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COMMITTEE ON FINANCE.
BOIES PENROSE, Pennsylvania, Chairman. PORTER J. MCCUMBER, North Dakota. FURNIFOLD M. SIMMONS, North Caroliny REED SMOOT, Utah.
JOHN SHARP WILLIAMS, Mississippi. ROBERT M. LA FOLLETTE, Wisconsin. ANDRIEUS A. JONES, New Mexico. WILLIAM P. DILLINGHAM, Vermont. PETER G. GERRY, Rhode Island. GEORGE P. MCLEAN, Connecticut.
JAMES A. REED, Missouri.
DAVID I. WALSH, Massachusetts.
LEIGHTON C. TAYLOR, Clerk.
TARIFF-FLAX, HEMP, AND JUTE, AND MANU
MONDAY, DECEMBER 12, 1921.
UNITED STATES SENATE,
Washington, D. C. The committee met, pursuant to adjournment, in room 312, Senate Office Building, at 10.30 o'clock a. m., Hon. Boise Penrose presiding.
Present: Senators McCumber, Smoot, La Follette, Dillingham, McLean, Curtis, Watson, Calder, Sutherland, Simmons, Reed, and Walsh.
The CHAIRMAN. The committee will come to order. The committee has before it this morning the hearing of certain gentlemen on schedule No. 10 in the House tariff bill, relating to flax, hemp, and jute, and manufactures of the same.
Is Mr. Linus C. Coggan present?
STATEMENT OF MR. LINUS C. COGGAN, REPRESENTING
CHAS. NIEDNER'S SONS CO. AND WILLIAM & CHARLES BECK (INC.), LAWRENCE, MASS.
The CHAIRMAN. Mr. Coggan, will you kindly state your residence ?
The CHAIRMAN. You are not there as a principal or as a manufacturer?
Mr. COGGAN. No, sir; I am representing all the linen fire-hose manufacturers of this country, and in addition to those which appear opposite my name I represent the Eureka Fire Hose Manufacturing Co., whom Mr. McKeon appears on that list as representing.
The CHAIRMAN. How many do you represent?
The CHAIRMAN. With all due deference to you as an attorney, the committee would like to hear from the principals.
Mr. COGGAN. Mr. Chairman, I am also an officer of the Beck Co. Mr. Niedner is here, as is Mr. McKeon. Adopting your suggestion, we have unified our interests and I am to speak for them.
The CHAIRMAN. You are to be the only speaker, are you?
Mr. COGGAN. Yes, sir; I am to be the only speaker. I am going to take but a few moments of
time. The CHAIRMAN. Very well; you may proceed.
Senator Watson. To what paragraph do you intend to address yourself?
Mr. Coggan. To paragraphs 1004 and 1007.
Senator Watson. You have a brief prepared in addition to the remarks you are about to make, have you?
Mr. Coggan. I have; yes, sir.
The CHAIRMAN. If you have something that you wish to print, I suggest that you call the attention of the committee only to the high points.
Mr. Coggan. I shall be glad to do so. There are three points to which I wish to call your particular attention. The first one is that we can not get in this country the material that we need. It is impossible to get it. There is not grown the flax from which can be made the flax-line yarn such as is used in the manufacture of linen fire hose, so that we are asking to have the flax-line yarn for the manufacture of fire hose admitted free of duty. The only result of imposing a duty on flax-line fire hose for this purpose is to make the American consumer of fire hose pay more for his product, and that being an element entering into building construction, we feel that those costs should be kept down and that the yarn should be admitted without duty.
Senator McCUMBER. Is there not something produced here in competition with that?
Mr. COGGAN. No, sir.
Senator MoCUMBER. Something in the nature of a substitute, or anything of that character?
Mr. Coggan. Nothing is made in this country which competes with the yarn which we use in the manufacture of fire hose. That comes from Scotland.
Senator McCUMBER. Can't you use a substitute!
Mr. Coggan. No, sir; not a substitute that is suitable. It is not made in this country.
Senator Smoot. Do you want to mention that class of yarn by number?
Mr. COGGAN. Yes. I have done that in my brief. I do not intend to take up the details. We have set out all these reasons and have analyzed the situation, if a duty is imposed.
As a second point, if a duty is to be imposed, it should be upon an ad valorem and not upon a specific basis, and the reason for that is also set out in our brief.
Senator Watson. You say none is manufactured in this country?
