I must apoligize for the length of this letter, but I send it to your committee for what it is worth, feeling sure that you will welcome expressions of opinion on the vital question of reduction of customs taxation and will give them such consideration as they may seem to you to deserve.

Very respectfully, yours,

CHARLES S. HAMLIN.

UNDERVALUATIONS AND DUMPING DUTY.

BOSTON, January 15, 1913.

To the Committee on Ways and Means, House of Representatives, Washington, D. C. GENTLEMEN: On behalf of American manufacturers engaged in many different lines of business and representing a total investment of many millions of dollars, and in the interest of all American manufacturers and producers, I wish to call the attention of the committee to a matter of the greatest importance, both from a revenue standpoint and from the standpoint of such manufacturers and producers as receive incidental protection from the tariff, whether as a protective or as a revenue measure. ask that an amendment be made to the administrative act of the tariff for the purpose of preventing undervaluations and in order to prevent the unloading by foreign manufacturers and producers from time to time of large quantities of articles of foreign manufacture or production at prices far below the normal prices of such articles for home consumption in the foreign countries.

ALL AMERICAN MANUFACTURERS ARE INTERESTED.

I

Such a duty, otherwise known as a dumping duty, has been referred to from time to time during the hearings by manufacturers and producers representing a wide variety of interests, and many of them have requested the committee to adopt such an amendment. It is a matter in which all are interested who make or produce goods in which there is any foreign competition, and the effect of such a duty is not to increase the incidental protection intended to be afforded to the American manufacturer or producer, but merely to insure to him the exact amount deemed fair for the time being.

IMPORTANT FROM A REVENUE STANDPOINT.

It is likewise a matter of particular interest to the Government from a revenue standpoint, for calculations of revenue to be produced can not be accurate if foreign shippers are permitted to send in their goods at figures far below the normal valuations. This is particularly important in connection with the present revision, if the committee intends, as I understand it does, to reduce most of the rates to an ad valorem basis.

THE PURPOSE OF SUCH SHIPMENTS.

That such undervalued shipments are made constantly is well known to all manufacturers, and their purpose is obvious. It is of vital importance for a manufacturer to keep down his costs by keeping his factory in constant operation; it is likewise necessary to keep his labor together, whether skilled or unskilled, but of particular importance with skilled labor, for once sent afield by a shutdown it is expensive and often impossible to get such labor back; furthermore, the home market must be sustained, if possible, at a figure that will yield at least a working profit on the capital invested. As a result, if the home market is supplied, it is a positive necessity and a real economy to keep the factory operating and send the surplus goods over and above the amount sufficient to supply the home market to other countries and at such prices as can be obtained. If the home market can thereby be preserved, the goods can be sold at a figure no greater than the actual cost of materials and labor in the particular goods and oftentimes it is an economy to sell them if necessary for an even lower figure.

THE EFFECT OF SUCH SHIPMENTS.

It

The United States offers a splendid dumping ground for such surplus production, and the practice of making such shipments is becoming more and more common. is clear that by reason of this the Government is deprived of the revenue contemplated by the framers of the tariff act, whose figures and estimates are based on the revenue to be produced by the rates as assessed on the normal foreign value of the goods, and that the American producers are deprived of the incidental protection that would normally be afforded them by the rates of duty established and which it was contemplated they should have.

WOULD PREVENT UNDERVALUATIONS.

Furthermore, the introduction of such a provision would help to prevent fraudulent undervaluations, the prevalence of which has been all too common in recent years, for it would make the fair market value for home consumption in the country of shipment the test and destroy the efficacy of fraudulent invoices.

IN OPERATION IN CANADA.

As the committee undoubtedly well knows, such a provision has been operative in Canada for many years and has worked most satisfactorily, and I understand that similar provisions are in force in certain European countries as well.

SUGGESTED AMENDMENT.

I would suggest that a new section be added to the administrative act, modeled upon the provision now in force in Canada and somewhat in the following form:

(1) "That whenever articles are exported to the United States of a class or kind made or produced in the United States, if the export or actual selling price to an importer in the United States, or the price at which such goods are consigned, is less than the fair market value of the same article when sold for home consumption in the usual and ordinary course in the country whence exported to the United States at the time of its exportation to the United States, there shall, in addition to the duties otherwise established, be levied, collected, and paid on such article, on its importation into the United States, a special duty (or dumping duty) equal to the difference between the said export or actual selling price of the article for export or the price at which such goods are consigned and the said fair market value thereof for home consumption: Provided, That the said special duty shall not exceed 15 per cent ad valorem in any case and that goods whereon the duties otherwise established are equal to 50 per cent ad valorem shall be exempt from such special duty."

