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Mr. MCMILLIN. I believe it is the history of cotton manufacture that the coarse goods go as an advance guard of the other?
Mr. SANFORD. We recognize the South as a competitor of ours perhaps for the finer fabrics at some day, but it will take time to get there. We have been a great many years getting to where we are.
Mr. MCMILLIN. It takes very expensive machinery?
Mr. SANFORD. Yes, very expensive machinery, and very skilled labor, and your people, that is the Southern people, have to get that experience the same way we have, and it takes time to get it.
COMMITTEE ON WAYS AND MEANS:
WESTBROOK, ME., December 24, 1896.
Allow me to call your attention to what appears to me a great detriment in the Wilson bill to the yarn manufacturers. The Yarn Spinners' Association was never satisfied with the present Wilson-Gorman cotton-yarn schedule. It was the best they could get after much hard work. They took the same under protest, and promptly, through their president, filed a protest with Senator Aldrich, of Rhode Island. The following clauses, “On yarns valued at 25 cents per pound or under, duty can not exceed 8 cents per pound," and "on yarns valued at over 25 cents per pound and not exceeding 40 cents per pound, duty can not exceed 15 cents per pound," and "on yarns valued at more than 40 cents per pound, duty is 45 per cent ad valorem,' have led to a great deal of undervaluation. They have proved quite a temptation and stumbling-block to the importers and have led them to put a low value on yarns. The large mills in Fall River and New Bedford on this account have been driven largely from the fine numbers above No. 60, and have made coarse yarns, producing nearly double the amount of coarse yarn they could produce of fine yarn. This increase of pounds by the fine mills has ruined the business for coarse mills like mine, and I hope the three clauses referred to may be stricken out of the Wilson bill. trust also that the manufacturers of knit goods will be well protected, for if they are and run it will make a large demand for yarn.
W. K. DANA, Treasurer Dana Warp Mills.
COMMITTEE ON WAYS AND MEANS:
NEW YORK, January 8, 1897.
We inclose herewith our views of what the schedule on spool cotton and kindred articles should be in the proposed tariff. A large majority (in point of business done) of the spool-cotton trade of the United States has joined us in signing this statement.
Spool thread of cotton, crochet thread of cotton, darning thread of cotton, marking thread of cotton, and embroidery thread of cotton, whether on spools, balls, cards, bobbins, tubes or cones, not exceeding one hundred yards of thread, six cents per dozen; exceeding one hundred yards on each spool, ball, card, bobbin, tube or cone, for every additional one hundred yards of thread, or fractional part thereof in excess of one hundred yards, six cents per dozen.
In regard to the duties on cotton yarns, the matter of a revision of the present ad valorem tariff to specific rates has been thoroughly and carefully considered by the cotton-yarn spinners, and the moderate and scientifically constructed schedule, which will be presented to your honorable committee by the cotton-yarn spinners, has our unanimous approval and cordial indorsement.
The Coats Thread Co., Theodore Frelinghuysen, Treasurer;
TUESDAY, December 29, 1896.
STATEMENT OF MR. S. B. CHASE, OF FALL RIVER, MASS.
Mr. CHASE said:
Mr. Chairman and gentlemen of the committee, I wish to say that I have prepared a short statement here similar, I presume, to the one Mr. Sanford has offered, understanding that the committee's time is limited and they do not wish to hear long-drawn-out arguments. I will just say, however, the cotton-cloth people are not asking for any increased duties. We realize, so far as the doctrine of protection is concerned, we are not what we would consider sufficiently protected on the fine end of our business, but we think the schedule as arranged under the last tariff was in the right direction, as far as making a new classification and making a designation for what we call coarse and fine yarns; and while it does not quite protect us in the fine yarns, we do not ask for any increase. We do ask, however, for two or three amendments which bring in certain classes under specific duties already existing, taking them out of the ad valorem category, as we are fully persuaded that abuses have crept in under that system and goods are brought in as they should not be under the law. I am quite willing to read what we ask for, if the committee desire, or hand it in in writing.
Mr. PAYNE. Is it your desire to strike out that proviso at the end of the clause?
