PARAGRAPH 290-TALLOW. Mr. LONGWORTH. Do you mean of this year? Mr. WADHAMS. I appeared stating not that we advocated it, but that we did not object to it; that we merely wished to call attention to the position we took on raw materials. Mr. LONGWORTH. I thought you said that you appeared before us on the free chemical bill. Mr. WADHAMs. No; not before. WASHINGTON, D. C., January 20, 1913. The CHAIRMAN AND MEMBERS OF THE WAYS AND MEANS COMMITTEE, House of Representatives, Washington, D. C. GENTLEMEN: This statement is submitted on behalf of laundry soap manufacturers of the United States representing over 75 per cent of the production of common laundry воар. The item and paragraph concerning which recommendation is made are Schedule G, paragraph 290. The particular item is "Tallow one-half of one cent per pound.” It is recommended that tallow be placed upon the free list. The reasons for such recommendation are: TALLOW PRODUCTION IN THE UNITED STATES A VIRTUAL MONOPOLY. Tallow is a basic element in the manufacture of laundry soap. The duty was originally placed upon tallow as a protective measure, the argument being that it was so placed for the protection of the interests of our farmers. At that time the business of slaughtering cattle and rendering tallow was conducted on a small scale by numerous local butchers and tallow renderers in every section of the country. Since then, however, a complete change has taken place. The slaughtering of cattle and the rendering of tallow are now and for a number of years have been concentrated in the hands of a few packers who have established branch houses in every principal city of the United States, through which they gather up the rough tallow that retail butchers formerly turned over to the local renderers, and have thereby, to a very large degree, shut out competition and acquired control of the tallow market in the United States. Under the Dingley bill the tariff on tallow was three-fourths of a cent per pound. With an apparent appreciation that some measure of relief should be given, the duty was reduced by the Payne-Aldrich bill to one-half of one cent per pound. As it is the avowed purpose of the dominant party to correct tariff abuses it would seem particu larly appropriate to place tallow upon the free list, as the present duty was imposed as a protective measure affecting an established business having already a practical monopoly. The average price of tallow has steadily advanced during the last ten years. The inquiry, therefore, must be directed as to whether or not the duty should be mposed upon tallow for the purpose of raising revenue. THE DUTY ON TALLOW IS NOT A REVENUE PRODUCER. Statistics show that tallow imports are of small importance compared with the exports of this product. The following tables show the imports and exports for the fiscal years ending June 30, 1905, to 1912, inclusive. Imports and exports of tallow, 1905 to 1912, inclusive. PARAGRAPH 290-WOOL GREASE. From the foregoing figures it appears that we are large exporters of tallow. This should be sufficient reason for the removal of the duty. It is our contention that tallow is not an appropriate article upon which to place a tax for revenue purposes for two reasons: First, tallow is not a revenue producer, as shown by the receipts of the past five years; and, second, it is an important ingredient in the manufacture of a necessary of life. The following are the statistics of the revenue produced for the fiscal years from 1905 to 1912, inclusive: 1905... 1906. 1907. 1908. 1909. 1910. 1911. 1912. an average of $3,576.70 per annum for eight years. $2,086. 44 6, 811. 24 3, 181. 24 2,285. 75 2, 737.00 4,851.00 4, 922. 00 1,739.00 While the resulting revenue is wholly insignificant, as shown, the duty nevertheless acts as a material deterrent to would-be importers of the article when the high-perhaps artificially inflated-price of the domestic article would lead soapmakers to resort to foreign markets for relief. In other words, free tallow, even though little be imported, is of material advantage to the manufacturers of laundry soap for the reason that it acts as a check upon artificial domestic prices. THE DUTY SHOULD NOT BE IMPOSED UPON A BASIC RAW MATERIAL USED IN THE MANUFACTURE OF A NECESSARY OF LIFE. The common laundry soap, which is the household soap, is properly classed as a necessary of life, and in the selection of articles upon which duty is to be imposed this should be taken into consideration. The burden of raising revenue should not be placed upon raw materials which enter into the manufacture of such articles. (See brief on duty