PARAGRAPHS 95-96-CARBON. The importation of carbon brushes and electrodes is very large and is increasing very rapidly, and the present tariff rate does not give the American manufacturer sufficient protection. The rate at present is 30 per cent, and this should be increased to 50 per cent for the reason that this higher rate is necessary to equalize the difference in the cost of production. Yours, truly, Hon. OSCAR W. UNDERWOOD, SPEER CARBON Co., Chairman Ways and Means Committee, House of Representatives, Washington, D. C. DEAR SIR: As manufacturers of carbon brushes for electric motors and generators we are interested in the tariff on this class of material. Competition at the present time is very keen, as there are a large number of manufacturers in this country. Under the present tariff, the sale of foreign brushes has increased materially, and we are very apprehensive of the results that might follow from any curtailment of protection. One point which we desire to emphasize is that the cost of production of carbon articles is composed largely of labor. Our pay roll constitutes by far our largest item of expense, and the labor is of a kind that is extremely well paid. We feel that the circumstances warrant a tariff of 60 per cent. Our company is engaged exclusively in brush manufacture, and whether we expand to include other carbon materials, for example, electric-light carbons, will depend largely upon what measure of protection we enjoy. It is our firm belief that a reduction from the present tariff will result in forcing out of business at least some of the smaller plants which are now manufacturing carbon. Very truly, yours, CORLISS CARBON CO., President and Manager. PROTEST AGAINST REDUCTION OF DUTY ON CARBONS. CONGRESSMAN UNDERWOOD, PARAGRAPH 95. STACKPOLE CARBON CO., Chairman of the Tariff Committee, Washington, D. C. HONORED SIR: We wish to enter our protest, as manufacturers of carbon and carbon products, against any reduction of duty on this product. We are obliged to pay $1.75 to $2 for ordinary labor in our works to manufacture the same carbon that the foreign carbon manufacturers pay as low as 35 to 50 cents a day for labor to do the same class of work. The writer absolutely knows this to be the case from the fact that several years ago we contemplated manufacturing a grade of carbon that was manufactured by a foreign carbon works, and one of the parties that was interested in this foreign carbon works contemplated taking stock in our company and gave us the manufactured cost of this carbon abroad in their plant and what it would cost to make it in this country; and I consider the present duty on carbons is entirely too low. Even at the present duty on foreign carbons the foreign manufacturers are in a position to undersell us on certain lines of carbon, and one case in particular we quoted our cost price on a particular carbon to find out how low the foreigner could go, and the exporter of this particular foreign carbon went below the price we quoted, which was cost; so this will give you some idea for the reasons that we enter our protest against reduction of the tariff on carbon products and the reason why we ask for an increase. If the foreign carbon manufacturers can bring their product here and pay the present duty and undersell us in cases I know of where we have quoted our cost price in order to find out how cheap they could sell their product at a profit, we certainly have just reasons to ask for an increase in duty on this particular product. Our books are open to inspection of any committee, and we are not trying to earn dividends on watered stock or inflated valuations. Our investment represents actual cash value and every share of stock that has been issued by this company has been paid for in cash. Hoping you will give this some consideration, we remain, STACKPOLE CARBON CO., PARAGRAPHS 95-96-CARBON. BRIEF OF THE CHAVANT MANUFACTURING CO., JERSEY CITY, N. J. GENTLEMEN: I desire to file this brief in support of a proposed amendment to the pravision in paragraph 95, tariff act of 1909, for articles composed of earthy or mineral substances. Following is paragraph 95, tariff act of 1909, as it is desired to have it amended, the words to be omitted being inclosed in brackets and those to be substituted being italicized:, 95. [Articles and wares] Manufactures or materials composed or consisting wholly or in chief value of earthy or mineral substances, not specially provided for in this section, whether susceptible of decoration or not, if not decorated in any manner, thirty-five per centum ad valorem; if decorated, forty-five per centum ad valorem; * * " (No change suggested for remainder of paragraph, which relates only to carbon articles.) The above amendment was drawn in order to accomplish what is believed to have been the original intent of Congress and to restore to said paragraph a wide variety of manufactured articles composed of earthy or mineral substances which have been excluded by judicial construction. The reason for the particular words suggested in the proposed