Mr. CHASE. We ask for one additional paragraph or section, or whatever it may be called, in the bill, making a further classification in the fine counts. Under the present law the counts are scheduled up to 200 threads to the square inch, and the last schedule provides for all goods exceeding 200 threads. We ask a further classification in that clause, and we should ask that exceeding 200 but not exceeding 300 threads be made at the same rate of duty as now exists in that clause, and then we ask for a further section defining the goods from 300 threads to the square inch and upward, with corresponding duties of what they are in other schedules. That is all we ask in that direction. Then we ask that goods known as lapit weaves (a new product in this country—a figure weave of that kind where the plain cloth has a woven pattern or design in its surface or embroidery) shall be subject to specific duties, and we ask for 50 per cent additional to the present specific duties on plain cloths for this embroidery or figure weave that is put on the cloth. The lapits are put on the cloth in the process of weaving. A loom has been invented where needles do this work, which is a step in advance of any former process of weaving, so far as this country is concerned. It has been done abroad to a certain extent, and machines have been recently brought out in this country, and we are making a weave of cloth with a great variety of patterns in that way. It adds about double the value to the fabric and therefore should be entitled to a higher rate than the present specific duty, otherwise there will be no protection whatever in the tariff law. We should like that provided for, and have asked that in our paper; that is, we have drawn a paragraph to guide the committee as to what we would like to have, and assume that they will give it due consideration.
Another item which we feel should be corrected is what we consider a clear evasion of the law now on the part of the handkerchief manufacturers. There may be some handkerchief men here and I may be treading on their toes, but we have from very good authority that cloths or fine goods have been brought in from the other side stamped or marked off in simple lines of color or simple crossbars. The color will wash out, it is fugitive, and these are brought in as printed cotton handkerchiefs under an ad valorem duty which applies to cotton handkerchiefs. Now, they are immediately sent to the bleacheries and the material is washed and they can be used for any purpose whatever, handkerchiefs or otherwise, and of course it opens the door for a rank undervaluation, and large importations which have been made of piece cotton goods in the last two years have been largely, I have been told, of that character, where it has appeared an evasion of what we consider was, at any rate, the intent of the present law.
The CHAIRMAN. And a fraud on the revenue?
Mr. CHASE. Yes, sir; of course. These are the things we ask for. It is not very much, but the one we lay special emphasis on is the last one I mentioned.
Mr. MCMILLIN. Have you the section of the law to which your amendment would apply so we could find it here?
Mr. CHASE. Yes, sir; I could tell you. I have it right here in my pocket. We wish an amendment of paragraph 256 of Schedule I, where it says "exceeding 200 threads." We ask to have that to read, somewhat as follows: "Exceeding 200 threads but not exceeding 300 threads."
The CHAIRMAN. You propose to introduce a new classification?
Mr. CHASE. Yes, sir; then we ask to have that followed by a further paragraph which takes up above 300 threads with a duty which will correspond according to the value of the goods that is already existing in this and other sections.
Mr. MCMILLIN. The present rate of duty on that is 35 per cent ad valorem?
Mr. CHASE. Yes, sir; we have not called attention to that. That is an obvious error, that 35 per cent. If you notice, the goods of lower value in the preceding section are assessed under the present law at 40 per cent.
Mr. MCMILLIN. They are assessed specifically?
Mr. CHASE. No; as far as the ad valorem feature goes it only applies to
Mr. MCMILLIN. Here is one on the preceding page, and I see there are three at 45 per cent?
Mr. CHASE. If you will look over the whole schedule there you will find in the lower counts, what we call the cheaper class of goods, the ad valorem begins with 25 per cent, and it is built up from 25, 35, and 40, if my memory serves me correct, without looking back here. Now, next to the last section, which represents a lower quality of goods than the last section does, it is assessed at 40 per cent, while paragraph 256, representing a higher class of fabrics, is assessed at 35 per cent, which is an obvious error. I may say I am perhaps sure of my ground in this case because I was present here in Washington when this bill was drawn and saw it all through the different stages, and I know the intent was meant to be 40 per cent in these last two paragraphs, and it is obvious to the mind of any man who investigates it that it would be absurd to assess a lower section 40 per cent and a higher one 35 per cent. The tariff is supposed to work in a contrary direction.
Mr. MCMILLIN. I understand by means of this new invention or new method of weaving there is added double value to the cloth? Mr. CHASE. I say it frequently does that. It may be 25, 50, 100, or even 150 per cent.
Mr. MCMILLIN. The ad valorem feature would catch that additional value?
Mr. CHASE. No, sir; I do not think the ad valorem catches anything in the custom-house.
Mr. McMILLIN. It catches "Hail Columbia" sometimes.
Mr. CHASE. It will catch something, but it will not catch what it ought to.
Mr. MCMILLIN. In that grade of goods which we are discussing, now, suppose you were to buy $100,000 worth of cotton and go and put it into a finished form, what would it cost to put it into the finished form, according to your experience?