on soap, Schedule A, dated Jan. 6, 1913.) Tallow is conspicuously one of the articles found in the tariff schedules which, upon revision, should be placed on the free list. Respectfully submitted. H. W. BROWN of THE PROCTER & GAMBLE Co., Chairman, W. H. WADHAMS of B. T. BABBITT, Secretary, L. H. WALTKE of WM. WALTKE & Co., J. R. COLLINGWOOD of FELS & Co., F. H. BRENNAN of THE N. K. FAIRBANK CO., Committee of National Conference of Laundry Soap Manufacturers. WOOL GREASE. TESTIMONY OF HARRY HARTLEY, OF HARRY HARTLEY & CO., PROPRIETORS OF THE VICTORIA MILLS, BOSTON. The witness was duly sworn by the chairman. Mr. HARTLEY. Mr. Chairman and gentlemen of the committee, we wish to enter a plea for additional protection to a comparatively new industry in the United States which has as its object the prevention of the pollution of our rivers and streams by mill wastes. Within the last few years mills engaged in the manufacture of wool have erected plants at considerable expense for extracting the grease from wool and cloth washings instead of dumping the grease and dirt into the river, as was formerly their custom. The Rhode Island Board of Health has frequently complained of the state of many of our large rivers near manufacturing towns, caused by the emptying of dirty water into the rivers by large manufactories. PARAGRAPH 290-WOOL GREASE. The extracting of grease from wool and cloth washings is quite an expensive process, and under the present duty of one-fourth cent per pound (equal to only 12 per cent ad valorem) on the grease so produced it has been sold at a loss by all those manufacturers who are now making it. The grease so extracted has a commercial value of 1.8 cents to 21 cents per pound; but it costs more than this to make it. Consequently the mills now engaged in purifying their mill effluents are doing it at a loss. This being a new industry in America, we had to bring out the overseers from England, getting a special permit from the customs authorities in Boston to do so, finding it difficult, if not impossible, to get help in this country who understood this process. We have gone carefully into the profit-and-loss account of our degras plant and find we have lost steadily since we started it. Our plant is one of the most up to date in this country, as we are using all the latest machinery and improved methods, and is quite a heavy investment on which to be losing money steadily. It cost $86,480.70. The duty on this grease (technically known as "degras") is onefourth cent per pound, or 12 per cent ad valorem. The Dingley bill gave one-half cent. Now as we have had to import all our machinery from England, paying 45 per cent duty on it, and are paying twice the wages to our employees in the degras plant that are paid in England, and all our supplies, such as sulphuric acid, coal, etc., costs us twice as much, we think we are entitled to have a duty placed on the degras of one-half cent per pound. It is made by mills in Europe, and owing to their cheaper labor cost, and cheaper sulphuric acid (see report attached), they can sell it in America at the price of 2 cents per pound duty paid. If the additional duty of one-fourth cent per pound were imposed, making the duty one-half cent per pound, the American manufacturers could make about cost price. This would encourage mills here to erect plants for the extraction of grease from their effluents, thereby purifying our streams. Such a result would immensely benefit the community at large. Under present conditions certain large mills, who at one time intended to erect plants for purifying their water, learning that it entailed a loss, have abandoned the idea, finding it cheaper and easier to continue letting it go into the river unpurified. We trust, after careful consideration of all the particulars inclosed, you will agree with us that if anything deserves protection this does. We append a list showing the difference in cost of materials used to manufacture degras here and in England. Comparison of cost of sulphuric acid, coal, labor, etc., in England and the United States. PARAGRAPH 290-WOOL GREASE. Amount of degras made by various firms in the United States we estimate at from 17,000 to 18,000 barrels per annum. Actual cost of manufacturing degras. [NOTE. It takes three-fourths of a pound of acid to produce 1 pound of degras. Or cost of production, $2.485 per 100 pounds of degras or 2.485 cents per pound of degras. Mr. HARRISON. You appreciate, of course, that in the chemical schedule which passed the House during the last session sulphuric acid was put on the free list? Mr. HARTLEY. If imported for