(2) "Export price" or "selling price" or "price at which such goods are consigned in this section shall be held to mean and include the exporter's price for the goods, exclusive of all charges thereon after their shipment from the place whence exported directly to the United States.

(3) The Secretary of the Treasury shall make such regulations as are necessary for the carrying out of the provisions of this section and for the enforcement thereof.

SUCH SHIPMENTS ARE NOW BEING MADE.

I urge the adoption of this amendment because from time to time I have been advised of shipments of articles to this country invoiced at far below their market value for home consumption in the countries of export, and in such instances duty has, of course, been paid only on the invoice price. The effect of such transaction both upon the revenue of the Government and upon the American manufacturer is exactly the same whether or not the goods were fraudulently undervalued. Such shipments would not be prevented by the adoption of a dumping duty, but the Government would thereafter receive the proper revenue and the American manufacturer would receive the incidental protection intended to be afforded him. Respectfully submitted.

JOSEPH O. PROCTER, Jr.

MANUFACTURING CHEMISTS' ASSOCIATION OF THE UNITED STATES,
January 31, 1913.

Hon. OSCAR W. UNDERWOOD,

Chairman Ways and Means Committee, Washington, D. C. DEAR SIR: The Manufacturing Chemists' Association of the United States has already called to the attention of your committee the question of the so-called “dumping duty" as a part of its brief filed under Schedule A.

The association believes the subject to be of such vital importance that it again desires to raise the question for your consideration in connection with the administrative features of the tariff act.

Although it is a subject which affects all American manufacturers in some degree, it is of peculiar concern to the chemical industry. It is generally known that the surplus product of foreign chemical manufacturers is unloaded or dumped into this country at prices far below the foreign market price and far below any price at which domestic producers can possibly compete. This fact is recognized in the "Report on Schedule A" filed by your committee at the last session of Congress.

SECTION 2-MAXIMUM AND MINIMUM.

It is further generally known that articles imported into this country and subject to an ad valorem duty are oftentimes invoiced at much less than their real or market value in the country of export. This, again, is peculiarly true of the chemical industry. A direct effect of the imposition of an adequate dumping duty would be to prevent fraudulent undervaluations, as the test of value would be the fair market price for home consumption in the country of export.

be:

In brief, the effect of the insertion of a "dumping" clause into our tariff laws would

(1) To insure the collection of revenue on the basis of the rates fixed by Congress as adequate.

(2) To prevent unfair competition on the part of foreign manufacturers.

(3) To give American manufacturers equal opportunity of competition with manufacturers in those countries which already maintain "dumping" duties.

(4) To prevent fraudulent undervaluations and consequent loss of revenue to the Government.

In this connection the association calls attention to section 6 of the Canadian customs tariff act of 1907, which provides as follows:

"In the case of articles exported to Canada of a class or kind made or produced in Canada, if the export or actual selling price to an importer in Canada is less than the fair market value of the same article when sold for home consumption in the usual and ordinary course in the country whence exported to Canada at the time of its exportation to Canada, there shall, in addition to the duties otherwise established, be levied, collected, and paid on such article, on its importation into Canada, a special duty (or dumping duty) equal to the difference between the said selling price of the article for export and the said fair market value thereof for home consumption; and such special duty (or dumping duty) shall be levied, collected, and paid on such article, although it is not otherwise dutiable: Provided, That the said special duty shall not exceed 15 per cent ad valorem in any case."

Respectfully submitted.

HENRY HOWARD, Chairman Executive Committee.

MAXIMUM AND MINIMUM.

STATEMENT SUBMITTED BY LOUISVILLE COTTON OIL CO.

Hon. OSCAR W. UNDERWOOD,

LOUISVILLE, KY., April 26, 1912.

Chairman Ways and Means Committee, Washington, D. C.

SIR: We wish to solicit your particular interest and valuable assistance in a matter of vital importance to the cottonseed oil industry of the United States.

