Mr. CURTIS. It might be well for me to explain to you something about the formation of our industry. In 1890 the state chemist of Connecticut, after many years of study and experiment, imparted to me, as a practical paper maker, his theoretical knowledge of making plain paper for photographic emulsions. By photographic emulsions I mean any kind of coating which may be applied to paper and when so applied is acted upon by light. We formed a company called the American Photographic Paper Company and in a small way began the manufacture of plain basic paper for photographic purposes at South Lee, Mass. We were encouraged in our experiments by the protection afforded under the McKinley bill. While there was no classification for such a paper under the McKinley bill, it supposedly came under the 35 per cent ad valorem rate. We spent five years experimenting, from 1890 to 1895, and in July of the latter year we succeeded in making a marketable paper after having spent many thousand dollars in experiments. While we were in the experimental stage the Wilson bill became a law and reduced the rate from 35 per cent ad valorem to 30 per cent ad valorem. We did not appear in remonstrance to this reduction because we had not perfected our process. We did appear, however, before your committee at the hearing on the Dingley schedule and explained that the then existing classifications did not properly cover our product, and upon our recommendation the classification of plain basic papers, etc., was made. Our principal reason for asking a rate of 3 cents and 20 per cent ad valorem is to restore us to the protection under the McKinley bill and as recommended by the Finance Committee in the Senate at the time of the framing of the Dingley bill, thus enabling us to better compete with foreign manufacturers whose price for labor and material is much less than ours. The price paid for machine tenders in this country is from $3 to $4 per day, against 87 cents to $1 per day in Europe, and ordinary laborers are paid in this country from $1.50 to $2, against 50 cents to $1 per day in Europe. Girls employed in sorting of rags and in the finishing of paper are paid in this country from $1 to $1.25 per day, against 50 cents to 60 cents per day in Europe. Under a secret process known to but three people, and in which process of manufacture all three take active part, the business is still being conducted by us. We further desire to call your attention to the fact that the paragraph covering our papers might be changed to cover more broadly the papers which are imported for all photographic processes. Finally, I would like to say that inasmuch as the McKinley bill afforded a rate of 35 per cent ad valorem when no plain paper for photographic processes was produced in this country, it seems to me proper that at least a like rate ought to exist now that such a paper is being successfully produced here. The CHAIRMAN. What is the production in this country of photographic paper of all kinds? Mr. CURTIS. The production in this country of the high grade, which we make The CHAIRMAN. In dollars? Mr. CURTIS. I can not give you the low grades, but it is about 100 tons a year of the high grade. The importations are about 2,000,000 pounds. Mr. CLARK. How much dividend are you making now? Mr. CURTIS. Our paper costs us 23 cents a pound, and we sell it for 29 cents. Mr. CLARK. That is, every time you invest 23 cents you make 6 cents. Do you know of any other business in which you can do that, excepting the lumber business [laughter]—that is, put in 23 cents and draw out 29? Mr. CURTIS. But with a large business it would be different. This is a limited business. Mr. CLARK. Of course it is. If it wasn't, you would be the richest man on earth. How much dividend do you make upon the money invested? Mr. CURTIS. Our money? You must remember we have been a long time in bringing this business up to what it is. Mr. CLARK. Well, let me put it this way: You do not expect Congress to put a tariff rate on your goods that will compensate you for money that you lost when you didn't know how to make the paper, do you? Mr. CURTIS. I think that if the American manufacturer was willing to support a thing like that, of benefit to the consumer in America, that he should have some benefit. Mr. CLARK. You are making money out of the business now? Mr. CLARK. How much are you making? That is what we want to find out. Mr. CURTIS. On the basis of sales of 150,000 to 200,000 pounds, 5 cents a pound. Mr. CLARK. If you are making 6 cents on every 23 cents invested, you are making 30 per cent profit. Mr. CURTIS. That should be 5 cents instead of 6 cents; 24 cents to 29 cents. Mr. CLARK. Still, that