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PARAGRAPHS 216-219-CANE SUGAR, ETC.
United States, being an agricultural country, the industry has nothing to fear even from the annexation of Cuba."
Excessive, abnormal, and unreasonable profits have been made by promoters in refining and not by farmers in cultivating sugar beets. This is fully demonstrated by the 100 per cent dividend declared by the Union Beet Sugar Co., as reported in the San Francisco Post of June 1, 1911, and the 35 per cent dividend declared by the Michigan Sugar Co. in addition to the regular 14 per cent quarterly dividend. With these facts, does it seem likely that those interested in the sugar business would be harmed by a removal entirely of this tax on the one great necessity of life?
The late Mr. Arbuckle, a recognized authority on sugar, who had recently returned from abroad, confirms what Mr. Spreckles had already said; that our people are entitled to cheaper sugar, and that the high price of sugar in England has caused thousands of tons of fruit to rot in the fields and orchards because it was impossible to preserve it at a reasonable cost. The same condition existed here in 1911, and all the goods which were canned cost more than they should and were sold to the consumer at an advanced price. It is not only the one article of sugar on which the consumer directly pays the 14 cents per pound, but when you enter a grocery store and cast your eyes upon the shelves and see the number and varieties of canned and preserved foods which to-day constitute a large part of the merchant's stock, and remember that in almost every can, jar, and container is to be found a quantity of sugar, you may have a slight conception of the commercial importance and how every family in the land is contributing, through the purchase of these foods, to the unjust, unwarranted, unfair monopoly of the sugar interests.
Mr. Arbuckle agreed with Mr. Spreckels and said there should be no tax on sugar and that through full publicity free sugar could be obtained. If publicity alone is necessary, it is the duty of every citizen of the country to proclaim it from the housetop, in the street, and in every highway and hedge in the land. Let there be an awakening and an arousing until the consumers have rid themselves of this unnecessary burden. If the fundamental theory of protection, which is to build up and assist infant industries, to protect labor, and place these industries in position to compete in the markets of the world until they shall be masters, as it were, of the situation be the true and correct theory, and I believe it is, it has failed completely in this instance. Because Louisiana, the only cane-producing State of any consequence which has raised sugar cane since 1823, produced last year but 160,000 tons, a trifle less than 9 per cent of the national consumption. Add to this 13.5 per cent of the beet sugar produced in this country and we have less than 25 per cent of the sugar consumed in the United States as an American product.
The foregoing shows very clearly that a sugar duty does not fulfill the protective tariff requirements of protection to American labor. As the beet-sugar factories are operated but 60 to 90 days, there is too small number of workers in the industry, nor is it true that States where these factories are established would be injured even temporarily, for in all of them other crops can be successfully cultivated with quite as lucrative result.
There is but one other argument to be met as a reason why the present duty should be maintained, and that argument would apply equally as well to flour, salt, milk, or coffee, and that is the old cry that it is an easy way of raising a revenue regardless of the source from which it comes. And in a spirit of fairness, gentlemen, let me ask, is it right and fair and just that the homes of the poor should be taxed more than the homes of the rich? It would seem so by the present schedule, for the man of wealth who brings from France an automobile of the latest design, capable of carrying his family and friends a hundred miles an hour, may do so by paying a duty of 45 per cent. He has 29 per cent better treatment from the Government than the American laborer who sparingly dips from his bowl of sugar to sweeten his morning cup of coffee.
Again, the man of leisure and of wealth, who passes his evenings at the fashionable club joking, jesting, and making merry with his friends, drinking champagne as a pastime, may do so by paying a duty of 70 per cent on his wine; while his coachman contributes 69 per cent on the sugar consumed by his frugal wife and family. The lover of art who desires to possess the rarest painting and most beautiful statuary may do so by contributing to the support of this Government 15 per cent duty; while the wayfarer must satisfy his longing and desire for the beautiful by gazing at the pictures in the comic almanac and paying a revenue to this Government of 69 per cent on the sugar in his baby's milk, and this must be contributed from infancy to old age.
I will speak of but one other article on the dutiable list, although scores might be mentioned. Diamonds, with the enormous duty of 10 per cent, made low, I suppose,
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in the interest of the farmers that all may have them. Can you conceive of a more wicked comparison, 10 per cent on diamonds, 69 per cent on sugar? This seems so inconsistent that I must ask your pardon for a moment in following to its logical conclusion. Suppose a young man 21 years of age purchased a diamond for $100; on this he pays a duty of $10. If he should live to be 72 years of age, this $10 and interest at 4 per cent would amount to the monstrous sum of $30.40, and as diamonds are constantly increasing in value, it is probable that it could be sold at a price in advance of its first cost, with duty and interest charge added, so that the young man would really pay nothing for his pride and it would prove a good investment.
