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diff --git a/20041.txt b/20041.txt new file mode 100644 index 0000000..55a8efe --- /dev/null +++ b/20041.txt @@ -0,0 +1,1983 @@ +The Project Gutenberg EBook of Men's Sewed Straw Hats, by +United States Tariff Commission + +This eBook is for the use of anyone anywhere at no cost and with +almost no restrictions whatsoever. You may copy it, give it away or +re-use it under the terms of the Project Gutenberg License included +with this eBook or online at www.gutenberg.org + + +Title: Men's Sewed Straw Hats + Report of the United Stated Tariff Commission to the + President of the United States (1926) + +Author: United States Tariff Commission + +Release Date: December 6, 2006 [EBook #20041] + +Language: English + +Character set encoding: ASCII + +*** START OF THIS PROJECT GUTENBERG EBOOK MEN'S SEWED STRAW HATS *** + + + + +Produced by David Garcia and The Online Distributed +Proofreading Team at http://www.pgdp.net + + + + + + + + + + + + UNITED STATES TARIFF COMMISSION + WASHINGTON + + + MEN'S SEWED STRAW HATS + + + REPORT + OF THE + UNITED STATES TARIFF COMMISSION + TO THE + PRESIDENT OF THE UNITED STATES + + + INVESTIGATION OF THE COSTS OF PRODUCTION OF + MEN'S SEWED STRAW HATS IN THE UNITED + STATES AND IN THE PRINCIPAL + COMPETING FOREIGN + COUNTRIES + + + WITH APPENDIX + PROCLAMATION BY THE PRESIDENT + + + WASHINGTON + GOVERNMENT PRINTING OFFICE + 1926 + + + + UNITED STATES TARIFF COMMISSION + + Office: Eighth and E Streets NW., Washington, D. C. + + + COMMISSIONERS + + THOMAS O. MARVIN, _Chairman_. + ALFRED P. DENNIS, _Vice Chairman_. + EDWARD P. COSTIGAN. + HENRY H. GLASSIE. + A. H. BALDWIN. + EDGAR B. BROSSARD. + + JOHN F. BETHUNE, _Secretary_. + + + ADDITIONAL COPIES + OF THIS PUBLICATION MAY BE PROCURED FROM + THE SUPERINTENDENT OF DOCUMENTS + GOVERNMENT PRINTING OFFICE + WASHINGTON, D. C. + AT + 5 CENTS PER COPY + + + + + CONTENTS + + + Page + Introductory: + Reference to files 1 + Rates of duty 1 + History of investigation 1 + Scope of investigation 2 + + Information obtained in the investigation: + Domestic production 2 + Kinds of hats produced 3 + Organization 3 + Labor conditions 3 + Imports 4 + Effect of imports 6 + Principal competing country 7 + Foreign production-- + Types of hats produced 8 + Organization 8 + Working hours and wages 8 + Costs of production-- + Methods of obtaining cost data 9 + Description of cost items-- + Material 9 + Labor 9 + Overhead 9 + Selling expense-- + (_a_) Domestic 9 + (_b_) Foreign 9 + Tables showing cost comparisons 10 + Competitive conditions-- + Transportation and marketing costs 11 + + Formal statement of conclusions 11 + Summary of conclusions 13 + + Separate statement of Commissioner Costigan, in part concurring + and in part dissenting, in the investigation of men's sewed + straw hats: + Both higher and lower duties indicated by the commission's + cost figures 15 + Determining the dividing line for tariff purposes between + higher and lower priced hats 15 + Some omissions from and doubtful features in the + commission's report 16 + Representativeness of samples 16 + Importers' selling expenses omitted 17 + Deficiencies in comparative overhead data 18 + + Appendix: + Proclamation by the President 21 + + + + + LETTER OF TRANSMITTAL + + + JULY 17, 1925. + + The PRESIDENT, + _The White House_, + _Washington, D. C._ + +MY DEAR MR. PRESIDENT: Herewith I have the honor to transmit the report +of the Tariff Commission in the investigation, for the purposes of +section 315 of the tariff act of 1922, of the costs of production in the +United States and in the principal competing foreign country of men's +sewed straw hats. Included in the report is a "Separate statement of +Commissioner Costigan, in part concurring and in part dissenting, in the +investigation of men's sewed straw hats." + +Respectfully, + + THOMAS O. MARVIN, + _Chairman_. + + + + + UNITED STATES TARIFF COMMISSION + WASHINGTON + + + + + MEN'S SEWED STRAW HATS + + + JULY 17, 1925. + +_To the President_: + +The United States Tariff Commission respectfully submits the following +report upon an investigation of the differences in costs of production +of men's sewed straw hats in the United States and in competing foreign +countries, for the purposes of section 315 of Title III of the tariff +act of 1922. + + + INTRODUCTORY + +_Reference to files._--The basic documents in connection with the +investigation on men's sewed straw hats are in the files of the Tariff +Commission and are available to the President. They include the +transcripts of the public hearings and the original cost schedules and +other data. These include confidential data, the disclosure of which is +forbidden by section 708 of the revenue act of 1916: + + SEC. 708. It shall be unlawful for any member of the United + States Tariff Commission, or for any employee, agent, or clerk of + said commission, or any other officer or employee of the United + States, to divulge, or to make known in any manner whatever not + provided for by law, to any person, the trade secrets or processes + of any person, firm, copartnership, corporation, or association + embraced in any examination or investigation conducted by said + commission, or by order of said commission, or by order of any + member thereof. * * * + +_Rates of duty:_ + + Act of 1922--Not blocked or trimmed } 60 per cent. } Par. 1406. + Blocked or trimmed } } + + Act of 1913--Not blocked or trimmed } 25 per cent. } Par. 335. + Blocked or trimmed } 40 per cent. } + + Act of 1909--Not trimmed } 35 per cent. } Par. 422. + Trimmed } 50 per cent. } + +_History of the investigation._--On May 29, 1924, the commission ordered +an investigation of men's sewed straw hats for the purposes of section +315 of Title III of the tariff act of 1922, and on the same date ordered +a preliminary hearing for June 12, 1924. + +An application was received from the National Association of Men's Straw +Hat Manufacturers of America requesting an investigation looking toward +an increase in the rate of duty on men's sewed straw hats, now dutiable +at 60 per cent ad valorem under paragraph 1406 of the tariff act of 1922. + +The domestic field work was carried on during the period August to +October, 1924, and the foreign work in Italy and England during the +period October, 1924, to February, 1925. After due notice, as prescribed +by law, public hearings were held in the offices of the commission on +June 12, 1924, and on May 4, 1925. The latter hearing was continued on +May 14, 15, and 16, 1925. Oral argument was waived and the date for +filing briefs was set for June 6, 1925. + +_Scope of the investigation._--Costs of production were obtained for +hats sold in the straw hat season of 1924 by companies whose fiscal +years ended at or about June 30, 1924. This period was the latest for +which cost data could be obtained at the time the investigation was +made. + +Domestic costs were obtained from 19 concerns in Maryland, New York, +Connecticut, and Massachusetts. The total production of these concerns +amounted to 718,265 dozen hats. Of this number, 553,253 dozen were men's +sewed straw hats. The 19 concerns produce approximately 85 per cent of +the men's sewed straw hats in the United States and include makers of +cheap, medium, and high-priced hats. They include nonmembers as well as +members of the national association. + +Costs were obtained in Italy from five concerns and in England from +three concerns exporting men's sewed straw hats to the United States. + +Both domestic and foreign straw hat factories are characterized by lack +of standardization in production. Variations exist in the quality of +the hats manufactured by different establishments, because of variations +in the type and quality of the braid, in the quality of the trimming +materials, such as leather sweat and silk bands, and in the amount +of hand labor employed in the finishing processes. Because of these +variations, it was considered inadvisable to compare the average costs +of production of all hats of the domestic concerns with the average of +all foreign hats. Evidence submitted at the preliminary hearing and data +in the possession of the commission indicated that competition between +domestic and foreign straw hats centered chiefly on three types, split +sennits of 13/15 millimeter braid, improved sennits of 16/18 millimeter +braid, and flatfoot sennits of 16/18 millimeter braid. The commission's +cost comparisons were therefore confined to hats of these +specifications. + + + INFORMATION OBTAINED IN THE INVESTIGATION + +From the commission's investigation of men's sewed straw hats, conducted +as indicated above, the following information has been obtained: + + + DOMESTIC PRODUCTION + +The manufacture of men's straw hats has been conducted on a commercial +scale in the United States for upward of 50 years. The industry is +centered in and around New York City, in a number of cities in +Massachusetts and Connecticut, and in Baltimore, Md. Statistics of +production of men's sewed straw hats are not available, since the census +of manufactures does not distinguish between men's and women's hats nor +between sewed hats and woven hats. Domestic manufacturers estimate that +the value of the men's straw hats produced in 1914 was $12,000,000, or +about 45 per cent of the total production of all straw hats. In 1920 +the value of the total production of men's straw hats was estimated at +$20,000,000, of which about $12,000,000 was men's sewed hats. At the +preliminary hearing it was estimated that the average annual production +of men's sewed straw hats in recent years amounted to 800,000 dozen. +There are about 40 manufacturers of men's sewed straw hats in the United +States. The majority are well established firms. + +The production of men's sewed straw hats for the season 1923-24 of 19 +factories for which costs were obtained was 553,253 dozen. The factories +may be classified as follows: + + +TABLE 1.