leaves it away up yonder at 25 per cent profit, doesn't it? Mr. CURTIS. The reason I ask for an increase in duty is because the foreigners are putting in so much paper. They can put it in for less than we can make it if they want to. Mr. CLARK. Is there any stock in your company for sale? Mr. CURTIS. No, sir. Mr. CLARK. You do not want to sell it? Mr. CURTIS. No; it is a close corporation. Mr. CLARK. I would like to get some of it if you want to sell it. THE AMERICAN PHOTOGRAPHIC PAPER COMPANY, BRIDGEPORT, CONN., WRITES RELATIVE TO DUTIES IMPOSED ON PLAIN BASIC PHOTOGRAPHIC PAPERS. BRIDGEPORT, CONN., December 29, 1908. Hon. EBENEZER J. HILL, M. C., Ways and Means Committee, House of Representatives, Washington, D. C. MY DEAR SIR: On Saturday, November 21, 1908. Nelson Curtis, of No. 2304 Washington street, Boston, Mass., appeared. before your honorable committee in behalf of the company of which I am president. He made a plea for a special classification in the latter part of paragraph 398 of Schedule M pertaining to plain basic papers for photographic emulsions. I have been one of the state chemists of Connecticut for many years. Back in the sixties I commenced experimenting in trying to make a paper which could be used, when coated, for photographic emulsions. I was not successful until I met Mr. Curtis and together with him experimented from the year 1890 until 1895, when we produced a satisfactory paper. Our risk in the manufacture of this paper is a great one, it being very difficult to produce and liable to losses in the manufacture. The testimony of Mr. Curtis made before your committee was that the paper costs us 24 cents a pound and we get 29 cents per pound, making a profit of practically 20 per cent in good times and provided we make no losses on bad accounts or poorly manufactured paper. Under the McKinley schedule we were allowed 35 per cent ad valorem. We ask now that the duty be 3 cents specific and 20 per cent ad valorem, which is a 10 per cent raise from the Dingley schedule, so that we can compete with the foreign manufacturers and practically restore us to the McKinley schedule. Trusting that you will give me your consideration in addition to Mr. Curtis's plea, I remain, Yours, very truly, THE AMERICAN PHOTOGRAPHIC PAPER Co. Per SYLVESTER P. WHEELER, President. EASTMAN KODAK CO., ROCHESTER, N. Y., OPPOSES INCREASE OF DUTY ON PLAIN BASIC PHOTOGRAPHIC PAPER. ROCHESTER, N. Y., December 31, 1908. COMMITTEE ON WAYS AND MEANS, Washington, D. C. GENTLEMEN: Our attention has been called to a statement made. to the committee by Mr. Nelson Curtis, of Boston, in favor of an increase of the duty on "plain basic photographic paper for albumenizing, sensitizing or baryta coating" (par. 398). His argument is found under date of November 21, 1908. Mr. Curtis's statements are so wide of the mark and his deductions so erroneous that we can not allow them to pass unchallenged. 1. Mr. Curtis is not a manufacturer of paper; he is simply a stockholder and officer of the American Photographic Paper Company. That company neither owns nor operates any paper mill. The paper which it sells is manufactured for it by the American Writing Paper Company at one of its mills located at South Lee, Mass. The manufacturing which the American Photographic Paper Company does consists simply in sizing the paper by a secret process. Several times a year Mr. Curtis and one or two assistants go to the mill at South Lee and supervise the preparation by his process of from 20,000 to 30,000 pounds of paper for photographic uses. His work is all done in the mill of the American Writing Paper Company, and the stock is carried in this same mill. In his argument Mr. Curtis, in reply to a question put to him by a member of your committee, made the following statement: "Our paper costs us $0.23 per pound and we sell it for $0.29." We happen to know that Mr. Curtis's company is under contract with a foreign manufacturer to sell to it its entire output up to 100,000 pounds at $0.23 per pound. It pays the American Writing Paper Company $0.19 per pound for the paper. On the basis of an output of 100,000 pounds, his company's gross annual profit is $4,000. In addition, the foreign manufacturer pays it an indemnity of $8,500 per annum, irrespective of the amount it takes. This added to the $4,000 makes a gross profit of $12,500. Making a liberal allowance for the expenses of Mr. Curtis and his assistants while at South Lee supervising the sizing of the paper and for the expense of the comparatively small amount of chemicals which they use, the net annual profit of his company must be in the neighborhood of $10,500 per year, including the indemnity, on an output of