amendment is found in the peculiar history of this paragraph and its prototypes. Probably in no paragraph in the tariff have repeated legislative efforts to broaden its purview met with so little success. * * The provision first appeared as paragraph 86, in the Wilson tariff of 1894, enumerating "all articles composed of earthen or mineral substances, including lava tips for burners." The General Appraisers held that this did not cover putz pomade, a completed article composed of mineral substances and ready for immediate use, being a metal polish put up in small tin boxes in the form of paste. The reason given for this conclusion was that, though it was not questioned that the merchandise-being an "article" and "composed of * mineral substances"-was literally within the language of the provision, yet it should be excluded therefrom and thrown into the catch-all clause for articles not enumerated in the act, on the ground that the paragraph was not intended to "cover a substance without form," such as the paste in question, also because the enumeration of lava tips "would indicate that Congress did not intend the provision to cover everything that was wholly or chiefly of mineral origin." (Ramsperger case, G. A. 3280, T. D. 16584.) The law was then amended in a broadening way, "wares" being added to the previous word "articles," "earthen" being changed to "earthy, 'composed" being made more definite by the addition of "wholly or in chief value," and the provision for lava tips being omitted. (Par. 97, Dingley tariff of 1897.) But the courts still further narrowed the purview of the paragraph by holding that the presence of the expressions "if not decorated" and "if decorated" implied intention to exclude articles not susceptible of decoration. (Dingelstedt v. U. S., 91 Fed., 112; U. S. v. Downing, 201 U. S., 354.) The effect of these authoritative adjudications was to give the paragraph a more restricted operation under the act of 1897 than the really narrower paragraph of the preceding act of 1894 had received. In Notes on Tariff Revision, a publication prepared for the use of the Ways and Means Committee in drafting the Payne Act of 1909, this comment was made (p. 109): * * "These judicial determinations have been followed in hundreds of decisions by the lower courts and by the Board of General Appraisers. * The rulings cited have all but emasculated paragraph 97 and have undoubtedly caused a tremendous loss to the revenue; for the articles excluded from classification under this paragraph, where they would have yielded 35 per cent duty, have, in the vast majority of instances, been relegated to the provision for nonenumerated articles dutiable at only 20 per cent. The remedy is to amend the paragraph so as to provide that such articles of earthy or mineral substances as would otherwise fall within the terms of the paragraph shall not be excluded therefrom because they are not susceptible of decoration, but shall be dutiable under the provision therein for such articles when not decorated." With this information before it as to the results of its legislation, Congress made another effort to extend the paragraph by adding the words "whether susceptible PARAGRAPHS 95-96-CARBON. of decoration or not." These new words have, of course, been given some effect, but the courts have followed the previous policy of imputing to the paragraph the narrowest possible intendment. For instance, the Court of Customs Appeals held that the law did not cover merchandise which unquestionably was "articles or wares,' and was "composed wholly or in chief value of * mineral substances." (Salomon v. U. S., 2 Ct. Cust. Appls., 92, T. D. 31635; U. S. v. Embossing Co., 3 Ct. Cust. Appls., T. D. 32536; Bartley v. U. S., 3 Ct. Cust. Appls., T. D. 32961.) * * As showing the narrow distinctions forced upon the court, it is pointed out that in two of these decisions the merchandise was held to be "articles" within the meaning of the catch-all clause of paragraph 480 (under which the court placed them), but not "articles" within the meaning of the paragraph now in question. The Salomon case, just cited, related to powdered talc. The reason given by the court for excluding it from the mineral paragraph was that the words "composed of" meant "made up of a mineral substance, and not the substance itself, which the ground talc clearly is." In the Embossing Co. case the articles in dispute consisted of so-called plasticine and plastilina, which were concededly of mineral origin and were completed articles, ready for the ultimate consumer, being in small boxes in a form adapting them for their intended use, chiefly by young children for modeling purposes, both at school and as toys at home. It is found at the toy counters of department stores. The reason given for excluding it from the paragraph was that the law was not intended to cover merchandise having no "specific or definite form or shape." This decision was followed in the Bartley case, which related to so-called plate powder put up in small boxes for retail, with sealed printed