PARAGRAPH 20-DYEING OR TANNING WOODS, ETC. Every reduction of 1 per cent would be equal to a decrease of 100,000 marks; every addition of 1 per cent would represent an increase of 80,000 marks, but in no case shall the payment of the Forestal Co. exceed two and one-half millions yearly. We to receive 10 per cent of all special reserves, but said amounts shall be deducted whenever said reserves later on are paid out in the shape of dividends. We bind ourselves not to sell any of our "participations" without the consent of the Forestal. This conditions does not include the 11,669 preferred Forestal and 9,624 common shares, procured last year, with which we can act as we please. Any profit we may make by a sale of these shares does not belong to the Forestal Co., but to our stockholders; we have also reserved to ourselves the ownership of a special reserve fund of 600,000 marks set aside to be used for the purpose of a supplement to our dividends in special instances. This agreement has been made for a period of 10 years and can be mutually canceled by giving notice 6 months in advance-earliest per January 1, 1920-by the payment of 30,000 pounds sterling as a compensation. The compensation of a cancellation for 1921 is reduced to 25,000 pounds sterling and for 1922 to 20,000 pounds sterling. The legal settlement of disputes shall be subject to the decision of the English auditors Deloitte, Plender, Griffiths & Co., and the Revision Treuhand A. G. Berlin. As a public indication of the amalgamation of interests, we propose the supplementary election of Mr. C. Hartneck, one of the directors of the Forestal Co., as a member of our executive committee. We ourselves are represented on the board of the Forestal Co. by our president, Herr Kommerzieurat and Herman Renner. The stockholders accepted the agreement unanimously by acclamation; in the same way Mr. Hartneck was elected a member of the executive committee. In reply to the question of a stockholder, whether the possibility exists to receive for the current year a considerably higher dividend, the presiding officer stated that, taking as a basis the result of the past 9 months, it is believed that at least the same dividend as the one paid last year will be distributed. But at the last moment he could not say whether a larger dividend could be paid, because it was impossible to foretell the result of the remaining three months, and, further, nobody could tell whether some complication in reference to the political situation may arise. In regard to the future prospect of the Forestal Co., the president, Mr. Renner, stated that the present year was of less interest for said company than the years 1913 and 1914. The outlook for the year 1913 could be called extraordinarily favorable, because there have been made such large sales of extract that it is believed that the average dividend of 19 per cent-paid for some years past is safe. In the future also we may count upon receiving the same good dividends regularly. In reply to a further question the speaker gave the additional information that the stockholders' meeting of the Forestal Co. was taking place on October 28 at 3.30 p. m. in London, and in that way all formalities in reference to the amalgamation of interest were settled on the same day. Again we quote from the Financial Times of London, under date of September 25, 1912: The Financial Times, referring to the reported amalgamation of the Santa Fe Land Co. with the Forestal Land, Timber & Railways Co., remarks that this will enable them, if the project is realized, to keep up the present price of quebracho, the working of which is the principal object of the two companies. Thus it seems that the control of this business is pretty well in the hands of one company, and all they require now in order to control PARAGRAPH 20-DYEING OR TANNING WOODS, ETC. a large part of the world is the American manufacturing interests which a reduced tariff rate would make it easy for them to accomplish. In the hearings before your committee in 1909 Mr. Klipstein, the agent of the Forestal Land, Timber & Railways Co., undertook to deny a statement made by Mr. Skiddy that there had been a trust formed in the Argentine in 1907 to control the price of quebracho extract, but his denial is as follows: Mr. Skiddy states that there was formed a trust in Argentine in 1907 to control the price of quebracho extract. As a matter of fact, the manufacturers of quebracho extract, in view of the impending panic, tried to form a combination to prevent enormous losses, but the panic was too severe, and the combine went to pieces, and the price of 24 cents per pound for quebracho extract, as mentioned in our first statement, was the result. The Argentine makers of extract had to take their panic medicine like all the rest of the world. Please note that the price went to 2 cents per pound in 1908, as stated by Mr. Klipstein, prior to their purchase of 130,000 pounds sterling of the Fusionados Co., a very natural result of prices below the cost of manufacture. Mr. Klipstein in 1909 furthermore stated before the Ways and Means Committee in a brief that the price used to be 4 cents to 5 cents per pound, and generally imported in the form of the liquid extract. Bear in mind, if you please, that Mr. Klipstein in this statement is referring back prior to the time of their making solid extract, and before they realized the growth of the American competition, and this competition when realized caused a reduction from 44 or 5 cents for liquid at 35 per cent tan to 4 cents for solid at 65 per cent tan (worth in the market almost double the price of the liquid), or, in other words, they were selling liquid without the American competition at a price equal to 9,8% cents per pound for the solid that they are selling to-day for 4 cents per pound. Why should not prices advance again without competition? If the Forestal Co. or their representatives in this country undertake to claim that they are being frozen out and that the present rates of duty are so great they can not compete, then we would refer you to their statements already made in their reports to their stockholders at their annual meetings held in London and their continuing to pay 24 per cent on their ordinary stock and 14 per cent on their preferred stock. Such dividends have not been and can not be earned by the American manufacturers. A reduction in the present duty would tend to bring about one of two results, either the closing out by the American manufacturers at great loss, or the temptation to get together, advance prices, and control the market. We also have received a copy of the Daily Mail of Paris, under date of November 14, 1912, with an advertisement of the Forestal Land, Timber & Railways Co., stating that the capitalization is 1,700,000 pounds sterling, setting forth their great earning power, etc., and offering to sell 1,000,000 pounds sterling of 5 per cent first mortgage bonds. 