following percentages: Assuming the price at which the article is sold to the consumer to be 100 per cent, the price to the retail dealer will be 663 per cent, and the price to the jobber will be 50 per cent. Of course, in individual instances, this percentage may be greater or less, but what I have stated is probably a fair average. We can not, without unduly lengthening this brief, enter into a broad general discussion of the business economics which justify these different prices.

It is probably enough for this purpose to say that they have been established under strictly competitive conditions, and from our knowledge of the athletic goods business we know that they result in only very moderate profits to the manufacturer, jobber, and dealer. It is perfectly apparent, however, that the tax which a particular manufacturer must pay will vary to the extent of at least one-half of the possible amount of the tax according to whether the sales were made to the consumer direct or to a jobber. It must be remembered also that merely because he is selling direct to the consumer he is not any more able to pay the double tax because he will have the same and in some cases even greater expenses in reaching the consumer direct than the combined expenses of the jobber and retail dealer where the sales are made through the channel of these two agencies, hence the next result of the tax which is a percentage on the price at which the goods are sold by the manufacturer results in a double burden on the manufacturer who sells directly to the consumer as against the manufacturer selling to the jobber. It would, however, make the matter very much simpler for us and also would be much fairer as between manufacturers, one having a sales policy to sell only to dealers or direct to consumers, and the other a sales policy selling to jobbers, if the price were a specific tax and identically the same on similar articles of the same grade. This can be done very simply if the tax is limited to golf balls and tennis balls, as we have suggested. It could also be done in the case of all athletic goods if Congress should decide to extend the tax to goods other than golf balls and tennis balls by providing that the tax should be a certain percentage on the retail price published and advertised by the manufacturer.

We believe that it is the general custom in the trade for all manufacturers of athletic goods, at least such as would be likely to be subjected to any tax, to publish retail prices. While they can not under the existing decisions of the Supreme Court compel by contract adherence to these selling prices on the part of their purchasers, nevertheless in general the prices are actually adhered to, and, in any event, where they are not adhered to the goods are sold. not at a higher price, but at a cut price, because in the practical operation of competition it is impossible for a dealer to charge more than the retail price published by the manufacturer. It should be borne in mind, however, in fixing any rate of taxation that the amount produced by putting the assessment on the retail price would be very nearly double what it would be if fixed on the manufacturer's price to the jobber.

Some objection might be made to this on the part of the manufacturers who make what are known as "special brand" goods-that is, goods which do not bear their name but bear the name of some jobber or dealer. I recommend that the law be so drawn that the tax on special-brand goods be paid by the jobber or dealer whose name appears on the goods or on the package containing them. He puts himself forth to the public as the ostensible manufacturer, and we believe it is not only fairer but would simplify the administration of the law for the tax to fall on him rather than the man who may actually make the merchandise.

VIII. CONCLUSION.

In the short time at our disposal we have been unable to gather any accurate statistics of sales of golf and tennis goods; from our general knowledge, however, of the trade we are able to make some estimates which may be of value to the committee.

In the tennis trade the sales of tennis balls in a normal year in the United States run from 150,000 to 200,000 dozen. The present average manufacturer's price for tennis balls is approximately $4.25 per dozen, which in a normal year would mean total manufacturers' sales of tennis balls of $850,000. Tennis rackets in a normal year at manufacturers' prices would make about $750,000. During the 12 months we have been in the war, and probably continuing during the war, the sales of tennis rackets have decreased to a far greater extent than 64059-18-No. 2- -4

the sales of balls, the reason probably being, as we have stated in a prior portion of this brief, that a tennis racket may be used for a number of years while the balls are consumed each season.

We would estimate that in the fiscal year commencing July 1, 1918, the sales of tennis balls in this country would be about 140,000 dozen, or, in round figures, would amount at manufacturers' prices to about $600,000, and that the sales of tennis rackets will probably not exceed 200,000. Under the present tax of 3 per cent this would produce a revenue of $24,000. Our suggested tax of 25 cents per dozen on 140,000 dozen would produce revenue of $35,000. In the case of golf, the quantities of golf balls sold in a normal year in this country are approximately the same as tennis balls. The average manufac turer's price per dozen for golf balls is to-day about $6. Assuming that during the fiscal year commencing July 1, 1918, there will be sales of 150,000 dozen golf balls, which we estimate as a probable maximum quantity, this would amount to a total at manufacturers' prices of $900,000. The sales of golf clubs at manufacturers' prices are in normal years about 600,000. This item of golf clubs is very difficult to estimate from the standpoint of the tax because of the large amount of clubs which are made up and finished by golf professionals and sold by them. During the next ensuing fiscal year we would estimate factory sales on golf clubs at about 300,000, or 50 per cent of normal. This makes the total golf sales 1,200,000, which at the present 3 per cent would produce a revenue of $36,000. Our suggestion of the tax of 50 cents per dozen on golf balls would produce, if 150,000 dozen were sold, a revenue of $75,000.