--_Domestic straw-hat factories grouped according to annual +production_ + + ------------------------------------+--------+------------+---------- + | Number | Production | Per cent + | | | of total + ------------------------------------+--------+------------+---------- + | | _Dozen_ | + Group I. Factories with annual | | | + production of | | | + 50,000 dozen and over | 4 | 265,767 | 48.0 + Group II. Factories with annual | | | + production of | | | + 25,000-49,000 dozen | 4 | 122,936 | 22.2 + Group III. Factories with annual | | | + production of less | | | + than 25,000 dozen | 11 | 164,550 | 29.8 + +--------+------------+---------- + Total production | | 553,253 | 100.0 + ------------------------------------+--------+------------+---------- + + +_Kinds of hats produced._--There are two general types of men's straw +hats produced by the domestic manufacturers: + +(1) Woven hats, such as panamas, etc. The bodies of these hats are +imported in the rough and are shaped, finished, and trimmed in this +country. + +(2) Sewed hats. All of the operations necessary in the manufacture +of a sewed straw hat, with the exception of plaiting the braids, are +performed in the United States. This investigation relates to sewed +hats only. + +_Organization of production._--The manufacture of straw hats is +essentially a factory business and with few exceptions each concern +carries on all of the major operations connected with the production of +hats in a single establishment. Plaiting of straw braid is a separate +industry, the domestic hat manufacturers being dependent upon foreign +sources for their supply of braids. The bleaching of straw braids is +performed by some of the hat manufacturers in their own establishments; +others have the bleaching done by outside concerns which specialize in +this class of work. Some firms make the tips (the inside linings of the +hats) in their own establishments; others buy the complete tip, or have +certain operations, such as printing or stamping, performed by outside +shops. + +_Labor conditions._--The hours of labor of employees in domestic straw +hat factories in 1923-24 varied from 42 to 54 weekly. Wages are based +both on piece and time work. Time wages ranged from $15 to $40 per week, +according to the character of the work performed. + +The production of straw hats is to some extent seasonal. Orders are +received in the late summer for delivery in the following spring. +Production on these orders begins in September and the factories are +usually busiest in the early months of the year. The summer is a +slack season and factories operate with reduced labor force or close +altogether for several weeks. The following table shows the monthly +variations in the total number of employees of 18 domestic factories +in the season 1923-24: + + +TABLE 2.--_Employees in 18 domestic straw-hat factories, season of +1923-24_ + + ---------------+-----------++----------------+----------- + | Number of || | Number of + Month | employees || Month | employees + ---------------+-----------++----------------+----------- + 1923 | || 1924 | + July | 1,116 || January | 3,331 + August | 1,775 || February | 3,371 + September | 2,542 || March | 3,403 + October | 2,765 || April | 3,380 + November | 3,221 || May | 3,117 + December | 3,291 || June | 1,871 + ---------------+-----------++----------------+----------- + + + IMPORTS + +The quantities and values of sewed straw hats imported into the United +States were not separately shown in official statistics prior to the +tariff act of 1922, in which sewed straw hats were given a separate +classification. + +Table 3 shows the imports for consumption of sewed straw hats from the +principal countries of origin, by months, for the calendar years 1923 +and 1924. Total imports increased from 93,309 dozen in 1923, valued at +$779,989, to 164,041 dozen in 1924, valued at $1,179,929, a gain of +approximately 75 per cent in quantity and 50 per cent in value. + + +TABLE 3.--_Imports for consumption of men's sewed straw hats[1] from +Italy, England, Germany, and other countries, by months, calendar years +1923 and 1924_ + +(Source: Foreign Commerce and Navigation of the United States) + + -------------+----------+----------+----------+----------+------------ + | Italy | England | Germany | Other | Total + | | | | countries| + | | | | [2] | + +----------+----------+----------+----------+------------ + Month | 1923 | 1923 | 1923 | 1923 | 1923 + -------------+----------+----------+----------+----------+------------ + | _Number_ | _Number_ | _Number_ | _Number_ | _Number_ + January | 51,225 | 9,734 | 2,460 | 26,606 | 90,025 + February | 53,644 | 9,235 | 8 | 4,756 | 67,643 + March | 54,102 | 55,920 | 7,420 | 51,305 | 168,747 + April | 66,552 | 46,222 | 1,931 | 84,684 | 199,389 + May | 78,602 | 68,989 | 80 | 31,888 | 179,559 + June | 38,658 | 42,776 | 1,960 | 4,414 | 87,808 + July | 23,049 | 6,717 | 848 | 11,685 | 42,299 + August | 1,796 | 1,250 | 1,504 | 1,041 | 5,591 + September | 120 | 960 | 1,272 | 102 | 2,474 + October | 53,129 | 396 | 3,411 | 331 | 57,267 + November | 77,962 | 2,718 | 8,929 | 7,524 | 97,133 + December | 78,372 | 1,647 | 21,334 | 20,415 | 121,768 + +----------+----------+----------+----------+------------ + Total number | 577,211 | 246,584 | 51,157 | 244,751 | 1,119,703 + Dozen | 48,101 | 20,549 | 4,263 | 20,396 | 93,309 + +==========+==========+==========+==========+============ + | | | | | + Total Value | $289,215 | $256,769 | $32,503 | $201,502 | $779,989 + | | | | | + Average | | | | | + value per | | | | | + dozen | $6.01 | $12.50 | $7.62 | $9.88 | $8.36 + +==========+==========+==========+==========+============ + Per cent | | | | | + of hats | | | | | + imported | | | | | + from each | | | | | + country | 51.50 | 22.00 | 4.60 | 21.90 | 100.0 + -------------+----------+----------+----------+----------+------------ + + -------------+----------+----------+----------+----------+------------ + | Italy | England | Germany | Other | Total + | | | | countries| + | | | | [2] | + +----------+----------+----------+----------+------------ + Month | 1924 | 1924 | 1924 | 1924 | 1924 + -------------+----------+----------+----------+----------+------------ + | _Number_ | _Number_ | _Number_ | _Number_ | _Number_ + January | 35,754 | 50,087 | 19,829 | 34,754 | 140,424 + February | 114,644 | 35,024 | 25,372 | 57,429 | 232,469 + March | 97,899 | 46,435 | 50,126 | 40,669 | 235,129 + April | 192,007 | 119,031 | 85,421 | 49,935 | 446,394 + May | 113,593 | 54,874 | 85,884 | 34,047 | 288,398 + June | 59,840 | 37,208 | 6,873 | 14,769 | 118,690 + July | 22,505 | 1,533 | 720 | 41,367 | 66,125 + August | 4,000 | 820 | 2,795 | 41,689 | 49,304 + September | 427 | 706 | 7,377 | 10,550 | 19,060 + October | 37,809 | 318 | 4,541 | 34,528 | 77,196 + November | 82,313 | 2,640 | 959 | 44,471 | 130,383 + December | 100,353 | 4,723 | 5,332 | 54,516 | 164,924 + +----------+----------+----------+----------+------------ + Total number | 861,144 | 353,399 | 295,229 | 458,724 | 1,968,496 + Dozen | 71,762 | 29,450 | 24,602 | 38,227 | 164,041 + +----------+----------+----------+----------+------------ + | | | | | + Total Value | $427,706 | $282,402 | $180,054 | $289,767 | $1,179,929 + | | | | | + Average | | | | | + value per | | | | | + dozen | $5.96 | $9.59 | $7.32 | $7.57 | $7.19 + +==========+==========+==========+==========+============ + Per cent | | | | | + of hats | | | | | + imported | | | | | + from each | | | | | + country | 43.75 | 17.95 | 15.00 | 23.30 | 100.00 + -------------+----------+----------+----------+----------+------------ + [1: Including men's, women's, and children's.] + [2: Including withdrawals from warehouse.] + + +A comparison of the imports for the first four months of 1925 with those +for the corresponding period in 1924 is shown in Table 4. A significant +feature of this table is the increase in imports from Italy and the +decrease of imports from both the United Kingdom and Germany. It should +be noted also that the average foreign[a] value per dozen of Italian +hats decreased while the average foreign[a] value of hats imported from +England and other countries increased. + +[Footnote a: Values upon which duties were assessed as computed from +data given in Foreign Commerce and Navigation of the United States.] + + +TABLE 4.