PARAGRAPHS 101-102-PLATE GLASS.

The producing countries are Belgium, Germany, Austria, France, England, Italy, Spain, and Russia. As Belgium produces more glass than any of the other countries, at the lowest cost, and exports 95 per cent of its product, we submit herewith a report of the consul general residing at Brussels, giving rates of wages in Belgium, to wit:

[United States Daily Consular and Trade Reports, Oct. 31, 1912, p. 566. From Consul General Ethelbert Watts, Brussels, Belgium.]

"FOREIGN WAGES AND COST OF LIVING.

"According to data published by the Government, wages in Belgium are lower generally than in any other European country. The Annuaire Statistique, which gives the official figures for 1910, shows the following daily wages:

"About 65 per cent of men workers over 16 years earn less than 68 cents. women, 67 per cent earn less than 39 cents, and 93 per cent less than 58 cents.

Of the

"In 1907 inquiry was made at the public schools of 18 towns, distributed over the country, into the quantity and kind of food each one of the children had had during the preceding 24 hours. The answers compiled have shown that 21.33 per cent of the children were insufficiently nourished."

The rates of wages paid to Belgian plate-glass workers are no higher than the general rates above given, while the average rate of wages paid by the American plate-glass manufacturers is about $2.30 per day.

Tariff-Germany (whose tariff is admittedly the most scientific in the world) taxes plate glass at a flat rate equivalent to 12.42 cents per square foot; Austria, a flat rate equivalent to 12.60 cents per square foot; Spain, a flat rate equivalent to 14.80 cents per square foot; France, 5.40 cents to 6.30 cents per square foot; and Italy, 7.79 cents to 9.86 cents per square foot. The European countries maintain this tariff notwithstanding that their costs of production are not materially higher than the cost of production of Belgian manufacturers.

Foreign Plate Glass Trust.-The European manufacturers are organized into one of the strongest and most successful trusts known to the commercial world, controlling absolutely and arbitrarily the output of its members. This trust, known as the International Glass Convention, was organized in 1904, and has been extended until 1924. It includes nearly all the continental manufacturers of plate glass. It has been very successful in its operations, some of its members earning as high as 83 per cent per annum on their capital, and paying as high as 30 per cent per annum in dividends, as is shown by the following extracts from the balance sheets of the two principal manufacturers in Belgium, published in 1911, according to the Belgian law.

PARAGRAPHS 101-102-PLATE GLASS.

This trust and its operations are described in the following extracts from the United States Daily Consular Trade Reports:

[United States Consular and Trade Reports, Aug. 18, 1909, pp. 2-3.]

"The scope of the plate-glass syndicate is mainly to place the manufacturer of plate glass in direct connection with the consumers of this article, in order, in a measure, to give stability to the selling price and to prevent overproduction, which always results in excessive damage in any form of industrial activity.

66 LIMITING PRODUCTION.

"In order to attain this object, the syndicate agreed theoretically, it is stated, to reduce the productive capacity of the syndicated concerns to 126 days per year working at full power. They have therefore imposed on the members of the combine a stoppage of work for a period of 180 days out of the 306 working days of the year. In this arrangement there is a tendency to oppose the interests of the working force, the members of which can with difficulty accept such a long period of enforced idleness. In order to obviate this inconvenience the shutdown was in practice regulated as follows: The factories in the combine were forced to remain in operation during the entire year, but with a productive capacity of machinery that would limit the output to what it would have been had they worked but 126 days during the year. Thus, a factory possessing 10 machines, according to the agreement, would have a productive capacity of 1,260 days working at full force., Instead of working 126 days at full force, however, the factory would work during the entire year but four of its machines, leaving the remaining six idle. This arrangement enabled the managers of the differeat factories in the combine to eliminate the least valuable element among their working forces, and to retain only the most skillful workmen. Besides, there resulted a saving in the cost of operating a large number of machines.

"The board of management (conseil general) of the international syndicate follows very carefully the movements of the different markets; the board meets every three months in order to regulate the matter of production. Besides a special committee examines each month all statistics communicated by the members of the syndicate, while an organization composed of agents of the principal factories meets at least once a month in order to regulate the question of orders received and communicate to the board of managers such information as may be deemed opportune."

The United States trade report of July 22, 1912, page 376, says, concerning the Belgium industry:

"CONDITIONS IN THE PLATE-GLASS INDUSTRY.

"Plate glass is one of the most important articles of export to the United States. The shipments last year were valued at $568,199, compared with $1,166,026 for the previous year. The large decrease last year was due to the fact that in 1910 one of the principal plate glass factories in the United States was destroyed by fire, thereby increasing the demand for the Belgian product.