paper which costs his company $19.000. Practically all of the paper which Mr. Curtis's company sizes is sold to us by the foreign manufacturer, and we pay $0.29 per pound for it. The combined profit of Mr. Curtis's company and the foreign manufacturer on this paper must be about 55 per cent. 2. During the year ending June 30, 1908, we imported about 2,266,000 pounds of photographic paper. Of this, 1,016,000 pounds cost $0.44 and upward per pound and about 1,250,000 pounds cost under $0.44 per pound. This paper is purchased by us from foreign manufacturers because it is not and, so far as has been discovered, can not be made in this country. We are obliged to import over 95 per cent of all of the raw paper which we use for photographic purposes, for the reason that neither Mr. Curtis's company nor any other American company can furnish a paper which can take the place of the foreign-made paper. It would therefore be unfair to increase the duty on raw basic paper and thus make us pay the increased duty on over 2,250.000 pounds, simply to enable Mr. Curtis's company to increase the present large profit on its output. If Mr. Curtis's company could make a paper that could take the place of foreign-made papers, it would have a very large field for its product and could sell at a large profit under the present tariff rates. In a former statement filed by us we stated that all our raw basic paper was made abroad. The amount of the Curtis paper (so-called) which we use is so small in comparison with our importation (less than 4 per cent) that we overlooked it. 3. As we understand it the general policy of this Government is to admit free of duty such articles as can not be manufactured in this country. We see no reason why this principle should not be followed in this case. There can be no substantial argument urged in favor of an increase of the duty. It should be decreased instead of increased. Very respectfully, EASTMAN KODAK COMPANY, By GEO. EASTMAN, Treasurer. PARCHMENT PAPER. [Paragraphs 398 and 402.] STATEMENT OF B. A. VAN WINKLE, REPRESENTING HARTFORD CITY PAPER COMPANY, HARTFORD CITY, IND. SATURDAY, November 21, 1908. Mr. VAN WINKLE. Mr. Chairman and gentlemen, I represent the Hartford City Paper Company, of Hartford City, Ind. We are engaged in manufacturing two special kinds of paper, one of which we call imitation parchment and the other of which we call glassine or parchment paper. We have been engaged in the manufacture of this paper since 1905. Previous to that time this paper was not manufactured in the United States, and all of it which was consumed in the United States was imported from Germany and Sweden. We find that this paper is classified and dutiable under paragraph 402 of the act of 1897, which brings it in under unclassified papers bearing a duty of 25 per cent ad valorem. This paper is identical in its uses with parchment paper, and in many places it is used interchangeably with it, and notably in the packing industries, by the grocerymen, by the confectioners and bakers, and parchment paper is classified under paragraph 398 and bears a duty of 2 cents a pound and 10 cents ad valorem. The transparent papers, or pergamyns, are used interchangeably with surface-coated or paraffin papers, which are admitted under the same paragraph and bear a duty of 2 cents a pound and 15 per cent ad valorem. Our experience in the business has taught us that we are not able to make this paper and put it in competition on the Atlantic seaboard with the imported article, for the reason that the Germans and Swedes are able to obtain their labor at about 41 per cent of our cost, and are also able to obtain their sulphite fiber, from which this paper is made, at from $10 to $15 a ton below us for the same grade of stock in this country. Therefore they are able to put their paper in the seaboard markets at from 10 to 15 per cent below our cost of production, which of course shuts us out of business there. The CHAIRMAN. I understand your contention is that parchment paper made from wood pulp is now classified by the courts as paper otherwise provided for at a lower rate of duty? Mr. VAN WINKLE. Yes, sir. The CHAIRMAN. And you desire to have it classified as paper made from rags, ordinary parchment paper? Mr. VAN WINKLE. Yes, sir. The fact, Mr. Chairman, is that parchment paper is sometimes made of rags and sometimes made out of sulphite. The CHAIRMAN. What relation does the parchment paper made. from pulp bear to the other parchment paper? Is it substantially the same? Mr. VAN WINKLE. Practically the same. The CHAIRMAN. Is the process about the same? Mr. VAN WINKLE. It varies a little. The CHAIRMAN. The cost is about the same per pound? |