--_Imports for consumption of men's sewed straw hats[1] from +Italy, United Kingdom, Germany, and other countries, by months, +January-April, inclusive, 1924 and 1925._ + +(Source: Foreign Commerce and Navigation of the United States) + + ------------+----------+----------+----------+-----------+----------- + | Italy | United | Germany | Other | Total + | | Kingdom | | countries | + | | | | [2] | + +----------+----------+----------+-----------+----------- + Month | 1924 | 1924 | 1924 | 1924 | 1924 + ------------+----------+----------+----------+-----------+----------- + | _Number_ | _Number_ | _Number_ | _Number_ | _Number_ + January | 35,754 | 50,087 | 19,829 | 34,754 | 140,424 + February | 114,644 | 35,024 | 25,372 | 57,429 | 232,469 + March | 97,899 | 46,435 | 50,126 | 40,669 | 235,129 + April | 192,007 | 119,031 | 85,421 | 49,935 | 446,394 + +----------+----------+----------+-----------+----------- + Total number| 440,304 | 250,577 | 180,748 | 182,787 | 1,054,416 + Dozen | 36,692 | 20,882 | 15,062 | 15,232 | 87,868 + +==========+==========+==========+===========+=========== + | | | | | + Total value | $228,452 | $201,291 | $102,366 | $123,775 | $655,884 + | | | | | + Average | | | | | + value | | | | | + per dozen | 6.23 | 9.64 | 6.80 | 8.13 | 7.46 + +==========+==========+==========+===========+=========== + Per cent | | | | | + of hats | | | | | + imported | | | | | + from each | | | | | + country | 41.76 | 23.76 | 17.14 | 17.34 | 100.00 + ------------+----------+----------+----------+-----------+----------- + + ------------+----------+----------+----------+-----------+----------- + | Italy | United | Germany | Other | Total + | | Kingdom | | countries | + | | | | [2] | + +----------+----------+----------+-----------+----------- + Month | 1925 | 1925 | 1925 | 1925 | 1925 + ------------+----------+----------+----------+-----------+----------- + | _Number_ | _Number_ | _Number_ | _Number_ | _Number_ + January | 212,292 | 8,995 | 12,070 | 6,104 | 239,461 + February | 189,736 | 31,776 | 7,697 | 22,580 | 251,789 + March | 207,218 | 61,755 | 3,828 | 24,482 | 297,283 + April | 260,145 | 45,711 | 40,479 | 10,545 | 356,880 + +----------+----------+----------+-----------+----------- + Total number| 869,391 | 148,237 | 64,074 | 63,711 | 1,145,413 + Dozen | 72,449 | 12,353 | 5,340 | 5,309 | 95,451 + +==========+==========+==========+===========+=========== + | | | | | + Total value | $395,298 | $161,422 | $40,923 | $78,222 | $675,865 + | | | | | + Average | | | | | + value | | | | | + per dozen | 5.46 | 13.07 | 7.66 | 14.73 | 7.08 + +==========+==========+==========+===========+=========== + Per cent | | | | | + of hats | | | | | + imported | | | | | + from each | | | | | + country | 75.90 | 12.94 | 5.60 | 5.56 | 100.00 + ------------+----------+----------+----------+-----------+----------- + [1: Including men's, women's, and children's.] + [2: Including withdrawals from warehouse.] + + +TABLE 5.--_Imports at the port of New York of men's sewed straw hats +from Italy[1] classified according to foreign value, including packing +January-June, 1924_ + + + [In dozens] + ----------------+-------------------------+------------------------- + | Sennits[2] | Fancies[3] + Value +-------+---------+-------+-------+---------+------- + |Trimmed|Untrimmed| Total |Trimmed|Untrimmed| Total + ----------------+-------+---------+-------+-------+---------+------- + $2.99 and less | | 18 | 18 | | 60 | 60 + $3.00-$3.49 | 6 | 38 | 44 | | 219 | 219 + $3.50-$3.99 | 255 | 23 | 278 | 1 | 250 | 251 + $4.00-$4.49 | 2,518 | 28 | 2,546 | 196 | 2,909 | 3,105 + $4.50-$4.99 | 1,617 | 24 | 1,641 | 61 | 477 | 538 + $5.00-$5.49 | 1,671 | 4 | 1,675 | 427 | 711 | 1,138 + $5.50-$5.99 | 1,687 | 1 | 1,688 | 608 | 89 | 697 + $6.00-$6.49 | 1,313 | | 1,313 | 2,831 | 182 | 3,013 + $6.50-$6.99 | 2,657 | 1 | 2,658 | 2,537 | 33 | 2,570 + $7.00-$7.49 | 740 | | 740 | 996 | 15 | 1,011 + $7.50-$7.99 | 255 | | 255 | 939 | 3 | 942 + $8.00-$8.49 | 147 | | 147 | 470 | 6 | 476 + $8.50-$8.99 | 165 | | 165 | 261 | 5 | 266 + $9.00-$9.49 | 10 | | 10 | 165 | 1 | 166 + $9.50-$9.99 | 30 | | 30 | 107 | | 107 + $10.00-$10.49 | 39 | | 39 | 56 | 1 | 57 + $10.50-$10.99 | 46 | | 46 | 34 | | 34 + $11.00 and over | 63 | 3 | 66 | 10 | 12 | 22 + +-------+---------+-------+-------+---------+------- + Total |13,219 | 140 |13,359 | 9,699 | 4,973 |14,672 + ----------------+-------+---------+-------+-------+---------+------- + + [In dozens] + ----------------+-------------------------+------------------------- + | Miscellaneous[4] | Grand total + Value +-------+---------+-------+-------+---------+------- + |Trimmed|Untrimmed| Total |Trimmed|Untrimmed| Total + ----------------+-------+---------+-------+-------+---------+------- + $2.99 and less | | | | | 78 | 78 + $3.00-$3.49 | 50 | | 50 | 56 | 257 | 313 + $3.50-$3.99 | 570 | | 570 | 826 | 273 | 1,099 + $4.00-$4.49 | 622 | | 622 | 3,336 | 2,937 | 6,273 + $4.50-$4.99 | 680 | | 680 | 2,358 | 501 | 2,859 + $5.00-$5.49 | 1,715 | | 1,715 | 3,813 | 715 | 4,528 + $5.50-$5.99 | 1,095 | 58 | 1,153 | 3,390 | 148 | 3,538 + $6.00-$6.49 | 1,826 | 10 | 1,836 | 5,970 | 192 | 6,162 + $6.50-$6.99 | 879 | 1 | 880 | 6,073 | 35 | 6,108 + $7.00-$7.49 | 433 | | 433 | 2,169 | 15 | 2,184 + $7.50-$7.99 | 346 | 17 | 363 | 1,540 | 20 | 1,560 + $8.00-$8.49 | 598 | | 598 | 1,215 | 6 | 1,221 + $8.50-$8.99 | 231 | | 231 | 657 | 5 | 662 + $9.00-$9.49 | 420 | | 420 | 595 | 1 | 596 + $9.50-$9.99 | 46 | | 46 | 183 | | 183 + $10.00-$10.49 | 203 | | 203 | 298 | 1 | 299 + $10.50-$10.99 | 56 | | 56 | 136 | | 136 + $11.00 and over | 527 | 1 | 528 | 600 | 16 | 616 + +-------+---------+-------+-------+---------+------- + Total |10,297 | 87 |10,384 |33,215 | 5,200 |38,415 + ----------------+-------+---------+-------+-------+---------+------- + [1: Taken from original invoices. Fractional dozen omitted in this + table.] + [2: Split, improved, and flatfoot.] + [3: Fancy straw and sennit, fancy.] + [4: Including hats the type of which is not specified in the invoice. + Probably many sennits and fancies.] + + +In Table 5, imports of Italian hats at the port of New York in the six +months January-June, 1924, have been classified according to foreign +values shown on consular invoices. There is a marked concentration of +imports in the value groups between $4 and $7 per dozen. About 90 per +cent of all the sennit hats and 80 per cent of the total importations +had foreign values of less than $7 per dozen. + + +TABLE 6.--_Percentage of men's sewed straw hats imported at the port +of New York from Italy with a foreign value less than that specified, +January-June_, 1924 + + --------------+------------+------------+------------------+----------- + Foreign value | Sennits[1] | Fancies[2] | Miscellaneous[3] | Total + less than-- | | | | + --------------+------------+------------+------------------+----------- + | _Per cent_ | _Per cent_ | _Per cent_ | _Per cent_ + $9.50 | 98.6 | 98.5 | 92.0 | 96.8 + $9.00 | 98.6 | 97.4 | 87.9 | 95.2 + $8.50 | 97.3 | 95.6 | 85.7 | 93.5 + $8.00 | 91.2 | 92.3 | 79.9 | 90.3 + $7.50 | 94.3 | 85.9 | 76.4 | 86.3 + $7.00 | 88.8 | 79.0 | 72.3 | 80.6 + $6.50 | 68.9 | 61.5 | 63.8 | 64.7 + $6.00 | 9.1 | 40.9 | 46.1 | 48.6 + $5.50 | 46.4 | 36.2 | 35.0 | 39.4 + $5.00 | 33.9 | 28.4 | 18.5 | 27.6 + $4.50 | 21.6 | 24.8 | 12.0 | 20.2 + --------------+------------+------------+------------------+----------- + [1: Split, improved, and flatfoot.] + [2: Fancy straw and sennit, fancy.] + [3: Including hats the type of which is not specified in the invoice.] + + +The imports at the port of New York of hats from England are classified +in Table 7. It is evident that the bulk of the English importations are +not competitive with Italian hats. Only 28 per cent of the imports from +England had a foreign value of less than $7 per dozen. + + +TABLE 7.--_Imports at the port of New York of men's sewed straw hats +from England,[1] classified according to foreign value, including +packing, January-June_, 1924 + + ------------------+--------- + Foreign value | Dozen + ------------------+--------- + $6.50-$6.99 | 2,631 + $7.00-$7.49 | ... + $7.50-$7.99 | ... + $8.00-$8.49 | ... + $8.50-$8.99 | 3,340 + $9.00-$9.49 | 1,260 + $9.50-$9.99 | 1,044 + $10.00-$10.49 | 98 + $10.50-$10.99 | ... + $11.00 and up | 948 + | ===== + Total | 9,521 + ------------------+--------- + [1: These data cover 9,521 dozen hats out of a total of approximately + 10,730 dozen imported from England, or 89 per cent. They represent + the larger invoices (several over 1,000 dozen) and hence are not + so evenly distributed as are the Italian hats.] + + +_Effect of imports._--The effect of the increasing imports of straw +hats on the production and sales of domestic firms was discussed at the +public hearings before the Tariff Commission. Evidence was introduced +showing that the production of 19 factories decreased from 468,424 dozen +in the eight months August, 1923, to March, 1924, to 391,189 dozen in +the corresponding months of 1924-25. Seventeen firms showed decreased +production and two firms reported increases. Meanwhile imports of +foreign hats increased from 74,355 dozen to 102,450 dozen. Imports +from Italy increased from 38,000 dozen to 70,000; imports from England +decreased from 12,000 dozen to 9,000. Representatives of several +domestic firms stated that their losses of business were directly +attributable to inability to meet prices quoted by importers of Italian +hats.