PARAGRAPH 108-LENSES, CAMERAS, ETC.

Mr. GENNERT. There are, but we can not bring them in at the price the Eastman camera is selling for here. We are selling some, but at a higher price than the Eastman. We sell, for instance, a small cheap camera for $2.50 which we import. That is, we sell it if we can. The Eastman Kodak Co. is selling the same camera for $2. Competition under those circumstances is very difficult.

Mr. PALMER. You mean the same kind of camera, about the same quality?

Mr. GENNERT. Yes, cameras similar to each other, which will do the same work ours will do.

Mr. PALMER. Would the removal of this 45 per cent duty open up this entire American market to the foreign article?

At

Mr. GENNERT. It would give us an opportunity to compete. the present moment we not alone have difference in prices against us, but we have the restrictive policy which scares off the customer. If we could get a much lower duty we could at least meet the Eastman Kodak Co. in price, and we might even afford to spend more money for advertising, and thus create a market.

Mr. PALMER. I should think that the Eastman Co. would be satisfied with a reasonable profit on its capital of, say, 10 per cent, or even 15 per cent, which is a fair manufacturers' profit, and it could reduce the price of cameras so as to still keep out the foreign camera.

Mr. GENNERT. The profit is so enormous it is hard to tell where the point would be reached by the Eastman Kodak Co. They could afford to keep dropping and dropping. It is unique. I do not remember just what the profit of the Standard Oil Co. is, but even with its tremendous dividends there is a surplus that in a very few years will exceed the capital stock, mounting and mounting by leaps and bounds.

Mr. LONGWORTH. But the tariff has nothing to do with the Standard Oil Co.; that is not protected.

Mr. GENNERT. I merely used the instance of the Standard Oil Co. as an instance of prosperity.

Mr. LONGWORTH. But you are speaking of the tariff.

Mr. GENNERT. My example was probably badly chosen. I did not use it for the purpose of producing a tariff argument. If I created that impression, I want to correct it.

The CHAIRMAN. This paragraph reads, "Opera and field glasses, telescopes, microscopes, photographic and projection lenses, and optical instruments.'

It seems the Government gets about $240,000 or $250,000 out of this item. There must be competition in some of these articles that are in this paragraph to produce that amount of revenue.

Mr. GENNERT. There undoubtedly is, Mr. Chairman, and we make the point that photographic lenses do not belong in that schedule. The CHAIRMAN. What I wanted to ask you was that very question. Does the term "photographic lenses" cover cameras?

Mr. GENNERT. It does not. A photographic lens is on a separate piece of wood and easily detachable from the body of the camera. In other words, the only optical part of the camera is the lens.

Mr. PALMER. Cameras come under this section as photographic lenses?

PARAGRAPH 108-LENSES, CAMERAS, ETC.

Mr. GENNERT. They come in under optical instruments. The board of appraisers has classed them as optical instruments.

Mr. HARRISON. It says, "Photographic and projection lenses and optical instruments and frames for mountings for the same."

Mr. GENNERT. Yes, but the Board of General Appraisers has said that cameras are optical instruments.

Mr. HARRISON. You probably know that the Democratic platform calls for the placing of trust-controlled products on the free list. Suppose we attempted to put the products of the Eastman Co. upon the free list; what effect, if any, would that have upon any of the manufacturers of cameras in the United States?

Mr. GENNERT. It would be a benefit to everybody, and it would permit a competition between outsiders and the Eastman Kodak Co. There would be only one class of manufacturers who might be harmed. The manufacture of lenses and shutters, while it is not a large part of the industry, is still carried on on a fairly competitive basis.

The suggestion I was going to take the liberty of making to this body was that a separate duty be levied on cameras. We desire to import from Europe camera bodies, namely, a box, which is not. optically equipped with a lens and a shutter. When this box has been imported from Europe we intend to go to the American manufacturers of lenses and shutters, an industry which is still independent, and equip our European-bought bodies with American optical portions. And I might add that we do not manufacture these American optical portions.

Mr. HARRISON. How large a proportion of the camera production in the United States is controlled by the Eastman people? Mr. GENNERT. At least seven-eighths, if not more.

Mr. HARRISON. Are they selling their products cheaper abroad than they are in the United States?

Mr. GENNERT. As to answering yes or no, I do not think I can answer. Their sale in foreign countries depends upon the condition of those countries. If, for instance, there is a duty into the country, persons buying are given a large discount for customs, so that they can meet competition. I do not think there is a great difference between the prices they get abroad and the prices the others get. They are always there and sell cheap enough to be able to compete abroad; and, while they have not the control abroad they have in America, they still do a large business in practically every civilized European country.

Mr. HILL. Do you know if they have factories abroad?

