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PARAGRAPH 448_JEWELRY. It has been alledged that importations have increased under the present act, but this is misleading. As will be seen from the above table, there was a distinct falling off for the last year as compared with the previous. It is true that the year 1910 showed some apparent improvement. This is due to two causes; there was a slump in the importations directly after the act went into effect in August, 1909, by reason of the artificial stimulus to importations during the last months of the Dingley law in expectation of the increased duty. Furthermore, the season's styles for 1910 were largely imitation jet goods which are not manufactured to any great extent in this country. In comparison between the volume of imports under this act, and those under the Dingley Act serve little purpose. By reason of court decisions, as explained by Mr. Washburn, many goods now classified under paragraph 448 were classified under the old law as “jewelry” but according to their component material of chief value.

On the other hand, our total exports of jewelry of all kinds for the last five years have been as follows: 1907, $1,287,111; 1908, $988,056; 1909, $882,738; 1910, $1,053,530; 1911, $1,302,502. During the same period we have exported to Canada alone jewelry of the following values: 1907, $836,852; 1908, $577,954; 1909, $576,823; 1910, $670,070; 1911, $840,115. It is well known in the trade that the bulk of the exports to Canada consist of cheap imitation or "near'' jewelry so that the exports of this article alone compare very favorably with the annual volume of imports of the same character. Compared with the total consumption of imitation or "near" jewelry in this country the volume of importation is petty and insignificant. Approximately nine-tenths of the goods of this character are sold to the department stores and we know whereof we speak when we say that not over 10 per cent of the "near" jewelry carried in this way is imported. Grouping the articles provided for in paragraph 448 in one class, and taking the country as a whole we are well within the bounds of moderation when we state that the domestic production is at least 25 times as great as the volume of foreign importations.

Moreover, the domestic manufacturer enjoys a natural advantage. For many years past under much lower rates of duty he has been able to underbid and undersell us once he can copy and reproduce a given design. Our trade is precarious in character and is strictly circumscribed by our ability to offer new and novel designs from abroad which for a short space of time encounter no competition. As soon as our domestic competitors can reproduce them we are obliged to abandon the field. Indeed a certain advantage flows to the domestic manufacturer in having the import trade reasonably prosperous rather than throttled, because in this way he gets suggestions from the imported designs which he could get in no other way. These designs must be purchased in quantities, and if the imported goods were practically denied the American market allogether samples would not find their way into it. We speak advisedly here because many of our number while engaged, it is true, in the importing trade make and handle domestic jewelry in substantial quantities.

As to certain novelty articles, such as coin holders, it may well be doubted whether such utilitarian articles find proper lodgment under such a paragraph as we are here considering. In any event, we are able to buy in the American market coin holders at about $7.50 per gross, the same quality of which costs us in the foreign market 36 marks or $9 per gross.

As to the new law we will suggest first of all the abolition of the compound rates and the substitution of a flat ad valorem. Under the McKinley law of 1890 the jewelry provision carried a 50 per cent ad valorem duty; under the Wilson Act of 1894 the rate of 35 per cent ad valorem; under the Dingley law of 1897 the rate was 60 per cent ad valorem. Under all these laws it can not de denied that our competitors flourished and enjoyed the full measure of prosperity. Speaking for dealers who handle from 85 to 90 per cent of the goods of this character imported into this country we assert that the present rate is unconscionable. We ask for a reduction to 45 per cent ad valorem which would restore the competitive conditions that do not exist to-day. Respectfully submitted.

S. H. Ganz,
For the Committee of Jewelry and Novelty Importers.

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PARAGRAPH 448/JEWELRY.

STATEMENT OF B. A. LEVETT, NEW YORK, N. Y.

Mr. LEVETT. May it please the committee, I appear on behalf of the New England Manufacturing Jewelers and Silversmiths' Association in connection with paragraph 448, which is known as the jewelry paragraph, although it was designed and intended to cover a great many kindred articles.

As the name indicates, the association includes members who are manufacturers of jewelry and also of silverware.

But I want to point out before going any further that the silver articles with which the members of this association are concerned are not what are known as tableware or flat ware, where the labor is very small as compared to the value of the material in the article. For instance, take a silver tablespoon, which might cost $24 a dozen wholesale. The labor in making that article would be probably not over $1, but the silver in it would run into the neighborhood of $17. This, perhaps, might be an extreme case, but we feel safe in saying that the average cost of labor in tableware would not exceed 20 per cent of the total cost, and we think that even that is high.

On the other hand, the class of articles we are concerned in are known principally as novelties.

Here is what is known as a coin holder [exhibiting article). It is made of silver, and is designed to be hung on a lady's chatelaine chain. It is made also in German silver and plated. In that article the cost of material, if made in German silver, would be 67 cents. That is the figure of one of the manufacturers of this particular article. The total cost of the article, without any profit added at all, would be $6.65. That, of course, is speaking by the dozen. So that there you find labor constitutes about 90 per cent of the cost of the article, without any profit added. If it is made in silver, the material would cost $4.32, as against a total cost of $10.26, in that case being about 40 per cent material, while the other 60 per cent would be labor. It is that class of articles with which we are chiefly concerned, where the labor is so high that in order to compete a high duty must be put upon it.

