Mr. OVERTON. Well, to whom do you refer? Mr. CLARK. The International Paper Company. Mr. OVERTON. No; we do not sell anything to the paper trust. Mr. CLARK. You have nothing in the world to do with the paper trust? Mr. OVERTON. Nothing in the world. BRIEF SUBMITTED BY FRANK C. OVERTON FOR THE NEW YORK PAPER STOCK DEALERS' ASSOCIATION. WASHINGTON, D. C., COMMITTEE ON WAYS AND MEANS, Washington, D. C. GENTLEMEN: The importers and paper mills handling paper stock are satisfied with what they believe to be the spirit or intention of the law as it now stands, but experience has demonstrated that owing to its wording, unnecessary hardship and expense have been entailed both upon the importer and the Government, and indirectly upon the paper mills. The clause "fit only to be converted into paper " causes most of the trouble, and a few examples will illustrate the nature of the trouble with which importer and appraiser have constantly to contend. Paper stock consists, almost without exception, of waste material of some character, whether paper, rags, cotton, linen, jute, hemp, flax, or manila, and may come in the form of new clippings from the fabrics made of the various fibers or old pieces of same, or may come in the form of threads, strings, twines, or ropes, or in the form of waste of various qualities, such as card waste, rove waste, washed flax waste, etc. The quality is so varied that although by far the largest percentage goes into the manufacture of paper, a certain small percentage may find its way into some other use as a raw material, or the appraiser may think that it could be put to some other use, and as the law specifies that the material must be "fit only to be converted into paper " he assesses duty at 10 per cent ad valorem under section 463, waste not specially provided for in this act, 10 per cent ad valorem." It has frequently been the case that an appraiser at one port has passed goods free, while exactly the same grade at another port was assessed 10 per cent. Contracts with paper mills using certain grades of flax-card waste and thread waste have been made with the clause, " duty, if any, to be paid by buyer," inserted, as it was impossible to tell what attitude the appraiser might take, and as an assessment of a 10 per cent duty would frequently more than offset the profit, and as duties of $20 per ton have been assessed, the importer was unwilling to take the risk. Flax waste should be distinctly defined so that the appraiser has no discretionary power to impose duty applicable to tow of flax or waste not otherwise provided for." 66 A low grade of colored jute waste, known as "colored jute caddis," and sold for about $12 per ton to a mill making roofing paper, has been assessed at 10 per cent on the ground that the small sample brought to the appraiser led him to believe it might be used to pack journal boxes, although wholly unsuited for the purpose on account of dirt and grit. Old shoddy, rags, and worn-out garments, or what is known in the paper-stock trade as "satinet garments," composed of a mixture of cotton and wool or shoddy, and used by manufacturers of roofing paper, have usually been admitted free, yet in one or two cases have been assessed at 10 cents per pound, although the grade was too low to be worked up into shoddy, and the stock could be used only to be converted into paper, and the domestic collection is sold regularly for that purpose, either packed separately or mixed indiscriminately with old cotton rags. Old gunny bagging has recently been classified into three grades by the Board of Appraisers, as follows: Assorted large pieces. Unassorted, or original gunny bagging. Scrap gunny, or small pieces, from which the large pieces have been assorted. waste The first two grades, assorted large pieces and original gunny, have been assessed 10 per cent ad valorem under section 463, not otherwise provided for;" and the last grade, scrap gunny, has been passed free under section 648, "rags not otherwise specially provided for in this act." A few years ago gunny bagging always came in free as fit only to be converted into paper. The question of paying duty on same first came up when it was found that a very small portion was broken up, or shoddied, for the purpose of stuffing horse collars, cheap mattresses, etc. Some time later it became the custom with certain packers to assort out the large pieces and ship them to America to be used as patches, tops, or sides, in rebaling cotton. The Government then assessed duty at 10 per cent ad valorem under section 463 on all old gunny bagging, irrespective of whether it was assorted, original, or scrap, and this custom was adhered to for several years, although the paper mills were still using a large percentage of it, but the oakum manufacturers were also using some to be manufactured into