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BOSTON PUBLIC LIBRARY 



3 9999 06317 362 7 



OFFICE OF NATIONAL RECOVERY ADMINISTRATION 
DIVISION OF REVIEW 



FOREIGN TRADE UNDER THE NATIONAL INDUSTRIAL RECOVERY ACT 

By 

H. D. Gresham 

Assisted By 

J. G. Burke D. S. Green 

M. E. Gross J. W. McBride 



WORK MATERIALS NO. 37 
IN TWO VOLUMES 
VOLUME II: APPENDIX TO PART B 



FOREIGN TRADE STUDIES SECTION 
March, 1936 



FOREIGN TRADE UNDER TH3 
NATIONAL INDUSTRIAL RECOVERY ACT 



APPENDIX TO PART B. 

SECTIOIT 3 (e) 0? TEE NATIONAL INDUSTRIAL RECOVERY 
ACT, AND ITS ADMINISTRATION 



by 

H. D. GRESHAu 

Assisted "by 

J. G. Burke D- S. Green 
i:. E. Gross J. ff. LIcBride 



FOREIGN TRADE STUDIES SECTION 
LiARCH, 1936. 



9829 



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5 

op 



FOREIGN TRADE UNDER THE 
NATIONAL INDUSTRIAL RECOVERY ACT 



APPENDIX TO PART B. SECTION 3 (e) OP THE NATIONAL 
INDUSTRIAL RECOVERY ACT, AND ITS ADMINISTRATION 



Table of Contents 



I. STUDIES OE COMPLAINT PROBLEMS UNDER SECTION 3(e) OF Page 
TIE NIRA (included in this volume) number 

Binder Twine (No. 47) 326 

Cigars (No. 29) 366 

Table Damask (No. 32) 404 

Handkerchief s, embroidered (No. 34) 452 

Horseshoes (No. 33) 498 

Pig Iron (No. 43) 515 

Newsprint (No. 13) 564 

Quebracho (No. 25) 59 

Rubber Erasers (No. 31) 6 

Salt Cake (Sodium Sulohate) (No. 46) 646 

Jute Webbing (No. 37) 694 

Note: Separate tables of content and lists of tables appear 
at the beginning of each study. 



II. FORMAL COMPLAINTS UNDER SECTION 3(e) FOR WHICH PRELIMINARY 
SURVEYS OF AVAILABLE INFORMATION HAVE BEEN FILED IN NBA. 
STUDIES SPECIAL EXHIBITS, WORK MATERIALS NO. 37 

Antimony (No. 8) 
*3raids and Hat Bodies, Pedaline (Nos. 21 & 22) 

Bread (No. 27) 

Brushes (No. 55) 

Cardboard Novelties (No. 55) 
*Chinavare and Earthenware (No. 15) 
**Cloth, Bleached Cotton (No. 50) 

Coal and Coke (Nortnv/est Area) (No. 51) 

Fertilizer (Maine) (Ho. 54) 

Fiber Board, Counterbo ?rd. (No. 39) 

Fish, Canned Tuna (No. 14) 

Fish, Frozen Tuna (No. 17) 

Fish Netting, Cotton and Linen (No. 48) 

Fishing Lines, Hemp Halibut ("No. 40) 

Fly Catchers, Ribbon (No. 35) 
* Goggles, Sun (No. 20 ) 
***Gloves, Wool Knit (No. 45) 

*Hat Bodies, Wool-felt (Nos 4 & 44) 

Hollow-ware, Silver-plated (No.2o) 

Horsehair, Dressed (No. 10) 

9829 -i- 



Table of Contents (continued) 



Ice (Mexican Border) (Ho. 12) 

Leather, Calx" and Kip (No. 11) 
* Matches (No. 3) 

."■ nthol (No. 23) 

Oil, Sunflower (ilo.lS) 

Paper, Kraft Wrapping (To. 38) 

Pearl 3ssence (No. 28) 
♦Pencils, "/nod Cased Leaf. (No. 5) 
* Qui ch silver (No. 7) 

Rice (Philippine Islands) (No. 24) 

Rubber [joys (l T o. 30 ) 

Rubber ~ ter Pottles (No. 19) 
♦Ri s, Cotton (No. 2) 
*R ;s, Cotton Oriental (No.l) 

Rugs, Crass and Fiber (lb. 52) 

Rugs, Jute. Oriental (No. 49) 

Salt, Com .on (No. 33) 
♦Shingles, Red Cedar (No. 18) 

Shoe Laces (No. 9) 

Is )ioca, Flour (No. 41) 

Thermostatic Containers (No. 42) 

Umbrellas (No. 35) 

W tches, Parts and Movements (No.S) 



♦The United States Tariff Commission has published 
the results of its investigations of the complaints 
with respect to these cases. 
**A report on conditions and problems of the cotton 
textile industry by a Cabinet Committee appointed 
by the President of the United States was publish- 
ed as Senate Document 12S, Seventy-fourth Congress, 
First Session. 
♦♦♦The United States Tariff Commission has published 
a report on a recent investigation of Tool Knit 
Gloves under Section 335 of the Tariff Act of 1930. 



9829 



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M 



TABLE OF CONTENTS 



Page No. 
Subject of complaint and status of the complainants 

under the National Industrial Recovery Act 32P 

Cooperation "by other producers 326 

Commodity and tariff treatment : -- 326 

Description of commodity 326 

Tariff treatment 327 

The raw material 327 

Sisal and henequen fibers 327 

(a) Sisal 323 

(b) Henequen 328 

(c) Production 328 

Abaca 329 

World production of the agave fibers and abaca 

since 1930 329 

Tariff treatment 330 

Imports 330 

Domestic consumption 330 

Channels of trade 330 

Uses of binder twine 330 

Consumption per acre 332 

Decreased twine consumption 332 

The domestic industry 334 

The private industry 334 

(a) Concentration of production 334 

(b) Branch factories and fiber 

plantations 334 

(c) The importance of binder twine to the 

domestic producers 335 

The State -orison binder twine industry 337 

(a) Importance of binder twine manufacture 

as a prison industry 337 

(b) Production by prisons 337 

Domestic production 339 

Carry-over 340 

Exports 341 

Imports 342 

By countries 342 

Unit values 342 

By quarters 342 

By customs districts 346 

Relation of imports to production 346 

Prices of binder twine 350 

The price system 350 

Domestic prices and the prices of raw fiber 350 

'The spread between raw fiber prices and whole- 
sale prices 351 

Effect of the national reco-'ery program 355 

Labor provisions of the code 355 

(a) ?age provisions 355 

(b) Hours provisions 355 

Employment and payroll 355 

Cost of production 359 

9329 

-in- 



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M 



LIST OF TABLES 



Table No. Page No, 

1 World production of agave fibers, 1909-1930 328 

2 Hard fiber: Estimated world production, "by countries, 

of abaca, sisal, and henequen, 1930-1934 329 

3 Sisal and henequen fiber: Inports for consumption 

into the United States, by countries, 1927-1934 331 

4 Domestic consumption of "binder twine for harvesting 

wheat, oats, barley, and rye, in relation to total 
acreage and the use of the combine harvester, and 
the price per pound and the tocai cost of twine 
used', 1919-1935 333 

5 Binder twine: Relation of total output to the produc- 

tion by private industry of all cordage products in 
the United States, 1927-1933 336 

6 Binder twine: Prison production for state use and 

state account in 1923', 1932, and 1934 338 

7 Binder twine: Production by all private companies and 

the prisons, and relation of prison to total 

domestic production 339 

8 Binder twine: Domestic production by complainant com- 

panies, other manufacturers, and prisons, 

1929-1934 340 

9 Binder twine: Indices showing trend of domestic 

production since 1929 340 

10 Binder t^ine: Domestic exports by countries, 

1923-1934 343 

11 Binder twine: General imports into the United States 

by countries, 1923-1934 344 

12 Binder twine: General imports into the United States, 

by quarters since 1931 345 

13 Binder twine: Ratio of imports to production, 1929 

to February, 1935 347 

14 3inder twine: Ratio of inports to private domestic 

production 1929 to February, 1935 349 

Chart 352 

15 Wholesale prices of binder twine in relation to 

New York prices of raw fiber, 1928-1935 353 

16 Spread between the prices of raw fiber and the 

wholesale prices of domestic binder twine, 

1928-1935 354 

17 Binder twine: Employment and payroll for the six 

leading private domestic producers, 1929 and 1932 

to January, 1935 — : 356 

18 3inder twine: Indices of employment and payroll for 

the six leading private domestic producers, 1929 

and 1932 to January, 1935 357 

19 Binder twine: Indices for wages paid and employment 

by the five leading complainant producers and for the 
leading manufacturer, before and after the code be- 
came effective on I larch 7, 1934 358 



9829 



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4 



list of tables-continued 



Table No. Page No. 

20 Binder twine: Production costs of the six lead- 

ing domestic manufacturers, including the five 

leading complainant conroanies, 1933 and first 

half of 1934 359 

21 Binder twine: Increases in production cost 

items in the first half of 1934 over 1933 

and ratio of separate cost items to total 

cost in 1933 and the first half of 1934 

for the five complainant producers and the 

largest manufacturer 360 



Appendices 

A Filing Price Schedules, Binder-Twine 

Division, Code for the Cordage and 

Twine Industry 361 

B TpqIe A. — Quarterly prices of raw ward fiber 

at New York, 1927 to 1935 363 

Table B. — Wholesale prices of binder twine 

effective in the private domestic 

industry, 1923 to" 1935 365 

Tablp C. — Unit value of binder-twine imports 

for six-month periods, 1927 to 1934 365 



3829 



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BIKDSR TWINE (No. 47) 



9829 



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survey of information 
on 
binder wine 

September, 1935 

Subject of Complaint and Status of the Complainants 
under the N a tional Industrial Recovery Act 



This is a report on a complaint filed by ten domestic manu- 
facturers of binder twine, pursuant to Section 3(e) of the national 
Industrial Recovery Act, with respect to imports of binder twine of all 
kinds. 

The complainant producers operated under the Code of Fair Com- 
petition for the Cordage End Twine Industry (Code Hoi 303), approved 
on February 21, 1934. These companies manufacture about 45 per cent 
of all binder twine produced in this country by private manufacturers 
and about 30 per cent of all binder twine produced in the United 
States by both the private manufacturers and eight State prisons. 

The largest priva.te manufacturer of binder twine, producing 
about 35 per cent of both privately manufactured end prison-made 
binder twine, the State prisons, and four very small producers of 
binder twine did not become parties to the complaint. 

Cooperation by Other Producers 



All the private companies, especially the leading producer, 
and the prisons as well cooperated in furnishing information with 
respect to the domestic production of binder twine at the request of 
the National Recovery Administration. Cooperation with the prisons 
manufacturing binder twine, with exception of the Kansas State 
prison, was obtained through the efforts of the Prison Labor 
Authority created under the Compact of Pair Competition for the 
Prison Industries of the United States, approved by -the President 
on April 19, 1934. The 28 signatory States under the compact under- 
took to establish and maintain fair competition between products of 
private domestic industry and those of prison industry. 



Commodity and Tariff Treatment 



Description of commodity 

Binder or binding twine is a single-ply, hard- twisted yarn, with 
a breaking strength of 65 pounds, which is manufactured from hard fiber 
to measure by weight approximately 500 feet to 650 feet in length per 
pound, the better grades of twine being of proportionately longer measure. 



9829 



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Bindcr twine is used extensively in this country for the harvesting of 
■ in crops. 

In 1880 the first hard-fiber binder twine was successfully 
manufactured from pure abacs fiber (reanila hemp) grown in the 
Philippines. Abaca has since been used in the manufacture of binder 
twine, although it has largely been displaced by Mexican and Cuban 
henequen and to a less extent by sisal from East Africa, the Fether- 
land East Indies, and Haiti. Relatively small amounts of istle, sunn, 
and Hew Zealand hemp have been used from time to time in the manu- 
facture of binder twine. 

Binder twine is gill- spun by machinery directly from the 
sliver of the various hard fibers. The twine is oiled when spun. 
After spinning, it is wound in balls weighing five or eight pounds, 
which are packed in 50-pound burlap-covered bales. 

Tariff treatment 

Paragraph 1522 of the Tariff Act of 1930 provides that binder 
twine "manufactured from New Zealand hemp, henequen, manila, istle or 
Tampico fiber, sisal grass, or sunn, or a. mixture of any two or more of 
them, of single ply and measuring not exceeding 750- feet to the pound" 
is free of duty. Binder twine was duty-free under the T a riff Acts of 
1922 and 1913. 

Henequen and sisal twines have been held to be not free of 
duty as binding twine under Paragraph 1521 of the Act of 1922 unless 
they are single-ply, hard- twis ted, oiled yarns measuring approximately 
not less than 500 feet and not more than 750 feet to the pound and wound 
in balls of five or eight pounds in weight (T.D. 40805). The Treasury 
Department has ruled that binder twine measuring 475 feet to the 
pound should be admitted free of duty provided other conditions pre- 
scribed in Treasury Decision 40805 are met. (CLE. 1527 r.f 1928) 

The Raw Material 

Domestic and imported binder twine is chiefly made from 
henequen, sisal, and abaca (manila hemp), the amount of each used in 
the manufacture of binder twine during any given period depending 
largely upon the relative prices for the individual fibers. It is 
believed that henequen is usually the chief component fiber of the 
two principal grades of domestic binder twine which are known in the 
trade as 500- foot Standard and 500- foot White Sisal, and which ac- 
count for about 85 per cent of total domestic production of all 
bind-er twine. The better gr.-des of twine, those of 600 feet and 650 
feet to the pounds, contain only abaca, or abaca, mixed with sisal 
and/ or henequen. 

Sisal and henequen fibers 

Sisal and henequen fibers are obtained from the leaves of two 
closely related but distinct species of the genue Agave . B th species 



9829 



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originated in the Yucat a n peninsula, and they are not known elsewhere ex- 
cept as introduced plants. Both are cultivated on large plantations in 
the Tropics, and the fibers are cleaned "by means of the same type of 
machines. Both fibers are used in the manufacture of ropes of small 
diameter and hard-fiber twines other than binder twine. 

(a) Sisal . - The sisal plant, Ag av e sis al ana , is now regularly 
cultivated on la^ge plantations in Kenya Colony, Tanganyika, Portuguese 
East Africa, Senegal, Dahomey, Sumatra, Java, India, and Haiti. The 
most extensive production is in tropical East Africa and Sumatra and 
Java. Cultivation in many areas was not greatly developed prior to the 
World War. 

(b) Henequen. - The henequen plant, Agave fourcroydes, is culti- 
vated in Yucatan and Campeche, and to a less extent in the States of 
Chiapas, Tamaulipas, and Sinaloa in Mexico, and in Cuba. 

The principal production of the fiber is in Yucatan where the 
total outpiit is marketed under the direction of Los Henequeneros de 
Yucatan Sociedad Cooperative. . The Cooperativa determines the price of 
the fiber to foreign purchasers from time to time, and occasionally re- 
stricts the output. A reduction in fiber output of 20 per cent of pro- 
duction in 1029 was enforced from 1930 to June 30, 1933, inclusive, 
by the Yucatan Cooperativa. to meet falling prices occasioned by growing 
stocks and declining world consumption of hard fibers. On March 4, 1935, 
the Governor of Yucatan levied a, production tax on the fiber, which will 
increa.ee progressively with the market price of the fiber from 4 to 10 
centavos per kilogram, and a. processing tax of 0.52 centavos on every 
kilogram of fiber "industrialized" in the States. 

( c) Production . - Before 1910 the world was dependent upon Mexico 
for its supply of agave fibers. Since that time henequen plantations 
have come into production in Cuba and sisal plantations elsewhere. The 
result has been an increasing production of sisal and henequen fibers, as 
may be noted from Table 1. 

Table 1. - World production of agave fibers, 1909-1930 



Period 



Sisal 



Henequen 



Metric tons 



1909-1913 
(5- year average) 
1926 
1927 
1928 
1929 
1930 



26 , 700 
76,700 
94 , 100 
98,100 
122,100 
133,940 



106,800 
117,000 
175,000 
113,700 
104,000 
112,200 



Source: Dept. of Agriculture, Circular No. 186, October, 
1931, Sisal and Henequen, Plants Yielding Fiber 



3829 



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for Binder Twine: estimates for 1930 furnished 
by; the Department to replace those given in the 
circular. 

Abr.cr. 

Binder twine ras first manufactured almost exclusively from 
abeca which for many years came entirely from the Philippine Islands. 
The Philippines remain the principal source of abaca, although in re- 
cent years the production of this fiber in the ITetherland E a st Indies 
has developed. Abaca is widely used in the United States for the maw*' 
facture of cordage, rope, and marine Coble. 

World ) r«? duct ion of the agave fibers and 
abaca since 1530 

Production of the agave fibers, as veil as abaca, has increased 
since 1330. This increase may partly account for the decline in price of 
raw fibers since 1929. Production by princi jal countries and producing 
regions is shown in the table below. 

Table 2. - Hard fiber: Estimated world production, by countries, 
of abaca, sisal, and henequen, 1930-1934 



(Lonff tons) 



Fiber and producing 
area 


1330 


"•931 


1932 


1933 


1934 


Abe ca 
Phi lippi ne I s 1 an d s 
Netherland Last Indies 


159,440 

10,000 


1.33,850 

10 , 000 


110,230 

10,000 


151,000 
10,000 


172,240 
5,000 ' 


Total 

Sisal 
East Africa 1/ 
West Africa 2/ 
Netherland Last Indies 
West Indies 3j_ 
Haiti 


139,440 

) 76,000 

L35.000 

4,600 
2,520 


143,850 

83,000( 

66,000 
6,350 
2,900 


120 , 230 

85,000 
6,000 

70,000 
6,000 

. 3,300 


161,000 

102,000 

6,000 

85,000 

6,000 

3,800 


177,240 

111,000 

10,000 

80,000 

10 , 000 

4,290 


Total 


158,120 


158,250 


.170,300 


202,800 


215^290.' 


Henequen 
Lexico 
Cuba 


104,000 
10,000 


70 , 000 
10,000 


88,000 
. 9,820 


93,000 
11,000 


92,000 
10,000 


Total 


114,000 


80 , 000 


97 , 820 


104,000 


102,000 



Total sisal and 
henequen 



252,120 238,250 ?68,12C 306,800 317,290 



Sj3&x>2Cl Dept. of Agriculture, Bureau of Flant Industry. The estimates, pro- 
vided by the Dept. of Agriculture are based on data obtained from 
the Philippine Fiber Inspection Service, Uiggleaworth & Co., Ltd. , 



9823 



-330- 



London, and consular reports, 
1/ Includes Tanganyika, Kenya Colony, and Portuguese East Africa. 
2/ Principally Senegal and Dahomey. 

3/ Principally British West Indies „ n d Jamaica; come production in 
Salvador may be included. 



ITO'IZ:^ World production of fcorium, maguey, s nd Maritius hemp, not sshovm 
m this tabulation, amounts to about 12.CCC tons annually. 

Tariff treatment 

Si cal, henequen, abaca are imported free of duty, under Parr T£~>v 
168-: of the Tariff Act of 1930. They were duty-free under the Tariff Acts 
of 192.3 and 1913. 

I mports 

Imports of sisal and henequen and the unit value of imports 
since 1927 by principal countries of shipment, are shown in Table 5. Im- 
ports of the raw fiber from the Netherlands, Germany, and the United 
Kingdom are believed largely to repre ent shipments from tne plantations of 
Africa and the Netherland East Indies that were transshipped' to the 
United States. 

In Table 3 it will be noted that the unit value of all sisal and 
henequen imports declined from 7.0 cents a pound in 1929 to 2.2 cents a 
pound in 1932, when the unit values for fiber from all sources reached 
their lowest level in history. In 1933 the unit value of all imports 
rose only three-tenths of 1 cent. During 1932 imports of sisal and 
henequen, amounting to 168,205 long tons, were greater than in any vear 
of tne 1927 to 1954 period, and in 1933 total Inroorta of 126,268 Ion- 
tons exceeded the imports of 1927, 1930, 1931, and 1934. 

Domestic Consumption 
Channels of trade 

Binder twine is sold to consuming farmers by farm implement 
dealers, general retail stores, supply houses, and farm cooperative buy- 
ing groups. 

0n3 -y about 20 Per cent of the binder twine manufactured by the 
State prisons is sold outside the State of manufacture. In 193d none 
of the binder twine made in the prisons ef Wisconsin and North Dakotr — s 
sola outside these States. About 68 per cent of orison-made binder 
twine is sold direct to retailers, 16 per cent to wholesalers and 
jobbers, 6 per cent to farm cooperatives, and 10 per cent through other 
channels including direct purchases by farmers. 

Uses of binder twin e 

In different areas of the country bin er twine is used for 
Harvesting a number of grains, although its greatest use is to be 

9829 



—331- 



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' -332- 

found in the wheat, barley, oats, rye, and rice growing regions. Bind- 
er twine is used for harvesting sorghum grains and buckwheat, as well 
as flax and grass-seed crops. No binder twine is used for harvesting 
corn in the corn-belt area where corn is picked in the field from the 
standing stalks, but in such eastern States as uhio, Virginia, Maryland, 
Pennsylvania, and Delaware, it is employed where the stalks are cut and 
the corn is harvested from the shock. Much corn for silage is first 
cut and bound with a binder. 

Consumption per acre 

The amount of twine used in any area depends upon the methods of 
narvesting, the stand of grain or corn acre, and the relative amount of 
grain straw, the latter being related to rainfall during the growing 
season. Under usual crop conditions, about 2.5 pounds of twine are used 
for harvesting an acre of wheat, 2.3 pounds for oats and barley, 2,8 
pounds for rye, 5 pounds for rice, and 3 ■ pounds for an acre of flax. For 
shocking corn about 2.2 pounds per acre are required, and for bundling 
corn for silage about 3.4 pounds are required. To a limited extent the 
growing practice of cutting corn ensilage in the field has reduced the 
consumption of binder twine. 



Decreased twine consumption 



The consumption of binder twine since 1920 has declined partly as 
a result of the increasing use of the combined harvester-thresher, es- 
pecially in the Great Plains area. Approximately 3 million acres of 
wheat, oats, barley, and rye were harvested by the combine in 1920. In 
1932 'the acreage 'of these grains harvested by the combine reached 25 
million. The use of the combine spread from the Pacific Coast to the dry 
areas of Oklahoma, Kansas, and Texas in 1918, and then to almost every 
State east to the Atlantic and north into Canada. An example of its 
spread is seen in North Dakota where three combines were reported in 1925, 
27 in 1926, 249 in 1927, and 1,172 in 1928. 

Drought conditions and crop restriction in 1933 and 1934 also ac- 
counted for a decrease in binder-twine consumption. As compared with 
1932, when approximately 112.9 million acres of wheat, oats, barley, and 
rye were harvested, there were harvested only 96..4 million acres in 1933 
and 81.7 million acres in 1934, as may be seen from Table 4. With this 
reduction in acreage correlated with the acreage of these four grains 
harvested with the combine, the total acreage of wheat, oats, barley, and 
rye for which twine was used in harvesting amounted to 87.9 million in 
1931, as compared with 76.4 million in, 1933 and 64.7 million in 1934. 

•Vith an increased acreage of all these grains estimated for the 
season of 1935, according to the Department of Agriculture, including a 
liberal estimate for the total acreage which will be harvested by combines, 
a total of about 78 million acreas requiring twine is anticipated in 1935. 
This increase is expected to require a total of about 195 million nounds 
of binder twine for the harvesting of wheat, oats, barley, and rye during 
1935, as compared, with about 136 million pounds in 1934, and 168.1 mil- 
lion in 1933, as shown in Table 4. This table also shows the average 
price per pound of twine and the total cost of twine to the farmers. 



9829 



- 33- 

Table 4. - Domestic consumption of "binder twine for harvesting wheat, 
oats, "barley, and rye, in relation to total acreage and the use of 
the combine harvester, and the price per pound and the total cost 
of twine used, 1919-1935. 





Acreage 






Binder 


twine 






of : 


Harvested: 


Using : 


: Amount: 


Total : Price per: 


Total 


Year : 


Specified: 


by : 


Twine : 


: per : 


used :pound to : 


cost to 




cro"os : 


combine : 




: acre : 


: fanners : 


farmers 




Mil] 

129.0 : 


.'.ons of ac 
3 : 


:res : 
126.0 : 


: pounds: 


Million: : 
pounds : : 

• 

302.4: $0,258 : 


Million 




: 2.40 : 


dollars 


1919 


$78.0 


1920 


116.1 ! 


3 ! 


113.1 : 


: 2.70 : 


305.4: .200 ' 


61.1 


1921 


121.1 : 


3 


118.1 : 


: 2.25 ■ 


265.7: .160 


42.5 


1922 


116.0 : 


4 : 


112.0 : 


: 2.45 


274.4: .130 


35.7 


1923 


111.9 


4 ! 


107.9 : 


: 2.50 


269.8: .134 


36.2 


1924 


105.1 


4 


101.1 : 


: 2.75 


278.0: .138 


38.4 


1925 


108.4 


6 


102.4 : 


: 2.55 


261.1: .153 


39.9 


1926 


110.4 


8 


102.4 : 


: 2.40 


245.8: .160 


: 39.3 


1927 


111.9 


12 


- 99.9 : 


: 2.40 


239.8 .152 


: 36.4 


1928 


• 114.3 


17 


97.3 .: 


: 2.60 


: 253.0 .142 


: 35.9 


1929 


117.4 


22 


95.4 : 


: 2.50 


: 238.5. 


.142 


: 33.9 


1930 


• 116.9 


24 


92.9 : 


: 2.60 


• 241.5 


.144 


: 34.8 


1931 


■ 109.6 


: 25 


! 84.6 : 


: 2.45 


: 207.3 


.122 


: 25.3 


1932 


: 112.9 


25 


: 87.9 : 


: 2.50 


: 219.8 


.088 


: 19.3 


1933 1/ 


! 96.4 


: 30 


: 76.4 : 


: 2.20 


: 168.1 


.081 


: 13.6 


1934 1/ 


: 81.7 


: 17 


: 64.7 : 


: 2.10 


: 136.0 


.096 


: 13.1 


1935 2/ 


: 3/102.8 


: 25 


: 78.0 : 


: 2.50 


: 195.0 


4/ .086 


: 16.8 



Source: Dept. of "Agriculture, Bureau of Agricultural Economics. 
1/ Subject to possible revision. 

2/ Estimated by Bureau of Agricultural Economics, H?y 15, 1935, on the 
basis of the acreage of winter grains remaining for harvest and intentions 
to plant spring grains, along "ith an average twine consumption of 2.5 
pounds per acre. 

Zj The estimated acreage of the f c ■■ ./ groins for the 1935 harvest, over 
1934, is as follows: Winter and spring wheat, 48.3 million in 1935 and 
42.2 million in 1934; oats, 39.1 million in 1935 and 30 million in 1934; 
barley, 11.9 million in 1935 and 7.0 million in 1934; rye, 3.5 million 
in 1935 and 2 million in 1934. 

4/ Estimated as being 20 per cent greater than the wholesale price of 500- 
foot white sisal and standard binder twine set for the 1935 season on 
April 18, 1935. (The wholesale price of this grade of twine ranged from 
74 to 81 -oer cent of the r>rice to the farmer in the years 1931-1934.) 



9829 



-334- 

Tho Domestic Industry 

Domestic ."binder twine is produced by 15 dif 'erent companies in IS 
mills situated in Massachusetts, Hon York, Pennsylvania, Her.' Jersey, 
Ohio, Illinois, i'issouri, Louisiana, Texas, and California, and \iy 8 
State prisons in the grain growing regions of the West. The heaviest 
production by private manufacturers is in Massachusetts, Hew York, Ohio, 
Illinois, and Louisiana. 

The -private industry 

In 1929 there were about 17 mills in which binder twine was pro- 
duced^ including three manufacturing only binder twine. In 193d- there 
were 16 mills, two producing binder twine exclusively. A total of approx- 
imately 1,457 wage earners was employed in the production of binder twine 
in 19.29 at .a payroll for the year of 'about $1 ,.-1-75,000; about 1,200 wage 
earners were employed in 1934 at -a payroll for the year of roughly 
$953,000. • : • ; : . . 

During the period May, "1929, to May, 19?2, mills producing binder 
twine at iiprth Kansas City, flo. , ■ St. "Paul, Minn. , and Portland, Oreg. , 
were closed. The St. Paul mill, 'producing only binder twine, prior to 
its closing had a relatively large annual output, while' the' production 
of the two- other mills which" were closed was .-comparable' with the annual 
output of some of the medium- si zed oo'rdage mills in the country. : 



1932, however,' t'-'o very 
of binder .'twine, one at 
Moreover , a. former nan- 



Between 1929 and the second quarter of 
small cordage mills commenced the production 
Hew, Orleans and the, other at Houston, Texas, 
ufacturer of binder, twine, not a party to this complaint, although pro- 
ducing no binder twine in 1929 and 1930, began again the manufacture of 
binder twine in 1931 and increased yearly production thereafter. 

(a) Concentration of production. - There is a high degree of con- 
centration of production in the binder twine industry. The two largest 
producers since 1929 have accounted for about 75 per cent of total out- 
out; four small- to-medium- size companies have produced about 23 per 
cent of the total, while some eight to ten very snail remaining produc- 
ers have accounted for "about 2 per cent of the total production of bind- 
er twine. 

(b) Branch factories and fiber jlantations . - There crP- five fib- 
er mills abroad operated in connection with branch factories controlled 
by the two leading domestic producers, including single mills in Sweden 
(established in 1905), Prance (1906), Germany (1908), and two in Canada 
(1902 and 1905). 

These same domestic producers own and operate abroad three fiber 
plantations, two of which are situated in Cuba, and one in Davao province 
in the Philippine Islands. The two Cuban plantations, together valued 
at $1,300,000, r.re devoted to the culture of henequen. The Philippines 
plantation, although not yet in bearing, is for the production of abaca. 



98^ 



(c) The in or tance of "binder twine to the domestic producers. - 
With the excemtio 1 of its production by one large producer engaged pri- 
marily in the manufacture of "an machinery, binder twine is manufactured 
by producers of yarn, ro^e, oakum, end twines other than binder twine, - 
all made principally from hard fibers. T7ith respect to the ten com- 
plainant manufacturers - all cordage producers, - binder twine accounted 
for about 1-3 per cent of the total value of al 1 - commodities produced 'by 
these companies in 1931, 52 per cent in 1932, and 42 per cent in 1933, 
and 39 per cent during the first nine months". of , 1934. ..The binder- twine pro- 
duction of four of the five largest complainant producers (the four class- 
ified above as snaH-to-r.iedium in size) amounted to 56 per cent of the 
total factory value of all fiber products manufactured by them between 
1931 and September, 1934. T7ith respect to each of these four producers, 
the value of bindor-twine production in relation to the value of total 
production of all commodities ranged from 30 per cent to 75 per cent. 
Binder-twine production is relatively 1">S3 important to the five other 
complainants, designated as very snail. 3?or four of these producers 
operating throughout the period 1931 to September, 193-1, binder twine 
amounted to only 5 per cent of the total value of all products which 
they manufactured, and was of greater relative importance (38 per cent) 
to only one producer. In relation to total production since 1932 by all 
five of the \ r er r snail complainant producers, binder twine a.ccounted 
only for 3 per cent of the value of all products which they manufactur- 
ed. 

The da.te of the following table indicate the importance of binder 
twine as a cordage- product* of 'private 'industry in the 'United States 
since 1927. In 192S binder twine amounted to 33 jer cent in quantity 
and 18 per cent in value of all cordage and twine products priva.tely 
manufactured, as con 'ared with 35 per cent in quantity and 16 per cent 
in value in 1933. 



9829 



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-337- 

St.-'te -ori?on hinder fr-'ine industry 

: y ■ ■ the manufacture for sale to the public of "binder 
twine by some eight or nine State prisons hp„s -constituted an important 
-orison industry nd has represented a substantial proportion of "total 

stic production. "Under twine is not produced in the Federal prisons, 

(a) I;r -ortaiv-.e of hinder twine npnuf ^cture as a prison industry. - 
Prison binder-twine production cane-at the insistence of farners in the 
wheat- raising eomnrunities of the T7Gst, after the ITationai Cordage Co., 
ostp.blis l 1887, and its predecessors, the United States- Cordage Co. 
(1894 to 1395), the Standard Rooe £ Twine Co. (1895 to 1905) , and the 
Standard Cordage Co. (1S05 to 1910), tried through "trust" organizations 
to monopolize completely the cordage and tuine industry in the United 
States by attempting to control not only the marketing of nanila hemp 

cr) and Mexican sisal (honequen) , but also the manufacture of cordage 
machinery. 

The first State prison binder- twine mill ws established by Minn- 
esota in 1891. The Minnesota prison plant soon became self-supporting 

and a source of revenue to the State. Its success led other Stp.tes to 
establish prison plants, including Kansps in 1398, ITorth Dakota in 1900, 
Missouri in 1905, Irdiana in 1906, Michigan in 1908, and in South Dakota 
in 1909. The first appropriation for a prison hinder- twine factory was 
mrae in Wisconsin in 1507 and in Oklahoma in 1916. Hone of the other 
arisen plants has been so financially successful as the one in Minnesota. 
Some have jeen operated at continuing losses. 

The manufacture of binder twine is an important ;:>rison industry. 
Of all prison goods and farm products produced in 47 Stp.tes in 1923 
for the competitive market under the public account, piece-price, and 
contract systems, binder twine accounted for approximately A 5, 550, 000 
of a total value of $44,826,622, or 12 per cent. In 1932, binder twine 
accounted for 14 per cent of the value of State prison manufactures and 
farm produce entering the competitive market, cr $-.= ,050,123 of a total 
528,895-, 629. A total of 1,365 inmates- was engaged full or part time in 
the production of binder twine in 1923, and 1,572 in 1932. 

(b) Production by orisons. - Among' the States in which prisons 
oroduce binder twine, Minnesota, the most important, accounted for 46 
per cent of the total in 1934, and was followed by Wisconsin and 
Michigan. Table 5 shews the production of prison binder twine by States 
in 1923 pnd in 1932 and 1934 for both Str.te use and State account. 
3inder twine jro-duced for State use is almost negligible, amounting 

to less than 1 :>er cent of the total. 



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Domestic Production 

lab^e 7 shows the total yearly production of all grades of binder 
Wine in the United States since 1923. Complete datp are not avail- 
able on the production by the iriva$;e manufacturers and the prisons of 

Lfferent grades of binder twine, i.e., 500-foot Standard, 600-foot 
I'anila, etc. Date furnished the National He cover-/ Administration in- 
dicate, however, that from Bo to 94 -ber" 'cent"* of all binder twine pro- 
duced between 1929 J and 1051- wps 500-foot Standard and- 500-foot Unite 
Sisal .twine. ■ : 



Table 7. - Binder twine: Production by all private companies 
and the arisons, and relation of orison to total domes- 
tic production 



' 


Total domes- 


Production 




■ 


Patio of : 


: Index of 


Year 


tic produc- 


hy 




Prison . : 


prison to : 


: total 




tion .( :riv ;.te 


private 


i 


production : 


total domestic: 


: product ion 




and : oriso _> 


companies 




: 


production : 


: 






Founds 


: 


Per Cent : 


:1923 ;= 100 


1925 


295,357,912 


1/239,800,117 


55,557,795 


:: 18.81 : 


: 100.00 


1925 


289,959,1 1 


1/233, 650, 54? 


56,298,552 


:: 19.42 : 


: 93.17 


1927 


227,60.3,.692 


1/15,9, .795, 2.3.8 


57,808,454 


: : 25.40 : 


: 77.06 


1929 


: 232,071,195 


: 2/ 134, 749, 515 


47, 322, 550 


:: 20.39 


: 78.57 


1931 


: 190,214,06^ 


2/138,052,86-1 


52,151,200 


:: 27.42 : 


: 64.40 


1932 


! 222,887,517 


: 2/159, 175, 842 


. 63,711,575 


:: 23.53 


: 75.46 


1933 


! 198, '153, 995 


! 2/141 ,331, 259 


57,135,737 


:: 23.79 : 


: 67.19 


193- 


! 150, 357. -1-20 


: 2/100, 355, 097 


: 50,002,323 


:: 33.26 . : 


: 51.24 



1/ c 



oiisus of Manufactures. 



2/ Total based en Data submitted to the National Recovery Administration 

From the da.ta in the foregoing table it will be noted that total 
domestic production of binder tuine in 1934 was slightly more than 
half of the output in 1923, production in 193d amounting to 150,357,000 
pounds as compared with 295,^353,000 pounds in 1923. Prison production 
did not decline during the period 1923 to 193d nearly as greatly as 
production by the private manufacturers, t as is indicated by the in- 
creasing ratio of prison production tq total production. Prison-made 
binder twine accounted for IS per cent of total domestic production 
of binder twine in 1923 and 53 per "cent in 1934. There are 55,568,000 
pounds of binder twine produced in the prisons in 1923 and 50,990,000 
in 193d. 

Table 3 shows the production of binder twine since 1929 by the 
ten' conplainant producers, in prisons, and other private manufacturers 
in relation to total production. It will be noted that while the 
ratio of production by the ten complainant producers to total pro- 
duction declined only one point from 1929 to 1934, the ratio of pro- 



9329 



-340- 

duction "by other private manufacturers in relation to total production 
declined 12 points, and that of the prisons increased 13 points. 

Table 8. - Binder twine: Domestic production by complainant 
companies, other manufacturers, and prisons, 1929-1934 



J 


Prison 


Other 


:H a tio to' total 


: Cora- 
Period Total : plainant 


:Com- : : 

: plain- :Pri son: Other 
: ant : ' 


: Pounds 

• 

1929 232,072,195:74,067,629: 47,322,550 

1931 190,214,064:67,671,825: 52,161,200 

1932 222,887,517:79,120,940: 63,711,675 

1933 198,466,996:64,618,332: 57,135,737 

1934 150,357,420:46,524,644: 50,002,323 


110,682,016 
70,381,039 
80,054,902 
76,712,877 
53,830,453 


: Per cent 

.31.92: 20.39:47.69 
:35.58: 27.42:37.00 
:35.50: 28.58:35.92 
:32.56: 28.79-38.65 
:30.94: 33.26:35.80 



1935 

( Jan. -Feb. ) 23,190,233 

(.Jan. -Mar.) 



5,834,000:1/9,816,233: 7,540,000 
-. : 10,224,350: 



25.16 



42.33:32.51 



Source: Census of Manufactures and data submitted to the National Recovery 

• Administration and the Prison Labor Authority. 
1_/ Estimated 

Total production of binder twine and production by the ten com- 
plainant-producers, the prisons, and. other private. -manufacturers, 
given in the foregoing table, are expressed in terms of indices of 
1929 in Table 9. , "' 

Table 9. - Binder : twine: Indices showing trend of domestic 

production since 1929 



(1929 = 100) 



p 


eriod 


Total 


Complainant 


Pri< 


son 


Other 






1929 


100 


,00 


100 


.00 


100 


.00 


100 


.00 






1931 


81 


96 


91 


.36 


110 


.22 


33 


.59 






1932 


96 


.04 


106 


.82 


134 


.63 


72 


,33 






1933 


85 


52 


87 


.24 


120 


.74 


69 


.31 






1954 


64 


.79 


62 


.81 


105 


.66 


48 


,63 




c 


arry-over 





















Unsold binder twine carried over from one season to the next by 
the prisons and by the private manufacturers has increased since 1931. 
It is estimated that the combined carry-over of the prisons and the 
private manufacturers amounted to 55 million pounds in 1932, 91 million 
pounds in 1933, and 124 million pounds in 1934, an increase in 1934 over 
1932 of 69 million pounds, or 125 per cent. Carry-over of the private 
producers has increased at a greater rate than carry-over of the prisons 
and in greater increasing ratio to production. 



9829 



-341- 

iotal carry-over on October 1 of all the private manufacturers in 
tile country, not including the carry-over of one of the medium-sized 
complainant producers, amounted to 42,117,970 pounds in 1931, 40,966,238 
pounds in 1932, 74,463,347 pounds in 1933, and 94,007,733 pounds in 
1934, an increase from 1931 to 1934 of 51,889,768 pounds, or 123 per 
cent, and an increase from 1932 to 1934 of 53,041,500 pounds, or 129 
per cent. 

Total carry-over as of December 1 of six of the eight prisons 
producing binder twine, including tiie carry-over of the three largest 
producing prisons, amounted to 11,781,393 pounds in 1932, 11,169,376 
pounds in 1933, and 22,411,596 pounds in 1934, an increase from 1932 to 
1934 of 10,630,203 pounds, or 90 per cent! 

With respect to total production in each division of the binder 
twine industry, the carry-over of the private manufacturers amounted to 
roughly 26 per cent in 1932 and 94 per cent in 1934 of total private 
production; the carry-over of the -orisons in 1932 amounted to roughly 
19 per cent and in 1934 to 45 per cent of total prison production. 

Exports. 

The data in Trble 10, below, show the quantity, value, and unit 
value of domestic exports of binder twine, by principal countries of 
destination, since 1923. Exports of the different grades of binder twine, 
i.e., 500-foot Standard, etc., are not separately recorded. 

Total domestic exports of binder twine declined from 74,407,000 
pounds in 1923 to 6,703,000 pounds in 1934, a decrease of 91 per cent. 
Exports in 1934 were 40 per cent less than a total of 16,779,000 pounds 
in 1929. The unit value of exports declined from $0,107 in 1929 to 
$0,064 in 1934, a decrease of $0,043, or 40 per cent. 

In 1933 and 1934 Argentina was the largest foreign market for 
binder twine exported from the United States, with Uruguay next in im- 
portance. Other countries were unimportant as markets for domestic 
exports of binder twine in these years. Argentina took 33 per cent of 
this country's exports in 1929, 77 per cent in 1933, and 87 per cent in 
1934. Until 1928 Canada was the United States' best customer of binder 
twine. Since then exports to Canada have declined greatly. As will be 
noted from data given later in this report, for a number of years 
Canada has been an important source of binder twine imported into the 
United States. Since 1928 imports from Canada have exceeded exports 
to that country. Exports of binder twine to Can-' a in 1934 amounted to 
only 311,015 pounds; in the same year imports from Canada amounted to 
2,943,107 pounds. Denmark, France, Bussia, and the United Kingdom, 
formerly important markets for binder twine exported from the United 
States, in 1934 took none of this country's exports. 

The two largest private producers since 1928 have exported something 
in excess of 95 per cent of all domestic exports of binder twine. The 
largest producer since 1929 has noticeably increased its ratio of exports 
in relation to the total annual exports at the expense of the other 
producer. 

9829 



-342- 

Ko prison-made binder twine is exported. Hone of the ten complain- 
ant producers with exception of one reports exports of hinder twine for 
the years 1929 to 1934. 

Imports r 

By countries 

1/ 
Imports of binder twine increased from 18,946,000 pounds .in 1929 
to 47,927,000 pounds in the peak year of 1934, an increase of 153 per 
cent, and then declined to 25,200,000 pounds in 1934, as may be seen 
from the data in Table 11. In 1933 and 1934, Mexico, Cuba, and the 
Netherlands were, in the order named, the chief sources of imported 
binder twine, followed, by Canada and the United Kingdom. Imports of the 
different grades of binder twine are not separately recorded. 

Unit values 

In Table 11 it will be noted that the unit value of all imports 
since 1923 was the lowest in 1933, the same year during which total im- 
ports in quantity reached, their highest point. The value of imports 
declined from $0,051 per pound in 1932 to $0,045 in 1933, a decrease of 
12 per cent, and from $0,106 in 1929, a decrease of $0,061, or 58 per 
cent. The unit value of imports increased from $0,045 in 1933 to $0,056 
in 1934, an increase of 24 per cent. 

By quarters 

Table 12 shows imports by quarters since 1931. 



1/ General imports and imports for consumption for most years are 
identical and in other years only slightly different in amount. 
There are no reexports of binder twine. 



9829 



-343- 



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-345- 



Table 12. - Binder twine: General imports into the 
United States, by quarters since 1931 



Feriod 


Quantity 




Value 


Un: 


It value 




r runds 










1929 


18,946,484 


$2,013,360 


$0,106 


1931 


22,888,560 


. 1 


,890,537 




'.083 


1932 


31,992,248 


1 


,623,197 




.051 


1933 


47,927,491 


2 


,177,315 




.045 


1934 


25,200,116 


1 


,401,329 




.056 


By quarters 












1931 












First 


1,290,142 




112,235 




.087 


Second 


13,256,765 


1 


,057,345 




.080 


Third 


7,038,153 




606,059 




.086 


Fourth 


1,303,520 




114,898 




.088 


1932 












First 


1,920,736 




113,163 




.059 


Second 


20,845,110 


1 


,065,141 




.051 


Third 


6,658,862 




317,540 




.048 


Four th 


2,567,540 




127,353 




.050 


1933 












First 


7,525,169 




359,171 




.049 


Second 


28,771,499 


1 


,249,824 




.043 


Third 


5,844,944 




241,071 




.041 


Fourth 


5,785,879 




317,248 




.055 


1934 












First 


7,770,252 




457 , 389 




.059 


Second 


10,866,077 




620,562 




.057 


Third 


3,398,390 




203,368 




.060 


Fourth 


3,165,397 




120,010 




.038 


1935 












First 


3,730,276 




181,596 




.049 


Source: Foreign 


Comnu-rce and navigation 


of the United 


States. 



Imports of tinder twine in the second cuarter of 1933, amounting 
to 28,771,000 pounds, were greater than in any quarter of the period 
1931 to 1934. Imports were the heaviest for any quarter of . the year 
in the same . quarter of 1932, amounting to 20,845,000 pounds, and again 
in the same quarter in 1934, reaching a smaller total of 10,866,077 
pounds. 

There is a decided seasonal trend to imports of hinder twine which 
increase during the first quarter, reach their peak in the second quarter, 
just prior to the active summer harvest season in this country, and 
then decline thereafter until the end of the year. 



9829 



-346- 
3y customs districts 

r 

Imports of "binder twine are made along the Great Lakes, Atlantic 
Coast, the Gulf and the Pacific Coast. Heaviest imports, amounting to 
about 48 per cent of the total, are entered through the New Orleans 
and Galveston custom districts. The heaviest., imports on the Great Lakes 
are entered through the Duluth and Superior customs districts through 
which pass about 18 per cent of all imports. The Philadelphia and 
Maryland customs districts account for somewhat more than two-thirds 
of all hinder twine entered along the Atlantic Coast. About two-thirds 
of all binder twine imported on the Pacific Coast is entered through 
the Oregon customs district. 

Relation of Imports to Production 

The following table shows the ratio of total imports to total 
production, and the ratio of imports, less domestic exports, to 
domestic production for consumption within the United States from 1929 
to February 1935. 



9829 



-347- 



628 G 



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9329 



-343- 

The data in Table 13 indicate that there was an increasing ratio 
of imports to domestic production from 1929 to 1933 and a decreasing 
ratio thereafter. Domestic production of binder twine for sale and 
consumption within the United States in relation to general imports, 
less domestic exports, shows a ratio of 21.78 per cent in .1933 and 
a ratio of only 1.01 per cent in '1929, as compared with a ratio of 
24.15 in 1933 and a ratio of 8.16 in 1928 when all imports are 
contrasted with total production for "both export and domestic con- 
sumption. 

The data in Table 14 show the ratio of binder twine imports to 
total private production and separately to production by the com- 
plainants and also to production by all other manufacturers, in- 
cluding the largest producer, from 1929 to 1934, and by quarters in 
1933 and 1934. It will be noted that imports reached their peal: in 
the second quarter of 1933, both in absolute .amount and in ratio to 
either total private production, or production by the complainant 
producers, or production by other manufacturers. The ratio of imports 
to total private production in this quarter rose to 73 from 18 per cent 
in the first quarter, and then declined in the following two quarters 
to 19 per cent.' There was a corresponding but minor peak in the 
following year, when in the second quarter of 1934, the ratio of 
imports to totals private production rose to 35 per cent.. The ratio 
of imports to production by the complainant companies was' 26 in 1929, 
40 in 1932, 74 in 1933, and 54 in 1934. 



9829 



-349- 



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9329 



-350- 
Prices of Binder Twine 



The price system 

The open price provisions in the Code of Fair Conpetition for the 
Cordage and Twine Industry did not change the price system which has 
prevailed in the private hinder-twine manufacturing industry for a number 
of years. (*) The code provisions, given in Appendix A, merely made 
possible the continuance of a system whereby one or the other of the lead- 
ing manufacturers announces, usually during March or April of each year, 
prices which, through established discounts, are rigidly adhered to by 
all private producers until new prices are sot. 

Prices for prison-made binder twine are usually lower than prices 
for priva/tely manufactured binder twine. In the past the differential 
has been greater than in the last few years. In 1932, 1933, and 1934, 
the prices for prison-made twine have ranged from about two-fifths of 1 
cent to Ijr cents per pound less than prices for privately manufactured 
twine, allowances being made for the various discounts effective. The 
average differential in the 1932-1934 period was between 1/2 to 3/4 cent 
per pound. 

In the prison industry pricos far tho selling sodson announced by 
the Minnesota prison authorities a week or two earlier than the date on 
which prices are set in the private industry are, for the most part, used 
as bases for the other prison producers in publishing their prices for the 
year. 

Domestic -prices and the prices of raw fiber 

Once—yearly price changes have made for a rigid price structure with 
respect to the domestic binder twine industry. Thus in the last few 
years wholesale prices of domestic binder twine have not reflected the 
changes in the price of raw fiber nearly as quickly and as much as have the 
wholesale prices of imported binder twine. Therefore, with falling fiber 
prices, greater competition from imported binder twine has been experienced. 

The accompanying char t (**) shows graphically through curves the relation 
of the wholesale prices of the two leading grades of domestic binder twine, 
500-foot Standard or White Sisal, and 600-foot manila, - along with two 
composite prices of fiber (based on New York quotations) largely used in 
the manufacture of each grade of twine. For further comparison there is a 
curve showing the unit value of imported binder twine, inasmuch as the 
wholesale prices of imported twine are determined to a great extent by the 
entered value of imports. The curve showing the trend of the composite 
weighted price of henequen, Ho. 2 British East African sisal, and grade B 
Java sisal represents the Hew York prices of fiber used in the manufacture 
of 500-foot Standard or White Sisal twine, and the curve showing the com- 
posite weighted price of grades J-2 and 0- abaca, Ho. 1 British East African 
sisal and Grade A Java sisal represents the prices of fiber used in the 
manufacture of 600-foot Manila twine. All data upon which the curves of 
the chart are based are given in Appendix B. 

(*) See Appendix A for price discounts followed by the industry. 
(**) For the data upon which this chart is based, see Appendix B. 

9829 



-3 C 1 - 

From the curves of the chart it nay be seen that, although the New 
York price of hard fiber fell rapidly from 1929 to 1932 and 1933, there 
was considerable lag in the lowering of the wholesale prices of domestic 
binder twine. In fact, prices of domestic binder twine were raised 
slightly in the first quarter of 1929 and then held to this higher level 
to be raised again, this time 6 per cent, in the first quarter of 1930, 
It may be seen from the price curves that, although the domestic industry 
lowered its prices of binder twine twice in 1931, and once again in April,, 
1932, before reducing them in 1933 to the lowest level in years, the unit 
value of imported binder twine fell more rapidly and as time went on 
became more sensitive in reflecting the trend of raw fiber prices. 

Both fiber price curves reached their lowest point in the second 
quarter of 1932, - that of henequen and sisal dropping 2.36 cents, and 
that of abaca and sisal to 2 ? 67 cents. It was not, hoT/ever, until the 
following April, 1933, just after a sustained and moderately sharp 
decline in the unit value of imports, that the domestic industry - 
reduced its wholesale prices to their lowest level, - 500-foot twine 
to 6 cents a pound and 600-foot twine to 7 cents a pound. Twine prices 
were raised about 29 per cent in the first quarter of 1934, following 
a limited increase in the prices of fiber and in the unit value of 
imports. In April, 1935, however, domestic wholesale twine prices were 
again lowered, following a decrease in raw fiber prices and a corres- 
ponding decrease in the unit value of imports. 

The spread between raw fiber prices and wholesale prices 

Table 15 shows the wholesale prices^) of 500-foot Standard or White 
Sisal, 600- foot manila, and 650-foot Superior Manila and Premax twines 
and a composite weighted price of the fiber used in the manufacture of 
each grade. The fiber prices, wherever related to the wholesale twine 
prices for a given period, are, with two exceptions where twine price 
changes occurred twice in 1931, for a period beginning approximately 
two months before the price of twine was changed and ending two months 
before a new twine price was set. 

From the data in Table 15, it may be seen that the ratio of the 
price of fiber to the wholesale price of 500-foot twine decreased after 
1930 from roughly 64 per cent in the period March, 1928, to March, 1931, 
to 38 per cent in the period April, 1932, to April, 1933, and again rose 
only to 43 per cent in the period April to June, 1935, There was a 
similar decrease in the ratio of the price of fiber to the wholesale 
price of 600-foot twine. There was a decrease in the ratio of the price 
of grade G abaca to the price of 650-foot Superior Manila twine from 
65 per cent in the period March, 1928, to March, 1929, to 38 per cent 
in the period April to June, 1935. 

More significant, however, than the ratio of fiber prices to whole- 
sale twine prices, is the difference between the wholesale prices and 
fiber prices viewed as an absolute amount over a period of years. The 
cost of fiber is the largest single item in total material and manufac- 
turing cost in the production of binder twine. For six leading domestic 



(*) See Appendix A for discounts prevailing in the industry, 
9829 



-353. 




uq: 



9829 



-253- 



'2 



3 &£& af s i * » 



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_^ O O o 

«s vi vi a 



9829 



M 






manufacturers the cost of fiber accounted for 43 per cent of the total 
cost of production in 1933 and 47 per cent in 1934. Thus, in an industry 
where fiber cost amounts to about half of the total cost of production, 
any substantial reduction of the cost of fiber (indicated by fiber prices), 
in relation to total cost, leaves a greater manufacturer's margin from 
which profits may be taken. 

The spread with respect to each of the wholesale prices for the 
three grades of binder twine and the related raw fiber prices, shown in 
Table 15, is set forth in Table 16. In each instance the spread is given 
both in absolute amount and as an index of the amount for the period 
March 31, 1928, to March 16, 1930. 

Table 16. - Spread between the orices of raw fiber and the 
wholesale prices of domestic binder twine, 1928-1935 





500-foot ! 


Standard : 


: 500-foot : 


650-foot i 


Superior 


Period 


or White 


Si sal : 


: Manila : 


Manila and Pre max 


Amount 


1928 and: 
1929=100: 


: Amount 


1928 and 
1929=100 


: Amount 


1928 and 
1929=100 


March 31, 1928 to 














March 16, 1930 


$0.0375 


100.00 : 


: $0.0412 


100.00 . 


: $0.0531: 


100.00 


March 17, 1930 to 














March 8, 1931 


.0482 ! 


128.53 : 


: .0683 


165.78 


: .0841 


158.38 


March 9, 1931 to 














October 16, 1951 


.0603 : 


160.80 : 


: .0675 ! 


163.35 


: .0746 


140.49 


October 17, 1931 














to April 8, 1932 


.0433 : 


115.47 : 


: .0478 


116.02 


: .0529 


99.62 


April 9, 1932 to 














April 9, 1933 


.0403 


107.47 : 


: .0453 


1C9.95 :: .0475 


89.45 


April 10, 1933 to 














March 18, 1934 


.0314 


83.73 : 


: .0385 


93.45 


: .0452 


: 85.12 


March 19, 1934 to 










: : : 


April 17, 1935 


: .0405 


: 108.00 : 


: .0516 


' 125.24 


:: .0617: 116.20 

► • ■ 


April 18, 1935 to 










• • 
» • • 


June 1, 1935 


: .0415 


110.67 : 


: .0493 


119.66 


:: .0572: 107.72 



It will be noted from the data in Table 16 that for both 500-foot (*) 
and 600-foot twine the spread between the wholesale price and the price 
of fiber increased after March, 1950, and was greater in every price 
period thereafter with the exception of the period April, 1933, to March, 
1934, when binder twine prices were reduced to their lowest level. In 



(*) It should be remembered that about 85 "oer cent of total domestic pro- 
duction is 500-foot twine. 



9829 



-355- 

this period the amount of the spread with respect to 500-foot twine fell 
from 3.75 cents in the ba.se period to 3.14 cents, a decrease of 16 per 
cent, and the spread with respect to 600-foot twine from 4.12 cents in 
the base period of 3.05 cents, a decrease of about 7 per cent. The amount 
of the spread after April, 1935, for 500-foot twine was 11 per cent 
greater than in the base period, and for 600-foot twine, 20 per cent 
greater. Although the amount of the spread with respect to 650-foot twine 
increased 58 per cent in 1931 over the base period, it declined to less 
than the amount of the base period from October, 1931, to 1 larch, 1934. 
Thereafter, however, it rose above the amount in the base period, 16 per 
cent in 1934 and 8 per cent in 1935. 

Effect of the National Recovery Program 

Labor -provisions of the code 

The Code of Fair Competition for the Cordage and Twine Industry 
prohibited employment in the industry of all persons under 16 years of 
age, and of all persons under 18 in operations or occupations which were 
hazardous in nature or dangerous to health. The code contained a number 
of provisions with 'respect to wages and hours which were pertinent to this 
complaint. 

(a) TTage provisions . - The minimum hourly wage to be paid any worker 
in the industry was 30 cents in specified southern States and 32- a - cents 

in all other States. There was no minimum weekly wage for plant or factory 
; workers. The minimum rate of pay for all office and clerical employees was 
$14 per week. It was further provided that "Every member of the industry 
shall increase the, rate of pay of all employees paid either by hour or 
• piece, *** and sh~ll increase the rate of- pay for all employees paid by the 
day, week, or mon+h, now receiving less than thirty-five dollars ($35.00) 
per week, *** to not less than ninety per cent (90;.) of the rates paid by 
said member of the industry, *** for the -same class of work at the same 
place of business in June, 1929, provided that no employee shall be paid 
less than the minimum fixed in this Code.'" 

(b) Hour previsions . - Factory and plant workers and office and 
clerical employees' were not permitted to work in excess of 40 hours a 
week, except that they might have been employed 48 hours in any one week 
provided their average employment for any calendar . quarter in the year did 
not exceed 40 hours per week. All factory and plant workers were to re- 
ceive time and one-third for all time over 40 hours a week. Shipping 
crews, watchmen, Esngineers, cleaners, etc., might not have been employed 
in excess of 44 hours a week, "except in event of emergency, and must have 
been paid time and one-third for overtime. 

Employment and payroll 

The hours and wages of workers employed by the six leading producers 
in the manufacture of about 98 per cent of the total binder twine output 
of the private industry are shown in Table 17. Employment and payroll data 
shown in this table are based on information submitted for all the mills 
operated by these companies and are representative of production in such 
widely scattered States as Massachusetts, Ohio, Illinois, and Louisiana. 

9329 



-356- 



TABLE 17 



Binder twine; Employment and payroll for the six 
leading private domestic producers, 1929 and 1932 
to January, 1935. 

















1 


Number- 


Hours 


Man-hours 


Total 


Average 


Ave rage 


( 


of 


per worker 


per payroll 


weekly 


weekly 


hourly 


Period 


employees 


per week 


period 


payroll 


wage 


wage 


Average l/ 














1929 


1,435 


48.5 


69,529 


$30,302 


$21.12 


$0,436 


1932 


1,501 


49.1 


73,677 


27,994 


18.65 


.380 


1933 


1,367 


44.1 


60,34-4 


22,340 


16.34 


.370 


1934 


1,196 


38.2 


45,641 


19,843 


16.59 


.435 


January, 1934 


1,372 


. 38.6 


52,897 


22,002 


16.04 


.416 



Code effective March 7, 1934 



April, 1934, to 

January, 1935 : 1;, 107 

15th of month 

1932 

January : 1,325 

April ; 1,516 

July : 1,897 

October : 1,266 

1933 

January : 1,518 

April : 1,399 

July : 1,202 

October : 1,347 

1934 

January : 1,372 



38.0 



42,053 



18, 743 



33.6 : 52,897 ;• 22,002 
Code effective March 7, 1934- 



16.93 



44.0 


58,236 


23,791 


17.96 


44.5 


67,476 


26,010 


17.16 


58.0 


109,957 


40,618 


21.41 


46.6 


59,040 


21,557 


17,03 


47.6 


72,202 


25,367 


16.71 


43.4 


60,754 


21,465 


15.34 


46.8 


56,217 


20,501 


17.06 


38.8 


52,201 


22,028 


15,35 



16.04 



.446 



.409 
.385 
.369 
.365 

.351 
.353 
.365 
.422 

.416 



April 
July 
October 
1935 

January 



1,455 

1,035 
923 

1,015 



38.2 
37.8 
37.9 

38.0 



55,519 
39, 129 
35,018 

38,546 



23,976 
17,584 
15, 808 

17,603 



16.48 
16.99 
17.13 

17.34 



.432 
.449 
.451 

.457 



Source; Complaint and other data furnished the National Recovery Adminis- 
tration. 



l/ January, April, July, October. 



9829 



-357- 

From the data of the foregoing table it may he seen that the six 
leading producers, accounting for ah out 98 per cent of private domestic 
production, as .a wnole did not exceed the maximum work week of 40 hours 
or pay less than the minimum hoiu-ly rate of 32} cents after going under 
the code. The table shows .'that after the adoption of the code the number 
of wage earners increased sharply in -April, then declined even more 
abruptly to a ne\ low level of 923 in October, 1934, and rose only to 
1,015 in January, 1935. The tfend of the total weekly payroll after the 
code became effective followed the course of the number of workers en- 
gaged. After the code became effective, however, there was a gradual 
upward trend in the weekly wage and the hourly rate, the former increas- 
ing from $16.48 to $17.34 from April, 1934, to January, 1935, and the 
latter increasing from $0,432 to $0457 during the same period. 

Separate data for the operations of each producer indicate that none 
paid less than the minimum hourly rate in the post-code period, although 
two complainant producers in a total of four payroll periods slightly 
exceeded the prescribed work week. 

The data of the above table indicate that the binder twine industry 
complied with the code admonition that hourly wages should be increased 
at least to 90 per cent of what jthey were in June, 1929. 

Part of the data in the foregoing table is expressed in the form of 
indices of 1929 in Table 18. 

Table 18..- Binder twine: Indices of employment and payroll for 
the six leading private ^domestic producers, 1929 and. 1932 

to January, 1935 : 



Per' od 
(15th of specified month) 



1929 
1932 
1933 
1954 



Number : Hours per : Average : Average 
of : worker : weekly : hourly 
enroloyees: per week : wage _ : wage 



100.0. 

104.6 
95 . 3 
S3. 3 



' 1929 = 


100 






100.0 




100.0 : 


100.0 


101.2 




88.3 : 


87.2 


■ 90.9 




77.4 : 


34.9 


: 78.3 




73.6 : 


99.8 



January, 1934 



95.6 



79.6 



76.0 : 95.4 



-Code effective Iiarch 7, 1934- 



April, 1934, to January, 1935 



77.1 



78.4 



80.2 .: 102.3 



1933 

January 

April 

July 

October 
1934 

Januar^- 



105.8 

97.5 
83.8 
93.9 

95.6 



98.1 
89.5 
96.5 

30.0 

79.6 



79.1 
72.6 
80,8 

.77.4 

76.0 



80.5 
81.0 
83.7 
96.8 

95.4 



-Code effective March 7, 1934- 



9829 



(Cont'd) 



-353- 

Table 18. - Binder twine: Indices of employment and oayroll for 
the six leading private domestic producers, 1929 and 1932 

to January, 1935 (Cont'd) 



April 
July- 
October 

1955 

January 



01.4 : 


78.8 


78.0 


99.1 


72.1 : 


77.9 


80.5 


103.0 


64.3 : 


78.1 


81.1 


103.4 


70.7 : 


78.4 


82.1 


104.3 



Table 19 shows indices for wages paid and employment by the five 
leading complainant producers, for four payroll periods during a 12-month 
period preceding the effective date of the code and during a like period 
after the code .rent into force. 

Table 19..- Hinder twine: Indices for wages paid and employment by 
the five leading complainant producers before and after the code became 
effective on March 7, 1934 





: lumber of 


Hours oer work- 


. Average 


Averags 


Period 


employees 


er per : 'eek 


weekly wa, r ;e 


: hourly i 


(week ending 15th 


Five 


Five 


: Five 


Five 


of month) 


c o rap 1 ai nan t s 


complainants 


: complainant 


s comol; 
ant's 


Before code 










April, July, Oct- 










ober, January, 1934 


100.0 


100.0 


: 100.0 


: 100.0 


After : od" 










April, July, Oct- 










ober, 1934, Janu- 










ary, 1935 


83.0 


90.3 


105.9 


117.4 


1934 










April 


111.4 


91.3 


103.2 


113.3 


July- 


76.4 


89.3 


107.7 


120-.-3 


October 


64.6 


89.3 


106.9 


119.0 


1935 










January 


79.6 


90.5 


107.1 


118.2 




74.1 


93.3 


105.9 


113.8 



The indices of the above table 
plainant producers did not increase 
effective, but reduced the number o 
worker per week. Weekly wages were 
rates, or vice versa,, in the post-c 
ant producers increased weekly wage 
per cent in the post code .period, 
five complainant producers and the 
period were roughly 18 per cent in 
cents. 



indicate that the five leading com- 
employment after the code became 
f workers employed and the hours oer 

increased, as reflected in hourly 
ode period. The five leading complain- 
s 5*9 per cent and hourly wages 17.4 
The average hourly wages paid by the 
largest manufacturer in the ore-code 
excess of the code minimum of 32.5 r 



9829 



-359- 



Cost of production 



The total cost of manufacturing and distributing 100 uounds of 
binder tv/ine together f or t he five leading complainants and the largest 
producer rose from $4.84 in 1933 to $6.03 in the first half of 1934, an 
increase of 25. per cent, as ma^ he seen from the data in Table 20. The 
cost of fiber, an item representing 47 per cent of total production cost 
in the first half of 1934, increased 38 per cent, the largest increase 
in an;- cost. Labor cost, amounting to only 14 per cent of total product- 
ion cost, increased 21 per cent. 

Table 20 shows the costs of manufacturing and distributing binder 
twine for the six producers in 1933, before the code, and in the first 
half of 1934. The code became effective March 7, 1934. 

Table 20. - Binder twine: Production costs of the six leading 
domestic manufacturers, including the five leading com- 
plainant companies, 1933 and first half of 1934 





Cost -per 


ICO pounds o 


f binder 


twine 




7eighted : 




: ?iatio 


to 


Item of Cost • : 


average cost ; 


Increase : 
C^-) over : 


: total 


cost 




First 




First 


. : 


1933 half of 


1933 : 


: 1933 


half of 




1934 






1934 








Per cent : 


: Per c 


ent 


Materials - ■ 












Fiber • ■ ' 


$2,170 


5 $2,855 


■ 37-39 : 


: 42.80 


• 47.34 


Burlap ■ : 


.'J93 


: .126 


35,09 : : 


: 1.92 


2.09 


Oil 


.160 


: .179 


11.35 ■ : 


: 3.31 


. 2.96 


Other 


.066 


: .073 


9.82 ■ : 


: 1.37 


1.21 


Total 


2.389 


: 3.233 


35.22 : 


: 49.39 


53.60 


Labor 


.673 


: .820 


21.02 : 


: 14.01 


13.60 


Depreciation 


.145 


: .157 


: 8.03 . : 


: 3.00 


2.60 


Factory Expense 


.697 


: .752 


: 7.38 : : 


: 14.42; 


12.47 


General and administra- 












tive exoense 


.245 


: .323 


: 32.12 : 


: 5.06 


5.36 


Total material and 












manufacturing cost 


■ 4.154 


: 5.285 


: 27.19 : 


: 85.83 


87.63 


Selling expense 


1 .683 


: .746 


: 9.27 : 


: 14.12 


12.37 


Total (all costs) 


; 4.837 


: 6.031 


: 24.73 


: 100.00 


100.00 



Source: Complaint and other data furnished the National Recovery 
Admini s trati on . 



9829 



-360- 



La"bor cost and factory expense each was in smaller ratio to 
total cost during the first half of 1934 than in 1933. About equal 
in amount, the two together represented 28 per cent of total cost in 
1933 and 26 per cent of total cost in the first half of 1934. 

TABLE 21 



Binder twine: Increases in production cost items 
in the first half of 1934 over 1933 and ratio of 
separate cost items to total cost in 1933 and the 
first half of 1934 for the five complainant pro- 
ducers . 





First half of 
increase (/) 
decrease (-) 
year 1933 


1934 
or 
Dver 


Ratio to 


total cost 




Item of cost 


Five 
producers 




Five complainant 
producers 


■ 1933 


First half 
of 1934 




Materials - 

Fiber 
Burlap 
Oil 
Other 


/24.S9 
/14.42 
/12.00' 
/ 1.10 


Per 


cent 

■ 41.67 
1.90 
3.20 

1.66 


43.32 
1.81 

2.98 
1.40 




Total 

Labor 

Depreciation 
Factory expense 
General and adminis- 
trative expense 


/22.81 

/17.7.8 

. . : 
/ 9.01 

/38.33 


48.43 

15.61 

3.36 

11.76 

7.43 


49.51 

15.30 

2.80 

10.67 

8.56 




Total material a.nd 
manufacturing cost 

Selling expense . . 


/20.48 
/17.98 


86.60 
13.40 


86.64 
13.16 




Total (all costs) 


/20.14 • 




100.00 


100.00 





It will be noted in Table 2, that, the .item of depreciation for 
the five producers did not increase, and there was an increase of 38 
per cent in the item of general and .administrative expense. 



)829 



-361- 
APPDtTDIX A 



Code of Fair Competition for the Cordage and Twine I n dustry 
(No. 303), approved February 31, 1934 

Schedule "B" 

Division for Manufacturers of Binder Twine 

Filing Price Schedules 

■1. Every member of this Division offering Binder Twine for 
sale shall file with the Code Authority a schedule of prices and terms 
setting forth the grade and lengths por pound, prices per pound, or 
the prices per "bale of fifty (50) lbs. gross weight, quantity discounts, 
terras and date of payment, d?te and amount of cash discount, and conditions 
of delivery; each such schedule shall set forth only the lengths there- 
in shall be, approximately five hundred (500) feet, five hundred fifty 
(550) feet, six hundred (600) feet and six hundred fifty (650) feet to 
the pound. Such schedules shall represent the basis upon which Binder 
Twine is to be sold by members when selling to retail dealers.. Such- schedule 
shall also set forth full information as to all discounts allowed to 
purchasers. Such schedule, when filed with the Code Authority, shall 
become effective on the date filed and shall rerrain in force until a 
new schedule is filed and becomes effective. 

2. Copies of all schedules filed by manufacturers shall be 
open to examination, as the Administrator may determine, to parties in 
interest. 

3. The Code Authority, at such time and after such study as 
it may deem proper, shall recommend to the Administrator the establish- 
ment of a definite quantity (bales) of binder twine, the purchase of 
which for a season's requirement shall entitle the purchaser to a dis- 
count, from any individual manufacturer, equal to the discount allowed 
by said manufacturer to jobbers. The Administrator may approve, dis- 
approve ir modify the recommendations. Pending such determination, 
each member shall file such discounts as he desires to make applicable 
to any purchaser. 

4. ITo manufacturer shall sell, or offer to sell, Binder 
Twine, directly or indirectly, upon any other conditions than specif- 
ied in his schedule as filed, or as may be established under the prov- 
isions of Section 3 hereof, and no manufacturer shall modify the cond- 
itions of sale by any concessions, either directly or indirectly, made 
subsequent to any sale. 



9829 



-362- 
Price Discounts for Binder Twine 



The following price discounts have been, generally effective in 
the private domestic binder—twine industry since 1921: 

200- bale lots, 6$ cents per bale less; 
400- bale lots, 12§ cents per bale less; 
10,000 to 20,000 pounds, l/8 cent per pound less; 
20,000 pounds or more, l/4 cent per pound less. 

In 1935, the largest producer listed its discounts as follows: 

Dealers . - Lots of 10,000 pounds, 12^ cents per owt.; 

lots of 20,000 pounds or carloads, 25 cents per 

cwt . 

Jobbers. - In any quantity, prior to December 29, 1933, 

75 cents ner cwt.; 
lots up to 200,000 pounds since December 29, 

1933, 75 cents per cwt.; 
lots of 200,000 pounds or more since December 29, 
1933, $1 per cwt. 






9829 



-363- 



APP3-TDIX 3 



Table A. - Quarterly prices of raw hare 1 , fiber at Now York, 

1927 to 1935 





: Composite of weighted 


•prices of 




: Standard Mexican : Grades G. and J-2 


Period 


: henequen, No. 2 Eritish: abaca, Ho. 1 British 




: East African sisal, and: Fast African sisal, and 




: Grade 3, Jgva sisal '• : Grade A. Java sisal 




: Price nor 'pound 


1927 






First 


: $0.0807 


: $0.0973 


Second 


: .0770 


: .0931 


Third 


: .0753 


: .0931 


Fourth 


: .0'- j 


: .0910 


1928 






First 


: .0719 


: .0867 


Second 


: ,0 


: .0361 


Third 


: 17:3 


: .0333 


Fourth 


: .0V2 1 . 


: .0864 


1929 






First 


i ,0740 


: .0240 


Second 


: . ' vt 


S .0891 


Third 


: .0: 


: .0889 


Fourth 


! . 313 


: .0846 


1930 






First 


: .0798 


: .0781 


Second , 


: .077.3 


: .0690 


Third 


.0503 


: . 0550 


'FDurth 


.0467 


: .0521 


1931 






First j 


.043'' 


: .0437 


Second j 


.0404 


.0327 


Third ; 


. '.lb 


.0381 


Fc oi-th ; 


.0256 : 


.0353 


1932 : 






First j 


. 0244 ; 


.0300 


Second ; 


.0236 ! 


. 0261 


Third ; 


.0241 ! 


.0239 


Fourth ; 


.0245 ; 


.0285 


1933 j 






First j 


.0243 J 


.0276 


Second • 


.0278 : 


.0295 


Third : 


.0375 : 


.0404 


Fourth : 


.0372 : 


.0596 


1934 • 






First : 


.0383 : 


.0383 


Second • 


.0382 : 


.0398 


Third : 


.0341 : 


.0360 


Fourth : 


.0313 : 


.0355 



°3 



29 



-364- 



APPENDIX B - continued 



Tabic A. - Quarterly prices of raw hard fiber at Hew York, 

1927 to 1935 



Cortrpo site of weighted prices of 

Standard Mexican : G" ra&es G. and J-2 
Period , . : henequen, No, 2 British: abaca, Ho. 1 British 

East African sisal, and: East African sisal, and 
Grade: B. Java sisal : Grade A. Java sisal 



1935 



First 



Price per pound 



.0303 



.0358 



Sources: Cordifie Trade Journal 

and prices furnished by Messrs.. Hanson & Orth, II. Y. 



9829 



-365- 

Table 3. - Wholesale prices of binder twine effective in 
the private domestic industry, 1927 to 1935 1/ 





: 500-foot 




650-foot 


Date effective 


; White Sisal 


600-foot ! 


Superior Manila 




; and Standard 


Manila 


and Premax 




: ?: 


.•ice -oe r pound 




February 15, 1927 


: $0.1275 


; $0.1450 


$0.1575 


March 31, 1928 


: .1100 


. 1263 


.1375 


March 13, 1929 


! . 1125 


! . 1325 


. 1438 


March 17, 1930 


! . 1200 


: . 1400 


! .1513 


March 9, 1931 


: .0975 


: .1125 


: . 1225 


October 17, 1931 


: .0725 


: .0838 


.0925 


April 9, 1932 


: .0650 


: .0750 


: .0825 


Aoril 10, 1933 


: .0600 


: .0700 


: .0775 


March 19, 1934 


{ .0775 


: .0900 


: .0975 


April 13, 1935 


: .0725 


; .0850 


: .0925 


Source: Data furnis' 


led the National 


Recovery Admini< 


stration. 



l/ Yearly price changes are announced in the Cordage Trade Journal 



T^ble C. - Unit of imports for six-month periods, 

1927 to 1934 





Value 




: Value 


Period , 


per 


: Period 


; per 




I -lound 




: pound 


1927 ! 




1931 




First ; 


$0.1144 


First 


$0.0804 


Second 


.1194 


Second 


.0864 


1928 j 




: 1932 




First ; 


.0997 


First 


.0518 


Second ; 


.0952 


; Second 


.0482 


1929 ; 




1933 




First ; 


.1066 


! First 


! .0446 


Second ; 


.1057 


: Second 


.0480 


1930 ! 




1934 




First j 


.1045 


First 


.0578 


Second : 


.1139 


Second 


.0493 



9829 



-366- 



CIGkES (No. 29) 



9329 



-367- 
TABLE OF CONTENTS 



Page No. 

Status of complaint under the national Industrial 

Recovery Act -r -* 370 

Subject of complaint and tariff status ' 370 

The domestic industry 370 

Distribution 370 

Employment ' 371 

Effect of machinery upon employment 376 

Effect of machinery upon concentration of production 376 

Effect of machinery upon wages 378 

Effect of the Rational Industrial Recovery Act \roon 

competition between hand and machine producers 379 

Exports of domestic cigars 380 

Imports 381 

Comparability of Philippine and domestic cigars 384 

Comparision of trend of imports from the Philippine 

Islands with domestic production 385 

Competitive factors 386 

Decline in cigar imports from Puerto Rico 388 

Wages in the cigar industry 389 

Wages for making cigars ~oy hand 392 

Effect of the national recovery program 394 

Arraendix 



9829 



-368- 

LIST OP TABLES 

Page II o . 
Table No . 

1 Trend of production, employment, and payrolls in the 

cigar industry by census years since 1^27 371 

2 Domestic production of class A -nc all other large 

cigprs, 1926-1934 372 

3 Cigar production of ten reporting companies distri- 

buted, by retail price classification, for fiscal 
'/errs, 1929-1934- 373 

4 Production of cigars and cigarettes, ly2d-1934 374 

5 Number oi men and women cigar workers employed at 

various types of work July 1, 1934 375 

6 Comparison of the distribution of cigar workers 

with the production of cigars in various States 375 

7 Comparison of total cigar production in the United 

States and estimated total output and labor dis- 
placement from machine production 376 

6 Changes in number of factories and. proportion of 
total cigar out nut manuf actured by factories 
grouped according to annual out nut from 1921 
to 1^33 377 

9 Net income of six large cigar companies, .192S-1934 378 

10 Imports of cigars from the Philippine Islands, 

1926-1934 381 

11 Imports of Philippine cigars ba.sea upon (l) in- 

ternal revenue stamp sales, and (2) exports 

of Philippine cigars to the United States, 

1926-2934 382 

12 Imports of Philippine cigars into the United 

States, by ouarters, 1933-1934 383 

13 Comparison of average value of imported Philippine 

cigars and average value of domestic cigars, 
1927-1933 384 

14 Comparison oi total imports of Philippine cigars 

with United States production of class. A cigars, 
1926-1935 386 

15 Comparison of total imports of Philippine cigars 

with domestic production of 2-forr-5 cent cigars 

by ten large producers 388 

16 Comparison oi domestic production of Class A 

cigars with total cigar shipments to the United 
States from the Philippine Islands and Puerto Rico-389 

17 Comparison of trend oi wages in cigar manufacturing 
industry and all manufacturing industries 390 

18 Comparison of .-average weekly wages of female 

cigar makers in 1929 and 1933 i or the United 

States and for Pennsylvania 391 

19 Comparison of trend of average piece rates for 

making class A cigars by hand in York County 

and in other sections of the United States 392 

20 Frequency distribution of makers of class A 

cigars by hand receiving specified, hourly earn- 
ings during a representative week in June, 1933 393 

9829 



-569- 

AFPEN.DIX 

TABLE Oi CONTENTS 

Page No. 

Tobacco in the Fhilicpine Islands 396 

Manufacture 01 vobacco products--" 396 

Froc'uction end imports from the United States of 

cigarettes 397 

Production rnd expci&rs of cigars 398 

Other tobacco products 398 

Reciprocal nature of tobacco trade by the United 

States anc the Philippine Islands 399 

Tobacco promotion activities 401 

Philippine ci -ars in relation to the National 

Recovery Administration 402 

Wages for making cigars in the Philippine' Islands 403 

LIST OF TABLES 

Table No . „ „ .-„ 
Page No . 

1 Comparison of total -production and exports of 

Philippine tobacco 396 

2 Comparison of .raw materials used in manufact- 

ure of Philip-cine tobacco products 397 

3 Comparison of tax-paid withdrawals in the 

Philippine Islands of domestic cigarette 
imports from the United States 397 

4 Comparison of the distribution of total Phi- 

lippine cigpr production to different 
consuming markets 398 

5 Comparison of the value of Philippine exports 

to and imports from the United States of 
tobacco products . 399 

6 Comparison of quantity and value of United 

States exports to and imp.rts from the 
Philippine Islands of tobacco products 400 

7 Expenditures from advertising, fund for pro- 

moting sales of Philipoine cigars in the 
United States 401 



9629 



-370- 
5URVEY 0j< INFORiviATION 

ON 

CIGARS 

April, 1935 

Status of Complainant under the National 
Industrial Recovery Act 

This is a report on a complaint under Section 3 (e) of the 
National Industrial Recovery Act, with respect to imports of cigars 
from the Philippine Islands, especially cigars manufactured to retail 
for 2-lor~5 cents or less, filed by the Code Authority of the Cigar 
Manufacturing Industry. The Code of Fair Competition for this indus- 
try was approved June 19, 1934. 

Subject of Complaint and Tariff Status 



Cigars are dutiable under Paragraph 605 of the Tariff Act of 
1930 at $4,90 per pound and 25 per cent ad valorem; they were dutiable 
at the same rate under the Tariff Act of 1922. 

Section 501 of the Tariff Act of li-30 provides "that all articles, 
the growth or product of or manufactured in the Philippine Islands from 
materials the growth or product of the Philippine Islands or of the 
United States, or of both, ***coming into the United States lrom the 
Philippine Islands shall hereafter oe admitted free of duty," 

On December 2, 1933, the Attorney General of the United States 
ruled that "articles brought into continental United States from the 
Philippine Islands are subject to the provisions of Section 3 (e) of 
that Act (National Industrial Recovery Act) concerning articles 
'imported into the United States in such manner or in such circum- 
stances' as to render ineffective or seriously endanger the mainten- 
ance of any code or agreement. " 

The Domestic Industry 

Distribution 

On the basis of the Census of ..Januf actures there were 646 cigar 
manufacturing establishments in the United States in 1933. During this 
year the industry produced 4,510 million large and small cigars valued 
at $135,576,000; it employed an average of 53,o&4 workers to m hom it 
paid $29,558,000 in wages. The leading cigar producing states with 
the percentage of the total United' States output derived from each were 
Pennsylvania, 37.6; Florida, 10.8; New Jersey, 10.3; New York, 5. 2; 
Ohio, 5.0; South Caroline, 4.9; Kentucky, 4.9; l.iichigan, 4.6; and 
Virginia, 3,5. 



9829 



-371- 

The total volume 01 cigar production in the United States has been 
declining; ox" more than a decide, the downward trend being particularly 
noticeable after 1930. Comparative figures for uroduction, employment, 
and wages in the industry since 1927 pre given in Taole 1, 



Table 1. - Trend. of production, employment, and payrolls, 
in the cigar industry by census years since 19^7 





Number of 


. Average 




Value 


Year 


establish- 


numoer of 


Wage s 


of 




ments 1/ 


wage earners 




Products 








Thousands 


1927 


1,950 


94,556 


$76,470 


$356,026 


1929 


1 , 587 


84,166 


67,222 


509,211 


1931 : 


1 , 063 


68,162 


46,074 


225,149 


1933 • 


646 


53,684 


29,558 


135,576 



Source:. Census of Manufac tures, Bureau of the Census. 
1/ Only those rerortiri": output valued at $5,000 or more. 



Production 

Cigars pre grouped into live classes according to their retail sal? 
price for the purpose of collecting internal revenue. The groups 
range from the cheap class A cigars, which retail at not more than 5 
cents each and pfv a tax of $2 per thousand, to the expensive class E 
cigars, which retail at more than 20 cents each and pay .a tax of $15.50 
per thousand. A study of the relative production oi the different 
grades of cigars, as shown by the sale of internal revenue stamps, 
indicated that the decline in total production has been due almost 
entirely to a decline in the demand for the more expensive cigars. 

Table 2 compares the annual production of Glass A cigars since 
1926 with the production oi cigars retailing .or mare than 5 cents. 
It may be. noted that the production oi the less expensive cigars rose 
36 per cent from 1926 to 1934, while at the same time the production 
of the more expensive cigars declined 63 per cent. 



9629 



-572- 

Table 2. - Domestic production of class A and all other large 

cigars, 1926-1934 \J 







( illions 


of cigars) 








Large cigar : 


: Index of lprge 






production : 


: cigar production 


Year 






: All 






All 






Class A 


: other 


Total : 


:Class A 


other 


Total 


"1926 


2,886 




: 3,703 


6,569 : 


: 100 


100 


100 


1927 


3,175 




5,396 


6,571 : 


: 110 


92 


100 


1928. 


3,310 




• 3,144 


6,454 : 


: . 115 


65 


98 


1929 


3,583 




■ 2,969 


6,552 : 


: 124 


80 


99 


. 1930: 


3,574 




2,315 


5,889 : 


: 124 


63 


69 


1931: 


3, 588 




1,631 


5,319, : 


: 128 


44 


61 


1932; 


3,491 




952 


4,443 : 


:. 121 


26 


67 


1933- 


3,590 




655 


4,345 : 


:. 128 


16 


66 


1934 


3,929 




640 


4,569 : 


: 136 


17 


69 



Source: Annual report of the Commissioner of Internal Sevenue. 
1/ Based on stamn tax sales. 

All cigars selling for 5 certs each or less are reported in 
internal revenue statistics in the class A group. These statistics, 
therefore, afford no basis for a comparison of the relative changes in 
the production ox cigars selling icr less than 5 cents each. Some 
indication oi the changes which nave occuri ed in the production of the 
cheaper graces of cigars may 'be gathered from the data given in Table 
5, which is based upon the statistics furnished by ten domestic cigar 
manufacturers. In 1929 onlv ti"0 of these companies were making cigars 
selling. for 2-for-5 cents or less. Fractically the entire production 
in this classification ^as cheroots or little cigars made by one machine 
producer and sold for less than 2-for~5 cents. The reported production 
of 2-for-5 cent cigars has grown very rapidly, rising from 5 million 
in 1929 to 222 million in 1934, an increase of aoout 37000 per cent. At 
the same time the reported production of all other :rades of cigars, 
even including those retailing for less than 2-for~5 cents, has 
declined sharply. On the basis of these data," it appears that the 
greater part of the grin which has taken -place in the production of 
class A cigars since 1929 has resulted from the phrnomenal increase 
in the production of 2-ior-5 cent cigars. It may be noted ^Iso that 
the machine production of 2-i'or-5 cent cigrrs rose 65 per oent from 
1933 to 1934, while the proouction of nand-made cigars in the same 
group declined 8 per cent. 



9829 



Trole 3. - Cigar production 01 ten reporting companies distributed 
by retail price classif icat-ion, for xiscal years, 

1 929-1934 1/ 







(Thousands of Cigars). 


1st-' 






rear 




Ciears nrocuce:c to retai" 




Fiscal ^ 






n'r oia 


Over 


Total, 


ending 


Less than 


2- for-: 


2-for-5 cents 


5 cents 


all 


June 30 


2-for-5 cents 


cents 


to 


each 


ci^prs 










5 cents each 


• 










Four machine nroducers 




1929 


2/ 


271, 217 


2, 630 


215,326 


84,922 


574,094 


1932 




157,034 


OUiUfO 


134,601 


32,399 


359,407 


1953 




L06.472 


66, 524 


127,161 


12,912 


315,068 


1934 




89,096 


113,160 
Six h? 


175,183 
md urocucers 


6,012 


363,748 


1929 


2/ 





3,o30 


165,. .92 





189,322 


1932 







56,486 


108,352 





164,829 


1933 







117,980 


86,497 


16 


206,494 


1934 


5/ 





108, C66 


69,698 


29 


178,592 








Total - 


- ten companies 




1929 




271,217 


6,260 


401,016 


64,922 


763,416 


1932 




157,034 


91, 8o3 


242,953 


32,399 


524,236 


1933 




106,47? 


186,504 


215,658 


12,930 


521 , 562 


1934 


3/ 


89, 096 


221 , 626 


243,081 


6,041 


562,540 



1/ Eight companies in 1929; nine companies in 1932, and ten com- 
panies in 1953 and 1954. 

2/ Three machine producers pnd five uand producers in 1929. 
3/ Partially estimated. 



The decline i r ' the total production of cigars has been in sharp 
contrast to the rise in the production of cigarettes. Hovever, since 
1926 the cheap clpss A cigars have risen in -production at about the 
same rate as cigarettes. This strongly suggests that the future of 
the cigar industry is dependent in very large leasure upon its ability 
to furnish the consuming public vith a relatively cheap "smoke", 
vnich vill compete with the cigarettes. In order to compete with 
tne lor-cost machine production of cigarettes, the cigar manufacturers 
are being forced, inevitably, to adopt machine methods of -production. 



9629 



-374- 



Table 4. - Production of cigars and cigarettes, 1925-1934 













Index of 


Year 


Cigar 




Oigrrettes : 




production 




: Cigars 


Cigarettes 




i 


[illions : 








1926 


6 , 499 . 




92,097 : 


: 100 




100 


1927 


6,519 




99,809 : 


: 100 




108 


1928 


6,373 




108,706 : 


: 98 




118 


1929 


6,519 




122,392 : 


: 100 




153 


1930 


5,894 




123,802 : 


: 91 




134 


1931 


5, 348 . 




117,065 : 


: 82 




127 


1932 


4,583. 




106,632 : 


: 67 




116 


1933 


4,300 




114,874 : 


: 66 




125 


1934 


1/ 4,'597 


" 


1/ 125,612 : 


: 71 




136 

















Source: Annual report of C6mmissioner of Internal Revenue. 
1/ Based upon stamp tax sales. \ 



Employment 

The cigar industry has Deen able to raeet the public demand for 
lower-priced cigars very largely as a result of technological develop- 
ments' in the industry which have greatly reduced the manufacturing cost 
of cigars. The automatic cigar-making machine has revolutionized 
the technique of cigar iapking, introducing almost complete mechanization 
where formerly a handicraft type of production predominated. The 
distribution of employment between machine and hand cigar workers as of 
July 1, 1954, is given in Table 5. This table also shows the distribu- 
tion of employment between men and women, indicating that the hand 
workers are predominantly women, and that the machine workers are almost 
exclusively women. 



9829 



-375- 



Table 5. - Fumuer of men and women cigar workers eumloved 
at various types of work, July 1, 1934 



CI 


-ssiiicatiun : 


Piece-workers : 


Time-workers : 




Total 


Fiece-v'orkers : 


Ti 


ne-workers : 




Total : 



Hand 
'. orkers 


(Ircnme 
workers 




All 
workers 




Lien 


'.Vomen 


iien 


Women 


Jen 


: Wo me n : 


Total 


8,827 
1,865 


19,899 
5.707 


23 
182 


11,978 
3,742 


8,850 
2.077 


: 31,877: 
: 9.449: 


40,727 
11.526 


10,712 


25,606 


205 


15,720 


10,927 


: 41,326: 


52,253 



16.9 

3.6 


38.1 
10.9 


Percentage oistribution 

1/ : 22.9 : 16.9 : 61.0 
0.4 : 7.2 : 4.0 : 16.1 


77.9 
22.1 


20.5 


49.0 


.4 


30.1 


29,9 


79.1 


100.0 



Source: Special Tabulation of the -ure.-u oi the Census. 
1/ Less than 0.05 oer- cent, 



.The distribution of cigar workers corresponds roughly with the 
distribution of r>rocuction among the various States. The c if f erences 
between the two noted in Table 6 were due in part to the varying degree 
of mechanization in- individual States, also in part to the lack of 
correspondence between: the production period (1933) and the date of 
employment- enumeration: (July 1, 1934). 

Table 6. -. Conroariscn of the- c lstrioution of cigar workers 
with the production of cigars in various States 





-roduction 


Number of cigar 


makers : 


: Percentage 




millions of 
cigars !_/ 


July 1, 1934 


: of total 




Machine 


Hand 


Total : 


: Cigar 


dumber of 




1935 








: oroduc- 
: t i on 


cigar 
makers 


Fenra. 


1,616 


3,697 


8,425 


12,322 : 


: 37.6 


30.3 


New Jersey 


443 


2,155 


3,1 (0 


5,255 : 


: 10.3 


12.9 


Florida 


466 


fc24 


! , 978 


o,802 : 


: 10.8 


16.7 


Few York 


266 


386 


2 , 122 


2,506 : 


: 6.2 


6.2 


Ohio 


214 


469 


1,779 


2,246 : 


: 6.0 


5.5 


Michigan 


196 


361 


l-,76£ 


2,126 : 


: 4.6 


5.2 


All other 


1 . 099 


Z ,906 


5, 559 


9,466 : 


: .25.5 


23.2 


Total 


4,300 


IS. '01 


28.726 


40.727 s : 


: 100.0 


100.0 



Source: Special tabulation of -trie 3ureau oi the Census. 

1/ Tax-raid removals. 

9629 






-376- 
Effect of machinery upon Employment 

Machine production of cigars has grown rapidly since trie first 
automatic machines were installed in 1919, tJechanized cigar production 
has oeen accompanied by significant changes within the cigar industry. 

The direct and immediate effect of technological advances in the 
manufacture of cigars has been widespread displacement of labor. 
Table 7 indicates the extent of the technological unemployment which 
has resulted from. the substitution of automatic machinery tor hand, 
production of cigars, estimated by the Bureau of Lao or Statistics, .in 
connection with a study of technological changes in the cigar industry. 
in 1831. 

Table 7. - Comparison of. total cigar production in the United 
States and. estimated total output and labor dfspla cement 
from machine production. 





(iilillions of cigars) 






United States production 


Ratio of 


Estimated 


Year 


of large cigars 


machine 

■production 


number of 




Total 


Made by 


hand workers 






machinery 


to totfcil 


displaced 








Per cent 




1919 


7,072 


162 


2.6 ■ 


1,331 


1921 


6,726 


401 


6,0 


'2,942 ■ 


1923 


6,950 


632 


9.1 


4, 636 


1925 


5,463 


957 


14.8 


7,015 


1927 


6,519 


1,625 


28.0 


13,381 


1929 


6,519 


2,291 


35.1 


16,797 


1931 


5,348 


2,912 


54.4 


21,356 


1933 


4,345 


1/ 2,782 


64,0 ! 


1/ 20,392 



Source: Monthly Labor Review , Dec. 
1/ See Leidesdorf Srief, p. 4. 



31, 1933, p. 13. 



Effect of Machinery upon Concentration of Production 

Since the introduction of automatic machinery, competition in the 
cigar industry has centered, around cigars manufactured to retail at not 
more than 5 cents each. Sustained demand in the low-price cigar field 
has made possible the volume of production necessary for the economical 
use of expensive machinery. This competition has resulted in the 
elimination of many of the relatively, high-cost , small factories which 
made cigars by hand,' and has concentrated production in a comparatively 
small number of plants using machinery.- Table 8 shows : the extent of 
the chpnre "hich took place from 1921 to 1933 in the production of 
cigars by factories, classified according to. the quantity of their 
output. 