Mr. CHASE. It depends somewhat upon the fabric. In the mills which I personally represent the raw material varies from, well, say 60 per cent of the cost of the fabric to 20 per cent. We make fabric of raw material of which the raw material will not be over 20 per cent, and the other 80 per cent would be made up mostly of labor, taxation, and other minor items of material and labor. It depends altogether upon the fineness of the fabric, and the finer you go the less the raw material costs. They are light weaves with a great deal of labor on it and that is the principle involved in this very bill adopted last session, to assess the cost of the higher counts of fine yarns more tariff than you put on the coarse yarns.
Mr. MCMILLIN. Then when you put the raw material that is free into the finished commodity the competing tax or import duty attaches not alone to the labor cost and the tax cost, but also to the material, and you get the benefit of that?
Mr. CHASE. Yes, sir; whatever tax there is applies to the whole fabric. Mr. EVANS. How much imported raw material is there in that cloth fabric of which you speak?
Mr. CHASE. I beg pardon, I did not catch that question?
Mr. EVANS. How much imported raw material is there in this fabric, in this product?
Mr. CHASE. Very little.
Mr. MCMILLIN. I see of this grade of goods we have mentioned there was imported in the year 1896 only $174,000, which shows a falling off from 1895 of $8,000?
Mr. CHASE. I do not know what class of goods that refers to.
Mr. MCMILLIN. The class we have just mentioned, exceeding 200 threads to the square inch?
Mr. CHASE. One thing must be borne in mind by the committee in regard to 1896, that the imports of everything coming into this country has shown a great falling off from the fact that the consumption of the people has been very light. It has been very hard times and not only have the imports fallen off, but the domestic manufactures have fallen off tremendously.
Mr. MCMILLIN. There is a very considerable falling off in most of these?
Mr. CHASE. In 1895, however, there was a large increase in imports of dry goods, an overwhelming increase, in fact.
Mr. MCMILLIN. If the present tariff rates on these things are too low, how is it you account for the falling off; do you account for that falling off by decreased consumption?
Mr. CHASE. There was a large increase in 1895, you will find, in general dry goods, but I can not say under what section, as I have not investigated that question to that extent. As a rule the imports of cottons and all kinds of textile fabrics was immense in 1895. It was very large, and necessarily the imports had to drop in 1896 because there was an oversupply brought in, and the domestic manufacturers suffered.
Mr. MCMILLIN. You say you were present when the schedule was framed?
Mr. CHASE. Yes, sir.
Mr. MCMILLIN. Was it satisfactory to you?
Mr. CHASE. No, sir; it was not satisfactory, but it was the best we could get.
or a mistake?
Mr. MCMILLIN. But there was a slip up in this section, Mr. CHASE. This 35 per cent is evidently an error. I think that is obvious to anyone, and I do not think that needs any argument. We saw it after the law was printed, but it was too late to rectify it.
Mr. WHEELER. You stated an ad valorem duty on this character of cloths did not operate effectively in the custom-house, I think?
Mr. CHASE. Where we ask for the application of a specific system instead of an ad valorem?
Mr. WHEELER. What I want to ask was this: We see a great many of these schedules are specific duties, and where a specific duty is laid down the equivalent ad valorem does not average more than 35 or 40 per cent.
Mr. CHASE. Exactly.
Mr. WHEELER. Why does that specific duty operate better than the ad valorem duty?
Mr. CHASE. Why, for the reason that we know that is the fact, and while nobody can ascertain it, we suppose it is because the goods coming in under the ad valorem system are undervalued. The percentage is calculated all right, but it is a percentage on a low price. For instance, goods are worth 10 cents a yard in England and the invoice is 6 cents, and they pay a duty of 40 per cent a yard, and there you only pay a duty of 2.4 cents. It is obvious how it works, and we know a great many foreign houses have their branches in this country and the goods are consigned to these branches and the price is made here directly on the sale of the goods. There is no method by which competing manufacturers can go into that custom-house and ferret out these things. We have to trust to the Government, but we know in certain cases it is done. Of course, you all know occasionally, once in a while, a man is pulled up and fined for it and the fine collected.
Mr. WHEELER. I want to get some information on this point. The South is intensely interested in trying to manufacture cotton goods, and it produces more than three-fourths of the cotton of the world, and we recognize that to increase the manufacture is the great object we have in view, and what the South wants is to prevent if possible any change in the tariff which will militate against their foreign market. Mr. CHASE. I do not blame them for that.
Mr. WHEELER. Can you suggest anything as to how the tariff will affect that question?
Mr. CHASE. I do not see that this tariff affects that in any way. The export business of the South has largely increased with China, and it is in goods of which in fact almost all the cost you may say is in the raw material. The labor does not cut any figure, and when it comes to the percentage they are able to compete to a certain extent