from nothing three years ago to an importation last year of between 10,000 and 12,000 tons, so we are informed, and as explained before on account of its superior strength it displaces twice this amount of tonnage of domestic production. If we were afforded a proper protection on these grades we are sure American enterprise would prepare itself to take care of the increased demand for these grades, as already there have been many experiments made in American mills, and one or two manufacturers have been looking very seriously into the problem. To emphasize the effect of this competition let us cite the following comparative table. Costs of manufacture at mills, properly balanced. No. 1 manila, made of 60 per cent sulphite (popular quality), costs as follows: 60 per cent sulphite, at $35 per ton_. 10 per cent shrinkage_ Conversion Freight Total. Or $2.55 per hundredweight. $21.00 7.20 28. 20 2.82 16.00 4.00 51.02 The Kraft paper costs 3 cents per pound f. o. b. port of entry, plus 25 per cent duty, 75 cents per hundredweight, total $3.75 per hundredweight, f. o. b. port of entry. If sold at 44 cents per pound, a ream of 25 pounds costs the consumer $1.06 per ream. No. 1 manila, 40 pounds basis, if sold at 3 cents, would cost the consumer $1.30 per ream, or 233 per ream in favor of the imported paper. We therefore claim that this grade of paper, where labor costs are as high relatively as the costs on the higher forms of steel products, should receive higher protection. We have prepared the following suggestions, which we ask you to include in your schedule on paper: Proposed schedule for wrapping paper, made in whole or in part from sulphate fiber and commonly known in the trade as "Kraft paper" (or any substitute of equal strength, quality, or appearance), white or colored, and of all kinds of wrapping paper, decorated or containing a design or character of any description, as follows: Weighing over 65 pounds to the ream of 480 sheets, on a basis of 24 by 36 inches, and whether in reams or any other form, 25 per cent ad valorem; if weighing 40 pounds and not over 65 pounds to the ream, 30 per cent ad valorem; if weighing 30 pounds and not over 40 pounds to the ream, 40 per cent ad valorem; if weighing 20 pounds and not over 30 pounds to the ream, 50 per cent ad valorem. All other papers known as wrapping paper, not especially provided for in the above, 25 per cent ad valorem. Novelty wrapping papers containing designs and characters are now being produced in this country, both with and without patents, that must compete with foreign-made papers of like character. The foreign manufacturers can produce these papers and land them in the United States at a price that will not permit the domestic manufacturers to compete, and, at the same time, nullify the value of the patent issued by this Government, for, owing to the patent laws prevailing now in most of the foreign governments, a patented article must be manufactured in those countries or be available to anyone who chooses to use them. Kraft paper weighing 20 pounds and under should be classed as tissue. INVESTMENT. The wrapping-paper industry is one peculiar unto itself. It occupies a different relationship as regards investment to production than any other industry in this country. To build and equip a wrappingpaper mill requires $2 investment for each $1 of annual production. This does not consider timber lands or working capital, but does include all expenditures for development of water power, construction of pulp mills (mechanical and chemical), paper mills, etc. Therefore, in order to secure a yield of only simple interest on investment, the wrapping paper manufacturer has to make 12 per cent on his product, free of all depreciation costs, etc. Men do not invest in manufacturing business for 6 per cent returns. They would not employ their time, intelligence, and money at so great a labor and risk for so small a return. Good judgment would dictate the preference of lending their money on good collateral for such returns. They must see at least 10 per cent on capital before they would place their money in such enterprises, in which they are not only serving their own interests but are public benefactors, in developing the country's natural resources and giving employment to its labor. To make this 10 per cent they would have to make 20 per cent on their product, and the result of recent years, as shown by ledger balances, shows this to be impossible, in view of foreign competition. "In considering the tariff on paper we would like for you to recognize the relation which exists between wood and the products therefrom, and iron ore and the