PARAGRAPHS 247-248-MILK

be able to bring milk from Canada, from France, from the Argentine, or from wherever we wish, and the freight plays very little in the cost of the product, while the duty of 2 cents per pound, equal to one-half cent a quart, is simply a tax on one of the greatest food products we have. I trust you will carefully consider this and bear it in mind when you come to that part of the schedule.

Mr. HILL. How is it dried?

Mr. AUERBACHER. By coming in contact with a heated roll, heated to 300° F., and the water passes off in steam, and the milk comes off like a sheet of paper, a process which at the same time makes it free from bacteria and more assimilable than the raw milk.

I believe the medical authorities of this country are agreed that it is far better, especially for infant feeding and for invalids, and naturally better for anybody, than the raw milk. I believe the chief health officers, in fact I know the chiefs of the milk committee, feed their own families with it, because it is a safe thing.

Mr. LONGWORTH. What is the retail price?

Mr. AUERBACHER. Skim milk is sold to the bakers; the bakers of this country are using such a large amount of it that they have to bring it from Canada now. That grade of milk, I believe, sells for about 10 to 12 cents a pound, equivalent to about 3 cents a quart. The one-half cream milk and the full cream milk is sold at the rate of 10 cents a quart. That is equivalent to the best certified milk, such as the famous milk farms give you, which sells, I believe, at 15 cents a quart.

Mr. LONGWORTH. I wish you would put that in pounds.

Mr. AUERBACHER. Four and one-half ounces is equivalent to about · a quart, so that for skim milk, selling at 12 cents a pound, it would be equivalent to a little over 3 cents a quart.

The CHAIRMAN. I understood you to say it takes 44 pounds of this? Mr. AUERBACHER. Four and a half ounces. I beg your pardon if I said pounds.

Mr. LONGWORTH. That would be nearly 50 cents a pound.

Mr. AUERBACHER. It would be about 32 cents a pound, if it is 8 cents a quart; if it is 10 cents a quart, 40 cents a pound; if it is 12 cents a quart it would be 48 cents a pound.

Mr. LONGWORTH. That is equivalent to a duty of only 4 per cent. Mr. AUERBACHER. I do not know what the equivalent duty is; it may appear small, but I take the stand that it is not right to tax the greatest food product we have.

Mr. LONGWORTH. Do you mean to say that a duty of 4 per cent is a prohibitive duty?

Mr. AUERBACHER. I never made that statement; I simply say it is wrong, morally wrong; wrong from every standpoint to tax the milk supply of this country one-half cent a quart. It may not appear much to-day, but the powdered milk supply, on a tax of one-half cent a quart, is going to mean a great deal of money, especially in the arts, to the bakers, and to the chocolate makers, who are using it in increased quantities. Why should they pay one-half cent a quart more when they can not get enough milk here? Why should they not be able to get milk from somewhere else without paying a tax. Mr. PALMER. Why should anybody pay taxes?

PARAGRAPHS 247-248-MILK.

Mr. LONGWORTH. But when you are talking about taxes, a 25 per cent tax would amount to something in your argument, but a 4 per cent tax is absolutely negligible.

Mr. AUERBACHER. No; it is not negligible. You are paying 10 cents a pound for the dry product, and if you have to pay one-half cent a pound it is not negligible when you buy a great many tons of it. Mr. LONGWORTH. But if you figure it up in quarts you get 50 cents a pound; the duty on it is only 2 cents a pound, which is only 4 per cent.

Mr. AUERBACHER. That is on the full cream, on the smallest product used. Take the largest product, the skim milk, the price is 10 and 12 cents per pound for the dry product, then the duty is 15 to 20 per cent on it; and in summer you well know you can not get enough milk in this country. There is not enough milk raised. Why should we not be able to bring it in from somewhere else without paying a duty on it?

Mr. HILL. Where is it imported from?

Mr. AUERBACHER. It is imported now chiefly from France, where they have a lot of very good milk from Normandy cattle. Why should we not be able to get good milk from France?

Mr. PAYNE. Why is it not manufactured here?

Mr. AUERBACHER. It is manufactured here in very large quantities; in enormous quantities. I doubt if there is a baker in New York who does not use it.

