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Mr. BURN. Well, we are not hoggish.
Mr. CLARK. You are not! You have already 94 per cent of the trade?
Mr. BURN. We have how much?
Mr. BURN. Of the 94 per cent, 75 per cent brings in no margin whatever.
Mr. CLARK. Are you losing money?
Mr. CLARK. But take it altogether you made an average of 15 or 20 per cent, didn't you?
Mr. BURN. No, sir; absolutely not.
Mr. Burn. Not 10 per cent. Notwithstanding the statements in the public document to which you refer, I contend that that amount of profit has not been made in the wall-paper business.
Mr. Clark. The gentleman who preceded you put it at 10 per cent.
Mr. CLARK. What is it you are complaining about in the German rating business?
Mr. BURN. As I understand it, there is a reciprocity arrangement with Germany whereby wall paper is admitted to this country at less than the 25 per cent duty.
Mr. CLARK. Now, really the thing you are complaining about and didn't want to say is that you believe that these importations are undervalued at the place they are sent from?
Mr. Burn. I did not say that. I say it is done legally. I understand that there is a reciprocity agreement with Germany which permits the importations of wall paper into this country at less than 25 per cent duty.
Mr. CLARK. How much are you making in your factory?
Mr. CLARK. Well, that is the worst year that has struck the country for ten years, so how much did you make before?
Mr. Burn. I could not say offhand. We did not make 10 per cent.
Mr. CLARK. Then, how can you say offhand that you did not make anything last year?.
Mr. Burn. Because that was clearly placed before my mind, and I could not get away from it.
Mr. CLARK. Your memory seems to be bad when it comes to profits, but good as to losses.
Mr. BURN. Possibly.
Mr. BURN. I do not think it is fair, in the presence of competitors, to answer that question.
The CHAIRMAN. Of course you are not obliged to answer the question, but you are asking for an increase in duty
Mr. Burn. I will say that it was not 10 per cent.
The CHAIRMAN. The committee will give your request consideration, and if you do not want to answer the question, of course the committee will consider that.
Mr. CLARK. You say it was not 10 per cent. Was it 94 per cent?
Mr. CLARK. The other man makes 10 per cent, and you make 6 per cent.
Mr. Burn. Well, he is a better merchant than I am.
Mr. UNDERWOOD. You recognize the fact that the Government has got to raise some revenue, and you believe that a portion of that revenue should be raised by tariff taxation, do you not?
Mr. BURN. Yes, sir.
Mr. UNDERWOOD. If we only allowed 6 per cent of the volume of business in this country of which importations may come in, to raise the tax on all commodities, that only 6 per cent could come in, you can realize that there would be very little revenue raised from tariff taxation ?
Mr. BURN. Very true.
Mr. UNDERWOOD. And are not the men in your business willing to take a part of the burden of the support of the Government, as well as expecting the other fellows to do it?
Mr. BURN. They always have. There has never, during the existence of the wall-paper industry, been a request from them for the increase of a duty. We did not even ask for the duty that exists today. Now, when you speak of 6 per cent, I contend that that is not a fair statement of the case. Seventy-five per cent of the wall paper manufactured in this country is of so cheap a grade that there is practically no margin on it at all. It is like the grocery man selling sugar. He does not make much profit on it, but he may have some very big sales of it.
Mr. UNDERWOOD. That is due to home production.
Mr. UNDERWOOD. You have a prohibitive market on 75 per cent of your product by reason of the present duties?
Mr. BURN. With unprofitable results. Mr. UNDERWOOD. If you do not make a profit on it, that is by reason of the competition here at home.
Mr. BURN. We do not charge the tariff on that.
Mr. UNDERWOOD. The Government has given you a prohibitive tariff on 75 per cent. Isn't it reasonable that the wall-paper manufacturers should participate in aiding in the raising of the revenues of the Government to the extent of 5 per cent of their production?
Mr. Burn. It would be if it did not imperil the entire industry,
Mr. Hill. You spoke of the German agreement. Wall paper is not in the articles listed as one of those referred to in the reciprocal arrangement. If there has been any increase of duty due to the arrangement, it must be in the form of the valuation. I want to ask you if you know of any importations since the German agreement
was made which caused you to think that there was any undervaluation?
Mr. BURN. Well, I will say to that that we understood the reciprocal arrangement was entered into about the 1st of last July. The figures are not at hand showing the importations since that time, so that we haven't any opportunity to refer to that.
Mr. HILL. Can you supply this committee with samples of any importations of wall paper made prior to the German agreement, and samples of the same paper made subsequent to the German agreement, with the different valuation put upon them?
Mr. BURN. I do not know that we could.
Mr. BURN. We have no place to refer to. We saw the report published that the reciprocal arrangement between Germany and this country included this paper. It was so published in the newspapers, and that is the only source of information that we have.
Mr. Hill. There is no agreement that can change the tariff rate. The only possible thing would be undervaluation, and it is up to you to show that:
Mr. Burn. In the case cited by the preceding speaker he referred to importations that were made on behalf of large hotels in San Francisco; that on that basis of fact those goods were a specially made exportation for this country, and the duties exacted were equivalent only to 10 per cent.
Mr. Hill. And you do not know of another case excepting that? Mr. Burn. Not at the present time; no, sir.
Mr. Hill. Any importations made prior to the agreement and subsequent to the agreement, showing a difference in valuation ?
Mr. Burn. No; and we only refer to it now with a view to calling your attention to it, and to having the thing removed in the future.
Mr. BONYNGE. Were these importations for the San Francisco hotels made since the German agreement?
