still we would only compel the turning of a very small percentage of this amount of coal into coke?

Mr. PENNOCK. Yes, that is true. I would like to make a further statement along this line regarding the same industry in Germany. Formerly beehive ovens were used almost exclusively. There has been a gradual development of the retort coke oven, so that one could say 80 or 85 per cent of the coal coked in Germany is now coked in the retort coke oven, so rapid has been the development of the retort coke oven in Germany. The same thing is developing in England. The beehive oven is rapidly being displaced by the retort coke oven, and these valuable by-products obtained.

The CHAIRMAN. Still, Germany is very far in the lead?

Mr. PENNOCK. Yes, sir.

The CHAIRMAN. As she is in the manufacture of all chemical products?

Mr. PENNOCK. Yes, sir. This is simply an argument to show that, could the manufacturer in this country derive some protection in this way, there would be additional returns from the retort coke ovens and capitalists might be induced to put up these rather more expensive ovens in preference to the extravagant beehive ovens, which naturally are less expensive to build; but the capitalist must see, in the return of his by-products, sufficient income to induce him to put up the more expensive retort coke oven.

The CHAIRMAN. Would our chemists be able now to produce those articles if there is a sufficient protective tariff upon them, or is it necessary for them to make investigation and invention?

Mr. PENNOCK. Not at all. There is no question about it; absolutely no question.

I have nothing to say about the coal-tar colors. Those, you understand, are principally patented, and we could not manufacture them here anyway, except the more simple sort; but these are the intermediate products which are imported into this country free of duty and go directly to the dyer, which he can use in the development of colors, and they all practically appear under that paragraph 524.

A number of these that we have petitioned for duty upon are introduced into this country in comparatively small quantities, but still a number are imported in very large quantities. I would refer particularly to aniline oil and aniline salts and alizarine. The importation of oil and aniline salts together they are classified together— amounts to something like $700,000 or $800,000 a year in value. Alizarine, which is made from anthracine as a starting point, is another. There are various other chemicals used in the manufacture of all our coal-tar products in this country. The importation amounts to $450,000 for alizarine alone.

Mr. NEEDHAM. You speak of some protection. You have not suggested any rate. What rate do you suggest?

Mr. PENNOCK. Well, sir, for instance: Among the crude or primary coal-tar products we have suggested on coal tar one-half cent per gallon; pitch, three-quarters of a cent per gallon; 100 per cent benzol, which is a starting point for these intermediate products, 7 cents a gallon. The selling price is from 25 to 30 cents a gallon. On 90 per cent benzol, which is an intermediate and cheaper grade, on that we ask 4 cents per gallon. On the crude or alloyed oil, which is a cruder product still, containing not over 50 or 60 per cent of pure

benzol, we ask 4 cents per gallon. Then on toluol, which is in the same chemical series as benzol, we ask 8 cents a gallon, because it is recovered from the crude oil in very much less quantity, and it is naturally more expensive. The same may be said of xylol. Benzol, toluol, and xylol all belong to the same series, all recovered from coal tar by distillation. Phenol and creosol are other products. Naphthalin is still another product, a primary product, on which we would ask 20 per cent ad valorem. Those are the ones that we consider primary coal-tar products. They result from one distillation of coal tar by the proper separation of the distillate. The second class, or intermediate coal-tar products for dyestuffs, result, as we have said, from the chemical treatment of the primary products which I have just spoken of. Among those I would enumerate aniline oil and the aniline salts as being first and most important imported into this country.

Mr. HILL. None is produced here now?

Mr. PENNOCK. None now. I would say that an attempt has been made in years past to produce them, but without success.

Mr. HILL. About 10,000,000 pounds were imported last year?

Mr. PENNOCK. Yes, sir; and it sells at the present time for about 11 cents; from 10 to 11 cents per pound. The aniline oil is the first product obtained in producing it. Pure benzol is used. Nitric acid can be made as cheaply in this country as elsewhere, and sulphuric acid can be produced as cheaply, if not more cheaply here. Mr. HILL. And aniline salts?

Mr. PENNOCK. The raw materials which go to produce aniline oil and salts are produced in this country as cheaply as in any other country in the world, because the base of nitric acid is nitrate of soda, and that is imported from Chile. We can get it as cheaply as anybody can. The other acid used in its manufacture, hydrochloric acid, can likewise be produced in this country equally well, so that all the raw materials which go into the manufacture of these products can be obtained as cheaply here as elsewhere.

