PARAGRAPH 1-ACIDS. produce and sell in competition with the European "convention." Obviously, neither scale of prices bears any relation to the present relatively insignificant duties on these articles: Past experience shows, therefore, that so long as the United States market in these and similar articles is controlled by Europewhich must be for a long time to come-any ordinary rate of duty is not an appreciable factor, either in the determination of the volume of imports or in the determination of domestic prices. Respectfully submitted. BAKER & ADAMSON CHEMICAL CO., SULPHURIC ACID. STATEMENT OF W. H. NICHOLS, JR., VICE PRESIDENT OF THE GENERAL CHEMICAL CO. Mr. NICHOLS. Mr. Chairman and gentlemen of the committee, I represent the General Chemical Co., manufacturers of what is known as heavy, inorganic chemicals almost exclusively, such as sulphuric, muriatic, and nitric acids, some of the soda products, and some of the alums. We have never enjoyed a very serious protective tariff in our particular branch of the chemical industry, and it was not with the idea of complaining that the tariff is not sufficient to protect us on the bulk of our manufactures that I appear here. I believe it is true in our line of business that we need no protection based solely on the difference between the cost of manufacture in this country and abroad. We have tried to take the best methods that we can find and adapt them to the conditions in this country, enabling us to pay the same rate of wages to our workmen as in other lines of industry, and making it unnecessary in many cases to ask for protection. There are two or three articles that we are interested in that I believe have been overlooked, or possibly have not been fully understood by the committee having this matter of revision in charge. Out of the 30 or 40 articles that we manufacture there are practically only three on which we would bring up this question of possible error. One is what is known as sodium sulphide. The solution of sodium sulphide has been put on the same basis as the concentrated in the proposed bill, so that an article of twice the strength of the solution. comes in at the same rate of duty as the solution. The concentrated should take twice the duty of solution. The CHAIRMAN. Is it an ad valorem rate or a specific rate? PARAGRAPH 1-ACIDS. Mr. NICHOLS. A specific rate. Epsom salts, in which we are interested, and, as has been pointed out in your very complete appendix and glossary to the chemical schedule, is made largely from magnesite. It is also manufactured from kieserite or crude magnesite sulphate which is a production of a German syndicate. I think under the present wording of the proposed bill, the crude material takes the same duty as Epsom salts, which is cut from the old rate of 20 cents to 10 cents per 100 pounds. We are entirely in the hands of our German friends in this matter, as we make our Epsom salts on sufferance. They are getting to-day, as near as I can discover, a little more for the crude kieserite than they are from their Epsom, after they have manufactured it from kieserite, and it is simply a question of what they want to let us make over here. The duty should remain on Epsom salts and kieserite should be free. The third article is acetic acid. This under the old schedule took a moderate duty for the weaker strength and 2 cents a pound for the so-called strong glacial acid. It is now proposed that acetic acid be placed entirely upon the free list. On the other hand, you have put on the dutiable list acetic anhydride, which may be said to be still stronger, at 24 cents a pound. I should urge very much the placing of glacial acid on the dutiable list at something like the old rate of 2 cents a pound, whether the weaker acid is or is not. These materials I believe to be illustrations of chemicals that can come into this country at times irrespective of the rate of tariff that is placed upon them the so-called "dumping" of certain surplus manufactured products from the other side. While we have by-product acid in this country, large volumes of it, it is made at points where the freight to the consuming points is very heavy; but in many directions we are growing faster than our production of by-product materials. On the other hand many of our European manufacturing competitors have surplus sulphuric acid to place. They can not place it directly as sulphuric acid and it must therefore be placed as one of the salts, as glacial acetic acid, or some other product made by the use of sulphuric acid. Seeing the need of protecting themselves from this class of importation Canada instituted what is known as a dumping clause, and I believe it has been successful. Whether or not it is wise to enact such a clause into our law, I am not prepared to say. I do think, however, that inasmuch as we must secure in this country some revenue for the maintenance of the Government, I think the duty should be placed on just such things as these I have mentioned-and of course there are many other things upon which it will be perfectly reasonable and fair to place a duty. It is quite immaterial, on some of these things what the duty is. If the foreign manufacturer wants to place them here, he is going to place them here. We are going to do our best to keep them from taking our business away from us, whether there is a duty or whether there is not a duty. In our experience we have found that irrespective of duty many of the foreign manufacturers will bring in such articles as glacial acetic acid, without any reference whatever to the cost but simply as a surplus material that they desire to rid themselves of. Mr. HILL. You would do the same thing abroad if you had