winter of 1916-17, paying an average price of 31 cents per grease pound delivered at the central markets, a price somewhat higher than the average price which prevailed for the clip marketed for the fall and winter of 1913-14. The price paid in 1916 was arrived at after long consideration of cost factors and other conditions of production, and undoubtedly contains some element of profit to Australian producers. This element of profit, however, was evidently small since the British Government agreed to return to woolgrowers one-half of any profit derived from the disposal of the wool for other than military uses. On the basis of changes in wholesale prices and of wool prices between 1913 and 1916, the committee estimates the cost in 1916 to have been 28 cents per grease pound. Conditions known to exist in the wool industry in Australia fully justify the conclusion that costs of production of wool were 20 per cent higher in 1927 than in 1916, and that in 1927 the cost of production was 33.6 cents per grease pound.

Mr. J. F. Walker, former secretary of the Ohio Wool Growers' Association, and later special investigator for the United States Department of Agriculture, made quite a study of conditions of wool production in Australia and has commented on them in numerous articles published in the National Wool Grower, organ of the National Wool Growers' Association. Mr. Walker states that the clean content of the Australian wool clip averages 48-50 per cent, and that in 1927 the average selling price was 35 cents per grease pound. view of his discussion of certain of the high cost factors, the selling price he arrives at for 1927, 35 cents per grease pound, supports the conclusion of the committee with respect to the cost of production that year; that is, 33.6 cents per pound.

In

Australian wool has a clean content of 50 per cent, hence costs 67.2 cents per clean pound, to which should be added 6 cents per pound for expense of preparing the wool for shipment and freight to the market in Boston, or a cost per clean pound landed in Boston of 73.2 cents. The difference between the domestic cost of production, 97.5 cents, and 73.2 cents, the Australian cost, is 24.3 cents.

Data submitted by the woolgrowers who testified before the committee, based on a study made by the Tariff Commission a number of years ago, are to the effect that the cost of producing wool in Argentina is 27.35 cents per grease pound. It has a clean content of 51 per cent, making a cost of production of 53.6 cents per clean pound. To this cost should be added 3 cents to cover cost of baling and other preparation for shipment and freight from the Argentine port to Boston, making a cost of Argentine wool landed in Boston of 56.6 cents per clean pound. The difference between this cost of Argentine wool, 56.6 cents, and the domestic cost of production, 97.5 cents, both landed in Boston, is 40.9 cents.

The competitive situation, however, is not based entirely on this difference between landed costs; it is materially affected by the quality of the Argentine clip and the fact that on the average it is worth about 8 cents less per pound than the domestic wool. The competition between domestic and Argentine wool, therefore, may be based on the estimated cost difference (40.9 cents) less the price differential against the Argentine wool; that is, 8 cents, or 32.9 cents per clean pound, when consideration is given to the difference between the average grades of wool.

As has been stated, the committee finds the difference between Boston landed cost of Australian and domestic wool to be 24.3 cents per clean pound. But this does not measure the competitive situation, because Australian wool averages finer than domestic wool, and averages about 8 cents higher in price per clean pound. This figure of 8 cents, the price differential in favor of Australian wool, plus the estimated cost difference of 24.3 cents, or 32.3 cents per clean pound, measures the competitive situation as between Australia and domestic wool when differences between grades of wool are considered. In other words, domestic wools compete with Argentina wools on a basis of 32.9 cents per clean pound, and with Australian wools on a basis of 32.3 cents per clean pound, when allowance is made for the average difference between grades of wool in the respective countries.

Testimony offered by representatives of the woolgrowers and briefs submitted by them recognize the wide difference between costs of production of Australian and Argentina wools, and that the duty to be imposed must be adjusted, taking into consideration the source of the most effective competition. The committee agrees with this reasoning, and taking full notice of the fact that the difference between domestic and Australian costs is only 24.3 cents, whereas the difference between domestic and Argentina costs is approximately 40 cents, it believes that a duty of 34 cents will provide adequate protection when the character, quality, selling prices, and actual competitive condition are given proper consideration.

In view of the foregoing it goes without saying that consideration should be given to the manufacturers of wool and their need for additional protection because they provide the only market for domestic wool. This consideration is asked not alone by manufacturers; it is urged by producers of wool. Their representatives, testifying in behalf of woolgrowers, speaking intelligently and as frankly of this phase of the question as of matters in which producers are directly interested, cost of producing wool and the need of an adequate protective duty, said that if manufacturers are not prosperous the market of domestic producers of wool will be destroyed. It appears that the wool-manufacturing industry as a whole in this country is depressed. To what extent that is due to the present tariff is debatable, but attention may be given to the fact that imports of certain manufactures of wool have increased in greater proportion than others. It is known also that the people of our country, men and women, do not wear as much woolen clothing as in former years, and that substitutes in the making of woolen and other fabrics for clothing have been much in use. It is not known, of course, to what extent the use of substitutes is due to higher prices of wool products, prices influenced to some extent perhaps by protective duties.