In 1921 the factories having an output of less than 20 million 
cigars a. year procuced 74 per cent of the total output for the year; in 
1933 factories in this same group accounted for only 39 per cent of the 
production for the year. The 11 factories having an annual output in 

9829 



-377- 

excess of 40 million cigars produced 16 per cent of the year's total in 
1921; the 23 factories in this class in 1933 accounted for 50 per cent 
of the year's output. 

1/ 
Table .8- Changes in number of factories- and proportion of total 
cigar output manufactured by factories grouped according to 
annual output from 1921 to 1933 









Factories with classified 


Annual out-nut 




output 


(millions of 


Number in 


Cigars 


Percentage of 


cigars) 


operation 


produced 


total production 




1921 


1933 


1921 . 


1933 


1921 


• 1933 


Under 1 


13,659 


6,293 


1,285 


328 


19.0 


7.6 


1 to 5 : 


620 . 


194 


1,410 


456 


20.9 


10.6 


5 to 10 


178 


59 


1,233 


409 


18.4 


9.6 


10 to 20 


85 


34 


1,073 


469 


• 16.0 


10.9 


20 to 40 


25 


17 


668 


475 


10.0 


11.0 


Over 40 


11 


23 


1,057 


2,163 


15.7 


50.3 


Total 


14,578 


6,620 


6,726 


4,300 


■100.0 


100.0 



Source: Annual reports of the Commissioner of Internal Revenue. 

1/ The greater part of the factories producing less than one million 
cigars each year represents individual or home production not included in 
census statistics which are limited to establishments having an output 
valued at $5,000 or more each year. 



The trend toward concentration of production of cigars in the hands 
of a few large companies has been even more pronounced than is indicated 
by Table 3. The Bureau of Internal Revenue lists the various cigar 
factories as physical units without reference to ownership. Practically 
all the 1; rge corporations own two or more large factories and the ten 
largest cc qnies in the industry have for several years produced more 
than half of the total United States output.—' These larger companies 
depend almosi entirely upon machine production, and while their profits 
have been greatly reduced during the depression, their record has been 
much better than the average industrial corporation. Table 9 shows 
the total net income available for dividends of six large companies from 
1926 to 1934. The combined net income of these companies was lowest in 
1931: it r?se somewhat in 1932 and 1933, and in 1934 advanced nearly 50 
per cent ever the average for the preceding three years. 



1/ See Reavi s Cox, Competit i on in the American Tobacco Industry 

(Columbia University Press, 1933), p. 95; also Willis N. Baer, The ' 
Economic Development of Ci^a r Industry in th e United States (Lan- 
caster, Pa-, 1933), p. 253; also Russell H. Mack, The Cigar Manu- 
facturing Industry, Factors of I nstability A ffecting Production and 
Employment "(University of Pennsylvania Press, 1953) . 



9829 



-378- 



1/ 



Table 9. - Net income, of six large cigar companies, 

1926-1934 



Year 



Net income 



Year 



Net income 



1926 
1927 
1928 
1929 



$10,861,000 
13,570,000 
14,382,000 
15,357,000 



1930 
1931 
1932 
1933 
1934 



1/ 



$7,101,000 
3,478,000 ; 
4,116,000' 
4,220,000 ; 
6,251,000 



Source: Moody' s : Manual of Inve 
1/ Net lasses of two companies 
for first nine monts. 



tments, In dust rial's . 



for the year estimated, from record. 



• . . Effect of Machinery upon Wages 

Mechanization has greatly weakened' the bargaining poorer of cigar 
workers, and thereby contributed to the low-wage scale which prevails 
in the industry. This has resulted from the following factors: 

(a) Automatic cigar machine operators reouire very little training 
or skill and the workers are almost exclusively women. This type of 
labor has never received a. very high wage. 

(b) The extension of machine production has created a surplus of 
skilled hand laborers, thereby tending to depress wages in this branch 
of ohe industry. 

(c) The hand manufacturers have been subjected to increasingly 
severe competition from the low-cost machine producers. In their 
struggle, for existence they have been compelled to reduce costs wherever 
possible, and labor has not been in a position to offer much resistance. 

(d) Mechanization has probably been the most important cause of 
the decline in the power of the Cigar Makers' International Union of 
America which flourished when cigar making was a skilled hand trade. 
The majority of the Cigar workers are now unorganized women. 

(e) During the most distressing years of the depression the wage 
scales in many of hand-made cigar factories were so reduced that the 
highly mechanized plants lost much of their competitive advantage. In 
order to escape the intense competition in the field of the 5-cent 
cigars, many of these hadn manufacturers took advantage of the low wages 
and cheap leaf tobacco to reduce prices to 2-for-5 cents. At. the time 
there was very little machine competition in the 2-for-5 cert field, ar.d 
these hand manufacturers experienced a gratifying increase in the volume 
of their sales. The machine manufacturers, however, accepted the 
challenge of price competition, and entered the cheap cigar field with 
special brands created for the purpose. Their competitive position 



9829 



-379- 

in this very low-price field wan guaranteed by the perfection of an 
automatic machine which makes cheap, short-filler cigars with only 
about half the labor cost of the standard, long-filler machine. 

Effect of the national Industrial Recovery Act upon Competition 
between Hand and Machine Producers 

The recovery program introduced a new element into the competition 
between the manufacturers of low-price machine and hand-made cigars. 
The continued existence of hand manufacture of 2-for-5 cent cigars 
depended upon very low wage rates and low prices for leaf tobacco. 
These manufacturers found that they could not continue to make 2-for*»5 
cent cigars and pay NRA wages and AAA tohacco prices. Their brands 
had become identified by the consuming public with 2-for-5 cent cigars, 
and they were unable to raise their prices. They attempted this in 
August, 1953, when a large group signed the President's Reemployment 
Agreement, and jointly agreed to discontinue the production of 2-for~5 
cent cigars entirely. The machine manufacturers, however, were expand- 
ing their production of 2-for-5 cent cigars rapidly at this time, and 
the hand manufacturers found it necessary to again drop back to the 
cheaper grade of cigars. 

When the Code of Pair Competition for the Cigar Manufacturing 
Industry became effective in June, 1934, the hand manufacturers of 
2-for-5 cent cigars in the York Count;/ district of Pennsylvania dis- 
missed all except those workers who could make the code minimum wages 
at the prevailing piece rates. The workers retaliated by calling a 
strike. A committee representing employers and labor was appointed 
by the Code Authority for the industry to determine the cost of pro- 
ducing 2-for-5 cent cigars by hand in that district. This committee 
found that less than 50 per cent of the employees were receiving the 
weekly wage of $10.80 required by the code, and that the factories 
were making very little or no profits. It recommended (l) that slow 
workers be exempted temporarily from the minimum wage provisions of 
the code, provided prevailing piece rates be paid, (2) that the 2-for-5 
cent cigar be eliminated from the United States market, and (3) that 
restrictions be placed upon Philippine cigar imports in order to insure 
the success of the second recommendation. 

The first recommendation was put into effect August 15, 1934. 
By virtue of successive extensions it has acquired very nearly a 
permanent status. The second recommendation apparently has not received 
general approval, since the machine manufacturers have continued steadily 
to expand production cf 2-for-5 cent cigars. By using the latest model 
automatic machines, these manufacturers are able to make 2-for-5 cent 
cigars at a profit, while complying with the minimum wage requirements 
of the code for their branch of the industry. The third recommenda- 
tion was offered as a necessary corollary to the successful administra- 
tion of the second. Obviously the domestic hand manufacturers of 
3-for— 5 cent cigars would gain little by restrictions upon imports from 
the Philippine Islands so long as the machine manufacturers of these 
cigars continued to expand their production. 



9829 



-380- 
Export of Domestic Cigars 

Export markets have never constituted an important outlet for 
American cigar manufacturers largely because of the high duties and 
other restrictions on importation in foreign countries. Exports have 
averaged slightly more than one million cigars annually in recent years; 
they dropped to 923,000 cigars in the fiscal year ending June 30, 1934. 
On the basis of the 1932 imports Panama and the United Kingdom each 
took about 34 per cent of the total. In relation to the domestic 
production of more than 4,500 million cigars the quantity of exports is 
negligible. 



« 



9829 



-381- 

Imports 

Table 10 shows the trend of tae quantity and value of cigar imports 
from the Philippine Islands since 1926. It will be noted that imports 
were unusually low Ln. 1933 and that they rose to- a -peak- in 1934. The 
to^al value of these imports was 15 per cent higher in 1934 than in 1933 
'■3 a result of the . sharp decline in the average-unit value. 



Table 10. - Imports of cigars from the Philippine 
Island, 1926-1934 



Statistical 






- W$Jt~ -* 


■ ■ — m».^ . - . . ■ 




period 


Quantity 


Value 


. ^it„v_alus 


■ ■ A 




. Thousand 


Thousand 




Per pound 






• pounds 


dollars 




n 




1926 


3,021 


55,047 




$1.67 




1927. 


2,645 


4,142 




1.57 




1928 


2,574 


: 4,190 




1.63 




1929 


2,073 


■' 3,341 




1.61 




1930 


, • 1,001 


2,997 




1.58 




1931 


2,056 


3,105 




1.51 




1932 


2,192 


: 3,066 




1.40 




1933 


1,824 


2,673 




1.47 




1934 


3,182 


3,080 




.97 




1935 (J an. -Mar.) 


1,271 


: ' 988 




.78 





Source: Foreign Commerce and Navigation of the United States. 

The number of Philippine cigar imports has been reported in the 
United States trade statistics only since January 1, 1934. A fairly re- 
liable measure of the number of these imports for earlier years, however, 
can be obtained from two sources, (l) tne record of United States inter- 
nal revenue starms for Philippine cigars to be sold in the United States, 
and (2) tne Philippine trade statistics of cigar exports to tae United 
States. On trie oasis of these data, the number of Philippine cigars im- 
ported into the United States reached its lowest level in 1930; it in- 
creased steadily thereafter until 1934 when it was somewhat greater than 
in 1926. The total value of thsse imports did not increase in proportion 
to tne quantity due to tne decline in the average unit value. The unit 
value was lowest in 1933, increasing slightly in 1934. Comparative statis- 
tics 3 of internal rpvenue stamp sales for Philippine cigars and Phil- 
ippine cigar exports to the United States are given in Table 11. 



9829 



-382- 

lable 11. - Imports of Philippine cigars based upon (l) 
internal revenue stamp sales, and (3) exports of 
Philippine cigars to the United States, 1925-1934 



United States imports of Philippine cigars 
,najcated by - 





Year 




: Internal ; 
: revenue : 
: stamp sales : 








: Thousand pi 


1925 






':" 206,184 : 


1927 






: 175.474 : 


1928 






: 191 ,397 : 


1929 






: 159,158 : 


1930 






: 154,243 : 


1931 






: 169,3^4 : 


1932 






: 175,012 : 


1933 






: 186,697 : 


1934 






: 210,009 : 


1935 


(Jan.- 


-Mar.) 


: 55,968 : 


l/Pre 


li mi nary. 





Philippine exp orts statist ics 









Uni t 


Quantity 


: Value 




value 


cigars 


Pnous.ands 


Pe. 


r thousand 


195,327 


34,569 ' 




cv co • c->y 


167,300 


3,769 




22.53 


179,570 


3,856 




21.47 


150,945 


3,013 




19.96 


144,767 


2,810 




19.41 


158,520 


2,885 




18.20 


154,515 


2,886 




17.53 


180,714 


2, p 23 




15.62 


203,896 


3,232 




15.85 


1/ 52,932 


1/ 8oi ; 


U 


15.13 



In order to facilitate a comparison of the three statistical series 
showing trie shipment of Philippine cigars to tne United States, quarterly 
data from the tnree sources are presented in Table 12. The internal reve- 
nue stamps are sold to manufacturers in tne Philip-nine Islands snortly be- 
fore tne exportation of tne cigars, Shipments from the Philippine Islands 
ar° recorded as import entries into tne United States from one to two 
months after the date of export. After due allowance is made for thin lag, 
it ap 'ears that Philippine export and United States import statistic:; agree 
fairly closely, and that stamp sales statistics overstate actual shipments 
by several per cent. 



9 829 



j'able 12. - Imports of Pnilippine ci ars into the United States, 

. y quarters, 1933 and 1934 







dumber 




: Average 


value : 


Average 




of c i gar s 




: of cigars : 


: weight of 


Statistical 


Revenue 


Philip- 


United : 


:?hilip- 


United : 


: cigars 


period 


stamp 


Dine 


States : 


: nine 


States : 


: United States 




sales 


exports 


imports : 


: exports 


imports : 


: imports 




In thousands : 


:P"i- thousand : 


: Pounds per 














: thousand 


1933 














Jan. -Mar. 


32,] 09 


29,0o5 


1/ = 


: $15.06 


1/ : 


: 1/ 


Apr. -June 


33,174 


29,247 


1/ : 


: 15,85 


u ■■ 


: 1/ 


July-Sent . 


54,^87 


53,298 


1/ • : 


: 15,47 


1/ : 


: 1/ 


Oct . -I ec." 


55,825 


59,114 


1/ : 


: 15.45 


1/ : 


: U 


1934 














Jan. -Mar. 


59,593 


54,814 


55,215 : 


: 16.03 


15.6.7 : 


: 11.9 


Apr. -June 


52 , S43 


54,874 


45,083 : 


: 15.57 


15.62 : 


: 15.8 


July-Sept . 


33,401 


3.1,987 


o8,508 : 


:. 15.82 


14.98 : 


: 17.8 


Oct . -Dec . 


64,272 


52,221 


40,293 : 


: 15.95 


15.72 : 


: ■ 18.1 


1935 














Jan. -Mar . 


Do, 968 


2/52,932 


6o,fi78 : 


ts 15.13 


15.59 : 


: 20.1 



iy Pumber of . cigar imports not reported prior to 1934 

2_/ Preliminary. . . j 

One of o.e most interesting aspects of • Philippine cigar shipments 
to tne United States concerns the average weight of trie cigars. In 1923 
and 1924 tne average weight of tne- Philippine cigars was 18 pounds per 
thousand, or aoout tne weight of standard size United States cigars.. Dur- 
ing tne succeeding years one size of tne Philippine cigars was gradually 
reduced until they weighed only 12 rounds per thousand in the early part 
of 1934. Concurrently with this reduction in tne weight, Philippine ci- 
gars were reduced in price, declining from about $24 per thousand in the 
earlier years to $16 in the first quarter of 1934. The unusual aspect of 
this situation relates to the weight and price of Philippine cigar im- 
ports after the first quarter of 1934. The average weight per thousand 
rose to 17 pounds in trie second quai ter of tne year and 18 pounds in the 
third and fourth, while tne average price fluctuated in succeeding quart- 
ers at aoout the level of tne first quarter. The explanation of this sud- 
den rise in the weight of Philippine cigars seems to be as follows. 

Philippine cigar shipments to the United States must be approved by 
tne Collector of Internal Revenue in tne Philippines under tne provisions 
of Act To. 2513 of tne "nilinpine Legislature (1915). On March 20, 1934, 
the Collector of Internal Revenue announced that government approval 
would be refused on export Shipments of 2-for-5 cent cigars to the United 
States priced at less than $16.50 per thousand in States which have cigar 
taxes and $17 in tax-free States, less a 2 per cent discount for cash. 
Tnese prices applied to sales to jobbers, and were amended on August 10 
to Demit sal<-s to importers at "15.17 per thousand, net. These minimum 
prices are identical with the minimum prices on domestic 2-for-5 cent 



9823 



-384- 

cigars provided by the merchandising plan of the cigar manufacturing in- 
dustry code. The Philippine manufacturers evidently found it necessary 
to offer standard size cigars at these prices in order to make sales. 
Despite the increase in size, the Philippine cigar imports during the 
last three quarters of 1934 averaged 13 per cent below the level of the 
first quarter. 

Comparability of Philippine and Domestic Cigars 

A comparison of the average landed value of Philippine cigars with 
the average factory value of domestic cigars indicates that the import- 
ed product competes only .with the cheaper domestic grades. This com- ; 
pariscn for census years' since 1927 is shown in Table 13. 



Table 13. - Comparison of average value of imported . 
Philippine cigars and average value of domestic : 
. ; cigars, 1927-1933 . 





: Average value per 


: : ■ . Index of average 




: one thousand cigars 


: : value of cigars 


Census 


: Philippine 


,. Manufactured 


: : Philippine : Manufactured 


years 


imports 


: in the 


, : imports : in the 




1/ 


United Gtates2y 


': • : 1/ : United States 2/ 








: • 1927. = 100 


1927 


$24.78 


$48.29 


: 100 : 100 


1929 ; 


21.96 : 


44.57 


: 89 : 92 


1931 : 


20.02 ; 


39.59 : 


: 81 : 82 


1933 : 


17.18 


30.06 


: 69 : 62 



1,/ Landed value estimated by adding It per cent to the average 

Philippine export value. 
2/ Quantity and value of total cigar production as reported to the 

Bureau of the Census. 

The Philippine cigars are primarily of the long-filler type, made 
by hand from native tobacco. Since 1926 tne wrapper leaf used upon a- 
bout 50 per cent of these cigars has been imported from' the United 
States. This undoubtedly contributes to tne a ttractive appearance of 
the Philippine cigars, which compares very favorably with domestic ci- 
gars. In recent years these cigars have been individually wrapped in 
cellophane, which not only makes them more attractive, but also helps 
to prevent drying out during the long period between manufacture and 
sale. 



The Philippine tobacco gives the imported cigars a rather distinc- 
tive flavor which has never gained a very large consumer following in 
the United States. Philippine cigars have been imported into tne United 
States free of duty since 19J9; they have always been offered at relative- 
ly low prices and for many years have had the advantage of advertising 
and promotion work, subsidized by the Philippine Government. Despite all 
these favorable factors, the Philippine cigars have never supplied much 
more than 5 per Scent of the domestic production. This suggests rather 
strongly the fact that the distinctive characteristics of tae Philippine 
cigar effectively limit its market in tne United States. 

9 829 



-385- 

C omparison of trend of impor ts from the Pnilippine 
Isla nds with domestic projection 

Both imported and domestic cigars must oay the United States inter- 
nal revenue tax, and tn° record of tne -sale of the different classes of 
internal revenue stamps provides a convenient and accurate m- j ans of com- 
paring; imports and dom-scic production. 

In view of tne fact that cigars retailing for not nior- than 5 cents 
;h constitute 97 to 100 per cent of the total imports from the Philip- 
pine Islands, competition between these imports and domestic production is 
confined almost entirely to the clr.ss A group. For this reason, the trend 
of imports of Philippine Cigars is compared with the domestic production 
of class A cigars in Table l*t. 

During the eignt-year period from 1926 to 1933 imports of Philippine 
cigars averaged 5.4 per cent Of domestic production of class A cigars. 
Tne ratio was lowest in 1930 when it dropped to 4.3 per cent; ic rose 
tnereai'ter to an average : of 5.1 -in 1933. On a quarterly basis tne ratio 
re-'Ched a high pcint of 7.6 during the;last three months of 1933; it 
declined therafter fco ohiy^S.0 per c >nt in the third quarter of 1934, 
out rose to an average of 6.1 in tne final quarter of 193<±. The average 
for tne 12 montns of 1934 was 5.3 per cent, almost exactly the average 
for the preceding eight years. ■ 



9829 



-386-- 

Table 14. - Comparison of total inroorts of Phili/ccoi-ne cigars 
with United States nroduction of class A cigars l/ . 

1936-1935 



1926 
1927 
1928 
1929 
1930 
1931 
1932 
1933 
1934 

1933 



Tax-paid withdrawals of cigars for 
consum-otion in United States 



Domestic 
class A 



Total 
Puilippine 



Thousand of cigars 



2,8F6,079 
3,175,158 
3,310,354 
3,583,593 
3,573,315 
3,687,784 
3,490,540 
3,689,733 
5,928,834 



206,184 
176, -4:74 
191,597 
159,157 
15^,243 
169,344 
175,012 
186,697 
210,009. 



Patio of total 
Philippine to 
domestic class, A 



P er cent 

7.1 • 

5.6 

5.8 

4.4 

4.3 

4.6 

5.0 

o.l 

5.3 



' 



Jan. -Mar . 


752,783 


33,109 


4.3 


Apr. -June 


951,204 


33,174 


3.5 


July-Sept . 


1,095,190 


54,587 


5.0 


Oct.-D^c. 


893,54 3 


65,825 


7.5 


1934 








Jan.-'.ar. 


868,863 


59,693 


6.7 


At. -June 


961,007 


52 , 543 


5.5 


July -Sept . 


1,044,123 


33,401 


3.0 


Oct .-Dec . 


1 ,054,841 


64,372 


6.1 


1935 








Jan . -Kar . 


900,618 


5. ,968 


5.2 



l_y As indicated by sales of internal revenue stamps 



Although therp was nracticaly no production of 2-for-5 cent ci- 
gars for mor^ tuan a decade nrior to 1930, a suostantial part of the 
Philitrnine inroorts has always b--n of this cn t -a~> variety. A comparison 
of Pnilip^ine inroorts witn domestic -nroduction of 2-for~5 cent ci 3 ars , 
however, cannot be mad*-, since neither has been separately r--nort-d. On 
tae basis of data submitted oy the com lainants for the automatic mach- 
ine and hand production of 3-for-5 cent cigars by ten representative comp 
panies in the United States since 1939, it appears tnat the ratio of 
Puiliopinp inroorts to domestic -production has been declining rapidly in 
recent ypars . 

In 1933 C fiscal ypar) ten dom^tic comoanips produced 3nly 6 mil- 
lion 3-for-5 cent cigars, comnared with 176 million irmortpd in the 
Philippine Islands. Altnougn a substantial proportion of the Philippine 
cigars in 1939 was sold for more than 2-for~5 cents, on the oasis of the 
average oricejjt- appeal that at lpast on— half of the total belongs in 



( 



9839 



-387- 

the cheap-r classification. In this year, therefor-, Fnilippine inroorts 
of 2-for-u cent cigars w- r f: om 10 to lb times gr- at--r than reported 
domestic production of ten companies, The great expansion of domestic 
nroduction of 2-for-5 cent cigars raised uhe production of these ten com- 
panies to a Higher level than Philippine imoorts in 1933. In 1934 Philip- 
pine imports increased <iS per cent to n level slightly aoove the nrodue- 
ion of these companies. It is interesting to note, however, that from 
1933 to 1934 machine production of 2-for-5 cent cigars rose 65 per cent, 
even more' rabidly t-.an Ptiili >pine imports. The increase in the ratio of 
Philippine im orts to total production of 2-for-b cent cigars in 1934 re- 
sulted entirely from the declin- in hand production. 

On the basis of the quarterly figures given in Table 15, it may be 
noted that tne ratio was highest in the last quarter of 1933 and that it 
has b^en declining since then. It should also be noted that the gain 
which the machine producers had mad° in the nroduction of 2-for-5 cent 
cigars has b -en offset to a considerable degree by the decline in their 
production of charoots and small cigars s- lling for less than 5 cents. 



9829 



-338- 

Tabl- 15. - Comparison of total im j-fos of Pnilippihe cigars 
with domestic production of 3 -for -5 cent cigars by ten 

large producers 





R- sorted 


domestic 


procluc- 


Gigar imports from 


Reported 






tion of 2 


-for-5 cent cigars 


°ni'lippine Islands ly 


' domestic 
production 














Ratio to 


of 


Statistical 










total 


l°ss tnan 




period 


Automatic 








r^orted 


2-for-5 cc-n 


t ?•/ 




macni-nery 


Hand 


lotal 


Total 


domestic 
production 
of 2-for-5s 


cigars by 
aut omat i c 
mscninery 






Thousand of cigars 




per cent 


Thousand ci 


gars 


^iscal years 
















' 1929 


2,630 


3,630 


5,260 


176,221 


2,542 


271,217 




1932 


35 , 375 


56,488 


91,863 


174,419 


190 


157,034 




. 1933 


68,524 


117,980 


186,504 


160,496 


86 


106,472 




1934 


113,160 


108,666 


221,326 


233,718 


105 


89,096 




Quarters 














( 


1932 
















Jan. -Mar. 


7,402 


13,750 


21,152 


38,610 


183 


* 32,469 




Apr. -June 


11,226 


16,559 


29,785 


41,190 


138 


35,468 




July -Sept . 


14,171 


20,854 


35,025 


52,932 


151 


33,820 




Oct. -Dec. 


20,398 


21,392 


41,790 


42,280 


101 


26,979 




1933 
















Jan. -Mar . 


2c,278 


23,795 


49,073 


32,109 


55 


21 ,449 




Apr. -June 


2P.868 


30,370 


59,238 


33,174 


56 


24,224 




July -Sept . 


30,538 


30,500 


61,038 


54,087 


89 


25,264 




Oct. -Dec. 


36,336 


15,867 


52,423 


66,825 


127 


21,996 




1934 
















Jan. -Mar . 


25,325 


23,280 


49,505 


59,693 


120 


20,137 




Apr. -June 


31,104 


27,227 


58,331 


52,643 


90 


21,720 





1_/ As reported by Bureau of Internal Revenue in form of stamp- sales, 
2/ Chiefly cheroots and small cigars. 
3/ Domestic production data availaole for only the first two quarters of 
1934. 



Competitive Factors 

Decline in cigar imports from Puerto Rico 

Imports of cigars into the United States from foreign countries are 
subject to duties which are prohibitive to all aut the most expensive 
grades, rhese duties, now^ver, do not apply to cigars coming from either 
the Philippine Islands or from ^auerto Rico. As a result, a substantial 
industry engaged in making cheap cig rs by hand has developed in each of 
these inBular possessions, dependent in very large measure upon the Un- 
ited States market. The wages paid to cigar makers in both Puerto Rico 
and the Pnilippines nave been lew, and neither comes under tn<= labor oro- 
visions of tne Code of Pair Competition for tae Cigar Manufacturing Ind- 
ustry. However, tue marketing provisions of the code apply to Puerto R; ico 



9829 



-339- 



ci - rs, although the"' do not apply to Philippine ci pars. Any competi- 
tive advantage which may accrue to manufacturers of cigars in the 

Philippine Islands by reason of their freedom from the labor provisions 
of the cigar code applies with- equal force to the manufacturers of 
cigars in Puerto Rico. The sharp decline in cigar imports from Puerto 
Rico in 1953 and 1934 hr.s more than offset the rise in imports from the 
Philippine Islands, the trend of combined imports from both sources 
being distinctly downward since 1931. Cigar shipments to the United 
States fro p both so\irces are compared with domestic production of class 
.a cigars in Table 13. 

I ' le 16. - Comparison of domestic production o^ class A cigars 
with to.ta] cigar shipments to the United States from the 
Philippine; Islands and Puerto Rico 







Domestic 


f .' 


Cigar 


shipments to the 


Stati 


stical 
riod 


production 
class A 


t . 


Uni 


ted States 


oe 


i .Prom , . : 


•From : 




Ratio of total 






: cigars 


, .Philip-nine: 
: Islaids : 


•Puerto : 
Pico : 


Total . : 


to domestic 
production 






: 3,310,35-; 


: ■ Thousands 


of cigars: 


323,140 


Per cent 


1928 


':'l79,570 


,'1144,373: 


9.8 


1929 




; 3,582,593 


{.150,-94o 


153,556: 


309,501 


3.6 


1930 




3,573,315 


: 144,7 57 


.145,566: 


290,333 


8.1 


1931 




3,637,784 


; 158 , 520 


155,535 : 


325,506 


3.3 


1932 




3,490,540 


: 154,316 


. 122,455: 


267,071 


: 3.2 


1933 




3,689,725 


: 130,714 


: 53,715: 


244,429 


: 5.6 


1934 




3,939 ,-122 


; 203,895 


: S3..375: 


257,271 


: 5.3 


1955 


(Jan.-: 


.ar.) 900,618 


: 52,932 


:- 9,874: 


62,806 


: 7.0 



Uages in the ci^ar industry 

TTages in the cigar industry average 30 per cent or more below the 
general level of wages in all manufacturing industries. Table 17 in- 
dicates that the disparity between wages in the cigar industry and all 
manufacturing industries has had a tendency to increase since 1926. 



9329 



-390- 

Table 17. - Comparison of trend of vages in cigar raanuf actiiring 
industry and all manufacturing industries 









: Index of average 


Statistical 


Average wee 1 . 


:ly wage ; 


: weekly wage 


period 


All 


Cigar : 


: All 


Cigar 




manuf actur ing 


industry : 


: manuf actur ing 


mdustry 


1926 


$24.38 


$18.45 : 


: 100 


100 


1927 


24.37 


18.04 : 


: 100 


98 


1928 


25.14 


17.10 : 


: 101 


93 


1929 


25.26 


17.02 : 


: 102 


92 


1930 


25.54 


15.97 : 


: 95 


87 


1931 


21.17 


14.30 : 


: 35 


73 


1932 


17.45 


12.60 : 


: 70 


63 


1933 


17.07 


; 12.08 


: 69 


66 


Jan.— i.Iax. 


15.53 


10.89 ■: 


: 62 


59 


Apr. -June 


16.40 


11.39 : 


: 66 


62 


July- Sept. 


17.74 


12. 24 •: 


: 71 


66 


Oct. -Dec. 


17.74 


13.71 •: 


: 71 


74 


1934 










Jan. -liar. 


18.79 


12.44 •: 


: 76 


67 


Apr.- Jun e 


19.68 


1 12.91 : 


: . 79 


70 


July-Sept. 


18.65 


13.25 .-: 


: 75 


72 



Source: 3ureau of Lahbr Statistics. Unpublished tabulation of 
employment and wages in the cdgar industry. 



9829 



-339- 



cigars, all the^ r do not apply to Philippine cigars. Any competi- 
tive advante ;e ■ hich m y accrue to manufacturers of cigars in the 
Philippine Islands by reason of their freedom from the labor provisions 
of the cigar code applies with equal force to the manufacturers of 

cigars in Puerto Rico. The sharp decline in cigar imports from Puerto 
Rico in 1933 and 1934 hrs more than offset the rise in imports from the 
Philippine Islands* the trend of combined imports from both sources 
being distinctly downward -since 1931. Cigar shipments to the United 
States fro i both sources are corropred with domestic production of class 
a cigars in .Tabic 15. ; : 

Table .16. - Comparison of domestic production o-f class A cigars 
with tota] cigar shipments to the United States from the 
: Philrprjine Islands and Puerto Rico 



Domestic . 



Ci ;ar shipments 



the 



Statistical 


product ion r 


, 


Uni 


ted : States 




oeriod 


class A : 


t 


From . : 


Prom : 


- : Ratio of total 




cigars - 


. 


Phili'roine: 


Puerto '• 


To Sal : to 


domestic 






• 


Islands ■ : 


?..ico : 


: product ion 






: 


Thousands 


of cigars: 


: Per cent 


1928 


3,310,354 : 


179,570 ; 


, 144,373: 


323,140: 


9.8 


1929 


3,582,593 


150,945 : 


153,556: 


309,501: . 


8. 5 


1930 


3,573,315 


144,757 . 


- 145,556: 


290,333: 


3.1 


1931 


3,687,734 


1 5 3 , 520 . 


: 135,935: 


325,505: . 


8.3 


1932 


3,490,540 


164,315 . 


: 122,455; 


237,071: 


3.2 


1933 


3,689,723 


: 130,714 


: 53,715: 


244,429: 


5.6 


1934 


3,929,122 


: 203,893 


: 33,375: 


257,271: 


3.-3 


1935 (Jan.-; 


lar.) 900,318 


: 52 , 932 


: 9,374: 


62,805: 


7.0 



gages in the ci^ar indur L ,r" 

Uages in the cigar industry average 30 per cent or more below the 
general level of wages in all manuf acturing industries. Table 17 in- 
dicates that the disparity between wages in the cigar industry and all 
manufacturing industries has had a tendency to increase since 1926. 



9329 



-390- 

Table 17. - Comparison oi tread of wages in cigar manufacturing 
industry and all manufacturing industries 









: Index of average 


Statistical 


Average weel 


:ly wage : 


: weekly wage 


period 


All 


Cigar : 


: AH 


Cigar 




manuf actur ing 


industry : 


: manuf actur ing 


industry 


1926 


$24.38 


: $18.45 : 


: 100 


100 


1927 


24. S7 


18.04 : 


: 100 


98 


1928 


25.14 


17.10 : 


: 101 


93 


1929 


25.26 


: 17.02 : 


: 102 


92 


1930 


25.54 


: 15.97 : 


: 95 


87 


1931 


21.17 


; 14.30 : 


: 35 


73 


1932 


17.45 


: 12.60 : 


: 70 


68 


1933 


17.07 


; 12.08 : 


: 69 


66 


Jan.— Liar. 


15.53 


; 10.89 : 


: 52 


59 


Apr. -June 


16.40 


: 11.39 :; 


: 66 


62 


July- Sept. 


; 17.74 


12.24 : 


: 71 


66 


Oct. -Dec. 


17.74 


; ; 13.71 : 


: 71 


74 


1934 










Jan. -Liar. 


18.79 


12.44 •: 


: 76 


67 


Apr. -June 


19.68 


12.91 : 


: ■ 79 


70 


July-Sept. 


18.65 


13.25 :; 


: 75 


72 



Source; Bureau of Labor Statistics. Unpublished tabulation of 
employment and wages in the cigar industry. 



9829 



-391- 

The low level of wages in the cigar industry is due in ^>art to the 
fact that 79 per cent of the workers in the industry are women. In J-cO_y, 
1933, there were only 215 men among 15,935 machine workers and 10,307 
men among 34, 532. hand workers. Evidently the trend toward greater 
mechanization is responsible in large measure for the increasing propor- 
tion of women to all workers in the industry. 

The low average wage paid to cigar workers is also a result of the 
oversiroply of hand workers who have "been displaced either by the tech- 
nological advances in mechanical production or by the general decline in 
the consumption of cigars. Furthermore, the concentration of hand pro- 
duction in the cneaper grades has forced cigar makers' wages very low, 
since these cheap cigars cannot carry the burden of very large labor 
costs and compete with machine-made cigars. Naturally very few young 
workers are learning cigar making as a trade, and this has resulted in 
a decline in the average productive efficiency of those workers who have 
continued in the occupation. The remaining hand cigar makers, through 
lack of opportunity or adaptability to change to other types of employ- 
ment, have been compelled to assume the major portion of the burden of 
compensating the advantages of cheap efficient machine production. 

Some idea of the relative position of the skilled hand cigar maker 
and the semi-skilled machine worker 1 cam be gathered from Table 18 which 
gives comparative data for female workers of both classifications in 
Pennsylvania, and the entire United States. It will be noted that the 
machine workers have received wages about 20 per cent higher than hand 
workers, and that hand workers' wages have declined. Although these 
wage rate comparisons are made on the basis of the rates paid to women, 
such statistics as are available indicate that wages paid to men are 
only slightly higher. 

Table 18. - Comparison of average weekly wages of female 
cigar makers in 1929 and 1933 for the United States 
and for Pennsylvania 







United States Pennsylvania 






Median wage 


1929 


- All cigars - 






Hand 


$15.65 : ; $16.60 




i iachine 


19.90 : 19.95 
Range of wages 


1933 


- Class A cigars - 






hand 


$3.90 - 11,60 : 37.50 - 11.23 




iiachine 


10.71 - 13.62 : ; 9.64 - 13.67 



Source: 1929 data, Bulletin No. 100, women's Bureau, 
U.S. Department of Labor, p. 93. 
1933, unpulbished tabulation of special survey made by 
the 3ureau of the Census for July, 1933. 



9829 



-592- 



Wages for making cigars by ha? id 



Labor cost is a relatively large iten in the total cost of making 
cigars by hand. The manufacturer using automatic machinery has been 
able to make a substantial saving in labor costs which has given him a 
decided competitive advantage' over hand cigar manufacturers. As a re- 
sult, machinery has largely displaced hand production methods in all but 
a few sections of the United States. One of the few remaining strong- 
holds of the hand cigar manufacturing industry is the York County dis- 
trict of Pennsylvania. Here the smaller independent manufacturers have 
formed a cooperative association to withstand the organization and ad- 
vertising campaigns of the machine manufacturers. They have received 
substantial aid in their endeavors from the workers in the district who 
regard cigar making as a family affair, with fathers, mothers, sons, and 
daughters combining their efforts to make a family wage. 

The reputation of the York County district has been based upon the 
production of low-priced cigars, which before 1930 were almost entirely 
of the grade retailing for 5 cents each. During the depression, however, 
machine competition in this field became very keen, and after 1931 a 
great many of the York County manufacturers shifted to the production of 
2-for-5 cent cigars. The major portion of the burden of this drastic 
reduction in price was borne by the farmers, viiose leaf tobacco prices 
in 1931-1933 dropped to less than 50 per cent of the pre-depression level. 
In addition, "the piece rates paid to York County cigar makers for making 
class A cigars were reduced 32 per cent between 1931 and the first half 
of 1933. ' ; 

Table 19 compares the average piece rates for making cigars selling 
for 5 cents or less by hand in York County and in other sections of the 
United States. It will be noted that in June, 1933, the average rate in 
the York County district was only 66 per cent of the rate paid in other 
sections of the United States. 

Table 19. - Comparison of trend of average piece rates for making 
class A cigars by hand in York County and in other sections 

of the Unites States 1/ . 





Average rates for mailing : 


: Ratio of 


Statistical 
period 


: class A cigars : 


: York County 


United States : : 
except ' : York County : 


: rate to 
: rest of 




York County : : 


: United States 




Per thousand : 


: Per cent 


1931 


$5.20 : $5.76 : 


: 93 


1932 


5.59' ' : 4.74 : 


: 85 


1933 






Jan. -June 


5.55 ': 3.89 : 


: 70 


June 


5". 73 : 3.89 ■ : 


: 66 


1/ Average rate for ] 


"oiling and bunching as reported in 


Statistical 


Survey of Hand-mac 


Le Cigar manufacturing Industry prep 


ared by S. D. 



Leidesdorf & Co. , and filed as brief at code hearings. 
9829 



-593- 

In June, 1933, recording to a comprehensive investigation of the 
production of hand-made cigars in the United States, 66 per cent of the 
cigars aade in the York County district were of the 2-i'or-5 cent classi- 
fication. On the basis of this survey, it ao pears that York County was 
making about 35 y er cent of all hand-made 2-for-5 cent cigars manufactur- 
ed in the United States. 

The average rate for making 2-for-5 cent cigars in York County in 
June, 1933, was S3. 07 a thousand, the rate for 3-for-10 cent cigarc being 
$4.09, and for 5-cent cigars, $5.36. Apparently the lower rate paid for 
making the cheaper cigars was an important factor in enabling the manu- 
facturers to shift to this type of production. The resulting wages, how- 
ever, were so low that 50 per cent of the workers in this district re- 
ceived less than 20 cent an hour. In contrast to this, only 15 per cent 
of the hand cigar makers outside the York County district received less 
than 20 cents an hour. Tabic 20 summarizes the results of the investi- 
gation relative to the wage level in the York County district and in the 
rest of the United States for making class A cigars by hand. 



Table 20. - Frequency distribution of makers of class A cigars 
by hand receiving specified hourly earnings during a 
representative week in June, 1935 1/ 





Number of workers within: 


: Cumulative percentage of work- 


Hourly j 


each wage 


f,roup in - : 


ers receiving less than grouo maxir rum 


wage 


.United States 




: United States 




group 


, e::cept . 
: York County 


York County: 


; except 
: York County 


York County 


Cents 






' 




Under 12 


: 9 


73 : 


: 0.4 


4.6 


12 - 13.9 


26 


164 ; 


: 1.4 


14.8 


14 - 15.9 


. 63 


202 : 


: 3.9 


27.5 


16 - 17.9 


! 106 


187 : 


: 8.0 


39.2 


18 - IS. 9 


: 177 


200 : 


: 15.0 


51.8 


20 - 21.9 


280 


222 : 


: 26.0 


65.8 


22 - 23.9 


: 462 : 


209 : 


: 44.2 


73.9 


24 - 25.9 


: 303 


105 : 


: 56.2 


85.4 


26 and over 


,1,113 


235 : 


: 100.0 


100.0 


Total 


, 2,539 


1,596 : 





1/ Rollers, bunchers, and hand cigar makers, from Exhibit ? of Statisti- 
cal Surve" of Hand-made Cirar Lanufacturing Industry prepared by S.D. 
Leidesdorf & Co., and filed as brief at code hearings. 



5829 



-394- 
Effect of the national Recovery Program 

The provisions of the Code of Pair Competition of the Cigar Manu- 
facturing Industry regarding .vages and hours of labor which are most 
significant in connection with the complaint against Philippine imports 
may he summarized as follows: 

"Ho productive employee engaged in the production of stogies or 
hand made cigars to retail at not more than 2. for 5 ce'nts shall be paid • 
less than 27 cents per hour, and no machine cigar operator engaged in • • 
the production of cigars made to retail at 2 for 5 cents shall he paid 
less than 29 cents per hour. 

"Cigar makers in the hand cigar manufacturing and stogie manufactur- 
ing industries who -are classed as slow workers, up to 25 per cent of the 
total number of such workers, and machine cigar operators, up to 10 per 
cent of the total number of such workers need not receive the minimum 
hourly rate herein specified, provided they shall be paid the same piece 
rate as paid other employees of the same class." 

Productive employees shall not be -oermitted to worlc'mbre than 40 
hours in any one week except during two peak seasons each year, in which 
the number of weeks and the number of hours per week shall be determined 
by the code authority, subject to the approval of the Administrator. 

TJage rates in the hand cigar manufacturing industry were generally 
increased in July, 1933, when quite a number of manufacturers signed the 
President's Reemployment Agreement. In June, 1933, the piece rates for 
making 2~for~ 5 cent cigars in York County averaged $3.07 per thousand. 
On the basis of data submitted in connection with the complaint, it ap- 
pears that a rate of approximately $4.20 per thousand was paid during the 
first si:: months of 1934. Under the rates ^prevailing in June, 1933, more 
than 90 per cent of the York County cigar makers earned less than the 27 
cents an hour minimum provided in the code;- during the first six months 
of 1934, with the higher rates prevailing under the President's Reemploy- 
ment 'Agreement, 61 per cent of the workers .received less than the code 
minimum. 

The York County manufacturers protested vigorously against the mini- 
mum wage provisions of the code for making. 2— for-5 cent cigars by hand. 
They declared that they could not manufacture 2-for-5 cent cigars and pay 
a higher rate than $4.20 per thousand. Po.llo\?ing June 25, when the Code 
of Fair Competition for the Cigar Manufacturing Industry, became effec- 
tive, the York County manufacturers posted notices that only the faster 
workers who could meet the minimum wage requirements of the code would be 
employed. This amounted to a virtual lockout for a large proportion of 
the workers, and resulted in a general strike among the cigar makers of 
the district. The Code Authority of the Cigar Manufacturing Industry 
solved the difficulty temporarily by declaring an emergency in the dis- 
trict and authorizing the exemption of manufacturers from the minimum 
wage rates of the code, provided piece rates of not less than $4.20 per 
thousand were paid for making this grade of cigar. This order was made 
effective for a period of 30 days, and has been subsequently renewed 
several times. Since the York County manufacturers have at no time 

9829 



complied with the minimum wage provisions of their code,- it is impossi- 
ble to measure the extent to which their costs would have "been Increased 
by code compliance. It appears, however, that piece rates were raised 
approximately 37 per cent after July, 1933, when a substantial propor- 
tion of the manufacturers began to operate under the president's Reem- 
ployment Agreement, and that no change has been made in these rates 
since then. 

In contrast to the difficulties experienced by the hand cigar manu- 
facturers operating under exemptions which practically nullified the 
minimum wage -revisions of the code, the machine manufacturers making 
2-for-5 cent cigars have been able to meet the higher minim-urn wage re- 
quirements of the code and expand their production. Some of the larger 
manufacturers have made substantial additions to their machinery equip- 
ment since the code became effective. One manufacturer has been operat- 
ing at full capacity, employing 1,600 workers three shifts a day. 

Despite the differential of 2 cents an hour in favor of the hand 
manufacturer, it appears that the minimum wage provisions of the code 
cannot be net by the hand manufacturing industry in competition with the 
machine manufacturing industry. 



9829 



-396- 
APPSNDIX .. 



Tobacco in the Philippine Islands 



Approximately 40,000 people in the Philippine Islands are engaged 
in raising t&bacco, and nearly 200, ooo acres of land are devoted to the 
crop. Philippine tobacco consumption, however is somewhat less than 
half the annual product! n of about 100 million pounds, the remainder 
being exported. Nearly half of the total Philippine crop is exported in 
the unmanufactured state as leaf tobacco, the major part being sold to 
the Spanish Tobacco Monopoly. Cigars, which are the leading item in the 
manufactured tobacco exports, depend to a vary large extent upon the United 
States mr-rket. 



Table 1. - Comparison of total production and exports 
of Philippine tobacco 









Tobacco 




: Ratio of 


Statistical 


Total crop : 
production ; 




exports 




: total 


period 


Unmanuf ac- : 
tured leaf: 


,0.1 
other 1/ 


Total . 


:exports to 
: total crop 






Thousand pounds 




: Per cent 


Ave rage 
1926-1930 


103,782 


46,956 


9,182 


56,138 : 


: 54.1 


1931 


• 95,954 


49,941 


8,730 


58,671 : 


: 61.1 


1932 


; 99 , 529 


47,664 


8,016 


55,680 : 


: 55.9 


1933 


; 92,042 


37 , 250 


6,167 


43,417 : 


: 47.2 



Source; Annual reports of the Insular Collector of Customs, Philippine 

Islands. 
1_/ Leaf equivalent of cigar and cigarette exports estimated from data 
for raw material used in manufacture of total production. 



(' 



Table 1 compares the tre-'-d of total production of tobacco in the 
Philippine Islands with the trend of leaf and manufactured tobacco 
exports. The decline in production in recent years has been due, in 
considerable measure, to the reaction of tobacco growers to the low 
prices which they have received for their crops. 



Manufacture of tobacco products 

The principal tobacco products manufactured in the Philippine 
Islands are cigarettes and cigars, Table 2 compares the trend in the 
manufacture of cigars, cigarettes, and smoking and chewing tobacco on 
the basis f the raw material requirements of each. 



9829 



~397~ 

Table 2.' Comparison of raw material? used in manufacture 
of Philippine tobacco produc" s 





Tobacco leaf used in manufacture of 


- 


Statistical 
period 


Cigarettes 


Cigars 


Smoking 
tobacco 


Chewing : 
tobacco 


All 
tobacco 
products 


average 

1926-1930 

1931 
1932 
1933 


17,080 

: 14 , 572 
: 13,040 
: 12,374 


Thousand rounds 

5,963 : 1,135 : 578 ; 

5,048 : 967 : 554 

4,831 : 667 : 469 

: 5,384 : 489 : 432 


24,756 

21. , 141 

19,007 
18,679 



Source : Annual reports of the Collector of Internal Revenue of the 
Philippine Islands 



rroductioi, and imports from the United States of cigarettes 

Cigarette production in the Philippine Islands has been declining 
almost steadily since 1926. ^'ji important factor contributing to this • 
decline has been the increase in the importation of cigarettes made in 
the United States. Table 3 compares the tax-paid withdrawals in the 
Philippine Islands of domestic cigarettes and the cigarette imports from 
the Unitea. States. Imports of United States cigarettes into the 
Philippine Islands increased rather steadily until 1933, when there was 
a sharp drop. Imports in the first six months of 1934, however, were 
8 per cent of imports for the twelve months of the preceding year, while 
the withdrawal of domestic cigarettes dropped to 43 per cent.. 



Comparison of tax-paid withdrawals in the Philippine 
Islands of domestic cigarettes and cigarette imports from 

the United States 





Indicated consumption in : 


:3atio of imports 




FhiliDpine Islands of - : 


: frbm the 






Cigarettes : 


: Unites States 


Statistical : 


Domestic : 


imported from the : 


: to domestic 


period : 


cigarettes : 


United States : 


: cigarettes 




4,903 


Millions : 




1926 


418 : 


: 8.5 


1927 


4,924 


542 : 


: 11.0 


1928 


4,881 


709 : 


: 14.5 


1929 


: 4 , 811 


1 , 020 : 


: 21.2 


1930 


: 4 , 659 


1,076 : 


: 23.1 


1931 


; 4 , 203 


: 1,132 : 


: 26.9 


1932 


: 3,929 


: 1,053 : 


: 26.6 


1933 


: 3,532 


: 73s : 


: 20.7 


1934 (Jan.- Jul 


ie) 1,536 


: 610 : 


: 39.7 


9829 









-393- 



Source; Animal reports of tl." 
Philiirsine Islands* 



I; :.tcr 



f Int ?rnal Tlevenur of the 



Exports of Philippine cigarettes are usually less than 1 per cent 
of total production. Imports from the United States regularly constitute 



more than 99 per cent of 
I si anus. 



total cigarette imports into the Philippine 



Production and exports of cigars 



The trend 
was downward fr 
More than twice 
in the Islands, 
United States. • 
sumption in the 
the United Stat 
cigar pro duct io 
the total Fhili 



i rii the manufacture of cigars in the Philippine Islands 
om 1926 to 1933 when a. slight upward movement took place, 
as many Philippine cigars are exported than are consumed 
and more than 85 per cent of the exports are sold in the 
In 1933, as a. result .of the decline both of cigar con- 
Philippine Islands and exports to foreign countries, 
es took more than 70 per cent of the total Philippine 
n. Table 4 compares the changes in the distribution of 
.pine cigar roduction to the different consuming markets. 



Table 4. - Comparison of the distribution of total Philip- 
pine cigar production to different consuming markets 







Philippine 




: Ratio of 


Stat i s- 






cigars 




: exports to 


tical 


: Total 


Consumed' • 


Exported 


Exported : 


:United States 


period 


:production 


in 


to foreign 


to the' : 


: to total 




: ; 


I slands 


countries 


United gtates : 


: product ion 






Thous; 


inds of cigars : 


: Per cent 


19L6 


: 357,668 


108,045 


43, 4,, 6 


206,187 : 


: 57.6 


1927 


: 317,466 


108,9 67 


34 ,684 


173,814 : 


: 54.7 


1928 


: 331 , 838 


10.6,871 


35,540 


139,427 : 


: 57.1 


1929 


: 298,323 


110,741 


.31,16.4 


156,413 : 


: 52.4 


1930 


: 283,352 


102,845 . 


27 , 299 


153,208 : 


: 54.1 


1931 


: 274,177 


87,400 


19,163 


1'67,613 : 


: 61.1 


1932 


: 257,959 


69,855 


12,890 


174,909 : 


: 67.8 


1933 


: 261,426 


62,344 


12,232 


186,467 : 


: 71.3 



So arc.- 



Annual reports of the Collector of Internal Revenue of the 
Philippine Islands. 



Cther tobacco products 

Philippine imports of chewing toba.cco average about BOOjOOO pounds 
annually, practically all of which comes from the United States. These 
imports constitute about 60 per cent of the tax-paid consumption of chew- 
ing tobacco in the Islands. Cn the other hand, slightly more than 90 per 
cent of the taxy-paid comsumption of smoking tobacco is manufactured within 
the Philippine Islands. Since 1926 Philippine imports of cigar leaf tobac-f 
co from the United States have averaged 2.73, Ono pounds^ annually, and it 
is estimated that 47 per cent of the Philippine cigars which have been 
exported to the United States since then have been wrapped with this im- 
port leaf. In recent years the Philippine Islands have been importing 
increasing quantities of leaf tobacco from the United States for use in 
the Manufacture of cigarettes. 
9829 



.. -599- 

Reciprocal nature of tobacco trade by the United States 
and the Philippine Islan ds 

An average of 48 per cent of the value of all Philippine tobacco 
exports from 1926 to 19 '-. -,.?. taken by the United states. At the same 
tine the Unitdd States; has supplied 95 per cent or more of the Philippine 
imports of tobacco products. Cigars constitute 9° per cent of the value 
of all Philippine tobacco exports to the United States; chewing tobacco 
and cigarettes constitute 78 per cent of the imports from the United 
States. It appears that the tobacco trade between the United States and 
the Philippine Islands is complementary in nature and very nearly equally 
balanced, particularly in recent years. Table 5 compares the value of 
Philippine exports to and imports from the United States, in total and 
for the leading manufactured products. 

Table 5. - Comparison of the value of Philippine exports 
to and imports from the United States of tobacco 

products 





Tobacco produ< 


;ts of Philippine Islands 


Statistical 


Exported to 

United States 


Imported from 
United States 


period- 


Total 


Cigars 


: Chewing tobacco 
Total :and cigarettes 


Average 

1926 - 1930 

1931 
1932 
1933 


$3,983 

3', 40? 
3,243 

2,976 


Ti 

$3,603 

2,885 
2,866 


lousands 

$2,678 

2,669 
2,527 
2,085 


$2,076 

2,342 
2,249 
1,195 


Source: Vnnu- 1 reoo 


rts of the 


Tnsular Co" 


lector of 


Customs. 



Phi 1 ippine I c -.lan x s . 



The data given in Table 5 are taken from Philippine trade statis- 
tics. The trends indicated by this table are confirmed by United States 
traae statistics relative to the sprne tobacco trade. A summary of these 
statistics, which, are given in .Table -6,. indicates that on a quantita- 
tive basis the balance of trade was favorable to the United States in 
both 19^3 and 19;,4. 



9,29 



-400- 

Table 6. - Comparison of quantity and value of United States 
experts to and imports from the Philippine Islands of 
tobacco products 





United State;; tobacco trade 








with Philippine "slands 




Statistical 


Experts to 




Imports from 


Ratio of 


period 


the Philipp: 


mes 


the Philippines 


quantity of 












exports to 




Quantity 1/ 


Value 


Quantity 


Value 


imports 




Thousand 


Thousand 


Tii^ucand 


Thousand 






pounas 


Dollars 


p ounds 


dollars 


Per cent 


Average 












1926 - 1930 


2,992 


: $2,497 


5,446 


$4,366 


54.9 


1930 


3,590 


z, , boo 


6,587 


3,537 


54.5 


1931 


4,2^9 


2,562 


6,209 


3,674 


67.8 


1932 


5,20? 


2,446 


5,754 


3,503 


90.5 


1933 


6,582 


2,662 


3 , 471 


2,840 


: 189.6 


1934 


5,123 


3,173 


4,672 


3,223 


109.7 


Source : Foreign ! 


Jonuaerce and: 11; 


avigation 


of the United States 


Monthly 



Summary, and Statement Ho. 2101 (Tobacco Exports) of the 
Bureau of Foreign and Domestic Commerce. 



< 



In connection with the comparison' indicated above, it should be 
noted that the United States internal revenue taxes on tobacco products 
are collected in the Philippine Islands and the proceeds turned over to 
the Philippine Government. The commodity value of the tobacco shipments 
from the Philippine Islands to the United States is therefore overstated 
by official trade statistics, since these data include not only the value 
of the products themselves, but also the internal revenue tax which 
ordinarily would be collected in the United States. On this basis the 
.value, as well as the quantity, of tobacco trade with the Philippine 
Islands has been favorable to the United States since 1932. 



1/ Weight of cigarette exports estimated from average weight of total 
production. 



9329 



-401- 



Tobacoo promotion activities 

The Government of the. Philippine Islanus is keenly interested in 
the sale of Philippine cigars in the Unite a States, since it derives a 
considerable amount of revenue from the internal revenue taxes collec- 
ted on these cigars. In 1927 the Government established an advertising/ 
fund with an initial appropriation -of $150,000 to "be expended in foreign 
countries to advertise Philippine tobacco products. 1/ 

Factories may draw upon this fund on the basis of allotments •deter- 
mined by a Tobacco Board representing the Government and the various 
tobacco interests in the Islands, providing they contribute an euual 
amount. The advertising has been carried on almost exclusively in the 
United States, the amounts indicated below being drawn from the fund 
each year. 

Table 7. - Expenditures from advertising fund for promoting 
sales of Philippine cigars in the United States 




1928 
1929 
1930 



$15,711 
20,891 
14,340 



1931 
1932 
1933 



$19 , 620 

•1/ 14,793 



Source: Annual reports of the Collector of Internal Revenue of the 
Philippine Islands. 

if Estimated. 



1/ Act No. 3424. 



9_2S 



-402- 

Up to 1932 allotments were made from the fund for only 5-cent 
or higher priced cigars. In 1932 the Tobacco Board disagreed regarding 
the inclusion of advertising for 2-for-5 cent cigars, and no allot- 
ments were made. In 1933, however, the 2-for-5 cent cigars were given 
an allotment, and an estimated total of $14,793 was required cf the 
fund. Total government contributions from this source during the 
six-year period from 1928 to 1933 amounted to $85„355. 

In addition to the advertising subsidy indicated above, the 
Philippine Government has aided the sale of tobacco products in the ■ 
United States by means of contributions from the Tobacco Inspection . 
Fund. This fund is derived from fees charged by the Government for 
the inspection of leaf tobacco, cigars, etc., and is used to defray 
the cost of inspection and tobacco agricultural development work in 
the Philippine Islands the expense of promoting cigar sales in the 
United States. Since 1934 two men, having the official title of to- 
bacco agents of the Philippine Government, have been traveling exten- 
sively in the United States for the purpose of urging uoon distributors 
the advantages of handling Philippine cigars. In addition, a sum of 
money, usually $5,000 each year, has been appropriated from the Tobacco 
Inspection Fund to nay for general advertising of Philippine cigars in 
United States tobacco trade journals. Apparently an average of more 
than $40,000 a year of the cost of imported Philippine cigars is re- 
turned to the United States in the form of these various advertising 
and promotional expenditures. 

Philip-pine cigar a __ in r elation to the National 
Re c ove ry Ad ml n i .-- ! ra t i o n 

It arrears that both the manufacturers and the internal revenue 
authorities in the Philippine Islands are anxious to avoid the charge 
that Piiilippine cigar imports are hindering the successful operation 
of the cigar manufacturers' code in the United States. 

On March 20, 1934, the Collector of Internal Revenue of the 
Phili-mine Islands, after consultation with the principal exporters, 
announced that government approval would be refused on export shipments 
cf 2~for~5 cent cigars to the United States priced at less than $16.50 
per thousand in States which have cigar taxes, and $17 in tax-free 
States, less a 2 per cent discount for cash. These prices applied to 
sales to jobbers, and were amended on August 10 to permit sales to 
importers at a $15.17 per thousand. An additional amendment wa.s made 
May 1, 1935, requiring that cigars weighing more than 13 pounds per 
thousand be retailed in the United States for not less than 2-for-5 
cents. 

Under the provisions of the merchandising plan of the cigar manu- 
facturing indxistry's code, the minimum selling price to jobbers, 
including cash discounts, is '"15.17 per thousand with $17. G4 as the 
minimum price to retailers. The minimum price on Philip-nine cigars 
was therefore fixed at substantially the same level as the code minimum 
for the United States. In addition, the Philippine cigar manufacturers 
have expressed their willingness to abide by the various provisions of 
the merchandising plan. 

9829 



Tile Collector i-f Internal RevwnTto wvc given po^er to regulate 
cigar exports to the United States by Act No. 2613 of the Philippine 
Legislature (1916) which authorised him to establish adeauate rules 
defining the standard and type of leaf or manufactured tobacco which 
might be ex-oorted from the Philippine Islands. The Act req-aircs that 
no leaf or manufactured tobacco be exported to the United States until 
it has been inspected by the Collector of Internal Revenue or hie duly 
authorized representative; heavy -oenalties are nrovided for violations, 
either of the provisions of the Act or cf eny of the rules issued by 
the Collector of Internal Revenue in accordance thereto. These laws 
give the Collector of Internal Revenue amnle no^er to enforce the regu- 
lations which he has issued regarding minimum sales -orices of cigar 
exnorts to the United States. His -nroblem is simplified somewhat by 
the fact that in the last few years approximately 80 ner cent of all 
cigar shipments to the United States was made by four large companies. 

Wages for. making cigars in the Philippine Islands 

Practically all Philinnine cigars are manufactured by hand, the 
industry furnishing emnloyment for about 12,000 workers. Statistics 
are not available, however, for tracing the course of wages paid to 
hand cigar makers in the Philinnine Islands. The industry is very 
largely concentrated in Manila, where the average wages for female cigar 
makers were 63 cents ner day in 1926, 64 cents in 1927, and 59 cents in 
1928. 

In the early nart of August, 1934, more than 11,000 Philinnine 
cigar workers struck for higher wages. On the basis of newsnaner 
accounts it appears that $2 ner thousand was paid for making cigars 
before the strike. After a period of 45 days, the strike was ended 
by the grant of a temporary increase of 25 cents ner thousand in the 
rates, sending the comoletion cf a comprehensive investigation by the 
Philinnine Department of Labor. The labor department officials stated 
that further increases would be forthcoming if the survey of the fact- 
finding committee indicated that the factories could nay the higher 
wages, but that in any event it seemed unlikely that there would be 
any reductions from the new rates. According to the Secretary of Labor, 
the average cigar maker should earn from 40 to 45 cents a day at the 
$2.25 ner thousand rate. 



9829 



-404- 



TABLE EA.MASK (No. 32) 



9829 



-40E - 
LI ST OF TABLES 

Table Pa x 

1 - Tariff classification of import items alleged to "be 

competitive 4<~>9 

2 - Domestic production of cotton table damask ns recorded by 

the Census 409 

2a- Recent trends in domestic production of cotton table 

damask by a group of seven important mills reporting 
directly to National Recovery Administration 410 

2b- Trends in monthly production, sales, stock and unfilled 
orders, for the past 15 months, of 15 damask mills 
reporting to the Cotton-Textile Institute 411 

S - Trends in exportation of cotton damask (piec>: goods ex- 
clusively) and in the ratios of exports to production 
and, .import s 41 2 

4 — Reported capacity of 'foreign' 'textile industries offering 

competition 413 

5 - Importance of the American market to foreign competitive 

industries, expressed in ratios of exports to the 

United States to total exports 415 

6 — Trends in total value of imports in the principal com- 

petitive groups; all in thousands of dollars 416 

7 - Imports of linen table damask and manufactures of (ex- 

cept napkins) ,' by principal countries of origin 419 

8 - United States imports of linen nankins, by principal 

countries, and by type 421 

9 - Imports of manufacture's 'of flaxy n-.-s.p.f., by principal 

countries (comprises chiefly linen table covers of 

weave s other than damask) 423 

10— Imports in the principal cotton groups combining table 

covers and napkins, ' by'COuntrie s 425 

11— Trends in the import unit values of linen damask and 

linen napkins 426 

12— Indices of trend in unit value of imports, by type and 

.country , 1934 428 

13— Seasonality of imports of competitive groups during the 

four-year period 1931-1934, indicated by percentage 

ratios 429 

14— Trends in the ratios of imports through ea^h of the prin- 

. cipal . customs districts, to tatal imports of allegedly 
competitive items; i.e., damask piece gocd"3 and manu- 
factures, and plain-woven table covers ani napkins «... 430 

(continued on following page) 



9829 



-406- 
Table Page 

15- Trends in the Ratios of Cotton Damask Production and Com- 

petitive Imports to Apparent Consumption of Table 

Covers and Napkins, merchandised either made up or in 

the piece ; basis of value 431 

16- Trends in quality of fiber imported, for the linen in- 

dustries of the United' Kingdom and Czechoslovakia 436 

17- Trends .in sources, and costs of imports of flax and tow 

into the United Kingdom mid 'Czechoslovakia 437 

13- Trends in unit values of imports of flax and tow into 
Ireland and Czechoslovakia, measured against trends 
in the prices quoted to those countries on standard 
Russian grades of flax and ton 438 

19- production costs for linen fabrics in North Ireland, as 
estimated by Thomas Woodhouse in 1S51 (excluding 
interest on investment) 439 

■20- Indices of price trends of haled cotton and hackled flax .. 441 

21- Trends in wholesale price indices' 'Of haled cotton and . 

, significant .cotton manufactures, as recorded by the • 

Bureau of Labor Statistics *. .'..,': .-.• 443 

22- Comparison of price trends in linen and cotton damask ..... 444 

23- Indices of. trend in prices of domestic cotton damask, 

"based on average for January - April 1933 = 100 445 

24- Course of fluctuations in the currencies of the United 

States and certain foreign countries 447 

•25- Composite employment and payroll statistics - four mills .. 449 
26- Ratio of individual cost items to total production costs 

(.excluding interest on investment), based on separate 

analyses of production 'costs of nine ■ individual pro- 
ducts, as reported by six mills 45C 

• -27- .'iiaasureraent qf .maximum possible effect of the National In- 
dustrial Recovery Act on the cotton damask industry, 
. .... . . .on the, "basis of production cost data submitted by com- 
plainants, covering the first six months of 1933 and 
of 1934 451 | 



9829 



. -407- 
TABLE OP COIITEITTS 



P&£e 



Complainants Status -under the national Industrial Re- 
covery Act 408 

Subject of Complaint 408 

Tariff Treatment 408 

The Done stic Industry 409 

Exports 411 

Character and Scope of Foreign Competitive Industries .... 413 

Imports 415 

Import movement by 'principal classes and sources 417 

Trends in unit values of imports 426 

Seasonality of imports 429 

Importance of customs districts in imports 430 

Trend in Apparent Consumption 431 

Important Cor.Detitive Factor s 432 

The style element 432 

Response of competitive industries to dictates of 

fashion 433 

Household storage practices 434 

Respective qualities of linen and cotton in table 

covers 435 

hedifications in type and fiber quality of table 

. linen manufacture 435 

Cost spread betueen danask and crash 439 

False labeling a.s to measure and fiber content 440 

Pr i ce movement s ' 440 

Fluctuations in currency values 44S 

The Domestic Labor Situation 448 

Comparison of Production Costs Before and Under the 

Code 452 



5829 



-400- 

SURVEY OF Ii~OHI.;ATIOK 

01 

TABLE COVERS . ■ ' 

April, 1335 . . 

Complainant's Status under .the National Industrial 
Recovery Act 



This is a report on a complaint to the President with respect 
to imported table covers and napkins., of linen or cotton, either 
made up or in the piece. The complaint was filed by the Code 
Authority of the Cotton Textile Industries, pursuant to Section 3 (e) 
of the IT IRA. 



The seven complainant companie.s. in. this case, all manuf acturers of 
cotton damask, operate under the Cotton Textile Code, approved "by 
the President on July 9, 1933, • • ■ • 



Subject of Complaint 



The complaint is directed against imports of ta.tle damask, 
table cloths and napkins, in jacquard, dobby, and -plain weaves, com- 
posed of pure linen, pure cotton* .or of rai::ed linen and cotton. Im- 
ports consist main]./ of linen table covers and napkins of dana.sk or 
plain weave. Less important items .embraced in -the -complaint include 
linen damask and cotton damask in .the piece, and cotton covers and 
napkins of either damask or plain .weave.. .The. only cotton and/or 
linen table covers not embraced in the complaint are those con- 
taining embroidery or drn/m threads.., . Complainan-t.& make- particu- 
lar reference to 'imports of linen jacouard fabrics .and finished 
cloths with plain or colored borders, colored border crash cloths, 
peasant design crash, plaids, and/or checks, fringed and/or hemmed. 

Comolainants state that "until recent years the word 'Linen' 
was closely associated with the finest type of workmanship and 
material, but that lately low-grade linen products have captured a 
substantial -oortion of the market by capitalizing on the reputation 
earned previously by s\ip<"-rior linen aroducts. " 

Tariff Treatment 



Products covered by this complaint are dutiable under five 
separate paragraphs of the Tariff Act of 1930, as indicated in the 
table below, v/hich shows the ad valorem rates carried in the present 
and the two -orevious tariff acts. 



9809 



Table 1. 



-409- 



Trriff classification of import items alleged to be 

competitive 





Present :■ 

tariff : 

parapraoh : 


: Rates carried 

: in Tariff Acts of - 


; 


: 1930 : 1922 : 


1913 


Linen 

Laics:: piece goods 

Dama,sk manufactures (except 

napkins) 
Plain-woven table covers 
ITaokins, counting; 'oer square inch 


1013 : 

1013 : 
1023 : 

1014 : 
1014 : 

: 9in : 
: 910 : 

: 911(b) : 


Per cent 

: 45 : 40 

: 45 : 40 
: 40 : 40 

: 55 : 55 
: 40 : 40 

: 30 : 30 
: 30 : 30 

: 30 : 30 


35 

35 
35 


Hot over 120 threads 
Over 120 threads 

Cotton 

Dana si: piece £Oods 
Damask manuf ac tur e s 


35 
35 

25 
: 25 


Plain-woven tpble covers, 
naukins, etc. 


30 













The Domestic Industry- 
Domestic production of cotton table danask as recorded by the 
Census Bureau dropped considerable from 1923 to 1927 and; after a small 
recovery in 1929, declined sharply -ith the deprf ssion. Production of 
tablp damask during this ten-year 'period failed to keep aace with gen- 
eral production of all cotton ^oven goods; table damask represented 
seventy-one one-hundredths of 1 per cent of the total poundage of woven 
goods in 1925 and only twenty-five one-hundredths of 1 por cent in ■ 
1933. Table 2 gives Census Bureau* data for the table damask industry 
over the period 1923-1933. 

Table 2. - Domestic production of cotton table damask as 
recorded by the Census 



Year : Quantity 



1923 
1925 
1927 
1929 

1931 
1953 



Value 1 : Unit value 



Thousand -oounds: Thousands : Cents per lb. 



15,193 
14,504 
11,006 
12,379 
5,993 
5,402 



$10,852* 
12,450 



o» 



751 
8,333 
3,551 
2,837 



71.4 
85.3 
61. 3 
67.7 
52.2 
52.5 



Percentage of all 
production of 
cotton woven ppods 



(poundage basis) 

1/ 
0.71 

.45 

.52 

.38 

.25 



1/ Hot available. 
9329 



-410- 



Domestic production of cotton table dam,' sk, woven on either 
jaecuard or dobhy looms, is now concentrated largely in seven mills, 
three of them in North Carolina and one each in Virginia, Georgia, 
South. Carolina, and Maine. The Census Bureau has received returns in 
recent years from 15 mills. The seven active mills reported aggregate 
table , damask production for 1933 directly to the National Recovery 
Administration, representing 63 per cent of national production of all 
cotton damask as reported for that year by the Census Bureau. The 
other cotton mills possessing damask looms do not appear to have pro- 
duced tahle damask regularly in volume daring the past few years. 
The Cotton-Textile Institute states that production of these other 
mills is decidedly subordinate to that of the seven mills. Table 2a 
traces the course of the combined production of the seven mills which 
have reported directly to the National Recovery Administration, 
annually from 1929 through 1934, and quarterly during the past three 
years. The quarterly data for the past three years show some concen- 
tration of production in the first two quarters, but information at 
hand is not sufficient to properly gauge normal seasonality. 



Table ,2a. - Recent trends in domestic production of cotton 
table damask by a group -of seven important mills reporting 
directly to National Recovry Administration 





Aggregate production : 






of seven mills : 






Thousand Bounds : 




Years 






1S29 


6, S3? : 




1931 ; 


4,482 : 




1952 : 


4,524 : 




li 53 ■ 


3,690 : 




1934 : 


3,528 : 




Quarters 






1952 






Jan.-Mar. 


1,548 : 




Apr. -June 


1,217 • : 




July- Seat. 


823 : 




Get. -Dec. 


941 ■ : 




1933 






Ja.a.-LIar. 


797 : 




Apr. ~ June 


1,045 . 




July- Sept. 


943 




Oct.-Df c. 


9 on : : 




1934 






Jam. -Mar* 


'1,073 : 




Apr. -June 


1,061 ' : 




July- Sept. 


584: : : 


: 


Oct. -Dec. 


' 807. : : 




, t 







Ratio to Census 
production total 
Per cent 

55.2 
64.1 

68.3 






-Ill- 
Table 2b is ba.sed on records compiled by the Cotton-Textile 
Institute covering 15 mills reporting on cotton damask, woven either 
on &obby or jacquard loons. It traces the course of monthly pro- 
duction, sales, and the coarse of unsold stock and unfilled orders 
since the beginning of 1934, It should be noted particularly that 
these data are in units of linear yards in conti ast to Census data. 
in units, of pounds. 

Table 2b. - Trends in 'monthly production, s'ales, stock, and un- 
filled orders, for , the past 15 months, of 15 damask mills re- 
porting-to the Cotton~Te::tile Institute 



' he nth 


. : 


Pro- . : 


, Sales : 


Unsold 


: 


Unfilled 




. * 

1 > 


duct ion : 




Stock 


: 


Orders 




- .« 
. • 

- .• 
't 


during month : 




End of 


month 






Thousand of linear 


yards: 




1934 


' « 








January 


• 


722 '. ! 


l,06i; 


: 3,376 




1,246 


Pebruary 


* 


74S ! 


959 


: 3 , 141 




1,373 


Lfcirch 


' • 


865 ; 


485 


: 3,478 




1,119 


April 


• 


838 .. : 


590 


'3,633 




1,057 


I [ay 


• 
• 


942 : 


65b 


'3,921 




1,029 


June 


• 


814 • 


81$ 


•3,903 




859 


July 


• 
■ 


730 


629 


: 4,014 




852 


August - 


• • 

• • 


652 


845 


: 3,937 




1,123 


September 


• 


320 


417 


: 3,377 




1,134 


October • 


■ : 


857 ■ 


648 


3,951 




1,181 


November 


: 


876 


557 


, ' 4,273 




1,063 


December 


I 


733 


9.14 


%277 




1,157 


1935 • ■ 


: ; 












January - : 


; 


1,199 


854 


: : 4,393 




1,026 


February 


• 


970 


580 


: ' 4,719 




672 


March 1-16 : 


a 


543 


: 892 


: ; 4,447 




943 



The bulk of domestic production of cotton damask is- made up by 
the manufacturers into table covers or napkins. The industry has con- 
centrated largely on bletached ahite goods, but several manufacturers 
have been introducing some c^lqr in borders, 'and several of them nou 
offer table covers and napkins in plaids and checks, made on dobby 
looms. The. percentage ' of total production contributed by these latter 
manufacturers appears to be increasing. 

Data at hand are not sufficient to establish the amount and 
character of seasonality in damask production. 

Exports 



£::-j0rts of cotton damask are comparatively small in relation to 
production, representing normally around 2 per cent. The principal 
markets lieve been Cuba, Cana.d t, Colombia, and the Philippines. Our 
official classification of exports does not permit thi •gaurgirig of the volume 
of export of cotton damask manufactures. Table 3 indicates a substantial re- 
vival in the volume of exuorts of cotton damask piece goods during 1934. 
9829 



-41 Sa- 
lable 3. - Trends in exportation of cotton damask (piece goods 
conclusively) and in the ratios of exports to pro- 
duction and imports 



"stimated :: Ratio of exp.to 
poundage ::Domest. imports 
total 27 :: product. Spc.gds. 






1,000 : 


1,000 : 


Cents per : 


1 , 000 : : 


2/ 


2/ 




so. yds. : 


dollars: 


sq.yd. : 


lbs. s: 


In percentage 


Yesrs : 














1927 : 


372 : 


497 : 


26.2 : 


127 :: 


1.1 ! 


53 


1928 


: 780 : 


213 . 


27.3 . ■ 


267 :. : 




126 


1929 : 


780 ■ 


245 : 


31.4 - 


267 :: 


2.2 : 


136 


1930 : 


506 : 


141 ; 


27.8 : 


, 175 :': 




152 


1931 : 


307 : 


64 : 


20.8 


104 : : : 


1.5 : 


2(Jl 


1932 : 


310 : 


51 • 


16.5 : 


106 i 




435 


1933 • ; 


369 . • 


:58 : 


15.3 ! 


126 : 


2.3 : 


4707 


1934 


• 485 . : 


■ 96 


19.8 : 


166 i 




* 


Recent 


. 












quarters 














1932 














First 


: 73 . 


. 12 


16.6 ; 


25 ': 


1.1 


153 


Second 


; 34 . 


. 10 


28.4 


12 : : 


. .6 


257 


Third 


96 . « 


: 16 


16.3 . 


34 ■: 


• 2.8 


961 


Fourth 


90 , 


14 


15.0 


31 ; : 


2.2 


: * 


1933 














First 


: P7 . 


: . 15 


15.2 


33 : 


: 2.8 


:1488 


Second 


104 


15 


14.3 


: 36 : 


: 2.3 


:7934 


Third 


: 112 , 


17 


■ 15.1 


: 38 : 


: 2.7 


. * 


Fourth 


: 56 . 


: ■ 12 


: 20.7 


: 20 : 


: 1.5 


. * 


.ISM 














First 


: 93 


: : 19 


: 2C.6 .' 


: 32 : 


: 2.0 


■ * 


Second 


: 103 


• 22 


: 21.1 


: 36 '■ : 


: 2.3 


. * 


Third 


: 120 


: 24 


: 20.0 


: 41 : 


; 4.8 


. * 


Fourth 


: 167 


: 31 


: 18.6. 


: 57 : 


: 4.8 




1935 














First 


: 109 


: 19 


: 17.4 


: 37 : 


: 3.9 


. * 



* No imports recorded for these periods. 

1/ Conversion from square yards to pounds effected on basis that one 
square yard of production averages, roughly, 0.342 pounds, in the 
light of Census returns. 

2/ Annual ratios are based on production as reported "by Census in 
square yards. Square yardage production for recent quarters has 
been estimated by applying a coefficient of 4.29 to the quarterly 
poundage production reported to us by seven important producers. 
The Census yardage production in 1933 vas 427;"o of the aggregate 
poundage production reported to us for 1933 by these seven mills. 

3/ Represents ratio of estimated export poundage to recorded import 
poundage. 



9829 



-41. - 

Character and Scope of Foreign 
Competitive Industries 

Flax was a popular material in the very earliest days of textile 
manufacture in Europe. Manufacture of linen tended to concentrate grad- 
ually in Belgium, Northern France and Germany, where conditions were 
more favorable for growing and retting the flax. Manufacture was ex- 
tended in the early days to North Ireland, owing to an abundane of cheat) 
female labor and owing to admirable conditions for grass bleaching.,-. 

Development of cotton manufacture was a serious. blow to the long 
established linen industries, inasmuch as cotton is a fiber more easily 
separated into grades and prepared for spinning, and as it possesses 
the tensile strength essential with the use of high-speed machinery. 
Cotton manufacture was taken up extensively in Europe,, spreading rapidly 
through North England and Scotland and in Germany, Netherlands, France 
and 3ohemia. The Japanese industry is a more recent development. 

Table 4 groups recent authoritative estimates for the present 
capc.city of the linen and cotton industries in most of the countries from 
which competition is felt locally by the domestic damask industry. The 
figures in this table, of course, cover all mill equipment in these 
countries and not merely the equipment producing articles competitive 
with domestic damask. 

Table 4. Reported capacity of foreign textile industries 

offering competition 





Spindles 


: 




Power 






• 


looms 




'In 


thousands 




North Ireland - linen 


900 ' 






38 


Czechoslovakia - linen 


234 






22 


cotton 


5,574 






105 


Belgium - linen 


240 








France - linen 


: 550 






22 


Netherlands - cotton 


; 1 , 242 






55 


Japan - cotton 


! 3,644 






86 



Manufacture in North Ireland is concentrated largely in the hands 
of about a dozen integrated companies which, after having built up a 
refutation for high quality daina.sk some decades ago, have since settled 
down to production of those standard items year after year. As a result, 
the Ulster industry has been undisturbed by, or at least relatively un- 
responsive to, ever-changing vogues for table covers of novelty weave, 
design, and color. Their mill equipment is comparatively standardized 
and has required little re-placement since the Y/ar. Tfeges are reported 
to have been increased generally about 10 per cent a year ago. 

Before the War, the linen industry in Bohemia consisted of about 
twenty mills working primarily on good standard quality. There are now 
in Czechoslovakia about sixty factories, and practically all of the new 

9829 



-414- 

ones are concentrating on the manufacture of novelty cloths of fairly 
coarse reave, Host of the old factories are still active, principally 
on orders for shipment to contiguous countries. The cheap novelty pro- 
ducts of the newer factories go chiefly to the United States. As the 
depression followed closely upon the era of capacity expension, most 
of the Czech mills are under bankers' control at present, according to 
reliable reports. Czechoslovakia has dealt harshly with attemtps of 
mills to exploit labor. The eight-hour day is prescribed generally. 
7a g? scales in the linen weaving industry are reported to have been 
advancad roughly 10 per cent in September 1934-. American Commercial 
Attache Sam Woods reports under date of November 8 that profits of 
nucerons mills in Czechoslovakia suffered during 1934 as a result of 
commitments entered into before the currency devaluation of a year ago 
increased the cost of imported flax. 

linen -Tanufacturers in Belgium have the advantage of local supply 
of the relatively best qualities of flax, end many of them have d evelop- 
ed a reputation for fine goods. A few Belgian manufacturers took up 
the novelty cresh patterns after the TJar, but the present disparity in 
the value of Belgian and Czech&slovakian currencies has made it extreme- 
ly difficult for the Belgian mills to meet the Chechoslovakian competi- 
tion. 

The Russian Pive-Yoar Plan included the building up of linen spin- 
ning and weaving industries, a move wiiich was quite natural in view of 
the fact that Russia, for a long time, had been the principal supplier 
of flax to the linen industries in other European centers. The Russian 
Government equipped itsfirst linen mills with second-hand machinery of- 
fered at decidedly bargain prices by the. German and Belgian mills. Oth- 
er mills now being completed, however, are equipped with quite modern 
swindles end looms. In developing its linen export business, Russia 
concentrated first on crash toweling. Prices on this item have been re- 
duced to such a low level that this toweling is reported to be running 
away with the market in the United States as well as throughout most of 
Eur owe. 

French linen table covers have not been a. big factor in the Ameri- 
can market since the TTar. 

A few cotton manufacturers, principally in Czechoslovakia and Japan, 
introduced novelty color designs in plain woven cotton table covers and 
this has bec-n responsible largely for their entry locally in competition 
with domestic damask. 

The imwortance of the American market to certain branches of foreign 
textile industries can be gleaned f rom Table 5. 



9829 



-41 1 



Table 5. - Importance of the American market to foreign competitive 
industries, expressed in ratios of exports to the United 
States to total exports 



1222 LL2JH_L.123^: 1933 



In percentages 



United Ilincdom linen industry 

Flain-woven "bleached piece goods 
Dama.sk piece goods 
Pamask manufactures 

Czechoslovakia!! textile industries 
Plain-woven linen manufactures 
Linen damask manufactures 
Cotton manufactures - present type 

Belgian Linen industry 

Plain-woven linen manufactures 

Japanese cotton table cover industry 
Cotton table covers and napkins 



62 
51 
62 



: 68 


75: 


: 53 


56: 


: 74 


79: 


: 81 


87: 


: 56 


62: 


: 9 


13: 


. * 


* . 


: 17 


17: 



71 
37 
73 



87 
54 
21 



50 



22 



Not available. 



Imports 



Inasmuch as our official import classifications record imports of 
articles competitive vrith domestic cotton damask in different units of 
quantity, the relative importance of imports in the various groupings can 
be indicated only by comparison of value totals. Table 6 shows the trend 
in the value of imports annually since 1926 and quarterly for the past 
two years in each of the seven official classifications which complainants 
allege to embrace competitive items. It will be noted that combined im- 
port values of the four linen groups rose gradually to a peak in 1929; also 
that the combined value of the three cotton groups in ]934 surpassed the 
previous high, registered in 1926. ,'■ 



9829 



-416- 



c 

> 



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O 

a 

■i m 

■ 

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p 



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d <n 

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a as 
p <p 

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II 

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o 

a 

h 

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43 8 



03 

d 
Eh 



9 

I 



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c; a 






i 


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ooooc^oi v -'*tocv:o 


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tococ^aocof-tointo 




fr 1-1 «<A 




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*• •• 








03 




r? 




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cowtococOi-HrHinin 


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00 H C- C>- 
03 CO CO H 
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^i co ^f in 



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co r~ co to 
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to co in to 



Tf CO CO o 
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m »* m in 



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tO Q 
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8 PhP o col 9 pn'p o col 

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Ph 

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d 

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9829 



-417- 

The seasonal movement in the aggregate quarterly value of these 
four linen groups and three cotton groups during the past four years 
is presented graphically on the next "cage, based entirely on values 
as given in our official import statistics. The dotted lines breaking 
away from the solid lines after the first quarter of 1933, represent 
the aggregate value equivalent in gold dollars of the discontinued 25.8 
grains gold content. Obviously the dotted line v, ould more directly rep- 
resent the real trend in import volume from countries Those currencies 
remained stable against cold during this interval. A study of the 
trend in unit values of exports from these foreign countries, as given 
in their official export statistics, would indicate that unit values, 
expressed in currencies which have remained stable against gold in most 
cases, have shown little change. This leads to the probability that 
the volume trend in our imports has actually more nearly followed the 
dotted line. 

Import movement by -principal classes and sources 

Table 7 traces the trend during the past few years in the import- 
ation of linen table damn sir and manufactures, except napkins, from the 
principal countries of source. It will be noted that imports from 
Belgium are nor 1 comparatively insignificant in relation to the 1927 
volume, and that imports of linen damask from Czechoslovakia have also 
declined considerably. Forth Ireland is shown to remain our chief 
source of linen damask. Attention is directed to the late start, but 
nevertheless rapid development, of importation of damask from Russia. 
The first damask received from Russia was of fairly simple design and 
usually the product of outmoded patterns. Importers are inclined to 
believe that damask competition will develop seriously from Russia 
within a few years, owing to the reports that PLussia has recently been 
importing more modern jacquard patterns. 



9529 



-418- 



Thousands 



IMPORTS OF TABLE LINENS 

(BY VAUPt) 



LINEN 












COTTON 








•400 


















300 












^--*v 






zoo 

100 




| 1 








K""* — \. 


--—!---- 




" 


l?3l 


1932 


1933 


1934 



Solid line - Totals in dollars 

Dotted line *■ Totals ar t previous full gold conte. 

Basis for the solid lint: Official U.S. Import Statistics. 



S«29 



-419- 



Table 7. - Imports of linen taole damask and manufactures (except 
nap"rins), by >'rincipal countries of origin 





i "2—- 


y-ir.ci a] 


countries of o 


•igin 


Totals 




: United 








Oerrv nv 


■ Pi ece : l.'anuf ae- 




Xingi c .' 


' G'jcohc - 


Belgium 


Hussia 


1/ 


: ^,'oods : ture f ( e::- 




(Ireland) 


: slovakis 








: cept naokins > 








In thousand 


3 of pou 


ids 


3" years 












1927 1/ 


■ 2,138 


■ 2, 335 


37 G 


' u\ 


• 557 


5,558 


19 ] 


1,704 


: 1,049 




7 


90 


• 412 


2, 539 


1932 


! 1,775 


911 




1 


38 


150 


: 2, 617 


1? 


L.S03 


61? 


• 31 


90 


15 


128 


2,207 


1934 


1.2 


713 


33 


144 


* 


48 


2, 211 


By Quarters 
















193? 
















Jan . -1 : p v . 


444 


271 


5 


X 


* 


38 


703 


Apr. -June 


440 


151 


5 




* 


35 


579 


July-Seot. 


394 


218 


10 


* 


* 


39 


597 


Oct. -Dec. 




251 


8 


* 


* 


38 


739 


1933 
















Jan.-iiar. 


333 


lo 


8 


1 


* 


35 


468 


Apr. -June 


£'94 


132 


5 


15 


* 


13 


437 


July- Sept. 


444 


203 


5 


48 


* 


46 


634 


Oct. -Dec. 


518 


149 


12 


25 


* 


34 


668 


1934 
















Jan.-i ,ar. 


357 


144 


5 


43 


* 


16 


544 


Apr. -June 


281 


115 


4 


4; 


* 


9 


434 


July- Sept. 


357 


225 


S 


3! 


* 


15 


635 


Oct. -Dec. 


334 


229 


IS 


c 


* 


8 


599 


1935 
















Jan. -Liar. 


252 


155 


T~1 
( 


:°S 


* : 


16 


427 



1/ Data for 1927, and annually for Germany, re-orcsent general imports. All 

others arc ,.ts for consumpti on. 
X = Tot record 
* = Figures not rvailable; presumedly ne-li^ible. 



9829 



-420- 

Table 8 compares the trend through recent years in inroorts of linen 
napkins from each important country of source. Figures in this table are 
not directly .comparable with the figures in the preceding table or in 
tables immediately following it, as napkin figures are given in number 
of napkins as against poundage sho r 7i for ] iaen damask, and as against 
value for other competitive items in later tables. 

Attention is directed to the steadiness of napkin import volume 
from North Ireland, Czechoslovakia and Belgium, and to the sharp in- 
crease in imports from Russia. Imports from Ireland and Belgium are 
chiefly damask, while those from Czechoslovakia are mostly crash or 
other olain weaves. 

The two final columns in the table show separately the trend in 
the t'-'o classifications .for napkins carried in our import statistics, 
the first now carrying ad Valorem duty rate or 4C per cent and the 
second carrying 55 -per cent, for the rea.son that towels dutiable in this 
second tariff cla.ss are more nearly competitive with domestic manufac- 
tures. These two columns indicate that the irroort volume of coarse nap- 
kins has held uo better .than that of fine verve. 



5829 



-4." 1 - 

ble 8. - United States imports of linen napkins, bv principal 

countries, and by by 





Uni t 








'Iv^i . • 


Thread count per 




Ki ng&om : 


Czecho-: 


Belgium: 


Hussia 


(All ':[ 


— square 


irch 




(Irel- i 


Slovakia: 






coxm- : 


Ovjr tlTot ovei" 












tries' 1 : 


120 1/ : 


_12Q l/_ 






In thousands of napkins 






.3"- -ears 
















1 31 : 


7,595 : 


15,8 ! 


C12 ■ 


34 ■ 


5,740: 


17,325 : 


9,414 


1932 : 


8,076 


15,449 


o04 


5 


25,534: 


15,961 


9,574 


1933 


6,913 ■ 


IS , 7 


9.'- 


98 


21,579: 


12,484 : 


9,115 


19 


5,907 


13,575 


945 


240 


' 1,190: 


11,873 ■ 


9,316 


3y Quarters 










: 






i;< ■ 










: 






Jan .-. iar. 


1,963 


A 1 OQ 


201 




5,577: 


4,391 


",186 


.'.-■ ■ -June 


2,109 


. -07 


202 




5,178: 


3,284 


1,394 


t. 


1,853 


4, "IS 


■ 273 


3 


S, 573: 


3,791 


2,882 


Oct. . -. 


2,141 


4, 194 


• 123 


- 


7 , 107 : 


4,495 


2,512 


193? 










: 






_* . 


1.54C 


3,02 


► P7 p 


- 


5,036: 


: 2,327 


2,210 


i 


1 , 55S 


3, i 


244 


- 


4,735: 


2,586 


2,199 


b .. 


1,859 


kj , 357 


: 255 


34 


5,993: 


3,538 


2,484 


: ■ - . •. 


2,147 


3,274 


: 158 


45 


5,755: 


3,543 


2,222 


1934 










• 








1,599 


• 3,826 


: 254 


: 49 


4,837: 


: 2,343 


1,994 


Apr. 


1,236 


2,086 


: 201 


144 


3,797: 


• 2,255 


1,532 


Jul-^-Sept . 


■ 1,597 


4,162 


: 196 


: 25 


: 6,128: 


• 3,316 


2,812 


-Dec, 


: 1,474 


4,501 


: 293 


: 2^ 


: 6,428: 


: 3,450 


: 2,978 


1935 










: ; 






.- 


r 1,219 


: 3,89£ 


: 243 


: 351 


: 5,817: 


: 2,724 


: 3,093 



l/ Mostly : reave. 
2/ i'iostl: cr; ave. 



9829 



Imports of linen table coverings of reaves other than damask are 
not recorded separately in our official trace figures, but invoice 
analyses have revealed that they are tie outstanding separate item enter- 
ed under the basket classification "manufactures of flax, n.c.p.f." Ta~, 
ble 9 traces the trend in dollar value of imports included in this bas- 
ket classification from principal countries. 

It will be noted that Czechoslovakia stands out as the principal 
supplier and that North Ireland has registered considerable gains, chief- 
ly at the expense of Belgium. The increase shown for Czechoslovakia in 
1934 can be discounted to some extent from 1 the volume standpoint, tak- 
ing into account the fact that the figures in this table are in units 
cf dollars subject to devaluation during the -oast two years. This same 
consideration diminishes the significance of the increased total from 
all countries sho^n for 1934. 



9829 



-423- 

Table 9. - Import? of manufacture? of flax, n.s.p.f., by 
principal countries (comprises chiefly linen table 
covers of weaves other than damask) 





sited 


Oz 


echo- 






Other : 


: Total 




Kingdom 


si 


ovakia 


Belgium 


countries: 


: all 














: 


: Countries 








In thou- 


sands of dollars 




3y years 


















1931 


29 V 


1 


, 533 


255 




255 : 


: 2 


343 


1932 


33 


1 


,335 


199 




163 : 


r 2 


,032 


•1933 


551 


i 


,148 


144 




128 : 


: 1 


781 


1934 


248 


t_ 


,537 


173 




146 : 




,154 


3" r Quarters 


















1932 


















Jan. -liar. 


72 




344 


59 




54 : 




529 


Apr. -June 


102 




234 


46 




38 : 




420 


July- Sept. 


75 




399 


39 




39 : 




552 


Oct. -Dec. 


65 




358 


55 




33 : 




531 


1932 


















Jan. -Mar. 


90 




292 


29 




33 : 




444 


Apr. -June 


77 




219 


38 




24 : 




358 


July- Sept. 


83 




328 


36 




: 35 : 




488 


Oct .-Dec. 


106 




309 


40 




36 : 




491 


1934 


















Jan.-: [ar. 


85 




359 


50 




31 : 




525 


Apr. -June 


59 




253 


37 




25 : 




374 


July- Sept. 


55 




502 


32 




34 : 




624 


Oct. -Dec. 


47 




474 


54 




: 56 : 




531 


1935 




• 




■ 




i 


: 




Jan . -! [arc . 


70 




378 


28 




34 : 


\ 


510 



9829 



_/. re- 
imports of cotton table covers are ret out in table 10: in dollar 
value, The final column of this table sho r, ?> a sharp rise in the import 
value of plain woven items for 1933, and maintained in 1934. It will be 
noted that this sudden spurt developed in the i'etaerlands where it now 
arroear^ to be on the wane. The Few York representative of the consortium 
of Dutch mills declares that his gjsilv colored merchandise has not been 
able to maintain the popularity it developed in 1933 as a novelty, and 
that it is losing out in competition '" r ita cheaper .merchandise from Japan. 
Imports from Japan are shown in the table to be rising rapidly. 

Total imports of cotton table covers of damask weave are shown to 
have increased somewhat in value, though they continued to be less im- 
portant than imports of plain weave, Czechoslovakia would appear to be 
holding its own as chief supplier of damask weave table covers composed 
principally of cotton. Imports from Czechoslovakia, include novelty 
tinted items of mixed, rayon and cotton, which '.fere featured in many de- 
partment stores during the Christmas season of 1934. 



9829 



-425- 

Table 10. - Ircports in the principal cotton groups combining 
table covers and napkins, oy countries 



Damask v 



: ' tec". : Czecho- 
: ^ i-igdon: Slovakia 



Plain weave 



Total imports 



: C "- echo- :i"ether-: Japan: ":' Damask: Plain 
: Slovakia: lands : : : weave : reave 



3y years 
1931 
1932 
1933 
1934 

3y quarters 
1S3C~ 

Jan. -Mar. 
Apr : -June 
Jul. -Sent , 
Oct. -Dec. 

1933 



Jan .-. '.a r. 
A r.-June- 

Jul. -Sent. 
•Oct. -Dec. 