There is this factor, the difference in labor; and labor, I am convinced, does enter into the manufacture of these products to such an extent that it will be a great detriment. Nevertheless, we need 20 per cent, or say about 2 cents per pound, in the way of duty.

Mr. HILL. What is the proportionate cost of labor at 8 cents a pound, which is quoted here as the import price, for aniline salts? What proportion of that would be labor?

Mr. PENNOCK. I should say 30 to 35 per cent.

Mr. HILL. How much cheaper is the raw material here than in Germany?

Mr. PENNOCK. I should say that the first raw material, which is benzol, may be produced equally as cheap in this country.

The other products, with one exception, hydrochloric acid-possibly it may be produced in the old country somewhat more cheaply than here but the other acids can not be.

Mr. HILL. Your idea is, then, that 2 cents a pound, or 2 cents, would promote the industry in this country of aniline salts?

Mr. PENNOCK. Absolutely so, sir.

Mr. UNDERWOOD. Mr. Chairman, I would like to ask the witness. some questions. You desire [addressing witness] a duty placed on the by-products of the retort coke ovens? That is the purpose?

Mr. PENNOCK. Yes, sir.

Mr. UNDERWOOD. You stated it a while ago, but I will ask you to state it again. What has been the development of these by-product coke ovens in this country under free trade? There is no duty on the by-product now?

Mr. PENNOCK. There is no duty.

Mr. UNDERWOOD. What has been the development in this country so far?

Mr. PENNOCK. As I have stated, since 1896 there has been a gradual development, an introduction of the by-product coke oven at the present time from 300 ovens to 4,000 ovens.

Mr. UNDERWOOD. What amount of by-product is produced in these 4,000 ovens?

Mr. PENNOCK. Of course the particular product here considered is tar. I should say 25,000,000 gallons. That is what the SemetSolvay Company can produce per annum, and we have constructed one-third of the retort coke ovens of the country; so I should say 75,000,000 gallons would cover it.

Mr. UNDERWOOD. Now, in the retort coke oven is the principal product manufactured coke, or the manufactured by-product?

Mr. PENNOCK. The chief product is coke.

Mr. UNDERWOOD. Has it not been claimed by the Semet-Solvay Company that they could manufacture coke as cheaply in the retort as in the beehive oven?

Mr. PENNOCK. The cost of producing coke in the retort coke oven depends entirely upon the value obtained for the by-products. The relative cost of the beehive oven and the retort oven is the same as $2,000 is to $5,000 per oven. That is, the relation is about that. To overcome that great difference in the cost something must be obtained for the raw materials.

Mr. UNDERWOOD. But in the prospectus issued from time to time by the Semet-Solvay Company to induce manufacturers to put their plant up, have they not held out to the manufacturers that they can produce coke cheaper and at less original cost in the retort coke oven than in the beehive oven?

Mr. PENNOCK. Yes, sir; it can be done.

Mr. UNDERWOOD. Then the natural tendency would be, if your statements are correct, to induce the manufacturer to put up the retort coke oven, even if there is no protection, if under the present conditions you can produce cheaper?

Mr. PENNOCK. The development of the retort coke oven has fallen off in the last two or three years.

Mr. UNDERWOOD. Is not that due to the fact that there is no demand in this country for your by-product; is not that the reason?

Mr. PENNOCK. We have at the present time some 500,000 gallons of benzol for which there is no market.

Mr. UNDERWOOD. The real reason that your product has fallen off is that you have not found a market in this country, and up to this time you have a product that fully supplies the demand of the American market.

Mr. PENNOCK. Under the existing conditions.

Mr. UNDERWOOD. If we put a tariff duty on your by-product would not that to that extent retard the chemical manufacturers of this country by increasing the cost of their materials?

Mr. PENNOCK. Referring to aniline and alizarin salts, one would naturally think that the cost of those salts would be slightly increased to the consumer. I do not see how we can get away from that.

Mr. UNDERWOOD. Instead of developing the manufacture of the product at home we would retard the development of the product by putting a tariff duty on this by-product which we have already developed in excess of the home market without any duty on it at all? Mr. PENNOCK. No, sir. I think there are so many articles-aniline, alizarin, and a number of others which are produced from benzol, and that it would develop an industry and that it would further lead to a greater return to the owners of the by-product ovens.

Mr. UNDERWOOD. I grant you that if we put a duty on the byproduct of the retort ovens that it would put a profit in the pocket of the manufacturer.