In considering the condition of wool-manufacturing industries in this country, the committee has taken into consideration (a) machinery activity, (b) decrease in employment, and (c) foreign competition. In January, 1929, the Department of Commerce reported 40 per cent of the wide wool and worsted looms idle compared with 19 per cent in January, 1923, and 34 per cent of the carpet looms idle compared with 14 per cent in 1923. The average number of employees in the woolen and worsted industry decreased from 194,552 in 1923 to 154,361 in 1927, or 21 per cent, whereas in the wool carpet and rug indus

try the number of employees decreased 8 per cent in the same period, and imports of manufactures of wool were valued at $54,560,869 in 1923 and $65,039,902 in 1927, or an increase of 19 per cent.

In the readjustment of duties the committee has retained the system of compensatory duties used in the Tariff Act of 1922 which were computed on the basis of data compiled by the Tariff Board, now the Tariff Commission, and published in the report on the wool schedule in 1911. In the draft of the bill now submitted, following that system, compensatory duties are raised only because of and in proportion to the increase of the duty on raw wool. Ad valorem or protective duties have been changed, in some cases increased, in order to account for the difference between labor costs in this country and in countries from which manufactures of wool are received.

Paragraph 1102 relates to wools and hairs for which a duty of 34 cents per pound is recommended. It provides an increase from 31 cents to 34 cents per pound; an increase of the duty on wool on the skin from 30 cents to 33 cents per pound, to correspond to the 34 cents; a duty of 36 cents per pound on sorted wools and matchings because labor is involved; a reduction of duty on wools not finer than 44s from 31 cents per pound to 24 cents per pound. This decrease of duty on 44s, coarse wools, is made because a negligible quantity of such wools are produced in the United States. They are used in cheap clothing, and the lower duty provided will favor those of our population who wish or find it necessary to buy lower priced clothing.

The duty on medium and fine wools is raised from 31 cents to 34 cents per pound of clean content as a protective measure. In both paragraphs 1101 and 1102 provision is made for tolerance of 10 per cent with respect to wools entered as not finer than 40s or 44s, in order to protect against improper mixtures of medium and fine wools in importations of these coarser grades and to conform with the practical limit of exactness in careful commercial grading.

Paragraph 1103: An exception is made in this administrative paragraph for the wool and hair dutiable under paragraph 1101 or 1102 by reason of the tolerance of not more than 10 per cent allowed on such wools.

Paragraph 1104: The only change in this paragraph is the addition of a provision for the use in customhouses of United States standards of grades for wool, and for permissive display of samples and interchange of such samples between customhouses, in the interest of uniformity in assessing the duties and for the more complete information of the trade and of appraisers with respect to wools and hairs. Paragraph 1105: With the exception of mungo, the duties on wool wastes, noils, shoddy, etc., are raised in proportion to the increase made in the duty on the medium and fine wools in paragraph 1102 from 31 cents to 34 cents per pound; the duty on mungo is raised somewhat more-that is, from 72 cents to 10 cents per poundbecause it is a partly manufactured product-i. e., is "pickered" inferior rags-and should pay a higher duty than rags.

The committee has not been able to agree with the woolgrowers who asked that the duties on all these wastes, etc., be made practically as high as the duties on the medium and fine wools, on the ground that they displace wool in the manufacture of clothing. These wastes, etc., do not displace wool; they supplement wool. They really 'furnish a market for wool, which must be mixed with

these other materials in order that the wastes may be used in clothing. By using the wastes, cheaper clothing is made available for that part of our people who desire it. The wastes, therefore, do not displace wool, and, contrary to the claims of the woolgrowers, do not lower the price of wool. Wool extract as such is eliminated, and a provision is added for an additional duty of 7 cents per pound on carbonized noils, wastes, rags, hairs, and wools to offset differences between domestic and foreign carbonizing costs.

Paragraph 1106: The only change in this paragraph is the compensatory duty which is raised in proportion to the increase in the duty on wool.

Paragraph 1107: A change is made in the compensatory duty proportionate to the change made in the duty on wool (par. 1102). Two additional value brackets are provided; yarns valued at more than $1 but not more than $1.50 per pound and for yarns valued at more than $1.50 per pound. The protective rate on yarns valued at more than $1.50 per pound is increased from 40 to 45 per cent because imports under the latter bracket are of the finer counts and labor is a greater proportion of the total cost than for those of lower counts.

