PARAGRAPH 436-MATCHES.

The item of miscellaneous expenses includes such items as overhead charges, cost of patents, transportation, advertising, selling expenses, etc. The labor cost is by no means fully shown by the items of services. Those items only represent the wages paid at the factories where the matches are made, and do not include the cost of labor in the production of materials delivered to the match factories in a finished or partly finished condition. The difference in wages here and in the chief competing countries is very marked. While it is very difficult to get at actual wages in any given factory, we believe that the following table is correct and can be substantiated:

From the table on page 323 of the Tariff Handbook it will be seen that the revenue has tripled under the reduction of duties made by the tariff of 1909. When this increase of importation is considered in connection with the burden of an increased cost of production of from 5 to 7 per cent imposed by the requirements of the Hughes bill, and the increased demand thereby created for safety matches (which are very largely of foreign manufacture), we believe that matches will be found to produce their fair share of revenue as compared with that derived from other sources if the present duties are maintained. A further suggestion as to revenue is made below in connection with the "safety" match provision.

THE PRICE TO THE CONSUMER.

Matches are not of the class of articles of which the cost to the ultimate consumer can be reduced by even a very radical reduction in the rates of duty.

According to the tables on pages 322 and 323 of the Tariff Handbook, the import value of 1 gross of boxes of matches, of less than 100 in a box, was $0.218; the duty of 27.59 per cent was $0.06, making a total cost to the importer of $0.278. These boxes sell to the ultimate consumer for 1 cent per box, or by the dozen boxes for 5 cents per dozen. The duty is equal to one-half of 1 cent per dozen. If the entire duty were taken off it is quite evident that the consumer would get no reduction in price.

Again, taking the matches packed in boxes of over 100 per box, these matches sell to the ultimate consumer for 5 cents per box of 500 matches. The rate of duty is three-fourths of 1 cent per 1,000 matches. If the entire duty were taken off the box of 500 matches would still be sold for 5 cents to the consumer.

PARAGRAPH 436-MATCHES.

EXPORTS OF MATCHES.

There has been a persistent effort on the part of some of the American manufacturers to compete in foreign countries, but they have not succeeded in doing so. They have never been able to export 1 per cent of the production or to increase their sales abroad sufficiently to get any hold on the market. These facts are corroborated by the table of exports of matches, found on page 31 of the Commerce and Navigation Report for 1911. It is as follows:

The bulk of these exportations went to Canada where, it is well known, the price of matches is much higher than in the United States. It is impossible to sell a single American match in any European country. This is corroborated by the table of exports to foreign countries, 1911, found on page 646, Commerce and Navigation Report for 1911, as follows:

While the importation of matches is small as compared with the domestic consumption, yet this fact does not result in the absence of competition or in high prices. We are engaged in an industry in which over one-half of the business is done by one concern, the Diamond Match Co. A discussion of that company's affairs is out of place in this brief. It need only be said that its business is carried on with the maximum of efficiency, and it is the only American company interested or engaged in the manufacture of matches abroad, and it is necessary for us, its competitors, to exert ourselves to the utmost at all times to meet the competition of that company. If the duties were lowered and we were subjected to the further competition of foreign match makers it would almost surely result in our being put out of business. The Diamond Match Co., with its close connection with the factories abroad, would then be left the only domestic manufacturers in the field. We are confident that the framers of the proposed legislation do not desire any such result.

FANCY MATCHES.

We further request that the last clause of paragraph 436, reading:

"Wax and fancy matches and tapers, thirty-five per centum ad valorem"be amended so as to read:

"Wax matches, fancy matches, safety matches, and tapers, thirty-five per centum ad valorem."

We urge this change for the reasons:

(1) We believe it will carry out the intention of classification under the present law. (2) It will not affect the selling price of safety matches.

(3) It will increase the revenue.

1. In the act of 1909 there was inserted for the first time a provision for fancy matches, as distinguished from friction or lucifer matches. We believe that this provision was intended to provide for the so-called safety matches. Such an interpretation was submitted to the Board of General Appraisers for determination. In the trial of the case several witnesses testified that safety matches were known as fancy matches, while, as is usually the case in litigation, other witnesses testified to the contrary. As a result the Board of General Appraisers adopted a definition for fancy matches which included some safety matches and excluded others. This case was not taken up to court for review, and the Treasury Department has since been administering the law in accordance with the interpretation promulgated by the Board of General Appraisers. Recently another case has been litigated and decided by the general appraisers in the same way. This later case has, however, been appealed to the Court of Customs Appeals and is now awaiting decision by that court. It involves only

PARAGRAPH 436-MATCHES.

one kind of safety matches, the so-called book matches given away in cigar stores. These are one of the kinds of safety matches which the board had formerly held to be fancy matches.

