by 1937 from almost 40 percent of total production to 10.18 percent. Class A cigars (5 cents or less) rose from 30 to about 88 percent of total production by 1937, and have now reached nearly 90 percent. This sharp decline in cigar production has naturally been reflected in a marked decrease in the production of domestic cigar leaf tobacco, grown in Connecticut, Florida, Georgia, Massachusetts, Minnesota, New York, Ohio, Pennsylvania and Wisconsin. For the years 1928-32 there was an average production of about 1721⁄2 million pounds (Crops and Markets, U. S. Department of Agriculture, Dec. 1, 1936). In 1938 production amounted to about 107 million pounds and in 1939 to about 126 million pounds. The increase over the prior year is due largely to increased yield per acre rather than increased acreage. This steady decline in cigar consumption and the consequent decrease in domestic cigar-leaf production are due not only to economic conditions generally, but to increased competition from cigarettes. The shift in public favor, it has frequently been urged, is not inevitable or permanent, but instead the cigar industry requires an effective stimulus, which it is believed is supplied in part by the readjustment of the Cuban tobacco-tariff rates. The unique aroma and flavor and the general suitability for cigar purposes of Cuban tobacco are well known. The two most important classes of cigars today, classes A and C, accordingly employ it. In general, class C has included the Clear Habana (all Habana filler and wrapper) and the higher grades of cigars blended of a Havana filler and a domestic binder or wrapper or both. Class A has predominantly included pure domestic and domestic filler type blended with some Habana filler. The price range of cigars has traditionally been an inflexible one and therefore cigar manufacturers in recent years have found it necessary, in order to meet competition, to improve the quality and value of their cigars by adding to domestic or Puerto Rican filler some of the more expensive Habana product. The extent to which Havana filler and scrap is used in blend with domestic has frequently been emphasized by our foreign trade authorities. (See, e. g., Analysis of Cuban-American Trade During the First 2 Years Under the Reciprocal Agreement, Department of State, January 19, 1937, p. 22; U. S. Tariff Commission Report on Cigar Wrapper Tobacco, report No. 16, second series, p. 15.) Far from adversely affecting the domestic tobacco grower, the readjustment of the Cuban tariff rates will undoubtedly benefit him. There is no competition between Cuban filler and domestic wrapper and binder. Indeed about 70 percent of the Connecticut Valley production of such types is used to blend with the Havana product. Respecting domestic filler tobacco, the higher price of the Cuban product prevents it from being used as a complete substitute for that commodity rather than as a blending ingredient. The best evidence that the American tobacco leaf farmer believes he will benefit from the reduction is that the request for such reduction was supported by the petitions of several thousand farmers in Wisconsin, Ohio, and Pennsylvania, the chief cigar tobacco growing sections of the country. The cigar manufacturing industry employs upwards of 56,000 workers, who together with the members of their families are dependent upon the industry for a livelihood. It is believed that the increased availability of Cuban tobacco will make possible further improvement in the quality of the cigar which should renew the popularity of and the demand and appreciation for cigars in all classes. This will have a beneficial effect upon the consumption of cigars generally. The resultant increase in volume of cigar consumption should give more stable employment to those already employed and require the employment of more workers in the cigar manufacturing industry and the related fields. It is likely moreover to permit of a more effective program of advertising which would further stimulate cigar sales. Thus it is believed that the supplemental trade agreement with Cuba will greatly benefit the American grower, consumer, cigar worker and cigar manufacturer. It is a splendid illustration of the inestimable benefits all branches of American industry derive from the Reciprocal Trade Agreements Act. We believe the act supplies necessary and practical stimulants to our domestic economy and keeps open the channels of foreign commerce. The association, therefore, urges that the period of the Reciprocal Trade Agreements Act be extended. Respectfully submitted. CIGAR MANUFACTURERS ASSOCIATION OF AMERICA, INC., FEBRUARY 10, 1940. 