:: -- 

Jan. -Liar. 

Anr.-June 
Jul. -Sent. 
Oct. -Dec. 

1935 

Jar. .— L'ar .■ 



1? 
25 
44 

49 



5 
5 
8 
7 



5 
11 

15 
13 



10 
16 
■13 
11 



(Value in thousands of dollars) 



99 
125 
153 
17? 



34 



oL 



24 
37 
45 
45 



38 

45 
25 



37 



32 


0.5 


32 


: 23 


59 


304 


54 


255 



5 


1 


9 




12 


2 


5 


• 20 


4 


.30 


16 


104 


24 


110 


15 


: 40 



in 



14 



105 
59 
47 

43 



52 



64 

43 
104 
150 



6 
10 

9 
18 



15 
22 
34 
32 



40 
31 
45 
45 



141 
193 
234 
280 



49 



137 
141 
508 
524 



49 


23 


45 


29 


52 


35 


47 


53 


33 


77 


56 


151 


75 


180 


70 


100 


64 


171 


75 


112 


59 : 


119 


81 : 


122 



134 



9829 



-426- 



Trends in unit valn.es of im'oort'v 

Table! 11, based on our official import statistics, traces the trend 
in unit value of imports of linen table damask both in the piece and made 
up into table covers, also the trend in unit value of linen napkins, both 
fine and coarse. It will be noted that .unit values on linen damask piece 
goods have advanced since early 1933 in almost full ratio to dollar de- 
valuation, but that the other items have advanced somewhat less. 



Table 11. - Trends in the import unit values of linen damask and 

linen napkins 





linen : 

damask : 


Linen napkins 




Thread count per 




In the : Table : 
"Diece : covers : 


scuare inch 




Over : ? T ot over 
120 : 120 




Cents per lb. : 


Gents per napkin 



3y years 



1931 




1932 




1933' 




1934' 




3y eras rt 


er? 


1932 




July 


-Sept 


Oct. 


-Dec. 


1933 




Jan. 


-liar. 


Apr . 


-June 


July 


-Sept 


Oct. 


-Dec. 


1934 




Jan. 


-Liar. 


Apr. 


-June 


July 


-Sent 


Oct. 


-Dec. 


1935 





Jan. -Mar. 



1934 

January-] larch 
July- S ep t ember 
October-December 

1935 

January-Larch 



95.3 
63.1 
70.5 
84.3 



69.5 

58 . 2 

50.8 
52.5 
73.5 
85.9 

79.9 
89 . 5 
35.2 
35.4 

73.4 



57 
68 



44 



100.4 
76.3 
83.3 
94.9 



77.7 
74.5 

71.6 
75.7 
35.2 

94.5 

94.5 
95.3 
93.4 
95.9 

96.8 



10.7 
8.6 
9.9 

11.5 



3.5 
3.2 

3.4 

8.5 

9.9 

12.2 

11.5 
11.9 

11.3 
11.5 

10.7 



3.5 
3.0 
3.3 
3.8 



2.9 
3.0 

2.3 

n n 
c • o 

3.8 
3.9 

4.0 
4.0 
3.3 
3.7 

3.9 



In percentage increase since January- 



Larch, 1953 

5? : : 37 

30 : : 35 

33 : : 37 

25 : : 27 



43 

35 
32 

39 



9829 



• 



-427- 

The advance ia mit value recorded for inroorts of important compe- 
titive items from individual countries of source are set out in Table 12 
in the form of indices based on 100 representing the first quarter of 
1933. The indices relating to these countries marked with an asterisk 
have been calculated from official export statistics for the countries 
concerned, the foreign values "being converted to dollars at average dol- 
lar exchange for the ouprter. Indices for linen damask items and for 
napkins are based on United States import statistics. 

It will be noted that unit values (expressed in dollars) have in- 
creased more substantially on imports from Ireland a d Belgium than on 
imports from Czechoslovakia. The New York agent for the Dutch manufac- 
turers of novelty cotton table covers has supplied data which would in- 
dicate that Dutch values have been cut consideraol"'- during the past year, 
oresumebl-'- to meet convoctition from Ja _ oan. 



9829 



-428- 



Table 12. - Indices of trend in unit value of imports, by type 

and country, 1934 



(Besed or: Januory-Larch. 1953- 10 0) 



1935 



Linen r>: 


'O ducts 


Damask 


piece 


rocc s 


Damask 


table 


co"t rs 



apxms 
Fine 



Coarse 



Trble covers - Plain- 
1 7 oven 



Cotton pr o ducts 
Table covers - plain- 
woven 



Table covers - ve i; yes 
otner thai; damask 



Country of 

source 



Ireland 

Ireland 

C z echo si ova 1 .1 a 

."his si a 



Ireland 

Czechoslovrhi--. 

Belgium 

Ireland 

C z e chn si ovalri a 

Belgium 



Ireland* 

C z e cho si ovaki a* 



Belgium" 



Czecho Slovakia* 
Netherlands** 



Japan* 



First 
ouarter 



154 

142 
124 
252 



141 
112 
127 

1.94 
143 
140 



167 
143 
144 



141 
150 



142 



Second 

quarter 



171 



165 
129 
137 



158 
127 



145 



Thi rd 
quarter 



167 



150 


143 


115 


119 


21 7 


575 


149 


150 


125 


114 


159 


157 


140 


157 


152 


148 


148 


148 



153 
131 
162 



141 
120 



145 



j'irst 
quarter 



144 

145 
132 
313 



142 
124 

196 

209 
133 

148 



* Bsti^.r tes based or. analysis of foreign unit values of exports to tne 
United 5trtes. 

** Based on dollar shipping values as reported by the factor^ representa- 
tive's in ITew York of the consortium of Dutch mills. 



9829 



-429- 



c . 



"li ty of impo rts 



Th° seasonal movement in the importation of all items competitive 
m ith domestic cotton damask is portrayed in the graph appearing on 
page 17, In further evidence, Table 15 gives the ratio to total 
imports in each classification during the -oast four years, of imports 
during each quarter and each month of those four years. 



Table 13. - Seasonality of imoorts of competitive groups during 
the four-year period 1931-1934, indicated by p°rc'entage 

ratios 



January- : Aoril- • July-! October- 
March '• June :Sept. December 



Li 



men 



1J Damask niece ^oods 

2) Table covers, etc., of damask 

3v Table covers, etc., plain "eave 

4.) Nankins, fine 

5; Napkins, coarse : . 

Simple average 



Cotton table manufactures 
6/ Damask 
7) Plain-Wov^n 



.Linen group Cl) ; . 
Linen groups (?) (3) (4) (5) 
.Cotton .groups (6) (7) 



Ratio of quarterly imports to 



total imnorts 




30 


16 : 


PI 


33 


22 


! 20 


27 


31 


24 


: 20 


28 


28 


24 


: 20 


26 


30 


22 ■ 


' 19 


29 


' 30 


£4 


: 19 ; 


26 


: 31 


20 • 


: 24 


27 


: 29 


24- 


: 25 ; 


: 28 


: 23. 



Ratio of 'monthly imnorts to 
; • total - imnorts 




7_8-6 : 9-6-18 
7-9-11:11-10-8 
9^-8-11 : 10-9-7 



Note: Based on poundage for it^ms (l) and (2); numbers for items (4) 
and (5); and value for items (3), (6), and (7). 



9829 



-430- 



Imoortance of cur tons district s in. imports 

The dominating position of New Ior v as receiving "ooint for 
competitive imports is revealed in Table 14. This sho^s that the 
Hom York customs district handles ov?r 30 o°-r c a nt of competitive items 
of linen, followed by Chicago. It sho^s also that Pacific Coa.st dis- 
tricts have risen substantially in importance as clearance joints for 
competitive articles of cotton and that Chicaro receipts have also 
increased. Ke^ York, neverless, continues to handle over 60 p°r cent 
of competitive imports of cotton. 

Table 14. - Trends in tli° ratios of imports through each 
of the principal customs districts, to total imports of 
allegedly competitive items; i.e., damask piece goods 
and manufactures, and plain-woven table covers and 
' - napkins 











(Pm- rp.nt) 










Customs 
district 


Articles of 
lin°n 


Articles of 
cotton 


All competitive 
imports 




19?7 


19?9 


1971 


19P7 


1929 


1 971 


1QP7 


1929 


1971 


IIott York 


79. 


:'78. 


81. 


68. 


78. 


62. 


77. 


78. 


77. 


Chicago ; 


8. 


: 8. 


7. 


8. 


7. 


14. 


8. 


: 8. 


8.4 


Massachusetts 




2.4 


3.2! 


1.5 


1.4 


1. 


1.9 


2.2 


2. 


Philadelphia' 


1.9 


' 2.2 


1.7 


1.1 


1.3 


• c 


1.7 


• 2. 


1.4 


St. Louis 






1.7 


1.5 


1.8 


1.2 


2.1 


2.4 


1.6 


Los Angeles 


.7 


.3 


1.2 


2.7 


3.5 


6. 


1.1 


1.3 


2.2 


San Francisco 


.8 


.8 


.9 


9.5 


1 n 
o • < 


7. ! 


2.5 


1.3 


2.1 


All other 


5.4 


; 5.3 


4.3 


7.7 


3.8 


8.6. 


5.7 


4.8 


5.3 



9829 



-431- 



Tr°nd in Apparent Consumption 

Table 15 gives a rough indication of the trend in apparent con- 
sumption of table covers and napkins of cotton and/or linen, merchan- 
dised either made up or in the niece. Apparent consumption in this 
case is gauged "by adding the total dollar value of imoorts to the 
value of domestic production as reported by the Censxxs Bureau. On this 
tasis, consumotion registered a pea 1 ' in 1927, and thereafter dropped 
68 per cent to a lo^ in 1933. 

The movement in relative importance of production and imports in 
apparent consumotion over the period 1923-1927, as indicated in the 
tWo final columns in Table 16* was due partly to increased volume of 
imoorts, but also to a considerable extent to curtailment of domestic 
production. The ratio of imoorts to a-oparent consumotion dropped 
• substantially from 1927 to 1929, but it is shoim to have been main- 
tained at close to 68 per cent since 1929. 



Table 1?: Trends in the Ratios of Cotton Damask Production 
and Competitive Imoorts, to Apparent Consumotion of Table 
Covers and "apkins, merchandised either made up or in 
piece; basis of value 





Domestic 
production 
value 


Total 
value 
of 
imports 


Apparent ! 
consumption 
(l) plus (2) 


Ratios to apparent 
consumption 




Domestic 

-nrnrhif.-H n-n } Xj' '.^f..\ A. 




(l) i 


(2) 


(3) 


(in percentage) 


1923 


10,851 


12,667 


23,518 


56 


'• 54 


1925 : 


12,450 


11,457 


23,907 


52 


48 


1927 


6,751 


21,087 


: 27,838 


24 


76 


1929 


8,383 


18,702 


27,085 


31 


' 69 


1931 


.3,651 


7,837 


11,488 


32 


68 


1933 


2,837 


5,985 


' 8,822 


32 


68 


1934 (est) 


; 3,247 


6,322 


10,069 


32 


68 


1st quarter 
1935 (est) 


; 990 


1,628 


2,618 


38 


62 



;929 



-432- 

Important Competitive Factors 

The style element 

Prior to the War, bleached doraa.sk of either linen or ootton 
enjoyed almost undisputed title in the field of taljle covers and 
napkins, owing primarily to dictates of fashion. Ascending the living 
scal°, families moved invariably from oilcloth to plain cotton check 
and finally to white damask. It was th n usual custom for housewives 
to have several Dualities of the latter so as to he -ore-pared for all 
occasions, ranging from familv meals to formal dinner parties and 
receptions. 

during and after the War, th° table itself gradually emerged from 
obscurity with the rapid extension of the vogu° for th° use of 
individual doilies, centerpieces, and runners. Owing to the background 
afforded by the table, open-work designs including la.ee were found to 
be effective, thereby displacing damask to some extent from its former 
supremacy. Fashion during this transition period continued to call 
for white goods or unbleached 1 in°n or mildly tinted over-all color. 

The next caprice in fashion for table covers was intimately bound 
up with the vogiie for -provincial dining rooms. Interior d°cora,tors 
decided that white table coverings produced an off-note in rustic 
settings inspired by Normandy, Brittany, etc., and they introduced 
color in table s°ts to harmonize with the -peasant furnishings. Modern- 
istic furniture also cried for color. The no longer a novelty p°r se, 
color in table lin°n continues to be considered decreed by numerous 
furniture backgrounds, and to be sma.rt for a. variety of occasions, re- 
gardless of the furniture type. 

More or less coincident with th° introduction of colored checks 
and -olaids in table covers to harmonize with provincial furnishings, 
interior decorators introduced fringed cra.sh table sets to more com- 
pletely transplant th° peasant atmosphere carried in th° furniture and 
furnishings, and th°se peasant weaves soon achieved widespread 
popularity. 

As a result of these" changes in fashion during th^ -past few years, 
the housewife's -problem is more complex than, it was when a series of 
white damask table sets ranging in quality, would suffice for all 
occasions. Now, if the family budget permits, she win aspire to the 
following range of items in her linen closet; (l) Several white table 
sets of damask or cut-out embroidery for family or informal dinners; 
K2) A double damask table cloth of elaborate -pattern, and probably also 
a lac table covering for formal dinners, the lace cloth serving also 
for formal afternoon receptions; (3) A dama.sk or crash set either 
bordered or otherwise -patterned with subdued coloring for informal 
Sunday night supper; (4) Several crash table coverings or doily sets in 
gay colors for the breakfast room, and on° of these will probably be of 
red and white check to go on the self-service table for evening en- 
tertainment, particularly if refreshments are to include to»r; (5) A 
heavily laced cloth for formal luncheons, and a "cWnie c ri" novelty 
set for less formal luncheons for women; (e) Linen bridge sets either 

9829 



-433- 

embroidered or a-p-pliqued on solid color. 

Repeal, rnor^ than any other singl° factor, may "be held responsible 
for the returning popularity of sll-over tints, inasmuch as these have 
"been found to he the most effective backgrounds for the serving of 
table wines. Repeal also resulted in the mushroom development, not 
of the old type har room, hut rather of arty cocktail bars, 
rathskellers, etc, H°r<= the continental atmosphere wa.s copied, usually 
to the extent of furnishings in gaily colored checks, r>laids, etc. 

As novelty table sets have become popular for numerous household 
•oUrposes, th° damask trade has become more dependent on the hotel and 
r°staurant group of consumers. Defection from this group has been 
pfetty well confined, up to the present, to tea rooms and rathskellers, 
but some hotels hav° compromised to the extent of s°tting ut>, alongside 
of their main dining rooms, a gaily furnish d and mor° speedily 
s°rviced "Deauyi]l° Coffee Sho-p" or. "Valencia Patio." 

A considerable -portion of the -pioneering in nov a lty lin°ns 
originates with interior decorators and "ith buyers for department 
stores. These buyers are ever on the alert to sense the trend in 
-po-oularity of types, -patterns and color effects, and they trv con- 
stantly to introduce an item ahead of rival establishments. They 
make a regular -practice of visiting mills in European centers and 
consequently exert considerable influence in th° inspiring of novelties. 
As a result there is some basis to a buyer's matter-of-fact statement 
that the -public, six months h°nce, will be giving -preference to, say 
heavier bandines, larger checks, and more tones of brown. It is 
almost c°rtain, however, that he mill have a quite different prediction 
for th° future, by the time the retail customers are confirming his 
previous prediction. 

Response of competitive industries to dicta t es of fashinn 

From the moment housewives became novelty-conscious in table 
covers, the domestic sales volume of an individual manufacturer of 
these novelty items has been somewhat dependent upon his agility in 
keeping up with or ahead of these -popularity trends. Domestic cotton 
damask manufacturers have res-ponded to the call for colorings to the 
extent of weaving a mildly colored border in some of their items. 
Several domestic mills are also using dobby looms to turn out gaily 
colored checks, plaids, etc. 

Asserting that the weaving of color in damask is tantamount to 
"gilding the lily", most of the Irish linen damask manufacturers have 
maintained production of their old. standard qualities carefully bleached, 
but a few have compromised to the extent of adding new it°ms to their 
line, designated in th° trade as -promotion cloths, made up of somewhat 
yarns and frequently containing a bit of color in the border. On the 
other hand, the vogue for -pea.sant cloths developed in a -period wh=n the 
Czeckoslovakian lin°n industry was in process of growth, and many of the 
n o w°r mills are equipped to specialize in crash and color weaves. Sev- 
eral mills in Belgium took up crash and color "eaves some years ago, but 
most of them have gone back to their old standard items, after an attempt 



9829 



- 434 - 

to compete on the crash, novelty goods with Chechoslovakia. Russian table 
linen offerings commenced with damask. It is reported, however, that 
some of the new Russian mills are equipped for crash and color weaves. 

The importing of Irish table damask into the United States is in the 
hands of a comparatively small number of firms, many of them branch sales 
offices of the Irish manufacturer. Tnc: sales approach of these branch 
offices tends to take the form: "You knew our good old standard lines. 
Here's our 'schedule of quotations. What do you wish?" In contrast, 
agents in Hew York for Czechoslovak! an Mills approach important customers 

in the following manner: "'Bfe are sales representatives for the , 

Mill in" Czechoslovakia, which is large and equipped with modern looms. 
This display indicates the range of items it has been turning out recently. 
Tell us what you. have in mind to purchase this season so far as pattern 
and color are concerned, and we will lay the matter before our mill and 
we will let you know later what they can quote." 

Chechoslovakian cotton mills got an early start in the meeting of 
local demand for dobby-woven table sets of novelty pattern and coloring. 
A group of Dutch mills" undertook an intensive sales campaign two years 
ago on cotton table covers of comparatively plain weave but highly colored, 
quoting unusually attractive prices. This campaign produced a good busi- 
ness volume but apparently a minimum of profit considering the trend in 
vc.lume of recent shipments. 

Household storage practices. 

When hope chests were a commonplace but very serious family institu- 
tion in the United States,. a large set of table damask was usually one of 
the first items to go into the chest, followed later on by one or more 
less pretentious ' sets. This took- hundreds of tons of damask. off store 
shelves and, at least temporarily, out of circulation. The original fine 
damask in hope chests of many a bride of the pre-War days is noT gracing 
the table for family celebration of her daughter's engagement . 

The probability of this daughter's having inherited and retained her 
mother's zeal for hope chest accumulation would depend on habitat and 
interests. It would be very small if she had taken up some profession 
and if she had moved from home to independent urban quarters. During 
the years of hope chest linen accumulation by a daughter now attaining 
marriageable age, she might have been tempted frequently to purchase 
novelty table sets; nevertheless she probably resisted temptation in 
most casCs and kept her fund for novelties intact pending settlement on 
such matters as marriage date and home furniture. When these matters are 
later settled and when she sets out to purchase her novelty linens, she 
will give relatively less consideration to durability and more to price 
if she aspires to keep up with constant changes in novelty vogues; but 
her damask purchases will still be made with an eye to durability and 
quality, as a long term investment. 



9829 



-435- 

If the b ride- to-be is faced with the pros-pent of living in an apart- 
ment, she will not think in dozens as her mother probably did when pur- 
chasing tatole linen* She may have to cope not only with small and incon- 
venient storing space for linen, tout with physical limitation to the num- 
toer of dinner guests* 

Res-pec tive aualitie r. of linen and cotton in tatole covers 

Linen damask is normally valued at a considerable premium over standard 
ootton damask, owing to its relatively greater wearing qualities, resis— 
tence to present day laundering methods, and permanency of sheen produced 
toy ironing. Standard cotton damask not only rates lower in the above 
qualities, tout lacks the "body" and elasticity demonstrated by linen after 
ironing 'end storage. The lint of cotton covers demonstrates an affinity 
for . w.ool' suitings, '■• ■ ■ ' 

With a view to overcoming these defects, several domestic manufac- 
turers of cotton damask' subject their fabric to special beetling and other 
patented' finishings, which result in the securing of a product closely re- 
sembling" linen damask and retaining most of its special -oroporties. 

In view of-' these superior qualities of linen, standard cotton damask 
has never been able to compete with standard linen dama.sk under conditions 
of purity prices. • The amount of necessary price' differential is cut down 
somewhat' but not entirely by the subjecting of cotton to patented finishing 
processess. One of the' complainant mills described linen damask as "made 
of costlier staple, in higher constructions as a luxury product," and cot- 
ton damask as "made of' a cheaper staple, generally in lower qualities for 
people who could not afford linens." 

Modifications in type and fiber quality of table linen manufacture 

In preceeding to a discussion of the competitive situation, this com- 
plainant adds that ,: during the last several years, this has been changing 
and the foreign manufacturer, with labor cheaper than ever and flax cheap- 
er than ever, has seen the opportunity to obtain the low and table cloth 
business here as well as the high and business, and by also using cheaper 
weaves and chorjper constructions? has been able to £lood ■ ■ • ■ .. ■ -v 
the American market with so-called all-linen table cloths in direct compe- 
tition with cotton table cloths.. The most serious competitor has been the 
linen crash table cloth." 

It is indeed a fact that numerous Continental linen mills, particularly 
in Czechoslovakia, are concerntrating now on cheaper constructions and 
weaves to cater to the market for peasant cloths in novelty patterns which 
are now favored for harmony with ..rustic furnishings. So far as damask is 
concerned, however, wholesale dealers and department store buyers report 
that, while plenty of foreign lin»n damask manufacturers have added one or 
more promotion cloth items to their line, practically all of the damask 
weavers in North Ireland and Belgium, and most of those in Czechoslovakia 
have refrained from debasing the quality of their standard items. The 
it does not lead to any conclusions specifically on table covers, Table 16 
gives a general indication of the trends in proportional use of flax and tow 
by the linen industries in North Ireland and Czechoslovakia. Crash table 

9829 



_ A.1A 



cover production undoubtedly contributed to the increasing and relatively 
greater use of tow in the latter country , and promotion cloths were res- 
ponsible in pari for the increased use of tor in North Ireland. 



Table 16 - Trends in quality of fiber imported for the linen 
industries of the United Kingdom and 
Czechoslovakia 



, 


Imj 

Ui 

Flax 
(1) 


jorts into the 
lited Kingdom 




: Imports into 
: Czechoslovakia 




Toy; : Ratio of 
(2) : (2) to (l) 


: Flax : Tow' : 
s (1) : (2) 


Ratio of 
(2) to (1) 


1913 
1930 

1931 
1932 
1933 
1934 (9 months) 


Thou; 
of J 

84.0 

. X 

28,9 

30,9 

. 29.0 

' 27.9 


;ands : 

:ons : Per Cent 

18.4 -j 22 

x : x 

14.3 : 49 

17.8 : 58 

22.7 : 81 

21.3 : 76 


: Thousands 
: of tons 

• X \ X 

: 11.8 : 5.3 
:• 5.6 : 5,3 

: 10,2 : 6,6 
: 4,2 : 6.3 
: 9.5 : 9.3 


Per cent 

X 

45 
93 
64 
149 
98 



x indicates that data are not available. 



Table 17 indicates the, changes which .have occurred during recent years 
in dependence of the linen industries in North Ireland and Czechoslovakia 
on various sources for their raw material; it also shows the relative price 
level each year on material secured from these different sources. As 
sources of supply for the Irish industry, Russia is shown to be returning 
rapidly to the importance it occupied before the War. Since 1931 Irish 
manufacturers have been drawing more of their' Russian grades direct and 
purchasing a lesser quantity of Russian grades from shippers in Baltic 
countries, despite the fact that the imports direct from Russia, show an 
increasing differential in unit. value over imports from the Baltic coun- 
tries. Irish manufacturers are shown also to be depending more upon Bel- 
gium than they were before the War. The unit value of imports from Bel- 
gium is shown to have remained fairly constant in sterling at a level very 
high in relation to imports from other sources. 

Czechoslovak! an mills are also shown to have increased their direct 
takings from Russia,, particularly takings of tow, thereby placing a smaller 
volume of orders in Germany and Poland, although unit volume of imports 
from these latter countries continue lower than unit volume for Russian 
shipments. Czechoslovak! an mills take comparatively little of the high- 
quality Belgian flax, 

9829 



- ■.- 



Table 17 - Irends in sources aid costs of imports of flax and 
tow into the United Kingdom and Czechoslovakia 





: Imports 


into th 


e : : : 


; a 


Import 


s into 






: United 


iCingdom 


: : : 




C'zechos 


Lovakia 


Year and 


: Ratio 


to com- 


: Unit 


value : : : 


: Ratio 


to corn- 


: Unit value 


s ource s 


:bined 


imports 


: per 


ton : : : 


:bined 


imports 


: per kilo 




: durin 


z year 




• • ■ 


: during year 






: PI ax 


: Tow 


: PI ax 


: Ton : : : 
rling : : : 


:• Plax 


: Ton 


: Plax : Tow 




: Per 


sent 


: £ Ste 


Per 


sent 


: Kroner 


1915 








: : : 








Russia 


: 67 


: 13 


: 41 


: 37 :: : 










northeastern 








* #' ■ ■ 










Eur oo e 1/ 


I X 


' X 


: x 


: x : : • 










Belgium 


: 14 


: 4 


: 89 


: 17 :: : 










1931 








• • • - • 










U.S.S.R. 


! 8 . 


: 6 


37 


: 23 : : : 


: 13 • 


: 11 


: 5.0 


: 3,6 


northeastern 








: : : ; 










Europe 


• 28 ; 


: 23 


36 


: 22 : : : 


: 34 


: 33 • 


: '4i8 


: 3.1 


Belgium 


28 


: 2 


81 


: 34 :: : 


: 2 


: - 


: 12.7 


: - 


1932 








; : : : 










u« s» s.r. 


17 


22 . 


43 


28 :: : 


: 16 


• 3 


4.3 


: 3,6 


northeastern 








: : : 










Europe 


20 


11 . 


41 


30 :: : 


: 41 


34 


•4.3 


, 3.1 


Belgium : 


23 


2 : 


75 


26 :: : 


: 2 


! 


9.5 


: - 


1933 








: : : 










U.S.S.R. : 


11 


34 : 


51 


31 :: : 


: 11 


26 


5,6 


3.2 


northeastern 








• • * 










Europe : 


11 : 




46 


34 : : : 


: 24 


30 : 


.'5.1 


3.2 


Belgium : 


29 : 


3 : 


81 : 


28 :: : 


: 1 : 


: 


11.2 : 


- 


1934 (9 months'): 








: : : 










U.S.S.R. ! 


20 : 


36 : 


50 : 


27 :: : 


: 18 : 


29 : 


5.4 : 


3.4 


Northeastern : 








: : : 










Europe : 


x : 


x : 


45 : 


33 : : : 


: 26 : 


18 : 


5.3 : 


3.3 


Belgium : 


23 : 


x : 


80 : 


x : : : 


'. ti '• 


— i 


9.2 : 


- 



1/ Comprises Baltic Countires, Poland, and Germany, and includes a con- 
siderable percentage of transshipments originating in U.S.S.R. 

NOTE: In place of figures (x) Is used when data are lacking; 

(») is used when imports were nil or insignificant. 



9829 



-438- 

TafcfLe 13 indicates the manner in which unit volume of Irish and 
Czechoslovakia imports of flax and tow have moved during "the past four 
years in relation tc quotations on Slanetz flax and Hallo tow, those 
latter being Russian grades so important in the trade as to strongly in- 
fluence the orice trends for all other grades in world markets. This 
given some support to the clai'a of lineal importers that manufacturers 
in North Ireland and Czechoslovakia have not moved over generally to use 
of relatively poor fiber. In 'the case of British imports/ where unit 
values would appear to have failed to keep up with the rise in Slazetz 
quotations, it is "believed' that ' t the unit value for the "base period was 
influenced abnormally "by heavy imports from Belgium at an' unusually 
heavy -premium over Russian' qualities. ' 



Table 18 - Trends in unit volume of imports of flax .and to« into Ireland 
and -Czechoslovakia, measured against, trends in the prices! quoted to 
those countries '.on standard Russian grades of flax mid 'tow 1/ 

(indices of trend, based on January-June, 1931 - 1D0) 





: U.Ki 


(llorth Ireland) 






Czechoslovakia 




( 




: :P] 


ax 


Tow 


: Flax 


: • ' Tow 




: : 


Unit 


: '■ : 


Unit 




: Unit 


• • 

• • 


Unit 




Period 


: : Quota- : 


• 


Quota- : 




:Quota- 


: 


: Quota-: 






: 


: tion : 


value ' 


tion : 


.value 


: tion. 


: Value 


: tion : 


value 




, 


:: Slanetz: 


of "■ 


Rallo : 


of 


; :Slanetz 


: of 


: Rallo: 


of 






• : ' : 


imoorts 


: imports 




: imports 


• t 


imports 




1931 ■ 




















Jan. -Mar • ) 


100 '• 


100' 


ioo 


.100 


: 100 - 


100 


100 


100 




Apr. -June ) 




















July- Sept. 


. 100 ' 


89 ; : 


102 


' 97 


. .98 : 


102 


98 


100 




Oct. -Dec. 


: 103 ' 


78 : 


114 


.119 


78 J 


87; 


86 


100 




1932 














' 






Jan.-Mar, 


■ 113 : 


85 '■ ■ 


l.Xl 


124 


81 " 


79 • 


80 


38, 




Apr. -June 


. 123 • 


96 ' 


117 


130 


: 93 


82 ' 


89 


103 




July- Sept... 


: 113 • 


87 ' ' 


126 


135 


• 81 


83 : 


89 


99 




Oct.-Dec. s 


: 130 


104 '• ; 


1.38 


139 


• . 33 


93 


95 


97 


( 


1933 




















Jan. -Mar. 


: 147 • 


103 " 


111 


i53 


102 


! 109 ' 


77 ' 


102 




Apr.-June , 


• 147 


109 ' 


92 


150 


. 93 


109 • 


62 


104 




July-Sept. 


■. 132 


120 


83 


137 


: '83 


: 103 


„55 


101 




Oct. -Dec. , 


118 


108 : 


71 


120 


78 


95 


46 


-86 




1934 : 




















Jan. -Mar. 


: 137 


97 


98 


117 


93 


87 


65 


86 




Apr.-June 


152 


109 


111 


131 


115 


108 


80 


103 




July- Sept. 


176 


113 


123 


' 133 


130 


123 


99 


124 




Oct. -Dec. 


. 196 




135 




142 




132 







1/ Price quotations as reported in Linen Trade Circular; in Sterling for 

Ireland a&&. in gold sterling for Czechoslovakia until the Czechoslovakia^, 
crown was devaluated in early 1934* 



9829 



439- 



Cost spro.-'d bet 1 -ee ] _dg --J ".l#tQ,nd c. r-'.sk 

While linen crash fnbrics can bo turned out "by relatively high- 
speed mechanical equi Meat involving a minimum of labor, linen damask 
manufacture is p. complicated process, permitting relatively very small 
output per dry. Damask manufacture rust also absorb the high cost of 
designing and pattern-making for the Jacauard looms. Furthermore, the 
finishing and "bleaching of damask are very substantial cost items. 

The price differential permissible befrveen linen damask and crash 
manufactures is indicated in Table 19, which tabulates production costs 
for various linen manufactures in Worth Ireland as estimated by Mr. 
Thomas Woodhouse, author of several technical volumes rated highly by 
the British textile industries. Mr. Woodhouse's cost study points to 
the probability that crash table covers can be offered profitably at 
one-half the price level for good quality damask. It will be noted 
that for twilled sacking, the cost of nerving labor represents 6 per 
cent, finishing 2 per cent and yarns 87 per cent of total costs. Wear- 
ing labor for damask represents 17 r>er cent of total cost, finishing 
9 per cent, and yarns only 55 per cent. 



Table 19 - Production costs for linen fabrics in llorth Ireland, as esti- 
mated by Thomas TToodhouse in 1931 (excluding interest on in- 
vestment) 

(per square yar d) 



Ind.i v i dual costs 



Yarns ^jffn? 5 : Finishing 



Total cost 



11 Porter; 40 inch Hessian 
lC-g- oz., 13 shots per inch 

10 Porter, 45 inch Taroaulin 

20 oz. , D. V. 12v shots 
10 Porter 28 inch Twilled Sacking 

20 oz. 10i shots . 

12 Porter, Imitation Tapestry 
36", 14 shots 

34 Porter, 27 inch Tent_Duck 

36 shots per inch 
24 inch checked union glass cloth 



40" scale, 10 shots per glass 
27 inch union huckeback 

bleached, 55 shots 
72 inch Damask, ' 1200 Reed 

40 !, scale, 3 threads per split, 

27 shots, bleached 



1.53 
2.55 
2.47 
5.65 
6.25 
3.00 
5.20 

8.51 



Pence 
0.17 
.18 
.16 
.72 
.50 
.64 
.65 

2.60 



0.03 
.06 
,06 

2/ 
2/ 
2/ 

2/ 

1.38 



Pence : U. S. 

: cents l] 

1.95: 3.69 

2.98: 5.63 

« 

2.84: 5.37 



7.27 
7.25 

4.31 
6.71 

15.47 



13.74 

15.70 

3.15 

12.68 

29.24 



1/ Conversion at average exchange for 1931, One pence = 1.89 cents, 
2/Not segregated from administrative exoense. 



9829 



-440- 

False labeling; as to Measure and fiber content 

Complainants allege that they have suffered from unfair 
competition in comtiection "ith the frequent occurence of improper 
labeling of imports, as to measure 'and fiber content. Complainants 
submitted samples of inonrted table covers which actually fail by 
as much as 10 per cent to meet the square yardage indicated in the 
label,- and which are not actually of -oure linen as inferred in the label. 

These two practices have now been outlawed or at least 
largely restricted by the Code of Fair Competition for the linen 
Importing Trade, signed November 22, 1934. Unfair trade practices 
cited in the code include the following: 

A. No linen importer shall mark goods, or sell or 
distribute goods which are ma.rked, in such a way as to vary 
more than two per cent (2^o) in the case of stable and 
apparel linens, or three per cent (3{S). in the case of 
fancy linens, from, the finished size in either length or 
width. Any merchandise remai'ning in warehouse or in stock 
on the effective date of this Supplementary Code either 
must be re-marked, or the correct finished size, in accord- 
ance with this iDrovision, must be directed to the attention 
of the buyer and the confirmation of the order must be 
marked accordingly. The merchandise shall be so invoiced. 

B. The use of the terms "linen," "mire linen," and 
"all iinen" and terms of similar inroort shall be limited 
solely : to articles the basic fabric «sf which has a linen 

: content of ninety-five per cent (9!?/>) or more in weight. 
.No article the basic fabric of which contains less than 
:five per cent (5~o) of linen by weight shall be labeled, 
:mar,ked,. branded, stamped, characterized, or named with 
the word "linen" in any form. Articles the basic fabric _ 
•.of -which contains between five 'per .'cent (5^>) and ninety- 
:five per cent (95$) in weight of linen content shall be 
•so .labeled as to indicate the exact linen Content expressed 
in percentage of weight, such figures to be printed in the 
.•same size type as : the Word '"linen. '[ The above limitations . 
shall also apply in the case of fabrics. 

Price- movenrents 

Table 20 traces the trend in ptices of baled cotton and 
hackled flax during the : past * nine years and during quarters of the 
past four years. Cotton prices are given not only on a dollar basis, 
but on a gold basis, so' as to_indicate the trend in cost of cotton 
to, manufacturers in countries still remaining on a gold basis; 
similarly, flax prices are given on both sterling basis a.nd gold basis, 
the former to indicate the trend 'in cost to North Irish manufacturers, 
and the latter to show the trend in cost to manufacturers in gold 
countries. 

It will be noted that cotton reached a low point in 1932 
and flax in 1932 on sterling ba.sis and 1933 on gold basis; also that 

9829 



- 



Cost spread bet-. -eon ^ ^SilikxsiDAjU'—lL. 

While line.;: crash fabrics cr.n bo turned out by relatively high- 
speed mechanical equipment involving r, minimum of labor, linen damask 
manufacture is a compile ted process, L »err.;itting relatively very small 
output per day. Damask manufacture mist also absorb the high cost of 
designing and pattern-making for the jacnuard looms. Furthermore, the 
finishing and bleaching of damask are very substantial cost items. 

The arice differential permissible betv.-een linen damask and crash 
manufactures is indicated in Table 19, which tabulates production costs 
for various linen manufactures in North Ireland as estimated by Mr. 
Thomas Foodhouse, author of several technical volumes rated highly by 
British textile industries. Mr. Foodhouse's cost study joints to 
the probability that crash table covers can be offered -a-ofitably at 
one-half the price level for good quality damask. It will be noted 
that for twilled sacking, the cost of weaving labor represents 6 per 
cent, finishing 2 per cent and yarns 87 per cent of total costs. Fear- 
ing laoor for damask represents 17 per cent of total cost, finishing 
9 per cent, and yarns only 55 per cent. 

Table 19 - Production costs for linen fabrics in North Ireland, as esti- 
mated by Thomas Foodhouse in 1931 (excluding interest on in- 
vestment) 



(Per square yard) 



11 Porter; 40 inch Hessian 
lCg- oz., 13 shots oer inch 

10 Porter, 45 inch Tarpaulin 
20 oz., D. F. 12-} shots 

10 Porter 28 inch Twilled S acking 
20 oz. 10|. shots 

12 Porter, Imitation Tape stry 
36", 14 shots 

34 Porter, 27 inch Tent Duck 

38 shots per inch 
24 inch checked union gl^ss cloth 



40" scale, 10 shots per glass 
27 inch union huckeback 

bleached, 55 shots 
72 inch Damask, 1200 Heed 

40"scale, 3 threads per split, 

27 shots, bleached 



Individual cojts 



Ynrr ,c i Weaving 




Finishing: : 



Total cost 



: : Pence ; U. S. 

:: : cents 1/ 

• • ♦ 

• • • 

0,08 :: 1.95: 3.69 

.06 :: 2.98: 5.63 

• • • 

.06 :: 2.84: 5.37 



2/ 
2/ 
2/ 

2/ 



:: 7.27 

:: 7.25 

:: 4.31 

:: 6.71 



1.38 ::15.47 



^Conversion at average exchange for 1931, One pence = 1.89 cents 
2/Not segregated from administrative expense. ' 



13.74 

13.70 

8.15 

12.68 

29.24 



9829 



• -44^- 

False labeling as to Pleasure and fiber content 

Complainants allege that they have suffered from unfair 
competition in connection -1th the frequent occurence of imurooer 
labeling of imports, as to measure and fiber content. Conrolainants 
submitted samples of imoorted table covers which actually fail by 
as much as 10 per cent to meet the square yardage indicated in the 
label, and Which, are not actually of nure linen as inferred in the label. 

These two practices have now been outlawed or at least 
largely restricted by the Code of Fair Competition for the linen 
Importing Trade, signed November 22, 1934. Unfair trade practices 
cited in the code include the following: 

A. No linen importer shall mark goods, or sell or 
distribute goods which are marked, in such a way as to vary 
more than two per cent (2?o) in the case of stable and 
apparel linens, or three per cent (3-'i) in the case of 
fancy linens, from the finished size in either length or 
width. Any merchandise remaining in warehouse or in stock 
on the effective date of this Supplementary Code either 
must be re-marked, or the correct finished size, in accord- 
ance with this provision, must be directed to the attention 
of -the buyer and the conf irma.tion of the order must be 
marked accordingly. The merchandise shall be so invoiced. 

B. The use of the terms "linen," "-Dure linen," and 
"all linen" and terms, of similar import shall be limited 
solely to articles the basic fabric of which has a linen 
content of ninety-five per cent '(95;o) or more in weight. 
No article the basic fabric of which contains less than 
five: per cent (tfo) of linen by Weight shall be labeled, 
marked, branded, stamped 1 , characterized, or named with 
the: word ."linen- 11 in any form'. Articles the basic fabric * 
of which contains between five per cent (5 c /o) and ninety- 
five: per cent (95^,) in weight of; linen content shall be' 
so labeled as to indicate the exact linen content expressed 
in percentage of weight,' such figures to be printed in the 
same" size type as the word "linen." The above limitations 
shall also apply in the case' of fabrics. 

Price movements '• .-:.■•" 

: • 'Table 20 traces the : trend in prices of baled cotton and 
hackled flax during the past nine years and during quarters of the 
past four years. Cotton prices are given not onl'y on a dollar basis, 
but on a gold basis, 'so as to 'indicate the trend in cost of cotton 
to -manufacturers in countries r still remaining on a gold basis; 
similarly, flax 'prices are given On both sterling basis and gold basis, 
the former to indicate the trend in cost to North Irish manufacturers, 
and the latter to show the trend in cost to manufacturers in gold 
countries. 

It will be noted that cotton reached a low point in 1932 
and flax in 1932 on sterling basis and 1933 on gold basis; also that 

9829 






the dro'^ in flax was not as pronounced as in cotton. 

The loner portion of Table 20 reveals that flax has 
increased 96 per cent in sterling and 18 ner cent in gold since 
earl; r 1931 and that cotton is up 26 per cent in dollars and do'-m 
26 per cent in gold since early 1931. 



Table 20: Indices of OTice trends of baled cotton and hackled flax 



Baled cotton 
Hen York l/ 



Dollars 



: Gold 
: dollars 



Hackled 
flax 



Sterling 
basis 



Gold 
basis 



1S2S 
1927 
1923 
1929 
1930 
1931 
1932 
1933 
1934 



1931 



Indices of annual average nrice based on 



1926 - 100 



100 

100 

114 

109 

77 

49 

37 



50 
70 



39 
42 



2/ 

100 

82 

127 

107 

83 



68 
79 
87 



63 
57 
SI 



Indices of quarterly average nrice based on 



January-June, 1931 * 100 

3/ 



First 


:) 100 




: 100 


Second 


i) 










Third 




76 




■ 100 


: 98 


Fourth 


! f 


53 




■ 103 


: 78 


1932 












First 


! 66 




: 113 


: 81 


Second 


> 


55 




: 123 


: 93 


Third 


69 




113 


: 81 


Fourth 


: 61 




• 130 


: 88 


1933 












First 


• 63 




63 : : 


: 147 


102 


Second ; 


83 




73 :: 


147 


98 


Third ■ 


99 




70 ::- 


132 


88 


Fourth : 


99 




64 ::: 


118 


78 


1534 












First : 


119 : 




73 : : : 


137 


88 


Second « 


118 ; 




70 : : : 


152 : 


96 


Third : 


126 : 




74 : : : 


176 « 


108 


Fourt h • 


126 : 




74 : : : 


196 : 


118 



As recorded ~by the Bureau of Labor Statistics. 
2/ Annual flax prices for 1926-1933 based on unit values of United States 
irroorts. 

3/ Average quarterly flax orices based on 3assian quotations for Slanetz 
grade. 

9829 



-•-442- 

Table 21 which compares the trend in trices of cotton 
table damask with the trend in prices on other important items of 
domestic cotton manufacture over the past nine years, indicates 
that cotton damask prices have held ut> much better than the 
average for all cotton goods and better than the price of other 
important items, alt ho the upward trend in price of gingham and 
duck has recently overtaken the price trend of damask. 

The lower section of Table 21 on the other hand, indicates 
that the price advance since early 1233 has been less in damask, 
relatively, than in the general cotton average, and than in any of 
the other individual items shown. 

Table 22 comoares the trend in prices as recorded by the 
Bureau of Labor Statistics during the past nine years for linen 
damask table covers and for cotton damask piece goods. The final 
column of this table, giving the ratio of cotton damask -orice to 
linen damask orice indicates that the soread between the two has 
decreased somewhat, tho not substantially. Prices as recorded by 
the Bureau of Labor" Statistics are supported in other columns of the 
tabulation by an indication of unit values over this neriod for 
linen damask imports and cotton damask exports. 

With the exception of two colums which give B. L. S. prices for 
comoarison -ourooses, Table 23 is based entirely on prices reported 
by complainant mills. The table indicates the trend in orices 
of domestic cotton damask, both in the piece and made ur> into 
table covers, in the form of indices based on ICC equalling the 
average quotations offered during the period January-April, 1933. 
It shows that cotton damask niece goods quotations have been in- 
creased by various of these seven mills in amounts ranging from 
zero to 73 per cent, and that the simole average of the different 
price increases was 42 ver cent, excluding' consideration of the 
processing tax, and 53 per cent with the processing tax taken into 
account. The range of increases and the simple average of increases 
in prices on damask table covers are shown to have been somewhat less. 
The product showing the minimum price increase in the group was of 
mixed cotton and rayon. 



'. n 29 



-443- 

Table 21 - Trends in wholesale price indices of baled cotton 
and significant cotton manufactures, as recorded by the 
Bureau of Labor Statistics 



Cotton : All 
baled, :cotto 
itJe^ York: goods 



: Bleached :31eached: Gingham 
Table :mereerized: sheeting:6.37 y a s» 
damasktbroadcloth: Series 1; per lb. 



Duck, 
wi de 



: Index 



66 x 56: 

58" : 



123 x 6S :6k x 64 



36" 



10/4 



27" 



36" 



Indices of annual average price based on 1926 average 



1926 


: 100 


1927 


; 100 


132s 


; llU 


1929 


; 109 


1930 


; 77 


1331 


; k 3 


1932 


; 37 


1933 


; 50 


193^ 


; 70 



1933 



100 

97 

ICO 

99 
85 
66 

54 

71 
57 



price = 100 




100 


100 


3 k 


106 


1C1 


11s 


105 


117 


83 


104 


59 ; 


87 


; 55 : 


69 


77 


83 


idk 


103 



Average quotation, cents per yard, January-March. 1933 
6.43 : 
(per lb.): - : 28.6 : 8.4 : IS. 5 : 6.1 : 23.2 

Indices of price trends based on January- j/iarch, 1933 = 100 



Jan, -March 


100 


100 


100 


100 


100 


100 


100 


A"nril 


107 


102 


92 


101 


103 


98 


100 


:..av 


13^ 


lib 


95 


113 


110 


102 


113 


June 


1U9 


135 


99 


1U5 


139 


103 . 


137 


July 


l6S 


lbl 


115 


182 


158 


X 


156 


August 


149 . 


188 


127 . 


! .. . 202 ■• 


178 . 


lk-3 " 


175 


September 


151 


184 


128 


190 


131 


148 


169 


December 


154 


172 


128 


163 


l6S 


148 


167 


1°34 
















January 


176 


Hk 


128 


l68 


163 


145 


Ilk 


April 


1S5 


HI 


135 


167 


168 


152 


191 


July 


201 


171 


135 


156 


157 


. 152 


139 


October 


194 


Hk 


135 


I65 


I.65 


I56 


189 


llovember 


196. . 


170 


135 


158 


157 


156 


189 



x - no quotation 



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fn 


rp P tH' 




U O 


P PH -P 




CD Ph rH P 




Ph : a 


O Cp +j 




•H 


X o to 




." 


CD 




CO rH 


P rH 




xJ: P 


p p 




Pi Ph 


CO CD 'H 




.(d CD 


CD P. O 
US) d 5 H 




> s > 




. CD 


Ph m Cf-I 




CD CO 


P <H-I 




r.j 


^3 CD o 




CCS 'H 


o .p- 




P O 


-p >, 




& 


-rO 




CO CO 


to >J 




-p 


CD pt) 




vo P 


^H 0) 




in cu 


En P Ph 




; • S 


CD Q) 




CM CD 


rp CM 




-P 


• • Ph c h 




<n cd 


P >; O O 




O -P 


O +J O 




CO 


•H p CD to 




to 


CO nd 'Ph -H 




•H P 


to to 




0) O 


.M CO CO p 




id 


B P CD rO 




^J 'P 


a rH O 




CD 


O Ph -H CD 




>b to 


O P, rH 




u cd 

Cd r-O 


tO Ph rO 




-CD CTi 




Ph 


CO p CD Ph 




-P « 


Ph rH rH Cd 




■H CO 


Gl P P Pi 




rO CD 


■P > CO 




P. bS> 


Ph CD O 




P Pi 


O -P rH O 




P 


Ph -H O 




P .P 


P .P O 




O O 


•H p ^ S 


CT, 

CM 


-hIojI 


H * 


60 



Table 23 - Indices of trend in prices of domestic cotton 
damask, based on average for January-April 
1933 = 100 



Cotton damask 


i.i the niece 




: : Cotton damask table covers 




: Range of 




: 


: : Range of 








: i ndi vi dual 


: Simple 


! J . Jj . • 


: : individual 


: Simple 


:3.L.S. 




: price 


: average of 


: whole- 


: : price 


: average of 


: whole - 




: indices l/ 


: pr i ce 
: indices of 


: sale 
:price 


: : indices l/ 


: price 
: indices of 


: sale 




: kills 


: : ...ills 


: price 




■ showing 


: six products l/ 


: ?V 


: : showing 


: six products l/ 


: 2/ 




L 077- High 






:Low - hiph 










: Processing tax 


;luded— 


r ; Excli 


:Processin£ tax 






ided 


: - In 


ided 


:- Included 


1926 






(Ave.) 








133 








• 150 


19,29 


















(April) 


75 193 


143 


143 


133 


: 88 153 


123 


123 


145 


1932 


















(July) 


71 11s 


94 


94 


105 


: 93 103 


100 


100 


100 


1933 


















( Jan- Apr) 


100 100 


100 


100 


100 


: 100 100 


100 


100 


100 


1933 


















July 


100 185 


129 


129 


119 


: 100 127 


112 


112 


109 


Aug. : 


100 16s 


135 


146 


131 


: 110 153 


126 


135 


131 


Sept. : 


10c 16s 


13S 


1U9 


132 


: 111 158 


123 


137 


131 


Nov. : 


100 162 


13b 


1^7 


132 


: 111 153 


130 


139 


131 


1934 : 


















Feb. : 


96 162 


142 


152 


133 : 


: 113 153 


130 


139 


131 


May : 


36 167 : 


1»43 


153 : 


133 : 


: 103 165 : 


133 


142 


137 


Aug. : 


96 167 


139 


150 . 


133 : 


: 105 165 j 


135 


144 : 


137 


Dec. : 


96 173 


142 j 


153 : 


153 : 


: 103 166 : 


135 : 


144 : 


137 


l/ Based or 


1 -orice dat? 


1 reported by si: 


: manuff 


icturers. Ar 


1 index of trend 


was 


computed 


. separately 


r for the 


product 


, of eac 


;h manufactui 


■er and then a simple 



average was taken of the six indices for each month. 
2/ Prices on a standard item recorded by the 3areau of Labor Statistics. 



9829 



-446- 
Fluctuaticn in currency values 

Table 24 traces the trend in the exchange value of currencies of 
countries concerned in this complaint. The Tipper section of this table 
indicates that Belgium and the Netherlands nave refrained from devalu- 
ating their currencies, "but that the pound sterling has dropped off 
40 per cent in gold value since a start in early 1931; that the Czecho- 
slovakian crown has dropped 16 per cent since a start early last year, 
and that the dollar has dropped off 41 per cent since early. 1933, while 
the Japanese yen has dropped gradually- away from gold since late 1931 to 
the lowest point of all at jDresent. 

The final section of the table shows the percentage increase which 
has taken place in the dollar exchange value of these foreign currencies 
since . January, 1933. These percentages represent the degree to which 
dollar- devaluation would have impeded imports from each of these coun- 
tries under level conditions of producing and shipping expense in orig- 
inal currency since the base period. 



9329 



• '-47— 



Table 34. - Course 



'3 < '■;■■ 



United States 



cis i ■ Le currencies of the 
certain forei-'-n countries 



: I n i ■ s 
:Sc fces 



Irela id 



Czecho- 
slov ■■ :ia 



-. -, . : Nether- : T 
3eltfium . , Japan 
: lands : 



1929 - 

1950 - 

1931 - 

1932 - 



1935 



x »/ ^ _ 



averr.. e 

aver.,:.: e 

July 

October 

January 

April 

July 

October 

January 

April 

July 

October 

J iary 

A" 'Til 

July 

October 

December 



Dollar ; . Sterling Crown : lel&a : Flor in : Yen 

• • • • • ■ 

• • • • • 

I. v. ices of t- e'.'.d iii old e.::c'nau£e value, based on 
100 = currency's pa r 




1951 


- January 




$4.85 


: $0.0.536 




50.139 


, \ 


0.402 


: $0,494 


1932 


- January 




: 3.42 


.0296 




.139 




.402 


: .360 


1932 


- January 




! 3.36 


: .0296 




.133 




.402 


[ .207 




April 




5.53 : 


.'512 : 




.153 




.420 : 


.221 




July 




4 .65 


.0416 




il95 




.562 


: .288 




October 




4.67 


.0442 




.207 : 




.600 


! .278 


1954 


- J-. nuary 




5.05 


.0471 




.220 : 




.636 


! .301 




October 




5.00 


.0411 




.237 




.686 


.293 




December 




t 4.95 


: .0418 




.234 i 




.676 


: .238 






Percentage inc 


:resse in c 


Lol 


lar exch? 


mpe 


value 


since 






Jar.ua: 




1333 












: : 47^ 


4b ; 


i 


68fS ! 




68? 





?829 



The Domestic Lac or Situation 

Tahle 25 is hased entirely on data supplied by four of trie most 
important mills supporting the complaint. In the upper section of 
the table, a. composite picture is given of labor use and labor cost 
in these four mills, showing the trend over spaced intervals running 
bach to 1932. The three lower sections of the table are devoted to 
indices of trend based on 100 equalling the average for .January, 
April, and July, 1933. The final section shows the range (and the 
section just previous the simple average), of indices of trend cal- 
culated separately for each mill. : The indices based on composite 
data of the four mills s'how that since early 1933, the timber- of 
workers had increased 10 per cent : in Jvly, 1934-, the Aggregate payroll 
6 per cent, the average, output per man-hour: 13 per cent, and payroll 
per man-hour; 37 per cent, tut that output, had dropped. Id- aer cent and 
man-hours of employment 22 oer cent. 



9829 



Table 25. - Cociposite Employment a n Payroll Statistics - Pour Mills 









• Mumber 






: Average 






Period 


Plant 


of 


: payroll 


: I "an- 


! output 


Pay-roll 






: output 


Wor 1 :ers 




: hours 


: per 
man-hour 


per 

■ man-hour 






Pounds 








! Pounds 


: Cents 


1932 


- January 


• 76,888 


: 644 


: $9,281 


: 31,358 


! 2,45 


: 29.6 


1935 


- January 


57.528 


545 


: 6,979 


: 25,744 


2,23 


: 27.1 




April 


45,062 


639 


8 y 224 


27,063 


: 1 ,67 


: 30.4 




July 


82,588 


726 


: 9,954 


: 36,340 


: 2.27 


! 27.4 




October 


68,453 


728 


10,606 


! 29,277 


2.34 


! 36.2 


1934 


January 


63,165 , 


790 


• 10 , 523 


: 30,145 


! 2.10 


! 34.9 




April : 


66,656 : 


836 : 


11,272 ! 


30,158 : 


a.' . ox 


37.4 




July ; 


52,939 : 


703 ! 


8,918 : 


23,036 


2.30 : 


38.7 



Indices of Trend "based on 100= average of January, April 

and July, 1933. 

(Based on composite enployment and payroll data.) 



1935 


- October 


111 


- 114 


! 126 


: 99 


: 115 


: 128 


1934 


- J - nuary 


102 


' 124 


• 125 


101 


: 102 


! 125 




Ap r i 1 


105 


' 131 


154 


101 


: 107 


: 152 




July 


36 


110 _ 


: 106 


7S 


: 112 


! 137 


* 




[Simple vv\ 


rerare of 3 


.ndicds of 


trend calculated 








Se _ ;D£ 


irately fo: 


- each mil! 


■ i/5 






1933 


- October 


110 


121 


146 


104 


: 105 


: 140 


1934 


- J nuary 


101 


103 • 


1 23 


92 


151 


! 150 




April 


' 109 


125 


145 


100 


• 129 


! 145 


* 


July 


' ; 79 


j 


97 ' 


75 


- 129 


: 105 






[Based on 


separate e 


■v lysis oi 


each of ' 


;he four 








mi 1 1 s , 


showing t. 
i 


le range ii 
he four nu 


i indices j 
.lis.) 


.'or 




1933 


- October 


85-I3§ 


103-155 , 


117-177 : 


86-121 


90-124 


! 108-173 


1934 


- January 


62-157 


69-175 : 


91-176 : 


56-179 


72-240 


96-179 




April j 


75-135 : 


56-178 : 


77-254 : 


50-157 


85-221 


104-179 




July : 


X-143 - 


X-171 , 


x~l : .-- : 


X-159 


X-190 : 


X-155 



l/ Indices -.'ere tahen separately for each of four mills. This group 
index is the simple average of the four individual indices (of 3 mills 
when one was closed) . 
X^ indicates that one mill was closed. 



9RP.9 



-450- 

Table 26 indicates the decree to which operation under the code 
affected the importance of individual cost items in total production 
costs, showing in each case the range, .as well as the simple average 
of ratios in the group of products analysed. It ■•will "oe noted that 
the • importance of labor costs in total production costs increased 
11 per dent. 



Table 26. - Ratio o-f individual cost items to tot-al production costs 
(excluding interest on investment), "based on separate analyses of 



production cos-ts of 



nine individual products, as reported "by six mills. 



Cost Item 

Material 

Lad or 

Factory expense 
Depreciation 
General and ad- 
ministrative expi 
Selling expense 
Processing tax 



Cost s_b e fore 'the code 
(first h alf: of 1935) 



Range of rabies of each cos - t 
item to ; total cos : ts, "based : 
on- separate computation for' 
each of nine products 



Product S ho win 



, . Simple 
: average for 



Lowest : Highest :9 products 



Cost s under the cod e 
(first "half of 1934) 



in perce nt age 



17 

17 

9 

1 



50 
37 

50 
13 

10 
11 



27 

26 

28 

4 

4 
8 



Range of ratios of- each 
cost" item to total 
cost's, "based on sepa- 
rate computation for 
each of nine products 
Pro due t s ho wing : Simple 
: average 
Lo we s t : Hi ghe s t : f o r 

:9 prod- 
:ucts 



15 

20 

6 

1 

1 
4 
2 



35 

35 

45 

9 

7 
11 
10 



25 
29 

24 
3 

4 
8 
7 



9829 



-451- 

The first two columns of Table !7 show the range and the simple 
average of increases in the sol • neurit of individual cost items 
from the earlier period to the later. I te rerage increase in material 
costs is shown to have been - tr cent, in labor cost c ' to have been 
53 per cent, and in 11 cost 41 >er ce: t. The effect oi the processing 
tax, of course, cannot oe shown i sent' , is it rose from zero. 

The three final columns od n bli 7 gives the range and the 
simple average of the ratio to t earlier production cost totals, of 
the absolute amount of increase i individual cost items from the 
earlier period to the later. The figures in the final columns should 
be representative of the influence on total costs of increases which 
occurred in individual cost items; thus, tne average mill price would 

increased 11 per cent to cover the increased cost of mater- 
ials, 14 per cent to cover increased labor costs, and 10 per cent to 
cover the processing tax. AH of these increased costs are related 
rtially, ii not entirely, to one or another phase of the Recovery 
■ an. 

Table 27. - Measurement of maximum possible effect of the national 
Industrial Recovery Act on the cotton dauasl- industry, on the 

sis 'if production cost data submitted by complo.ino.nts, cover- 
ing t. first si:-: months oi 1933 md of 1934 



— . — — - ■■ ^1 






: Range of 


percentage increo.se s 


: Ratio to the earlier pro- 








:as computed separately ..for 


: duct ion 


cost total, of the 








\e..cYi of 9 products, in the 


: absolute amount 


of in- 








{absolute 


amount of each cost 


: crease in indivi 


dual cost 








litem, from the earlier period 


• : items from the earlier 








! to 


the lati 
showing 


;r 


: : period to the la. 


ter 




Product 


Simple 

; average of 


, : Product 

• 
• 


showing 


: Simple 




: Lowe s t 


:Ki Rest 


: average 








! percent 


{percent 


increases 


:: Lowest 


! Highest 


: ratios i 








increase 


{increase 9 products 


: : ratio 


: ratio 


:9 product 








In pe: 


-centage 






Cost Items 


















terials 






! 


: 105 


: 42 


': 


: 32 


: 11 


Labor 






t 34 


: 76 


! 53 


. o 


: 20 


: 14 


Selling ex • 


ise 


: 


: 79 


! 40 


:: 1 ! 


7 


: 3 


Processir 


tax 


! X 


! x 


: x 


1 C 


: 18 


: 10 


:tory expense 


> o 


! 35 


: 19 


: 


: 13 


: 4 


All cost ite; 


is 




: 10 s 


: si 


41 


: 10 


: 81 


: 41 



9339 



-452- 



HANDKERCHIEFS (No. 34) 



9329 



HATTD-MADE AJTO miD-S.OROIIIEREI) HAHDKERCHIEFS 
TABLE 0? CONTENTS 



Comolainants' status under the National Industrial 

Recovery Act 456 

Commodity and- tariff status 456 

Tariff nrovisions 456 

Analysis of ad valorem eouivalents of current rates of duty 457 

The domestic industry 461 

The Puerto Ric.-in industry 461 

The mainland industry 452 

Domestic production 462 

Official statistics 463 

Puerto Rican production reported oy mainland concerns . . . 463 

Embroidered handkerchief production in Puerto Rico 471 

Production data submitted by Puerto Rican contractors . . . 477 

Inroorts ' 479 

Imports of linen handkerchiefs ornamented 'vith 

embroidery, etc 479 

Inroorts of embroidered cotton handker chiefs 482 

Inroorts of -olsin linen handkerchiefs 482 

Conroetitive ch-racter of nlain linen handkerchiefs' 

imported from China 484 

Trend of inroorts from China of all linen handkerchief s. . . 434 
Retail price classes at ^hich handkerchiefs inroorted 

from China are sold 485 

Ratio of inroorts to domestic product ion 488 

Effect of fluctuations in foreign e^chan^e rates 489 

Competitive factors 492 

• ■ Arraendix 

Payroll data surrolied by Puerto Rican contractors 

Cony of letter addressed to Mr. Victor Domenech requesting 

information about the effects of bhe code on production and 

payrolls 



List of Tables 



Table 
number 



Ad valorem eouivalents of the duty collected on 
various types' of handkerchiefs under the 
Tariff Act of 1930 '. . 453 

Estimated amount of duty and ad valorem eouivalents 
applicable to inroorts from China of embroidered 
linen handkerchief s , 1931 - 1934 450 

Estimated amount of duty and a.d valorem equivalents 
applicable to inroorts from China of ulain linen 
handkerchiefs, 1931 - 1934. 46 ° 



9829 



.AR A. 



List of Titles ( continued ) 



Table 
number 



3 Shipments of cotton and linen handkerchiefs from 

Puerto Rico to continental United States, 1931-1934. . 463 

4 Estimated quarterly distribution of payments by 

22 mainland concerns to contractors in Puerto 

Rico for work done on handkerchiefs, 1932-1934 .... 465 

5 Estimated quarterly distribution of total 

handkerchief production in Puerto Rico for 18 

mainland concerns, 1952-1934 466 

6 Handkerchief production in Puerto Rico classified 

according to material used 467 

7 Estimated quarterly distribution of linen 

handkerchief production- in Puerto Rico for 17 

mainland concerns, 1932-1934 . . 469 

8 Distribution of total reported Puerto Rican 

production of embroidered handkerchiefs 

according to retail o~ice classes 472 

9 Distribution of embroidered ■ handkerchief 

production in Puerto Rico according to retail 
■price classes- for 13 reporting concerns, 1932-1934 . . 474 

10 Comparison of- indices of -oroduction of embroidered 

handkerchief s • in various retail nrice classes, 

1933 - 100 . .' 476 

11 Estimated Puerto Rican -oroduction- of embroidered 

handkerchiefs priced at 25 cents or more retail 

18 concerns, 1931 - 1934 476 

12 Total- Handkerchief -oroduction- of 10- Puerto Rican 

■ contractors- by quarters, 1932 - 1934 477 

13 Handkerchief production in Puerto Rico reported 

by five- contractors, 1931 - 1933, and the first 

9 months of 1934 478 

14 Inroorts of consumotion of linen handkerchiefs 

ornamented with embroidery, etc. , 1925—1934 480 

15 Inroorts for consumption of linen handkerchiefs, 

ornamented with embroidery, etc., by quarters, 

1931 - 1934 ' 481 

16 Inroorts for consumption of cotton handkerchiefs 

ornamented with embroidery, etc. , 1931-1934 432 

17 Inroorts for consumption of plain linen handkerchiefs. . 4 ^3 
13 Comparison of imports for consumption from China 

of linen handkerchiefs, plain and embroidered, by 
corresponding quarters, 1931-1934 48 4 

19 Distribution of imports from China of embroidered 

linen handkerchiefs according to retail price 

classes 486 

20 Coverage represented hy importers' questionnaire 

• returns . . . ^ 7 

21 Comparison of total imports for consumption from 

Chin-- of linen handkerchiefs, plain and embroidered, 
with estimated Puerto Rican production of com- 
petitive items, 18 concerns, 1931-1934 490 

9829 



- ns- 

List of Tables (continued) 



Table 
number 



Relative changes in the dollar exchange rate of the 

English -oound and the yuan dollar 491 

Appendix 

Quarterly payroll data reported by 10 Puerto Hican 
contractors engaged in handkerchief production, 
1932-1954 49 3 



9829 



-455- 

SURVEY Oi n IHFCBltAIIGH 

ON 

HAND-MADE A:D HAND-EI.SROIDERED handkerchiefs 

KAY, 1935 

Coirolain-mts' Status under the National Industrial 

Recovery Act 



This is a report on a coraolairit under Section 3(e) of the National 
Industrial Recovery Act with respect to inroorts of hand-made and hand- 
embroidered handkerchief So The complaint was filed by the Code Authority 
of the Needlework Industry in Puerto Rico in behalf of 25 contractors 
and manufacturers who claim to produce the bulk of the handkerchief s 
made in Puerto Rico s The complainants have been operating under a Code 
of Pair Competition aucroved by the President on June 28, 1934. 



Commodity and Tariff Status 
Tariff -provision s 

Handkerchiefs made of cotton, linen, or any other material, which 
are trimmed or ornamented with lace, embroidery ; &~n slioue work, etc., 
are dutiable under Paragraph 1529(b) of the Tariff Act of 1930 at the 
following rates: 

Valued at not more than 70 cents per dozen, 3 cents each and 
40 per cent ad valorem; 

Valued at more thai ^0 cents ner dozen, 4 cents each and 40 
per cent ad valorem; 

If ma.de with hand-made or hand-rolled hems, 4 cents each 'olus 
40 cent ad valorem. 

Under the Tariff Act of 1922 ornamented handkerchiefs were dutiable 
under Paragraph 1430 at 90 per cent ad valorem if ornamented with lace, 
and 75 per cent ad valorem if ornamented with embroidery, applique, 
work, etc. 

Plain linen handkerchief s a^e dutiable under Paragraph 1016 of the 
Tariff Act of 1930 at 35 ioer cent ad valorem if they are unhemraed, and 
at 50 per cent ad valorem if they are hemmed or hemstitched. If the 
handkerchiefs are made with a hand-rolled or hand-made hem they are 
subject to an additional duty of 1 cent each. Under the Tariff Act 
of 1922 plain linen handkerchiefs were dutiable under Paragraph 1016 
at 35 per cent ad valorem if unhemmed and 45 per cent ad valorem if 
hemmed or hemstitched. 

It will be noted that identical rates are apolied under Paragraph 
1529(b) to handkerchiefs ornamented either with machine or hand 

9829 



-457- 

embroidery. However, special provision is raade for hand-rolled or 
hand-made hems, both in Paragraph 1529(b) and in Paragraph 1016. 

Analysis of ad valorem equivalents of cu rre nt rates of duty 

The ad valorem equivalents of the conraound duties levied on 
ornamented handkerchiefs and on plain linen handkerchiefs made with 
hand-rolled or hand-made hems are shown in Table 1. Variations in 
these ad valorem eauivalents from year to yea.r and variations between 
cotton and linen are the result of changes in the unit values of the 
imports. The unit values of iranorted ornamented linen handkerchiefs 
rose from $0,905 per dozen in 1931 to $1 3 151 in 1934 and- the ad valorem 
equivalent of the conroound duties fell from 90.1 per cent in 1931 to 
81.6 per cent in 1934, The higher ad valorem eruivalent of the duties 
levied on ornamented cotton handkerchiefs is the result of the lower 
unit values of these handkerchiefs. 

It is reasonable to assume that the bulk of the imported ornamented 
handkerchiefs uses embroidery and applique work rather than lace trimming. 
On this basis it will be observed that tne compound duties applicable to 
ornamented handkerchiefs under the Tariff Act of 1930 represent sub- 
stantial advances over the 75 "oer cent ad valorem rate of the Tariff 
Act of 1922. The current rates arralicable to ornamented linen handker- 
chiefs represent increases over the 1922 rate- ranging from 3.8 per 
cent in 1933 to 20.1 uer cent in 1931. Current rates applicable to 
ornamented cotton handkerchief s represent increases over the 1922 rate 
ranging from 31.9 t>er cent in 1931 to 50.9 -oer cent in 1932. Ornamented 
handkerchiefs must have a uni* value of &1«36 a dozen before the current 
tariff rates will approximate an ad valorem equivalent of 75 ner cent. 

The ad valorem eauivalents of the current rates apnlicable to 
plain linen handkerchiefs made with hand-rolled or hand-made hems 
exceed the 45 per cent ad valorem rate applied under the Tariff Act of 
1922 by an amount ranging from 26.4 per cent in the last half of 
1930 to 35.6 -oer cent in 1932. 



9829 



-453- 

Table 1 
AD VALOREM EQUIVALENTS OF THE -DUTY 
COLLECTED ON VARIOUS TYPES OF HANDKERCHIEFS 
UNDER THE TARIFF ACT OF 1930 

I. Handkerchiefs Made of Vegetable Fibre Other 
Than Cotton, Hemmed; Embroidered Etc. 



Period 


Value of Imports 


Amount of Duty 


Ad Valorem 
Equivalent 








Per Cent 



1930 (June 18 

- Dec. 31) 
1931 
1932 
1933 



$' 1,175,295 
2,266,249 
1,345,604 
1,104,253 



$1,001,848 

2,041,474 

1,192,683 

911,068 



85.2 
90.1 
88.6 
81.6 



II. Cotton Handkerchiefs, Hemmed, Embroidered, Etc. 



Period 



Value of Irrroorts 



Amount of Duty 



Ad Valorem 

Equivalent 

Per Cent 



1930 (June 18 

- Dec. 31) 
1931 
1932 
1933 



71,218 

158,098 

'57,787 

45 , 152 



71,913 

156,280 

65,451 

49 , 175 



101.0 

96.9 

113.2 

108.9 



III. Handkerchiefs of Vegetable Fibre Other Than Cotton, 
Plain, and Made With Handmade or Hand Rolled Hem. 



Period 


Value of Imports 


Amount of Duty 


Ad Valorem 










Equivalent 










Per Cent 


1930 (June 13 










- Dec. 31 


$ 512,585 


$ 


291,880 


56.9 


1931 


642,452 




373,675 


58. C 


1932 


314,565 




190,664 


61,0 


1933 


294,786 




175,671 


:8.9 



9829 



-459- 

Table 2 shows the ad valorem equivalents of the estimated amount 
of duty levied on imports from Chins of ulain and embroidered linen 
handkerchiefs. Because the handkerchiefs imported from China have lower 
average unit values than the embroidered and plain linen handkerchiefs 
imported from European countries, the ad valorem equivalents given in 
Table 2 are somewhat higher than those indicated in Table 1. The 
inverse relationship which exists between average unit value and equiv- 
alent ad valorem rates of the current conroound duties is illustrated 
further by the 40.5 -oer cent increase in the unit values of embroidered 
linen handkerchiefs between 1931 and 1954 and the 17.7 per cent decline 
in the equivalent ad valorem rates during' the same period. 



9829 



Table 2 

ESTIMATED AMOUNT OF DUTY AND AD VALOREM 
EQUIVALENTS APPLICABLE TO IMPORTS FROM CHINA 
OP EMBROIDERED LINEN HANDKERCHIEFS. 1931 - 1934 











Estimated 


Ad Valorem 




Quantity 




Value 


Amount of 


Equivalent 


Tear 


(Dozens) 


Value 


Per Dozen 


Duty 1/ . 


Per Cent 



1931 1,624,240 $1,219,897 .751 

1932 1,029,218 853,354 .329 

1933 750,760 706,166 .928 

1934 1,216,407 1,232,932 1.055 



1,267,594 


103.9 


835,366 


97.9 


£47,631 


91.7 


1,097,048 


85.5 



1/ Computed on the basis of 4 cents per handkerchief plus 40 
■oer cent ad valorem. 



ESTIMATED AMOUNT OF D;'TY A;D AD VALOREM 
EQUIVALENTS APPLICABLE TO IMPORTS FROM CHINA 
OF PLAIN LINEN HANDKERCHIEFS. 1931 - 1934 



Estimated Ad Valorem 
Quantity Value Amount of Equivalent 

Year (Dozens) Value Per Dozen Duty 1/ Per Cent 



1931 15,500 ft 11,191 .829 7,216 64.5 

1932 35,322 22,378 .639 15,738 68.8 

1933 57,369 38,311 .662 20,100 68.1 

1934 32,592 71,734 .869 45,778 63.8 



1/ Comnuted on the basis of 1 cent ner handkerchief nlus 50 
per cent ad valorem. 



6/18/35 
H:jp 



9829 



-461- 
The Domestic Industry 

The domestic hand-made handkerchief industry is located principally 
in Puerto Rico. On the mainland a fair volume of production is reported 
in California and Texas, and small quantities of hand-made handkerchiefs 
are also manufactured commercially in si:: additional States. 

Both in Puerto Rico and on the mainland the industry relies on 
home workers who are paid on a niece-rate basis. The number of estab- 
lishments varies from year to year, and the number of home workers is 
largely a matter of guesswork. 

The Puerto Rican Industry 

The Code Authority of the Needlework Industry in Puerto Rico reports 
a total of 39 contractors and manufacturers engaged in the production 
of handkerchiefs in Puerto Rico in 1934. Many of these operators are 
not engaged exclusively in the handkerchief industry, but also contract 
to do other types of needlework for wholesalers and manufacturers 
located principally in New York City. Practically none of the Puerto 
Rican operators is an independent manufacturer producing goods to be 
sold in the open market on the mainland. Operators on the Island are 
either the representatives of mainland manufacturing concerns or 
contractors who receive the fabric from the mainland manufacturer and 
distribute the material to various sub-agents and home workers for 
further processing. 

The Puerto Rican industry is engaged almost entirely in hand-work 
so far as handkerchiefs are concerned, but the bulk of the needlework 
activity consists of hand rolling operations. Quite frequently a 
handkerchief will be embellished with machine embroidery in New Jersey 
and hemmed by hand in Puerto Rico. Likewise machine hemstitching may 
be done on the mainland and the handkerchiefs may be sent to Puerto Rico 
for embroidery or applique work. All available evidence indicates that 
a. considerable proportion of Puerto Rico's handkerchief output is only 
partially processed on the Island. 

The bulk of the Puerto Rican out-out is known to consist of low- 
"orices handkerchiefs and, while there is very little coimoetition in 
hand rolling operations, much of the hand embroidery is competitive with 
the machine embroidery of the mainland. 

The - 39 operators in Puerto Rico in 1934 are classified by the 
code authority as follows: 

Large-scale operators 25 

Medium-scale operators 8 

Small-scale operators _6 

Total 39 

The accuracy or significance of this classification is open to Question. 
The invested capital of a contractor is negligible, and comparisons on 
the basis of plant capacity, etc., are impossible. Twenty-five of the 
39 operators are complainants, and 14 are not parties to the complaint. 

9829 



-462- 

The relative importance of these two groups of operators cannot be 
ascertained. 

The principal complainants are contractors, whereas several of 
the non-complainants are mainland, concerns which have their direct 
representatives in Puerto Rico. While the list of cdmplainants is not 
exclusively a list of contractors, a suggestion of the oasis of the 
complaint is found in the impression of persons returning from Puerto 
Rico, to the effect that a somewhat higher percentage of the total 
handkerchief production is now handled by direct manufacturers' repre- 
sentatives and the contractors feel that they are not getting their 
share of the business. 

The number of persons employed by the handkerchief industry in 
Puerto Rico cannot be ascertained. As explained above, the needleworkers 
on the Island do not confine their activities to one type of article, but 
take whatever work the contractor or his sub-agent has available for 
distribution. The number of home workers in Puerto Rico is variously 
estimated from 50,000 to 100,000,,. The number of home workers for the 
entire needlework industry is unknown, so it is obvious that no estimate 
can be made of the number of persons engaged in hand rolling or embellish- 
ment of handkerchiefs. A system of subagents creats a situation in 
which individual contractors do not know how many people are working on 
their products. 

The code sought to rectify this situation in part, but no evidence 
has been submitted to indicate the number of persons employed in the 
industry. 

T he mainland industry 

The hand-made handkerchief industry- on the mainland operates under 
the Code of Pair Competition for the Handkerchief Industry, approved by 
the President on October 9, 1933. This code permits home manufacture of 
"handkerchiefs made entirely by hand" and exempts such production from 
the minimum wage and hours of labor provisions of the code, provided 
that such handkerchiefs have a wholesale price of not less than $3.50 
per dozen. 

The mainland hand-made handkerchief industry consisted in the fall 
of 1934 of 24 operators, 17 of whom were located in tir near the cities 
of Los Angeles or San Prancisco. The seven remaining producers were in 
seven other States. The maximum number of persons employed at any time 
in 1934 totaled 3,873 home workers and 188 inside workers. The mainland 
industry is not a party to this complaint. 

Domestic Production 

The sales of hand-made handkerchiefs manufactured on the mainland 
are reported at $440,300 in 1934. (*) Aside from this estimate there is 

(*) See Section 4, Introduction to Report on The Hand-made Handkerchief 
Industry in Continental United States , Women's Bureau,, U. S. 
Department of Labor, January, 1935. 

9829 



-463- 



no available information regarding the volume of production either in 
terms of quantity or in terns of value for previous years. As a re- 
sult, this section on donestic production will "be confined tp Puerto 
Rican production. 

Official statistics 

Official statistics covering shipments of handkerchiefs from 
Puerto:. Pico to the mainland are customarily taken as the measure of 
the volume of production in Puerto Rico. Table 3 shows these data 
on an annual basis for the years 1931-1934. 

Table 3. - Shipments of cotton and linen handkerchiefs from 
Puerto Rico to continental United States, 1931-1934 l/ 



y ear Cotton Handkerchiefs Linen handkerchief s 

Quantity Value Quantity Value 

Dozens ■ Dozens 

1931 1,298,209 $984,794 65,723 $76,726 

1932 1,865,190 1,267,493 315,402 365,888 

1933 1,605,119 919,589 746,587 802,924 

1934 1,687,282 979,402 1,040,601 1,029,505 

l/ Source: December issue of Monthly Summary of Foreign Commerce of 
the United States , 1931-1934. 

The accuracy of these official statistics has been questioned 
at various times by members of the industry. One important Hew York 
concern reported an output of linen handkerchiefs in Puerto Rico in 
the year 1933 greater than the volume reported by the official 
statistics. The relatively small proportion of linen handkerchiefs 
reported in earlier years has been explained on the grounds that 
many mixed shipments were listed as being entirely of cotton. The 
system of reporting shipments appears to be so lax that there is no 
reason to believe that official statistics even indicate the trend 
of Puerto Rican production. 

Puerto Rican -production reported by mainland concerns 

The general lack of adequate records on the part of the Puerto 
Rican contractors and the manner in which the Puerto Rican industry is 
integrated with the handkerchief industry of the mainland made it 
necessary to request information from mainland concerns which had 
handkerchiefs processed, in whole or in part in Puerto Rico. Sixty- 
five mainland concerns which were reported to be operating in Puerto 
Rico received questionnaires covering their handkerchief production 
on the Island. Becuase these concerns were not parties to the com- 
plaint, the questionnaires were answered on a voluntary basis, and 
the 29 replies which were received varied materially in the degree 
to which they gave the desired information. 



OOOO 



-464- 

The coverage in these 29 questionnaire returns is substantially 
greater than a comparison with the total number of concerns engaged 
in the Puerto Rican industry would indicate. The completed question- 
naires constitute a good sample in the statistical sense in that 
firms making both high-grade and low-grade handkerchiefs are re- 
presented. Likewise, several concerns known to be among the most 
important operators on the Island sent in fairly detailed informa- 
tion. 

Despite variations in wage rates over a period of years, payments 
by mainland concerns to the contractors represent a fairly good 
index of the degree of activity in the handkerchief industry in 
Puerto Rico. Table 4 shows this information for 22 mainland concerns 
by quarters for 1902, 1933, and the first nine months of 1934. It 
will be noted that the volume of payments was lowest in the first 
quarter of 1933, essentially the bank holiday period, and highest 
in the fourth quarter of 1933, a period in which the mainland in- 
dustry was subject to a code, but no restrictions were in effect 
in Puerto Pico. This interpretation seems reasonable despite the 
fact that fourth quarter production is usually high because of 
seasonal factors. The greatly increased payments to the contractors 
continued throughout the first three quarters of 1934 and most of 
this period represents pre-code operation in Puerto Pico. A com- 
parison of the trend of payments in the first nine months of 1932, 
1933, and 1934 indicates an increase over the levels of 1932 of 29 
per cent and 83 per cent in 1933 and 1934, respectively. On an 
annual basis payments in 1933 represent an increg.se of 55 per cent 
over 1932 levels, and payments in the first nine months of 1934 
were in excess of 87 per cent of those reported for the previous 
12-month period. All of this ifiaterial would indicate something 
approximating a pre-code boom in Puerto Rico. 



9829 



-465- 



Peri*d 



1st Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

Total 



1st Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

Total 



Period 



TABLE 4 

ESTIMATED QUAETSELY DISTRIBUTION OF 
PAYM3STS 3Y 22 iaAIHLAltD COHCERIJS 
TO CONTRACTORS IS PUERTO RICO FOR 
WORK DOIIS OH HASDK3HCHI3FS, 1932 - 1034 



1932 



Payments to Contractors 
1933 



$ 168,641 
190,390 
163,589 
182,688 



$ 160,717 
221,509 
291,630 
421,813 



ft 
v 



1934 

318,774 
280,483 
358,332 



705,308 1,095,669 

Indices of Trend. 1932 - 100 



100 

100 

.100 

.100 

100 



95.3 
116.3 
178.3 
230.9 

155.3 



957,589 



189.0 
147.3 
219.0 



Trend of Payments in First 9 Months 
of 1932, 1933 and 1934 



Index. 



1932 - 100 



1932 (Jan. - Sept.) 

1933 (Jan. - Sept.) 

1934 (Jan. - Sept.) 



100.0 
128.9 
183.2 



As indicated previously the completed questionnaire returns receiv- 
ed from the mainland concerns varied materially in the scope of the in- 
formation submitted. Total handkerchief production in Puerto Rico as 
reported by 18 concerns is shown by quarterly periods for 1932, la^, 
and the first three quarters of 1934 in Table 5. It will be noted that 
the rate of increase indicated in this table is somewhat slower tnan 
the rate of increase in the volume of payments to contractors wmch 
is shown in Table 4. Total production for the first nine months of 
1934 is only 71.9 per cent of reported production in the preceding Ld 
months, whereas a comparison on the same basis of payments to contrac- 
tors indicates a ratio of 87 per cent. A comparison of the first 
three quarters of 1934 with the corresponding period in 1932 and 
1933 indicates a substantial increase in production, but the second 
and third quarters of 1934 represent a decline from the preceding 
quarters in 1933. 



9829 



-466- 



TA3L3 5 



3STIUATZD QUARTERLY DISTRIBUTION OF TOTAL HA1IDK3RCHI3; 
PBODUCTIOIT IN PUERTO RICO FOB 18 MAINLAND' CONCERNS 

1932 - 1934 



Period 



1st Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

To tal 



1st Quarter 
2nd Quarter 
3rd Quarter 
4th Quarter 

Total 



Unit Quantity - Dozens 



1932 



193C 



428,062 
697,074 
444, 635 
517,626 

2,087,397 



498,275 
752,217 
743, 719 
935,837 

2,928,048 



QUARTERLY INDICES OF TREND 1932 = 100 



100 

100 
100 
100- 

100- 



116.4 
107.9 
167.3 
180.4 

140.3 



1934 



632,571 
688,549 
735,253" 

2,106,373 



159.5 

98.8 

165.4 



INDEX OF PRODUCTION III 


FIRST 9 LiOFTHS OF 1932, 
1932 = 100 • 


1933, 


AND 1934 






Period 


Index 









1932 (Jan-Sept.) 

1933 (Jan-Sept.) 

1934 (Jan-Sept.) 



■100 
•127.0 
134.2 



9829 



-457- 

Although Table 5 is "based on the reports of 18 concerns, several 
of which are known to "be among the largest producers of high-grade 
handkerchiefs; the -course of total production indicated in the table 
is greatly influenced by the reported production of one company, the 
entire production of which is known to consist of low-grade handker - 
chiefs selling at less than 25 cents each in retail markets. This 
company reported a drastic decline in production in 1934 with the ;• w i 
result that in that year it accounted for only IS per cent of the total 
output reported in Table 5, as compared with the ratios of 34.4 per cent 
and 31 per cent in 1932 and 1933. Yhe course of reported production of 
this one oompany is not typical of most of the: other concerns. 

Table 6 shows the classification of Puerto Rican handkerchief pro- 
duction according to the material used. A small production of silk 
handkerchiefs is know to exist, but it is negligible when compared with 
total production. Linen and cotton are the principal materials used, 
and a substantial proportion of the handkerchiefs for which the material 
was not specified is believed to be eotton. Linen handkerchiefs repre- 
sent slightly over 60 per cent of the total output reported by 21 con- 
cerns in the first nine months of 1934. A comparison of the trend of 
linen and cotton handkerchief production on the part of 18 concerns 
indicates that linen has accounted for a steadily increasing percentage 
of the total output. 



Table 6 

HANDKERCHIEF PRODUCTION IN PUERTO RICO CLASSIFIED 
ACCORDING TO MATERIAL USED 





1932 1932 


i Jan, -Sept 


. 1934 






Per >•' 


Per 


Per 






Cent 


Cent 


Cent 






of 


of 


of 


Material 


Dozens 


Total Dozens 


Total Dozens 


Total 


Cotton 


59,249 


2.8 164,301 


5.5 607,123 


24.4 


Linen 


1,300,868 


62.3 l ,.896, 734 


63.9 1,504,513 


60.4 


Not : 1/ 










Specified 


727,280 


34.9 907,647 


30.6 379,235 


15.2 




2/ 


3/- 


1/ 




Total 


2,087,397 


100.0 2,968.682 100. n 2,490,871 


100.0 


1/ Production believed t 


o consist mostly of cotton. 




2/ Based on 


18 questionnaire returns, 4 of 


which reported no 




production in Puerto 


Rico in 1932. 






3/ Based on 


19 questionnaire returns, all of which reported 




production in Puerto 


Rico in 1933. 






4/ Represents production 


. of 21 concerns. 







9R29 



-4S8- 

TOTAL HANDKERCHIEF PRODUCTION IN PUERTO HI CO OF 18. MAINLAND 
CONCERNS, CLASSIFIED ACCORDING TO .THE 1A.TERIAL USED 
1932 - 1934 (1st. 9 MONTHS 







1932 




1933 


Jan. 


-Sept. 1934 






Per 




Per 




per 








Cent 




Cent 




Cent 








of 




of 




of 


Material 




Dozens 


Total 


Dozens 


Tota] 


Dozens 


Total 


Cotton 




59 , 249 


2.8 


140,390 


4.8 


289,347 


13.7 ', 


Linen 




1,300,868 


62.3 


1,860,011 


64.2 


1 , 437 , 791 


68.3 


Not 


1/ 














Specif iei 


I 


727,280 

2/. 


34.9 


.907,647 


31.0 


379 , 235 


18.0 


Total 




2,087,397 


100.0 


2,928,048 


100.0 


2,106,373 


100.0 



1/ Production "believed to consist nostly of cotton 

2/ Represents production of 14 concerns. Four concerns- .reported no 

production in Puerto Rico in 1932. 



Ta"ble 6 
TREND OF PRODUCTION OF COTTON AND LINEN HANDKERCHIEF IN 
PUERTO RICO. 18 MAINLAND CONCERNS. 1932 - 100 



Year 




u. 

Cotton 1 


1932 




100 


1933 
1934 


, 


133.2 
■ 2/ 
85.0 


(Jan. 


-Sept. ) 





Linen Total 



100 100 

144.5 140.3 

2/ 2/ 

110.5 100.9 ' 



1_/ Included production of handkerchiefs, of unspecified material 

which is "believed to consist mostly of cotton. 

2/ Index for 1934 is not adjusted, "but compares production in first 

9 months of 1934 with total annual /production in 1932 and 1933. 



9829 



-469- 

Table 7 shows the quarterly distribution of linen handkerchief 
production in Puerto Rico as reported by 17 concerns for the period 
1932, 1933, and the first three quarters of 1934. A comparison nf 
corresponding quarters indicates a steady increaee in production since 
1932, although the second and third quarters of 1934 represent rather n 
negligible increases over the corresponding periods of 1933. A com- 
parison on the basis of the first nine months of the year indicates an 
increase of 27 per cent in 1933 and 46.6 per cent in 1934 over 1932 
levels. It will be noted that the reported production of linen hand- 
kerchiefs is somewhat higher relative to 1932 than the corresponding 
ratios covering the total handkerchief production of 18 concerns. 

Table 7 

ESTIMATED QUARTERLY DISTRIBUTION OF LINEN HANDKERCHIEF 
PRODUCTION IN FUERTO RICO FOP. 17 MAINLAND CONCERNS 

1932 - 1934 



Unit of Quantity - Dozens 



Ferird 1932 1933 1934 



1st Quarter 271,009 334,740 513,503 

2nd Quarter 430,758 447,136 451,279 

3rd Quarter 278,993 464,538 473,009 

4th Quarter 328,678 633,597 - 



Total 1,309,438 1,880,011 1,437,791 

INDICES OF TREND OF PRODUCTION BY QUARTERS 1932 Z 100 

1st Quarter 100 123.5 189.5 

2nd Quarter 100 103.8 lf4.S 

3rd Quarter 100 166.5 165.5 
4th Quarter 100 192.8 



Total 100 143.6 



INDEX OF PRODUCTION IN FIRST 9 MONTHS OF 1932, 1933, and 1934 

1932 = 100 



9829 



-470- 
Period Index' 



1932 ( Jan. -Sept.) 100 

1933 ( Jan. -Sept. ) 127.1 

1934 ( Jan. -Sept. ) 146.6 



9829 



"Smbroidered handkerchief -production in Puerto Rico 

It is impossible to determine accurately what proportion of the 
total handkerchief production in Puerto Rico is embroidered. As 
stated before hand rolling is known to be one of the most important 
operations on the Island and a substantial minber of olain and machine- 
embroidered handkerchiefs are hemned in Puerto Rico. Since the com- 
plaint against imports of hand-made and hand- embroidered handkerchiefs 
did not affect the interests of the pro&ucersof the cheaper grades of 
handkerchiefs, it is entire^ possible that the firms which gave de- 
tailed information about their Puerto Rican -oroduction consisted pri- 
marily of those concerns which had an active interest in the complaint. 
If this is the case, the proportion of embroidered handkerchiefs shown 
in the questionnaire returns is bound to be somewhat higher than a more 
comprehensive survey would indicate. 

On the basis of the production data submitted by 21 mainland 
concerns, 63.7 per cent of the Puerto Rican handkerchief production 
was ornamented with embroidery, applique work, etc. , in the first nine 
months of 1934. This is the broadest coverage of the Puerto Rican 
industry that it is possible to develop from the questionnaire returns. 

Of the 21 companies reporting production for 1934, two reported 
no production of embroidered handkerchiefs, and numberous others re- 
ported the production of vj-.n^ing quantities of olain linen and cotton 
handkerchiefs. One concern reported its-production of embroidered 
handkerchiefs, but failed to give a breakdown according to retain 
price brackets. 

Table 8 shows the distribution of the reported embroidered hand- 
kerchief production (cotton and linen) according to retail ;orice 
classes for 1932, 1933, and the first nine months of 1934. In the lat- 
ter period, 18 concerns reported that 74.2 per cent of their embroid- 
ered handkerchief production consisted of low-grade handkerchiefs oriced 
to sell in retail markets at less than 25 cents each. In the main, 
these handkerchief s are sold, in competition with the machine-embroid- 
ered products of the mainland. Handkerchiefs selling at 25 cents or 
more, retail, accounted for 25.8 per cent of total embroidered hand- 
kerchief production, and most of these were concentrated, in the lower 
nrice brackets. 

If 63.7 per cent of the total production reported, in the first 
nine months of 1934 consisted of embroidered handkerchiefs, and if 
25.8 per cent of these handkerchief s may be regarded, as a high-grade 
nroduct designed, to sell at 25 cents or more in retail markets, it is 
evident that the ra.tio of high-grade handlcerchief s to total Puerto 
Rican production is 16.4 per cent. It should, be emphasized that this 
represents a high estimate and. that a more- complete survey would pro- 
bably indicate a lower ratio. 



9829 



-472- 

Table 8 

DISTRIBUTION OP TOTAL REPORTED PUERTO RICA1T PRODUCTION 
OP EMBROIDERED HANDKERCHIEFS ACCORDING TO RETAIL 
PRICE CLASSL'S 



Retail Price Jan. -Sept. 4/ 

Classes 1931 1/ 1932 2/ 1933 3/ 1934 * 

Dozens Dozens Dozens Dozens 



Under 25^ 970,506 1,055,132 1,658,067 1,165,789 

25^, 3 for $1.00,350 99,988 286,358 396,106 354,830 

50^ and u P 19.481 16.474 51 . 710 ,50.089 

Total 1,089,975 1,357,964 2,105,883 1,570,688 

PERCENTAGE DISTRIBUTION 

Under 25rf 

250, 3 for $1.00, 350 

500 and up 

Total 100.0 1 00.0 : 100.0 100.0 



1/ Based on 10 questionnaire returns giving production of em- 
broidered handkerchiefs 1931-1934, however 6 concerns 
indicate no production in 1931 

2/ Based on 13 questionnaire returns. Five concerns indi- 
cated no production in 1932. 

3_/ Based on 15 questionnaire returns. Three concerns indi- 
cated no production in 1933. 

4/ Based on 18 questionnaire returns, all of which reported 
production for the first 9 months of 1934. 



89.0 


77.7 


78.7 


74.2 


-9.2 


^21 r .l 


18.8 


, 22.6 


1.8 


1.2 


2.5 


3.2 



9829 



1*473- 

In order to establish the trend of product ion in the variour, classes 
of embroidered handkerchiefs, it has been neces^ar" to select such Question- 
naire returns as give the breakdown according to retain price classes for 
a period of several years. Table 9 shows such a distribution for 13 con- 
cerns for the period 1932 - September, 1934, end for 15 concerns in the 
period 1933 - September, 1934. 

There is no question as to the adenuac"'' of the sample of 13 concerns. 
Of the reported embroidered handkerchief production in the first nine 
months of 1934, 13 concerns accounted for 81 per cent of the total. For 
these concerns, it will be noted that the percentage of high-grade hand- 
kerchiefs, i.e., hand].: er chiefs valued at 25 cents or more in retail mar- 
kets, stood at 22.3 pel cent in 1932, 20 per cent in 1933, and 25.9 per 
cent in 1934. With the addition of two more concerns which reported the 
retail price breakdown for their embroidered handkerchief production in 
1933 and 1934, these percentages were increased to 21.3 per cent for 
1933 and 27.8 per cent for 1934. 