2. While large quantities of safety matches are sold in boxes of about 60 matches each at 1 cent per box or at 5 cents per dozen boxes, large quantities of these as well as those put up in the form of paper booklets covered with advertising matter are given away by cigar stores, hotels, cafés, etc. Whether these matches pay duty at the rate of 6 cents per gross of boxes or at 35 per cent ad valorem would not affect the selling price.

3. A duty of 35 per cent ad valorem, or even a higher rate, would be a purely revenue duty. There are very few safety matches produced in this country, and there can be no general manufacture of them here unless the duty is increased to about 100 per cent ad valorem. The only concern which is equipped to make safety matches in the United States is the Diamond Match Co., and we believe that that company has machinery in only one of its factories.

The foreign safety matches are delivered at New York at less than 22 cents per gross of boxes f. o. b., exclusive of duty. It is impossible to manufacture and lay down such matches here for less than 45 cents. That they can not be successfully made here in competition with foreign manufacturers is shown by the fact that the Diamond Match Co., which has the machinery here to make them, is one of the largest importers of these matches.

The safety match is not the kind of match commonly found in the homes of the masses. The bulk of them are used by smokers, and they bear a striking similarity in use to cigars and other forms of tobacco, which have always been considered peculiarly suited to revenue taxation.

Respectfully submitted.

The Ohio Match Co., Wadsworth, Ohio, by E. J. Young, Treasurer; Sommers Bros. Match Co., Saginaw, Mich., by Frank F. Sommers, Secretary; Fred Fear Match Co., Bloomsburg, Pa., by Fred Fear, President; Union Match Co., West Duluth, Minn., by John B. Himnik, Treasurer; the Reliable Match Co., Ashland, Ohio, by Chas. D. Darrah, President; the Pennsylvania Match Co., Bellefonte, Pa., by J. L. Montgomery, Treasurer; National Match Co., Joliet, Ill., by Fred Bennitt, President; Indiana Match Corporation, Crawfordsville, Ind., by A. M. Smith, Secretary-Treasurer.

BRIEF OF SOMMERS BROS. MATCH CO., SAGINAW, MICH.

Hon. J. W. FORDNEY,

House of Representatives, Washington, D. C.

SAGINAW, MICH., February 13, 1913.

MY DEAR MR. FORDNEY: While presuming that a reduction in the tariff on matches will not be countenanced by your good self, still I would like to call your attention to the extremely prejudiced position held by one Mr. Waldo Peck Adams, who recently gave a rather extended talk before your committee.

In reply to Mr. Palmer's question, "Whom do you represent?" Mr. Adams replied, "I represent myself. I am in the fire insurance business in New York." In the same tariff hearing, in a printed extract taken from the New York Tribune of December 19, 1912, Mr. Waldo Peck Adams is confessedly a representative of the Salvation Match Co. I say "confessedly" in view of the fact that it was he who submitted these newspaper articles to your committee.

To say that the Salvation Match Co. is not actuated by any philanthropic or humanitarian motives is putting it mildly, as it is a known fact that these people have entered into large contracts for matches with manufacturers abroad, realizing that they can purchase the class of goods they have contracted for at a much less price than they can manufacture them in this country, the present duty on matches notwithstanding. The writer would like to see you pass this information along, and he would also appreciate your writing him as to what the attitude of the committee in general is on this subject of matches.

Anticipating the pleasure of hearing from you, we are,

Sincerely, yours,

SOMMERS BROS. MATCH Co.,

FRANK F. SOMMERS, Secretary.

PARAGRAPH 437.

PARAGRAPH 437-AMMUNITION.

Percussion caps, cartridges, and cartridge shells empty, thirty per centum ad valorem; blasting caps, two dollars and twenty-five cents per thousand; mining, blasting, or safety fuses of all kinds, not composed in chief value of cotton, thirty-five per centum ad valorem.

AMMUNITION.

BRIEF OF COAST MANUFACTURING & SUPPLY CO., OAKLAND,

CAL.

SAFETY FUSE.

OAKLAND, CAL., January 17, 1913.

Hon. OSCAR W. UNDERWOOD,
Chairman Committee on Ways and Means,

House of Representatives.

DEAR SIR AND GENTLEMEN: We desire to present for your consideration, the following statement of facts regarding the manufacture, profits, and general information of safety fuse as applied to the business in the United States and particularly on the Pacific coast.