862 RECIPROCAL TRADE AGREEMENTS ACT TANNERS' COUNCIL OF AMERICA, CHAIRMAN, COMMITTEE ON FINANCE, United States Senate, Washington, D. C. DEAR SIR: The Tanners' Council requests that inclosed statement in regard to patent-leather imports from Canada be included with report of hearings on trade agreements by Finance Committee. Very truly yours, IMPORTS OF PATENT LEATHER FROM CANADA E. A. BRAND. May we call to your attention certain facts in connection with the importation of patent leather from Canada which have become extremely important to domestic producers. In 1939 imports of patent leather from Canada increased tremendously, thereby very seriously affecting the domestic producers of this leather. This increase in imports of patent side leather was the direct result of a reduction in the applicable tariff rate to 71⁄2 from 10 percent in the Canadian trade agreement effective January 1, 1939. The reduced United States duty, it should be noted, compares with a Canadian rate of 20 percent for American patent leather. There is shown below a record of patent leather imports from Canada since 1930. Imports in 1939 were the largest since 1929 and were very sharply higher than in recent years. From these data it would seem perfectly clear that redue tion in the patent-leather duty has caused a sharp increase in imports into the United States. h ci pl on Cu rut tut of t 19330 1931 1952 1933 1934 TABLE I 223, 911 44.712 1937 32, 315 1938 198, 766 i 31, 321 1939 It is extremely important to note that the 1939 imports were much m portant in relation to the total domestic market than imports 10 years agoers Since then consumption of patent has declined strikingly. În 1930 te deliveries of patent leather by United States tanners was approximately 4. sides. By 1939, however, the available market for patent had declined t 000 sides. Although total leather demand in 1939 increased substantial the semidepression level of 1938, patent leather deliveries showed only a tr gain. The following table compares deliveries of domestically prodieri leather since 1930, R high nego agre ber 2 An reduc exam. Amer 233 helpfu indust In t of Inte in ciga were c significa by the ferted net ery As a result of the shrinking domestie market and the loss of acr for patent leather, the cam in Cans far shiperents to the United United States tammes are now de taff rates, but by several clear "Les in Hides cost t'e United States tanner since by virtue of Pix pour pux States rems is about 10 pement 25 to 33 percent more than in Canada. Finally, since the drop in Canadian currency a further advantage has accrued to the producers in Canada. 863 We believe it absolutely important to note here the general inequality between the high Canadian tariff and comparable United States rates. United States patent leather is dutiable at 20 percent in Canada. ential Empire rates tend to exclude United States patent from the British market and to encourage the use of Canadian leather. In addition, however, preferKingdom free, whereas United States leather must pay 71⁄2 percent. The latter enters the United The above facts cannot, we believe, be dismissed as incidental results of trade reciprocity. Patent leather producers of the United States do not ask for preferential treatment. They merely desire that an unjust and unfair situation be corrected in order to protect the domestic industry from extinction. Very truly yours, TANNERS' COUNCIL OF AMERICA, Executive Vice President. MARCH 6, 1940. FINANCE COMMITTEE, United States Senate, Washington, D. C. GENTLEMEN: Since my attitude toward certain tariff questions was brought into the hearings before the Senate Finance Committee on March 1, I desire that the following statement be included as part of the printed record. As a manufacturer of linoleum and felt-base floor covering and therefore a large consumer of linseed oil and other drying oils, neither the Armstrong Cork Co., of which I am president, nor so far as I know anyone else connected with the linoleum industry, opposed the increase in the duty on imported flaxseed and the upward adjustment of the compensatory rate on linseed oil in the 1930 Tariff Act. At that time a modest increase was also made in the duty on inlaid linoleum and we, along with the American flaxseed growers, recognized that there was a definite relationship existing between the duty on this raw material and the duties on the finished goods as Dr. Coulter indicated in his testimony. The tariff rates on flaxseed and linseed oil have not been changed since the 1930 act. There is a serious deficiency in the domestic production of flaxseed (linseed oil) I am in favor of true reciprocity in foreign trade. TANNERS' COUNCIL OF AMERICA, CHAIRMAN, COMMITTEE ON FINANCE, United States Senate, Washington, D. C. DEAR SIR: The Tanners' Council requests that inclosed statement in regard to patent-leather imports from Canada be included with report of hearings on trade agreements by Finance Committee. Very truly yours, IMPORTS OF PATENT LEATHER FROM CANADA E. A. BRAND. May we call to your attention certain facts in connection with the importation of patent leather from Canada which have become extremely important to domestic producers. In 1939 imports of patent leather from Canada increased tremendously, thereby very seriously affecting the domestic producers of this leather. This increase in imports of patent side leather was the direct result of a reduction in the applicable tariff rate to 71⁄2 from 10 percent in the Canadian trade agreement effective January 1, 1939. The reduced United States duty, it should be noted, compares with a Canadian rate of 20 percent for American patent leather. There is shown below a record of patent leather imports from Canada since 1930. Imports in 1939 were the largest since 1929 and were very sharply higher than in recent years. From these data it would seem perfectly clear that reduction in the patent-leather duty has caused a sharp increase in imports into the United States. It is extremely important to note that the 1939 imports were much more important in relation to the total domestic market than imports 10 