PARAGRAPHS 216-219-CANE SUGAR, ETC. Committee, 62 cents per 100 pounds on refined sugar and 60 cents on raw sugar testing 96°, with the assessed differential per degree of 0.006 cent per pound. Importations from Cuba would, under our reciprocity treaty, pay 20 per cent less than these rates, and as a result of this rate the price of refined sugar to the consumer would probably be advanced by the duty about 53 cents per 100 pounds instead of $1.60, as at present. Be assured that any sugar industry that can not work profitably with a protection of a half a cent a pound (this being 20 per cent to 25 per cent of the cost of production under natural conditions) is artificial in the extreme. Sugar is a large business and the margin of profit should be small in it and depending upon volume of business to carry you through. Mr. HARRISON. This is the protective rate suggested by you? Mr. LowRY. Yes. Mr. HARRISON. You do not refer to the present rate? Mr. LowRY. No. I am comparing the present "pork-barrel" protective tariff with a scientific protective tariff. This rate I suggest is a trifle higher than the rate which the countries of Europe have arrived at as a proper protective rate. This is purely from a protective standpoint, you understand. I would call your attention to the fact that this protective rate is a trifle higher than that which the leading countries of Europe (where beet sugar is produced so extensively) have decided is a proper protective tariff. The rate of 0.47 cent on raw and 0.52 cent on refined was agreed upon at the convention of a number of countries of Europe, known as the Brussels Convention, and was adopted by Austria, Belgium, France, and Germany as a maximum protective rate to be charged. This is, perhaps, the nearest approach we have to a scientific conclusion as to what is a proper protective tariff for the beet-sugar industry. No evidence has been presented to show that on a protective basis this rate could not be adopted by the United States to advantage. I would also call your attention to the fact that, based on the inbond price of sugar for the past seven years of 2.518 cents per pound, this tariff would be equivalent to an ad valorem rate of about 21 per cent and would produce $19,330,000 in annual revenue, would subsidize the domestic sugar industry to a like amount, $19,330,000, and would result in a yearly saving on our present consumption of $83,988,234 to the American consumers. It seems to me that in producing this much revenue a necessity of life like sugar is doing its full share, but if you should decide that sugar must produce more revenue, then I urge you to adopt in addition the consumption tax, which is strictly a revenue measure. Mr. SHACKLEFORD. As a revenue tax it would be paid by the consumer? Mr. LowRY. Oh, yes; just as the tariff tax is now paid by the consumer. You can not get revenue without having it paid by the consumer, I believe. The difference is if you tax all the sugars 25 cents a hundred pounds you get the same amount of revenue that you would get by taxing half the sugar consumed, or that which is imported, at the rate of 50 cents a hundred pounds. The former method has the advantage of increasing the price to the consumer only a PARAGRAPHS 216-219-CANE SUGAR, ETC. quarter of a cent a pound, while the latter increases the price a half a cent a pound. Mr. SHACKLEFORD. Is it an example that might become contagious? Mr. LowRY. In what way? Mr. SHACKLEFORD. As a means of taxing other domestic products. Mr. LowRY. If it reduced the price it might be an advantage to do that. I do not know whether it would become contagious or not. Mr. PAYNE. That chance for contagion has had about 100 years to work, has it not? Mr. LowRY. What did you say? Mr. PAYNE. That chance for contagion with other products has had about 100 years to work, has it not? Mr. LowRY. As I do not believe it to be the sentiment of our people that American industries should be compelled to compete with bounty-fed products of other nations, I would suggest that, whether or not sugar be placed on the free list, a countervailing-duty clause be enacted similar to that found in the tariff law of 1909, section 6, page 84. Gentlemen, the United States, because of its proximity to Cuba and its insular possessions, Porto Rico, Hawaii, and the