Mr. HILL. How do you get that in at the same rate when the law says you shall pay 10 per cent additional for the other?

Mr. ROBINSON. We do not buy it in this condition. We put it in this condition.

Mr. HILL. You can not import that at the same rate of duty as the other?

Mr. ROBINSON. Yes, sir; that is my contention.

Mr. HILL. The law does not say that. The law says you pay 10 per cent more for that. Is that to make gloves?

Mr. ROBINSON. No; this is a window leather.

Mr. HILL. The law distinctly says:

Provided, That leather cut into shoe uppers or vamps or other forms, suitable for conversion into manufactured articles, and gauffre leather, shall pay a duty of ten per centum ad valorem in addition to the duty imposed by this paragraph on leather of the same character as that from which they are cut.

Mr. ROBINSON. How is it they only pay 20 per cent?

Mr. HILL. I do not know. You have been very lucky in getting them in.

Mr. ROBINSON. We are not buying in this condition. ours ourselves.

Mr. PALMER. You are a manufacturer?

We finish

Mr. ROBINSON. Yes. We manufacture the goods in this condition [indicating]. This [indicating] is the condition in which we buy them, yet these goods [indicating] are bought by other people from the manufacturer on the other side and sent here for the same rate of duty. Mr. HILL. At the same rate of duty?

Mr. ROBINSON. Yes, sir; at the same rate of duty.

Mr. HILL. I do not see how they do it.

Mr. ROBINSON. They do it just the same.

Mr. HARRISON. Suppose the first skin you show us there is worth 40 cents at the customhouse and you pay on that 20 per cent ad valorem ?

Mr. ROBINSON. Yes, sir.

Mr. HARRISON. That is one-fifth, or 8 cents duty?

Mr. ROBINSON. Yes, sir.

Mr. HARRISON. Let us assume that the other piece of leather is al full-sized skin, just like the first one, except that it is finished in that condition; that is worth more, it it not?

Mr. ROBINSON. It ought to be.

Mr. HARRISON. Let us assume it is worth 60 cents, just for the sake of the calculation. On that you claim 20 per cent duty is paid? Mr. ROBINSON. Yes, sir.

Mr. HARRISON. Twenty per cent is one-fifth; one-fifth of 60 is 12; so there is a duty of 12 cents paid on it when finished and only 8 cents paid on it when it comes in unfinished, and therefore there is a higher amount of duty paid on it after labor has been expended on it, and you correspondingly are protected for the amount of work you put on it in this country.

Mr. ROBINSON. I do not think you are right.

Mr. HARRISON. My figures may not be right, but my reasoning is. Mr. ROBINSON. No; your reasoning is not right. It is sold in the old country just as cheaply as we sell it. That is my argument, and we can not compete with them on the other side, as they can sell

cheaper over there than we can sell here. That skin does not cost any more. They are valued just about the same.

The CHAIRMAN. There seems to be nothing further, Mr. Robinson. You may be excused.

The next witness is Mr. A. T. Scharps, toy manufacturers, New York City.

Is Mr. Scharps present?

Mr. SCHARPS. I am here, Mr. Chairman.

SCHEDULE N, PARAGRAPH 431, TOYS.

STATEMENT OF MR. ALVA T. SCHARPS, OF NEW YORK CITY.

The witness was duly sworn by the chairman.

The CHAIRMAN. You may proceed, Mr. Scharps.

Mr. SCHARPS. Mr. Chairman and gentlemen of the committee, I appear in reference to paragraph 431 of Schedule N. This paragraph deals practically with toys, and reads as follows:

Dolls, and parts of dolls, doll heads, toy marbles of whatever materials composed, and all other toys and parts of toys, not composed of china, porcelain, parian, bisque, earthen or stone ware, and not specially provided for in this section, 35 per cent ad valorem.

I represent myself as a manufacturer and about 35 other manufacturers of American toys. That is the direct representation I have here this evening. I am also authorized indirectly to represent about 40 other manufacturers.

The toy industry in America commenced practically about 20 years ago, and the statistics under the Thirteenth Census shows that in the year 1899 there were manufactured in the United States $4,010,000 value of toys; in the year 1904, $5,578,000; in the year 1909, $8,264,000. That is an increase of about 100 per cent in a period of 10 years.