Paragraph 1108: In this paragraph a change is made in the compensatory rates proportionate to the change made in the duty on wool. Two additional value brackets are provided, one for fabrics valued at more than $1.25 but not more than $2 per pound; another for fabrics valued at more than $2 per pound. On these the ad valorem or protective rate is increased from 50 to 55 and 60 per cent, respectively.

This change in the protective rate is predicated on estimated differences between home and foreign costs of producion. In the manufacture of the more expensive light worsted fabrics as low as 20 per cent of the total production cost results from cost of raw material; i. e., 80 per cent is conversion cost. About 60 per cent of this conversion cost is the charge for labor. Domestic wool textile labor averages about 23 per cent more efficient than in Great Birtain, but American wages are two and one-half times as high. The other conversion costs are estimated at nearly 100 per cent higher in the United States than in Great Britain. It is obvious that with the higher prices American labor constituting so large a proportion of the manufacturing cost a higher protective rate on the more expensive of these light-weight fabrics is necessary in order to keep American labor employed in the domestic mills.

Thus on fabrics costing $1.50 per pound in Great Britain, the conversion cost amounts to as much as 75 per cent of total cost. The cost of the raw material in this case is about 38 cents per pound and conversion $1.12. The labor included in this foreign conversion cost amounts to 67 cents and other conversion charges to 45 cents: per pound. In American mills, with wages 150 per cent higher and 23 per cent more efficient, the corresponding labor cost is $1.37. Other conversion charges amount to about 85 cents, making a total of $2.22 per pound. The difference between the domestic and the British conversion costs is $1.10 per pound, to be protected by an ad valorem rate. Fabrics costing $1.50 per pound in Great Britain have an export value of approximately $1.75, and the ad valorem rate is 60 per cent. Owing to general use of estimates in arriving at this figure, a protective rate of 55 per cent is recommended on those valued at $1.25 but not more than $2 per pound.

The conversion cost for fabrics which cost $2 per pound in Great Britian amounts to as much as 80 per cent of the total, i. e., raw material comes to 40 cents per pound, conversion costs $1.60, of which labor costs 96 cents and other items 64 cents per pound. In American mills, with labor costing 150 per cent more but 23 per cent more efficient, the corresponding labor cost is $1.85 and other conversion costs about $1.25 per pound, making a total conversion cost of $3.10. The difference, to be protected by an ad valorem rate, is $1.50 per pound. A fabric which costs $2 per pound in Great Britain, has an export value of about $2.30. This calls for a protective rate of 65 per cent. In view of general use of estimates in the foregoing, a protective rate of 60 per cent is allowed.

Paragraph 1109: The committee has made a change in the compensatory rates on woven fabrics of wool proportionate to the change made in the duty on the raw wool (par. 1102). In the act of 1922 the highest value bracket provided for fabrics valued at more than 80 cents per pound, whereas the average value of imports under this paragraph amounts to approximately $2 per pound; 97 per cent of the total value of imports are valued at more than 80 cents per pound. The committee has therefore added two value brackets: (1) For fabrics valued at more than $1.50 but not more than $2 per pound, and (2) for fabrics valued at more than $2 per pound, and on these the protective rate is increased from 50 to 55 and 60 per cent, respectively.

The proposed increase in the protective rate is based on estimated differences between costs of production here and in England. On fabrics valued at more than $1.50 per pound abroad the labor cost, as stated in relation to paragraph 1108, is a greater proportion of the total cost than on fabrics of lower value.

Woven felts and articles made thereof are not specifically mentioned in the Tariff Act of 1922. A provision is made for these articles, which are mainly paper-makers felt, to be dutiable at the rates. provided for woven fabrics of wool.

Paragraph 1110: The committee has made a change in the compensatory duty on pile fabrics and manufactures thereof proportionate to the change made in the duty on raw wool, but has made no change in the value brackets or in the protective rates.

Paragraph 1111: The committee has made a change in the compensatory duty on blankets and similar articles proportionate to the change made in the duty on raw wool.

During the period 1923-1928, imports under paragraph 1111 increased from 243,585 pounds to 662,101 pounds, or 172 per cent. Since the greater number of the blankets imported were valued at more than 50 cents, but not more than $1 per pound, the protective rate on this bracket is increased from 322 to 36 per cent, and on the next higher bracket, i. e., those valued at more than $1 but not more than $1.50 per pound, from 35 to 371⁄2 per cent.

Paragraph 1112: The committee has made a change in the compensatory duty on felts not woven proportionate to the change made in the duty on raw wool, but has made no change in the value brackets or in the protective rates.

Paragraph 1113: The committee has made a change in the compensatory duty on small wares proportionate to the change made in the duty on raw wool.