In order that you may be thoroughly conversant with the subject, it will be necessary for us to go somewhat into details of the manufacture of fuse.

In the first place, safety fuse is an article that is not used by the general mass of the public. Its sale and use is restricted to mines, quarries, and railroad contractors, with a very slight percentage to the farmer and lumbermen for blasting stumps and hardpan.

Its manufacture has been to a certain extent restricted to a few people for the reason that but few understand the method of its manufacture.

The manufacture of safety fuse is a very small industry comparatively, but is a very necessary and particular one, entailing the danger of loss of life and limb with all users of the article. The amount of capital invested compared to the number of people employed is very large and the reducing of the amount of production will advance the proportion of overhead charges to such an extent that the cost of production would be so greatly increased as to surely put the American Fuse Manufacturers entirely out of business.

Great care is needed and is used by the manufacturers in this country, on account of the liability of loss of life in its use if not properly made.

The manufacture of safety fuse is in itself a dangerous operation, subject to explosions, fires, etc. This company has had three explosions at different times since its organization, and while fortunate in not causing any loss of life, we suffered a considerable loss of property. Other factories, both here and in the Eastern States, have had serious explosions, causing both loss of life and great loss of property. It is not possible to insure against fire and explosions, owing to the extreme rate of insurance on such risks, and the profits of the business are not large enough to warrant paying

such extreme rates.

Seldom is there found any business that does not turn over its capital at least once a year, and the most ordinary lines of business with no such risks attached turn-over their capital several times in a year.

To show you just what business is done by this company, we give you the following figures:

Our capital is $1,000,000.

Our gross sales during the years of:

Showing a decrease each year, excepting 1912, with the duty at 35 per cent ad valorem.

In 1912 it was decided that as the inroads of foreign fuse were becoming much greater our policy would be to try and get greater volume of business, even at less

PARAGRAPH 437-AMMUNITION.

profit, and try and hold business for American made goods until such time that some relief might be had. This policy was to a certain extent successful, as is shown by the slight gain in the total amount of business done. At the same time the year 1912 showed a considerable increase, owing to the increased production of metals, especially copper.

Our net profit for these years were as follows:

Showing a profit which is ridicuously small for such a business, and in the face of all kinds of improvements in manufacture, and lowering of manufacturing cost, which have been adopted during the past five years.

The corporation taxes of both the Federal Government and State levy, together with the State franchise taxes, of course have affected our net profits without giving us any chance of recuperation.

Owing to foreign competition, we are not able to change our prices to cover the market changes on our raw materials. The fact is that we have made no changes, except to reduce prices where compelled to by foreign competition, since January,

1907.

We also face the inevitable inroads into our business by the development of electricity for use in blasting, which is slowly but surely taking away from us our means of livelihood, and we have people connected with us who have been in the business since childhood and know no other business.

Taking all of these things into consideration, we can not but think that your committee, when understanding the situation, will do us justice.

We wish to call your attention to the increase in imported safety fuse since the passage of the Payne-Aldrich tariff bill in 1909. These figures are given us by the Bureau of Statistics: In 1908 the imports were valued at $10,326; in 1909 the imports were valued at $13,418; in 1910 the imports were valued at $93,689; in 1911 the imports were valued at $113,888; in 1912 the imports were valued at $105,000.

The ad valorem basis was much lower than our cost of production with the profits of the German manufacturer already added.

The slight decrease in 1912 no doubt was the result of our forced policy of lower prices.

The cost of manufacturing our product is much greater here than in Germany and Belgium, from which countries most of the imported fuse comes.

For instance, the actual cost of the fuse we manufacture to compete with the imported article is $2.73 per thousand feet, or $16.38 per case. The average cost of manufacture in 1912 of all kinds of fuse was $2.618 per thousand feet, or $15.71 per case, based on the total of all moneys spent for materials, labor, etc., and all fuse manufactured during the year. This includes a large percentage of the cheaper grades, which naturally brings the average down. This cost does not include any profit whatever, being the actual manufacturing cost.

The fuse imported from Germany and Belgium, with which we have to compete, is invoiced from $1.73 to $2.08 per thousand feet, and this includes the profit to the manufacturers.

COST OF MATERIALS.

The cost of raw materials in this country is greater than in Europe, and at the present time the cost of many materials is much higher than the first part of 1912. We give the following comparative figures on the value of materials used in the manufacture of fuse in the United States and in Europe. The prices are the latest we can get at the present time in Europe and the prices in the United States are what we are actually paying at this time.