This same census discloses there are 226 establishments in the United States which manufacture toys. These establishments were located in a number of States, but out of the whole 226 there were more than 200 in the New England States and the States of New York, New Jersey, Pennsylvania, Ohio, Michigan, Indiana, and Illinois; so that we have here a compact industry in the United States which manufactured over $8,000,000 worth of products in the year 1909, and I believe that in the year 1912 those products exceeded $10,000,000 in value.

We ask that this duty be maintained. We ask for a continuance of this 35 per cent ad valorem rate.

When the hearings were had before this committee in 1909, the importers and manufacturers both appeared here by counsel and asked for a continuance of that same rate.

The CHAIRMAN. They import as much as they make, and I do not think you need worry about further argument.

Mr. SCHARPS. I have put all these facts into my brief, and I think we are entitled to a continuance of this rate.

There is one thing I would like, with your permission, to say. I would call your attention to the advances which the Japanese are now making. I have a specific instance to which I want to call your

attention. We make baseballs and import them into the United States to sell at retail for 10 cents, as good an article as can be bought from the American manufacturer at retail for 25 cents.

Mr. KITCHIN. Baseballs?

Mr. SCHARPS. Yes, sir.

Mr. KITCHIN. Those are a necessity now, are they not?
Mr. SCHARPS. Yes, sir.

That only shows the character of labor and competition which we actually meet as manufacturers of toys.

Mr. HULL. What is the present attitude of the importers?

Mr. SCHARPS. They would be delighted to have the rate reduced. I do not know whether it means necessarily a greater revenue to the Government, but it means practically the wiping out of these American toy manufacturers who all have factories.

The CHAIRMAN. Your product is not a necessity, and you are importing as much as you make, so I do not think you need worry about a 10 per cent duty.

Mr. SCHARPS. Does the committee care to have any of these exhibits filed with them?

The CHAIRMAN. Yes; you may file them with the clerk.

Mr. FORDNEY. What do these baseballs retail for?

Mr. SCHARPS. Ten cents, after paying a 35 per cent duty.

Mr. FORDNEY. They retail for 10 cents?

Mr. SCHARPS. Yes, sir; the Japanese baseballs do. That shows what the competition might amount to. In fact, so far as the Japanese are concerned, we ought to have an increased duty. Mr. FORDNEY. What is the duty on those baseballs?

Mr. SCHARPS. Thirty-five per cent.

Mr. HULL. There are no trade agreements among the manufacturers?

Mr. SCHARPS. Absolutely not. I have adverted in my brief to a trade agreement some years ago, which was a gigantic failure and finally went into a receivership, and the creditors got 30 cents on the dollar and the bondholders nd stockholders got nothing.

Mr. KITCHIN. I noticed in that paragraph all toys except those made out of rubber bear a 35 per cent duty?

Mr. SCHARPS. Yes, sir.

Mr. KITCHIN. Did not they formerly, under the Dingley Act, bear a duty of 35 per cent?

Mr. SCHARPS. That was a change made in 1909.

Mr. KITCHIN. What duty do they bear now?

Mr. SCHARPS. I understand 45 per cent.

Mr. KITCHIN. An increased duty on rubber itself was put in there since?

Mr. SCHARPS. Yes, sir; it has been changed afterwards.

Mr. PALMER. Is that a Rhode Island industry?

Mr. KITCHIN. Oh, yes. [Laughter.]

The CHAIRMAN. That seems to be all, Mr. Scharps; you may be excused.

The next witness on the calendar is Mr. William Cordes. Is Mr. Cordes present?

Mr. CORDES. Yes, sir.

SCHEDULE N, PARAGRAPH 423, TOOTHBRUSHES.

STATEMENT OF MR. WILLIAM CORDES, TREASURER OF THE FLORENCE MANUFACTURING CO., FLORENCE, MASS.

The witness was duly sworn by the chairman.

Mr. CORDES. Mr. Chairman and gentlemen of the committee, I have a brief that I have already presented to your honorable chairman, but have another copy if you prefer it. I would like to supplement it by a few brief remarks.

This afternoon in a statement that was made by Mr. Holton, representing some importers, regarding the brush industry, he referred specifically to my company on page 5 of his printed brief, in which he stated that we were shipping into Canada Prophylactic toothbrushes at a less price than we were selling them at in America. I simply wish to state that perhaps Mr. Holton made this statement with partial knowledge only. He says here that we sell the goods in America for $23.25 and in Canada for $21. He forgot, or perhaps he did not know it, that there is a discount from that $23.25 of $3.75. We get a net price of $19.50 in America, and we sell the few brushes which we export at the same price abroad.

