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pull his money out of the manufacturing business and invest it in securities. Do you know of any securities that will pay 12 per cent!
Mr. MARCUSE. I beg your pardon. I made no such statement.
Mr. MARCUSE. I said that in order to make 6 per cent on the capital invested you have to make 12 per cent on the production of your plant.
Mr. CLARK. And you said that if he did not make that much he would pull his money out and invest it in good securities, did you not?
Mr. MARCUSE. No; I said that that kind of a return does not attract men to that kind of business.
Mr. Clark. Well, now, what was it you said?
Mr. CLARK. I would like to have the same statement made again, the same as before.
Mr. MARCUSE. I have it right here. It has not been changed.
Mr. MARCUSE. I said: “ To build and equip a wrapping-paper 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 the investment the paper manufacturer has to make 12 per cent on his product, free of all depreciation, costs, etc.” Then I went on to say: "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," etc.
Mr. Clark. How many concerns, or firms, or corporations, or whatever you are pleased to call them, are there
Mr. MARCUSE. There are 103 wrapping-paper manufacturers.
Mr. Clark. How many of them are making the same kind you make?
Mr. MARCUSE. There is such a diversity of the character of wrapping paper that—well, I would say probably 33per cent are making the same grades on which I work.
Mr. CLARK. And are they all selling at the same price ?
Mr. MARCUSE. I do.
The CHAIRMAN. I wish the reporter would make this note: Onionskin paper is classified as paper not specially provided for under paragraph 402 of the act of 1897. It is claimed, however, that it should be dutiable as print paper under paragraph 396. The importers have appealed from the decision of the general appraisers, and that appeal is now in force. Meanwhile the Government is collecting under paragraph 402.
Mr. CLARK. I want to ask the last witness a question. Do you ask to have this tariff remain as it is, or to raise it?
Mr. MARCUSE. We ask that the tariff on wrapping paper remain as it is, but that a classification be made for Kraft paper.
BRIEF OF GUSTAVUS MILLHISER, RICHMOND, VA., FILED BY MILTON E. MARCUSE, RELATIVE TO PAPER AND STEEL.
RICHMOND, VA., November 21, 1908. COMMITTEE ON WAYS AND MEANS,
Washington, D. C. GENTLEMEN : We want to approach this subject, not from the selfish standpoint of its commercial aspect as applied to the possible profit to our particular business only, but we want to approach the subject along the combined lines of commercialism, which is self-interest and patriotism, which is the altruistic interest.
In doing this, the first step is to recognize that the people of this country have practically voiced that protection, legitimately applied, meets their approval. We wish to keep before us the fact that while underprotection is an injustice to the particular industry so affected, on the other hand, overprotection is an injustice to all of the many millions of the people of this country.
We realize that under the application of the protective tariff due regard should be had to strengthening the sinews of the country and never weakening them at any point.
We recognize that among the important sinews of future strength in this country wood and steel form important and very far-reaching features.
We recognize that these two articles are totally unlike the products of the soil, which can be produced from year to year in such quantities as the efforts of man may be stimulated to produce.
We realize that proper forestry. laws can be made to provide for such a reproduction of forest products as to make the supply of such products practically inexhaustible, and especially so in face of the fact that we have rapidly drifted into extensive substitution of steel . for wood in many forms of construction work.
We realize that the natural storehouses in the earth of steel (iron ore) can not be replenished by the powers or ingenuity of man; that once exhausted they are forever exhausted; and we realize that to-day the nation, with its natural storehouses of iron ore exhausted, occupies
a position which places it almost at the mercy of other nations provided with an ample supply of iron ore.
We are living in a steel age, and to preserve our supplies in the earth is the first duty in the direction of protection which is due the American people.
We ask and claim that, inasmuch as wood does renew itself and can be made to do so to an almost unlimited extent, and that as steel (iron ore) does not and can not be made to renew itself-we ask and claim that whatever protection may be seen fit to apply to wood and the products thereof that still lower duties be applied to iron ore and the products thereof.
Not only for the perfectly clear reasons that I have mentioned does this policy impress itself and intrench itself behind the spirit of justice and justice itself, but it would also be helpful toward improving the position of each and every man, woman, and child in the United States engaged properly in the struggle for advancement.
It would not only reduce to some extent, varying only in degree, the cost of every operation in which one can engage to-day; but in doing so, it would also enable each and every manufacturer, who has articles to export or who might be induced to reach out in the direction of articles for export, to be put in a more favorable position to conduct his present operations and to look forward to increasing same in existing and yet unexplored directions.
Under the present tariff, wood in the form of logs (that is to say, in its crudest form) is on the free list, and we do not ask that it be removed from the free list; to the contrary, we want it to remain there, and we correspondingly ask that iron ore be similarly placed upon the free list.
We find that timber, when converted into boards for building purposes, or when converted into ground-wood pulp for paper purposes, carries a duty of about 10 per cent, and we find, that under the existing tariff, iron ore, when converted into pig iron, carries a duty of about 33 per cent. The actual expenditure for labor in producing $1 worth (at cost value) of either, boards for building purposes or ground-wood pulp for paper purposes-embracing all of the operations from the tree in the forest to the production of these articles is as great (or greater) as is the actual expenditure for labor in producing $1 worth (at cost value) of pig iron-embracing all of the operations from the ore in the ore bed to the production of the pig iron.
