SURFACE-COATED PAPERS.

FRIDAY, July 6, 1888.

STATEMENT OF ETHAN ALLEN DOTY,

Of Doty & McFarlan, manufacturers of surface-coated papers, No. 70 Duane street, New

York.

Mr. Doty read the following to the subcommittee:

NEW YORK, July 5, 1888.

To the honorable Committee on Finance of the Senate of the United States: GENTLEMEN: The undersigned, representing the American manufacturers of surface-coated papers and card-board, respectfully represents:

That the manufacture of surface-coated papers and cards is largely carried on by some twenty-five different firms, with a capital of several millions of dollars and employing about two thousand hands. The business consists in taking paper as made by the paper-mills, coating its surface with various colors, glazing, decorating, embossing or printing it, as needed, for the purposes of paper-box makers, printers, etc., or pasting it with other sheets to form card-boards. This business being largely a product of the past twenty-five years, is not specifically mentioned in the tariff laws, and the goods are by decision of the Treasury Department rated in the act of March 3, 1883, section 2502, under schedule M, as "paper not otherwise provided for," or as "manufactures of paper not otherwise provided for."

Under this classification it is held that while surface-coated papers shall pay a duty of 25 per cent. ad valorem, if those papers shall by an additional process, involving more labor, be printed or cut into strips, stamped, pasted into card-board, or otherwise changed, they shall pay a duty of but 15 per cent. ad valorem. This discrimination against labor certainly could not have been intentionally inserted in the law, and we presume results from the adoption of the classification of the older tariff laws, the same phraseology having been used in the tariff law of 1861 and previous acts, as well as in all subsequent acts, though in the mean time new conditions have arisen and new industries have sprung into being. During the war and until the resumption of specie payments, the competition with foreign papers was but little felt, and subsequently it was not by the introduction of labor-saving machinery in our manufactories.

Since the reduction of the duty by the act of 1883, the foreign manufacturers have purchased here sample machines and reproduced them abroad, so that now our competition is almost entirely with German and Belgian surface-coated papers, made on machines similar to ours and produced by labor which receives as compensation less than one-third the amount paid here for the same work. We have to meet this competition not only as against this great disparity in wages, but using raw paper, which is protected by a duty of 25 per cent. and colors that are protected in many cases by a duty equal to 60 and 80 per cent. of their values, the result being that considerable importations have been made during the past year at rates that we can not meet, and which threaten the very existence of our business. While we may employ our capital perhaps in other more productive fields, we can not think that Congress can permit the labor engaged in the manufacture of these papers to be degraded to the condition of that in the manufactories abroad whose competition we haye to meet. The three elements which enter into our manufacture are:

(1) Paper as it comes from the paper-mills.

(2) Colors and dyes, with which we coat the surface of the paper.

(3) The labor required in the various processes of coating, polishing, decorating, and otherwise preparing the goods for the market.

In different varieties of our goods, the proportion of each item varies with the weight and quality of the paper, the expense of the different colors, and with the character of labor required in the varying processes, but for general purposes they may be considered as of equal importance and cost.

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Paper for our use is protected by a duty of 25 per cent. The domestic paper costs us from 41 to 8 cents per pound, according to the quality used.

Prices in England are probably no lower, but in Germany and Belgium, where our competitors manufacture, the papers are 20 to 25 per cent. lower on some grades at least; though the quality of the papers there differ so much from ours that a direct comparison is not easy.