78959°-VOL 1-13- -12 PARAGRAPH 20-DYEING OR TANNING WOODS, ETC. That imports have not been checked by the present tariff, we submit the following table: Please note that in 1906 the United States manufacturers did a little more business in pounds of extract than did the importers. The Forestal Trust at that time, as already shown, was not fully in the saddle, but later the imports were considerably over 100 per cent, and in 1908-1909 it was the largest, probably due to the low price of 2 cents mentioned by Mr. Klipstein. The year 1912 shows about double the quantity of extract imported as compared with the quantity manufactured in this country, but a decrease of about 20 per cent from the imports of 1911. This decrease can not be attributed to the increase of the home manufacture, as they only show about 5 per cent increase between the same years, which was 10 per cent less than they showed in 1910. The present tariff can not be called excessive; otherwise, the imports would not exceed the home manufacture by 100 per cent and maintain this position year after year. We understand that the desideratum of tariff adjustment is to establish a rate that will produce the greatest revenue, combined with greatest encouragement for both home and foreign competition: therefore as a tariff for revenue and competition the present rate should be retained. PARAGRAPH 20-DYEING OR TANNING WOODS, ETC. If the tanners of this country understood the actual conditions, they would be more anxious than the extract manufacturers to have the duty on these extracts maintained. We have seen of late articles in the leather-trade papers advocating reductions in the tariff, all written by importers or representatives of foreign manufacturers (or their employees), the usual method they have adopted for years prior to tariff hearings. On the 30th day of August last the Stamford Manufacturing Co. wrote to their agent in Buenos Aires, putting to him a few questions, wishing to have an answer in time to place before your committee, which we now submit: Question No. 1. What is the wage per day or month of the ordinary laborer at a quebracho factory in the Argentine? Answer. The wage of the ordinary laborer in the Chaco is about $20 per month. NOTE. In this country the ordinary laborer receives $1.75 per day, about 127 per cent higher. Question No. 2. What are the wages per day or month of a more intelligent man, such as bosses, etc.? Answer. The wages of a more intelligent man, such as a foreman, is about $40 per month, or perhaps $50. NOTE. The wage of such men in this country is from $2.75 to $3 per day, about 56 per cent higher. Question No. 3. What are the wages per day or month of still higher class of mechanics or engineers who have to be imported to that country? Answer. About $80 a month. NOTE. In this country from $4 to $4.50 a day, about 46 per cent higher. Certain other questions as to cost, freights, etc., he states, depends upon distance, freight, etc., making the cost of the solid extract on board vessel ready for shipment to the United States at from $59 to $62 gold per thousand kilos. NOTE. This represents 2.6-2.7 cents per pound. To this must be added the freight from the Argentine and the present duty to give the cost price here. Assuming an equal division of the various grades of labor (although the ordinary labor of $1.75 per day would be the largest), the average shows 76 per cent higher in this country than in the Argentine Republic. The difference in wages, taking the cost of the extract in this country and as shown to be in the Argentine, estimated on the average higher wage of 76 per cent, shows about nine-tenths of 1 cent per pound. Chestnut extracts are largely used in connection with quebracho extracts, a combination of the two extracts used quite extensively by the tanners. Chestnut extracts are made abroad and could easily become a part of the business of quebracho manufacturers, a natural result of a reduction in the present tariff. Such a result would be injurious to the American chestnut manufacturers, probably causing many of them to quit business, thus throwing on the market many plants at low prices, the purchase of which might result in the absolute control of the two most important and largely used extracts by the tanners in the United States. PARAGRAPH 20—DYEING OR TANNING WOODS, ETC. The attached pamphlet is submitted as part of this brief, it being a compilation of the tariff hearings in 1909 and since, and which we believe in this form will be of aid to your honorable committee. ADDITIONAL STATEMENT OF W. W. SKIDDY, NEW YORK, N. Y. NEW YORK, January 28, 1913. Hon. OSCAR W. UNDERWOOD, Chairman Ways and Means Committee, House of Representatives, Washington, D. C. DEAR SIR: Certain corrected figures furnished by the Department of Commerce and Labor somewhat changed the brief under date of January 6, 1913, relative to the dutiable clauses No. 20 and No. 22 in Schedule A, and 559 on the free list. (Corrections made in brief above.) I also beg that you accept a few statements further in relation to the matter. First, that you notice in a page taken out of the Review of the River Plate under date of December 13, 1912, being a general trade paper, published in Buenos Aires, which shows, according to the reports from the Argentine Government, the exports for the first 11 months of 1912, and notice the total amount of quebracho wood exported from that country, there was 31 per cent of it shipped to the United States and 34 per cent of it shipped to Germany, and there was shipped of the extract to the United States 41 per cent of the total and to Germany only 17 per cent, showing that an excess of the manufactured article over the raw material to the United States was 10 per cent, but that to Germany it was the reverse, and there was 85 per cent in excess of the raw material over the manufactured goods. The total raw material, therefore, would indicate that 65 per cent of it was shipped to the United States and Germany. These figures prove absolutely that when 41 per cent of the total exports of any particular kind of manufactured goods from any one country can be shipped to the United States that the existing laws do not interfere with the free trading in these goods, particularly when this quantity shows, as it does in the Government figures, that it is 100 per cent greater than the amount of the same kind of goods manufacture in the United States. The American manufacturers under these conditions certainly do not control the market, but are simply competitors as against the much greater market that is bringing into this country the same kind of goods. On the 6th of January last Mr. August Vogel appeared before your committee, stating that he represented the tanners, and I believe he does represent some of them, but not all of them, and in his crossexamination, which you will find on page 87 of No. 1 Tariff Hearings, in answer to Mr. James, is the following: Mr. JAMES. How much cheaper do they sell that stuff in Canada than here? Mr. VOGEL. They just add the tariff. |