In all the schedules the great number of instances should be noted in which the increase in the duty is 5 per cent; that is, for instance, a duty may be increased from 30 to 35 per cent ad valorem. Wool suitable for the manufacture of woolens and worsteds has been increased from 31 cents per pound of clean content to 34 cents, and compensatory duties given on manufactured products based on this increase of 3 cents per pound; in some instances the protective rate has been increased by the 5 per cent mentioned above. In the schedule on papers and books but little change was made. The sundries schedule contains many paragraphs covering a very diverse list of articles impossible to enumerate in detail. Many of the paragraphs are unchanged except in language. Hides and skins, boots and shoes, and leather generally, remain on the free list. SUMMARY The Republican members believe that the readjustments are justified by existing differences in competitive conditions, and necessary for the welfare of all interested in the changes made, and that they will maintain and promote the general welfare. Especial attention was given to their importance to our wage-earning population. ADMINISTRATIVE PROVISIONS A detailed discussion of the changes in the administrative provisions of the present law will be found under the appropriate headings in this report. Accordingly, it is unnecessary to discuss them at this time. The more important changes are recommended modifications in the so-called "flexible tariff provisions", in the organization of the Tariff Commission, and in the determination of the basis to be used in the appraisal of merchandise. OUR POSSESSIONS All amendments proposing to restrict in any way imports from the possessions of the United States by imposing limits as to kind, quality, values, or in any other way, were rejected. REPORTS BY SUBCOMMITTEES ON THE SEVERAL SCHEDULES This is a general and preliminary statement. It has been considered best in reporting the bill that each subcommittee should report on the schedule assigned to it. Therefore, the changes made, and the reasons for such changes, will appear in this report under the separate schedules. At the end of each schedule will be printed the present law with language to be omitted inclosed between black brackets and the new rates and new language printed in italics. This will assist anyone desiring to find any proposed change and the reasons therefor. The schedules will appear in the report in their numerical order. TITLE I-DUTIABLE LIST SCHEDULE 1.-CHEMICALS, OILS, AND PAINTS REPORT BY THE SUBCOMMITTEE LINDLEY H. HADLEY, Chairman JAMES A. FREAR The Committee on Ways and Means, in the preparation of Schedule 1, was furnished with detailed information on all the articles in the chemical schedule by the United States Tariff Commission in the form of so-called Summaries of Tariff Information. The Treasury Department and the Tariff Commission also supplied detailed information regarding suggested rephraseology of certain paragraphs in the Act of 1922 in order to avoid litigation which has arisen, and to broaden the scope of the general provisions of some of the paragraphs. The exhaustive revision of nomenclature and simplification of phraseology which was made in the Act of 1922 rendered unnecessary any fundamental redrafting of the chemical schedule of the present bill. In the consideration of Schedule 1, the Tariff Commission has made available a greater wealth of statistics of imports, exports, and production, of prices, and of costs of production, than has perhaps been possible in the case of any other schedule. The costs of production investigations by the Tariff Commission for the purposes of section 315 of the Act of 1922, have afforded invaluable data, not only on the items investigated, but on many others indirectly concerned in the investigations. The committee has in general been guided by the facts obtained in these investigations, and it has perpetuated nearly all the rates which have been changed by presidential proclamations. Full consideration was given to the testimony and the contents of the briefs submitted at the hearings on chemicals and allied products. The equivalent ad valorem rate for the dutiable items of the chemical schedule imported under the Act of 1922 up to 1928 is 33.78 per cent, compared with an average of 37.67 per cent for all dutiable. items imported during the same period. Furthermore, the percentage of imports (by value) of duty-free chemicals to that of all dutiable chemical imports under the Act of 1922, is 71.83, as compared with 62.73 per cent, the ratio for all duty-free imports to all dutiable imports. The equivalent ad valorem rate on all chemicals, dutiable and free, imported under the Act of 1922, is 9.39 per cent, as compared with an equivalent ad valorem rate of 14.04 per cent on total imports of all kinds during the same period. Therefore, it can not be successfully contended that the rates of duty in Schedule 1 of the Act of 1922 are above the levels of other schedules. 50785-H. Doc. 15, 71-1- -17 In general, the treatment of Schedule 1 by the committee is in no sense a revision, but rather a readjustment in certain items in order to meet the changed conditions in certain industries since 1922. This schedule contains many hundreds of items. The committee received requests for changes in 70 of the 93 paragraphs of the chemical schedule. Changes have been made in rates in only 29 of these paragraphs. In addition, about 32 commodities have been specifically mentioned, and there have been changes in phraseology in certain paragraphs in order to avoid litigation and ambiguity. Rates have been changed on 39 commodities, of which 33 were increases and 6 were decreases. Some of the increases represent adjustments of compensatory duties which were out of line with the base rates, and these have been properly adjusted. Thirteen items have been transferred from the dutiable list to the free list, of which seven are of particular interest to agriculture-the fertilizer materials urea, fish scrap, fish meal, and tankage, the insecticides calcium arsenate and Paris green, and santonin and its salts, used as a vermifuge for hogs. Other items transferred include materials not produced in this country-buchu leaves, a crude botanical drug; licorice root, the raw material for licorice extract; and argols, tartars, and wine lees, the raw materials for tartaric acid and cream of tartar. Of the seven transfers from the free list to the chemical schedule, three items-citrous juice, palm-kernel oil, and sesame oil-pertain to agricultural products; the other items include chromic and nitric acids, kieserite, and spermaceti wax. Decreases were made in the