Mr. PAYNE. Is it imported in large quantities?

Mr. AUERBACHER. It is imported in large quantities also.

Mr. PAYNE. Then it is not a competitive tax, as the language is used here, is it?

Mr. AUERBACHER. I do not know that it is really a competitive tax. If the people want it they simply have to pay the increased price for it. We simply pass it on to the consumer. I should just as leave make 10 per cent on 12 cents as on 10 cents. Mr. PAYNE. Do you not think as long as there is a duty on milk there should be a duty on dried milk?

Mr. AUERBACHER. I have not got any think on that score at all, because I am not in the liquid end of the milk business; but I do know the dried milk is going to be the bigger end of that business very soon.

BRIEF OF THE NATIONAL MILK SUGAR CO. OF VERMONT AND THE DRY MILK CO. OF NEW YORK.

The WAYS AND MEANS COMMITTEE,

House of Representatives:

On behalf of the Dry Milk Co. of New York and of the National Milk Sugar Co. of Vermont it is respectfully submitted that paragraph 248 of Schedule G, tariff act of 1909, should not be changed.

This paragraph covers milk, preserved, condensed, or sterilized, 2 cents per pound, and sugar of milk 5 cents per pound.

These products are both intimately related to the dairy, and the basic or raw material, skimmed milk, is purchased from the farmers of the United States. Skimmed milk 10 years ago was almost a drug in this country. It was fed to the pigs and calves, where such stock was on the farm, and it was sold when any purchaser could be found. It was almost a waste product, bringing from 5 to 15 cents per

PARAGRAPHS 247-248-MILK.

hundred pounds (50 quarts) only. When the manufacture of powdered milk and sugar of milk began in the United States, however, the farmer found a new and profitable market for his skimmed milk, and at present in nearly all the so-called dairy or grazing States this product sells at from 25 and 30 cents to 50 cents per hundred pounds.

DRY MILK.

It requires approximately 100 pounds of skimmed milk to produce 94 pounds of powdered or dry milk, and even at 25 cents for the raw material this means a cost of 23 cents per pound for the manufactured article. To this must be added the expense of manufacture, the package and sales expenses, including freight and transportation, so that the finished product represents to the manufacturer about 7 cents per pound. Should the skimmed milk be selling at 30 to 50 cents per hundred pounds, this cost will be from 1 to 3 cents higher.

The average price of dry milk at present is 9 cents per pound. The principal customers are the bakers. Three pounds of dry milk is used with each barrel of flour, from which there is obtained approximately 212 5-cent loaves of bread; that is, the cost of the powdered or dry milk in each loaf of bread is about one-tenth of 1 cent.

It will readily be seen that a low or high tariff rate upon powdered or dry milk will have absolutely no effect upon the cost of bread.

Holland produces dry milk which is landed in New York duty paid at a cost not exceeding 7 cents per pound, thus putting the foreign article upon an exact competitive basis with the American.

That the home product can compete is due to two facts:

First, its superior quality; and second, the fact that the strict requirements of the pure food law are fully complied with by the American manufacturer gives to his dry milk a name and reputation which maintains it in public favor.

Too much stress can not be laid on this question of purity. In this country every community has its own strict rules and regulations regarding the cleanliness and general sanitation of its dairies, the supervision of the herds, etc. The Federal and State authorities do not permit the manufacture of food products unless operations are carried on under conditions most conducive to the health of the operatives and the consumers. All this adds to the cost of the domestic product. There are no such restrictions abroad, and the domestic consumer of foreign milk powders would have no guaranty of the healthfulness of the foreign products.

To reduce the present duty rate would be to destroy this business, actually an infant industry not 10 years old; would rob the American farmer of the best market for his skimmed milk; and would open the door for the sale of foreign dry milk of lower quality.

But even if it were placed upon the free list no reduction in the cost of any food product would result.

The gross business of the Dry Milk Co. for five years last past has averaged a little over $280.000; its total dividends have averaged $35,000, upon a capitalization of $880,000, without water.

SUGAR OF MILK.

The paragraph above referrred to (248) places a duty of 5 cents per pound upon sugar of milk.

This is also a product from the milk sold by the farmers and it is used almost exclusively in homeopathic medicines and in prepared foods for infants, in both of which uses it is subjected to the most careful inspection as it must meet all the requirements of the United States Pharmacopoeia.

