list prices. These prices were increased right in the beginning beyond prewar prices and from 700 per cent advance paid in November, 1919, went up to 1,500 per cent since last May.

Senator MCCUMBER. Fifteen hundred per cent higher?
Mr. SCHMITS. Fifteen hundred per cent higher.

Senator WATSON. What does that expression mean?

Mr. SCHMITS. It means that a list price which before the war was $6.80 is now 15 times as much.

Senator MCCUMBER. That is, measured not in American money but in their money?

Mr. SCHMITS. In kronen (crowns).

Senator MCCUMBER. How much has it increased on the gold basis? Mr. SCHMITS. The increase on the gold basis, as stated, shows that some articles on which the prewar prices were 3 crowns 80 are now 75 crowns and 60 heller. Reduced to dollars before the war, it was 77 cents and is now $1.05. I have taken a number of articles, not restricting myself to the common type of chair, and the average shows that I am paying now 70 per cent more in gold for my goods than I did before the war.

Senator LA FOLLETTE. Can you state a comparison of the domestic product for the same dates in price?

Mr. SCHMITS. I can make an appropriate comparison; yes.

Senator LA FOLLETTE. What was the prewar price of the same article?

Mr. SCHMITS. We always have held a difference in our selling prices of at least 10 per cent over domestic chairs.

Senator LA FOLLETTE. I did not get that.

A

Mr. SCHMITS. We always held the imported chair at least 10 per cent higher than the domestic article. For instance, before the war a certain chair was sold, we will say, for $20 domestic and we would sell it for $23 or $24. Now, the difference is about the same. chair of this make is sold now up to $45 by American manufacturers and we hold it at $51 to $54. So that we have established more than a difference of 10 per cent. Of course, we have to remain within some distance, because otherwise the purchaser here would not want to pay such an exorbitant plus difference. We always have to remain within some alignment, but we have never competed against the domestic chair.

Senator SMOOT. Is that on account of the fact that the domestic chair is not as good as the imported chair?

Mr. SCHMITS. Yes; that is one reason.

Senator MCCUMBER. At least the public thinks so, which is the same thing.

Mr. SCHMITS. When the imported chair was first brought into this country in 1875 there was not a bent-wood chair made in our country. Subsequently, American manufacturers took up to make it, and they have become quite adept in the manufacturing of bentwood chairs. However, the quality of the lumber here does not compare with the lumber obtained abroad.

Senator LA FOLLETTE. What is the difference in the lumber?
Mr. SCHMITS. Austrian beech is used abroad.

Senator LA FOLLETTE. What is used here?

Mr. SCHMITS. Over here beech is a very brittle wood, a very coarse formation. Perhaps I should not say "coarse formation," but it acts

brittle; they can not use beech. They use elm or oak. Oak is very good.

Senator LA FOLLETTE. How does oak compare with the beech of the foreign countries?

Mr. SCHMITS. It being a hand process of an industry over there transferred from generation to generation, they devote more care in steaming the wood than the American manufacturers do. The American manufacturers extract too much of the sap of the wood. As a result of that the American chair weakens in its joints after a number of years' use and falls to pieces. There are many American manufacturers that originate from abroad, and still they do not go to the same trouble that the foreigners do.

Senator LA FOLLETTE. Do you know the wages paid before the war in the country from which you imported these chairs? Mr. SCHMITS. At one time I had a rough idea of it. any particular attention to it.

I never paid Senator LA FOLLETTE. You never had definite information on that subject?

Mr. SCHMITS. No.

Senator LA FOLLETTE. Do you know anything about it n_w?

Mr. SCHMITS. I can speak of my recent experience; perhaps not so much in the matters of dollars and cents to compare with our wages over here, but it is one of the greatest hardships for manufacturers abroad now to keep factories going. The volume of business they have does not induce them to keep their factories open. It is more or less the excitation of the workingmen abroad coming in close contact with the Russians and the Soviets that run around and into these factories which makes these men come forth with exorbitant demands which tax the profits of the manufacturers over there. In time common sense will prevail and conditions will return to normal.

Senator SIMMONS. Taking into account all the conditions that you have mentioned, do you think the labor cost of producing these chairs in Czechoslovakia is less or greater than the cost of producing them here?

Mr. SCHMITS. In proportion I would say that the cost is not any more than it is here.