the surplus ? PARAGRAPH 1-ACIDS. Mr. NICHOLS. Absolutely; and I make no argument against it. But here is an opportunity for us to get additional revenue without charging the ultimate consumer more. I would like to add just a word or two about things in which we are only very slightly interested. You have, and wisely, I believe, decided to place a duty on aniline oil and salt. We are interested in a company producing aniline oil and salt in this country. Mr. HARRISON. What is the amount of production of those things? Mr. NICHOLS. I think our maximum production in this country would be 1,000 tons. I think that is one-half of the consumption in this country. You have, I believe, placed that on the dutiable list at 10 per cent. Whether that is going to protect a very young infant which is starting, is something I do not know. I believe a larger duty than that would be reasonable-15 or 20 per cent. The industry was started in a time when there was no protection. Mr. JAMES. Which would produce the most, 15 or 20 per cent? Mr. NICHOLS. I believe you would get all the revenue you charged, because the production is not sufficient to meet the demand. Mr. HILL. Why did you start that industry without any duty? Did you think you could make it pay? Mr. NICHOLS. There are a great many experiments that we tryMr. HILL. Mr. Emory was speaking of the manufacture of oxalic acid running 6 years under free trade. You say you started this industry without any duty on it at all? Mr. NICHOLS. Yes, sir. Mr. HILL. And you think it ought to have more duty than the committee has given it? Mr. NICHOLS. We agree with the Congress which has already decided that the duty on that for revenue purposes, I believe, was wise. Mr. HILL. Did you start it for the purpose of using the by-product, or with the idea of making a successful business investment? Mr. NICHOLS. That is one of the things in which we use sulphuric and nitric acid, a thing which I believe we must encourage in this country, the use of the growing production of what might be called basic chemicals. Mr. HILL. You did not start it as an altruistic proposition? Mr. NICHOLS. We haven't made any money. Mr. HILL. You are not satisfied with your experience? Mr. NICHOLS. It has not been very good. Mr. HARRISON. This witness has made no request for protection. Mr. HILL. I know that. Mr. NICHOLS. We have no business in this country in fine chemicals that can compare with the chemical industry abroad. It is simply a question of whether it is not wise to foster the growth of the chemical industry or at least give us a source of revenue. I believe that our business is going to grow over here, whether we have free trade or whether we do not. I believe that we are going ahead in this country, but I think there are certain things that should be protected and that certain duties should be levied. It seems to me to be a question so important that one man's wisdom is not sufficient to cover the ground. PARAGRAPH 1-ACIDS. The CHAIRMAN. There are several other witnesses, and we must adjourn early this afternoon. Mr. NICHOLS. I am entirely at your disposal. The CHAIRMAN. Have you covered the ground that you wish to cover? Mr. NICHOLS. I have, sir, unless you would like to ask me to submit a brief later on. The CHAIRMAN. We would be very glad to have you submit a brief. Mr. NICHOLS. I intended to have the chairman of our research department to do that, but that has been impossible on account of his illness. The CHAIRMAN. If you will submit your brief and get it in to-day, it will be printed in the hearings on the chemical schedule; if not, it would go back in another schedule, where it would not be so much in evidence. Mr. NICHOLS. Any brief that I would submit to-day would be of no very great aid to your committee. The CHAIRMAN. You can file a brief at any time before the hearings are over, at the end of the month. Mr. LONGWORTH. Where are your plants? Mr. NICHOLS. We have them all over the country. Mr. LONGWORTH. You have a number of them? Mr. NICHOLS. Yes, sir; we have about 25 of them. At a later date the witness filed the following statement of General Chemical Co. regarding the Underwood bill to amend the Chemical Schedule of the tariff act. Hon. OSCAR W. UNDERWOOD, NEW YORK, JANUARY 27, 1913. Chairman, Ways and Means Committee, House of Representatives, Washington, D. C. SIR: In accordance with your request to our vice president, Mr. W. H. Nichols, jr., at the hearing of 7th January 1913, we submit a few criticisms of the Underwood bill. We are of the opinion that no great injury would result by the adoption of the amendments to the duties in that portion of Schedule A with which we are familiar, and we would be willing to accept the proposed amendments with the exception of four articles, namely: "1. Magnesium sulphate: Epsom salt and kieserite.-Pagej 11, line 22, erase "onetenth" and in lieu thereof insert "one-fifth." Page 22, between lines 19 and 20 insert "88a kieserite." Kieserite contains about 60 per cent sulphate of magnesia in an impure state, which has always been on the free list (paragraph 602 of present tariff act); its only use is as a raw material for Epsom salt and for which it is the only commercial raw material; it must all be imported since this country has no deposits thereof. If the understanding be correct that, in general, raw materials are to be duty free, then kieserite should be definitely placed on the free list in some such manner as that proposed; the bill, as at present framed, leaves open to serious discussion whether or not kieserite is dutiable under paragraph No. 45 of H. R. 20182. In any event, we believe that sulphate of magnesia or Epsom salt should be taxed as heretofore, namely, one-fifth of 1 cent per pound, plus any tax that may be assessed against kieserite, and we so request, the reason being that 1 pound of kieserite produces about 1 pound of Epsom salt. In this connection it is only just to you and to us to point out that on page 229 of report No. 326 on Schedule A, kieserite is not mentioned as a raw material for Epsom salt; the statement there made that Epsom salt is obtained from a by-product in the making of liquid carbonic acid was true some years ago, but no longer represents the actual state of affairs. It may very well be that this incorrect statement led to the omission of kieserite from the free list of H. R. 20182. PARAGRAPH 1-ACIDS. 