PARAGRAPH 18-CHALK. this business under the present tariff, and it appears to us the limit of possibilities in that direction is reached. We will be pleased to inform you in detail any information we possess in relation to this industry, believing that careful investigation by your committee will verify these statements and convince you that the industry is not deriving undue profit from the present rate of one-fourth of 1 cent per pound duty, that the present rate barely protects the common laborer in this industry in a modest wage, and that any reduction of the present duty is certain to seriously disturb and, if the rate proposed is maintained in the new tariff, probably abolish the manufacture of whiting and Paris white in this country. In this connection it is only fair to state that the investments in mills and machinery, because of their nature, would become practically worthless, seriously crippling the various owners. We therefore protest, and earnestly request that in your proposed bill these articles be placed at not less than that now imposed, and further ask the benefit of your wide influence to give us this measure of justice. I present this not only in my own behalf, but have been requested to do so by the legislative committee of the whiting manufacturers, all of whom have indorsed this, and I would be pleased to present it as the brief of the whiting manufacturers, to be substituted for any brief that any individual member may have filed with your committee, because it embraces substantially all the facts contained in the various briefs that have been submitted. I am also pleased to file with your committee, for reference, a couple of photographs that may be of some interest in determining the competition we are against as regards simply the process of manufacturing. BRIEF OF THE CRESCENT BURNER MANUFACTURING CO., NEW YORK, N. Y. Hon. OSCAR W. UNDERWOOD, NEW YORK, January 27, 1913. Chairman Ways and Means Committee, House of Representatives, Washington, D. C. DEAR SIR: We take the liberty of submitting to you herewith specimen of a raw material which is extensively imported into this country for the purpose of manufacturing gas burners and insulators. This material is now taxed, in the condition in which we submit it to you, at 1 cent per pound, the same as talcum powder. We would ask to have this material, which classifies either as "cut steatite" or "German lava," on the free list, as it can not be used in this condition for any other purposes than to manufacture other articles, and in order to reduce it by crushing to powder American labor would have to be added, which amounts to more than 1 cent per pound. We have established a considerable industry with this material, and not only sell these goods all over the United States but also in foreign countries, where we have to compete with the market of Germany, which is also the country of origin of this raw material. PARAGRAPH 15-COAL-TAR DYES. The case would be covered by a paragraph in Schedule B, which would read: "Steatite, German lava, or soapstone, cut either in squares or in trapeze form, free." Very respectfully, PARAGRAPH 14. CRESCENT BURNER MANUFACTURING CO. Chloroform, ten cents per pound. For chloroform, see also Mallinckrodt Chemical Works et al., page 48. PARAGRAPH 15. Coal-tar dyes or colors, not specially provided for in this section, thirty per centum ad valorem; all other products or preparations of coal tar, not colors or dyes and not medicinal, not specially provided for in this section, twenty per centum ad valorem. For other coal-tar products, etc., see also Mallinckrodt Chemical Works et al., page 48; for coal-tar dyes or colors n. s. p. f., see also John F. Queeny, page 81; E. C. Klipstein, page 231; Verona Chemical Co., page 71; and General Chemical Co., page 40. COAL-TAR DYES. STATEMENT OF J. F. SCHOELLKOPF ON BEHALF OF THE SCHOELLKOPF, HARTFORD & HANNA CO., BUFFALO, N. Y. Mr. SCHOELLKOPF. We respectfully request that no change be made in the rates on coal-tar dyes and allied products, covered by paragraphs 15, 482, 491, 536, 593, and 639, until a careful and expert investigation of the whole chemical schedule has been made by a committee or commission appointed for that purpose. We are members of the Manufacturing Chemists' Association of the United States (with the exception of Central Dyestuff & Chemical Co.) and we thoroughly agree with the position taken by that association as outlined in the letter of October 31, 1912, addressed to you by the chairman of the executive committee, Mr. Henry Howard. We maintain that the coal-tar color industry has never had adequate protection since the tariff act of 1883, and the most conclusive proof of this is that the large German manufacturers have consistently refused to establish plants in the United States, while they have not hesitated to build branch factories in Russia, France, and England, in all of which countries the consumption of these dyes is smaller than here in America. A further convincing proof that this industry has not received proper encouragement is the fact that since its establishment over 30 years ago it at no time supplied over 20 per cent of the domestic consumption, and at the present time more than 80 per cent of the coaltar dyes used in the United States are imported, principally from Germany. The principal reasons for the nondevelopment of the coal-tar industry in the United States are: (1) Patent law.-Up to 1880 the industry was in its infancy everywhere, even in Germany. About that time the first important German patents were taken out. Under our patent laws then, which remain unchanged to this day, the foreign owners of patents were not compelled to manufacture in the United States. The American PARAGRAPH 15-COAL-TAR DYES. manufacturers were therefore restricted to a few colors, such as magentas, rosanilinblues, eosines, chrysoidines, bismarckbrowns, etc. (2) Duty on raw materials. Since 1883 the domestic color manufacturers were necessarily confined to using coal-tar products which were on the free list and could be obtained in this country on a competitive basis, such as aniline oil and salts, benzole, nitrobenzol, arseniate of aniline, etc. For this reason the American maker was slow in taking up new lines even when the expiration of the foreign patents permitted him to do so. (3) Insufficient duty on colors.