Read Ebook: Men's Sewed Straw Hats Report of the United Stated Tariff Commission to the President of the United States (1926) by United States Tariff Commission Coolidge Calvin Contributor

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Woven hats, such as panamas, etc. The bodies of these hats are imported in the rough and are shaped, finished, and trimmed in this country.

Sewed hats. All of the operations necessary in the manufacture of a sewed straw hat, with the exception of plaiting the braids, are performed in the United States. This investigation relates to sewed hats only.

The production of straw hats is to some extent seasonal. Orders are received in the late summer for delivery in the following spring. Production on these orders begins in September and the factories are usually busiest in the early months of the year. The summer is a slack season and factories operate with reduced labor force or close altogether for several weeks. The following table shows the monthly variations in the total number of employees of 18 domestic factories in the season 1923-24:

IMPORTS

The quantities and values of sewed straw hats imported into the United States were not separately shown in official statistics prior to the tariff act of 1922, in which sewed straw hats were given a separate classification.

Table 3 shows the imports for consumption of sewed straw hats from the principal countries of origin, by months, for the calendar years 1923 and 1924. Total imports increased from 93,309 dozen in 1923, valued at 9,989, to 164,041 dozen in 1924, valued at ,179,929, a gain of approximately 75 per cent in quantity and 50 per cent in value.

A comparison of the imports for the first four months of 1925 with those for the corresponding period in 1924 is shown in Table 4. A significant feature of this table is the increase in imports from Italy and the decrease of imports from both the United Kingdom and Germany. It should be noted also that the average foreign value per dozen of Italian hats decreased while the average foreign value of hats imported from England and other countries increased.

In Table 5, imports of Italian hats at the port of New York in the six months January-June, 1924, have been classified according to foreign values shown on consular invoices. There is a marked concentration of imports in the value groups between and per dozen. About 90 per cent of all the sennit hats and 80 per cent of the total importations had foreign values of less than per dozen.

The imports at the port of New York of hats from England are classified in Table 7. It is evident that the bulk of the English importations are not competitive with Italian hats. Only 28 per cent of the imports from England had a foreign value of less than per dozen.

Representatives of the importers, on the other hand, called attention to the increasing competition of small firms in and around New York City with larger and longer established firms located principally in Baltimore. Some of the new firms operate on small capital and specialize in cheap hats which are directly competitive with the cheapest Italian hats. Others produce a somewhat better hat, such as is sold by chain stores. The rate of business failure among the newer firms is unusually high. Although the membership of the group of producers of cheap hats is fluctuating, its total output of hats each year is a factor in the competitive situation.

A relatively new development in the distribution of straw hats is the chain stores. Sales of such stores, estimated at 150,000 to 200,000 dozen straw hats yearly, include Italian and English hats but are principally of domestic manufacture. In some cases a chain-store organization has established factories and thus has instituted direct competition with manufacturing firms already established. Chain stores also have furnished capital to small manufacturers, contracting for the bulk of their output. Thus the change in marketing methods has a bearing on the failure of the older establishments to keep pace in the volume of their sales with the national expansion in straw hat consumption.

PRINCIPAL COMPETING COUNTRY

Table 3, on page 4, shows that in the calendar year 1923 imports of sewed straw hats from Italy amounted to 48,101 dozen, or 51 per cent of total imports. The average value per dozen of these Italian hats was .01. During this same period imports from England amounted to 20,549 dozen or 22 per cent of total imports, at an average value of .50 per dozen.

During the calendar year 1924 imports from Italy amounted to 71,762 dozen, or 44 per cent of the total, at an average value of .96 per dozen. Imports from England were 29,450 dozen, or approximately 18 per cent of the total, at an average value of .59. Total imports increased from 93,309 dozen in 1923, valued at 9,989, to 164,041 dozen in 1924, valued at ,179,929, a quantitative gain of approximately 75 per cent.

The latest available import data covering the months of January-April, 1925, are shown in Table 4, on page 5. For these four months imports from Italy amounted to 72,449 dozen, or about 76 per cent of the total, and the average value of Italian hats imported declined from .23 per dozen, on the comparable four months' period in 1924, to .46 per dozen in 1925. Imports from the United Kingdom for this same period were 12,353 dozen, or about 13 per cent of the total, and it should be noted that the average value increased from .64 to .07 per dozen.

Italy, is, therefore, for the purposes of section 315, the principal competing country.

FOREIGN PRODUCTION

The center of production in Italy is Signa, near Florence. It was estimated that 1,500 persons were employed in the Signa district in establishments producing men's straw hats. The employees were about evenly divided between men and women.