[1] + +[Footnote 1: See Transcript of Public Hearings, May 16, 1925, pp. 408, +420.] + +Representatives of the importers, on the other hand, called attention +to the increasing competition of small firms in and around New York +City with larger and longer established firms located principally in +Baltimore. Some of the new firms operate on small capital and specialize +in cheap hats which are directly competitive with the cheapest Italian +hats. Others produce a somewhat better hat, such as is sold by chain +stores. The rate of business failure among the newer firms is unusually +high. Although the membership of the group of producers of cheap hats +is fluctuating, its total output of hats each year is a factor in the +competitive situation. + +A relatively new development in the distribution of straw hats is the +chain stores. Sales of such stores, estimated at 150,000 to 200,000 +dozen straw hats yearly, include Italian and English hats but are +principally of domestic manufacture. In some cases a chain-store +organization has established factories and thus has instituted direct +competition with manufacturing firms already established. Chain stores +also have furnished capital to small manufacturers, contracting for the +bulk of their output. Thus the change in marketing methods has a bearing +on the failure of the older establishments to keep pace in the volume of +their sales with the national expansion in straw hat consumption. + + + PRINCIPAL COMPETING COUNTRY + +Table 3, on page 4, shows that in the calendar year 1923 imports of +sewed straw hats from Italy amounted to 48,101 dozen, or 51 per cent +of total imports. The average value per dozen of these Italian hats was +$6.01. During this same period imports from England amounted to 20,549 +dozen or 22 per cent of total imports, at an average value of $12.50 +per dozen. + +During the calendar year 1924 imports from Italy amounted to 71,762 +dozen, or 44 per cent of the total, at an average value of $5.96 per +dozen. Imports from England were 29,450 dozen, or approximately 18 per +cent of the total, at an average value of $9.59. Total imports increased +from 93,309 dozen in 1923, valued at $779,989, to 164,041 dozen in 1924, +valued at $1,179,929, a quantitative gain of approximately 75 per cent. + +The latest available import data covering the months of January-April, +1925, are shown in Table 4, on page 5. For these four months imports +from Italy amounted to 72,449 dozen, or about 76 per cent of the total, +and the average value of Italian hats imported declined from $6.23 per +dozen, on the comparable four months' period in 1924, to $5.46 per dozen +in 1925. Imports from the United Kingdom for this same period were +12,353 dozen, or about 13 per cent of the total, and it should be noted +that the average value increased from $9.64 to $13.07 per dozen. + +Italy, is, therefore, for the purposes of section 315, the principal +competing country. + + + FOREIGN PRODUCTION + +The center of production in Italy is Signa, near Florence. It was +estimated (1924) that 1,500 persons were employed in the Signa district +in establishments producing men's straw hats. The employees were about +evenly divided between men and women. + +In England the principal centers of straw-hat production are St. Albans +and Luton, towns near London. No estimate was obtained of the number +of factories in operation, the volume of production, or the number of +persons employed. The English manufacturers of men's straw hats in +1923-24 were suffering a business depression, and some of them were +changing over to the manufacture of women's hats. + +_Types of hats produced in foreign factories._--Neither the English nor +the Italian factories producing men's straw hats confine their business +exclusively to men's sewed straw hats. Some of them also block and trim +woven-hat bodies, such as panamas; some make women's and children's +hats, and others produce, or deal in, felt hats. Nor is production of +sewed straw hats confined to those made of sennit braids; hats are made +of other braids as well. + +_Organization of foreign production._--The sennit braids used in the +Italian straw hats exported to the United States are not made in Italy +but are of Japanese origin, as are also the sennit braids used in the +sewed straw hats made in the United States and in England.[2] + +[Footnote 2: Milan and fancy braids are plaited by Italian women +in their homes, but this industry is not to be confused with the +manufacture of sewed hats, the subject of this investigation.] + +In general, the foreign straw-hat factories do not bleach straw braids +in their own establishments. In Italy, however, one concern not only +bleached its own braids but also bleached braids for other straw-hat +manufacturers. + +With respect to hats, some of the unfinished bodies, usually leghorns, +are made by women in their homes. But men's sewed straw hats, the +subject of this investigation, are produced in factories or in small +workshops. The latter generally operate on a contract basis for the +larger manufacturers or shippers. The workshops which own their own +equipment are organized to produce from 25 to 200 dozen sewed hats per +week. In the making of the shell or body of the hat the contractors +are paid on the basis of the number delivered to and accepted by the +principal. The contractors furnish their own sewing cotton, gelatin, +and other materials, except braid, used in making the shells or bodies +of the hats. The trimming of straw hats is also to some extent performed +on a contract basis. + +The establishments visited in England generally perform all the +operations of making and trimming hats in their own establishments, +although at times "outworkers" are employed. + +_Working hours and wages._--The labor employed in the manufacture of +sewed straw hats is well organized in both Italy and England. The rates +of wages and hours of labor, both of factory workers and of employees +of contractors, are determined by collective bargaining. A minimum wage +scale for both pieceworkers and timeworkers became effective in Italy +October 27, 1924. The labor of women and children in Italy is limited to +48 hours per week (decree of March 15, 1923). The employment of children +under 12 years of age in shops and factories is prohibited. + + + COSTS OF PRODUCTION + +_Methods of obtaining cost data._--Costs of the domestic Italian and +English hats were obtained by representatives of the commission. In the +United States they were given access to the books and records of the +manufacturers. Domestic costs of materials, labor, and overhead are +based on actual records. + +In both Italy and England representatives of the commission were given +access to manufacturers' books showing estimates of their costs. The +estimates of material and labor costs were verified from original +records. Estimates of general administrative and factory expense were +expressed as percentages of the combined cost of labor and materials or +of sales. Access to records from which the latter estimates could be +verified was not permitted. + + + DESCRIPTION OF COST ITEMS + +_Material._--Material includes costs of braid, of bleaching, and of +trimming materials and sundries, and also the cartons in which the hats +are packed. + +_Labor._--The amount charged to the individual hat for labor includes +all labor costs connected with its manufacture. The amount of direct +labor on each hat was first determined. The indirect labor charge for +each hat was determined by applying to its direct labor charge the +percentage which total indirect labor for the factory bore to the total +direct labor. + +_Overhead._--In each domestic factory the total overhead charges were +obtained and the ratio of these charges to the total direct labor cost +of the respective factory was computed. This ratio, expressed as a +percentage of direct labor, was applied to the direct labor cost of +individual hats to determine the overhead charge to be apportioned to +each hat. + + + SELLING EXPENSE + +(_a_) _Domestic._--The ratio of total selling expense in each factory +to total manufacturing cost (material, labor, and overhead) was first +determined. This ratio (expressed as a percentage of total manufacturing +cost) applied to the manufacturing cost of the selected hat determined +its proper share of the total selling expense. Firms organized to deal +directly with retailers uniformly had higher selling expenses than those +whose products were marketed chiefly through jobbers. The average +selling expense of the selected hats was $1.64 per dozen, or 10.8 per +cent of the average manufacturing cost. In selling expense is included +the charge for cases and other packing material. + +(_b_) _Foreign._--Costs of selling hats to importers in the United +States are included in the general overhead expenses reported by +foreign companies, but are an inconsiderable item when compared with +manufacturing costs. No expenses of the offices maintained in this +country by foreign manufacturers have been included. + + + TABLES SHOWING COST COMPARISONS + +In Table 8 are shown the costs of domestic and Italian men's sewed straw +hats, irrespective of the type of braid used in their manufacture. In +Table 9 are shown similar cost data for domestic and English hats. In +both tables costs are shown with and without transportation charges on +foreign hats, and ad valorem rates of duty necessary to equalize +differences in foreign and domestic costs have been computed. + + +TABLE 8.