PARAGRAPH 197-MACHINE TOOLS. THE INDUSTRIAL PRESS, Mr. FREDERICK A. GEIER, Washington, D. C. DEAR SIR: Acting on your request I have hastily collected the following information regarding conditions in the machinery industry in Europe and the United States, for use with the Senate Committee on Finance next Tuesday. In December, 1908, in response to a request from Senator Foraker, of Ohio, I compiled the following table showing the average rates of wages, in cents per hour, paid in European countries and in the United States: Since then wages in Europe have increased on an average from 8 per cent to 10 per cent. In many works no increase has been made, in others, where unusual conditions prevail and highly skilled labor has been employed, the increase has been more, but the above is a fair average. In a letter to Senator Foraker said, "Progressive foreign manufacturers who recognize the superiority of American methods are rapidly adopting them, and all they really need to compete on even terms with our own manufacturers anywhere is a wider market, which will enable them to produce in larger quantities." Since 1908 a continuous and marked improvement has taken place in the product and capacity of German machinery works, especially those manufacturing machine tools. Their progress is shown not only by the published statistics, but it is evident to all students of conditions who have made periodical visits to Germany. While there last summer the writer was more strongly impressed than ever with the changed conditions. The increase in German trade is not confined to her domestic markets, but extends to every country where machine tools and supplies are used except the United States. Even in this country some machinery can be sold, plus the present duty, with a profit, and any material reduction in our tariff would bring in large quantities of German tools. Statistics show an increase in German machinery exports of a thousand per cent in 10 years, while those from the United States are decreasing. The exports of the United States to Austria-Hungary for the first nine months of 1909 were 433 tons of machine tools, while during the same period Germany sent into Austria-Hungary 6,025 tons; and this disparity is even greater for 1910 and 1911. Prof. Schlesinger, a well-known German authority, in a series of articles in the Zeitschrift des Vereines Deutscher Ingenieure (December 9, 16, and 23, 1911), entitled "The Status of German machine tools in the world's markets," says the exports of German machine tools alone in 1900 amounted to 11,000 tons and in 1908, 58,000 tons, while the imports in 1900 amounted to 7,000 tons and now average about 5,500 tons. He points out the reasons for the early development of American machine tools and explains the necessity for the Germans to specialize on certain types of machines, so that they may be accurate for the production of interchangeable parts, as well as efficient and convenient to operate. He states that the makers of special German PARAGRAPH 197-MACHINE TOOLS. machine tools now export as much as 60 per cent of their product, and that in one case, through specialization, it has been possible to bring up the production to 9,000 marks per worker in a factory employing 400 men. His article, in the main, consists of a review of American and German methods, showing that the former have been adopted by the German manufacturers and indicating their progress along lines laid out originally by American manufacturers. Mr. J. E. Reinecker, of Chemnitz, one of the largest machine tool builders in Germany, said to the writer that all that is necessary to further reduce the cost of German machinery is the extension of their markets, which would enable them to produce in larger quantities; and as the United States is by far the largest consumer of that product, Germans are anxious for a reduction in our duties so as to open this great market to them. Distance cuts no figure in the selling cost, as the freight rates from Hamburg and Bremen to New York are less than from Cincinnati, except in car-load lots which are only occasionally available. COMPARISON OF FREIGHT RATES. Hamburg and Bremen to New York, 2 tons and over (less than 2 tons, $5 per cubic meter, 35.3 cubic feet). Cincinnati to New York (less than carload lots). Per ton of 2,240 lbs. $7.50 12. 