(d) In 1914 the company's tube industry represented a capital investment of $6,500,000; in 1912 its profits from the sales of tubes represented an earning of about 10 per cent on this investment.

(e) In 1914 the earnings from sales of tubes had fallen to less than 2 per cent on this investment, a figure so low as to make the employment of the capital involved unprofitable.

The above facts were due to foreign, especially British, competition, made possible by the provisions of the Panama Canal act and the Underwood Act above referred to, and by the general low duties on tubes embodied in Schedule C of the Underwood Act, namely, 5 per cent on copper tubes and 20 per cent on brass and bronze tubes. The recent (1921) report of the Tariff Commission to the Committee on Ways and Means, entitled "Copper and Copper Alloys," states (p. 82) with reference to foreign competition in tubes, that they were increasingly imported into the United States in 1913 and 1914, several British firms having special agencies in this country. The American Brass Co. during that period encountered many instances of successful British competition. The Tariff Commission admits that this competition was made possible by the legislation of 1912 and 1913, and makes the following significant

statement:

The shipbuilding industry is one of the largest consumers of brass and bronze products and the chief consumer of certain tubes and sheet products. The Panama act and the provisions under the 1913 act for the free entry of material for use in the construction, equipment, or repair of vessels nullifies the nominal protection given to domestic manufacturers on certain products. Since many of the shipyards are on the Atlantic seaboard, material can in many cases be unloaded from ocean-going vessels at the point of consumption without further handling or freight charges, whereas shipment from domestic mills ordinarily involves railroad transportation, which makes a further handicap to the domestic manufacturers in competing for this kind of business."

3. The situation produced by the Panama Canal act and the Underwood Act in 1913 and 1914 will undoubtedly immediately recur with greater severity unless these provisions are altered as recommended; signs of its recurrence are already manifest. Successful foreign competition in tubes and other brass, bronze, and copper materials for use in maritime construction was made possible before the war by the removal of the duty and by the advantages of the foreign producer in labor costs. Unless the above quoted provisions of the Underwood Act are repealed or amended as suggested, the foreign competitor will be in an even better position in 1921 than he was in 1914.

Labor costs, while they have increased abroad, have increased at an equal or greater rate in the United States. (The average daily wage in the American Brass Co.'s mills in 1921 is 260 per cent of the same wage in 1914.) The report of the Tariff Commission above referred to states, page 83:

"British wages in the brass-rolling mill industry in 1920 are only a little more than one-half those paid in the United States."

*

* * "French wages are apparently not greatly different from those paid in the United States, although, owing to the depreciation of the franc, they are actually only about one-third of those now being paid in American plants.

As to Japan, the commission says:

"Japan has been importing large quantities of copper and zinc since the war and is believed to be on the verge of producing brass and copper rolled products on a large scale. Little is known about the plans of the Japanese, but it is reported that considerable equipment suitable for rolling nonferrous metals has been purchased, and, under proper management, the low-priced labor should result in low-cost product. The same general situation is undoubtedly true of Germany.

In addition to the low labor cost, the European producer has the tremendous advantage of the depreciation in exchange, which now ranges from something over 20 per cent in the case of the pound sterling to 95 per cent in the case of the German mark. In such a situation the foreign producer can sell at dollar prices in New York which he could not ordinarily accept, and will still receive a handsome profit in his home currency.

The American Brass Co. has concrete evidence that these factors are encouraging foreign competition. One of its large customers recently reported to the company that its bids on tubes (which had, in fact, been made so low as to yield no substantial profit) had had to face a Japanese bid of 3 cents a pound lower.

The company's representatives have met in this country representatives of English manufacturers who have spoken of immediate expectations of successful competition

in the American market.

German competition, made possible by recent large German importations of copper, is only a matter of a short time.

The tube industry was greatly expanded during the war at the urgent request of the Government, in which expansion patriotic duty played a large part.