"In 1904 the International Glass Convention was organized, with a view to control the production and sale of polished glass. With the exception of two companies, one in France and the other in Belgium, all the plate-glass companies in Germany, Austria, Belgium, France, Netherlands, and Italy agreed to the convention which is still in operation and which operates to the satisfaction of all concerned. Since the agreement the plate-glass manufacturers have prospered, while prior to that time the industry was unsatisfactory. Great improvements have been made in the machinery. A glasspolishing machine of 1 square meter to-day produces as much or more than one of 2 square meters before the convention. Great improvements have been made in the manufacturing of the rough glass (glacé brute) and the cost greatly reduced. Eight years ago the cost of manufacturing glass in Belgium was 9 to 10 francs ($1.74 to $1.93 per square meter (10.76 square feet). At present it is 5.60 to 6.50 francs ($1.06 to $1.25) and rough glass is now manufactured at the cost of less than 2.50 francs (48) cents) per square meter (10.76 square feet) or 4 cents per square foot."

PARAGRAPHS 101-102-PLATE GLASS.

The report of November 6, 1912, states as follows:

"Belgium plate-glass manufacturers are very prosperous, paying yearly dividends as high as 30 per cent. Because of the cheap labor the plate glass industry in Belgium maintains on all foreign markets its power as price regulator. The advantage of a low cost of production (11 cents United States currency per square foot of polished plate glass) is assisted by the successful operation of the international syndicate of plate glass manufacturers which regulates the selling prices according to conditions existing in such foreign market. These arbitrary selling prices are consequently of great variety. For example, the same glass and the same size, quality for silvering are sold (off the gross prices of the same list) at 20 per cent discount for England and 30 per cent discount for the United States, and quality for window at 30 per cent and 24 per cent for England against a discount of 45 per cent and more for the United States.

"The reason for this discrimination is said to be the fact that American plate glass manufacturers are not associated with the European syndicate and consequently the syndicate establishes a low range of prices for the American market on the kinds and sizes of glass which, through overproduction, must be disposed of by the American manufacturers regardless of cost."

Organization of foreign sales agency.-Within the last 30 days a new and most important step has been taken by the foreign manufacturers of plate glass. The trust described above left to each factory the sale of its own product, under certain restrictions which left the manufacturers in limited competition with each other. The product of each factory being handled separately, the trust had not the power to control and regulate markets as it would have had if it had charge of the selling of the entire product of all its members. This power has just been vested in the trust through the organization in Belgium of a selling company, which will purchase from each manufacturer his entire product and then distribute and sell it in such markets and at such prices as is deemed to the best interest of all the manufacturers in the syndicate. The control of the entire output of the factories gives the trust an enormous power. It can undersell competitors in any market in the world and recoup its losses by adding them to the price of glass in markets that it controls. The trust is therefore in a position to at once successfully invade the American market, which consumes practically half the glass production of the world, and is the only market which the foreign manufacturer does not at present control, although it does regulate the prices upon part of the American product and could easily do so on all of it.

CONDITIONS OF THE INDUSTRY IN THE UNITED STATES.

Production. The production in the United States is about 60,000,000 square feet, about 47 per cent of which is produced by the Pittsburgh Plate Glass Co. and the remainder by 11 separate companies. None of the American product is exported, excepting a negligible quantity to contiguous territory to supply pressing require

ments.

The capital invested in the industry in this country is about $49,000,000, the smallest concern in the industry having a capital investment of about $1,000,000. The average number of men directly employed in the industry in this country is about 11,000. Those indirectly employed will equal more than twice this number.

Importations. Importations of unsilvered polished plate glass into the United States from 1906 to 1911, inclusive, in feet, were:

An inspection of the table of imports given above shows that most of the importations consist of small sizes. Small sizes of plate glass have never been adequately protected, and the American product under 384 square inches, now bearing a duty of 10 cents per square foot, and above same but not exceeding 720 square inch es bearing a duty of 12 cents per square foot, does not yield an average price equal to

PARAGRAPHS 101-102-PLATE GLASS.

the cost of production. (See Annexed report of the Audit Co.) This was not important originally, because the production in this country was not equal to the demand for large sheets and there were large quantities of all sizes imported. The manufacturer in those days contented himself with selling such quantities of small glass in the two brackets named as resulted from breakage and was incidental to the operation of his plant, which amounted to about 10 per cent.

Prices to consumer.-The prices to consumers of plate glass in the United States have, on the whole, been in distinct contrast to the upward tendency in the price of most commodities during the last 10 years, while the manufacturers have been compelled to pay more for the materials entering into its production and have been compelled to increase wages in keeping with the general upward tendency of wages, all of which for a time increased the cost of production. Nevertheless, by the introduction of labor-saving devices and new inventions, the tendency in the cost of production for the last four years has been downward, and the cost to the consumer has also had a downward tendency, as is shown by the following table, giving the retail price to the actual consumer:

COST OF MANUFACTURE OF GLASS IN THE UNITED STATES.

At the hearing before the Ways and Means Committee in 1908 there was a conflict of testimony as to the cost of manufacturing plate glass in this country. At that time a representative of the importers of plate glass stated that the importers "would ask for nothing better than to have the subject (cost) gone over by a public accountant and the new tariff based on the difference between the cost of production here and abroad.' (Hearings of 1908, Schedule B, p. 1124.)