65 If the United States is added to the territory in which the Germans are now selling machinery, our manufacturers will manifestly find it impossible to compete with them unless the cost of labor is materially reduced. The foregoing points refer to German manufacturers, but second only to them is the progress made by English machinery builders. The largest dealer in machine tools in Great Britain, who for many years handled American machinery exclusively, not long ago wrote us: "During the past ten years English machine tool makers have remodeled their designs, and most of them are now building tools similar to those made in the United States. Continental makers have also made exact copies of many American machines, and these are now about as good as the American, and can be sold here at much lower prices. On small tools the conditions are similar. There are a dozen or more manufacturers making twist drills in England, and on high speed drilling and milling cutters, gear cutters, etc., the prices are lower than American. English makers will, we think, capture much of the continental trade which has previously been supplied by America." One of the inconsistencies and injustices of the proposition to place machine tools on the free list is shown by the continuation of a 40 per cent duty on automobiles, although the export of American automobiles has rapidly increased and the imports of foreign automobiles have decreased during the past three years. Exactly the opposite conditions prevail in respect to machine tools. Every machine tool builder knows that one effect of the automobile "boom" has been to greatly increase the wages of skilled mechanics, because they have been attracted to automobile works by the higher wages prevailing in that industry, which automobile manufacturers are able to pay on account of the far greater margin of profit in the manufacture of automobiles than in machine tools. It will be evident to any one who makes a study of existing conditions that the placing of machinery on the free list will unquestionably transfer to German and English works the manufacture of a large part of the machinery now made and sold in this country, and until our labor costs can be adjusted to the new conditions, this market will be absolutely demoralized and thousands of skilled workmen thrown out of employment. No compensating benefit will result to American consumers, for a reduction of even 25 per cent or 30 per cent on the price of a machine would have no appreciable effect on the cost of its output. This demoralization would not be confined to the branches of the machinery industry directly affected by this bill, but would necessarily extend to the entire metal-working industry, employing between 900,000 and 1,000,000 men, not including the industries which sell them supplies and material. Any reduction in the present duty will necessarily admit a volume of foreign machinery increasing in size according to the amount of the reduction and the character of the machinery imported. Very truly, yours, ALEX LUCHARS, Publisher of Machinery. PARAGRAPH 197-MACHINE TOOLS. APPENDIX. [Excerpts from hearings before the Committee on Finance, United States Senate, Feb. 14, 1912, on H. R. 18642.] SCHEDULE C-METALS AND MANUFACTURES OF METALS-ITEM, MACHINE TOOLS. [Pages 1109 to 1111 and pages 1116 to 1119.] Quotations from report of Government expert, Capt. Godfrey L. Carden, report to Department of Commerce and Labor, "Machine Tool Trade in Germany, France, Switzerland, Italy, and United Kingdom." Page 17: "It is not too much to say that Americans in generally have not been giving the Germans credit for learning and developing in machine-tool construction, and if it is proposed to keep ahead in shop efficiency the United States must look to the training of workmen from boyhood up." Page 43 of the report, speaking of a write-up of a large concern in Berlin: "The shop managers at Borsig's have learned wonderfully well how to get the maximum capacity out of tools. There could undoubtedly be reductions made in the force employed; but there can be no mistake about the tools working at practically 100 per cent efficiency. It would be refreshing for some of our American manufacturers who believe that we alone understand the term "shop efficiency" to take a walk through these shops, and I believe that a glimpse of the workings of this particular plant would cause a realization of what there is ahead of America in foreign competition." Capt. Carden, in his 1909 report, page 33, says: "Restricted number of tools built by the Pitler firm shows that the tendency in Germany, provided the market can be obtained, is to specialize. There are several milling-machine tool houses which are endeavoring to reach the specializing stage, and there is a gear-cutting house near Chemnitz-Herman Pfauter-which is practically making only one tool-gear-hobbing machines." Page 34: "The writer has observed Schiess tools, not only in Germany but in many of the leading manufacturing plants of other countries of western Europe, and has been impressed by the high character of the products of this firm. Aside from the good workmanship on the tools, there is probably no better casting work in Germany than can be found in the Schiess foundry." Page 48: "Noteworthy in this last list are the milling machines of the Wanderer Fahrradwerke, of Chemnitz, and the opinion has been expressed by German experts that the products of this firm are pressing some of our best American millers closely. The millers of the Chemnitz establishment undoubtedly have merit and certainly possess much form. It would not be too much to say that these Saxony tools represent in a very high degree the best that