The industry is one which involves heavy and expensive machinery and a large capital investment. If foreign competition under the above conditions and tariff provisions continues, the inevitable result will be heavy losses to the manufacturers, leading ultimately to scrapping of machinery and dismantling of tube mills.

4. The manufacture of brass, bronze, and copper products for maritime construction is a vital industry and should be preserved and protected.

Brass, bronze, and copper products of various kinds, especially tubes, are absolutely essential for the construction of ships and their machinery. The shipbuilding industry is no doubt an essential industry and the provisions of the Underwood Tariff Act above quoted were doubtless designed to aid that industry. The American Brass Co. makes no case against the shipbuilding industry. But it points out most emphatically that it is futile to encourage the shipbuilding industry at the expense of a necessarily constituent industry without whose products shipbuilding can jot be carried on.

The war furnished a striking illustration of the need which the country has for large tube-manufacturing resources. The Government was in constant serious need of more and more tubes for its naval vessels and for ships of all kinds. Notwithstanding the greatest efforts by the manufacturers, they were continuously, until the armistice, more than 50,000,000 pounds behind on Government orders. It will be obvious to the committee that to decrease the country's tube manufacturing capacity, (as will inevitably happen if the present tariff provisions above quoted are maintained) will make a serious breach in our economic independence. The breach will not merely affect the brass industry, but its deleterious results will extend with direct force to the shipbuilding industry itself.

5. In view of the foregoing facts, The American Brass Co. respectfully urges that in the enactment of a new tariff law sections 19 and 20 of the Payne-Aldrich Act, and their broader descendants, paragraphs 5 and 6 of section IV, J, of the Underwood Act, should be repealed; or, alternatively, that these sections if reenacted be amended by the addition of clauses substantially as follows: "Provided, That nothing contained in this section shall be deemed to apply to articles composed wholly or in part of brass, bronze, or copper."

III. THE INCONSISTENCIES IN SCHEDULE C OF THE PAYNE-ALDRICH ACT (CONTINUED IN THE UNDERWOOD ACT) SHOULD BE ELIMINATED.

Paragraph 199 of Schedule C of the Payne-Aldrich Act provided a general rate on metals not specifically provided for in that section of 45 per cent ad valorem. This paragraph covered brass, bronze, and copper manufactures. Nevertheless, paragraph 176 provided for a duty on certain specific copper manufactures and also on sheathing or yellow metal (which is itself brass) of 24 cents per pound and 2 cents per pound, respectively (equivalent to approximately 10 to 15 per cent). The company knows of no real reason for this especially low duty on these specified copper manufactures, and sheathing or yellow metal, while most brass products were under a duty of 45 per cent. The processes of manufacture are substantially the same. The costs of manufacture are substantially the same. The only substantial difference between the brass and copper products is that one contains more copper and less zinc than the other, a factor which the company believes has no real bearing upon tariff rates. The Tariff Commission report states (p. 84):

"There is no apparent reason for distinguishing yellow metal, and especially yellow metal sheathing, from other manufactures of brass in similar stages of manufacture.” The company believes that this inconsistency in the tariff should be ironed out and that copper products should be under the same duty as general brass products. It holds the same view as to German silver, which, under paragraph 174 of the PayneAldrich Tariff Act, was under a duty of 25 per cent ad valorem.

The foregoing points of inconsistency in the Payne-Aldrich Tariff Act were continued in the Underwood Tariff Act with even more serious discrepancies.

Paragraph 167 of the latter act imposes a duty on brass and copper products of 20 per cent ad valorem, but paragraph 147 singles out copper sheets, rods, strips, and copper bottoms, and sheathing or yellow metal (i. e., brass) and fixes the duty on these special products at 5 per cent ad valorem.

Similarly, the duty on German silver is fixed at 15 per cent ad valorem.

Here again are inconsistencies in the shape of diverse tariff rates made applicable to products manufactured by the same concerns, in the same mills, and under like conditions of labor costs.

