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TABLE 23b.-Handwork cottons-Imports for consumption under act of 1922, classified according to rates of duty 1

1

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Calendar year

19221 1923

1924_.

1925_

1926-

Total.

1 Imports here shown are included in Table 23.

* From Sept.22 to Dec. 31, 1922, inclusive.

Table 22 shows that of the total cotton sewing thread and handwork cottons imported under the act of 1922 from September 22, 1922, to December 31, 1926, no less than 82.45 per cent in quantity and 95.93 per cent in value were entered under the minimum ad valorem rate of 20 per cent.

Since the specific rate, as well as the maximum ad valorem rate, applies only to low-priced shipments, the heavy concentration of imports under the minimum ad valorem proviso indicates that the incoming goods are of a high unit value.

Table 24 is inserted to show the average values, per unit of 100 yards, of the cotton sewing thread and handwork cottons imported under the act of 1922 to the end of the calendar year 1926. It may be observed from this table that imports in 1926 averaged $0.108 per 100 yards, the highest value recorded with the exception of 1925. The annual unit value of goods imported during the four years, 19231926, has shown a considerable increase, even exceeding the inflated prices of 1920. This recent trend toward higher values per unit of quantity, therefore, reflects a well-defined change in the type of goods imported.

TABLE 24.—Cotton sewing thread and handwork cottons—Average unit values' per 100 yards, of imports for consumption under act of 1922

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1 Sept. 22 to Dec. 31, 1922, inclusive.

Total period from Sept. 22, 1922, to Dec. 31, 1926, inclusive.

The foregoing table shows that imports of cotton sewing thread and handwork cottons under the act of 1922, to the end of the calendar year 1926, averaged 8.86 cents per 100 yards. The ineffectiveness of the specific rate of one-half cent per 100 yards is shown by the fact that without the minimum and maximum ad valorem rates the specific rate would have been equivalent to 0.5 divided by 8.86, or only 5.64 per cent ad valorem.

Comparison of duties on cotton sewing thread and on cotton yarn.—For the purpose of comparing the duties levied on cotton sewing thread with the duties levied on the yarn of which the thread is made, Table 24 has been compiled, giving the tariff rates on representative numbers of 6-cord spool cotton and on the yarns used in their manufacture.

TABLE 25.-Comparison of tariff rates on 6-cord cotton sewing thread and on yarn used in its manufacture

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A 6-cord thread of a ticket No. 30, made nominally from six strands of a No. 60 yarn, would run 8,400 yards to the pound. On the basis of a specific duty of half a cent per hundred yards, a pound of a 6-cord No. 30 thread would be dutiable at 42 cents. The specific duty on the combed No. 60 yarn entering into the manufacture of this 6-cord thread of ticket size 30 is according to the provisions of paragraph 901, 16 cents a pound.30 The specific duty on the 6-cord thread is, therefore, over two and one-half times greater than on the yarn. This ratio between the specific duty on the thread and the yarn entering into its manufacture is maintained approximately throughout almost the entire range of yarn counts.

The relationship between the minimum ad valorem duties on the 6-cord thread and the yarn of which it is made is, on the other hand, variable. The ad valorem duties on the cotton yarn are progressively graduated for all counts up to 80, above which point they are fixed at 30 per cent. On thread there is but one minimum ad

30 PAR. 901. Cotton yarn, including warps, in any form, bleached, dyed, colored, combed, or plied, numbers not exceeding number 40, one-fourth of 1 cent per number per pound; exceeding number 40 and not exceeding number 120, 10 cents per pound and, in addition thereto, three-tenths of 1 cent per number per pound for every number in excess of number 40; exceeding number 120, 34 cents per pound: Provided, That none of the foregoing, of numbers not exceeding number 80, shall pay less duty than 10 per centum ad valorem and, in addition thereto, for each number, one-fourth of 1 per centum ad valorem; nor of numbers exceeding 80, less than 30 per centum ad valorem: Provided further, That when any of the foregoing yarns are printed, dyed, or colored with vat dyes, there shall be paid a duty of 4 per centum ad valorem in addition to the above duties.