Mr. GENNERT. They have factories for certain articles, but which ones I can not tell you.

Mr. HILL. Do you know whether there is any financial connection between the Eastman Kodak Co. and the foreign Kodak Trust in England?

Mr. GENNERT. There is undoubtedly some connection.

Mr. HILL. There is undoubtedly? Then putting the article on the free list, even though the Democratic platform called for it, does not necessarily call for putting the foreign trust on the free list, but only domestic articles on the free list?

PARAGRAPH 108-LENSES, CAMERAS, ETC.

Mr. GENNERT. I might say

Mr. HILL (interposing). Can you reach these people by the tariff? Mr. GENNERT. Yes.

Mr. HILL. Then I would like to know why could not the Eastman Co. manufacture abroad any article made free, manufacture it in their factories abroad, and ship the finished product here and sell it here under the free schedule?

Mr. GENNERT. They make everything here that they can make cheaper; they do not manufacture abroad for the American market at all.

Mr. HILL. Why would not they do it if it was free?

Mr. GENNERT. I do not know.

Mr. HILL. That is what I say. Can you reach this problem by tariff regulation?

Mr. GENNERT. If the tariff is reduced we can. Even if we do not buy the goods from Eastman, if the tariff is reduced, we can get the goods from others at such a price that we can compete here.

Mr. HILL. I am just as much opposed to the trust proposition as you are. But the question I want to know about is what is the best way of reaching it. If the Eastman Co. has a factory in England, and another in Germany, and the articles they make are put on the free list, how have you helped the situation any?

Mr. GENNERT. To answer your question properly, I would have to know more than I do about the extent to which the Eastman Kodak Co. manufactures abroad.

Mr. G. C. GENNERT. I think I can answer your question. The Eastman Kodak Co. does not manufacture in Germany.

Mr. HILL. Do they in England?

Mr. GENNERT. They have a factory in England. I do not think they make any cameras in England.

Mr. HILL. Have they any business connection with anybody else in other countries, or is it the same company there as here?

Mr. GENNERT. They have none that I know of. They have offices for the sale of their goods. There was a report some time ago they had joined with a company in Dresden. I tried to verify that report when I was in Germany this summer, but I was assured there was no truth in it by the officers of the company.

Mr. HILL. Are you manufacturing here?

Mr. GENNERT. I manufacture on a small scale here.

Mr. HILL. What would be your judgment if they did have a factory abroad whether putting the product on the free list would in any way relieve the situation?

Mr. GENNERT. The putting of cameras on the free list will relieve the situation in this way: There are factories abroad at the present moment prepared to supply us with goods appropriate for our use. There are none in the United States. We are making plans now to go into the manufacture ourselves. We are not afraid of the free list. There will always be a certain trade in this country in cameras of foreign manufacture.

Mr. HILL. You are not manufacturing now?

Mr. GENNERT. We are on a small scale. We are preparing to embark on a larger scale. It is only a year since the Houston patent,

PARAGRAPH 108-CAMERAS, LENSES, ETC.

which controlled the camera, expired. Before that the Eastman Kodak Co. had absolute control, except of a license owned by the Ansco Co.

Mr. HILL. While I am opposed to the trust proposition, I can not quite see how, for instance, taking sewing machines that are made here, and then having the same machines made as extensively abroad as here how it is going to relieve the situation by putting such an article on the free list, when it can be made abroad cheaper than it can be made here.

Mr. GENNERT. I have not said it could be made abroad cheaper. I do not believe the kodak company would save any money by manufacturing in Europe.

Mr. HILL. They certainly are not barred out of England by a protective tariff, and if they have a factory in England there would be nothing to prevent them making them there, and if they could make them cheaper, selling them over here in competition.

Mr. GENNERT. They do not make them in England. They export to England, Germany, and France, as far as I know. The exports amount to more than half a million dollars, photographic cameras alone.

Mr. HARRISON. What do the imports amount to?

Mr. GENNERT. They are very small.

Mr. HARRISON. About one-half million came in under paragraph 108, but they are classed by the Treasury Department with these other goods, under the same paragraph, and we do not know what proportion was photographic material.

Mr. GENNERT. It is so infinitesimally small they could not be considered separately.

Mr. HARRISON. Putting cameras on the free list, then, would have no effect upon the revenue?

Mr. GENNERT. None whatever. It would, in so far as the imports would increase, and if there was a light duty the Government would have that advantage. Of course, if they are put on the free list that would not be the case.

Mr. DIXON. Do the Eastman people manufacture everything that goes to make up a camera?

Mr. GENNERT. They manufacture everything that is used in photography.