Mr. Coggan. No, sir. There is a product made which can be used in a cheaper character of hose, but it would be impossible to get it in quantity.
Senator SMOOT. Are you objecting to flax straw at $2 a ton?
Senator Smoot. All you want is flax yarn for fire hose to come in free?
Mr. Coggan. Yes; and if not free, upon an ad valorem rather than upon a specific basis.
Senator Smoot. Do you mention the ad valorem you desire in your brief?
Mr. Coggay. Yes; whatever the ad valorem is, we desire a differential of 30 per cent as between the yarn and the finished goods.
The CHAIRMAN. Is there anything else, Mr. Coggan?
(The brief submitted by Mr. Coggan is printed in full, as follows:) BRIEF for EUREKA Fire Hose MANUFACTURING CO., CHARLES NIEDNER's Sons Co., AND Wu. & Chas. BECK (INC.), ON SCHEDULE 10, FLAX LINE YARNS, PARAGRAPHS 1004 AND 1007.
GENTLEMEN: This brief is submitted by and in behalf of every linen fire-hoee manufacturer in the United States.
There are three contentions:
1. That flax-line yarns imported solely for the manufacture of linen fire hose should be admitted free from duty.
2. That if it seems wise to impose a duty upon flax-line yarns admitted for this or any other purpose the duty should be upon an ad valorem and not upon a specific basis.
3. The duty imposed on finished hose under paragraph 1007 in the proposed bill is insufficient.
1. Linen fire hose, such as you see hanging in the corridors of all large buildings and about industrial plants, is a high-grade product manufactured to comply with specifications, as determined by the boards of fire underwriters. It is made exclusively from imported flax-line yarns of grades between 8 and 20 lea, inclusive.
There is not grown in this country a suitable flax, nor is there manufactured in this country a flax line yarn suitable for making high-grade linen fire hose.
Necessarily any duty whatever which is paid by the manufacturers of linen fire hose upon the yarns entering into their products only forces the consumer of fire hose in this country to pay just so much more for the finished product. Inasmuch as this is an item entering into building costs, everything should be done to decreare these costs and encourage new construction rather than to increase them. Further, as no one needs protection for this class of raw material, it seems to us highly advisable that flax line yarns imported solely for the manufacture of linen fire hose should be admitted free from duty.
If it should be admitted that it is possible to procure a character of yarn in this country to make a cheap and inferior grade of fire hose, evidence and proof is available that there is no adequate supply to satisfy the requirements of the hose manufacturers.
2. It is submitted that the specific duty on yarns as proposed in paragraph 1004 is wholly impractical and unscientific, and may under conditions, which it is quite probable will arise in the near future, drive out of existence manufacturers using this class of material.
C'nder the proposed bill the completely manufactured foreign goods with which we have to compete are assessed only at an ad valorem duty of 26 per cent, while the raw material or yarns is advanced from an ad valorem duty of 20 per cent to a specific duty amounting to from 35 to 40 per cent of present-day values and which would amount to from 70 to 80 per cent ad valorem should these goods reach the prewar values, which is entirely probable.
It may be argued that under the proposed "American valuation clause" the foreign article with which we must compete will pay a higher duty than if assessed upon the foreign values, which we admit, but even so, the foreign goods may well be landed here at less cost than we are able to manufacture them for.
To illustrate specifically this conclusion, let us take an actual example. In May, 1921, our Underwriter's hose, 24-inch, was selling at approximately $2 per pound. The duty on such hose under the proposed Fordney bill, 26 per cent ad valorem, would be 52 cents per pound. Now, bear in mind that slightly more than 1 pound of boiled yarn, 20 lea, would be required to make 1 pound of hose, so that the duty as scheduled in the proposed bill upon that 1 pound of hose would be 20 cents. Therefore, the net protection would amount to 52 cents per pound of hose, minus 20 cents, leaving 32 cents, which is a protection of 16 per cent upon the domestic price. It will be obvious, of course, that as prices gradually recede to normal the percentage at a specific rate of duty will constantly increase, while the imported finished hose which competes with our goods will pay less and less duty until finally we will have to pay as much duty in actual dollars and cents upon yarn or raw material per pound as our foreign competitor pays upon his finished article, as we will
show. Assume that the hose mentioned above selling at $2 a pound was selling at 75 cents a pound in 1914 and the yarn now costing us 75 cents a pound without duty would