PARAGRAPH 20-DYEING OR TANNING WOODS, ETC.

following statement in connection with paragraphs 20 and 22 in the dutiable list and 559 in the free list.

Messrs. Kerr & Carr are manufacturers of tanning extracts only; and Mr. Skiddy of both dyewood and tanning extracts, representing also the dyewood manufacturers. These gentlemen constitute a committee appointed by these manufacturing interests in the United States to represent them.

DYEWOOD EXTRACTS.

Your attention is called to what is known in the present law as paragraph No. 20, Schedule A, relative to woods imported that are used expressly for dyeing or tanning, and these woods represent the raw material for the manufacturing of these extracts. These woods have always come into this country free, provided that they have not been advanced in value by grinding, chipping, etc., as stated in this paragraph No. 20, and also stated in a corresponding section of the free list No. 559.

These woods come from the islands of the West Indies, from the Gulf ports of Mexico, and from South American ports, aiding very materially the trading and shipping interests between these countries and the United States. Cargoes consisting of a great variety of goods can always be secured for export from this country, but owing to the fewer articles that these countries have that can be used in the United States, it is more difficult to get return cargoes.

When these trees are cut down, it takes but a short time for considerable of the bark to peel off naturally, owing to the heat in these countries, so that the chipping is resorted to, to save time. This saves unnecessary handling and freight on the worthless bark, and enables the storing of the wood in vessels to better advantage.

The adding of the word "peeling" in the two sections named, would place a duty on them for the first time, adding greatly to their cost, for one-fourth of 1 cent per pound and 10 per cent ad valorem would mean over 13 cents per pound on the extract, as you can call 4 tons of wood equal to 1 ton of extract, and the value in the United States $19 to $20 per ton.

Endless litigation would also be created in trying to prove what bark had fallen off naturally and what had been chipped off, opening wide the door for misrepresentation and fraud.

A sample of the wood of the logwood tree, and of the bark of same, and one of the quebracho tree and the bark, is submitted.

These dyewood extracts also meet strong competition in the importation of coal tar or aniline colors, manufactured in Germany, all of them having a prohibitive protection for a long term of years by United States patents.

The tonnage imported annually of these dyewoods at the present time is not as great as many years ago, owing to the competition. with foreign goods and aniline colors.

These conditions have caused several manufacturers of dyewood extracts of former days to quit the business.

In the early eighties there was from seventy to eighty thousand tons of wood brought into this country, and, if I remember correctly,

PARAGRAPH 20-DYEING OR TANNING WOODS, ETC.

nearly 100,000 tons per annum prior to that time; the figures since 1906, according to the United States reports, show as follows:

Importations of logwood and fustic into the United States from 1906–1912, inclusive.

In 1897 nearly the whole of the textile manufacturers, the users of these extracts, presented a protest against any reduction in the duty on these dyewood extracts of seven-eighths of 1 cent per pound and as at present in paragraph 22, realizing that any injury done to the manufacturers in this country would greatly decrease competition and that it was the home competition that kept down the prices for them, not only in dyewood extract, but in the patented German aniline extracts.

These dyewood extracts are made in England, Germany, France, and Russia, and 25 years ago the United States shipped large quantities to France and Russia, but these countries placed a prohibitive tariff on them, completely killing these exports. France has been using this country as a dumping ground for these extracts when their manufacturing output could not be taken care of in their own country. The duty on dyewood extracts in France, unless it has been lately changed, is on blacks and violets (which is logwood), 20 francs per hundred kilos, which equals 1.8 of a cent per pound, and on reds and yellows (which means fustic and redwoods) 30 francs per hundred kilos, which represents 2.7 of a cent per pound, and I do not know of any commercial agreement between the two countries that changes in any way these rates.

The wages paid in this country are much higher than paid in England, France, or Germany.

Any reduction from the present rate of seven-eighths of a cent per pound on these extracts, as in paragraph No. 22, would be an encouragement to the European manufacturers to ship their surplus to this country, thus running their factories full at the expense of the American manufacturers, knowing that their tariffs prohibit interference from the American market.

During the last few years, as stated, five or six manufacturers of dyewood extracts, included in former tariff hearings, have been obliged to go out of business, owing to foreign competition, including aniline colors, thus reducing profits, and those few who remain earnestly ask that no change be made in the present law, thereby crippling their business and probably reducing still further the number left.

TANNING EXTRACTS.

Tanning extracts are made from various woods and under processes similar to dyewood extracts.

