Part 2

+----------+----------+----------+-----------+----------- | Italy | United | Germany | Other | Total | | Kingdom | | countries | | | | | [2] | +----------+----------+----------+-----------+----------- Month | 1925 | 1925 | 1925 | 1925 | 1925 ------------+----------+----------+----------+-----------+----------- | _Number_ | _Number_ | _Number_ | _Number_ | _Number_ January | 212,292 | 8,995 | 12,070 | 6,104 | 239,461 February | 189,736 | 31,776 | 7,697 | 22,580 | 251,789 March | 207,218 | 61,755 | 3,828 | 24,482 | 297,283 April | 260,145 | 45,711 | 40,479 | 10,545 | 356,880 +----------+----------+----------+-----------+----------- Total number| 869,391 | 148,237 | 64,074 | 63,711 | 1,145,413 Dozen | 72,449 | 12,353 | 5,340 | 5,309 | 95,451 +==========+==========+==========+===========+=========== | | | | | Total value | $395,298 | $161,422 | $40,923 | $78,222 | $675,865 | | | | | Average | | | | | value | | | | | per dozen | 5.46 | 13.07 | 7.66 | 14.73 | 7.08 +==========+==========+==========+===========+=========== Per cent | | | | | of hats | | | | | imported | | | | | from each | | | | | country | 75.90 | 12.94 | 5.60 | 5.56 | 100.00 ------------+----------+----------+----------+-----------+----------- [1: Including men's, women's, and children's.] [2: Including withdrawals from warehouse.]

TABLE 5.--_Imports at the port of New York of men's sewed straw hats from Italy[1] classified according to foreign value, including packing January-June, 1924_

[In dozens] ----------------+-------------------------+------------------------- | Sennits[2] | Fancies[3] Value +-------+---------+-------+-------+---------+------- |Trimmed|Untrimmed| Total |Trimmed|Untrimmed| Total ----------------+-------+---------+-------+-------+---------+------- $2.99 and less | | 18 | 18 | | 60 | 60 $3.00-$3.49 | 6 | 38 | 44 | | 219 | 219 $3.50-$3.99 | 255 | 23 | 278 | 1 | 250 | 251 $4.00-$4.49 | 2,518 | 28 | 2,546 | 196 | 2,909 | 3,105 $4.50-$4.99 | 1,617 | 24 | 1,641 | 61 | 477 | 538 $5.00-$5.49 | 1,671 | 4 | 1,675 | 427 | 711 | 1,138 $5.50-$5.99 | 1,687 | 1 | 1,688 | 608 | 89 | 697 $6.00-$6.49 | 1,313 | | 1,313 | 2,831 | 182 | 3,013 $6.50-$6.99 | 2,657 | 1 | 2,658 | 2,537 | 33 | 2,570 $7.00-$7.49 | 740 | | 740 | 996 | 15 | 1,011 $7.50-$7.99 | 255 | | 255 | 939 | 3 | 942 $8.00-$8.49 | 147 | | 147 | 470 | 6 | 476 $8.50-$8.99 | 165 | | 165 | 261 | 5 | 266 $9.00-$9.49 | 10 | | 10 | 165 | 1 | 166 $9.50-$9.99 | 30 | | 30 | 107 | | 107 $10.00-$10.49 | 39 | | 39 | 56 | 1 | 57 $10.50-$10.99 | 46 | | 46 | 34 | | 34 $11.00 and over | 63 | 3 | 66 | 10 | 12 | 22 +-------+---------+-------+-------+---------+------- Total |13,219 | 140 |13,359 | 9,699 | 4,973 |14,672 ----------------+-------+---------+-------+-------+---------+-------

