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Against Renewing Tax
of 40 a Pound on




COPPER

S u b m i t t e d by
GENERAL CABLE CORPORATION
420 Lexington Avenue
New York City
(.For description of Company, see last page)

February 18, 1937

To the Chairman ofthe Finance Committee ofthe
United States Senate and the Chairman
of the Ways and Means Committee of the
United States House of Representatives:
REASONS FOR NOT RENEWING T H E TAX OF 4<J A
POUND ON COPPER IMPORTS IN T H E EXCISE
TAX BILL WHICH EXPIRES J U N E 30, 1937
Very briefly, this tax should be terminated, because—
(1) It was assessed purely as an emergency measure when,
during the depression, there was vast overproduction and accumulation of stocks and it seemed wise to shut out any possibility
of imports in order to sustain the then low level of American employment in American copper mines. A precisely reverse condition
now exists. A shortage actually occurred at the end of 1936.
Present indications are that in 1937 United States production
will not supply United States consumption and this threatens the
probable increase of employment in American fabricating plants.
(2) Since the tax was imposed, the foreign price of copper
has not been substantially lower than the United States price
and frequently has been above the United States price. Whenever the price of copper is as high or higher abroad, exports of
both virgin and secondary* copper still further accent any shortage in the United States.
(3) The tax produces no revenue—not enough to pay administrative charges.
(4) There is no need of a protective tax on copper.
(5) Foreign trade would be stimulated.
(6) The tax promotes waste of an irreplaceable natural
resource.
(7) The tax promotes a copper fabricating monopoly.
•NOTE—The term "secondary copper" is used to describe copper that has been
in use, but scrapped and retreated to the purity of "primary" or "virgin" copper, which
is that newly produced from the mines.
1




I.
T H E T A X W A S FOR A N

EMERGENCY N O W

A N D T H E R E V E R S E — A COPPER
Now

PASSED,

SHORTAGE—

THREATENS.

The duty on copper was imposed in 1932 at a time of great
panic in the copper industry. When the crash of 1929 happened,
copper was 180 a pound and the mines were operating at peak.
Production remained high, owing (1) to a hope that demand
might soon increase, and (2) to the fact that mines hesitate to
reduce production, because of (a) obligations towards labor;
(b) scattering of labor, mines being situate in sparsely inhabited
localities; (c) the very high cost of upkeep of a shut-down mine.
By the time the mine owners finally were convinced that buying
of copper was not coming back, they found themselves with an
unprecedented amount of excess stock on hand.
Consumption in the United States fell from a maximum of
1,119,386* tons in 1929 to 335,981* tons in 1932. The figures
of stock in 1932 were not assembled, but they were assembled
for 1933 and show that total United States duty-free stock at
the end of 1933 was slightly over 523,000f tons, while United
States consumption in 1933 was slightly under 388,000$ tons.
At the rate of consumption for 1933, the total stock would
suffice for over sixteen months without any new production.
The price fell from 18^ in 1929 to a low of 5ff in 1932.
Hysteria, or something very like it, possessed the copper industry. It felt something must be done, but no one knew what.
Finally, a tariff was suggested. Copper, since 1894—thirty-eight
years—had been on the free list and always had held its own
against foreign copper. But it was argued a tariff would not
harm, even if it did not help, the situation. A plausible argument was made by comparing the labor costs of African and
South American mines with those of United States mines. The
*American Bureau of Metal Statistics (1935, p. 11)
tCopper Institute Report No. 242
XCopper Institute Report No. 218
2




hope of revenue even was held forth. But the "emergency" was
the main and most potent argument.
And Congress evidently acted on the "emergency" theory,
for on three occasions it has distinctly limited the life of the tax.
(1) The tax was imposed first by the Revenue Act of 1932,
Section 629 of which provided that no importation after June
30, 1934, should be taxable. (2) By the Act of June 16, 1933,
Chapter 90, Section 212 (48 Stat 206), "1935" was substituted
for "1934." (3) By resolution of June 28, 1935, Chapter 333
(49 Stat 431), "1937" was substituted for "1935."
We contend that statistics of stocks, sales, consumption as
distinguished from sales, prices, exports, actual experience of
shortage of copper in late 1936, and production, all indicate that
the "emergency" is now passed, and that a probable shortage
of copper for 1937 if the tax is continued, is now threatened.
Let us discuss each of these factors:
STOCKS: United States duty-free refined stocks at end of each
of the last four years were as follows (in tons of 2,000 pounds) :
Stocks

