SCHEDULE N. SUNDRIES. COMMITTEE ON WAYS AND MEANS, The committee met at 10 o'clock a. m., Hon. Oscar W. Underwood in the chair. Present with the chairman: Messrs. Harrison, Kitchin, James, Rainey, Dixon, Hull, Hammond, Peters, Palmer, Payne, Hill, Fordney, and Longworth. The CHAIRMAN. The committee will come to order. PARAGRAPH 421. Beads and spangles of all kinds, including imitation pearl beads, not threaded or strung, or strung loosely on thread for facility in transportation only, thirty-five per centum ad valorem; fabrics, nets or nettings, laces, embroideries, galloons, wearing apparel, ornaments, trimmings, curtains, fringes, and other articles not specially provided for in this section, composed wholly or in chief value of beads or spangles made of glass or paste, gelatin, metal, or other material, but not in part of wool, sixty per centum ad valorem: Provided, That no article composed wholly or in chief value of beads or spangles made of glass, paste, gelatin, metal, or other material shall pay duty at a less rate than is imposed in any paragraph of this section upon such articles without such beads or spangles. BEADS AND SPANGLES. BRIEF OF JULIUS LOEWENTHAL & CO., ON BEHALF OF IMPORTERS OF DRESS TRIMMINGS. [In re change in phraseology of paragraph 421 of the tariff act of 1909.] Hon. OSCAR W. UNDERWOOD, NEW YORK, February 10, 1913. House of Representatives, Washington, D. C. DEAR SIR: The object of this brief is to call the attention of your committee to the provisions in paragraph 421, Schedule N, of the tariff act of 1909, which relate to goods we are interested in. The first provision, covering trimmings and similar articles made wholly or chiefly of beads and spangles, reads as follows: "Fabrics, nets or nettings, laces, embroideries, galloons, wearing apparel, ornaments, trimmings, curtains, fringes, and other articles not specially provided for in this section, composed wholly or in chief value of beads or spangles made of glass or paste, gelatin, metal, or other material, but not in part of wool, 60 per cent ad vaforem." We have no suggestions to make as to the phraseology or rate in the passage just quoted, other than to express the hope that the duty of 60 per cent ad valorem may be reduced to such an extent as may appear wise to your committee in keeping with your general program of tariff reduction, as well as with the reductions on trimmings which you may decide upon under paragraphs 179, 349, 383, 402, 405. The provision in paragraph 421 in which we are chiefly concerned is the proviso following the words just quoted, which reads as follows: PARAGRAPH 421-BEADS AND SPANGLES. "Provided, That no article composed wholly or in chief value of beads or spangles made of glass, paste, gelatin, metal, or other material shall pay duty at a less rate than is imposed in any paragraph of this section upon such articles without such beads or spangles." We have already had occasion to call your attention to the confusion created by the proviso, in our briefs dealing with paragraph 179 of Schedule C and paragraph 405 of Schedule L, respectively, and shall summarize here the difficulties it has created in the administration of the law. Paragraph 179 provides that trimmings and similar articles "made wholly of or in chief value of tinsel wire, lame or lahn, bullions, or metal threads" shall pay a duty of 15 cents per pound and 60 per cent ad valorem. Paragraph 405 provides that the same articles if made "wholly or in chief value of yarns, threads, filaments, or fibers of artificial or imitation silk or of artificial or imitation horsehair," shall pay a duty of 45 cents per pound and 60 per cent ad valorem. Although the law thus very clearly provides that only articles composed wholly or in chief value of the materials enumerated shall pay the compound duties provided in the respective paragraphs just quoted, the collector of customs at the port of New York, through which most of these goods coming into this country are imported, has ruled that under the proviso of paragraph 421 trimmings made of chief value of beads are nevertheless dutiable at the compound rates of paragraph 179 or paragraph 405 if they contain a single thread of tinsel or artificial silk. As we have shown by samples attached to our briefs on paragraph 179 (Schedule C) and paragraph 405 (Schedule L), this has resulted in the imposition of a duty of 45 cents per pound not on the weight of artificial silk, for which the specific duty is supposed to compensate the domestic manufacturer, but almost entirely on glass beads, which constituted 97 per cent of the weight of the sample submitted. This is clearly against the intent of the framers of the law. If it had been their intention to levy the compound rates of 15 cents per pound and 60 per cent ad valorem, and 45 cents and 60 per cent ad valorem, respectively, irrespective of whether those materials constituted the chief value of the articles or not, paragraphs 179 and 405 would have been worded accordingly. This is exactly what the law does in the case of trimmings containing wool, when it provides in paragraph 383 for a compound rate of 50 cents per pound and 60 per cent ad valorem on trimmings and similar goods "made of wool or of which wool is a component material." Having worded, however, paragraphs 179 and 405 so as to apply to goods made "wholly or in chief value" of the materials referred to, it could not have meant that the proviso of paragraph 421 shall be taken to completely reverse that meaning. CONTRADICTING DECISIONS UNDER THE PROVISO OF PARAGRAPH 421. How confusing the language of the proviso of paragraph 421 is is best attested by the fact that no two bodies of customs officials have been able to agree upon