coverings containing directions for use, therefore being in its final condition and completely ready for use by the ultimate consumer in polishing silver. The court said that the paragraph could not be held to cover an impalpable powder like that just described. The Board of General Appraisers went even further and held that the word "composed" should, by reason of its etymological significance, be construed as relating only to compositions, and not including articles made from a single material; but this ruling was reversed by the Customs Court. (U. S. v. Tamm, 2 Ct. Cust. Appls., 425, T. D. 32173.) The foregoing is not meant as a criticism of the various judicial tribunals concerned in making the rulings referred to, nor as suggesting that strong reasons did not exist for their conclusions. The application of their decisions, however, leaves the law uneven in its practical operation. Suppose the plate powder in the Bartley case had been pressed into cakes, the same as some other well-known articles of similar use, probably it would then have been held to be within the mineral-substance paragraph, because having a specific form. The same is true of the tale involved in the Salomon case, if, instead of having been ground to powder, it had been ground into disks, cubes, or other forms. From the legislative standpoint no reason exists why in the one case the duty should be 20 per cent and in the other 35 per cent. Our purpose is to secure the adoption of a form of words that will result in a uniform rate of duty, whether the merchandise shall have a specific form or otherwise. Under the traditional legislative policy that increases duty in accordance with the labor that goes into the production of an article, the rate of 35 per cent would have been much more appropriate on plasticine, plastilina, and plate powder, which are carefully prepared articles, than on some of the much simpler articles of a specific form which the court has held were properly so assessed. In order to meet the decisions above cited, to secure symmetry of rate, and to restore the effect which it is very likely Congress intended the provision should have from the very beginning in 1894, it is necessary to use words not subject to the limitations which the courts have attached to the present form of expression. It is thought that this can surely be accomplished in the way suggested at the beginning of this brief, namely, by striking out the ineffective words "articles and wares" and inserting in lieu thereof "manufactures and materials,' as well as adding "consisting." The use of the word "manufactures" was suggested by the Customs Court in the Embossing Co. case, where it said: "Had Congress intended to change the meaning given to 'articles and wares' by the tribunals whose duty it was to interpret the paragraph, it could have done so very readily by substituting for the words 'articles and wares' the word 'manufac tures.' The word "materials" might not be necessary were it not for the strong judicial inclination to give the provision a narrow scope. It is possible, in view of this tendency, that the term "manufactures," by itself, would be held applicable only to PARAGRAPHS 95-96-CARBON. articles of substantial structure, that is, in definite and specific forms, and completely ready for ultimate use. So narrow a meaning could not be imputed to "materials." The new word "consisting" probably would not be necessary in other paragraphs of the act which have not been so narrowly construed, but in view of the disposition to restrict the paragraph, it is prudent to make the provision in question as explicit as possible. That at least can do no harm. It may be urged that the suggested amendment, while having the effect of assuring the desired classification, would also include crude articles which ought to be free of duty. This is answered by pointing to paragraph 626, which will presumably be reenacted, and which places on the free list: "Minerals, crude or not advanced in value or condition by refining or grinding, or by other process of manufacture, not specially provided for in this section." This specific language would retain within the free list any imports now classified there. The only effect of the proposed amendment would be to place within paragraph 95 articles which by judicial action have been taken out of that paragraph. Respectfully, CHAVANT MANUFACTURING CO., BRIEF OF THE CHAMPION CARBON CO., CINCINNATI, OHIO. Hon. OSCAR W. UNDERWOOD, House of Representatives, Washington, D. C. MY DEAR SIR: It was my intention to have appeared before your committee during the adjustment of the tariff schedule on carbon, and because of unavoidable conditions which prevented my being present, I wish to add my protest to any reduction of the present tariff, and at the same time emphasize to you many reasons why the tariff on carbon products of every description should be increased rather than reduced. It is only natural that the importer and domestic manufacturer should be far apart, but in view of the fact that the importations under