The Underwood Tariff
Posted: Thu Nov 05, 2015 12:27 pm
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 When the Payne-Aldrich law was superseded by the present Act not a single line of merchandise was being assessed under the first part of the jewelry paragraph, No. 448.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
Trev.
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
Trev.