INFORMATION OBTAINED IN THE INVESTIGATION

From the commission's investigation of men's sewed straw hats, conducted as indicated above, the following information has been obtained:

Domestic Production

The manufacture of men's straw hats has been conducted on a commercial scale in the United States for upward of 50 years. The industry is centered in and around New York City, in a number of cities in Massachusetts and Connecticut, and in Baltimore, Md. Statistics of production of men's sewed straw hats are not available, since the census of manufactures does not distinguish between men's and women's hats nor between sewed hats and woven hats. Domestic manufacturers estimate that the value of the men's straw hats produced in 1914 was $12,000,000, or about 45 per cent of the total production of all straw hats. In 1920 the value of the total production of men's straw hats was estimated at $20,000,000, of which about $12,000,000 was men's sewed hats. At the preliminary hearing it was estimated that the average annual production of men's sewed straw hats in recent years amounted to 800,000 dozen. There are about 40 manufacturers of men's sewed straw hats in the United States. The majority are well established firms.

The production of men's sewed straw hats for the season 1923-24 of 19 factories for which costs were obtained was 553,253 dozen. The factories may be classified as follows:

Table 1.—Domestic straw-hat factories grouped according to annual production
	Number	Production	Per cent of total
		Dozen
Group I. Factories with annual production of 50,000 dozen and over	4	265,767	48.0
Group II. Factories with annual production of 25,000-49,000 dozen	4	122,936	22.2
Group III. Factories with annual production of less than 25,000 dozen	11	164,550	29.8
Total production	...	553,253	100.0

Kinds of hats produced.—There are two general types of men's straw hats produced by the domestic manufacturers:

(1) 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.

(2) 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.

Organization of production.—The manufacture of straw hats is essentially a factory business and with few exceptions each concern carries on all of the major operations connected with the production of hats in a single establishment. Plaiting of straw braid is a separate industry, the domestic hat manufacturers being dependent upon foreign sources for their supply of braids. The bleaching of straw braids is performed by some of the hat manufacturers in their own establishments; others have the bleaching done by outside concerns which specialize in this class of work. Some firms make the tips (the inside linings of the hats) in their own establishments; others buy the complete tip, or have certain operations, such as printing or stamping, performed by outside shops.

Labor conditions.—The hours of labor of employees in domestic straw hat factories in 1923-24 varied from 42 to 54 weekly. Wages are based both on piece and time work. Time wages ranged from $15 to $40 per week, according to the character of the work performed.

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:

Table 2.—Employees in 18 domestic straw-hat factories, season of 1923-24

Month	Number of employees	Month	Number of employees
1923		1924
July	1,116	January	3,331
August	1,775	February	3,371
September	2,542	March	3,403
October	2,765	April	3,380
November	3,221	May	3,117
December	3,291	June	1,871

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 $779,989, to 164,041 dozen in 1924, valued at $1,179,929, a gain of approximately 75 per cent in quantity and 50 per cent in value.

Table 3.—Imports for consumption of men's sewed straw hats¹from Italy, England, Germany, and other countries, by months, calendar years 1923 and 1924
(Source: Foreign Commerce and Navigation of the United States)
Month	Italy		United Kingdom		Germany		Other countries²		Total
Month	1923	1924	1923	1924	1923	1924	1923	1924	1923	1924
	Number	Number	Number	Number	Number	Number	Number	Number	Number	Number
January	51,225	35,754	9,734	50,087	2,460	19,829	26,606	34,754	90,025	140,424
February	53,644	114,644	9,235	35,024	8	25,372	4,756	57,429	67,643	232,469
March	54,102	97,899	55,920	46,435	7,420	50,126	51,305	40,669	168,747	235,129
April	66,552	192,007	46,222	119,031	1,931	85,421	84,684	49,935	199,389	446,394
May	78,602	113,593	68,989	54,874	80	85,884	31,888	34,047	179,559	288,398
June	38,658	59,840	42,776	37,208	1,960	6,873	4,414	14,769	87,808	118,690
July	23,049	22,505	6,717	1,533	848	720	11,685	41,367	42,299	66,125
August	1,796	4,000	1,250	820	1,504	2,795	1,041	41,689	5,591	49,304
September	120	427	960	706	1,272	7,377	102	10,550	2,474	19,060
October	53,129	37,809	396	318	3,411	4,541	331	34,528	57,267	77,196
November	77,962	82,313	2,718	2,640	8,929	959	7,524	44,471	97,133	130,383
December	78,372	100,353	1,647	4,723	21,334	5,332	20,415	54,516	121,768	164,924
Total number	577,211	861,144	246,584	353,399	51,157	295,229	244,751	458,724	1,119,703	1,968,496
Dozen	48,101	71,762	20,549	29,450	4,263	24,602	20,396	38,227	93,309	164,041
Total Value	$289,215	$427,706	$256,769	$282,402	$32,503	$180,054	$201,502	$289,767	$779,989	$1,179,929
Average value per dozen	$6.01	$5.96	$12.50	$9.59	$7.62	$7.32	$9.88	$7.57	$8.36	$7.19
Per cent of hats imported from each country	51.50	43.75	22.00	17.95	4.60	15.00	21.90	23.30	100.0	100.00
¹ Including men's, women's, and children's. ² Including withdrawals from warehouse.

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[^a] value per dozen of Italian hats decreased while the average foreign[^a] value of hats imported from England and other countries increased.

[!--Note--]

a ([return])
Values upon which duties were assessed as computed from data given in Foreign Commerce and Navigation of the United States.