is being turned out by German tool manufacturers. From statements made it would seem that the Chemnitz firm is selling its tools much cheaper than the American manufacturers demand for the same type of machine. In fact, some of the figures quoted are so considerably less as to make it advisable for American manufacturers of milling machines to watch this German development closely." Page 15: "The German builders have everything practically but territory and with territory the ability to specialize. Their country is too circumscribed to make it possible for a new firm to hope to live on domestic trade. Export business is therefore the life of the nation, and every thought and every energy is accordingly directed in the interest of export." Writing of a shop in Belgium, "Machine Tool Trade in Belgium": "Mr. Jules Mélotte was a member of the jury of awards at the St. Louis Exhibition and is the sole proprietor of the Mélotte works. He has a wide knowledge of American manufacturing methods, and, being an engineer, he has applied American ways in the Remicourt shops. The most exacting of American shop superintendents would find it difficult to improve on the Mélotte installation; and as to the administration, the system in vogue would seem to leave little to be desired. I could perhaps mention shops which are working faster than Mélotte's, but the list would comprise our very best works." Page 70: PARAGRAPH 197-MACHINE TOOLS. "What Melotte has accomplished has been the effecting of an output capacity at apparently minimum expense. He has placed American standards as examples to be attained, and he is accomplishing wonderful results with the men he employs. I do not mean to say that the Melotte workmen, working for less than $1 per day, are doing as much work as American machine-tool hands earning $3.50 a day, but I do say that Melotte has trained up a class of workmen who are getting splendid speed out of the machines and who have developed a high output capacity." AN OBJECT LESSON. "There is hardly any doubt but what the Remicourt shops are turning out 85 separators per day at a very much lower figure than would be possible at the present time in the United States. American manufacturers are able to hold their own in foreign competition so long as our technical knowledge is superior and our shop efficiency greater. The object lesson presented by the Remicourt shops shows what might be further possible for some American manufacturers to accomplish were they able to work on Belgian territory. The Melotte equipment, composed as it is almost exclusively of American machine tools and operated on American lines, gives the Remicourt shops practically all the advantages of an American plant plus the further advantages offered by a lower wage scale." BRIEF OF THE NILES-BEMENT-POND CO. ON MACHINE TOOLS. NEW YORK, February 4, 1913. Hon. OSCAR W. UNDERWOOD, House of Representatives, Washington, D. C. DEAR SIR: Your very kind consideration of the facts I ventured to present to you some months ago bearing upon the machine-tool industry emboldens me to trespass on your time with certain other reflections, which seem to me worthy of some attention in this connection. In determining the question of protection-whether merely incidental or intentional-account must be taken not only of the welfare and standard of living of the wage earner, but also, and distinguished from this, there must be considered the welfare of the country at large. Industries engaged in the production of pure luxuries, articles of personal adornment and the like, might, by the withdrawal of protection, be greatly weakened or even extinguished, the owners impoverished, and the wage earners, until absorbed by other industries, sharply distressed. The country at large, however, would feel but little disturbance. The consumptive demand for such luxuries being easily met by importation, the industries themselves having no vital connection with the unavoidable necessities of the country, the area of disturbance would be localized and confined practically within the bounds of the industry affected. There are, however, certain industries which form the base whereon the other activities of the whole country are built and without which these varied activities can not exist. Any serious disturbance, therefore, of these fundamental industries must necessarily involve not only particular groups of proprietors and wage earners, but the whole country in a distress whose reach and continuance would be in direct proportion to the area of disturbance in these underlying industries, or the indispensableness of the disturbed industry to the proper functioning of the general activities of the country. Industries involved in the working of metals, in all their countless applications, are, perhaps, the most important of these basic activities. It is perfectly possible to imagine a country highly developed industrially while producing no luxuries and importing all of these it might desire. It is unthinkable that such a country