[In dozens] ----------------+-------------------------+------------------------- | Miscellaneous[4] | Grand total Value +-------+---------+-------+-------+---------+------- |Trimmed|Untrimmed| Total |Trimmed|Untrimmed| Total ----------------+-------+---------+-------+-------+---------+------- $2.99 and less | | | | | 78 | 78 $3.00-$3.49 | 50 | | 50 | 56 | 257 | 313 $3.50-$3.99 | 570 | | 570 | 826 | 273 | 1,099 $4.00-$4.49 | 622 | | 622 | 3,336 | 2,937 | 6,273 $4.50-$4.99 | 680 | | 680 | 2,358 | 501 | 2,859 $5.00-$5.49 | 1,715 | | 1,715 | 3,813 | 715 | 4,528 $5.50-$5.99 | 1,095 | 58 | 1,153 | 3,390 | 148 | 3,538 $6.00-$6.49 | 1,826 | 10 | 1,836 | 5,970 | 192 | 6,162 $6.50-$6.99 | 879 | 1 | 880 | 6,073 | 35 | 6,108 $7.00-$7.49 | 433 | | 433 | 2,169 | 15 | 2,184 $7.50-$7.99 | 346 | 17 | 363 | 1,540 | 20 | 1,560 $8.00-$8.49 | 598 | | 598 | 1,215 | 6 | 1,221 $8.50-$8.99 | 231 | | 231 | 657 | 5 | 662 $9.00-$9.49 | 420 | | 420 | 595 | 1 | 596 $9.50-$9.99 | 46 | | 46 | 183 | | 183 $10.00-$10.49 | 203 | | 203 | 298 | 1 | 299 $10.50-$10.99 | 56 | | 56 | 136 | | 136 $11.00 and over | 527 | 1 | 528 | 600 | 16 | 616 +-------+---------+-------+-------+---------+------- Total |10,297 | 87 |10,384 |33,215 | 5,200 |38,415 ----------------+-------+---------+-------+-------+---------+------- [1: Taken from original invoices. Fractional dozen omitted in this table.] [2: Split, improved, and flatfoot.] [3: Fancy straw and sennit, fancy.] [4: Including hats the type of which is not specified in the invoice. Probably many sennits and fancies.]

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 $4 and $7 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 $7 per dozen.

TABLE 6.--_Percentage of men's sewed straw hats imported at the port of New York from Italy with a foreign value less than that specified, January-June_, 1924

+------------+------------+------------------+----------- Foreign value | Sennits[1] | Fancies[2] | Miscellaneous[3] | Total less than-- | | | | --------------+------------+------------+------------------+----------- | _Per cent_ | _Per cent_ | _Per cent_ | _Per cent_ $9.50 | 98.6 | 98.5 | 92.0 | 96.8 $9.00 | 98.6 | 97.4 | 87.9 | 95.2 $8.50 | 97.3 | 95.6 | 85.7 | 93.5 $8.00 | 91.2 | 92.3 | 79.9 | 90.3 $7.50 | 94.3 | 85.9 | 76.4 | 86.3 $7.00 | 88.8 | 79.0 | 72.3 | 80.6 $6.50 | 68.9 | 61.5 | 63.8 | 64.7 $6.00 | 9.1 | 40.9 | 46.1 | 48.6 $5.50 | 46.4 | 36.2 | 35.0 | 39.4 $5.00 | 33.9 | 28.4 | 18.5 | 27.6 $4.50 | 21.6 | 24.8 | 12.0 | 20.2 --------------+------------+------------+------------------+----------- [1: Split, improved, and flatfoot.] [2: Fancy straw and sennit, fancy.] [3: Including hats the type of which is not specified in the invoice.]

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 $7 per dozen.

TABLE 7.--_Imports at the port of New York of men's sewed straw hats from England,[1] classified according to foreign value, including packing, January-June_, 1924

+--------- Foreign value | Dozen ------------------+--------- $6.50-$6.99 | 2,631 $7.00-$7.49 | ... $7.50-$7.99 | ... $8.00-$8.49 | ... $8.50-$8.99 | 3,340 $9.00-$9.49 | 1,260 $9.50-$9.99 | 1,044 $10.00-$10.49 | 98 $10.50-$10.99 | ... $11.00 and up | 948 | ===== Total | 9,521 ------------------+--------- [1: These data cover 9,521 dozen hats out of a total of approximately 10,730 dozen imported from England, or 89 per cent. They represent the larger invoices (several over 1,000 dozen) and hence are not so evenly distributed as are the Italian hats.]

_Effect of imports._--The effect of the increasing imports of straw hats on the production and sales of domestic firms was discussed at the public hearings before the Tariff Commission. Evidence was introduced showing that the production of 19 factories decreased from 468,424 dozen in the eight months August, 1923, to March, 1924, to 391,189 dozen in the corresponding months of 1924-25. Seventeen firms showed decreased production and two firms reported increases. Meanwhile imports of foreign hats increased from 74,355 dozen to 102,450 dozen. Imports from Italy increased from 38,000 dozen to 70,000; imports from England decreased from 12,000 dozen to 9,000. Representatives of several domestic firms stated that their losses of business were directly attributable to inability to meet prices quoted by importers of Italian hats.[1]

[Footnote 1: See Transcript of Public Hearings, May 16, 1925, pp. 408, 420.]

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 $6.01. During this same period imports from England amounted to 20,549 dozen or 22 per cent of total imports, at an average value of $12.50 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 $5.96 per dozen. Imports from England were 29,450 dozen, or approximately 18 per cent of the total, at an average value of $9.59. Total imports increased from 93,309 dozen in 1923, valued at $779,989, to 164,041 dozen in 1924, valued at $1,179,929, 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 $6.23 per dozen, on the comparable four months' period in 1924, to $5.46 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 $9.64 to $13.07 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 (1924) 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.

