8 cents, or one-third of the par, and the knife costs as much as it did before the war. Prices have risen in Germany as they have here, or two and one-half times as much, if you please. That would be 5 marks instead of 2; five times 8 would be how many cents that a knife would cost in Germany? Your ad valorem duty, 55 per cent, would be 60 cents, or a little over-much less than before the war? Mr. DAVIS. Yes; but I do not think those are the facts. I do not know about knives particularly, but I think if you will take the German price of the knife in 1914, say, at 2 marks, 24 cents to the mark, you will find that the mark price of that knife to-day is about 30. Senator MCLEAN. That is the exchange value? Mr. DAVIS. Yes. Senator MCLEAN. That is less than 2 cents. At 30 marks it would be a little over 50 cents. Mr. DAVIS. The same equivalent gold value as in 1914. Senator MCLEAN. Yes; they would be about the same if you figured it up and if you estimated the purchasing value of the mark at 8 cents. Mr. DAVIS. You would have to multiply your 30 marks by 8. Senator MCLEAN. In either case it would not be as low as it was before the war. Your 2 marks would be 50 cents before the war and now would be pretty close to that, it it costs as much as that. Mr. DAVIS. I think it would cost a little more than that, perhaps. Senator MCLEAN. Are you sure about that? Mr. DAVIS. Not in regard to the knives. I do not know anything about the price of knives. Senator MCLEAN. And a great many other things. Mr. DAVIS. I have seen any quantity of commodities where the depreciated mark was involved, and the number of marks required to buy the article to-day has gone up in the relation that the currency has gone down. Senator MCLEAN. That is the gold value of the mark in gold here? Mr. DAVIS. Yes. Senator MCLEAN. But in the debates in the House, as I read them, it was claimed and not disputed that if this valuation was retained as in this bill the tariff which the German exporter would pay would be much less than the rate under the Underwood tariff, and as far as I see in the debates it was not successfully disputed. Mr. DAVIS. Well, I think he would pay just as much duty now and more on the number of depreciated marks converted as the true value of the mark than he did pay in 1914 on the same thing. Senator MCLEAN. But what I wanted to know was whether you had any information that you could give to this committee as to the cost of production in Germany which would be of value to this committee. Senator MCCUMBER. On the whole, the goods produced in Germany to-day, when measured by American dollars, costs less in Germany than they did in 1914, do they not? Mr. DAVIS. In Germany, I think that is true. Senator MCLEAN. That is just the point. Senator MCCUMBER. They would cost less in Germany than they did before, and on the average the ad valorem duty would be less? Mr. DAVIS. If you took the home German value. Senator MCCUMBER. Yes; but measured in American money. Senator MCLEAN. As the law is to-day? Mr. DAVIS. Yes. Senator MCLEAN. That is the point I am making. Senator LA FOLLETTE. Did you not state a few moments ago the decline in the value of the money had been about offset? that Mr. DAVIS. For export to the United States the prices that the American importer pays in the United States, as a rule, has gone up in marks in about the same ratio that the mark has gone down. Senator LA FOLLETTE. That is the German price that you are talking about? Mr. DAVIS. No; the German price in the home country is lower. Senator LA FOLLETTE. Why should that be so? Mr. DAVIS. I do not know, but it is so. Senator LA FOLLETTE. Are you sure it is so? Mr. DAVIS. Oh, yes-I will not say in every instance, but in the greater majority of cases. Senator LA FOLLETTE. Many things are oftentimes conceded that are not so. Senator MCLEAN. I think the purchasing power of the mark in Germany might naturally be more than it is here. If Senator SMOOT. Mr. Davis, it seems to me that this thing will work out in an entirely different way than we are anticipating now. this provision works adversely to the German manufacturer in importing his goods into this country, why should he not sell his goods direct to England, and then England make a profit by shipping those goods here and selling them to America? Mr. DAVIS. He could. Senator SMOOT. And then we would not have any question of the amount of depreciation of currency, which could only be measured by what it is in England, plus whatever profit the merchant in England may want to make on the German goods, and ship them into this country. Senator MCLEAN. But the valuation would be much higher if valued in the English currency than