the present tariff have increased enormously and that home manufactures have been unable to increase their output anything like an apportionate amount, shows conclusively the necessity and justness of further protection for American manufactures of carbon. I would say and urge that your honorable committee increase the duty on flaming arc carbons to at least 50 per cent and on brushes, electrodes, plates, disks, and that class of carbons to 50 per cent. Nothing less would be high enough to cover the difference in the cost of manufacture in this country and Germany and France, where most of the imported product comes from. No statistics give us the exact consumption of the various forms of carbons, but we who are constantly canvassing the consumers, know and fully understand the tremendous increase in the sale of foreign carbons and realize that the importers, because of the German and French labor being fully not more than one-third of our cost of labor, are getting rich, and we feel that the above increase is necessary to give even moderate protection to domestic manufactures. Now, in view of the fact that our product is used only by municipalities and large corporations and does not affect the great common people nor the laborer, except as moderate and just protection will permit us to maintain our present scale of wages, may we urge that you increase the duty rather than decrease it? Most respectfully submitted by THE CHAMPION CARBON Co., STATEMENT OF HUGO REISINGER, OF 11 BROADWAY, NEW YORK, ON THE SUBJECT OF ELECTRIC-LIGHT CARBONS, ETC. The CHAIRMAN. Will you kindly state what paragraph you wish to talk about? Mr. REISINGER. Paragraphs 95 and 96, electric-light carbons, battery carbons, and brushes. 78959°-VOL 1-13- -44 PARAGRAPHS 95-96-CARBON. The CHAIRMAN. You may proceed, Mr. Reisinger. Mr. REISINGER. Mr. Chairman and gentlemen of the committee, I had an opportunity of making oral statement to the Committee on Ways and Means on Monday, November 23, 1908, on the subject of a duty on electric-light carbons, battery carbons, and brushes, and I pointed out at that time that by procuring from the Fifty-fifth Congress an enactment of a practically prohibitory duty on this class of goods the trust, known as the National Carbon Co., has been able to prevent the importation of low-grade carbons entirely and to secure such an amount of protection on the high-grade carbons as to enable them to control 80 per cent of the output of this kind. After I had spoken, a statement was made by Mr. J. S. Crider, of Cleveland, Ohio, representing the National Carbon Co. (see hearing, pp. 1545 to 1551), and in view of that statement I now beg again leave to respectfully submit in writing a few additional suggestions on this very important subject. It will be remembered that my statement made before the Committee on Ways and Means on November 23, 1908, that the carbon business was in the hands of a trust was not denied. On the contrary, on page 1459, in answer to questions by Mr. Underwood, Mr. Crider conceded that his company was the only concern that made high-grade carbons and that it had a monopoly of the American market. It also appears from his testimony on the same page that his company had $4,500,000 of preferred stock (presumably representing the actual capital investment), and $5,500,000 common stock (presumably representing expectations or hopes, in fact water). The National Carbon Co. are paying 7 per cent dividends on the preferred stock and 6 per cent dividends on the common, and on November 7, 1910, paid an extra dividend on the common stock of 15 per cent. Besides they have accumulated an enormous surplus. The Carbon Trust has been protected by an unreasonably high rate of duty since the Dingley tariff went into effect, and in fact was founded on the strength of this tariff. The present administration, as everyone knows, promised a downward revision, and I take the liberty to explain to you how this revision, which is always advertised as "downward," looks in reality. The duty under the Dingley tariff was 90 cents per 100 carbons. This rate was "reduced" by the Payne-Aldrich tariff to 65 cents per 100 feet, but the adding of the word "feet" raised the duty considerable, because we paid 90 cents duty on carbons of 2 and 3 feet length and now have to pay 65 cents on carbons of 1 foot length, so while in fact the duty appears at first sight to the general public as a reduction it was materially advanced, which illustrates that mode of tariff making. I claim that the present rate of duty on electric-light carbons is exorbitant, and I can prove by my books that the import in the main carbon for inclosed arc lamps has fallen off from 40 to 50 per cent since the new tariff has been in force, because it is now absolutely impossible to compete against the trust. Our business is now solely confined to such special qualities which the trust is not able to manufacture to the satisfaction of the consumer, and therefore the high duty is just as unreasonable on the special carbons as on the regular inclosed carbons. |