9829 



-.'7-''— 
Table 9 

DISTRIBUTION Ol" 1 EL3ROIDERED HANDKERCHIEF PRODUCTION 

IN PUERTO RICO ACCORDING TO RETAIL PRICE CLASSES 
FOR 13 REPORT I" TG CONCERNS 
1932 - 1934 



Retail Price 
Classes 



1932 
Dozens 



1933 

., Dozens 



Jan. -Sept. 
1934 
Dozens 



Under 25$ 1,055,132 

25c*, 3 for $1.00, 35c* 286,358 



50^ and up 


16,474 


Total 


1,357, J64 


Under 25^ 


77.7 


25^, 3 for $1.00, 35^ 


21.1 


50 c* and up 


1.2 


Total 


100.0 



1,631,322 


. 9.53,971 


369,677 


298,233 


37,282 


35,302 


2,038,281 


1,287,506 


80.0 


74.1 


18.2 


23.2 


1.8 


2.7 



100.0 



LOO.O 



DISTRIBUTION OF EMBROIDERED HANDKERCHIEF PRODUCTION 
IN PUERTO RICO ACCORDING!- TO RETAIL PRICE CLASSES 
FOR 15 REPORTING CONCERNS 
1933 and JAN.- SEPT. 1934 



Retail Price 
Classes 



1931 



Jan. -Sept. 
1934 



Under 25c* 

25^, 3 for $1.00, 35c* 
50 f* and up 
Total 



Dozens' 

1,658,067 

396,106 

51,710 

2, 105,883 



Dozens 
981,684 
329,323 
48,342 

1 , 359 , 349 



(Continued on following page) 



9829 



(Cont'd) 



Tsble 9 
PERCENTAGE DISTRIBUTION 



Retail Price 
Classes 





Jan.- Sept 


1933 


1934 


78.7 


72.2 


18.8 


24.2 


2.5 


3.6 


100.0 


100.0 



Under 25^- 

25f£, 3 for $1.00, 55rf 

50^ and up 

Total 



Table 10 compares the indices of trend of enbroidered handkerchief 
production in various retail v>rice classes, as indicated in 13 question- 
naire returns giving a continuous series since 1932 and in 15 question- 
naire returns giving data for 1933 and the first nine months of 1934. 
No attempt has been nade to adjust the index for the nine months' period 
in 1934 because there is no satisfactory basis on which to construct an 
index of seasonal variation. It Trill be noted that the production of 
low-priced handker chiefs in the first nine months of 1934 is naterially 
under 1932 levels whereas the production of high-grade handkerchiefs 
has shwon a very satisfactory increase over 1932 levels amounting to 
approximately 4 oer cent in the case of medium-priced handkerchiefs and 
114 per cent in the case of handkerchief s priced at 50 cents or more 
in retail markets. According to the information s\ibmitted by the 
mainland concerns the lag, if any, in the Puerto Rican production of 
embroidered handkerchiefs in 1934, took olace in the lov;-priced product 
which is competitive with the machine-embroidered product of the 
mainland. 



9829 



-476- 



Table 10 

COMPARISON OP INDICES 01' PRODUCTION 0? E1I3R0IDEHED 
HANDKERCHIEFS IN VARIOUS RETAIL PRICE CLASSES 
193". - 100 







13 Concerns 






15 Con 


cerns 










25«f 








25 v < 










3 for 


50 $ 






3 for 


50 rf 






Under 


$1.00 


and 




'Jnder 


$1 . 00 


and 




Year 


25d 


35 <p 


up 


Total 


25rf 


35rf 


UT3 


Total 


L932 


64.7 


77.5 


44.2 


66.6 


- 


1935 


100 


100 


100 


100 


100 


100 


100 


100 


1934 


58.5 


80.7 


94.7 


63.2 


59.2 


83.1 


93.5 


64.6 


( 9 in on 


ths not 


adjusted 




















Table 11 











Year 



1931 


1932 


1933 


9 month 



3STLUATED 1/ PUERTO RICAN PRODUCTION 0_ E 1R0IDEEED 
HANDKEECHIEES PRICED AT 25 CENTS OR HOT'S RETAIL 
18 CONCERNS, 1931 - 1934 



Production 1 / _ 



Dozens 
462,844 
367,774 
494,288 



I nclex 
1951-100 



100 

79.5 
106.8 



Index 
1933- 100 



93.6 
74.4 
81 .-9 



1/ The basis of the estimate is the index of production of embroid- 
ered handkerchiefs priced bo sell at retail at 25 cents or 
higher, as indicated in the reports of 13 concerns. Total em- 
broidered handkerchief production priced at 25 cents or more for 

18 cpmcerns was 404,919 dozen in the period January-September, 
1934. This figure has been adjusted to show estimated production 
since 1931. 

Table 11, which immediately precedes this section, represents 
an effort to construct the probably oroouction for 18 concerns of 
highgrade embroidered handkerchief s, i.e., those priced at 25 cents 
or more in retail markets, since 1931. The basis of this estimate 
is the e::perience of 13 representative concerns and the adjustment 
f or 1931 has been made on the basis of the questionnaire returns 
which give 1931 data. Fhile this estimate is highly tentative, it 
represents the nea.rest approach -nos^ible, on the basis of the data 



9829 



-477- 

submitted, to a statement of the volume and trend of high-grade hand- 
kerchief production in Puerto Rico. It should be noted that no attempt 
has been made to adjust the indices of production as as to make the 
nine months' data submitted for 1934 strictly com-oarable with previous 
years. However, the evidence indicates that production of embroidered 
handkerchiefs priced at 25 cents or more, retail, has increased steadi- 
ly from 1932 until the end of the third quarter of 1934. 

Production data submitted by Puerto Rican contr a ctors 

Of the 25 complainants, 10 submitted production data by quarters 
covering the period 1932 - September, 1934. These contractors were 
unable to classify their production either with reference to the mater- 
ial used or the retail -.'rice classes into which their production would 
fall. The available data are shwon in Table 12. It will be noted 
that pefik --production is reported in the fourth quarter of 1933 and that 
the low point of operations appears to be the first quarter of 1932, 
although re-oorted -production for the third quarter of 1934 is almost on 
a parity with the 1932 low. This presumably would indicate the dampen- 
ing influence of the code which became effective July 19, 1934. A 
comparison of these data with corresponding material submitted by the 
mainland concerns, shown in Table 5, indicates a measure of similarity 
in the reported trend of production in 1932 and 1933, but the Puerto 
Rican contractors report a drastic decline in 1934 which is not sub- 
stantiated by the reports submitted by the mainland concerns. 

Table 12 

TOTAL HANDKERCHIEF PRODUCTION 05' 10 PUERTO RICAN 
CONTRACTORS BY QUARTERS 1932 - 1934 1/ 



1st 2nd 3rd 4th 
Year Quarter Quarter Quarter Quarter Total 
Dozens Dozens Dozens Dozens Dozens 

1932 364,566 439,035 386,847 514,778 1,705,376 

1933 380,852 530,641 622,672 936,633 2,470,798 

1934 381,353 541,620 365,447 - 1,238,420 



Indices of Trend, 1932-100 

1932 100 100 100 100 100 

1933 104.4 120.9 161. 182. 144.9 

1934 104.6 123.4 94.5 



1/ Production data for last quarter 1934, not available. 

INDEX OF PRODUCTION IN FIRST 9 LiONTHS 

of 1932, 1933, and 1934. 1932~100 

Period production (Dozen) Index 

Jan.-Seut. 1932 1,190,598 • 100 

11 I" 1933 1,534,165 128.9 

" " 1934 1,288,420 108.2 



9829 



-478- 

Table 13 shows the production of five Puerto Rican contractors 
from 1931 through the first three quarters of 1934. In 1931 and 1932 
the course of production remained practically unchanged, at least on an 
annual basis. In 1934, theae contrrctorr reported a 50 per cent in- 
crease in production, ?nd in the first nine months of 1934, a volume 
of oroduction equal to approximately 85 per cent of the toal production 
in 1931 and 1932. Relative to the year 1933, oroduction in the first 
nine months of 1934 amounted to 56.9 per cent of the total - a slightly 
better showing than that indicated in Table 12. 

A comparison of reported oroduction with the trend of shipment 
as reported officials statistics indicates wide differences. Further- 
more, it should be noted that the reported, 'oroduction of ten contractors 
exceeds the official statistics in point of ouantity in 1932 and 1933. 

Table 13 
HANDKERCHIEF PRODUCTION IN PUERTO RICO 
REPORTED BY FIVE CONTRACTORS. 1931-1933, 
AND THE FIRST 9 MONTHS V 1934 



Year 



Production 
(Dozens) 



Index of Production 
1932-100 



1931 


1,029,433 


1932 


1,029,113 


1933 


1,549,903 


1934 


881,687 


(9 months) 





iro.«3 
ior\ 

150.61 
85.67 



TOTAL HANDKERCHIEF SHIPMENTS FROM PUERTO RICO 
AS REPORTED IN OFFICIAL STATISTICS. 1931-1933 
Al-ID THF FTP ^ 9 MONTHS OF 1934 



Year 



Shipment: 



Index of Shipments 



1931 
1932 
1933 
1934 
(9 months) 



1,3«3,932 

2,190,592 
2,351,706 
2,130,140 



62.6 
100.0 
107.8 

97.7 



1/ Based on 9 months data and not adjusted. 



9829 



-479- 
Iraports 

Imports of linen handkerchiefs orr.amentod 
with embroidery, etc. 

Table 14 shows imports for consumption of ornamented linen handker- 
chiefs over the ten-year period 1925-1934. Prior to 1950 the United 
Kingdom was the chief source of supply, and the country of secondary 
importance was Switzerland. Since 1930 China has been the principal 
supplier of imported ornamented linen handkerchief s. The growth of the 
imports from China is well illustrated by the ratio of imports from 
China to total imports. In 1925 this ratio stood at 2.03 per cent; 
in 1929, at 17.42 per cent; in 1931, at 64.87 per cent; and in 1934, 
at 88.72 per cent. 

Both total imports and imports from China reached a peak in 1331. 
Imports from countries other tlian China reached a peak in 1929. Rel- 
ative to 1929, the index of total imports in 1334 stood at 82.10, the 
index of imports from China stood at 418.14, and the index of imports 
from other countries, 11.21. The low print in the importation of emb- 
roidered linen handkerchiefs, subsequent to the peak year of 1931, was 
reached in 1933. Imports from China registered a decline of 53.2 per 
cent, largely as a result of a style change which created a demand for 
larger-sized women's handkerchiefs. The time required to place orders 
in Chinaand receive the finished product for distribution to domestic 
retail outlets is variously estimated from 6 to 10 months. As a res- 
ult the importers of Chinese handkerchiefs found themselves stocked 
with poorly styled products and wore unable to place additional orders 
in China for quick delivery. 

The unit value of the imports from China have always been mat- 
erially below the unit value of imports from European countries. In 
1931 the average value of the embroidered linen handkerchiefs imported 
from China was 36.8 per cent below the value of the imports from other 
countries. In 1932 this difference amounted tn 23.3 per cent; in 1933 
41.9 per cent and in 1934, 44.6 per cent. Despite this increasing 
price disparity, the average value of the handkerchiefs imported from 
China rose from $0,751 per dozen in 1931 to $1.0555 per dozen in 1934, 
an increase of 40.5 per cent. During the same period the average unit 
value of the embroidered linen handkerchiefs imported from European 
countries rose from $1,189 to $1,905 per dozen, an increase of 62.4 
per cent. 

Table 15 shows imports for consumption of ornamented linen handker- 
chiefs, total and from China, by quarters, 1931-1934. It will be noted 
that the imports follow a well defined seasonal pattern in which imports 
are uniformly heaviest in the last half of the year. In every year the 
fourth quarter represents the peak of importation and is followed in 
importance by the third quarter. This is due to the increased sales 
of high-grade handkerchiefs during the Christmas holiday period. 

In connection with this seasonal variation is the volume of 
9829 



-480- 



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-481- 



imports, it should, "be noted that the highest unit value for Chinese 
handkerchiefs were registered in the fourth quarter of each year with 
the exception of 1932. 

Table 15 

IMPORTS FOR CONSUMPTION OF LIIOI HANDKERCHIEFS, 
ORNAMENTED WITH EMBROIDERY, ETC., BY QUARTERS 
1931 - 1934 











Ratio of 












Imports 










Imports 


From 
China to 


Value 


per Dozen 






Imports 




Total 


FroB 


Total 


Total 


From 


Period 


Imports 
Dozens 


China 


Imports 


Imports 


China 




Dozens 


Per cent 






1931 












1st Quarter 


359,365 


257,250 


71.58 


?0.954 


$0 . 737 


2nd Quarter 


385,811 


265,969 


68. 9< 


.803 


.674 


3rd Quarter 


739,104 


430,887 


58.30 


.895 


.739 


4th Quarter 


1,019,660 


670,134 


65.72 


.932 


.795 


Total 


2,503,940 


1,624,240 


64.07 


.905 


' .751 


1932 












1st Quarter 


289,397 


233,732 


80.76 


; .872 


'; . 8oo 


2nd Quarter 


185,032 


114, 032 


61,62 


.949- 


". . 885 


3rd Quarter 


374, 135 


244,0'?9 


65.24 


.923 


'.838 


4th Quarter 


600, 128 


437, 385 


72.88 


.950 


.825 


Total 


1,448,592 


1,029,218 


71.04 


.929 


.829 


1933 












1st Quarter 


127,505 


85,261 


66.81 


1.038 


.824 


2nd Quarter 


114, 821 


84, 239 


73.36 


1.161 


.762 


3rd Quarter 


347, 557 


267,665 


77.01 


.953 


.921 


4th Quarter 


420,211 


707 \Or. 


77.00 


.803 


1.005 


Total 


1,010,194 


760,760 


75.31 


1.093 


.928 


1934 












1st Quarter 


200,364 


172,937 


' 85.51 


1.153 


1.093 


2nd Quarter 


131,209 


110,736 


84.40 


1.145 


1.021 


3rd Quarter 


439,831 


385,112 


87.56 


1.111 


1.006 


4th Quarter 


599,654 


547, 622 


91.32 


1.130 


1.084 


Total 


1,371.058 


1,216,407 


88.72 


1.151 


1.055 



9829 



-482- 



Imports of embroidered cotton handkerchiefs 

Table 16 shows the annual imports for consumption of cotton hand- 
kerchiefs ornamented with embroidery, etc., for the period 1931-1934. 
The bulk of these handkerchief s are machine-embroidered and Switzer- 
land is the chief source of supply; However, there is a small import- 
ation of hand-embroidered cotton handkerchiefs from China which amount- 
ed in 1933 to 1,404 dozen, and in 1934 to 1,052 dozen. 

At one time imports of cotton handkerchiefs ornamented with emb- 
roidery, etc., constituted a substantial proportion of the total imp- 
orts of ornamented handkerchiefs, but in recent years this trade lias 
declined to negligible proportions. It will be noted that total im- 
ports for 1934 amounted to only 5.4 per cent of the value of imports 
in 1931. 

Table 16. - Imports for consumption of cotton handkerchiefs 
ornamented with embroidery, etc., 1931-1934 



Year 


: Quantity 


: Value 


: , Value : 
: per : 
; dozen : 


: Index of 
: quantity 
: 1931 - 100 


1931 

1932 

•1933 

■ 1934 


; Dozens 

! 240,759 

113,544 

. 82,403 

! . 13,047 


$158,098 
57,787 
45,152 ! 
10,478 


$0,657 : 
.509 : 
.548 : 
. 803 : 


: 100.0 
: 47.2 
: 34.2 
: 5.4 



Imports of plain linen handkerchiefs 

Table 17 shows the imports for consumption by quarters for the 
period 1931-1934, of plain linen handkerchiefs which are hemmed or 
hemstitched. The bulk of these handkerchiefs is from the United 
Kingdom. The imports from China which represented less than 1 per 
cent of the total imports in 1931, represented 29' per cent of the 
total in the fourth quarter of 1234, and 19.4 per cent of the total 
for the year 1934. Imports from European countries declined in 1934 
to less than 20 per cent of the 1931 level of imports, whereas imports 
from China increased 511.8 por cent during the same period. 

The exact character of the total imports of plain linen handker- 
chiefs is not known. A substantial proportion consists of men's hand- 
kerchiefs, and many of the imports are block printed by hand. So far 
as imports from the United Kingdom are concerned, they may be machine- 
made, hand-made, or a combination of hand and machine -orocesses. 



9829 



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9829 



•=584-*. . . 

Competitive character of -plain linen handkerchiefs 
imported from China 

For the purposes of this complaint, special interest attaches to 
the imports from China of plain linen handkerchiefs. It is "believed 
that the "cull: of these imports consist of women's handkerchiefs ornam- 
ented with a shadow hem or an Armenian edge. Since the centers are 
plain these handkerchiefs have been held dutiable under Paragraph 1016 
of the Tariff Act of 1930, l/ but the ornamentation is such as to make 
them competitive in retail markets with embroidered handkerchiefs. 

Trend of imports from Cnina of all linen handkerchiefs 

Tabic 18 shows a comparison of the total imports from China of 
plain and embroidered linen handkerchiefs, by quarters, for the per- 
iod of 1931-1934. It will be observed that the low point in imports 
was reached in the first quarter of 1533 and that the peak quarter of 
1933 and the peak period of imports occurred in the fourth quarter of 
1931. On on annual basis imports in 1934 amounted to 79.3 per cent of 
the 1931 volume, but a comparison of imports during the last six months 
of those years shows a ratio of 89.5 per cent in 1934. 

Table 18 

COuPAEISOH OF IMPOSTS FOE CONSUMPTION FROM CHINA OF LIN3N 
HA1TDK3RCHIZFS, PLAIN AND 3MB20IDEB3D, BY C0PJBSP0NDING CHARTERS 
1931-1934 





1st Quarter 


2nd Quarter- 


3rd Quarter 


4th Quart 


e r To tal 


Year 


Dozens 


Dozens 


Dozens 


Dozens 


Do z ens 


1931 


260,390 


269,113 


434, 438 


673,799 


1,637,740 


1932 


235,628 


118,531 


259,814 


451,067 


1,065,040 


1933 


92,491 


95,374 


289,148 


341,616 


818,629 


1934 


186,720 


120,755 


407,579 


583, 945 


1,298,999 






INDICES OF TH3MD 1931 = 100 






1931 


100 


100 


100 


100 


100 


1932 


90.5 


44.0 


59.8 


66.9 


65.0 


1933 


35.5 


35.4 


66.6 


50.7 


50.0 


1934 


71.7 


44.9 


93.8 


86.7 


79.3 



1/ See decision of the customs court in T.D. 46477 and by the U.S. 
Court of Customs and Patent Appeals in T.D. 47067. 



9829 



-485- 

Rot^.il price classes at "Inch handkerchiefs impo r ted from China 
are sold 

In order to establish the character of the conpetition between 
the Puerto Rican handkerchief industry and the imports from China it 
was necessary to request the importers of Chinese handkerchiefs to des- 
ignate the retail price classes at which these handkerchiefs were sold. 
The importer sells, the handkerchiefs to retail outlets and is in a pos- 
ition to know the retail price because of the relatively fixed price 
relationships which prevail in the handkerchief industry. For exam- 
ple, handkerchiefs selling at 25 cents each in retail markets have a 
wholesale value of $1.75 to $2 per dozen; handkerchiefs having a re- 
tail value of 50 cents each have a wholesale value of $3.65 to $4.25 
per dozen. In periods of declining prices, competition takes the 
form of supplying a better fabric or putting mo re. work on handker- 
chiefs in the lower price brackets. 

Tabic 19 shows the distribution according to retail price classes 
of embroidered linen handkerchiefs imported from China. It will be 
noted that the percentage retailed at loss than 25 cents is negligible, 
except in 193", a year in which the importers had considerable quant- 
ities of poorly styled products. In this year only 4.8 per cent of 
the total was sold at less than 25 cents. The bulk of the handker- 
chiefs imported from China retail at 25 cents, 3 for $1, and 35 cents; 
however the percentage soiling at 25 cents has declined since 1931 
whereas the percentage selling for 3 for $1 and 35 cents has increased 
since 1931. Likewise, there has been a great increase in the 50-ccnt 
and 75-ccnt cl?,sses. 

The fact that handkerchief sales for the first nine months of 
1934 indicate an increased percentage in the 25-cent and 3~forr$l price 
brackets is not conclusive evidence of a reversal of- the trend toward 
higher prices for the handkerchiefs imported from China. The fourth 
quarter is the best period for sales of high-priced handkerchiefs and 
complete data for the year 1934 would probably result in a different 
percentage distribution from that reported, in Table 19. This is a 
matter of importance because the complainants allege that Chinese 
handkerchiefs were not sold at 25 cents in retail markets until re- 
cently, whereas the data submitted by the importers would indicate 
that 63 per cent of their sales was in the 2i3-cent bracket and 78 per 
cent was below the 50-cent level in 1931. 



9829 



-486- 



Table 19 



DISTRIBUTION OF IMPORTS FROM CHINA OF 
ACCORDING TO RETAIL PRICE CLASSES 



IMBROIDERHD LUIS HANDKERCHIEFS 



Price 
Classes. 



1931 
Per Cent 



1932 
Por Cent ' 



1933 1934 

Per Cent Por Cent 













1st 9 months 


5$, 10$ ' ' 
















12^,15^,3 for 


50$ 


.7 


1.8 * 


4.8 


.4 


25<f 




63. 3 


41.8 


29.5 


36.6 


3 for $1.00,35^ 




14.3 


23.4 


23.6 


26.0 


50^ 




17.4 


24.3 


32.2 


28.0 


75(£ and "up 




4.3 


8.7 


9.9 


9.0 


Total 




100.0 


100.0 


100.0 


100.0 



DISTRIBUTION OF IMPORTS FROM CHINA OF EMBROIDERED LINEN HANDKERCHIEFS 
ACCORDING TO BROADER RETAIL PRICE CLASSES 






Price 
Classes 



1931 
Per Cent 



Under 25^ .7 

25^,3 for $1.00, 35j* 77.6 

50^ and up 21.7 

Total 100.0 



1932 


1933 


1934 


Per Cent 


Per Cen 


t Per Cent 






1st 9 months 


1.8 


4.8 


.4 


65.2 


53.1 


62.6 


33.0 


42.1 


37.0 



100.0 



100.0 



100.0 



Unit values of embroidered 
linon handkerchiefs imported 
from China 
U. S. Customs Statistics 



(9 Months)l/ 

$.751 per dz . $.329 per dz. $9.28 per dz 

$1,031 per dz. 



1/ The unit value of imports for the 4th quarter of 1934 is $1,084 so 
the percentage distribution according to retail price classes for 
1934 would he altered on an annual basis. Sales of high priced 

handkerchi efs are heavy during the Christmas Holidays. 

Table 20 shows the coverage represented by the importers' question- 
naire returns. Not all importers are represented, but the replies 
are known to be from representative concerns and the ratio of 
reported imports to total imports is over 53 per cent for 1931, 
a year for which the number of companies reporting was only 13. 
In later years tho coverage is more adequate in all years it is 
sufficient to constitute a good sample. 



J 829 



'487- 



Table 3o 
COVERAGE REPRESENTED BY IMPORTERS' QoESTIOliEAjRE RETURNS 







ITumber of 


" 






Concerns 




Year 




Rcoortiiv 




1931 




13 




1933 




16 




1933 




16 




1934 




18 




1st 9 mo 


nths 







Ratio of ' Reported Imports 
to Imports for Consumption 
from China of Embroidered 

Linen Handkerch iefs,.. 

Per Cent 

53.8 

86.4 

78.4 

94.3 1/ 



1/ Several replies covered handkerchiefs in bonded warehouses ana m 
transit from China. This factor accounts for the high ratio of 
reported imocrts to total imports for consumption for the xirst 
9 months of 1934. 



9829 



-488- 
Ratio of Imnorts to Domestic Production 



For purposes of constructing a ratio of imports to domestic pro- 
duction of hand-made and hand-embroidered handker chiefs, it has "been 
necessary to segregate certain portions of the imports and of the re- 
ported domestic production. 

Imports which may be deemed competitive with the domestic pro- 
duction are imports of linen handkerchief s from China, although, as 
indicated in a previous section, the handkerchiefs imported from 
China are materially higher-priced in retail markets than the better 
grades of the Puerto Rican output. Imports of plain linen handkerchief s 
from European countries have declined drastically in volume since 1931 , 
and are of a type which offers relatively little competition to Puerto 
Rico, but the plain linen handkerchiefs imported from China have 
elaborate hems which makes them competitive with a portion of the 
ornamented handkerchiefs produced in Puerto Rico. 

Embroidered linen handkerchiefs from European countries have 
materially higher unit values •than those imported from China, and the 
r>ricc spread has been increasing in- the past few years. Por this 
reason, it would appear that Puerto Rico encounters very little com- 
petition from European countries since the price and quality of the 
imports are so much higher than the price and quality of the domestic 
product. 

The Seme problem of comparability arises in a comparison- of the 
domestic output and the imports from China, but t refined analysis is 
not possible on the basis of v;he information submitted in connection 
with this complaint. 

Table 21 gives the ratio of imports of linen handkerchief s, plain 
and embroidered, to the estimated Puerto Eican production of com- 
petitive items as reported by 18 mainland concerns. To be classed as 
competitive, Puerto Eican handkerchiefs must be priced at 25 cents or 
more in retail markets. It will be noted that the ratio of imports 
to domestic production stood at 353.8 per cent in 1931 and 289.6 per 
cent in 1932. In 103" it fell to 165.6 per cent and in the first nine 
months of 1934 rose slightly to 17''. 6 per cent. 

If the comparison is made on the basis of an index of trend using 
1931 as 100, a comparison of the first nine months of 1934 with the 
full year in 1931 shows the index of Puerto Eican production to be 
87.5 and the index of imports to be 43.7. If it is assumed that the 
post-code decline in Puerto Rico - a decline which followed a prc- 
code boom - means that the production reported for the first nine 
months of 1934 is ir effect the production for the entire year, and if 
we are to add the fourth quarter imports from China, the indices for 
1934 will stand at 87.5 for Puerto Eican production and 79.3 for the 
imports from China. 

Despite the highly tentative character of the estimated Puerto 
Rican production, it is clear that the indices of trend and ratios of 



9829 



-439- 

imports to domestic production presented in Table 21 overstate the com- 
petition between the Puerto Rican output and the imports from China* 
If an adjustment is made on the basis of the comparability of the im- 
ports and the Puerto Rican output, and if an allowance is made for the 
declining proportion of the imports from China which sell in the 25- 
cent price" bracket, the ratio of imports to domestic production would 
be somewhat lower. 



Effect of Fluctuations in Foreign Exchange Rates 



In order to appraise the effect of fluctuations in foreign ex- 
change rates on the importation of linen handkerchief s from China, it 
is necessary to have s slight knowledge of the organization of the 
Chinese industry. The linen is shipped from Belfast and stored in 
Chinese ports, particularly Shanghai. When orders for handkerchiefs 
arc placed by American importers, the linen is withdrawn from storage 
and turned over to Chinese contractors who are responsible for the 
needlework. Obviously the linen is paid for in Pounds Sterling and 
labor is compensated in one of the several Chinese currencies. Trans- 
portation costs arc presumably paid cither in sterling or in dollar 
exchange . 

The proportion of the total cost of the handker chiefs which is 
represented by raw material cost, transportation, labor, etc., is not 
known, but from data submitted in connection with this complaint re- 
garding domestic costs in Puerto Rico, it would appear that linen was 
the principal cost item in the manufacture of handkerchief s in China. 

Table 22 shows the dollar rates of exchange for the English pound 
and the yuan dollar since 1929. It will be noted that the trend of im- 
ports has not been effected materially "by the fluctuations in foreign 
exchange. The year 1931 was the peak year in the importation of linen 
handker chiefs from China and any linen entering into these handkerchiefs 
was bought prior to England's departure from the gold standard. The 
year 1932 saw materially lower levels of exchange rates, both for 
sterling end the yuan dollar, but this did not result in increased 
imports. Furthermore, exchange rates continued to be relatively low in 
the first part of 1933, when the orders must be placed in China if the 
handkerchiefs arc to be available for the fall trade in the United 
States, but handkerchief imports from Chxna. were at a low level in that 
year because of a style charge. Subsequently, as a result of our own 
devaluation and our silver policy, exchange rates for sterling and the 
yuan dollar rose appreciably, but 1934, especially in the last half of 
the year, saw a marked increase in the imports of linen handkerchief s 
from China. 

The increasing unit values of the handkerchiefs from China are in- 
fluenced in all probability by the increasing exchange ra/tcs, especially 
the more recent increases in the value of the yuan dollar, but there is 
no evidence to indicate that fluctuations in foreign exchange rates 
have been an important influence on the trend of handker chief imports 
from China. 



9329 



-490- 
Table 21 



comparison or total imposts for cohsumptiou prom ciiiita o? lie* 

EAKDIZERCKIEPS, PLAI1T AiT> EMBROIDERED, WITH ESTIMATED PUERTO 

1/ 



Year 



RicAii ?:;oeuctio: OP COMPETITIVE ITEMS. 1/ 



18 COrCEIlIJS 1931 - 1934 



1931 
1932 

1933 
1934 
(9 months) 



Estimated 
Puerto Rican 
Production 



Dozens 
462,844 
367,774 
494,288 
404,919 



Imnorts 



Dozens 

1,657,740 

1,065,040 

818,629 

715,054 



Ratio of Imports 
to Puerto Rican 
Production 



Per Cent 
353.8 
209.6 
165.6 
176.6 



1931 
1932 
1933 
1934 
(9 months) 



I1TDICES OP TREND 1931 - 100 

100 100 

79.5 65 

106.8 50 

87.5 43.7 



1/ Embroidered handlcerchief s selling in retail markets at 25 cents each or 
higher are deemed competitive with imoorts from Chin?. 



9829 



-491- 



:'ablo 22 



Relative changes in the dollar exchange rate of the 
English pound ?nd the yuan dollar 







English value : 


: Index of exchange value 


Peri< 


)d 


of - : 


: of - 




English poundrYuan dollar: 


: English pound: Yuan dollar 






Cents : 


: 1930=100 


1929 




485.69 : 


41.90 : 


: 99.9 : 


140.0 


1930 




486.21 ! 


29.92 : 


: 100.0 : 


100.0 


1931 




453.50 i 


22.44 : 


: 93.3 ! 


75.0 


1932 




350.61 : 


21.74 : 


: 72.1 ! 


72.7 


1935 






# * 


' 


Jan. - 


Mar. ■ ! 


340.54 : 


20.21 : 


: 70.0 


67.5 


Apr. - 


June 


388.24 : 


24.28 : 


: 79.9 


81.1 


July- r 


Sept. 


460.58 : 


29.01 : 


: 94.7 


97.0 


Oct. - 


Dec. 


497.80 


32.07 : 


: 102.4 


107.2 


1954 


. 










Jan. - 


". x.r . 


505.86 


34.31 : 


: 104.0 


114.7 


Aor . - 


June 


510.27 


33.22 : 


: 104.9 


111.0 


Juip - 


Sept. 


503.32 


34.73 : 


: 103.5 


116.2 


Oct. - 


Dec. 


495.85 


34.07 : 


: 102.0 


113.9 


1935 












J an . — 


liar. 


484.74 


36.61 : 


: 99.7 


122.4 


April- 


- - & l' 


486.23 


39.94 


: 100.0 


133.5 



9829 



-49 a- 



Competitive Factors 



Rico ossesses an advantage over China, in the manufacture 
of . . er hiefs as a result of proximity to continental United States. 
This becomes highly important in producing Highly styled and novelty 
items. 



I : average elapsed time between the date of cloth shipments from 
I7ev7 York and the receipt of handkerchief s from the Puerto Eican con- 
tractors appears to be from four to six weeks for hand rolling and 
■am ei " t to twelve weeks for embroider;." work. The time involved de- 
Lds in part on the degree of ornamentation, but in part on the col- 
1. ction mechanism maintained by the contractor. Y. r hen work is dis- 
tributed through r series of sub-agents throughout the hinterland, 
there is considerable delay in returning the finished product to 
ITew Pork. However , ' even at its slowest, the Puerto hi can deliveries 
are made with great speed as compared with the six to ten-month period 
required to receive handkerchiefs ordered in China. This lengthy 
period obviously effects the rate of capita 
capital costs ;to the importer, from Chine,. 



•1 turnover and raises 



So far as., skill in needlework is concerned, the available Chinese 
workers are undoubtedly superior co the Puerto Hi cans. 



9829 



-493- 

APPSKDIX 

QUARTERLY PAYROLL DATA REPORTED 3Y 10 PUERTO RICAM 
CONTRACTORS ENGAGED IT. " "AhYXZ.lO '.ITS' PRODUCTION 

193.2-1934 



A— HOME iiTORKSES PAYROLL 



1st 2nd 3rd 4th 

Year Quarter Quarter Quarter Quarter Total 



1932 $104,675 $136,256 $102,760 $144,756 3438,447 

1935 117,571 142,911 170,130 73,360 '713,030 

1934 125,099 149,145 109,072 l/ 333,323' 



Indices of trend - 1932 =100 

1932 100 100 100 100 IOC 

19333 112.3 110 163.6 190.2 146 

1934 119.5 



100 


100 


100 


110 


163.6 


190 


109.5 


105.1 


— 



1/ Payroll for 4th Quarter 1934, is net avail abl 



INDEX 0? HOME .7GRK3RS PAYROLL II" 3I23T 9 1/E0NTZ8 
01 1932, 1S33, and 1934. 1932=100 

Period Payroll Index 



Jan- Sept. 1932 3343,691 100 

" » 193:' '437,670 127.3 

■ » 1934 383,323 111.5 



3. FACTORY ".70RKZR3 PAYROLI 





1st 


2nd 


3rd 


4 th 


Year 


Quarter 


Quarter 


Quarter 


Quarter 


L E 5 3 


326,468 


• j~/J ,676 


3j3 , 377 


330,266 


1933 


25 , 917 


28,041 


43,762 


52,475 


1934 


29 , 344 


32,932 


26,206 


ll 






Indices of 


trend - 1032 


= 100 


1232 


100 


100 




ioo : 


1933 


97.9 


97.8 


153.1 


173.4 


1234 


110.9 


114.3 


91.7 


- 



Total 



150,195 
38,482 



100 



l/ Payroll for the 4th Quarter 1934, is not available. 
9829 



_4S 4- 



IEDSX OF FACTORY TOHKEZ3 PAYROLL IE FIRST 3 1/IdTTIIS 
'F 193?, 1933, and 1934. 1932=100 



Period . 



Payroll 



Index 



J an- Sept. 193? 
" » 1933 

n ii 193A 



383,7.31 
97,720 
8G. 432 



100 

116.7 

105.7 



9 . 19 



u495i- 



May ,3, 1935. 



Mr. Victor E. Domenech, 
Chair, The Code Authority for the 
.Needlework Industry in Puerto Rico, 
I iayague z , Puerto Hi c . 

lay dear Llr. Domenech: 

Tli is is to acknowledge the receipt of your letter of 
April 26 in which you requested information regarding the present 
status of the complaint filed by the Code Authority for tie Needle- 
work Industry in Puerto Rico against iipcrts from China of hand-made 
and hand-embroidered handkerchiefs. 

As you know, this complaint was filed in October, 1934, 
after a very short period of operation under the Code. Likewise, the 
basis of tne complaint was in a large measure Lie anticipated effect 
on the competitive position of the Puerto Rica.ii Industry of tne (}2 
weekly minimum wage lor home workers. 

A survey of import statistics at the time the complaint was 
filed indicated that total embroidered linen handkerchief imports for 
the first nine months of 1954 exceeded tie quantity of imports for 
the corresponding period of 1933 by 30 percent, however, the imports 
in the first nine months of 1934 were below the levels of 1931 and 
1932 by 48 percent and 9 percent, respectively. 

In order to submit a report to the President in accordance 
with the terms of Section 3(e) of the National Industrial Recovery 
Act, it is necessary to show the ratio of imports to domestic produc- 
tion. The official statistics of handkerchief s shipments from Puerto 
Rico to the mainland show a steady increase from 1931 to 1934 and 
shipments for the first nine months of 1954 exceeded shipments for 
the corresponding period of 1931 by 116 percent. Furthermore, ship- 
ments of linen handkerchief s (the class the most comparable with the 
imports complained of) increased 63.7 percent in the first nine 
months of 1934 over the corresponding period of 1935. 

Clearly, if official date, of shipments between Puerto Rico 
and the mainland ^7ere to be used as t e equivalent of Puerto Rican 
production, it would be difficult to establish an increasing ratio 
of imports to domestic production. Likewise, there is evidence that 
the volume of production in Puerto Pico has been several times larger 
than the volume indicated 0:/ official statistics. 

In order to determine what portion of the Puerto Rican 
production was competitive with imports from China, and in order to 



9829 



-496- 



estimate the volume an:l trend of production of these competitive 
items, it was necessary to reouest information from mainland concerns 
whic' had handkerchi ef s manufactured in wlicle or in part in Puerto 
Rico. Several important operators were slow in submit ting^ie* infor- 
ma t i on r e que s t ed . 

Pending the collection of these data, the piece rates 
.'.id t: heme workers -..ere revised downwards. Obviously, this ex- 
emption to the $2 minimum weekly wage provisions (effective January 8', 
1935) affects the competitive position of the Puerto Rican industry. 

For this reason, I am suggesting that you sxibmit information 
regarding payrolls and production for the fourth quarter of IS34 end 
the first quarter of 1935. The return may be consolidated but the 
names of the firms submitting data to ymar office should be indicated. 
The attached form is for your convenience in making this return. 

Upon receipt of definite information regarding the recent 
effects of the operation of the Code in Puerto P.ico, this office j 

will be in a. Position to expedite the convolaint. 



Very truly yours, 



h.D. ire si '.a. -, 
Chef, L. rt Section, 
Research and Planning Division. 



Enclosure. 



-497- 

Payroll and Production Statistics for the Handker- 
chief Industry in Puerto Rico 





Payroll for handkerchief 


Handkerchiefs 


Name of 


workers 


finsihed in 


contractor ! 


Factory 


Home 


each 




workers 


workers 


quarter 


4th Quarter. 1954 : 








1. ! 








2. 








3. ! 








4. : 








5. 








1st Quarter, 1935 








1. 








2. 








3. 








4. 








5. 









9329 



-498- 



t 



HORSESHOES (No. 33) 



9829 






T A3LH OF CO ITTEiTTS 

Page ITo . 

Complainant's Status under the national Industrial Recovery 

Act 501 

The domestic industry 501 

Production 502 

Sales 503 

Stocks 503 

Exports 504 

Imports 504 

Comparison of imports with domestic production and sales... 506 

Competitive factors 507 

Decline in consumption 507 

Prices 508 

Effect of exchange fluctuations ^H 

Effect of the Recovery Program °-^ 



oOo - 



?329 



-500- 
LIST 0? TABL ES 
Tabic I T o . Page : : o , 

1 Distribution of horse or mule shoe production 

among compani es • . . 502 

2 Total United Str^tes production of horse or mule 

shoes "by census years, 1925-1933 -503 

3 Reported sales of horse or nulc shoes by four 

companies, 1931-1934 503 

4 Reported year-end stocks of horse or mule shoes 504 

5 Trend of exports of horse or mule shoes 504 

'6 Trend of imports of horse or mule shoes 505 

7 Imports for consumption into various customs 

districts in 1933 and 1934 506 

8 Comparison of iranorts with total production, 

production in the eastern area, and domestic 

sales 507 

9 Comparison of trend in the po^ulrtion of horses 

and mules with the consumption of horseshoes 508 

10 Comparison of trend in the delivered prices of 

horseshoes at various points of competition with 
import s 510 

11 Average price per 100-nound ke£ of annuel sales 

of horseshoes by four companies 510 

12 Comparison of the trend in the dollrr value of the 

reichsmark" with the avcra; e unit value of im- 
ports of horseshoes from Germany 512 

13 Weighted average cost of producing horseshoes before 

and after code. 513 

14 Comparison of trend of employment and payrolls in the 

horseshoe manufacturing industry 513 



- oOo - 



9829 



-501- 

SURVEY 0? IiTOBtiATION 

017 
HORSES! 01 3 



M arch, 195 5 



yainant's Status under the National Industrial 
Recover;/ Act 



This is a report on a complaint under Section 3 (c) of the 
." ■ tion.-.l Industrial Recovery Act with respect to imports of horse 
or mule shoes, filed "by the Code Authority of the Horseshoe and 
Allied Products Manufacturing Industry in accordance with the pro- 
visions of Article IX of the Code of Fair Cometition for the indus- 
try, approved March 3, 1934; this section provides that, "the said 
Code Authority is also established as an Agency of the Industry for 
the purpose of investigating and informing the Administrator as to 
■che importation of competitive commodities into the United States.. 
.. and as an Agency for r.iakin;. complaint with respect thereto, to 
the President, en behalf of the said industry " 

Commodity and Tariff St- tus 

Horse or mule shoes, specified in this complaint, are mado : of 
wrought ire:- or steel. Imports are almost exclusively the common 
variety of flat' shoes, dutiable at one-fifth of 1 cent per pound under 
Par -graph 333 of the Tariff Act of 1350; they were dutiable at the 
sane rate i n tlle Act of 19--.. Uroujht i r0 n or steel horseshoes with 
adjustable or turned calks are dutiable at 1 cent per pound; there 
are practically no imports of these special typos/ 

The Domestic Industry 

According to reports of the Burea.u of the Census, the number of 
horseshoes manufacturing establishments declined from 26 in 1923 to 
9 in 13 "9 and to 3 in 1933. This decline resulted from two causes: 
(l) the decreasing consumption of horse and mule shoes in the United 
States, and (2) the consolidation of conioeting establishments. The 
complainants st- to that only four companies, operating five plants, 
are now engaged in the manufacture of the common type horse or mule 
shoes specified in this connlaint. The remaining companies manu- 
facture only special types of horseshoes and calks. 

The largest company in the industry operates two plants, both 
of which are advantageously located with rcs2">ect to supplies of raw 
material :.n;«. to important consuming markets. One of these plants 
is located within the Chicago-Gary steel producing district, and is 
the only horseshoe manufacturing establishment west of the Appalachian 
Mountains. The other plant is located not far from Bethlehem, Pa., 
another important steel producing center. 

9329 



_ 502 



The three smaller manufacturers, which operate one plant each, are lo- 
cated at Richmond, Va. ; Troy, N. Y. ; and' Warehara, i/iass. 

The manufacture of horseshoes amounts to about 20 and 50 per 
cent, respectively, of the business of two companies in the industry 
which together are responsible for somewhat less than 15 per cent of 
the domestic output. A third company, which produces about 5 per cent 
of the domestic output, is exclusively engaged in the manufacture of 
horseshoes. The fourth and largest company, which produced over 75 per 
cent of the total output in 1933 and 1934, is almost exclusively en- 
gaged in the manufacture, of common horseshoes; less than 5 per cent of 
its output consists of special types of horseshoes and equipment. 



Table 1 shows the distribution of production among the four com- 
plainant companies in the domestic industry. It may be noted that the 
principal company increased its share from 58 per cent of the total out- 
put in. .1929 to 81 per cent for the first nine months of 1934. The share 
of the next largest company declined from 17 per cent in 1929 to 10 per 
cent in 1933 and 1934, and the share of the two o+her producers was less 
in 1934 than in either 1933 or 1931. 



< 



Table 1. - Distribution of horse or mule shoe production 

among companies 













Company : 
number 


1929 


1931 


1933 


1934 

(9 months) 




Per cent 
of total 


Per cent 
of total 


Per cent 
of total 


Per cent 
of total 


1 
2 
3 
4 
All other 


58 
17 

: 5 
3 14 


65- 
14 

7 

6 

8 


76 

10 

6 

6 

► o 


81 

10 

5 

4 

: 


Total 


: 100 


100 


100 


: . 100 



1_/ Production based upon sales. This plant was sold in 1930 to 
company No. 1, but was purchased by a new company which began 
operation in late 1930. ..... 

On the basis of data submitted with the complaint, it appears that 
average employment in the horseshoe manufacturing industry in 1933 was 
somewhat less than 500 workers and total wages for that year amounted 
to about $450,000. 

Production 

Data from the Bureau of the Census, shown in Table 2, indicate 
that the production of horse or mule shoes in the United States de- 
clined from about 81 million in 1925, to 29 million in 1931, but rose 
to somewhat over 31 million pounds in .1933. 



982= 



-503- 



Table 2. - Total United States production of horse or 
mule shoes by census years i 1925—1933 







irse or 


;iul o 


:- T orse or nule 


Year 




»es 




shoe calks 








: average 






: Quant i ty . 


Value : 


• unit value 


Value 




1 , 000 pounc j 


1 i.ooo •■'-' 


e-v 100 Founds 


1,000 


1925 


: SI, 273 


34,218 : 


$5.19 


: $1 , 109 


1927 


: 79 , 537 


: 4,812 : 


6.05 


870 


1929 


: 41,718 


■ 2,664 : 


6.39 


539 


1931 


: 29,354 


: 1,429 : 


4.37 :: 


251 


1933 


31 , 140 . 


• 1,298 : 


4.17 


: 221 


Source: Ce 


msus of -i'anuf' 


:ctuTres. 







3 n .les 

Sable 3 shows the trend of the quantity, value,' and unit value 
of sales "by the 'four complainant companies from 1931 to 1934. Sales 
by these companies reached their lowest point in recent years during 

J- ■> O ± . 

Table 5. - Reported sales of horse or mule shoes by 
four 'comnanies , 1951-19:54 



Year 



1931 
1932 

1933 
1934 



Quantity 



Value 



1,00 -pound s 

34,615 
25,966 
23,059 
25,073 



31,960,197 
1,706,857 
1,743,039 
i, 590, 485 



Stocks 

Table 4 shows year-end stocks of 
the four complainant com-anies for the 
this table it may be noted that stocks 
from 1933 to 1934, the highest level for the four-year' period. 



iverage unit 
value 



per 100 pounds 

$5.66 

6.57 

: 6.21 

6.34 



Lorse or mule shoes held by 

years 1931 to 1934. From 

o.i hand rose about 12 per cent 



J 829 



_ 504 - 

Table 4. - Reported year-end stocks of horse or 

mule shoes for four companies, 1931 - 1934 





Reported stocks 


i of four companies 


Year 








Quantity 


Value : 


Average unit 
value 




1,000 pounds 




Per 100 pounds 


1931 


14,590 


$611,443 


$4.19 


1932 


13,017 


517,080 


3.97 


1933 


13,108 


510,697 


: 3.90 


1934 


14,762 : 


604,278 


4.09 



Exports 
Islands and 
in 1925 to 1 
somewhat, ri 
nine months 
from $7.30 p 
1934. Table 
unit value o 
high-priced 



Exports 

of horse or mule shoes, which go mainly to the Philippine 
Canada, declined from about 2 per cent of domestic production 
ess than 1 per cent in 1932. Since 1932 they have gained 
sing to 1.4 per cent of the domestic output in the first 
of 1934. The average unit value of these exports declined 
er 100-pound keg in 1925 to $6.19 in 1932, and to $5.25 in 

4 compares the trends of the quantity, value, and average 
f exports since 1925. Exports probably include some relatively 
special type horseshoes. 



Table 5. - Trend of exports of horse or mule shoes 



. 






Average 


Year 


Quantity 


Value 


unit value 




1,000 pounds 




Per 100 pounds 


1925 


1,587 : 


$115,872 : 


$7.30 


1927 


1,289 


90,699 


7.04 


1929 


985 


68,726 : 


6.98 


1931 


342 


21,128 


6.18 


1932 


225 


13,935 


6.19 


1933 


323 


22,909 


7.10 


1934 


390 


20,452 


5.25 



Imports 

Imports consist almost entirely of common horseshoes which differ 
in no important respect from the domestic product; they are shipped in 
standard 100-pound kegs. 

Germany supplied 71 per cent of the horseshoe imports in 1933 and 
93 per cent in 1934. 



9829 



-595- 



Table 6 shows the trend of the quantity, value, and average unit 
value of import from 1930 to 193-'-, inclusive. It will be noted 
that imports declined from a peal: of 1,948,000 pounds in 1924 to an 
average of about . I, 10 pounds annually for the years 1926 to 1931, 
inclusive, and then rose to 371,000 pounds in 1932, to 781,000 pounds 
in 1933 and to §65,000 in 1934. The average unit value of imports 
declined to a low point in 1932, out rose 'to the 1929 level in 1934. 

Table 6.. - 'Trend of imports of horse or mule shoes 









: Ave rape 


Year : 


Quantity 


: Value : 


unit value 




: 1,000 p.ounds- 




: Per 100 pounds 


1920 


: 44- : 


$3,496 


07.99 


1924 


1 , 948 - : 


87,408 . : 


4,49 


1935 


130 : 


5,971 : : 


4.59 


1926 


; 2 : 


.132 : 


6.56 


192? 


•30 


1,754 : 


5.82 


1923 


19 


787 : 


4.15 


1929 


: . 60 : 


2,441 : 


4.08 


1930 


' 32 •: 


1 , 344 : 


4.14 


1931 


: 40 : 


1,533 : 


3.07 


1950 


371 • 


13,531 


3.64 


: 


701 


29,421 : 


3.76 


1 


965 


39,325 


4.08 



Source : Foreign Commerce and H.-nvig ? ti on of the TJ/.itec States 



Table 7 shews the distribution of imports for consumption 
among varicus customs districts in 1933 and 1954. From this 
table it will be noted that there was a sharp decline in entries 
at hew York and a considerable increase in southern districts in 
1934 as com-oared with 1953. 



-50R- 

Table 7. - Imports for consumption into various customs 

districts in 1933 • nd 1934 













Percent age 




Customs 
district 


: Quantity 
1933 : 1934 


Unit 
1S53 


value 
1934 


distribution 
1933 : 1934 






: Pounds 


Per 100. 


joounds 








Hew York 


328,644 


147,42^ 


S3. 83 


$4.47 


41.5 


15.3 




Philadelphia 


- 


10,590 


- 


3.51 


- 


1.1 




Virginia 


57,741 


124,517 


3.72 


4.31 


7.3 


12.9 




South Carolina 


66,^00 


203,400 


3.65 


3.92 


8.4 


21.1 




Georgia 


253.400 


288,200 


3.78 


3.64 


32.0 


29.9 




Florida 


- 


5,500 


- 


3.58 


, 


,fi 




Mot) ile 


13,000 


52,500 


3.65 


3.60 


1.6 


5.4 




New Orleans 


- 


104,489 


- 


4.72 


- 


10.8 




Galveston 


- 


15,500 


- 


5.40 


- 


1.6 




Puerto ?.ico 


73,280 


3 , 042 


•..00 


6.64 


9.2 


.3 




District not given 


- 


10,000 


- 


3J12 


- 


. „i«.o. 




Total - 
















United States 


:792,6«5 


964,964 


3.80 


4.08 


100.0 


100.0 





Comparison of Imports rith Domestic Production 

,nd Sales 



Taole 8 shows a. comparison of the trend of imports with the 
total production, production in the eastern area, and sales reported 
by four compli.anant companies. 



-507- 

Table 8. - Comparison of imports -ith total production, 
Production in the eastern area, and domestic sales. 



1934 





Imports 


Reported by four companies : 


: Ratio of imports 


to - 




Production - : 


Sales : 


: Producticn 


Sales 


Period 




In : 






In 








Total 


eastern; 

area : 


..Total: 


: Total 


eastern 
area 


Total 






Thousand nounds 




: Per cent 




1929 


SO 


1/35,931 


l/l4,110: 


2/ ; 


: 0.17 


0.43 


•3/ 


1931 


40 


26,790 


15,615: 


34,615 : 


: .15 


.26, 


0.12 


1932 


371 


25,180 


13,946: 


25,966 : 


: 1.47 


2.66 


1.43 


1933 


781 


30,530 


13,350: 


28,059 : 


: 2.56 


• 5. 85 


2.78 


1934 


! 965 


• 3/ 


3/ :; 


25,073 : 


: 3/. 


: 3/ 


- 3.85 



Jan. -Sept. 


698 


. 21,180 


8,509: 


3/ : 


: 3.30 


8.20 


1 3/ 


Jan. -Mar. 


149 


3,854 


3,151: 


3/ :' 


: 1.68 


4.73 


3/ 


Apr. -June 


370 


8,364 


3,177: 


3/ : 


: 4.17 


11.64 


H 


July-Sept. 


179 


3,462 


2,181: 

t 
* 


3/ : 


: 5.17 


8.21 


3/ 



1/ Production of one company based on sales. 

2/ Sales of two of the four companies amounted to 37,528,000 nounds 

during this year. 
3/ Not available. 



Prom the foregoing table it may be noted that the ratio of imports 
to total production rose from less than 1 per cent in 1929 and 1931 to 
roughly 2k per cent in 1933; and that after the adoption of the code by 
the horseshoe manufacturing industry, the r°tio increased to somewhat 
over 5 per cent cf total domestic production. The ratio of imports to 
production by the four plants located e'st of the Appalachian Mountains 
rose from somewhat less than 6 per cent in 1933 to over 10 per cent in 
the six-month period following the adoption of the code in March, 1934. 



Competitive Factors 



Decline in consumption 

The decline in the domestic consumption of horseshoes has been in 
large measure a result of the displacement of horses by automobiles, 
trucks, and tractors. The decline in the horse and mule population in 
the United States, however, has been much less than the decline in the 
consumption of horseshoes; this is indicated by the data shown in Table 
9. 



9829 



-508- 

Table 9. - Comparison of trend in the population of horses and 
mules with the consumption of horseshoes 



: Total 


In licated : 

horse and , : 

mule shoe : 

consumption : 

2/" 


: Index of - 


: Number of 
Year : horses and 
: mul e s 

I/: 


: Total 
: number of 
: horses and 
: .mules 


Indicated 
; horse and 
: mule shoe 
consumption 


: 1,000 

1923 I 25*589 . 
1925 :. 23 ,.738 ■ 
1927 . , :' 22,057 ■ 
1929 :- 20, .245 . 
1931 : 18,745 . 
1933 :■ 17,531 : 


1 , Q00 pounds : 

125,324 •;: 
79,316 : 
73,278 : 
40,793 ■ : 
29,052 : 
31,598 : : 


: 1 923 

: 100 
: 93 
: 8'6 
: 79 
: 73 
: 69 


= 100 
100 

64 ; 
; 62 . 

; 33 ; 

: 23 ' * 
" 25 



1/ horses and -mules: on "farms: plus estimated number in cities based upon 

census figures of 2,034,000 in 1 920 : and 375,000 in 1930- 
Agricul ture Yearbook , .1934* \ 

2/ Domestic production . plus imports, minus exports. 

The number of horses and'-mul.e.s en farms declined 6,690,000, from 1920 to 
1930, while the number in cities is estimated to have declined 1,709,000 dur- 
ing the same period. . With reference to the consumption of horseshoes, the 
decline in the number of horses in cities was probably of much greater im- 
portance than the decline in the number on farms, for the reason that horse- 
shoes wear out more rapidly on hard-surfaced cr paved streets. 

The available production statistics do not, indicate accurately the 
consumption of horseshoes in the United States in recent ypars for the rea- 
son that a number of companies in the ;.ndustry were liquidated during the 
years 1922 to 1930 and their accumulated stocks. were sold in subsequent 
years. For example, one of the complainant' companies sold 35 million pounds 
in 1929, although it produced only 24 million, and 27 million in 1931, when 
its production was only 19 million. 

A further factor of importance in the declining consumption of horse- 
shoes is the effect of the agricultural depression in curtailing the pur- 
chasing power of farmers. A comparison of the trend of farm prices of agri- 
cultural products with the indicated mill prices of horseshoes for census 
years from 1925 to 1933 indicates that, on the basis of the relationship ex- 
isting in 1925, the price of horseshoes was 86 per cent higher than farm 
prices in 1933. The rise in cost of horseshoes in terms of farm products 
has undoubtedly tended to decrease their consumption. 

The consumption of common horseshoes, which require fitting by black- 
smiths, has been afi'ected'by competition from special type shoes and calks, 
produced to some extent by the complainants but principally by other com- 
panies. For example, the special type screw and drive calk shoes are con- 
structed so that the calks may be replaced from'. time - to time as they wear 
out. Replaceable toe calks may also be attached to 



9329 



-. ^9- 

standard shoes or replaced without welding. Likewise, ruober shoes and 
pads may be used with standard iron shaes or in combination with iron 
toe crlks to give maximum protection against slipping and to eliminate 
noise; they are also replaceable. Special type shoes and calks, there- 
fore, compete with standard horseshoes by prolonging wear and by elim- 
inating to a considerable extent the necessity for and the cost of 
fitting by blacksmiths. 

Prices 

The complainants have submitted data showing the trend of deliv- 
ered prices at : various points where import oompetition is claimed to 
oe severe. These data indicate that prices were not, on the average, 
reduced from 1929 to 1932. In July, 1932, a small company in Ma ss- 
achusetts reduced its price for delivery in southern territory by • $1.03 
per 100 pounds. In January, 1933, the New York producer lowered *he 
New York City price $1 per 100 pounds and the Philadelphia prie $1.55. 
The largest producer followed in July with a price reduction of $1 
for delivery at New York City and Atlanta, G-a. These lower prices 
were maintained until April, 1934, when the pre-depression level was 
restored by all producers. No data were submitted for prices in 
districts west of the Appalachian Mountains. The statistics, however, 
indicate that the average decline in tne value of output at the mill 
for all producers' after 1^29 was considerably greater than the reduc- 
tion in delivered prices in the eastern area. 

Table 10 presents a comparison of the trend.s in the various ■ 
prices submitted by the complainants. 



9829 



-510- 

Table 10. - Comparison of trend in the delivered prices of 
horseshoes at various points of competition with imports 





: N 


D 

3W 


slivered j 

:Phila- 


Drice per '. 


.00 pounds 


at - 




Company 


Southern 


Rich- 




number l/ 


York 


: delphia 


Atlanta 


joints 


mond 2/ 


Average 




la 


2 


: 2 


lb 


: 3 


4 




1929 
















April 


$6.60 


$6. 61 


: $6.59 


$K.37 


! - 


$6.30 


o6.ro 


1932 
















Jam.xa.ry 


6.62 


6.61 


6.59 


6.89 . 


$6.93 


6.05 


6.62 


April 


6.62 


^.59 


6.55 


6.39 


6.93 


6.04 


6.60 


July 


6.^2 


«.63 


6.55 


6.89 


5.90 


S.09 


6.45 


October 


6.62 


R. 63 


6.55 


6.89 


5.90 


6.10 


^.45 


1933 : 
















January 


6.62 


5.63 


5.00 


6.39 


5.90 


6.02 


6.01 


April : 


6.R2- 


5.63 


5.00 


6.39 


5.70 


5.12 


5.33 


July 


5.62: 


5.63 


5.00 


5.89 


5.70 


5.94 


5. 63 


October : 


5.60 


5.63 


5.00 


5.87 


5.70 


5.96 


5.63 


1934 
















Jamuary : 


5.60 


5.63 


5.00 


5.37 


5.70 


5.95 


5.^2 


April 


6.60 


6.60 


R.5fi 


R.87 


6. 65 


6.72 


6.67 


July 


6.60 


6.60 


6.56 


6.87 


6.63 


6.91 


6.70 



1/ Company number - la located at Catasauqua, Pa.; lb at Joliet, 111.; 
2 at Troy, 11. Y.; 2 at War ©ham, Mass.; and 4 at Richmond, Va. 
2/ F.o.b. shipping point. 

Table 11 shows the average unit value of annual sales of horse- 
shoes as submitted by four companies. 

Table 11. - Average price per 100-pound keg of annual 
sales of horseshoes by four companies 



Year 




Company number 




Average 
four 


» - - • - - 


x 


2 _ , 


....?. 


4 


companies 


1931 


$5.41 


$6.52 


$6.76 


$6.fifi 


§5.66 


1932 


6.64 


6.50 


5.93 


6.33 


6.57 


1933 


6.27 


6.19 




6.14 


6.21 


1934 


6.41 


6.49 


5.27 


6.58 


6.34 



It will be noted that company I T o. 1, increased its price 23 per cent 
between 1931 and 1932. This rise in price was accompanied by an 18 per 

cent drop in the quantity of sales mr.de by this company, and by a sharp in- 
crease in the volume of imports. An inverse relationship between the vol- 
ume of sales and prices is indicated by statistics for the other three 
companies. The clearest case is that of company Wo. 3, which lowered 
its price slightly each year after 1931 and increased its sales steadily, 

9829 



-511- 

while the spies of its three compe titers declined an average of 30 per 
cent. From 1333 to 1931 the -jrice ciwrg< C by this company was lowered 
5 per cent, while the average price quoted by its competitors rose 3 
per cent, a difference in'. 1934 of $1.16 wer keg. At this lower price 
conroany No, 3. increased: its sales IS' per cent as compared with a 23 per 
cent increase in imports: from 1933 to 1934. 

Effect of Exchange Fluctuations 

The rise in the dollar value of the German mark since April, 1933, 
has made it' increasingly difficult for German products, including horse- 
shoes, to be sold in the United States 1 . However, while outwardly main- 
taining the", jold value of the reichsmark at par, the German Government 
has resorted to foreign exchange control measures which have had much 
the same effect as currency depreciation. Special concessions have been , 
made to e.cporters for the :purpose of promoting sales in foreign markets 
which otherwise ■ -cold have been closed 'to German -products. The prin- 
cipal methods by which exports have been encouraged ar& as follows; 

(1) By an arrangement enabling the German exporters to real- 
ize profit by accepting part payment in the form ocf German bonds 
v 'hich could be purchased in foreign markets at considerably below 
the German market price. 

(2) By ma'ring exchange available to German exporters at con- 
siderable discount derived from "blocked" accounts of foreign cred- 
itors in German banks. 

(3) After October 1, 1933, by makin; exchange available to German ex- 
porters,. at discounts ranging as high as 5'"> per cent, from a spec- ". 

ial fund of "blocked exchange" created in connection with a govern- 
ment monopoly of foreigh exchange. 

Table 12 shows a comparison of the trend in the dollar value of 
the reichsmark with the average unit value of imports of horseshoes 
from Germany during 1933 and 1934. 



9329 



-512- 

Table 12. - Comparison of the trend in the dollar value 
of the reichsmark with the average unit value of imports 
of horses irru Germany 





Average 

unit value 


Exchange : 


: Index of 


- 


Statistical 


: Unit value : 


Exchange 


period 


of imports 


rate : 


: of imports 


rate 




yer 100 pounds 


Cents : 


: Jan. -Mar., 1933 - 100 


1933 










Jan. -Mar. ! 


$3.58 


1/ 23.82 : 


: 100 ! 


100 


Apr. -June 


3.50 


26.85 : 


: 98 i 


113 


July- Sept. 


3.63 


33.80 : 


: 107 . : 


142 


Oct. -Dec. 


4.11 


37.00 : 


: 115 


155 


1934 










Jan. -Mar 


3.61 


38.71 : 


: 101 


163 


Aor.-June 


4.12 


39.12 : 


: 115 


164 


July- Sept. 


3.83 


39.42 : 


: 107 


165 


Oct. -Dec. 


4.61 


40.28 : 


: 129 


: 169 



1/ January-March exchange at par. 



The fact that the average unit value of imports of horseshoes from 
Germany increased very little from the beginning of 1933 to the third 
quarter of 1934, while the exchange value of the reichsmark in terms of 
dollars rose 65 per cent, indicates that German exporters have in fact 
"benefitted "by some form of exchange subsidy sufficient to offset the 
disadvantage which would otherwise have been caused by the revaluation 
of the United States dollar. It thus appears that the dollar exchange 
value of the reichsmark may have little or no significance as an indica- 
tion of increased disadvantage in the sale of German horseshoes in the 
United States. 

Effect of the Recovery Trogram 

Data submitted by the complainants indicate that direct labor costs, 
which accounted for 28 per cent of total costs, increased 16 per cent 
after the adoption of the code. The cost of materials, which amounted 
to 23 per cent of total costs, increased 31 per cent; other cor.fcs in- 
creased approximately 13 per cent. As shown in Table 13 a comparison 
of weighted average costs for the industry oefore and after the adoption 
of the code indicates an increase in total casts, exclusive of selling 
expense, of 18 per cent. 



9829 



- 513 - 

Table 13. - Weighted average cost of producing horseshoes 
"before snd after code 



firer 100 pounds) 





Before 


co c e 
per cent 


' After 


code 


: Increase 


Cost item 


Cost ; 


Cost 


Per cent 


Co 


st"i 


Per 


'Per cent 






of total 




of ' total 


• 




dent 


:of total 


Materials 


•51.02 


: 23 


$1.34 


• 26 


:$0 


.32 


31 


: 41 


Labor 


1 OA 
X . CrZ 


28 


1.44 


28 




.20: 


16 


: 26 


Factory expense 


.88 


20 


1.00 


20 




.12: 


13 


15 


Depreciation 


.21 


5 


.22 


4 




.01: 


4; 


1 


General and admini- 


















strative expense 


.46 


11 


.52 


10 




.06: 


13 


18 


Total 


3.81 


87 


4.52 


88 




.71 


18 


91 


Sell in-; expense 


.55 


13 


.62 


12 




.07 


13 


09 


Total including: 


















selling expense: 


4.36 


100 


5.14 


100 




.73 


18 


100 



Although the cost of production data indicate that la"bor costs ad- 
vanced 16 per cent after the code, the employment and payroll data sub- 
mitted "by the complainants reveal little or no increase in the average hour- 
ly wage, and only a slight advance in the average weekly wage rate. 
Table 14 summarizes the employment and payroll data for periods before 
and after the code. 

Table 14. - Comparison of trend of employment and payrolls 
in the horseshoe manufacturing industry 







Total reported for 


one week 








in period indica 


sed 






Period 


Number 


Amount ! 


Total : 


Weekly 


Hourly 




of : 


of : 


hours 


wage s 


wa 


Ses 




workers 


payroll : 


worked 








1929 


581 


: $13, 907 


27,920 


:;i23.94 


: $0 


.50 


1932 


575 


: 3,629 


: 20, 332 


15„35 




.43 


1933 








• 






January 


376 


4,748 


9,999 


: 12,63 




.47 


April 


337 


7,480 


14,208 


: 22.20 




.53 


July 


578 


10,725 


23,485 


: 18.56 




.46 


October 


430 


8,970 


17,656 


: 18.69 




.51 


1934 














January 


639 : 


12,766 


24,291 


19.98 : 




.53 



Code- 



Approved kiarch 3 



April 
July 



627 : 12,771 24,812 20.37 .51 

615 : 12,305 24,122 20.01 .51 



Source: Data supplied by complainants. 
9829 



-514- 

The code of the horseshoe manufacturing industry provides a min- 
imum wage of 40 cents per hour in the North and 30 cents per hour in 
the South, and limits the normal week to 40 hours. These provisions 
had little effect upon the costs of the horseshoe manufacturer s for 
the reason that the plants had been operating on a 40 hour per week 
schedule prior to the code-, and were paying wages considerably in excess 
of the minimum. The relatively high level of wages, in the industry is 
accounted for in part by the fact, that the majority of the workers in 
the industry are unionized. 



9829 



-515- 



PIG IRON (No. 43) 



9329 






-516- 



TABLE OF CONTENTS 



Page No. 



Commodity and tariff treatment 519 

Description of commodity 519 

Tariff treatment 519 

The domestic industry 520 

Location 520 

Type s of producers 520 

Capacity 520 

Area of import competition 522 

The complainant producers 522 

Course of domestic production 525 

Pig iron production compared with general 

inanuf acturing 525 

Total, for sale, and for makers ' use 526 

Total production by grades 527 

Merchant production by grades 527 

Importance of merchant production 528 

Importance of merchant production in area of 

import competition 529 

Exports 531 

Imports 531 

By customs districts 533 

Ratio of imports to production- • 534 

Effect of the National Recovery Program 538 

Pertinent provisions of the code 538 

Labor provisions 538 

Basing point provisions 538 

Price provisions 538 

Employment 539 

Earnings of labor 540 

Hourly wage rate s 541 

Costs of production 542 

Raw material costs 542 

Pr ice s 545 

The currency situation 547 

oOo 



3829 



LIS ? 0? TAI LS S 

Table Pa^e 

Number Number 

1 Annual blast furnace capacity of the United States... 521 

Comparison of pig iron production by reporting com- 
plainants with total merchant production in the 
United States in which they operate, 1931-1934 524 

3 Comparison of index of daily av.er.age production of 

pig iron with general index of manufactures 525 

4 Domestic production of pig iron 526 

5 Total domestic production of pig iron by grades 
1920-1334 527 

6 Merchant production of pig iron by grades, 

1920-1934 528 

Ratio of merchant production to total output of 

pig iron, by grades » 529 

8 Comparison of merchant production with total produc- 
tion of pig iron in the United States end in the 
producing area of import competition, 1931-1934 530 

9 Course of exports of pig iron, 1322-1934 531 

10 Imports of pig iron into the United States by 
principal countries 532 

11 General imports of pig iron in 1933, by customs 
districts 533 

12 Comparison of imports of pig iron with total produc- 
tion, and production for sale, 1923-1334 534 

13 Ratio of imports to domestic production of 

pig iron 536 

14 Ratio of imports to reported production of ■> 
complainants 537 

15 Employment and activity in the production of pig 

iron by the reporting complainants 540 

16 Course of semi-monthly earnings of labor employed 

by reporting complainant producers 541 

9829 



-510- 

( Continued) 

Table Fage 

Mumper Number 

17 Course of indicated hourly wage rates % • 542 

18 . Domestic consumption of principal raw materials 

per gross ton of pig iron, 1933 543 

19 Imports of iron Te in 1933 and 1934 "by customs 
districts 544 

20 Comparison of approximate landed costs of imports 

with domestic prices delivered at Thiladelphia 546 

21 Comparison cf trend of unit value of imports from 
the Netherlands with course of florin-dollar ex- 
change 547 

22 Comparison of trend of unit value of imports from 
British India with course of rupee-dollar exchange... 548 



oOo 



9829 



-519- 

SURVSY 07 INTOHKATION 
ON 
PIC IROK 

Karch, 1935 

Commodity and Tariff Treatment 

Description of commodity 

Pig iron is described by the American Iron and Steel Institute 
as "a metallic product, the result of blast furnace or electric smelt- 
ing of iron ores, v.'hich is used as part or all of the initial metallic 
charge in steel making, puddling (the point of departure in process 
between the manufacture of wrought iron and of steel), and producing 
molten metal for foundry use (casting)." It is produced by smelting 
iron ore with carbonaceous fuel and a fins (chiefly limestone) in 
blast furnaces. 

Of the total domestic output of pig iron, less than one-fourth 
in the past has been produced for sale; more than three-fourths has 
been produced by large integrated companies for further use in the 
manufacture of iron castings, steel, and wrought iron. 

Domestic "merchant" pig iron, - i.e., produced for sale, - 
which is the subject of this report, consists chiefly of (1) foundry 
iron which is characterized by a silicon content of from 1.25 to 3.25 
per cent, (2) malleable iron which is characterized oy a phosphorus 
content not exceeding 0.20 per cent, and (3) minor quantities of forge 
iron, used largely in the manufacture of wrought iron. 

Gas and coke are the principal fuels used in the manufacture 
of pig iron, having almost entirely displaced charcoal. In fact, 
there are now only five blast furnaces in the United States ^hich 
are designed for the production of charcoal iron. 

Tariff treatment 

Pig iron is dutiable under Paragraph 301 of the Tariff Act of 
1930 at $1.12tt per long ton (or gross ton as it is known to the in- 
dustry). The Tariff Act of 1922 originally provided a specific rate 
of duty of 75 cents per ton. As the result of an investigation by 
the Tariff Commission under Section 515 of that Act, the duty was in- 
creased by Presidential proclamation, March 24, 1927, to $1.12^- per 
ton, which rate was made statutory in the Act of 1930. A similar 
investigation by the Tariff Commission in 1931 resulted in no change 
of duty. 



982$ 



- 520 



The ad valorem equivalent of the duty under the Tariff Act of 1922 
averaged approximately 4 per cent; the duty of $1.12% per ton made effect- 
ive by Presidential proclamation in 1927, and continued in the Tariff Act 
of 1930, averaged around 7 per cent ad valorem prior to 1930; on account 
of lower prices it was over 12 per cent in 1933. As a result of an up- 
ward turn in prices, it declined to somewhat over 8 per cent for the year 
1934. 

The Domestic Industry 

Location 

The pig iron industry of the United States is located almost entirely 
east of the Mississippi River, generally centered at or near the product- 
ion centers for steel, wrought iron, and cast iron products. The great- 
est pig iron producing area of the United States embraces western Penn- 
sylvania, eastern Ohio, and' West' Virginia. Frobcbly the second area in 
importance is the eastern part of Pennsylvania and Sparrows Point, Md. 
Another important pig iron producing region is centered in and around 
Birmingham, Ala., a district which, although somewhat distant from the 
markets for finished iron .and steel products,, enjoys the natural advan- 
tage of large deposits of iron ore, limestone, and coking coal within 
short distances from the blast furnaces. A fourth major pig iron pro- 
ducing area is located in northern Indiana and Illinois; and more recently 
Michigan has attained relative importance as a. .pig iron producing State. 
In addition, there are two pig-iron producing areas in New York State, 
one in the vicinity of Buffalo, and the other in the northeastern part 
of the State. 

Types of producers 

The domestic industry may be roughly classified by types of pro- 
ducers as follows: (a) steel nanufacturers who consume their entire 
output of pig iron; (b) manufacturers of cast iron, wrought iron, and 
steel, who attempt to merchandise the pig iron produced in excess of 
their requirements; and (c) ' pig iron producers who are entirely dependent 
upon sales for the disposal of their output of pig iron. 

Capacity 

The total domestic pig iron capacity in 1933 was 240 blast furnaces 
(excluding furnaces which had been long idle, and those which produce 
ferro alloys) whose rated capacity was more than 50 million gross tons 
per annum. Table 1 shows the distribution of domestic pig iron capacity 
by States. 



9829 



-521- 

Table 1. 
Annual 'Blast furniace capacity of the United States* 



:Pig iron capacity 
: in 1933 


Number of blast : 
furnaces : 


: Per cent of 
: total number 


State : Gross :Per cent 
: tons l/:of total 


1933 2/ 


. 1934 3/: 


:1933 


1934 


: Thousands: 


275 


! 258 : 


: 100.0 




Total : 50.322 : 100.0 


: lO\0 



Massachusetts 


175 : 


.3 


1 : 


1 : 


: 6/ : 


6/ 


New York 


3,477 


6.9 • 


19 


18 : 


: 6.9: 


7.0 


Pennsylvania - : 


16,935 : 


33.8 : 


93 : 


82 : 


: 33 . 8 : 


31.8 


Eastern 


4/2, 713 


5.4 


19 


5/ : 


: 6.9: 




Other 


4A4 272 ' 


28.4 


74 


5/ : 


i 26.9: 




Maryland 


1 ; 653 


3.3 


6 


6 : 


: 2.2- 


2.3 


Virginia 


90 


. 2 


6. 


5 : 


: 2.2 


1.9 


West Virginia 


603 


1.5 


3 


3 : 


: 1.1 


1.2 


Kentucky 


256 


.5 




2 : 


: 6/ 


6/ 


Tennessee 


180 


.4 


6 


4 : 


: 2.2 


1.5 


Alabama 


3,^75 


6.1 


25 


25 : 


: 9.1 


9.7 


Ohio 


11,346 - 


22.5 


55 


53 : 


: 2° . 


20.5 


Illinois 


5,561 


11.1 


25 


25 : 


: 9.1 


9.7 


Indiana 


5,058 


10.1 


: ..18 


IS : 


6.5 


7.0 


Michigan 


: 875 


1.7 


: 8 


8 : 


: 2.9 


3.1 


". .innesota 


: 113 


: .2 


3 


3 : 


: 1.1 


1.2 


Miss our i 


' 1/ 


: 1/ 


: 1 


1 : 


: 6/ 


6/ 


Colorado 


: 493 


1.0 


: 3 


: 3 : 


: 1.1 


1.2 


Utah 


: 172 


.3 


: 1 


1- : 


: 5/ 


6/ 


All other 


: - 


! — 


; — 


i — : 


: 1.8 


: 1.9 



* Compiled from statistical reports cf the American Iron and Steel 
Institute. 

1/ Does not include capacity of blast furnaces which have long been 
inactive or are likely to remain inactive. 

2/ Includes all blast furnaces whether producers of coke or charcoal 
pig, iron, or ferro alloys. 
3/ As of June 30, 1934. 

4/ Special communication of American Iron and Steel Institute. 
5/ Not available. 
6/ Less than 1 per cent; iicluded in "All other." 



9829 



-522- 



Area of import competition 



m 



Because of the high cost of inland freight, pig iron produced 
ore than approximately IOC miles inland does not enter directly into 
competition with imports. Import competition, however, is an important 
factor; in the areas of consumption along the Atlantic seaboard and the 
vicinity of Buffalo, N. Y. The former area is supplied "by nearby domes- 
tic producers and "by producers in the Alabama district who ship by water 
to eastern centers of consumption. The rated capacity of the producing 
areas which compete with imports is approximately 11 million gross tons 
per annum, or about 22 per cent of the total pig iron capacity of the 
United States. 

Of the total pig iron capacity of the producing area in which 
competition from imports is encountered, approximately 50 per cent, or 
5.5 million gross tons, is normally available for merchant production, 
of the 20 producers in this area, eight (combined merchant capacity 
over 3 million gross tons per annum) are either operating units or sub- 
sidiaries of steel companies; two (combined capacity over 250,000 tons) 
are subsidiaries of producers of cast iron products; at least one is 
a producer of wrought iron; and the status of three other producers is 
not clearly indicated from available information. The remaining six, 
whose combined capacity is 1,287,000 tons, or 23.4 per cent of the total 
merchant capacity of this area, are entirely dependent upon sales for 
the disposal of their pig iron output. 

The complainant producers 

The complaint which is the subject of this report was submitted 
for 12 producers having 24 blast furnaces situated : by States as follows: 
Massachusetts, 1; Hew York, 9: Pennsylvania, 7; Virginia, 1; and 
Alabama, 6. Their combined annual blast furnace capacity on December 31, 
1933, was 8,765,436 gross tons, or 17.4 per cent of the total pig iron 
blast furnace capacity of the United States. Their capacity for produc- 
tion of merchant pig iron was 4,400,828 gross tons per annum, or 50.8 
per cent of their total capacity. Of the 12 complainant producers, five 
are either integrated steel producers of subsidiaries thereof, and thus 
are not entirely dependent upon sales for the disposal of their pig iron 
output. Five complainants, having a combined capacity of 1,137 gross 
tons, or 13.0 per cent of aggregate pig iron capacity of the complain- 
ants, are entirely dependent upon sales for disposal of their pig iron 
output. Of these, two are subsidiaries of fuel companies, but their 
bla.st furnaces have not operated since 1931; one other, which also oro- 
duces coal-tar derivatives, has produced pig iron more or less consist- 
ently throughout the depression. Available information with respect to 
the operations of two other producers is indefinite. 



9829 



of the nine producers who submitted data in support of this 
complaint, one producer has not been at all active, and three have 
not operated since 1S31. Of the remaining five, only two were active 
throughout the year 1932; two were in operation during the first quarter 
only, and one other producer operated only during the last quarter of 
that year. 

During the first six months of 1933, immediately prior to the 
adoption of the code, only two producers were active. From July to 
December, however, all of the complainants were in blast, excepting 
the three who had not operated since 1931. 

During the first six months cf 1934, four of the producers were 
in continuous operation, one operated irregularly, find another sus- 
pended operations in February. During the third auarter, four pro- 
ducers were in continuous operation, one continued idle, and one sus- 
pended operations during August. During the month of October, the last 
month for which data were submitted, only three producers were active. 

Table 2 compares the production of the reporting complainants 
with the total merchant production of pig iron in the States in which 
they operate. 



9329 



-524- 



Table 2. 



Comparison of pig iron ^reduction by reporting complaints 
with total merchant production in the States in 
which they operate*, 1931-1934 





Merchant produc- : 


Production : 


Hatic 


of reoorted produc- 




tion (north : 


as reported ttion 


to merchant produc- 




Atlantic States l/ 


by : tion 


in States in which 




and Alabama 2/ : 


conrolaintants complaintants operate 




Gross 


tons : 




Per cent 


Years 










1931 : 


2,007,838 ; 


1,027,562 : 




51.2 


1932 


887,8-4 : 


408,292 : 




46.0 


1933 


1,232,936 : 


476,6^7 : 




38.7 


1954 


1,626,^46 : 


3/ 






Quarters 










1932 










First 


347,818 


118,949 




34.2 


Second 


201,681 


96,799 




48 . 


Third 


119,017 


90, 623 




76.1 


Fourth 


219,388 


ru,92i 




46.5 


1933 










First 


: 122,559 


49,628 




40.5 


Second 


: 177,195 


65,928 




37.2 


Third 


: 467,993 


159,272 




34.0 


Fourth 


: 465,189 


201,779 




43.4 


1934 










First 


: 425. 704 


183, 016 




43.0 


Second 


: 547,692 


181,491 




33.1 


Third 


: 361,425 


171,981 




47.6 


Fourth 


: 291,185 


3/ 







* Compiled from monthly reoorts apoe' ring in Steel and aata sup- 
plied individually by nine comolainants. 

1/ Does not include Massachusetts, Virginia, and Maryland which could 
not be segregated. 

2/ Includes indeterminate quantities of f erromanganese and spiegeleisem. 
3/ Reports cf complainants not complete. 



9829 



-525- 

Course of loraestic Production 

Fig iron •production compared with general manufacturing 

From 1924 through 1329 the daily average domestic outnut of nig 
iron ranged, between 10' \ 000 and 116,000 tens per day. Btiring those 
years the index of daily output moved in relatively close harmony with 
the index of general manufacturing. After 1929, however, pig iron 
output declined to a much greater degree than did general manufacturing, 
reaching a low point in 1952 of somewhat less than 24, «VX) tons per day, 
or 24 per cent of the 1923-25 average, as corn-pared with the low point 
of 65 per cent in that year for the index of manufacturing. The index 
of pig iron output rose to 37 in 1933 and to 45 in 1954, as compared 
with 75 and 78, respectively, in those yj- rs for the general index of 
manufacturing. Table 3 shows a comparison of average daily output of 
pig iron with the index of manufactures compiled by the Federal Reserve 
Board. 

Table 3. 
Comparison of index o*" daily average production of pig 
iron with general index of manufact\irers 



1923-1925= 100) 










Daily average output : 


: General 




Year 


of pig iron : 


: index of 
: manufactures 






Gro r JS tons 1 / 


Index 


2/ 


1926 


l 1 ?,]^ 


: 119 : 


: 108 




1927 


99,422 


101 : 


: ■ 106 




1928 • 


103 ,.36 5 


105 : 


: 112 




1929 . ' 


115,008- 


118 : 


: 119 




1930 


86, 141 


88 : 


: 95 




1931 


50,035- 


51 : 


: 80 




1932 


23,699 


24 : 


: 63 




1933 


36,223 


37 : 


: - 75 




1934 


43,774 


45 : 


: 78 




Quarters 


; • 








1933 










First 


18,487 


19 : 


: 61 




Second 


30, 559 


31 : 


: 80 




Third 


55,897 


57 : 


: 90 




Fourth 


39, 504 


40 : 


: 71 




1934 










First 


45, 8^1 


47 : 


: 81 




Second 


62, 973 


p 4 . 


: 87 




Tnird 


34, 650 


35 : 


: 71 




Fourth 


31, 924 


32 : 


: 74 





1/ Steel , January 7, 1933. 

2_/ Federal Reserve 3oard - unadjusted. 



9829 



Tot-il for Sale, and makers' Us e 



-526- 



The course of domestic production of pig iron 
inclusive, as published by the American Iron and St 
shown in Table 4. It may be noted that, with the e 
share of domestic production which ras offered for 
est level in 1924; a secondary peak was reached in 
the trend of the ratio of merchant production to to 
iron was downward until 1S33 when only 15.9 per cen 
tion of this commodity was offered for sale. In IS 
recovery in the ratio of production for sale to tot 



from 1920 to 1933, 
eel Institute, is 
xception of 1920, the 
sale reached its high- 
1927. Since that year, 
tal production of pig 
t of the total produc- 
34, there was a slight 
al nroduction. 



Table 4. - Domestic production of oig iron*, 1920-1934 



Year : 


Total 


Production 


Satio to total 


production 






nroduction 




For 


For : 


: For For 






sal e 


makers' use: 


: sale makers' 
: use 




Thousands c 


if gross 


tons 


Fer cent 


1920 


36 , 244 


10,243 


26,001 : 


: 28.3 : 71.7 


1921 


16,399 


3,570 


12,829 : 


: 21.8 


78.2 


1922 


26,325 


6,21,2 


20,593 : 


: 23.2 


76.8 


1923 


39,721 


10,106 


29,615 : 


: 25.4 


74.6 


1924 


30,375 


8,058 


22,817 : 


: 26.1 


73.9 


1925 


36,116 


8,587 


27,529 : 


: 23.8 


76.2 


1926 


38,698 


9,283 


29,410 : 


: 24.0 


76.0 


1927 


35,858 


8,978 


26,880 : 


: 25.0 


75.0 


1928 


37,402 


7,724 


29,678 : 


: 20.7 


79.3 


1929 


41,757 


9,014 


32,743 : 


: 21.6 


78.4 


1930 


31 ,021 


6,567 


24,454 : 


21.2 


78.8 


1931 


: 17,958 


4,000 


13,958 : 


• o<j • O 


77.7 


1932 


8,550 


1,714 


b,doo : 


: 20.0 


80.0 


1933 


13,001 


2,063 


10,933 : 


: 15.9 


84.1 


1934* 


15,972 


2 , 755 


13,217 : 


: 17.2 


82.8 



(*) Compiled from American Iron and Steel Institute - Annual Statistical 

Report. 1933 . 
(**) Compiled from monthly reports in Steel ; includes ferromanganese and 

spiegeleisen which were impossible to segregate. 



9829 



-527- 



Total production h< r grades 

Tacle 5 shows". the course of domes-tic production of pig iron and its 
distribution between the two princioal "'use 11 grades, i.e., steel making 
and casting iron grades. The steel making grades include Bessemer and 
low-phospherus iron. The casting grades include foundry, malleable, and 
forge iron. It will be noted that the proportions have shifted from 
approximately 80 per cent steel making grades and 20 per cent casting 
grades, during the period 1920 to 1923, to over 05 .per cent and somewhat 
less than 15 per cent, respectively, in recent years. 



Irble 5. - Total domestic production of pi; 

1920-1934* 1/ . 



iron by grades, 





'( 
Total 


In thousands of gro 


3S tons) 










: Steel 

making 


: Casting 


: ' All : 


: Steel 
' making 


! Per ce] &otaf 


I ear 


. Casting 


r~KiT 






grade s 


rfades 


other; 


's grades 


graa.es 


Mother 


1920 
If 21 


56,244 ' 
16,399 


28,800 • 
13,348 


7 , 352 
3,027 


■ 92 : 

■ 24 ■ : 


: 79.5 
: 81.4 


20.3 
18.5 


: 0.2 

: .1 
: .3 
: .3 
: p 


1922 


26,825 


21,654 


5 , 100 


■ 63 • : 


: 80.7 


: 19.0 


1923 


39 , 721 


.1,473 


8 ,147 


101 : 


: 79.2 


20.5 


1924 


30,875 


24,171 


6,852 


52 : 


: 78.3 


21.5 


1925 


36,116 


29,087 


6,978 


51 : 


: 80.5 


19.3 


r"i 


1926 
1927 
1928 ; 
1929 


38,698 
35,858 
37,402 
41,757 


31,211 
28,463 

31,139 
34,789 


7 , 405 
7 , 343 
S , 221 
6,927 


62 : 
47 : 
42 : 
41 : 


: 80.7 
: 79.4 

: 83.3 


19.1 
20 5 
16.6 
16.6 


.2 
.1 
.1 
.1 
.2 
.2 
.3 
.1 
• 1 


1930 


31,021 


25,703 


5,245 


68 : 


: 82.9 


16.9 


1931 


17,958 


14,810 


3,116 


32 : 


: 82.5 


17.5 


1932 
1933 


8,550 
13,001 


7,295 
11,426 


1,556 ! 


22 : 
19 : 


: 85.3 : 
: 87.9 ; 


14.4 : 
12,0 : 

12.6 : 


1934 1/ 


9,669 


8,4-40 : 


1,216 


13 : 


: 87.3 : 



Merchan t -product ion b" grade s 



Table 6 shows the distribution of merchant production of pig iron as 
between steel making and casting grrde^. It 'ill be noted that approxim- 
ately 70 per cent of the merchant oig iron outout consists of the casting 
grades, - i.e„, foundry, malleable, and forge iron, - and approximately 
30 per cen J consists of the steel making grades, - i.e., basic Bessemer 
and low—phosphorus. 

(*) Compiled from statistical reports of the American Iron and Steel 

Institute, 
(l/) lirst six months. 



9829 



-528- 

Table 6. - Merchant production of pig iron by grades 

1920-1934* 1/ 

(in thousands of gross tons) 













Per cent 


Year ; 


Total " 
, merchant 


Steel 
making 


Casting" 


AH : . 




of total 




: Steel : 


Casting : 


All 




| production 


grade s 


grade s 


other 


: making 
: grades 


grades 


other 


1920 


: 10,243 


: 3,245 


: 5,952 


: 35 : 


: 31.7 


: 68.0 


: 0,3 


l c : '21 


: 3,570 


: 975 


: 2,592 


: 3 : 


: 27.3 


: 72.6 


: .i 


1922 


: 6,232 


: 1,687 


: 4,534 


: 11 : 


: 27.1 


: 72.7 


: .2 
: .1 
: .1 
: .1 
: .3 
• .1 
.1 


1923 


: 10,106 


: 2,877 


: 7,218 


: 11 : 


: 28.5 


: 71.4 


1924 


: . 8,058 


: 2,226 


: 5,828 


: 4 : 


: 27.6 


: 72.3 


1925 


: : 8,587 


: 2,510 


: 6,069 


: 8 : 


: 29.2 


: 70.7 


1926 


9,288 


: 2,638 


: 6,621 


: 29 : 


: 28.4 


71.3 


1927 


: 8,978 


: 2,425 


: 6,545 


: 8 : 


: 27.0 


• 72.9 


1928 


: 7,724 


: 2,158 


: 5,560 


: 6 : 


: 27.9 


72.0 


1929 


: 9,014 


2,737 


' 6,274 


: 3 : 


: 30.4 


' 69.6 


2/ 

.6 


1930 


6,567 


1,921 


: 4,604 


: . 42 : 


: 29.3 


70.1 


1931 


: 4,000 


: 1,160 


: 2,823 


: 17 : 


: 29.0 


: 70.6 


' .4 

.9 


1932 


1,714 


52b 


: 1,173 


: lb : 


: 30.7 


' 68.4 


1933 : 2,068 
1954 1/ 1,484 


: 645 
: 411 


: 1,417 
: 1,069 


: 6 : 
: 4 : 


: 31.2 
: 27.7 


68.5 
72.0 


• -* 

.3 
.3 


Importance of merchant 


production 













Table 7 shows the importance of domestic merchant pig iron output in 
relation to the total domestic production of pig iron, and the importance 
of the domestic output of the steel making and casting grades in relation 
to 'the total domestic output of each of those grades. It will be noted 
that the merchant furnaces have been responsible for approximately 90 per 
.cent of the domestic outout of casting iron for more than a decade. In 
contrast, less than 10 per cent of the steel making grades is produced in 
merchant furnaces and this proportion reached its lowest point of approx- 
imately 5 per cent in 1933 and 1934. 

(*) Compiled from statistical reports' of the American Iron and Steel 

Institute, page 6. 
(l/) First six months. 
(2/) Less than 0.1 per cent. 



9829 



„r ■-.(-!_ 



Table 7. - Ratio of merchant production to total output 
of pig iron, by grades* 

(Per ce nt) 







Steel ' 






Year 


: All grades 


making ', 
£rad.e s 


Casting 
grades' : 


All other 


1920 


28.3 


11.3 


94.7 


39.1 


1921 : 


21.8 


7.3 


85.6 


12.5 


K 22 


23.2 


7.8 


: 38,3 


17.5 


1923 


25.4 . 


9.1 


: 85,6 


10.9 


1924 


26.1 


9.2 


: 87.6 


7.7 


1925 


23 .8 


8.6 


: 87.0 


15.7 


1926 


24.1 


8.5 


: 89.4 


35.4 


1927 


25,0 


0.5 


: 89.1 


17.0 


1923 


20.7 


6.9 


: 89.4 


14.3 


1929 . 


clot 


7.9 


: 90.6 


: 7.3 


19 3D 


.21.2 


7.5 


: 87.8 


: • 61.8 


1931 


.22.5 ■ 


7.8 


: 90.5 


: 53.1 


1932 


20.0 


: 7.2 


: 95.1 


: 68.2 


1933 


15.9 


! .5.6 


: 91.1 


: ' 31.6 


1934 


: 15.4. 


: 4.9 


: 87.9 


: 30 „ 8 



Importance of merchant production in area of import 
competition 

The ratio of merchant production to^ total United States production 
of pig iron declined from 21 per. cent in 1931 to 19 per cent in 1932, and 
to 15 per cent in 1933,- but rose, to 17 per cent In 1934. In the States 
in which the complainants are located, however, the ratio of merchant 
production to total production was approximate ly 26 per cent in 1931 and 
1932; it declined .to 23 per cent in 1933 and rose to 24 per cent in 1934. 
The proportion of .the total merchant 'output produced in this area in- 
creased from 53 per cent in 1931 to 59 per cent in 1934. 

Table 8 compares the course of total domestic production of pig iron 
and total merchant production with production in the area in which import 
competition is encountered. 

(*) Computed from, statistical reports of the Iron and Steel Institute. 



9829 



-530- 



Table 8. - Comparison of merchant production with total production 
of pig iron in the United States and in the producing 
area of import competition*, 1931-1934 



Period 



Domestic pig 
iron production 



Total 



Merchant 



Production in 
States in which 
complainants are 
located 1/ 



n otal 



Merchant 



Patio of merchant 
to total 



In 

United 
States 



In States 
in which 
complain- 
ants are 
located 



Ratio of 
merchant 
production 
in States 
in which 
complain- 
ants are 
located to 
total mer- 
chant pro- 
duction 



Years 



Thousands of f cross ton s 



Per cent 



1931 


. 18,234 


3,768 


7,784 


2,003 


20.7 


25.3 


53.3 


1932 


: 8,66? 


1,653 


3,432 


888 


19.1 


25.9 


53.7 


1933 


13,229 


1,995 


5,492 


1,255 


15.1 


22.4 


61.8 


1934 


15,972 


2,755 


6,712 


1,626 


17.2 


24.2 ■ 


59.0 


Si:c months 
















periods 




1931 
















First 


11,096 


2,186 


• 4,805 


1,094 


19.7 


: 22.8 


50.1 


Second 


7,133 


1,532 


. 2,978 


914 


22.2 


30. 7 


57.3 


1932 
















First 


5,157 


957 


2,103 


550 


18.6 


26.1 


57.5 


Second 


3,510 


696 


1,329 


338 


19.3 


25.4 


48.6 


1933 
















First 


4,445 


548 


1,546 


300 


12.3 


: 19.4 


54.7 


Second 


8,784 


1,447 


3,946 


933 


16.5 


23.6 ! 


64.5 


1934 
















First 


9,847 


1,604 


4,196 ! 