valorem rate, 20 per cent, applicable to all ticket numbers. The minimum ad valorem duty on yarn of 32 count, taken for illustration, is 18 per cent, whereas that for the 6-cord thread made of this yarn is 20 per cent. In this instance both the specific and ad valorem duties on the thread exceed those on the yarn entering into its manufacture. This is true of all threads and cottons made from yarns below No. 40. At this point the ad valorem duties on the finished product and the primary yarn coincide. Above No. 40, which represents the practical limit of yarn of short staple cotton, the specific duty is less but the minimum ad valorem is more on yarns than on threads.

Although the minimum ad valorem for yarns above 40s is greater than the corresponding duty on thread, in actual dollars and cents, however, the duty is considerably less. Owing to the greater amount of labor involved in the advancement of yarn into thread, the invoice price of thread is generally more than twice as great as the average import value of the yarn from which it is made. Hence, in the adjustment of tariff rates on the ad valorem basis, the equivalent, in cents per pound, of the 20 per cent duty assessed on the thread actually exceeds by a large margin the equivalent, in cents per pound, of the higher ad valorem duty of 30 per cent levied on the less costly yarn. This is illustrated in the following table, which compares the import duties on cotton sewing thread and the yarns used in its manufacture.

TABLE 26.—Comparison of average invoice price and duty on typical numbers of cotton sewing thread and yarn of which made 1

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Table 27.—Cotton sewing thread and crochet, darning, and embroidery cottons— Rates of duty, 1883–1922 1

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Act of

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1883

326 Spool-thread of cotton,

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1890

exceeding one hundred yards of thread.
Exceeding one hundred yards on each spool, for every addi-
tional one hundred yards of thread or fractional part thereof in
excess of one hundred yards.

343 Spool-thread of cotton, containing on each spool not exceed-
ing one hundred yards of thread.

1894

1897

1909

Exceeding one hundred yards on each spool, for every addi-
tional one hundred yards of thread or fractional part thereof
in excess of one hundred yards.

Spool thread of cotton, containing on each spool not exceeding
one hundred yards of thread.

Exceeding one hundred yards on each spool, for every addi-
tional one hundred yards of thread or fractional part thereof
in excess of one hundred yards.

Spool thread of cotton, including crochet, darning, and em-
broidery cottons on spools or reels, containing on each spool
or reel not exceeding one hundred yards of thread.
Exceeding one hundred yards on each spool or reel, for every
additional hundred yards or fractional part thereof in excess
of one hundred.

If otherwise than on spools or reels.

Provided, That in no case shall the duty be assessed upon a less number of yards than is marked on the spools or reels. 314 Spool thread of cotton, crochet, darning, and embroidery cottons, on spools, reels, or balls, containing on each spool, reel, or ball, not exceeding one hundred yards of thread. Exceeding one hundred yards on each spool, reel, or ball, for every additional hundred yards or fractional part thereof in excess of one hundred.

1913

1922

If in skeins, cones, or tubes, containing less than six hundred
yards each.

Provided, That in no case shall the duty be assessed upon a
less number of yards than is marked on the spools, reels, cones,
tubes, skeins, or balls: And provided further, That none of the
foregoing shall pay a less rate of duty than_..

Spool thread of cotton, crochet, darning, and embroidery cot-
tons, on spools, reels, or balls, or in skeins, cones, or tubes, or
in any other form.

Cotton sewing thread.

Crochet, darning, embroidery, and knitting cottons, put up for
handwork, in lengths not exceeding eight hundred and forty
yards.

Provided, That none of the foregoing shall pay a less rate of duty
than

In no case shall the duty be assessed on a less number of yards
than is marked on the goods as imported.