an interpretation of the same. Thus in the case of United States v. Ewing & Clancey the collector's ruling was completely reversed by the Board of General Appraisers, which sustained the contention of the importers (G. A. 7303, T. D. 32045). But when the Government appealed from the decision of the board to the United States Court of Customs Appeals the latter rendered a decision reversing both the judgment of the Board of General Appraisers and the ruling of the collector, and taking a middle ground, the reasons for which will be found by your committee, if you care to pursue the subject further, in the decision of the court rendered May 8, 1912. (U. S. v. Ewing & Clancey, No. 829, T. D. 32624.) PROPOSED AMENDMENT OF PARAGRAPH 421. But no matter which interpretation of the proviso may be considered right, the fact remains that a provision of law which lends itself to three different interpretations by three bodies of experienced customs officials, including two judicial bodies which devote themselves exclusively to the study and interpretation of our customs laws, manifestly needs modification, so as to clearly mean but one thing. We respectfully suggest that the best way of mending the confusing proviso of paragraph 421 is by ending it. While the suggestion may seem radical it offers the only way out of the legal muddle created by that proviso. There is not a single point it can legitimately cover that is not already amply covered by other paragraphs in the law. Every material of which trimmings and similar articles are made is provided for in paragraphs 179 (tinsel wire), 349 (cotton and other vegetable fibers), 382 (wool), 402 (silk), 405 (artificial silk and artificial horsehair), and 421 (beads or spangles of glass, paste, or metal). PARAGRAPH 422-STRAW HATS, ETC. In each of these paragraphs the law clearly provides whether the duty is to be applied according to the component material of chief value or irrespective of the value thereof. Under these conditions to retain the proviso in paragraph 421 is equivalent to giving the collectors a mandate to administer the provisions in the paragraphs enumerated in a sense the very opposite to that in which they are clearly worded. We therefore respectfully suggest the wisdom of the following amendment: Paragraph 421. Amend paragraph 421 by striking out the proviso at the end of that paragraph, which reads as follows: "Provided, That no article composed wholly or in chief value of beads or spangles made of glass, paste, gelatin, metal, or other material shall pay duty at a less rate than is imposed in any paragraph of this section upon such articles without such beads or spangles." Respectfully, JULIUS LOEWENTHAL & Co. Also represent C. Willenborg & Co., Kern Loewi & Mendel, Ewing & Clancey, L. Maul & Co., Seurdheimer Bros., Royal Embroidery Works, S. Katz & Co., B. Blumenthal & Co., Case & Co., Mills & Gibb, Max Mandel, G. Hirsch & Son. PARAGRAPH 422. Braids, plaits, laces, and willow sheets or squares, composed wholly or in chief value of straw, chip, grass, palm leaf, willow, osier, rattan, real horsehair, cuba bark, or manila hemp, suitable for making or ornamenting hats, bonnets, or hoods, not bleached, dyed, colored, or stained, fifteen per centum ad valorem; if bleached, dyed, colored, or stained, twenty per centum ad valorem; hats, bonnets, and hoods composed wholly or in chief value of straw, chip, grass, palm leaf, willow, osier, rattan, cuba bark, or manila hemp, whether wholly or partly manufactured, but not trimmed, thirty-five per centum ad valorem; if trimmed, fifty per centum ad valorem. But the terms "grass" and "straw" shall be understood to mean these substances in their natural form and structure, and not the separated fiber thereof. STRAW HATS, ETC. TESTIMONY OF MILTON DAMMANN, ATTORNEY AT NEW YORK CITY. LAW, Mr. DAMMANN. Mr. Chairman and gentlemen of the committee, I wish to speak in reference to paragraph 422, in behalf of the Straw Goods Association, comprised very largely of manufacturers of men's straw hats. I appear in the place of Mr. Vanderhoef, the president of the association, who was here yesterday, but was taken sick with laryngitis. I am going to tell you a little bit about it. I do not know as much as he does. I may be a little bit deficient in facts, but that is going to make me a little bit shorter, perhaps, than Mr. Vanderhoef would have been, but as it is growing late I do not imagine that will be a particularly discouraging bit of information to you gentlemen. The particular point that we wish to attract this committee's attention to is to clear up and iron out some of the inconsistencies in the working out of the paragraph that have developed within the last three or four years. The tendency of the suggestion we make is one which will increase the revenue of the Government and also is toward downward revision. If you will observe the paragraph you will find it is divided into three parts: First, braids which go into the manufacture of hats; second, hat bodies not trimmed; and third, trimmed hat bodies. The class of braids which are enumerated in that particular paragraph are all braids which are not manufactured in the United PARAGRAPH 422-STRAW HATS, ETC. States. There is not a single inch of braid mentioned in that large group of braids which is made here. The first suggestion which we make in regard to braids is that braid which is composed of ramie, a vegetable fiber made from Chinese grass, and which is manufactured for the trade in Switzerland, and which has come into existence during the last three or four years, and is only used for the making of hats, be placed in the other group of hat braids in that particular paragraph. It now comes in under