973 : 


16.3 ' 


25.2 


60.7 


Second 


6,125 


1.151 


2,516 


653 


18.8 


26.2 : 


56.7 



(*) Compiled from reports published in Steel . 

(if) Does not include production in Massachusetts, 
figures for these States could not be se^re^f; 
States not along the North Atlantic seaboard. 
Massachusetts or Virginia have been in operat 
quarter of 1931, however. Total Pennsylvania 
although not all of it competes with imports. 



Mar 
ted 
Ho 
ion 

pro 



"land, and Virginia; 
from those for other 
blast furnaces in 
since the second 
duction is included, 



9829 



-531- 



Exports of pig iron are small in comparison with either domestic 
production or imports. For more than a decade exports Have not 
amounted to as mucn as 1 percent of the annual domestic production 
for sale except for the year 1928. Since 1928, exports have declined 
steadily in ratio to production for sale in the United States. 



Table 9. - Course of exports of pig iron, 1922-1934 



Year 


Quantity 




Gross tons 


1922 


: 30 , 920 


1923 


32,318 


1 9 ~ -~- 


41 ,483 


1925 


3.3,674 


■ 1926 


25 , 208 


1 327 


50,99 2 


1S28 


84,662 . 


1929 


46,357 


1950 


13,671 


1931 


6,719 


1932 


■2 , 324 


1933 


2,750 


1934 : 


4,096 



Value 



$756,842 

'862,443 

957,921 

724,565 

523,833 

1,028,425 

: 1 ,336,794 

830,225 

291,683 

150,658 ' 

53,966 ; 

■ 63,985 

• 97,060 



Value 
per ton 



$24.48 
26.69 
23.09 
22.18 
20,78 
20.17 
15.79 
17.91 
21.34 
23.42 
23.23 
23.27 
23.69 



Imports 



Table 10 shows the course of imports of pig ir^n by important 
countries during three pre-denression years and in 1932, 1933, and 
1934. It will be ncted that imports from the Neth^^ 1 rnds amounted 
to 54 percent -of the total auantity in 1934 as compared with 12 
percent in 1925 and 16 percent in 1929. British India, tnroughout 
this entire period, has been an important source of imports. 
The unit values of imports from British India have been somewhat 
lower than those of other important sources. 

The sharp decline in the total quantity imported in 1927 
reflects tie immediate effect of the change in duty resulting from 
the Presidential procla.nation of that year. 



9329 



-532- 

Table 10. - Imports of pig iron into the Unitec 
principal countries 



States by 



11)35 



1937 



1929 



1933 



1934 1/ 



Quantity (tons) 2/ 














' 'United Kingdom.' 


: 96,369 


: 21,129 


: 39 , 140 


: 23,378 


: 5,495 


600 


Canada 


6 , 455 . 


735 


7,382 


2,113 


13,259 


: 8 , 934 


Brit if i India 


184,325 ■ 


66,627 


: 69,243 


23,820 


: 63,056 


. 36,013 


Netherlands 


o4,904 


29,380 


24,189 


74,372 


. 68,341 


. 61,939 


All otlier 














hountries 


98,872 


14,707 


7,309 


1,947 


4,465 


6,748 


Total 


441,425 


132,563 


147,763 


130,630 


153,596 


. 114,284 


Value 














United Kingdom 


1,926,275 


;;406,0C3 


; $676,247 


$231,680 


$64, i-; 1 


$10,451 


Canada. 


142,419 


13,166 


■ 150,383 


38,339 


336,303 


177,023 


British India 


3,020,816 


1,002,070 


956,685 


254,093 


389,705 


333,142 


Netherlands 


1,033,686 


535,454 


435,782 


748,564 


701 , 546 


332,747 


All otlier 














Countries 


1,828,087 


297,662 


179,436 


23,949 


57,^-95 


104,335 


Total 


7,951,283 


2,254., 355 


2,398,488. 


1,301,625 


1,439,306 


1,457,703 


Unit value : 








/ 






United Kingdom : 


$19,89 


$19.22 


$17.38 : 


$9.91 


|511.67 


$17.42 


Canada 


22.06 


18,16 


30.36 


13.14 


18.45 


19.71 


British India : 


16.39 : 


. 15.04 . 


13.83 ■ 


8.82 


5.73 


9.25 


Netherlands 


18.33 ! 


18.23 


18.03 . 


10.07 


10.37 


13.44 


All other 














ccun tries 


18.49 : 


20.24 


22.98 


14.87 


12. 8J 


15.46 


Average : 


18.01 : 


17.01 


16.33 : 


9.96 


9.07 


12.75 


Percent of total 














quantity ! 














United Kingdom 


31 . 9 


15.9 


26 . 5 : 


17.9 


3.5 : 


0.5 


Canada ! 


1.5 


.5 • 


5.0 : 


1.6 


7.7 


7.9 


Britis" . India : 


41.8 


50.3 


46.8 : 


22.1 


42.9 « 


31.5 


Neth errands 


12.4 


22.2 


16.4 : 


56.9 


43.1 : 


54.2 


AIL other i 














countries 


22.4 


11.1 


5.3 : 


1.5 


2.8 


5.9 


To tal 


100.0 


100.0 


100.0 : 


100.0 


100.0 


100.0 



1_/ Imports for consumption. 
2/ Tons of 2,240 pounds. 



9329 



-533- 



By customs districts 

Imports of pig iron are entered almost entirely along the Atlantic 
seaboard north of Norfolk, Va. , and are centered in tne customs dis- 
trict of Philadelphia which accounted for 58.3 percent cf the total 
importation in 1933. An examination of imports by countries through 
the various customs districts during the first six months of 1933, the 
most recent period for which this information is available, indicates 
that imports through Buffalo are entirely of Canadian origin and were 
entered at unit values equal to or higher than tie domestic price of 
merchant pig iron produced in that area. Table 11 shows the imports 
of pig iron in 1933 by customs districts. 



Table 11. - General imports of pig iron in 
1933, by custom districts 







Percent 


District 


Quantity 


r of total 




Gross tons 




Total 


158,596 


100.0 


Philadelphia 


92,366 


58.3 


Massachusetts 


10,335 


6.5 


Connecticut 


10,049 


6.3 


Maryland 


3,998 


5.7 


New York 


7,732 


4.9 


Hhode Island 


: 10,847 


: 6.8 


Buffalo • 


2,749 


1.7 


All other 


13,500 


9.8 



9829 



-534- 



ilatio of Imoorts to Production 



Table 12 shows the course of the ratio of imports to domestic 
production of pig iron since 1922, with respect to both total produc- 
tion and production for sale. 



Table 12. - Comparison of imports of pig iron with total 
production, and production for sale, 1923 - 
1934 



Year 


Production : 


: Imports : 


: Ratio of imports to 
: production 




Total 


Fo r sal e : 
only : 


: Total 


For sale 

only 


1923 
1924 
1925 
1925 
1927 
1923 
1929 
1930 
1931 
1932 
1953 
1°34 1/ 


Thous? 

39,721 
30,875 
36,116 
38 , 698 
35 , 853 
37,402 
41,757 
31,021 
17,958 

8,550 
13,001 

9,669 


mds of long 

10,106 : 
• 3,058 : 
3 , 587 : 
9,288 : 
8,978 : 
7 ,724 : 
9,014 : 
6,567 : 
4,000 : 
1,714 : 
2,068 : 
1,434 : 


tons : 

: 368 : 
: 209 : 
: 441 : 
: 446 : 
: 133 : 
: 141 : 
: 148 : 
:• 137 : 
: 84 : 
: 131 : 
: 159 ' : 
: 65 : 


: Perc 

: . 93 
: .68 
: 1.22 
: 1.15 
•': . 37 
: .38 
: .35 
': .44 
: . 47 
: 1 . 53 
■: i . 22 

: .67 


;ent 

3.64 
2.59 
5.14 
4.30 
1.48 
1.82 
1 . 64 
2.09 
2.11 
7.62 
7.69 
-"■.S3 



l/ First six months. 



The production figures in Table 12 were obtained from the annual 
reports of the American Iron and Steel Institute. Table 13 shows in 
greater detail the course of the ratio of imports to total production, 
to total merchant production, and to raercnant production in the area 
in which the complainants operate. These data include some f erromanganese 
and spiegel ei sen for which separate data are not available. 

It will be noted that the ratio of imports to total production 
exceeded 1 percent only in the years 1925 and 1926, immediately prior 
to the increase in the tariff by Presidential proclamation, in 1932, 



9829 



-535- 



tlie low point of the depression, and in 1933, tie first year of tie 
recrv ^o^ram. 

The ratio of imports to production for ~ule readied its first 
peak of 6.1<? percent in 1935, after wnica it followed a downward trend 
to 1.64 percent in 1939. It rose to approxi;nately 2 percent in 1950 



anc 



s , i ".^i 






A sliarp increase in shipments 'from the Netherlands after 



1931, arising from the 'special circumstances of sterling depreciation 
an?, t. e British tariff, parelled by low domestic production, resulted 
in an increase in tie ratio of imports to domestic merchant production 
to 7.6 percent in 1933 and 1933, despite an increase of 31 percent in 
domestic merchant output in the latter year. 

In 1934 domestic merchant production increased while imports 
declined and the ratio dropped to .-.beat 4 percent, as shown in 
Table 13. In fact, 'the ratio by quarters during 1934 was lower than 
in corresponding periods of 1933 or 1933. Roughly speaking, the same 
trend appears from a comparison of imports with domestic merchant 
production in the area of import compe tition. 



9839 



-536- 
Table 13. - Ratio of imports to domestic production cf pig iron 

(Quantities in thousands of gross tons) 







: 






. Fat 


lo of imports to 




Lod 


: Domestic production 1 / : 






production 


Per: 


: 




: Merchant : 






: i Is r chant 






: 


: Her - 


: production : 


: Imports: 






: production 






: Total 


: chant 


: in area of : 
: import : 
:conroetition2,/ : 




: Total 


:Mer- 
: chan t 


: in are?, cf 
: import 
: co'iroetitioii 






. 








:q 


Percent 


Year 




: 




: : : 










1931 




13 , 234 


3,768 


. 3/ 2,008 : 


: 84 : 


: 0.46 


: 2.23 


: 4.18 


1932 




:8,667 


1,653 


: 888 : 


: 131 : 


: 1.51 


7.92 


: 14.75 


1933 




J-O j&uJ 


1,995 


: 1,233 : 


: 159 : 


: 1.20 


: 7.97 


: 12.90 


1934 




15,972 


2,755 


: 1,626 : 


: 114 : 


: .71 


: 4.14 


: 7.01 


Six-montlis 


: 














periods 


: 








: o 






1931 


- First 


•.'11,096 


2,166 


3/ 1,094 : 


: 56 : 


: .50 


2.56 


5.12 




Second 


:7,138 


1,582 


914 : 


: 28 : 


: .39 


1.77 


: 3.06 


1932- 


• First 


:5,157 


957 


550 : 


: 75 : 


: 1.45 


7.84 


13.64 




Second 


: 3,510 


696 


338 : 


: 56 : 


: 1.59 


8.45 


: 16.57 


1933 


- First 


:4,445 


548 


300 : 


: 63 : 


: 1.42 


11.50 


21.00 




Second 


:S,784! 


1,447 


933 : 


: 96 


: 1.09 


6.63 


10.29 ' 


1934 


- First 


: 9,847. 


1,604 


973 : 


: 65 : 


: .66 


4.05 


6.68 




Second 


:6,125 


1,151 


653 : 


: 49 : 


: .80 


4.26 


7.50 


Quarters 


: 














1931 


- First 


:5,452 


1,050 


2/ 474 : 


: 22 


: .40 


2.09 


4.64 




Second 


:5,644 


1,136 


2/ 620 : 


: 34 : 


: .60 


t+j • Z/ •? 


5.48 




Third 


:3,882: 


928 


521 : 


: 14 : 


: .36 


1.51 


2.69 




Fourth 


: 3,256: 


654. 


393 : 


: 14 : 


: .43 


2.14 


3.56 


1932 


- First 


:2,891: 


586 


348 : 


: 34 : 


: 1.13 


5.80 


9.77 




Second 


:2,266: 


371: 


202 : 


: 41 : 


: 1.81 


11.05 


20.30 




Third 


: 1,692: 


324 


119 : 


: 15 . : 


: .89 


4.63 


13.60 




Fourth. 


:1,818: 


372 


219 : 


: 41 : 


: 2.26 


11.02 


13.72 


1933 


- First 


: 1 , 650 : 


240: 


123 : 


: 24 : 


: 1.45 


10.00 


19.51 




Second 


:2,795: 


308: 


177 : 


: 39 : 


: 1.39 


12.66 


23. 03 




Third 


:5,138s 


721 


468 : 


: 57 : 


: 1.11 


7.91 


12.13 




. Fourth 


:3,646: 


726: 


465 : 


: 39 : : 


: 1.07 


5.37 


3.39 


1934 


- First 


:4,120: 


671: 


426 : 


: 43 : 


: 1 .04 


6 . 41 


10.09 




Second 


:5,727: 


933 


547 : 


: 23 : 


: .38 


2.36 


4.02 




Third 


:3, 188: 


632. 


361 


: 33 : 


: 1.03 


5.25 : 


9.14 




Fourth 


1 & 1 i? o i '' 


519. 


292 


: 16 $ 


: .54 


3.03 


5.48 


1935 


-January 


: 1,476: 


143 


75 : 


: 2 : 


: .14: 


1.40 


3.67 


1/ Co. 


railed from repc 


>rts put 


dished in Stee 


1. 









2/ Production in Maryland not included because not separately available. 
3/ Data, for the first six months of 1931 do not include small production 

in Massachusetts and Virginia.. No blast furnaces nave operated in 

taose States since that time. 



9829 



-537- 



Table 14 shows the course of the ratio of imports to the combined 
pig iron production cf the producers who have submitted data in 
support of this complaint. It will be noted that this ratio was at 
its highest point in the second quarter of 1533 - the three-months 
period immediately preceding the promulgation of the code under which 
these producers operate. Since the code has been in effect, the trend 
of the ratio of imports to the combined output of these producers has 
been generally downward. 



Table 14. - Ratio. of imports to reported production 
of complainants 





Number of 






: Ratio of imports 


Period 


companies 


Reported 


Imports : 


: to reported 




reporting 


production 




: production 






G-ros 


3 tons : 


: Percent 


Years 










1929 : 


9 : 


1,700,540 


:• 147,763 : 


: 8.69 


1931 


: 7 


. : 1,027, 562 


:1/ 34,259 : 


: 8.20 


1932 


: 5 


403,292 


: 130,53 : 


: 31 . 97 


1933 


: 6 


: 476,607 


153,393 : 


: 33.23 


1934 2/ 


6 


:• 536,478 


97 , 905 : 


: 18.24 


Quarters 










193- 










First 


4 


113,949 


: 33 , 932 : 


: 28 . 53 


Second 


2 


96,799 


41,169 : 


: 42.53 


Third 


2 


90,623 


15,121 : 


: 16.69 


Fourth 


3 


101,921 


40,306 : 


: 39 . 55 


1933 










First 


. 2 


42,628 


24,140 : 


: 48 . 64 


Sec 


2 


65,923 


33,551 : 


: ' 58.47 


Third : 


6 


159,272 


56,572 : 


: ■' 35.52 


Fourth 


6 


201,779 


39,130 : 


: 19.39 


1934 










First 


6 : 


183,006 ; 


43,337 : 


: 23. 63 


Second : 


5 


181,491 


21 , 947 : 


: 12.09 


Third 


5 


171,931 


32,621 : 


: 18.97 



1_/ Data from Tariff Commission; differs slightly from Department of 
Commerce data which report 84,269 gross tons. 

2/ First nine months. 



9829 



Effect of the National Recovery Program 



Pertinent provisions of the code 

The Code of Fair Competition of the Iron and Steel Industry, under 
which the complainant producers are operating, contains the following 
provisions which are pertinent to this complaint: 

Labor provisions . - Article IV, Section 2, states that " *** except 
in the case of executives, those employed in supervisory capacities and 
in technical work and their respective staffs, and those employed in 
emergency work, in so far as practicable and so long as employees 
qualified for the work required shall be available in the respective 
localities where such work shall be required *** none of the members of 
the code shall cause or permit any employee to work at an average of more 
than 40 hours per week in any six-months period or to work more than 48 
hours or more than 6 days in any one week or more than 8 hours 'in any one 
day. " 

Section 5 of the same Article, and Schedule D, provide minimum 
hourly wage rates for common laborers in 21 districts. These wages range 
from 35 to 40 cents per hour, with the exception of: the Birmingham and 
Southern districts, where, minimum wages of 2.7 and 25 cents, respectively, 
are provided. Section 5 further provides for an immediate increase of 15 
per cent in wages of laborers receiving more than the specified' minimum. 

Basing point provision s. - Schedule E of the code provides that 
prices of all iron and steel products, produced under the code shall be 
quoted f.o.b. designated .basing points listed in Schedule F of the code. 

The basing points which affect the marketing of pig iron are 
located by States as follows: Massachusetts, 1; New Y ork, 2; Pennsyl- 
vania, 7; Maryland, 1; Alabama, 1; Tennessee, 1; Ohio, 5; i'ichigan, 1; 
Minnesota, 1; Illinois, 2; Utah, 1. In general, this represents little 
change from the pre-code policy of quoting prices f.o.b. blast furnaces. 

Price provisions . - Article VII and Schedule E of the code provide 
that each member of the industry shall adhere to an open price policy by 
maintaining on file with the Code Authority, a list showing the base 
prices for all of its products, together with any discounts which may be 
allowed. These prices are not to be changed except by filing a new list, 
which shall be effective not less than ten days after the date of such 
filing 

Quoted prices are to be delivered prices which must not be less than 
the sum of the published base price (f.o.b. basing point) and an amount 
equal to the all-rail published freight tariff charges from the basing 
point, to the place of delivery. If such place of delivery is at the 
basing point, the published tariff switching charges to such place of 
delivery must be added to the basing point price. If other all-rail 
delivery is made, freight charges may be adjusted accordingly with the 
prior consent of the Board of Directors. 



9829 



_ 3 I— 

Violation of the provisions of this pricing -oolicy is chargeable 
with a fine of $10 per ton of the product sold in violation. The 
following proviso nay operate as an exception to the price provision: 

"The Board of Directors by the affirmative vote of 
three-fourths of the whole Board may permit any member of 
the Code generally to sell or contract for the sale of any 
product produced by such member or members at a base price 
which snail be less than the then published base price of 
such member or members for such product at the respective 
basing points therefor of siich members, or at a delivered 
price which shall be less than the delivered -price other- 
wise chargeable under the provisions of this Section 4, if 
by such vote such Board shall determine that the making of 
such sale or contract of sale a.t such less base price or 
less delivered price is in the interest of the Industry or 
of any other branch of the industry and will not tend to 
defeat the policy of Title I of the National Industrial 
Recovery Act by making possible the using or employing of 
an unfair practice." 

Employment 

Data supplied by the nine comolainants indicate that in 1929 
approximately 2,000 workers were engaged in their blast furnace plants 
and that the normal work day during that year consisted of 12 hours. 
This cannot be considered =s representing total employment at any one 
time, because the individual reports cover different periods. During 
1933 and 1934, however, summarized data as supplied by the complainants 
may be considered a.s representing the total employment in their blast 
furnace plants. These data are shown in Table 15. It will be noted 
that in July, 1937;, the month immediately following the passage of the 
National Industrial Recovery Act, the number of workers was almost 
double the employment in the preceding April; also that employment 
apparently rose to a peak of 1,700 workers in January, 1934, but has 
followed a downward trend since that time. 



9829 



-540- 



Table 15. - Employment and activity in the production of pig 
iron by the reporting complainants 



1/ 







Number of com- 


Nximber of companies 


Payroll period - 


Number of 


panies reporting 


reporting no 


including 15th 


employees 


s ome 


production 


of - 




employment 


during period 


1929 (aggregate) 


l/ 7,901 


9 





1932 








January 


'329 


3 


5 


April 


359 


1- 


7 


July 


10 


1 


7 


October 





r 


6 


1933 








January 


460 ' 


4 


7 


April 


506 


4 


7 


July 


1,007 


6 


3 


October 


1,220 


6 


3 


1934 








January 


1 , 302 


6 


3 


April 


1,011 


5. 


4 


July 


1,297 


6 . 


4 


October 


829 


5 


6. 



This total is arrived at by combining reports rf producers as of 
different periods; it should not be considered as representing total 
employment as of any one date. 



Various data submitted by the complainants indicate that employment 
in the pig iron industry was greatly affected by a., "spread the work" 
policy on the part of the producers; that is, individual employees 
worked only a few days during each payroll period, being replaced by 
other employees in order to enable the workers to realize some earnings. 
The data in hand are not sufficiently detailed, however, to measure the 
extent to which this policy was followed. They do indicate, however, 
that part-time employment during periods of operation has largely dis- 
appeared in the pig iron industry under the code. 

Earnin gs o f labo r 

Apparent earnings of labor have not risen to the level of 1929 as 
the result of compliance with the Iron and Steel Code. However, in that 
year the normal work day was 12 hours in length, whereas the maximum 
work day under the code is eight hours. Moreover, the work week in 1929 
consisted of six, and in some cases, seven days, whereas at present the 
maximum work week, with specific exceptions, is 40 hours. This will 
explain the failure of average semi-monthly earnings of labor, as shown 
in Table 16, to be as high as the level of 1929. 



9829 



-541- 

The difference 'between the anrwrent weekly earnings in all re-porting 
plants and those of northern plants exists by reason of the fact that 
wages are normally lo^er in the Southern States, a condition which was 
nerpetuated by a differential in minimum wages provided in the code. 



Table 1^. - Course of semi-monthly earnings of labor 
employed by reporting complainant producers 





Number of 
reporting 


Average semi- 


-monthly wages 


Payroll neriod 


All 


Northern 


including 15th of - 


producers 


producers 


nroducers 


1929 1/ 


9 


$70.10 


$72.74 


1932 1/ 


5 


42.95 


47.93 


1933 








January 


4 


27.80 


32.89 


April 


• ' 4 


30.70 


34.88 


July 


6 


38.94 


41.95 


October 


6 


36.19 


38.04 


1934 








January 


6 


37.27 


39.38 


April 


5 


39.18 


42.54 


July 


6 


41.13 


43.82 


October 


5 


44.47 


48.07 



\J Cannot be considered as representing any one specific payroll period; 
available data relating to specific -oeriods are not adequate for 
establishing any trend within the year. 



Hourly wage rates 

Data from which the course of hourly earnings of labor can be 
estimated with any degree of satisfaction have been supplied for the 
period 1929-1934 by only three northern producers. These ds,ta are 
summarized in Table 17.. It will be noted that average wages paid by 
these three producers increased from 36.5 cents per hour in July, 1933, 
the month immediately preceding the adoption of the code, to 45.0 cents 
in October, 1933; and that the general tendency continued upward through- 
out 1934. 



9829 






Table 17. - Course of indicated hourly wage rates 



Payroll 1 
including 


oeriod j 
15th of - : 


Number 

of 
report 
produc 


Lng: 

3rs 


Simole 
average 
wage 
rates 


:Average wage rates of 
: producers who supnlied 
:data for the entire 
: neriod 














: Cents 




1929 1/ 
1932 T/ 






4 
.3 




■ 41.8 
38.2 


; 




.44,9. . .., 

38. 2 


1933 

January 
April 
July 
October 






3 
3 
3 
3 




56.5 
35. 8 
36.5 
45.0 


• 




36.5 
35.8 
36.5 
45.0 


1934 

January 
April 
July 
October 






4 
2/3 

4 
2/ 3 




43.5 
42.5 
46.4 
56.1 


*• 




45.7 
45.1 
49.6 
65.6 



1/ Cannot be considered as representing any one specific payroll period; 
available data relating to specific neriod s are not adequate for 
establishing any trend within the year. 

2/ 31ast furnaces belonging to two of those producers were banked. 



Costs of production 

Data have been supnlied by only two producers, from which the 
change in the cost of producing foundry pig iron since the passage of 
the National Industrial Recovery Act can he estimated.. One company 
supnlied costs applicable to the last six months of 1931 as corn-oared 
with the period from September 1, 1933, to January 31, 1934. Data 
submitted by 'this producer indicate that his total cost was only 5 
per'cent higher during 1 the latter neriod than during 1931. This is 
largely due to the fact that raw material costs were slightly lower' 
during the latter period. Da.ta submitted by the other nroducer indicate 
that raw material costs were 14.7 per cent nigher during June, July, 
and August, 1934, than the average of the first six months of 1933, 
and that total costs had increased by 17.4 ner cent. 

Both producers indicate an increase of approximately 42 tier cent in 
labor costs over those in effect under -ore-code conditions. 

Raw materials costs . - Raw material for the manufacture of pig iron, 
the cost of which amounts to about 80 per cent of total cost of pro- 
duction, consists of iron ore, coke and crushed limestone. The following 

9829 



-543- 

table shows the amount of each of these materials required to produce 
one gross ton of nig iron. 



Table 18. - domestic consumption of -principal raw 
materials per gross ton of pig iron, 1933 







C 


onsumption per gross 


Raw material 






ton of pig iron l/ 








Gross tons 


Iron ore 






1.660 '. 


Mill cinder, scale, 


etc. 




.217 


Coke 






.864 


Limestone 






.351 


Total 






3.092 



TJ Computer 1 from American Iron and .Steel Institute, 
Annual Statistical Report, 1933 . 



Published reports in the leading periodicals of the iron and 
steel industry indicate that the price of Lake Superior ore delivered 
to lower Great Lake ports has not varied since March 22, 1929. Prices 
of iron ore in the Birmingham district are not available. 

Imports of iron ore are entered chiefly into Maryland from sources 
controlled oy a major stee-I producer. The unit values 1 of entries through 
other customs districts have varied widely and irregularly siiice the 
beginning of 1933, apparently depending upon the analysis of the ore. 
This renders impossible the establishment of a trend of unit values of 
a specific grade of ore. Table 19 shows imports of iron ore in 1933 
and 1934 by customs districts. '■ . 



3829 



344- 



Table 19. - Imports of iron ore in 1933 and 1934 by customs 

districts 





• Total 




Phila- 


Hew 




: All 


Period 


. imports 


' Maryland : delphia 


York 


Buffalo 


other 






Quantity - 


. ong tons 






1933 












July-September 


376,332 


372,994 


746 


40 


- 


2,542 


October-December 


343 , 527 


292,890 


49,337 


66 


- 


1,244 


1934 














January-March 


232,296 


146,469 


6,100 


70,702 


1,549 


7,476 


April-June : 


517,870 


427,707 


6,800 


75,669 


6,864 


830 


July-September 


426 , 798 


'368,191 


806 
Value per 


22,400 

ten 


35,237 


114 



1933 



July-September 


$2.23 


$2.22 


: $14.59 


$33.22 


; — 


: $6.65 


October-December 


: 2.33 


2.02 


: 4.08 


44.95 


; — 


3.89 


1934 














January-March 


2.16 


2.00 


4.25 


2.21 


: S3. 39 


3.10 


April- June 


2.27 


2.17 


2.94 


2.40 


5.55 


4.38 


July-September 


2.55 


2.30 


11.70 


2.04 


5.30 


9.74 






Per ( 


:ent of tc 


;al quant' 


Lty 




1933 














July-September 


100 


99.1 


0.2 


negligible 


0.7 


October-December 


100 


85.3 


14.4 


Do. 


— 


.3 


1934 














January-Mar ch 


100 


63.1 


3.6 


30.4 


0.7 


3.2 


April- June 


100 


82.6 


1.3 


14.6 


1.3 


.2 


July-September 


100 


36.3 


.2 


5.2 


3.3 


Negli- 
gible 



The price of furnace coke at the ovens in Connellsville, Pa., as 
reported in Iron Age, increased, from $1.75 per net ton during the first 
five months of 1933 to *,3.85 during the last nine months of 1934, as 
compared, with an average of $2.75 in 1929. The increase affects five of 
the 12 complainant producers , inasmuch as they purchase this material. 
Of the seven complainant producers who own and operate their own coke 
ovens, five are either branches or subsidiaries of steel producers and 
are not entirely dependent upon the sale of pig iron as an oixtlet for 
their metallic product. 



In 1933, the average consumption of coke per gross ton of pig iron 
produced, in the United States was 0.864 gross ton, or approximately one 
net ton. Although the yield of by-product coke in that year was only 
68.97 per cent of the coal consumed (62.3 per cent in the case of 
beehive coke) , the complainants owning their own coke ovens are able to 
utilize gas which is produced in the coking process as fuel in the produc- 
tion of pig iron; and a number of these producers normally sell their 



-: 45- 

excess gas to municipalities, tans recovering a portion of their- fuel 
costs. One producer of pig iron also manufactures coal-tar products, 
thus recovering a substantial -oortion of its cost in producing coke. 

Data with respect to cost? of limestone used in the production of 
pig iron are not available. 'Most iron and steel producers own their own 
limestone quarries, thus obviating the necessity for purchasing this 
material in an open market. 

Prices ' ' : . . . 

During the first three months of 1933, the Iron Age composite pig 
iron price stood at $13-. 56 per: gross ton, the lowest'.average since the 
World War. By June, 1933, this average., had increased to $15.01 and by 
December of that year, -to $16 ..90; there was a further rise to $17.90 per 
gross 'ton, the price which has prevailed sinqe April', 1934'. The increase 
of $4.34 per gross ton -from .the low point in ] 1933 .'.Represented an advance 
of 32'per cent. During the 'same period of tine, 'the price of No. 2 
foundry pig iron delivered from eastern Pennsylvania furnaces to Phila- 
delphia, the principal- center, of consumption. for merchant iron, rose from 
$13.26 te~$20.26, or approximately 53 t per cent; and' the price of the 
same grade of iron delivered from Birmingham, Ala.,' to the docks of 
Philadelphia increased from $15 per ton to $19.38 per ton, or 32.5 per 
cent. • 

In 1934 the prices of ITo. 2 foundry iron quoted at points in eastern 
Pennsylvania (3ethlehem, Birdsboron and Swede land), at Sparrows Point, 
Md., and at Everett, Mass.,' with one .exception have been 'the highest 
basing point prices for this 'grade of the commodity in the United States. 
The same is true with- respect to prices quoted for'" the malleable grade 
of pig iron, with the- exception of the fact that Sparrows Point, Md. is 
not a basing point for this 'grade of. product. Moreover/ the delivered 
price of pig iron in Boston,' Mass. ,. from Everett, Mass.,' a suburb of 
Boston, where'- the plant of- one. of the complainants! is-- located, is the same 
as the all-rail freight delivered price from Buffalo, IT. Y. 

Table 20 compares delivered prices of domestic No. 2 foundry iron 
at Philadelphia, the'prineipal market in the United States, with the 
average landed cost of imports through that port for the years 1933 and 
1934. 



9829 



-546- 



Table 20; - Comparison of approximate landed costs of imports 
with' domestic prices delivered at Philadelphia 





Price of No. 


2 foundry iron; : 


Approximate landed cost of 




delivered 


from ; : 


imports from- 




Feriod 


Eastern 


Birmingham : : 


The Nether- : 


British 




Pennsylvania Ala : : 


land si/ : 


India 1/ 


1933 


: : : 






January $13126-$15..7Si 


' : $15.-15.25 : 


14.88 


$10.77 


February 


13.26-13,76 ! 


15-15.25 : ' 


14.98 1 


9.59 


March 


13.26-13.76 


15-15.25 : 


15,91. 


9.63 


April 


14.26 


15-15*25 : 


14.29 


9.29 


May 


15.26 ! 


17-17.25 : 


13.97 


! 10i52 


June 


'16.26-16,76 


17-17.25 : 


14.58 


10.13 


July 


'16.26-16,76 


17 T 17.25 : 


15,53 


: 12.00 


August 


[17.26-17.76 


18.12-18.37 : 


' 14. G8 


! 11.14 


September 




18.88 : 


! 15.00 


:' 12. 29 


October 


! 18.26 




: 16.42 


: 11.72 


November 


! 18.26 




: 19.73 


: 12.73 


December ' 


i 19.26 


! 18.88 : 


: 17.10 


: 13.39 



1934 



January ! 


19.26 ! 


18.88 ; : 


14,49 ! 


13.41 . 


February ! 


19.26 


18.68 : : 


20.70 


14.52 


March 


19.26 


18.68 : : 


17.61 


15.53 


April 


19.26 


18.88 : 


17.15 


20.06 


May- 


20.26 


19,88 : 


18.77 


15.71 


June 


20.26 


19.88 : 


19.00 


15.47 


July 


20.26. 


19.88 : 


19.73 


14.96 


August 


. .20.26 


19.88 : 


20.69 


■ • 15.76 


September 


! 20.26 


: 19,68 •• : 


20.16 


! 16.22 


October 


! 20,26 


! 19.80 : 


22.10 


: 15.26 


November 


: 20.26 


! 19.88 : 


20.55 


! 16.45 


December 


! 20.26 


! 19.88 : 


! — 


: 16.14 


1935 










January 


: 20,26 


: 19.88 : 


» — •— 


: 18.58 



1/ Unit value of imports plus duty at $1,125 per gross ton plus ocean 
freight at conference contract rates; does not include handling costs 
or importers' profits. 



9829 



-547- 

From data shorn in Table 20, it mav be noted th.-^t the landed cost 
of pig iron imported from the Netherlands, net including minor costs of 
shipping and handling or importers' profit, was not greatly different 
from domestic delivered prices during 1933 and errly 1934. Since 
July, 1934, the landed cost of imports appears to have been somewhate 
higher than domestic delivered prices of No. 2 foundry iron. It may 
also be noted th^t the landed cost of imports from British India dur- 
ing 1933 and the early part of 1934 was roughly $5 to $7 per ton 
lower than tne domestic delivered prices for No. 2 foundry iron. 
Since March, 1934, howevfr,tha landed cost of imports from British 
India has been only $3 to $5 per ton lov;er than domestic delivered 
prices. 

. The Currency Situation 

The exchange value of the florin in.ttrms^of dollars rose 69 per 
cent from 40.27 cents in the first quarter of 1933- to 68.22 cents tn the 
third quarter of 1934, whereas the average unit value of imports from 
the Netherlands rise 56 per cent during the same period. Table 21 
shows a. comparison of .the extent of the rise in the exchange value of 
the florin and of the unit value 'of import s during 1933 and 1934. 

Table 21. Comparison .of trend of unit value of imports from the 
Netherlands with course of florin-dollar exchange 





Unit value 


Florin-: 


Comparison with 


Comparison 




of imports 
in 


dollar : 
exchange 


first ouarter, 1933 


of trade 


Quarters 


Unit 


Florin- 


jlorin- 


Unit 




dollars 


in cents 


value 


dollar 


dollar 


value 




per gross 


per 


of 


exchange 


exchange 


of 




ton 


florin 


imports 






imports 


1933 


• 








; 




First 


$9.80 


40.27 


100.0 


loo. n 


100.0 


100.0 


Second 


9.21 


45 e 97 


94.0 


114.1 


, 100.0 


82.4 


Third 


! ]/i.l9 


57,15 


104.0 


141.9 


100.0 


73.3 


Fourth 


! 11.57 


62.46 


118.1 


155.1 : 


100.0 


76.1 


1934 














First 


: 12. 27 


: 65.^5 


125.2 


163.0 


100.0 


76.8 


Second 


: 12.80 


• 57.86 


130.6 


168.5 


100.0 


77.5 


Third 


: 15.31 


: 68.22 


156.2 


169.4 


■ 100.0 


92.2 


Fourth 


: 15.63 


: 1/87. 85 


159.5 


168.5 


: 100.0 


94.7 



1/ Average for October and November used since no imports from the 
Netherlands were entered in December. 



The exchange value of the rupee in terms of dollars rose 45 per cent 
from the first ouarter to the fourth quarter of 1933, whereas the average 
unit value of pig iron imported from British India roseonly 18 per cent 
during the same period. However, during 1934 the average unit value of 
imports from British India ranged from 50 to 84 per cent higher than the 
first quarter of 1933, whereas the exchange value of the rupee in terms 
of dollars averaged somewh-t less than 50 per cent aDove the l>:vel for 
that quarter. Table 22 shows a comparison of the unit value of imports 
from British India with the exchange value of the rupee during 1933 
and 1934. 



9829 



-548- 



Table 22. - Comparison of tfendof unit value of imports from 

British India with course of rupee-dollar exchange 



Period 
(quarters) 



Unit value 
of imports 
in dollars 
per gross 

ton ' 



ffiupee- 
rdollar 



: :' Comparison with Comparison 
: first quarter, 1933 of trends 



: exchange : Uni t v alue 
:incc ents : :' of 
:per run ee: im ports 



Rupee- :Eupee- : Unit- ■• 
dollar : dollar : value 
e xchange: exchange ;of import 



1935 

First 

Second 

Third 

Fourth 

1934 

First 

Second 

Third 
Fourtii 



$5.47 

4.81 
5.02 
6.45 



25,50: 

29.17: 
34.50: 
37.25: 



100.0 

87.9 

110.0 

117.9 



8.24 


38.05 


: 150.5 


10.07 


38.33 , 


1G4.1 


9 . 53 


37.33 


: 174. 2 


9.86 . 


: .37.27 


! 180.3 



100.0 : 100.0 : 100.0 

113.6 : 100.0 : 77.4 

134.7 : 100.0 : 31.7 

145.1 : 100.0 : 01.3 



143.2 : 100.0 : 101.5 

149.3 : 100.0 : 123.3 
147.3 : 100.0 : 118.3 
145.1 : 100.0 : 124.2 



c 



c 



9fi; 



-549-.. 
APPENDIX A 

The Industry in the Netherlands 



Development of the Industry 

The pig iron industry, in the Netherlands is an outgrowth of the 
position of that country during the Uorld War, at which time ex- 
treme difficulty was encountered in obtaining sufficient iron and 
steel for its needs. The promotion of this industry was "begun in 
1917, with the formation cf a "committee for the establishment of 
blast furnaces, steel works, and rolling mills in the Netherlands." 
The original capitalization was 25 million florins, of which the gov- 
ernment subscribed 7| million. This was later increased to 35 million 
florins, of which the city of Amsterdam subscribed 5 million. Oper- 
ations were begun early in January, 1924. At the present time there 
are three blast furnaces with total annual capacity of about 500,000 
tons. 

Sources of raw materials 

The pig iron industry in the Netherlands obtains virtually its 
entire stock of raw materials from foreign sources. .In 1933, im- 
ports of iron ore into that country amounted to 459,000 metric tons, 
of which Spain supplied 157,000, France 121; 000, Sweden 117,000, and 
Algeria 49,000 tons. In addition, 379,000 metric tons of unroasted 
iron pyrites (sulphide, ores) were imported chiefly from Spain, Italy, 
Portugal, Greece, and Belgium and Luxemburg. This gra.de of- ore is 
not economical in the production of pig iron alone, since the sul- 
phur must be eliminated by roasting before the ore is smelted. The 
sulphuric acid thus obtainable is important, however, in the produc- 
tion of phosphoric acid of which the Netherlands is a substantial 
exporter. 

Coal is obtained from Germany, the United Kingdom, Belgium- 
Luxemburg,' Poland and Danzig, Soviet Russia, and France. Limestone, 
the flux, is obtained chiefly from the concessions in Belgium and 
Luxemburg. 

The fact that the Netherlands imports its iron ore from various 
sources indicates the possibility of changing at minimum cost the grade 
of iron produced to accomodate changing demands. 

Location of the industry 

The blast furnaces of the Netherlands are situated at the water's 
edge in the city of Amsterdam. This location is stragetic because of 
its accessibility for both ocean shipping and inland water transpor- 
tation, which make possible virtual, if not complete, elimination of 
overland freight costs. This constitutes a substantial oconomy in 
costs of production and of marketing the product. 



9829 



-; du~ 



Production and exports 



The output of -oig iron in the Netherlands in 1924, the first year 
of production, was 91,100 metric tons. 3y 1927 the output was over 
200,000 metric tons; and from 1928 to 1933, annual production was more 
than 250,000 metric tons. 

The pig iron industrj' of the Netherlands depends primarily upon 
exDorts for the disposal of its metallic product. Table 1 shows the 
ratio of total exports to the production of rug iron since 1925. 



Table 1. - Production and exports of pig iron in the Netherlands, 

in metric tons 







Gross 


Hatio of exports 


Year 


Production 1/ 


exoorts 2/ 


to production 


1926 


142,500 


114,721 


80.5 


1927 


203,700 


149,633 


73.5 


1928 


258,200 


215,774 


83.6 


1929 


253,800 


179,276 


70.6 


1930 


272,700 


: 209,727 


76.9 


1931 


256,717 


222,857 


86.8 


1932 


236,426 , ■■■ 


212,237 


89.8 


1933 : 


252 , 645 


, 238,807 


94.5 



.1/ American Iron'and Steel Institute, Annual Statistical Eeport,1933. 
.2/ Netherlands foreign trade returns. 

Transshipment constitutes an important but ' indeterminate element 
in the exportation of ' pig iron from the Netherlands. In 1933, imports 
of pig iron into the Netherlands amounted to 9,204 metric tons, where- 
as exports during that year were 283,307 tons. Data from which the 
consumption of imported pig iron in the Netherlands can be estimated 
are not available. Since the average unit value of imnorts has been 
considerably higher than thnt of either gross exports or net exports, 
however, it appears reasonable to suppose that they have been entered 
either for purposes of transshipment, or to satisfy a demand for iron 
of special grades, or both. Inasmuch as the unit value of gross ex- 
ports has exceeded that of net exports, however, the hypothesis of 
transshipment appears to be the most reasonable one. This hypothesis 
is strengthened by the fact that, since the industry is an importer 
of iron ore, it should be in a position to produce the grades of iron 
required in its domestic market. 



9829 



-551- 

Table 2 -shows the quantity and unit value of exports, imports, and 
net exports of pig iron from the ITetherlands since 1925. 



[able 2, - Netherlands exnort-s and imports of pig iron,(*) 

1926-1934- 



Year 


G-ro s s 


Imports 


Net 




exports 




• exports 




Quantity - metric tens 


1926 


114,721 


37,155 


77,565 


1927' 


149,655 


51,727 


117,906 


1928 


215 , 774 


35,628 


180,146 


1929 


179,276 


30 , 506 


148,770 


19c C 


209,727 


- 32,840 


176,887 


1951 


222,857 


16,228 


206,629 


1952 


212,237 


10,501 


201,735 


1933 


238,807 


. 9,204 


229,603 


1954 1/ 


183,312 


8,748 


174,564 




Valu< 


3 - -florins per metric 1>on 


1926 


40.44 


52.88 


34.45 


192? 


: 40.39 


: 37.06 


35.91 


1928 


: 40.83 


54.24 


38.24. 


1929 


: 41.54 


55. r '3 


38.78 


1950 


: 42.65 


50.73 


41.14 


1931 


: 34.68 


: 46.17 


33.77 


1932 


: 23.62 


35.01 


23.02 


1933 


: 21.47 


43.07 


20.61 


1934 1/ 


21.37 


: 53. £1 


20.76 



(*) Netherlands foreign trade returns 
1/ January to October. 



9829 



-552- 

E xport markets 

The principal' market, for. Netherlands nig iron, in the collective 
sense, is Europe.- The principal markets on, that continent in recent 
years have been the customs union of Belgium and Luxemburg, and France, 
while important secondary markets have included Sweden, Switzerland, 
Italy, and a number of other European countries. The largest single 
market at the present time, however, is the United States. 

The rela.tive importance of the export markets for Netherlands oig 
iron underwent a drastic change during the period 1931-1933. For 
example, prior to the financial collapse in Europe in 1931, Germany 
had been receiving approximately 14 per cent of these exports; in 1931 
Germany's share wa,s 5.8 per cent and since that year that country has 
imported no iletnerlands nig iron. With declines in other foreign 
markets, the exoorts of Netherlands pig iron to the United Kingdom rose 
from 28,000 metric tons in 1.930 to 64,000 tons in 1931, or from 13 to 
over 28 per cent of the total exports. As a result of the depreciation 
of sterling and' change "rom a duty of 10 per. cent to one of 33-1/3 ;oer 
cent, exports of pig iron to the United Kingdom declined to .22,000 metric 
tons in 1932, and to negligible quantities since that time. 

. s 

Meanwhile, total exoorts of ''pi, iron from the 'Netherlands were 
210,000 metric' tons in 1930, 223JOO0 in 1931, 212,000 in 193.2, 
239,000 in 1933, and 183,000 metric tons in the first tern months of 1934. 
This has been due in great measure to increased exports to the United 
States. In 1928 and 19?9, less than 13 -per cent of exports was con- 
signed to this country; in 1932, 1933, and the first ten montns of 
1934, more than 30 per. cent of the Netherlands exports of pig iron was 

1 1 r 

shipped to the United States. 

Table 5 shows the coiirse of Netherlands exports of pig iron by 
important countries, the relative importance of these exoort markets, 
and .the annual average,, unit values of exoorts to these countries in 
terms of Netherlands currency.' With respect to unit values it will 
be noted that, although average values have declined greatly since 
193.0, they have at all times been closely grouped. 



9829 



-55i - 

Table 3. - "Jether lands exoorts of Dig iron, "by important 
countries, 1928-1934.* 





T QOQ 






i 


t 
\ 


• 


Country : 


1929 


1930 


: 1931 


1932 


: _1933~ 


±3&2A..Xl 




Average 
















Quantity - 


metric tons 




United States : 


25,920 


6,615 


15,223' 


• 67,089 


74,613 


58,728 


Belgium-Luxemburg : 


•49,698- 


59,528 


58,879 


48,407 


58,7-93 


'42,244 


France : 


•35,272 


24,358 


16,942 


19,435 


■ 36,503 


11,299 


United Kingdom 


21,052 


27,810 


63,934 


22,421 


600 


8/ 


Germany 


23,689 


29,600 


13 , C 10 


15 


- 


2/ . 


Sweden ': 


9,378 


23,715 


21 , 140 


■, 16,771 


17 , 932 


23,893 


Italy ' : 


8,861 


■ 6,520 


■ 6,825 


5 , 647 


, 3„219 


5,081 


Switzerland : 


2,440 


5,529 


3,204 


5,458 


8,453 


10,325 


Denmark : 


10,683 


14,209 


3,867 


2,779 


4,930 


7,716 


Canada 


1,275 


950 


254 


. . 58:1 


.;- 


2/ . 


All other 


'9,252: 


: 10,895 


21 , 579 


23,627 


28 , 764 


24 , 031 


Total 


197.5C3: 


: 209, 727 


222,857 


212,237 


233,807 


183,312 




13.1 


xJ • ft 


D or cent ( 


if total 


. 31.2 




United States 


5.9 


31.6 


32.1 


Belgium-Luxemburg : 


25.:: 


28.4 


26.4 


• 22.8 


24.6 


23.0 


Prance 


17.9 


11.6 


7.6 


9.1 


15.5 


6.2 


United Kingdom 


10.6 


13.3 


23.7 


10.6 


.3 


2/ 


Germany 


12.0 


14, 1 


5.8 


Negligible- 


2/ 


Sweden 


4.8 


11.3 


9.5 


' 7.9 


.7.5 


13.0 


Italy 


4.5 


3.1 


3.1 


2.7 


3.4 


2.8 


Switzerland 


1.2 


2.6 


1.5 


2.6 


3.5 


5.6 


Denmark 


5.3 


6.8 


1.7 


-L. <-> 


• 2.1 


4.2 


Canada 


.7 


. .4 


• .1 


.3 


- 


- 2/ 


All other 


4.7 




9.7 


11.1 


t 12.1.- 


■ 13.1 


Total 


100. 


100.0 


10 0.0 


. 100.0 


: : .100.0 


: 100.0 




40.98- 


Value— f 


lorins pc 


r metric 


ton 

: : 21.77 




United States 


• 45.70 • 


32.48 


24.44 


: 21.18 


3 e lgium- Luxemburg 


40.56 


41.33 ■ 


• 32; 79 


22.43 


: 21.52 


: 21.00 


France 


40.59 


: 43.77 


32.59 


: 22.59 


20.76 


: 21.42 


United Kingdom 


43.40 


44.35 


31.3:2 


: 25.44 


21.01 


• 2/ 


Germany 


: 41.41 


: 43.72 


: 36107 


: 57.73 


' 


: 2/ 
19.63 


Sweden 


: 40.91 


: 41.47 


: 33.19 


: 21.59 


19.59 


Italy 


: 40.17 


I 40.90 


: 33.61 


:'■' 22.82 


: 21.41 ■ 


20.27 


Switzerland 


: 43.21 


: 43.14 


: 33.51 


: 24.53 


• 22. 12 


27.41 


Denmark 


:' 40.93 ' 


: 42.54 


: 33.04 


23.57 


2C.61 


20.61 


Canada 


40.00 


40.85 


: 36.32 


25.87 


_ 


2/ 
25.88 


All other 


42.72 


41.97 - 


54.15 : 


24.19 : 


22. 74 : 


Average : 


41.13 : 


42. 65 : 


34.68 : 


23. 62 : 


21.47 : 


21.32 



Netherlands fo 
1/ January- Octobe 
2/ Exports, if an 



reign trade returns. 

r, inclusive. 

y, were negligible, and are 



included in "AH other. " 



9329 



-554- 
E ffect of the currency situ ati on on costs of production 

Adherence to the gold standard on the part of the Netherlands has 
contributed materially to the lowering of the cost of producing pig iron 
since 1931. This arises from the fact that raw materials are purchases 
from, countries whose currencies have depreciated. Neither Spain nor 
Sweden, the principal sources of hematite (oxide) ore, nor the United 
Kingdom, an important source of coking coal, are on the gold standard; 
and Gernany, the most important source of coal, is pursuing a policy of 
stimulating exports by means of exchange manipulation. As a result, 
from 1931 to 1933, the average unit va'lue of the net imports of hematite 
ore declined from 10.37 to 6. '30 florins per metric ton ($4.17 to $2.56, 
converted at par); iron pyrites (sulphide ore) from 11.29 to 9.00 florins 
($4.54 to .$3.62), and coal from 11.88 to 6.14 florins ($4.78 to $2.47). 
Although Belgium, the principal source of limestone, has remained on the 
gold standard, the unit value of this imported material declined from 
2.87 florins in 1931 to 1.91' florins in 1933 ($1. 15 to $0.77, converted 
at par). The effect of these price changes on the raw material cost of 
producing pig iron is estimated in Table 4. This estimate is based upon 
the United States consumption! of iron' ore, ' coal* and limeston-e par gross 
ton of pig iron in 1933, as indicated- in reports of' the American Iron and 
Steel Institute. It does not include prices of mill cinder, scale, etc., 
which- are_ not available, The table indicates a decline of more than 40 
per cent in the total cost of imported 1 raw ; materials, however. 

• ( Table.. - Effect of declines in import values on the raw 
material 'cost o'f producing pig iron in the Netherlands 





Estimated 


Unit 


value • : 


Approximate raw : 




Raw 


quantity ! 


• c 


)f • : 


material costs : 


.•Percent 


material 


're qui red 'par 
'metric ton 1/ 


imports 


per ton 2,1 - 


tdecline 




.' 1931 ' 


: 1933 


1931 : 


1933 : 






Metric tons 




■FIoj 


:ins 






Hematite ore 


1.633 


10.37 


:' 6.30 


16.93 


10.29 : 


:39.2 , 
:48.3 


Coal 


.850 


11.88 


: 6.14 


10.10 


5.22 : 


Limestone' 


..345 


: 2. 87 


: 1.91 : 


.99 


. 56 : 


:33.3 


: Total 


. 2-828 




• 

• 

• 


28.02 


16.17 : 


: 42.3 



iy .U.S. quantities reported by American 'Iron and'Steel Institute, con, 

verted to metric equivalents. " * : 

2/ Computed from Netherlands foreign trade returns. 

Other factors affecting costs of production • 

. The possibility of recovering sulphuric acid' from the roasting of iron 
pyrites is noted above 1 in the discussion-' of "Sources of raw materials, " 
Although current data regarding costs of production in the Netherlands are 
not available, it may be reasonably supposed that some degree of flexibility 
in the allocation of costs of producing is possible in so. far as pyrites is 
used. Coal, rather than coke, is imported into the Netherlands. This in- 
dicates that the pig iron producer operates its own coke ovens in conjunc- 
tion with its blast furnaces; it further indicates the possibility of 



!829 



-555- 



recovering substantial costs of producing pig iron by producing coal-tar 
derivatives which, are used in the chemical manufacturing industry. The 
Netherlands is a substantial exporter of chemicals, paints, varnishes, and 
fertilizers. ... 

The Netherlands pig iron, industry supplies the city: of .Amsterdam 
with fuel gas. Although that. practice is not uncommon in the United 
States, wherever followed, it makes possible partial recovery of the 
fuel cost of producing pig iron. 

The location of the Netherlands blast furnaces with respect to deep 
water is noted above in the discussion of "Location of the industry. " 
The effectiveness -of this location is in sharp contrast .with the locations 
of the blast furnaces in the United States; in this counjtry it is neces- 
sary to transport either coal or iron ore, or the finished product rela- 
tively long distances (usually overland), thus adding materially to. domes- 
tic costs of producing or marketing iron and steel products. 

Returns from exports 

The 42 per cent decline in the purchase prices of raw materials 
described above was instrumental in enabling the Netherlands pig iron 
industry to reduce the unit value of exports by approximately 38 per cent 
between 1931 and 1933 without great adverse effect on its profits. This 
is especially true if, as is true of production costs in the United 
States, between 75 and 80 per cent of the cost of producing pig iron is 
in the cost of raw materials. Inasmuch as production was only approximate- 
ly 4,000 metric tons less in 1933 than in 1951, it does not appear prob- 
able that fixdd costs of production increased in substantial degree. 

U nited States trade with the Netherlands 

The United States normally enjoys substantial commodity trade with 
the Netherlands, the balance of which is "favorable. " The commodity 
trade of the United States with the Netherlands from 1926 to 1933 is 
shown in Table 5. It may be noted that our "favorable" balance of trade 
has declined from $61 million in 1927 to $18 million in 1933, and that 
our exports declined by approximately $100 million during the same period. 



9829 



-556- 



Table 5..- United States trade with the Netherlands, 1926-1933* 
(in thousands o f dollars) ; 









: Excess of 


Year 


Exports 


Imports 


: exports 


1926 


$135,795 


$101,855 


$33,940 


1927 


148 , 220 


87,242 


60,978 


1928 


142, 278 


83,604 


58,574 


1929 


128,295 


83,853 


44,442 


1930 


104,915 


51,193 


53,722 


1931 


: 65,590 


: 34,952 ': 


: * 30,638 


1932 


: 45-, 254 ■ 


22,430 : 


: 22,824 


1933 


: 48,659 


: 30,949 : 


: 17,710 



* U. S. Department of Commerce, ForeiCT, Commerce and Navigation of 
the United States . 

Iron and steel products . - The increase in United States imports of 
pig iron from, the Netherlands since 1932 has been an important phase of 
the search of that country for foreign markets for her output of pig iron 
after the British tariff of 33-1/3 per cent against that commodity 'became 
effective. In 1932 our imports of iron and steel products from the 
Netherlands, which consist chiefly of pig iron, increased from $400,000 
to $973,000, while our. exports to that country declined from $639,000 to 
$359,000, thus changing our. "balance of trade with respect to iron and 
steel products from a favorable one of $239,000 to an unfavorable one of 
$614,000. In 1933 our exports to the Netherlands of iron and steel 
products increased to $820,000, while our imports of this class of com- 
modity declined to $832,000, thus producing an approximately even "balance 
of trade in iron and steel commodities "between the two countries. Table 
6 shows a comparison between our exports to and imports from the Nether- 
lands in iron and steel products, excluding machinery and similar highly 
advanced commodities, since 1925.. 



( 



I 



9829 



-557- 



Table 6. - Balance of trade with the Netherlands in iron and 

steel manufactures* 

(In thou sa nds of dollars) 



Year : 


Exports 


1926 


1 $972 


1927 


: • 891 


1928 : 


1,004 


1929 ■! 


1,362 


1930- 


: 980 


1931 


: 639 


1932 


359 


1933 1/ 


: 820 





Imports : 


Excess 




. £xpo rt s : 


Imports 




$2,134 : 




$1,162 




: 897 : 


: _ 


6 




: 1,068 : 


: — 


64 




.738 : 


: $624 


: 




: 354 


: 626 


: - 




: 400 


: 239 


: - 




: . . 973 


: ; — 


: 614 




: 832 


: ; — 


: 12 



*U. S. Department of Commerce, Foreign Commerce and Navigation of the 
United States . 
1/ Preliminary. 

Importance of United States in Netherlands trade 

The United States declined in importance as a market for Nether- 
lands exports from 3.7 per cent of the total exports of that coimtry 
in 1929 to 2.7 per cent in 1931, but rose to 3.6 per cent in 1932. 
Similarly, the United States declined in importance as a source of 
imports into the Netherlands from 9.9 per cent in 1929 to 6.7 per cent 
in 1932. Similar data for 1933 are not available at this time. Table 
7 shows the course of the trade of the Netherlands with the United States 
from 1929 to 1932. 

Table 7. ~ Importance of the United States to the Netherlands 

in commodity trade* 







(In millions of dollars) 








Exports : 


: Imports 








To : 


Ratio: 




Erom : 


Ratio 


Year : 


Total : 


United : 


to : 


: Total 


United 


: to 






States 


total 




States 


total 




: $790 


: $29 


:Per ceni 


:: : 


$109 


Per cent 


1929 


: 3.7 


: $1,106 : 


: 9.9 


1930 


: 681 


: 19 


: 2.8 


: 972 


: 85' 


: 8.7 


1931 


: 519 


: 14 


: 2.7 


. : 760 


59 


: 7.8 


1932 


: 336 


: 12 


: 3.6 


:: 522 


: 34 


: 6.7 


1933 1/ 















*U.S. Department of Commerce, Foreign Commerce Year Book, 1933. 
1_/ Not available. 



9829 



APFBVTIX 



The Pig Iron Industry of Iritis]! India 



History and ".resent capacity • 

The pig iron industry of British India i in its modern sense, majr 
be considered as -having developed since 1881, when the government took 
over the pioneer plant of what 'is novr the Bo'ngal Iron £. Steel Co., and 
put it on an operating "basic. :This plant was acquired by the present 
organization in 1889, and operations continued until 1931. 

The Tata Iron and Steel Co., Ltd., the largest producer of pig 
iron in British India, was organized in 1907, began building its plant 
in 1908, and beg n the production oi pig iron in December, 1911. Two 
other producers, the Indian Iron & Steel Co., Ltd., and the Mysore Iron 
Works, began operations in 1933. 'The latter producer is a small govern- 
ment-owned plant which produces charcoal pig iron only. 

The total pig iron capacity of British India in 1933 consisted of 
13 blast furnaces with rated capacity of 1,730,000 gross tons per year. 
Three small furnaces of this number are more or less obsolete, however, 
and the capacity is not included in published estimates. 



Location 

The blast furnaces which produce about 99 per cent of the pig iron 
output of British India are located in the midst of coal and high grade 
iron are deposits of sufficiently abundant reserves to satisfy the needs 
of the industry indefinitely. The -producers are located at such short 
distances from active coal and iron mines and limestone' quarries xs to 
incur minimum costs of transporting raw materials to their blast furnaces. 
The industry has the further advantage of location within less than 200 
miles from Calcutta, the' principal port of exportation. Moreover, the 
same railroads which connect this "iron belt" with Calcutta connect it 
directly with one of the principal iron and steel markets of the country. 



grade from basic 
to the rough e qui v- 



G-rades'of pig iron produced 

Coke pig iron produced in British India ranges i 
and low-phosphorus iron, with hi ; _,h' manganese* content , 
alent of Ho. 2 or 2X foundry iron Which has a silicon content of approxi 
mately'2.25 per cent. An' analysis of the various grades of Indian pig 
iron reported by the Bureau of '"Foreign and Domestic C pmmerce indicates 
that it is comparable in grade with most of the domestic product. 

Production and exports . * 

Prior to the beginning of operations in 1923 by the Indian Iron 
& Steel 6o., pig iron output ranged from 300,000 to 350,000 gross tons 
per year. Prom 1923 to 1926 total annual output ranged from 600,000 to 
900,000 tons. Prom 1927 to 1931 the annual output of Indian iron was 

9829 



— . . . — 

million tens but in 1932 reduction was slightly below that 
over one million T-on^, uu.« ^» 
level. More recent figures are not available 

Table 1. Production and exerts of pig iron in 
: • British India* 













*" C* 








• — 





txpor 

Ity . '• 


Ratio to 




Year : 


Production 




Quant 


production 
Per cent 

16.0 




1920 : : 


Thousands 
311 . 


of i 


tons 

59 : 
11B . : 
183 : 
341 
382 
309 
393 

449 . 
568 . 
439 
350 




1921 

1922 : 


369 
340 


* 




34.7 
29.4 




1923 


623 


'• ; 




39.1 




1924 
1925 
1926 
1927 
1928 


573 

. eeo 

902 

: 1,140 
: 1,052 


• • 




43.4 
; 34.3 
: 34.5 
. 42.7 

40.8 




1929 


: 1,392 


: '• 




37.4 




1930 
1931 


: ■ 1,175 
: . 1,058 


: : 




: 33.1 




1932 


: ■ 914 


• • 






i_— — — 



















JaP an is the chief foreign ■*£ %**£** TeZ^ 
receiving more than 50 per cent of the total _ xno ^ 

States is the second market in !*>?**»"; ^^ries since 1920. 
of pig iron from British India by important countries 



Bureau of Foreign and Domestic Commerce, TradeJnforHation 



*U.S 
Bulletin Fo . 815 



1/ Fiscal year, 1929-32, etc. 



9829 



-560— 

Table 2. Exports of pig iron from British Ihaia, 1921-1932* 
( I n thou s ands of ^ross tons) 







: Total 




Exports 


to - 






Fiscal year 


: exports 












United 


United 


All 








Japan 


States 


Kingdom 


other 




1921-22 


: 59 


58 






1 




1922-23 


118 


112: 


3 


- 


3 




1923-24 


: 183 . 


14|±, 


24 


3 


12 




1924-25 


'34T 


171' 


134 


■ 19 


17 




1925-25 


382 


-15 -8- - 


155 


20 


38 




1925-27 


309 


234 


40 


16 


19 




1927-28 


393 


271 


65 


' 21 


35 




1928-29 


4^9 ; 


. 353 




5 


39 




1929-30 


068 


349 


85 


71 


62 




1930-31 


439 


150 


108 


• 99 


72 




1931-32 


3o0 


188 


51 


59 


42 






F.atio to total (per 


cent) 






1921-22 


100 


96;.31 : 


„ 


1.69 




1922-23 


100 


94.92 : 2.0^ 


- 


2.54 




1923-24 


100 


78.59 : 13.11 


1.64 


6.55 




1924-^5 


100 


30.15 : 39.30 


5.57 


4.98 




1925-26 


100 


43.98 : 40.84 


5.2^t 


9.94 




1926-27 


100 


7D.73 : 12.94 


5.18 


6. Id 




1927-28 


100 


68.95 : 16. o4 


'O .34 


9.16 




1928t29 


■100 


7 C .52 : 11.58 


1.11 


8.69 




1929v30 


100 


61.44 : U-..14 


12.50 - 


10.92 




1930-31 


100 


36 '.45 : 24.60 


22 . 5o 


16.40 




1931-32 


100 


53.72 : 14.57 


19.71 


12.00 



*U.S. Bureau of Foreign and Domestic Commerce, Trade Information 
Bulletin No. 815, 1933 



9829 



- 



-'r^i e of ti.r United S t_at es with British India 

Total. Table 3 indicates that commodity imports into the United 
States from British India normally exceed commodity exrtorts to that 
country. It will be noted that the commodity balance of trade declined 
from -.95 million in 19 :8 to 8 million in 1933. Partly as a result rf 
tne continued declim in our exports to British India and partly because 
of incre; sed imoorts from that country, the "unf, vor-.ole" balance of 
trade increased to million in 1933- Invoorts in 1933 were smaller, 

v-r, than in 1931; on the other hand exports in 1933 were only 
slightly more than 50 oer cent of the 1931 exports to British India, 
•is a result tne 'unfavorable" balance of tr';df in 2 933 was slightly 
aser than that of 1931. 



Table 3. Trade with British India, 1936-1933* 
( I n thousand dollars) 









excess of 




Year 


exports 


Imoorts 


imports 




1925 


00,013 


;p 150, 930 


$100,917 




19 -? 


53,397 


131,00; 


57,708 




19. '3 


53 , 594 


148,9; 


95,238 




1 


5c ,359 


149,332 


93,973 




1930 


45,195 


104,1 E 


58,953 




19 : 


,598 


£.8,5 '1 : 


2U823 




19; . 


24, -dL' 


33 . 30 


8,289 




19." 


19,858 


•*3,759 


13,901 





*U.S. Department of Commerce - For^ i^:n Commerce 
of tne United Stat-s. 



avigation 



- -3- 



-552- 



Iron and steel tr fi.d e. In contrast with our "unf avorable" balance 
of tptal commodity trr.de with British Indi-^, trie United States enjoys 
a decidedly "favorable" balance of tr^de in iron and steel. .T^ble 4, 
which snows tae trade between tnese two countries in iron and steel 
manufactures, shows a recline in this balance from i4 million in 1926 
to 390,000 in 1933. 



Table 4. Balance of trade with Britisn India in iron 
and steel manufactures* 



Year 



(Thous nds of dollars) 



Exports 



1926 


5,438 


1937 


4,685 


1928 


4.301 


1929 


3,986 


1930 


3.593 


1931 


l,P n 5 


1932 


73c 


1953 1/ 


782 



Imports' 



Excess of 
-xports 





1,423 


4,015 




1,011 


3,674 




777 


, .-■ 




858 


3,028 




1,811 


2,43-! 




597 


1 , 209 




2 bo 


479 




392 


590 



Importance of tne United Stales in Britisn Indian trade . The 
importance of the United States as a source of imports into British 
India increased from 7.3 per cent in 1929 to 10.3 per cent in 1931, 
but declined to 8.5 ner cent in 1933. At the same time, our importance 
as a market for exports from British India declined from 12.0 -per cent 
of total exports from that country in 1929 to 7.6 per cent in 1933. 
Data for 1933 are not available. Table 5 snows the course of the 
trade of British India with United States since 1928. 



( 



*U.S. Department of Commerce 
of the United States. 



- Fore ign Commerc e a nd Navigation 



!_/ Preliminary. 



9 329 



-56C 



Table j. InnDortai.ee to 3ritish India of United States trade* 

C Tnousaiids of dollars 



Year 



1929 
1930 
1931 
1932 
193? 1/ 





SxDorts ' 




Inroorts 








To 


P.atio : 




From 


Hatio 




: Total 


United 


to : 


: Total 


United 


to 






States 


total : 




States 


total 








Per c^nt : 






Per cent 




: $1,174 


141 


12.0 : 


: o907 


;se 


7.3 




: 919 


90 


9 8 ; 


: 574 


55 


8.2 




: 566 


50 


Q.O : 


: 464 


48 


10.3 




: 355 


27 


7.5 : 


: 3o2 


30 


8.o 





*U.S Department of Commerce - Foreign Commerce Yearoook - 1933 
1_/ Not available.- 



9 829 



~5S4~ 



NEWSPRINT (No. 13) 



9829 



-565- 

C0NT2NTS 

Page 

567 
Complainant's Status Under the NIEA 

Subject of Complaint 567 

Descrintion of commodity *.*.•••. 567 

Tariff treatment. . ..... ... .....' 568 - 

The Newsprint Industry in the United States 568 '•■ 

Zmoloyment , payroll and working hours, 568 . 

Number and capacity of mills 569 ••• 

Principal producers in the United States.. 570 o 

Relative consumption of domestic and imported woodrulp 570 

The Newsprint Industry in Canada .. .. •• .-.' 572 

Number and Rapacity of mills 572 

Principal Canadian producers .••••• '••'•' 572 

United States investment in and control of the Canadian 

Newsprint Industry 572 

Consunrotion of Newsprint Paper in the United States 572 

Proportion of world production consumed in the 

United States 573 

Growth of consumption by publishers. .... 573 

Trend of consumption and stocks 573 

Consumption by states 574 

Source of newsprint consumed in the United States. 574. 

World Production of Newsr;i - nt Paper'. 57$ - 

Changes in distribution cC world production, 1939 - 1932 57$ 

Course of Newsprint Production in the United States 575- 

Newsprint Production by States,'.' ......' 578 

Comparison of production in the United States and Canada 578 

Exports v.V.Y.V .'..'. V.7.V 580 

Exoorts from orincipal oroducing countries...... .•.•...•...'•.. 58P 

Exoorts from Canada tc the United' States 580 

Exports from the United States . . . 58?. 

Inmorts into the United States '...'.. 582 

Course cf total imports. .<.•;."; ; : '. '. '..'. 582 

Imports by countries.,...-....;....' 582 

Ratio of Imports t^ Comestic oroducti^n 534 

Effect of the NIRA ■.;•. .-.'.' ...'.'.. .'.'.* ■. 546 

Employment and payroll. . .-••••. .'.'. .'.".' 586 

Costs of production. , < • 586 

Imoortant Competitive Factors 5Q.' 

Trend of newsprint prices in relation tc the general 

orice level • 539 

Comparison of average import Values with domestic prices 589 

Trend of import values and exchange rates 591 

Proposed Cooperation Between 'the "Co'de 'Authority of the 

Newsprint Industry in the United States and the Newsprint 

Export Manufacturers Association of Canada. 593 



9829 



' -boe- 
I1TPEX OF TABLES 



Table Page 

Unrobe r lumber 

1 Number of emoloyees and payroll.................. 563 

2 Number of machines and rated' capacity 569 

3 Proportion of United States woodpulp 

cons\urroti6n stTODiied. "by imoorts 571 

4- United States share of world newg-orint 

consumption. 573 

5 Consunrotion and stocks of n°- r s;orint in 

' the United States 574 

6 Sources of newsprint c">nsum=d in the. 

United States '. . . . 575 

7 World m^cuiction of n°wsr>rint paper "by 

iirroortant countries, 1929 and 193? 576 

8 United States production, ISgQ - 1933..... 576 

9 Conroarison of an index of newg-nrint produc- 
tion with the general manufacturing index........ 577 

10 Newsprint -oroduetion by state:;, 578 

11 Production by United States and Canada with 
percentage of total -produced by °ach country 
annually," . 1913 - 1933 579 

12 , i Total exoorts, and exports to the United 

Stat°s, in relation to production by 

principal "oroducing countries, 1929. 580 

13 Percentage of Canadian -oroduetion exnorted 

•■■to the United States, 1921- 1933 581 

14 Ratio of United States exports to nroduction 

' 1929 - 1933. 581 

15 Imoorts of standard. newsprint nauer, 1929 - 

March', 1934. . . ' ...... 582 

16 . General imoorts, 1929 - March/' 1934 .' 583 

17 ., Ratio, of inroorts to domestic -oroduetion 584 

18 Weighted cost of newsprint -np^er n°r ton in 

. Canada and the United States, 1933. 587 

19 Cost changes under U.R.A. ■Cod' 3 588 

20 . Conroarison of tr°nd of prices; nf w^sinrint 

paper with trend in general wholesale price 
■ index and index of -D^ner and pulo prices 589 

21 Conroarison of average, import values with 
domestic -nrices, 1929 - 1933. ■ 

22 Conroarison of trends of inroort values and 
exchange rates, 1929 - March, 1934 592 



p; 



90 



9829 



-567- 
SURV^Y OF INFORMATION 

ON 
STANDARD NEWSPRINT PAPFR 
May, 1934. 
Complainant ' s Status Under the National 
Industrial Recovery Act 



This is a report on a complaint filed January 17, 1934, by the 
Cod" Authority of th<= lTew S -orint Industry with the Imports Division of 
th° National Industrial Recovery Administration, pursuant to Section 
3 (e) of Title I of the Recovery Act. The complainant Code Authority 
represents the entire newsprint industry in the United States, Hiich 
is composed of twenty-five member companies operating principally in 
the states of Maine, Now York, Oregon, Minnesota, Wisconsin and 
Washington, and involving an estimated aggregate capital investment of 
about 300 million dollars. Most of these companies manufacture news- 
print paper only, including the wood oulp from which it is made; 
however a few, chiefly the larger .concerns, also manufacture a wide 
variety of -paper and paper products. 

The news-print industry is operating under the Code of Pair 
Competition for the N^wg-orint Industry, approved- -by the President on 
November 17, 1933. The Cod" Authority states that all of the news- 
print producers in th° United States have complied with the provisions 
of Title I of: the National Industrial Recovery Act. They have supplied 
information as outlined in the -prescribed Rules and Regulations 
Governing Complaints, and have agreed to furnish to the National 
Industrial Recovery Administration and/or th<= United States Tariff 
Commission, ah:/ further information which may b Q necessary in completing 
the action requested in their -petition. 

Subject of Complaint and Tariff Treatment : 

Description of commodity ' - 

Newsprint -paper, designed for use in the -printing of regularly 
-published news-pa.pers, is ^6.°. -principally from woodpulp and is composed 
of apnroximately 75 to 80 -percent of the short fibre ground-wood pulp 
and 20 to 25 -percent of th D long fibr° sulphite -pulp. Woodoulp, in 
turn, is made chiefly from s-oruce timber and to some extent from hem- 
lock and fir. Experiments in recent years have resulted in the 
development of methods by which other species of timber, notably 
yellow pin o „ may in the future "be converted into pulp suitable for 
newsprint. 



9829 



-»568-» 



Tariff treatment 



Standard newsprint paper is imported into the United States free 
of duty under Paragraph 1772 of the Tariff Act of 1930, and ^as also 
imported free of duty und°r the Tariff Act of 1922. 

Printing paper valued not above 2t? cents per pound was free of 
duty in the Act of 1913; that valued at not above 5 cents per pound 
remained free in the Revenue Act of Sept°mber 8, 1916; and that not 
a"bove 8 cents o°r pound in the Act of April 23, 1920. 

The Newsprint Industry in the United States 

Employment, payroll, and wording hour s 

As shown in Table 1, employment and the average annual earnings 
per worker in the newsprint industry declined 27 and 28 percent 
respectively from 1928 to Jun<=, 1933, while total payroll declined 47 
percent. 

Table 1. Number of employees and payroll 



Year 


Number of 

emoloyees 




payroll 




Total 


! Average per 
worker 






Thousands 






1928 

1930 : 

1932 

1933 (June) 


8,960 
8,340 
6,790 
6,560 


$13,500 
12,750 

7,850 
7,150 U 




$1 , 510 
1,530 
1,155 
1,090 1/ 


Percentage 
decline 
1928 - 1933 


?lfo 


47$ 




*>8$ 



l/ On annual basis 



A large proportion of the employees in n a ^sprint mills work on a 
tour' system, i.e., three tours of 8 hours each for continuous operation. 
Prior to the adoption of the code some of the employees not directly 
connected "ith the paper machines worked as much as 10 hours p°r day; 
however, most of them were on an 8 hour day "basis. In recent years 
also most newsprint mills have operated only about 80 percent full 
time - from 38 to 39 hours out of a maximum 48 hour week - and some of 
them have operated even a smaller percent of full time. 



9829 



-569- 



The Code for the Newsprint Industry provided for a 40-hour week, 
averaged over a 13-week period, with a. limitation on day workers of 
48 hours in a single wo°k, with tine and one-third for hours worked in 
excess of 8 in a single day. Provision is also made for additional 
hours for tour workers who desire to he free to exchange shifts to 
meet situations such as the changing of wires and washing and cleaning 
of machines after a run. Such work is too small in amount and to 
irregular to justify the employment of an additional shift. 

Employees not engaged directly in production, of whom there are 
only a few in each plant, are on a 42-hour "basis averaged over a 4-week 
period. Watchmen may work 56 hours per week and office employees 40 
hours per week averaged over a year, hut not more than an average of 
48 hours per week in any quarter. In emergency cases restrictions 
are removed for employees engaged in repair and maintenance work. 

A comoarison of the provisions of the code regarding working 
hours with the actual conditions of employment which prevailed 
prior to the adoption of the code indicates that the code probably 
has had little effect upon employment in the newsprint industry. 

Number and capacity of mills 

The number of companies producing newsprint paper in the United 
States declined from 39 in 1929 to ah out 27 in 1933, and the number 
of mills declin°d from ahout 60 to ahout 40. 

From Table 2 it appears that, while there we're 40 .less machines 
in operation in 1932 than in 1927, the rated capacity in the industry 
remained practically stationary, indicating the installation of new 
machines or the modernization of old ones. However, the Newsprint 
Association states that whereas 354,000 tons of annual capacity have 
heen withdrawn by nine companies since 1929, only 113,000 tons of 
annual capacity ^ere added by t^o companies. 



Table 2. Number of machines and rated capacity 



Year ! 


Number of ! 
machines ! 


Capacity in short tons 




P°r day of ! 


Per year of 






24 hours 


310 davs 








Thousands 


1925 


146 


5, 721 


1,774 


1927 


156 


6,349 


1,968 


:i928 


141 


: 6,101 


1,891 


1929 


127 


: 5,468 


: 1,695 


1930 


: 121 


: 5, 523 


! 1,712 


1931 


: 105 


: 5,279 


! 1,636 


1932 


: 116 


: 5,630 


: 1,745 



qp--i 



-570- 

Princioal producers in the United States; 

Over 50 percent of the productive capacity Of the news-print indus- 
try in the United States is controlled "by three' companies. The largest 
of these companies is the International Paper . Company, of New York, 
which, in addition to its holdings in Canada, - operates ten mills in 
the United States with a combined rated daily capacity of, 1,360 tons, 
or approximately 23 percent of the United States capacity in 1932. 
The second largest -producing company is the Great Northern Paper Compan ~, 
of Hillinocket, Maine, ?/hich owns and operates three mills with a com- 
bined rated daily capacit?/ of 1,010 tons,;, or approximately 17 percent 
of the United States daily capacity in 1932. The third largest company 
is the Croi.m Zeller.oach Corporation, of San IVancisco, California, a holding 
company which owns or controls three mills' in Oregon and Washington, 
with a combined rated daily capacity of 840 tons, or aoproximat ely 14 
percent of the domestic newsprint capacity. 



.Relative consumption of domestic and imported wood-pulp 



ce woodpulp is used in the manufacture of products other than 

, it is impossible to determine exactly to what extent the domes- 



Sin 
newsprint 

tic industry depends upon foreign sources of supply. Table 3 shows the 
-proportion of total United States, consumption f woodpulp of all types, 
of sulphite, and of mechanically ground pulp, which is supplied by imports 



(' 



It will be noted that the proportion of woodpulp consumption of 
all kinds supplied by imports increased sharplv from 15 to 28 percent 
from 1919 to 1926; it remained practically stationary at about 28 
percent from 1926 to 1932; and increased to 32, percent in 1933. 



i 



9829 



-571- 

Tatile 3. Proportion of United States wood-pulp 
consumption supplied "by imports 







(Thousands of she 


>rt tons) 












Ratio of 


Period 


Apparent : 
consumption : 


Production : 


Imports . 


Exports : 


imports to 

apparent 

consumption 












Percent 






All kinds : 






1909 


2,791 : 


2,496 : 


307 1/ 


12 1/ : 


11.0 


1919 


4,114 : 


3,518 : 


636 " ! 


40 


15.5 


1926 : 


6,094 : 


4,395 


1,734 


34 


! 28.4 


1929 ! 


6,695 ! 


4,863 


1,886 


! 54 


28.2 


1930 


6,414 : 


4,630 : 


1,832 ! 


48 


: 28.6 


1931 ! 


5,952 : 


4,409 


1,596 


53 


: 26.8 


1932 ! 


5,194 ■ 


3,760 


1,482 


48 


28.5 


|1933 


6,002 : 


4,160 


1,921 


79 


32.0 






Sulphite 






1909 


• « • • 


1,018 : 2/ ■ 


i i/ 


• • • • 


1919 


• • • • 


1,420 


283 ' 


1 2/ ' 


• • • • 


1926 


2,570 ! 


1,558 


1,035 


: 23 


! 40.3 


1929 


2,798 : 


1,682 


1,160 ' 


! 44 


! 41.5 


1930 


2,639 x 


1,567 


1,107 


: 35 


: 41.9 


1931 


! 2,330 ! 


1,417 


963 


! 50 


: 41.3 


1932 


: 2,017 


1,146 


: 917 


: 46 


1 45.5 


1933 


! 2,452 


1,360 


1,169 


! 77 


: 47.7 






Mechanically 


ground 




1909 


: 1,309 


1,179 


: 130 1/ 


\ 3/ 


: 9.9 


1919 


! 1,721 


1,519 


: 202 " 


: 2/ 


: 11.7 


1926 


: 2,068 


: 1,764 


: 304 


: 3/ 


: 14.7 


1929 


: 1,910 


: 1,637 


: 273 


' 3/ 


: 14.3 


1930 


: 1,859 


; 1,560 


: 299 


: 3/ 


: 16.1 


1931 


: 1,659 


! 1 , 449 


: 210 


I 3/ 


: 12.6 


1932 


: 1,391 


! 1,203 


: 188 


1 3/ 


: 13.5 


1933 


: 1,410 


: 1 , 200 


: 210 


1 3/ 


: 14.9 



1/ Fiscal years. 
2/ Not Available. 
3/ Negligible. 



-572- 

Of the total consumption of woodpulo in the United States 40 percent 
is sulphite, and, as shown in the preceding table, over 40 percent of this 
is imported from abroad. The proportion imported increased from about 
41 percent in the years 1929 to 1931 to 45.5 percent in 1932 and to 47.7 
percent in 1933, The annual consumption of mechanically ground pulp in 
recent years has amounted to between 25- and 30 percent of total woodpulp 
consumption, and as shown in the above table, somewhat less than 15 per- 
cent of this, on the average, is imported from abroad. 

The Newsprint Industry i,n Canada 

Number and capacity of mills 

The Canadian newsprint industry consists of about 30 companies oper- 
ating about 40 mills which are equiped with about 150 Fourdrinier machines. 
The dail" r capacity of the Canadian industry increased from 2,630 tons 
in 1920 to 12,940 tons in 1932, an increase of 492 percent. 

Principal Can a dian producers 

Approximately 50 percent of the total capacity of the Canadian news- 
print industry is controlled by three: companies. The largest of these, 
the Abltibi Power and Paper Company, operates eight mills with a combined 
daily capacity of about 2,000 tons. 'The second largest company, the 
International Paper Company, controls three mills in Canada with a com- 
bined daily capacity of 1,970 tons. :The third largest company is the 
Consolidated Paper Corporation, which controls five mills, having a 
daily capacity of 1,950 tons. : 

United States investment in and con t rol of the Canadian Newsprin t ; 
Industry 

Al though no estimate i^> available as to the amoiint of United States 
capital invested in the Canadian newsprint industry alone, the Depart- 
ment of Commerce has estimated that. the investment of the United States 
capital in the Canadian paper and pulp industry as a whole amounted, in 
1930, to over 400 million dollars, which is more. than 50 percent of the 
794 million dollar capital investment in th t industry. 

Approximately 35 percent of the Canadian newsprint capacity is con- 
trolled either by United States corporations or. by corporations operat- 
ing both in the United States and Canada, In addition to controlling 
about 37 percent of the capacity of the newsprint industry in the United 
States, The Crown Zellerba.cn Corporation "and the International Paper 
Company operates four mills in Canada, having a daily capacity of 2,270 
tons, or approximately 18 percent of the total capacity of the Canadian 
industry. Six other Canadian mills, which have a daily capacity of about 
2,250 tons, or approximately 17 percent of the total Canadian newsprint 
capacity, are owned or controlled by United States corporations. 

Consumption of Newsprint Paper in the United States 

Proportion' of world production consumed in the United States 

9829'.' 



-573- 

From Table 4 it will be noted th t- prior to 1°32 about 50 percent of 
the world -oroduction of newsprint was consumed in the United States; in 
that year the proportion dropped to 44 percent. 

Table 4. United States share of world 
newsprint consumption 









Percent of 








world production 


Year ! 


Uo rid 


United States 


! consumed : in the 




■oroduction 


consumption 


United States 




! (in thousand snort -SoiiQ) : 


: sv .l-i ; 


1929 ! 


I 7,308 


! 3,794' 


: 52 • 


1930 ! 


6,975 


: , 3,652' 


: • 51 : 


1931 


: 6, .622 . : 


! 3 , 214 


: 49 : 


1932 ! 


: 6,275 


: 2,791 


! ■■ 44 : 



Growth of consumption ."by publishers 

The rapid development of the newsprint paper manufacturing industr" and 
the correspondingly rapid growth of the newspaper publishing industry have 
"been interdependent. The rapidity of expansion in these two industries, 
following the first use of vroodpulp in the manufacture of paper is indi- 
cated by the increase in the number and circulation of newspapers. In 
1860 there were only 387 daily papers, with a total circulation of approx- 
imately 1,500,000 and about 3,000 weekly papers, with a circulation of 
about 7,500,000. In 1914 there were 2,500 daily and Sunday papers and 
about 14,000 weekly and semi-weekly newspapers in the United States, 
'The daily papers had a circulation of about 30 million copies, the Sunday 
papers about 17 million and the weekly and semi-weekly papers about 24 
million, in 1927 there were 2,265 daily newspapers with a gross cir- 
culation of 42 millions, 7,760 weekly newspapers with a circulation of 
about 56 million, and 511 Sunday newspapers with a circuit ion of 27,- 
700,000. 

In addition to the increase in the number of papers and in the cir- 
culation per issue, it is important to note the growth in size from the 
small four page paper of the early days to the not uncommonly large 
sized daily paper of 50 to K pages. In fact, there are now many daily 
papers which run well over 100 pages. 

Trend of consumption and stocks 

The table below shows the trend of total consumption, consumption 
by publishers, and of stocks at mills, in the United States in recent 
years. It will be noted that total consumption declined 24 percent from 
the 1926—1929 average to 1933. Stocks at mills and total stocks de- 
clined 15 and 17 percent respectively. The significant fact is that 
consumption has declined to a greater extent than stocks, indicating a 
relative increase in the latter in 1933 as compared to former years. 



9829 



-574- 

Table 5. Consumption and stocks of newsprint in the 

United States 



Statistical 
Period 



Total 
consumption 



Stocks at end of month 



At mills 



At mills, at 
publishers 
and in transit 



In : thousand short tons: 



Annual average: 
1926 - 1929 

1930 
1931 
1932 
1933 

Percentage 
decrease from! 
1926-1929 
average tol933 



3,582 



512 



3,552 


333 


3,214 


: 399 


2,791 


398 


2,729 


255 



3,084 

3,399 
2,223 
2,940 
2,567 



di 



2A% 



18 } o 



175t 



P 



Consumption bv States 

For 1928, the latest year' for which. data are available, . the distri- 
bution of ner/sprint consumption among leading states was as follows: 
Hew York 22 per cent, Illinois 12 per cent, Pennsylvania 9 percent 
Massachusetts 6 percent, California 6 percent, Ohio 5 percent,' Mich- 
igan 5 percent, Missouri 4 percent, Tennessee 3 per cent, Minnesota <2 
per cent, Indiana 2 percent, Texas 2 per cent. The consumption in this 
group of 12 states amounted .to ovor 75 per cent of the total con- 
sumption in the United States. Although the total consumption of news- 
print paper in 1933 was less than that of 1926, it is probable that the 
percentage relations have not greatly changed. 

Source of newsprint consumed in the United State s 

Approximately 35 percent of the newsprint, consumed in the United 
States is supplied by the .domestic industry; roughly 66' percent is 
supplied by imports from Canada, Newfoundland and Labrador; the remain- 
ing 5 percent is supplied chiefly by Sweden and Finland. Table 6 
shows the sources from which the newsprint consumed in the United States 
is drawn, in quantity and in percentages for the years 1923 to 1933. 



9829 



-575- 



Year 



1923 

1925 

1927 

1929 

1930' 

1931 

1932 

1933 



1923 
1925 
1927 
1929 
1930 
1931 
1932 
1933 



Table 6. Sources of newsprint consumed in the United 
States, 1923 - 1933 

(Thousand short tons) 



United 
States 
consumption 



2,778 
955. 



3,461 
3,794 
3,552 
5,214 
2,791 



*t 



729 



United 
States 
prrduction 



1,485 
1,530 
1,436 
1,392 
1,232 
1,157 
1,007 
• 946 



Imports 
from Canada 
Newfoundland 
and Labrador 



1,108 
1,315 
1,865 
2,327 
2,145 
1,915 
1,647 
1,640 



100 
100 
100 
100 
100 
100 
100 
100 



Percentage distribution \ 



53.4 
51.8 
42.9 
36.7 
36.1 
36.0 
36.0 
34.7 



39.9 
44.5 
53.9 
61.3 

5916 
59.0 
6C.0 



Imports 
from all 
other 
countries 



200 
133 
122 
96 
135 
151 
145 
154 



7.2 

4.5 
3.5 
2.5 
3.8 
4.7 
5.2 
5.6 



World Production in Newsprint Paper 
Changes in distributions of world production 1S29 - 1932 

Table 7 indicates the distribution of world production of newsprint 
paper among the principal producing countries in 1929 and 1932, and the 
significant changes which have occurred in the intervening period.- For 
example, the decline of 14 per cent in total world production was due chie- 
fly to the sharp decline in Canada, the United States, and Germany* Pro- 
duction in Sweden. land Japan' declined a relatively small amount. On the 
other hand, production showed a remarkable increase in England, Pinland 
and France, and substantial- increases occurred in Newfoundland and; Norway. 



9329 



-576- 

Table 7. Uorld production of newsprint paper 
by important countries, 1929 and 1932 

(Quantity in thousands of sh ort tons) 





: 1929 




..932 


• • 
> * 




Country- 




: Percent 




Percent: 


[Percentage 






: Quant i ty 


: of 
: Total 


: Quontity 


of : 
total : 


. change 




Total all : 














countries 


I 7,503 . 


: 100.0 


: 6,275 


: -100.0 


! —14.1 




Canada 


: 2,729 . 


! 37.4 


: 1,^15 


30.5 


! -29.8 




United States ! 


! 1,392 ■ 


! 19.0 


: 1,007 : 


16.1 : 


-27. 7 




Great Britain ! 


636 


8.7 


: ' 790 


12.6 


! +24.2 




Germany 


! 623 


8.5 ' 


' 450 


: 7.2 


! -27.8 




Japan 


! 286 


: 3.9 


272 


: 4.3 


--4,9 




Swede.n ; 


275 . 


3.8 


257 


4.1 


: - 6.5 




iJewfoundland ! 


256 : 


3.5 


272 ! 


4.3 


: * 6.3 




Finland i 


215 : 


2.9 


254 : 


4.0 


+18.1 


( 


France : 


210 


2.9 ! 


275 ! 


4.4 


+31,0 


Norway ! 


189 ! 


2.6 ! 


200 : 


3.2 


+ 5.8 




Other : 


497 ! 


6.8 ! 


583 : 


9.3 


t-17.3 





It will he noted that the United States' share' of world production declin- 
ed 3 percent from 1929 to 1932 as compared with a decline of 7 percent 
in Canada's share; this decline was off-set, roughly, by 'a corresponding in- 
crease of production in Suropean countries. 

Course of newsprint production in the United States 

Table '8 shows the trend of newsprint production in the United States 
by o L uantit3", value, and unit value,, for certain years since 1899. 



Table 8. United States production, 18b9~IC33 





» — ■ — ■ — ■ 

Quantity 




1 


Year 


(Thousands 


: ' Value 


: Unit value 




' of short tons) 


: (Thousands) 


: per short ton 


1899 


! 569 


; $20,092 


: 35. 3C 


1904 


! 913 


! 35,906 


: 39.34 


1909 ! 


! 1,168 


: 46,390 


: 39.71 


1914 | 


! 1,313 


! 52, 943 


! 40.31 


1919 


! 1,324 


: 98,559 


! 74.45 


1921 


! 1,237 


. 114,315 


t 92.38 


1923 ! 


! 1,521 


110,865 


72.39 


1925 ! 


! 1.563 


106,083 


67.86 


1927 


! 1,517 ! 


98,782 ! 


65.12 


1928 : 


! 1,415 J 


— — ; 





1929 ! 


1,409 :: 


80,707 ! 


57.27 


1930 


! 1,226 ! 


_— < 





1931 : 


1,203 ; 


63,654 ! 


52.90 


1932 : 


1,047 : 




— 


1933 : 


946 : 


1 


43.09 1/ 


1/ Avers 


ige delivered cost Jan, 


- Sept. 




9829 









-577- 

From Table 8 it will be noted that the annual production of newsprint 
in the United States from 1904 to 1935 showed remarkably smell variation. 
After a fairly sharp increase -orior to 1909 the trend of production 
was gradually vipward until 1925, the result being a total increase of 
70 percent in the twenty year period. From 1925 to 1929 production 
declined about 10 per cent and then fell sharply - over 30 percent - 
from 1929 to 1953. In 1933 production was only 946,000 tons, just a 
little in excess of the orodu.ction of 913,000 tons in 1904, In con- 
trast to the trend of production, the value of newsprint rose sharply 
in the war --ears and remained at a high level until 1923. Since that 
time it has steadily declined to a level not greatly higher than that 
prevailing in the pre-war period. 

Table 9 conroares the Federal Reserve Board index of newsprint 
production in the United States with the combined index of manufacturing 
for the years 1923 to 1933 and by months for the year 1933. It will be 
noted that the annual index of newsprint production was consistently 
below the index of general manufacturing from -'1927 to 1931; in 1932 it 
was above the general index, but again .dropped considerably below it 
in 1933. • : 

Table 9. Comparison of an index of newsprint productipn with 
the general manufacturing index. 



:' Combined : 


• 


: : : Combined.: 




i 


index ! 


'newsprint 


: : index ' : 


newsprint 


Year i 


( manuf ac- ; 
tur e s ) 


pap er ' 


: Year (manufac- . : 
: 1933 :tures) ,' : 


paper 


1923-1925 ; 


100 ! 


: 100 


; January: 63 ! 


59 


1926 ! 


! 108 ! 


112 


: February 63 


: 59 


1927 ! 


! 106 


! 99 


: Inarch : 58 


59 


1928 j 


; 112 


! 94 


.•April : 68 


! 62 


1929 ! 


119 


! 93 


:May : 80 


61 


1930 ! 


! 95 


: 86 


:June : 93 


• 65 


1931 


! 80 | 


! 77 


:July : 97 


: 66 


1932 •' I 


: 63 


! 68 


:August : : 89 


: 68 


1953 1/ ! 


: 76 


: 63 


: Sept ember 84 
:0ctober: 77 
:Uovember 70 
: Dec ember 67 

• • 


: 60 
: 66 
! 70 
! 67 



1/ Preliminary, 



From the index of monthl~ T production it appears that the com- 
paratively low production in the newsprint industry in 1933 resulted 
from its failure to share in the general rise in production during 
the middle Of the year. There was, however, a considerable improvement 
in newsprint production during the last six months of 1933 as compared with 
a sharp decline in the general manufacturing index, and in consequence the 
level of production in the last two months of the year was the same in the 
newsprint industry as in general manufacturing. 



9829 



-578- 
ITewsprint Production by States 

Table 10 shows the distribution of newsprint production by states, 
It will be noted that in 1929 Maine was the principal producing state, 
and that her share of the United States production increased from 30 
percent in 1925 to about 40 percent in 1929. The share of ITew York 
the next largest producing state, declined about one-half from 1925 
to 1929. 