in

At
end of year

193 3
193 4
193 5
1936

Stocks Other than Producers

hands of
a/c
N. Y. ComProa/c
Nonmodtty
dttcers Consumers Consumers Exchange

376,259
225,581
130,614
83,493

99,654
78,040
70,340
51,229

33,164
23,155
11,587
9,733

14,358
27,660
18,874
16,589

Total

147,176
128,855
100,801
77,551

Grand
Total

523,435
354,436
231,415
161,044

(Copper Institute Report No. 242 for Dec. 1936)

Producers' (mines') stock of 83,493 tons was not really available stock, but had been sold and not yet delivered. This is shown
by the fact that "Forward Sales" (i.e., sales not yet delivered) at
the end of 1936 were 377,704 tons, or 294,211 tons in excess of
refined stock in the hands of producers (mines) at the end of
the year.




3

Moreover, it takes about ninety days between the time copper
comes out of the mine and the time it can be metallurgically transformed into the form of commercial copper available for delivery
in the market. It follows that the producers (mines), in order
to take up any slack in production that may occur for various
causes (such as strikes, car shortage, weather conditions, etc.),
should carry an available stock of refined copper of at least two
months, and preferably three months, unsold and available to
take care of such emergencies. If production is, therefore, at
the level of 50,000 tons per month, this would mean at least
100,000 tons; if at 75,000 tons per month, at least 150,000 tons.
Nor is this situation affected by the fact that total stocks, as
above shown, are 161,044 tons. For the stocks held by other
than mines (77,551 tons) are not available for purchase by the
fabricating industry. They are held by the financially strongest
fabricators, who purchased in anticipation of a rise in price as
well as for actual requirements. Except for a negligible tonnage
held by outsiders, these stocks will ultimately be consumed by
the owners. The average sales and production of fabricators as
a body indicate a shortage of copper notwithstanding these fabricator stocks, and some individual fabricators have little or no
available stock.
The shortage of stocks, therefore, quite strongly supports
the argument of a probable shortage of copper.

SALES: The figures of sales prior to 1 9 3 4 were not collected,
but from that date they are as follows:
Tons

1934
1935
1936

284,159
602,044
967,598

We hereafter (page 12) show that mine production of the
United States in 1936 was 613,000 tons of copper. So that sales




4

in 1936 were more than one and one-half times current mine
production.
The deficit between production and sales must be sales of future production; i.e., production yet to come out in 1937. We later
show (pages 12 and 13) that mine production in 1937 probably
can not reach 800,000 tons and that total mine capacity is approximately 1,000,000 tons. As pointed out on page 3, approximately 294,211 tons have already been sold from the anticipated
production of 1937. If that production is 800,000 tons, there
remain only about 500,000 tons plus custom and secondary
production available for 1937, since there are no mine stocks
now left. Sales in 1936, as above shown, were 967,598 tons,
and secondary production cannot possibly make up the deficit.
In 1936, secondary production was about 101,000 tons, an unknown amount of which was exported.
If 1937 requirements only equal those of 1936, a shortage
seems indicated.
: Sales are usually considered the best evidence
of demand in the long run, but it may be argued that sales in
1936 are an exception and may have exceeded actual or probable
consumption owing to the rapid rise in price during 1936 (See
prices, page 14). Hence, for 1936 estimates of consumption
may be more reliable in determining future demand than are
sales.

CONSUMPTION

There is, of course, no way of determining actual consumption, but two estimates are made in the trade: One, by the
American Bureau of Metal Statistics, which is based on shipments by refineries to fabricating plants as the ultimate consumer.
The other estimate of consumption is made by Copper Institute,
a trade association, which is based on shipments of duty-free
copper to fabricators. These two estimates of consumption are
as follows (in tons of 2,000 pounds):




5

1933

1934_

1935

1936

American Bureau of
Metal S t a t i s t i c s
(Year Book 1935,
page 11)
381,726
417,110 579,741 (not yet available)
Copper Institute Report No. 242, December^
(not collected) 379,843 528,194
764,560

It is very significant that the Copper Institute shows a rapid
increase in consumption in the last six months of 1936 (same
report):
1936

