The Underwood Tariff

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dognose
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The Underwood Tariff

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THE UNDERWOOD TARIFF IN ITS RELATION TO JEWELRY AND SILVERWARE

By Woodward Booth, Manager New England Manufacturing Jewelers' and Silversmiths' Association


The Underwood tariff is believed to give the jewelry and silverware industry the best classification, or wording of the law, of any tariff bill that has been enacted. The rates of duty though by no means sufficiently high to shut out all foreign manufactures of jewelry, will, provided the Act be interpreted in harmony with design and intent of Congress, provide a better protection for the industry than the jewelry paragraph of the Payne-Aldrich Act, as that act was interpreted by the United States Board of General Appraisers and Customs Court of Appeals.

The provisions made in the new tariff law for jewelry and silverware are largely the result of the exhaustive work of the New England Manufacturing Jewelers' and Silversmiths' Association through its Tariff Committee. The task of this Committee was difficult in the extreme and the results of its efforts redound to the marked advantage of the entire jewelry and silverware industry in all sections of the country.

The first task of this Committee was the drafting of a jewelry paragraph and a clause for gold, silver and platinum, and articles plated with gold or silver in the basket or "catch-all" paragraph of the metal schedule. When the Act of 1909 went into effect it seemed that the American jewelry manufacturer had an excellent though no more than fair protection. The jewelry paragraph, however, did not withstand the legal assaults made upon it, with the result that various lines of merchandise intended by Congress to be assessed under the jewelry paragraph were thrown by judicial decision into the basket paragraph of the metal schedule together with a miscellaneous line of manufactures of base metal that bore no resemblance in any way to jewelry of kindred lines. When the Payne-Aldrich law was superseded by the present Act not a single line of merchandise was being assessed under the first part of the jewelry paragraph, No. 448.

In the drafting of the above mentioned proposed classifications thorough study was given a long line of judicial decisions under several prior Acts in order that the new paragraph should not conflict with established precedents of tariff law interpretation. Of course, both paragraphs were also drawn with a view to making them sufficiently comprehensive to include all the legitimate products of the industry. So essential was proper classification considered, that in the minds of the Committee it was deemed of greater importance than the question of rates. Without a closely woven classification, no industry can estimate what degree of protection it can count upon, whatever may be the indicated rates.

When the bill was reported to the House and finally enacted into law it was found that the recommendations of the Committee in regard to classification had been adopted. This is the first law in which in the metal schedule manufactures of gold, silver and platinum and articles plated with gold or silver are differentiated from manufactures of base metals not otherwise provided for.

Every legitimate effort having been made to obtain a proper classification, attention was then directed to the presentation of data bearing on the question of rates. The Committee on Ways and Means always sought the relation between the value of imports and of production. If too great a disparity existed, the announced purpose was to cut the rates sufficiently to cause increased importations and thus stimulate competition. The findings of Congress were based on the reports of the Department of Commerce and Labor. That Department reported a domestic production of jewelry for the last year canvassed of $80,350,000 and imports for 1912 of $1,156,975. The disparity here indicated was of course very great, and unless the figures could be shown to be incorrect, rates of duty injurious if not ruinous to the industry were inevitable. The difficulty of disproving the accuracy of Government statistics is apparent, but as those possessing an exact knowledge of the industry were confident that the figures were vastly though unintentionally erroneous, no effort was neglected to show the true relation between production and imports.

The incorrect report as to the value of imports was largely, though not entirely, due to the decisions of the United States Board of General Appraisers and the Court of Customs Appeals. As already indicated, various lines of merchandise intended by Congress to be assessed under the jewelry paragraph had been assessed under the basket parresult, much jewelry, jewelry novelagraph of the metal schedule. As a ties and jewelry findings, or parts of jewelry, were absolutely lost so far as statistical purposes are concerned. This was due to the fact that in listing the value of imports under the various paragraphs of a tariff law the Government never differentiates between the several classes of merchandise assessed under a basket or "catch-all" paragraph. Attention was also called to the fact that while the Government figures for the American product represent the factory price, the figures for imports represent the foreign market value, and that therefore, to the reported value of those imports should be added the amount of duty paid. Furthermore, that the Department of Commerce and Labor figures on the value of imports were in themselves unreliable was indicated by contrasting them with reports of the Department of State which indicated considerably larger value than the former. In this manner the fact was established that the published value of jewelry imports was decidedly though unintentionally below true value.