Newsprint production by states 





1925 




1S29 




States 












! Thousand 


: : Percent 


: Thousand 


Percent 




! tons 


: of Total 


: tons 


of Total 


Total 


: 1,563 


! 100.0 


: 1,409 


! 100.0 


Hew York 


: 483 


: 30.9 


235 


: 16.7 


Maine 


! 470 


30.1 


561 


: 39.8 


Wisoonsi ■< 


: 151 


! 9.7 


103 


7.3 


Minnesota, 


: ' 122 


: 7.8' ! 


122 


8.7 


r ."ashington ! 


96 


6.1 ' : 


140 


9.9 


All other ; 










States ! 


241 : 


15.4 '• ! 


248 : 


17.6 



Comparison of production in the United States and Canada 

Table II compares tlie trend of newsprint production in the 
United States and' Canada for : the past twenty years. It shows that in 1913 
the domestic industry was responsible for approximately 80:per cent 
of the combined production of newsprint : in Canada and the United States, 
but that since then the United States' share of the total has fallen 
steadly. In 1925 each country produced : aoproximately 50 per cent of the 
total. 3y 1929 the United States' share had declined to 34 per cent and 
by 1933 to 32 per cent. 



9829 



-579- 



Tal 


Die II. Pr 


eduction "by 


United Sta 


tes and Canac 


la with percentage 




of 


total produced by each country annually, 1913-1933 




: Total 
: tli ou sands 


United States 


Canada 


Year 


: Thousands 




: Thousands 






:of snort 


:of short . 


Percent 


; of sho rt 


Percent 




: tons 


tons 




tons 




1913 


1 , 655 


: 1 , 305 


79 


350 


21 


1914 


1,728 


1,313 


76 


415 


24 


1915 


1,728 


1 , 239 


72 


48a 


: 23 . 


1916 


1,923 


1,315 


68 


608 


32 . 


1917 


2,045 


1,359 


•66 


686 


34 


1918 


1,995 


1,260 


■63 


735 


37 


1919 


2,178 


1 , 375 


63 


80S 


37 ; 


1920 


2,387 


1,512 


63 


875 


37 


1921 


2,033 


1 , 225 


•60 


808 


40 ■ 


1922 ! 


2,530 


1,448 


57 


1,082 


43 


1923 ' 


2,751 


'1,485 


:54 


1,266 


46 


1924 


2,834 


•1,481 : 


'52 


1 , 353 


48 ■ 


1925" : 


3,053 ' 


•1,530 ' . 


:J0 


1,523 


50 


1926 ■ : 


3,566 • ! 


'-1,634 : 


= 47 


1,882 


53 


1927 : 


3,573 ' 


: 1,486 : 


;42 


2,087 


58 


1928 ' . 


3,799 • 


'1,418 


:37 


2,381 


63 


1929 : 


4,121 : 


•1,392 : 


34 


2,729 


66 • 


1930 : 


3,786 ■ : 


1,282 : 


• 34 : 


2,504 


66 


1931- : 


3,378 • : 


1,157 : 


:34 


2,221 


66 


1932- : 


2,915 • : 


1,007 ! 


■ 35 : 


1 , 908 


65 : 


1933 : 


2,963 : 


• 946 


32 


2,017 


68 



[Fie rapid expansion of the newsprint industry in Canada during 
the past tv/enty years has been due to the fact that extensive tracts of 
timber and an abundance of advantageous water power sites have been avail- 
able in Canada under Government lease at a comparatively low capital cost, 
making the initial investment incidental to the establishment of newsprint 
mills distinctly less in Canada than in the United States. On the other 
hand, the situation in the United States has been that substantially all 
sites affording sufficient supplies of timber and v/ater power, and con- 
veniently located for shipment of the finished newsprint to the consuming 
markets, have been available, if at all, only at a capital cost greater 
than those available in Canada. Furthermore, obsolescence of equipment, 
which has affected the industry on both sides of the boundary line, has 
been longer at work in tue United States industry. However, many United 
States mills which have become obsolete during the last twenty years have 
been abandoned or have gone into t.ie manufacture of other types of paper; 
other mills _xave been modernized by the installation of new machinery, 
and adequate reserves zf timber aave been provided or maintained. 



9829 



-580- 

Sxports 

Exports from principal producing countries 

Table 12 shows the importance of total exports, and exoorts to the 
United States, from the principal newsprint producing countries for the ■ 
vear 1929, the most recent year for which complete data are available 

Table 12. 
Total Exports, and exports to the United States, inrelation to 
production by principal producing countries, 1929 • 

; (Thousands of short time) 











Hatio to production 




: Production 


Exoorts to 




of exports 


Country 


All coun- 


United. 


To all 


To the 






tries ! 


States 


countries 


United 
States 






' 




Percent 


Percent 


United ; 






States 


: 1,392 


19 




1.4 




Canada 


: 2,729 


!2,515 


: 2,195 


92.2 


80.4 


Great ; 












Britain 


1 6S6 


108 


; 


17.0 


1 — ,J 


Germany , 


! 623 : 


254 


9 


40. 8 


: 1.4 


Japan ; 


! 286 : 


58 


1/ 


20.3 


: — 


Sweden | 


275 


218 


: 51 


79.3 


• 18.5 


Kewfound— ' 












.land ' 


! 256 : 


244 


: 132 


'95.3 


51.6 


Finland 


\ 215 


191 


: 33 


b8. o 


: 15.3 


Norway ; 


189 

l 


189 


: 3 


100.0 


1.6 



1/ 1900 lbs, 

It will he noted from data in this table tliat newsprint is pro- 
duced principally for export in Canada, Newfoundland, Sweden, Finland, 
and Norway. I.ioreover, the proportionately large amount exported to the 
United States is of more importance, and any restriction of the market 
would he more serious, in cases where the industry is principally an ex- 
port industry than would he the case if the exoorts were merely incidental 
tc a relatively large domestic production. 

Exports from Canada to the United States 

The proportion of the ajinual Canadian production of newsprint ex- 
ported to the United States since 1921 is indicated in Table 13, 



9829 



-581- 



Ta"ble 13. Percentage of Canadian production exported to the 
Halted States, 1921 - 1933 









( Thous 


and short tons) 








* ' * *' ( 


' Exports 




Percen 


tage 


Year 




Prod-action 


' to the 


• 


exported to the 








United St 


at est 


United 


States 


1921 




80*3 


657 ' 




: 81.3 




1923 




1,266 


: 1,109 




: 87.6 




1925 


•i 


1,522 


1,295 




85.1 




. 1927 




2,087 


! 1,776 




85.1' 




1929 




2,729 


! 2,195 ■' 




: 30.4 


: 


1931 




2,221 


! 1,756 ' 




: 79.1 


.* 


^1933 


1/ 


2,017 • 


1,545 




i ■ 76.6 





1/ Preliminary, 

Proa the above table it will he noted that the increase in ton- 
nage exodrts to the United States corresponded closely with the increase 
in production in' Canada up to 1929. The decline in^ the percentage of , 
exports to the United States since 1926 is due in part to the develop- 
ment of fJie newsprint industry in Newfoundland, which has. exported 
approximately 50 percent of its production to the.* United States, amount- 
ing to .over 5 percent of total imports into the United States in; recent 
years. j :• ...•■' 

Exports fron the United- States : :. >a*r[, • 

Exports of newsprint from the United States.* are negligible^ in 
amount. "However', even a small volume of exports i-s significant, in . the 
case of an industry which is operating at a relatively increasing dis- 
advantage as is the newsprint industry of the United States. • 
• " . • 

Table 14 : s'iows the elation of exports to domestic production of 
newsprint for the years' 1929 to : 1933. 

• h- ■ ' 

Table 14._ : latio 'of United States exports to - production, 1929- 1933 
[ \ (Thousands of short tons) . • :. . ■. j " 



Year 



Pr'oductio'n 







'. Patio of 


ports : 




• expor.ts : to 
: r>ro duct ion 






: Percent 


19. ! 




• 1.4 


10 : 




.8 


10 : 


■ 


.8 


8 j 




.8 


11 • : 


! 


1.2 



1929 
1930 
1951 



1,392 
1,232 
1,157 



*S8**w -• : h°°? 



19.33 



,946 






9829 



-582- 

Imports into the United States 

Course of total inroorts ■ 

Table 15 shows the quantity, value, and average unit value, of imports 
of newsprint paper into the United States in recent years.. It will Dp 
noted that the quantity of imports declined 26 per cent^ and' the value 
of imports somewhat over 50 percent, from 1929 to 1933. 

Sable 15, Imports of standard newsprint paper, 

1929 - March, 1934 ■ . '. : '. 

(Quantity and value in thousands) t 



Statistical 


: Quantity 


: Value . : 


: Average 


period 


: (short tons) 


• , ; 


: unit lvalue 


1929 


: 2,423 


: $144,493" 


: $59.64 


1930 


: 2,280 


: 131,793 


: 57.82 


1931 


: 2,067 


: 112,170 


! 54.27 


1932 


! 1,792 


: 84,721 


! 47.27 


1933 : 


! 1,794 


: • 68,495 { 


:. 38.18 


1931 Jan # — March. 


492 


! 27,845 


: 56.60 


Apr.-June 


560 


30,492 


! 54.45 


July—Sept 


490 ' 


26,234 , - 


!, 53.54 


Oct, —Dec, 


: 524 


: 27,600 , , 


52.67 


1932, Jan, -liar. . : 


446 


! 21,623 ! 


48.48 


April-June 


487 


! 23,577 


48,41 - . 


July-Sept , 


421 


20,185 


47.94 


Odt.-De'c. 


438 


19,335 


! . . 44.-14 


1933 Jan.-Mar. 


341 


13,689 , 


: . 40,14 


Apr.-June 


! 439 


!• 17,038 .! 


38.81 


July— Sept : ! 


' 492 


18,809 -j 


38,23 


Oct, -Dec, j 


521 ! 


18,960 A 


36.39 


Oct, ; 


176 • : 


6 , 638 .! 


37.72 


ITov. . j 


177 


6,360 ■ 


35.93 


Dec.. ! 


168 : 


5,962 j 


••; , 35,49 


1934 Jsn.-Mar. • 


463 ; '. ! 


. 15,737 : 


33, 99 


Jan, j 


1'69 ! 


5,'808 : 


•.••■ ...v 34,42 


lob, j 


125 i 


4, '207 ! 


33,77 


Mar,. : 


169 j 


5, 722 : 


33,89 


Imports by count i 


■ies •• 






\ ' 



Table 16 shows imports of newsprint paper into the. United States from 
the principal countries and the share of each in the total for the years 
1929 to 1933, The percentages in the table indicate that the shares of 
Sweden, Finland and, to a lesser extent, Norway, although small, are incre- 
asing. Canada still greatly predominates but its proportion of the total 



d829 



-583- 

importation tends to decline. Through January 1934, Newfoundland and 
Labrador continued to supply from 5 to 8 -jercent; the significance of the 
decline in February and March, 1934, oarnot now be determined. 





Table 16. General i-moort; 


3, 1929 - Mar. 1934 










(in quant: 


Lty - tons 


5 of 2,000 


pounds ) 










: Newfoundland 








Period 


! Canada 


: and 

: Labrador 


: Sweden 


: Finland 


Germany 


: Norway 




1929 


! 2,194,587 


: 131,915 


: 50,719 


! 32,607 


: 9,250 


, 3,498 




1930 J 


i 1,989,285: 


156,186 


: 69,267 


; 41,796 


• 13,789 


: 9,327 




1931 ! 


, 1,756,056 


159,781 


! 66,687 


: 47,992 


! 21,910 


: 14,444 




1932 


! 1,533,389 


: 113, 827 : 


59,986 


! 46,626 


14,323 


22,692 




1933 ! 


• 1,545,293 


94,944 


68,061 


56 , 576 • 


12,058 


: i6/: r 9l 




Jan-Mar. i 


t 295, 751 


: 9,043 : 


16,487 


: 11,701 


! 3,078 


: 4, 514 




) Apr-Jun i 

Jul-Sep ! 


! 378,833 


23,777 


16 , 3,79 


: 13,074 


: 2,834 


' 4,410 




! 431,992: 


21,467 ! 


19,279 


: 14,418 


3,027 


; 2,194 




Oct-Dec ! 


! 458,716- 


40,658 : 


15,916 


: 17,333 


: 3,118 


: 5,472 




1934 ! 
















Jan. -Mar,- 


: 413,921: 


15,495 


' 13,468 


! 13,672 


1,607 


: 4,007 




January 


! 141,409 


14,945 ! 


6,183 


! 3,775 


491 


: 1,949 




February ! 


! 115,810' 


293 : 


2,135 


4,762 


424 


1,161 




March ! 


! 156,702 


257 


5,150 


: 5,135 


692 


897 








In percent 


of total 


imports 








1929 


! 90.6 


5.4 


2.1 


: 1.3 : 


.4 


t .1 




1930 : 


: 87.3 : 


6.8 


: 3.0 


! 1.8 


: .6 


: .4 




1931 ! 


! 35.0 


: 7.7 : 


3.2 


2.3 


1.1 


: .7 




1932 


! 85.6 


: 6.4 


3.3 


! 2.6 


.8 i 


1.3 




1933 


! 86.2 


! 5.3 : 


3.8 


: 3,2 


.7 l 


-• .9 




Jan -Mar 


! 86,8 


! 2.6 


: 4.7 


: 3.5 


.9 - 


: 1.3 




Apr.-Jun 


! 86,2 


5.5 


3.6 


! 3.0 : 


.7 ! 


.9 




Jul-Sep 


! 87.8 


1 4.4 : 


3.9 


: 2.9' : 


.6 ! 


.4 




Oct. -Dec 


! . 84.2 


7.8 


! 3.1 


» 7 n i 


.6 : 


1.0 




1934 
















Jan-Mar 


! 89.0 


1 3.3 


2.9 


: 3.0 


.3 ! 


, 1.5 




Januar?/ 


: 83,4 j 


8.9 


3.6 


2.3 


.3 . : 


1.2 




February 


: 92,3 


.2 ! 


1.6 


4.0 : 


.3 


.8 




March 


: 92,8 


1 .2 : 


3.1 


3.0 : 


.4 • 


.5 





r -3£S 



-584- 

Ratio of imports to domestic production 

Tabic 17 shows the trend of imports of newsprint paper in relation to 
production in the United States -since 1926. . It indicates a decline in done .tic 
production in each year since 1926; the total decline from 1S26 to 1933 was 
44 percent. Imports, on the other hand, increased approximately 30 percent 
from 1925 to 1929 hit thereafter declined, and in 1932 and 1933 were shout 
3 percent less than imports in 1926. Nevertheless, with the exception of the 
year 1932, the ratio of imports to domestic production, based on annual figures, 
increased steadily throughout the period 1926 to 1933. This increase has been 
in progress £or tv/cnty years, but for a decade has been particularly rapid. 
It rose from] 110 percent in 1926 to 175 percent in 1929, to 178 percent in 1932, 
and to 190 percent in 1933. 



Table 17. Ra,tio ! of imports to domestic 
production 



(Thousand short :tons) 



Statistic?! 


Domestic 


Imports 


Ratio of [imports , 


jcriod 

t 


produc tion 




to domestic 




* 




:' ■ production 


_ 


i 1 , 684 


1 , 850 , 


Percent 




1926 .' 


: . 110 


i . 


1927 ; 


'.'1,486 


1,987. 


: 134 




1928 


'1,418 


2,157 


152 ; 


• .* 


1929 


' 1 , 3*92 ' 


2,423 


: . 175 : 




1930 


1,282 


2,280 


178 


1931 


1,157' ;: 


2,067 . 


179 


1932 


1,007 v 


1,792 


178 


1933 , .' 


946 ■; ' 


l,7-9d : 


.190 . 


1932 ' [ 


, 


- • 




Jan. -Lia^r. 


281 . 


44, . 


159 


Apr. -Jim c 


264 


: 487 


184 


Jiil'y-SQpt. ■ 


225 ■ 


: 421 ' \ 


. ' 187 


Oct.-Dtc. : 


237 • 


438 .' 


185 


1933 ; : 


, * 






Jan. -Liar. 


218 • 


341 '. 


156 


Apr. -June 


238 


439 


184 


Jul - -Sept. 


240 • 


492 


205 


Oct. -Dec. 


251 ■ 


521 


208 


'Aug.. 


: 83 • ■ : 


151 ; 


172 


Sept. 


: 72 • : 


178 . 


247 


Oct. 


82 


176 


215 


ITov. 


83 


177 


201 


Dec. 


81 


168 


207 


1934 








Jan. -Mar. 


242 


463 


191 


Jan. 


85 


169 


199 


Feb. 


72 


125 


174 


tlar. 


85 


169 


199 



9829 



-585* 

From the quarterly figures in Tabic 17 it appears that both imports and 
domestic production declined irregularly from the second quarter of 1932 through 
the first quarter of 1933 and increased in the last three quarters. The in- 
crease in imports in the last three quarters of 1933 was greater than the in- 
crease in domestic production, and, as a result, the trend of the ratio of 
imports to production, which had been interrupted in the preceding six months, 
resumed its upward movement. The ratio in the first qxiartcr of 1934, although 
lower than in the preceding two quarters, was higher than in any other preceding 
quarter. The ratio for January, 1934, was still higher than in any quarter 
prior to the last two quarters of 1933, although less than those two. In 
February, 1934, imports declined more than production and the ratio dropped lower 
than that for any month since August, 1933, and lower than for any quarter since 
the low point reached in the first quarter of 1933. In general it will be noted 
that there was an irregular decline from September, 1933, to February, 1934, 
but an increase in March. 



5829 



-586- 

Effect of the National Industrial Recovery Act 

Employment and payroll 

Statistics of employment and oayroll were submitted in support of 
the complaint by six individual companies. However, the data for some 
companies include pulp and paper mills other than newsprint. For this 
reason, and "because the data cover only one month's operation under the 
code, it is difficult to draw any satisfactory conclusions as to the 
effect of the code on emplovment in the industry as a whole. Some com- 
panies appear to have increased employment and/ or payroll; others appear 
to have increased employment, "but this increase was offset by a decrease 
in payroll; still others appear to have experienced a decline in both em- 
ployment and payroll. If the changes in opposite directions as between 
companies, and as.' between: the number employed and payroll within indivi- 
dual companies, are taken into account, it seems probable that the News** 
print Code had little effect on average labor cost for the industry. 

Table 19, on page 33, shows the changes which occurred in labor cost 
per ton for eight newsprint companies. Three companies which experienced 
an increase in production from October to December of 1933 show a decline 
in the unit cost of labor ranging from 4 to 9 percent. Three companies 
whose output remained at the same level for the two months show increases 
in unit cost of labor ranging from 7 to 10^ percent. Two companies which 
experienced a decline in output show increase in unit cost of labor of 
13 and 17 percent respectively. The comparison of the average unit cost 
of labor for the eight companies in the two months shows a net increase 
of 5 percent. 

Costs of production 

Table IS gives in considerable detail the average costs of producing 
newsprint by twelve companies in Canada, and by twenty-four companies in 
the United States, for the first half of 1933. It. also gives the average 
costs of prcritucing newsprint in the United States in the third quarter of 
1933 and an estimate of the increase in United States costs from May to 
December, 1933. These data were submitted in support of the complaint 
under Section 3 (e), and also at the National Recovery Administration 
hearing on the stabilization proposals of the Newsprint Code Authority on 
February 1, 1934. With respect to the greater total cost shown for Canada 
than for the United States, it should be noted that the twelve Canadian 
companies operated at only^55 percent capacity, whereas the twenty-four 
domestic companies operated at 70 percent capacity. Manifestly, the costs 
of the Canadian mills would have been somewhat l0"er if those mills had 
been operating at the same percentage of capacity as the domestic mills. 
Moreover, a higher or lower level of output in Canada or the United States 
would have the effect of altering the cost advantage prevailing between 
the producers of newsprint in the two countries. 



932< 



587- 



Table 13. Weighted cost of newsprint paper per ton in 
Canada and the United States, 1933 



(Excluding interest en indebtedness and return on investment) 




Canada 
(12 companies) 


United States (24 companies) 










Estimated 


Cost items 


First six 


First Six 


Third 


increase 


• 


months 


months 


quarter 


December 
over May 


wood 


$ 9.93 


$10.09 


$10.00 


$1.70 


Purchased pulp 


.19 


1.73 


1.82 


.48 


Sulphur 


.53 


.40 


.42 


- 


Alum, Size, Color, etc. 


.35 


.57 


.67 


.07 


Limestone 


.3.9 


.10 


.11 


' 


Pulpstones 


.16 


.11 


.11 


- 


Fuel 


2.37 


2.52 


2.24 


.42 


Power 


4.11 


3.43 


3.51 


- 


Repair Materials 


.91 


.93 


1.05 


: .15 


Wires & Machine Clothing 


1.01 


1.18 


1.17 


: .11 


Supplies 


.42 


.27 


.31 


: .05 


Finishing & Shipping 










material 


.53 


.49 


.49 


: .06 


Labor 


4.80 


5.61 


5.76 


.85 


Factory Burden & Misc. 


1.33 


1.76 


1.57 


.08 


Insurance 


.33 


■ .28 


.24 


.01 


Ta r.e s 


.79 


.97 


;.95 . 

3'. 23^/ 


.08 


Depreciation 


3.7c 


3.57 


- 


Depletion 


.92 


.51 


.51 


- 


General & Administra- 










tive Expense 


2.35 


1.97 


1.70 


.06 


Selling Expense 


1.04 


.90 


.87 


.03 


Cost f.o.b. mill 


35.37 


37.44 


36.73 




Delivery to destination 










Points 


■7.66 


5.84 


5.98 




Total 


43.53 


43.28 


42.71 


4.15 


Estimated increase 










December over May 








9.5$ 


Percent of capacity 










ope rated 


55.4,i 


70.8$ 


76.0$ 





1/ This item was listed as $0.51 in the record of the hearings, and, if 
correct, would make a total delivered cost of $39.99. 



=829 



- 538 - 

The indicated decrease in costs in United States mills in the third 
quarter of 1933 compared with the first half of that year probably was 
due primarily to the increase in production from 70.8 per cent to 76 per 
cent of capacity. Only about one-fifth of the increase of $4.15 per ton 
was due to labor costs, whereas two-fifths of it was due to the increase 
in cost of pulp wood. 

The relative increase of 9.5 per cent shown in Table 18 as occurring 
between May and December should be compared with the average increase in 
costs of 4.4 per cent shown in Table 19 as occurring between October, the 
last full month before the newsprint code became effective, and December, 
the first full month under the code. The increase from October to December 
is based on the average of the costs submitted individually by eight manu- 
facturers in support of the complaint under Section 3 ( e) . Table 19 shows 
separately for each company the percentage of increase from October to 
December, in total costs, in general administrative expenses, and in labor 
costs. It also shows the percentage of capacity operated by each company 
in October and December. Taking all eight companies together the percent- 
age of capacity operated was practically the same in the two months. 

Table 19. Cost changes under N.R.A. Code 





Percentage of 


: Percentage changes in costs 




capacity 


operated 


October to December 


Company 








General & 






October 


December 


Total 


administra- 
tive 


: Labor 


1 


69 


: 83 


- 7.0 


if 12.6 


- 8.3 


2 


67 


92 


- 3.6 


- 28.0 


- 4.2 


3 


100 


92 


•(- 13.3 


4. 21.0 


*16.8 


4 


100 


100 


*■ 3.7 


1 87.8 


+ 8.7 


5 


93 


87 


+ 24.1 


+ -185.1 


j-13.1 


6 


73 


73 


4- 3.2 


■»• 81.0 


+10.5 


7 ! 


68 


78 


* 2.7 


- 27.6 


- 7.1 


8 : 


100 


: 100 


f .4 


*■ 2.9 


+ 7.1 


Average 






+ 4.4 


•»- 44.5 


■[ 5.0 



The data in Table 19 indicate changes from October to December in 
total mill costs of production ranging from a decrease of 7 per cent to 
an increase of 24 per cent, or an average increase of 4.4 per cent. 
Changes in general and administrative expenses ranged from a decline of 
28 per cent to an increase of 185 per cent or an average increase of 44.5 
per cent. In sharp contrast it will be noted that the changes in labor 
costs shown in the last column of the table ranged from a decline of 
approximately 9 per cent to an increase of approximately 17 per cent, 
with an average increase of only 5 per cent. 



9 829 



-539- 

Important Competitive Factors 

Trend of newsprint prices in relation to the general price level 

Table 20 compares the trend of prices of newsprint paper with the 
trend since 1926 in general wholesale commodity prices and in the prices 
of all paper and pulp products. It will be noted that up to and in- 
cluding 1930 the index of prices of newsprint paper compared favorably, 
but since 1S30 has compared unfavorably, with the general price index 
for paper and pulp products. Moreover, from 1926 through the first 
three quarters of 1532 newsprint prices fell less than general whole- 
sale price. Since the first quarter of 1933, however, newsprint has 
not shared the general rise in wholesale prices, and the index in Decem- 
ber, 1935, was 55.7, based on avera ;e 1925 prices as 100, whereas the 
general price index on the same basis stood at 70.8 and the price index 
for the paper and pulp products industry as a whole stood at 82.5. 

Table 20. Comparison of the trend of prices of newsprint paper 
with the trend in the general wholesale price index and 
the index of paper and pulp prices 





Wholesale 


Paper 


New sprint 


Period 


commodity 


and pulp 


paper 




index 


index 


index 


1926 


100.0 


100.0 


100.0 


1927 


95.4 


93.8 


94.2 


1928 


96.7 


91.4 


94.2 


1929 


95.3 


83.9 


94.2 


1930 


86. 4 


86.1 


94.2 


1931 


73.0 


81.4 


79.4 


1932 


64.8 


75.5 


70.2 


1933 


65.9 


76.6 


57.4 


1932 - March 


; 66.0 


76.8 


73.8 


June 


63.9 


76.2 


73.8 


September 


: 65.3 


75.5 


71.1 


December 


62.6 


73.0 


62.7 


1933 - March 


60.2 


72.2 


62.7 


June 


: 65.0 


73.5 


55.7 


September 


; 70.8 


32.2 


55.7 


December 


; 70.3 


82.5 


55.7 



Comparison cf average import values with domestic prices 

Table 21 compares the annual average import values with domestic 
average delivered prices for the years 1929 to 1933. It should be noted 
that the average unit values of imports do not include transportation 
and importers' or brokers' profits. 



9829 



-590- 

Table 21. Comparison of average import values 
with domestic prices, 1929 - 1933 

(Average valxie per ton, of 2,000 "pounds) 



Year 


Domestic 
price 


Canada 


New- 
. foundland 
' and 
La bra do r 


Sweden 


Finland 


Germany 


No rway 


1929 
1930 
1931 


$62.00 

62.00 

( 52.00 

( 57.00 


$60 . 23 
58.55 
55.12 


r 
* 

$56 . 35 
56.65 
53.24 


$50.79 
45 . 57 
46.55 


$47.98 
46 . 20 
43.73 


$49.02 

4P . 78 
43.05 


$50.84 
47.62 
49.58 


1932 


( 53.00 
( 45.00 


4C.07 


49.77 


38.92 


34.92 


35.11 


37.15 


1933 


( 45.00 
( 40.00 


39 . 31 


38.05 


27.92 




27.67 


28 . 50 



The average unit values of ever 85 percent of the imports, which come 
from Canada and Newfoundland are only slight^ below the domestic price, and 
the addition of a small amount to cover the cost of transportation would 
bring the net price to the consumer up to, or above, the level of the domestic 
price. However, a study of a breakdown of the average import values by ports 
of sntr^ shows that imports from lie' r£ oundland at times have been entered at 
average values which were very much below that of combined imports from 
Canada and Newfoundland. 

The foreign value of imports from European countries in 1333 averaged 
about $12.50 less per ton than the average domestic delivered price at prin- 
cipal Atlantic and Gulf ports. This difference is accounted for chiefly by 
costs of packing, handling, and transportation. The North Atlantic Con- 
ference ocean freight on newsprint from North European to Atlantic ports 
was about $5.00 per short ton during 1933; in addition there were pre- 
terminal and post-terminal charges amounting to from $4.00 to $7.00 per 
short ton, depending upon the quantity involved. The total cost of handling 
and transportation therefore, would range from about $9.00 to $12.00 per 
ton. Adding these costs, and s reasonable margin of profit for importers, 
tc the average import values shown in Table 21, j'i ves ? total landed cost 
somewhat less than delivered prices' of domestic newsprint at the principal 
Atlantic ports. It is impossible to determine what price advantage, if 
any, would remain to the importer if differences in grade, quality, and 
methods of packaging for shipment, should be taken into consideration. 

We have no reliable information as to variations in grade or quality 
of imported and domestic newsprint, and no information as to the exact 
amount of cost variations which are due to differences in the quantity 
shipped or in the methods of packaging. Furthermore, no statistics are 
available as to the 'amount of newsprint shipped, or the cost of transporta- 
tion, by "tramp steamer." Consequently no strictly accurate price com- 
parisons can be made. 



9829 



-591- 

Trend of import values and exchange rates 

The present competitive position of the domestic newsprint in- 
dustry, insofar as it is affected by the currency situation, is sub- 
stantially better than it was from September, 1931 to April, 1933. For 
example, the dollar value of the currencies of Canada, Sweden and 
Finland averaged about 12 percent, 30 percent-, and 40 percent, respective- 
ly, below par for the year 1932. During 1923 the currencies o_" Sancda and 
Sweden returned to par and that of Finland to within 10 percent of par. 

Table 22 compares the trends of foreign exchange rates with the 
average unit value of imports from each of the countries which are the 
principal sources of newsprint. 



It will be noted that the average annual import values for the 
countries shown in Table 22 declined to a considerably greater extent 
from 1930 to March, 1933 than did the exchange value of their currencies. 
Moreover, the average dollar value of imports has not risen, since 
March, 1S33, to correspond with the appreciation of the currencies of 
these countries. In fact, although the exchange rates for Canada, 
Finland and Sweden rose 20, 45 and 49 percent respectively from March to 
December, 1933, the average value of imports from Canada and Finland 
declined' a further 12.4 percent and 1.9 percent respectively, and the 
imports from Sweden' rose only 1.6 percent. In short, it appears that 
the price competition has become somewhat ' more serious instead of less 
serious during the period of rising foreign exchange, since March, 1933. 
This is due in part to the existence of excess stocks and the operation 
of relatively long term contracts. ' 



9329 



-592- 



Table 22. Comparison of trends of import values and 
exchange rates, 1929 - March, 1934 





: Exchange value in 1 


Jnited 


; Unite 


value of inroorts 


Statistical 


■ 


States dollars 


per 


short ton f 


iTm 


period 


Canada 


Svieaen 


| Finland 


Ca na da 


' Sweden 


| Finland 




; Par = 


: Par = 


; Par s 










: $1.00 


: $0,263 


: $0.0252 








1929 


: $0.9925 


$0.2678 


. $0.0252 


; $60.28 


; $50.79 


: $47 . 98 


1930 


; .9934 


: . 2635 


; .0252 


; 58 . 55 


; 49.57 


: 46 . 20 


1931 


; .9633 


; . 2525 


; . 0239 


55.12 


; 46 . 55 


; 43.73 


1932 


.3809 


.1847 


: .0155 


48 . 07 


; 38.92 


: 34.92 


1933 


.9196 


.2203 


.0187 


39 . 31 


: 27.92 


: 25 . 33 


1933- Jan. 


.8746 


.1830 


.0146 


41.61 


30.18 


: 28.69 


Feb. 


.8351 


.1827 


.0149 


40 . 74 


29.36 


: 26 . 61 


Mar. 


.3352 


.1819 


.0152 


41.24 


27 . 27 


; 25 . 90 


Apr. 


.8472 


.1831 


.0158 


39.65 


26.49 


I 27.03 


May 


.8759 


.2024 


.0175 


40 . 44 


27. 3S 


; 25.26 


June 


.3939 


.2128 


.0182 


39.69 


27.66 


; 24.26 


July 


.9447 


.2398 


' .0205 


' 39.80 


26.48 


: 24.76 


Aug. 


.9423 


.2323 


.0200 


59.06 


27.04 


24.01 


Sept. 


.9647 


.2505 


.0207 


39.54 


23.69 


; 24 . 46 


Oct. 


.9760 


.2407 


.0207 


38.82 


28.17 


24.49 


Nov. 


1.0118 : 


.2655 


.0227 


36.77 


27.45 


24.70 


Dec. 


1.0055 ; 


. 2639 


.0227 


36.17 


27.71 


25.41 


1934- Jan. 


.9952 


.2604 


.0224 


34.92 


27.71 


25.68 


Feb. 


.9917 


.2596 


.0223 


34.28 


28 . 84 


25.54 


Mar. : 


.9974 ■ 


.2626 


.0225 


34.41 


27.59 


25.12 


Percentage 














change ; 














1930 to Mar. ; 














1933 : 


-16.4 : 


-32.3 


-39.7 ■ 


-29.6 


-45.0 


-44.0 


Mar. to Dec. : 














1933 : 


/20.4 ; 


/45.1 . 


/49.3 


/12.4 : 


/ 1.6 


- 1.9 


Mar. 1935 to ; 














Mar. 1934 ; 


/19.5 : 


/44.4 . 


/48.0 : 


-15.6 : 


/ 2.3 ; 


- 3.0 



9829 



-593- 

Prcoosed cooperation between the Code Authority of the 
Newsprint Industry in the United States and 
the Newsprint Export manufacturers 
Association of Canada 

At the public hearing on February 1, 1934, before Deputy 
Administrator Fickard, the Code Authority of the Newsprint Industry 
made t-o general proposals for the stabilization of the newsprint 
industry. The first included a series of recommendations covering 
minimum prices, tr^de practices and trr.de customs; the second was ■ 
a propsed agreement between the Association of Newsprint Manu- 
facturers of the United States and the Export Manufacturers 
Association of Conada, providing and setting up machinery for the 
uniform administration and/or enforcement of the proposed trade 
practices in both the United States and Canada. 

The principal feature of the proposed regulation of trade 
practices is a provision for the maintenance of a fixed minimum 
price for newsprint marketed in the United States. This is set 
out in the recommendations in the following terms: Except in the 
fulfillment of contracts signed before October 24, 1935, "no paper 
shall be sold or offered for sale directly or indirectly in any 
manner whatsoever by any member of the industry for delivery 
during the years 1933 and 1934 at less than a base price of $41.00 
per ton, subject to the zone and other differentials;" these 
price differentials range from $1.50 below the base price to $6.00 
above, depending upon the zone or territory as determined by the 
Newsprint Code. 

It is further provided in the trade practices that the Code 
Authority, upon its own motion or upon application by any member 
of the industry or group of consumers, might adjust or modify 
such minimum prices to the extent that it should find such adjust- 
ment or modification justified by general changes in the cost of 
manufacturing or in the value of the dollar and by conditions in 
the newspaper publishing industry. Moreover, the agreement with 
the Expert Manufacturers Association of Canada to comply with the 
requirements of the recommendations included agreement to comply 
with the adjustments and modifications which might be made from time 
to time by the Code Authority. 

The proposed agreement further provided for a joint committee 
composed of four representatives of the American and four repre- 
sentatives of the Canadian association, selected in such manner and 
for such terms as the associations respectively should from time 
to time determine. It provided that the joint committee should have 
power to call joint meetings of the associations and to confer 
with members of the association, other manufacturers, importers, dis- 
tributors, and consumers, with respect to stabilization of the in- 
dustry and the elimination of unfair practices and destructive com- 
petitive prices, and to report the results of such conferences, with 
their recommendations to the associations. 



9829 



-594- 

Otlnr principal provisions of the proposed agreement vrere: 
(l) methods of enforcing compliance -ith the trade practices, i.e., 
machinery for investigating, stipulation of legal remedies and 
penalties for, violation of the agreement, including application 
for restriction or regulation of imports under Section 3 (o) of 
the Act: (2) the interchange of statistics of plant capacity. 



9829 



-595- 



QUEBRACHO (No. 7) 



9829 



-•596~ 

TABLE OF CONTENTS 

Page No . 

Complainant's Status under the rational Industrial 

Recovery Act 599 

Subject of Complaint 599 

Tariff Treatment 50 ° 

The Domestic Industry 60 ° 

The chestneut branch ^00 

The quebracho branch °O0 

The miscellaneous branch s01 

Complainant' s interest in imports 601 

Concentration of control b0 ' : ' 

Course of Domestic Production °°2 

Exports ^02 

Quebracho Logs D 

The Quebracho Industry in Argentina and Paraguay — 6 °5 

Course of Imports 608 

Ratio of imports to production 610 

Important Competitive Factors "^-^ 

Competition bet'Jeen vegetable and chemical 

tanning agents ° 2 

Inter-relationshin of vegetable tanning ex- 
tracts 613 

Price relationships 

Trend of 'orices in relation to consunrotion 

Currency fluctuations 

Influences of currency fluctuations on que- 
bracho import volume 

Structure of the Solid Quebracho Extract Import- 
ing Business 

Causes of Increased Resort to Direct Purchase 

Effect of the National Industrial Recovery Pro- 
grara 621 

Effect on labor °g" 

Effect on costs of production . 

The Competitive Position of the Domestic Industry- 



9829 



-537- 
LIST OF TABLES 



Table Page 

No. No. 

1 Trend of production of chestnut extract and 

fresh quebracho extract, compared with pro- 
duction trend of vegetable-tanned leather 603 

2 Trend of exports and domestic production of 

chestnut extract in terms of 25 per cent 

tannin content 604 

3 Annual invoorts of quebracho logs, by customs 

districts and total, with indication of 
potential yield of extract 605 

4 Exports of quebracho logs and extract from 

Argentina and Paraguay, both in terms of 
obtainable extract of 25 per cent tannin 
content 606 

5 The quebracho extract industry in Argentina 

and Paraguay, with indication of capacity 

and exports, in metric tons of solid cf 63 

per cent tannin content 608 

6 Imports of solid quebracho extract, in terms 

of 25 per cent tannin content 609 

7 Percentages of total imports of solid que- 

bracho through principal customs districts — 610 
3 Batio of solid quebracho extract imports to 
domestic production of chestnut and fresh 
quebracho extracts 611 

9 Trend of production of vegetable-tanned and 

chemical-tanned heavy leather 612 

10 Comparison of trends of average domestic mar- 

ket prices for principal tanning extracts 

and general wholesale prices 614 

11 Comparison of the trend of prices and the 

perhide consumption of chestnut and que- 
bracho extracts 615 

12 Course of fluctuations in United States and 

Argentine currencies 616 

13 Solid quebracho extract despatched to the 

United States by principal shippers in Buenos 
Aires during recent quarters, in terms of 
extract of 25 per cent tannin content 618 

14 Comparison of Buenos Aires market prices and 

import unit values; also comparison of landed 

costs of direct purchases in the Buenos 

Aires market and ex-dock purchases 6 20 

15 Trend in employment, payroll, man-huiirs, and 

productivity of labor in the domestic tan- 
ning extract industry 622 

16 Comparison cf trends of labor costs, selling 

prices, and unit value of imports. 623 



9829 



-598- 

LIST OF CHARTS 



I Solid quebracho extract: - Comparison of trend 

of imports with trend of cost 625 

II Solid quebracho extract: Comparison of shipments 

to "regular" importers and to "Independent" 

importers s) by volume, and b) by cost to 

consumer. ; t "°' 



9829 



-599- 
SURVEY OF IKPOHMA.TIOH 

ON 

SOLID QUEBRACHO EXTRACT 
December, 19 3 4 

Complainant's Status under the National 
Industrial Recovery Act 

This is a report on a complaint under Section 3 (e) of the National 
Industrial Recovery- Act, filed by the Code Authority of the tanning extract 
industry, with respect to imports of solid quebracho extract. This industry 
is operating under a code of Fair Competition approved by the President on 
March 29, 1934. Prior to that time it operated under the President's Re*- 
employment Agreement. 

Subject of Complaint 

Quebracho extract is an important tanning material, approximately 
90 'oer cent of which is used in the tanning of heavy leathers, such as sole, 
belting, and harness leather, and 10 per cent in tanning lighter leathers, 
such as bag, strap, and upholstery leather. The extract is prepared in 
two commercial grades known in the' trade as (l) "ordinary" or "hot water 
soluble" and (2) "clarified" or "cold water soluble." For industrial use, 
the clarified grade of solid merely requires dissolving to form a liquid, 
but the ordinary grade (which has comprised over 85 per cent of total 
imports during recent years), must also be treated with bisulphite of 
soda to free all of the tannin. 

Quebracho extract is imported in solid form almost exclusively from 
Argentina and Paraguay. It has an available tannin content ranging from 
62 to 55 per cent. For industrial use it 'must be dissolved to form a 
liquid of approximately 35 per cent tannin content. 

The complaint is directed against solid quebracho extract which the 
complainant states "is being imported in increasingly large amounts at 
distressed prices." These imports are alleged to be competitive with 
chestnut extract produced from domestic chestnut wood and with liquid 
quebracho extract, which is produced domestically from imported quebracho 
logs. 

The complainant further states that "the advent of the National 
Recovery Administration has raised the operating costs of the domestic 
producers, and fchey are now at still a greater disadvantage, facing fur- 
ther curtailment of their production and sales volume on account of the 
increasing imports of solid quebracho. " They suggest that action be taken 
under Section 3 (e), to require (l) that importers "agree that no impor- 
tation is to be sold at less than a certain price per net pound, ex-dock 
in bond, United States ports, basis 53 per cent tannin content", (2) that 
consumers and dissolvers be permitted to import under conditions specified 
above, but if the cost to them is less than tne selling price established 
thereby, they be required to pay a tax equal to the difference, and (3) 
that no consumer be allowed to purchase for resale. 



9829 



-600- 

Tariff Treatment 

Quebracho extract, whether solid or liquid, is dutiable at 15 per 
cent ad valorem under Paragraph 30 of the Tariff Act of 1930. It was 
dutiable at the same rate under Paragraph 39 of the Tariff Act of 1922, 
and was imported free of duty under Paragraph 624 of the Tariff Act of 
1913. 

Quebracho logs and wood are imported duty-free, along with other 
dyeing and tanning raw materials, under Paragraph 1670 of the Tariff Act 
of 1930. They were liewise on the free list in the Tariff Acts of 1922 
and 1913. 



The Domestic Industry 

The Code of Pair Competition defines the tanning extract industry as 
"the manufacture, the liquefying and/or dissolving, for sale, of tanning 
extract from domestic woodand bark or from imported wood, bark, leaves, 
nuts and extracts." The code membership comprises 14 companies operating 25 
plants and employing approximately" 900 workmen. Representation on the node 
authority is provided for the following three branches of the industry: (l) 
Chestnut branch, consisting of nine companies, (2) quebracho branch, con- 
sisting of three companies, . and (3) miscellaneous or specialty branch, con- 
sisting of two and -oossibly more manufacturers of extracts. 

' The chestnut branch 

The chestnut branch of the industry consists of 19 plants situated 
in Tennessee, North Carolina, Virginia, and Alabama. Over 60 per cent 
of the total output of this branch of the industry in 1931-1933 was con- 
tributed by nine plants operated by two important manufacturers of paper 
and/or paper board, the extract being derived from chestnut-wood chips 
which are used later for pulp in the paper mills. A third company, op- 
erating three extract plants , maintains a contractual arrangement by 
which it furnishes its de-tanned chips to one of these paper manufacturers 
for pulp purposes. Considerable amounts were produced in three extract 
plants operated by two large tanners of sole leather "ho consumed practi- 
cally all the output of the three plants. These companies work almost 
exclusively' - on chestnut. 

The sole leather manufacturers, who operate three chestnut extract 
plants, are also important importers of solid quebracho extract and other 
tanning materials which they dissolve and/or otherwise prepare for consump- 
tion at their tanning plants. The ■•extract' output of the two paper manu- 
facturers is limited to chestnut, all of it being produced for sale. 

The annual cut of chestnut is roughly estimated at 050,000,000 board 
feet, of which about 30 per cent goes to extract plants. This annual con- 
sumption represents only about 5 per cent of the standing timber, but 
government entomologists have stated that the supply may run out in 10 to 
15 years, owing to ravages of a blight, concerning which the following is 
quoted from a report of the Forest Service of the Department of Agriculture; 



9829 



-601- 

The entire stand of chestnut in the United States is 
threatened with extinction from a fungus disease known as 
the "chestnut blight." This blight first attracted at- 
tention in 1904 in New York City and has since spread over 
New England and New York, and southward and westward into 
Virginia and T7est Virginia. Every attempt to check the 
spread of the blight has met with failure. It is estimated 
that nine-tenths of the remaining stands of chestnut in 
the Southern Appalachians will be heavily infected by the 
blight by 1935 unless something occurs to stop it. 

The quebracho branch 

The quebracho branch of the industry includes three firms. (l) One 
is a comoany manufacturing dyes and tanning materials which operates a 
special plant to produce fresh quebracho extract- from l n gs received from 
an affiliated company, in Argentina. (2) The second one is a domestic 
corporation, which is a subsidiary of a British company in Argentina 
from which it receives quebracho logs and solid, quebracho extract. This 
corporation, operating a domestic plant produces fresh quebracho extract 
from the imported logs and also dissolves and/or otherwise prepares for 
sale to tanners the imported solid quebracho extract. .This company also 
sells the imported solid extract directly to tanners on dollar terms of 
f.o.b. cars, American ports. (.3) The remaining one is an American conroany, 
operating extensively in Paraguay, which receives solid quebracho extract 
from its foreign plant and dissolves and/or -otherwise prepares it in 
a domestic "olant for sale to tanners. This company also offers the im- 
ported solid quebracho extract to tanners on terms of f.o.b. cars, Ameri- 
can ports. This third, firm has been operating under the tanning extract 
industry code, although the business of dissolving solid extract was out- 
side the scope of the ind.ustry as defined in the original code. An amend- 
ment was approved on October 9, 1934, which clarified this company's member 1 
ship status. 

The miscellaneous branch 

The so-called miscellaneous 'branch of the tanning extract industry is 
composed of two companies. One manufactures for sale a wide range of 
extrs.cts from domestic and imported materials, including solid quebracho. 
The other company supplies tanners with a spruce ex-tract obtained as a 
by-product in sulphating pulp preliminary to paper manufacture. 

Complainant ' s interest i n imports 

The complaint, directed exclusively against imports of solid que- 
bracho extract, has been filed by the code authority for the tanning ex- 
tract industry, the membership of which includes two companies which 
normally handle 70 per cent of imports into the United States of that 
extract. Only one of these two companies is directly represented on the 
code authority. The industry membership also includes extract-plant 
subsidiaries of certain tanners who are responsible for another 5 per cent 
or more of the imports. These subsidiaries have no direct representation 
on the code authority. 



9829 



Concentration of control 

Control of production in the tanning extract industry is highly 
conccentrated. Over 75 per cent of the total output is controlled by 
three companies. Furthermore, the major portion of the domestic fresh 
quebracho extract output is produced "by the company which usually imports 
a substantial percentage of the solid quebracho extract. 

Course of Domestic Production 

Approximately 90 per cent <Jf the domestic production of vegetable tanning 
extracts - exclusive of dissolving the imported solid ouebracho extract - 
consists of chestnut extract and of fresh quebracho extract produced from 
imported logs; the balance is derived from myrabolan, rattle, summac , oak, 
spruce, etc. The following table shows the trends of domestic production 
of both chestnut and fresh quebracho extracts and in comparison the trend 
of vegetable-tanned. leather production. 

It may be noted that domestic production of chestnut extract fol- 
lowed closely the downward trend o.f 'production of vegetable-tanned lea- 
ther. Despite the fact that there was a heavy importation of solid que- 
bracho extract in the latter half of 1933 and early in 1934, the produc- 
tion of chestnut extract ^ose considerably during the third quarter of 
1933, and has maintained a relatively high level through the first six 
months of 1934. Apart from the table it may be observed that at the same 
time the relatively high level of Production of vegetable-tanned leather 
has resulted in a decline in the chestnut extract stocks in the hands of 
all. producers. According to a statement of the code authority, these 
stocks dropped from 57,528,000 pounds in July, 1933, to 55,967,000 in 
April, 1934. 

The domestic production of fresh quebracho extract likewise kept 
pace relatively with production of veg'etable-tanned leather until 1931, 
after which time it dropped abruptly to a decidedly lower level. Com- 
plainant states that present quotations of domestic fresh quebracho are 
below cost of production. If this statement is correct with regard to 
present. conditions, and considering the trend in the cost of imported 
quebracho logs and other costs, it appears that the domestic fresh oue- 
bracho plants have been unable to compete successfully with the imported 
solid ex.tra.ct since 1931 when there occurred in the price of the latter 
a sharp drop from the artificially high level maintained prior to that 
time by the Argentine cartel. 

Exports 

Chestnut is the only domestic extract exported in any volume, Can- 
ada, being the principal market with smaller amounts going to Cuba, Ger- 
many, and the United Kingdom. The annual exoort totals given in Table 2, 
converted to 25 per cent tannin content, are taken directly from the com- 
plaint. They are based on exports as reported to the Tanners Council 
Statistical Bureau by the various chestnut plants. 



9829 



-603- 



Table 1: Trend of production of chestnut extract and 

fresh quebracho extract, compared with production trend 

of vegetable-tanned leather. 



Period 



1927 
1928 
1929 
1930 
1931 
1932 
1933 



1933 

Ja/uary - l.iarch 
April - June 
July - September 
October - December 

1934 
January - Larch 
A-pril - June 



Production in thou- 
sands of pounds of 
25 per ce nt tanninl/ 

Chestnut: Presh 
extract : quebracho 



Indices of trend. 
Average 1927-29 

production B 100 

Chestnut: Fresh : Vegetable- 
extract : quebracho: tanned 

:_ :_ leather 2 / 



323,527 
3? 4, 429 
323,427 
336,162 
269,284 
218,089 
241 , 770 



45,301 
55,255 
69,863 
71,351 



69,969 



,907 



115,764 

S/ 
125,385 

3/ 

92,891 

59 470 
44,022 



6,967 
10,498 
13,481 
13,076 



10,376 
10,664 



By years 

) 

) 100 



) 



) 

)4/ 100 



) 



98 
78 
63 
70 



By_cuarters 



53 

64 
81 
83 



CI 
81 



5/ 



77 
33 
37 



) 

) lob 
) 

94 
76 
64 
67 



35 
45 
43 



34 
35 



3/ 
82 



83 
89 



1/ 

2/ 
3/ 
1/ 



Con-iled 'o^ the Ta.nr.ers Council of America, acting for the American 

Tanning Extract manufacturers Association, as reported by complainant. 
3ased on data furnished by Tanners Council of America. 
Tot available. 
1927 and 1929 - 100. 



9829 



-604- 



Table 2: Trend of exports and domestic production of chestnut ex- 
tract in terns of 25 per cent tannin content. 



Year ' 


Domesti 




procucti 


1927 


323,527 


1928 


384,429 


1929 


323,427 


1930 


r ;36 , 162 


1931 


269,284 


1932 


218,089 


1935 


241,770 



In t housands of 
Exports 



■ . 19,784 
25,291 

'29,968 
. . 25,855 
'. ', 26,968' 
. .' 36 , 178 

' 45 , 752 



£2]i£^.?JL ,.. 

Ratio of exports 
to domestic 
production 

Per cent 
6.1 
5.6 
9.3 
7.7 
; 10. 

16.6 : 
18.9 



As shown in the. above table, during the period from 1927 to 1933 dom- 
estic production declinec. 25 per cent, while exports increased 131 per 
cent. This resulted in an increase in the ratio of exports to domestic 
production from 6 ~oer cent in 1927 to 19 per cent in 1933. Available sta- 
tistics indicate that the trend of exports has continued upward during 1934. 

.Quebracho Logs 

Quebracho logs which constitute the raw material for the two domestic 
producers of fresh ouebracho . extract are imported into the United States 
free of duty. Table 3 shows the trend of these imports by years since 1926 
in total and by customs districts. Quebracho logs yield approximately 21 
per cent tannin, therefore their potential yield in terms of 25 per cent 
tannin extract amounts to about 84 per cent of the weight of the logs. 
These logs can be stored for an indefinite period. It is reported that the 
domestic industry has a supply considerably in excess of its requirements. 



9829 



- 605 - 

Table 3: Annual imports of quebracho logs, by customs 
districts and total, with indication of -ootential 

yield of extract. 







Now York 


Total : 


Total 


Year 


Mobile 


end 


imoorts : 


■potential yield of 






Philadelphia 1/ 




extract 2/ 










In thousands of 




Tor 
5,97^ 


is of 2,2^0 nounds 
26.09U 


32,062 : 


■oounds 


1926 


60,352 


1927 


17,170 


^3,756 


60,926 : 


llU,6b3 


192S 


22,320 


^7,675 


75,995 : 


1^3,023 


1929 


23,260 


46,7^2 


70,602 : ■ 


132,22*1 


1930 


lk,k9Z 


29,622 


l+U,llU : 


23,023 


1931 


15.3^ 


U0.052 


55,396 : 


104,255 


1932 


U.95U 


2,429 


13.3S3 : - 


25.1S7 


1933 
133^ 
(6 mos, 


- 


20,115 


'20,115 : < 


37,S56 


.) - 


36,710 


36,710 ft, 

• 1 


69,022 



1/ Ooerations of one oroducer transferred from New York to Wilmington 

in 1927. 
2/ Twenty-five t>er cent tannin content. ■ 

The ruebracho Industry in Argentina and 
Paraguay 

The "uebracho tree 'is only native to South America and 
commercially exploited in Argentina and • Paraguay . The 
heartwood of this tree from which the extract is obtained is 
extremely hard, having a density of 72 -oounds -oer cubic foot. 
Extraction was first undertaken in Argentina about 1220, but 
did not reach substantial -oro-oortions until early in the pre- 
sent century "hen plants were established by the British Forestal 
Company, and several German and French companies. As early as 
1272 a small plant was erected in France for the extraction of 
tannin from imported quebracho logs. Further development 
later took clace in several Eur or) e an countries. The expor- 
tation of the solid extract aroduced by plants in Argentina 
and Paraguay increased raoidly after the World War, and dur- 
ing the same neriod the exportation of logs declined. Com- 
pars.tive figures showing the relative -imrjortance of the two 
types of exports are given in Table H. 



9229 



- 6o6 - 

Table 4: Exports of quebracho logs and extract from Argentina and 
Paraguay, both in terms of- obtainable extract of 25 ^er .cent .tannin 
content. 



(in thousands of ooundf ) 





: Logs - 


Solid quebracho 




Period 


tannin content 


extract 




Annual averages 








1891-1900 


217,473 


7,735 




1901-1910 


:. 472,515 


179,5b2 




1911-1920 


: 377, S60 


596,295 




1921-1930 


: 212,867 


1,267,160 ,. 


, 


Annual totals 


. 


f 


f 


1925 


206,9Ul 


1,739,320 
1,563,%7 , 




1927 


240, 204 




1928 


309,945 - 


1,535,091 , 




1929 


300,733 • 


1,186,211 , 




1930 


262,202 


1,109,736 
1, 315,144 




1931 


i5S,;6f3 r ' 




1 1932 


101,560 


1,4.72,966 




1933 


187,700 


1/1,600,000 





1/ Estimated. 



The industry' in Argentina and Paraguay expanded more 
than the world demand for quebracho justified and, after re- 
peated attempts to control output, the Forests,! Land Timber 
and Railways Company, Ltd., which has always been the .largest 
producers, arranged exclusive export marketing contracts with 
the other producers. This cartel arrangement functioned 
satisfactorily from about 1927 to the middle of 1931 ^7 main- 
taining prices at an artificially high level. luring the 12 
months p.fter its dissolution, the price of quebracho dropped 
nearly 60 per cent, and has continued at a relatively low 
level ever since. 

The quebracho extract producers in Argentina and 
Paraguay have been striving, so far unsuccessfully, to de- 
vise a substitute plan for the cartel in order to restore 
the industry to a profitable basis. The producers, with the 
exception of three' large companies which are foreign-control- 
led, presented a petition to the Argentine Government propos- 
ing that the Government take control of the quebracho extract 
industry for the purpose of rationing production on a level 
with consumption, and also urging the Government to embargo 
the export of logs. The petition asserted that (l) the oro- 
ductive capacity of the plants in Argentina and Paraguay was 
sufficient to supply world needs for quebracho extract; (2) 
foreign plants using Argentine logs depended upon high tariff 
barriers to offset the handicap arising from their uneconomi- 
cal location; (3) the greater value of the solid extract would 
yield additional foreign credits to bolster the exchange value 



9829 



- 607 - 

cf the peso; (k) the value of foreign plants would not be de- 
stroyed if log exports nere prohibited since these plants could 
make extracts from other materials and continue their present 
practice of -ore-oaring liquid extract from imported solid que- 
bracho; and (5) ten of the leading companies suffered an 
average loss of 3*7 P er cent on caoital investment in 1932* 

Trro of the larger companies, -rhich are foreign-con- 
trolled, oppose the plan advanced by the remaining -oroducers 
insofar as it relates to the embarg of log exports for the 
re? son that they operate fresh extra.ct plants in foreign con- 
sumer markets. 

Table 5 compares relative productive capacity, total 
exports, and exports to the United States, of the leading pro- 
ducers of solid quebracho. extract in Argentina and Paraguay. 
Two of these companies, ship to corporate affiliates in the United 
States which quote to llorth American tanners on dollar terms, f.o.b. 
cars, American port. These two companies are very large, and 
have played a prominent cart in the United States import market 
for quebracho in the past. The importance of one of them in this 
respect is greater than its shipments of solid extra.ct indi- , 
cate, since it --lso supplies logs to its fresh extract plant 
in the United States. 



9323 



- 603 - 

Table ^>: The quebracho extract industry in Argentina and Para- 
guay, with indication of capacity and exoorts, in metric tons of 
solid of 63 "oer cent tannin content. 



Name 






: Exoort 


: shiamen 


bs 


of 


■ Registered 


: capacity 


i To all countries 


: to U. 


5. Ports 


producer 


: caoital 


: production 


1932 


: 1932 


: 1933 




-1,000 -oesos 


Orjerat: 


mz in Argentina 






Forestal 


54,117 


165,156 


97,145 


■ 14,192 


: 31,097 


Colorantes 


1,000 


9,600 


3,630 


483 


: 529 


Del Norte 


500 


6,000 


5,900 


i 392 


1.931 


Pfahl 


• . 500 


: 2,000 


313 


: - 




Curtiunidas 


500 . 


18,000 


! ' — 


— 


: — 


Del Yuto 


600 


6,000 


544 


: 323 


: — 


Fusianados 


7,000 


■ 36,000 


lSyOHO 


. 1,922 


— 


Fontana 1/ 


4,000 


20,500 


— 




- 


Chaquana 


5.11U 


IS, 000 


753 


: 1 


: S45 


No e tinge r 


2,415 


16, soo 


15,126 


367 


- 


Atorrasagar 












sti 


1,000 


15,000 


2,440 


1,494 


249 


Curtientes 


500 


15,000 


1 ? 1 z.Z 


11,725 


7,498 


Franc ia-Arg, 


soo 


7,596 


852 


! 5 


- 


Jalon 


525 


7,483 


- 


- 


- 


Sarauhi 


i,4oo 


7,200 


7,454 


.3/771 


2,550 


Fern, Fenian* 


l.V 600 


6,980 


1,732 


444 


257 


Noruego-Arg, 


750 


5,4oo 


1,723 


350 


- 


TTelbers 


1,000 


4,500 : 


4,969 


405 


446 


Las Palmas : 


600 


4,000 : 


135 . 


- 


394 


Dubosc 


1,108 : 


7,000 : 


4,909 


752 


299 


Formosa 


2,000 


IS, 000 


9,216 


151 


1,560 






Oners 


it ins in Paraguay 







Internation- 








al Prod- 








ucts Co. 


3,000 


36,000 


22,902 


Carlos Casa- 








do 


7,955 


21,600 


8,369 


Puerto 








Sastre 


4,S24 


27,000 


9,590 


Puerto 








Cuarani 


1,750 


15,600 


3,031 



6,983 



42 



12,24l 



Ui4 



2.60G 3O3 



1/ Export handled "by Fores tal. 

Course of Imoorto 
Table 6 shovrs the trend of the quantity, value, and unit value of im- 
ports of solid quebracho extract "Inch is the subject of comolaint. 
The increase in iimorts in late 1931 and during 1932 v:as due in nart 
to the cheaper 'orice of the solid extract resulting from breakdown 
of the Argentine export cartel. 



9829 



- 609 - 

The trend in 1933 '""' r - influenced "by speculative pur- 
;] ses mpde in rntici i-tion of higher n-ices resulting from the 
rise in the dollar vplue of the oeso. 

A com \T' tivel insignific nt ->ro->ortion of the im- 
ported extrrct is reerroorted, orincipally to Canada. The trend 
of reexports h-s been dcviva-. d since 1926, hen they amounted 
to sir tenths of 1 ner cent of the "mount of innorte. 

Table 6: Imports of solid quebracho extract , in terms 
of 25 ^© r cent tannin content. 









Thousands 


: Thousands : Do.llar value 








of. pounds 


of dollars' : "our. 100 oounds 










3y years 


1926 






284,273 


: 3,721 


$1.31 


1927 






311,910 


: 4,304 


1,57 


1928 






270,528 


: 4,301 


: 1.59 


1929 






228,969 


: 3,7^ 


: I.63 


1530 






243,975 


: 3.328 


1.57 


1931 






263,377 


: 2,435 




1932 






290,344 : 


1,79S 


1933 






345,366 


2,5^5 : 


•i u 


1933 








By quarters 


Janup 


ry-fe 


rch 


66,556 


: 37^ 


: .56" 


Aori] 


-June 




37,280 


: 214 


.57 


July- 


Septe 


rnber 


87,572 


: 625 


.71 


October-De 


cember 


153,958 


: 1.331 


.86 


1934 










Janus.ry-Ir 


rch 


122,903 


! 1,073 


.37 


Aoril 


-June 




65,62b 


: 519 


.79 



Since 1926, New York has drooned substantially in importance as 
a "oort sf entry for solid quebracho extract, and the customs districts 
of Virginia and IJaryland have increased in importance. Table 7 shows 
the ^ercentr e of tot->l inroorts through the -orinei-oal customs district: 
since 1926. 



IZS 



-61D-. 



Tabl3 7: Perc^ntara o^ total' irroori 



r 5lio. auebrach' 



-orinci-oal cr.stonis districts. 



cormetition with domestic fresh ouehracho' e>: tract ,and, to sore 
e;-t<5irt, nith doriestic chestnut sxtraet. Tr'ole 8 shoTS a cora- 
oarison of the trend of domestic product i V- of fresh que'bracho 
and of chestnut extracts with the trend of imorts of .solid 

q etiracho extract. 



Peri"d 


I e- 


} Ian sa- 


Pl-ila- 




San 


Connecti- 


3y years 


Yo: ]'. 


:chuse'tts 


d.el-ohia 


fir^inia: Kd. 


I i-an. 


cut 














192 : 


79 


9 


2-. 


6 : o.3 


4 


„ 


1927 


7C 


r» 


4 • 


13 : G 


3 


- 


1S20 


64 


9 


7 


18 : 3 


i: 


- 


192? 


44 


9 


21 


22 ;---4" - 


.8 


- 


19f0 


52 


15 


10 • 


24 : 17 ' 


.7 


• 2 


] r 31 


37 


24 


11 ' 


16 : 11 ' 


.7 


'1 


1932 


31 


. 25 


6 


15 • i c 


.5 


.2 


1933 


29 


n 


n 
O 


26 : 24 


.7 


■ : 3 


Hatio of iiroorts to ^reduction 


• 




In- 


iorts 


of s~l..d 


ouehrac": 


lo e::.tract cb: \ ; 


i--.to t 


"irect 



9829 



-611- 



7;' 1< B: ... io of co'i, 1 quebracho extract inroorts to 
donestic production of chestnut and fresh quebracho 

extracts. 









: Inroorts 


: Ratio of 


Period 


: Domestic Product 


ion 


: of 
; solid 


: inroorts 




i : Fresh 


i 

i 


: to 




; Che sinut : quebracho 


: Total 


: quebracho 


: production 




' In millions o. 


Z r> v.mC. s ( 


jf 




By years 


; 25 -~>er cent extract 




: Per cent 


192? 


324 


: 116 


: 439 


: 312 


: 71 


1929 


323 


: 125 


AAO 


: 229 


: 51 


IS 30 


- 336 


: 1/ 


; ij 


: 244 


« u 


1931 


: 269 


■ C7 

1 *-' <-> 


: 562 


253 


\ 70 


1 c M 

— *' l_^ — 


218 


: 39 


: "57 


1 290 


S 113 


1 c-v 


242 


> 44 


: 286 


: 345 


: 121 


By auatte* s 












l£ r 3 












Januar "-if rch 


45 


: 7 


: 52 


: 67 


127 


Anril-June 


» en 


: 10 


: 65 


38 


: 57 


July-Se-it cno ?r 


70 


! 13 


! 83 


88 


: 105 


Oct.-D--c- «: 


71 


13 


: 84 


154 


: 182 


1934 : 












Januar -LI" re': ! 


70 


!• 


80 


123 


153 


Aoril-Jun : ! 


70 


11 


81 ! 


66 


81 


3y months : 


25 


4 


! 29 ! 


55 




January ) 


224 


February : 


21 


»_, 


t 24 j 


30 : 


125 


March ! 


2< 


o 


27 


27 


101 


Aoril ! 


24 


3 


27 ! 


22 


80 


May < 


23 


4 : 


27 : 


25 j 


94 


June ; 


23 ! 


4 « 


27 ! 


19 


71 


Jiily ! 


*» 


— j 


— i 


25 ! 


_ 


August : 


— 


— J 


— ! 


17 : 


- 



1/ Production not rooort 



;c 



From 



-'or~z r -'"- table, it r.iay be noted thft th 



rrtio of imports of solid cu fcracho e::t: act to domestic ora- 
duction of chestnut and fresh quebracho extracts -as much 
hirher in 1932 and 1933 than in former years. As erolainec 
in detail elsewhere in this report, this -as principally on 
account of increas a iiroorts o-.'ing to a sharp decline, inihe 
price o:: th imported solid quebracho extract which 'resulted from 
two factors: (1) Zrea'rdovn of cartel control in Argentina, 
and (2) the decline in the exchange value of the Argentine oeso. 



9329 



-612- 



This shan decline in price mF,cle the domestic production of fresh 
quebracho iron the inrnortec 1 logs relative!" xurprof itable. 

As sho v 'n in Telle, 8, the -oroductior. of domestic extracts 
increased substantially during 1933. The sharp increase in the 
ratio of imports to production in. the latter part of 193-7 and early 1934 
resulted from ebnomally large inserts in anticipation of rising 
costs due to the de-oreciation of the United States dollar. 



lionthly data in the table sho - " 1 that; rhile the domestic 
production of chestnut and of fresh Gue.rac' o extracts: remained 
relatively high through the final montr r sorted by the complainant, 
the imports oi solid quebracho errtract declined almost: steadily 
fron January to August of 1934. As r consectuence, '.n June, 1934, 
the ratio of imports to Tjroductior declined to vh.ri might be 
termed a normal level, namel ■-, that nhich nr vailed in. 1927 and 
1931. : 



Imoortant Corroetitivs factors 

C onn o t i t i on b e t ■-• ~ - n ye ';e - ell-- _ : nd_cj L suical tanning c gent s 

In addition to the extent to "rhich leather products have 
been displaced b; rubber substitutes - particularl;* rubber 
and textile cannosition belting arf s'ree soles - vegetable 
tanning agents have suffered sOmerrhat in competition -ith 
chemical tanning agents. This is indicated in the follorring 
table shoving the trend of production of vegetal] B- tanned and 
chemical-tanned heavy leather in recent years. 

Table 9 - Trend of production of vegetable- tanned ■ 
and chemical—tanned he-aw leather. 





Total 


: 


2. 


evtio of 




of 


: 


V 


3 get able 




tanne 6 


• 


t 


Mined tc 




cowhides 


1/: 


+; 


Dtal 2/ 




In thovis; 


• 
• 

vnds 




Fer cent 


1927 


21 , 824 


■ 


47.. 7 


1928 


20,2- 


: 




• 50- 4 


1929 


19,147 


: 




■ 49.4 


1930 


17,674 


: 




! 3.4 


1951 


J. O j CCu 


: 




47.1 


1932 


14,583 


: 




44.3 


1953 


16,941 


. 




59.3 



1/ from "Survey of Current Business." 
2/ Data on production of vegetable-tanr 
Tanners Council of America. 



Indices "be- o eel or .927 
: production 



Ve/ 



tabl 


-5 mm 


■ Che- 


rical - 


.eel" 


2/ 


tanned 


100 






IOC 


98 






8C 


91 






85 


91 






72 


75 






75 


,62 






71 


65 






P9 



ed leather furnished b T r 



982^ 



-613- 

As shown in th • above table, vegetable tanning agents 
have encotuiter d gradually increasing competition from chemical 
agents - principally chrome - during the past several years. 
As compared with a drop of roughly 22 per cent iron 1527 through 
1S33, in th-- number of cattle hides tanned, the consumption of 
vegetable tannin ; onts declined 35 per cent, and th. t of 
chemical a-rents declined only 11 per cent. 

Inter-rel ationship of veget able tanning extract s 

Vegetable tanning agents utilized by manufacturers, of 
leather, either in the raw forn or a„s extract, are commonly 
classed iv t"0 "roups - pyragallols and catechols - each of 
which has properties that are essential in the proper -'tanning 
of heavy leather. Chestnut is the nost important pyragallol 
and quebracho the principal catechol. Chestnut and other 
pyragallol agents impa.rt ol-empnoss, durability, cuttirg equality, 
and dull yello- or browr. color to leather*. Quebracho and other 
catechols impart flexibility, resistance to -ater and chemicals, 
and brighten the color of leather i nd hasten the tanning -orocess. 

distinct properties of each roup fix the relative amounts 
of t". 2 two which tanners must use in the .preparation of blends 
needed in the tanning o: n leather to meet particular specifica- 
tions. Contrasted with ■• the United interchangeability between 
groups, in nost uses various agents within each group — for 
example, th: catechols: qu.ebra.cho and rattle - nay be substituted 
for each other to a. conside: able extent without alt u-ing the 
character of the tanned, leather. 

With reference to the question of competition between 
chestnut and quebracho' extracts, the relatively narro 1 ■ limits 
within nhich they may 'be substituted for each other in the 
bulk of the leather tanned, of necessit:" limits the 'extent 
of the actual competition between the !• .As a ma.tter : of fact, 
the demand for leather over a period of .years has been pre- 
dominantly for those grades and Qualities in the tanning of 
which the range of- substitution between chestnut and quebra-c] o 
extract was limited to roughly 10 per cert. To that extent, 
the tanner was able to take advantage of a relatively 1o t - 
price for one or bhe oth'-r extracts in order to reduce his 
raw material costs. 

Price relationships 

- price of imported solid quebracho directly in- 
fluences ths price of domestic fresh quebracho for the reason 
that the two extracts are interchangeable in us- . In contrast, 
the data sho-n in Sable 10 indicates that there is little, if any, 
correlation between the price of imported solid arc' the price of 
domestic chestnut 3xtra-cts. 

The price of chestnut extract is mors directly influenced 
by conditions in the leather tannin'- industry than by the quantity 
or price of the quebracho imports. 

9829 



-614- 



In fact, since September, 1933, th price of chestnut extract has 
"been slightly hi her than the average for the years 1928 and 1929, 
! .Thile the price of iuroorted solic" quebracho e:-:t. r :,t has "been a-o~oro::i- 
mately 40 per cent belo 1 " the level for the sf.-T.ie "cars. 

Tr"ble 10; Comparison o: r trends, of avera ye domestic marmot 
•or ices for "orincipal tannin--; extract and general 

vrholesale -3ric.es. 







Indices 


of -orices l/ 




Statistical 


' Imported 


~lr e sh 




General 




period 


! soT id 


done fit ic 


Chest 


■ hole sale 






quebracho .2 


Quebracho 


: nut 


■orices 3/ 




1926 


100 


100 


100 


100 




1927 


112 


100 


104 


95 




1928 


11s ■ ■ 


100 


90 


97 




1929 


117 


' 108 




95 




1930 


113 


100 


92 ' 


83 




1931 - 












January-June 


00 


■1r- 


: 92 


75 




July-Dece-iber 


62 


57 


85 


71 




19:2 - 












J anuary- Jun e 


45 


57 


82 


65 




July-Decemb er 


45 


57 


ri A 


64 




1933 - 












Janue.ry-i.Iar ch 


42 


: 67 


74 


60 




April-June 


48 


67 


• 74 


63 




July-Se-ot emb er 


69 


: 57 


82 


70 




Octofeer-Decenb' r 


72 


57 


92 


71 




1934 - 












January-liar ch 


S3 


7S 


92 


: 73 




April-June 


65 


79 


92 


' ' 74 





1/ ~l:tract -orices furnisl & "by coi:nlainant. 

2/ Prices quoted by "reyular" inoorters, plus dutj". 

3/ Bureau of Labor Statistics. 



oo n n 

3 0GJ 



—615— 



Trend of prices in relation to cons umption 

The next table shows a comparison of the effect of the relative 
price changes of imported solid quebracho, domestic fresh quebracho, 
and domestic chestnut extracts, upon the extract consumption per hide 
of leather tanned by vegetable tanning agents. 

The table shows that imported solid made substantial gains at the 
expense of the domestic fresh quebracho extract quoted at a premium. 
However, despite the fact that the price of the imported solid extract 
was very much below the price of domestic chestnut extract, the per- 
hide consumption of chestnut has continued at much the same level as 
formerly, indicating that the two extracts have rather definite limits 
of interohangeability. 

Table 11: Comparison of the trend of prices and the per-hide 
consumption of chestnut and quebracho extracts l/ 





Tnrl-i nes of - 




Chestnut 


Quebracho : ; ■- 


'. ■ . i 




Imported solid. : 


Domestic fresh 




Prices ! Per-hide 
: consumption 


Prices 


per-hide • 
supply 


Prices 


Per-hide 
supply 


1927 

1929 
1931 
1932 
1933 


100 '. 100 

&5 : 106 

85 : : 109 

75 : 97 

: 77 : : 100 


100 : 
: 104 : 
: 72 : 
: 41 • 
! 51 : 


100 • 

81 •' 

: 110 : 

: 150 : 

: 171 : 


100 

108 '' 

: 77 : 

: 67 : 

: 67 ' 


: 100 
: 120 
: 109 
: 55 
: :59 



=L No allowance has been made for changes in warehouse^ stocks. 
However these were not particularly' significant until 1933. 

Note: Per-hide consumption of chestnut extract in 1927 was 29.2 
pounds, of imported solid quebracho extract 30.0 pounds, 
and of domestic fresh quebracho 11.1 pounds. 

The limit of displacement of chestnut by quebracho extract is 
further indicated by the fact that' chestnut imports into Germany held 
up well during the period 1928-1933, whenHamburg prices starred at 424 
per metric ton for Argentine quebracho extract and 423 for Italian 
chestnut, and finished at 413 and ^25 respectively. 

Currency fluctuations 

Since 1931 the Argentine peso has been pagged successively to 
the pound sterling, the dollar, the French franc, and then again to 
sterling. lable 12 shows the trend in the gold value of the peso and 
of the dollar and the exchange value of the two currencies. It may 
be noted that the gold value of the peso declined approximately 40 
per cent from 1928 to April, 1933, when the dollar began to depreciate. 
During 1933, when the dollar was depreciating most rapidly, the g*»ld 
value of the peso remained steady, resulting in an improvement of ap- 
proximately 57 per cent im the peso-dollar exchange from March to Nov- 



9829 



-616- 



ember of that year. In November, 1933, the Argentine Government 
arbitrarily reduced the value of the peso about 17 per cent. 



Table 12: Course of fluctuations in United States 
and Argentine currencies. 





Indices 


of trend . 


Peso-dollar : 


Appreciation 


of 




in gold exchange : 
value based on : 


exchange rate 


peso against 
the dollar 






United States : 






100- currency's par: 


cents per sold peso 


after 1932 






Peso 


Dollar 








Par i 


(100) 


(100) . 


(96,48) 






1928 average 


100 ; 


100 : 


96,48 






1929 average 


99 


100 : 


95.13 






1930 average 


37 : 


100 ! 


83.51 






1931 












January 


72 


■ 100 


69.70 






October 


64 


99 


*52.00 






1932 












January 


60 


: 100 


: 58.27 






October 


: 61' 


100 


: 58.58 






2933 












March 


60 


99 


: 58.30 


!■ — 




April ; 


: 60 


! 96 : 


: 60.49 


I: 3 




June : 


. .■ 60 


: 82 ■ 


: 71.06 


: : 21 ' 




August : 


: 60. 


! 73 : 


: -79.43 


: 36 




November 


: ■ 60: 


: 63 . 


: :9 2.04 


!: 57 .■ 




December : 


: 50: 


64 : 


: 75.75 


:• 29 : 




1934 












January 


: ,5© 


63 


: . 76.14 


: 30 




March 


: 48 


: 60 


: 77.18 - 


: 32 




June 


: 47 


. . . .59 


76.50 


: 31 


• 



Source: Federal Reserve Bulletin . 

Influences of currency fluctuations on quebracho import volume 

The Buenos Aires market quotation for solid quebracho, 
extract, which had. stood for. some time at around 96 pesos 
per metric ton, dropped rapidly after the breakdown of the -ex- 
port cartel late in 1931, reaching a low of 46 pesos late in 
1932. 



9829 



-617- 

Gradual devaluation of the pes- during 1931 and 1952 accentuated the decline 
in the erst of the solid extract in terms of dollars. 

During the ten-month period from February through November of 1933 when 
the Buenos Aires quebracho market price remained constant at 59 pesos, the 
full 57 per cent improvement in the peso in terms of dollars was reflected 
in costs of quebracho imported into the United States. Import costs dropped 
at the end of November in direct ratio to the 17 per cert devaluation of the 
peso. 

Inasmuch as the solid quebracho extract can be readily stored, heavy 
purchases by American tanners and accumulation of stocks by importers during 
1935 were motivated by the fact that the price of solid quebracho (already at 
low level following the breakdown of the Argentine cartel) , was bound to move 
upward as a. result of the advance of the peso- dollar exchange. This situation 
doubtless furnishes the principal explanation for the exceptionally high 
volume of imports during the second half of 1355. The influence of the 
exchange situation of speculative purchases is further indicated by the degree 
to which the volume of imports declined during the period of relative ex- 
change stability, i.e., from January to August, 1934. 

Structure of the Solid Quebracho. Extract Importing Business 

Two prominent companies with sales offices in New York solicit orders for 
imported solid extract, quoting in dollars on landed basis. These two firms 
are members of the tanning extract industry operating voider the code. The 
complaint filed by the code authority prays for relief from imports received 
through other channels at "distressed prices. " It designates these two 
companies as "regular" importers and describes other imports as handled by 
"independent" importers. 

American tanners have the option of making their solid extract purchases 
through those two "regular" import firms, or of purchasing direct in the 
Buenos Aires market. In acquiring direct supply of extract, the American 
tanner usually entrusts the purchase to the branch office or agency in Buenos 
Aires through which he regular 1: receives the bulk of his supply of raw hides. 
The tanner may also place his direct- purchase order through brokers in New 
York connected with Argentine shippers. 

) 

By making his extract purchases from "regular" importers, the domestic 
tanner has effective means of redress for claims, secures prompt delivery, and 
avoids tie-up of funds in irrevocable letters of credit. Furthermore, he 
knows his costs without bothering with the purchase of foreign exchange in a 
restricted market. On the other hand, if the American tanner carefully studies 
the Buenos Aires market and is representee, there by a competent agent,, he is 
in a position occasionally to buy closer to the market, but not, however, 
without certain attendant risks in the event of deficient weight, quality, etc. 
Purchases through brokers in New Y rk involve even greater difficulties as far 
as concerns redress for claim. Follow-up orders placed by tanners^ are con- 
tingent upon satisfaction. The tanner has a check on quality in the course of 
utilizing" the extract, and he is able to measure his cost in terms of net tan^ 
in content. 



9829 



-613- 

Table 13 shows exports by individual shippers in Buenos Aire:- .wring 
recent quarters, as compiled from official Buenos Aires port records "by a 
private statistical agency. The shipments shown for the first three companies 
were made to affiliated lompanios in New York, i.e., "regular" importers. 
Shi men ts made b^ the other firms listed in the table were invoiced to Ameri- 
can companies described by complainants as "independent" importers. The 
record of shipments shov/n in Table 13 indicates that American "brokers took 
very little part in the abnormal volume of business during the latter part 
of 1S33, and tha.t the Buenos Ak es brrnch offices or hide purchasing agents 
of American tanners handled the bulk of the "independent" business during 
that period.. The table also shows that shippers to se-enlled "independent" 
importers handled roughly 50 per cent of all shipments to the United States 
during the first half of 1934, as compared with only 21 per cent during the 
first cpartcr of 1933. 

Table 13: Solid quebracho extract despatched to the United 
States by principal shippers in Buenos Aires during recent 
quarters, in terms of extract of 35 per cent tannin content. 

( Uni t- 1 , 00 , OQC pounds) 



c 


t.-Dec. 


J an. -Mar. 


Apr.-Ji 


me. 


Jhly-Sept. 


Oct. -Dec. 


Jan.— Mar. 


April 


X 




1932 


1333 




1933 




1933 


1933 


1934 


C: nay 








Sh 


ipments 


to 


"re u.lar": 


importers 








Foresta.l 


33.1 


22.8 




21.0 




67. 5 


81.6 


13.2 


13.0 




Internation- 






















al Products 






















Company 


19.6 


11.0 




18.2 




20. G 


TO D 


16.7 


10.1 




Cie Francia 


3.0 


3.7 




.6 




- 


- 


- 


- 










Shipments 


to 


"independe 


nt" import 


ers 






Tanners 












* 




Trading Co. 


22. 


6.4 




8. 3 




20.2 


29.8 


23.9 


15.6 




Rod Silva 


- 


- 




3.5 






6.6 


9. 3 


5.8 




Clarendon 


2.8 


1.6 




2. 




1.1 


— 


1.5 


.9 




Kistler 






















Trading Co, 


- 


- 




- 




— 


3.1 


3.1 


— 




Oakshect 


i.e 


c 




1.6 




o R 


2.4 


- 


.7 




Otto Lacker 


9 *~> 


.9 




.6 




.6 


- 


- 


- 


e 


Wil .iams 




















Chemical Co 


• ■""* 


— 




— 




— 


— 


2.4 


1.2 




Total 


82.6 


47.3 




&i?« 8 




124.1 


146.3 


75. 1 


45. 3 




Per cent 






















shiijoou to 






















"regular" 






















importers 


66£ 


795i 




71', 




7?p 


71$ 


46;, 


50£ 





Source: Boletin Mariti 



no. 



9829 



-619- 

The Turners Trading Company, shown in Tabic 12 to be the principal shipper 
to "independent" importers, was established some years ago in Buenos Aires by a 
group of prominent American tanners to handle their purchases of hides. Eod 
Silva conducts a commission business in Buenos Aires acting as representative 
of a number of American tanners for their purchases of hides on letters of 
credit. Clarendon is e hide buyer acting as commisi ion agent for several 
American tanners. The Kistler Trading Company is a subsidiary of an American 
tanner. Owing to their close and long-existing relation with Anerican tanners, 
shipments of these four firms undoubtedly resulted from buying orders placed by 
the tenners without resort to American brokers as intermediaries. It is pos- 
sible that some of the shipments were invoicec. to third parties in I T cw Tor 1 .: or 
other ports, but these third parties served as little more than customs brokers 
and freight forwarders. 

Otto Lacker and Oaksheet serve in some instances as hide buyers for 
American tanners, but they are identified also with hide brokers in the United 
States. Extract purchases placed by tanners through Anerican brokers would 
probably be passed to one or the other of these two firms. The shipments of 
the Williams Chemical Company, shown in the two final columns in Table 12, are 
reported to have been offered to American tanners through brokers. 

The sta.temnent is made in the complaint that "it is not unusual to find 
South Anerican firms not directly interested in the Quebracho business who 
purchase Quebracho in the Argentine and Paraguay, shipping it to the United 
States for sale in order to establish credits in this country and in that way 
evade the Argentine capital export prohibition." Available information points 
to the conclusion that this type of transaction v'as not frequent or important 
in the qu.ebiacho extract export business. It involved circumventing the system 
of foreign exchange control then exercised by the Argentine Governement. 
Quebracho extract was orominent among the export commodities for which the 
shipper had to show actual sale of his foreign currency draft to the Banco 
de la llacion at the official exchange rate, before he could obtain export 
despatch papers. Even if an importer who had been refused foreign exchange 
had been able to convert his peso account into : commodity, such as quebracho 
extract, he still would have had to sell his foreign draft covering the export 
sale to the Banco de la llacion before he received his shipping permit. 

Causes of Increased. Resort to Direct Purchase 

Table 14 indicates the rising costs of the solid extract which prompted 
American tanners to order beyond current needs, both by direct pure ase and 
through the intermediary of "regular" importers. An additional factor, which 
appeaxs to have encouraged direct purchase during certain late months in 1S35, 
was the abnormal spread between the cost of direct purchases and the cost of 
purchases from "regular" importers. The two final colv-mns in the table give 
a c son cf these two costs, up to payment of duty. It will be noted tnat 
from the normal amount of roughly 10 cents per hundred pounds, this spread 
increased to ever 30 cents during certain months of active dollar depreciation. 
This probacl; resulted from the fact that the "regular" importers, presumably 
to insure coverage of higher replacement costs, increased their quotations at 
a faster rate than the actual rate of increase which took place in the cost 
of direct purchases. It will be noted that this price spread was reduced in 
December by a decrease in the quotations of the "regular" importers. Con- 
sequently, the price spread, while still abnormal, was less in June, 1934, than 
during the third quarte: of 1933. 

9829 



-620- 

Table 14: Comparison of Buenos Aires market prices ?nd import unit 

values; also comparison of landed costs of direct purchases 

in the Buenos Aires market and ex-clock Dirchases 





3iienos 


Ai 


res mark 


et 


Am 


■erage 


Landed cost 


Ex- dock 




P. A. S. 


qu 


otat ion 


1/ 


uni 


t value 


of direct 


quotation 


Month 


As actu- 




Convert 


ed 


of 


imports 


purchases in 


of domestic 




ally 




to U. S 


• 


for the 


Buenos Aires 


"regular" 




quo ted 


i 


currency 


2/ 


month 


market 


importers Zj 




Gold pesos 
















per 


















metric ton 


I 


n cents 


•per 100 


poinds of 25fj extract 


1931 






•• 












June 


96 




109 






136 


126 


134 


September 


78 




75 






82 


92 


98 


December 


66 ' 




63 






73 


77 


09 


1932 


















March 


58 




55 






71 


69 


71 


June 


51 




48 






68 


62 


71 


September 


46 




44 






58 


58 


71 


December 


52 




49 






55 


53 


71 


1933 


















March 


59 




56 






63 


66 


67 


April 


59 




58 






57 


68 


67 


May- 


59 




65 






57 


75 


80 


June 


59 




68 






59 


78 


80 


July 


59 




77 






59 


87 


98 


August 


56 




72 






73 


82 


107 


September 


55 




77 






73 


87 , 


120 


October 


56 




78 






82 


88 


120 


November 


59 




88 






84 


98 


120 


December 


61 




75 






94 


. 85 


103 


1934 


















Jrnuary 


63 




78 






95 


88 


103 


February 


60 




74 






80 


84 


103 


March 


59 




74 






70 


84 


103 


June 


59 




73 






79 


83 


108 



1/ F.A. S. quotation as posted by the Buenos Aires Board of Trade for solid 

quebracho extract on first Saturday of month indicated. 
2/ Converted at average exchange for the month indicated. 
Zj Furnished by complainant. 



9829 



-621- 

A stud^ of unit values of monthly exports of Argentine solid quebracho 
extract to the United States ant to other countries does not reveal my 
invoicing to this country below the unit value of exports to other countries. 
Comparison of rverage monthly unit values shown in column 3 of the preceding 
tabic and the dollar equivalent of the Buenos Aires export market quotations, 
as shown in column 2, serves as another indication that shipments to this 
country have paid the full Buenos Aires export market price (if, in con_ aring 
these two columns, allowance is made for the normal lag between purchase in 
the Buenos Aires market and clearance through American ports). 



Effect of the National Industrial 
Recovery Program 

Effect on labor 

Statistics relating to employment and payroll were submitted in support 
of tlic complaint for the two fresh quebracho extract plants and for eight 
chestnut extract plants operated by two companies out of a total of 19 plants 
in the chestnut branch of the domestic extract industry. These data., shown in 
Table 15, are believed to be sufficiently representative to indicate the 
general trends in the domestic industry, showing roughly the changes which 
have occurred since adherence to the President'' Reemployment Agreement and 
during subsequent operation under the approved code for the tanning extract 
industry. 



98 2£ 



-622- 

Table 15: Trend in employment, payroll, man-hours, and 
productivity of labor in the domestic tanning 

extract industry 



Month 



Number Average 

Extract of Payroll Llan-hours Ou.tput 

output workers per 

man-hour 



1.0C0 lbs. 



Dollars 



Pounds 



Payroll 

per 
man-hour 

Cents 



Two fresh quebracho extract plant ; 



1929- Jul y 




10 , 614 


142 


12,749 


29,118 


365 


1935- April 




4,144 


51 


3,705 


9, 343 


448 


July 




4,194 


77 


5,798 


15,790 


266 


Octob 


er 


4,857 


123 


3,253 


19,977 


243 


1934- April 


1/ 


4,176 


111 


7 , 645 


1C,460 


226 



40 
37 
41 
41 



Percentage 
change since 
July, 1933 



-4£ 



44£ 



32£ 17Jb -15p' 

Eight chestnut extract olants 



1929- July 


15,572 


470 


1932- April 


9,055 


277 


July 


13,870 


344 


October 


14,164 


497 


1934- April 


14,815 


492 


Perccr.tr ,e 






change since 






July, 1933 


7;S 


43, 



38,385 124,193 



17,132 
22,770 
34,222 
50 , 642 



39)3 



60,387 
81 , 040 
89,614 
7S,76 r ' 



-.S'j 



124 

150 
171 
158 
188 



10p 



ns 



50.9 



23.3 



Ijlla . ' 



1/ Data for the month of May used for one plant. 



9829 



-62o~ 



From data in the foregoing table relating to the domestic Pro- 
duction of fresh ouebracho extract, it will he noted that the number 
of enroloyees increased 44 per cent from July, 1933, just Prior to ad- 
herence to the President's Reemployment Agrement, to April, 1934, 
and the monthly payroll increased 52 p<=r cent during the same period, 
The 44 per cent increase in the number employed was paralleled by 
an increase of only 17 per cent in man-hours of enroloyment. With prac- 
tically no change in the level of production, the average productivity 
per worker declined 15 per cent. 

From data in Table 15 relating to the operations of the eight 
chstnut extract plants, it willbo noted that the number of employees 
increased 43 per cent from July, 1933, just Prior to adherence to the 
President's Reemployment Agreement, to April, 1934, and monthly pay- 
roll increased 35 per cent during the same period. In fact, -employ- 
ment in April, 1934, exceeded that for July, 1929. The increase in the 
number employed was offset by a sharp decline in the average hours "f 
employment per worker, resulting in a net decrease in the total man- 
hours of employment. The 35 per cent increase in payroll was paralleled 
by a 7 per cent increase in total output and a 10 per cent increase in 
the Productivity per worker. 

Effect on costs of prodcution 

Table 16 shows the trends of labor cost of the chestnut and fresh 
quebracho branches of the domestic tanning extract industry and the 
selling price of their products in comparison with the trend of the 
unit value of imports during recent yea.rs. 

Table 16: Comparison of trends of labor costs, selling prices, and 
unit value of imports 
J. F or 1,000 pounds of extract of 25 per cent tanning content) 





Hight chestnut 


Two fresh quebracho 




Period ! 


extract plants 


extract plants 


Value . of 




Labor 


Selling ! 


Labor 


: Selling 


imports 
1/ 




cost 


price 


cost 


Price 


1929 - July : 


$2.50 ; 


Sl5 ! 


1.20 ! 


23.20 


$16.25 


1933 - April' 


1.89 


12 : 


.89 


14.30 


5.70 


July 


1.64 


12.5 


1.38 


14.30 


5.96 


October 


2.42 


15 


1.70 


14.30 


8.20 


1934 - April 


2.07 


15 


1.83 


16.90 


7.90 


Increase 












since July, 












1933 


: 264 


204 : 


33$ 


: 184 


334 


Approximate r- 


^tio of 






<• 




labor erst t 


3 sell- 










ing price 


: 14$ 


ll c 


\ 


: 



1/ Solid quebracho extract 

It is net possible to state the amount of the total increase in 
costs of prcdu: ing .chestnut and fresh ouebracho extracts for the reason 
that complainants have not submitted co^t data other than the item of 
lab or . 



9829 



-624- 

Frora data shown in Table 16, it will be noted that the labor cost 
per unit of chestnut extract increased ?6 ner cent from July, 1933, to 
Anril, 1934, and the labor cost ner unit of fresh auebracho extract 
increased 33^ during the same neriod. Roughly sneaking, the labor cost 
item represented 14 per cent and 11 ner cent, respectively, of the 
selling -prices of the two -products. Therefore, these increases rep- 
resent less than a 3 ner cent increase in total co^t as indicated 
by selling nrices, and this increase wa.s offset by increa.ses of 20 
ner cent and 18 per cent, respectively, in the selling prices of 
the two products during that period. 

The Competitive Position of the 
Domestic Industry 

The position of the domestic chestnut and fresh auebracho extract 
industry, as compared with the conditions nrevailing nrior to adherence 
to the National Recovery Program, may, in general, be characterized 
as follows: 

(1) The domestic production of chestnut extract was substantially 
higher in the second quarter of 1934 than in the corresponding auarter 
of 1933. The domestic nroduction of fresh auebracho extract remained at 

a uniform level during those twi Quarters. 

(2) Exnorts of domestic chestnut extract rose from 27 million 
pounds in 1931 to 36 million pounds in 1932 and to 46 million pounds 
in 1933. Available statistics indicate th?-t the trend ha.s continued 
upward during 1934. 

(3) Despite the fact that the price of the imported solid nueb— 
ra,cho extract has been very much below the price of domestic chest- 
nut extract, the ner-hide consumption of chestnut has continued 

at anproximately the same level as formerly. 

The relatively high level of production of r vegatable- tanned '. ■ 
leather resulted in a decline in the chestnut extract stocks in the hands 
of all nroducers, according to data submitted by the code authority, 
from 57,52B,000 nounds in July, 1933, to r55, 967, : 000 in ApriJ.,1934. 

(4) After declining sharply from 1927 to 1929, imports of solid 
quebracho extract increased steadily in quantity, but declined steadily 
in value, to 1932. In 1933 there was a sharp upward movement in both 
quantity and valixe of imports, reaching a peak ir. the last auarter of 
1933 and the first month of 1934. They have since declined to approx- 
imately the average level for 1931. The increase in imports of the 
solid extract after 1929 was paralleled by a decline in the imports of 
quebracho logs. 

(5) The leveling off of import costs which occurred in December, 
1933, ©wing to relative stability of dollar-peso exchange, removed the 
incentive for further advance purchases, and, as a result of the heavy 
speculative buying in 1933, import orders were reduced sharply and the 
trend of imports continued downward during the neriod of comnaritive 
stability of dollar-peso exchange from January to August of 1934. 

9829 



-625- 

As a conseauence, in June, 1934, the ratio of invoorts to production de- 
clined to approximately the level which availed in 1927 and 1931. 