Mr. HARRISON. Let me interrupt you a moment. Is not your rate, instead of being $23, as a matter of fact $27 per gross to the jobbers in this country?

Mr. CORDES. To jobbers, less 20 brushes that we give as a discount, and less 20 brushes that we give to the retailers as a discount.

Mr. HARRISON. Twenty-seven dollars per gross is the price of toothbrushes to the jobbers?

Mr. CORDES. That is the price.

Mr. HARRISON. From that you deduct the bonus, which amounts to 20 brushes?

Mr. CORDES. Yes, sir; or $3.75.

Mr. HARRISON. Supposing that the jobber does not sign your selling agreement, does he get that bonus?

Mr. CORDES. No, sir.

Mr. HARRISON. It is given only to the jobbers if they agree not to sell below a certain price?

Mr. CORDES. A minimum price.

Mr. HARRISON. So you have a selling agreement with all the jobbers to whom you sell, and unless they agree to that they do not get the bonus of $3.75?

Mr. CORDES. Yes, sir.

Mr. HARRISON. So your price is $23.25 net to the good, wellbehaved jobber?

Mr. CORDES. Our jobbers all behave.

Mr. HARRISON. I judge they all sign the selling agreement.

Mr. CORDES. We have never been obliged to take anybody off that list. We have never refused to sell anybody.

Mr. HARRISON. You never blacklisted any of your jobbers?

Mr. CORDES. No, sir.

Mr. FORDNEY. Even though they violated the agreement and sold below the minimum ?

Mr. CORDES. We have never had occasion, because they have never gone below the minimum.

Mr. FORDNEY. They have to be good or they can not get the goods? Mr. CORDES. No, sir; anybody gets the goods.

Mr. FORDNEY. Then why do you have that agreement?

Mr. CORDES. To maintain the price. If a jobber does not sign the agreement, he buys as a retailer, and the retail price is exactly the

same.

Mr. FORDNEY. You do not help the jobber out very much, do you ? Mr. CORDES. He sells the goods at $27 a gross and gets a profit of 14 per cent.

Mr. FORDNEY. But you say you will sell to the retailer at the same price.

Mr. CORDES. Yes, sir.

Mr. FORDNEY. If they sell below a certain price, you do not discriminate, although you give them to understand you will if they do not live up to that agreement?

Mr. CORDES. We simply speak to them.

Mr. FORDNEY. And they behave?

Mr. CORDES. Yes, sir.

Mr. FORDNEY. The child learns his lesson and knows it well.

Mr. CORDES. We have never taken anybody off that list and never have refused to sell to anybody. I would not refuse to sell them under any circumstances. I do not think that would be fair.

Mr. FORDNEY. Why do you make the agreement?

Mr. CORDES. The agreement is simply to keep them from slashing the prices all to pieces.

Mr. FORDNEY. But if they do slash prices to pieces you will forgive them and kill the fatted calf?

Mr. CORDES. They simply say, "We will not do it any more."
Mr. FORDNEY. Oh, "We will be good now."

Mr. CORDES. Yes, sir.

Mr. HULL. This kind of trade agreement does not exist in other lines of business, does it?

Mr. CORDES. I do not know, I am sure; perhaps it does.

Mr. FORDNEY. If any man in the manufacture of lumber or steel or cotton or wool should make an agreement of that kind, he would be before the Supreme Court in 15 minutes. Why are not you there? That is a violation of the Sherman antitrust law.

Mr. CORDES. If it is, I will stop it right off.

Mr. KITCHIN. He is not there because the Republican administration would not enforce the law against him. [Laughter.]

Mr. FORDNEY. We will wait and see what the Democrats do. I will watch that. [Laughter.]

Mr. CORDES. I do not think it is fair to make this a political matter. I want to be fair. If it is not right, I will fix it so that it will be right. I do not propose to violate any law. I never have violated any law.

Mr. FORDNEY. There has been case after case before the Supreme Court involving an agreement of that kind as being in violation of the Sherman antitrust law.

Mr. CORDES. The matter has never been called to my attention in that way. In fact, I can not find an attorney that will interpret that in that way. I have had this matter before several attorneys, and they tell me we are entirely within the law.