Another young man marries and starts in housekeeping, and in due season has a family of three children. His wife is prudent, and uses no more sugar than the average housekeeper. At the end of his life of 72 years he has contributed as his share of the tax on sugar $832.32, and if he has followed the teaching of a distinguished exPresident and had eight children instead of three, he would have contributed more than $2,000. Now, gentlemen, look upon that picture and then on this, and let me ask you if the burden is on the proper shoulders.
Gentlemen, permit me to say, in closing, that we are not represented by an attorney. We have felt that we ought to take as little of your time as seemed necessary, and I have endeavored to state the facts as briefly as possible. And if, after due consideration, you find it feasible and advisable to strike from the dutiable list this one article of sugar, you will have given to the canned-food interests of this country a relief which is greatly desired, and to the consumer-the farmer, mechanic, artisan, laborer, and every citizen of this Republic-a greater boon than has been bestowed by any Congress of this century.
The following addition to his brief was filed by Mr. Fernald on January 20, 1913:
It has been contended that owing to the ability to collect drawback on goods exported that the tariff on sugar is not a handicap to our domestic industry who wish to have an export business. This may be true in theory but in practice it is not correct. and I would like to quote from a letter written by one of our western members on this question as follows:
"It occurred to me to say that the inadequacy of the drawback law from the canner's point of view, in my opinion should be shown most strongly. The trouble arises not only because of the delay, uncertainty, difficulty, and expense of collecting the drawback, but perhaps even more because the canner and preserver is obliged to anticipate his market long in advance. He can not manufacture his product during the year to suit the market conditions. He operates only during the short fruit season. If he anticipates foreign demand and packs with a higher priced duty-paid sugar the foreign demand may not come, and the goods have to be sold domestic at a sacrifice. When you realize that to secure the drawback we must notify the Treasury Department of the exact variety and grade of each variety of fruit we propose to export, the amount of sugar varying with the grade, you will see how very complicated the situation is. It is impossible to determine what quantities of each of the five or six grades of the dozen or more varieties will be required for export. As a result in every season canners doing an export business find themselves short on some grades on which their drawback sugar has been exhausted, and long on others packed with duty-paid sugar for which they can not find a foreign market.
With the duty reduced so that refiners could supply sugar made from imported raws with no increased cost over domestic, and the actual cost reduced to a reasonable figure, we could hope to compete for a large volume of business in the Orient now going to Great Britain, Tasmania, and other producing countries enjoying cheaper sugar and tin plate.
P. S.-We paid one-fourth of a cent per pound premium for duty-paid sugar in 1912— both the local refineries demanding this differential. In 1911 the C. & H. people broke away from the long-established custom of charging premium and the western sugar people followed very reluctantly. This year they both came back to the old practice.
The CHAIRMAN. Now, gentlemen, Mr. Lowrey has used an hour and twenty minutes of your time. Now, Mr. Lowrey, you desire to have your people file their briefs, do you?
Mr. LOWREY. Yes. Can you tell me just how much time we have left.
PARAGRAPHS 216-219-CANE SUGAR, ETC.
The CHAIRMAN. You have used 1 hour and 20 minutes, and you have 40 minutes left. Mr. Bass is here, and we have agreed to give him 10 minutes, too.
Mr. LOWREY. If you will allow Mr. Jamison to file his brief and say what he has to say, then Mr. Post could follow and Mr. Atkins could have all the time he wants, and leave some for Mr. Bass.
The CHAIRMAN. Mr. Bass says that he wants some time, but I do not know how much.
TESTIMONY OF WILLIAM A. JAMISON, OF BROOKLYN, N. Y., REPRESENTING ARBUCKLE BROS.
Mr. Jamison was sworn by the chairman.
Mr. JAMISON. Mr. Chairman, we desire to file this brief on the matter of sugar tariff, and only to repeat in conjunction with it what we have repeated each time we have appeared before you at other times, asking for free sugar, and urge that Congress take such action that may reduce the duty in such an amount that the consumer will receive an equal amount of benefit.
Mr. FORDNEY. You are interested entirely in the consumer, Mr. Jamison? Are you manufacturers or users of sugar?
Mr. JAMISON. We are refiners-Arbuckle Bros.
Mr. FORDNEY. You are a member of the Arbuckle Bros. Refining Co.?
Mr. JAMISON. I am one of the firm; yes, sir.
Mr. FORDNEY. And you appear here in favor of free sugar?
Mr. JAMISON. Yes, sir.
The brief referred to is as follows:
AN ARGUMENT FOR FREE SUGAR BY ARBUCKLE BROS.
To the WAYS AND MEANS COMMITTEE,
NEW YORK, January 15, 1913.
