Second. Enable municipalities to add to their man power for these purposes and thus relieve local unemployment. Third. Relieve unemployment in those industries serving municipalities with apparatus and service needed for this serious emergency purpose by enabling the municipalities to enter into contracts and place orders for apparatus and supplies now badly needed. Fourth. Reduce fire losses. Fifth. Stimulate the demand for insurance protection. Sixth. Enable those seeking fire insurance against loss to secure a lower rate on buildings and contents. Seventh. Provide the insurance companies with better protection for their investments in fire and other casualty forms of insurance. Eighth. Assist credit organizations in their field by enabling them to secure better protection for their clients. Ninth. Provide better control against fire losses by arson. Tenth. Provide the Federal Government agency having supervision over these loans with the opportunity to make these projects self-liquidating in whole or part according to the local conditions as they now exist in the individual municipalities throughout this country. Respectfully submitted. WILLIAM F. FRANKLIN, Grand Central Terminal, New York, N.Y. MEMORANDUM OF MONSANTO CHEMICAL WORKS OF ST. LOUIS, MO., ON H.R. 5755 SENATE FINANCE COMMITTEE, Washington, D. C. GASOLINE TAX ON INDUSTRIAL BENZOL GENTLEMEN: Yesterday the undersigned, through arrangements made by Senator Clark of your committee, had the privilege of making a very brief appearance before your committee, and was requested by your chairman, Senator Harrison, to file a memorandum. Monsanto Chemical Works is engaged in the manufacture of chemicals and drugs and for such purpose uses what is known as "industrial benzol," as distinguished from "motor benzol." In the Revenue Act of 1932 fixing a tax of 1 cent per gallon on gasoline, section 617 (c) defines "gasoline" as follows: Section 617 (c) (2). "The term 'gasoline' means gasoline, benzol, and any other liquid the chief use of which is as a fuel for the propulsion of motor vehicles. motor boats, or aeroplanes." At the time this 1932 act was passed it was our understanding that this tax was intended to cover motor fuels and that it would not apply to industrial benzol. This understanding was confirmed by the Treasury Department and shortly after the law was enacted the Treasury Department rules that the tax did not apply to "industrial benzol." This ruling of the Treasury Department remained in effect until about a month ago, April 28, 1933, when a new ruling was issued in which the Treasury Department reversed its earlier ruling. The new ruling recognized that it was probably the original intent of Congress to tax motor fuel but held that the wording of the 1932 act was such as to cover all benzol regardless of the quality or purpose for which it is used. The Treasury Department has advised us that in the absence of any change in the language of section 617 of the 1932 act their recent ruling will continue in effect, which means that under H.R. 5755 "industrial benzol" would be taxed for two more years at 14 cents per gallon. Industrial benzol is a much different product from motor benzol. Industrial benzol is highly refined, whereas motor benzol is a very crude product. Their differences are illustrated by the differential in price, the industrial benzol costing about 19 or 20 cents a gallon and the motor benzol costing about 10%1⁄2 or 11 cents a gallon. The uses of the two products are not interchangeable, because motor benzol is entirely unfit for the manufacture of insecticides, medicinals, pharmaceuticals or dyes, and it is economically impossible to use industrial benzol as a motor fuel by reason of its very high price. The consumption of industrial benzol in this country is about 8,000,000 to 10,000,000 gallon per year, practically all of which is used by five or six chemical companies. This industrial benzol is about 10 percent to 15 percent of the amount of motor benzol used, and, of course, is an insignificantly small fraction of one percent of gasoline used. We use industrial benzol to manufacture phenol and paradichlorbenzol. Phenol is the base for various medicinal and pharmaceutical products such as phenolphthalein, aspirin, salicylic acid, sodium salicylate, phenacetin (acetphenedetin) and so forth, and paradichlorbenzol is used extensively as an insecticide. particularly against peach tree borer, termites and moths. Industrial benzol is used by other chemical manufacturers in the production of aniline dyes and dye intermediates. We believe it was the intent of Congress to tax motor fuels and not the raw materials for insecticides, pharmaceuticals, medicinal products or dyes, and the Treasury Department so issued its original ruling on that basis. This tax on industrial benzol is not a sales tax so far as the users of industrial benzol are concerned, as it cannot be passed on by them, but is simply a tax on a product that is used in further manufacture, and would be an additional cost of raw material. Furthermore, it is the practice to sell such insecticides and medicinal products under annual contracts at fixed prices and such contracts usually run for the calendar year. This gasoline tax on industrial benzol expires June 30, 1933, but section 208 (g) of H.R. 5755 would extend it for 2 more years and increase the tax from 1 cent to 14 cents per gallon. The apparent oversight of Congress in the wording of the 1932 act can be corrected and the language clarified by inserting the word "motor" before the word "benzol” in section 617 (c) of the 1932 act. To the best of our knowledge no tax on industrial benzol has yet been collected by the Government and, therefore, such clarification in language will not deprive the Government