--_Rates of duty necessary to equalize differences in costs of +production of men's sewed straw hats in the United States and in Italy, +the principal competing country_ + + -------------------------------------------+-------------+------------ + Item | Domestic[1] | Italian[2] + -------------------------------------------+-------------+------------ + (_a_) Cost (transportation not included): | _Per dozen_ | _Per dozen_ + Material cost | $6.44 | $4.35 + Labor | 4.60 | .87 + Overhead | 1.70 | .76 + +-------------+------------ + Total manufacturing cost | 12.74 | 5.98 + +=============+============ + Difference | | 6.76 + Foreign valuation[3] | | 6.42 + American selling price[4] | 13.28 | + | | + Ad valorem duty necessary to equalize | | + on basis of-- | | _Per cent_ + Foreign valuation | | 105 + American selling price | | 51 + +=============+============ + | | + (_b_) Cost (transportation on Italian | | + hats to New York included): | | _Per dozen_ + Total manufacturing cost | 12.74 | $5.98 + Transportation to New York--Inland | | + freight, ocean freight, marine | | + insurance, consular fee | | 1.10 + +-------------+------------ + Cost, including transportation to | | + New York for Italian hats | 12.74 | 7.08 + Difference | | 5.66 + Foreign valuation[3] | | 6.42 + | | + Ad valorem duty necessary to equalize | | + on basis of-- | | _Per cent_ + Foreign valuation | | 88 + -------------------------------------------+-------------+------------ + [1: Average costs of 15 domestic hats selling to jobbers at $10.55 to + $15.52.] + [2: Average cost of 15 Italian hats whose imported cost plus duty + ranged from $8.51 to $13.10.] + [3: Average of wholesale selling prices reported by foreign + manufacturers.] + [4: Average of wholesale selling prices to jobbers reported by domestic + manufacturers.] + + +TABLE 9.--_Rates of duty necessary to equalize differences in costs +of production of men's sewed straw hats in the United States and in +England_ + + -------------------------------------------+-------------+------------ + Item | Domestic[1] | English[2] + -------------------------------------------+-------------+------------ + (_a_) Cost (transportation not included): | _Per dozen_ | _Per dozen_ + Material cost | $8.34 | $5.47 + Labor | 5.85 | 1.84 + Overhead | 1.87 | 2.01 + +-------------+------------ + Total manufacturing cost | 16.06 | 9.32 + +=============+============ + Difference | | 6.74 + Foreign valuation[3] | | 9.73 + Ad valorem duty necessary to equalize | | + on basis of-- | | _Per cent_ + Foreign valuation | | 69 + +=============+============ + (_b_) Cost (transportation on English hats | | + to New York included): | | _Per dozen_ + Total manufacturing cost | 16.06 | $9.32 + Transportation to New York--Inland | | + freight, ocean freight, marine | | + insurance, consular fee | | 1.35 + +-------------+------------ + Cost, including transportation to New | | + York for English hats | 16.06 | 10.67 + Difference | | 5.39 + Foreign valuation[3] | | 9.73 + | | + Ad valorem duty necessary to equalize | | + on basis of-- | | _Per cent_ + Foreign valuation | | 55 + -------------------------------------------+-------------+------------ + [1: Average costs of eight domestic hats selling to jobbers at $16.74 + to $22.50.] + [2: Average costs of eight English hats whose landed costs duty paid + ranged from $15.64 to $18.60.] + [3: Average of selling prices reported by foreign manufacturers.] + + + COMPETITIVE CONDITIONS + +Styles for men's straw hats are set about one year in advance. +Sample hats are manufactured in May and June and orders are taken by +manufacturers in July, August, and September for hats to be delivered +the following spring. This custom of the trade makes it possible for +foreign manufacturers to copy and offer in competition the same styles +as those made by American manufacturers. Imported hats have a wide range +of styles and prices, including not only sewed hats of sennit braid +but also those of fancy braids, and woven body hats such as leghorns. +Domestic hats also comprise a wide range of styles and prices. Within +this range there is a more or less definitely limited field in which +imports compete directly with domestic merchandise. + + + TRANSPORTATION AND MARKETING COSTS + +Before the Italian or English hats enter into competition in the +domestic wholesale market with hats of domestic manufacture expenses for +transportation, marine insurance, and consular fees must be incurred. In +the season 1923-24 the charges specified amounted to approximately $1.10 +per dozen for Italian hats and $1.35 per dozen for English hats.[3] Such +expenses are set forth in the lower half of Tables 8 and 9. + +[Footnote 3: Computed from consular invoices for hats imported at the +port of New York in the six months, January-June, 1924.] + +The methods of marketing foreign and domestic hats are similar, but +because of minor differences in terms of sale, etc., it was not found +practicable to institute a mathematical comparison of selling costs. +Some domestic firms deal only with jobbers, others only with retailers. +A few of the largest firms sell to both jobbers and retailers. When +the manufacturer dispenses with the services of jobbers his selling +costs are, of course, increased. Foreign straw hats are distributed +principally by importing jobbers. Such firms are usually engaged also in +the marketing of domestic hats and in some instances are manufacturers +or have financial interests in domestic factories. Foreign factories +occasionally deal directly with large retailers in this country. In such +cases it is usual for the retailer's representative to travel abroad to +inspect samples and place orders. One large Italian factory maintains a +New York office through which it deals directly with domestic retailers. + + + FORMAL STATEMENT OF CONCLUSIONS + +(1) Italy is the principal competing country. While Commissioners +Costigan and Dennis agree with this conclusion, they are also of opinion +that, with respect to hats valued at more than $9.50 per dozen in the +country of exportation, Great Britain is shown to be the principal +competing country. + +(2) The average cost of production in the United States, as shown by +the cost data for the season 1923-24, of men's sewed straw hats sold +to jobbers for $10.55 to $16.52 per unit of one dozen is $12.74. The +average cost of production, not including transportation costs, of +imported men's sewed straw hats whose landed costs, duty paid, range from +$8.51 to $13.10 per dozen, and which are like or similar to the domestic +hats above described, is $5.98 per dozen. The difference in said costs +of production, transportation costs not included, is $6.76 per dozen. +The cost of production of the imported hats, including transportation +costs from the foreign factory to the dock at New York, is $7.08 per +dozen, and the difference in said costs is $5.66 per dozen. + +(3) The average selling price of such imported men's sewed straw hats, +in the country of exportation, as shown by said cost data, is $6.42 per +dozen. The American selling price, as defined in subdivision (_f_) of +section 402 of the tariff act of 1922, of similar competitive articles +manufactured or produced in the United States, is $13.28 per dozen. + +(4) If transportation costs be not included, the differences in costs +of production in the United States and in said principal competing +country are greater than the amount of the present duty of 60 per cent +ad valorem increased by the total maximum increase authorized under +section 315, subdivision (_a_), of said act, and said differences in +costs of production in the United States and in said principal competing +country can not be equalized by proceeding under the provisions of said +subdivision (_a_); that is to say, by increasing to the extent of 50 per +cent the existing ad valorem duty applied to the value of the imported +article in the country of exportation. + +(5) If transportation costs be included, the rate of duty shown +by the differences in costs of production, necessary to equalize said +differences, upon men's sewed straw hats valued at $9.50 or less per +dozen in the country of exportation, is a rate of 88 per cent ad valorem +based on the valued in the country of exportation, as defined in section +402 of said act. + +(6) If transportation costs be not included, the rate of duty shown by +the differences in said costs of production, necessary to equalize said +differences, upon men's sewed straw hats valued at $9.50 or less per +dozen in the country of exportation, is a rate of 50 per cent ad valorem +based upon the American selling price, as defined in said section 402, +of similar competitive articles manufactured or produced in the United +States. + +(7) The average cost of production in the United States, as shown by +the cost data for the season 1923-24, of men's sewed straw hats sold +to jobbers for $16.74 to $22.50 per unit of one dozen is $16.06. The +average cost of production, not including transportation costs, of +imported men's sewed straw hats whose landed costs, duty paid, range +from $15.64 to $18.60 per dozen, and which are like or similar to the +domestic hats above described, is $9.32 per dozen. The difference in +said costs of production, transportation costs not included, is $6.74 +per dozen. The cost of production of the imported hats, including +transportation costs, is $10.67 per dozen, and the difference in said +costs is $5.39 per dozen. + +(8) The average selling price of such imported men's sewed straw hats, +in the country of exportation, as shown by said cost data, is $9.73 per +dozen. + +(9) If transportation costs be included, the rate of duty shown +by the differences in costs of production necessary to equalize said +differences upon men's sewed straw hats valued at more than $9.50 +per dozen in the country of exportation is a rate of 55 per cent ad +valorem based upon the value of such hats in the country of exportation. + +(10) If transportation costs be not included, the