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PARAGRAPHS 216-219-CANE SUGAR, ETC.
EDWIN PACKARD, NEW YORK, N. Y,, WRITES CONCERNING PORTO RICAN CONDITIONS.
Hon WILLIAM C. REDFIELD,
House of Representatives, Washington, D. C.
NEW YORK, January 27, 1913.
MY DEAR MR. REDFIELD: I am obliged for your attention and reply to my letter. I will not trouble you beyond adding this statement to my former communication: The company in which I am interested has $3,500,000 actual money invested. Last year, with unusually good prices for sugar, it netted barely 7 per cent on this capital. This year prices start off much lower. The company being very well managed the stock sold from 120 to 125. I refused 120 for a block of it a year ago. Threatened action on the tariff has so alarmed stockholders that the stock is offered at 70, with a bid price of only 65.
The company has paid unusual attention to the housing of the workmen. What is to become of them if the threatened legislation is enacted is hard to tell.
The densely inhabited little island of Porto Rico, about the size of Long Island, has a population in excess of the combined population of Delaware, Utah, Arizona, and New Mexico, and is yearly increasing its imports of merchandise from the States. The sugar business of necessity involves great risks, from droughts, hurricanes, etc., but if rates are left as at present a natural development of all resources will make the island prosperous and contented; a good year will take care of a bad one. There is no big thing in it however.
With an easily collected revenue of $55,000,000 to $60,000,000, I fail to see the wisdom of throwing this away, causing the ruin which is sure to follow, and seeking elsewhere an equal amount for the support of the Government.
I fear that in the multiplicity of conflicting interests this matter, so vital to the life of many, may not receive the consideration to which it is fairly entitled, but in presenting the matter through your kind offices I have done what I feel to be a duty. Sincerely, yours,
BRIEF OF HON. LUIS MUÑOZ RIVERA, RESIDENT COMMISSIONER FROM PORTO RICO.
WASHINGTON, D. C., January 15, 1912. Although the free-sugar bill, in its relation to the injury that it might work upon the sugar industry of the United States and its possessions and the profit that might accrue from its passage to the American consumer, was fully discussed before the House Committee on Ways and Means, and later on-April, 1912-before the Senate Committee on Finance, it behoves me as the representative of the people of Porto Rico to again enter a protest against the suppression of the present duty on sugar, basing the same, among other important facts, upon the following reasons:
The development of the sugar industry in Porto Rico may be seen by the following table, taken from the governor's report of 1912:
It will be noticed by the above table that the sugar exports from Porto Rico have in twelve years increased to over five times those of 1901. This development is due to the activity of the people and the protection afforded the industry at present. Let the duty be taken off and the production of the country will decrease year after year, be
PARAGRAPHS 216-219-CANE SUGAR, ETC.
coming, no doubt, what it was in 1901, when the exports amounted to $4,715,611 as against $31,594,063 in 1912.
The total exports of the island in 1912 were as follows:
Of the $49,705,413 to which our exports amounted in 1912, $31,544,063, as may be seen by the statistics previously given, came from sugar, and the balance of exports, a mounting to $18,161,350, from all other products together. It will be seen, therefore, that sugar exports constituted 63 per cent of the total value of the external sales. The sugar industry may be said to be the basis of the island's wealth.
Having thus brought to the knowledge of the committee the importance of the sugar industry to the life and welfare of the people of Porto Rico, I will proceed to show why, under different conditions, this business would be greatly affected.
COST OF CULTIVATION.
According to the figures contained in a memorial presented by the Association of Sugar Producers of Porto Rico to the Hon. Henry L. Stimson, Secretary of War, in July 27, 1911, we have that the cost of sugar production per acre is as follows:
The above-stated figures represent actual expenditures, excepting as follows: Rent of land, depreciation, interest on capital employed, and overhead.
The first year the acre's production is 25 tons and for the second year 12 tons, with an average of 18 tons.
It is impossible for the colonos to support any reduction of the tariff, as we shall show: Cost of 1 acre of new cane is $83.50; cost of 1 acre of ratoons, $39.50; total, $123.
PARAGRAPHS 216-219-CANE SUGAR, ETC.
The yield of 2 acres being 37 tons of cane, each ton costs $3.31; and sold at the rate of 6 pounds of sugar for every 100 pounds of cane at the price of $3.50 in the island, it is worth $4.20, so it leaves the colonos a benefit of 89 cents per ton of cane.
The tariff is $1.68 per 100 pounds, so if it is reduced 25 per cent the colonos' benefit will be reduced to 41 cents. If reduced 50 per cent, the colonos will lose 7 cents per ton. If reduced 75 per cent, the colonos will lose 55 cents per ton, and with free trade the colonos will lose $1.03 per ton. The central sugar factories would follow the same fate, as their expenses and profits are relatively divided.
This cost of production, higher than the cost of production in Cuba, Santo Domingo, and other West Indian sugar-producing countries, due to the condition of the soil, which has for many years been under cultivation, yielding less crops and making imperative the fertilization of the land at more frequent periods than in the abovementioned countries, would not allow the sugar planter or the sugar factory to compete with their fellow producers in those countries, to say nothing of the Russian, German, and other producers of the beet sugar in Europe, where labor, machinery, land, etc., are much cheaper.
