PARAGRAPH 488-COPAL GUM.

Mr. DORIAN. If you import wine, that is a luxury, that is something that is quite different. I would go as far as any member of this committee in imposing a tax upon a raw material of that kind.

Mr. HILL. The greater part of this schedule is a raw material schedule?

Mr. DORIAN. I do not know about the rest of the schedule.

Mr. HILL. These gums are all raw materials?

Mr. DORIAN. These gums are raw materials.

Mr. HILL. I will state this, that in the Payne bill the ad valorem of that whole schedule, according to this classification, was 10.7 per cent; the ad valorem on this schedule, according to this classification, is 13.1 per cent. Is it a wise policy, in your judgment, for the benefit of all manufacturers that are using these things, to increase this schedule between 2 and 3 per cent ad valorem?

Mr. DORIAN. I do not think so, sir, and I say that as a business man. The CHAIRMAN. All right, Mr. Dorian, unless you have something else to say you will be excused.

The following letter was also filed by the witness:

Hon. OSCAR W. UNDERWOOD,

WASHINGTON, D. C., January 7, 1913.

Chairman Committee on Ways and Means, House of Representatives.

SIR: I appeared before your honorable committee on the 6th instant to recommend on behalf of the American Graphophone Co. the retention on the "free list" of shellac and copal gums.

In the course of the hearing a number of inquiries were addressed to me by members of the committee as to the capitalization and profits of the company which I thought the committee was not entitled to make and I declined to furnish some of the particulars asked for.

I find that a misleading summary of my statements has appeared in a Washington newspaper, and I therefore request permission to file the following statement.

The authorized capital stock of the company is, as I stated yesterday, $10,000,000. Of this authorized capital stock, however, but $4,723,180 has been issued, viz:

Common..
Preferred.

$2,627, 550

2,095, 630

4,723, 180

The company has paid dividends of 7 per cent as I stated-but on its preferred stock only. Instead, therefore, of paying dividends on its $10,000,000 of authorized capital it has paid on $2,095,630 only, or $146,694.10 per annum instead of $700,000 as published.

The bonded indebtedness of the company is about $1,350,000.

The newspaper summary referred to quotes me as declining to state, in answer to an inquiry of Representative Kitchin, how much of the capital was paid in. I did not so decline. I at first failed to grasp the purport of his inquiry, but, when I did, stated that all of the capital issued was paid in.

Yours, respectfully,

M. DORIAN, Treasurer, American Graphophone Co.

BRIEF SUBMITTED BY THE TARIFF COMMITTEE OF THE NATIONAL VARNISH MANUFACTURERS' ASSOCIATION.

Hon. OSCAR W. UNDERWOOD,

Chairman Committee on Ways and Means,

House of Representatives, Washington, D. C.

DECEMBER 31, 1912.

SIR: We, the representatives of the National Varnish Manufacturers' Association, comprising over 80 per cent of the varnish industry in the United States, do respectfully protest against the imposition of any duty on the following raw materials which

PARAGRAPH 488-COPAL GUM.

enter into the manufacture of varnishes, and which articles are of foreign origin only, and not any of them found or produced in this country: Gum copal (act of 1909, par. 488; H. R. 20182, par. 37); gum kauri and damar (act of 1909, pars. 488 and 559; H. R. 20182, par. 37); gum shellac (act of 1909, par. 605; H. R. 20182, par. 37); soya bean oil (act of 1909, par. 639; H. R. 20182, par. 50); Chinese nut oil (act of 1909, par. 639; H. R. 20182, par. 50).

DESCRIPTION AND STATISTICS.

[Gum copal (act of 1909, par. 488, free); gum kauri (act of 1909, par. 488, free).]

These gums are found in various parts of the globe, but none in the United States. They are brought to this country in their natural state as they are mined or dug from the earth. They are of a fossil nature, and it is supposed they were originally exudations from trees which have, to a very large extent, disappeared; the age of these gums being uncertain.

It is pretty safe to assume that nature is at the present time producing only a limited quantity, and in the course of a few years the present fields will become entirely exhausted. This fact is strongly indicated by the deterioration of the quality and the continued advance in price.