rate of duty shown +by the differences in costs of production necessary to equalize said +differences upon men's sewed straw hats valued at more than $9.50 per +dozen in the country of exportation is, according to a mathematical +calculation, 69 per cent ad valorem based upon the value of such hats +in the country of exportation. Commissioners Marvin, Glassie, and +Baldwin are, however, of the opinion that the existing rate of 60 +per cent ad valorem substantially equalizes differences in costs of +production in respect of hats valued above $9.50 per dozen in the +country of exportation. + + + SUMMARY OF CONCLUSIONS + +On the basis of the facts presented the commission agrees that the data +indicate an increase in tariff rates, if the differences in costs of +production are to be equalized between lower-priced grades of foreign +hats and comparable products of American factories. In respect of such +hats, Italy is the principal competing country. + +The commission further agrees that foreign hats sold in the United +States on a basis of quality rather than price are the higher-priced +hats which at this time are not keenly competitive with the products +of the American industry. With respect to such higher-priced hats, +Commissioners Costigan and Dennis are of opinion that Great Britain is +shown to be the principal competing county, and that under the law the +data indicate that the duty should be reduced. + +The commission agrees that $9.50 per dozen, foreign valuation, +represents a fair breaking point for customs purposes between +lower-grade hats competing on a price basis and hats of superior +material and workmanship competing on a quality basis. + +Under section 315 of the tariff act of 1922 there is an undetermined +legal question with respect to including transportation expense in +estimating foreign production costs. Commissioners Costigan, Dennis, and +Baldwin agree that under subdivision (c) of section 315 a fair estimate +of foreign costs should include the expense of transporting the foreign +product to the principal competitive market or markets in this country. +For hats whose foreign value is not in excess of $9.50 per dozen the +rate of 88 per cent ad valorem is indicated as the correct duty for +equalizing costs, with transportation included. + +Chairman Marvin and Commissioner Glassie agree that under the law costs +of production do not include transportation costs on either side. If +transportation costs be not included in the foreign costs of production +shown by this investigation, the rate indicated by the cost data would +be 105 per cent on foreign valuation. This rate being in excess of the +maximum permissible under subdivision (a) of section 315, resort must be +had under subdivision (b) of section 315 to the American selling price +basis of valuation in order to equalize the differences in production +costs. For hats whose foreign valuation is not in excess of $9.50 per +dozen the rate of duty thus indicated by the cost difference is 50 per +cent on the American selling price. + +As to hats with a foreign valuation above $9.50 per dozen, if foreign +transportation be included, the present duty of 60 per cent on the +basis of foreign valuation is in excess of the difference in cost of +production and the rate of duty indicated is 55 per cent on the basis of +foreign valuation. If foreign transportation be not included, the rate +of duty indicated is 69 per cent on the basis of foreign valuation. +The figures are shown in detail in Table 9, on page 10. + +In the accompanying report the above conclusions will be found more +formally stated for the purposes of a proclamation. + +Respectfully submitted. + + THOMAS O. MARVIN, + _Chairman_. + EDWARD P. COSTIGAN, + HENRY H. GLASSIE, + ALFRED P. DENNIS, + A. H. BALDWIN, + _Commissioners_. + + + + + SEPARATE STATEMENT OF COMMISSIONER COSTIGAN, IN PART CONCURRING AND + IN PART DISSENTING, IN THE INVESTIGATION OF MEN'S SEWED STRAW HATS + + +While I concur with my associates in transmitting the commission's data +in the investigation of men's sewed straw hats, a differentiation of +views must be expressed with respect to certain conclusions which may be +drawn from such data. + +_Both higher and lower duties indicated by the commission's cost +figures._--Under the provisions of section 315 of the tariff act of +1922, the information secured by the commission and summarized in this +report points not only to an increased duty on lower-priced hats but +also to a decreased duty on higher-priced hats. It is submitted that +no satisfactory reason can be assigned under the present record for +failing to recommend such a simultaneous upward and downward change in +the present rate of duty by the use of the provisions for flexibility in +the tariff act of 1922. Under the controlling statute all commissioners +are agreed that a clear distinction exists between the bulk of the +lower-priced hats coming from Italy and the lesser but considerable +quantity of higher-priced hats imported from Great Britain. This feature +of the commission's summarized data is particularly presented in Tables +5, 6, and 7, in which are shown the sources, volume, and foreign values +of imported hats. Table 8 presents American and Italian costs of +lower-priced hats; Table 9, cost data for higher-priced hats in the +United States and Great Britain. Table 8 indicates that, in lieu of the +present duty of 60 per cent on foreign value, a duty of 88 per cent on +foreign value is required to equalize the costs incurred with respect +to the lower-priced hats; and Table 9, that a duty of 55 per cent on +foreign value will suffice to equalize such costs in the case of the +higher-priced hats. In other words, the record establishes the need, if +competitive costs are to be equalized under section 315, for creating +two classes of men's sewed straw hats, with a different principal +competing country and a separate rate of duty for each class. Under the +circumstances, to confine the findings of the commission to an increased +duty on lower-priced hats is, in one important particular, to fall short +of the statutory responsibility undertaken when the commission ordered +an investigation of the adequacy of the present 60 per cent ad valorem +duty as a measure of equalized costs in the United States and foreign +countries. A partial conclusion from the commission's data, where, as +here, a comprehensive conclusion is clearly warranted, would appear +to be discriminatory and fail to fulfill the scientific and impartial +purposes of the provisions of section 315. + +_Determining the dividing line for tariff purposes between higher and +lower priced hats._--The above tables sufficiently demonstrate that the +great bulk of men's sewed straw hats, imported at the port of New York +during the period of investigation, came from Italy and had a foreign +value of $7 or less per dozen, and much the larger part of the +higher-priced hats came from England and had a foreign value of $8.50 +or more per dozen. The separation into classes of lower and higher +priced hats, with different duties for each class tends to result in +an overstatement of the values of the lower-priced imports in order to +obtain the benefit of the lower duty on high-priced imports. There is +also a tendency of the higher-priced imports to increase in volume. To +meet the changed situation a higher "breaking point" than the $7 value +is desirable. For example, with a 90 per cent duty, a hat whose foreign +value is $7 per dozen would cost, landed, duty and transportation paid, +$14.40. If the rate of 60 per cent remain on hats in the higher bracket, +as certain commissioners suggest that it continue to do, instead of the +$7 hat it might be profitable to import a hat worth $8.25 per dozen, +which would enter, duty paid and transportation included, for $14.30. +Adopting and applying the same method to hats having an invoice value +of $7.50 or less per dozen, a breaking point of approximately $9.10 +would make it unprofitable to bring in higher-priced hats in order to +obtain the benefit of a 55 per cent rate of duty. A breaking point of +approximately $9.50 would therefore appear to be safely calculated to +prevent overvaluation with respect to the great bulk of low-priced men's +sewed straw hats now being imported. + +_Some omissions from and doubtful features in the commission's +report._--Although from the point of view of equalizing foreign and +domestic costs under the provisions of section 315, the data of the +commission on their face point to an increase from 60 to 88 per cent ad +valorem, complete frankness compels the statement that the conclusion +arrived at is not free from difficulties; that the record is not +unequivocal; and that a strong case might be made for not advancing +the duty to the full extent thus indicated. Since the application +of the cost-of-production standard under section 315 is still in its +experimental stages, it may promote accuracy and help to bring about +scientific amendments of the present law to illustrate in this +investigation the possible danger of using the commission's figures +to fortify different and inconsistent conclusions. The data obtained +by the commission in the straw-hat investigation are unsatisfactory +in the following particulars: + +_Representativeness of samples._--In selecting hats assumed to be +representative of American production, it was found impracticable +to determine the respective percentages of production of cheap, +medium-priced, and high-priced hats. In consequence there is some +reason to believe that the limited figures secured with respect to cheap +American hats has tended to exaggerate American costs beyond what an +exactly representative selection would have shown. Figures were secured +for only a few producers of cheap American hats, and while it is +impossible to say what weight should be given to such cheap American +production, expert opinion is not wanting in support of the view that +because of the method of sampling employed, American costs as a whole +have been unduly elevated for comparison with Italian costs. While it is +too late to make any exact mathematical adjustment on this account, it +is only fair to urge distinct caution in accepting at their face value +and following to their inexorable conclusions the comparisons based on +the domestic and foreign data. + +Probably the most important principle of sampling employed by the +commission's agents when confronted with the problem of selecting for +cost comparison a few types of hats from the many manufactured was +the choice of those types of hats with respect to which the domestic +industry has been suffering the keenest competition. It must be clear +that the selection of such hats tended to show the widest cost +divergence for the two countries, since it was to be expected that the +severest competition would have been experienced when the relatively +higher-cost hats of the United States met the relatively lower-cost hats +of Italy. Nor could it be said that such hats as were chosen were the +only "similar competitive articles," since the foreign manufacturers +can and do produce all types and styles sold in the United States. The +fact that the American industry earned approximately 10 per cent on its +invested capital (even after the payment of large salaries) must be +chiefly explained by the profits earned on hats with respect to which +there was no such acute competition. Obviously such more profitable hats +strengthened the domestic industry's competitive resistance. + +_Importers' selling expenses omitted._--Through inadvertence, but +none the less unfortunately, the selling expenses of importers were +not obtained by the commission. There was considerable testimony at +the commission's public hearing to the effect that a relatively heavy +burden rests on such importers in selling such straw hats in the United +States. (See Transcript of Public Hearing, pp. 110-116.) The American +manufacturers' costs of marketing their hats to the jobbers were secured +by the commission's representatives, but the selling expenses of +importers of foreign hats (without which Italian hats could not reach +American jobbers) were not secured: thus, the complete picture of the +competitive cost situation is not presented in the commission's report. + +The significance of this omission is considerable. Under the provisions +of subdivision (c) of section 315 the statutory mandate to consider much +"advantages and disadvantages in competition" is unavoidable, and, while +it is probably not reasonable to reject the commission's findings as a +whole because of this record defect, some allowance would be reasonable +falling short of the extreme conclusions to which the data would +otherwise point. + +In answer to the argument that the domestic industry has so well +withstood the competition offered by what seem to be extremely low-cost +Italian hats, it has been urged that the Italian producers are far +from their market and that jobbers prefer a source of supply more +conveniently at hand. This statement involves the admission of a +competitive disadvantage suffered by the foreign producer, which is +clearly not capable of being measured. However, the one statistically +measurable marketing disadvantage of the foreign producer, referred to, +was unfortunately neglected when the commission's data were assembled. +As has been suggested, costs secured, though not used, for the American +producer included his expense of placing his hats in condition ready for +delivery to the jobber, but only those Italian costs were obtained which +with transportation added bring the product to the docks at New York. +Importers must incur the expense of handling and reselling before the +product is ready for the jobbers. In so far as such importers perform +the jobbers' functions, the objections stated may not be valid, but any +importers' costs of reselling to jobbers should undoubtedly have been +collected and considered. + +It may further be noted that some American manufacturers actually sell +their hats to retailers. Such domestic selling expenses were secured by +the commission on its schedules, and there is reason to believe that +certain overhead items in the assembled costs are probably larger than +they would otherwise be because of the imperfect allocation of selling +and manufacturing expenses. + +_Deficiencies in comparative overhead data._--More striking in some +respects than the failure to secure importers' selling expenses is the +contrast exhibited in the commission's report between overhead expenses +in the United States and abroad. The foreign overhead expenses are mere +estimates, since the commission's representatives were refused access +to the original books and records by practically every foreign firm. +It accordingly became necessary to resort to estimates based on flat +percentages of prime costs or sales price. These were in fact submitted +by Italian manufacturers and used by the commission's representatives. +It now develops that these percentages have never been analyzed or +justified. Indeed, there is no definite record of what expense items +were included or neglected in such percentages. The overhead expenses +in the United States include very considerable salaries paid to officers +of the domestic manufacturing concerns, and the question is presented +whether, as some accountants maintain, such salaries should not be +charged exclusively to selling rather than manufacturing expenses, since +such officers usually pay more attention to the selling end of the +business. In the commission's records it appears that about 85 per cent +of the total officers' salaries was charged to manufacturing and about +15 per cent to selling. The importance in cost investigations of +scrutinizing high salaries should be evident, as they might easily be, +although, in this instance it is not suggested that they have been, used +to conceal profits. It is worthy of note that the average salaries +allowed by the commission's representatives in the domestic costs of all +the hats manufactured amounted to 69 cents per dozen--nearly as much as +the entire average Italian overhead charge. It is to be remembered, as +already stated, that this average amount does not include the additional +item allowed in the selling expense for officers' salaries. It is of +interest to note, further, that the American firms which complain most +of Italian competition showed the largest salary accounts. One firm, +in fact, had a salary expense, included in manufacturing cost, of more +than $1 per dozen hats. Nevertheless, even after the payment of such +salaries, it has been shown that the industry as a whole earned +approximately 10 per cent on the invested capital during the period +covered by the commission's investigation. + +It would be obviously difficult to determine what salaries should +reasonably be allowed, but, in view of such a showing, it might be +argued with force that, as has been done in other investigations when +data unsatisfactory for a fair comparison have been secured, such +data on both sides should be excluded from the final calculation. To +illustrate, the commission in the present investigation has eliminated +the item of interest here and in Italy, since adequate data for the +Italian industry were unobtainable. If this principle were followed +in the matter of overhead, a conclusion might reasonably be based on +the comparison of material and labor costs here and in Italy plus +transportation from Italy to our principal market or markets. + +To illustrate the possibility, already mentioned, of diverse conclusions +from the commission's record, the difference between the material and +labor costs here and in Italy, with transportation included, is shown in +the following table: + + + ------------------------------------------------+--------+-------- + |Domestic|Italian + ------------------------------------------------+--------+-------- + Material costs | $6.44 | $4.35 + Labor | 4.60 | .87 + +--------+-------- + Total | 11.04 | 5.22 + +--------+-------- + Difference | $5.82 + Transportation to New York | 1.10 + +----------------- + Final difference | 4.72 + +================= + Foreign selling value | 6.42 + +================= + | _Per cent_ + Ad valorem duty required to equalize | + on basis of foreign selling value | 74 + Present duty | 60 + ------------------------------------------------+----------------- + + +The failure to consider interest on investment in the overhead +introduces another difficulty of some importance. If rents actually paid +are included in costs, equality of treatment demands that interest on +capital invested in plants owned, and therefore not rented, should be +considered. In the costs of 14 of the American companies investigated +the rent charge amounted to $0.29 per dozen