Tons

July
August
September
October
November
December

59^807
64,140
75,892
75,919
67,379
82,409

These figures of consumption, which include both primary
and secondary copper, for the last four months of 1936 average
over 75,000 tons a month, or 900,000 tons per annum.
From the figures given above, it is apparent that consumption in 1935 was roughly 40% more than in 1934, and in 1936
was a little more than 40% in excess of that in 1935. If consumption in 1937 is 40% more than in 1936, it would still be
slightly below the peak consumption of 1929, which was over
1,100,000 tons. If there should be any such increase in 1937
over 1936, a shortage of copper would be certain.
We have seen above that in the last four months of 1936,
consumption very materially increased and was at the rate of
an average of 75,000 tons a month, or 900,000 tons a year. If
we assume that in 1937 there is only a 10% increase over this
rate of consumption in the latter part of 1936, we would have
a consumptive demand for the balance of 1937 of very close to
1,000,000 tons, and this again would indicate a highly probable
shortage for 1937, for the reason stated at top of page 5.




6

United States copper consumption for the last fourteen years
was:
Tons

192 3
1924
192 5
192 6
J927

730728
756,579
813,497
904,217
825,182 f F r 0 m Year Book of American

ml:::::::: 808,758 (
Jmit)
193 0
193 1
193 2
193 3
193 4
193 5
193 6

600,753
335,981
381,726
417,110
579,741
764,560

(1934

*,Metal *atistics
* P £
>
a

e n

(Year Book of 1935, page 11)
(Copper Institute Report No. 242)

From this table, we see that consumption in 1936 was about
that of 1924, and that for six years following 1924, including
1930, consumption was greater than in 1936.
Peak consumption of 1929—1,119,000 tons—was reached
after four years of consumption greater than in 1936 and after
an addition of two years (1923 and 1924) of consumption fairly
comparable to that in 1936.
Five years have now passed with consumption much less
than in 1936, three of them markedly so.
Meanwhile, population has continued to increase. More
houses must be built. Plants and machinery of all kinds using
copper need renovation and enlargement. New electric installations are required, since 1936 recorded an electric consumption
exceeding even that of 1929. There must be a very large pentup demand for copper in all forms.
A continuation of the rapidly increasing demand of the last
half of 1936 seems certain, unless we are to have some unforeseen cessation in, even a recession from, the present level of
business activity.




7

: Prices of copper since the tax was imposed (1932) are
hereafter set forth (page 14), but the changes in price and the
sales made at each time deserve to be shown for each month of
the year 1936.
PRICES

D O M E S T I C C O P P E R S A L E S FOR

1936 (excluding sales for export)
Price (per lb.)

Month

January
February
March
April
May
June
July
August
September
October
November

•

•

9J40
9X4

•

Raised

from

to... •
•

9

from 9]/2$ t o . . . •

9-M
9-M
9y 4 j

•
•

9H4
M*

•

Raised

Raised
from
Raised
from 100
[Raised y2$, from
December •s Raised % f r o m llfJ
[Raised
from 1 1 ^
TOTAL

Tons

33,898
80,984
34,985
155,911
11,035
15,547
180,374
23,847
41,924
184,424
93,636

to. .. 10{S
to. . 10y 2 $
to. • 114 I
to.
UH*\ 111,033
to. . 12*
967,598
•

J

On January 11, 1937, the domestic price of copper was
raised from 12^S to
and on January 14, 1937, it was again
raised from \2y 2 $ to 13$ per pound, at which price it remained
to February 16, 1937, when it rose to 14^ per pound.
Comparison of prices here and abroad, printed on page 14,
indicates that the price in the United States has substantially
followed along with the price realized for United States copper
for sale abroad, c.i.f., exchange being taken into consideration,
and that for over a quarter of the time the price has been actually higher abroad.
The rapid change of both world price and United States price
since January 1, 1936—the latter rising from 9*4$ to 140, or
P e r pound ($95 per ton) indicates more conclusively than
words the rapid increase in demand.