I want to call the attention of the committee also to the fact that all the articles with which we are concerned are luxuries and are revenue producers. I will point out a little later that even with the rate which was provided by paragraph 448, 85 per cent, the imports have increased and are increasing.

Before going into the question of the rate, I would like to call the attention of the committee to the paragraph itself. When that paragraph was drawn up, while it was known as the jewelry paragraph, it was intended to include besides jewelry and other articles purely of adornment the line of articles known as novelties made of silver or base metals. It was the purpose of this paragraph to provide a higher rate on articles of this sort than upon jewelry made of gold and platinum. The reason for the higher rate is obvious, for a moment's reflection will show that while the value of gold and platinum jewelry is in the material, the labor being incidental, on the other hand, in base-metal jewelry and novelties, the labor is far in excess of the material, frequently to the extent of 85 per cent to 90 per cent of the total cost of production,

PARAGRAPH 448/JEWELRY.

I think I need not expatiate on that point because it is clear that where you take an article of German silver, in which the metal constitutes only 10 per cent of the cost, it needs a higher duty than the same article made of gold or platinum where the chief value of the article is in the material and not in the labor.

If the committee will look at paragraph 448, which is a very long and complicated paragraph, you will find a great many provisions in there, and the reason for the excess of language is undoubtedly due to the fact that under all of the previous

tariff acts a tremendous number of cases arose as to what was or what was not jewelry. It may surprise the committee to know that the article I am showing you (exhibiting a gold-plated vanity case) has been held by the Board of General Appraisers to be dutiable as a manufacture of metal, and not jewelry, and that it goes into the same paragraph with manufactures of iron and steel.

It may surprise the committee also to know that this article (exhibiting a small spherical silver coin holder] is not jewelry, but pays a duty only as manufactures of metal.

Here is a little powder tube. When you press the top the powder squirts out. It is not classed as jewelry. It is a manufacture of metal not covered by paragraph 448.

Here is another little article, a powder case, which has a miniature powder puff inside of it and a mirror. This is not jewelry.

Mr. PALMER. Under what paragraph does that come in now?

Mr. LEVETT. Paragraph 199, as a manufacture of metal not specially provided for, and under the proposed bill

, which was introduced at the last session, it will pay a duty of 25 per cent. That is true also of this article {exhtbiting article] in which if made of German silver, as I have pointed out, the labor cost would constitute 90 per cent.

Mr. PALMER. Have you suggested the language for a paragraph that would put it back in the sundries schedule, and under the jewelry clause?

Mr. LEVETT. I have prepared a paragraph that I would like to submit. I would also like to submit a brief.

In connection with jewelry decisions which have come up I would like to call the attention of the committee to the Notes on Tariff Revision, which were used by the Committee on Ways and Means during the last tariff discussion. I will briefly refer to some of the decisions:

The following articles were held not to be dutiable as jewelry: Chain purses, imitation and precious metal; chain purses, silver; children's finger rings; combs, celluloid and jet; combs, flimsy metal ornamentation; gun-metal pencils and purses; metal coin holders; metal portemonnaies; miniatures, frames for, set with precious stones; necklaces, value less than 11 marks per gross; shells, Tasmanian, strung on cords; steel-point ornaments; umbrella handles set with imitation precious stones; umbrella handles set with precious stones; watch charms, miniature opera classes, watch charms, miniature penknives; watch guards, leather and polished steel.

The following articles were held dutiable as parts of jewelry; Chatelaines drilled for setting; clasps and slides for necklaces; parts

PARAGRAPH 448_JEWELRY.

of watch fobs, nickel; swivels and hooks, white metal; swivels, white metal.

The following articles were held not to be dutiable as parts of jewelry: Keystones, agate or onyx; pearls, imitaion, matched and strung; rope chain; swivel clasps, brass; swivels, amber; swivels, rough brass; theatrical jewels set in metas. I will not read any more. They are all cases prior to the present

act and Mr. Palmer. Are you asking us to correct this by writing a new paragraph ?

Mr. LEVETT. Yes, sir.

Mr. PALMER. You are not asking us to raise the duties on jewelry in that paragraph?

Mr. LEVETT. No, not to raise the rate at all.

Mr. PALMER. You would have us leave them as they are now, from 60 per cent to 85 per cent, but you want these articles which, by Treasury decisions, have come in at 45 per cent, under the metal schedule, to come in where you contend they were originally intended to come?

Mr. LEVETT. That it it; that is it exactly. I might also read from the statement contained in that publication.