-At no time since 1883, when the specific duty of 50 cents per pound was taken off coal-tar dyes, was the duty on colors high enough to compensate for the difference in cost between America and Europe. This was true even for colors using free raw materials, let alone dyes, the raw materials for which were taxed. (See Table D, annexed hereto.) Immediately following the passage of the tariff act of 1883 more than half of the American coal-tar dye factories shut down permanently, and the few remaining plants have kept up the struggle ever since under the most adverse circumstances. We refer to the Report No. 326, on Schedule A, which report was printed to accompany H. R. 20182. On page 17, paragraph 4 of this report, the following language occurs: Probably the most radical change in the chemical schedule made by H. R. 20182 is that of the classification and change of the duties of coal-tar products. The manufacture of these products is little developed in this country and imports are principally from Germany, where this manufacture is highly developed. The changes alluded to were radical, indeed, for they proposed to reduce the duty on the finished colors and dyes and make the raw materials, which were on the free list, dutiable, thus placing the American manufacturers in a worse position than they ever were in before. Why this industry, already underprotected and in a precarious condition, should be singled out in this manner we do not pretend to understand. If under present conditions it is hardly able to supply 20 per cent of the domestic requirements, one can easily imagine what would happen if these conditions were made infinitely worse by adopting such radical changes as proposed in H. R. 20182. We have annexed hereto the brief submitted to the Ways and Means Committee during the tariff revision of 1909. The statements made in that brief are as true to-day as they were then, and if given the opportunity every statement made therein can be substantiated. WASHINGTON, D. C., March 14, 1912. Hon. BOIES PENROSE, Chairman Senate Committee on Finance. DEAR SIR: The undersigned respectfully wish to protest most emphatically against the amendments to the present tariff law contained in H. R. 20182, paragraphs 21, 23, and 24, for the following reasons: 1. Even with the present duty on coal-tar colors and with coal-tar products coming in free we are barely able to hold our own against our foreign competitors. In fact we can only do so by sacrificing the greater part of our legitimate profits, and if a change is made in the rate for coal-tar dyes it should be increased rather than decreased, as is clearly shown by Tables A, B, C, and D, annexed hereto. 2. If the purpose of making these changes was to increase revenues this object will not be attained, for even if the importers should give the American consumers the benefit of the entire reduction in the duty, the consumption would not be stimulated, PARAGRAPH 15—COAL-TAR DYES. If, as the makers of the bill assume, the value of imported coal-tar dyes would actually increase a million dollars, then as the total consumption of coal-tar dyes in the United States is about seven and one-half millions, of which the American manufacturer produces but one and one-half millions, the result would be to deprive the domestic manufacturers of a million dollars worth of products, which would be equivalent to driving them out of business. 3. The American consumers of coal-tar colors would not be benefited by the reduction in the duty proposed for the reason that the importers would not lower their selling prices in the same ratio. On the contrary, to judge by similar experiences in the past, the foreign makers, after eliminating American competition, would raise their prices, so that the final result would be higher prices to the American user and smaller revenues to the United States Government. 4. It would be an economic blunder to crush out American competition and abandon the market to the mercy of foreign makers. It has been our experience in the past that whenever we came into the market with a new color the price of this particular dye experienced a decided drop, thus benefiting the American consumer. The mere fact that the industry exists in this country has a restraining influence on the importers, tends to keep prices at their proper level, and saves the American consumer from the arbitrary exactions and high prices of the foreign manufacturers. We beg to call special attention to the fact that our raw materials, which are now on the free list and which this bill proposes to tax, can not be manufactured to advantage in this country for the reason that the individual products are used in comparatively small quantities, which would not warrant the investment of the capital required for their manufacture. We speak from experience in this matter, for we ourselves spent a great many thousand dollars in endeavoring to make these products, but we finally had to give up the attempt. We took up the manufacture of these colors in 1880 and within the next three years eight other factories were established for the same purpose. If this industry had not been so handicapped at that time, America would now doubtless be manufacturing its own requirements in these products. But what happened? The tariff act of 1883 abolished the specific duty of 50 cents per pound, leaving an ad valorem duty of 35 per cent on the colors and 20 per cent on the coal-tar products, the raw materials for the colors. The immediate result was that five of the new factories closed their doors, and the remaining four struggled along under adverse conditions, hoping that some future revision would bring them relief. This hope was in