products therefrom. Whether converting wood into ground wood pulp for paper purposes, or in converting iron ore into pig iron, the relation of labor to finished product is relatively the same. "From every point of view, in bringing wood products and steel products into their relation with each other, whether considering the labor expenditure to produce $1 worth; or whether considering the plant investment necessary to produce $1 worth, or whether considering the investment necessary for protection, the supplies of raw material as they are found in the earth or growing from the earth, or whether considering the abstract aspects in connection with political economy, it appears that the duties upon wood and the products thereof should be greater than the duties upon steel (iron ore) and the products thereof, and yet we find that under the present tariff this condition is not only reversed, but most severely reversed, because in some cases the duties upon important heavy steel products are three times as great as upon corresponding wood products. "We now ask that whatever duties be placed upon iron ore and the products therefrom, correspondingly higher duties be placed upon wood and the products therefrom." I have also a paper here Mr. UNDERWOOD. The duty on iron ore is 50 cents a ton. Mr. MARCUSE. And pulp wood is free. Mr. UNDERWOOD. Pulp wood is free. You want 50 cents a ton on wood pulp? Is that what you claim? Mr. MARCUSE. Whatever your judgment sees fit to give to iron ore, we would like the relationship of wood and its products considered in its relative position. Mr. UNDERWOOD. I want to ask you, on this subject of wrapping what is the volume of the business in the United States? paper, Mr. UNDERWOOD. About 700,000 tons per annum. That is, the consumption in this country is 700,000 tons? Mr. MARCUSE. The production in the country is 700,000 tons. That is what you asked me. Mr. UNDERWOOD. What is the importation? Mr. MARCUSE. The importation is a difficult problem to reach, because the wrapping paper comes under that indescribable quantity of 'not otherwise specified." Mr. UNDERWOOD. You mean that you have no figures on the amount of importations? Mr. MARCUSE. We have made some effort to get some, and hope that we will be able at some not distant day to give those figures. Mr. UNDERWOOD. But at the time you prepared your statementMr. MARCUSE. I was looking into the subject of Kraft paper, and the importations that I found in one port of entry gave me an indication that the quantity we imagined was being imported should be cut down exactly one-half. The effect that it has had on the trade has influenced the manufacturers of paper to believe that from 20,000 to 25,000 tons were imported last year, but when we found out that about 4,000 tons were received at one port of entry, we concluded that from 10,000 to 12,000 tons were the receipts in the United States. Mr. UNDERWOOD. You think that the production of wrapping paper in this country amounts to about 700,000 tons, and the importations to about 12,000 tons? Mr. MARCUSE. But that is of this one particular grade. This is a new product, that has not only disturbed us, but has disturbed us twice as much as it would if it was not serving twice the duty that our papers do. Mr. UNDERWOOD. On that new product, the importation Mr. MARCUSE. If it grows from nothing to 12,000 tons in the short space of three years, in simple geometrical progression, what will it do in ten years? That is what alarms us. Mr. UNDERWOOD. It might be that the market has been already filled, possibly. Mr. MARCUSE. To draw it more closely to your attention, it has been a matter of only the recent past when you carried home from the first-class stores of your community your bundles wrapped in Kraft paper. Heretofore they have been wrapped in No. 1 manila or fiber papers of American production. But now, in all of the larger stores, in the larger cities, you find they are working this into common use. Mr. UNDERWOOD. I do not care to take up the time of the committee in arguing this question with you, if you will pardon me; but I would like to your time. Mr. MARCUSE. I do not want to take up any of Mr. UNDERWOOD. I say, I would like some information, so that if the question comes to a vote I can intelligently vote on the matter. Therefore I want the information for my own guidance. You stated the amount of the production in this country. Now, I would like to know the total amount of importations, in the line of wrapping paper, if you know it. If you do not, you may say so. Mr. MARCUSE. I do not know it, but I will try to ascertain and give it to you. I have tried to do it, but