PARAGRAPH 20-DYEING OR TANNING WOODS, ETC.

The largest quantities of tanning extracts used in the United States are those made from chestnut wood and quebracho wood. These extracts are manufactured in Virginia, West Virginia, North Carolina, Tennessee, Pennsylvania, New York, and Connecticut. The chestnut wood used grows in Pennsylvania, Virginia, West Virginia, North Carolina, and Tennessee, and the quebracho wood is imported from the Republics of Argentina and Paraguay.

As already stated, a sample of the quebracho wood and of the bark has been submitted. This wood holds the same position as dyewoods, according to paragraphs 20 and 559 of the present law, and the same statement made for dyewood applies to quebracho wood.

We would add that after a quebracho tree has been cut down and allowed to lie on the ground, which is always the case, it becomes necessary to remove the bark; otherwise the sap contained in this bark breeds a large quantity of worms which immediately attack the wood and injures its value for extract purposes.

The duty thus created would add, as stated regarding dyewood extracts, an additional cost to the extract manufactured in this country of over 13 cents per pound. We pray that this word "peeling" will not be placed in these sections.

The first mention of quebracho distinct from other tanning extracts was made in the law of 1897. At that time only one grade was shipped into this country, as regards density or gravity, and that grade was a liquid article in barrels standing at about 28° Baumé and containing about 35 per cent of tannic acid, and the law of 1897 placed upon this grade one-half of 1 cent per pound.

Tanning extracts are sold by the pound, the price per pound based upon the percentage of tannic acid or tannin, as it is termed, contained in a pound; therefore, according to the strength or the weakness of the percentage of tan is fixed the price per pound on the market. Some time after 1897 and prior to 1909 great improvements were made in machinery and apparatus for the reducing of liquid extracts to solid extracts without injury to the article so reduced. Extracts from woods are very susceptible and can easily be ruined by excessive heat, nothing more so than tannic acid, and these new methods and improvements enabled the manufacturer of the liquid to reduce these extracts further, or, in other words, to take the liquid which was at 28° Baumé, representing one-half quebracho extract and one-half water and containing 35 per cent of tannic acid, to a heavier density by driving off the half amount of water, and producing what is known as solid extract.

By driving off this water they of course made 1 pound of extract represent more quebracho and less water, the result showing that this solid article contained about 12 to 15 per cent of water only and 65 per cent of tannic acid. This decrease of water and increased percentage of tannic acid immediately increased the value per pound; therefore in 1909 the manufacturers of this extract in the United States asked that an adjustment or equalization be made to meet these new conditions, and that the duty of one-half of 1 cent per pound on the liquid quebracho remain as in the law of 1897, by adding the words "under 28° Baumé" (which is the universal standard in this country and all European countries to distinguish the

PARAGRAPH 20-DYEING OR TANNING WOODS, ETC. difference between liquid and solid extracts), and that the solid extract, or that above 28° Baumé, be placed at seven-eighths of 1 cent per pound, which would equal the one-half cent per pound on the liquid, as the solid was 65 per cent tannic acid instead of 35 per cent, as in the liquid.

The Congress at that time, in 1909, saw fit to make the rate of duty on the solid three-fourths of a cent per pound, as per paragraph 21 in present law, instead of seven-eighths of a cent, which we asked for, which was a slight reduction, as it made the duty based on the percentage of tannic acid (viz, 65 per cent) less than the old duty of one-half cent on the liquid (viz, 35 per cent) as in 1897. The foreign manufacturer, in addition to this decrease in duty on sol'd, gained a reduction of freight, in that they did not pay on the weight of barrels, as they put up and ship the solid in bags, which is a much cheaper package than barrels, also saving the freight on 50 per cent water that they formerly paid on the liquid extract and getting about double the price they could get for the liquid which they brought in under the law of 1897.

Manufacturers of tanning extracts have always felt, and still do, that this adjustment was not an advance in 1909, but actually a reduction. Immediately after the passage of the 1909 law liquid extracts were no longer imported into this country, they coming only in solid form.

The foreign manufacturer is noted for his shrewdness, and were it not to his advantage he would not have dropped the liquid entirely in favor of the solid.