National House of Representatives.
GENTLEMEN: The undersigned, Arbuckle Bros., of the city of New York, is a partnership which owns and operates a cane-sugar refinery on the Brooklyn shore of the East River, with a capacity of over 7,500 barrels of refined sugar a day. We are among the independent refiners. Our contest with the American Sugar Refining Co. and our competition have been important factors in keeping the prices of sugar stationary, while all other food prices have rapidly advanced. At every opportunity we have advocated "free sugar" before the House of Representatives, feeling able to meet the competition of the world, and that the lower prices which must follow free raw material will increase the consumption and more than offset any importation of refined sugar. We do not ask the American people to pension us for conducting a legitimate business, or subsidize us in the production of a food commodity of universal use. We are not clamoring about the cost of production abroad. We do not fear the competition of the world, but ask the world for our market. We are independent, and free from alliances with any trust or combination or "gentlemen's understanding.' We are not a corporation, but a partnership, and have "no interlocking directors" with any competitive interests. In advocating and urging the removal of the import duty on sugar, raw and refined, we are not actuated by altruistic motives, but by purely business motives, believing that through the increased consumption of sugar, incident to a substantial reduction in price, the additional business will fully compensate for the loss, if any, due to refined sugar imported.
We protested against the bill reported by the Senate committee at the last session of Congress, and we respectfully submit the following reasons for consideration:
In the report of the Committee on Finance of the United States Senate it was denied that "free raw sugar" would lessen the cost of refined sugar to the consumer. Why,
PARAGRAPHS 216-219-CANE SUGAR, ETC.
then, do the beet-sugar men besiege the Halls of Congress? Why have they subscribed great sums of money "to educate the American people "-moneys which are being spent largely in concentrating upon Congress biased statements of its beneficiaries for the continuance of this heavy tax upon food to further swell their grossly swollen profits? Why do they rage that their industry will be ruined, and why does the report (p. 4) go on to say:
"Your committee do not think, if the full significance of results from "free sugar" to our home production was clearly understood by our people, that they would be willing to see the labor and capital engaged in our sugar industries sacrificed, especially in view of their chances ultimately to secure cheaper sugar from American farms and fields.'
The beet-sugar men know that the price of sugar will be decreased more than the import duty if a "free-sugar bill'' were to become a law. Experience has shown that the consumer saves more than the duty that is remitted. During the three years and five months of free sugar (Apr. 1, 1891, to Aug. 1, 1894), the price of refined sugar decreased by the whole of the duty remitted, and in addition by a portion of the refiner's gain. Mr. Willett testified before the Hardwick committee of the House of Representatives that it takes 107 pounds of "raws" to make 100 pounds of refined sugar, and further, as follows:
"The consumer, therefore, received the benefit of the full duty taken off of 107 pounds of raws, $2.397, plus 11.05 cents-$2.512 per hundred pounds. That is, during the time of free duty the consumer paid for granulated $4.40 and during the time of $2.24 duty the consumer paid for granulated $6.92. He got the benefit of the full duty taken off.
"The CHAIRMAN. And some of the increased profit of the refiner?
"Mr. WILLETT. Some of the increased profit; yes.
It is true, as stated in the Senate committee report, that the refiner's margin of profit was increased. The gain to the refiner came from two sources. It takes 107 pounds of raw sugar to make 100 pounds of refined sugar. The refiner saved the difference in the cost of these 7 pounds. In addition, a given capital will purchase and carry a larger amount of raw sugar and sugar in course of refining. This gain amounted to $0.234 per 100 pounds. He divided this profit with the consumers, keeping 11.9 cents for himself and giving up to the consumer 11.5 cents. The price of beet sugar follows the price of cane sugar and the import tax on cane sugar increases the price of both. A very simple calculation, based on figures in the report, will show that the tariff tax on sugar costs the people of the United States between one hundred and one hundred and fifty million dollars per annum. The report answers this argument by dividing the consumption of sugar into parts and by assuming that the only saving to the consumer will be on the sugar which he uses on his table. If that were true, the remainder of the saving would go to manufacturers of candy, of condensed milk, of preserved fruits, and other industries, all of which would be stimulated by the lower price of sugar. It is reasonably certain that the keen competition in these trades would reduce the price of their manufactured product by approximately the whole of the reduction in the price of sugar.
Mr. Frank Lowery, of the Wholesale Grocers' Association, in a recent pamphlet, writes as follows:
"The public benefits from the cheaper sugar would not end with reducing the cost of that article to the consumer. Under the present tariff the relatively high cost of sugar seriously burdens our great fruit canning and preserving industries, and by increasing the cost of these products, limits their consumption in this country, and practically prohibits exportation on a large scale.