of any revenue that it has been receiving. We respectfully request that H.R. 5755 now pending before your committee be amended so as to limit the gasoline tax on benzol to motor benzol, which will be accomplished by the following amendment, the proposed change being underlined: Amend H.R. 5755 as passed by the House by amending subdivision (g) of section 208 so that said subdivision when amended shall read as follows: "(g) Effective as of the day following the date of the enactment of this act, section 617 (a) of the Revenue Act of 1932 is amended by striking out '1 cent' and inserting in lieu thereof '14 cents', and by amending section 617 (c) of said act by inserting the word 'motor' before the word 'benzol.' Respectfully submitted. MONSANTO CHEMICAL Works, UNITED STATEMENT OF JOHN E. DOWSING, REPRESENTING Mr. DOWSING. Mr. Chairman, and members of the Finance Committee, my name is John E. Dowsing, of 420 Riverside Drive, New York, tariff counsel for the United States Potters Association of East Liverpool, Ohio. This association represents one of the large basic industries of the United States-manufacturers of chinaware and earthenware. I wish to address myself to one feature only of this national industry recovery bill (H.R. 5755, S. 1712) to which very little attention seems to have been given. This lack of provision in my view will result in destroying the whole purpose of the bill. Representing this association only in all matters affecting directly or indirectly the importations into this country of competitive merchandise is my reason for confining my remarks to this phase and the further fact the other features of the bill will be considered either by brief or personal appearance of manufacturing representatives of this association. Under section 1 of this bill, headed Declaration of Policy it is provided among other things the policy to be "to reduce and relieve unemployment, to improve standards of labor, and otherwise rehabilitate industry." These things are sought to be accomplished through the control and restriction of domestic competition and a general increase in the whole domestic cost and price structure. The whole cost and price structure of the country is to be raised. But no provision is made by which this price and cost structure is to be protected against foreign competition. There is no provision for the control and restriction of foreign competition in the American market. We are left at the mercy of the foreign manufacturer. There are, gentlemen, no compensatory duties proposed to offset this increased domestic cost. The lack of such provision will destroy the very purpose of the bill. At the present time this industry is and has been for several years struggling along with its factories going on even part time and waging a losing fight against foreign importations of chinaware, particularly from Japan. Japan is dumping into their market chinaware literally by the millions of pieces at a landed price below the cost of production of similar or comparable goods of domestic make. We have been forced to close factories, lay off thousands of workers and other thousands of workmen are only able to average 21⁄2 days a week. This bill as it is will not, cannot help the unemployment situation of the pottery industry. Under this bill, unless some provision is made to control and restrict the foreign importations, I ask you gentlemen, how can the manufacturers of pottery in the United States maintain an increased wage level and higher price level if you permit cheap foreign goods, made by the low and pauper labor of Europe and Japan-goods, which are not subject to the burden of higher taxes, higher wages, and shorter hours of employment to be dumped upon our markets in competition with our goods? How long do you imagine our domestic manufacturers and the American workmen can compete with the cheap foreign labor which is beyond our control? Unless something is done, gentlemen of the committee, it is inevitable that the importations into this country will be vastly increased and the decreased domestic competition which this bill will bring about will give to the increased foreign competition what remains of our market. Gentlemen, something should be done, must be done to offset the low foreign costs or the result will be that our prices and wage level will have to be reduced to the low standard of Japan if we are to sell anything here in our home market. Such a contingency is unthinkable. Yet it narrows down to just that. Gentlemen, give this your serious consideration and permit me to suggest that as the means of correcting the proposed bill it be amended by a provision which will prohibit the entry of all foreign goods which are similar or comparable to goods produced in the United States, when and if the landed cost of such foreign goods are below the cost of production of the similar or comparable American-made goods. The Secretary of the Treasury should be authorized to ascertain these questions of fact, the cost of production and act accordingly. His decision should be final and not reviewable. I thank you, gentlemen. The CHAIRMAN. The first witness this morning will be Mr. Hook. STATEMENT OF CHARLES R. HOOK, PRESIDENT, AMERICAN ROLLING MILL CO. Mr. Hook. Mr. Chairman, I do not presume to represent any group except the corporation of which I happen to be president. However, from numerous conferences which I have had with large numbers of executives of the steel industry, and with manufacturers in other lines of industry, I am quite confident that I represent the viewpoint which is very general in industry today. We have some 7,000 men on our pay roll. Therefore I think I represent a fair number of employees. The weight that you give to whatever I might say will be determined