There has been a tremendous volume of litigation under this paragraph with the net result decidedly against the Government. The cases afford another illustration of the success of importers in employing the doctrine of commercial designation entirely to promote their financial interests, although such action involved proving the exact opposite of the claims they may have set up under earlier acts.

For example, in the tariff act of 1883 and earlier statutes, jewelry was made dutiable at 25 per cent, while manufactures of metal, glass, etc., paid higher rates, and under these statutes the importers proved that imitation jet ornaments made of black glass; steel brooches, brass earrings, gilt chains, gilt eardrops, and bracelets and ornaments of horn, shell, ivory, etc.; theatrical ornaments made of metal, set with imitation precious stones; hair daggers, hatpins, buckles, dress buckles, dress pins, head bands, etc., made of cut steel, of steel and brass and mother-of-pearl; theatrical crowns, made of velvet with metal and glass ornaments; butterflies on wire, in imitation of precious metal; buckles of base metal, mounted with black glass, other glass and mother-of-pearl, were all properly classifiable as jewelry and heavy refunds of duty were made by the Government accordingly.

Yet, under the present law, when these same articles were assessed for duty as jewelry, the importers strenuously objected and carried their objections to court, with a large measure of success, as the decisions cited above, as well as those discussed on pages 236 and 237 of this book amply show.

At the time that the subject was under discussion before the Ways and Means Committee in 1909 the difficulty of providing for these novelties by descriptive language was fully recognized. In their brief before the Ways and Means Committee the association suggested a paragraph reading as follows:

Articles commercially or commonly known as jewelry and parts thereof, including small articles of silverware commonly or commercially known as silver novelties and toilet articles, finished or unfinished, 85 per cent ad valorem, and the term jewelry, as used in this act, shall be held to include all articles made of gold, of whatever karat or fineness; silver, of whatever alloy or fineness; or platinum or any base metals, or any articles of which these metals or either of them form a component part, whether of chief value or otherwise.

All articles commercially or commonly known as millinery and military ornaments and composed wholly or in part of either a precious or base metal; hat pins, of whatever material composed, and all other articles not specially provided for in this act, composed wholly or in part of either of the precious or base metals, designed or adapted for use as ornaments for the person or carried in the hand for purpose of adornment or utility, 85 per cent ad valorem.

PARAGRAPH 448-JEWELRY.

It should be noted that a straight ad valorem duty of 85 per cent was asked for. This language was found to be so comprehensive as to include articles not intended to be covered thereby. The author of Notes on Tariff Revision then suggested as an amendment to the paragraph as it appeared in the Dingley Act the following language:

Articles not specially provided for used to be worn upon the person or carried in the hand for purpose of adornment or utility made in part of metal, including chain purses and bags of gold or silver wire or imitation thereof, portemonnaies with watch charms and guards.

Careful consideration of this provision seemed to indicate that as drawn it was also so comprehensive as to include many articles not intended to be therein provided. For example, the provision for articles used to be worn upon the person or carried in the hand for purpose of adornment or utility, was seen to be so broad as to include everything of metal used upon the person or carried in the hand even where its sole use was utilitarian unless it was somewhere specially provided for in another paragraph. It is obvious that under this provision as first drawn such an article even as a pair of roller skates would be included and the following articles might be mentioned as coming within the provision and dutiable thereunder unless more specially provided for, the only limitation being that they must be''in part of metal”-dress-suit cases, umbrellas, walking sticks, eyeglasses, keys, etc.

It should be noted that the provision did not relate only to those which were for ornamentation, nor was it limited to those which were designed for the purposes mentioned. It covered every article which was used upon the person or carried in the hand.

It thus came about that an effort was made to have this paragraph as passed by the House changed, and we find the domestic manufacturers and certain importers getting together in an effort to agree not only upon the form of the new paragraph but also the rate to be recommended. The result of their agreement appears in Volume 8 (Appendix) of the Tariff Hearings at page 8376, where we find Mr. Thresher submitting a letter dated February 23, 1909, to the Committee on Ways and Means, in which he uses the following language:

In presenting this schedule for your consideration, we desire to state that George R. Howe, representing the manufacturers of gold jewelry; H. G. Thresher, representing the makers of cheap jewelry; and Alfred Krower, of Albert Lorsch & Co., representative importers of precious and imitation stones, chains and jewelers' findings, have labored diligently to harmonize their differences and so successfully that they all unite in supporting the paragraph we now propose.

On pages 8378 and 8379 the proposed paragraph is set out at length and is couched in the exact language of the present law with 85 per cent, the rate asked originally by the association.

It should be noted that the House bill was not introduced until March 18, 1909, and the agreement and the paragraph had already been printed in the report of the Ways and Means Committee, but it is probably the fact that the presentation of this paragraph came too late to be considered by the House.

A brief reference to two or three of the most important decisions under this act will show you how these articles have been cut out of paragraph 448, and the paragraph as it stands shorn of perhaps 90 per cent of its force.

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