The duty on our dyes and colors varies with each, running from 20 to 80 per cent. The cost of our labor here is easily from three to four times that of the German and Belgian factories we compete with. Several of our emyloyés, who previous to the present year worked for six and eight years at the same work in the Aschaffenburg Bunt Papier Fabrik at Aschaffenburg, Germany, assure us that the wages there for ten hours' work on the coating machine was 13.8 marks per week, equal to about $3.30 of our currency. On the same machine, and same character of work, our employés receive $12 to $16 per week. The same ratio holds out through the other departments of our factory. Engineer and machinist, whom we pay $21 per week, receive there 20 marks, equal to $4.76. Calendar hands, that we pay $12 to $16 per week, receive there 15 marks, equal to $3.57. A trained workman sufficiently expert to run a simple machine receives at the German factories 10 marks per week, equal to $2.38 of our money. In the Belgian factories, the same man would receive but 9 francs per week, equal to about $1.80. It is unnecessary to state that these workmen do not live as our workmen do; they simply subsist. In our factory we have some who have been with us twenty-five or thirty years and many others for half that time; it would be useless to ask these men to live as the workmen do abroad; they have been trained up to a better style of living.

Without actual statistics at hand, I estimate the surface-coated paper and card industries to employ about twenty-five hundred employés directly in their factories, to say nothing of several hundred more who are indirectly affected as jobbers and dealers in those goods through the country. The value of the goods produced I estimate at not less than $4,500,000 per annum. This industry, which has increased to these dimensions from very small beginnings in 1860, has developed its own market, and seeks now the protection necessary to hold it. Every item entering into the cost of our plant, buildings, machinery, etc., are of course much greater here than abroad, and this enhances the cost of our goods.

In a statistical table published in the number of February 11 of "Bradstreet's," which is received as the best authority on this class of statistics in the financial quarters of our city, it is shown that while the average rate per cent. of duty on the total imports in Class D (manufactured articles ready for consumption) has been increased slightly in the years 1884 to 1887, under the tariff of 1883, over the years 18-0 to 1883, that paper and manufactures of paper almost alone has borne the very serious reduction of over one-third, namely, from an average of 34 per cent. in the years 1880–83 to 21 per cent. in the years 1884-'87. This reduction is largely due to the unaccountable change effected in the tariff of 1883 on "manufactures of paper,” which were reduced from 35 to 15 per cent. duty, then, in common justice to our own as well as to several other industries, it should not have been altered.

As we are unable to conceive any reason why these industries should have been singled out for attack, or of any other industry that has been benefited by it, we be lieve it to have been a clerical error, though a very serious one for us. It is to correct this error, at least on our own manufactures, that we have petitioned Congress, but we also desire to have the duty on our goods specifically fixed by name, that they may not be dependent on the decisions of appraisers, who at present admit some as paper at 25 per cent., and others as manufactures of paper at 15 per cent.

It has been suggested in some quarters that we should look for relief to a reduction of the duty on our raw materials. But our investigations have shown us that the mills which produce the grades of paper that we use-the grades commonly known as news and book papers-can not suffer any further reductions without seriously reducing their labor. Our colors are compounded from so many different dyes, that it would be necessary to encroach on a hundred industries to effect any serious reduction in that quarter. As we do not understand this to be the policy of your committee, we do not consider it further.

The bill now under consideration in the House of Representatives contains a clause readingSurface-coated paper, and all manufactures of which surface-coated paper is a component material, not otherwise provided for, and card-board" shall pay 25 per centum ad valorem. This is inadequate and unsatisfactory, in that it proposes the same or less duty on our finished goods than is proposed on the raw material in use; which is the substance of our complaint against the present tariff. But it also leaves in force a very objectionable paragraph in the present tariff, viz: Schedule M, paragraph 802, "Paper, manufactures of, or of which paper is a component mate rial, not specially enumerated or provided for in this act, 15 per centum ad valorem. This paragraph is unjust not only to us, but to the lithographic and other printers and to several other trades. It enables unscrupulous importers to introduce goods

of similar make to ours under other names, such as leatherette, feltine, etc., claiming them as "manufactures of paper," and subject to duty of but 15 per cent. It enables the importer to put finished lithographic prints here at 15 per cent, while the American lithographer must pay a much greater duty on his raw material.

