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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 statistics 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 Whole-
salers' 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.

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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.

BIZE 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.

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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 314 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, 571 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 apply. ing machinery to the process of manufacture. The European manufacturer can now secure the same machines used by the American manufacturer from the same machin. ery company. This company supplies the European manufacturer with trained instructors to teach his operators and with equal service in caring for his machines.

PARAGRAPH 451-BOOTS AND SHOES.

LABOR.

The American shoe manufacturer can not successfully compete in cost of manufacture with the European manufacturer because of the wide difference in the cost of labor in favor of the European shoe manufacturer. The difference in wages between this country and abroad is generally recognized and has been the subject of numerous Government reports in this country and of reports of royal commissions in Great Britain. The difference in wages paid in the shoe manufacturing industry, however, between this country and Great Britain and the Continent of Europe is not generally known and has not been widely commented on. The facts, however, are clear and beyond the possibility of question. Comprehensive schedules have been prepared and are submitted herewith.

SOURCE OF INFORMATION.

These schedules are based upon investigations made by the Government into the cost of manufacturing shoes abroad and specifically upon a report prepared by the Department of Commerce and Labor, Special Agent Series 49, Shoe and Leather Trade, and Department of Commerce and Labor, Special Agent Series 50, Shoe and Leather Trade. The American figures are taken from the cost figures of five of the leading shoe manufacturers of this country. Only by a comparison of the detailed schedules following can one appreciate fully the very marked disparity between the wages paid in the shoe industry in this country and in Europe. These tables can be no more than summarized here.

WAGES.

The wages in the average factory in the United Kingdom making men's Goodyear welt shoes average 46 per cent of the average wages of workmen in American factories making a similar grade of goods. The average wages in shoe factories in the Leeds district of Great Britain, making heavy goods, average 55 per cent of the wages received by American workmen in American factories making a corresponding grade. The average wages in factories in Glasgow, Scotland, are exactly 50 per cent of the wages paid in factories in America making a similar grade of goods. The average wages in German factories reported on by the Department of Commerce and Labor are 50 per cent of the wages in American factories making similar grades of goods.

LABOR COST.

The total labor cost per pair of manufacturing shoes in the United Kingdom and Germany is approximately 60 per cent of the labor cost in this country on similar grades of work. It is obvious that in many industries the foreign wage may be lower than the American wage, and yet the foreign labor cost may be equal to or greater than the American labor cost. This condition, which is well recognized, is, of course, due to the greater efficiency of American methods, American machinery and American labor. This condition does not, however, obtain in the shoe industry. The foreign shoe manufacturer with the advantage of American machinery and American instructors supplied by the machinery company and with a wage scale of approximately 50 per cent of his American competitor is able to secure a labor cost of approximately 60 per cent of his American competitor.

DIFFERENTIAL IN FAVOR OF FOREIGN MANUFACTURER.

The difference of 40 per cent in the labor cost in favor of the foreign manufacturer is a differential susceptible of mathematical proof. The tables which follow and the graphic chart summarizing these tables amount to a demonstration. The average labor cost of an American shoe retailing from $4 to $4.50 is 64 cents. The foreign manufacturer, with his advantage of a 40 per cent lower labor cost, saves 25 cents per pair in competition with the American manufacturer on this point alone.

OVERHEAD CHARGES.

The overhead charges of the foreign shoe manufacturer are distinctly lower than the corresponding charges of the American manufacturer.

PARAGRAPH 451—BOOTS AND SHOES.

DEPRECIATION.

It is a well-recognized principle of management that a manufacturer having a low wage scale will perform many operations by hand which a manufacturer with a high wage scale must perform by machinery. This principle is particularly applicable to the shoe industry. Each shoe in the course of its manufacture passes through approximately 150 operations. Most of these operations in an American factory are performed by machinery. Many of these operations in British and German factories, which are here performed by machinery, are there performed by hand. This materially reduces the overhead expense of the foreign manufacturer. He not only saves depreciation and interest on the investment in machinery, if the machine be one subject to purchase, or royalty on the machine in case of a leased machine, but he saves a very substantial item of parts and repairs required to keep the machine in condition.

POWER.

Furthermore, the very materially greater use of machinery in this country results in a large increase in the power expense of the American manufacturer. From the nature of the case, accurate figures can not be secured, because no details of overhead charges in foreign factories are published. The fact, however, is undisputed and is a necessary conclusion from the published reports of wages, labor cost, and operations performed by hand and machines.

SALARIES.

Furthermore, the expenses of the foreign manufacturer for nonproductive labor are lower than the corresponding expense to the American manufacturer. Salaries for foremen, superintendents, clerks and office employees generally in the United Kingdom are not over 60 per cent of the salaries for corresponding positions in American shoe factories.

POINT II.

The present tariff is a necessary protection to a large 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.

AMERICAN SHOE WORKERS.

There are to-day over 200,000 workmen employed in American shoe factories. These workmen are highly skilled and a large proportion of them are Americans. They are employed at high wages, under good conditions, and maintain a standard of living as high as the workers in any manufacturing industry of the country. Approximately 33 per cent of the shoe workers are women. The wages of the women in shoe manufacturing average higher than the wages of women in any other of the 24 industries selected by the United States Census for detailed analysis.

READJUSTMENT OF WAGES REQUIRED BY TARIFF REDUCTION.

The present tariff on boots and shoes actually finds its way into the pockets of the American workman. It does not swell the profits of manufacturers, it does not contribute to monopoly. The shoe manufacturing industry could work on no lower profits even if the tariff were reduced. The present profit is as low as a healthy industry can accept and continue to exist. A reduction in the tariff, since it could not permanently reduce the profits of the American manufacturer, would come directly from his wage schedule. The detailed statistics as to wages are discussed in detail on a previous page. It has there been pointed out that the average wage of shoe workers in the United Kingdom and in Germany is approximately 50 per cent of the average wage in this country. These readjustments will affect men and women of one of the most skilled industries of the country and will bring them into direct competition with the low wages and the low standards of living in Great Britain and on the Continent. We submit that no adequate reason has been shown for requiring the American workman in the shoe industry to submit to such radical readjustment. Only dire necessity should be considered adequate cause for requiring him to take so radical a step backward in industrial progress.

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