Therefore, the American Brass Co. requests that the provisions of Schedule C of the Payne-Aldrich Act relating to brass, bronze, and copper products be readopted, with the elimination of the inconsistencies and discrepancies above specified, and with the exclusion of brass, bronze, and copper products from any provision permitting the free admission of shipbuilding materials.

APPENDIX.

STRONTIUM NITRATE AND CARBONATE, BARIUM NITRATE, AND POTASSIUM PERCHLORATE.

[Paragraphs 10, 143, 144, 575, and 615.]

SUPPLEMENTAL BRIEF OF THE COLUMBIA RAILWAY SIGNAL CO., PITTSBURGH, Pa.

Supplementing our communication of January 27, 1921, addressed to your Committee on Ways and Means, through your chairman, Hon. Joseph W. Fordney, and in relation to chemicals manufactured abroad, comprising our raw materials, and now brought into the United States under a 15 per cent ad valorem duty.

We refer specifically to the following list: Strontium nitrate, strontium carbonate, barium nitrate, potassium chlorate, potassium perchlorate, amorphous phosphorus sometimes designated as red phosphorus), and needles of antimony."

In order to fully comprehend the disastrous effects upon our railway signal industry that will be promptly manifested should the present iniquitous increase in the duty to 33 per cent, as proposed by the present tariff measure (embodied in Schedule A, according to our advices), be made effective, it becomes very necessary to view certain phases of the American chemical manufacturing industries, as it were, from behind. the scenes.

To properly do this it must be remembered that there is in the United States but a single manufacturer of strontium nitrate, this chemical being a minor product from among a long list of major and minor products produced by huge corporate interests now already fabulously rich beyond all earthly human or material needs. To be specific, having recourse to figures, we submit the following:

Strontium nitrate in 1920.-The f. o. b. New York quotation in carload lots for the American-made product was 23 cents per pound, a price that was absolutely ruinous to our industrial welfare and a figure that we positively could not avail ourselves of, even under the most desperate and trying circumstances, due to the fact that for "inside" reasons, these huge corporate interests saw fit to give our principal competitor a reduced price or a figure of about 184 cents per pound, in carload lots f. o. b. his eastern shipping point, an underlying reason apparently being the desire of these huge corporate interests to assist our competitor in promoting and maintaining a monopoly of the manufacture and sale of railroad fusees or signal torches, to the end that these self same coporate interests might absolutely dominate and control arbitrarily the entire market for strontium nitrate irrespective of foreign makers' imports, duties, or anything else, and that a program of this character becomes readily feasible when importations of strontium nitrate are cut off or their importation greatly handicapped by excessive duties (and the proposed duty of 33 per cent is highly excessive) is apparent if the members of your committee will please remember that about one-half the total average cost, overhead included, in the manufacture of railway fusees lies in the cost of the strontium nitrate. In other words, the value of strontium nitrate to a pyrotechnic industry is of such transcendent importance that no independent manufacturer, of sufficient size to be worthy of the name, could hope to long exist if he is compelled to pay a higher price for a supply of strontium nitrate than a more favored "inside" competitor.

To put it still another way, the present 15 per cent ad valorem duty is a considerable handicap of itself, since it amounts to about 2 cents per pound on the imported materials, present New York quotations, and a further increase that would arbitrarily add more than 2 cents per pound to the average New York f. o. b. quotations on strontium nitrate, ultimately can have no other effect than to further promote a monopoly in the manufacture of railroad fusees and in the manufacture of strontium nitrate, so far as the United States is concerned, and only with resultant financial benefits and emoluments to huge chemical interests that now, by reason of their very selves, are already so great and so strongly intrenched, as to now threaten the very existence of smaller and less favored industries, and in our case, a further increase in the tariff on strontium nitrate, amounts to our industrial annihilation.