should depend, even preponderantly, on foreign production and importation for the satisfaction of its needs in metals and their industrial applications. Such importations of metals in the state of raw material is possible, but domestic production of the greater part of those appliances into which saw metals are converted is a sine qua non not only of prosperity but even of an industrial civilization in every country. Let anyone pass in mental review the various nations of the world, ranking them in the order of their prosperity and modern industrial civilization, and the evidence of the truth of these assertions is overwhelming. PARAGRAPH 197--MACHINE TOOLS. Manifestly, then, changes of the conditions under which the domestic working in metals is carried on in any country can be justified only when assurance is present beyond peradventure that the proposed changes shall not throw these indispensable industries into lasting confusion. If this is true of these industries in general, it is, by far the more, true of the manufacture of machine tools. It is not an exaggeration to say that back of every application of metals in modern civilization stands somewhere a machine tool. Dependence on foreign production and importation for so vital a need would be the grossest folly, a fact which is recognized and evidenced by every nation which has reached even a moderate degree of industrial development. In times of peace such lack of domestic production involves an industrial inefficiency and loss far in excess of the cost which any necessary degree of protection could impose. Whatever burden a tariff on machine tools may involve is so divided and redivided among its products, primary or derived, that it reaches the consumer in almost negligible quantity, and is greatly more than offset by the economic efficiency resulting when-and only when-the maker and the user of the tools can come into close contact with each other, unhindered by distance, foreign tongues, and the diversities of method that show themselves in the practice of different countries. It is scarcely necessary to refer to the very obvious disadvantage of obtaining repair parts when these must be brought from a distance measured by thousands of miles in space and by months in time. In case of war the disadvantages of the lack of domestic production of machine tools in adequate supply must rise to a point nothing short of the disastrous. Without proper machine tools not a firearm, great or small, can be produced, not a ship, a locomotive, an engine of any type, not even a dead freight car can be built or repaired, nor can a machine tool itself be produced or, if damaged or worn, put again in working condition. Neither can adequate domestic production of these indispensable instruments of modern manufacture be quickly provided. In few, if any, industries is time so essential a factor as in the establishing of a machinetool plant capable of turning out a satisfactory or even usable product. When it is remembered that every defect in a machine tool is magnified in its product and that accuracies of one one-thousandth of an inch are not uncommonly necessary in the products of machine tools it can be easily realized that the getting together of carefully studied designs and of a plant and working force capable of embodying these in iron and steel can not be a matter of hasty, happy-go-lucky improvisation. Any action, therefore, on the part of this country which might be fairly suspected even of causing serious disturbance to the domestic production of instruments so essential to modern industrialism as are machine tools should not be taken until it can be clearly shown that such suspicion of ensuing damage was unfounded. This, a fortiori, because there is no difficulty in getting at the facts on which a sound conclusion may be soundly based. There is needed only the avoidance of hasty or impatient decision arrived at as a result of faulty or insufficient information. Believing it to be the desire of those about to inaugurate changes in our present tariff laws that the welfare of the country shall not be endangered by such changes, I venture to urge upon you, and through you upon those by whose hands these changes must be made, that the underlying importance to the country of its machine-tool production be recognized and that there be had very full and patient investigation of the effect upon it of any proposed change in the present tariff before such change is finally determined upon. I have the honor to remain, very respectfully, yours, THOMAS T. GAFF. LETTERS OF THE DEPARTMENT OF COMMERCE AND LABOR REGARDING IMPORTS AND EXPORTS. Mr. DANIEL C. ROPER, DEPARTMENT OF COMMERCE AND LABOR, Ways and Means Committee, House of Representatives, Washington, D. C. DEAR SIR: Referring to your letter asking whether this bureau can supply such a description of the imports and exports during the fiscal year 1912 as will show separately the merchandise properly classified as machine tools, I have to say that the Bureau of |