have not been able to give it to you as yet. Mr. UNDERWOOD. Is there any exportation of this paper? Mr. MARCUSE. Of our papers? Mr. UNDERWOOD. Yes. Mr. MARCUSE. It is very limited. Mr. UNDERWOOD. Where do you export it to? Mr. MARCUSE. I hardly think of exporting now. There is some little exporting going on to Cuba. Mr. UNDERWOOD. Where have you been exporting in the past? Mr. MARCUSE. The export business for domestic manufactures in wrapping paper is so small that it is not a factor. Mr. UNDERWOOD. If you can, I wish you would give the information. Mr. MARCUSE. As I say, the figure is so infinitesimal that it is not a factor as to which I could even give you the information you are trying to get. I know some little goes to Cuba, and before Porto Rico was made a part of our country some went to Porto Rico. Mr. UNDERWOOD. Some goes to the Continent, does it not? Mr. MARCUSE. I do not know of any wrapping paper going to the Continent. Mr. UNDERWOOD. You ship none to England? Mr. MARCUSE. I know of none going there. Mr. UNDERWOOD. Of course you only speak for your own house and not for the trade? Mr. MARCUSE. I only speak for my own house and from a general knowledge of the trade. Mr. UNDERWOOD. But you are unable to give the information at present as to a comparison of the amount of the volume of this business that is controlled to-day by the American product as compared with the other? Mr. MARCUSE. No. Mr. UNDERWOOD. I would be obliged to you if you would put that statement in, if you can get the figures. That is one of the important propositions that we want to know about. Mr. MARCUSE. I will be very pleased to do that at a later time, if possible. Mr. BOUTELL. Who are your principal purchasers? Mr. MARCUSE. The jobbers. Mr. BOUTELL. You do not sell to the paper-bag manufacturers, do you? Mr. MARCUSE. Some of the paper manufacturers do who make bag papers. They sell to the paper-bag manufacturers. Mr. BOUTELL. Some of the class that you represent here? Mr. MARCUSE. Yes, sir. Mr. BOUTELL. There is a large exportation of paper bags, is there not? Mr. MARCUSE. So I am informed. Mr. BOUTELL. To Australia and South Africa? Mr. MARCUSE. Yes. Mr. BOUTELL. That is made out of your paper? Mr. BOUTELL. Are those paper bags that are sold in Australia and South Africa sold in competition with the English and German manufactures? Mr. MARCUSE. Being unfamiliar with that branch of the business, I am unable to give a reply, but there are other gentlemen here who know more about it. Mr. BOUTELL. There are paper-bag manufacturers represented here, are there? Mr. MARCUSE. Yes. Mr. CLARK. How much per cent did you say you are making? Mr. CLARK. But I ask you how much per cent of money you are making on your investment? Mr. MARCUSE. Well-how much per cent we are making on our investment? Mr. CLARK. Yes; it is a simple question. Mr. MARCUSE. It is a very simple question, and a very difficult one to answer. Mr. CLARK. Did you not state a while ago that you made 12 per cent? Mr. MARCUSE. That we would have to make 12 per cent. Mr. CLARK. Well, how much are you making? Mr. MARCUSE. I think for an average period of years if it showed 5 per cent net above depreciation and costs the manufacturers would consider themselves fortunate. Mr. CLARK. How much did you make from 1897 to 1907? Mr. MARCUSE. I have not been in the business that long, but I want to say now that 5 per cent would be a fair average of the per annum profits that paper manufacturers made in that period. Mr. CLARK. That is, after you count out the interest, depreciation, and the whole thing? Mr. MARCUSE. After we count out nothing. The interest is there. Mr. CLARK. You are all getting poor, then, according to your own tale. Mr. MARCUSE. I think we are. Mr. CLARK. You are worse off now than you were ten years ago? Mr. MARCUSE. We are no better off. Mr. CLARK. You have not made any money in the meantime? Mr. MARCUSE. No, sir; we have not made the money that a manufacturing business entitles us to. Mr. CLARK. I am not talking about what a manufacturing business entitles you to. I am talking about how much you made. Mr. MARCUSE. Well, I have answered that. Mr. CLARK. Did you make money or did you lose it? Mr. MARCUSE. Some years we made money and some years we lost money. Mr. CLARK. Well, how would it average, on the whole? Mr. MARCUSE. Five per cent per annum for the last ten years is a fair average of what the paper manufacturers have made. Mr. CLARK. You said a while ago that if a man did not make 12 per cent Mr. MARCUSE. I said Mr. CLARK. Wait a minute. You said if a man did not make 12 per cent on his investment in the manufacturing business, he would |