vain, however. On the contrary, the ad valorem duty on the colors was further reduced to 30 per cent in 1897 without any corresponding reduction in the duty on raw materials. During the last revision for the first time in 30 years Congress evinced a disposition to meet us in a fair spirit by adding to the free list these additional raw materials: Naphtylaminsulfoacids and their sodium or potassium salts. Diamidostilbendisulfoacid. Metanilic acid. Binitrochlorbenzol. This enabled us to increase our range of colors considerably but it certainly is rather discouraging that barely two years after these changes were adopted, to practically put us out of business by not only again placing a duty on these products but also at the same time lowering the duty on the finished colors to a point where their manufacture becomes absolutely unremunerative. We wish to state here that we have signified to the Tariff Board our willingness to open our books to them whenever they are ready to investigate the chemical schedule. In closing we would like to draw your attention to that part of the "Glossary on Schedule A" prepared by the Tariff Board, relating to "Special features of the German chemical industry" (p. 224) (H. Rept. 326, 62d Cong., p. 378) which discloses in a rather startling manner the danger to the domestic consumer of the elimination of American competition SCHOELLKOPF, HARTFORD & HANNA CO PARAGRAPH 15-COAL-TAR DYES. Hon. SERENO E. PAYNE, Chairman Ways and Means Committee. BUFFALO, N. Y., November 9, 1908. DEAR SIR: The undersigned respectfully request that at the impending revision of the tariff the minimum duty on coal-tar colors and dyes be increased from 30 per cent to 40 per cent ad valorem, and that all coal-tar products and preparations not colors or dyes used in the manufacture of these dyes be placed on the free list. In submitting this request we do so with the understanding that it is the intention of Congress to adjust import duties, so as to give the domestic manufacturer adequate protection against his foreign rival, or, in other words, the duties imposed shall cover the difference in cost of the article protected when made in America as against the same article when made abroad. In asking for free entry of all coal-tar products and preparations used in the manufacture of coal-tar colors, no American industry will be injured, as these articles are not made in the United States, nor can they be manufactured profitably under existing conditions. In order to prove that our demands as outlined above are not unreasonable, we have prepared the following tables: Table A: Showing cost of a coal-tar dye plant in America and Germany designed for a yearly output of 3,000,000 pounds; also showing the cost for depreciation on buildings and wear and tear on machinery and interest on investment. Table B: Showing number of employees required and their salaries for such a plant in America and Germany. Table C: Showing material required to produce 3,000,000 pounds of color and cost of same under present tariff; also under tariff as proposed by us; also cost of same material in Germany. Table D: Showing comparative cost of 3,000,000 pounds of color when produced in Germany, also cost when produced under present tariff, also cost when produced under tariff as proposed by us. By referring to Table D, it appears that taking the cost of colors in Germany at 100 per cent, the same colors cost to produce in America under the present tariff, 144.1 per cent, and in case all coal-tar preparations should be admitted free, the cost would still be over 134.4 per cent. That our figures are correct is positively proven by two highly significant facts: First. These same colors are now being imported from Germany and sold in this market for less than it costs us to produce them, even omitting charges for depreciation and interest on investment. Second. By the fact that German manufacturers do not manufacture in the United States, because, as people high in authority state openly, they can manufacture the colors in Germany and lay them down in the United States, with duty of 30 per cent and manufacturer's profit added, at a lower price than they could manufacture the same colors in America. By referring again to the same table, it appears that under the proposed tariff the cost of colors would be only 35 per cent higher than the same colors when made in Germany, while we are asking for a duty of 40 per cent. It should be borne in mind, however, that in the first place the American manufacturer, in order to secure the home market, must be in a position to undersell the importer, and in the second place, the foreign manufacturer, when driven to it, will always assume part of the duty himself. The result would be that with a duty of 40 per cent the American manufacturer could not hope to realize more than 30 per cent in excess of what the same goods are sold for in Germany, and probably considerably less. In any event, therefore, even with a 40 per cent duty the American manufacturer would have to content himself with a considerably smaller profit than his German rival. Since the present tariff went into effect American coal-tar dye manufacturers have striven strenuously to capture the home market, and while they have succeeded in increasing very materially their output, they have done so at no profit to themselves. Whenever the domestic production of any one color increased sufficiently to interfere seriously with the sale of the imported product, the foreign manufacturers dropped prices to a point that compelled the American manufacturer to sell at cost or even lower. On the other hand colors not made in America and controlled by the foreign manufacturers, either through patents or combinations, were not only not reduced but in many instances actually increased in price. Eliminate American competition, and prices, even with a reduced duty, will rise and not fall. We refer to such products as alizarines, aniline salt, aniline oil, beta naphthol, etc., which during the past few |