for all styles of hats. It +appears that there is no information to show that any one of the Italian +companies covered rented its factory; therefore, the failure to include +interest on the capital invested in the Italian factories may have +overestimated the relative strength of Italian competition. The failure +to include interest on invested capital in the Italian costs might +justify the exclusion of the rent item from the American overhead costs. + +It will, of course, be argued that to disregard all overhead costs in +both the foreign and domestic figures in the way suggested would fail +to measure the domestic disadvantage arising from relatively higher +overhead expenses. There are, however, two considerations, discussed in +detail in this statement, which tend to compensate for any inaccuracy +which the above findings might imply. They are (1) the method of +sampling employed by the commission; and (2) the failure to consider +certain of the Italian industries' marketing expenses. + +_Conclusions._--The principal significance of the foregoing discussion +is to be found in the conclusion that, in recommending under the law an +increase in the present rate of duty on lower-priced hats from 60 to 88 +per cent on foreign value, the statute is being liberally construed from +the point of view of the domestic industry, in the effort to arrive at +an equalization of costs in the United States and abroad. Regardless of +the legal question as to whether transportation should or should not be +included, any higher duty on any of the hats investigated than 88 per +cent on foreign value--particularly so high a duty as 105 per cent, or +the equivalent 50 per cent on American selling price, which has been +suggested by certain commissioners--involves such a grave departure from +the economic purposes sought to be promoted by section 315 as to make it +highly desirable that the present investigation be reopened before any +such increase in duty is proclaimed. + +Reviewing, therefore, the whole record in this investigation and +dismissing, though not without hesitation, the foregoing argument in +favor of a lower rate of duty than 88 per cent, foreign value, on the +lower-priced hats, it is submitted that under the law the data collected +by the commission in this investigation warrant formal findings of fact +to the following effect: + +1. The classification for men's sewed straw hats in paragraph 1406 of +the tariff act of 1922 should be changed to provide separate rates of +duty for imported hats of different foreign values. + +2. The present rate of duty should be increased to 88 per cent on +imported hats having a foreign value of less than $9.50 per dozen. + +3. The present rate of duty should be decreased to 55 per cent on +imported hats having a foreign value of $9.50 or more per dozen. + + EDWARD P. COSTIGAN, + _Commissioner_. + + JULY 15, 1925. + + + + + APPENDIX + + + A PROCLAMATION + + BY THE PRESIDENT OF THE UNITED STATES OF AMERICA + + INCREASING THE RATE OF DUTY ON MEN'S SEWED STRAW HATS + + +Whereas in and by section 315 (a) of Title III of the act of Congress +approved September 21, 1922, entitled "An act to provide revenue, to +regulate commerce with foreign countries, to encourage the industries +of the United States, and for other purposes," it is, among other +things, provided that whenever the President, upon investigation of the +differences in costs of production of articles wholly or in part the +growth or product of the United States and of like or similar articles +wholly or in part the growth or product of competing foreign countries, +shall find it thereby shown that the duties fixed in this act do not +equalize the said differences in costs of production in the United +States and the principal competing country he shall, by such +investigation, ascertain said differences and determine and proclaim the +changes in classifications or increases or decreases in rates of duty +provided in said act shown by said ascertained differences in such costs +of production necessary to equalize the same; + +Whereas in and by section 315 (c) of said act it is further provided +that in ascertaining the differences in costs of production, under the +provisions of subdivisions (a) and (b) of said section, the President, +in so far as he finds it practicable, shall take into consideration +(1) the differences in conditions in production, including wages, costs +of material, and other items in costs of production of such or similar +articles in the United States and in competing foreign countries; +(2) the differences in the wholesale selling prices of domestic and +foreign articles in the principal markets of the United States; +(3) advantages granted to a foreign producer by a foreign government, +or by a person, partnership, corporation, or association in a foreign +country; and (4) any other advantages or disadvantages in competition; + +Whereas, under and by virtue of said section of said act, the United +States Tariff Commission has made an investigation to assist the +President in ascertaining the differences in costs of production of +and of all other facts and conditions enumerated in said section with +respect to the articles included within the class or kind of articles +provided for in paragraph 1406 of Title I of said tariff act of 1922, +namely, men's straw hats, whether wholly or partly manufactured, not +blocked or blocked, not trimmed or trimmed, if sewed, being wholly or +in part the growth or product of the United States, and of and with +respect to like or similar articles wholly or in part the growth or +product of competing foreign countries; + +Whereas in the course of said investigation hearings were held, of which +reasonable public notice was given and at which parties interested were +given reasonable opportunity to be present, to produce evidence, and to +be heard; + +Whereas the President upon said investigation of said differences +in costs of production of men's straw hats, whether wholly or partly +manufactured, not blocked or blocked, not trimmed or trimmed, if sewed, +wholly or in part the growth or product of the United States and of like +or similar articles wholly or in part the growth or product of competing +foreign countries, has thereby found-- + +That no change in the existing rate of duty is required to equalize +differences in costs of production in the United States and in the +principal competing country, with respect to men's straw hats, whether +wholly or partly manufactured, not blocked or blocked, not trimmed or +trimmed, if sewed, valued at more than $9.50 per dozen; + +That the principal competing country for men's straw hats, whether +wholly or partly manufactured, not blocked or blocked, not trimmed or +trimmed, if sewed, valued at $9.50 or less per dozen, is Italy; + +And that the duty fixed in said title and act does nor equalize the +differences in costs of production in the United States and in said +principal competing country, namely, Italy, in respect of such men's +straw hats, whether wholly or partly manufactured, not blocked or +blocked, not trimmed or trimmed, if sewed, valued at $9.50 or less per +dozen, and has ascertained and determined the increased rate of duty +necessary to equalize the same. + +Now, therefore, I, Calvin Coolidge, President of the United States of +America, do hereby determine and proclaim that the increase in the rate +of duty provided in said act upon men's straw hats, whether wholly or +partly manufactured, not blocked or blocked, not trimmed or trimmed, +if sewed, valued at $9.50 or less per dozen, shown by said ascertained +differences in said costs of production necessary to equalize the same +is as follows: + +An increase in said duty on men's straw hats, whether wholly or partly +manufactured, not blocked or blocked, not trimmed or trimmed, if sewed, +valued at $9.50 or less per dozen from 60 per cent ad valorem to 88 per +cent ad valorem. + +In witness whereof, I have hereunto set my hand and caused the seal of +the United States to be affixed. + +Done at the city of Washington this twelfth day of February, in the +year of our Lord one thousand nine hundred and twenty-six, and of +the Independence of the United States of America the one hundred and +fiftieth. + +[SEAL.] + + CALVIN COOLIDGE. + + By the President: + FRANK B. KELLOGG, + _Secretary of State_. + + + +[Transcriber's Note: Original tables presenting data for the years 1923 +and 1924 in adjacent columns under each country header have been broken +into two parts; one for each year, with headers and rows duplicated.] + + + + + + +End of the Project Gutenberg EBook of Men's Sewed Straw Hats, by +United States Tariff Commission + +*** END OF THIS PROJECT GUTENBERG EBOOK MEN'S SEWED STRAW HATS *** + +***** This file should be named 20041.txt or 20041.zip ***** +This and all associated files of various formats will be found in: + http://www.gutenberg.org/2/0/0/4/20041/ + +Produced by David Garcia and The Online Distributed +Proofreading Team at http://www.pgdp.net + + +Updated editions will replace the previous one--the old editions +will be renamed. + +Creating the works from public domain print editions means that no +one owns a United States copyright in these works, so the Foundation +(and you!) can copy and distribute it in the United States without +permission and without paying copyright royalties. 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