8

E X P O R T S : Since the tax was enacted, no year has passed without heavy exports of United States duty-free copper. This is
so for two reasons:

(1) As shown by the table on page 14, for twenty-six per
cent, of the time the foreign price of copper has exceeded the
United States price. Naturally, whenever this happens, United
States production seeks the foreign market because of the higher
price.
(2) Even when the price is slightly lower (say,
or $1
a ton, c.i.f. abroad), there are often exports, since there is a
natural tendency to dump copper at a slight loss abroad, thus
relieving pressing necessities for money without lowering the
price in the United States and thus diminishing the realization
on a much larger tonnage sold at home.
The Copper Institute estimates (Report No. 242-A, December, 1936) virgin duty-free copper (exclusive of secondary) exported from the United States as follows:
Tons

1933
1934
1935
1936

28,031
125,866
91,485
54,447

6 months
Year
Year
Year

The Copper Institute makes no estimate of exportation of
secondary copper.
A slightly different result is reached by a comparison of
United States imports and United States exports as shown in
the following table, taken from the Year Book of the American
Bureau of Metal Statistics (1935, p. 35). These figures include
secondary pure copper, but not copper in brass.
U. S. Imports

193 3
193 4
1935
193 6

143,715
213,330
257,699
190,342*

U. S. Exports

185,159
331,219
323,890
286,200f

Excess of Exports

41,444
117,889
66,191
95,858f

*American Bureau, Release C-1049, Jan. 29,193?.
tAmerican Bureau, preliminary estimate, believed correct within 1,000 tons.




9

The excess of exports over imports necessarily must be dutyfree copper, which is really United States production. Imports are
almost exclusively copper coming in under bond for treatment
(smelting or refining) in the United States, and on exportation
the bonds are cancelled, or if sold with benefit of drawback, for
fabrication in the United States, are cancelled on exportation of
the fabricated copper. This is more fully described on page 15.
In December, 1 9 3 6 , the
forces at work—increase in consumption, rapid increase in price,
reduction in stock and insufficiency of production—culminated
in an acute shortage of copper in the United States. Fabricators
were unable to buy the amount of copper required to cover orders
placed for fabricated material, and in many cases considerable
tonnages of such orders had to be refused as a consequence. As
the building season opens, around March or April, demand
should normally rise, since orders are then largely placed for
open season construction, and a large pent-up demand, caused
by five years' subnormal buying, may greatly increase the usual
seasonal activity.
Nothing will be more effective to bring in the use of substitutes for copper (e.g., aluminum, stainless steel, etc.) than the
necessity of telling customers that copper cannot be bought except at the foreign price plus
and transportation cost. The
danger of a change to substitutes is that it is likely to become
permanent, as customers will not in every case come back to the
use of copper. Thus, the entire copper industry—both producers
and fabricators—will suffer, and when the rate of consumption
decreases, it will be found that a shortage, which could have
been avoided by the discontinuance of the
tax, has resulted
in a large use of substitutes for copper.
A C T U A L E X P E R I E N C E W I T H SHORTAGE:

SECONDARY C O P P E R : Perhaps a word should here be said about
the supply of secondary copper as affecting the foregoing conclusions. Secondary copper has once been in use, been scrapped




10

and reclaimed for further use. It is gathered from and through
various sources largely from secondary plants and dealers. By
far the larger part is always reworked in the secondary plants by
relatively simple metallurgical processes into form that will fit it
for use in practically the state of its former use. For example,
junked brasses are melted together and formed into brass ingots
which can be used for making that particular type of brass. Also,
grades of copper are cast into copper ingots, which are used by
small foundries and manufacturers. As such treatment is much
less expensive, it follows that only that portion of secondary
copper which cannot be used in this way, must bear the additional cost of electrolytic refining to the status of virgin copper.
The secondary dealers react quickly to a higher price abroad
and promptly export whenever that condition arises.
Another reason indicating a lesser supply of electrolytically
refined secondary copper is the fact that both Germany and
Japan are manifesting a preference for purchase of their copper
requirements in the form of secondary copper to be electrolytically refined in their own countries. They do this because the
refining of secondary copper can be done more cheaply in Germany and Japan with lower labor and fuel costs and at the same
time relieves unemployment. Whenever the foreign price of copper is only slightly lower than the United States price, secondary
copper tends to flow to Germany and Japan, both because of
their lower refining costs and also because of this preference.
While secondary sources may supply some copper additional
to that of mine production, it cannot be in an amount which
will sufficiently overcome the disparity between production and
consumption heretofore pointed out.
: We should now examine the possibilities for
production of copper in 1937 and the mine capacity in the United
States when running full.
PRODUCTION