It is our judgment that two clauses of the bill introduced into the House of Representatives by Hon. Samuel J. Randall would meet the approbation of all the interests involved in this subject-manufacturers, submanufacturers, and consumers-and that its adoption would save dispute and litigation, as well as undervaluation under these sections We ask therefore, as a matter justice to our trade, that, in any bill your committee may propose, in the schedule relating to paper and its product there be added these clauses:

"Manufactures of paper, or of which paper is the component material of chief valvo not specially enumerated or provided for in this act, 25 per centum ad valorem.

"Papers known commercially as surface-coated papers and manufactures thereof, card-boards, albumenized and sensitized papers, lithographic prints, from either stone or zinc, bound or unbound (except illustrations in printed books), and all articles produced either in whole or in part by lithographic process, 35 per centum ad valorem." Trusting that you may be able to grant us the relief we ask, I remain,

to.

Respectfully,

ETHAN ALLEN DOTY,

(DOTY & MCFARLAN, 70 Duane street, New York.)

Senator ALDRICH. Have you anything special to add?

Mr. DOTY. There is one point I would like specially to call attention

Senator ALDRICH. Proceed in your own way.

Mr. DOTY. In the present tariff law there is this provision:

Paper, manufactures of, or of which paper is a component material, not specially enumerated or provided for in this act, 15 per centum ad valorem.

We understand that the Mills bill, as introduced in the House, does not modify that at all.

Senator ALDRICH. We intend to revise or recommend some change of that, of course.

Mr. DoTY. That is so completely out of accord with all the rest of the tariff that it works great injustice, and it is especially so now in regard to our goods, because importations are made the same as ours, but under other names.

Senator ALDRICH. What rate have you to suggest for "manufactures not otherwise provided for?"

Mr. DOTY. We would certainly suggest 25 per cent. I do not know of any reason why it should not be more than the other things, and I suppose 25 per cent. would not interfere with the other trade. The peculiar wording of that clause permits a certain amount of undervaluation.

Senator ALDRICH. What suggestion have you to make?

Mr. DOTY. The suggestions on that point are embodied in that paper which I have read. In connection with paper I submit a book of samples showing the grade of goods made and the stock from which they are made.

Senator ALDRICH. Are the descriptions contained in the Randall bill satisfactory to you?

Mr. DOTY. They are satisfactory to us. I appear here in connection with Mr. Henry H. Collins, representing the entire trade of surfacecoated paper. I think Mr. Collins has something to say.

STATEMENT OF HENRY H. COLLINS,

President of the A. M. Collins Manufacturing Company, 527 Arch street, Philadelphia.

Mr. COLLINS. I simply want to call attention, in connection with Mr. Doty's statement, to this book of samples of six sheets of imported paper and to another book of samples of six other sheets of paper made by ourselves.

Senator ALDRICH. This sample is for photographers' use?

Mr. COLLINS. For photographers' use. I also show you specimens of a German card and our card made out of that paper. That German stock comes in for less money than this can be sold for.

Senator ALDRICH. That is evidently wrong.

Mr. DOTY. That must have been a clerical error.

Senator ALDRICH. I have no doubt our committee will adopt your clasifications and make such corrections and such modifications as seem to be proper.

Mr. DOTY. And we shall be glad if they will do that.

Senator ALDRICH. Have you anything more to say, Mr. Collins? Mr. COLLINS. I think not.

Senator ALDRICH. Everything you want to present to us is incorpo rated in these papers?

Mr. Collins submitted the following:

To the honorable the Committee on Finance of the Senate of the United States :

As manufacturers of paper card-boards and on behalf of that industry, we beg leave to call your attention to what seems to be an error in the act of 1883, Schedule M. We quote the paragraph which covers our manufactures: "Paper, manufactures of, or of which paper is a component material, not specially enumerated or provided for in this act, 15 per centum ad valorem."

The act of 1874, Schedule M, reads: "Manufactures of, or of which paper is a component material, not otherwise provided for, 35 per centum ad valoreni.” Further, in the same schedule (M) of the act of 1883, paper boxes are rated at 35 per cent. and our manufactures at 15 per cent., while the raw material used in each case is of the same kind and taxed in the same schedule at the same rate.