agricultural purposes, I think, sir. Mr. HARRISON. No, that is the present law. We included sulphuric acid of all kinds and put it on the free list, so that your raw material, under another schedule, is to go upon the free list, if it should be adopted and become law? Mr. HARTLEY. Of course, that would help us. However, conditions attending the transportation of sulphuric acid entail a tremendous expense. It has to be shipped in iron drums, and the cost of returning those drums when empty to England is very considerable. Or, if you attempt to import the acid in very large glass bottles the danger of breakage is such that I do not think it would be admitted in that way. Mr. HARRISON. Your argument was, as I understood it, that your raw material was taxed too much, at a higher rate than your finished product, and you wanted to correct that, and I wanted to let you understand the situation. Mr. HARTLEY. Yes, I am glad to know that. We had an accountant to go over our books, and this is the result of his examination: BOSTON, January 10, 1913. I hereby certify that I, H. W. Loveland, have examined the profit and loss account of the dégras plant of Harry Hartley & Co. for the past 11 years, since the plant was started, and find the account shows a loss of $34,848.98. These figures include depreciation, but do not include interest on the cost of the plant. COMMONWEALTH OF MASSACHUSETTS, County of Suffolk, City of Boston, ss: HERBERT W. LOVELAND. Personally appeared before me this 10th day of January, 1913, Herbert W. Loveland, and made oath that the facts as stated above are true and correct to the best of his knowledge and belief. [SEAL.] Mr. JAMES. Is all your machinery imported? GEORGE P. WILDER, Notary Public. Mr. HARTLEY. Yes, sir. We have hydraulic presses, and this being a new business the machinery is not made in this country for the requirements of this particular industry. PARAGRAPH 290-WOOL GREASE. Mr. JAMES. Will you give us about what percentage of the total consumption of wool grease in this country is manufactured in this country? Mr. HARTLEY. About one-third is manufactured in this country. I think there is about twice as much imported as we manufacture. Of course, if it could be made at less cost, or even at a slight profit, its manufacture in this country would increase two or three times. Manufacturers have been to look over my plant, and when it was explained to them and they saw the extent of it, and realized that I was losing money, they said of course they would not go into the business. The plant covers about 4 acres of ground, and then we have to have another 8 acres on which to dump what we call sludge. It is quite a complicated thing and has caused us more, considerably more, trouble than running our mill. Considering that it is a laudable enterprise we are engaged in, we think we ought at least to get cost price. We scour every week 320,000 pounds of wool. Out of the 600,000 gallons scouring liquor used in scouring the wool we extract 200,000 pounds, or nearly 100 tons per week, of sludge containing manure, grease, alkali, sand, and ammonia. This sludge is dried out by us, and the farmers use it for fertilizing. If we had no degras plant, all this would go into the river. Cost of vitriol in England, 43 cents per 100; duty on vitriol is 25 cents per 100, or 60 per cent ad valorem. Mr. HILL. I would like to ask a question, not exactly bearing on the degras. You are in the wool-scouring business? Mr. HARTLEY. Yes, sir. Mr. HILL. And you say you scour 320,000 pounds of wool a week? Mr. HILL. Do you scour it for yourselves or for other people? Mr. HILL. You know what it costs to scour wool? Mr. HARTLEY. Yes, sir; including labor, materials, and everything. Mr. HILL. What would be the entire cost if I were to bring 100,000 pounds of wool to your establishment to be scoured? Mr. HARTLEY. We should charge you about 75 cents per 100 pounds, or three-fourths cent per pound. Mr. HILL. As a matter of fact, in round numbers-I do not care to know what your profit is-what is about the net cost of scouring wool? Mr. HARTLEY. It would be about 6.1 mills per pound, or a little over one-half cent per pound. Mr. HILL. I am very much obliged to you. That is all. Mr. HARTLEY. I thank you, gentlemen. TESTIMONY OF FRANKLIN W. HOBBS, TREASURER OF THE ARLINGTON MILLS, BOSTON. The witness was duly sworn by the chairman. Mr. HOBBS. I appear on the same subject, wool grease, and will simply outline the matter and submit a brief giving all details. As an American manufacturer of "wool grease, including that known commercially as degras or brown wool grease, crude and not |