, and the cheaper button, which is in the greatest demand, will average 52 per cent duty. Mr. HARRISON. Then you recommend an ad valorem duty? Mr. KELLER. I recommend an ad valorem duty on all classes of agate buttons, the same as I would on any other button. Mr. HARRISON. What figure do you recommend to get the most revenue? Mr. KELLER. Twenty-five per cent on all kinds of buttons. The gentlemen here yesterday, speaking as importers on the other classes of buttons, had the same rates of duties applying in those cases. When it comes up to the high-class goods you will find the duty will run down to 20 per cent, and when it comes to the very cheap ones and the sizes go down and the button gets smaller and gets cheaper, the rate goes on up. Mr. HARRISON. Did you hear the testimony yesterday of the pearl-button manufacturers? Mr. KELLER. I did. PARAGRAPH 427-BUTTONS. Mr. HARRISON. Do you agree with them there is something special in the manufacture of that button? Mr. KELLER. I do. From the knowledge I have of the pearlbutton business, I believe that industry should not be interfered with. Prior to the McKinley bill there were not any pearl buttons manufactured in this country, but when the bill placed a duty of cent a line and 15 per cent on those goods, I know personally of workmen from Austria who brought over their tools, and the mechanics themselves came into this country and started in a small way, just as these pearl-button men said, starting little places of their own, and those little places gradually started others. Ninety-five per cent of the pearl buttons that are used in this country are actually made here at the present time. If you reduce the tariff on these, I am afraid that we will get the foreign button. As I say, 95 per cent of the pearl buttons that are used in this country are made here, and the other 5 per cent are principally Japanese goods. Mr. HARRISON. Do you not think if we reduce this 64 per cent duty we now have on pearl buttons, we would be able to get more revenue? Mr. KELLER. If you reduce it on pearl buttons? Mr. HARRISON. Yes. Mr. KELLER. Yes; we handle pearl buttons ourselves, and as an importer it is only natural for me to say the lower the duty the better I like it; but we buy our goods abroad. At the present time we are compelled under the circumstances to buy our merchandise right here in America. Mr. HARRISON. But now only 5 per cent of them come in? Mr. KELLER. About 5 per cent, I should say. Mr. HILL. Do you manufacture any buttons? Mr. KELLER. We did. Mr. HILL. Do you now? Mr. KELLER. None now. Mr. HILL. Why did you stop? Mr. KELLER. Because there was nothing in it. We were in a branch of the pearl-button business, manufacturing a button which we called the ocean pearl. Mr. HARRISON. I suppose there would be no more come in if we were to reduce the duty one-half? Mr. KELLER. I am not asking that the duty be reduced one-half. I am speaking of agate buttons. Mr. HILL. I know it, and the duty is 45 per cent now, according to the figures, and you want it reduced to 25 per cent? Mr. KELLER. Yes, sir. Mr. HILL. What commission do you get on selling buttons? Mr. KELLER. What do you mean by commission? Mr. HILL. Do you sell on commission or do you buy them? Mr. HILL. Do you expect the change of duty to make much difference in the price here? Mr. KELLER. It surely will. We always figure the basis of the selling price of our merchandise on the amount of cost we pay for them plus the duties and 10 per cent business expense. If the duties go down, the price of buttons goes down. PARAGRAPH 427-BUTTONS. Mr. HILL. The price of the domestic button? The price in the domestic market? Mr. KELLER. The domestic market uses these agate buttons principally at the present time and I am speaking of those that go on the cheaper garments and children's wearing apparel-and are asking for a reduction, and we told them, "You can have a reduction when the duty goes down." Mr. HILL. What kind of a button did you make when you were in the business? Mr. KELLER. I was not personally in the business, but the firm I represent did make some pearl buttons. Mr. HILL. Do you mean the kind that is made from the fresh-water mussel? . Mr. KELLER. No, sir; we have the ocean pearl. Mr. HILL. Did you make any other kind of button? Mr. KELLER. No, sir. Mr. HILL. None whatever? Mr. KELLER. None whatever. Mr. HILL. Because, as you say, there is nothing in that? Mr. KELLER. There was nothing in it. Mr. HILL. As a matter of fact, do you not think there would be less in it if you reduced the duty? Mr. KELLER. You are speaking now of the pearl button? Mr. HILL. Any of them, whether pearl or otherwise. Mr. KELLER. No; it would not. When you speak of the pearl button, I would say yes. Mr. HILL. Do you not think the duty was to the advantage of the domestic manufacturer? Mr. KELLER. I do not know that it would interfere with them in any way. Mr. HILL. Why would it interfere in any way to reduce the duty? Mr. KELLER. If you eliminate the pearl-button feature of it and speak of the others, then it would not. Mr. HILL. What is the ordinary commission of the importer in selling goods of this kind? Mr. KELLER. As I stated before, we take the value of the merchandise plus the duties and allow about 10 per cent for business expenses, and that would be the figure on which we base the sale of the merchandise. Mr. HILL. Then what would you expect to add as a profit? Mr. KELLER. The profit is included in that. Mr. HILL. Out of the 10 per cent? Mr. KELLER. Yes, sir. Mr. HILL. You would probably make a commission, if you were a commission house, of about 5 per cent and have 5 per cent for expenses? Mr. KELLER. We not being a commission house, I would not like to say. Mr. HILL. Would that not be the ordinary rule? Mr. KELLER. Offhand, from what I have heard, it would be about 5 per cent. |