Mr. Burn. That was my understanding.
Mr. BURN. At New York. That is my understanding, but they may have been entered at San Francisco.
Mr. Griggs. How long have you been in the business of manufacturing wall paper ? Mr. Burn. I have been in it all my life; ever since 1871. Mr. Griggs. In your own business?
Mr. Burn. During the last twenty-three years it has been my own business; yes, sir. I started at the foot of the ladder and climbed up.
Mr. Griggs. You did not begin to lose money until you had made enough out of it to buy a business?
Mr. Burn. Oh, I have made some money.
Mr. Hill. Do you know the name of the parties to whom the San Francisco hotel paper was consigned!
Mr. Burn. L. Tozer & Son, San Francisco.
Mr. GRIGGs. And you want us to furnish the cane ?
BRIEF SUBMITTED BY REPRESENTATIVES OF THE WALL-PAPER
MANUFACTURERS ASKING FOR INCREASE OF DUTY.
WASHINGTON, D. C., November 21, 1908. COMMITTEE ON WAYS AND MEANS,
Washington, D.C. GENTLEMEN : The wall-paper manufacturers .whose signatures are hereto affixed respectfully ask your consideration of the effect produced upon the wall-paper industry by the rapidly increasing importations of wall papers, due to the low rate of duty applying to same under the present tariff, according to Schedule M, paragraph 402, law of 1897, wherein the duty is placed at 25 per cent ad valorem, and hope that our arguments will justify you in recommending á material increase in the rate of duty in order that the manufacturer may be afforded at least some relief from the present discouraging conditions.
It might be well to observe in the first place that the wall-paper industry has never heretofore requested any protection against importations of foreign wall papers, and that the conditions which compel it to do so at the present time are the result mainly of the enormous increased cost of manufacture, caused by the peculiar contracts with labor unions into which the manufacturer has been obliged to enter, and which provide for the continuous employment of the operatives, whether the plant is running or not.
In the face of these discouraging conditions, we understand that under the reciprocity agreement with Germany a minimum rate of duty has been placed on importations of wall paper from that country of less than 25 per cent, operating directly in favor of the German manufacturer to the detriment of the American manufacturer, inasmuch as the export from the United States to Germany for the fiscal year ending June 30, 1907, amounted to only $7,564, while the importations of wall paper from that country amounted to several hundred thousand dollars.
Another unfavorable condition affecting the industry in this country is due to the fact that many of the raw materials, as far as the manufacture of wall paper is concerned, bear a higher rate of duty than the finished wall paper, of which the said raw materials form the principal item of cost, and as a glaring example of such inconsistencies we refer to the silk floss papers, the duty on the silk floss used in the manufacture of same being 50 per cent, while the duty on the finished wall paper is only 25 per cent.
Again there are imitation leather papers, in which the main cost is that of the varnish, on which the duty is over 100 per cent, while the duty on the finished wall paper is only 25 per cent. There are, of course, many minor items, which figure as raw materials in the manufacture of wall paper, on which the duty ranges from 35 per cent upward, while, as already stated, the duty on the wall paper itself is only 25 per cent.
We appreciate the fact that these so-called raw materials, as far as wall paper is concerned, are finished productions in themselves, and that it might work an injustice to other industries in this country to have the duty on such materials reduced, and, because of these facts, we ask for an increased duty on foreign wall papers.
To demonstrate that the facts are not exaggerated, we submit tabulated returns of the Bureau of Statistics of the Department of Labor and Commerce, Washington, showing that the imports of paper hangings for domestic consumption for the five years ending June 30, 1907, have been as follows: 1903
$287, 154. 42 1904
291, 114.00 1905
361, 929. 89 1906
456, 898.00 1907
671, 904. 00 The returns for the year ending June 30, 1908, are not at hand, but would no doubt show a considerable increase over 1907.
The burdens imposed on the manufacturer by labor conditions in this country make it impossible for him to compete with foreign countries in the markets of these countries, as is demonstrated by the fact that for the year ending June 30, 1907, we exported to all of the countries of Europe, including the United Kingdom, but $46,921 in value of American wall papers, while, as already shown, we imported from these countries during the same period goods to the value of $671,904, and being unable, because of labor conditions in this country, to compete successfully with the foreign business, we contend that we should at least be given the fullest opportunity of holding the American business for American manufacturers by protection in the way of increased duties.
In addition to the advantages under which the foreign manufacturer is operating, due to a much lower wage scale, is the fact that the word "foreign" has in the minds of most dealers and consumers a significance, which is given a money value. In other words, the imported article, even if it is inferior in many respects, will bring a better price than the domestic article, for the simple reason that it is “imported.” Accordingly, for the same grade of papers a price several cents per roll less must be given by the American manufacturer in order to meet this competition.
Another point demands attention. Foreign competition is against the better ends of the domestic lines of wall paper, where the margin of profit should reasonably be the best. Assuming that the money value of the total domestic production of wall paper of all grades is $12,000,000 annually, which is not far from the truth, it is safe to say that not over 25 per cent is of the higher grades.
Local conditions of demand and supply have so reduced the selling price of these cheaper grades, or blanks, that the present margin of profit is reduced almost to a vanishing point. The only possible escape from a net loss in making this grade of papers is by a maximum of production. For the financial balancing of the business, therefore, dependence must be placed on the sale of the higher grades of papers, on which, as has been stated, there should be a fair margin. If foreign competition were restricted, this might be an encouraging possibility. Twenty-five per cent of the value of the annual output of the American factories above referred to is