in the German currency. The tariff would be higher. Senator SMOOT. Not if the home value is no higher for the article. Senator MCLEAN. I do not understand that is so, because I happen to know that Americans are renting large factories in Germany to-day for the purpose of making goods, and they are doing it, hoping to take advantage of this tariff bill. Senator MCCUMBER. The home value in the case of shipments from Germany to England for export from England to the United States. would be the English value, not the German value. Senator SMOOT. That is what I say. Senator MCLEAN. Certainly, but if he sends them right straight. from Germany Senator SMOOT. But it would not be nearly as high if the values. of the depreciated mark were taken into consideration; it could not be. For instance, if Germany sells their goods on the basis of one and a half a mark to England, England can sell those goods to us and make a great profit and sell lower than the American manufacturer can on the basis of $3.30 for an English pound. Mr. DAVIS. Perhaps the Englishman would not sell the goods; the German might establish an agency in England or other countries. where the currency was fairly stable. Senator SMOOT. Either way. He could either sell or have an agency, and have the goods shipped from Germany into England and then from England into the United States. Senator DILLINGHAM. Mr. Davis, the other day you were speaking about your difficulties in securing information as to the cost of production of goods in foreign countries. I understood you to say that the Treasury Department had only one man abroad representing the customs service to secure that information. Mr. DAVIS. In Germany, only one man. Senator DILLINGHAM. Well, how many have you in Europe, generally? Mr. DAVIS. We have one in Germany; one in France, with an assistant; one in England, with an assistant; one assistant in Japan, and one in Canada. Senator MCCUMBER. Six, all together? Senator DILLINGHAM. I fell into conversation incidentally with a gentleman connected with the Department of Commerce, who told me they had 70 men abroad securing that very information, and I was wondering if that be true, why there was not coordination between the Treasury Department and the Department of Commerce in securing and in giving to officials of your character the information. Senator MCCUMBER. Have you inquired of the Tariff Commission how many they have? Senator DILLINGHAM. No; I have not. But if that be true, the Tariff Commission has men there and the Department of Commerce has men there and the State Department has men there, why should not some arrangement be entered into by Congress by which all that information could be collected and laid before them? The CHAIRMAN. It has already been stated, Senator Dillingham, that none of these bureaus or departments are obtaining information of the slightest value to the customs officials in ascertaining these things. I think it is a scandal the way the American Government duplicates work and indulges in the publication of worthless reports. Senator DILLINGHAM. I think Congress has a duty to perform in that respect. The CHAIRMAN. So do I. Ninety per cent of the reports are never read. Senator SMOOт. Within six months it will have to be done or none will be issued except what Congress authorizes to be issued. We will know within six months what they are going to issue, anyhow. The CHAIRMAN. Is there anything more, Mr. Davis? Mr. DAVIS. That is all. STATEMENT OF MR. OTTO FIX, SPECIAL AGENT IN CHARGE, COMPARATIVE VALUATION REPORT BUREAU, NEW YORK, N. Y. The CHAIRMAN. I will now call Mr. Otto Fix, who has devoted some attention to this question, and is special agent in charge of the foreign value report bureau in New York customhouse. How long have you held this position, Mr. Fix? Mr. Fix. About one year. The CHAIRMAN. What had you been doing prior to that? Mr. Fix. New York. The CHAIRMAN. How long have you been in the Customs Service? Mr. Fix. About 32 years. The CHAIRMAN. From what State were you appointed? Mr. Fix. New York. The CHAIRMAN. Will you now state in your own way what suggestions you may have concerning this dumping valuation phase of the tariff bill? Mr. Fix. In regard to the statement of Mr. Davis, the imposing upon the appraiser the duty in each instance to determine whether or not goods are of a kind or class comparable to those made in the United States, and establish the various necessary factors to determine dumping, I think, as Mr. Davis testified, that dumping bills should be operative only in such instances where it has been found that dumping does exist, or where it is likely to exist. If not so limited, it will be necessary