oakum, thus paying duty on raw stock and manufacturing it into a finished product which is free of duty. Old gunny bagging has also been used in this country as a raw product by a manufacturing concern making gunny bagging, the old stock being shoddied and used in connection with raw jute, which is also free. All of these different rulings have been under the present tariff law or previous laws whose wording of the section pertaining to paper stock was, in effect, the same as the present law. Although the paper-stock importers cheerfully admit that the Board of Appraisers have given the cases which have come before them careful, intelligent, and impartial consideration, yet the very wording of the section has made it absolutely impossible for them to give uniform decision, not because the goods in question varied in character or quality, but because the law specifies that the material must be fit only to be converted into paper, and whenever an appraiser had evidence or believed that the material could be used for anything else than paper making (and this happens frequently) duty would be assessed. If the Government sustained their claim, and they sometimes showed uses of which the importer had never heard, the importer would make a loss not figured on in the cost of the goods, and if the importer won he received a refund, half of which went to his attor ney for handling the case. Such uncertainties necessarily curtail business and make it difficult to figure cost, owing to unknown quantity of duty. We respectfully but strongly urge that the wording of section 632 be revised so that it is definite and unequivocal, and that, being raw stock, the question of whether or not it is dutiable be determined by the material itself rather than the use to which it is or may be put. A possible exception to this principle might be made with reference to a definite grade, such as "old satinet garments," above mentioned, and which contain a small percentage of wool or shoddy, by stipulating in a separate section that it must be converted into paper. Again referring to old gunny bagging, it is hoped that Congress may not feel that it is essential, for the purpose of protection, to assess duty on any of the three grades before mentioned and admit all free of duty. If, however, duty is to be charged on any of the grades of gunny, we respect fully suggest that the duty be made specific rather than ad valorem, as is the custom at present. The reason for requesting a specific duty is that old gunny bagging frequently follows the market on jute butts, which are free, and when a short crop of jute butts causes manufacturers to supplement the supply with old gunny bagging a wider market and correspondingly wider range of prices is apt to occur, frequently increased by speculative interests in no way connected with the paper trade, and it is most difficult to determine the correct value for duty purposes, so that in addition to the duty, fines and penalties are imposed, owing to difference of opinion between appraiser and importer as to the market value at time of shipment. Original, unassorted gunny to-day is worth approximately $13 per ton, and within the past three years it has been as high as $45 per ton. Instances have occurred where importers have contracted for the purchase abroad of a quantity of old gunny bagging at a low price, and not wishing to speculate have simultaneously sold same in this country on a small profit, figuring duty at 10 per cent on the cost, with the result that a rapidly rising market and correspondingly higher valuations upon which duty must be paid have resulted not only in loss of profit but a substantial loss in addition, even though furnisher and consumer properly lived up to the terms of their contract. We do not think duty should be assessed on any gunny, because, in the first place, it all originates from American cotton bales shipped abroad, and has consequently either been manufactured in this country or else paid a duty of six-tenths cent per pound. Furthermore, it is used exclusively as a raw product for manufacture, and even the assorted sides for baling must be reassorted, mended, sewed together, and put in rolls before being ready for the market, so that all the duty which is paid by the importer must eventually be paid by the manufacturer who uses the goods as raw material. In place of section 632, which is as follows: Paper stock, crude, of every description, including all grasses, fibers, rags (other than wool), waste, including jute waste, shavings, clippings, old paper, rope ends, waste rope, and waste bagging, including old gunny cloth and old gunny bags, fit only to be converted into paper We recommend the following: Paper stock, crude, of every description, including all grasses, fibers, rags (other than wool), waste, including jute waste, flax