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House or cabinet furniture wholly or in chief value of wood, wholly or partly finished, and manufactures of wood or bark, or of which wood or bark is the component material of chief value, not specially provided for in this section, thirty-five per centum ad valorem.
For broom handles see Samuel Wesserman under Schedule N, paragraph 323.
BRIEF SUBMITTED ON BEHALF OF IMPORTERS.
DANIEL C. ROPER, ESQ.,
WASHINGTON, D. C., February 18, 1913.
Clerk, Committee on Ways and Means, House of Representatives.
MY DEAR SIR: I hand you herewith a duplicate copy of our brief in behalf of bentwood furniture importers filed with the committee on Saturday last, and trust you will get an opportunity to lay the same before the committee when paragraph 215 of the wood schedule, which carries a rate of 35 per cent ad valorem, is again taken up for consideration.
For your immediate information we would like to say that in 1912 exports of household furniture amounted to $6,281,000, and that the imports for that year were $816,643.39.
The total importation of Austrian bentwood furniture, in which we are specially interested, for 1912 is estimated to be from $250,000 to $300,000.
The output of household furniture of Grand Rapids, Mich., is at least $15,000,000 per annum, while the total domestic production of such furniture throughout the United States is estimated to be about 10 times that sum.
These figures strongly indicate that the domestic furniture business is not an infant industry; that there is great competition; and that very little protection is needed against foreign production.
We desire to call your particular attention to the fact that under the present tariff law no distinction is made in the rate of duty on finished bentwood furniture and the rough, unfinished parts which require labor and material to assemble and put in shape for market. The latter requires the employment of American labor and the use of American material. The tabulation at the end of the brief shows that during the year 1911 $65,988 was paid for rent of factory, materials used to complete articles, and for wages. It would therefore be in the interest of American labor to insert in the new tariff act a separate provision covering these unfinished and unassembled parts on the lines set forth in the brief.
We earnestly request that a paragraph covering this differential between the finished article and the rough, unassembled parts be favorably considered by the committee. Respectfully, yours,
Charles J. Kappler, Charles H. Merillat, counsel.
JOHN GIBLON DUFFY.
BRIEF IN BEHALF OF REDUCTION OF DUTY ON FURNITURE AND PARTS.
The COMMITTEE ON WAYS AND MEANS,
House of Representatives, Washington, D. C.
GENTLEMEN: The undersigned desire to call your attention to paragraph 215 of the tariff act of 1909, and to request an amendment thereof in any new enactment, which is wholly in accord with the declared policies of the majority of your committee, as we trust we can demonstrate to your satisfaction.
Said paragraph 215 now reads: House or cabinet furniture wholly or in chief value of wood, wholly or partly finished, and manufactures of wood or bark, or of which wood or bark is the component material of chief value, not specially provided for in this section, thirty-five per centum ad valorem."
We are addressing you wholly with reference to household furniture, as to which we claim that the rate of 35 per cent is excessive and that a rate of 15 per cent would afford adequate protection to the American industry in this line. The exports of household furniture from this country have steadily increased, as will be shown by
the following figures: 1896, $3,261,209; 1905, $4,439,944; 1910, $5,572,191; 1911, $6,206,391; 1912, $6,281,000.
It is a fact that must be well known to your committee that in the manufacture of furniture this country stands in a very superior position, as is practically demonstrated by these figures when compared with the imports for the same years. We now give you the official figures showing the imports: 1896, $374,302.10; 1905, $748,743.22; 1910, $790,688.71; 1911, $802,562.30; 1912, $816,643.89.
Household furniture may be classed among the most ordinary necessaries of life. The reduction we ask would enable importers of articles of this general character, that for special reasons are more perfectly produced abroad, to increase their importations by carrying more stock and of a wider assortment. We speak particularly with reference to what is known as Austrian bent-wood furniture, the total importation of which in 1912 we estimate at from $250,000 to $300,000. The output of furniture in the city of Grand Rapids, Mich., alone, we are informed, is at least $15,000,000 per year, and we believe that the total domestic production throughout the United States is at least ten times that sum. It can hardly be maintained with any show of reason that an industry of these proportions would be endangered by a substantial reduction of the rate now applicable to its product.
A gauge of the relative positions of the domestic and import trade in our line is afforded by the selling prices of the product generally prevailing. As a rule, the imported bent-wood chair of the most frequent type sells from 25 per cent (in the East) to 40 per cent (in the Middle West) higher than the domestic-made chair. This conclusively demonstrates that the public is being made to pay an unjustly discriminating impost upon our product. ̧
The condition of the import business in our line is such that the yield on our invested capital is much below the normal return on a commercial business. We maintain that on an average our return is but 5 per cent on the invested capital. A business can not long continue upon this basis and, should we get no relief in the new act, it is strongly probable that our imports will steadily diminish with a consequent loss of revenue to the Government, subjecting the consumer at the same time to what is practically a monopoly in our special line, viz, bent-wood furniture.
To show you first just the conditions that have prevailed in our line, we give you the total of importations (foreign market value) of the firm of Thonet Bros., which is the largest importing house in the business, handling about one-third of the total imported product. These figures are as follows:
Imports 1901, $53,078.14; 1905, $78,169.83; 1907, $109,861; 1908, $57,311.31; 1909, $98,779.62; 1910, $113,673.00; 1911, $118,305.48; 1912, $96,307.60.