(6) The abnormal spread between "regular" importers' auota.tions 
for s^lid auebracho extract and the dollar cost of direct purchases 
which prevailed during 1933, owing to the fact that these quotations 
were increased at a rate faster than the increase in direct import 
costs caused by depreciation of the dollar, has since been reduced, 
thereby diminishing the incentive for direct purchases by tanners. 

(7) As compared with a net increase in cost, due to increase in 
labor element, of less than 5 eer cent of total cost as indicated by 
selling prices, and as compared with increases of 20 per cent and 

16 ner cent, respectively, in the selling prices of chestnut and 
fresh quebracho extracts, the unit val e of imported solid ouebracho 
extract increased 33 per cent from July, 1933, to April, 1934, 
and continued upward since that date. 

Two important aspects of the problem in this case are presented 
graphically in Charts I and II, which follow. 



9829 



v 




8- 



9829 



-627- 

CHART II. 

Solid Quebracho Extract:- Comparison of shipments to "regular" 
importers and to "independent" importers A. by volume, and B. 

by cost to consumer/ 






A. 




1932 



1933 



1934 



9829 



\ 



«628~ 



RUBBER ERASERS (No. 31 ) 



9029 



INS- 
TABLE of contents 

Page Mb. 

Complainants* strtus under the National Industrial 

Recovery Act 631 

Subject of complaint • 631 

Description of commodity ■ — < ■ — 631 

Tariff treatment 631 

The domestic industry « ■ *• 631 

Production in the United States - — 632 

Exports — ; 634 

Course of exports 

The foreign market — ■■ 635 

Imports -'-- 635 

635 
Imports sepr.rr.tely recorded for 1934 . — . 

Import, date, obtained by invoice analysis ~— — • „ 

Course of imports ~ ~ — ° 

Imports in relation to domestic production 639 

Important competitive factors — — ■ 649 

Comparability of imported end domestic erasers ■ 649 

Channels of trade 649 

Domestic prices 649 

(a) Range of domestic prices — b4y 

(b) Stability of domestic prices ° 4 - 1 - 

Average unit values of imports and exchange rates 

64-P 

Effect of National Recover;'' Program ^ 

Production costs — 

Labor 644 



9329 



-630- 



.1ST OF TABLES 



Table _ Page 

No. • • t-Tq. 

1. Rubber erasers: Domestic production in- 1929, 1931, 

and 1933 6:32 

2. Rubber earsers: Production, 1929, 1931-Septnmber, 1934 633 

3. Rubber erasers: Domestic exports, 1929 to October, 

1934 i _ 6 34 

4. Rubber erasers: Domestic exports by countries, 

1929 and 1933 v 635 

5. Rubber erasers: Imports separately recorded as rubber 

erasers, at the port of Ne™ York and at all ports, first 
ten months, 1934 636 

6. Rubber erasers: Data obtained by invoice analysis of 

all erasers imported at New York and recorded under 

the classification of "manufactures of rubber, n.s.p.f.", 

1933 to September, 1934 337 

7. Rubber erasers: Total imports at Hew York, 1933 to 

September, 1934 638 

8. Rubber erasers: Ratio of imports at New York £0 

domestic production 639 

9. Domestic rubber erasers: Trends of weighted wholesale 

selling prices, average unit export values, and 
production, 1929, 1931 to September, 1934 S41 

10. Rubber erasers: Costs of production of six pro lucers 

for the first half of 193,3 and for a representative 
period under the code — 643 

11. Rubber erasers: Indices of employment, payroll, and 

wages, 1933 and 1934 ~- -~r 545 



9829 



*»629- 

TABLE OF C017TEFTS 



Page No . 



Complainants' status under the National Industrial 

Recovery Act — 631 

Subject of complaint ■ • ' °^ 

Description of commodity — — — • Dl - > - L 

Tariff trec.tmont 631 

The domestic industry • ■ • ■ ■- 

Production in the United States - — r 

Exports — ^34 

n -P 4. 634 

Course of exports ~ — ■ ■ ' 

The foreign market — — ' ' 

Imports ■ " ■■■■ " 53 ^ 

Imports separately recorded for 1934 ■ 

Inroort. data obtained by invoice analysis — — • 

Course of imports — «—— ' — 

Imports in relation to domestic production — "^ 

Important competitive factors — ~— 3 

Comparability of imoorted and domestic erasers • 6/ * 9 

Channels of trade — ; e jf 

Domestic prices - 

(a) Range of domestic prices 

(b) Stability of domestic prices — 5 

Average unit values of imports and exchange rates 

Effect of National Recovery Program 

Production costs — ~ ~. A 

, . 644 

Labor — — — — 



9329 



-630- 



LIST OP TABLES 



Table 
No. 



Page 

la . 



1. Rubber erasers: Domestic production in 1929, 1931, 

and 1933 — 1— — ■ 632 

2. Rubber earsers: Production, 1929, 1931-Septeraber, 1934 633 

3. Rubber erasers: Domestic exports, 1929 to October, 

1934 - -. 634 

4. Rubber erasers: Domestic exports by -countries, 

1929 and 1933 •? " 635 

5. Rubber erasers: Imports separately recorded as rubber 

erasers, at the port of Ne™ York and at all ports, first 
ten months, 1934 63B 

6. Rubber erasers: Data obtained by invoice analysis of 

all erasers imported at Hew York and recorded under 

the classification of "manufactures of rubber, n.s.p.f.", 

1933 to September, 1934 537 

7. Rubber erasers: Total imports at Hew York, 1833 to 

September, 1934 638 

8. Rubber erasers: Ratio of imports at New York to 

domestic "production b 39 

9. Domestic rubber erasers: Trends of weighted wholesale 

selling prices, average unit export values, and 
production, 1929, 1931 to September, 1934 S41 

10. Rubber erasers: Costs of production of six producers 

for the first half of 1933 and for a representative 

period under the code ^43 

11. Rubber erasers: Indices of employment, payroll, and 

wages, 1933 and 1934 545 



9829 



-631- 

SURVEY 01? INFORMATION 
ON 
RUBBER ERASERS ' 
January, 1935 



Connlainants 1 Status under the National Industrial 
Recovery Act 



This is a report on a complaint to the President with respect to 
imported rubber erasers filed August 20, 1934, by the Code Authority of 
the Rubber Manufacturing Industry, pursuant to Section 3 (e) of Title I 
of the National Industrial Recover Act. < 

The eight complainant companies in this case operate under the 
Rubber Manufacturing Code, approved December 15, 1933, as members of the 
Stationers' Rubber Goods Subdivision of the Rubber Sundries Division of 
the Code; the:/ represent 100 per cent of the rubber eraser industry. 

The Rubber Manufacturing Code -provides that any .division of the 
industry may investiage the importation of competitive articles with a 
view to obtaining possible action under Section 3(e) of the National 
Industrial Recover;'- Act and report its findings to the Divisional Auth- 
ority which shall inform the President through proper channels. 

Subject of Complaint. 

• * * . * 

Description 'of commodity 

The complaint is directed against the importation of all kinds of 
rubber erasers, exclusive of rubber pencil knobs and art gum erasers which 
contain no rubber. The imports consist mainly of the cheaper grades of 
double-beveled rubber erasers used, largely ''oy school children.- Some of 
the imported erasers are sold in sets or separately as toys, such as ani- 
mals, pencils, watches, blocks, etc. 

Tariff treatment 

Rubber erasers are dutiable at 25 per cent ad valorem under Para- 
graph 1537 of the Tariff Act of 1930, being classified as manufactures 
in which India rubber or gutta percha is the component material of chief 
value. They were dutiable at the same rate under Paragraph 1439 of the 
Tariff Act of 1922. 

The Domestic Industry 

The number of companies producing rubber erasers (not including pencil 
knobs and art gam erasers) increased from seven in the 1929-1935 period to 
eight in 1934, when a large manufacture of tires, rubber sundries, and other 
goods, began producing erasers in small qunatities. In 1929 there were 

9829 



-632- 

approximately 325 wage earners, earning a total yearly pare of about 
$275,000; in 1933, there were about 150 workers earning a total yearly 
wage amounting to approximately $140,000, according to data submitted in 
the complaint. 

The seven principal establishments are all situated within the New 
York metropolitan area, largely in New Jersey, They accounted :f or virtually 
l n per cent of domestic production of rubber enasers prior to 1934. 
Rubber erasers amounted to approximately 28 per cent in value of the pro- 
duction of all commodities by these establishments in the period 1931-1933. 

According to the Census of Manufactures, three of the manufacturers 
of rubber erasers accounted for approximately 71 per cent in value of the 
total domestic output in the years, 1929, 1931, and 1933.. 

Production in the United States 

The following table shows the trend of domestic prodiiction of rubber 
erasers in quantity, value, and unit value since 1929, as repoictad' by the 
Census of Manufactures. These data correspond closely to the value of 
sales -reported in the complaint for these same years. 

Table 1. - Rubber erasers: Domestic production in 1929, 

1931 and 1933 





■ Quant i ty 




Sales Valrze 


Unit Value 


Year 


Pounds 


Patio to 
1929 


Dollars 


Ratio to 

1929 


Po^ars 


•Ratio to 
■ 1929 




1,832,683 
1,306,143 
1,256,618 


Per Cent 


$1,065,186 
662,716 
577,489 


Per Cent 


SO. 581 

.507 

. .460 


Per Cent 


1929 
1931 
1933 


100.0 
71. 
69. 


100.0 
62. 
54. 


100.0 
87. 
79. 



Source: Census of Manufactures. 

The next table shows (l) total domestic production of erasers, 
(2) production of erasers reported to be most comparable with imports, 
and (3) the ratio of production of erasers most comparable, with im- 
ports to total domestic production of erasers. Table 2 is based on 
data submitted by the complainants. 



9829 



- ,__ 



Table 2. - Rubber erasers: Production, 192 r ', 1931- Sept ember, 1934 
(Cuantity) 



1/ 







sers -iost 


latio of erasers 


Period 


Total 


comparable 


comparable with 




production 


with 


imports to total 






iuroorts 


production 




rounds 


Per cent 


Year 








1929 


1,522,065 


336,854 


22 


1931 


1,164,012 


242,755 


21 


1932 


811,925 


181,721 


22 


1933 


969,820 


200,144 


21 


First nine months 








1932 


6-:-5,598 


153,935 


24 


1933 


675,752 


154,176 


23 


1934 2/ 


889,862 


182,028 


20 


By auarters 








1932 








J anuary-! lar ch 


166,123 


. 39,885 


24 


April-June 


227,398 


45,312 


: 19 


July- Sept ember : 


253, u7 7 


70 , 738 


28 


October-December 


155,327 


27,786 


17 


1933 








January-i :arch . . 


164,664 


. '. 46,184 


28 


April-June 


202,336 


• . 39,284 


19 


July- Sept ember . 


308,752 


: . 68,708 


22 


October-December. 


294,058 


• ' 45,968 


16 


1334 2/ 








January— 1 iar ch 


289,601 


. 58,721 


! 20 


April-June 


329,342 


! '. 74,194 


23 


July- September 


270,919 


: . 49,113 


: 18 



Source: Complaint. 

1/ Production data for one producer not included in this table as 

they were not reported. 
2/ Includes one producer not manufacturing prior to 1934. 

From the foregoing table it may be noted that after a rather sharp 
decline from 1929 to 1932, the production .both of all rubber erasers and 
of erasers most comparable with imports increased in 1933. "'oreover, pro- 
duction in both categories was greater during the first nine months of 
1934 than, in the corresponding period of 1933; the rate of increase for 
each was approximately the same as shown by the fact that the ratio of pro- 
duction of erasers most comparable with imports to the total declined only 
2 per cent from 1932 to 1934. 

The production of era-sers is seasonal, the peak being reached in the 
late spring or summer, usually in the third quarter, reflecting orders 
placed prior to the opening of the shcool year in September. Increased 
general business activity during the fall also contributes to this 
seasonal trend. 



9829 



-634- 



Exports 
Course of exports 

Since January 1, 1929, the United States has annually exported about 
30 per cent in quantity and 34 per cent in value of its total rubber eraser 
production. The proportion of exports to total production in quantity de- 
clined from 31 per cent in 1929 to 27 per cent in 1933 and in quantity from 
35 to 32 per cent over the same period. 

The following table shows the trend of domestic exports of rubber er- 
asers since 1929. 

Table 3. - Rubber erasers: Domestic exports, 1929 to 
October, 1934 









: : Indices o 


f trend 


Period 


: Quant i ty 


: Value 


: : 1929= 


LOO 




: : Quant i ty 


: Value 




: Pounds 




: : Per 


cent 


Year 










1929 


: 577,235 


: 5367,542 


:: 100.0 


: 100.0 


1930 


: 507,125 


■ 307,901 


:: 87.9 


: 83.8 


1931 


: 400,576 


: 239,179 


:: 69.4 


: 65.1 


1932 


: 261 , 783 


• 152,465 


:: 45.3 


: 41.5 


1933 


■ 337,481 


184,112 


: 58.5 


: 50.1 


By nine months 










1932 (Jan. -Sept.) 


189,169 


114,158 


: 43.7 


: 41.4 


1933 Db. 


231,638 


123,052 


: 53.5 


: 44.6 


1934 Do. 


251,329 


138,449 


: 58.1 


• 50.2 


By quartors 






[■ 




1S33 










J an uary-Mar ch 


59,862 


. 32,873 


: 41.5 


35.8 


April -June : 


87,295 : 


48,056 


: 60.5 


52.3 


July- Sept ember ! 


84,481 . 


42,123. 


: 58.5 


45.8 


October-December • 


105,843 : 


61,060. 


: 73.3 


66.5 


L934 i 










January-March : 


72,309 : 


37,188. 


: 50.1 


40.5 


April-June ■ 


85,755 : 


48,305: 


: 59.4 


52.6 


J i:Jy- Sept ember ; 


93,265 : 


52,956: 


: 64.6 


57.6 


July : 


39,424 j 


22,437: 


: 82.0 : 


73.2 


A::, "cist ; 


25,860 : 


14,720: 


: 53.8 : 


48.0 


September : 


27,982 : 


15,809: 


: 58.2 : 


51.6 


October • 


29,352 : 


16,691: 


: 61.0 : 


54.5 



Source: Foreign Commerce and Uavigation of the United States. 



9829 



Prom the atiove table it nay be noted that exports of rubber erasers 
declined from over 500,000 pounds in 1929 and 1930 to 252,000 in 1932, 
but rose to 337,000 pounds in 1933. Toreover, they increased from 
232,000 po i .inds in the first nine months of 1333 to 251, 300 pounds in the 
corresponding months of 1934. 

The Foreign r?arke -ft 

The domestic industry exports rubber erasers to a world-wide market, 
Germany being the. largest customer, followed in order of importance in 
1933 by the United Kingdom and! Argentina. The distribution of foreing 
demand remained relatively stable from 1929 to 1933, as is indicated by 
the following table. 



Table 4. - Rubber erasers: Domestic exports by countries, 

1929 and 1S33 



















.' 1929 


: 1933 


Country 






Ratio to: 






Ratio to 




Quantity . 


: Value 


total : 
value : 


: Quar t i ty 


Vp.lue : 


total 
value 




Pounds 

577.235 . 


: £367.542 


Per cent: 


: Pounds 


$184,112 


Per cent 


Total 


100.0 : 


:' 337,481 


100.0 , 


Germany 


79,022 


: 51,148 


13.9 : 


: 79,471 


39,726" 


21.6 


United Kingdom 


77,720 


: 33,708 


9.2 : 


: 30,087 


15,089 


8.2 


Canada.- 


46,743 


: 27,355 


" 7.5 : 


: 30,051 


9,520 


5.2 


Argentina 


37,297 


25,690 


7.C : 


: 20,817 


: 16,003 


8.7 


Japan 


33,450 


: 25,633 


3.0 : 


: 6,930 


: 3,273 


: 1.8 


Denmark 


: 30,086 


: 19,202 


: 5.2 : 


: 12,725 


: 5,495 


3.C 


China 


: 24,567 


: 16,519 


: 4.5 : 


: 10,103 


: 6,397 


: 3.5 


Brazil 


! 18,473 


: 14,279 


3.9 : 


: 4,375 


! 3,968 


: 2.2 


Switzerland 


: 19,342 


: 13,111 


: 3. 5 : 


: 19,906 


: 10,706 


: 5.8 


Sweden 


• 16,286 


: 12,929 


: 3."5 : 


: 11,525 


: 6,514 


: 3.5 


Australia 


: 22,173 


: 11,784 


: 3.2 : 


: 8,982 


: 4,576 


: 2.5 


All other 


: 171.576 


: 115.' 584 


: 31.4 : 


: 102.509 


: 62.845 


: i 34.0 


Source: Foreign Coi 


".nerce and 


Haviffation 


cf the Un 


ited Stat 


3S. 





Imports 

Separate statistics of imports are not available prior to 1934, imports 
of erasers being classified as "manufactures of rubber, n.s.p.f." Despite 
the fact that a separate classification was set up at the beginning of 1934, 
some of the imports have continued" to be classified as "manufactures of 
rubber, n.s.p.f." 

Imports separately recorded for 1954 

Bfao table behcv? s2fcjws-.the 'imports Separately recorded axnder the 'new " ••?- 
Class ificBttiori*'fT>¥. thai fa-ret ten months ".oil: 1 304 , " bothi&t -Jfew rYorlc "and at' 
all port:?. -. All "But two sifall shixftients vrero from Japan. 



9829 



•DOO- 



Table 5. - Rubber erasers: Imports separately recorded as 
rubber erasers, at the port of New York and at all 
TDorts, first ten months, 1934 





At New York 


: At all ports 






Quantity : Value 


: Quar.t i ty 


Value 




Pounds : 


: Pounds 






January- 


11,775 : Si, 459 


: 26,470 


$2,335 




February 


7 , 250 : 490 


: 7,250 . 


490 




IJarcli 


9,511 : 716 


: 10,645 


794 




April 


10,128 : 1,046; 


: 16,220 


■ L,494 




May 


5,036 : 994 


•: 14,329 


1,695 




June 


13,228 : 1,382 


: 16,828 


1,672 




July 


21,315 : , 1,857 


•;. .. 31,967 


2,881 




August 


: 52,250 . : 2,819 


;:. . 38,895 : 


3,344 




September 

Total' - J an, -Sent. 


34.679 ■: 2.454- 


::: 40.177 : 


• 2.911 




•145.172 •: 13.227 


:: 202.781 : 


: 17.617 




October. 


• 13,033 : _ :: 1..533 


:: . 15,040 


1,832 




November 


.■'■"■ 4 *"■ 


>: 27,728 


: 2,599 





Source:- Bureau of Foreign; and Domestic Commerce. 

Note: All impor.ts from Japan, with, exception of shipment from 
Germany: of 710 pounds, valued at. $79,: in August 1 , and shipment of 15 
■ pounds valued at $10 from Czechoslovakia, in October, both at New York. 



Imports at New York ampunted to ; 72'per cent in quantity and 75 per cent 
in value of all separately, recorded imports into the. United States during 
the first nine months, of 1934. .Detailed, import statistics for the period 
show that a total of 29,993- rounds valued at $2,382 was entered through 
customs districts on the Pacific Coast. Shipments' of 10,733 pounds valued 
at $644 were entered at Baltimore, and 8,995 pounds valued at $814 at New 
Orleans. 

Import data obtained by invoice analysis 

An invoice analysis was made in connection with this complaint 
of all erasers imported at New York and recorded under the classifica- 
tion of "manufactures of rubber, n. s.p.f." both in 1933 and in the 
first nine months of 1934. The results of this analysis are given in 
the following table. All imports were from Japan. 



9829 



-657- 

Table 6. - Rubber erasers: Data obtained by invoice 
analysis of all erasers imported at New York and 
recorded under the classification of "manufactures 
of rubber, n.s.p.f. ", 1933 to September, 1934 



Period 


Quant i ty : 


Value : 


: Quantity 


Value 




Pounds 




: Gross 




1933 










January , 






: 11,881 


ft 2, 100 


February 


2,980 : 


ft 70 : 


: 2,920 


634 


' 'arch 


1,606 


77 : 


: 8,165 


1,550 


April 






: 6,559 


1,652 


Hay 






: 1,935 i 


802 


June 


2,418 


118 : 


: 1,720 


697 


July 


720 ! 


65 : 


: 6,075 


1,994 


August 


2,890 


231 : 


: 5,690 


1,625 


September 






: 10,615 


3,180 


October 


295 


16 : 


: 3,691 


1,172 


November 






: 8,145 


2,754 


December 


515 


196 : 


: 14.520 


4.731 


Total 


11.425 


773 : 


: 82.216 


22.891 


1934 










January 






: 18,567 


5,523 


February 






: 4,906 


1,879 


i iarch 






: 11,451 


3,509 


April 






: 9,936 


5,294 


i iay 






: 4,999 


: 2,450 


June 


5,235 


■ 374 : 


: 5,346 


2,549 


July 






: 10,367 


2,917 


August 






: 5,416 


: 2,014 


September 


3, 320 


. 1 . 425 : 


: 3.641 


: 1.551 


Total-Jan.-SeT)t. 


: 8.555 


•1.799 : 


: 74.629 


: 27.491 



Source* United States Tariff Commission. 

Note: All inroorts from Japan, 

Course of imports 

The available statistics of imports of rubber erasers entered at ports 
other than Her; York P.ve incomplete. However, imports at that port during the 
first nine months of 1934 amounted to over 70 per cent of total imports. In 
vie" - ' of there facts, imports at lleyi York have been taken as representative 
of total imports curing 1933 and 1934. 

The data presented in Tables 5 and 6 are shown in consolidated form 
in Table 7 below. These data were combined by the method of partially esti- 
mating the unit of quantity in pounds. The weighted average unit value of 
imports for 1933 invoiced in pounds was used as the basis for converting to 
pounds the imports invoiced in gross. For the various months of 1934, the 
monthly unit value of imports in pounds was used as the basis for converting 
to nounds imports invoiced in gross for those months. 



9829 



-638- 

Tat>le 7 . -Rubber erasers: Total imports at Kev; York, 
lb33 to September. 1934 



Feriod 



: Qu.an.tity 
{partially 

estimated) 



1933 

Tanufxy-March 

April- June 
July-September ■ 

Total : - 9 months 

October-December 

Total 'for year 



1934 

January-March 

April-June 
July-Sent ember 

Total - 9 months' 

January : 

February 

march ■' : 

April 

may • : 

June 

July 

August 

September 



86,693 

61,984 

133.135 

282.0,15 

164,459 

446,471 



147,227 
119,765^ 

436 . 997- 

56,070 

3 5,040 
56,111 
61 , 37? 
17,447 

.40,941 
54,805 
5 ; , 293 

.59,907 



Value 



$4,431 
3,259 
7,093 



2&JSL 



„J^,85?_ 
23,664 



13,591 
13,889 
15, 057 



.42^.517.,: 



6, 99' 7 

2,369 

4, 225 

6 , 340 '. 

3,444.' 

4,105 

4,774 

4,833 

5,430 



Index of 



Quantity 



100.0 

71.3 

153.2 




169.4 
137.8 
195.6 



157. 6 



193 
121 
193 
211 
60 
141 
189.2 
190.9 
206.8 



Value 




■306.7 
313.4 
339.4^ 

519.8 

473.8 

160.4 
286.0 
429 . 2 
235.4 
277.9 
323.2 
327.2 
367.6 



Note: All imports from Jaoan, with exception of shipment 
from Germany of 710 pounds valued at $79 in August, 1934. 

The Code of Fair Competition for the -Rubber Manufacturing 
Industry became effective December 15, 1933. On the basis of the 
data shown in Table 7 it may oe noted that imports of rubber erasers 
increased from 282,000 rounds in the first nine months of 1933 to 
437,000 pounds in the 'corresponding months of 1934, and from $15,000 
to about $43,000 in value representing inc: easts of 55 per cent in 
quantity and 178 per cent in value. The increase in value was only 
partly on account of the rise in the unit value of imports. 



9829 



-639- 
Imports in Relation to Domestic Production 

Inasmuch as imports at He'-; York, amounting to over 70 per cent 
of total imports in 1S34, have been tal en as representative of total 
i iports into the United States, the folio'ving table sho'.7s a comparison 
of the trend of these inports with domestic production of erasers for 
the year 1933 raid through the first nine months of 1934. 



Table 3. - Rub 



;r erase: s: Ratio of imports at New York to 
domestic production 





Domestic 


: Total imports: 


Ratio of 


imports to 




tiroduction 


: at her: York : 

fc (Partially : 

estimated) : 


production of 


Period 


211 : Gr- des ;ios 
. : com; i rable 


: Grades most 
- 1, : comparable 




grades :with im- 


: y : 


grades. , 


•ith imports 




ijports 










: Pounds 




P©r 


cent 


1$9$ 










By Quarters 










Jan . -I i ■ r . 


164,664: 46,184 


: 86., 293 


52.8 


188.1 


A r.— June 


202,336: 39,294 


: 61,984 


30 . 5 : 


157.8 


July- Sept . : 


303 J 753.:__J8 J 70B,. 
675.752: 154,176 


■„. „125jl35^__ 


43.1 : 


193.8 


Total - 9 months 


: 282.012 


41. 7. __ 


182.9 


Oct. -Dec. 


294.068:- 45, 968_ 


: ; 164.459 


55.9 


367.8 


1934 








By Quarters 










J an. -Max. 


28. , 601 : 58 , 721 


: 147,227 


50.8 


250.7 


Apr.— June 


329,542: 74,194 


: 119,765 


36.4 


161.4 


July-Sept . 


g^o^grgj i^iis,, 

889.862:: 182,028 


: „ _ 170.005 
: 436.997 


62.8 


346.2 


Total - 9 months 


' 49.1 


240.1 


By m iths 










■~ 


95,072: 21,695 


: 56,070 


• 59.0 


258.4 


Feb? ■ ty 


83,098: 13,559 


: 35,046 


42.2 


225.2 


.. : 


111,431: 21,467 


: 56,111 


: 50.4 


261.4 


A 


112,343: 33,608 


: 61,377 


54.5 


132.6 


' 


116,397: 22,186 


: 17, -147 


• 15.0 


78.6 


! 


10 ,602= 18,400 


: 40 , 941 


• 7 


222.5 


Ju Ly 


'.88,454: 10,320 


: 54,805 


• 62.0 


531.1 


A ust 


: 93,431: 15,164 


: 55,^93 


: 59.2 


342.1 


September 


: 89,034: 22,629 


: 59 , 907 


: 67.3 


264.7 



Kofce: Production data for one producer a e not included in this table 



1// See Table 7 and accompanying textual comment, 
9329 



-640- 



From data shown in Table 8, it may bo noted that the ratio of 
imports t-o-domestl-c-protmttlbn of all grades of erasers increased from 
42 per cent during the first nine months of 1933 to 49 per cent for the 
corresponding jiionths of 1934^-:, a similar comparison shows an increase 
fro:.! 133 to 240 per cent in the ratio of imports to that part of domestic 
production reported to be comparable with imports, furthermore-, a 
comparison of data for the third quarter of 1933, just prior to the 
period when the code feocaflfs? effective, with the corresponding quarter 
of 1934, under the code, shows increases of from 43 to 63 p G r cent and 
from 194 to 346 per cent, respectively, in the two ratios. 



Important Competitive Factors 

Comparabilit y of i mported a nd domestic erasers 

Era- ers imported in largest quantities are the double-beveled type. 
This type is also produced in greatest volume by the domestic industry. 
Among the standard grades of double-beveled, erasers, the imported eras- 
ers pre similar in general appearance and shaoe to domestic erasers. 

Unlike any of the customary domestic tyoes, some of the imports are 
novelty erasers which might well be classed as toys since they are shap- 
ed like animals, pencils, watches blocks, etc. They are sometimes sold 
in sets or groups wrapped together in cellophane. There is some question 
whether these novelty erasers are strictl - " comparable v, ith standard 
domestic erasers which form the bulk of the "school line." The novelty 
character of the imported er.asers, however, is said to be a substantial 
competitive feature. 

Channels o f trade 

Imported rubber erasers have only af 'ected to an appreciable extent 
the production of domestic erasers going into the "school line", the 
imported erasers being sold at retail throughout the country to children 
and for children's use by syndicate or chain 5-andlO-cent stores, and 
small corner stores. Because of their alleged inferior erasing qualities 
and a prejudice against Japanese products in general, imported erasers 
have been purchased hardly at all by commercial stationers and large 
industrial consumers . 

For many years domestic erasers have been sold in the United States, 
along with other stationers' supplies, to wholesale stationers, jobbers, 
and direct to large retailers. It is stated that the syndicate stores 
refused'to handle imported 'erasers when, they,- first appeared on the 
market in 1932, but because job.iers and small retail stores began pur- 
chasing and selling these erasers at lower prices, the syndicate stores 
were forced to handle them. 

Dome st ic prices 

(a) Range of d omestic prices. - Domestic net wholesale selling- 
prices of erasers with which imports are said to be ".ost competitive, 
roughly speaking, range from between 42 cents and 90 cents per pound. 

9339 



The prices of sone domestic e: asers are higher than 90 cents a pound, 

but there is doubt -hether these erasers enter into competition with 

J, lanese imports. The net 'vholesale selling, prices of one manufacturer, 

-- ' >- ■ i '■ th t 53 out of 45 1-inds of erasers produced have been affected 
by imports and that all erasers produced cure comparable with imports, 
average about 55 cents per pound. 

(b) Stab ility of dom esti c orices_._ - The weighted average of whole- 
sale selling prices reported- b r seven domestic manufacturers declined 
less than 5 per cent from 1929 to 1932- It rose slightly in the second 
half of 1952 and remained through 1933 anc the irst nine months of 1954 
at a level approximately 3 per cent u der 1929. In comparison, the 
average unit value of exports declined approximately 15 per cent from 
1929 to the second half of 1932 and remained substantially at that level 
during 1933 and 1934. It appears, therefore, that domestic wholesale 
selling prices were not reduced to any important extent as a result of 
increasing competition fron imports. The greater decline in export 
prices " doubtlessly -reflicfcs more severe ■ compet it. ion.'' in "foreign, .markets 
during recent years. 

In contrast to the relative stability of wholesale orices of rubber 
erasers in the domestic market, total domestic production declined 
roughly 40 per cent from 1929 to 1932 raid 1933. 

•The following -.table shows the trend of. .weighted wholesale prices, 
the unit value of. exports, and domestic production of rubber erasers in 
1929 and from 1931 to September, 1934. 

Table 9. -Domestic rubber erasers: Trends of weighted wholesale 
selling prices, average unit export values, and production, 
1929, 1931 to September, 1934 



Per iod 



1929 
1931 
1952 

January- June 
July-December 

1933 

1934 - 9 months 



Weighted 
wholesale 
selling 
price s 1/ 



: 100.0 

: 2/ 

: 96.7 

: 96 . ? 
:3/ 97.1 

: 97.1 

: 97.2 



Average 
un i t 
export 
value 
1929 

100.0 
95.7 
91.4 

96.1 
8.3 

85.7 

86.5 



All 
erasers 

»" IPO"" " 



Production 



100 





76 


5 


53 


.3 


51 


7 


55 





63 


7 


78 






Erasers most 
comparable with 
imports 



100 





72 


.1 


53 


,9 


49 


4 


58 


5 


50 


4 


72 






Source: Complaint and roreign Commerce and navigation of the United 
States. 
Note: The indices in this table are based upon the selling prices of 
domestic erasers produced in large quantities anc? reported to be com- 
parable with iroortr. . _^ ___ 

1/ Weighted according to value of production for each producer in the 

years 1929, 1931, and 1935. 

2/ hot available. 

3/ July, 1935. 

9829 



-642- 
Average unit values of imports and exchange rates 

On the basis of the available data covering imported erasers 
recorded in pounds, the average duitiable value of erasers imported 
from Japan increased from $0,053 per pounu in 1933 to an average of 
$^.0869 per pound for the first nine months of 1934. The averages 
during 1934 were $0.1026 for the second quarter, $0.0821 for the third 
quarter $0.1212 for the month of October, and $0.0937 for November. 
In general, these data indicate that the unit value of imports increased 
from 1933 to 1934 by more than the amount of the rise in the value of the 
yen in terms of dollars, which was 43 per cent from the first quarter of 
1933 to the third quarter of 1934. 



Effect of National Recovery Frograra 



Production costs 

The following table shows the various items of cost per 100 pounds 
of rubber erasers for six producers for the first half of'. 1933 contrasted 
with corresponding costs for a representative period under the code. 



9829 



-545- 

Table 10. - Rubber erasers: Cost'- of production of six 
producers for the first half of 1933 and for a repre- 
sentative period under the code 



Item 


Weighted 
ave rage 
cost 
first 
half of 
1933 1/ 


Costs pei 
Weighted: 
average 
cost for 
period : 
under ■ 
code 2/ ; 


• 100 rounds o 
Increase ( ) : 
or decrease : 
(-) over : 
first half : 
of 1933 : 


f erasers 
: Ratio to 
: total costs 


of 
cost 


: First : 
: half : 
: of : 
: 1953 


Period 

under 

code 


Material 

Labor 

Factor expense 
(except depreciation) 

Depreciation 

General and administra- . 
tive expense 

Selling expense 


$10 . 67 
10.33 

6.81 
1.78 

: 8.18 
: 9.74 


$14.54 
11.16 

7.58 
2.15 

: 6.45 
: 7.69 


per cent : 

36.4 : 

8.1 : 

11.2 : 
20.4 : 

21.1 : 
21.1 : 


: Per 
: 22.5 
• 21.7 

: 14.3 
: 3.7 

: 17.2 
: 20.5 


Cent 
29.4 
22.5 

15.3 
4.3 

13.0 
, 15.5 


Total 


: 47 . 50 


: 49.57 


: 4.4 : 


: 100.0 


100.0 



Source : Complaint. 



From data in the above tabic, which is based on information sub- 
mitted by the complainant companies, it may be seen that the cost of 
material ^as 36 per cent higher under the code tiian for the first half of 
1933; depreciation was 20 per cent higher, factory expense 11 per cent 
higher and labpr cost 8 per cent higher. These increases were largely 
offset, however , oy a decline of 21 per cent in the items of general 
and administrative expense and of selling expense, respectively, leaving 
a net increase in total costs of only 4.4 per cent. 



1/ Ratio of all erasers produced by each manufacturer to total 

production of erasers in 1933 used in weighting costs. 

2/ Ratio of all erasers produced by each manufacturer to total 
production for the first nine months of 1934 used in weighting costs. 



9829 



-644- 

Labor 

A "basic minimum hourly wage of 35 cents, applicable to the 
Stationers' Rubber Goods Subdivision, is provided by the c^de for the 
Rubber Manufacturing Industry. There is likewise provided minimum 
weekly wages' ranging from' $15 for workers in cities having ove? 5 n 0,ono 
population, or in the immediate ti-ade area, of such a city, down to $12 
per week for wage earners- in towns of less than 2,5 r ' n population. A 
40-hour week' and an 8 hour day are' established by the code, although 
each employee may be permitted to work a total of 80 hours per year in 
excess of the maximum hours specifier, but not more than 48 hours in any 
one week. 

. . ' In 1929 , wage earners in the rubber eraser industry were paid an 
average hourly wage of about $0.54, and en average weekly wage of about 
$24. The industry ouring' 1933 and the first seven months of 1934 main- 
tained average hourly '^ages between approximately $0.49 and $0.56, or 
between roughly 40 to 60 per cent 'above the basic minimum hourly wage 
of $0,35 established for the entire rubber manufacturing industry by 
the code. 

The average weekly ''-'age maintained in the rubber eraser industry 
during 1933 'ranged from $15.50 tt>:$20,62, or roughly between 3 and 37 
per cent above the highest minimum weekly wage established for the 
rubber manufacturing industry. 

In 1929, the work averaged approximately 45 hours. The average 
work week during 1933 ranged from 28 to 36 hours. -During the. first 
seven months of 1934, after adoption of the code, the average weekly 
work period was roughly 38 hours. 

The following table snows the trends of employment, payroll, and 
wages for the rubber eraser industry in the first half of 1933, before 
the code, and for the first seven months of 1934, after the code became 
effective. 



-645- 

Table 11. - Rubber erasers: Indices of enrol oyment , 
! yroll, and -ages, 19 To and 1934 



Period 


Numbe r : 


Hours per, 


Man hours : 


Total : 


Average; 


Ave rage 


1 - k ending 


of 


worker 


per payroll 


weekly: 


weekly ; 


h -urly 


15th of month) 


employees 


per week 


period 


payroll. 


"•age 


rage 






Jan 


1933 b inn 








1953 














January 


ion . o 


inn . o 


100.0 


100.0 


100.0 


inn. n 


April 


104.9 


92.0 


96.6 


100.1 


95.4 


103.5 


July 


109.7 


133.9 


147.0 


139.3 


127. n 


94.8 


October 


125.0 


118.9 


148.8 


150.1 


120.1 


inn. 7 



Coae 




Approved De< 


1954 








January 


116.0 


127.2 


147 


April 


129.2 


129 . 6 


167 


July 


155.7 


125.9 


172 



5 


135. n 


4 


161.2 


9 


187.3 




91.5 
96.3 
96.7 



Source 



Complaint. 



The indices of the above table she- that the number of wage earners 
engaged in producing ruboer erasers was 56 per cent greater in July, 
1934, than in January, 1933; the average work week was 26 percent Z"~ '■ 
greater, the weekly -age 22 per cent greater, and the hourly wage rate 
3.3 per cent. less. 



;829 



( 






-646- 



SALT CAKE (Sodium Sulphate) (Ho. 46) 



3829 



I 






-647- 
TABLE OF COIVI 



Subject of Complaint and Status of Complainants 

Under the National Recovery Act 549 

Tariff Treatment 549 

1!n.e Domestic Industry 350 

Nature of Product . -■ 550 

'Uses of the product 55O 

Methods of production ■ 651 

Organisation -of the industry 652 

Cone it ions : of production and marketing. <. . . : 654 

Statistics of domertic production. 654 

Exports . .;•..'.•.;•.•.•..•...•■.<. 659 

The Industry in Poreigni Countries 660 

Canada.;' ' • 660 ' 

Germany. . . : .'..-. ■ ■...-... 661 

Imports' .; 663 

Important Competitive Factors ■-. 568 

Foreign exchange ' -. . . : 668 

Comparability of product •. 572 

Frices and transportation rates. . ..-. . . ,-y, 672 

iii'fec't of the National- -I-ndu atrial ecovery Act . ._ 679 

Cod« provisions. ..-...' 679 

Costs, wage rates and- employment . , 679 



9829 



-643.. 



LIST OF TABL3S 

Table 
number 

1. . Salt cake (sodium sulphate, crude): Domestic 

chemical production, census years 1933-1933. ,.. . 655 

2. Salt cake (sodium sulphate, crude), natural : 

Domestic production, 1924-1934. 656 

3. Salt cake (sodium sulphate, crude); Domestic 

production from natural and chemical sources, 
. census years, 1925-1933 657 

4. .... Salt cake (sodium sulphate, crude) : 

Complainants' production, 1929-1934 658 

5. . Salt cake (sodium sulphate, crude): Total 

. production for sale, non-primary chemical, 
primary, and complainants' production; and 

percentage participation of each class in the / 

total production for sale, 1929-1934 657 

6. Salt cake (sodium sulphate, crude and refined): 

Srports , 1929-1932 .....: 660 

7. .. Salt cake (sodium sulphate, crude): Imports 

for consumption, 1923-1934 664 

8. Salt cake (sodium sulphate cruds): Imports 

for consumption by countries, 1929-1934 665 

9. Salt cake (sodium sulphate, crude): Imports 

for consumption by customs districts, 1929-1934. 666 

10. Imports for consumption compared with primary, 

non-primary chemical, and total domestic 
production for sale, 1929-1934 667 

11. Trend of competition between imports for 

consumption and domestic primary production 

serving Gulf and Pacific Northwest market 

areas, 1929-1934 678 

-oOo- 



9829 



-649- 

SUHV3Y 07 IiJFOHi ATI ON 
Oil 
SALT CAKE (Sodium Sulphate Crude) 
May 1935 

Subject of Complaint and Statue of Complainants 
Unter the National Industrial Recovery Act. 

This is a report arising out of a complaint under Section 3 (e) of 
the National- Industrial Recovery Act with respect to imports of salt 
cake (sodium sulphate crude), filed by the producers who manufacture 
salt cake as a primary objective. Barring one exception they produce 
salt cake from natural deposits of "brine and thenardite ore and mira- 
bilite. 

The complainants operate under the Code of the Chemical Manu- 
facturing Industry approved by the President February 10, 1934. Pour 
of these complaining companies have made it their primary objective to 
produce crude sodium sulphate for sale in commercial form. The other 
complainant is affected less directly since it does not actually produce, 
but leases its properties on a royalty basis to another producing com- 
pany not a party to the complaint. Chemical companies producing salt 
cake but not as a primary product are not parties to the complaint. 

Tariff Treatment 

Salt cake (crude sodium sulphate) is imported into the United 
States free of duty. In the Tariff .Act of 1930 it falls under Paragraph 
1765, Sodium * * * sulphate, sulphate crude or crude salt cake * * * . 
Comparison of tariff rates since 19-13 reveals that salt cake has long 
been on the free list, thus: 



1930 


Paragraph 1766 


• Pree 


1922 


1667 


,n 


1913 


605 


ii 



In its refined form as glauber's salt (hydrated sodium sulphate) 
it falls under Paragraph 81 of the. Tariff Act of 1930 and is dutiable 
at $1.00 per ton, or as dehydrated glauber's salt (anhydrous sodium 
sulphate) it is dutiable under the same paragraph at $3.00 per ton. 
The difference between the two rates on the refined forms is com- 
pensatory, as conversion of glauber's salt costs approximately 
$2.00 per ton. 

American producers of natural sodium sulphate, in Mprch, 1932, 
protested the free entry of sodium sulphate crude, and- asked for a 
proper classification which would place it in the category of anhydrous 
sodium sulphate. "Crude", it was maintained, meant in the natural 
state, and the foreign product was manufactured and, therefore, should 
be held dutiable. The Treasury "Department declared that the foreign 
product was indentical in use with natural crude sodium sulphate, and 
adopted the definition of anhydrous sodium sulphate" as a pure grade 
sold for special uses, sometimes sailed anhydrous glauber's salt and 
usually made by separating it from its concentrated form (T.D. 45856) . 

9829 



-650- 



On a supplementary complaint sodium sulphate crude was held not 
dutiable as an earthy or mineral substance under Paragraph 214, or aa an 
unenumerated manufactured article under Paragraph 1588, nor was it 
dutiable under Paragraph 81 or Paragraph 214 by reason of the similitude 
clause in Paragraph 1589 of the Tariff Act of 1930 (T.D. 46005). The 
liquidation of entries of salt cake was suspended pending judicial 
determination of the Treasury Department's classification (T;D. 46150). 
A protest filed under Section 516 (b) against liquidation under Paragraph 
1766 was abandoned and T.D. 46150 was revoked (T.D. 46323). An anti- 
dumping complaint is again before the Bureau of Customs undergoing 
investigation at the time this survey is being made. 



The Domestic Indu.stry 



Hature of product 



Sodium sulphate is a chemical which occurs in commerce in three forms: 

anhydrous sodium sulphate or refined salt cake, appearing as white 
amorphous powder containing no water of crystallization; 

Glauber's salt or refined salt cake, a-yoearing as a crystalline solid 
containing 55 per cent of water of crystallization; and 

salt cake, the crude form of anhydrous sodium sulphate available in 
powder or more typically in Pumps containing 92 to 99 per cent sodium 
sulphate. 

Ordinarily, commercial salt cake, or sodium sulphate crude, varies 
in color from yellowish to greenish white, occassionally pure white. A 
dirty gray color is indicative of sodium chloride contamination, that is, 
incomplete decomposition. In general, the finer the grain of salt cake 
the higher the grade. 

Uses of the -product 

Sodium sulphate has numerous uses. It is a sdurce of soda in the 
sulphate process used in making sulphate pulp for kraft paper manufacture. 
It is also an important ingredient in glass and soap-making, and in 
artificial refrigeration. The textile industry finds it useful as a 
bleaching agent for fabrics and as a mordant in cotton dyeing. It is also 
used as a diluent in the manufacture of synthetic dyestuffs. In construction 
work it is an ingredient of hydraulic cement. Pigment making uses it to 
promote crystallization. It is also valuable in metallurgical processes, 
in photography, in tree surgery, and for pharmaceutical purposes ?s 
Glauber's salt. 

The crude salt cake is most extensively used, however, in the manu- 
facture of sulphate pulp for kraft paper. Kraft paper has been so much in 
demand in recent years that the tonnage of sulphate pulp used in its 
manufacture increased from 120,378 short tons in 1929, t'o the high figure 
of 1,259,000 short tons in 1933. Large quantities of sulphate pulp arc 
also imported free of' duty. It has been estimated that over 50 per cent 
of the salt cake or crude sodium sulphate produced 'for sale in this 
country is usod by the producers of sulphate pulp who 



9829 



-651- 

reouire about one ton of salt cake to produce five tons of pulp. In 1927 
it was estimated that the domestic consumption of sodium sulphate in all 
forms was as follows: 



Industry 

Pulp and paper 
Heavy chemicals 
Rayon and textiles 
Glass and ceramics 
Dye and coal tar 
Soap 

Fine chemicals 
All other 



Short tons 

103,000 
97,000 
92,000 
45,000 
20,000 

2,000 

1,000 
15,000 



Type of sodium 
sulphate used 

crude 

crude ana refined 

n n ii 

ii ii n 

n n it 

crude 

crude and refined 



Total comsumption 575,000 



Methods of production 

Salt cake is obtained by chemical manufacture or frara natural 
sources such as brine lakes or deposits in the form of the minerals, 
thenardite or anhydrous sodium sulphate and mirabilite, the hydrated 
form containing water. 

Chemically it is derived from the manufacture of hydrochloric 
acid which is made by several chemical processes. It may be produced 
by the reaction of common salt ( sodium chloride) with niter cake (sodium 
bisulphate); by the reaction cf common salt with sulphuric acid; or by 
the reaction of common salt with sulphur dioxide. 

Production by the first process is of declining importance. 
This is due to the fact that niter cake is much less plentiful than 
formerly. The introduction of new methods of producing nitric acid, in 
the production of which niter cake was formerly a residual product, is 
responsible for the decline. 



The most widely used process is by treating common salt with 
sulphuric acid from which is derived hydrochloric acid and salt cake, 
The apparatus long used was the pot and muffle furnace, but it is said 
that it is being rapidly displaoed by the Mannheim furnace, which 
operates mechanically. 

The other process, known as the hargreaves process, which 
yields salt cake and hydrochloric acid from the reaction of common salt 
and sulphur dioxide, has been used extensively in Europe and is used in 
this country by one company in Louisiana. 

The chemical output of salt cake has dimished considerably 
due to changes in methods of acid manufacture. Hydrochloric acid is 
now being produced as a by-product of the cnlorination of organic 
materials, chiefly of coal tar origin. Synthetic processes based upon 
direct combination of elementary hydrogen and cnlorine from electro- 
lytic cells has been adopted also. v '!heri such methods are used salt 
cake is not produced. 
9629 



-652- 

The natural sodium sulphate is present in great quantities in 
the United States, but unfortunately in remote section of the country. 
Usually it is to be found in arid regions - in the great closed "basins 
where rainfall is deficient and streams have no outlet to the ocean. 
In a few places sodium sulphate minerals are present in dry "beds of 
mineable thickness, mixed with other salts .ana mud. Typical occur- 
rences are in "playas" which are dry or marchy bootoms of more or less 
dried up salt lakes, ranging in size from small doughs with a scanty 
incrustation of salts on the surface of the mud, to thick beds several 
miles in extent, In such deposits sodium sulphate frequently mixed with 
other soluble salts may occur.; (l) in solution as a brine in varying 
degrees of saturation: (2) in intermittent crystal layers, or (3) as a 
permanent bed protected from solution in wet weather by a covering of 
mud. 

Large deposits are known to exist in Arizona, Nevada, Texas, 
Utah, California, North Dakota, Washington, and Wyoming. The methods 
of extraction very considerably. Thus, in the Verde River section in 
Yapavai County, Arizona, a flat-lying bed of thenardite ore about 3-| 
feet thick is worked underground through tunnels. The ore is drilled 
with machines, loaded into cars, and carried to a near-by plant for 
processing. The contaminating clay and sodium chloride are removed by 
a fine-mesh cylindrical screen, equipped with sprays and employing a 
saturated sodium sulphate solution instaed of water. A drum dryer 
removes moisture and rolls are employed to crush the sulphate to the 
desired size. A typical analysis reveals a product containing about 
95 to 96 per cent sodium sulphate content. 

In the Rhodes marsh region of Nevada, sodium sulphate is also 
mined from thenardite ore. In this region the area, to be mined is 
stripped of the overburden ^r top soil by means of gasoline shovels 
to get at the underlying mineral vein. Frequently it is necessary to 
pump out the eater which has collected in the stripped areas before 
the blasting of the thenardite ores takes place. After blasting the 
ore is loaded into conveyers and transported to the plant. There it 
is crushed and washed. It is then dehydrated, classified, and given a 
final washing. Once more it is dried and then crushed to size and 
made ready for shipment. Chemical analysis shows a high degree of purity 
from this deposit, the sodium sulphate content running 97 per cent or 
better. The balance is sodium chloride, calcium sulphate, insolubles, 
and moisture. 

Still another method of production is employed by a Texas pro- 
ducer. Brine is pumped from a lake and the sodium sulphate is obtained 
from solar evaporation or by means of a chilling procer.s. The latter is 1 
used when the weather conditions require artificial refrigeration to pre- 
cipitate the sodium sulphate. 



Lrganization of the industry 

A final tabulation of data collected by the Bureau of the Census 
reveals that in 1933 there were 30 establishments producing salt cake 
(sodium sulphate), and other chemicals, which is seven more than in 1931. 

9829 



-I . . - 



Five are located in New Jersey, 4 in Illinois, 3 in Pennsylvania, 3 in 
Ohio, 4 in California, 2 in Texas, i e;.ch in Co:mecti cut," Delaware, Mass 
Massachusetts, New York, Indiana, Michigan, Louisiana, Maryland, and 
Tennessee, it is interesting to note that most of the chemical estab- 
lishments are located in the Eastern United States and the Middle West. 
This is a matter of considerable significance, since transportation 
rates tend to confine the sale of domestic salt cake to market areas of 
limited ranee. 



According to the United States Tariff Commission the bulk of 
salt cake chemically pro dace d is made by less than 10 large companies 
manufacturing a general line of heavy chemicals. 

In Louisiana one company - included in official statistics in 
the Census with the other chemical producers - maintains that it produces 
salt cake as a primary objective rather than as a minor product. This 
company is a party to this complaint , whereas the other chemical producers 
are not . 



It has been fceported also that a company in California in 1934 
planned to produce sodium sulphate as a by-product from potash and borax. 
The brine in the Searles Lake region was to be used as raw material. 
According to the Bureau of Mines this company actually entered produc- 
tion in 1934, -but its production statistics are not availablp. 

The number of companies producing salt cake as a primary objective 
are few and widely scattered. In the case of the five complainants, one 
has its plant in Texas; one in Louisiana; one in Nevada; and one has a 
plant under construction in Utah. The fifth leases its properties in 
Arizona on a royalty basis to a company which is controlled by a large 
chemical concern which imports salt cake. 

The properties of three of these complainants, when in operation, 
are devoted to the exploitation of natural salt cake deposits; those of 
another will produce from natural sources when production is started; the 
fifth complainant produces salt cake chemically in conjunction with hydro- 
chloric acid by the Hargreaves process. 

The number of companies actually producing natural crude salt cake 
vanes from year to year and from available information it appears that 
l. no one year recently have more than four or five comoanies been in 
actual operation. 

The complainant company making salt cake by chemical process is a 
subsidiary of a salt company in Louisiana. Three complainant companies 
producing or about to produce salt cake from natural sources, appear to 
be independent organizations. The remaining complainant has its properties 
under lease to a company controlled by a large chemical company as already 
indicated. 

9829 



-554- 

These primary producer organizations are not large. 'vailable 
statistics reveal that they have had on their combined payrolls from 
51 to 148 men at various times in recent years. It would "be conser- 
vative to state that the producers of sodium sulphate as a primary . 
objective probably never had more than 200 employees on their combined 
payrolls at any one time, 



Conditions of production and marketing 

Despite the developments of new methods in the manufacture of 
heavy acids wherein salt flake or its derivative, niter cake, is no longer 
produced jointly with acids, it nevertheless remains true that a very 
large share of the sodium sulphate produced in this country is the 
chemical type. .This supply of salt cake, therefore, varies with 
demand for hydrochloric acid. A brisk demand for acid means a larger . 
supply of salt cake, regardless of the demand for the latter at the pre- 
vailing prices. A lag in demand for acid means a le&senes supplu of salt 
cake. Unfortunately, chemical companies cannot produce sodium sulphate 
only, by permitting the acid gases to escape uncollected, due to the 
excessive amount of damage which the gases inflict on the surrounding 
countryside. Hence, the acid must be collected whenever salt cake is 
made. The high cost of storage of acid is a factor in determining how 
much acid will be produced. Comsequently, from this source of pro- 
duction salt cake is subject to the varying demand for hydro chloris 
acid. 

Insofar as salt cake is a minor product of the chemical industry 
it might be sold even at a loss without, serious injury, perhaps, to the 
large chemical companies which produce many products. Under such con- 
ditions it would .appear that unlss there were an absolute scarcity of 
chemical salt cake the market areas served by the chemical companies 
could be denied the producers of natural sodium sulphate in most in- 
stances. This is likely to be the case in the Northeastern and Middle 
Atlantic States and that section of the country bounded on the West by 
the Mississippi River and on the South by the Ohio, where chemical 
companies producing salt cake are most numerous. The transport costs 
of getting the natural salt cake from the remote regions in which it is 
mined, has ever been a handicap to the natural industry and is still 
very much of a limiting factor on the activities of the natural sodium 
sulphate producers/ 



Statistics of domestic production 

Table 1 presents by census years the chemical production of salt 
cake, it may be observed that since 1927 the trend of yearly output 
has been downward. This is attributable largely to technological 
changes in the production of heavy chemicals. 



9829 



-655- 



Table 1. Salt cake (sodium sulphate, crude): Domestic 
chemical production, census years 1923 - 1933 





Number 


i 


Made and : 


?r( due- : 


Value : 


Value 




of 


Total : 


consumed : 


tion : 


of : 


per 


Year 


establish-! 


oroduction: 


by : 


for : 


product : 


short 




ments 


. 


■producer , 


sale : 


sold 


ton 






: Short tons 








1923 


34 


187,064 


46,047 


141,017 


$2, 973,013 


$21.08 


1925 


38 


189,593 


48,450 


: 140,843 


2,339,002 


18.61 


1927 


34 


20-8, 5 65 


33,573 


: 174,992 


:■ 2,786,818 


: 15.93 


1929 


28 


206,612 


36 , 436 


: 170,176 


: 2,014,838 


: 11.84 


1931 


23 


119,399 


20,672 


: 98,727 


i 1,528,032 


: 15.48 


1933 


30 


143, 148 


, 28,538 


: 114,610 


: 1,471,278 


: 12.84 



Source: Basic data, Ccnsiis of lianufactUTcs. 



production of 
production has 



Table -2 presents the bureau of i^ines figures of the 
natural salt cake since 1924. 'Considerable variation in 
been present from 1924 to 1929. In 1930 natural production reached a new 
high level and maintained it in 1951 and 1932. In 1933 natural production 
was again noticeably increased, but dropped precipitously in 1934, 
declining 64 per cent. 

The trend of unit values has been downward up to 1934 when they 
advanced sharply. It is believed that this advance is attributable to 
the influence of the production of one producer, who by virtue of a 
somewhat more strategic location in relation to the market than the other 
producers is able to produce and sell at mill prices somewhat higher 
than those u reducers mora i-omotelv Jomt.od. 



9829 



-656- 



Table 2. Salt cake (sodium sulphate , , crude) , n a tural : 
, Domestic production,, 1924-1934 1/ 



Statistical 






Unit 




: Production 


Value 


value 




Short tons 






1924 


16,148 


$174 ,'600 


$10.81 


1925 


• '9,909 : 


84.-380 


; 3-. 52 


1926 ; 


• 19,557 


165,800 


: 8.53 


1927 


• '28,006 


168,882 


7.34 


1928- - : . 


6,559 


42,485 


6.48 


1929 


7,540 


41,199 


5.46 


1930 


32,630 


206,323 


6. 32 


1931 


32,510 


198,132 


6.ng 


1932 


32, 204 


210,342 


6.53 


1933 


46 , 539 


245,240 


5.27 


1934 


16,o50 


148,225 


8.90 



< 



Source: Bureau uf Mines and U, S. Tariff Commission. 
1_/ Includps small emounts of dauber salt. 



Table 3 classified domestic production "by census years 1925 to 
1933. Up to 1930, barring 1927, natural salt cake production has been 
a negligible part of total sodium sulphate oroduction. In recent years 
it has become a more important factor in the market, due to the fact 
that chemical production has been decreasing, while natural production 
has increased. In terms of a ratio of value oroduct, the natural nroduct 
has also increased, but not as noticeably as in the case of production 
ratios. This is due to the fact that the unit value of the natural oro- 
duct runs considerably lower than the unit value of chemical product. 



9829 



-657- 



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Table 4 presents the production figures of the complainant parties. 
Those producers are classified herein as primary producers , that is", 
those whose primary obj e ctive is the production of salt cake, and in- 
clude several natural producers and a chemical oroducer. 



Table 4, Salt cake (sodium sulphate, crude) 
Complainnnis' production, 1929 - 1934 



Statistical period 


Production 




Short tons 


1929 


15,536 


1931 


• • 17,340 v ■ 


1932 


24,049 


1933 


33,248 


1934 


25,336i/ 



Source: Complaint, Exhibit P. 

1/ 9596 tons from natural ' sources. 

The production of the complainants has increased steadily from 1929 
to 1933, the peak year,' In 1934, however, their production was .about 
80 percent of what it was in 1933. The fact that one complainant company 
producing salt cake from natural sources closed its plant in 1934 accounts 
largely for the. decline in the complainants' output. As reference to 
Table 2 will show, natural producers, ■ including the complainant natural 
producers, appear to have suffered heavily in 1934 as compared with 
previous years, unless 1933 production was abnormally large by reason 
of stock accumulation in accumulation in anticipation of increasing pro- 
duction costs, 

Table 5, derived from official data, oresents a readjustment of 
data necessitated by distinguishing producers whose primary abjective is 
salt cake production and producers who make salt cake as a minor chemical 
product. 

Total production of salt cake for sale decreased sharply in 1931 
compared with 1929 due to the great decline in non-primary chemical pro- 
duction, despite the noteworthy increase in primary production. Both 
non-primary chemical and primary production increased in 1933, with 
primary producers representing about 40 percent of the total production 
for sale. However, in 1934 the primary production declined drastically, 
the plants of several natural producers being- closed. 

The complainants represented about 52 percent of the primary pro- 
duction in 1933 and about 79 percent in 1934. In 1933 they represented 
about 21 percent of total- production for sale. 



9329 



-659- 



Table 5. Silt c»':e (sodium sulphate, crude): Total 
oroduction for sale, non-orimary chemical, primary, 
and complainants ' oroduction, and 'nercentige 
participation of each class in the total 
oroduction for sale, 1929 - 1934 



Production for sale 



Percent of 
total oroduc- 
tion for s?Je 



Complainants ' 



Year 



: Uon- : 
Total : primary: Primary 
: chemical:' 



Hon- : 
orimary. Primary 
chemical : 



: Percent 
: of total 
Production : product ion 
:for sale 



1929 
1931 

1953 

1934 



: Sht. tons: 



Sht. tons : 




87.0 
62.0 
60.1 



13.0 
33.0 
39.9 



15,536 
17,340 
33,248 
26,336 



8.7 
13.2 
20.6 



Source: Derived from official data and complainants' production 
figures. 



1/ Not available 



Exports 



Prior to 1929 exports of sodium sulphate were not separately recorded. 
Since then, the figures shown are for both crude and refined sodium 
sulphate and are not comparable with statistics of oroduction and imports. 
Experts have gone mostly to Canada, with lesser amounts to Japan. Since 
1933, sodium sulphate has not been separately classified, but it is known 
that exports in recent years have been negligible. Table 6 shows the 
exoorts from 1929 to 1932. 



3829 



-660- 



Table 6. Salt cake (sodium sulphate, crude and refined) 
Exports, 1929 - 1932 1/ 











Value per 


Ye ar 


: Pounds 


Short tons 


Value 


short ton 


1929 


3,331,630 


1 , 666 


$53,176 


$31.92 


1930 


8,872,462 


4,436 


113,253 


25. 53 : 


1931 


9,304,887 


4,652 ; 


75,784 


16.29: 


1932 


2,870,061 


1,435 


24,155 


16.83 



Source: Foreign Commence and Navigation. 

1/ Sodium sulphate not separately' classified prior to 1929 nor after 
1932, From 1929 to 1932 both crude and refined are sho^n together, 
hence they are neither comparable with domestic* production nor with 
imports. 

Competition with the Eur one an cartel is not conducive to any great 
development of an export trade in sodium sulphate by the United States, 
Moreover, Canada, which has been our best customer, has 'large natural 
denosits, particularly in Saskatchewan, and is protected now by a high 
tariff - $12,00 per short ton - and a special excise tax of 3 percent 
applicable only to imported goods on their duty-paid value. A six per- 
cent sales tax is imposed also on all salt cake sold in Canada and on 
imported salt cake the tax is figured on the duty-paid value. 

The Industry in Foreign Countries 

Sodium sulphate is produced in many countries as a natural product 
from ore -and brine and as a More or less minor product of the chemical 
industry. Natural deposits of considerable size and of increasing im- 
portance are found in Canada, Russia, and Chile. Chemical production is 
found in the leading European industrial countries, notably in Germany. 

No attemnt will be made to describe the industry as it exists in 
all foreign countries. However, since Canada ha.s assumed importance in 
recent years as a producer of natural sodium sulphate and since Germany 
has long been the dominating factor in world markets through the cartel, 
attention will be directed to trie industry in these two countries. 

Canada 

The production of Sodium sulphate in Canada prior to 1920 was 
negligible. The domestic shortage of potash so noticeable during the 
Sorld war led to an extensive search in Saskatchewan and Alberta. 
Many deposits of sodium sulphate in the form of mirabilite were uncovered. 
Exploitation of these natural resources started in a small w ay to serve 
the needs of the pulp industry and the smelting of nickel-copper ores and 



9829 



-Col- 



in very recent years production figures in Canada have built up rapidly. 
Canada has placed herself on a self sustaining basis and is able to ex- 
port salt cake, some of which has entered the United States. In 1933, 
"the Canadian output of salt cake was valued at $485,416. Preliminary 
figures for the first six months of 1934 show a oroduction of 27,689 short 
tons valued at 209,409. 

Plants h^ve been installed at Likes Kuskiki, Frederick, Fusilier, 
Sybout, White Shore, Horseshoe, and Alsask, and consular reports indicate 
considerable productive activity. 

In Canada, three methods of production have been employed. Accord- 
ing to the nature of the deposit and otner factors it has been possible 
(1) to mine the bed; (2) to fish crystals oat of the brins; or (3) to 
evaporate the brine. In the late summer, brine in deposits become suf- 
ficiently concentrated so that intermittent beds of crystals can be 
harvested by means of steam shovels. In the fishing operations the crystals 
are loaded into scows that are floated over the deposits. This method is 
slow, but has the advantage of yielding almost pure crystals needing little 
further treatment. However, any method dependent upon intermittent 
crystals is naturally limited to a short harvesting season of only a few 
months at most each year. On the other hand, methods dependent upon 
permanent beds or evaporation of brine involve chemical processes of 
ourif ication to eliminate soluble as ""ell as insoluble impurities. 

As in the case of natural product production in *he United States, 
oroduction in Canada suffers through uneconomic location in terms of 
markets and long hauls of the product are necessary. The nearest market 
to the Saskatchewan oroduction regions is probably to be found in 
Minnesota and Wisconsin, among the sulphate pulp mills. 

Germany 

The German production of sodium sulphate and niter cake (aoid 
sodium sulphate) has been estimated as high as 350,000 tons annually. 
The Kaiseroda Works alone have an annual capacity of 120,000 tons and 
the I. G. Farbenindustrie plants in 1928 were credited with the capacity 
to make 80,000 tons annually, and to these may be added the output of 
several smaller producers. 

In Germany, one method of oroduction is from magnesium sulphate 
liquor, a residue from the process of making fertilizer potash. Former- 
ly this liquor was dumped into the rivers as a waste product. Its 
commercial possibilities were discovered, however, and there followed 
conversion cf magnesium sulphate to sodium sulphate by adding common 
salt (sodium cnloride) to the magnesium sulphate at suitable temperatures. 
This chemically manufactured product is generally superior to that de- 
rived from acid production since it contains practically no free acid, 
so that in purity it approaches anhyrdous sodium sulphate, the refined 
salt cake. About one-half of the total German production is from this 
method. The balance is produced in conjunction with hydrochloric acid. 

These synthetic processes have made Germany a leading producer, and 
it has been the dominant factor in international trade in salt cake 

9829 



-662- 

through the cr.rtcl ( Sill fat Vereinigung) which has its headquarters at Frank- 
fort- on~i.Iain. Other European Industrial countries, notably Great Britain, 
France, and Belgium, with exportable surpluses, have frequently pooled their 
interests with. Germany to the extent of el locating markets ana even operating 
through a joint sales organisation in the form of an international eartcl. 

The Se.lfat Vercinigung, hereinafter called the • Sulphate" Union, './as or- 
ganized in 1926, with one of its objectives the elimination of intermediaries 
in the distribution cf salt cake. Selling conditions were unsatisfactory to 
the industry (largely because of the -operations of the so-called "Coffee house" 
urokers and curb merchants), and it desired to exercise a greater degree of 
control over prices and markets, particularly with respect to prices -aid b;* 
ultiua.te consumers. The Union desired to deal only with buyers known to use 
the merchandise in their own establishments .and un 'er the present operation 
of the Union'- strict control is exercised. The Sulphate Union is a limited 
liability company which was organized to handle the' export sales of the principe 
German producers of sodium sulphate. It ec -ccrns itself only with the so-called 
"technical cre.de salt cake," the purity of which runs from 95 per cent to about 
98 per cent. The • Sulphate Union is the sole exporter of crude salt cake. pro- { 
duced b its members" in Germany, and individual producers who belong to the 
Union are not permitted to export crudi; salt cake, on 'an independent basis. 

The Sulphate Union is also said to be under Contract with one or two small 
producers not actually members of the Union.' One or two minor concerns in 
Germany are said to work in competition with the Union. 

. While the Sulphate Union is an export organization, it also exercises some 
control over Gorman inland' business, in that each individual producer of salt 
cake, the selling independently, must file 'copies of contracts and, invoices with 
the Union. 

The Sulphate Union is a part o: the European Salt Cake Cartel, known as the 
"European Salt Cake Association," which has its ee (-quarters in London. This 
is the ke , organization for the following affiliates! 

(l) The Salt Cake Association of. London. I 

(S) The Sulphate Union of Frankfort. 

(o) Belgian interests. 

(4) French interests. , 
The French ana Belgian interests, which arc relatively small, are represented 
by secretariats and arc bound by agreement not to sell to the United States or 
Scandinavian countries, which are the principal users of salt cake, except 
through the. Sulphate Union. The British interests cell largely to the 
Scandinavian countries, while all contracts for the United States arc made by 
the Sulphate Union of Germany* 

. . Under the terms nf the European Salt Cake Association's agreement the 
Sulphate Union is obliged to allot a given amount of business to the Belgian 
producers, also to the French, and sometimes to Butch interests. Thus, ship- 
ments for the i nitcd States might at timers consist entirely of German or of 
Belgian goods, anc sometimes of 'mixed shipments fron both countries. 



9829 



-bto~ 



Except where special qualities arc specified, such as Kaiseroda from 
Germany, the Sulphate Union allots deliveries on export orders to German and 
Belgian producers on s quote basis. Eai .av.iu, quality, which comes from natural 
mineral deposits yielding magnesium sulphate, is considered a somewhat better 
quality than the crude salt cake which is produced in conjunction with the 
manufacture of hydrochloric acid. 

The Sulphate Union is represented in the United States by three fins, each 
of which is said to have its own distributing area. Two of these firms are 
under agency contracts, working on a commission basis, end the other is a sales 
agency, buying at a discount and reselling. 

The only relationship between the Sulphate Union and the ultimate buyer 
in the United States is that of buyer and seller. The Union exercises no 
control over the resale price, in the United States, but in its contracts 
requires assurance that buyers are purchasing the salt cake for their own use. 
It is said that there is no community of financial interest between the Union 
and its customers in the United States. 

Prices quoted by the Sulphate Union have been c.i.f. American ports until 
recently, when some customers in the United States requested a change to f.o.b. 
European port, such as Hamburg, Antwerp, etc. 

Payments to the Sulphate Un_on arc made in dollar amounts to the Union's 
American agents, who in turn remit through dollar drafts, after deducting the 
amount of the agents' commission. 

In the case of payments for Belgian merchandise, the Sulphate Union's 
American agent in New York- remits to the European Salt Cake Association in 
London, which is instructed by the Sulphate Union in regard to the distribution 
of the remittance to the various participants in the shipment, including the 
Sulphate Union. 

The fact that Germany produces much of its spit cake as a by-product, 
and because salt and magnesium sulphate from potash refining are abundantly 
available raid very cheap in Germany, together with the fact that the control 
of all sales abroad is in the hands of the Sulphate Union, which in turn is a 
dominant factor in the European Cartel, make German producers very keen com- 
petitors in any market. 

Imports 

Annual imports of salt cake from 1922 to 1934 arc shown in Table 7. Prior 
to 1328 the amounts imported were negligible, the domestic demand being amply 
cared for by the chemical industry producing crude sodium sulphate. However, 
the phenomenal growth of the sulprhte pulp industry because of the increasing 
popularity of kraft paper, the fact that chemical production of salt cake 
depends on the demand for hydro- chloric acid and nitric acid and not on the 
demand for salt cake, together with technological changes in the production of 
acids wherein salt cake is no longer produced, and the then very small amounts e>: 
sodium sulphate produced iron natural sources, made the American market peculiar', 
dependent upon imports to meet the increasing demand for salt cake. T..ie, 
relative scarcity encouraged imports and accounts in part for their rapid increar 
since 1927. At the same time they encouraged greater production of salt cake 
domestic: 11; from natural resources. 
9829 



•■ -664- 

Table 7. Salt coke (sodium sulphate, crude): Imports for 

consumption, 1953-1924 



Statisticrl Quantity Value Value per 

period . ( short tone) ( doll; rQ short ton 

1922 715 $ 8,537 $ 11.94 

1223 .5,283 84,051 15.91 

1924 . 3,427 40,582 11.84 

1925 1,913 . 18,176 9.50 

1926 6,270 6 ,321 10.58 

1927 11,172 100,279 8.08 

1928 28,227 253,553 8.98 

1929 91,634 829,793 9.06 

1930 70,335 800,432 11.38 

1931 72,747 803,509 11.05 

1932 01,124 . 644,074 10.54 
1935 99,209 885,306 8.92 
193-:. . . . 89,701 799,141 8.91 



Source: U, 3. Tariff Comrais.sion., 

The. chief sources of imported sodium sulphate are revealed in Table 8. 
It may be observed that Germany has ranked high as an exporter, to the United 
States in every year since 1920. In 1954, Germany' s contribution v/as par- 
ticularly large, representing 70 per cent of the imports for that year. The 
proportion contributed by Canada was 26.5 per cent in 1931, but the tondency 
has been for imports to decline from that source since the 1931 high. The 
unusually large amounts from the Netherlands in 19.09 and Belgium in 1933 arc 
believed to je due to transshipments of the product from Germany." 



9829 



Table 8. Salt cake (sodium sulphate crv.de): Imports 
for consumption by countries, 
1929 - 10, I 





1029 


19, 


1931 


X J Co 


1933 


1934 


(Juan tit" (short tons 















Germany 


34,811 


2*, 334 


3 . 


32/ 5- 


38,110 


63 , 270 


Belgium 


2,022 


8,811 


8,454 


16,156 


35,610 


17,793 


Canada 


2,545 


6,897 


19,246 


7,980 


12,423 


3,648 


Netherlands 


5 ,038 


5, 236 


4,395 


3,573 


4,C 63 


3,634 


All other l/ 


1,419 


18,057 


. 732 


1,355 


9,062 


1,356 


Tote 


tl 91,635 


70,335 


72,747 


61,123 


99,268 


89,701 


Value 














Go many 


$316,242 


$312,171 


$469,308 


$356,279 


$354,246 


$565,337 


Belgium 


18,642 


128,311 


78,677 


161 , G27 


330,114 


152,255 


Canada 


21, CSS 


94,260 


188,687 


77,193 


109,329 


34,198 


Net: crlands 


•459,220 


46,754 


60 , 394 


38,880 


37,426 


39,656 


All other 1/ 


14, 51 


218,946 


5,943 


10,095 


54,191 


7,144 


Total 829,793 


800,432 


803,509 


64- ,074 


855,506 


799,14-1 


Vrlue per short ton 












• 


Germany 


$9.00 


$10.64 


511.85 


311.11 


$9.30 


30. 94 


Belgium 


9.22 


14. 56 


9.31 


10.00 


9.27 


3.56 


Canada 


8.50 


10.59 


9.3 


9.67 


8.80 


9.37 


i t-icrlands 


9.03 


8.93 


12.97 


10. 87 


9.21 


10.91 


All other 1/ 


9.90 


12.13 


3.12 


7.45 


5.98 


5.27 


Average • 


; 9.06 


11. 38 


11.05 


10. 54 


8.62 


'i p.-l 


Per cent of total en 


lantity 













Germany 38.0 41.7 54.4 52.4 38.4 70.5 

Belgium 2.2 12.5 11.6 26.4 35.9 19.8 

Canada 2.3 12.7 26.5 13.1 12.5 4.1 

Netherlands 55.5 7.4 6.5 5.9 4.1 4.1 

All ether 1/ 1.5 25j/7 1.0 2.2 9J. 1.5 

Total 100.0 100.0 100.0 100. r: 100. 100.0 



S our c c : U.S. Tari f f C ommi s s i o n. 

1/ Cilc, Spain, United Kingdom, Hungary and U.S. S.3. in Europe. 

The points of impact of imports arc shown in Tabic 9. In 1934, ap~ 
proximately 75 per cent of the imports entered through Gulf customs districts 
and about 12 per cent through North Prcific ports. It is iii these coastal and 
immediate hinterland areas that the primary producers of salt cake hope to marko" 
their product. Consequently, these market areas re pre rent the regions of keenesi 
competition between domestic and foreign saltteeakc. In the C-ulf area in 
particular this is true, since about 50 per cc St of the total drily capacity of 
the el ate pulp industry is represented in the coastal regions of the four 
States of Florida, Alabama, Mississippi, and Louisiana, and it is this industry 
which is the largest user of sodium sulphate. 



9829 



-666- 



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-667- 

Table 10 indicates the trend of imports for consumption compered 
with domestic production Tor sale from primary and non-primary chemical 
sources of sodium sulphate. It nay be observed that primary production 
has increased rapidly from 1929 to 1S33, whereas non-primary chemical 
production for sale has decreased noticeably due to the technological 
changes already indicated. However, the net effect has been a decline 
in sodium sulphate available for sale from domestic sources. Imports for 
consumption which had risen rapidly in the 1920s reached their peal: for 
that decade in 1929. They declined considerably in 1930, 1951, and 1932, 
and then reached a new high in 1933. Expressed in terns of a percentage 
of total domestic production for sale, imports for consumption increased 
from 51.7 per cent in 1929 to 61.8 per cent in 1933. This increase in 
large measure appears to be more attributable to chemical production de- 
cline in the domestic industry, particularly on the part of the non- 
primary producers, rather than to a material increase in imports in 1933 
as compared with 1929. In 1934 imports for consumption declined to a 
level just under the 1929 figures. Despite this decline, the ratio of 
imports for consumption to primary production increased greatly due to 
the materially greater decline in the output of the primary producers. 
The ratio of imports to total domestic production for sale in 1934 is 
not known, since total chemical production of salt cake in 1934 is not 
available. However, chemical production for sale would have to increase 
about 16 per cent in 1934 over 1533 to maintain the same ratio of imports 
for consumption to total domestic production for sale in 1934. 



Table 10. Imports for consumption compared with primary, 
non-primary chemical, and total domestic production 
for sale, 1929 - 1934 





Domestic production 
for sale 


Imports 

for 
con- 
sumption 


Ratio of imports for 
: consumption to 


Year . 


Irinary 


IFon- : ; 

primary : Total 
chemical : 


Pr imary 

produc- 
tion 


Eon- 
: primary 

chemical 


Total 
produc- 
tion 






: : 






Per cent 




1929 


: 23, 075 


; 154,640 ; 177, 716 


i 91,634 


: 397.1 


59.2 


, 51.5 


. 1931 I 


49 , S50 


81,387 : 131, 237 


72,747 


145.9 


89.4 


55.4 


1932 


49,965 


1/ ! - 


61,124 


122.3 


- 


- 


1933 . 


64,261. 


96,693 : 161, 149. 


99 , 269 


154.5 


102.4 


61.6 


1934 . 


,33,390 


1/ ': - 


89,701 


> 2c d. o 


- 


- 


Source 


U.S. 


Tariff Commission 


and data 


in Tsble 5. 







1/ ITot available. 



9629 



•668- 
Important Conroetitive Factors 



Fore ign e:: change 



Since the rise in the dollar value of the German reichsmark from 
parity 23.8 cents in March 1933 to 40.2 cents in the last quarter of 
1934, German goods have been at a disadvantage in the American market. 
To meet currency devaluation in other countries the German government 
has resorted to foreign exchange control measures, which have amounted to 
a devaluation of the reichsmark for -.purposes of foreign trade, while the 
free reichsmark within the country represents the gold standard currency. 

This has been accomplished by means of "blocked" foreign-owned funds 
in the form of "blocked marks," of which there are several kinds, classi- 
fied according to origin; and, more recently, by means of German scrip. 

Originally, it was intended that these blocked funds be used to fi- 
nance "additional exports," that is, exports from Germany in addition to 
such usual and regular exports as existed at the time when blocked funds 
were made available. However, blocked funds have become an instrument 
which has as its chief function the retention of control over already 
existing exports,. the loss of which was threatened by various factors, 
such as devaluation of foreign currency , anti-German boycott, and rising 
production costs within Germany itself. Thus, in practice,., "additional 
exports" may consist of any export order which an exporter is in danger 
of losing by reason of underbidding by a competitor in some other country. 
For example, an American importer may write a German exporter that the 
latter' s prices are too high, a.nd unless adjustments are made downward 
the order will be placed elsewhere. The German exporter is, under such 
circumstances, in a position to go before the German exchange control 
authorities with a demand for assistance from blocked funds. 

Tho there axe numerous types of blocked funds, only three types are 
of general interest insofar as financing of "additional exports" : is con- 
cerned.. These are: registered marks, scrip, and dollar bonds. : 

TThen scrip procedure was introduced in October 1, 1933, it was in- 
tended tha.t the use nf registered marks for financing exports be dis- 
continued. However, American importing .firms already holding permits to 
use registered marks in payment, for German goods were allowed to use 
their unexpended portions for current importations. In recent months not 
only have old permits for the use of registered marks been extended, but 
new permits have also been issued. In the case of the registered marks, 
it is the foreign importer who : takes the initiative and obtains a permit 
to buy registered marks. This allows him to buy marks at from 30 to 40 
per cent below the day's rate for free marks, that is, for the usual and 
ordinary currency of Germany as quoted on the world's exchanges. Usually 
the foreign importer is permitted to pay for 50 per cent of the value of 
the imports with these registered marks purchased at a discount. However, 
declining German exports have compelled the German foreign exchange con- 
trol authority to issue permits authorizing the use of 60 to 70 per cent 
in registered marks, in order to overcome the currency devaluation of 
foreign countries. 



9 829 



- by- 
Use of scrip has "been the prevailing procedure during 1954 for fi- 
nancing ^additional exports." The German exporter in this instance 
takes the initiative by making application to receive scrip payment in 
reichsmarks. Technically, he is required to prove that he has had to 
accept an export order at a loss. Actually, as in the case of registered 
niarks, evidence of compulsory price redaction to meet genuine or fancied 
.foreign competition may he sufficient to place the transaction within the 
meaning of "additional exports. " 

Scrip has arisen out of interest payments on German public and pri- 
vate "bonds held by American (and otner foreign) investors. Payments are 
made through the German Conversion hank, hor example, the Conversion 
Bank forwards the American investor 50 per cent of the amount of interest 
due on bonds in dollars and 30 per cent in German scrip. The bondholder 
can hold and redeem this scrip at 100 per cent of its face value sometime, 
though the date is indefinite; or the scrip can be sold at a 50 per cent 
loss to certain American banks authorized by the Conversion Ban 1 : to buy 
at that reduced price. The American banks remit this scrip to the Gold 
Discount Bank in Germany and receive credit for the full purchase price 
paid ~bi' them, plus a commission for services rendered. The German, ex- 
porter -/ho has invoiced his goods at the lowest price necessary to meet 
competition, is maid in free reichsmarks for the full amount of the in- 
voice by the American importer. To compensate for the difference between 
what he should have received for his goods and what he had to take, he 
buys scrip from the Gold. Discount 3ank at a discount sufficient to cover 
the loss on his order, and re-sells the scrip to the Conversion Bank at 
100 per cent of its face value, thus compensating himself for the reduced 
prices necessary to meet competition. 

The net result of this procedure is that G-erman exporters make 
foreign sales which otherwise could not nave been made,- and American in- 
vestors in German public and private bonds bear the burden through the 
reduced returns in interest on their loans in Germany. 

A third method of financing "additional exports" is through the re- 
purchase of German dollar bonds held in the United States. It is not 
known whether this procedure is in very wide use at the present time. It 
is believed that its application is reserved eitner for large transactions, 
or for those German exporters who have outstanding bond obligations in the 
United States. The German exporter does not actually buy and sell bonds, 
but he is authorized by the foreign exchange control authority to deal in 
so-called "export valuta" up to a certain percentage of the total invoice 
value of the goods shipped - usually about 50 per cent. German banks do 
the actual buying and selling of the bonds, and the exporter simply re- 
ceives his additional payments from the profit on the bond transactions. 
Recently quotations on "export valuta 1 ' have run as high as 175 per cent, 
that is, German dollar bonds purchased in New York can be sold in Germany 
at a price 175 per cent over the "Jew York purchase price. This permits 
the exporter to receive 40 per cent of the selling price in reichnarks 
at the current exchange rate of about Ei» 2.50 per dollar and the balance 
in bonds, convertible through sale in Germany at a price sufficiently 
attractive as to compensate the exporter for making the sale under the 
conditions neces.sary to obtain the order. 



-670- 

However, with respect to crude salt cake exported to the United 
State-, the Sulphate Union disclaims receipt of payments in scrip or 
other forms of blocked funds, or of any form of drawback, "bonus, or 
premium designed especially to facilitate the exportation of this product. 
If this he the situation, then foreign exchange control in Germany so far 
as it relates to salt cake, is a matter of potential, if not present 
concern. 

The accompanying chart is presented to show the trend of United 
States imports of salt cake from Germany and the movement of the reichs- 
mark in terms of dollars. It is significant that despite reichsmark ap- 
preciation in dollars during 1S33 and 1934 Germany contributed 38,110 of 
the S9,25S short tons of salt cake imported into the United States in 
1933 and 63,270 of the 89,701 short tons in 1934. Germany's percentage 
participation in the total United States imports of salt cake rose from 
33.4 in 1933 to 70.5 in 1934. Expressed in another way Germany increased 
its exports of salt cake to the United States in 1934 by 25,160 more short 
tons than 1933. This is equivalent to a 66 per cent increase in 1934 
over 1933. 

The chart also shows the reichsmark equivalent of the dollar value 
of German salt cake t>er unit of one short ton based on the going rate of 
exchange in cents per mark from January 1933 to March 1935, as compared 
with the number of reichsmarks German sellers would have received for 
one short ton of salt cake had the old dollar mark parity of 23.32 cents 
been maintained. 

These trends tend to raise some doubt as to the validity of the 
disclaimers of the Sulphate Union that the salt cake industry in Germany 
is not deriving some benefits through governmental exchange control 
devices. 



98?9 



-671- 

SALTCAKE COMPARISON OF U.S. IMPORTS FROM GERMANY 
WITH MOVEMENT OF DOLL AR/REICHSM ARK EXCHANGE, AND 
VALUES PER SHORT TON IN TERMS OF MARKS. BY MONTHS. 

1933-1935 

1600 , 

UNITED STATES IMPORTS TOR CONSUMPTION, 



1400 

IZOO 

1000 

800 

600 

400 

200 


60 

40 

20 



O 
60 



40 



20 



BY MONTHS, 1933 - 193 5 
SHORT TONS 




REICHSMARKS 


PER 


SHORT TON. 


COLLAR VALUE 


CONVERTED 


AT 


PARITY OF E 


XCHANGE 


x *^^_/ \ fy 
\ ir"^ X/ 








£yr 


V- N 


*** • 




REICHSMARKS 


SHORT TON, DOLLAR VALUE 


CONVERTED 


AT 


GOING RATE OF 


EXCHANGE 





GERSvi~.N 
REICHSMARK 




PARITY-23.82 CENTS 

DOLLAR DEVALUATION 
JANUARY 30, 193-4 




U S ABANDONS 

GOLD STANOARD 

APRIL 1, 1933 





J F AMJJASONOJFMA' JjAL,ONDJFMAMJJASOND 



1933 



193 4- 



SOURCt U S TARIFF COMMISSION AND 
FEDERAL RESERvF BOM 



1935 

MR A 
research & planning 

IMPORTS SECliON 
No. 223 



a 39 



-673- 

Comparab ility of •product 

German s:lt cake of the quality exported to the United St; tes 
varies between 25 end 98 per cent purity. The Kaiseroda product is gen- 
erally recognized as the best quality of German salt cake, and "bears a 
slightly higher price than that produced in ether quarters. In general, 
alt cake produced chemically and from natural sources in the United 
States and the German salt cake are closely comparable in quality. So 
for most uses, technically, the source and method of production appears 
to be a matter of indifference. This fact confines the competitive sit- 
uation largely to price and delivery. 

Prices end transportation rates 

As a rule, German salt cake producers sell to their American cus- 
tomers on long-term contracts, with "orices quoted c.i.f. American port. 
However, since March 195?, prices on deliveries ra.de to Gulf ports have 
been quoted f.o.b. European port. Salt cake delivered to Pacific Coast 
ports continues to be quoted c.i.f. Certain additional charges (about 
$1.90 per ten for bagging) are riade for delivery in bags rather in bulk. 
Terms of sale are net cash, except '..here delivery is made to an American 
firm having a scles contract with the Sulphate Union. These long-term 
contracts usually contain a conditional price-reduction clause, thus en- 
abling the American buyer to benefit from any price decline. Under this 
clause reductions in price have been made from time to time since 1931 
from $14.75 per short ton c.i.f. Gulf ports, to $9.25 per short ton f.o.b. 
steamer European port, at the present time the buyer now making his own 
arrangements for shipment and its attendant costs, or about $12.35 p er short 
ton, Gulf port. Prices to customers in the Pacific Forthwest have also 
been reduced from $16.95 per short ton c.i.f. American port in 1932 to 
$14.50 in 1933, and to $12.75 c.i.f. in 1954. This latter price appears 
to be the prevailing one for G-erman salt cake delivered to the Pacific 
Northwest ports at the present time. 

Ocean transportation rates from Antwerp, Hamburg and Bremen, Germany, 
and Rotterdam, Netherlands, to New Orleans, La. for the participating steam- 
ship lines in that service arc as follows: 

Salt C ake ( Sodium sulphate, crude ) 

Per thousand Short ton 
kilos equivalent 

In bags $3.25 $2.95 



in cr sl:s 



3.40 



Ir bulk 3.00 3.72 

These rates apply to Llobile, Ala.; Galveston, and Houston, Texas, 
also, but not to Panama City, Fla. 

It should be noted that the rate of $3.00 per thousand kilos was 
originally shown in the shipping tariff schedule, but subsequently was 
deleted prior to the receipt of the tariff in Washington, November 16, 
1934. Consequently this occasions some doubt as to the precise rate 

9339 



* 



-573- 

ilicable to sr.lt cake shipments in bulk to tlie Gulf ports. 

On the basis of the above rates the price of German salt cake in 
bull:, wharfside, "ew Orleans, La., would be, therefore, approximately 
$1.3.00 per short ton, not inclx di : as rine insurance and other charges 
incidental to ocean shippin- . Also, bhere must be added wharfage and 
unloading charges, pins freight to inland points of consumption, such as 
Camden, Arkansas and Tuscaloosa, Ala. These inland rates, which are im- 
port commodity rates and lower than domestic commodity rates between the 
same points, are rs follows: Hew Orleans to Camden, Ark., 15 cents per 
100 pounds carload lots, or $5. .1 per short ton; ITew Orleans to Tusca- 
loosa, Ala., 16g cents per 100 pounds carload lots or $3.53 per short 
ton. These charges include the additional 7 per cent emergency rate on 
the line haul charge, when such a charge is not in excess of 2 cents ier 
hundredweight . The delivered cost of German salt cake to Camden, Ark., 
therefore,- would approximate $15.96 to $16.21 per short ton, allowing 75 
cents to $1.00 to cover marine insurance and the. unloading and handling 
charges at the American dock, etc. The delivered cost at Tuscaloosa, Ala., 
would approximate $16.28 to $16.53 per short ton. 

The ocean rate on salt cake from Antwerp, Hamburg, Bremen, Rotter arm 
and Amsterdam to the Pacific ports of Los Angeles end San Francisco, Cal- 
if., Portland, Ore., Seattle and Takoma, Washington, is $8.50 per thousrnd 
kilos, or $7.71 per short ton. Longview, 'Washington, which is also the 
destination of German salt cake shipments, is net a terminal nort of dis- 
charge for ocean carriers constituting the ocean freight conference, the 
rates of which are quoted herein, hence post-terminal rates are imposed 
on shipments destined to this port. The post-terminal rates applicable 
to Longview, Washington, follow: 

P er 1000 k ilos 

On rates over $10.00 O n rates of 5 10 .00 and below 

1000 tons and over - no extra Kb extra 

500 tons to 1000 tons - $2.50 $1.25 

250 tons to 500 tons - $5.00 2.50 

Under 550 tons - $10.00 5.00 

Shipments destined ultimately to Camas and Port Tcwnsend, Washing- 
ton, would bear the rate to the terminal ports of Portland, Ore., and 
Seattle, Washington, respectively, plus additional charges for reshipment 
by coast '.vise and river lines. 

It is unlikely that shipments from abroad would run less than 500 
tons per shipment, hence the post-terminal rate to be added to the term- 
inal rate would be $1.25 per thousand kilos, or $1.14 per short ton. The 
rate to Longview, Washington, therefore, would be $8.85 per shrrt ton 
wharfside, net including marine insurance and incidental shipping ex- 
penses. At the contract price of $12.75 c.i.f. American port, German ship- 
ments to Longview, for example, would yield the Sulphate Union $3.90 per 
short to.;, from which would have to be deducted German inland transport- 
ation rates as well as marine insurance end ether incidental ocean shin- 
ping charges not accounted for. 

9829 



-674- 

Since 1930 the trend of salt cake prices has been downward. It is 
difficult, however, to accurately describe the price situation for the 
domestic product, since it is produced under various conditions at wide- 
ly scattered points and transportation rates bulk large in the final 
price th the consumer. 

The Bureau of Labor statistics report the wholesale price of domes- 
tic salt cake from the chemical industry at $13.58 per short ton in bulk 
at the works .in 1932, $13.00 in 1933 and 1934, and $12.00 in March 1935. 

The Oil,. Paint and Drug Reverter, a trade journal, reports prices 
for salt cake each "eek. This medium of trrde information quotes a range 
of prices of salt cake in bulk at the -'orks, e.g. $13.00 to $13.00 per ton. 
.This ciuotation has varied little, if any, from week to week during 1933 
and 1954. At present, Hay 1935, salt cake is ouoted. at $12.00 - $16.00 
per ton by this journal. It is said that the low auotation constitutes 
the bulk of sales, which are usually made on a. contract basis during the 
early part of the "-ear. Occasional sales in snail amounts, and quality 
differences, account for the range. 

However, these reported orice quotations rre more or less nominal and 
are significant only as they indicate the trend of orices. In the chem- 
ical trade the reported f.o.b. price for salt cake represents the price 
obtained by suppliers of salt, cake enjoying the lowest transportation rates 
to the consuming point. The real f'.o.b. orice to other producers is less 
than the quoted f.o.b. price.. by the amount of the freight absorbed by the 
shipper whose location in relation to the market is less favorable. The 
extent of any market, therefore, is limited b-r the degree of variance in 
production costs in the trade and the willingness and ability of less 
favorably situated chemical companies to absorb freight. The situation is 
further complicated by the fact that the chemical industry produces salt 
cake- along with many other chenicals. 

kith respect to the producers of salt cake as a primary objective 
which includes the producers of salt cake from natural sources, the range 
of prices of salt cake, f.o.b. plant, is very wide. This is due in part 
to varying production methods and costs- koreover, freight rates are of 
cardinal importance in the marketing problem. Thus, in 1932 the range of 
f.o.b. orices of the cormlainant primary producers was from $5.30 to $14.80 
per short ton on shipments destined to consumption points in the lo'ver 
Mississippi Valley, from points as far distant as the Nevada deposits, and 
as near to that market area as a. producing point not far from lieu Orleans. 
In 1934 the range was from $'5.10 to $13.08 f.o.b. these points. 

The accompanying map sno- s the location of the leading points of pro- 
duction of the Sulphate Pulp Industry, '.'hick is the largest single consLuner 
of crude salt cake; the location of the properties of the complainant pro- 
ducers, rhose primary objective is the production of salt cak? t and trans- 
portation rates from the points of production to points of consumption in 
the sulphate pulp industry! The location of the plants of a feu non-primary 
producers of chemical salt cake is also shown. As already indicated, chem- 
ical plants producing salt cake are numerous in the region East of the Miss- 
issippi and korth of the Ohio Rivers, and obviously are in such a strategic 
position to meet the demand for salt cake in tais market area that the pri- 
mary producers of salt cake and the importers of German salt cake, cannot 

9829 



-675- 

easily compete with then under present conditions. It is nob likely that 
this domestic chemical salt cake ' ould be shipped into the Gulf market area 
either coastwise or by rail, due to transportation costs, except possibly 
in tiio case of chemical salt cake "oroduced in Monsanto and Hegeswich, 111., 
end Grasselli, Ind. Even these plants '•ould be more likely to serve their 
natural mark-, t areas, including the "'.'i sconsin sulphate pulp mills, unless 
their stocks of salt cake became excessive in terms of the demand in their 
own natural market areas, due to an increased demand for hydrochloric acid 
which is produced jointly with salt cake. The fact that the annual salt 
cake reauirements of the large consumers ore usually provided for by con- 
tracts arranged earl" each year, it is doubtful whether the chemical pro- 
ducers would enter this Gulf market are? to any great extent other than 
occasionally. It is highly unlikely that the].' would serve the more dis- 
tant Pacific l^orthv.-est under the present price and competitive conditions. 