It was likewise demonstrated that the total American production of jewelry was far less than the amount stated, namely, $80,350,000 for one year. Attention was riveted on several important truths. In compiling statistics the Bureau of the Census, Department of Commerce and Labor, or as it now is, the Department of Commerce, added the total value of each factory's product and thereby in many instances, counted the product of one factory, or part thereof, several times. This mistake of method in computing the total product of the industry lies in the fact that in the manufacturing jewelry industry many manufacturers assemble part of other manufacturers' products and by uniting and finishing the whole prepare their article of merchandise for the market. It was also shown that many articles, the total value of which is included in the published figures, are made in part of findings, mesh, chain and imitation and semi-precious stones that are imported. Gem-set jewelry, of which the gems are by far the component of chief value, and are imported are likewise included. The settings in such cases are of such relatively small value as to be practically negligible. Finally, it was demonstrated that the figures for production included selling and administration expenses, which are very large, and profits. In brief, the claim of the Association's Committee that no such disparity actually existed between the value of imports and production as official reports indicated was completely substantiated.

The subject of the relation of foreign and domestic wage scales was fully entered into. Letters containing a list of categorical questions were addressed to the United States consular officer in every European city or district in which jewelry or jewelry novelties are manufactured. Replies to these communications passing through the United States Department of State practically became reports of that Department and subsequently proved invaluable in the establishment of a claim for rates of duty under which the American industry could live. Various other kinds of data drawn from Government sources were also presented to the members of Congress for their consideration.

The result of the Association's tariff work so far as classification is concerned has already been indicated. The rates carried by the jewelry paragraph and the metal schedule basket paragraph are known to all who have read those paragraphs. For the former the rates are 60 per centum ad valorem on all jewelry and jewelry novelties above 20 cents per dozen pieces and 50 per centum ad valorem on findings or materials. The clause in the metal schedule providing for manufactures of gold, silver and platinum or articles plated with gold or silver not specially provided for elsewhere carries a rate of 50 per centum ad valorem.

The rates of duty as already indicated, while not sufficiently high to cover the difference in cost of production in this country and abroad are higher than the jewelry rate of the Wilson-Gorman Act, the last Democratic tariff law before the present one. If the integrity of the classification covering this industry is maintained by court decisions in harmony with the intent of Congress, the jewelry and silverware manufacturing interests of America will be able to hold their present share of the great American market.


Source: The Protectionist - February 1914

See: https://en.wikipedia.org/wiki/Revenue_Act_of_1913

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dognose
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Re: The Underwood Tariff

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THE FORDNEY BILL

The New Tariff Bill

Manager of New England Manufacturing Jewelers' and Silversmiths' Association Discusses Jewelry and Fuel Oil Provisions of Fordney Bill

Providence, R. I., July 9.—The manufacturing jewelers of Providence, the Attleboros and other centres of the jewelry industry are confronted by a number of new problems that have arisen in connection with the reconstruction period, the solving of which, it is believed, will have much to do with the business policy of the future. Prominent among these are the Fordney tariff bill and its effect on the industry; the proposed additional duty on fuel oil from Mexico and the petition of the express companies to the Interstate Commerce Commission for an order discontinuing shipment of diamonds and other precious stones by express, subject to collection upon delivery.

Of these problems the one concerning the proposed new tariff is receiving the most attention and is the topic of discussion wherever and whenever two or more manufacturers chance to meet, as well as being the subject of anxious inquiry to the various jewelers' associations for information, interpretation and advice concerning the proposed bill.

In an interview this morning with the representative of The Jewelers' Circular, Woodward Booth, manager of the New England Manufacturing Jewelers' and Silversmiths' Association said:

"It is rather early for the men in the jewelry industry to criticize or condemn the Fordney tariff bill as it is impossible to foretell just exactly how it is going to work out. The tariff committee of the association conferred with the Ways and Means Committee and with individual members several times, to explain the contentions and situation of the industry. The arguments for the industry were submitted in writing to the Ways and Means committee asking that the industry be given, not only the protection accorded it under the Underwood bill but to increase this protection to a 75 per cent duty. The Ways and Means committee has reported its bill to the House and before we take the opportunity of thoughtfully and impassionately considering the provisions of the bill there are many who want to fight it at once.

"In some ways I can see where it may prove advantageous to the industry notwithstanding that the proposed bill carries a 55 per cent ad valorem duty in the jewelry paragraph as compared with a 60 per cent rate in the present Underwood bill, and 45 per cent in the first clause of the metal schedule basket paragraph as compared with the present 50 per cent under the Underwood tariff. But one thing should not be lost sight of, and this is very significant and important—the classification and wording of the jewelry paragraph of the present law, as well as the basket clause in the metal schedule have been retained without the change of a single word.