waste, flax-thread waste, hemp waste, linen-thread waste, shavings, clippings, old paper, rope ends, waste rope, and waste bagging, including old second-hand gunny bagging, not advanced in manufacture, to be used as raw material, free. This, in our opinion, would cover all grades of paper stock, excepting old satinet garments and rags containing a small percentage of wool or shoddy, and suitable only for paper making, and this should be provided for in a separate section, and to cover same we urge the following section: Rags or old garments composed of a mixture of cotton and wool, or cotton and shoddy, or cotton and wool and shoddy, and suitable for, and to be used for, the manufacture of paper, and for no other purpose. The object of this brief is solely to get the clearest possible wording of the section relating to paper stock in order to avoid conflicting rulings in the future, without changing what we believe to be the intent of the existing law. Respectfully submitted. NEW YORK PAPER STOCK DEALERS' ASSOCIATION, Committee. EXHIBIT A. BOSTON, November 18, 1908. Messrs. CASTLE, GOTTHEIL & OVERTON, New York, N. Y. GENTLEMEN: In reply to your communication of yesterday I will say: Owing to the indefiniteness of section 632 of the tariff act, we have for ten years been subjected to a series of annoyances which are a disgrace to any well-ordered government. There has been no uniform. practice of custom-house officials in levying duties on paper stock. Ten years ago, after a certain grade of flax waste had been passed as free for a dozen years, there was a sudden hold up, and duties of $20 per ton were demanded on stock which only cost $25 per ton, delivered at one of our mills, and the authorities demanded this rate on six carloads which had been entered, examined, passed as free, and manufactured into board. We protested and refused to pay, but after five or six years the Government sued us and recovered the duty, and then we took the case before the General Appraisers and they decided that the stock was not dutiable and the duties were refunded; but it cost us $1,200 for expenses. I can point to more than a score of cases where duties have been extorted from importers and refunded later after a loss of interest and legal expense had been incurred. As "tow of flax " is dutiable at $20 per ton, there should be a definition of the distinction between tow of flax and flax waste. The words "fit only to be converted into paper" are worse still, as every paper stock is fit for something else, if only for kindling fire or bedding horses. The law was doubtless intended to have all crude paper stock free, and it should be so expressed that if some one uses a few bales for some other purpose, it should not subject the whole class to duty. While the present practice at Boston is more uniform than formerly, the difficulties I have mentioned still exist and should be remedied. Yours, very truly, NATIONAL FIBER BOARD COMPANY, By STEPHEN MOORE, Treasurer. NEW YORK, November 20, 1908. Messrs. CASTLE, GOTTHEIL & OVERTON, No. 41 Park Row, New York City. GENTLEMEN: Referring to the hearing of the Ways and Means Committee on paper stock, we beg to advise you that in our mills we consume approximately 25,000 tons per year of rag stock, and find it necessary to secure a portion of this from a foreign market. Referring to the tariff act under "Importations of rags," section 632, as the matter now stands there is a difference of opinion among appraisers as to whether old satinet garments, etc., should be dutiable at 10 cents a pound or free as paper stock. Their value is approximately the same as dark rags for roofing-paper use, and for all intents and purposes as rags covered by section 632, but if the assessment of same be entirely at the discretion of the appraiser, and a possible duty of 10 cents per pound be assessed, there is difficulty in getting importers to secure this stock for us. We would urge that a clause be made applying to this grade of stock, stating that old satinet garments or rags composed of a mixture of cotton and shoddy suitable only for paper stock, and to be used only to be converted into paper, be admitted free of duty. In view of the fact that it is necessary to supplement our stock by the purchase of foreign rags, we think this uncertainty as to the interpretation of the present tariff should be definitely settled, and we trust that you will exert every effort in helping secure the modification above referred to. Yours, truly, BARRETT MANUFACTURING COMPANY. Manager Manufacturing Department. LATROBE, PA., November 18, 1908. Messrs. CASTLE, GOTTHEIL & OVERTON, New York. GENTLEMEN: We understand you people are going before the Ways and Means Committee on the tariff question. Our views are simply this: In the first place, we do not think there are enough domestic |