the paragraph 349 of vegetable fibers at 50 per cent. None of it is made here, and we suggest that it be put in the other group of braids. Mr. HARRISON. You are not advocating putting ramie at a lower rate of duty than it now carries? Mr. DAMMANN. Yes, substantially; for this particular reason. No great quantity of ramie comes in. Mr. HARRISON. I understand that very little of it comes in now, and it bears a duty of 50 per cent. Suppose we put it down at a lower rate of duty, could not the hat manufacturers of the United States make their own braids? Mr. DAMMANN. They could not manufacture those braids here at all. Mr. HARRISON. They manufacture them in Switzerland. Mr. DAMMANN. They do. The industry has never been developed here. Perhaps if ramie grass came in here the industry could be fostered, but up to this point there are none of the braids of that character or of any other character mentioned in that paragraph which are made here. We have illustrations here for the benefit of the committee of any number of classes of braids, many of which are more expensive in price than the ramie braid, which come in at 15 per cent. Here is a chip braid, which you will see appears from a distance to be about the same. This braid is made from chips from a particular tree largely grown in Cuba, and some oriental countries. These different braids go into women's hats, and if the ramie braid is brought in under that same rate the women can get a much better hat. It is not of any particular importance to us, because if we pay more for the braid we have got to add it to our cost. We think that a reduction of the duty on this braid would allow more of it to come in and then it will be a revenue producer. Mr. PALMER. You want to put all the hat braids under one group? Mr. DAMMANN. Yes, sir. Mr. PALMER. And under the same rate? Mr. DAMMANN. Yes, sir. Mr. PALMER. And you are willing to have that rate left as it is now? Mr. DAMMANN. Yes, sir. Mr. PALMER. Although none is produced in this country? Mr. DAMMANN. No, sir; there is none produced here. Mr. PALMER. It is absolutely a revenue rate? Mr. DAMMANN. Purely a revenue rate. Under the braid paragraph last year the importations amounted to something like $5,000,000, which paid a little over $800,000 in revenue to the Government. Mr. RAINEY. How low do you want to make them? Mr. DAMMANN. Just the same as the other braids in the paragraph15 per cent. PARAGRAPH 422-STRAW HATS, ETC. We Mr. RAINEY. How much revenue do you think we would get? Mr. DAMMANN. The whole paragraph is now 15 per cent. simply want that included in the same group because we think that is where it belongs. Mr. HAMMOND. Is ramie braid now under a separate paragraph? Mr. DAMMANN. No; it is not specially provided for. It comes in under paragraph 349 by virtue of similitude. The second suggestion we make is one with regard to real horsehair hats. Paragraph 409 of the act of 1897 did not include braids composed of real horsehair, cuba bark, or manila hemp. Those braids were not in existence at the time of the passage of the Dingley law. They were added to this paragraph and have been coming in under the 15 per cent rate. At the same time the cuba bark, manila hemp, and real horsehair were added to the braid paragraph, Cuba bark and manila hemp were added to the body-hat paragraph and carried a duty of 35 per cent; but for some unaccountable reason, probably an oversight, real horsehair hats were not included in that second section of the act. From that time on real horsehair hats have been subjected to considerable litigation in the courts, and finally the customs court of appeals held that they should not fall under paragraph 422 as hats, but applied them as being more closely comparable to articles composed of artificial horsehair, reversing the board of appraisers and sustaining the collector; so that real horsehair hats, the few that do come in here, are classified as being comparable with artificial horsehair articles and pay a duty of 60 per cent plus 45 cents a pound, which amounts to between 85 and 100 per cent. We think that real horsehair hats should be included in the same paragraph as braids composed of real horsehair, and that the same grouping of braids suitable for making hats and hats composed of horsehair braids should be followed. The next suggestion we make is one affecting body hats. The straw-hat industry is divided into two classes of hats, one known as woven body hats and the second known as sewed braid hats. Woven hats are hats such as I now put upon the table. They are composed of grass and are woven in the countries which produce the grass. Not a single woven hat up to this time has ever been made in the United States. They are made largely by oriental labor in the fields and are gathered by the men, who go out and pick them up and send them to the large cities in the oriental countries, and they are transported here. These hats now pay a duty of 35 per cent ad valorem. We take these hats when we get them here and bleach them and block them and trim them for the home market. Under the wording of that paragraph every single hat that now appears on this table pays 35 per cent duty. The hat in the natural state, just as it comes from the field, and that same hat bleached and blocked pays 35 per cont. This same hat body, although of thin texture and dyed and colored [exhibiting hat], pays the same duty. These hats range in prices. The common harvest hat, commonly used by the farmer, comes over here at a cost of between 25 and 35 cents a dozen and is sold throughout the stores at 5 cents apiece. Our suggestion is that a slight differential should be made to distinguish between these hats as they progress in manufacture. At the |