As you are undoubtedly aware, the Department of State has been in negotiation with the Austro-Hungarian Government for the past six years to endeavor to secure a compatible reduction in the Austrian tariff governing import duties on cottonseedoil products, which, upon revision of that tariff, effective in March, 1906, was raised from 9.52 kronen to 40 kronen per 100 kilos, thereby closing entirely one of the most important outlets for American cottonseed oils. In order to judge of the importance of the Austrian markets for this industry, would state that in a single year the exports from the United States to Austria fell from 150,000 to a few hundred barrels. It is to be emphasized that not a single barrel will be imported, neither in Austria nor in Hungary, for the above reasons explained, while during the year 1905 the year previous to the increase, the port of Trieste itself had imported 23,087,800 kilos of cottonseed oil, worth about $2,500,000. Other comestible oils, which compete with cottonseed oil, and which are manufactured in Europe, enter Austria at duties ranging from 4 to 15 kronen per 100 kilos. Olive oil, imported from Italy, Turkey, Greece, Spain, and other countries, is paying a duty of only 4 kronen per 100 kilos. The duty imposed on cottonseed oil, therefore, must be considered prohibitive, and the entire action discriminating.

While we have no doubt that the Department of State, through its negotiations with the Austro-Hungarian Government, and also Ambassador Kerens, are using their best endeavors to secure the desired result, the fact remains that in the course of six long years no definite progress in the matter has been made, and although we understand that the Parliaments of Austria and Hungary would consent to a reduction in this arbitrary rate of duty from 40 kronen to 24 kronen per 100 kilos, such a reduction would be just as ineffective as the present exorbitant rate of 40 kronen, as on that

SECTION 2-MAXIMUM AND MINIMUM.

basis business would be just as impossible as under the present circumstances. In fact any rate in excess of 15 kronen per 100 kilos would not relieve the present situation in any particular.

The point we wish to impress upon you quite particularly is the fact that in the 6 years which have passed since the enforcement of this prohibitive tariff, the production of cottonseed-oil products in the United States has so materially increased over previous years that it is only natural to assume the business which could have been done with those markets during this period would have been considerably larger.

The conditions as prevailing at the present time do not affect the American oil producer alone, but the entire industry, down to the planter who raises the cotton. We are reliably informed that there are 30,000,000 acres planted to cotton in the United States. The crops during the interim have been very important, namely: 1906-7, 13,510,982 bales; 1907-8, 11,571,966; 1908–9, 13,825,457; 1909-10, 10,609,668; 1910-11, 12,120,095; 1911-12, 16,000,000 of 500 pounds each. Considering that a bale of upland cotton will yield 35 per cent in fiber and 65 per cent in seed, and seaisland cotton 25 per cent fiber and 75 per cent seed, the importance of the cottonseed-oil industry will readily be recognized. Also, roughly estimated, there are $80,000,000 invested in oil-mill establishments and refineries, requiring approximately twice that amount for operation. The importance of the industry can no longer be overlooked or underestimated, and would appear entitled to considerable consideration at the hands of the administration, and in our opinion a more strenuous effort would be deemed necessary to relieve the situation under which this industry has been suffering for the past six years.

Viewing the situation from a somewhat broader point of view, it would appear that the foreign powers have recognized readily the importance of this industry, and are discriminating largely against same, and in order to substantiate our statement would recall that cottonseed oil is not permitted entrance into Spain without being denatured, and thus rendered unfit for edible use. The duty, though high, is not prohibitive if the importation of pure oil were allowed. This stringent measure against the importation of foreign comestible oil into Spain was adopted sometime ago to safeguard the oilve oil of that country from adulteration, so that it would have the confidence of the trade, but the adoption of pure-food laws in many countries, prohibiting the labeling of mixed oil as olive oil has led the trade to look to its own, rather than to the country from which the oil comes, to prevent adulteration. France now levies a duty of 12 francs per 100 kilos on American cottonseed oil, an increase over the old rate of about one-half cent per pound. The country is a heavy consumer of comestible oils, and when a shortage in the olive crop necessitates the use of cottonseed oil, which will frequently happen, the advance in the duty will probably not keep it out of the country. In Italy nonedible cottonseed oil is taxed the same duty as edible grades, whereas other soap-making products, such as palm oil, are on the free list. In Greece agitation by the olive-oil interests led to the imposition of a duty of 100 drachmas per 100 kilos on American cottonseed oil, and only in February, 1910, through the successful efforts of the American minister, the duty was reduced to 30 drachmas per 100 kilos, and although this duty is not prohibitive it handicaps trading with that country materially. In Servia we understand a petition has been presented to the Government, asking a reduction of the duty on cottonseed oil from 25 to 18 francs per 100 kilos, the latter being the duty enjoyed by competing comestible oils, and the matter is still under consideration. Before cottonseed oil can be imported into Bulgaria it must be denatured, and even in that form it is dutiable at 15 francs per 100 kilos, while the duty on competitive oils, such as peanut, sunflower, and olive oil, is only 10 francs.