In presenting this brief we have only been able to deal with the general situation of the tax and also present suggestions and criticisms which occur to us in view of the section of the existing law covering athletic goods. It very often happens in the drafting of legislation of as complicated a character as our tax laws that confusion arises in their enforcement due to unfamiliarity with the technical or trade language which has to be used in order to specify the items intended for taxation; also lack of familiarity with conditions existing in the trade may result in the law containing provisions which cause unnecessary hardship and inconvenience. We realize that we can not take up the time of the committee by lengthening a discussion on the general principles involved, or ask for another hearing on those principles, but we do believe that we can render valuable aid and assistance to the committee when it has determined upon the principles that will apply on this section of the tax law in possibly making suggestions for the wording of the section in order to avoid confusion and conflict of opinion in its enforcement. For that purpose we place ourselves at the disposition of the committee for such assistance as we may be able to render.

Respectfully submitted.

H. BOARDMAN SPALDING, For A. G. SPALDING & BRO.

STATEMENT OF MR. A. H. EMERY, OF GLENN BROOK, CONN.

Mr. RAINEY. Please state your name.

Mr. EMERY. A. H. Emery, civil and mechanical engineer; moving pictures, postal rates, and advertising.

First, I would like to speak on the subject of moving pictures. Moving pictures should be a source of very great education.

Mr. RAINEY. Before he starts, I would suggest that Mr. Emery be allowed to finish his statement, and the members of the committee make notes and ask no questions until he finishes. Would you prefer that, Mr. Emery?

Mr. EMERY. Yes, sir. I will take the moving pictures and finish that subject up: and then there is another subject.

Mr. RAINEY. We will ask you questions on that subject when you finish, and you can indicate when you are ready for questions.

Mr. EMERY. Yes, sir. The moving picture, if properly selected and properly made, should be a source of very great education. The moving pictures as they are made and shown to-day are a source of

very great revenue to the operators and of very great payment by the public who patronize the pictures, and of very great injury to millions of people who patronize them. We have in the little town of Stamford, Conn., half a dozen of those picture shows. They are all of them open in the evening, and part of them in the afternoon. Many of them are low priced places-10 or 15 cents. The Government tax on all these moving pictures is 10 per cent. Whatever the patron pays for admission, 10 per cent is added to what he pays for

the tax.

Many children-boys and girls-and others, go to these moving pictures, if they can get away, every evening. Many of these pictures that are shown are pictures of crimes, and they are in the class of our old sensational dime novels showing many scenes of crime— and many boys who go to see these pictures are thus led into crime. They are made bad citizens by seeing these pictures. They are taking time to see them which should be spent in study or a useful pursuit; so that they are wasting a large portion of their evenings, and they are being despoiled of good morals. A minister in my town will not allow his children to go to these pictures. I tell him that he is right. The children think it is very hard to be kept from them. There are persons in that town that are supported largely by charity. and it is found that they go almost every evening to these pictures.

If we would raise the price of those pictures to just double the amount of admission that the proprietor charges, instead of making the tax 10 per cent make it 100 per cent, or double the admission, we would wipe out a lot of those pictures. Those that now charge 25 cents admission would charge 50 cents instead of 28 cents, and these little boys and girls, and the poor people who go to these places and lose so much time could not go. The other people would go very much less frequently and be less harmed by those things. This mass of pictures, many of them, show infidelities in the family; they teach crime; they teach that the relations of men and women are very bad; they promulgate whoredom. They are teaching children and educating them to make the way to hell easy. We want to submit that, as good citizens, we want to stop this waste of time of all children and other people who support these pictures.

If we could have only good pictures shown. pictures which would educate us, they would be very useful. Now, I can go in and see a film and see the cotton plant growing and see the men picking the cotton, and see cotton baled and shipped to the market, see it carded, spun, and woven. That teaches us in a single hour as much as we could get running around the country in a week. That is very useful. But that is a small part of the moving picture, seeing things that way. If we had, on the other hand, these pictures of stories which are often useful as to morals, which would make us better, our censors would not permit any pictures to be shown unless they were right and tended to increase the morals of the people, then the result would be good.

Let us cut down these objectionable pictures and at the same time give the Government additional revenue. This will give you a lot of revenue and at the same time wipe out a lot of this cheap stuff. There should not be any admission less than 25 cents, and adding the tax of 25 cents it would make the admission 50 cents. That will

create a great reduction in the number of those who attend and will save a great deal of the time of the people who are now patronizing these pictures, to the great detriment of their own interests and destruction of their morals and waste of their time. I think that is enough on the moving picture.

Mr. RAINEY. Does any member of the committee want to ask any questions on the subject of moving pictures?

Mr. GREEN. Did you appear before the committee that was investigating the subject of moving pictures in the Senate?