In England the principal centers of straw-hat production are St. Albans and Luton, towns near London. No estimate was obtained of the number of factories in operation, the volume of production, or the number of persons employed. The English manufacturers of men's straw hats in 1923-24 were suffering a business depression, and some of them were changing over to the manufacture of women's hats.

In general, the foreign straw-hat factories do not bleach straw braids in their own establishments. In Italy, however, one concern not only bleached its own braids but also bleached braids for other straw-hat manufacturers.

With respect to hats, some of the unfinished bodies, usually leghorns, are made by women in their homes. But men's sewed straw hats, the subject of this investigation, are produced in factories or in small workshops. The latter generally operate on a contract basis for the larger manufacturers or shippers. The workshops which own their own equipment are organized to produce from 25 to 200 dozen sewed hats per week. In the making of the shell or body of the hat the contractors are paid on the basis of the number delivered to and accepted by the principal. The contractors furnish their own sewing cotton, gelatin, and other materials, except braid, used in making the shells or bodies of the hats. The trimming of straw hats is also to some extent performed on a contract basis.

The establishments visited in England generally perform all the operations of making and trimming hats in their own establishments, although at times "outworkers" are employed.

COSTS OF PRODUCTION

In both Italy and England representatives of the commission were given access to manufacturers' books showing estimates of their costs. The estimates of material and labor costs were verified from original records. Estimates of general administrative and factory expense were expressed as percentages of the combined cost of labor and materials or of sales. Access to records from which the latter estimates could be verified was not permitted.

DESCRIPTION OF COST ITEMS

SELLING EXPENSE

TABLES SHOWING COST COMPARISONS

In Table 8 are shown the costs of domestic and Italian men's sewed straw hats, irrespective of the type of braid used in their manufacture. In Table 9 are shown similar cost data for domestic and English hats. In both tables costs are shown with and without transportation charges on foreign hats, and ad valorem rates of duty necessary to equalize differences in foreign and domestic costs have been computed.

COMPETITIVE CONDITIONS

Styles for men's straw hats are set about one year in advance. Sample hats are manufactured in May and June and orders are taken by manufacturers in July, August, and September for hats to be delivered the following spring. This custom of the trade makes it possible for foreign manufacturers to copy and offer in competition the same styles as those made by American manufacturers. Imported hats have a wide range of styles and prices, including not only sewed hats of sennit braid but also those of fancy braids, and woven body hats such as leghorns. Domestic hats also comprise a wide range of styles and prices. Within this range there is a more or less definitely limited field in which imports compete directly with domestic merchandise.

TRANSPORTATION AND MARKETING COSTS

Before the Italian or English hats enter into competition in the domestic wholesale market with hats of domestic manufacture expenses for transportation, marine insurance, and consular fees must be incurred. In the season 1923-24 the charges specified amounted to approximately .10 per dozen for Italian hats and .35 per dozen for English hats. Such expenses are set forth in the lower half of Tables 8 and 9.

The methods of marketing foreign and domestic hats are similar, but because of minor differences in terms of sale, etc., it was not found practicable to institute a mathematical comparison of selling costs. Some domestic firms deal only with jobbers, others only with retailers. A few of the largest firms sell to both jobbers and retailers. When the manufacturer dispenses with the services of jobbers his selling costs are, of course, increased. Foreign straw hats are distributed principally by importing jobbers. Such firms are usually engaged also in the marketing of domestic hats and in some instances are manufacturers or have financial interests in domestic factories. Foreign factories occasionally deal directly with large retailers in this country. In such cases it is usual for the retailer's representative to travel abroad to inspect samples and place orders. One large Italian factory maintains a New York office through which it deals directly with domestic retailers.

FORMAL STATEMENT OF CONCLUSIONS

Italy is the principal competing country. While Commissioners Costigan and Dennis agree with this conclusion, they are also of opinion that, with respect to hats valued at more than .50 per dozen in the country of exportation, Great Britain is shown to be the principal competing country.

The average cost of production in the United States, as shown by the cost data for the season 1923-24, of men's sewed straw hats sold to jobbers for .55 to .52 per unit of one dozen is .74. The average cost of production, not including transportation costs, of imported men's sewed straw hats whose landed costs, duty paid, range from .51 to .10 per dozen, and which are like or similar to the domestic hats above described, is .98 per dozen. The difference in said costs of production, transportation costs not included, is .76 per dozen. The cost of production of the imported hats, including transportation costs from the foreign factory to the dock at New York, is .08 per dozen, and the difference in said costs is .66 per dozen.

The average selling price of such imported men's sewed straw hats, in the country of exportation, as shown by said cost data, is .42 per dozen. The American selling price, as defined in subdivision of section 402 of the tariff act of 1922, of similar competitive articles manufactured or produced in the United States, is .28 per dozen.

