+=================
| _Per cent_
Ad valorem duty required to equalize |
on basis of foreign selling value | 74
Present duty | 60
------------------------------------------------+-----------------

The failure to consider interest on investment in the overhead
introduces another difficulty of some importance. If rents actually paid
are included in costs, equality of treatment demands that interest on
capital invested in plants owned, and therefore not rented, should be
considered. In the costs of 14 of the American companies investigated
the rent charge amounted to $0.29 per dozen for all styles of hats. It
appears that there is no information to show that any one of the Italian
companies covered rented its factory; therefore, the failure to include
interest on the capital invested in the Italian factories may have
overestimated the relative strength of Italian competition. The failure
to include interest on invested capital in the Italian costs might
justify the exclusion of the rent item from the American overhead costs.

It will, of course, be argued that to disregard all overhead costs in
both the foreign and domestic figures in the way suggested would fail
to measure the domestic disadvantage arising from relatively higher
overhead expenses. There are, however, two considerations, discussed in
detail in this statement, which tend to compensate for any inaccuracy
which the above findings might imply. They are (1) the method of
sampling employed by the commission; and (2) the failure to consider
certain of the Italian industries' marketing expenses.

_Conclusions._--The principal significance of the foregoing discussion
is to be found in the conclusion that, in recommending under the law an
increase in the present rate of duty on lower-priced hats from 60 to 88
per cent on foreign value, the statute is being liberally construed from
the point of view of the domestic industry, in the effort to arrive at
an equalization of costs in the United States and abroad. Regardless of
the legal question as to whether transportation should or should not be
included, any higher duty on any of the hats investigated than 88 per
cent on foreign value--particularly so high a duty as 105 per cent, or
the equivalent 50 per cent on American selling price, which has been
suggested by certain commiss