It appears, therefore, that the so-called primary producers, largely 
composed of the complainants, and the German Sulphate Union, would serve 
the Gulf and Pacific i'orthwest coastal regions. The competitive position 
of the domestic primary -nrodveers is revealed by the transportation rates 
shown on the map. Thus, salt cake shi yoed from Weeks, La., to Camden, Ark., 
bears a rail charge of 33 cents per 100 pounds in carload lots, minimum 
weight 40,000 pounds, plus the emergency 7 per cent rate on the line haul 
charge, or $4.92 per short ton. In view of the present approximate deliver- 
ed price of German salt cake to Camden, $15.93 to $16.21 per short ton, 
the producer at Weeks could not operate with production costs above nor 
afford to quote a f.o.b. mill price much in excess of $11.04 to $11.29 per 
short ton, without losing trade to German competitors. Probably better de- 
livery service due to proximit;' to the market would allow the domestic salt 
cake producers some leeway in their price quotations. 

Shipments of salt cake from Monahans, Texas, to Camden, Ark., bear a 
rate of 26 cents per 100 pounds in carload lots, minimum weight 30,000 
pounds. This is equivalent to $5.56 per short ton, including the additional 
emergency 7 per cent line naul charge. The primary producer at Monahans, 
therefore, could, not quote a price f.o.b. mill much above $10.40 to $10.65 
per short tor: and obtain business against German competition at this con- 
suming point under the present price Quotations. From Monahans, Texas to 
Tuscaloosa., Ala., salt cake shipments in carload lots boar a rate of $8.50 
per snort ton, including the emergency charge. Therefore, to meet the com- 
petition of German salt cake shipped- inland by rail, the f.o.b. price Mona- 
hans must not greatly exceed $7.85 to $8.13 per short ton in the Tuscaloosa 
market. 

The production co r ts of the domestic primary producers attempting to 
compete with German salt cake at the points of consumption mentioned above, 
according to data supplied by the complainants, are either about equal to 
or in some instances higher than the f.o.b. prices which they must quote to 
be able to compete with German salt cake and obtain orders from the sul- 
phate pulp mills and other users of salt cake in the market areas considered 
herein. 

Freight rates from hina, Nevade and Clarkdale, Arizona, under the pre- 
sent price conditions, appear to make it extremely difficult for these pro- 
ducing points to enter the Gulf market area in competition with their more 

9829 



-67f- 




9G5i 



-677- 

favorably located domestic competitors and the German product. The bur- 
den of freight rates, as reference to the mco would show, is somewhat 
less in the case of Clarkdale but burdensome, nevertheless under the pre- 
vailing market conditions. On the other hand, Hina is more favorably 
located to serve the Pacific Northwest demand for salt cake. With Ger- 
man sff.lt cake quoted at $12.75 per short ton, c.i.f. at the Pacific North- 
west points, Hina can compete as long as production costs and auoted mill 
prices do not greatly exceed $8.15 per short ton. "Test Coast chemically 
produced salt cake and imports from Chile and Canada tend to complicate 
the situation in this area. 

Developments at Trona, Calif., in the Searles Lake Region, where 
salt cake was produced in 1934 as a by-product of the potash and borax 
industry, offer possibilities for the rise of a strong competitor both 
of the German and present domestic suppliers of the salt cake markets on 
the Pacific Coast, also. Furthermore, water rates out of San Francisco 
northward to Portland, Oregon, and Seattle, Washington, are relatively low. 

At the present moment the company '."'hose plant is under construction 
near Salt Lake City is precluded from entering the market competitively 
either against domestic or German salt cake, due to extremely high freight 
rates. Such rates as a^e quoted at present are class rates. Hence this 
potential producer must obtain a reasonable commodity rate on salt cake in 
order to enter the existing markets. 

In general, it would appear that the domestic primary producers are 
suffering from uneconomic -locations in relation to markets, a disadvantage 
which is accentuated as long as the price of salt cake is relatively low 
and freight rates make up such a large proportion of the delivered price 
to the consumer. Furthermore, these small primary producers are obliged 
to comt^te with salt cake produced by large domestic and German chemical 
producers and the Germans' are favored by ocean transportation rates which 
are very low in comparison with our railroad rates. 

In view of the fact that foreign produced salt cake' enters the country 
largely through the Gulf and Pacific Northwest .ports) Table 11 is submitted 
to compare these entries in recent years with the production of primary 
producers of salt cake in the United States who, by reason of their loc- 
ation, must also serve the Gulf and Pacific Northwest market areas in com- 
petition with the German' product. 

The data in Table 11 reveal that' a' larger and larger percentage of 
the imports for consumption are entering the Gulf and Pacific Northwest 
ports in the regions which are the market areas most economically available 
to the domestic primary producers. In 1931, 55 ;er cent of the imports for 
consumption entered through the customs in these two areas, whereas through 
the same areas in 1934 there entered 91 per cent of the total imports for 
consumption. 

In 1933 the ratio of imports into Gulf and Pacific Northwest ports was 
119 per cent of the production of the domestic primary producers; whereas, 
in 1934 the ratio rose to 244 per cent. This was due to a decline of slight- 
ly less than 50 per cent in the production of salt cake by the primary pro- 
ducers, while imports for consiimption declined only about 10 per cent. The 

9829 



-678- 



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■H 


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to 




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h- 


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CM 


to 


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■ 


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rH 


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to 

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•^ 






















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r- 


o 


4* 


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d 



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9229 



-G79- 

ratio of total imports for consnwntion to domestic primary production in 
1933 was 155 per cent am in 1934, 259 per cent. 

The ratio of total imports for consum >tion to total domestic pro- 
duction, which includes both chemical and natural salt cake, as reference 
to Table 10 will show, was 61.6 oer cent in 1933, which is about 10 per 
cent higher than it was in 1.959 and about 5 per cent higher than it was 
in 1931. The total chemical salt cake production for sale in 1934 is not 
known, but unless the output from this source increased hy about 16 per 
cent in 1934 over 1933, the ratio of imports for consumption to total 
domestic production for sale v;ould be greater in 1934 than they were in 
1933. 

Effect of the National Industrial 
■Recover;-- Act 

Code -provisions 

The Code of Fair Competition for the Chemical Manufacturing Industry, 
on and after its effective date, Tebruary 30, 1934, restricts the hours of 
work of persons (with certain exceptions) employed within the chemical in- 
dustr; 1 " to no more than an average cf 40 hours per week during any period 
of four months end to not more than 48 hours during any week. 

Minimum wage provisions are summarised as follows: On and after the 
effective date of the Code, the minimum wages paid by any employer in the 
chemical industry to any employee sha.ll not be less than 35 cents per hour 
when enroloyed in the Southern district, that is, territory south of Mary- 
land, "est Virginia, Kentucky and Missouri, and including the states of 
Oklahoma and Texas; no less than 40 cents "oer hour elsevhere in the United 
States, provided, howevsr, that if the hourly rate for the same class of 
work or. July 15, 1929 was less than 35 cents per hour in the Southern 
distrfct or les& than 40 cents per nour else v 'nere in the United States, 
in which case the minimum wages paid hereunder shall not be less than the 
hourly rate paid on June 15, 1929, and in no event less than 25 cents 
per hour in the Southern district and 30 cents per hour elsewhere in the 
United Sta.tes, except 'lerever a state provides a higher minimum wage, in 
which case the wa~e per hour shall not be less than the minimum provided 
by the state law. Certain exceptions are made to these provisions in the 
case of apprentices and the aged or infirm kept or the payroll as watch- 
men, etc. 

Costs, wa^e rates and employment 

"ith respect to the complainant primary oroducers it is difficult 
to formulate any general conclusions with respect to the effect of the 
National Industrial Recovery Act on costs, wage rates and employment. 

One complainant is a. corroa.ny whose plant has been under construction 
and has as yet not seen fit to go into oroduction, allsgedly because of 
price conditions due to imports. Another leased its properties in 1930 
to a company which is not a party to this complaint, consequently, data 
are lacking in this instance. A third company oroduced in 1933 and pro- 
vided data with "erpect to costs, payroll and emplo3' - raei..t for that year, 
cut it has not been operating in 1934 since the code became effective. 

9829 



-680- 

The remaining two complainants have operated in pre-code and post-code 
periods, but their production technique differs considerably, one ob- 
taining salt cake from brine by means of a chilling process, and the 
other treating common salt (sodium chloride) chemically and obtaining 

salt cake. In the one case laoor costr ' ere slightly under 41 per 
cent of total costs of production (not including interest on invest- 
ment) in the last half of 1933, and 33 pi r cenb ^or s representative 
period under the code. In this instance the .downward trend in percent- 
age of labor costs to total costs per "unit may have been due to the 
fact that this company had just begun operations about the middle of 
1933 and "as able to cut laoor costs per unit as -oroduction got under 
way. Also, in this care total costs per ton were less after the code. 
In the other instance labor costs before the code constituted about 11 
per cent of total production costs, er. elusive of interest on investment, 
and slightly over 15 per cent after the code. Total cofts per unit 
were 5 per cent higher in the post-code than in the "or?-code period. 

However, the costs submitted by this company hich produces salt 
cake chemically are subject to question for several reasons. In the 
first place this company buys its raw material, salt, from its parent 
and the price paid for it 'may or may not be at the prevailing market 
price. Secondly, it produces hydrochloric acid in conjunction with salt 
cake, and though salt cake is its primary product, it is not known from 
the available information precisely now costs are allocated between the 
two products. 

7ith respect to employment, an increase in the numbers employed "as 
experienced by the two companies operating when the cod.e vent into effect. 
This increase amounted to 35 per cent, approximately, However, it is 
not known to what extent code requirements have precluded operation and 
employment in the plants which have been and still are closed. 

In the instances '"'here data "ere sufficiently complete to permit 
analysis, it appears that hours of work per week per worker have been 
reduced to conform to the code requirements and the average weekly wage 
has risen slightly since the code became effective. 

In the case of the one operating company giving nearly complete data, 
the average hourly wage rate, though low in absolute amount, is relatively 
much higher than it was in 1933, and slightly higher than it was in Oct- 
ober, 1929. In terms of the code, the wage rate in this case would con- 
form to the code requirements under the exception "That if the hourly 
wage rate for the same class of work, on July 15, 1929, was less than 35 
cents per hour in the Southern district * * * and in that case the min- 
imum wages paid, hereunder shall not be less than the hourly rate paid on 
July 15, 1929 and in no event less than 25 cents per hour in the Southern 
district * * *. " 



9829 



-681- 



Statis tical Arroendix 



LIST 01' SA 



Spit cake (date for chart). ■ 

ire~u of Lacor Statistics wholes le. price of crude salt cake and tread 
Of unit values of salt _c-i:e fron various sources, 1925-1934. 

Salt c; ke -orices (wholesale) per ton, spot, Her? York. 
(U.S. Tariff Commission) 

iTiter cake brices -,er ton, bulk, at rorks,' siot He" York. 
- (U.S. Tariff Commission) 

Glauber salt orices (wholesale) >er 100 pounds, spot, Hew York. 
(U.S. Tariff Commission) ' ". 

G-lauier salt prices (inoortedj i, "orgs, 100 pounds, spot, JTew York. 
(U.S. Tariff Com ission) 

Domestic production of hydrochloric acid and chemical salt -cake, by- 
census ye ;rs, 1923-1933. 

Consumption of salt crke" injjthjs lass industry, by States, 1927 and 1929, 

Sulphate pulp mills and their daily capacity. 



Salt cake (sodium sulphate, crude): Production 
indices, classified on'the'basis of objective, 
. chemical or primary producers* 



nd' value data with . 
as': either non-primary - 



Number of reichsmarks -oar .dollar: rTew York exchange. 

Comoarative dost of German and domestic salt cake on Pacific Coast in 
1929. 

Sodium sulohate, all forms: United State imports for consumption, 
1922-1933. 

Salt cake (sodium sulphate, crude): Trend of imports for consumption, 
1929-1934. 



9829 



-ess* 



Salt cake (data for chart) 





: la -lorte, : 


.'or 


Heichsnarks 


s per short 


Value of 


Statis- 


! consumt 


Lon 


ton - doll? 
» converted ; 


\r vr.lue 
it - 


reichsmark 


tical 


'All countries 


'Germany 


in cents 


period 


Parity of 


Crbin.'i rate 


(Par s 








exchange 


of exchange 


23.82-<# 




! Shor 


t tons 








1933 












January 


6,955 


2,257 


46.01 


46.10 


23.77 


February 


5,429 


859 


41.56 


41.54 


23.83 


March ' 


8,173 


2,438 • 


37.66 


37.31 . ! 


23.85 


April 


8,063 


2,225 , 


44.71 


43.66 


24.39 


May i 


10,543 


3,021 ■ 


40.51 


35.27 


27.36 


June : 


8,464 


1,674 : 


,38.08 • 


31.48 : 


28.81 


July 


6,819 


2,299 : 


44.92 


o2.1o 


33.26 


AUgUSt ! 


11,032 


6,134 : 


36.27 


26.41 


32.71 


September: 


8,214 


5,202 ! 


36.86 


' 24.78 


35.43 


October 


12,516 


3,669 : 


38.53 


25.93 


35.43 


November 


7,166 


4 , 351 


34.30 


21.36 


38.24 


December 


5,797 


3.930 


-.40.76 


28.01 


37.32 


Total i 


99,269 


38,110 • 








1934 : 












January 


5,235 


3,585 


36. 82 ' 


23.33 


37.59 


February : 


10,512 


7,430 ' 


40.72 


24.94 


38.88 


March ; 


9,407 


3,917 ! 


55.84 


20.32 


39.66 


April : 


12,034 


9,945 . 


35.47 


21.34 


39.59 


May : 


5,555 


4,790 . 


36.52 


22.04 


39.47 


June : 


7,837 


5,284 , 


34.59 


21.51 


38.30 


July : 


6,301 


4,706 


. 37.07 


23.94 


38.49 


August , : 


5,002 


4 , 237 


57.49 


22.61 


39.48 


September: 


7 , 352 


4,295 


38.34 


23. 26 


40.28 


October : 


7,508 


6,114 


39.12 


23.04 , 


40.45 


November . 


3,276 


1,335 


33.54 ' 


. 22.83 


40.21 


December : 


8.471 


7,134 


40.09 • ' 


23.75 


40.19 


Total : 


39,701 


63,270 








1935 : 








( 




January ! 


11,482 


3 , 054 


36.35 


21.61 


40.06 


February 


5,205 


4,551 


37.99 


22.55 


40.12 


March 


11,730 


7,550 


37.15 


21.92 


40.37 



Source: U.S. Tariff Commission and Federal Reserve Board. 



9829 



» 



3ureau of Labor Statistics - olesale jrice of\cni&e -salt cal e and trend 
of unit valu-s of s It crk ?r - v i arces, 1925-1934 





> ; T c; 
• . • • 


Chenical 1/ 


Natural 


: Imorted, 


Year 


•^rice ner 


value oer 


value pe r 


: value per 




short ton 


short ton 


short ton 


: short toll 


1925 


$19.35 


LilS.61 


$3.52 


$9.50 


1926 


20.00 


- 


3.53 


10.58 


1927 


17.93 


15.93 


7.34: 


3.98 


1923 


12.91 


- 


6.43 


8.98 


1929 


15.62 


11.84 : 


5.46 


9.06 


1930 


17.35 


- 


6.32 


11.38. 


1931 


15.92 


15.48 


5.09 


11.05 


1932 


13.68 


-: : 


o« Oo 


10.54 


1953 : 


13.00 : 


12.84 


5.27 


3.92 


1934 : 


13.00 : 


— ' 


8.90 


8.91 



Sources: 3.L.S.: Census of ' "rnufactures ; U.S. Tariff Commission; 

Bureau of I lines*- ' 
1/ Available by census years only. 



9829 



-684- 
Salt cake prices (wholesale) per ton, snot, lie-n York 
(U.S. Tariff Co: miss ion) 









... 


', 


Year , 


Jr nuary 


' April 


'July : 


.October 


1912 


: ' $11 


$11 


'-$11 


$11 


1913 


: " 11 


11 


: : 11 


: 11 


1914 


11 


11 ; 


11 


: 11 


1915 


11 


• ' IV 


• 11 


: 11 


1916 


ii ; • 


12; 


_ 


: 11 


1917 


; - 


_ ■ ' 


_ 


• : 30 


1918 


30 


30' 


: 30 . 


• 35 


1919 


25 


13 


■ 12 . 


14 


1920 


17 


21 


: 40 . 


50 


1921 


! 25 


25 


: : 17 


17 


1922 


5 18 


17 


18 . . . 


;25 


1923 


25 


25 


25 


24 


1924 


: 22 


23 


i 17 


18 


1925 


18 


20 


: 18 


20 


1926 


20 


20 


20 


20 


1927 


! 20 


13 


: 18 


18 


1928 


! 17 


17 


10 


10 


1929 


: 15 


15 


15 


18 


1930 


20 


20 


! 18 


14.50 


1931 


! 14.50 


14.50 


17 


16 


1932 


15 


15 


13 


13 


1933 


! 13 


13 


13 


13 


1934 


13 


13 


13 


13 



9829 



inter cn!:e prices per ton, twlk, at works, spdt, 

jjev Yen- 1 : 

(U.S. Tariff Commission) 



Ye ex 


: January 


: April ; ' 


: July 


October 


1922 








$6.50 


1923 


: $0 


$6 


$6 


6 


1924 


: 6 


5.50 


: 5.50 


5.50 


1925 


5. 50 


5.50 


4.50 . 


4.50 


1926 


4.50 : 


4.50 


4.50 


4.50 


1927 


4.50 : 


4. 50 


4. 50 


4.5C 


1928 ! 


4.50 


4. 50 


4.50 : 


10. 


1929 : 


12 • 


14 


14 


14.50 


1930 : 


15 - : 


14 


14 


14 


1931 : 


14 : 


14 


14 


14 


1932 


13 


13 


10 


10 


1953 : 


10 


10 


10 


12 


1934 : 


12 : 


12 


12 ! 


12 



Glauber's salt prices (tfholesale)per .100 pounds, spot, 
. . ITerr York 



(U.S. Tariff Concision) 



Jan'ucry 



April 



July 



October 



1912 : 


$0.60 


$e.6o . 


?o:^o 


$0.50 


'. 1913 : 


• .50 


.60 ■ 


: . 6u 


.60 


1914 




.60 


. 60 


.60 


1915 : 


.60 : 


.50 


.60 


.60 


1915 ; 


.60 : 


• 70. 


.65 


: .60 


1917 : 


.60 : 


.60 


' .65 


- 


1913 


.90 


1.50 


1.50 


2.00 


1919 ; 


1.75 


1.50 


1.00 


1.25 


1920 


1.15 


1.60 


: 2.30 


2.10 


1921 : 


1.75 


: 1.75 


1.50 


1.75 


1922 : 


1.00 


.95 


.35 


1.25 


1923 ! 


1.25 


1.25 


1.30 


1.35 


1924 


1.35 


1.35 


1.20 


1.25 


1925 ! 


: 1.25 


! 1. 25 


1.25 


1.20 


1926 


1.20 


1.10 


1.10 


1.00 


1927 


! 1.10 


1.10 


1.10 


1.10 


1921 


: 1.10 


: 1.00 


1.00 • 


1.00 


1929 


: 1.00 


: 1.00 


1.00 


1.00 


1930 


: l.CO 


: 1.00 


: 1.00 


: 1.00 


1931 


l.GO 


: 1.00 


: 1.00 


1.00 


1932 


: 1.00 


: 1.00 


: 1 . 00 


1.00 


1933 


: 1.00 


: 1.00 


1.00 


1.00 


1934 


: l.OC 


: 1.00 


: 1.00 


1.00 



:29 



-686- 

Glauber's salt prices (imported), "begs, 100 pounds, soot, 

re':; York 





( 


U.S. Tariff ( 


3o= .mission) 




J ear 


January 


April 


July 


. October 


1925 


M 


_ 




$0.05 


1926 


$0.75 


$0.85 


: $0.30 


.70 


1927 


.90 


.80 


.70 


.70' 


192^ 


.70 


.70 


.70 


.70 


1929 : 


.70 


.70 


: .70 


.70 


1930 


.70 


.70 


.70 


.70 


1931 


.70 


.70 


.70 


.70 


1932 *: 


.70 


.70 


.75 


.75 


1933 : 


.75 


.75 


.75 


.75 


1934- : 


1.05 


1.05 


1.05 


1.05 



Donestic Traduction of hydrochloric, acid and chemical 
salt' cake, by census years, 1923-1933 



Year : 


Aci 


d -oroduction ■ 




Value 


S 


alt cake - 


Dro- 


Value 1/ 




100 


-pp.v r.ent 


"hnsis 




duced. rath 


acid 






Short tons 








Short tons 




1923 : 




69,092 






$3,102,172 




187,064 




$3,943,309 


1925 : 




71,619 






2,976,155 




189,293 




3,144,157 


1927 : 




70,848 






: 3,016,014 




203,565 




3,322,440 


1929 : 




81, 309 






3,195,415 




•206,612 




2,446,286 


1931 : 


2/ 


• 40,68V •' 


'. 




2,422,439 




119,399 • 




1,848,297 


1933 : 


2/ 


44, 89 : 5 






2,386,790 




143,148 




:• 1,838,020 


Source : Cen 


JUS 


of lirnufactur 


3S, 




i. 








1_/ Based on 


value oer' ton of 


SE 


lit cake sole 




2/ Includes 


onl 


y tonnage 


for 


SJ 


\le, therefor 


•e 


not strictly comparable to 



other figures. 



-687- 



Co n simp t ion of salt cake in the glass ind\istry, "by States, 

1927 and 1929 



(Short tons) 



State 


1927 


! 1929 


California 


95 


i 314 


Illinois 


: 4,133 


3,739 


Indiana 


: 3,635 


3,464 


New York 


! 494 


473 


Ohio 


3,719 


2,729 


. Oklahoma 


1,166 


814 


Pennsylv; nia 


14,575 


14,717 


Test Virginia : : 


9,809 


7,684 


Other Stc tes 


9,658 


8,673 


Total 


47.284 


42,607 



Source: Basic data, Census of Ilanufactiires, 1929 , p. 871. 



9829 



-688- 



Lo cation 

Southern — 

Al 0.1) ana 

Motile 

Tuscaloosa 
Arkansas 

Camden 
Florida. 

Panama City 
Louisiana 

Bastrop 

Bogalusa 

Calcasieu 

Hodge 

West Ll6n.ro e 
Mississippi 

Moss Point 



Sulphate Pulp Hills and Their Daily Capacity 

Company 



Southern Kraft Corp. 
Gulf States Paper Corp. 

Southern Kraft Corp. 

Southern Kraft Corn. 



Daily capacity 
in pounds 

• 5,180,000 

500,000 
375,000 

425,000 

850,000 



Southern Kraft Corp. 700,000 

Bogalusa Paper Co. Inc. 500,000 

Calcasieu Sulphate Paper Co. 110,000 

So. Advance Dag and Paper Co. Inc. 400, 000 

Brovm Paoer Mill Co. 1,000,000 



Southern Kraft Coro, 



320,000 



Middle Atlantic 1,370,000 



North. Carolina 

Canton 

Roanoke Hapids 
Virginia , 

Covington 

Hopewell 

West Point 



Champion Fibre Co. 
Halifax Paper Co. Inc. 



200,000 
70,000 



¥. Virginia Pulp and Paper Co. 400,000 
Hunmell-Boss Fibre Corp. 200,000 

Chesapeake Corporrtion 500,000 



Hep England — 
Maine 

Van Bur en 



International Paper Co. 



110,000 

110,000 



Horth Central and Lake Region 1,700,000 

Wisconsin 

Thilmany Pulp and Paper Co. 180,000 
Mosinee Paper Mills Co. 200,000 
Nekoosa-Edwards Paper Co. Inc. 300,000 



Kankanna 

Mosinee 
Nekoosa 
Oconto Falls 
Stevens Point 



Continental Payer and Bag Corp. 150,000 
Stevens Point P\i1p and Paper Co. 70,000 



9829 



-689- 
Sul hate Pulp Hills and Their Daily Capacity (Continued) 



Location 

Minnesota. 

Cloquet 

International Falls 
Michigan 

Filer City 

i iuskegori 

Ontonagon 



Co.: ian" 



Daily Capacit 1 " 
in pounds 



Northnest Paper Co. 150,000 

Kinnesota and Ontario Paper Co. 180,000 



Pilar Fibre Co. 
Central Paper Co. 
Ontonagon Fibre Corp. 



120,000 
200,000 
150,000 



Pacific "orthwest 
~.'c s:'i:r:to:; 

Camas 

Longvien 

Port Towns end 
Oregon 

St. Helens 



Crown-Uillamette 
Longview Fibre Co.. 
rational Paper Products Co. 

St. Helens Pulp & Paper Co. 



-1,170,000 

200,000 
240,000 
500,000 

230, 000 



All States -Total 9,530,000 



Source: lioclrwood Directory, 1934. 



Salt cake (sodium sulphate, crude): Production and value data 
•:ith indices, classified on the basis of objective as 



either non-'-orimary chemical or -orlmatv producers- 





Non— primary chemical : 
production l/ : 


Primary 
: production 2/ 




Year 


Short 
tons for 
:sale 


Index of 
produc- 
tion 


: Index: 

Value : of : 

: value : 


: Short: Index of 
: tons:produc- 
: : tion 


Talue 


Index 

of 
value 




154,640 

81,387 
96,898 

; 2/ 


100. 
52. 6 
, 62.7 

| 2/ 


000s : : 

$1,831:100. : 

! 1,062: 58. : 

1,119: 61.1: 

: 2/ : 2/ : 


• 

:23,075 100. 
:49,850 216. 
: 64, 251 278.4 • 
:33,390 144.7 


000s 




1929 
1931 
1933 
1934 


$226 

466 

478 

2/ 


: 100. 
206.2 
211.5 

2/ 



Source: Jasic data from Census of Manufactures and Bureau of Mines: Adjusted to 

show actual primary and non-primary chemical production. 
1/ Chemical companies producing a variety of chemical products, including salt 
cake. 

2/ Primary production indicates production where primary objective is salt cake. 
Includes all producers from natural sources and one chemical producer. 



9829 



;9c~ 



IMmber of reichsmarks per dollar: Ner; York Exchan, 



1/ 



Month 



ge 




January 

February 

March 

April 

May 

June 

July 

August 

September 

October 

November 

December 



Source: London and Cambride 



conoraic Service ' (Supplement 



to Monthly Bulletin), Vol. XIII, iTo. 4, May 7, 1935, 
p» lob, ' 

1/ First of month quotations. 



9829 



-691- 

C omparative Cost of &em an __and Domestic Gait Ca ke on Pacific C o ast in 1939 

(Source: .American Sodium Co., Rko.do's Salt & Borax Co., Sodium Products 

Corp., and Westates Co. Brief. Tariff Hearings "before Committee 
on Finance. U.S. Senate, 1939. Free List, p. 577) 





.American 


.American 


German 


byproduct 


Natural 


$2.28 




$7.50 


1/4.18 


$3.50 


- 


.18 


.05 


- 


.16 


.50 


- 


1.90 


2.25 


2.25 


2/ 4.50 


10.00 


'6.75 


13.20 


15.30 


16.50 


15.95 


15.95 


15.95 



Railroad freight 

Ocean freight 

Fees and insurance 

Commission and incidentals 

Sacking 

Production costs 

Total 
German sales price 

Profit 2.75 0.65 3/ 0.55 

1/ Includes $1.20 Panama Canal tolls. 2/ Estimated. 3/ Loss 

Comparative Cost o f German; and D omestic S alt Cake on Gulf Coast, in 1929 

(Source: .American Sodium Go., Rhodes Salt & Borax Co., Sodium Priducts 

Corp., and Westat;es Co. Brief. Tariff Hearings "before 'Committee 
on Finance. U.S. Senate, 1929-. Free List, p. 577.) 



.American American 
German "byproduct N atura l 

Railroad freight $2.38 l/ $7.00 $12.00 

Ocean freight 2.70 

Fees and insurance .18 - - 

Commission and/or incidentals .16 - 

Production costs z] 4.5n 10.00 6.75 

Total 9.92 17.00 18.75 
German price per ton, 

Gulf ports 13.50 13.50 13.50 

Profit 3.58 ~z] 3.50 3/ 5.25 

1/ Average rail rate (Illinois, Missouri, er Ohio) 
2/ Sstimat ,d 
3/ Loss 



9829 



-692- 



Sodium sulphate, .all forms; 
ccnsiurotio:. 



United States imports for 
19 22-12 7Z 



• 


Salt cake 


Value 


Anhydrous 
(i-ofinsd) 

spdiura .jn"!ol:at( 


Value 

3 * 


\ Glauber 
\ salt 


: Value 




She, b tons 




, ^ ; l^i 1 ;_-.i. , L t ;. 




: g'yrfa tons 




1922 


714 ' 


$S : r37 


u 


u 


• 6.S18 


: $74, 155 


1923 
1924 
1925 


5.223 
3 4 27 
1 913 


■ 84,051 

: 40 o23 

18,175 


84 

132 
.1 36 


: $5A8 

■ 4,443 

3,700 


• 9.C1.5 
: 6.423 
: 6,682 


: 100, 145 
: 68,315 
: 77,150 


1926 


6,269 


66,221 


1,413 


. 35 ,946 


: 3.530 


: 38,303 


1927 


11.272 . 


100,2^9 


2-877 


I 5:.- : 6j5 


; 3, ] 45 


: 31,210 


1928 


28,228 


253 : 553 


3.. 573 


; 7'r s 742 


: 1.550 


: 17,651 


19 29 


91,633 


029.. 793 


5 ; 553 


116.935 


: 1,161 


: 9,517 


1930 


70,337 


800,432 


9,934 


200,143 


: 1,156 


: 9,241 


1931 


72, 746 


803,509 : 


10,315 


193,041 


: 924 


: 9,615 


1932 : 


61,124 : 


644,074 : 


8 , 855 


153,612 


: 304 


: . 2,848 


1933. ■ 


: • 99,269 

* ■ " i 


885,306 . 


10,371- ■' • 

* • 


179,529 


: -.629 "'■ 


: 8,677 



Source: Tyler' P-.M.y 'Monograph,' Sodium Sulphate', 

Information Circular II. 6333, p. 37. 
1_/ Not separately reported. 



U.S. Bureau of Mines 



9829 



-693- 



Tablo. - Salt cake (sodium sulphate, crude): 
for consumption, 1929-1934 



Trend of imports 



Statistical : 
period : 


Quantity ) 


Value \ 


Value per : 
long ton 


: Index 
:of imports 




Long tons : 








1929 i 


31,816 ! 


$829,793 : 


$10.14 : 


: 100.0 


1930 : 


62,799 : 


800,432 : 


12.74 : 


: 76.8 


1931 : 


64,953 : 


803,509 : 


12.37 : 


: 79.3 


1932 ! 


54,575 


644,074 ! 


11.80 : 


: 66.7 


1933 : 


88,633 : 


835,306 ! 


9.99 : 


: 106.3 


1934 : 


80 , 090 : 


799,141 : 


9.98 : 


: 97.9 


By quarters 










1932 










First 


: 14, 163 


171,995 


12.14 : 


: - 


Second 


13,614 


: 150,347 


: 11.78 : 


: 


Third 


9,634 


: 111,721 


• 11.60 : 


: 


Fourth 


: 17,146 


: 200,011 


: 11.67 : 


: 


1933 










First 


: 13,354 


• 195,414 


: 10.65 : 


: 


Second 


: 24 , 169 


: 233, 284 


: 9.65 : 


: 


Third 


: 23,272 


: 228,978 


: 9.84 : 


: - 


Fourth 


: 22,838 


: 227,630 


: 9.97 : 


: - 


1934 










First 


: 22, 549 


: 232, 650 


: 10.32 : 


: 


Second 


: 23,693 


: 226,413 


: 9.56 : 


: 


Third 


: 16,656 


: 162,151 


: 9.74 : 


: 


Fourth 


: 17,192 


: 177,927 


: 10.35 : 


• ■"* 



9829 



-694- 



JUTE flEEBING (Ho. 37) 



9829 



-69 - 



Pane No . 



Complainants' st; tus under the Hat i one 1 Industrial 

Recovery Act 697 

Description of commodity = 697 

Tariff treatment ? 697 

The raw material 

The domestic industry 

The industry as a whole 

The largest producer 

Production in the United States 699 

Exports 7 ° 2 

Imports 

The foreign industry ""-— 

Imports ih-r elation to domestic production . 

Price con; orisons : 

Imported end domestic webbing 

The relationship between webbing and rev jute prices 708 

The crice cf jute yarn as a competitive factor 710 

Yarn as a domestic manufacture ' J - 

Domestic tariff treatment of yarn '■'- 

71 9 

Foreign tariff treatment ■ 

71 ? 

Foreign and domestic yarn prices ^ 

Prices stability of domestic yarn 

Manufacturer 's margi'. 

The effect cf dollcr depreciation ; _ 

The effect cf the natio: al recovery -irogram 

71 8 

Labor ^revisions of the code 

71 R 

Ho^rs ci'.d wages ~ — 

7?0 

Production and sales cost 



698 
698 
698 
699 



sua 
706 
707 
708 
708 



9829 



.-696- 



LIS- CI- 1 TABLES 



Fa, ;e "- T o . 
Ta ble I'o. 

1 Jute wetting: Dor.iestic --.reduction for census years 

since 1919 700 

2 Jute webbing: Trend of quantity, vrlue, and unit 
vrlues of domestic production, in census pears since 

1929 70^ 

3. Jute webbing: Dor.iestic porductior. e.s rcnor ;od by 

comlainancs, 19.39 to October, 1934 701 

4 Jute webbing: Imports for consumption, 19.23~133E 703 

5. Jute webbing: Irrroorts for consuivriticn by principal 

cour tries , 19 7:9-1934 705 

6 Jute webbing: Ratio of imports for consumption to 

domestic production ' ' 

7 Jute webbing: Indices of domestic production, weighted 

domestic mill prices, unit vrlue of imports, and the 
"iricc of medium grades of rv into at Few Yorl:, 

1929-1934 — 709 

Single Jute yarn: Imports and equivrlent ?d valorem 

duty, 1925-1934 — 711 

9 Plain, 2-ply jute cordage, twine, arc twist: Im;oorts 

and equivalent ad valorem duty, 1935-1934 711 

10 Jute yarn: Comparison of domestic prices with Dundee 

prices and Dundee trices plus ad valorem eouivo.lent 

duty of 65 -ier cent, 1 79-1934 712 

11 Raw jute and jute yarn: Indices of wholesale rices 

of medium grades of raw jute at Few Yon;, donestic 

mill arices of Ho. ", 14-pound co 16-pound carpet 

yarn, and mill nrices of 14-aound (warp) carnet yarn 

ac Dundee, Scotland 714 

IP Raw jute and jute yarn: Prices of rr\- jute and carpet 
yarn, and the manufr ccurer' s r.iar ; .in, 19 39 to 
March, 1935 — - - 715 

15 Exchange and webbing imports: Indices of belga-ar.d 
rupee- do 11, or excha:. _,e and of the unit values of 
imoorts, along with ch quantity of imports, 1332 
to March, 1935 " 717 

14 Jute webbing: Trend of avera e weekly and hourly wa„ cs 

in the industry since 19p9 713 

15 Jute webbing: Indices of enrol oyment, nayroll, and 

wages, 1933 and 1334 '— 719 

K Jute webbing; Producing n d sellin costs for four 
comio.niec in 1933 and 1934, and- percentage 
distribution of cos'; items 7 ^0 



9C29 



-697- 

SC :"" v r I;"F0H1A.TI0U 

01: 

AP2IL, 1935 

Complainants' Status under the National Industrial 

Recovery Act 

This is r report on a connlaint to the President with respect to 
imported jute webbing, filed Octobea ?.3, 1934, by the Code Authority 
of aril-Soft Fibre Manufacturing Industry, pursuant to Section 3(c) of 
Title I of the retinal Industrial Recovery Act. 

Fie six comolai ant connanies in this case, representing virtually 
100 per cent of the donestic industry, operated under the Cede of Fair 
Competition for the Soft Fibre Manufacturig Industry, approved April 9, 
1934; prior to that date only two operated at any tine under the President's 
Reemployment Agreement. One producer manufacturing small amounts of jute 
webbing to fill special orders did not join in the complaint. 

The Code for the Soft Fibre Manufacturing Industry provided that 
the cod authority she Id investigate ,he efiect and inform the President 
of innortation of competitive m-oducts into the United States. 



Description of Commodity 



Jute webbing is principally used in the upholstery of furniture, 
cashets, and automobiles. It is estimated that about 0.5 per cent of 
all jute manufactures consumed in the United States is jute webbing. 

Imports are plain-woven fabrics with fast edges ranging in width 
from ? inches to 5 inches; domestic webbings are plan-woven and twilled 
fabrics with fast edges, ranging in width from 1-jj to 5 inches. Both 
imported and domestic webbings arc put up in rolls from 70 to 72 linear 
yards, the former weighing from 5g to 13 pounds per roll and the latter, 
from 4 to 14 pounds. The grades of webbing most commonly imported are 
3g inches and 4 inches wide and from 7 to 10'- pounds in weight per roll, 
beinn constructed of 5-pound to 37.0-pound single yarn and 6-pound to 13- 
pound 3-ply yarn, often woven double in the warp and sometimes in the 
filling. Domestic webbin; s produced in largest quantities are usually 
3-| inches vide and from 7 to 9t? rounds in weight per roll, beinn con- 
structed of 7-pound to 20-pouiod single yarn and from 7-pound to 18-pound 
2-ply yarn which is woven single or double in the warp and filling. 



Tariff Treatment 



9829 



-698- 

Jute webbing is dutiable at 55 per cent ad valorem under paragraph 
1015 of the Tariff Act of 1930 as a fabiic with fast edges, not exceeding 
1"! inches; in width, in chief value composed of vegetable fibers other than 
cotton, and for use other than the raanuf - cture of measuring tapes. It 
was dutiable at the same rate under the Tariff Acts cf 193.? and 1913. 



The Raw Material 



Jute webbing is constuctcd from yarn manufactured in the United 
States of raw jute imported from India. The jute fiber of commerce is 
produced chiefly in the Province of Bengal, where about 3 million acres 
are devoted to .it? production, and shipped through the port of Calcutta. 
fibre jute is now retained for manufacture into burlaps, hessians, gunny 
bags, and ether products in Calcutta and its environs than is shipped in 
the ra\i state to all other countries together. Jute is the most easily 
spun, cheapest, .weakest, and least, durable of the important textile 
fibers, and is used in larger quantities than all other fibers combined 
except cotton. 

Raw jute is imported duty-free under Paragraph 1684 of the Tariff 
Act of 1930. 



The Domestic Industry 



At the congressional tariff hearings in 1929 it was said that there 
was a total capital investment of 3oOC,-454'.in the jute webbing industry, 
and that 777 wave earners were emoloyed in the production of jute webbing 
in 19 38. According to data submitted in the complaint, en average of 185 
wage earners were emoloyed in the industrv in 1929, 105 in 1933, and 83 
in 1934. 



The industry as a whole 

Jute webbing is regularly produced in- Ohio, Pennsylvania, New York, 
Massachusetts, and Georgia. There are five principal producers of jute 
webbing who have accounted for at leapt 95 per cent of total domestic 
production since 1939. There is a sixth producer whose output is much 
smaller than any of the others. The two largest, producers account for 
about 63 per cent of domestic output, the remaining three each accounting 
for 11 to 14 per cent of the total. 

The productive capacity of the jute webbing industry to some con- 
siderable extent has exceeded che domestic demand of the past few years. 
Two narrow fabric producers, sti">l possess.: 1 .;: machinery for production 
of jute webbing, have ceased manufacturing this product; another estab- 
lishment has limited its production to special types made to order, and a 
fourth establishment claims to have the necessary :iachinery for the pro- 
duction 3f jute webbin but has never manufactured the product* 



9 "39 



-699- 



The lar/.est producer 



that jute webbi is constructed entirely from 
doraestic juti ••r: , 6 '. i Lr tvo of the webbing manufacturers - the 
largest and one of the smaller producers - spin their own yarns, it is of 
interest to examine the oosiiicn if thelargest producer in the industry. 

In 1919 this company extended its operations to India where it 
established near Calcutta a selecting and baling ;?lant for handling raw 
jute and a mill cr.ch for manufacturing cotton bagging, hessians, and 
sacks rnt". bags from hessians. The selecting and baling plant is said to 
be the newest and most improved one in Bengal. With the extension of 
this co.pnvr .into India, all the major branches of jute manufacturing 
fro i i vy bagging .to webbing and the finest yarns arc integrated under 
a si firm. Besides', this company is the only manufacturer of jute 
outside India operating- its own plant; go as to control the grading and 
handling o:. the raw. fiber. 

I T oue f he other webbing manufacturers approaches in any degree the 
integration :f this firm; nor has any other r branch manufacturing estab- 
lishment ir India. 



Production in the United States 



In 1931 the value of jute webbing amounted to 30 per cent of the 
total value of all commodities >roduced in the plants of the members of 
the jute webb int. industry, this ratio, declining to ,29 per cent in 1932 
and 10 per cent in 1933. Jut" webbing produced in the United States 
amounts to about 2.5 per cent of the total value of domestic jute manufac- 
tures. In 1935, jute webbing accounted for 2.4 per cent of the total 
value of all jute .venuf re cures as compared with 2.9 per cent in 1931, 
3.7 per cent in 1929, and 4.6 per cent in 1927, according to the Census 
of Manufactures. 

The following table shows domestic production of jute webbing in 
quantity and value -since'' 1919. The data on production, converted from. 
linear yards to pounds, arc shown so- ara.tely. 



9229 



-700- 



Table 1. - Jute nebbing! 



D one s t i c pro due i 
since 1919 



x or census y e r rs 





Qjiaht i ty : 


: Value 2/ : 


: Unit value -ner - 


Year 


Linear : -. - , / : 

Pounas 1/ 
yards : : 


: Linear 

: yar d 


Pound 


1919 
1921 
1923 
1925 

1927 
1929 
1931 
1933 


25,417,400 : ?, 824, 15. : 
17,464,062 : 1,940, 451 : 
47,085,030 :5, 231, 670 : 
38 , 496 , 307 : 4„;?G7 , 590 : 
45,853,260 :5, 095,918 : 
43,736,731 :4, 859, 687 : 
22,723,590 :3, 524,043 : 
17,870,956 :1, 935, 551 : 


:?1,055,170 : 
: 483,745 : 
: 1,375,910 : 
: 1,185,214 : 
: 1,554,009 : 
: 1,122,021 : 
: 467,825 : : 
: 367,626 : 


: $0,041 
: .028 
: .029 
: .029 
: .029 
: . 026 
: .081' 
: . 021 


$0,373 

. 349 

.263 

. 253 

: . :66 

: .281 

: .185 

: .185 



Source: Census of Manufactures. 

1_/ Domestic production, ...r.eported in linear yards, converted to pounds on 

oasis of 9 linear yards to the pound, or an averr:,e of 8 younds per roll 

of 70 to 78 linear 3 r ards. (The average weight of jute webbing is 

believed co range from 7-i- to 8-^- pounds, or possibly 9 pounds.) 

2/ At f.o.b. factory orices. 

Table 2 shows the trend of production in linear yards, sales value, 
and the unit value of jute webbin_ sir.ee 1929. From the indices of Tabl.e 
2 it may be seen that total produccirn in o_uuantity declined about 59.1 
per cent fron 1929 to 1935, while the value of output decreased 67.2 oer 
cent and unit values declined 19.2 per cent. 

Table 8. -Juts -web ing: Trend ox quantity, value, and unit values 
of donestic -oroduction, in census yerrs since 1929 



Year 


• Quantity 


Value 


Unit 
V?lue 


"Quantity * Value 

• • 


Unit 
Value 


1939 
1931 
1933 


:Linear yards 
: 43,736,731 
: 2 ; , 723, 590 
: 17,878,956 


$1,1.22,021 

! 407,825 
367,626 


$0,026 

.021 
.0,21 


1929 = 100 
: 100.0 : 100.0 
: 5.2.0 : 41.7 
:• 40.9 : 32.8 

• • 


100.0 
80.8 
80.0 


Source: 


Census of L'anufac 


;tures. 









Table 5 shows '.domestic production of jute webbing since 1929 as rcoorted 
by complainant lanufacturers. Their outwit was 46.1 per cent of 1929 in 
1933 and 40.7 of 1929 in the first en months of 1934~. Table 3 indicates 
less of a decline in domestic production than is shewn in the preceding 
table by data obtained from the Census oi Mrnufactures. Thcr* 
apparent seasonality in the producti 



lirnufactures. Thcr r is no 
of jute web' i: g in the United States 



9829 



-701- 



Table 3. - Jute webbing: Domestic production as reported by 
complainants, 1929 to October, 1934 







Indices of 


period ; 


Quantity . 


production 




Pounds : 


1929 = 100 


1929 : 


6,201.649 : 


100.0 


1931 : 


3,810,273 : 


61.4 


1932 : 


2,790,229 : 


45.0 


1933 : 


2,861,224 : 


46.1 


First nine months : 






1933 : 


2,175,741 : 


46.8 


1934 : 


1,836,243 ! 


39.5 


First ten months of 1934 : 


2,105,850 ! 


40.7 


By Quarters l/ : 






1 9 V* 






January-March 


547 , 809 


55.3 


Ap ri 1- June 


652,131 


: 42.1 


July- Sep t erabe r 


! 975. SOI 


: 62.9 


October-December 


■ 685,483 


: 44.2 


1934 






January-March • 


648,291 


: 41.8 


April-June 


; 571,464 


• 36.9 


July- S ep t emb e r 


t 616,489 


! 39.8 


By months - 1934 


• ■<■ » - » ■*■ 




January 


: 199,071 


: 38.5' 


February 


: 207,257 


: 40.1 


March 


: 241,963 


: 46.8 


April 


: 223,164 


: 43.2 


M y 


: 212,276 


: 41.1 


June 


: 136,024 


: 26.3 


July 


: 181,993 


: 35.2 


August 


: 19C, 886 


: 38.5 


September 


: 235,610 


: 45>6 


October 


: 269,606 


: 52.2 



Source: Complaint. 

1/ Quarterly production data of two small companies; prcrrtfted. for 1933, 



9829 



-702- 

The decline of domestic production since 1929 was a consequence of 
the recession in automobile ana furniture production, combined since 1931 
with increasing irrorts. Automobile production in 193.? was only about 
26 per cent and in 1934 roughly half of the 1929 output. Statistics 
reported "by the industry in furniture manufacturi g indicate that the 
recession began as earl as 1927 and continued uninterrupted until the 
second quarter of 1933, Only a very limited degree of recovery has 
taken place in this industry in the la"s't"'"frw years. In 1933 end 1934 
furniture factories, on the basis, of plant hours and man-hour employment, 
operated at roughly 30 to "35 per cent of their 19^9 level with a corresponding 
output. According; to data in the 'Census of Manufactures, employment in 
the industry in 1933 was 54.5 per' cent and wages and the value of production 
were each. 31.4 per cent of 1929. "More particularly, available census data 
indicate < that th:.. value of upholstered furniture in 1931 was roughly 56 
per cent^and in 1^35 roughly' 23 per cent of 1929. In 1933 the value of 
upholstered furniture produced in' each if the three leading sta.tes, Hew 
York, Illinois, anc California, was roughly 61 per cent, 78 -ier cent, and 
63 per cent, respectively, of 1929. 

Export?. 

Although domestic exports a.re not separately .recorded in official 
trade statistics, it is believed ■ that jute webbing exports are negligible. 



imports 

Roughly half of the imported jute webbing is entered at Hew York, 
and somewhat over a fifth through Massachusetts. In 1934, the Phila- 
delphia and Virginia customs districts v, ere the only two other areas along 
the Atlantic Coast through which webbing was imported. On the Pacific 
Coast the principal center of importation is los Angeles, followed by 
Portland. 

Table 4 chaws imports of juts webbing since 1923, the first year 
in which this product Was separately classified for statistical purposes. 



9829 



„ _ 



Table 



J wi t Lng: I- •' i' 1 ' ■ ration, 1923-1935 



Period 


Quantity 




Founds 


3y years : 




19.33 : 


77,339 


1925 ! 


86,242 


l.:37 - : 


149,061 


1929 : 


537,891 


19.30 : 


494,564 


1931 : 


761,037 


1932 ! 


1,202,649 


1933 : 


1,912,186 


1934 ! 


1,075,717 


By q\iarters 




1932 




First 


257,971 


Second 


287,376 


Third 


: 216,173 


Fourth 


431,129 


1933 




First 


! 332,602 


Second 


: 535,964 


Third 


: 514,371 


Fourth 


: 479,249 


1934 




First 


: 336,92 


Second 


> 144,209 


Third 


: 196,925 


Fourth 


: 397,661 


1935 




First 


: 338,320 



Value 



$18, -203 
15,593 
24,597 
98,521 
76,846 

101,071 
98,936 

160,879 

100,336 



22,778 

23,650 
18,117 
34,391 

31,276 
38 ,931 
45,209 
45,463 

33, 682 
13,578 
19,296 
33,780 

30,943 



Unit 
value 



$0.2353 
.1924 
.1650 
.1831 
.1554 
.1328 
.0823 
.0841 
.0933 



.0850 
.0823 
.0838 
.0798 

.0817 
.0726 
.0879 
.0949 

.1000 

.0942 
.0980 
.0894 

.0915 



S ur c e : Fo reign Co ^tcrce and ravi~ation of th e United States , 
and U.S. Tarifj Commission. 



; 829 



-704- 

The data in Jfablo 4 show that there was a general increase from 
1923 to 1932 in the quantity of imports for consumption of jute webbing, 
followed "by a decline in 19-34 of roughjLy 44 per cent under 1933, imports 
in 1934 being slightly less than in 1932, although greater than- in the 
years previous to 1932. The unit value of iim: :rts declined roughly 
60 per cent from 1923 to 1934, A sharp decrease in unit value from the 
previous year occurred in 1932, while at the same time the quantity of 
imports increased substantially. 



The following table shows imports for .- consumption by principal 
countries since. 1929. It will be noted that the only important sources 
of webbing are Belgium and British India, the former country supplying 
71 per cent of all webbing imports in 1934. The quantity of imports 
from Ijjdia has been increasing in relation :to total imports since 1929. 
Webbing imports .from Belgium; since 1929 have been }f greater unit value 
than imports from India, 11 per cent greater inl929, 1 per cent greater 
in 1931, 28 per .cent in 1932, 12 per. cent in 1933, and 55 per cent in 
1934. What competitive advantage with respect to Indian webbing maybe 
found in the difference between the foreign values of Belgian and Indian 
webbing depends -upon the ocean freight rates to the United States from 
the respective countries of shipment. Freight rates are not available 
to furnish the data for any determinative comparisons. 



>82< 



-7 - 



Table 5. - Jut« L: : Irrr.ort i in by irincipal 

co , 1929-19: 





1939 


1931 


1931 


1933 


j 1934 


1 it (-pounds) 












] 1 Lub 


513,344 


611,776 


1,081.938 


1,584,125 


• 759,947 


. ritish India 


8,784 


132,589 


73,344 


150 , 723 


: 313,570 


Fr nee 


- 


> - 


8,377 


145,311 


: - 


All d ther 


• 15,463 


16,672 


38,990 


33,0.33 


: 200 


I t 1 : 


537,391 


, 761,037 


1,202,649 ) 


,:1,912,186 


Sl, 075, 717 


Value 


■$90,606 


$80,891 


$90,111 


$135,153 




Belgi 


: $76,547 


British Indis 


1,377 


: 17,402 


4,731 


11,407 


: 23,729 


Fr nee 


: - 


- 


: 685 


11,095 


: 


All )ther 


: 6 ,538 


; 2,778 


: 3,409 


3,219 


: 60 


I t 1 


: 98,521 


•'101,071 


. 03 035 


160,379 


S 100,336 


Unit value 






• 






Belgium 


S0.1'76 


S .132 


30.083 


: SO. 085 


: $0,101 


British India 


.137 


.131 


: .065 


.076 


S .075 


France 


: ~ 


j — 


: .03.-. 


.076 


: - 


All otl;-3 -• 


. ~~; .-J 


: .167 


: .08? 


.101 


: .300 


Aver-^e 




: .133 


: .082 


.084: 


.093 


Per cent : f total 












quantity 












Belgium 


95.5 


30.4 


90.0 : 


82 . 8 ! 


70.6 


British India. 


: 1.6 


17.4 


: 6.1 : 


7.9 


: 29.3 


France 


! — 


- 


.7 


7.6 


: 


All )ther 


: 2.9 


: 2.2 


: 3.2 


1.7 


: .1 


Total 


100.0 


■100.0 


! 100.0 


100.0 


: 100.0 



i29 



-706- 
The Fo r e i gn I ndus try 



Kothing is known of the jute aebbing industries in Belgium and 
British India, except th t they are ver; small segments of much larger 
jute spinning and weaving industries in each country. 

In this connection it should -.e pointed out that British India, 
although second as an exporter of jute webbing to the United States, 
is this country's principal source of all imported jute manufactures, 
being- fol owed in importance by the United Kingdom and Belgium, respec- 
tively. In 1953, British 1 India was the source of 78 per cent of the value 
of .all general imports of 'jute manufactures (exclusive of waste sacking 
avid waste bagging), the United Kingdom accounting for 10 per cent, and 
Belgium 4 per cent. Belgium and the United Kingdom in 1933 were the two 
most important sources of woven jute fabrics, n.e.s., imported into the 
United States.'. : 

The Belgian Jut'_ ; Weavers' Association, comprising 13 concerns with 
2,500 looms, this'- spring ( : 1935) reported improved business and the end of 
sever losse-s experienced during the past few years. Members of the 
Association, in consequence of plant modernization and resultant improve- 
ment of their manufactures', are widening their markets i'nithc United States 



and South America 
by the' Association 
per cent was sent 
competitor is the 



for jute fabrics. In 1934, 90 percent of production 
•s members was exported, whereas eight years ago 50 
abroad. '■ The Belgian manufacturers assert their chief 
1 13d i an jute industry. 



9329 



-707- 



Irrroorts in Relation to Domestic Production 



Table 6 shows a comparison of the trend of imports for consumption 
with domestic production from 1929 to 1934. 

Table 6. - Jute webbing: Ratio of imports for consumption 

to domestic "production 





Domestic 


Imports : 


: Ratio of 


Period 


production 


for i 


A imports to 






consumption : 


:_ _ production 




Pounds : 


: Per cent 


1929 : 


5,201,649 


537,891 : 


: 8.7 


1931 


3,810,273 


! 761,037 : 


: 20.0 


1932 


2,790,229 


l', 202, 649 : 


: 43.1 


1933 . : 


3,835,986 


1,912,136 ': 


: 67.4 


1934 (first r,en months) 


- 2,105,850 


777', 959' : 


: 36.9 


1933 








January-March 


! 547 , 809 


382,602 : 


: 69.8 


April-June 


: 652,131 


: 535,964 : 


: 82.2 


July-September 


975,801 


514,371 : 


: 52.7 


Octcoer-De cember 


: 685,435 


: 479,249 : 


: 69.9 


1934 








January-March 


! 643,291 


: 336,922 : 


52.0 



-Code approved April 9, 1934 



April- June 
Jul y- Sep t ember 

October 



571,464 
616,489 
269,606 



144,209 

196,925 

99,903 



25.2 
31.9 
37.1 



9829 



-708- 

From the data in Table S it may "be noted that the ratio of imports 
to domestic production decreased from 52 per cent in the first quarter of 
1934 to 25 per cent in the second quarter, after the code was approved, 
and rose only to 52 per cent in the third quarter after alrnort six months 
of code operation. The ratio of imports to domestic production~for the 
first ten months of 1934 was 37' per cent as compared with 67 per cent for 
1933 and 4-3 per cent for 1932. : 



Price Comparisons 



Importec and domestic webbing 



Wholesale-, prices in 1934 of foreign v/ebbing, f.o.b. New York, ranged 
from 15-3/4 cents to 14-1/2 cents per pound', averaging ahout 17 cents per 
pound. 'Prices : quoted f.o.b. Boston "by importers in 1934 averaged roughly 
16-1/3 cents. ; Whole-sale prices' for imported webbing m the Pacific Coast 
were similar to -those quoted by importers at Atlantic ports. In the 
fall of '1934, f,.p.b. mill price's of domestic jute webbing ranged from 
roughly $0.14 to- $0.22 per pound. The average mill price of nine leading 
varieties of domestic webbing at the same time was $0,185. These varieties 
of webbing are all said to be competitive with imports. 



The relationship 



-between we bbing a nd raw j ut e: prices 



It will be noted from the indices of Table 7 that the price of 
domestic webbing-. did not follow the same course as the trends of the 
unit value of imported webbing arid the price of raw jute, which, practically 
paralleled each other. During the first half of 1933, when the price of 
raw jute declined 64 per cent from 1929 and the unit value of webbing 
imports about 60 per cent, the price of domestic -webbing dropped only 
33 per cent. By the third quarter of 1934 the .price of domestic webbing 
had risen to 80 per cent of its 1929 level, but the price of raw jute 
had only risen to -.about half and the unit values of imports to slightly more 
than half of 1929. ,- The data in trie tahle indicate the close relationship 
between the price of jute and the unit value of we'b'bing imports, the 
latter, of course, bearing upon the prices of imported webbing in the 
United States, 



9829 



-7«9~ 



The following table shows the trend of domestic production of jute 
webbing, weighted mill prices of domestic webbing, the unit value of 
imports, and the price of raw jute from 1229 to 1954. 



Table 7. - Jute webbing: Indices of domestic production, weighted 
domestic mill prices, unit value of imports, and the price of 
medium graces of raw jute at Hew York, 1929-1934 



Period 



1929 
1932 

1933 
1934 



1934 (first eight months) 



By 


quarters 




1933 - 


- First 
Second 
Third 
Fourth 




1934 - 


- .First 
Second 
Third 
Fourth 




1935 - 


- First 



: Weighted : Unit : Price 
Domestic .domestic mill: value : of 
product .on . -nricesl/ :,of t-ig^q rt s : raw juts 



pr ice; 



1929 - 100= 



100.0 
45.0 
45.7 



38.7 



2/ 100.0 
3/ 71.4 
4/ 71.9 



80.1 



35.3 .: 




70.9 


42.1 




66.5 


62.9 




75.2 


44.2 




75.7 


41.8 




80.1 


36.9 




80.1 


39.8 


5/ 


80.1 



100.0 


100.0 


44.9 


41.7 


45.9 


45.8 


51.0 


52.8 


54.4 


: 53.0 


44.6 


36.1 


39.7 


45.8 


48.0 


1 51.4 


51.8 


! 48.6 


54.6 


! 55.6 


51.4 


! 52.8 


53.5 


50.0 


48.8 


! 51.4 


50.0 


: 54.2 



Source : Complaint : jj^> reign Ccmme~rce an d, Nav igation of the United Statesj. 

and Bureau of Labor Statistics, Wholesal e Prices. 
l/ Weighted for each year or period within year according, to ratio of 
production of separate establishments to total production of five leading 
producers for respective ye?.r. 
2/ April and October. 
3/ January, April, July, and October. 

4/ January, April, July, September, October, November, and December. 
5/ September not included. 



>829 



-71*- 

From the data in the foregoing table it may be seen that from 1929 
to August, 1934, weighted mill prices of domestic jute webbing did not 
decline more than 34 per cent. In contrast, domestic production in 1932 
and 1933 decreased roughly 55 per cent from 1929. In the first ten 
months of 1934, domestic production decreased still more, and was 
roughly 60 per cent less than in 1929. 

The Frice of Jute Yarn as a Competitive Factor. 

Domestic manufacturers of webbing not making their own yarn are 
obliged to compete with imported webbing constructed from lower-priced 
jute yarn. Domestic webbing since 1929 has been produced almost exclu- 
sively from grades of domestic jute yarn and twist (2-ply yarn), which, 
in turn, are manufactured behind a tariff protective enough to prohibit, 
virtually all imports of competitive yarn and twist from abroad. Little 
or no yarn is exported from the United States. 

The jute yarn market in the United States is dominated and prin- 
cipally supplied by two, or possibly three, '• integrated producers of jute 
and other fiber textiles, the two largest having branch jute manufacturing 
establishments in India. 

Yarn as a domestic manufacture 

Yarn is far more important a domestic 'jute manufacture than webbing. 
In value it is the mosc important single manufacture of jute, accounting 
for roughly 45 per cent of the total value of domestic jute manufactures, 
as compared with the ratio of 2. 5 per cent for webbing. About 35 per 
cent in quantity and Value of all domestic yarn sold by producers is used 
in the manufacture of wool carpets and otherr floor coverings. Less than 
10 per cent is purchased for further manufacture by the jute goods in- 
dustry. More yarn is believed to be purchased for use in manufacturing 
electric cables than in weaving jute' fabrics, such as webbing. The Census 
of Manufactures records domestic pro'duction of jute yarn "for sale" in 
1933 amounting to 61,853,153 pounds valued at $6,827,370, or 95 per cent 
in quantity of all fiber yarns' (exclusive of cotton) made for sale. There 
is no record of the output of jute yarn produced and used for further 
manufacture by the same companies. 

Domestic tariff treatment of yarn. 

Domestic webbings are constructed from 7-pound to 20-pound single 
yarn and from 7-pound to 18-pound twist or 2-ply yarn. Since the Tariff 
Act of 1922, jute yarns ranging in fineness from 20-pound up to but not 
including 10-pound have been dutiable at 4 cents per pound, and from 10- 
pound up to but not including 5-pound at 5f v cents per pound; unbleached 
and undyed jute twist (two or more yarns twisted together to form a single 
strand of the same size as single or roving yarn) , ranging in size from 
20-pound up to but not including 10-pound, have been dutiable at 5 cnnts 
per pound, and twist from 10-pound up to but not including 5-pound, 6^ 
cents per pound. 

The prohibitive character of these specific duties is indicated by 
the fact that imports of both yarn and twist in the above classes since 

9829 



-711- 



1929 have been negligible. Imports since 1925, with the ad valorem 
equivalent duties for each year, are shown in the following two tables. 
It will be noted that the equivalent advalorem duty on yarns most used 
in making webbing - 20-pound up, to 10-pound single - in 1932 amounted 
to 144 per cent and in 1933, to 133 per cent, and also that there were 
no imports of these yarns in 1934. The ad valorem equivalent for both 
20-pound to 10-pound yarn and twist together in 1929 and 1931 to 1934 
amounted to 65 per cent. 

Table 8. Single jute yarn; Imports and equivalent ad valorem 

duty, 1925-1934. 



Feriod 



20-pound up to 10-pound 
(dutiable at 4 cents per pound 



Quantity Value 



Equivalent 

ad valorem 

duty 



10-pound up to 5-pound 
(dutiable at 5-| cents per pound) 



Quantity Value 



Equivalent 
ad valorem 
duty 



1925 
1927 
1929 
1931 
1932 
1933 
1934 



Founds 



316,708 
2,311,942 



320 
199 



42,562 
261,562 



9 
6 



Fer cent 



30 
35 



144 
133 



Founds 

308,604 

79,518 

1,008 

9,793 

106 

7,560 

406 



$47,194 

10 , 303 

118 

1,146 

8 

808 

48 



Fer cent 

36 
43 
47 
47 
88 
52 
47 



Source: Foreign Commerce and Navigation of the United States , and 
U. S. Tariff Commission. 

Table 9. - Flain(*), 2-ply jute cordage, twine, and twist: 

Imports and equivalent ad valorem duty, 1925-1934. 





20-pound up to 10-pound : 


10-pound up to 5-pound 


Feriod (dutiable 


at 5 'cents per pound 


(dutiable 


at 6t T cent: 


3 per pound) 






Equivalent : 






Equivalent 




Quantity 


Value ad valorem : 
duty 


Quantity 


Value 


ad valorem 
duty 




Founds 
57,593 


• ■ 


Fer cent 


Founds 
86 , 880 


$15,168 


Per cent 


1925 


$10,526 


27 


29 


1927 


35,367 


2,982 


59 


_ 


_ 


— 


1929 


2,710 


291 


47 


570 


151 


25 


1931 


2,000 


100 


100 


_ 


— 


— 


1932 


6,858 


528 


65 


106 


8 


88 


1933 


1,383 


83 


83 


— 


_ 


— 


1934 


250 


34 


37 


11,307 


1,224 


60 



Source: Foreign Commerce and Navigation of the United States, and 

U. S. Tariff Commission. 
(*) Hot bleached, dyed, or otherwise treated. 



9829 



-712- 



Foreian tariff treatment 



In contrast to the foreign trade of the United States in jute yarn, 
Belgium and the United Kingdom are "both heavy exporters of jute yarn 
and also import, at nominal rates of duty, consideiably more jute yarn 
than this country. The ad valorem equivalent of the Belgian specific 
duty on 8-pound to 14-pound single yarn since 1929 has probably ranged 
from roughly 7 to 10 per cent, raid the ad valorem equivalent on 8-pound 
to 14-pound twist from 8 to 13 per cent. Jute yarn, including twist, 
imported into the United Kingdom is dutiable at a general ad valorem 
rate of 10 per cent. Jute yarn imported into British India, both an 
unimportant importer and exporter of yarn, is dutiable at 25 per cent 
ad valorem. 

Foreign and domestic yarn prices 

In Table 10 are given the prices since 1929 of yarn at Dundee, 
Scotland, the jute-yarn center of Europe, and at domestic mills. In 
addition, there is shown the Dundee price to which has been added the 
ad valorem equivalent duty on yarn and twist of 65 per cent for the 
1929-1934 period. 



Table 10. - Jute yarn; Comparison of domestic prices with 
Dundee prices and Dundee prices plus 'ad valorem 
equivalent duty of 65 per cent, 1929 - 1934. 

(Per pound) 

Dundee price l/ Dundee price .'Domestic mill Ratio of 

price of domestic 
14-pound to price to 
16-pound Ho. 2 Dundee price 
carpet yarn plus dut y 





of 14-pound 


Period 


(warp) 




carpet 




y;v?n 


1929 


$0.1010 


1930 


.0823 


1931 


.0661 


1932 


.0652 


1933 


.0610 


1934 


.0569 



of 14-pound 
yarn, plus 
65 per cent 

duty 



$0.1667 
.1358 
.1091 
.1076 
.1007 
.0939 



$0 . 1490 
. 1380' 
. 1170 
.1050 
.1140 
.1230 



Per cent 


89, 


.4 


101 


.6 


107, 


.2 


97 


.6 


113, 


.2 


131, 


.1 



Sources: Dundee Prices Current and Bureau of Labor Statistics , 

Wholesale Prices. 
1/ Converted from pounds into dollars at the 1929 rate of $4.8569 



It will be noted that the domestic price per pound in 1929 and 1932 
was less than the Dundee price plus the duty and that in only two years, 
1933 and 1934, was the domestic price more than 10 per cent greater than 
the Dundee price plus the duty. Considering the price of imported yarn 
to include necessarily the Dundee price plus the duty as well as freight, 
handling, and brokerage charges, it would appear that, except possibly in 
the years 1933 and. 1934, Dundee exporters could not have profitably 
shipped 14-pound yarn to the United States market. 



9829 



«713^ 



Frice stability of domestic y?:rn 

The fact that the domestic price of jute yarn has not been subject 
to the possible influence of competitive prices of imported jute yarns 
is at least a possible explanation for the stability of the price of 
domestic yarn in relation to the downward fluctuations in the price of 
raw jute since 1939. The indices of Table 11 show the trend since 1929 
of wholesale prices at Hew York of medium grades of raw jute in relation 
to the mill price of No. 2, 14-pound to 16-pound domestic carpet yarn 
and the price at Dundee, Scotland, of 14-pound (warp) carpet yarn. 
(Yarn widely used in the manufacture of webbing is substantially the same 
as this grade of carpet yarn, with the exception that sizing is added 
to carpet yarn.) 



9829 



-714- 



Table 11. - Haw jute gild jute yarn: Indices of wholesale 

.prices of medium grades of raw jute at Hew York, domestic 
mill prices of i : o . 2, 14-pound to 16-pound carpet yarn, 
and mill prices of 1 i-pound (warp) carpet yarn at 
Dundee, Scotland. 



w 


holesale price ; 


Mill price 


of jute 




of medium ■ 
grades of • 


carpet y 


arn 


Period j 


Domestic j 


At Dundee , 




raw jute at • 


No . 2 , 14-pound < 


14-pound 




New York < 


to 16-pound 


(warp) 




1929 


- 100 




1929 


100.0 : 


100.0 


100.0 


1930 


69.4 


92.6 


81.9 


1931 


51.4 


78.5 


65.8 


1932 


41.7 


70.5 


64.8 


1933 


45.8 


76.5 


60.6 


1934 


52.8 


82.6 


56.6 


By quarters 








1932 - January-March 


47.2 


70.5 


69.9 


April- June 


40.3 


70.5 


62.7 


July- September 


43.1 


70.5 


: 64.4 


October-December 


37.5 


70.5 


62.3 


1933 - January-March 


36.1 


70.5 


: 58.5 


April- June 


45.8 


71.8 


: 61.5 


July-September 


51.4 


80.5 


: 63.4 


October-December 


48.6 


82.6 


: 59.2 


1934 - January-March 


55.6 


82,6 


59.2 


April-June 


52.8 


82.6 


: 55.7 


July- Sept ember 


50.0 


: 82.6 


56.6 


October-December 


51.4 


: 82.6 


56.6 


By months 








1935 - January 


55.6 


82.6 


58.5 


February 


55.6 


82.6 


: 59.2 



Sources: Bureau of Labor Statistics, Wholesale Frices , and 
Dundee Prices Current (weekly) , Dundee, Scotland. 



9829 



-715- 

Prom the three price indices in the above table, it will "be noted 
that in the first quarter of 1933, when the price of raw jute fell to 
36 from its 1929 level of 100, - the lowest point for the entire 1929- 
1934 period, - the mill price of domestic yarn declined only 71. At the 
same time the price of yarn (in pence) at Dundee fell to 59 per cent of 
1929. Since the first quarter of 1933 the price of domestic yarn has 
risen to 83, while the Dundee price has generally continued to decline, 
notwithstanding the fact that the pound was devaluated a year and one-half 
earlier than the dollar. 

Manufacturer's margin 

The stability of the price of domestic jute yarn, despite the greater 
general decline of prices during the depression, allowed the manufactureers 
to increase the margin between the cost of the raw fiber and the selling 
price of the finished yarn. Thus, through an increased manufacturer's 
margin, the yarn producers have, in effect, raised the price of their 
services. 



The data of Table 12 indicate that in every year shown, with exception 
of 1932, the manufacturer's margin in the production of jute yarn was 
greater than in 1929, being 5.2 per cent greater in 1933 and 10.4 per 
cent greater in .1934. 



9829 



-716- 



Table 12. - Raw jute and jute yarn: Prices of raw jute and 
carpet yarn, and the manufacturer's margin, 
1939 to March, 1935. 





YTholesale 


Domestic 


Manufacturer' s 


Period 


price of 
medium grades 


mill price, No. 2 
14-pound to 


mars] 


.n 






Indices 




of raw jute 


16-pound 


Amount 


of amount 




at Hew York 


carpet yarn 




1929= 100 


1929 


$0,072 


$0,149 


$0,077 


100.0 


1930 


.050 


.138 


.088 


114.3 


1931 


.037 


.117 


.080 


103.9 


1932 


.030 


.105 


.075 


97.4 


1933 


.033 


.114 


.081 


: 105.2 


1934 


.038 


.125 


.085 


110.4 


By quarters 










1932 










J anuar y-M ar ch 


.034 


.105 


.071 


: 92.2 


April- June 


.029 


.105 


.076 


98.7 


July-September 


.031 


.105 


.074 


: 96.1 


October-December 


.027 


.105 


.078 


: 101.3 


1933 










January-March 


.026 


.105 


.079 


102.6 


April-June 


: .033 


.107 


.074 


96.1 


July- Sept ember 


.037 


.120 


.083 


107.8 


October-December 


.035 


.123 


.088 


: 111.7 


1934 










January-March 


.040 


.123 


.083 


: 107.8 


April- June 


.038 


.123 


.085 


: 110.4 


July-September 


.036 


.123 


.087 


: 113.0 


October-December 


.037 


.123 


.086 


111.7 


1935 










J anuar y-M arch 


.039 


.123 


.084 


109.8 



Source: Bureau of Labor Statistics, Wholesale Prices, 



9829 



-717- 
The Effect of Dollar Depreciation 

The depreciation of the dollar in terms of belgas and rupees during 
the period from the second quarter of 1933 to the second and third 
quarters of 1934 apparently was a factor in the decreasing volume of 
imports from Belgium, hut was without apparent effect in decreasing the 
volume of imports from India, as may be seen from the data of Table 13. 
This table gives the indices both of the respective exchange rates and 
of the unit values of imports, along with the amount in pounds of imports 
from each country, f iron 1932 to the first quarter of 1935. 

Table 13. - Exchange and webbing imports: Indices of belga-and 

rupee-dollar exchange and of the unit values of imports, 
along with the quantity of imports, 1932 to March, 1935. 





'Belga- 


Imports from 




Imports from 


Period 


dollar 
exchange 


Bt 


jlffium 


Rupee- 
dollar 


British India 




Unit 


Quantity 


Unit 


Quantity 






value 




exchange 


Value 




: ■ 


1932 - 


100 


Pounds 


1932 = 


100 


Pounds 


1932 


■100 


100 


1,081,938 


100 


100 


73 , 344 


1933 


129 


102 


1,584,125 


121 


117 


150,722 


1934 


167 


121 


759 , 947 


144 


111 


315,570 


By Quarters 














1933 














J a nuary-M ar ch 


100 


98 


331,247 


97 


104 


21,750 


April- June 


115 


87 : 


430,301 


111 


108 


41,762 


July-September 


142 


108 


441,981 


131 


117 


8,700 


October-December 


155 


117 


380,596 


141 


: 126 


78,510 


1934 : 














January-March . 


163 


126 J 


239,417 


144 


136 


97,305 


April-June 


168 


132 • 


101,209 


145 


89 


43,000 


• July- Sept ember 


170 


121 ' 


170,980- 


144 


120 


25,945 


October-December 


' 168 


■ Ill : 


248 , 341 


141 


111 


149 , 320 


1935 














January-March 


166 


113 - 


300 , 145 


139 


112 


38,175 



Source: federal Reserve Bulletin , and U.S. Tariff Commission, 



In the foregoing table it may be noted that the value of the belga 
in terms of dollars rose 67 points from. 1932 to 1934, and that the unit 
value of imports increased 21 points. From 1933 to 1934 the quantity of 
webbing imports from Belgium declined about 50 per cent. From 1932 to 
1934 the rupee rose 44 points in terms of dollars, while the unit value 
rose only 11 points. From 1933 to 1934 the quantity of webbing imported 
from British India increased 100 per cent. 



9829 



-718- 

The Effect of the National Recovery Program 
La"bor provisions of the code 

A basic minimum wage rate of 32^ cents, regardless of whether 
employees are compensated on a time-rate or piece-work "basis, was es- 
tablished by the Code for the Soft Fibre Manufacturing Industry. A 
basic minimum weekly wage, however, was not provided. A basic 40-hour 
week was established by the code, but there was no limitation on the 
number of hours in a work day. _, 

Hours and wages 

The trend of weekly wages and hourly rates of pay in the industry 
since 1929 may be seen from the data in Table 14. 

Table 14. - Jute webbing: Trend of average weekly and hourly 
wages in the industry since. 1929. 





Average wee 


:kly wage 


Average hourly rate 


Period 












Amount - : ' 


Index ' 


Amoun t 


Index 






1929- 100 . 




1929=100 


1929 : 


$21.04 


100.0 


$0,455 


100.0 


1932 : 


8.47 ■ 


40.3 


.379 


83.3 


1933 : 


10.48 


49.8 


.346 


76.0 


1934( first nine months) 


9.98 ■ 


47.4 


.372 ! 


81.8 


1932 










January 


11.66 


55.4 


.361 


79.3 


April 


7.48 • 


35.6 


.441 


96.9 


July 


4.62 


22.0 


.422 


92.7 


October 


6.93 


33.2 


.367 


80.7 


1933 










January 


: 7.34 


34.9 


.355 


78.0 


April 


: 5.80 


: 27.6 


: .281 


: 61.8 


July 


: 11.38 


: 56 .5 


: .317 


: 69.7 


October 


: 15.83 


: 75.2 


: .400 


: 87.9 


1934 










January 


: 11.00 


: 52.3 


: .398 


: 87.5 



April, July, September 
April 
July 
September 



-Code approved April 9, 1934- 



9.67 

10.24 

9.66 

1/9.48 



46.0 
48.7 
46.0 
45.1 



.367 

.375 

.362 

1/.366 



80.7 
82.4 
79.6 
80.4 



Source: Complaint. 

1/ Includes data of one company for payroll period ended August 18, 

1934, instead of for September, because September data are unacceptable. 



9829 



-719- 

From the data in the foregoing table it may be seen that wage earners 
in the jute webbing industry in 1929 were paid an average hourly rate of 
about 30.46. The average hourly rate was about $0.38 in 1932, $0.35 in 
1933, and $0.37 in the first nine months of 1934. During 1933 the average 
hourly rate ranged from approximately $0.28 (April) to $0.40 (October). 
After approval of the code on April 9, 1934, the average hourly rate 
through September, 1934, was roughly $0.37, as compared with the average 
hourly rate of about $0.40 in January, 1934. (According to data sub- 
mitted in the complaint, at no time from the date of the approval of the 
code to September, 1934, was the hourly wage paid by any single establish- 
ment less than $0,34*). 

In the above table it may be seen that the average weekly wage was 
about $10.48 in 1933 and $9.98 in the first nine months of 1934. In 
January, 1934, just prior to the approval of the code, the weekly wage 
was about $11 and $9.67 in the period from April to September, after 
the approval of the code. 

Table 15 shows indices of employment, payroll, and wages for the 
year 1933 and for the one-week period ended the middle of January, 1934, 
before approval of the code, and similar periods in April, July, and 
September, after approval of the code. 



Table 15. - Jute webbing; Indices of employment, payroll, and 
wages, 1933 and 1934. 



Period 
(week ended 
of month) 


15 th 


Number 

of 
employees 


Hours per Man-hours 
worker' :per payroll 
per week : period 


Total 
weekly 
: payroll 


Average 

Weekly 

wage 


Average 

hourly 

wage 






59.34 


■ :1933-l/= IOC 


) 

■ 

62.07 


104.96 




1934 
January 


91.54 : 54.11 


• 

115.03 








--Code Ajjproved April c . 


5, 1934— 






April 

July 

September 


2/ 


. 66.81 

87.91 

: 89.01 


90.22 : 78.09 
• 88.24 : 77.47 
: 88.90 : 76.10 


84.54 
80.77 
80.25 


97.71 
92.18 
90.46 


108.38 
104.34 
105.78 



1/ Fayroll periods in January, April, July, and October. 
2/ Includes data of one company for the payroll period ended August 18, 
1934, instead of in September, because September data are unacceptable. 



The indices of the foregoing table show that the number of workers 
employed, hours of work, and weekly wages declined in 1934, after approval 
of the code, as compared with 1933. There was, however, an increase in 
the index of hourly wages in the post-code period. As compared with the 
period in January, 1934, before approval of the code, the indices for the 
later payroll periods in April, July, and September, show only an increase 
in the number employed, with declines in the hours per worker and the 
weekly and hourly rates of pay. 



-720- 



Production and sales cost 



Table 16 shows costs of producing- and selling 1,000 pounds' of jute 
webbing for four companies in the first half of 1933 and generally for 
1934 and the percentage distribution of costs in the two periods. The 
costs were submitted in the complaint in consolidated form without 
separate data for each company, thus precluding a determinative analysis 
of the various factors which should be considered before any valid con- 
clusions can be drawn as to costs in pre-and post-code periods. 



Table 16. - Jute webbing: Producing and selling costs for four 
companies 1/ in 1933 and 1934, and percentage dis- 
tribution of cost items. 





Cost 




Per cent 


Percentage 


Per cent 




per 1,000 


increase (/) 


distribution of 


increase^) 


Item of cost 


pounds ■ 


or decrease 


separate costs 


or decrease 




1933 


1934 


(-) over 


1933 : 1934 


(-) over 




2/ 


3/ 


1933 


2/ : 3/ 


1933 


Material 


$79.59 


$92.53 


/ 16.2 


56.9 


56.3 


-0.6 


Labor 


20.76 


28.49 


/ 37.2 


14.8 


17.3 


±2,5 


Factory expense 


14.10 


15.67 


i 11.1 


10.1 


9.5 


- .6 


Depreciation 


4.66 


4.37 


- 6.2 


3.3 


2.7 


- .7 


General, administra- 














tive, and selling 














expense- 


20.83 


23.29 


/ 11.8 ■ 


14.9 


14.2 


- .7 




139.93 


164.35 


/ 17.5 ■ 


100.0' 


100.0 


— 


Total 















Source: Complaint 

\l .Representing about 50 'per cent of 'domestic production.' 

2/ Based on operations for the first half of 1933. 

3./ Based on operations for various periods in 1934. 



. The cost of: material was 16 per cent greater in 1934 than in 1933, 
an .increase greater than the known general increase in the cost of yarn, 
the chief material used in weaving jute webbing. The mill price of No. 
2, 14-pound to 16-pound carpet yarn rose from $0,114 in 1933 to $0,123 
in 1934, an increase of 0.9 of a cent, or 7.9 per cent. 



9829 



OFFICE OF THE NATIONAL RECOVERY ADMINISTRATION 

THE DIVISION OF REVIEW 

THE WORK OF THE DIVISION OF REVIEW 

Executive Order No. 7075, dated June 15, 1935, established the Division of Review of the 
National Recovery Administration. The pertinent part of the Executive Order reads thus: 

The Division of Review shall assemble, analyze, and report upon the statistical 
information and records of experience of the operations of the various trades and 
industries heretofore subject to codes of fair competition, shall study the ef- 
fects of such codes upon trade, industrial and labor conditions in general, and 
other related matters, shall make available for the protection and promotion of 
the public interest an adequate review of the effects of the Administration of 
Title I of the National Industrial Recovery Act, and the principles and policies 
put into effect thereunder, and shall otherwise aid the President in carrying out 
his functions under the said Title. I hereby appoint Leon C. Marshall, Director of 
the Division of Review. 

The study sections set up in the Division of Review covered these areas: industry 
studies, foreign trade studies, labor studies, trade practice studies, statistical studies, 
legal studies, administration studies, miscellaneous studies, and the writing of code his- 
tories. The materials which were produced by these sections are indicated below. 

Except for the Code Histories, all items mentioned below are scheduled to be in mimeo- 
graphed form by April 1, 1936. 

THE CODE HISTORIES 

The Code Histories are documented accounts of the formation and administration of the 
codes. They contain the definition of the industry and the principal products thereof; the 
classes of members in the industry; the history of code formation including an account of the 
sponsoring organizations, the conferences, negotiations and hearings which were held, and 
the activities in connection with obtaining approval of the code; the history of the ad- 
ministration of the code, covering the organization and operation of the code authority, 
the difficulties encountered in administration, the extent of compliance or non-compliance, 
c;nd the general success or lack of success of the code; and an analysis of the operation of 
code provisions dealing with wages, hours, trade practices, and other provisions. These 
and other matters are canvassed not only in terms of the materials to be found in the files, 
but also in terms of the experiences of the deputies and others concerned with code formation 
and administration. 

The Code Histories, (including histories of certain NRA units or agencies) are not 
mimeographed. They are to be turned over to the Department of Commerce in typewritten form. 
All told, approximately eight hundred and fifty (850) histories will be completed. This 
number includes all of the approved codes and some of the unapproved codes. (In Work Mate- 
rials No^ 18, Contents of Code His to ries , will be found the outline which governed the 
preparation of Code Histories.) 



(In the case of all approved codes and also in the case of some codes not carried to 
final approval, there are in NRA files further materials on industries. Particularly worthy 
of mention are the Volumes I, II and III which constitute the material officially submitted 
to the President in support of the recommendation for approval of each code. These volumes 
9768 — 1 . 



-ii - 

set forth the origination of the codes, the sponsoring group, the evidence advanced to sup- 
port the proposal, the report of the Division of Research and Planning on the industry, the 
recommendations of the various Advisory Boards, certain types of official correspondence, 
transcript of the formal hearing, and other pertinent matter. There is also much offi- 
cial information relating to amendments, interpretations, exemptions, and other rulings. The 
materials mentioned in this paragraph were of course not a part of the work of the Division 
of Review. ) 

THE WORK MATERIALS SERIES 

In the work of the Division of Review a considerable number of studies and compilations 
of data (other than those noted below in the Evidence Studies Series and the Statistical 
Material Series) have been made. These are listed below, grouped according to the char- 
acter of the material. (In Work Materials No. 17 . Tentative Ou tlines and Sum m arie s of 
Studies in Process , the materials are fully described) . 

I ndustry Studies 

Automobile Industry, An Economic Survey of 

Bituminous Coal Industry under Free Competition and Code Regulation, Ecnomic Survey cf 

Electrical Manufacturing Industry, The 

Fertilizer Industry, The 

Fishery Industry and the Fishery Codes 

Fishermen and Fishing Craft, Earnings of 

Foreign Trade under the National Industrial Recovery Act 

Part A - Competitive Position of the United States in International Trade 1927-29 through 

1934. 
Part B - Section 3 (e) of NIRA and its administration. 
Part C - Imports and Importing under NRA Codes. 
Part D - Exports and Exporting under NRA Codes. 

Forest Products Industries, Foreign Trade Study of the 

Iron and Steel Industry, The 

Knitting Industries, The 

Leather and Shoe Industries, The 

Lumber and Timber Products Industry, Economic Problems of the 

Men's Clothing Industry, The 

Millinery Industry, The 

Motion Picture Industry, The 

Migration of Industry, The: The Shift of Twenty-Five Needle Trades From New York State, 
1926 to 1934 

National Labor Income by Months, 1929-35 

Paper Industry, The 

Production, Prices, Employment and Payrolls in Industry, Agriculture and Railway Trans- 
portation, January 1923, to date 

Retail Trades Study, The 

Rubber Industry Study, The 

Textile Industry in the United Kingdom, France, Germany, Italy, and Japan 

Textile Yarns and Fabrics 

Tobacco Industry, The 

Wholesale Trades Study, The 

Women's Neckwear and Scarf Industry, Financial and Labor Data on 

9768 — 2 



- iii - 

Women's Apparel Industry, Some Aspects of the 

T rade P ractic e Studies 

Commodities, Information Concerning: A Study of NRA and Related Experiences in Control 

Distribution, Manufacturers' Control of: Trade Practice Provisions in Selected NRA Codes 

Distributive Relations in the Asbestos Industry 

Design Piracy: The Problem and Its Treatment Under NRA Codes 

Electrical Mfg. Industry: Price Filing Study 

Fertilizer Industry: Price Filing Study 

Geographical Price Relations Under Codes of Fair Competition, Control of 

Minimum Price Regulation Under Codes of Fair Competition 

Multiple Basing Point System in the Lime Industry: Operation of the 

Price Control in the Coffee Industry 

Price Filing Under NRA Codes 

Production Control in the Ice Industry 

Production Control, Case Studies in 

Resale Price Maintenance Legislation in the United States 

Retail Price Cutting, Restriction of, with special Emphasis on The Drug Industry. 

Trade Practice Rules of The Federal Trade Commission (1914-1936): A classification for 

comparision with Trade Practice Provisions of NRA Codes. 

Labo r Studies 

Cap and Cloth Hat Industry, Commission Report on Wage Differentials in 

Earnings in Selected Manufacturing Industries, by States, 1933-35 

Employment, Payrolls, Hours, and Wages in 115 Selected Code Industries 1933-35 

Fur Manufacturing, Commission Report on Wages and Hours in 

Hours and Wages in American Industry 

Labor Program Under the National Industrial Recovery Act, The 

Part A. Introduction 

Part B. Control of Hours and Reemployment 

Part C. Control of Wages 

Part D. Control of Other Conditions of Employment 

Part E. Section 7(a) of the Recovery Act 
Materials in the Field of Industrial Relations 
PRA Census of Employment, June, October, 1933 
Puerto Rico Needlework, Homeworkers Survey 

A dministrative S tudie s 

Administrative and Legal Aspects of Stays, Exemptions and Exceptions, Code Amendments, Con- 
ditional Orders of Approval 

Administrative Interpretations of NRA Codes 

Administrative Law and Procedure under the NIRA 

Agreements Under Sections 4(a) and 7(b) of the NIRA 

Approved Codes in Industry Groups, Classification of 

Basic Code, the — (Administrative Order X-61) 

Code Authorities and Their part in the Administration of the NIRA 
Part A. Introduction 
Part B. Nature, Composition and Organization of Code Authorities 

9758—3. 



- iv - 

Part C. Activities of the Code Authorities 

Part D. Code Authority Finances 

Part E. Summary and Evaluation 
Cjde Compliance Activities of the NRA 
Code Making Program of the NRA in the Territories, The 
Code Provisions and Related Subjects, Policy Statements Concerning 
Content of NIRA Administrative Legislation 

Part A. Executive and Administrative Orders 

Part B. Labor Provisions in the Codes 

Part C. Trade Practice Provisions in the Codes 

Part D. Administrative Provisions in the Codes 

Part E. Agreements under Sections 4(a) and 7(b) 

Part F. A Type Case: The Cotton Textile Code 
Labels Under NRA, A Study of 

Model Code and Model Provisions for Codes, Development of 

National Recovery Administration, The: A Review of its Organization and Activities 
NRA Insignia 

President's Reemployment Agreement, The 

President's Reemployment Agreement, Substitutions in Connection with the 
Prison Labor Problem under NRA and the Prison Compact, The 
Problems of Administration in the Overlapping of Code Definitions of Industries and Trades, 

Multiple Code Coverage, Classifying Individual Members of Industries and Trades 
Relationship of NRA to Government Contracts and Contracts Involving the Use of Government 

Funds 
Relationship of NRA with States and Municipalities 
Sheltered Workshops Under NRA 
Uncodified Industries: A Study of Factors Limiting the Code Making Program 

Legal Studies 

Anti-Trust Laws and Unfair Competition 

Collective Bargaining Agreements, the Right of Individual Employees to Enforce 

Commerce Clause, Federal Regulation of the Employer-Employee Relationship Under the 

Delegation of Power, Certain Phases of the Principle of, with Reference to Federal Industrial 
Regulatory Legislation 

Enforcement, Extra-Judicial Methods of 

Federal Regulation through the Joint Employment of the Power of Taxation and the Spending 
Power 

Government Contract Provisions as a Means of Establishing Proper Economic Standards, Legal 
Memorandum on Possibility of 

Industrial Relations in Australia, Regulation of 

Intrastate Activities Which so Affect Interstate Commerce as to Bring them Under the Com- 
merce Clause, Cases on 

Legislative Possibilities of the State Constitutions 

Post Office and Post Road Power — Can it be Used as a Means of Federal Industrial Regula- 
tion? 

State Recovery Legislation in Aid of Federal Recovery Legislation History and Analysis 

Tariff Rates to Secure Proper Standards of Wages and Hours, the Possibility of Variation in 

Trade Practices and the Anti-Trust Laws 

Treaty Making Power of the United States 

War Power, Can it be Used as a Means of Federal Regulation of Child Labor? 

9768—4. 



- V - 

THE EVIDENCE STUDIES SERIES 

The Evidence Studies were originally undertaken to gather material for pending court 
cases. After the Schechter decision the project was continued in order to assemble data for 
use in connection with the studies of the Division of Review. The data are particularly 
concerned with the nature, size and operations of the industry; and with the relation cf the 
industry to interstate commerce. The industries covered by the Evidence Studies account for 
more than one-half of the total number of workers under codes. The list of those studies 
follows: 



Automobile Manufacturing Industry 
Automotive Parts and Equipment Industry 
Baking Industry 

Boot and Shoe Manufacturing Industry 
Bottled Soft Drink Industry 
Builders' Supplies Industry 
Canning Industry 
Chemical Manufacturing Industry 
Cigar Manufacturing Industry 
Coat and Suit Industry 
Construction Industry 
Cotton Garment Industry 
Dress Manufacturing Industry 
Electrical Contracting Industry 
Electrical Manufacturing Industry 
Fabricated Metal Products Mfg. and Metal Fin- 
ishing and Metal Coating Industry 
Fishery Industry 
Furniture Manufacturing Industry 
General Contractors Industry 
Graphic Arts Industry 
Gray Iron Foundry Industry 
Hosiery Industry 

Infant's and Children's Wear Industry 
Iron and Steel Industry 



Leather Industry 

Lumber and Timber Products Industry 
Mason Contractors Industry 
Men's Clothing Industry 
Motion Picture Industry 
Motor Vehicle Retailing Trade 
Needlework Industry of Puerto Rico 
Painting and Paperhanging Industry 
Photo Engraving Industry 
Plumbing Contracting Industry 
Retail Lumber Industry 
Retail Trade Industry 
Retail Tire and Battery Trade Industry 
Rubber Manufacturing Industry 
Rubber Tire Manufacturing Industry 
Shipbuilding Industry 
Silk Textile Industry 
Structural Clay Products Industry 
Throwing Industry 
Trucking Industry 
Waste Materials Industry 
Wholesale and Retail Food Industry 
Wholesale Fresh Fruit and Vegetable Indus- 
try 
Wool Textile Industry 



THE STATISTICAL MATERIALS SERIES 



This series is supplementary to the Evidence Studies Series. The reports include data 
en establishments, firms, employment, payrolls, wages, hours, production capacities, ship- 
ments, sales, consumption, stocks, prices, material costs, failures, exports and imports. 
They also include notes on the principal qualifications that should be observed in using the 
data, the technical methods employed, and the applicability of the material to the study of 
the industries concerned. The following numbers appear in the series: 
9768—5. 



- VI - 

Asphalt Shingle and Roofing Industry Fertilizer Industry 
Business Furniture Funeral Supply Industry 
Candy Manufacturing Industry Glass Container Industry 
Carpet and Rug Industry Ice Manufacturing Industry 
Cement Industry Knitted Outerwear Industry 
Cleaning and Dyeing Trade Paint, Varnish, ana Lacquer, Mfg. Industry- 
Coffee Industry Plumbing Fixtures Industry 
Copper and Brass Mill Products Industry Rayon and Synthetic Yarn Producing Industry 
Cotton Textile Industry Salt Producing Industry 
Electrical Manufacturing Industry 

THE COVERAGE 

The original, and approved, plan of the Division of Review contemplated resources suf- 
ficient (a) to prepare some 1200 histories of codes and NRA units or agencies, (b) to con- 
solidate and index the NRA files containing some 40,000,000 pieces, (c) to engage in ex- 
tensive field work, (d) to secure much aid from established statistical agencies of govern- 
ment, (e) to assemble a considerable number of experts in various fields, (f) to conduct 
approximately 25% more studies than are listed above, and (g) to prepare a comprehensive 
summary report. 

Because of reductions made in personnel and in use of outside experts, limitation of 
access to field work and research agencies, and lack of jurisdiction over files, the pro- 
jected plan was necessarily curtailed. The most serious curtailments were the omission of 
the comprehensive summary report; the dropping of certain studies and the reduction in the 
coverage of other studies; and the abandonment of the consolidation and indexing of the 
files. Fortunately, there is reason to hope that the files may yet be carec for under other 
auspices. 

Notwithstanding these limitations, if the files are ultimately consolidated and in- 
dexed the exploration of the NRA materials will have been sufficient to make them accessible 
and highly useful. They constitute the largest and richest single body of information 
concerning the problems and operations of industry ever assembled in any nation. 

L. C. Marshall, 
Director, Division of Review. 
9768—6.