Although produced abroad at a much cheaper cost than in this country there can not be the certainty of its purity, nor after manufacture is it possible to be aware of the conditions surrounding its origin.

Prior to 1883 no sugar of milk was made in this country, but all that was used came from Switzerland. Since the establishment of factories in this country its cost has been greatly cheapened, while it has set the mark for quality throughout the world. The price fluctuates according to the demand for milk, although the foreign cost is at most times under that of the home product, as is the rule with all agricultural products of Europe. To reduce the present duty rate of 5 cents per pound would hardly cheapen the sugar of milk to the consumer, but it would permit a large quantity of foreign sugar of milk of a much lower quality to flood the market, endangering the public health. The National Milk Sugar Co. purchases from the American farmer about 60,000,000 pounds of skimmed milk annually to make its product, while the Dry Milk Co. purchases at least 30,000,000 pounds more to produce powdered

PARAGRAPHS 247-248-MILK

milk. To change the tariff upon either of these products will be to largely reduce if not entirely eliminate this market for the American farmer, and to cripple if not destroy two most creditable industries, each producing cleanly and needed food products, substituting therefor a lower grade product from abroad uncertain as to purity.

Sugar of milk is so generally used in the preparation of infant foods that in this country a far more rigid system of inspection and supervision exists than abroad. Every State has strict rules and regulations regarding the cleanliness and general sanitation of its dairies, the supervision of the herds, etc. Both Federal and State authorities forbid the manufacture of food products unless all operations are carried on under conditions most conducive to the health of the operatives and the consumers. All this adds to the cost of the domestic product. There are no such restrictions abroad, and the domestic consumer of foreign milk sugar would have absolutely no guaranty as to the cleanliness or healthfulness of the foreign product.

There is no danger of any monopoly by leaving the present duty on milk sugar in force, as only moderate capital is required in the industry.

The gross business of the National Milk Sugar Co., of Vermont, for five years last past has averaged a little over $209,913. Its total dividends have averaged $27,736 per

annum.

For all of which reasons it is prayed that no change be made in paragraph 248 of the act of 1909.

Dated New York, N. Y., January 18, 1913.

THE NATIONAL MILK SUGAR Co., or VERMONT.
THE DRY MILK Co., OF NEW YORK.

By Francis E. Hamilton, counsel, 32 Broadway, New York, N. Y.; temporary address, Hotel New Willard, Washington.

BRIEF OF THE SHEFFIELD FARMS-SLAWSON-DECKER CO. AND SHEFFIELD BY-PRODUCTS CO., OF NEW YORK, N. Y.

Sheffield Farms-Slawson-Decker Co. is the second largest milk company selling milk at retail in the city of New York, and it has an annual business of over $7,000,000 in the territory known as Greater New York. It maintains creameries in some 48 localities in New York, Vermont, Pennsylvania, and New Jersey.

Sheffield By-Products Co. is a corporation engaged in the business of manufacturing by-products of milk, including milk sugar and casein, and is affiliated with the first-named company in a large part of its business in that it purchases from Sheffield Farms-Slawson-Decker Co. a great part of its skimmed milk, from which its manufactured products are made. Sheffield By-Products Co. is a very large manufacturer of sugar of milk. It began business in March, 1911, taking over the business formerly done by the parent concern, Sheffield Farms-Slawson-Decker Co., which was then small in amount. It has built up manufacturing establishments in various localities in New York and Vermont for manufacturing milk sugar, and in 1911 manufactured and sold 460,401 pounds of milk sugar, and in the calendar year 1912 manufactured and sold 777,301 pounds of milk sugar.

