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The number of establishments allied with this industry and more or less dependent upon their success is approximately 4,000. (See appendix.)

Foreign manufacturers are protected in their patent rights in America, while American manufacturers must manufacture abroad in order to retain their foreign patent rights.

The price of labor in America is two and one-half times as much as it is in Europe, and the cost of selling in America is one and onehalf times as much as it is in Europe, while the cost of technical employees is twice as much here as in Europe. We do not at this time enumerate the difference in the cost of material, advertising, rents, insurance, or all overhead charges. (See appendix.)

If the tariff is to be primarily adjusted at the difference between wages paid here and abroad, then the tariff should be 60 per cent instead of 45 per cent. This is not the desire of your petitioners. We seek to have automobiles specified as such in the tariff bill itself, and not governed as now by a tentative ruling of the Treasury Department. While the present duty of 45 per cent may not be a sufficient protection as time goes on and trade conditions change, still the industry itself should by its own strength be able to meet these emergencies. As a matter of fact, the industry is still in such a condition of early growth that final figures can not be made absolute on an exact rate of full protection in the tariff.

In the brief statement filed with you by our committee on November 25, 1908, we stated that strenuous efforts were being made by various manufacturers abroad to introduce their goods in the American market, and that to do so there had been enormous reduction in prices, special export discounts, and, as we believe, undervaluations. The" protective" tariff of 45 per cent ad valorem has been almost wiped out by a reduction of 25 per cent to 30 per cent in the so-called market value" of automobiles abroad and an additional 10 per cent discount to dealers. (For verification, see appendix.)

If your committee will take into consideration the figures quoted in appendix in conjunction with the statements and facts shown in private and confidential Exhibit C, we believe you will find there is some basis for our contention that the import values are not fair, and do not justly express actual market value, and that commercial conditions are making it possible to import into the United States and sell at prices lower than American product.

The fact of overproduction and the alarming commercial conditions prevailing at present in this industry abroad is shown in the reports from the automobile shows in London and Paris in the various foreign trade publications comprising Exhibit G.

Individuals are allowed to import a single machine purchased abroad and to bring it in under section 19, when the law is clearly defined on actual purchases under sections 3 and 4. This alone has made a difference in revenue to the Government of over $200,000, and given to the foreign manufacturer an unfair advantage over the American manufacturer and dealer. (See Exhibit C, RochetSchneider case.)

We call the attention of your committee to a Treasury ruling which permits an examiner of automobiles (custom-house) to place a market value upon machines which may have been used for a period of less than a year abroad, and respectfully suggest that there be some arbi

trary rule adopted, governed either by the length of ownership, number of miles traveled, or actual condition of the vehicle, or a rule which takes in all three of these elements. (For example see private Exhibit C.)

We wish especially to call your attention to the evasions of existing treasury regulations, T. D., 23743, and T. D., 26162, to which the custom officials are constantly subjected by reason of false representation made by importers of cars alleged to be for racing and touring purposes only. Cars are regularly imported under above provisions of the regulations, and, contrary to said regulations, being exposed for show purposes and sale and being sold. Under these regulations an importer is enabled to expose for sale cars imported for alleged racing or touring purposes for a period of three months after importation without the payment of duty thereon. The only penalty provided in the bond given under these regulations is the payment of the duty or the exportation of cars. (See Exhibit C.)

We call your attention to the fact that a 40-horsepower Fiat car made by the Fabrico Italiano Automobilio Torino in Turin, Italy, sold in 1907 at 17,500 francs, less a discount to agents of 20 per cent, and which entered this country at a market value of 14,000 francs, has been reduced in price and is now entered at the port of New York at 8,000 francs net, a reduction of $1,200 in the price of this machine. One hundred and fifty of these 40-horsepower machines have been imported into this country. The machines are consigned to an Italian banker. The close alliance and interest apparently existing between the Fabrico Italiano Automobilio Torino, of Turin, Italy, and the Fiat Automobile Company, of New York, is fairly deducible from the phraseology of a letter from the New York company to the mayor of Detroit, dated December 21, 1908, from which we quote as follows:

We have decided to establish a large factory in this country for the manufacture of our cars, and to remove to it a large portion of our manufacturing machinery as well as our organization from Turin.

We submit complete copy of this letter as Exhibit E.

Referring to the foregoing paragraph we desire to call your attention to the fact that the automobile therein specified is offered for sale in this country at $6,000 with body and equipment, and $5,000 for the chassis alone. Also, that agents receive a discount of 20 per cent from the last price, leaving a net selling price of $4,000, and a margin of profit to the importer of $1,600 less the cost of equipment with mud guards and running boards, which is trifling. It is clear that the importer has this ample margin with which to meet and undersell American competitors with the Italian factory. (See appendix.)

We also call your attention to the fact that the Lancia car, made by Lancia & Co., Turin, Italy, is offered for sale at list price with tires in France, England, and Italy, for $2,000, and after adding 45 per cent duty and 5 per cent import charges is offered for sale in this country, similarly equipped, for $1,800-or in other words for $200 less than its parallel selling price abroad. (See Exhibit C, Lancia case.)

In view of the fact that the aggregate value of imported vehicles between 1906 and 1908 has been reduced almost 50 per cent, and between 1907 and 1908 26 per cent, and the average value per vehicle

for a corresponding period shows a respective reduction of 40 per cent and 30 per cent (see appendix) we urge upon your committee the imperative necessity of such provisions in the interpretation of the words "market value" as will entail the requirement of certain specific rulings under certain conditions without permitting the exercise of discretion by the administrative officers of our ports.

There has been a constant growth in importations, increasing yearly in volume, decreasing yearly in average value. We refer you also to the statistics of imports compiled by the Department of Commerce and Labor.