Our greatest competition in quebracho extract in fact, we might say 90 per cent of it comes from the Argentine Republic, and from one concern in that country known as the Forestal Land, Timber & Railways Co. In 1896 and 1897, when this extract was first manufactured in the United States, there were a number of small independent manufacturers in the Argentine, but certain Germans, seeing an opportunity for large combinations, started in, and late in 1907 our agent or representative in Buenos Aires wrote us a letter in which he said an agreement has been made between several of the quebrachoextract manufacturers, etc., of the Argentine as to the fixing of prices and the selling of the extract, and stating that "the signing parties are the Forestal Land, Timber & Railways Co., the Puerto Sastre Co., T. H. Bracht & Co., the Puerto Marie, the Industrial Del Chaco, and the Cassados."

Since that time we have been constantly hearing of the Forestal Trust, and nothing we think can be more convincing as to their increased growth and power and control of this business than to quote from their own reports and the newspaper statements, relative to hat they have done.

In 1909 there appeared a small pamphlet published in London by this company, giving maps, views, and facts concerning their business, and they state in this prospectus that their chief business is to make the extract from the quebracho wood. We quote:

It is interesting to note that the pioneers of the quebracho-extract industry were Messrs. Hartneck, Portalis & Renner, now directors of the Forestal Land, Timber & Railways Co.

PARAGRAPH 20–DYEING OR TANNING WOODS, ETC.

The result of the labors of those gentlemen culminated in the formation of the Compania Forestal del Chaco, which built a factory at Guillermina, capable of turning out 24,000 tons of extract per annum, some 300 miles north of the factory which had already been established at Calchaqui, which had a capacity of 14,000 tons yearly, and they later on completed a third plant with a capacity of 7,000 tons yearly at Peguaho.

The business of that company was taken over by the Forestal Land, Timber & Railways Co. (Ltd.), as from the 1st January, 1906. This company has now a share capital of 1,200,000 pounds sterling, of which 1,171,500 pounds sterling has been issued, divided equally into preference and ordinary shares, besides 477,680 pounds sterling outstanding 5 per cent first mortgage debentures.

On a slip placed in this book after publication they say:

Since this pamphlet was sent to press, the Forestal Land, Timber & Railways Co. (Ltd.), has purchased $1,500,000 paper (or, say 130,000 pounds sterling) of 6 per cent first mortgage debentures of La Sociedad Quebrachales Fusionados at 90, and secured at the same time, the consignment of the total production of the Fusionados extract for the next seven years.

The Review of the River Plate (a trade paper published in Buenos Aires), under date of June 16, 1911, presents the report of the directors to the stockholders for the year 1910, and states:

The company has taken a substantial participation in the capital of the Ocampo Railway Co., which owns 36 kilometers of permanent way between the port of Ocampo and the terminus of the company's Malberti Railway, together with rolling stock, an investment which will conduce to the economical working of the Campo Redondo factory. The directors have been advised by cable that the long-deferred arrangement with the Fusionados Co. has been completed, and they await fuller mail particulars. The Fusionados Co. and the Hardy & Co. were the largest and strongest competitors the Forestal Co. had in the Argentine, and now they own or control them both.

In 1912, at their stockholders' meeting in London, they issued a statement, with a balance sheet (a copy of which we have) showing a profit of over 429,000 pounds sterling. They also declared for 1911 dividends, the same as previous year 1910, viz, 14 per cent on their preferred stock and 24 per cent on their ordinary or common stock. Next to the Argentine, the largest manufacturing interests of this extract, is found in Germany and was started some years ago in Hamburg by Mr. Herman Renner. This gentlemen, as already shown, is a director in the Forestal Land, Timber & Railways Co., and we now quote from a Hamburg paper of October 28, 1912, as follows:

[Gerb und Farbstoffwerke H. Renner & Cie, A. G. Hamburg.]

The principal object of the extraordinary stockholders' meeting held on October 28 was the proposition to accept an amalgamation of interests with the Forestal Land, Timber & Railways Co. (Ltd.), London. The presiding officer, Herr Geh. Kommerzieurat, Dr. Ing. Carl Delius opened the meeting with the statement that the executive committee felt sure that the amalgamation of interests would be beneficial to the shareholders. The principal points of the contract were as follows:

We conclude on January 1, 1913, an amalgamation of interest with the Forestal Land, Timber & Railways Co. (Ltd.), by handing over our total profit, including the dividends, received from our ownership of Forestal shares and other participations in connection with the Forestal Co.

The Renner Co. continues its present and absolutely independent organization; we in return are to receive a payment, which shall be governed by the dividend paid on the common and preferred shares of the Forestal. Calculating the dividend of 19 per cent paid for the past 2 years on the fully paid-in capital, said payment would amount to 1,940,000 marks a year.