PARAGRAPH 451-BOOTS AND SHOES.

hides would produce cheaper leather. I believed it, whether I said it or not, and I paid for it by staying out of the market at that time. We are large consumers of leather, and I backed my judgment on the proposition by not buying any leather in anticipation of a decrease and it cost our company thousands and thousands of dollars. We were only acting on the best judgment we had, and I can acknowledge a mistake, but a sincere mistake, with little embarrassment.

Mr. JAMES. The thing I am objecting to is that you never make any mistake in favor of the people to give them cheaper stuff, and I want to see if we can not get some tariff off of your shoes.

Mr. RAND. I think the statement is quite true that the active competition of 1,200 shoe manufacturers has produced values for the consumer in shoes that are nearer the cost of production than any other great industry that I know of in the country. I believe that statement is true.

Mr. JAMES. With reference to these shoes which you sell abroad, do you sell them cheaper than you sell the same shoes at home? Mr. RAND. No, sir.

Mr. JAMES. Do you sell them at the same price?

Mr. RAND. Yes; we sell them at the same price plus the cost of some extra work that has to be done in the way of preparing the shoes for export shipment in heavy cases.

Mr. JAMES. Notwithstanding you send $18,000,000 worth of shoes to all parts of the world and are paying this extra cost and paying freight in getting to their own market places and selling them in competition with these people there at the same price or a little higher than you do here, you surely get a profit out of those shoes, and yet you are afraid to take the tariff off to meet those people in your own market.

Mr. RAND. $18,000,000 is a bagatelle as compared with the total business of the United States-the total production of the United States. It is not as much business as one company does.

Mr. PALMER. Would it be a mere bagatelle if it were imports instead of exports?

Mr. RAND. It would on that percentage.

Mr. PALMER. You could stand for $18,000,000 of imports?

Mr. JAMES. Still, while this is a mere bagatelle, it is one hundred times greater than the imports under your 10 per cent tariff protection.

Mr. RAND. We can stand for anything that we have to stand for. I am trying not to represent the shoe manufacturers by being weak in my statements. We like to feel that we are able to take care of ourselves under a fair and even break with other men.

Mr. JAMES. Do you not really believe, looking at this thing from the standpoint of the exports and the imports and the 10 per cent. rate, that if we made boots and shoes free you people could go on and do business without being hurt in the slightest?

Mr. LONGWORTH. Before you answer that question, Mr. Rand, I want to set Mr. James right on the tariff rate.

The tariff rate on that particular class of shoe which we export largely is 15 per cent, and the exports are not $18,000,000 but $16,000,000, according to the Treasury figures. The exportations of shoes are all of the 15 per cent grade and not the 10 per cent grade, are they not?

PARAGRAPH 451-BOOTS AND SHOES.

Mr. RAND. I do not know when they commenced, Mr. Payne. Mr. PAYNE. Was it not along in 1909 or later that they commenced operation vigorously?

Mr. RAND. In the absence of specific knowledge, I can not answer that question.

Mr. PAYNE. You can not say whether it was or not?

Mr. RAND. I can not say definitely. I know that progress has been made in the past four or five years along the lines mentioned. When it comes to specific dates I can not answer.

Mr. PAYNE. Prior to 1909 none of these first-class shoes were made abroad that came in competition with ours. Since then the shoe machinery people have sent their machinery abroad and started the industry abroad, and have made pretty good shoes over there?

Mr. RAND. I think my statement also was that the foreigners had been making, for a number of years, good shoes, but they were making shoes unattractive from the American standpoint of lines and pattern and last

Mr. PAYNE (interposing). Absence of style?

Mr. RAND. Yes; absence of style.

Mr. PAYNE. But since then they have been making stylish shoes? Mr. RAND. I do not mean that has come from the United Shoe Machinery Co. I mean it has come from the best shoe manufacturers of the United States.

ery

Mr. PAYNE. I am afraid to talk about the United Shoe MachinCo.

Mr. RAND. I am not.

Mr. PAYNE. The fact was stated publicly, in the public press, that they sent these teachers over there after 1909, and some of the manufacturers have stated that that changed the conditions somewhat. Some of them thought they could make shoes free in competition with the world. I do not know whether that is your idea or not. Mr. RAND. That is my idea as you have expressed it, and you probably expressed it more clearly than I did.

Mr. JAMES. You spoke of the tariff you had to pay on machinery used in the manufacturing of shoes. What is the rate of tariff on that machinery?

Mr. RAND. Forty-five per cent on machinery.

Mr. LONGWORTH. Mr. Rand, I am going to read from an English trade paper called the Boot and Shoe Trade Journal. Are you familiar with it?

Mr. RAND. No.