And if on top of the present 15 per cent ad valorem duty, there is to be added an increase of 18 per cent, making the proposed duty 333 per cent, and then on top of that yet, the proposed allied reparations export tariff on German-made chemicals amounting to 12 per cent more, we ask you, gentlemen, in the name of common sense and all reason, pray, how are we to exist? Furthermore, in considering this proposed protection for the strontium nitrate industry and at the expense of other industries and railway interests included, kindly consider what the strontium nitrate industry really is. We, of course, can not definitely determine the country's approximate consumption, since we have no way of knowing the amount consumed by the purely fireworks industries; nevertheless, some conception of what this strontium nitrate industry really amounts to may be obtained from the following, to wit: Indeed, we have it on excellent authority that a plant unit with a capacity of five to eight tons per week may be erected at a cost of $35,000 or less, while giving employment to only six or eight men at nominal wages, the strontium nitrate being produced at a cost of about 7 cents per pound, the raw material coming from abroad as ship ballast.

Incidentally, it would not be practical, for very many manufacturing reasons, for our company to engage in the production of our multifarious raw materials, since we are primarily torpedo-fusee makers, these reasons being readily comprehended by a casual glance at our present day's highly complicated industrial processes, making it utterly impractical to attempt to combine the manufacture of variegated products, except where the largest aggregations of capital are employed and even then only under a variety of managements.

Mark you this: The strontium industry's raw material comes in as ship ballast, while our industry's raw material is to be heavily taxed, and our industry is poor and struggling, while the strontium, potassium perchlorate and chlorate, and allied industries are powerfully entrenched. Think of it! Indeed, why protect the strong against the weak? Why not protect the weak against the strong?

And in all fairness we respectfully submit that a profit of 12 cents per pound, as indicated by the present f. o. b. New York quotations on American-made strontium nitrate or a profit of about 74 cents per pound on material sold to our competitors, as we understand it, is quite sufficient, and any increase in the tariff at this point could only have the effect of throttling independent manufacturing industries dependent on cheap strontium nitrate that are of vastly more importance to the national welfare as industrial units than could possibly be the further enrichment of the present American monopoly of the manufacture of strontium nitrate.

Viewed from another angle, profits per pound to a strontium nitrate manufacturer of from 7 to 12 cents mean an average profit of approximately 93 cents per pound. Consider, then, the ratios of profit to capital invested, to wit: If it be true that $35,000 invested in plant equipment will net an average yield of 7 tons per week or 14,000 pounds, or a profit of $1,365 per week, or an annual profit based on 300 days operation out of the year of about $58,695 for each unit of $35,000 of invested plant equipment capital, and this under the present 15 per cent ad valorem duty, will anyone in the face of these facts, with only a faint sense of justice for the rights of all parties concerned, including the small manufacturer, to whom strontium nitrate is a raw material, have the temerity to arise and assert that so favored an industry as this one strontium nitrate industry now is will anyone have the temerity to assert that such an industry as this is now stands in need of a further increase of 183 per cent duty, or a total of 33 per cent without having recourse to the additional 12 per cent protection that will arise from the proposed allied reparation German export tax? Certainly if Congress wishes to be fair, in view of this reparation tax, the present 15 per cent ad valorem duty should be decreased and assuredly not increased.

In the matter of potassium perchlorate, we find our industrial aims checked, handicapped, and often thwarted by more or less similar monopolistic conditions, and for proof of this assertion your committee is respectfully referred to the recent investigations during the last two years or more of the Federal Trade Commission, as a result of which this body issued a formal complaint against our principal competitor, also against the sole American manufacturer of potassium perchlorate and the latter concern's sole agents, residence in New York. (See Federal Trade Commission's Docket No. 259, this issue now pending and awaiting a hearing.)

Furthermore, a careful investigation of the positions attained and now held by the manufacturers of the items included in the above list (strontium carbonate excepted) will readily convince any fair-minded person that the industries using these products as raw materials stand in the greatest need of protection by keeping down the tariffs on these same chemicals, when imported from abroad, as a safety valve against the domestic chemical manufacturer's extortion; and that to the Nation at large this is of far greater benefit than the giving of increased protection to these chemical manu