[The "Tariff Board" report on Schedule 1 of the tariff of 1909 (Cotton Manufactures), was transmitted by President Taft to Congress, March 26, 1912. In its published form it is a document of 841 pages, in two volumes (House Document No. 643, 62d Congress, 2d session). The Board's letter of submittal contains, in brief summary, the findings of the investigation as to relative costs of production and prices, with reference to the existing rates of duty. We omit the introductory survey of the scope of the investigation but give the greater part of the letter of submittal (pp. 8-17 of the report).]

Cost of equipment. The method of determining costs adopted by the Board does not include the item of interest, so that the cost figures as given show nothing regarding the original investment necessary to carry on the process of manufacture except the item of depreciation. This item is slight so far as cost per yard of cloth is concerned. Obviously, however, the relative advantage or disadvantage of the foreign and domestic manufacturer in competition is affected by the amount of original capital on which interest must be earned. Consequently figures are presented showing the relative costs of completing and equipping a spinning plant and a weaving plant in England and this country, designed to carry on the same line of production. From these figures it appears that the cost of erecting a building is about 40 per cent greater in this country than in England, the cost of equipment for a spinning mill about 70 per cent higher, and the cost of equipment for a weaving plant (with plain looms in both countries) about 50 per cent higher. These figures are for the equipment considered adequate for a given production in the two countries. It varies somewhat according to different methods prevailing in the two countries, and the figures do not necessarily establish the relative prices of identical machines here and abroad. Where a mill is equipped with automatic looms the cost of the looms is at least two and a half times the cost for a mill equipped with plain looms.

A very small part of the cotton machinery used in this country is imported, a marked contrast to the case of worsted machinery. With the exception of spinning mules, more than 90 per cent of the machinery is of domestic manufacture. Practically all looms and all ring spindles are of domestic make. Of cards and jack spindles about 15 per cent are of foreign make. Mule spinning in this country involves only about 20 per cent of the total number of spindles, and of the mules in use in the mills investigated 83 per cent were imported.

Cost of yarns. In comparing the cost of making yarns in England and the United States it has seemed essential, in view of the fact that 80 per cent of English spindles are on mules and 80 per cent of American spindles on ring frames, to compare the cost of mule spinning in England with the cost of ring spinning in this country. As a rule, mule spinning is a more expensive process, and the production from mule spinning is of somewhat finer quality, even with yarns of the same nominal count. These facts should be kept in

* mind; but it is evident that the really significant comparison is that between the actual results obtained under the prevailing methods of each country.

In the cost of raw material there is practically no advantage possessed by either country. Any general difference in the price between England and the United States is less than occurs from mill to mill or month to month in either country.

The actual book figures for English mills and American mills show that in comparing the most efficient mill for which we have figures in England with the most efficient mill for which we have figures in this country - and these mills are typical in both cases - the per cent of the total English labor cost to the total American labor cost per pound of yarn varies from 78 to 95 per cent. Comparing all of the yarns selected, the English labor cost is found on the average to be practically seven-eighths of the American in the case of these two mills.

In the matter of general expense the difference between the two countries is decidedly greater, thereby increasing the difference in the total conversion cost of yarn. Again, by comparing the two most efficient mills, as referred to above, it is found that the total conversion cost of yarn in England varied from 65 to 79 per cent of the American conversion cost. The average on all counts taken shows the English conversion cost to be about 73 per cent of the American.

It should be noted that these comparisons are based upon taking that mill in each country which showed in general the lowest cost on the whole range of yarns. On certain particular counts a lower cost was shown in other mills, so that the figures may be taken as typical for mills of high efficiency. They cover warp and filling yarns not higher than 50's for warp and 70's for filling.

Taking all the mills covered by the investigation in each country, there were wider variations in the American costs secured than in the English costs, due partly to the fact that the English mills were all in the Lancashire district, where wages and other conditions are well standardized, while the American costs were taken from mills covering a much wider area, with much greater differences in labor and other conditions. Another reason for the wider variations in American costs is that the English mills for which figures were secured are all of a modern and efficient type, while some of the American mills included were old and of low efficiency.

In the case of most yarns for which figures are given for the United States the highest conversion cost is 50 per cent higher than the lowest conversion cost. In a few cases it is nearly double. Consequently the difference in conversion cost would appear much greater in a comparison drawn between mills of lowest cost in England and mills of highest cost in the United States.

In this connection care should be taken not to confuse conversion cost with the value of the finished yarn. In saying that the cost of manufacturing yarn in an English mill is 72 per cent of the cost in an American mill, it is not meant that the total cost of English yarn, including the value of the cotton in it, is 72 per cent of the total cost of the American yarn. As a matter of fact, the difference in conversion cost between the two countries varies from 3.8 per cent to 11.9 per cent of the total cost of production in England, including raw material.

It should also be noted that these relative costs do not include yarns of the highest counts or other yarns used largely for special purposes, since the Board was not able to secure sufficiently detailed figures on the higher counts abroad. They do include, however, the great mass commonly manufactured in the United States. It is entirely possible that a comparison of costs on these special counts or qualities would show a different ratio between the two countries than is here presented.