Among the domestic producers of bent-wood furniture an entirely different condition prevails. We may state here that bent-wood furniture was originated in Austria and for a time patented. The patents have expired and the American manufacturers are quite free to produce it without the payment of royalties or any limitation whatsoever. In this country up to about 10 years ago bent-wood furniture was being put out by a number of factories. Certain large interests acquired control of the several factories and have succeeded in practically consolidating the domestic trade. They may, of course, be operating within the law, but the effect is to establish a monopoly of the domestic production. This is demonstrated by the fact that 10 years ago a typical article of bent-wood furniture, to wit, the ordinary bent-wood chair that is seen in homes, offices, restaurants, and other places, of the commonest type in this line, 10 years ago was sold by these several factories at a price of about $12.50 per dozen. The same chair is offered now by the consolidated interests for $16.50 per dozen. Our chair of this type is selling for $20.50 per dozen. These figures demonstrate conclusively that this domestic industry is operating under an excessive protective rate or they would not have been able to have made this large advance in their selling prices and at the same time stay so much below our figures.
In quality the domestic output compares favorably with the imported article. There is, without doubt, some superiority in the imported article, which is natural enough considering that it was in Austria, as has been stated, that the article itself was invented. This condition is rapidly passing, however. With the normal improvement in manufacturing processes and the growth of skill under a highly increasing business, these domestic factories are closely rivaling us in every detail as to composi tion, construction, finish, and appearance. The ordinary type of bent-wood chair, which we have before referred to, constitutes about 60 per cent of the entire bentwood furniture industry, both imported and domestic. The American factories are to-day producing a chair of this type which people competent to judge consider as
substantially equal to ours in every respect. That is the chair they are marketing at $16.50 per dozen as against our price of $20.50 per dozen. We should state at this time that these figures refer to typical wholesale transactions. There may be instances where special conditions obtain in which these figures are not followed, but we are firmly convinced that the ratio between the price of the imported article and the domestic article would not be significantly altered in such instances.
REASONS FOR THE IMPOSITION OF A LOWER RATE UPON UNFINISHED PARTS OF HOUSE-
The strong competition which the import trade in our line has been confronted with for the last decade has led to the adoption of various expedients that would tend to enable us to lower our selling price. One of these expedients has been to bring over the bent-wood pieces "in the white." "In the white" means merely bent, not stained or polished, or fitted, or assembled. The staining, the polishing, the fitting, and the assembling of these pieces into a finished article of furniture are being done to some extent in this country. Our industry therefore becomes in a large measure a domestic one. These unfinished pieces that we import are a raw material, and we do not see why they should be subjected to the same rate of duty as is applied to a finished article of furniture. In order to show you the force of this contention, we annex hereto, as Schedule A, an itemization of the expenditure of Messrs. Thonet Bros. in their factory at No. 542 West Thirty-sixth Street, New York City, in converting these unfinished pieces into different articles of furniture. If this trade were favored with this very reasonable and proper differential rate, the effect would be to stimulate the doing of this sort of work by importing houses in this country. It involves, as the schedule shows very clearly, a considerable expenditure for American materials and for American labor. In this aspect it is entitled to the consideration of your committee as a domestic industry.
The contention here made is in entire conformity with the accepted tariff policy of this country for many years in the control of whatsoever party its administration rested. That pr nciple was well expressed in Treasury Decisions, volume 12, page 649, at page 651 (T. D. 27792, G. A. 6504), in this language: "The generally accepted theory is that the congressional policy in constructing tariff acts has always been to place upon raw materials lower rates of duty than those fixed for the finished product of manufactured articles. In other words, rates of duty, with practical uniformity, have been increased in proportion to the amount of labor expended on the article imported."
The most casual inspection of the existing and prior tariff acts will indicate the legislative adherence to that principle. For example, under paragraph 463 of the act of August 5, 1909, manufactures of bone, grass, horn, quills, india rubber, palm leaf, straw, weeds, or whalebone are enumerated at the rate of 35 per cent, whereas these substances in the crude condition are provided for as either free of duty or dutiable at lower rates, respectively, under paragraphs 515 (bone), 578 (grass), 589 (horn), 438 (crude feathers of all kinds, which would include quills, 20 per cent), 267 (straw), 630 (weeds, as crude vegetable substance), 710 (whalebone). Similar instances of a distinction being made in the rates of duty applicable to advanced and unadvanced products could be cited without number. Our contention is for the application of this accepted principle to what is the raw product of our industry, namely, the unfinished pieces of bent wood, which we use as stock in making bent-wood furniture in this country. We therefore submit to your honorable body the language which we concieve would meet this end, and in order to bring out our point more plainly we have placed in parallel the corresponding provision as at present written. Your committee will observe that we have separated the general provision for manufactures of wood from the household-furniture paragraph. The object of this is to obtain greater clarity in the enactment for which we are contending.
The old paragraph and our suggested modification are subjoined.
BRIEF OF ANDREW DUTTON CO., BOSTON, MASS.
Hon. JOHN W. WEEKS, Washington, D. C.
BOSTON, MASS., February 4, 1913.
DEAR SIR: Referring to our previous letter regarding the customs duties charged by the Government on containers, we would respectfully request that they give it their attention; and if possible reduce the present rate, which is the same as the goods which are in the containers. In our own case, we receive a great many goods from Europe upon which we pay from 40 to 60 per cent and the cases that these goods come in are charged from 40 to 60 per cent duties when the cases really consist of cheap lumber for which we have to pay.
We understand that in years past, when the duties were not charged at this rate, that the privilege was abused, but we hope that some way can be arranged by which honest importers may not be charged for the shortcomings of crooked people. We thank you in advance for filing this request with the proper authorities.
This concludes the hearings on Schedule D.
ANDREW DUTTON CO.