Mr. GENNERT. In conclusion I would like to read the suggestion I have taken the liberty to put into my short brief. We request the following new paragraphs in the law that is being prepared, in place of the present duty of 45 per cent on cameras levied as optical instruments under paragraph 108 of the present tariff law:

1. Camera bodies not optically equipped and parts thereof to be free. 2. Cameras optically equipped, 15 per cent ad valorem.

Mr. Chairman and Members of the Ways and Means Committee:

I am here before your committee for the purpose of requesting changes in the tariff on photographic cameras. These changes, if made, will tend to free the trade in these instruments from the unfair selling restrictions under which it is now laboring, by reason of the fact that the entire photographic supply business in this country is controlled by the Eastman Kodak Co. These changes would increase the revenue to the Government by changing the present condition of merely nominal imports to one of considerable importation, and would benefit the public by making possible a reduction in prices.

PARAGRAPH 108-LENSES, CAMERAS, ETC.

Some years ago there were a number of factories engaged in manufacturing cameras in America. At the present time one single company, the Eastman Kodak Co., which has absorbed the most importantcamera factories of this country, is producing at least seven-eighths of all the cameras made in America; the Eastman Kodak Co. is selling cameras to retailers under a restriction policy and refuses to allow anybody to sell its cameras who either sells cameras made by any other manufacturers or who sells films used in the cameras which are not the product of the Eastman Kodak Co.; this same principle they apply at will to their other products.

That the charge that this company is a trust in violation of the Sherman law is not an empty statement, is best evidenced by the fact that this company's methods are now under investigation by the Department of Justice, where detailed information can most easily be obtained by this body.

I append a copy of a letter received by my firm from a dealer in photographic materials in New York City, whose name I will not give, unless this committee requests the same, in order that this dealer may not be cut off from further supplies of goods by the Eastman Kodak Co. The letter is as follows:

"We are returning herewith 1 Ensignette camera, list, $10; 1 Ensignette, list, $15. Please credit these to our account. We could, no doubt, have sold a large number of these cameras, but, as the Eastman Kodak Co. refuses to sell us their product if we sold Ensignettes, we are obliged to discontinue the sale of them."

This letter is dated March 27, 1912, and is one of a large number of similar import, which we are prepared to submit to this body.

That the Eastman Kodak Co., which not alone dominates but controls the entire photographic business of this country in cameras, plates, and films, is in no need of a protective tariff is best evidenced by the fact that it has paid in 1911 and 1912 a dividend on its common stock of 40 per cent per annum, and that its earnings on the common stock for 1911 were 57 per cent, the common stock amounting to about $20,000,000. My firm, for instance, is unable to buy any goods or to buy any cameras or films from the Eastman Kodak Co. simply because we have the temerity to wish to sell also films and cameras not manufactured by the trust. Under these trade conditions and particularly in view of the high duty of 45 per cent levied on cameras, competition has been impossible, and we have been forced to go to Europe to get our cameras, which we must import and sell with very little profit. This is a situation from which we now desire relief.

Cameras have never been specifically provided for in any of our tariffs; they have been classified by the board of appraisers as optical instruments, which we contend they are not. Cameras are made up of a camera body and a lens, which latter is an optical instrument. The camera body is certainly not an optical instrument.

The lenses, and the shutters used to govern the quantity of light admitted through the lens, both of which are properly optical instruments, are not under the domination of any trust in this country, and their manufacture is independently and successfully carried on in the United States at present under proper and fair conditions, quite different from the completely equipped cameras.

We desire to import camera bodies as we have been doing in the past-that is to say, cameras not equipped with a lens and shutter--for the reason that we can not buy these bodies in America. After their importation we will equip these bodies imported from abroad with lenses and shutters of American manufacture, thus giving employment to American labor. The optical portion of the camera-that is to say, the lens and shutter originally constitutes about one-third of the value of the completely equipped camera. We request, therefore, the following new paragraphs in the law that is being prepared in place of the present duty of 45 per cent on cameras levied as optical instruments under paragraph 108 of the present tariff law: 1. Camera bodies not optically equipped, and parts thereof, to be free. 2. Cameras optically equipped, 15 per cent ad valorem.

We feel sure that if these changes in the tariff law are made, the present importa tion of cameras, which is so small that the Department of Commerce and Labor furnishes no statistics in regard thereto, will be increased at least fourfold over the present figure, of less than $50,000 per annum, an amount to which the undersigned is no doubt the largest contributor. Opposed to this small amount are exports of cameras and other photographic apparatus which amounted for the nine months ended March, 1912, to $535,158, an amount shown by the last statistics of the Bureau of Commerce and Labor to be on a constant increase. Respectfully submitted.

NEW YORK, January 9, 1913.

G. GENNERT,

24 and 26 East Thirteenth Street, New York, N. Y.