rates on phenol or carbolic acid, cresylic acid, ortho, meta, and para cresol, and synthetic camphor. A number of commodities which have become of importance in the industrial change since 1922 have been given specific mention for the first time. The rates in paragraph 5, the basket paragraph, and in the basket clauses of other paragraphs, have not been disturbed. The chemical industry has undergone striking developments during the seven years in which the present tariff act has been in operation. New processes have reduced costs and rendered old methods obsolete. Many new products have been developed. The ability of America to apply research to the solution of manufacturing problems and the development of new products has been most gratifying, and gives us every reason to believe that we are on the threshold of even greater and more far-reaching achievements in the course of the next few years. COAL-TAR PRODUCTS The coal-tar chemical industry became firmly established in the United States as a result of the World War. Since the close of the war, under the protection afforded by the Act of 1922, the industry has continued to develop so that to-day it represents an investment of about $100,000,000 and employs 10,000 men. The years since 1922 have been characterized by sharp competition between domestic manufacturers, a decreasing number of manufacturers, cheaper prices for dyes and other products, and an increased demand for fast colors. The development of fast dyes having brightness, fastness to sun, laundering, ironing, etc., has been brought about by the devotion of a large amount of money and time to the problems involved. The increased production by improved methods of the important intermediate, anthraquinone, greatly facilitated the development of fast dyes. Other important developments in the coal-tar industry include the production of phthalic anhydride by cheaper methods, the production of synthetic phenol from benzene, the development of insecticides and fungicides, by which increased yields and improved qualities of such crops as wheat, corn, potatoes, and other farm products may be obtained. The production of new chemicals for the rubber industry is of more than usual significance, in that by the development of antioxidants, of accelerators for vulcanization, and of compounds for improving the ageing of rubber, the life of many articles of rubber has been extended in some cases from 100 per cent to 500 per cent. The development of new pharmaceuticals for the control and prevention of disease is one of the most important contributions of chemistry to the welfare of mankind. Requests were made for the restoration of the original rates which obtained in paragraphs 27 and 28 for two years after the date of the passage of the Act of 1922. These rates were automatically reduced under the provisions of the act from 60 per cent ad valorem to 45 per cent ad valorem in paragraph 28 and from 55 per cent to 40 per cent ad valorem in paragraph 27. In view of the creditable progress of the industry and upon the further facts as to its status and condition disclosed upon the hearings, the committee recommends the continuance of the present rates based upon the American selling price as provided in the present law. In this connection attention is called to a further important recommendation, viz, that the provision of the existing law prohibiting any increase of the rates in paragraphs 27 and 28 under section 315 be stricken out. In view of the automatic reduction from the temporary to the permanent rate above specified there does not appear to be any sound reason for longer retaining this distinction in the application of the flexible provision. The adoption of this recommendation will afford thereafter the benefit of this remedy to all items in the schedule. DERIVATIVES OF HYDROCARBON GASES Paragraph 2 of the Act of 1922 covers chemicals derived from hydrocarbon gases which are constituents of natural gas. In 1922 this industry was in its infancy and production of the derivatives was not on a commercial scale. The rates of duty provided by the Act of 1922 have fostered the development in the United States of this new synthetic organic chemical industry based upon a hitherto undeveloped series of chemical compounds, and comparable in promise of future value to the development of the coal-tar series of chemicals in Germany. There has been a phenomenal increase in the domestic production of some of these products, and a decline in price. Of great military significance is the fact that the plant for manufacturing certain of these products can readily be converted to the production of mustard gas. Among the more important products of this industry is ethylene glycol, the chief use of which is as a partial substitute for glycerin in the manufacture of dynamite, the freezing point of which it lowers. It has also substantially displaced denatured alcohol and glycerin as an antifreeze in automobile radiators. The domestic consumption of ethylene glycol increased from 10,000 pounds in 1922, to nearly 12,000,000 pounds in 1927. Other valuable derivatives are used for lacquer solvents, extraction solvents, synthetic gums and resins, and medicinals. Paragraph 2 has been expanded to include the more important of these products not mentioned in the Act of 1922, but the rates of duty in paragraph 2 remain unchanged. It was not until 1927 that synthetic acetaldehyde and its solid form, paracetaldehyde, were produced on a large scale in the United States from acetylene, the gas evolved when calcium carbide is treated with water. These products have become of increasing importance in the manufacture of accelerators for the vulcanization of rubber, and in the synthesis of many organic chemicals. Of these synthetic derivatives, the most important is acetic acid, production of which was commenced on a large scale in 1928. BUTYL ALCOHOL, METHANOL, AND OTHER ALCOHOLS The domestic production of butyl alcohol from corn, by a process developed during the war, has kept pace with the increased output of automobiles, in the lacquers for which this alcohol and its derivatives are chiefly used. In 1928 about 8,000,000 bushels of corn were consumed in the production of butyl alcohol. Of the derivatives of butyl alcohol, butyl acetate is the most important and has suffered the most from the competition of imports. It is estimated that the importations of butyl acetate in 1928 displaced nearly 800,000 bushels of corn which would have been used in the production of the primary product, butyl alcohol. Butyl acetate is not specifically mentioned in the Act of 1922, being dutiable under a basket clause at a lower rate than the equivalent duty on butyl alcohol. The committee |