The importation of these gums is comparatively small and every year grows less.

The decrease in value in kauri does not represent a decline in the market price, but is due to a larger importation of the lower grades.

Prior to the years mentioned the statistics obtainable included all imported varnish gums and did not classify them separately.

[Gum damar (act of 1909, par. 488, free).]

Batavia gum damar differs from gum copal and kauri inasmuch as it is not a fossil gum, but is a hardened exudation taken from the trees grown in the Dutch East Indies. There is another damar gum known as Singapore, which exudes from the trees and is found in the ground partly fossilized.

PARAGRAPH 488-COPAL GUM.

[Gum shellac (act of 1909, par. 559, free).]

Gum shellac is found in India. It is an exudation from the branches of a tree. Small insects affix themselves to twigs, puncturing the bark and sucking the sap, which they give out again as an excretion. This solidifies on contact with the air, gradually forming a deposit.

This oil is expressed from the soya bean, which is found principally in Manchuria, northern China. The bean grows on small bushes. The beans are edible and also the cake after the oil is expressed, but not the oil itself.

This is known by several names: Chinese nut oil, China wood oil, tung oil. The Department of Agriculture mentions this oil as that expressed from nuts of the Aleurites fordi tree. This tree grows wild in central China in Provinces bordering on the Yangtze River.

Importations.

All of these articles briefly described have been for years imported free of duty. In the chemical schedule (H. R. 20182), which passed the House of Representatives in February, 1911, they were removed from the free list and placed on the dutiable list as follows: Gum copal (par. 37), one-half cent per pound; gum kauri and damar (par. 37), 1 cent per pound; gum shellac (par. 37), 14 cents per pound; soyabean oil (par. 50), one-fourth cent per pound; Chinese nut oil (par. 50), 5 cents per gallon.

78959°-VOL 6-13- 4

PARAGRAPH 488-COPAL GUM.

ARGUMENTS.

GUMS COPAL, KAURI, DAMAR, AND SHELLAC.

1. From the point of view of the domestic manufacturers, it would seem that they are entitled to the admission into this country witnout payment of duty, the said gums copal, kauri, damar, and shellac, which are not products of this country and which are an absolute necessity in the manufacture of varnishes.

2. The Government of the colony of New Zealand, from which gum kauri_comes, has had it in mind for some years back to place an export duty on this gum. In fact, such a bill passed the New Zealand Parliament in recent years, but was not made effective because of the panic of 1907. We can not help feeling that an attempt on the part of the United States Government to tax such an important product of New Zealand as gum kauri will result in the application of the export duty by the New Zealand Government that will work still further hardship to the American manufacturer.

3. As already stated, the supply of gums copal and kauri is gradually growing less and the quality poorer with advancing prices; therefore the domestic manufacturers should not be burdened with a duty which would increase the cost of the finished products.

CHINESE NUT OIL.

1. The domestic manufacturer believes he is entitled to admission into this country without payment of duty Chinese nut oil (oil expressed from the nut of the Aleurites fordii) which is not a product of this country and which is an absolute necessity to the manufacturers of varnish.

2. Chinese nut oil has materially increased the use of rosin produced in our Southern States, for certain grades of varnishes are manufactured by combining this oil with rosin and still others by combining this oil with rosin and certain grades of gums copal and kauri.

3. Chinese nut oil possesses peculiar properties which are most desirable in the manufacture of varnish in this country, and these properties can not be found in anything else of which the varnish manufacturers have any knowledge.

4. Chinese nut oil more than any other raw material has made it possible to produce a satisfactory varnish at a moderate price, thereby benefiting the public at large.

5. The varnish manufacturers have been enabled to develop many products for sanitary, waterproofing, and other purposes by the use of Chinese nut oil.

GENERAL.

FOREIGN COMPETITION.

To impose a duty on the above-mentioned raw materials will put the American manufacturers of varnish at a decided disadvantage in competition, particularly with the English manufacturer for the following reasons:

First. There are no duties on these raw materials in England.

Second. Linseed oil is lower in price in England than it is in this country. (See exhibit attached.)