years ago or more. Since then consumption of patent has declined strikingly. In 1930 the total deliveries of patent leather by United States tanners was approximately 4,911,000 sides. By 1939, however, the available market for patent had declined to 2,915,000 sides. Although total leather demand in 1939 increased substantially from the semidepression level of 1938, patent leather deliveries showed only a negligible gain. The following table compares deliveries of domestically produced patent leather since 1930. As a result of the shrinking domestic market and the loss of our export market for patent leather, the gain in Canadian shipments to the United States is vitally serious. United States tanners are now confronted not only with inequality in tariff rates, but by several clear disadvantages in relative cost of production. Hides cost the United States tanner 10 percent more than the Canadian tanner, since by virtue of this country's duty on raw hides, the market in the United States remains about 10 percent higher than world markets. Production costs are, of course, substantially higher in this country with wage rates averaging 25 to 33 percent more than in Canada. Finally, since the drop in Canadian currency a further advantage has accrued to the producers in Canada. We believe it absolutely important to note here the general inequality between the high Canadian tariff and comparable United States rates. United States patent leather is dutiable at 20 percent in Canada. In addition, however, preferential Empire rates tend to exclude United States patent from the British market and to encourage the use of Canadian leather. The latter enters the United Kingdom free, whereas United States leather must pay 7% percent. The above facts cannot, we believe, be dismissed as incidental results of trade reciprocity. Patent leather producers of the United States do not ask for preferential treatment. They merely desire that an unjust and unfair situation be corrected in order to protect the domestic industry from extinction. Very truly yours, TANNERS' COUNCIL OF AMERICA, Executive Vice President. MARCH 6, 1940. FINANCE COMMITTEE, As a United States Senate, Washington, D. C. GENTLEMEN: Since my attitude toward certain tariff questions was brought into the hearings before the Senate Finance Committee on March 1, I desire that the following statement be included as part of the printed record. manufacturer of linoleum and felt-base floor covering and therefore a large consumer of linseed oil and other drying oils, neither the Armstrong Cork Co., of which I am president, nor so far as I know anyone else connected with the linoleum industry, opposed the increase in the duty on imported flaxseed and the upward adjustment of the compensatory rate on linseed oil in the 1930 Tariff Act. At that time a modest increase was also made in the duty on inlaid linoleum and we, along with the American flaxseed growers, recognized that there was a definite relationship existing between the duty on this raw material and the duties on the finished goods as Dr. Coulter indicated in his testimony. The tariff rates on flaxseed and linseed oil have not been changed since the 1930 act. There is a serious deficiency in the domestic production of flaxseed (linseed oil) as well as the other drying oils. We produce no perilla oil in this country; we produce no hempseed oil and we produce only a fractional part of our requirements of tung oil. All these cils, as well as two-thirds of our requirements of linseed oil must come from abroad. In 1936 very naturally we opposed the enactment of a tax of 41⁄2 cents per pound on perilla and hempseed oils. A duty on perilla and hempseed oils can be justified only on the theory that they compete with linseed oil. Therefore such duty should be correlated to the effective duty (3.3 cents per pound) on imported linseed oil, the latter being by far the most important of the drying oils. A year ago in connection with legislation to tax the compensation of public officers and employees, certain Senators proposed amendments to the taxes on vegetable oils that would have increased the existing import tax of 41⁄2 cents per pound on perilla and hempseed oil to 5 cents, and in addition would have taxed the floor stocks of these oils at the rate of 5 cents per pound, notwithstanding the fact that an import duty might already have been paid. Our position in opposing such taxes was entirely consistent with our position taken in 1930. It is also to be noted that under the British trade agreement negotiated in 1938 the duties on linoleum and felt-base floor covering were reduced to the lowest level in the history of the American industry. At the same time, as I have pointed out, the trend has been to increase duties on certain of the drying oils of which there is no domestic production. I am in favor of true reciprocity in foreign trade. I also subscribe to the doctrine of a protective tariff for American industry, realizing full well that every square yard of linoleum or felt-base floor covering that is imported into the United States from Great Britain and other European countries, displaces precisely an equivalent amount of American-made linoleum or felt base and to that degree the lower-paid European workman displaces American labor. One can logically believe in protecting American industry and at the same time be opposed to the |