Table 4.—Imports for consumption of men's sewed straw hats¹from Italy, United Kingdom, Germany, and other countries, by months,January-April, inclusive, 1924 and 1925.
(Source: Foreign Commerce and Navigation of the United States)
Month	Italy		United Kingdom		Germany		Other countries²		Total
Month	1924	1925	1924	1925	1924	1925	1924	1925	1924	1925
	Number	Number	Number	Number	Number	Number	Number	Number	Number	Number
January	35,754	212,292	50,087	8,995	19,829	12,070	34,754	6,104	140,424	239,461
February	114,644	189,736	35,024	31,776	25,372	7,697	57,429	22,580	232,469	251,789
March	97,899	207,218	46,435	61,755	50,126	3,828	40,669	24,482	235,129	297,283
April	192,007	260,145	119,031	45,711	85,421	40,479	49,935	10,545	446,394	356,880
Total number	440,304	869,391	250,577	148,237	180,748	64,074	182,787	63,711	1,054,416	1,145,413
Dozen	36,692	72,449	20,882	12,353	15,062	5,340	15,232	5,309	87,868	95,451
Total value	$228,452	$395,298	$201,291	$161,422	$102,366	$40,923	$123,775	$78,222	$655,884	$675,865
Average value per dozen	6.23	5.46	9.64	13.07	6.80	7.66	8.13	14.73	7.46	7.08
Per cent of hats imported from each country	41.76	75.90	23.76	12.94	17.14	5.60	17.34	5.56	100.00	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 strawhats from Italy¹ classified according to foreign value, includingpacking January-June, 1924
[In dozens]
Value	Sennits²			Fancies³			Miscellaneous⁴			Grand total
Value	T r i m m e d	U n t r i m m e d	T o t a l	T r i m m e d	U n t r i m m e d	T o t a l	T r i m m e d	U n t r i m m e d	T o t a l	T r i m m e d	U n t r i m m e d	T o t a l
$2.99 and less	...	18	18	...	60	60	...	...	...	...	78	78
$3.00-$3.49	6	38	44	...	219	219	50	...	50	56	257	313
$3.50-$3.99	255	23	278	1	250	251	570	...	570	826	273	1,099
$4.00-$4.49	2,518	28	2,546	196	2,909	3,105	622	...	622	3,336	2,937	6,273
$4.50-$4.99	1,617	24	1,641	61	477	538	680	...	680	2,358	501	2,859
$5.00-$5.49	1,671	4	1,675	427	711	1,138	1,715	...	1,715	3,813	715	4,528
$5.50-$5.99	1,687	1	1,688	608	89	697	1,095	58	1,153	3,390	148	3,538
$6.00-$6.49	1,313	...	1,313	2,831	182	3,013	1,826	10	1,836	5,970	192	6,162
$6.50-$6.99	2,657	1	2,658	2,537	33	2,570	879	1	880	6,073	35	6,108
$7.00-$7.49	740	...	740	996	15	1,011	433	...	433	2,169	15	2,184
$7.50-$7.99	255	...	255	939	3	942	346	17	363	1,540	20	1,560
$8.00-$8.49	147	...	147	470	6	476	598	...	598	1,215	6	1,221
$8.50-$8.99	165	...	165	261	5	266	231	...	231	657	5	662
$9.00-$9.49	10	...	10	165	1	166	420	...	420	595	1	596
$9.50-$9.99	30	...	30	107	...	107	46	...	46	183	...	183
$10.00-$10.49	39	...	39	56	1	57	203	...	203	298	1	299
$10.50-$10.99	46	...	46	34	...	34	56	...	56	136	...	136
$11.00 and over	63	3	66	10	12	22	527	1	528	600	16	616
Total	13,219	140	13,359	9,699	4,973	14,672	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 theport of New York from Italy with a foreign value less than thatspecified, January-June, 1924
Foreign value less than—	Sennits¹	Fancies²	Miscellaneous³	Total
	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 strawhats from England,¹ classified according to foreign value, includingpacking, 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 ofapproximately 10,730 dozen imported from England, or 89 per cent. Theyrepresent the larger invoices (several over 1,000 dozen) and hence arenot 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]

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.

[!--Note--]

1 ([return])
See Transcript of Public Hearings, May 16, 1925, pp. 408, 420.

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]

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.

[!--Note--]

2 ([return])
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.

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 incosts of production of men's sewed straw hats in the United States andin Italy, the principal competing country
Item	Domestic¹	Italian²
(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 valuation³	...	6.42
American selling price⁴	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 valuation³	...	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 incosts of production of men's sewed straw hats in the United States andin England
Item	Domestic¹	English²
(a) Cost (transportation not included):	Per dozen	Per dozen
Material cost	$8.34	$5.47
Labor	5.85	1.84
Overhead	1.87	2.01
Total manufacturing cost	16.06	9.32
Difference	...	6.74
Foreign valuation³	...	9.73
Ad valorem duty necessary to equalize on basis of—		Per cent
Foreign valuation	...	69
(b) Cost (transportation on English hats to New York included):		Per dozen
Total manufacturing cost	16.06	$9.32
Transportation to New York—Inland freight, ocean freight, marine insurance, consular fee	...	1.35
Cost, including transportation to New York for English hats	16.06	10.67
Difference	...	5.39
Foreign valuation³	...	9.73
Ad valorem duty necessary to equalize on basis of—		Per cent
Foreign valuation	...	55
¹ Average costs of eight domestic hats selling to jobbers at $16.74 to $22.50. ² Average costs of eight English hats whose landed costs duty paid ranged from $15.64 to $18.60. ³ Average of selling prices reported by foreign manufacturers.

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 $1.10 per dozen for Italian hats and $1.35 per dozen for English hats.[³] 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.

[!--Note--]

3 ([return])
Computed from consular invoices for hats imported at the port of New York in the six months, January-June, 1924.