If transportation costs be not included, the differences in costs of production in the United States and in said principal competing country are greater than the amount of the present duty of 60 per cent ad valorem increased by the total maximum increase authorized under section 315, subdivision , of said act, and said differences in costs of production in the United States and in said principal competing country can not be equalized by proceeding under the provisions of said subdivision ; that is to say, by increasing to the extent of 50 per cent the existing ad valorem duty applied to the value of the imported article in the country of exportation.

If transportation costs be included, the rate of duty shown by the differences in costs of production, necessary to equalize said differences, upon men's sewed straw hats valued at .50 or less per dozen in the country of exportation, is a rate of 88 per cent ad valorem based on the valued in the country of exportation, as defined in section 402 of said act.

If transportation costs be not included, the rate of duty shown by the differences in said costs of production, necessary to equalize said differences, upon men's sewed straw hats valued at .50 or less per dozen in the country of exportation, is a rate of 50 per cent ad valorem based upon the American selling price, as defined in said section 402, of similar competitive articles manufactured or produced in the United States.

The average cost of production in the United States, as shown by the cost data for the season 1923-24, of men's sewed straw hats sold to jobbers for .74 to .50 per unit of one dozen is .06. The average cost of production, not including transportation costs, of imported men's sewed straw hats whose landed costs, duty paid, range from .64 to .60 per dozen, and which are like or similar to the domestic hats above described, is .32 per dozen. The difference in said costs of production, transportation costs not included, is .74 per dozen. The cost of production of the imported hats, including transportation costs, is .67 per dozen, and the difference in said costs is .39 per dozen.

The average selling price of such imported men's sewed straw hats, in the country of exportation, as shown by said cost data, is .73 per dozen.

If transportation costs be included, the rate of duty shown by the differences in costs of production necessary to equalize said differences upon men's sewed straw hats valued at more than .50 per dozen in the country of exportation is a rate of 55 per cent ad valorem based upon the value of such hats in the country of exportation.

If transportation costs be not included, the rate of duty shown by the differences in costs of production necessary to equalize said differences upon men's sewed straw hats valued at more than .50 per dozen in the country of exportation is, according to a mathematical calculation, 69 per cent ad valorem based upon the value of such hats in the country of exportation. Commissioners Marvin, Glassie, and Baldwin are, however, of the opinion that the existing rate of 60 per cent ad valorem substantially equalizes differences in costs of production in respect of hats valued above .50 per dozen in the country of exportation.

SUMMARY OF CONCLUSIONS

On the basis of the facts presented the commission agrees that the data indicate an increase in tariff rates, if the differences in costs of production are to be equalized between lower-priced grades of foreign hats and comparable products of American factories. In respect of such hats, Italy is the principal competing country.

The commission further agrees that foreign hats sold in the United States on a basis of quality rather than price are the higher-priced hats which at this time are not keenly competitive with the products of the American industry. With respect to such higher-priced hats, Commissioners Costigan and Dennis are of opinion that Great Britain is shown to be the principal competing county, and that under the law the data indicate that the duty should be reduced.

The commission agrees that .50 per dozen, foreign valuation, represents a fair breaking point for customs purposes between lower-grade hats competing on a price basis and hats of superior material and workmanship competing on a quality basis.

Under section 315 of the tariff act of 1922 there is an undetermined legal question with respect to including transportation expense in estimating foreign production costs. Commissioners Costigan, Dennis, and Baldwin agree that under subdivision of section 315 a fair estimate of foreign costs should include the expense of transporting the foreign product to the principal competitive market or markets in this country. For hats whose foreign value is not in excess of .50 per dozen the rate of 88 per cent ad valorem is indicated as the correct duty for equalizing costs, with transportation included.

Chairman Marvin and Commissioner Glassie agree that under the law costs of production do not include transportation costs on either side. If transportation costs be not included in the foreign costs of production shown by this investigation, the rate indicated by the cost data would be 105 per cent on foreign valuation. This rate being in excess of the maximum permissible under subdivision of section 315, resort must be had under subdivision of section 315 to the American selling price basis of valuation in order to equalize the differences in production costs. For hats whose foreign valuation is not in excess of .50 per dozen the rate of duty thus indicated by the cost difference is 50 per cent on the American selling price.

As to hats with a foreign valuation above .50 per dozen, if foreign transportation be included, the present duty of 60 per cent on the basis of foreign valuation is in excess of the difference in cost of production and the rate of duty indicated is 55 per cent on the basis of foreign valuation. If foreign transportation be not included, the rate of duty indicated is 69 per cent on the basis of foreign valuation. The figures are shown in detail in Table 9, on page 10.

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