"In so far as our export trade in jellies, jams, and other preserved fruits is concerned the direct result of a lower sugar duty would be to give us a much larger share of the world's markets than we now enjoy. This is perhaps the greatest fruit-growing country in the world, but our export trade in canned and preserved fruits is relatively small, owing to the fact that we can not compete, in neutral markets, with countries having the advantage of cheap sugar. Preservers like the H. J. Heinz Co., of Pittsburgh, have found it necessary to establish factories in England, where they secure this advantage. At present the duty on sugar in England is 1/6.6 and it is generally believed that the next budget will show this has been still further reduced.
"A material reduction in the sugar tax would at once enable our canners to greatly increase their exports, thus creating a demand for the fruits, berries, etc., of our farmers, which now go to waste, for lack of a market. It would likewise increase the demand for all products used in these industries, such as tin plate, glassware, labels, cases, etc. The advantages to our farmers and the people generally from the
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increased market for these products would far exceed the doubtful benefit which a very few of them now derive from the growth of sugar beets or cane."
At the time the Payne-Aldrich tariff law was being enacted, the National Canners' Association (which numbers nearly 3,000 firms), at their annual convention in Louisville, Ky., passed a resolution urging Congress to abolish the duty on raw and refined sugar, because, as stated in their resolution: "It is greatly desired to offer the product of our factories to the consumer at the lowest possible cost.
The National Food Manufacturers adopted a similar resolution.
An officer of the California Canneries Co. recently expressed himself as follows: "As to the sugar tariff there is no question but that it is a serious handicap to the fruit industry of this State, and we certainly trust that you will succeed in your efforts to have this tariff removed, as there can be no doubt but that the people of this country are bearing this great burden for the benefit of a few multimillionaires, that control the Sugar Trust, and are in a position to force a tariff that is for their own benefit as against the interests of the people at large."
Great as is the amount of sugar used by the canners, it is small indeed when compared with that consumed by the housewives of the country. Tons of fruit rot every year, which in farmhouses would be preserved if the price of sugar were lowered by free raw sugar.
SUGAR A UNIVERSAL REVENUE PRODUCER.
It is true the European countries exact large revenues from sugar. They tax the import of foreign sugars and the consumption of domestic sugar, causing prices to vary from 4 cents per pound in London to 14 cents in Rome. They tax salt, also, and the salt tax was a potent cause of the French Revolution. To-day in some continental countries salt may be bought only at the Government depots and at prices which include heavy taxes. If the import tax on Cuban sugars were removed and the excise taxes of Europe copied and made one-half cent per pound on all sugar consumed, the revenue would amount to $40,000,000 per annum, and $75,000,000 per annum would be saved to the people of the United States. The revenue would, moreover, be always increasing with consumption, rather than diminishing as it does now with the growth of the domestic industry.
FREE SUGAR AS AFFECTING OUR EXPORT TRADE.
It is argued in the Senate committee's report that Cuban reciprocity would be ended and the "advantages which we now have for our exports in the Cuban market" destroyed by free sugar. Cuba produces sugar cheaper than any country in the world. The island lies at our doors. The planter can lay down his sugar in the New York market and have his money within a week. The East Indian planter must wait 60 to 90 days. The Cuban planter sells with exact knowledge of the market. The East Indian takes the chances of the changing markets. If the import tax on Cuban sugars was removed, our trade and commerce with that island would grow apace. It is, indeed, a novel idea that the Cuban planter is protected by taxing his sugars more than half their values. The Hawaiian planter produces sugar at 2 cents per pound and he is in combination with the steamship carriers, the refiners in California, and with the beet-sugar men. He is making enormous profits because he sells at full New York prices, which include freight and duty. Mr. C. A. Spreckels testified that between 1894 and 1895 he bought, operated, and sold a plantation in the Hawaiian Islands and made a clear profit of nearly $2,000,000. (Hearings before Committee on Finance, p. 418.) Very little sympathy will be wasted upon the Hawaiian planter by those who know the combination of refiners, planters, and beetsugar men who control prices on the Pacific coast.
Gen. Clarence R. Edwards, Chief of the Bureau of Insular Affairs, stated before the Senate Committee on Finance (p. 176) that the Philippine Islands suffered from the limitations on their free export of sugar to the United States to 300,000 tons per year and from their land laws which limit the acreage to be acquired by one person or corporation. We advocate the removal of both limitations, that capital may seek investment in the Philippines and under better laws be highly remunerative. The export trade to the United States of the Philippine Islands would be greatly increased by laws which would increase their export of sugar to the United States.
It must be conceded that the Louisiana planters are dependent upon the tariff. They were nursed on bounties and live on tariff taxes. They produce a crop the annual value of which is $25,000,000, and, for this, demand that the people of the