The retail value of foreign cars sold in America during a period of six years, with additional parts, is approximately $52,677,046. (See appendix.) The value of American cars sold in America for a corresponding period is approximately $250,000,000.

A motor vehicle of any kind can be made in Europe certainly for 60 per cent of the cost thereof in America, including the manufacturer's profit, as shown in the Fiat case, and by the figures on cost of materials and labor.

We particularly point out that Mr. Charles H. Sherrill, representing the importers, and especially the Fiat Company, of Italy and America, stated to your committee that the tariff ought to be reduced to 33 per cent. In other words, such a rate of tariff would be satisfactory to the Italian company as giving it free access to the American market.

It is further of the utmost importance to note that Mr. Sherrill also admitted that the 40-horsepower Fiat chassis, which we referred to in our preliminary brief and which we refer to again in this brief as being imported at a customs value of $1,800, was actually imported at a customs value of $1,600, and he further stated that this sum of $1,600 was the full and total sum which went abroad in full payment of the 40-horsepower chassis referred to.

We direct your attention especially to a complete and detailed refutation of erroneous statements made by Mr. Sherrill in his hearing before your committee, in the attached appendix and exhibits referred to therein.

We wish most urgently to impress upon your committee that with 60 per cent of American cost a tariff of 65 per cent, plus 5 per cent freight and import charges, would still permit a European manufacturer to place his product on the American market at 102 per cent of the American cost-only a margin of protection of 2 per cent. If. however, you assume that average European costs are 65 per cent of American costs (though American workmen are entitled to protection against the cheapest labor and not the average labor), then a tariff of 45 per cent, plus 5 per cent freight and import charges, would put foreign cars on the American market at 973 per cent of the American cost. (See appendix and problems below.)

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In this case 65 per cent duty affords only 2 per cent margin of protection on cost basis without profit.

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In this case 45 per cent duty lacks 24 per cent of protection on cost basis without profit.

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In this case allowing even that European costs are as high as 70 per cent (which we allege is not the fact, however), a 45 per cent tariff rate affords a margin of protection of only 5 per cent without profit.

We will next call attention to the manufacture of commercial vehicles, cabs, etc.

The industry of manufacturing commercial vehicles in America to-day absolutely does not exist to the extent that it may be dignified as an industry, yet it is in process of evolution, though its development will be slow.

There are many reasons for this. The most important are that the commercial vehicles so far manufactured and sold to users have had so large an annual depreciation and cost of operation that people who bought them lost money and are timid about further investments in commercial vehicles.

In the next place, it is natural that commercial vehicles should follow in the wake of the so-called pleasure motor vehicle, because all of the engineering of pleasure vehicles practically applies to commercial vehicles, though the shop equipment of a pleasure vehicle factory is not of the nature to produce the parts of commercial vehicles, many of which are heavier and larger than can be worked on pleasure vehicle machine tools. The pleasure vehicle manufacturer has also been obliged to devote every scrap of his energy, talent, and money in the most strenuous effort to get his pleasure vehicle business onto a paying basis, and in only a few cases has this been accomplished. In the very large percentage of cases they are yet striving toward this end. When this has been accomplished, the natural direction will be toward the production of commercial vehicles, which must go through to a great extent a similar process of evolution at a great expense to the manufacturer before they arrive at the crystallized final marketable product.

It would be unfortunate in the extreme to deprive the commercial vehicle of the protection which will insure its evolution and development in America and open our American markets to the foreign commercial vehicles which are now coming forward in the European markets.

We urgently insist that the same protection be accorded to commercial vehicles as now exists on pleasure vehicles, namely, 45 per

cent duty, and possibly your committee may recommend a higher duty in view of all the facts.

It has been suggested that a commercial vehicle does not need so high a rate of duty to protect it as does the pleasure vehicle on account of the alleged fact that in the commercial vehicle labor is not so large a component part of its cost in proportion to the value of the material purchased as is the case in pleasure vehicles. So far as the crude information goes which we now possess as to the commercial vehicle industry it goes to show that the commercial vehicle made in the highest possible class of workmanship and material, in order that it shall have the longest possible life and least possible annual depreciation or cost of upkeep consistent with the stage of the art, has exactly the same or so nearly the same relation between labor and material that it is not possible to classify it separately and give it a separate tariff from the pleasure vehicle. It should, in our judgment, be in the same tariff scale with other motor vehicles and be allotted a 45 per cent or greater duty, if the greatest value to the American workman is to be obtained by the development of the commercial vehicle industry in America, to say nothing of its importance to the entire transportation and manufacturing interests of the United States.

In connection herewith we wish to call the attention of the committee to the very free imports of taxicabs now going on.

The Packard Motor Car Company is obliged to ask $3,700 for its 3-ton-load capacity truck, and Mr. Henry B. Joy, its president, states that it will take many hundreds of thousands of dollars and many months of time before it can build up a sufficient demand to enable it to make any profit whatever at that price. To-day, the De Dion Bouton Company, of Paris, is landing at the New York customs a 3-ton truck at a duty valuation of about $2,500, which, with duty and import charges of 50 per cent additional, place the truck on the New York market at $3,750, including manufacturer's profit and middleman's profit, while the Packard Company has yet to make a deduction from its price stated above of 10 per cent to the dealer.

We call your attention to the Wyner-Huber-Reich letter, addressed to our special agent, Mr. James M. Carples, with reference to motortruck prices from Austria. (See Exhibit F.)

Commercial conditions summarized are as follows: The 253 recorded American manufacturers of automobiles are grouped as follows:

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About 80 of these are marketing a product that is of some importance to the trade. About 10 per cent of the whole number (25) have so far, possibly, made a commercial name, but we doubt if even 20 manufacturers can show a fair profit.

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