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PARAGRAPH 472-PENCILS.

new tariff on lead pencils, the tariff on which, under the Payne bill was 45 cents per gross and 25 per cent ad valorem. The specific duty has protected us on cheap and medium-priced pencils which, on account of cheap labor, could be brought in 60 cheaply from Germany, Austria, and Japan under a low ad valorem duty, that our very positions are threatened.

We respectfully request that if the Committee on Ways and Means find it expedient to cut out all specific duty that they put a minimum ad valorem duty of 50 per cent on pencils.

Trusting to receive a favorable reply from you, we remain, very respectfully, yours,

LEON C. FELSER, Chairman. (The petition is signed by 1,214 employees of the above-named company.)

men.

MURFREESBORO, TENN., January 7, 1913. Hon. W. C. Houston, Washington, D. C.

DEAR SIR: Referring to Schedule N, Paragraph 472, pencils, of the present tariff:

We object strongly to any reduction in the present tariff on pencils. "A number of our people manufacture slats for pencil factories and any reduction in the tariff on pencils would make the price of the manufactured stock eo low that some of our poeple would no doubt have to go out of business or cut the price of our labor to equal the pauper labor of Europe. The farmers own the cedar wood that is left in the Southern States, and a reduction in the tariff on pencils would mean a tremendous loss to these

Red cedar formerly found only in the Southern States of this country is now shipped in large quantities and much cheaper from the German East African possessions to Germany, where the authorities have publicly recommended to the people not to use any other cedar. The lower the tariff on pencils here the more finished pencils will be imported made of the African wood, thereby cutting down the farmers' income and lowering the wages of the laborers.

Our people depend for their living upon protection of the finished article made in this country as against the low-priced wood used in Germany, Italy, France, and Japan in the manufacture of pencils. Yours, very truly, JNO. M. BUTTES, President, First National Bank.

(And 6 others.) (A similar petition dated Smyrna, Tenn., Jan. 14, 1913, with 12 signers was also received and filed.)

ROCKVALE, TENN., January 14, 1913. Hon. W. C. HOUSTON, Washington, D. C.

Dear Sir: Referring to Schedule N, paragraph 472, pencils, of the present tariff:

We object strongly to any reduction in the present tariff on pencils. A number of our people manufacture slats for pencil factories and any reduction in the tariff on pencils would make the price of the manufactured stock so low that some of our people would no doubt have to go out of business or cut the price of our labor to equal the pauper labor of Europe. The farmers own the cedar wood that is left in the Southern States, and a reduction in the tariff on pencils would mean a tremendous loss to these men.

Red cedar, formerly found only in the southern States of this country, is now shipped in large quantities and much cheaper from the German East African possessions to Germany, where the authorities have publicly recommended to the people not to use any other cedar. The lower the tariff on pencils here the more finished pencils will be imported made of the African wood, thereby cutting down the farmers' income and lowering the wages of the laborers.

Our people depend for their living upon protection of the finished article made in this country as against the low-priced wood used in Germany, Italy, France, and Japan in the manufacture of pencils. Yours, very truly,

J. P. LEATHERS, J. P.,

(And 7 others).

PARAGRAPH 472—PENCILS.

CHATTANOOGA, TENN., December 31, 1912. THE WAYS AND MEANS COMMITTEE,

House of Representatives, Washington, D. C. GENTLEMEN: Referring to Schedule N, paragraph 472, pencils, of the present tariff: We object strongly to any reduction in the present tariff on pencils.

We manufacture slats for pencil factories, and any reduction in the tariff on pencils would make the price of our manufactured stock so low that we would no doubt have to go out of business or cut the price of our labor to equal the pauper labor of Europe. The farmers own the cedar wood that is left in the Southern States, and a reduction in the tariff on pencils would mean a tremendous loss to these men.

Red cedar, formerly found only in the Southern States of this country, is now shipped in large quantities and much cheaper from the German East African possessions to Germany, where the authorities have publicly recommended to the people not to use any other cedar. The lower the tariff on pencils here, the more finished pencils will be imported made of the African wood, thereby cutting down the farmers' income and lowering the wages of the laborers.

We depend for our living on protection of the finished article made in this country, as against low-priced wood used in Germany, Italy, France, and Japan in the manufacture of pencils. Yours, very truly,

Hudson LUMBER Co.,
0. F. CHICHESTER,

General Manager.

LEWISBURG, TENN., December 31, 1912. The WAYS AND MEANS COMMITTEE,

House of Representatives, Washington, D. C. GENTLEMEN: We understand that the tariff will shortly come up for discussion, and we would request of you not to make any change in Schedule N, paragraph 472, for the following reasons:

Since the last tariff bill went into effect we have invested a great deal of money in purchasing red cedar and red-cedar rails and represent a number of farmers in the purchase and sale of their red cedar (used almost exclusively for the manufacture of fead pencils) in this State. We ourselves own some good large tracts of cedar rails and are interested to an extent in a large mill here and one at Columbia, Tenn.