by your opinion as to whether or not I am qualified and competent to speak with respect to the matters which I am going to call to your attention, so in passing I simply want to say to you that I have gone through the ranks of the employee class, if you may term it that. In other words, I started 35 years ago as an office boy in the steel industry, and have gone through the various positions in the operating division first, and then in general charge of the affairs of the company. As a worker I spent a year and a half working Sundays and many nights without compensation in order to become proficient in a skilled job, known as a "roll turner", so that at one time I was in the ranks of the skilled worker. Therefore, it seems with this background I can properly come before you and present the viewpoint which I wish to present. Realizing that your time is limited, and that you have requested witnesses to be brief, I will make this just as brief as possible, and instead of reading this very short statement at the end of what I have to say, I will read it now and then explain several of the statements which I have made and retire. The corporation which I represent and, I think I may add, the vast majority of all industrial corporations in the United States, are in hearty sympathy with the objects of the proposed legislation. Judging from the expressions of the chief executives of steel companies representing not less than 95 percent of the production of the country, I can confidently state that this industry is anxious and willing to do everything in its power to cooperate with the President in his efforts to increase employment through the encouragement of business volume and the fair distribution of available work. He would be a poor citizen indeed who did not bring to your attention provisions or lack of provisions in the act which would militate against a successful accomplishment of the desired ojectives. I think we must all agree that never was there a legislative proposal of such magnitude, so all embracing, and with the delegation of such tremendous power and authority as is contemplated in the bill under consideration. Therefore, it should have the most careful, calm, and thorough consideration before the wording of the bill is given final approval. In our opinion there was never greater need for the most careful consideration of the form of organization and personnel of the administrative body. The success or failure of this most commendable experiment will depend as much upon able and fair administration as upon the sound, coordinated, and cooperative effort of industry itself. This statement is meant to imply no lack of confidence or faith in the fairness or ability of the President, but the character of support which he receives will determine whether his shoulders will support the burden which has been placed thereon. There are two things which I wish particularly to bring to your attention for your careful consideration: First. The happy relationship which has existed between employer and employee in this country during the past 10 years, and particularly during this period of great personal and corporate suffering should not be endangered by any wording in the bill which would permit of misinterpretation or imply a privilege on the part of the employer or on the part of those not employees of a corporation which it is intended they should not have. I am quite sure that it is the desire of Congress as well as the President to recognize the right of employees to bargain individually or collectively and to belong to or not to belong to labor organizations as they choose, and that where collective relations exist or are established, they should be in any form which is mutually agreeable to the parties, and in which their respective representatives are designated without interference by either party or by those not connected by employment with the industrial corporation in whose plants the questions of hours of labor, rates of pay, and other working conditions are under consideration. I offer for your consideration under section 7: (a) The following in substitution for the present wording in the bill: 1. That employers and employees shall have the right to bargain collectively in any form mutually satisfactory to them, through representatives of their own choosing. 2. That no employee and no one seeking employment shall be required as a condition of employment to join or to refrain from joining a legitimate labor organization. Second. The prime objective of the act is to increase employment in the industrial plants of the United States and thereby cause a normal exchange of goods and services amongst the citizens of this country. In our opinion the much hoped for results to be secured from the enactment of the legislation will not be accomplished unless the President is given authority to make such regulations as are necessary to protect American made goods and American workman against the influx of foreign-made goods produced under labor conditions and with wage rates and other conditions not comparable with American standards. With reference to title 2, it is our opinion that the most equitable method of taxation is to spread a 1-point manufacturers sales tax over our industries. The CHAIRMAN. Thank you very much. Mr. Hook. May I explain one thing in this cross bill which we have here for consideration on that clause? The CHAIRMAN. I don't want it to appear that we are appearing to rush too much, but we have got to close these hearings today so 'that we can go into executive session, and all the witnesses will have to curtail their time. Mr. Hook. I appreciate that; and if you will permit me to read this one section, then I can explain what I said there more fully. The CHAIRMAN. Very well. |