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1 "Crochet, darning, and embroidery cottons" were first mentioned in the act of 1897; in previous acts they were dutiable, without specific mention, as cotton yarn.

COURT AND TREASURY DECISIONS RELATING TO COTTON THREAD AND

HANDWORK COTTONS

Specific provision was made for crochet cottons, with darning and embroidery cottons, in the act of 1897. The entire clause became involved in litigation. In Calhoun v. United States (99 Fed. 424), the dutiable length of darning cotton in four 2-ply strands slightly twisted, in balls, was declared to be the length of the cotton in the condition in which imported and not the aggregate length of the strands composing it. The Board of General Appraisers followed this decision in a case upon darning and embroidery cottons (G. A. 4817, T. D. 22649 of 1900).

In Loeb v. United States (150 Fed. 327 of 1906, reversing 143 Fed. 698 of 1905), the term "embroidery cotton" was found by the Circuit Court of Appeals for the Second Circuit to have, when the act of 1897 was passed, a well-known commercial meaning excluding 5-ply yarn put up on paper bobbins and universally wound and used on machines in embroidering. The proper classification was held to be as yarn. The court declared that under the law use was not the test. This decision was applied by the Board of General Appraisers under the act of 1897 to 2-ply yarn used on embroidery machines to lock the stitch on the fabric (G. A. 6544, T. D. 27915); to yarn in skeins from 15,000 to 21,000 yards each (G. A. 6730, T. D. 28803, overruling G. A. 5372, T. D. 24560) upon thread in large skeins of about 72 inches perimeter measurement; to yarn in small skeins labeled "embroidery floss" (G. A. 5936, T. D. 26070), and to similar merchandise under the act of 1909 (Abstracts 26633, T. D. 31883 and 36780, T. D. 34871).

These decisions limited "embroidery cotton" to hand embroidery yarn in small skeins.

A different conclusion was reached by the Court of Customs Appeals in a later decision. The rate of duty on embroidery cotton was higher than the rates on yarn in the act of 1897, under which the Loeb decision, supra, was made. This decision was reversed in 1913. Free entry of embroidery machines for a time under the act of 1909 (par. 197) gave an impetus to machine embroidery, and in the act of 1913 (par. 251) a lower rate of duty was imposed on embroidery cotton than on the finer yarns. In accordance with the decision in the Loeb case the Treasury Department continued to assess the yarn rates; importers, on the other hand, contended for the rate on embroidery cotton.

"

In a case (Straus v. United States, 7 Ct. Cust. Appls. 414, of 1917, T. D. 36982) carried on appeal to the Court of Customs Appeals the Board of General Appraisers classified as "embroidery cotton" yarn used on embroidery machines in the process of making fancy or ornamental designs on the face of the fabric, and classified as "yarn No. 60 2-ply yarn on bobbins, in which form it is used as the bottom thread on embroidery machines to hold the embroidered design in position, the yarn itself not appearing on the face of the fabric. The court, adverting to the impetus given to machine embroidery by the act of 1909, supra, and reading the provision in paragraph 358 for "embroideries * * * and all articles or fabrics embroidered in any manner by hand or machinery" as indicating a purpose to place hand and machine products on a parity, held the term "embroidery cottons" not restricted to those used in hand embroidery or imported only in skeins, and fully sustained the importers' protests as to both classes of merchandise in issue. This decision was followed in Abstracts 41239, 41620, 41916, 42034, 42068, 42455, 42511, 42525, and 42564. In another case (Abstract 42456, of August 9, 1918) the importers failed to prove that the merchandise was embroidery cotton and the collector's classification as "yarn" was affirmed.

Mercerized yarn in 2-ply strands combined with a slight twist, in the grey, suitable only for use as embroidery cotton, was held by the Treasury Department (T. D. 35873 of 1915) to be dutiable as embroidery cotton.

There was less litigation on spool thread than on yarns for handwork. What "spool thread of cotton" comprehends was considered

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