Upon receipt of your notice of these hearings the Audit Co. of New York was authorized to proceed at once with the work of ascertaining the cost of production of the American manufacturers of plate glass by auditing the books of the plate-glass manufacturers in this country, and has worked diligently upon the preparation of this audit, but has not been able to complete an audit of all the companies up to the date of drawing this brief. It has found that the average cost of manufacturing plate glass by the companies so far examined was, in 1909, 28.16 cents per square foot and in 1912, 23.98 cents per square foot before adding depreciation. With depreciation added, but without allowing anything for interest on bonds or capital invested, the cost of glass per square foot was, in 1909, 33.71 cents and in 1912, 28.45 cents. (See audit annexed.) The Audit Co.'s chief mechanical engineer has carefully estimated the cost of depreciation over and above the sums which have been charged for repairs and maintenance. The aggregate charged for the maintenance of buildings and equipment, including the depreciation, aggregates but 12 per cent on the actual costs of the buildings and equipment, which is not higher than exists in many other lines of manufacture in the United States, although the strain on much of the equipment is very great, owing to the very high temperature and the necessity for running power plants with less than normal rest.

The average selling prices obtained during the years ending July 31, 1909, and November 30, 1912, were as follows:

A comparison of the foregoing costs before deducting depreciation or any interest in bonds or capital, compared with the average selling prices for the same periods, show that all glass under 5 feet was sold at a large loss, while the margin of profit on glass

PARAGRAPHS 101-102-PLATE GLASS.

over 5 feet was but 1.81 cents per square foot in 1909 and but 4.66 cents in 1912. If we include depreciation, which is an actual cost of production and should be invariably considered, there existed on sales of glass over 5 square feet an actual loss in 1909 and but nineteen one-hundredths cent profit per square foot in 1912.

The companies which have been examined by the Audit Co. on the average therefore show losses instead of gains, after considering depreciation, but before allowing anything for interest on bonds or upon actual capital invested.

The companies examined are fair examples of a majority of the manufacturers. If this committee desires it, the audit company will be instructed to proceed with the audits of the remaining companies or we shall be glad to have the committee designate any competent auditing concern to complete the audits.

FOREIGN COST OF PLATE GLASS.

The cost of plate glass abroad is understood to be from 10 to 11 cents per square foot, and this is borne out by the United States Daily Consular and Trade Reports of July 22, 1912 (p. 376):

"Eight years ago the cost of manufacturing glass in Belgium was 9 to 10 francs ($1.74 to $1.93) per square meter (10.76 square feet). At present it is 5.60 to 6.50 francs ($1.06 to $1.25), and rough glass is now manufactured at the cost of less than 2.50 francs (48 cents) per square meter (10.76 square feet), or 4 cents per square foot."

And November 6, 1912 (p. 688):

"The advantage of a low cost of production (11 cents, United States currency, per square foot of polished plate glass) is assisted by the successful operation of the international syndicate of plate-glass manufacturers, which regulates the selling prices according to conditions existing in each foreign market."

The present Belgian cost, as above, is the cost on the basis of operating at 66 per cent of their capacity, and would be decreased if the foreign syndicate should release the excess capacity and let their factories run to full capacity.

FREIGHT RATES.

The transportation problem is another phase of the tariff question, and must be taken into account. Plate glass can be imported from Antwerp, Belgium, to any of the Pacific coast cities for approximately 2 cents per square foot and in any quantity. We now pay the railroads in this country about 74 cents per square foot to transport plate glass from the factories to the Pacific coast in carloads and about 10 cents on less than carloads, and the railroads have filed rates to increase this charge to 10 cents per square foot in carloads and 18 cents per square foot on less than carload quantities. The rate from Antwerp to New Orleans is less than 1 cent per square foot regardless of the quantity of plate glass shipped. The rate from the Pittsburgh district factories to New Orleans on American-made plate glass is about 34 cents in carloads and about 5 cents per square foot on less than carloads.

ALL PLATE GLASS COSTS THE SAME PER SQUARE FOOT, REGARDLESS OF SIZE.

It should be borne in mind that a square foot of plate glass costs the same amount whether manufactured in large or small plates, because it must of necessity be cast first in large plates exclusively. Glass can not economically be melted in small quantities. It is necessary to manufacture in large sizes, in the course of which manufacturing process the unavoidable breaking and cutting down for imperfections produces some smaller sizes under 5 square feet. Normally this production of small sizes, to wit, under 5 square feet, is about 10 per cent.

In answer to the statement made by the representative of the importers four years ago, that the cost of small glass was not the same as the cost of large glass, and to the effect that the small glass was a by-product, we wish to distinctly say that neither one of these statements is in accordance with the facts. Assuming now for the sake of argument that the 10 per cent of glass under 5 square feet above referred to is a by-product, it must be borne in mind that the consumption of the country for glass of this character has now grown to be nearly 50 per cent of the entire production, which compels the manufacturer to cut 35 to 40 per cent of additional glass which would normally be large sizes down to the market requirements under 5 square feet, and which can certainly not be considered a by-product from any standpoint.

The query may naturally arise as to why the manufacturer should supply this additional glass if he does it at a loss. The answer is that by increasing his output