11

Careful questioning was made by N. R. A. in the formation
of the Copper Code, which resulted in its estimating the annual
capacity of production of United States mines at 1,001,000 tons
(Copper Code, p. 381). Adding the production of Matahambre
from Cuba, of 18,000 tons, which comes in free under the Cuban
Convention, we have an annual capacity of 1,019,000 tons. This
compares with the 1929 peak year of United States production,
as given by the Year Book of American Bureau of Metal Statistics (1935, p. 10), viz., 1,026,348 tons.
Since 1934, some of the copper mines of the United States
have become exhausted in whole or in part. No new mines have
been brought in whose production makes up for that lost by
exhaustion of mines.
Capacity can rarely be attained. Weather and labor conditions, car shortage and breakdowns or other abnormal happenings all detract from theoretical capacity.
We may, therefore, take, in round figures, the copper capacity
of United States mines plus Cuba as less, rather than more,
than 1,000,000 tons per annum. But taking 1,000,000 tons per
annum as capacity, the following table shows the actual production and per cent, thereof for the years indicated:
Tons

%

•American Bureau of Metal
Statistics, Year Book
(1935) p. 10.
fl936

613,000

61

fBureau of Mines,
Mineral Market Report
No. M. M. S. 520

It may be said that United States mines have now started
to operate at full capacity, and if so, will produce at the rate
of 1,000,000 tons per year, instead of 613,000 tons as in 1936,
or an increase of approximately 400,000 tons, which should be
able to supply an indicated demand.




12

In the first place, this cannot possibly be realized in 1937.
The mines are not yet in operation. They have been closed,
in whole or in part, for six years. Plants must be reconditioned, general equipment overhauled and renewed, and, most
important of all, an adequate supply of labor obtained and
trained. Mines are situated mostly in mountain districts with
few other resources or attractions. Consequently, labor, when
unemployed, drifts away to more promising fields. Old age
and deaths for six years have reduced the ranks of skilled
miners required for the capacity production of 1929. New
men were substituted only to the extent necessary to enable
running at the low levels above set forth.
Before capacity production is possible, it is necessary to get
and train 40% of the labor from outside sources. It is very
doubtful if, trying the best they can, the mines can increase
their production from 613,000 tons in 1936 to a total of 800,000
tons in 1937.
II.
S I N C E T H E E N A C T M E N T OF T H E T A X ON COPPER

IMPORTS,

T H E FOREIGN P R I C E OF COPPER H A S N O T B E E N SUBSTANTIALLY
BELOW T H E U N I T E D STATES P R I C E AND AT T I M E S H A S B E E N
ABOVE T H E U N I T E D STATES P R I C E .

Little needs to be added to this statement other than comparison of the foreign price of copper and the domestic price of
copper on a comparable basis, current exchange being included.
The following table is compiled, from "Metal and Mineral
Markets," being the weekly market service of "Engineering and
Mining Journal." These quotations are used generally in the
trade as the prices for copper, lead and zinc, in settlements between mines and smelters. It is the most reliable and generally
used of all trade statistics of this type.
THIS

TABLE

SHOWS

THAT

OUT

OF

THE

THIRTY-NINE

M O N T H S — E X C L U D I N G T H E CODE P E R I O D — T H A T T H E T A R I F F
H A S BEEN I N E F F E C T , T H E FOREIGN P R I C E ACTUALLY H A S BEEN
H I G H E R I N T E N M O N T H S , OR 2 6 % OF T H E T I M E .




13

E. & M .

J . MONTHLY AVERAGE COPPER PRICES
Export
C.I.F.
European
Ports

July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.
Apr.
May
June
July
Aug.
Sept.
Oct.
Nov.
Dec.
Jan.
Feb.
Mar.

1932
1932
1932
1932
1932
1932
1933
1933
1933
1933
1933
1933
1933
1933
1933
1933
1933
1933
1934
1934
1934

Domestic
F.O.B.
Connecticut
Valley

4.803
5.419
6.057
5.574
5.414
5.059
5.016
4.985
5.054
5.460
6.844
7.759
8.721
8.212
8.063
7.832
7.922
7.985
8.131
8.144
8.137

5.278
5.444
6.203
5.958
5.356
5.038
5.000
5.000
5.236
5.620
6.923
7.998
8.860
8.993
8.978
8.175
8.106
8.110
8.115
8.002
8.000