A while ago you stated that the object of this was to increase the development of the chemical manufactures in this country. I want to know if we put a tariff on this by-product that is now on the free list if we would not retard the manufacture of chemicals from these coal-tar products rather than advance it in this country.

Mr. PENNOCK. I do not think so, because these chemicals are not produced in this country at the present time.

Mr. UNDERWOOD. You would increase the cost of the raw material by putting a duty on the coal-tar products, would you not? Mr. PENNOCK. Naturally.

Mr. UNDERWOOD. And to that extent it would retard their manufacture and the ability of the American manufacturers to compete with foreign manufacturers of chemical products?

Mr. PENNOCK. It would naturally keep out of this country a good deal of the oversurplus of this raw material.

Mr. UNDERWOOD. Nitrates are on the free list?

Mr. PENNOCK. Yes, sir.

Mr. UNDERWOOD. If you put a tariff on the coal-tar products manufactured from nitrates to that extent you would raise the cost of all nitrates manufactured in this country?

Mr. PENNOCK. There are no nitrates manufactured in this country. Of course the raw material, nitrate of soda, enters somewhat into their manufacture.

Mr. UNDERWOOD. And you would increase the cost of nitrate of soda in this country?

Mr. PENNOCK. Nitrate of soda is merely a raw material that goes into the manufacture of aniline and alizarin, and so on.

Mr. UNDERWOOD. They are all on the free list now?

Mr. PENNOCK. Yes, sir; and remain there.

Mr. UNDERWOOD. You would increase the cost to the home manufacturer by putting a tax on his raw material when he can only compete with the world by putting the product on the free list.

Mr. PENNOCK. I do not see it that way. Not the chemical manufacturer. The only possibility of increasing the cost to anyone is the user of aniline salts and alizarin, and it is a question whether in time that would be increased. It must be done temporarily until the infant industry of this country is well established.

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Mr. UNDERWOOD. But the fact is you have developed your retort oven to the full extent that the country is able to consume your byproduct already.

Mr. PENNOCK. Yes, sir; but there is a gradual consumption of all raw materials, particularly ammonia sulphate. There has been very little fertilizer used in this country up to the present time and there is going to be a great deal more. All the other by-products are consumed in this country, with the exception of benzol, at the present time. The price of ammonia sulphate still keeps up no matter how much is produced in this country. That is one of the largest returns that the owners of the retort coke ovens get.

Mr. GRIGGS. Did I understand you to say that we should put a duty on nitrate of soda ?

Mr. PENNOCK. No, sir.

Mr. UNDERWOOD. Nitrate of soda is made from the coal-tar byproducts ?

Mr. PENNOCK. Nitrate of soda is a mineral substance which enters simply in the production. Nitrate of soda is a commercial term applied to benzoi.

Mr. HILL. You do not ask for any duty on benzol; you ask for a duty on aniline salts and alizarin oil?

Mr. PENNOCK. We do ask for a duty on benzol, because there is a large importation of it at the present time, and then the question of freight enters so into these articles that are now imported from England and Germany. Take the cotton ships returning from England and Germany. Take the cotton ships returning from Liverpool, and they will bring goods to this country at a lower price, freight rate, than we can ship from New York or Philadelphia to New Orleans, or it can be brought from England to Boston cheaper than it can be shipped from Philadelphia to Boston, all water, both water rates. So the question of freight rates enters into the subject and to offset that we would like some protection. I simply mention that as a reason for giving us a little something on these raw materials. We do not know what may develop.

Mr. NEEDHAM. As I understand, the demoralization of the market is not because of the excess of production, but because of the excess of importation which, added to the production here, has made a surplus?

Mr. PENNOCK. Yes, sir; that is true.

Mr. NEEDHAM. And if it were confined to what is produced in the United States there would not be an excess?

Mr. PENNOCK. No, sir. In the potential value of the tar there is material which we have not begun to recover because there is no market. If we could have protection on benzol a large amount of the substance that is in the tar would be recovered and disposed of.

Mr. UNDERWOOD. I understand that the freight rates affect you. Is not the freight rate from foreign countries really in your favor; they have a greater freight rate than you have to pay?

Mr. PENNOCK. No, sir. As to the internal rates throughout the country it is a different matter. On these return steamers that go to England loaded with cotton from New Orleans the freight rate is lower than it is from New York or Philadelphia to New Orleans.

Mr. UNDERWOOD. That applies to the coast line, but not to the interior of the country?