Third. Tin cans also are lower in cost.

Fourth. The rate of freight from the primary markets to England on the above gums and oils is lower. Most of these raw materials for American consumption have to be shipped via England and European ports in the absence of direct shipping facilities.

Fifth. The cost of labor in England is decidedly lower than in this country. To illustrate the difference for the same class of work in Ergland and the United States, a varnish tester in England makes an average salary of £2 per week (about $10 United States gold). The same class of labor in this country would command at least $25 per week. For ordinary labor where we are obliged to pay $12 per week, the same class of labor can be obtained in England for £1 68. (about $6.50). The same relative difference maintains in all classes of labor employed in the varnish industry.

Sixth. It is a well-known fact that rents and overhead charges are also comparatively lower in England than they are in this country.

Seventh. All of these advantages will enable the English manufacturers to undersell the varnish manufacturers in this country in spite of the 25 per cent duty on

PARAGRAPH 488-COPAL GUM.

varnishes if the American manufacturer is burdened with any duty on the raw materials that enter into varnish manufacture.

Eighth. The Canadian manufacturer, our nearest competitor, pays no duty on gums copal, kauri, damar, shellac, or Chinese nut oil, and therefore the imposition of a duty on these articles would be a manifest injustice to the varnish manufacturer of this country.

VARNISH INDUSTRY.

It is not generally known to what extent varnish is used, and that it has become a necessity and ceased to be a luxury. It is used on woodwork and metal work of buildings, on furniture, agricultural implements, sewing machines, locks, bolts, hardware, metal work, labels, pianos, wagons, carriages, automobiles, and in short on almost everything where wood or metal is exposed. It is now being applied to the interior walls and floors of concrete work to give a good surface and to prevent the flying of dust.

For sanitary purposes it is of great importance, as in hospitals and public buildings. From the above it can be clearly seen that a duty on any raw material used in the manufacture of varnish will affect directly or indirectly every person in the country. The growth of the varnish industry in this country is due largely to the fact that we have free raw materials.

In the report of the census of manufactures of 1905, part 4, page 461, it is stated that the value of oil and turpentine varnish was $16,170,614 and that the value of alcohol varnish for the same period was $2,202,645, from which it would appear that the varnish industry in this country is a very substantial one, and the product of this domestic industry has increased very greatly since 1905.

The present tariff has produced no trusts, pool, or agreement on prices. Internal competition has reduced the price of the article to a minimum of a reasonable profit on the capital employed.

The revenue derived from a duty on all of these raw materials referred to would be comparatively of small benefit to the Government as a source of revenue, and yet such an imposition of duty would greatly injure a growing domestic industry.

We beg to call your attention to an interesting fact and that is, after the hearings of the Senate Finance Committee on the House bill 20182, the minority of the Finance Committee, composed of Senators J. W. Bailey, F. M. Simmons, William J. Stone, John Sharp Williams, John W. Kern, and Charles F. Johnson, gave their views to the Senate in Calendar No. 576, and recommended amendments which would return all of these articles to the free list. The Hon. Charles F. Johnson of Maine, in his speech in the Senate June 14, 1912, favoring the passage of this same bill, also offered the amendments already mentioned.

In view of the foregoing facts, the National Varnish Manufacturers Association urges respectfully upon your honorable committee that gums copal, kauri, damar, shellac, and Chinese nut oil and soya-bean oil shall remain on the free list, all of which is respectfully submitted.

NATIONAL VARNISH MANUFACTURERS ASSOCIATION,
R. O. WALKER, President.

Tariff committee: Col. P. H. Callahan, chairman, Louisville Varnish Co.; Max Wolf, Standard Varnish Works; Charles C. Chopp, Glidden Varnish Co.; L. H. Conklin, Flood & Conklin Co.; S. V. V. Huntington, Edw. Smith & Co.; Col. Franklin Murphy, jr., Murphy Varnish Co.; W. H. Phillips, F. W. Devoe & C. T. Raynolds Co.

EXHIBIT.

London and New York quotations on linseed oil from July 1, 1911, to Nov. 21, 1912.