(in cents per lb.)
Difference

Ex-port
Price
Higher

Export
Price
Lower

.025
.146
.384
.058
.021
.016
.015
.182
.160
.079
.239
.139
.781
.915
.343
.184
.125
.016
.142
.137

Period of Copper Code from April, 1934, to June 15, 1935, eliminated
because price was fixed in United States.
July 1935
Aug. 1935
Sept. 1935
Oct. 1935
Nov. 1935
Dec. 1935
Jan. 1936
Feb. 1936
Mar. 1936
Apr. 1936
May 1936
June 1936
July 1936
Aug. 1936
Sept. 1936
Oct. 1936
Nov. 1936
Dec. 1936
Average 1936




7.650
8.038
8.446
8.814
8.714
8.714
8.658
8.866
9.008
9.149
9.119
9.090
9.293
9.597
9.823
9.969
10.649
11.135
9.530

8.000
8.204
8.729
9.192
9.250
9.250
9.250
9.250
9.250
9.394
9.500
9.500
9.577
9.750
9.750
9.788
10.386
10.988
9.699
14

.350
.166
.283
.378
.536
.536
.592
.384
.242
.245
.381
.410
.284
.153
.073
.181
.263
.147

III.
T H E T A X PRODUCES N O R E V E N U E

This, of course, can be proved only by figures of the Treasury
Department, which are not available. But the trade knows of
few, if any, instances in which copper intentionally has been imported into the United States and the duty paid. While large
importations of copper have been made, they have been reexported, as shown in the table on page 9. Importations are in foreign ore, concentrates or blister coming for smelting and refining into the United States from mines in Chile, Peru, Mexico
and Canada, which are really owned in the United States by
American companies. These imports are treated in bond and
after treatment, on exportation of the resultant copper, the customs bonds for payment of the tax are cancelled.
There may be a few possible inadvertent importations (for
example, where the resultant copper could not be treated and
reshipped within the time limit), but we think it safe to say
that the revenue from this tax does not pay expenses of administration.
IV.
T H E R E I S N O N E E D OF A PROTECTIVE T A X O N COPPER

Copper had no protective tax for thirty-eight years prior
to the present tax in 1932. It needs none now. The "money
cost" of producing United States copper is not greatly, if any,
in excess of the "money cost" of foreign copper. This is because
United States copper mines have a greater content of gold,
silver, platinum and other by-products. The South African and
Chilean copper mines have very little. Their lower labor
schedule is offset by lack of by-products in the ore. On a "money
cost" basis, the 1,000,000 tons, theoretical capacity of United
States copper mines, divides about as follows:




15

At a cost of 4y2$ to 5f per pound
Between 5^ and 7$, averaging 60 per pound...
Between 7$f and 9$ per pound
Average cost below 6^ per pound of total

500,000 tons
400,000 "
100,000 "
1,000,000 "

With a copper price of 140 per pound, what justifies an excise
tax which yields no revenue?

On the other hand, such a tax, in case of shortage of United
States supply, means either that (1) substitutes (e.g., aluminum,
stainless steel, and cheaper alloys) will be used in place of copper,
to the possible permanent injury of the copper industry, or (2)
the shortage must be filled by paying the 40 tax and importing
foreign copper. This at present would mean 180 instead of 140
per pound. The entire United States production would also
advance correspondingly.
Who would benefit thereby? — only mines now working at
capacity and selling their product at more than twice its "money
cost."
Removal of the excise tax would undoubtedly permit the
fabricators in this country to avail themselves of a sufficient
supply of copper to fill the requirements of the United States
Government and also the commercial demands made upon these
fabricators for finished goods, and further insure increased
employment in the fabricating industry, which would be denied
in the event of a copper shortage.
No tariff (i.e., dropping the present excise tax) means a
much larger reservoir from which to draw a supply. The price
would be the same inside and outside the United States. Less
wide fluctuations of price would be the result. World trade
would be helped without damage to American mines, and copper
fabricators would be able to get the copper necessary to fill
orders, without jumping the price 40 per pound.