Mr. LONGWORTH. It is the Boot and Shoe Trade Journal of London, and this was published in April or May of 1911. I just want to read one or two sentences from it and ask you if you agree with what they say:

We are selling shoes to America, and the world knows it pretty well by now. The continental buyers of foreign shoes know it, too, and doubtless reason with themselves in this way: That if England is selling shoes to America it is because they are better, and that it is policy for them to buy English shoes instead. The interest displayed by both American and Canadian buyers in the British goods is a happy omen. It is now more readily granted that British boots are best; that they are all we claim for them; and that, money for money, they are, owing to our national economic conditions and cheaper methods of production, of exceedingly better value.

PARAGRAPH 451-BOOTS AND SHOES.

Are English shoes being sold in this country now?

Mr. RAND. Yes; they are being sold in this country, and the man appointed by the Bureau of Commerce and Labor to get up the statístics of the foreign shoe industry strikes a note of warning in his introduction to the report that he made, that America had best look out for her shoe industry.

Mr. LONGWORTH. Is it true that England is taking away our continental trade in shoes?

Mr. RAND. If you will allow me, I will leave that to the speaker who will follow me, who is familiar with these matters, and has the information at his fingers' ends, and I think can answer you more intelligently.

Mr. JAMES. On the contrary, is it not true that our exports of shoes are increasing year by year?

Mr. RAND. You mean with regard to volume?

Mr. JAMES. Yes.

Mr. RAND. I do not know. We have the records, and they will be taken up by the next speaker. I know some of America's best shoe manufacturers are having difficulty selling shoes through their own private stores abroad, where they did not have difficulty several

years ago.

Mr. KITCHIN. In regard to the article which Mr. Longworth read from the English paper, stating that England is now exporting shoes to this country, is it not a fact that she exported less than $75,000 worth last year, and that you shoe manufacturers in the United States exported to England more than $1,500,000 worth?

Mr. RAND. I think you have the figures of their exports and our imports. I think also we have those figures in our brief. I am trying to avoid those statistics, because we have them accurately, and I do not like to give them approximately.

Mr. HARRISON. If there are no further questions, we will call the next witness.

TESTIMONY OF J. FRANKLIN MCELWAIN, OF BOSTON, MASS. The witness was duly sworn by the chairman.

Mr. MCELWAIN. Mr. Chairman, and members of the Ways and Means Committee, I have been requested to represent the National Boot and Shoe Manufacturers' Association, the National Shoe Wholesalers' Association, the National Shoe Retailers' Association, and the New England Shoe and Leather Association, to argue before you the retention of the present duty on boots and shoes.

I will file a brief at this point, to be inserted in the record.
The brief above referred to is as follows:

BRIEF IN SUPPORT OF THE RETENTION OF THE PRESENT IMPORT DUTY ON BOOTS
AND SHOES, BY THE NATIONAL BOOT AND SHoe ManufacturERS' ASSOCIATION,
NATIONAL SHOE WHOLESALERS' ASSOCIATION, NATIONAL SHOE RETAILERS'
ASSOCIATION, AND NEW ENGLand Shoe and LEATHER ASSOCIATION.

Hon. OSCAR W. UNDERWOOD, M. C.,

Chairman Committee on Ways and Means,

House of Representatives, Washington, D. C.

DEAR SIR: On behalf of the National Association of Shoe Manufacturers, the National Shoe Wholesalers' Association, the New England Shoe & Leather Association, and the National Shoe Retailers' Association we hand you a brief in support

PARAGRAPH 451-BOOTS AND SHOES.

of the retention of the present import duty on boots and shoes provided for by Schedule N, sections 450 and 451.

With specific reference to the recommendations of your committee regarding the outline of such a brief we beg to state:

First. That we recommend no change in duties, but appear in support of the retention of existing duties on boots and shoes. The reasons upon which we base our support are specified in our printed brief.

Second. Since no specific modification of the duties fixed by these sections is now before the committee, no estimate is possible of an increase or decrease in imports. Third. We have no suggestions to make regarding changes in the phraseology of the present tariff law or for the betterment of the administrative features thereof. Respectfully submitted.

NATIONAL BOOT AND SHOE ManufacturERS' ASSOCIATION. OFFICE OF THE SECRETARY,

Rochester, N. Y., January 29, 1913.

INTRODUCTION.

The Payne-Aldrich Tariff Act levied an import duty of 10 per cent ad valorem on (sec. 450) "boots and shoes made wholly or in chief value of leather made from cattle hides and cattle skins of whatever weight of cattle of the bovine species, including calf skins"; and an import duty of 15 per cent on (sec. 451) "boots and shoes made of leather."

The duty of 10 per cent applies in general to men's shoes; the duty of 15 per cent applies to women's shoes.

The shoe industry as represented by associations of manufacturers, wholesalers, and retailers is in favor of scientific tariff revision. This brief is respectfully submitted in the confidence that a scientific examination of the facts will justify beyond question the retention of the present duties on boots and shoes.