2. Sodium sulphid.-Page 19, line 25, erase "sulphid of, and." Page 20, line 1, before "cyanide" insert "sulphid of, containing not more than 35 per cent of true anhydrous sodium sulphid, one-fourth of one cent per pound; containing more than 35 per cent of true anhydrous sodium sulphid, one-half of one cent per pound." 66 In the manufacture of sulphid of soda two distinct and clearly differentiated commercial qualities exist and are so recognized and so treated in the trade. They are known as "crystal" and "concentrated" respectively. "Concentrated" contains rougly twice as much actual active material as "crystal;" "crystal" seldom, if ever, contains more than 35 per cent true anhydrous sulphid of soda, whereas "concentrated' rarely contains less than 60 per cent true anhydrous sulphid of soda. "Concentrated" can and does therefore, weight for weight, perform twice the work of "crystal;" 'concentrated" is in a more advanced stage of manufacture than is "crystal." These iacts are our reasons for suggesting that "concentrated" should bear twice the duty imposed on "crystal." We are convinced therefore that for purposes of fair taxation ft would be better to define the grades of sulphid of soda by their actual content in anhydrous sulphid, and suggest that the two classes be distinguished by drawing a line between sulphids containing more than 35 per cent and those containing less than 35 per cent. It would seem that such a classification would be better than "crystal" and "concentrated." We agree to the 50 per cent cut in duty on "crystal" as proposed in H. R. 20182. 3. Acetic acid.-Page 21, line 4, after "pyroligenous" insert "containing not more than 65 per cent of true acetic acid." Page 2, line 7, before "benzoic" insert "acetic acid containing 65 per cent or more of true acetic acid, 2 cents per pound." In the chemical manufacture of acetic acid there are at present several processes in use, and the average resulting product contains about 65 per cent of true acetic acid. In order to produce acids of higher strength, it is necessary to add another step in the manufacture. Since it is a fair general statement that acetic acid of more than 65 per cent strength is a different article of manufacture from acid below 65 per cent, and is in a more advanced stage, and since the actual value of acetic acid is greater the greater its strength, we accept the placing of the weaker acid on the free list and ask for the retention of the present duty rate of 2 cents per pound on acid of a strength above 65 per cent. 4. Nitrate of soda.-Page 23, between lines 9 and 10, insert "95a soda, nitrate of, or cubic nitrate." Nitrate of soda is now on the free list (paragraph 677). It is omitted from the free list in H. R. 20182 and would therefore presumably be assessed at 10 or 25 per cent duty according to the classification finally adopted for it; at any rate its position now is ambiguous. Nitrate of soda comes exclusively from South America, the United States importing between 400,000 and 500,000 tons annually; none is produced in this country. About 40 per cent is used in agriculture as fertilizer; about 40 per cent is used in explosives; about 15 per cent is used in chemicals; about 5 per cent is used in miscellaneous. It is essentially a raw material and its omission from the free list must be an oversight. The duty on many items in the chemical schedule might, however, we believe, be advantageously retained as in the present act, or even raised, without reducing importations or affecting prices. In the United States the chemical industry as a whole is not evenly developed. The manufacture of fertilizers is its largest branch and is absolutely unprotected by any tariff. In the manufacture of heavy chemicals, sulphuric acid, muriatic acid, and nitric acid, there is either no duty at all or it is a noneffective duty. The large number of mineral salts made from these acids are dutiable and furnish some revenue. They are subject to attack from Europe, and the tariff placed upon them is simply a means of collecting revenue rather than in any sense a protective measure. Coal-tar dyes and medicines are other branches of great importance, but they can hardly be said to exist in the United States. A moderately high duty on these products would, we believe, neither restrict the importation thereof nor seriously affect the selling price of the finished products consuming them. Paragraphs 487 and 592 of the present free list might safely be put on the dutiable list at a duty of 30 per cent ad valorem or even higher, and paragraphs 536, 639, and 491 might be raised to 15 or 20 per cent. The census bulletins show the total revenue under Schedule A in 1911 to have been 4.06 per cent of the entire revenue collected under the existing act, while for the previous 10 years the average tariff collected from Schedule A was only 3.42 per cent. The average rate of duty on all of the schedules is 41 per cent and the average rate of duty on Schedule A is 23 per cent. |