We feel that justice, coupled with the best business discretion, would leave these duties upon timber products at the existing, say, 10 per cent; but would correspondingly place pig iron below 10 per cent.
We find that the duty under the existing tariff upon chemical pulp is, upon an ad valorem basis, practically the same as upon groundwood pulp; i. e., 10 per cent, and we find that the duty upon steel rails is about 40 per cent. The actual expenditure for labor in producing $1 worth (at cost value) of chemical pulp, embracing all of the operations from the tree in the forest to the production of chemical pulp—is as great (or greater) as is the actual expenditure for labor in producing $1 worth (at cost value) of steel rails, embracing all of the operations from the ore in the ore bed to the production of the steel rail.
We do not ask that the rate of duty upon chemical pulp be advanced, but we do, in the interest of ourselves and the whole American people, ask that a corresponding basis of protection be applied to steel rails.
We find that under the existing tariff print paper carries a duty of about 15 per cent and, we will say, other papers about 25 per cent; and we find that articles of steel manufacture corresponding to these in their removal from raw stock toward finished products carry duties of at least double these percentages.
The complete expenditure for plant for producing finished paper, embracing all of the operations from the tree in the forest to the production of finished paper, is $2 to $2.25, average, for each $1 worth (at cost value) of finished paper produced. The complete expenditure for plant for producing the heavy finished products of steel, embracing all of the operations from the ore in the ore bed to the production of the heavy finished products of steel, is $1 to $1.25, average, for each $1 worth (at cost value) of the heavy finished products of steel produced.
The investment involved for a paper mill to protect itself in its wood supplies by ownership of either timber lands or stumpage rights is, for each $1 worth (cost value) of paper produced, as great as the investment involved for a steel plant to protect itself with its combined supplies, in the ground, of iron ore, coad, and limestone, provided that on the part of the steel plant this protection be obtained by ownership of the iron ore, coal, and limestone deposits; but if this protection on the part of the steel plant be accomplished by leases based upon the payment of royalties at the times these different products may be mined, then the investment for such protection disappears entirely or falls far below the investment required for protection on the part of the paper mill.
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 protecting 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.
It should be borne in mind that all the products which, by their nature, are heavy in gross weight in relation to their cost value, carry, by their very nature, an innate protection; e. g., 100 pounds of merchandise, valued at $100, and subject to an import freight of $1, would carry an innate protection of 1 per cent, whereas 100 pounds of merchandise valued at $10 and subject to an import freight of $1 would carry an innate protection of 10 per cent. The heavy products of steel and the corresponding products of wood are conspicuous under this head.
The railroad freight charges for assembling all of the raw materials and afterwards transporting the finished products—both of wood and steel-constitute a large part of the production cost.
Should the steel schedules be revised in the direction that these views would suggest, then the railroads, by getting their steel supplies at lower prices, would, instead of crying for increase in freight rates, in a short time, no doubt, be prepared to decrease freight rates; and the benefits from such a change would not accrue to any favored spots, but would reach, in some degree, every man, woman, and child in the nation.
I can only believe that the discrepencies under the present tariff in the comparative treatment of wood and steel products were due to the oversight in failing to bring these two products together and considering their relation to each other.
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. Respectfully submitted.
GUSTAVUS WILLHISER, President Bedford Pulp and Paper Co.
R. S. ELLIOTT, PHILADELPHIA, PA., MAKES A STATEMENT RELA
TIVE TO SWEDISH KRAFT WRAPPING PAPER.
SATURDAY, November 21, 1908. Mr. ELLIOTT. Mr. Chairman, I now want to present the following arguments why the present rate of duty, namely 25 per cent on wrapping papers which are imported under the style of a paper known as Swedish Kraft," should not be changed.
First, the American has been taught by the Swede that it was possible to produce a superior paper with greater yardage from a given cord of spruce. This being true it would naturally help to save our forests. By yardage I mean that this Kraft paper being so strong can be used in a much lighter weight than regular manila wrapping paper. Thus the cost to the consumer is equalized and not as much timber is necessary to supply the wrapping requirements of the con
When the domestic manufacturers of manila paper began to see that the domestic user of wrapping paper demanded this Kraft paper they undertook to produce the same article with the result that to-day papers equal to the Swedish, both in price and quality, are made by domestic mills. One of the largest domestic mills is producing a superior grade of Kraft made from pulp imported from Canada, which, coming across the line, has to pay a duty to say nothing of the freight to the mill making this paper. But even under these conditions, that paper is sold in competition in New York with the best grades made in Sweden.
Mr. UNDERWOOD. Let me ask you a question about that. Do you know the volume of this wrapping-paper business in this country?
Mr. ELLIOTT. No; I do not.
Mr. ELLIOTT. Not in this Kraft paper; no. It has only grown up in the last three years.