"Now what does that mean? Although this industry of ours is one of the smallest it is an absolute fact borne out by records that there is no other industry that has furnished so much litigation before the United States Customs Appraisers and Board of Customs Appeals as has our own. The Payne-Aldrich tariff was only 10 per cent effective as regards to jewelry litigations but the Underwood tariff jewelry paragraph as well as the basket paragraph in the metal schedule, have withstood every litigation that has been brought against it and is today considered the most effective of any clause in the entire bill.

"To accomplish the effectiveness of these paragraphs it has been necessary for this association, assisted by its members and other jewelers of the country to maintain eternal vigilance and support the Government in the workings of the paragraph. To do this numerous rulings have been given by the customs officials and these have been supported and substantiated by court decisions which have strengthened these paragraphs beyond successful assailment. With the retention of these paragraphs in the proposed bill every one of those rulings and decisions remain as a bulwark against all attacks. Make any changes in the classification or wording of the jewelry paragraphs and those rulings and decisions become useless; our years of work and expense have been thrown away and all that we had won comes to nought.

"'Well,' say some of the over-anxious manufacturers in dismay, 'even so, how about the reduction of the rate from 55 to 60 per cent and from 45 to 50 per cent?'

"While there is a reduction of 5 points in each paragraph of jewelry reference in the proposed bill, it must not be forgotten that the proposed bill establishes an entirely new definition of what an ad valorem duty is. It provides that the ad valorem value shall be figured on the basis of the American market valuation of the article rather than on the foreign invoice valuation.

"The Tariff Committee of the New England Manufacturing Jewelers' and Silversmiths' Association is continuing in close touch with this entire situation with a view to securing adequate protection for the industry and it feels that it has the situation still well in hand and ask that the trade continue its confidence in the committee sufficiently to consult with its members uppon any question that may arise rather than rushing ahead individually, without being fully conversant with all the conditions and applications."

Within the last few days the manufacturing jewelers here and elsewhere in New England have discovered that the industry is vitally interested in still another phase of the Fordney tariff bill, besides merely in the paragraphs dealing with jewelry products and rates.

This is in connection with the oil duties that arc contained in the proposed tariff bill and which imposes additional taxes on those which have been in vogue and to the proposed advance that Mexico is taking steps to impose. Practically every building in this city occupied by the several hundred manufacturing jewelry establishments, or the numerous co-ordinate industries, use fuel oil for the development of both power and heat. It is estimated that the increased rates proposed by the Fordney bill, in addition to the exactments of the Mexican government, will add at least $200,000 to the fuel expenses of these buildings, and this burden must be borne by the manufacturers and ultimately by the consumer.

It is feared that this will necessitate a complete revision of cost accounting and price lists that will take weeks to adjust and to bring about an equitable adjudication of conditions. This in itself would bring about a serious loss to the manufacturers as it would mean such a delay that the jewelry season would be well advanced before new orders could be handled and this in a year that so far has been none too satisfactory or profitable to the jewelry industry.

While under the Underwood schedules the use of oil entailed a cost far less than coal, it now threatens to become far more expensive. For, at the same time that there is an increase in the cost of oil because of the additional import duties, the supply and costs of coal is bringing that commodity back into a position to forcibly assert itself. But to take full advantage of these changing coal conditions it would be necessary to reconvert the plants from oil to coal, involving a considerable expense.

It is stated that comparatively few, if any, of the large plants or building owners, have contracts with the oil companies for either supply or price and that the oil corporations decline to take any new contracts at any price. At the present time fuel oil is quoted in the vicinity of $2 per barrel. To which must be added the proposed Mexican tax and the Fordney tariff amounting to an increase of about 57 1/2 per cent. 4 barrels of oil will equal a ton of bituminous coal in heat production and soft coal in this city within a few days, has been quoted delivered in the cellar at $8 per ton. It will thus be seen that the fuel proposition is developing into a problem of more than casual moment.

And while these problems connected with the production end of the industry arc rearing their disquieting heads, there comes an attack upon the shipping facilities enjoyed by the handlers of jewelry and precious stones in an order from the Interstate Commerce Commission discontinuing shipments of diamonds and other precious stones by express, subject to collection upon delivery.

While this order does not directly affect many of the manufacturing jewelers of this city and the Attleboros, who do comparatively little diamond business for consignment, still there is sufficient local interest to cause the industry as a whole to take recognition of the situation.

Advices from Washington indicate that already the jewelers in other parts of the country, notably, Boston, New York, Chicago and elsewhere, have taken this matter up and entered complaint to the Interstate Commerce Commission that no opportunity had been given the industry to be heard on the proposition.


Source: The Jewelers' Circular - 13th July 1921

See: https://en.wikipedia.org/wiki/Fordney%E ... ber_Tariff

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