The price paid by Sheffield Farms-Slawson-Decker Co. for milk during the 10 years of its existence to farmers has always been the highest market price paid in the New York district, it being an established business policy of this company that a higher quality of product was required and that to induce farmers to produce a higher quality of milk a price should be paid which would be an encouragement and incentive to that end. This present year the price paid for milk in the New York district to the farmer has been higher than at any previous time since the Civil War, this company paying over $100,000 more for its milk than at any previous period in its history for the same amount of milk. In order to be able to pay the milk producer a high price for his product the Sheffield Farms-Slawson-Decker Co. has largely invested in and developed the business of making use of the by-products of milk, mainly sugar of milk and casein. By being able to utilize the skimmed milk, which would otherwise be waste, in making sugar of milk and in using surplus milk not required for family consumption in the same way, the company has been able to maintain high prices to its farmers and at the same time build up a substantial and growing business in these by-products. The Sheffield Farms-Slawson-Decker Co. is mainly interested in the continuance of the present tariff on sugar of milk, because it enables the company to maintain a higher purchase price for its milk to its milk producers than it could otherwise, and thereby obtain a better milk for the consumers with whom it deals in

PARAGRAPHS 247-248-MILK.

the metropolitan district, and because it enables this company at various periods of the year when milk is being furnished by producers far in excess of the demands of the metropolis to utilize surplus milk at a smaller per cent of actual loss than it would otherwise sustain.

Sheffield By-Products Co. is interested in the maintenance of the tariff schedule, since its existence depends upon its being able to obtain a fair price for its product. The two companies are so associated that it is deemed proper to submit this memorandum for them jointly.

As to the present American market, there is now produced in America, roughly, about 2,500,000 pounds of milk sugar. The American-made milk sugar is of the finest quality produced in the world. It is subject to both local and Federal supervision. The American producers are now producing all the milk sugar which the home market requires. Milk sugar was first produced in this country in about the year 1883. Prior to that time the product used in this country was imported from Switzerland. With the increase in volume of milk sugar production, the price has been materially reduced, the standard of quality improved and the quality now made in America being the best in the world and subject to the strictest supervision, which insures a more wholesome product than that produced abroad where the American restrictions do not exist or are not rigidly enforced. The purposes to which sugar of milk can be put are limited in character, is used for pharmaceutical purposes, invalid foods, etc. It is a product which can be made in practically any locality in which milk is produced in sufficient quantities. There is no possibility of a monopoly in its production, and the American producers are entirely capable of producing all the milk sugar which the country requires and do so produce it at present at fair prices, and prices which tend to reduce with the increase of the number of manufacturers engaged in its production. The present tariff protection is a protection not merely to the manufacturer, but more especially to the American farmer, since it has a strong tendency to sustain the price of milk by increasing the number of uses to which milk can be put, and a reduction of the tariff would effect no reduction of cost to the consumer, would result in the importation of a large quantity of this product of inferior quality and would reduce the returns of the milk producer since it would greatly reduce if it did not entirely eliminate this outlet for the product of the American farmer and substitute an inferior product from abroad.

There are only two milk by-products which have any considerable market-casein and milk sugar. The market for casein is largely demoralized by a heavy influx of foreign casein of a generally low grade, and which tends to eliminate the profit in casein manufactured in this country. To require companies such as the Sheffield ByProducts Co. to suffer from the competition of foreign producers of milk sugar as well would be not only a great injury to the business of manufacturing these by-products, but would be a great injury to that vast body of milk producers in all the farming districts, the price of whose products is substantially influenced by the use to which the by-products of milk can be put and who would be injuriously affected by any change in the present tariff on sugar of milk.

We therefore respectfully submit that these considerations not only justify but require the continuance of the present duty of 5 cents a pound on sugar of milk, as provided under Schedule G, paragraph 248 of the tariff act. Respectfully submitted.

ALGER & SIMPSON,

Attorneys for Sheffield Farms-Slawson-Decker Co.
and Sheffield By-Products Co.

BRIEF OF SMITH, KLINE & FRENCH CO., PHILADELPHIA, PA.

Hon. OSCAR W. UNDERWOOD,
Chairman, Ways and Means Committee,

PHILADELPHIA, PA., February 8, 1913.

House of Representatives, Washington, D. C.

DEAR SIR: Your letter of the 5th instant received, in which you state that the hearings on the tariff have been concluded, but that we may file a brief with your committee containing our suggestions and views in connection with Schedule G. In answer, there fore, to this suggestion, we would make the following statement:

So far as we know, we are the largest consumers of milk sugar in the world. This milk sugar is used in the manufacture of Eskays Food, a food intended to be used by children and adults. This food is a proprietary article, but there is no secret as to its

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