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This erroneous classification and unequal rate of duty works serious injustice to our industry. This injustice will be seen referring to the accompanying exhibits, illustrating the process of manufacture. In number 1 we have six slips, cut from sheets of paper 23 by 29 inches, rated in Schedule M, act of 1883, as all other paper not specially enumerated or provided for in this act, 25 per centum ad valorem.” In number 2 we have a finished card, which is made by pasting together six sheets of paper, forming a sheet of paper card-board 23 by 29 inches, which is then enameled with a pigment, then cut to shape, then covered on edges with gold leaf.

The materials used in the process of manufacture being rated in the act of 1883 (with the exception of the gold leaf, which is rated at 20 per cent.) at 25 per cent., the difference in the cost between the raw materials (number 1) and the finished product (number 2) is 60 per cent.; 50 per cent. of which difference represents the home labor, left entirely unprotected by the present tariff.

The injustice of the present act will still further appear by comparing number 2 with number 3, an imported German paper card. The materials of these two cards are substantially the same, but the raw material of number 2 is taxed at 25 per cent., the German card (number 3) at only 15 per cent. This is contrary to what appears to be the underlying principle of the act, namely, the highest duties where labor is the important factor:

As a classification of our manufactures may appear to you desirable, we would respectfully suggest for your consideration the following:

Paper card-boards, 35 per centum ad valorem.”

This classification is believed to be correct and the duties suggested no higher than is necessary in order to protect against a rapidly-increasing foreign competition. Respectfully submitted.

A. M. COLLINS MANUFACTURING COMPANY,

PHILADELPHIA, July 5, 1888.

HENRY H. COLLINS,

President.

PAPER.

FRIDAY, July 6, 1888.

STATEMENT OF HON. WILLIAM WHITING, M. C. FROM MASSACHU

SETTS.

Mr. WHITING. I think the paper manufacturers are satisfied with the present rate of duty on everything except manufactures of paper. They are not satisfied with that, because paper, which pays a duty of 25 per rent., is manufactured, and then they import it and pay a duty of 25 per cent.; and the people who manipulate it or cut this paper in one way or another bring it in on a duty of 15 per cent.; and on that point our people are not satisfied.

Senator ALDRICH. We have heard the surface-coated-paper people this morning as to the reasons upon which they think there ought to be an increase in the rate of duty. They ask for 35 per cent.

Mr. WHITING. I think they ought to have 30 or 35 per cent. That is substantially all I have to say now. I should like 35, but I think 30 is a fair figure.

Senator ALDRICH. Did you ever hear of this proposition which we have embraced in a skeleton bill before us: "Books, including blank books of all kinds, pamphlets or engravings, bound or unbound, photographs, etchings, maps, charts, and all printed matter not specially enumerated or provided for in this act, 25 per cent. ad valorem." Would that be satisfactory to the paper people?

Mr. WHITING. I think it would.

Senator ALDRICH. Then we have a provision for surface-coated paper, which we have made 30 per cent. ad valorem in this suggested bill. This is only a suggestion, you understand. Then follows this: "Paperhangings and paper for screens or fire-boards, writing-paper, drawingpaper, filtering-paper, letter-press copying-paper, and all other paper not specially enumerated or provided for in this act, 20 per cent. ad valorem."

Mr. WHITING. That is putting it down 5 cents.

Senator ALDRICH. The next provision is: "Paper, unsized, or sized, or glued, suitable only for use as printing paper, 15 per cent. ad va

lorem."

Mr. WHITING. That is as it stands to-day.

Senator ALDRICH. The next provision is: "Sheathing paper, 10 per cent. ad valorem." What suggestions have you to make? You think the rate on paper-hangings and letter-press paper and writing-paper

should be 25?

Mr. WHITING. Twenty-five per cent. That is what it is now, and that is a pretty small rate of duty.

Senator ALDRICH. Are these descriptions satisfactory to you?

Mr. WHITING. I think so. Where have you book paper; for instance, paper as they use in the publication of magazines?

such