_Types of hats produced in foreign factories._--Neither the English nor the Italian factories producing men's straw hats confine their business exclusively to men's sewed straw hats. Some of them also block and trim woven-hat bodies, such as panamas; some make women's and children's hats, and others produce, or deal in, felt hats. Nor is production of sewed straw hats confined to those made of sennit braids; hats are made of other braids as well.

_Organization of foreign production._--The sennit braids used in the Italian straw hats exported to the United States are not made in Italy but are of Japanese origin, as are also the sennit braids used in the sewed straw hats made in the United States and in England.[2]

[Footnote 2: Milan and fancy braids are plaited by Italian women in their homes, but this industry is not to be confused with the manufacture of sewed hats, the subject of this investigation.]

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.

_Working hours and wages._--The labor employed in the manufacture of sewed straw hats is well organized in both Italy and England. The rates of wages and hours of labor, both of factory workers and of employees of contractors, are determined by collective bargaining. A minimum wage scale for both pieceworkers and timeworkers became effective in Italy October 27, 1924. The labor of women and children in Italy is limited to 48 hours per week (decree of March 15, 1923). The employment of children under 12 years of age in shops and factories is prohibited.

COSTS OF PRODUCTION

_Methods of obtaining cost data._--Costs of the domestic Italian and English hats were obtained by representatives of the commission. In the United States they were given access to the books and records of the manufacturers. Domestic costs of materials, labor, and overhead are based on actual records.

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

_Material._--Material includes costs of braid, of bleaching, and of trimming materials and sundries, and also the cartons in which the hats are packed.

_Labor._--The amount charged to the individual hat for labor includes all labor costs connected with its manufacture. The amount of direct labor on each hat was first determined. The indirect labor charge for each hat was determined by applying to its direct labor charge the percentage which total indirect labor for the factory bore to the total direct labor.

_Overhead._--In each domestic factory the total overhead charges were obtained and the ratio of these charges to the total direct labor cost of the respective factory was computed. This ratio, expressed as a percentage of direct labor, was applied to the direct labor cost of individual hats to determine the overhead charge to be apportioned to each hat.

SELLING EXPENSE

(_a_) _Domestic._--The ratio of total selling expense in each factory to total manufacturing cost (material, labor, and overhead) was first determined. This ratio (expressed as a percentage of total manufacturing cost) applied to the manufacturing cost of the selected hat determined its proper share of the total selling expense. Firms organized to deal directly with retailers uniformly had higher selling expenses than those whose products were marketed chiefly through jobbers. The average selling expense of the selected hats was $1.64 per dozen, or 10.8 per cent of the average manufacturing cost. In selling expense is included the charge for cases and other packing material.

(_b_) _Foreign._--Costs of selling hats to importers in the United States are included in the general overhead expenses reported by foreign companies, but are an inconsiderable item when compared with manufacturing costs. No expenses of the offices maintained in this country by foreign manufacturers have been included.

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.

TABLE 8.--_Rates of duty necessary to equalize differences in costs of production of men's sewed straw hats in the United States and in Italy, the principal competing country_

+-------------+------------ Item | Domestic[1] | Italian[2] -------------------------------------------+-------------+------------ (_a_) Cost (transportation not included): | _Per dozen_ | _Per dozen_ Material cost | $6.44 | $4.35 Labor | 4.60 | .87 Overhead | 1.70 | .76 +-------------+------------ Total manufacturing cost | 12.74 | 5.98 +=============+============ Difference | | 6.76 Foreign valuation[3] | | 6.42 American selling price[4] | 13.28 | | | Ad valorem duty necessary to equalize | | on basis of-- | | _Per cent_ Foreign valuation | | 105 American selling price | | 51 +=============+============ | | (_b_) Cost (transportation on Italian | | hats to New York included): | | _Per dozen_ Total manufacturing cost | 12.74 | $5.98 Transportation to New York--Inland | | freight, ocean freight, marine | | insurance, consular fee | | 1.10 +-------------+------------ Cost, including transportation to | | New York for Italian hats | 12.74 | 7.08 Difference | | 5.66 Foreign valuation[3] | | 6.42 | | Ad valorem duty necessary to equalize | | on basis of-- | | _Per cent_ Foreign valuation | | 88 -------------------------------------------+-------------+------------ [1: Average costs of 15 domestic hats selling to jobbers at $10.55 to $15.52.] [2: Average cost of 15 Italian hats whose imported cost plus duty ranged from $8.51 to $13.10.] [3: Average of wholesale selling prices reported by foreign manufacturers.] [4: Average of wholesale selling prices to jobbers reported by domestic manufacturers.]

TABLE 9.--_Rates of duty necessary to equalize differences in costs of production of men's sewed straw hats in the United States and in England_