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V,
FOREIGN TRADE W O U L D B E STIMULATED

Copper ores and bullion from the smaller mines of Mexico,
Chile, Peru and other Latin American countries, and also from
Canada, formerly came to United States smelting and refining
plants for treatment. The tax tends to drive such tonnages to
Europe, because freight direct to Europe is much less than
freight to the United States plus the cost of re-shipping the resultant copper to Europe. If the tax is removed, this tonnage
will again come to United States plants and employ American
labor. Such sales of copper in the United States would enable
goods to be shipped to those countries in equivalent dollar
amount. Thus, foreign trade would be stimulated without
damage to any real interest of the United States.
The result of the tax to date has been to reduce foreign
trade with Canada, Chile, Peru and Mexico, with no corresponding benefit to the copper industry of the United States.
VI.
T H E T A X PROMOTES W A S T E OF A N IRREPLACEABLE
N A T U R A L RESOURCE

In considering the advisability of the tax, Congress should
consider the effect upon the future of the copper supply in this
country. Present known mines of the United States probably
can not produce more than a total of 25-30 million tons of refined
copper. If a prohibitive tax is maintained, and if, as now seems
indicated, United States consumption will be practically the annual capacity of these mines, in from twenty-five to forty years
(allowing for some years of relative depression) the present
operating mines of the United States will be exhausted. That
other copper deposits will be found is quite possible, even
probable. But within the last twenty years, no new mine of
major importance has been discovered. The country has been




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prospected very thoroughly and the probabilities of discovery
of new properties equalling the production of present mines are
small. Copper is a very important and necessary asset in industry and in time of war. The tax fosters exhausting the
known copper resources of the United States within a
generation.
And it exhausts prematurely, for immediate gain, the major
resource of some of our Western states.

VII.
T H E T A X PROMOTES A COPPER FABRICATING MONOPOLY

Three large companies control 80% of the copper producing capacity of the mines of the United States. These same
companies control approximately 50% of copper fabricating capacity. Naturally they supply the necessities of their own fabricating plants first. ^Whenever the foreign price is higher than
the United States price and as a consequence United States
duty-free copper flows abroad, the independent 50% of fabricating capacity must alone suffer any shortage of copper. It
cannot compete with the producer fabricators because it cannot
obtain the necessary copper, and the
tax makes recourse to
foreign copper impossible. Therefore, business flows to the producer fabricators and it becomes within their power to absorb
80% of the copper fabricating of the United States.
It is lawful for these three large companies to own the copper mines which they own; it is lawful for them to own the
copper fabricating capacity which they own; and it is lawful
for them to supply their own fabricating capacity first. It is
the tax, and the tax alone, which gives them the power of a
monopoly, and for that reason, if for no other reason, the tax
should now be abolished.




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CONCLUSION

We submit that the foregoing discussion discloses a complete
reversal of the situation existing at the time the emergency tax
was imposed, and shows—
(1) No surplus stock, instead of an unprecedented amount
of stock as in 1932;
(2) United States production in 1936 not equal to United
States consumption;
(3) An actual shortage of copper in late 1936 and a
rapid rise in price from 9%$ to 140 between April, 1936, and
February 16, 1937;
(4) The shortage of copper accented by exports of United
States duty-free copper when the foreign price is higher than
the United States price;
(5) The highly improbable ability of United States mines
to increase their production in 1937 above 800,000 tons;
(6) An indicated consumption for 1937 in excess of production capacity, with no stocks to draw on;
(7) No need for a protective tax on copper;
(8) The tax lessens foreign trade;
(9) The tax tends to waste an irreplaceable natural resource;
(10) The tax promotes a copper fabricating monopoly.




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W E RESPECTFULLY P R A Y that the present excise tax of
a pound on copper be allowed to expire with the present law,
and be not renewed.

GENERAL CABLE CORPORATION,
B y D W I G H T R . G . PALMER,

President

In 1936, Company shipped product containing 162,000,000
pounds (81,000 tons) of copper.
Plants at:
Pawtucket, R. I.
Rome, N. Y.
Buffalo, N. Y.
Bayonne, N. J.
Perth Amboy, N. J.

Baltimore, Md.
St. Louis, Mo.
Fort Wayne, Ind.
Los Angeles, Cal.
Emeryville, Cal.

Company supplies its products to:
Department of the Navy
Department of War
Department of the Interior
Department of Agriculture
Department of Commerce

Post Office Department
Department of the Treasury
Works Progress Administration
Rural Electrification
Administration

and
Airplane Industry
Automotive Industry
Building Industry
Industrials
Mining Industry




Railroads
Shipbuilding Companies
Telephone and Telegraph
Companies
Utilities

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