Senator SIMMONS. Do you think the labor cost there is as great as it is here?

Mr. SCHMITS. I do not think so. As a general thing the labor cost in Europe, even in England, has een less.

Senator SIMMONS. I am not speaking about per diem rate paid the labor, but I am taking into consideration the amount paid him and the efficiency of his labor. Now, do you think the total labor cost of producing these chairs abroad is greater than the total cost of producing like chairs in this country?

Mr. SCHMITS. On reflection, it would seem to be greater now because the labor cost is something tremendous, it is staggering. Always they are demanding more money and the manufacturer can not see his way through any more. That is the feeling I had abroad recently.

Senator SIMMONS. Labor is very much higher over there now than it was in prewar times, just as it is higher here.

Mr. SCHMITS. Yes, and the hours have been shortened.

Senator SIMMONS. Your judgment is that the total labor cost that enters into the production of these chairs is greater in Czechoslovakia than it is here?

Mr. SCHMITS. Yes. I can cite instances to bear me out in that statement. The factories run eight hours a day. Before the war they ran 10 hours, and their eight-hour day would not compare with the work of our eight-hour day. I have been to their factories and have seen the spirit of the men.

Senator SIMMONS. Coal is one of the great elements in the cost of production. Have you any idea what the cost of coal over there is as compared with the cost of coal here?

Mr. SCHMITS. I understand that they have been paying in Germany more for coal than we have been paying over here, but that on account of recent occurrences in Germany and in England the American coal is now offered at a less price. The same is true with reference to the Czechoslovakia situation. They are mining their own coal and they are charging extortionate prices.

Senator SMOOT. Your written statement says that the list prices as mentioned in your report is on an average of 68 per cent higher than before the war?

Mr. SCHMITS. Yes; the corrected statement reads 70 per cent higher.

Senator SMOOT. Taking into consideration the offset of the currency depreciation, do you think that the cost of making these same bent-wood chairs mentioned in this report of yours has increased at least 68 per cent in this country since the war?

Mr. SCHMITS. The relation of what actual increase the manufacturer needs and what the working men need I do not know.

Senator SMOOT. You state here that before the war they sold these chairs for $20 and that you sold them for $23 or $24. Mr. SCHMITS. Yes.

Senator SMOOT. Now you say the American price is $45.
Mr. SCHMITS. Yes.

Senator SMOOT. That is a 125 per cent increase. You say your increase of cost from the prewar period averages 68 per cent?

Mr. SCHMITS. Yes; by considering the offset in the currency depreciation alone. The increase in crowns, however, against prewar cost, as per statement submitted, shows is from 20 to 28 times. Senator SMOOT. Evidently the price in the United States has increased even more than that.

Mr. SCHMITS. Prices naturally have increased here and over there also.

Senator MCLEAN. But if you increase only 70 per cent you could undersell the American product to-day?

Mr. SCHMITS. Gentlemen, that is not the whole of the story: I am comparing factory prices; I am not comparing prices landed here. What about paying the big ocean freight rates to-day? What about paying all the other excessive charges? You have to figure everything together.

Senator MCLEAN. We supposed you had done that when you said it cost you 70 per cent more.

Mr. SCHMITS. I was figuring on the price at the factory-the dutiable value; I was not comparing the market price here when I produced my cost. I have not figured the duty and the freight. I merely wanted to show the difference of the cost at the factory.

Senator MCLEAN. Well, you had to pay more duty before the war than you do now.

Mr. SCHMITS. No.

Senator MCLEAN. Well, that would not make any difference. Senator LA FOLLETTE. You are paying somewhat higher freight rates now, are you not?

Mr. SCHMITS. Yes; six or seven times higher than before the war. Senator SMOOт. But I was getting at the cost of the goods, because the question of the wage increase in Czechoslovakia is involved in the cost of the goods. You say that on account of the increase in the cost of goods and on account of the depreciation of currency the cost of making your chairs in Czechoslovakia has been increased by 68 per cent.

Mr. SCHMITS. Yes.

Senator SMOOT. What I wanted to get at was this: Evidently there is not a manufacturer of these chairs in the United States but what will claim that this cost has increased even more than 68 per cent.

Mr. SCHMITS. I do not want to refer to American conditions. While I am in very close contact with American factories and know that they made money during the war, some of them

very much moneySenator LA FOLLETTE. You know his prices increased more rapidly than his cost of production?