We also understand that samples of cottonseed oil were forwarded to the supreme sanitary council, whose sanction is necessary in changing the regulations, and everything seemed favorable for a speedy change, but the council refused its sanction, abiding by the decision of the same board 10 years ago, which decreed that cottonseed oil was unwholesome and should not be permitted to enter Bulgaria as an edible product.

In Roumania the duty on comestible oils, including cottonseed oil, and excepting olive oil, is 30 francs per 100 kilos, while olive oil enjoys a duty of only 5 francs per 100 kilos. This is a serious handicap to cottonseed oil.

Although it appears from the above that the American cottonseed-oil industry has been made the target of the nations of the world for discrimination and exploitation, this industry has assumed tremendous proportions, one could say, in spite of such discrimination, not alone in our home markets, but in all foreign market centers. This fact, however, we believe should not be considered a reason for inactivity on the part of our administration in relieving such an unjustified situation.

SECTION 2-MAXIMUM AND MINIMUM.

All of which tends to show the discrimination by foreign governments against an American industry of prime importance.

As far as the question affecting Austria-Hungary in particular is concerned, would say the Austrian mills do not provide enough oil to supply the home demand, while the duty on cottonseed oil is several times higher than is necessary to give protection to these mills. The oil consumption is limited now to sesame, arachides, rapeseed, and linseed oils, manufactured in Austria-Hungary, besides olive oil imported from Mediterranean countries, and the Levant, and which, as already stated, enjoys a duty of only 4 kronen per 100 kilos gross.

We aim to solicit the particular interest of the Departments of State and Commerce and Labor and the tariff commission and the Ways and Means Committee in order to devise an effective way by proper cooperation to secure the much needed prompt action and quick result. We feel safe in stating that if the results of the present negotiations will provide for a sufficient reduction of the duty that the rate agreed upon will permit of the importation of American cottonseed-oil products into AustriaHungary those markets will certainly regain their former importance.

If, in this connection, we may be permitted to venture an opinion, would say that in our minds one of the following methods would present the shortest and most effective way of arriving at the desired result: Either the adoption of the President's recommendation to Congress for such changes to section No. 2 (the retaliatory clause) of the tariff as would permit the Executive, in cases of discrimination against American commodities, which, while serious enough to the industry which they affect, do not nevertheless appear to justify upsetting of trade relations between the United States and the offending country; to select one or more important articles of export from the discriminating country for penalization, by way of additional duty, or a reciprocal reduction in our own tariff, governing imports of one of the principal Austrian commodities of export to the United States sufficient to induce the Parliaments of Austria and Hungary to meet the requests of our Government in the cottonseed-oil controversy.

We trust that you will recognize the urgent need of the industry for speedy relief from the difficulty and will use your personal influence and that of your office to secure a favorable solution in a not distant future.

We are, sir, very respectfully,

LOUISVILLE COTTON OIL Co. By J. J. CAFFREY, President.

STATEMENT SUBMITTED BY ACHILLE STARACE, NEW YORK

CITY.

NEW YORK, January 8, 1913.

COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

GENTLEMEN: I have the pleasure to acknowledge receipt of your esteemed favor dated December 31, 1912, and in obedience to your kind request I would supplement my previous arguments in support of my recommendation to abolish the maximum and minimum clause in our tariff law by stating that same is economically wrong; it is neither logical nor practical. Evidently it is a theory that can not serve any good purpose, being at most a threat of little value. In fact, it has never been enforced, and undoubtedly is difficult if not impossible of application, as shown in the controversy with Germany on potash, with France on the ceramic matter, and with Canada on the wood-pulp question.

Furthermore, should the Government attempt to enforce the maximum rates with a country that may in some instances appear to discriminate against the United States, even if on goods that may not directly affect our business, or should any nation through legislation dictated by their interests or by a special agreement, for a valuable consideration, grant some concessions to another country, it will be seen that in each case, first, it would not warrant us to go into a rate war with an otherwise friendly power, and secondly, it would not seem right or equitable that we should demand the same privilege or benefit and, if not accorded, to jeopardize not only our friendly relations, but also to impose a burden on our own people, because in such an event we can not but expect full retaliation to the detriment of our own commerce as regards the imports from and the exports to that country.

The maximum clause is something new in the history of the American tariff laws, and evidently was inserted in the last Payne Act as a substitute for reciprocity; but, as above demonstrated, it has not proved its equal, particularly that the foreign countries who do not look favorably upon such coercion or said method of imposition