Under the protection given this industry at present, a good many native corporations have been formed, and their money was invested in the business with the honest purpose of developing the island and establishing an industry for which its soil is most adaptable. A list of those corporations follows herein:
The following are American corporations engaged in the sugar business in Porto Rico:
This capital, American as well as Porto Rican, will be greatly affected should the sugar industry of the island be thus dealt with by leaving it unprotected and at the mercy of unfair competition. American capital will not continue to be invested in that business, nor lands especially adaptable to the raising of sugar cane will find any other application in the course of a few years.
With the development of the sugar industry in Porto Rico, American exports to the island became of considerable importance. This trade will naturally decrease if the main source of our wealth disappears. The following is a list of the exports from the United States into Porto Rico for the last 12 years:
One hundred and seventy thousand laborers find emloyment in the cultivation of sugar cane and the manufacture of sugar. If an estimation is made that three other lives depend upon each of these wage-earners, we have that 680,000 human beings are dependent on the sugar industry. If sugar is admitted free into the United States, American factories in the island will have to get out of business and at least half of the land now devoted to sugar cane will lie idle. And it may be estimated that 340,000 laborers would be without work. Wages would also be lowered and employment would not easily be found under the prevailing circumstances. The average wage paid in 1901 was 40 cents per day; to-day the average wage amounts to 80 cents per day. A very serious situation would be created in Porto Rico should sugar be placed on the free list, and we would have to face an economical problem of difficult solution.
The suppression of the duty on sugar would have a generally detrimental effect upon the prosperity and life of the island as a whole. I will try to prove this statement. Coffee, coming at present free into the United States-the exports of this product represent the third source of our wealth-and sugar being placed on the free list, we have that of the three main products of the island, tobacco alone would remain protected. The exports of fruits and other products raised in Porto Rico have not attained very much importance. The following is a list of all the exports of the country during the year 1912:
It will be seen by the above table that all the exports from the island to other countries amounted in 1912 to $49,705,413. If sugar is placed on the free list we will have that, taking 1912 as a basis, $31,544,063 from sugar and $6,754,913 from coffee, making a total of $38,298,976, would remain without any protection, while tobacco and fruits, the exports of which amounted to $9,784,603, would alone remain protected.
PARAGRAPHS 216-219-CANE SUGAR, ETC.
This would be unjust. Porto Rico bought from the United States in 1911 merchandise amounting to $33,774,263, which would have paid, according to the prevailing rates, $12,178,135 into the custom houses. American goods, therefore, were protected to that extent, having come into Porto Rico free of duty. If we estimate in $4,000,000 the benefit that may be received from protection on tobacco, fruits, and other small products, the island would still be discriminated against to the amount of $8,178,135 in the balance of its commerce with the United States.
OUR CRISIS IN 1911.
The mere news last year that sugar was going to be placed on the free list was the cause of a crisis in Porto Rico. Business suffered a loss which may be conservatively estimated in twenty million dollars, including, of course, the depreciation that it worked on the price of land all over the island. Banks stopped giving credit, the price of stock went down, and business generally found itself without means for its development and operations. Business houses saw their sales diminished and, naturally, reduced their purchases. Several bankruptcies were experienced and commerce came nearly having a panic. This uneasiness is yet felt. And another commercial crisis will occur, probably of a larger scope, when it should be ascertained that there is a reasonable probability of Congress passing the free sugar schedule.
The Porto Ricans would perhaps accept and applaud the establishment of free trade between the United States Porto Rico included-and the rest of the world. Absolute free trade would lower the cost of living and establish, in our case, a satis factory balance in the interchange of commodities. But it would be unjust and unsatisfactory to make us buy protected merchandise from the United States to the value of $38,000,000 a year, and leave out of the $42,873,401 we sold the United States $38, 318, 976 without any protection whatever.
L. M. RIVERA,
Resident Commissioner from Porto Rico.
BRIEF OF PORTO RICO SUGAR GROWERS.
ASOCIACION DE PRODUCTORES DE AZUCAR DE PUERTO RICO,
To the honorable chairman and members of the Ways and Means Committee of the United
GENTLEMEN: We, the sugar growers of Porto Rico, avail ourselves of this opportunity to place before you our petition against any reduction of the sugar tariff and beg to place before you our reasons why this tariff should not be touched. In 1898 the island became a possession of the United States as a result of the SpanishAmerican War, thus changing our sovereignty. In 1901 free trade between the United States and Porto Rico was declared, greatly to the satisfaction of the inhabitants of Porto Rico, because we saw ahead an era of prosperity, which we were certain would bring happiness to the island. We have not been mistaken in that expectation; the sugar industry has been the one that has been the most encouraged, and it has gone ahead and developed in such a way as has seldom been seen in any other country. From 60,000 tons, more or less, that we produced in 1900 our production has been increased to about 375,000 tons. Other industries in Porto Rico, like tobacco, coffee, and fruits, have also in a certain way increased, but not to the great extent as has the sugar industry. The cost of producing sugar in Porto Rico has also increased in relation to the value it has acquired. To-day it represents about 75 per cent of the actual cost of production. Our sugar laborers are getting to-day three times as much as they used to get in the old Spanish times, and necessi ties have been created to this people that any change in the sugar tariff that might affect this great staple industry will certainly bring hardship and ruin to them and to the balance of the inhabitants of this island, and we say this because three-fourths of the people of the island depend directly or indirectly upon the sugar industry. It is true that we are being protected by the present tariff, but do not forget for a moment that this protection is reciprocal. It will be interesting to study the following figures showing the relation existing between the development of the sugar industry in the years that free trade has been in effect and our importations from the United States, which show the purchasing power we have when we have the sugar industry well protected behind us: