Mr. VAN WINKLE. I said we did not want to have the tariff changed. The CHAIRMAN. As interpreted by the courts, there is a difference. But you desire to have it the same? Mr. VAN WINKLE. Yes. Mr. CLARK. When did you start this business? Mr. VAN WINKLE. In 1905. Mr. CLARK. That is, under the same law as you have got now? Mr. VAN WINKLE. Yes, sir. Mr. CLARK. Are you making money? Mr. VAN WINKLE. A little money. Mr. CLARK. How much money did you make? Let us be perfectly frank with each other. Mr. VAN WINKLE. On a 300,000 investment we are able to earn from $8,000 to $10,000 a year. Mr. CLARK. How much per cent is that? Mr. VAN WINKLE. That would be less than 8 per cent. Mr. CLARK. Is it more than 7 per cent? Mr. VAN WINKLE. I would have to stop to figure that out. Let us see. Yes; it would be. Mr. GAINES. You have your figures wrong somewhere; either the amount you are calculating on or your percentage. Mr. VAN WINKLE. I have not figured it out in per cent. We can earn from $8,000 to $10,000 at the rate we have been going in the last six months on a $350,000 investment. Mr. GAINES. That would be 3 per cent. Mr. CLARK. That is the nub of the whole business-what you have just said, "On the basis of the last six months," and the last six months are the worst six months anybody has seen in the United States in the last ten years. Is not that the honest truth? Mr. VAN WINKLE. The honest truth is that business has been very dull in most lines. Mr. CLARK. All manufacturing lines? Mr. VAN WINKLE. I think there are some exceptions. Mr. CLARK. In most of them. Now, take the best six months, say, in 1907. How much dividend could you make in those six months if you segregated what went before from what came after? Mr. VAN WINKLE. We are selling our paper at as high a price as we can get for it, and under present conditions the imported paper will not allow us to get any more. Mr. CLARK. But we have the gorgeous promise that everything is going to blossom like the rose from now on. [Laughter.] Mr. VAN WINKLE. If it blossoms that way it will be all right. But it might not blossom. [Laughter.] Mr. CLARK. If it does blossom according to programme, you will not need any increase of the tariff? Mr. VAN WINKLE. Yes; there would be need of it, because the imported article would come in here cheaper than we could produce it. Mr. CLARK. You made the first ever made in the United States? Mr. VAN WINKLE. Yes; so far as I know, that is so. Mr. CLARK. Why did you not go on and investigate the relation. of things in Germany and Sweden to America under the Dingley rates before you went into it? Mr. VAN WINKLE. We thought we did, but we were mistaken. Mr. CLARK. Why did you not employ somebody to tell you? The CHAIRMAN. Nobody could tell what the courts would hold. He could not employ that man in the United States. [Laughter.] Mr. DALZELL. It is a question of classification. Mr. CLARK. I know, but it is also a question of raising revenue. The CHAIRMAN. If all parchment papers ought to be reduced, that would be a fair proposition? Mr. VAN WINKLE. It would. Mr. CLARK. If this man is making a fair profit, instead of marking up his the other fellow's ought to be marked down. Mr. VAN WINKLE. I want to say that no man considers 3 per cent in manufacturing business a very good profit. Mr. CLARK. I do not believe so, either, if that is what you got. Mr. CLARK. You counted out interest and wear and tear before you commenced, and that dividend is "clear velvet," in the language of the street. Mr. VAN WINKLE. Suppose there was an accident. You know one does not want to take too much risk in the manufacturing business. We might have an accident, or an explosion of a boiler, or things like that, that you could not have on a farm. Mr. CLARK. No, but our teams might run off and destroy all the machinery and everything we have. Mr. VAN WINKLE. I do not believe you can get anybody to put money in a 3-per-cent manufacturing industry. Mr. CLARK. You just now stated that after counting out the interest and wear and tear of machinery you still had 3 per cent. velvet. Mr. VAN WINKLE. We did during the last six months. Mr. CLARK. That is, during the worst time we ever saw you would get your interest and wear and tear and 3 per cent profit for the first six months? Mr. VAN WINKLE. We do not think an interest charge on the investment in a manufacturing industry should be counted as part of the profit. You would not do that on a farm. Mr. CLARK. That is precisely what we would do. The right way to cipher out what you can make as profit is first to count your interest on your investment. Mr. CALDERHEAD. If that is right, I would have to give my wheat away. [Laughter.] Mr. CLARK. Oh, no; you would not. You are raising wheat on that land out there at the rate of $125 an acre. Mr. GRIGGS. Mr. Van Winkle, what salary do you pay to your president? Mr. VAN WINKLE. We do not pay him a cent. Mr. GRIGGS. Does anyone of your executive officers get a salary? Mr. VAN WINKLE. Not excepting the general manager. Mr. GRIGGS. What do you pay your general manager? Mr. VAN WINKLE. We pay the general manager $2,500 a year. Mr. GRIGGS. And you say the president gets nothing? Mr. VAN WINKLE. The president gets nothing, and the secretary gets nothing, and no directors get anything at all, only their percentage of the dividends. If the mill earns anything, they get it; if not, they do not. Mr. FORDNEY. Mr. Van Winkle, you do not feel under present conditions, with the tax on that imported article, that you have made a fair profit on your investment? Mr. VAN WINKLE. That is it. Mr. FORDNEY. And you want a fair protection to do that? Mr. GRIGGS. Have you increased your stock since you have been in operation? Mr. VAN WINKLE. No, sir. We have increased our debts, because we have had a lot of experimenting to do and a lot of new machinery to install; and until the last six months we did not make any money at all; in fact, we lost money. The CHAIRMAN. That is all, Mr. Van Winkle. Mr. VAN WINKLE. I want to file this brief. (Following is the brief filed by Mr. Van Winkle:) BRIEF ON BEHALF OF THE HARTFORD CITY PAPER COMPANY, HARTFORD CITY, IND. This statement or brief is submitted on behalf of the Hartford City Paper Company, organized under the laws of the State of Indiana and doing business in Hartford City, Ind., and involves the manufacture of paper, under Schedule M-pulp, papers, and books, and more particularly paragraph 398 of the act of July 24, 1897, as follows, the portion italicized being particularly under discussion: Surface-coated papers not specially provided for in this act, two and one-half cents per pound and fifteen per centum ad valorem; if printed, or wholly or partly covered with metal or its solutions, or with gelatin or flock, three cents per pound and twenty per centum ad valorem; parchment papers, two cents per pound and ten per centum ad valorem; plain basic photographic papers for albumenizing, sensitizing, or baryta coating, three cents per pound and ten per centum ad valorem; albumenized or sensitized paper or paper otherwise surfacecoated for photographic purposes, thirty per centum ad valorem. It is respectfully urged that the section above quoted should be amended so as to read as follows, the portion italicized being added thereto : Surface-coated papers not specially provided for in this act, grease-proof, imitation parchment, pergamyn papers which have been supercalendered, and rendered transparent or partially transparent, and commercially known as glassine, parchmyn, and japanin paper, two and one-half cents per pound and fifteen per centum ad valorem; if printed, or wholly or partly covered with metal or its solutions, or with gelatin or flock, three cents per pound and twenty per centum ad valorem; parchment papers, imitation parchment, grease-proof, pergamyn papers, and papers of a density sufficient to show blisters when subjected to heat, two cents per pound and ten per centum ad valorem; plain basis photographic papers for albumenizing, sensitizing, or baryta coating, three cents per pound and ten per centum ad valorem; albumenized or sensitized paper or paper otherwise surface-coated for photographic purposes, thirty per centum ad valorem. The suggested amendments are descriptive of various grades of paper manufactured by the company on whose behalf this statement is made by other companies in the United States. These papers come into open and direct competition with the same class of papers now imported into this country, mostly from Germany and Sweden. The imported product, under a decision of the Secretary of the Treasury hereafter referred to, is dutiable at 25 per cent ad valorem under the italicized portion of the general provision of paragraph 402, as follows, the italics being ours: Paper hangings and paper for screens or fireboards, and all other paper not specially provided for in this act, twenty-five per centum ad valorem; all Jacquard designs of one-line paper, or parts of such designs, finished or unfinished, thirty-five per centum ad valorem; all Jacquard designs cut on Jacquard cards, or parts of such designs, finished or unfinished, thirty-five per centum ad valorem. It is contended that these papers, now being imported into this country under the commercial names of grease-proof, pergamyn, imitation parchment, No. 2 parchment, glassine, parchmyn, and japanin, and sold in competition with the same grade of paper manufactured here, should not be permitted to come in under the general classification as provided in paragraph 402, and that paragraph 398 should be amended as above suggested so as to clearly include these grades of paper in the classification of papers there described to which they are similar either in material, quality, texture, or the use to which they may be applied. There are many reasons why this should be done, and we shall refer to some of them briefly: Reasons for classification under paragraph 398. 