Mr. SCHMITS. Yes. I have not seen their present cost, but I ques-tion whether they bear any other relation than mine.

Senator SMOOT. I did not catch that statement.

Mr. SCHMITS. I question whether the Americans' increased cost is of a different percentage than mine. Granted they are selling certain chairs at $45 a dozen which they sold before the war at $20 a dozen. That is the price to the dealer. I am not speaking of jobbers' dis-count or other allowances they make. When it comes down to a question of close competitive figures you will find that the price of $45 for the domestic chair is not maintained. The market is irregular and the natural costs change also from day to day. But my impression from information I have is that we can keep a very good comparison as to the increase of cost abroad and the actual increase over here.

Senator SMOOT. That is what I thought. I thought that the increase in wages and cost of manufacturing in this country were not far from the increases with respect to the same article abroad.

Mr. SCHMITS. I wish now to show the result of the proposed increase of duty by allowing us only one-third of the standard valuation. Instead of h ving to pay a duty of 15 per cent, I would have to pay 73 per cent, which is prohibitive. I might just as well close my doors. I could not even think of importing because I would lose by the purchase of the goods, considering the question of exchange fluctuations which has not been considered here at all. The currency fluctuates so quickly over there that unless you are a banker and gamble in the market you lose money.

I have here a corrected statement which I desire to have substitute dfor the one contained in the brief that Mr. Duffy submitted for me. Senator SIMMONS. Do you want it put in the record?

Mr. SCHMITS. Yes, sir.

(The corrected statement submitted by Mr. Schmits will be found. in the brief inserted in the remarks of Mr. Duffy.)

Mr. SCHMITS. I would like to say one more word pertaining to an inquiry by one of the Senators. With regard to prices. The basic

prices have also changed. Chairs formerly costing, for instance 11.70 now cost 14.40 crowns. That is an increase of 20 per cent. Other articles have gone up from 13 to 17 crowns. The extent of the penalty (meaning excess duty) that would e put upon me now by enforcing the new proposition would amount to 390 per cent on my importations from Czechoslovakia.

Senator SMOOT. That is taking the value of the currency into consideration?

Mr. SCHMITS. Yes.

Senator SIMMONS. Is your business confined to that of importing altogether?

Mr. SCHMITS. I also purchase American chairs. I am selling American bent-wood chairs just as well as the others; but, of course, my specialty is the imported chair.

The CHAIRMAN. Is that all, Mr. Schmits?

Mr. SCHMITS. Yes, sir.

Senator SIMMONS. You sell the imported chair a little more than the American chair?

Mr. SCHMITS. Yes.

The CHAIRMAN. The chairman of the committee is not informed as to any other applications for a hearing from the taxpayers. Therefore, the hearings are closed. Of course, if any of the members desire, the committee can call again on any of the Government people who are present.

Senator WATSON. Senator Knox is suffering from a slight attack of tonsilitis and can not appear before the committee to-day, but wants to appear on Monday, Mr. Chairman.

Senator McCUMBER. On what point?

Senator WATSON. On the dye-stuff business.

Senator McCUMBER. What I want to find out is whether this 66} proposition has any friend anywhere. I have not heard any testimony favorable to it.

Senator SMOOT. I have a hundred letters here with respect to it. Senator CURTIS. Mr. Chairman, do you not think we ought to invite the Tariff Commission here in executive session to go over these matters?

The CHAIRMAN. Yes; I was going to suggest that we proceed to hold an executive session with the Government experts present and the Tariff Commission.

Senator WATSON. They can not be here to-day; that is the Tariff Commission representatives, but they can be here Monday.

Senator CURTIS. We ought to get this bill out Monday.

The CHAIRMAN. We can hardly do that because the committee has to pass on these amendments with the Government experts.

Senator SMOOT. This provision in section 25 of the bill with regard to the limitation of 663 per cent, of course, is opposed by all importers. I think there are no exceptions, but take the American manufacturer, and, of course, he wants it.

The CHAIRMAN. The Chair would suggest that if we are going to discuss the bill we ought to be in executive session. The committee will now proceed to go into executive session, and the Government experts may remain.

(Thereupon, at 11.28 o'clock a. m., the committee went into executive session.)