SUMMARY OF POINTS.

I. The present tariff is a necessary protection to a great American industry, national in extent, highly competitive, working on a small and constantly decreasing margin of profit, in which trusts, combinations, and pools are unknown. Its reduction would result in a serious blow to the industry and in the importation of large quantities of boots and shoes manufactured abroad under conditions with which Americans can not and should not compete.

II. The present tariff is a necessary protection to a vast number of highly skilled, well-paid American workmen. Its reduction would necessitate radical readjustment of wages and of standards of living to compete with European wages and standards. III. The present tariff is already low and has but recently been reduced. Its further reduction would not benefit the consumer.

IV. Opposition to any reduction is national in extent. East and West, North and South join in unanimous protest. Shoe manufacturers, shoe merchants, and shoe workers alike oppose any reduction in the present reasonable rate.

POINT I.

The present tariff is a necessary protection to a great American industry, national in extent, highly competitive, working on a small and constantly decreasing margin of profit, in which trusts, combinations, and pools are unknown. Its reduction would result in a serious blow to the industry and in the importation of large quantities of boots and shoes manufactured abroad under conditions with which Americans can not and should not compete.

SIZE OF INDUSTRY.

The boot and shoe business ranks among the greatest manufacturing industries of the continent. The capital employed amounts to over $220,000,000. The annual product is valued in excess of $500,000,000, or greater than that of the woolen, sugar, or paper and pulp industries.

PARAGRAPH 451-BOOTS AND SHOES.

NO TRUSTS.

It is one of the few great staple lines of industry in which the trust form of organization has made no headway. There are to-day over 1,300 separate and independent shoe manufacturing concerns in the United States. No pool, pooling agreement, or combination in any form has ever existed in the industry. The largest single concern to-day manufactures not over 4 per cent of the total product of the country.

NATIONAL SCOPE.

The industry is national in extent, stretching from Lewiston, Auburn, and Gardiner, Me., to San Francisco, and from St. Paul and Minneapolis to Atlanta and New Orleans. Shoe manufacturing forms an important industry in Maine, New Hampshire, Massachusetts, Connecticut, New York, Pennsylvania, New Jersey, Maryland, Virginia, Georgia, Louisiana, Ohio, Illinois, Missouri, Michigan, Wisconsin, Minnesota, California, Oregon, and Washington.

MARGIN OF PROFIT.

Competition in the shoe industry has resulted in the consumer receiving the maximum value possible. The margin of profit, never large, has decreased to from 5 per cent to 3 per cent on the turnover, or lower than most, and as low as any important manufacturing enterprise. No more than healthy profits are made by shoe manufacturers, and it is a significant fact that no large fortunes have ever arisen from this industry. Competition, on the other hand, has resulted in progressive manufacturing policies and in the scientific study of the problems of manufacture and distribution.

ANALYSIS OF COSTS.

In considering the effect of any tariff reduction we must first analyze the costs that enter into the manufacture of shoes, namely, merchandise, machinery, labor, and overhead charges.

MERCHANDISE.

The merchandise items in a shoe which make up the major part of the cost are sole leather, upper leather, cloth, hooks, eyelets, buttons, laces, thread, nails, and tacks. Other merchandise items entering into the cost of this production are lumber for wooden cases, carton boards for cartons, tissue paper for packing, last blocks for lasts, dyes and chemicals for stains and finishes. Every item above without exception, is itself subject to import duty, ranging in amount from 4 per cent to 60 per cent. Such vitally important items as cut soles, calfskins, sheepskins, and goatskins pay a rate of 15 per cent; cotton lining pays 31 per cent; calfskins, japanned or patented, 25 per cent; carton boards, 35 per cent; hooks and eyelets, 45 per cent; cotton webbing, 60 per cent; linen thread, 38 per cent; and buttons, 57 per cent.

A reduction of the present tariff on boots and shoes will place the American shoe manufacturer in competition with the markets of the world in the sale of his products while not allowing him the advantages of the markets of the world in the purchase of his raw materials. It in effect offers a subsidy to competing foreign manufacturers who are able to purchase their merchandise at lower prices than American manufacturers of boots and shoes.

MACHINERY.

While the merchandise items are heavily protected, machinery is no less so. Shoe machinery carries a rate of 45 per cent import duty; needles, 47 per cent; brushes, 40 per cent; and last blocks, 20 per cent.

The American shoe manufacturer is no longer at an advantage in competing with his European rivals because of his American inventive skill in developing and applying machinery to the process of manufacture. The European manufacturer can now secure the same machines used by the American manufacturer from the same machinery company. This company supplies the European manufacturer with trained instructors to teach his operators and with equal service in caring for his machines.