1. Present construction: It was probably intended by the framers of the act, under the designation "parchment papers," to include all other papers which, in point of either material, quality, texture, or uses to which they may be put, are similar to parchment papers. At the time of the passage of the act in question, imitation parchment, grease-proof, pergamyn, glassine, parchmyn, and japanin papers were not manufactured in this country at all and were but little used. However, it was evidently not the intention of Congress in framing the act of July 24, 1897, to give to the descriptive words "parchment papers a narrow construction or to bring within their meaning only such papers as were made of a particular material or in a particular manner. That this is so is evident from section 7 of the same act, which we quote in full: That each and every imported article, not enumerated in this act, which is similar, either in material, quality, texture, or the use to which it may be applied, to any article enumerated in this act as charge ble with duty, shall pay the same rate of duty which is levied on the enumerated article which it most resembles in any of the particul rs before mentioned; and if any nonenumerated article equally resembles two or more enumerated articles on which different rates of duty are charge: ble, there shall be levied on such nonenumerated article the same rate of duty as is chargeable on the article which it resembles paying the higher rate of duty; and on articles not enumerated, manufactured of two or more materials, the duty shall be assessed at the highest rate at which the same would be chargeable if composed wholly of the component material thereof of chief value; and the words "component material of chief value," wherever used in this act, shall be held to mean that component material which shall exceed in value any other single component material of the article; and the value of each component material shall be determined by the ascertained value of such material in its condition as found in the article. If two or more rates of duty shall be applicable to any imported article, it shall pay duty at the highest of such rates. (101 Fed. Rep., 713), In the case of United States v. Stone et al. decided February 9, 1900, by the circuit court of appeals, second circuit, this question was very briefly considered. The case arose on an appeal to the circuit court of the United States by Stone and others, who were importers, from a decision of the Board of General Appraisers affirming a classification for duty by the collector of certain imported merchandise. It appears from the opinion of the district judge that "imitation parchment," "parchment No. 2" or "grease-proof wrapping paper," had been classified for duty under paragraph 308, Schedule M, of the act of 1894, at 30 per cent, as parchment paper. The importers protested, claiming that it was dutiable under paragraph 313 or under paragraph 310 of said act, as paper, or manufactures of paper not specifically provided for. The district judge held that the decision of the general appraisers should be reversed, and this decision was affirmed by the circuit court of appeals. It should be noted that at the time this case was considered no paper of the kind designated as grease-proof, imitation parchment, or parchment No. 2, was being manufactured in this country and the decision was made wholly without reference to its effect upon manufacturers of the same class of paper here. Moreover, section 2499, Revised Statutes of the United States, 1878, was then in force and very similar in effect, if not in language, to section 7 of the act of 1897. We quote as follows: There shall be levied, collected, and paid, on each and every nonenumerated article which bears a similitude, either in material, quality, texture or the use to which it may be applied, to any article enumerated in this title as chargeable with duty, the same rate of duty which is levied and charged on the enumerated article which it most resembles in any of the particulars before mentioned; and if any nonenumerated article equally esembles two or more enumerated articles, on which different rates of duty are charged, there shall be levied, collected, and paid on such nonenumerated article the same rate of duty as is chargeable on the article which it resembles paying the highest duty; and on all articles manufactured from two or more materials the duty shall be assessed at the highest rate at which any of its component parts may be chargeable. The effect of this section probably was not considered at all, and probably was not even called to the attention of the court in United States. Stone, supra, for it is not referred to in any way by either of the courts that considered the question. From the language of the opinion of the district judge, it is perfectly apparent that the "imitation parchment," "parchment No. 2," and "grease-proof wrapping paper," the imported articles, were very similar in many particulars to the parchment papers referred to in section 308, Schedule M, of the act of 1894. With this admitted similarity, it seems probable that the court would have sustained the general appraisers in their decision to classify these importations as parchment papers if section 2499 had been referred to or considered in any way. The Treasury Department, in Decision No. 22,163, followed the case of United States v. Stone, supra, and it has been the practice since that decision in 1900 to admit all these papers described as grease-proof, pergamyn, imitation parchment, glassine, parchmyn, and japanin under the general classification of section 402, act of 1897. Since 1895 the above-described papers have been made in this country. The industry is new and, in view of the facts presented here, the case demands a new interpretation of the meaning of parchment papers and a consideration of the effect of section 7, supra, on the whole matter. |