There are a large number of farmers engaged in growing red cedar for lead pencils, and those who have good tracts of standing cedar are fencing same at an enormous cost to prevent depredation, believing in its future value for the use of pencils, and are growing and protecting same for their children.

If the tariff on the above paragraph is reduced it will result in the cedar mills having to close down, as lead pencils made of cheaper and poorer wood would then be imported from foreign countries to the detriment of the southern farmers and laborers engaged in this industry, and take from the working people employment, there being thousands of such engaged in marketing, growing, protecting, and manufacturing this class of wood for present and future use.

We will say here that the majority of the southern people are high protectionists and do not wish any change in the present tariff.

Leaving out the mill industry, most all the timberlands on which there is cedar has tripled under the present tariff, and we can see no reason why it should be changed to the detriment of the farmers, who would be the sufferers as owners, and the laborers, who would suffer for want of work, all depending on this cedar to be manufactured into lead pencils and boards that are used for this purpose exclusively,

We would again ask that you give this subject and the above facts due consideration when this measure comes up for discussion. Yours, very truly,

HOUSTON & LIGGETT, Per C. C. Houston.

PARAGRAPH 473—PENCIL LEADS.

PARAGRAPH 478.

Pencil leads not in wood, or other material, black, three-fourths of one cent per ounce; colored, one and one-fourth cents per ounce; copying, two cents per ounce.

PENCIL LEADS.

TESTIMONY OF JOHN J. ROONEY, REPRESENTING RICHARD

BEST, 29 BROADWAY, NEW YORK.

Mr. ROONEY. Mr. Chairman and gentlemen, I am appearing here as an attorney and not as a manufacturer.

Paragraph 473 of Schedule N covers pencil leads in wood; that is the black, the colored, and the copying pencil lead; the ordinary black lead that goes into a lead pencil.

All the way back from the tariff of 1883 to the Payne bill, as it emerged from the conference committee of the two Houses, pencil leads were put down in the tariff at 10 per cent. They carried a 10 per cent rate from the tariff of 1883 up to the Payne bill. The pencil business in this country, as I am told by my clients, was built up on that proposition, of a moderate rate of duty upon the black lead, the colored lead, and the copying lead.

Along in 1909, when the Payne bill was under discussion before this committee, an effort was made to take that rate out of the ad valorem class and to throw it into a specific duty, for the obvious purpose of raising it and concealing the amount of the raise. That attempt was made by four or five concerns in this country, who had combined, not in a single company, but into a gentleman's agreement-a misnomer, according to my way of looking at it. They had agreed in practically all of the big biddings and in a particular part of the territory of the United States on prices. They attempted to have this rate thrown out of the moderate and decent rate of 10 per cent—if any rate is considered decent on articles of this kind into a specific rate. It did not succeed in the House; it did not succeed here in this committee. All the tariffs from 1883 had carried this 10 per cent rate, and practically all of the manufactories were built up on that, at least four or five of the leading ones who are well known.

When this rate went into the Senate and emerged from the conference committee we have the following result, which exists to-day in the Payne bill:

Pencil leads, not in wood, black, three-fourths of one cent per ounce; colored, one and one-fourth cents per ounce; copying, two cents per ounce.

Those are the rates to-day.

Mr. UILL. Let me ask you a question right there. In 1912 the rate on pencil leads, copying, seems to be 1} as against 2 cents in 1911 ?

Mr. RAINEY. A cent and a quarter. Mr. ROONEY. A cent and a quarter on the colored. Mr. Hill. There seems to be a discrepancy in paragraph 473, pencil leads, not in the wood, or other materials, colored, seem for 1910 and 1911 to have been 1} cents.

Mr. HARRISON. That is just a misprint, I think.
Mr. HILL. It is evidently a misprint.

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PARAGRAPH 473-PENCIL LEADS.

Mr. ROONEY. I looked over the source book. I asked for the privilege of seeing some of the figures and I looked over the source book and I saw that that is a misprint.

Translated into the ad valorem equivalent, I find that the source book gives the ad valorem equivalent on black—that is, three-fourths of 1 cent per ounce-as about 20 or 21 or 22 per cent. As a matter of fact that is a mistake also. I have here the actual number of importations showing that the ad valorem equivalent on that lead, taken from invoices of this one concern that I represent-and which, by the way, did not go into the gentleman's agreement and has refused to go into it up to the present minute—that the ad valorem equivalent runs from 20 up to about 90 per cent. There is the result of throwing it from the 10 per cent rate over into this specific rate on the ounce.

Mr. KITCHIN. That is only an increase from 100 to about 800 per cent?

Mr. ROONEY. Of course, and that is the nigger in the woodpile. Mr. KITCHIN. That is the revision downward.

Mr. ROONEY. That is the revision downward that we got in the conference committee in the upper House.