in each instance for examiners to proceed to find all the necessary factors, as if dumping existed. High-class original novelty cottons coming from France, of innumerable items for each of which the appraiser would have to determine the foreign market value at date of purchase, the sales price of a kind and class of merchandise which in no manner would come into competition with American-made goods, except through displace ment. The CHAIRMAN. Have you any figures to show prewar values, Mr. Fix? Mr. Fix. This morning I received from the New York appraiser prewar values of various classes of merchandise and present prices, but I have not been able to go over the figures. But since there was a special reference to a knife from Germany, I looked over the figures, and find memorandum: Pocketknife, German, pearl handle, price May 20, 1914, 22.80 marks per dozen, converted at the rate of 4.20 to the dollar. The CHAIRMAN. Is that gold standard? Mr. Fix. That is gold standard. The same knife imported on March 14, 1921, cost 626.80 marks per dozen, converted at 61 marks 75 to the dollar, would show The CHAIRMAN. You mean, converted at the prevailing rate of exchange? Mr. Fix. Yes, sir; at the prevailing rate of exchange, would show that there is an increase in price of 2,100 per cent, and an approximate depreciation of one-fifteenth in exchange value in the currency. Senator MCCUMBER. I did not quite understand that. Senator SIMMONS. I do not understand it. Mr. Fix. The value of the knife, prewar, was 22 marks; at the present time the value of that same knife is 626 Senator SIMMONS (interposing). Quote both in dollars. Mr. Fix. I will do that. I had not time to tabulate the figures. Senator SIMMONS. Then take the time. We will understand it so much better. Mr. Fix. Figuring 4 marks to the dollar, the prewar price was $5.70 and the present price is $10.03, the prewar price converted at 25 cents to the dollar; the present price converted at 1.6 cents per mark. Senator SIMMONS. That is how much higher than before the war? Mr. Fix. About 75 per cent. Senator SIMMONS. Do you know whether that holds good generally as to the German manufacturer of goods? Mr. Fix. I can cite of my own knowledge a few illustrations, but I have many other comparisons, not figured, I received 15 minutes ago, and which I have not been able to tabulate. German Chinaware selling at 4 marks before the war or one dollar, is now increased fifteen times for home consumption, and sells at 60 marks. The same article to-day is being sold for exportation to the United States on the basis of 4 marks multiplied by 25 cents, which equals a dollar plus 150 per cent. The comparison being foreign market price 60 marks or 96 cents, and $2.50 for exportation to the United States, and a prewar price of 4 marks or one dollar. A certain German hemstitched linen towel sold before the war at 7 marks. The similar towel to-day is being sold for exportation to the United States at approximately 350 marks, or at an increase of fifty times. Certain machinery-if you will permit me, gentlemen, I would much prefer to tabulate these figures. Senator LA FOLLETTE. Will you do that for the record and supply it, and convert it into our money? Mr. Fix. Yes, sir. Senator MCLEAN. Before the witness leaves this subject, I want to go back to the knife. In your estimate of the valuation in Germany, where do you get that estimate; who makes it? Mr. Fix. The estimation of the value in Germany? Senator McLEAN. Yes. Mr. Fix. That is the price paid by the American importer. Senator MCLEAN. That takes into consideration the value of the product in Germany, the increase in the cost of production there? Now, have you any comparisons as to the cost of producing the knife in this country with which that German knife would come in competition the tremendous increase in the cost of production in producing that knife here? Mr. Fix. No, sir; I have no comparison. Senator MCLEAN. Well, you see, of course, that if the knife costs 50 per cent less to produce in Germany, or 25 per cent before the war, than it did in this country, and you doubled the cost of production in those countries, as a result of the war, you double the difference in the cost? Mr. Fix. Oh, certainly, Senator. But that illustration is simply to show Senator MCLEAN (interposing). And you have got to have some protection to meet that if you meet the difference in the cost of production? Mr. Fix. Yes, sir. Senator MCCUMBER. I would like to ask you a question, Mr. Fix. You gave the case of the knives and the towels. You gave the price in Germany before the war, and then you gave the price in which they were exported to the United States? |