Mr. EMERY. I did not.

Mr. MOORE. Do you think we could regulate that by Federal lawcensorship; by Federal enactment?

Mr. EMERY. It is a difficult thing to do; but it would be very beneficial to the public. Our generation of children growing up now would be the better for it.

Mr. MOORE. I asked because I wondered how your supposed remedy to raise more revenue by reducing the number of bad shows and increasing the number of better shows would work out. It is a question whether, if they paid more, the moral tone would rise as you intend. Some people are willing to pay a higher price to seeMr. EMERY. One that is worse.

Mr. MOORE. To see a worse show. That is the point. How would we get more revenue out of it?

Mr. EMERY. We should have two objects in making these laws. one to get revenue and one to make our people better.

Mr. MOORE. Our idea, of course, is to get two dollars for one to-day, in the way of revenue. We have got to have two dollars this year where we got but one last year.

Mr. EMERY. No man can say how much your revenue would be changed by wiping out these low-priced admissions.

Mr. MOORE. The question is whether by abolishing them we would increase or decrease the revenue. I suppose primarily we have nothing to do with the moral question.

Mr. EMERY. I doubt very much whether it would make much difference. I think the revenue would be very much increased. Of course, it would not wipe out all those that are bad. The probability is that the revenue would be increased very much by charging double the price instead of only 10 per cent on the price of admission.

Mr. MOORE. Just illustrating, and not for the purpose of detaining you at all, there are a number of people that would pay a pretty high price for a show that was a little risqué.

Mr. EMERY. The revenue will not help those people. They will continue. They will pay the increased admission. You will get more revenue that way, but you will not help the morals of those men or women; but the censorship must do that, and that is a much more difficult problem.

Mr. MOORE. That does not help the revenue very much.

Mr. EMERY. No: I think not.

Mr. RAINEY. Will you proceed, now, with the other subject you had?

Mr. EMERY. If we take the zone-postal rate and add a tax on advertisements, it becomes a very complicated subject; whereas if you take the zone rate and you carry this piece of paper which weighs a pound [indicating pamphlet] and put a tax on that pound, it is

very simple; and it matters not to this postal expense whether this car carrying a ton of this paper is carrying some advertisements in it or not. The expense of carrying it is so much per pound.

Now, if you leave the advertisements out of that entirely, out of this zone rate, you will simplify the matter very much. All these advertisements that are published in these papers, if they had to pay a postal rate on the advertisements, because of the advertisements going in there, for this week, not because it is an advertisement, but because it is in this paper they are carrying, it is very complicated. Leave the advertisement business out of the carriage of these mails. It is second-class postage. What shall the second-class postage be to-day? As a matter of fact, there was a loss of $80,000,000 to pay its costs. If the postal rate is fixed on zones, as it should be, in my mind, it will do two things. In the first place, it will help to wipe out a large class of 15-cent and 10-cent magazines which to-day are a curse to this country. They are the old dime novel dressed up and sent about over the country at a cost of one-fifth of what it costs the Government for carrying them. Let the Government charge whatever the cost of carriage may be. Then you can wipe out a large class of these cheap magazines, and you will save to the country a large amount of paper which, by its consumption, to-day is destroying our forests; and that is destroying our climate.

Now, if you will put that tax on advertising, where it belongs, then you will simplify the procedure and you will carry the secondclass mail at a price which makes it up, which is not 1 cent a pound for this zone but several times that; and if you are carrying it to the farther zone, you will pay a price that makes it up; so that instead of collecting ten or eleven millions a year for secondclass matter you may wipe out that cheap magazine business and collect $40,000,000 from the second-class mail. If you carry it at cost, you will get $40,000,000 instead of $10,000,000.

Now, let us raise that revenue to the cost of carrying the mail, whatever it is; and the cost of carrying depends on the weight, not on the number of pages or the size of it, but the weight of it. If you put the tax on advertising in a revenue bill, the postage should be paid to the post office for that. You will increase the revenue to the Government about $40,000,000 instead of having a loss of $80,000,000. They will get that $40,000,000 back, and they will not have wasted so much of our forests or done so much harm to the morals of our people through these cheap magazines, which are carried by the Government for one-fifth of the cost of carrying them. Mr. RAINEY. Are there any questions that any member desires to ask? If there are none, you may proceed. Mr. Emery.

Mr. EMERY. This divorces the tax on advertisements from postal rates and puts it where it belongs, and puts a tax on this secondclass matter such as that it shall pay the cost of carrying it. Mr. RAINEY. Have you anything else you want to discuss? Mr. EMERY. Yes; I want to discuss another subject in the law, and that is the tax on advertisements and a tax on pictures in all papers and magazines. I have written a little paper, which I will read, and then bring in the details again [reading]:

A very large revenue may be collected each year by leaving a large tax on all advertisements of all our newspapers and magazines, and on all the pictures published therein.