Mr. PALMER. Is that a Rhode Island industry?

Mr. Rooney. That is the Aldrich end of the Payne-Aldrich bill on this particular item.

Mr. PALMER. I am asking about the industry. Where is it located ?

Mr. Rooney. It is not a Rhode Island industry, but it sounds very much like it. It did not come out this way. This House stood on the 10 per cent rate—the old rate that had gone on right along.

The present petitioner asks that the old rate of 10 per cent be restored or, if in your wisdom you think-and personally I think that it should be taken off entirely-it should be put on the free list.

Mr. KITCHIN. As a punishment for the way they slipped it across in 1909 ?

Mr. Rooney. Yes, sir. If you want to suit me you will put it on the free list, but if you want to put on the old rate of 10 per cent you will be taking, what I consider, a very conservative step. I urged my client to recommend that it be put on the free list entirely, and he said he had no objection to that.

I think that is all I can say, gentlemen, except that if we can get this article with which we are all familiar on a reasonable basis, this article which is the essential part of the manufacture of lead pencils, we will have a better chance for competition in lead pencils, because this is the only concern that has kept up active competition with the combination that has absolutely shielded itself behind the tariff and behind a peculiarly insiduous form of tariff. I would like to submit this brief.

Mr. Hill. Do you manufacture lead pencils ? Mr. ROONEY. No, sir; I do not. Mr. Hill. Do you represent anybody that does ? Mr. Rooney. I represent a gentleman whose name is on the list, Mr. Richard Best, of New York, who has been a friend of mine for the last 23 years.

PARAGRAPH 473—PENCIL LEADS.

Mr. Hill. Does he recommend a similar reduction on the finished product ?

Mr. ROONEY. I did not ask him anything about it. He did not tell me anything about it; but as far as I am concerned, if you ask me I would say yes,

Mr. Hill. As his attorney, you do recommend a reduction on the finished product?

Mr. Rooney. As his attorney, I have no recommendations to make, because he did not ask me to make any recommendation, but if you want my personal opinion, which I am authorized to make for myself, I would think it would be a good thing to make a reduction all around, not only in the matter of lead pencils, but on every article that will come before this committee.

I thank you, gentlemen.

BRIEF OF JOHN J. ROONEY.

To the WAYS AND MEANS COMMITTEE,

House of Representatives. This is a request to revise substantially downward paragraph 473 of the act of the existing tariff (Schedule N-Sundries).

1. The existing tariff provides, under the paragraph named above, as follows:

“473. Pencil leads, not in wood or other material, black, three-fourths of one cent per ounce; colored, one and one-fourth cents per ounce; copying, two cents per ounce."

2. Under all tariffs since 1883, including the so-called McKinley bill of 1890, the so-called Wilson bill of 1894, and the so-called Dingley bill of 1897, a duty was levied upon pencil leads of 10 per cent ad valorem, the object of this rate being to provide a moderate rate of duty upon the raw material for the manufacture of pencils in this country.

3. The Ways and Means Committee of the House in 1909 proposed a continuance of this 10 per cent ad valorem duty, but the Senate Finance Committee changed the basis of the duty from an ad valorem rate to a specific rate. The result of this change which was embodied in the existing tariff was that the ad valorem equivalent of the new, and now existing, rates amounted to from 50 to 90 per cent.

4. The object of this advance was to put a prohibitive rate of duty against the raw material which was used in manufacturing a pencil made in the United States in competition with a combination of other American pencil manufacturers. No other article used as a raw material was assessed, under the act of 1909, under such an enormous rate of duty.

5. The intent in putting such an article as black and colored lead under a specific duty levied by the ounce instead of by the pound or the hundred pound must be manifest. The statement that it was difficult to find the correct market value of such an article as black, colored, and copying leads, which had been imported for many years and whose values were well known, is ridiculous in the extreme.

6. But that this was a mere excuse for handicapping a rival American manufacture is manifest by comparing the long-standing 10 per cent rate with the new and now existing 50 to 90 per cent rate, against which we protest. The change was simply a cloak to cover an exceedingly onerous and almost prohibitory rate of duty. The object was to handicap and possibly kill an independent and competing American industry.

7. The entire pencil industry of the United States was built up upon a basis of 10 per cent duty on pencil leads. All the manufacturers of lead pencils in this country were started on this basis. The leads were imported and the pencils were finished here.

8. A combination, or trust, was started in this country. Petitioners never joined this combination, but started a factory in this country to manufacture lead pencils, relying upon the duty of 10 per cent on the leads. Thereupon the combination sought and succeeded in obtaining the existing enormous specific duties against the pencil leads, for the manufacture of which they were especially equipped.

9. The revenue to the Treasury, never large from this small item, has increased under the new rates, but is still small.

10. The rate of duty should be restored to the old rate of 10 per cent ad valorem or put on the free list. This rate would not only tend to encourage independent manu

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