Philippines, as well as from the fact that beet sugar can be produced in our Western States at a very low cost, should have cheaper sugar than any nation in the world. From these sources, with their natural advantages, we are assured not only of an ample supply of sugar, but that this supply could be obtained at a minimum cost, if it were not for the high duty which enhances the price. No other nation in the world is so favorably situated, and the question is, Are the people to receive the benefit of our natural advantages, or are they to be exploited for the benefit of the promoters of our domestic beet and cane sugar industry? The present high tariff means the latter. In amplification of this I desire to file the attached statements, one under the caption of "Our high tariff on sugar from the consumers' standpoint" and the other a Protest," which directly refers to the majority report of the Senate Finance Committee. The statements filed are as follows: OUR HIGH TARIFF ON SUGAR FROM THE CONSUMERS' STANDPOINT. [By Frank C. Lowry, secretary committee of wholesale grocers, formed to assist in obtaining cheaper sugar for consumers through reduction of duties on raw and refined sugar. 138 Front Street, New York, N. Y. This was originally issued from time to time during 1912 in the form of bulletins and now compiled for convenience.] Under reciprocity treaty importations from Cuba pay 20 per cent less in both cases. PARAGRAPHS 216-219-CANE SUGAR, ETC. COMMITTEE OF WHOLESALE GROCERS. Carl Schuster (Koenig & Schuster), New York City; B. F. Parsons (Parsons & Scoville Co.), Evansville, Ind.; R. E. Collins (Collins & Co.), Birmingham, Ala.; G. Thalheimer, Syracuse, N. Y.; F. J. Dessoir (R. C. Williams & Co.), New York City; W. E. Small (the A. B. Small Co.), Macon, Ga.; A. Blanton (A. Blanton Grocery Co.), Marion, N. C.; W. H. Baker (Baker & Co.), Winchester, Va.; H. C. Beggs (Dillworth Bros. Co.), Pittsburgh, Pa.; R. E. Bentley (Bentley, Shriver & Co.), Baltimore, Md.; A. S. Hammond (Monypeny Hammond Co.), Columbus, Ohio; W. E. Cooper (Cooper Bros.), Winchester, Va.; H. T. Gates (E. W. Gates & Co.), Richmond, Va.; E. L. Woodard (E. L. Woodard & Co.), Norfolk, Va.; Jacob Zinsmeister (J. Zinsmeister & Bro.), Louisville, Ky.; A. Brinkley (A. Brinkley & Co.), Norfolk, Va.; Isaac Horner (Hy. Horner & Co.), Chicago, Ill.; E. P. McKinney (McKinney & Co.), Binghamton, N. Y.; H. Y. McCord (McCord, Stuart Co.), Atlanta, Ga.; A. S. Webster (Webster Grocery Co.), Danville, Ill.; Edward Cumpson (T. & E. Cumpson), Buffalo, N. Y.; F. J. Dessoir, chairman; Frank C. Lowry, secretary. EFFECT OF TARIFF UPON PRICE. Testimony before the Hardwick committee showed that the tariff on sugar increases the price to consumers from 14 to 2 cents per pound, and Mr. C. A. Spreckels, president of the Federal Sugar Refining Co., estimated that it cost the American people $140,000,000 annually. This is forcibly illustrated by the following comparison of domestic and export prices. Refiners' quotations, Apr. 27, 1912, on granulated to the domestic trade (Willett & Gray). In San Francisco, where only domestic beet or Hawaiian cane sugar is sold on which no duty has been paid: Cane.. Beet... ..pound.. 5.50 5.30 Export price in New York on same sugar free on board steamer is 3.50 cents to 3.55 cents per pound. Let those, who through unfamiliarity with the situation, do not believe that a reduced tariff would mean a lower price on sugar to consumers, refer to the year 1891, when the tariff law became effective April 1, removing the duty of about 2 cents per pound on sugar, and they will find that refiners' quotations fell from 64 cents, as quoted on March 26, to 44 cents on April 2, and by May 14 granulated sugar had reached 4 cents per pound. The Federal Sugar Refining Co. recently made the Government a price of 5.35 cents on a 700,000-pound contract, calling for summer delivery, with a proviso that if the bill passed by the House of Representatives placing sugar on the free list became a law before they are called on to make delivery of the sugar, their price will be reduced 14 cents per pound, because of the fact that they will not be required to pay any duty on the raw sugar imported. (Senate hearings, p. 460.) INTERESTS FAVORING HIGH TARIFF AND WHY. There is absolutely no question but that the consumer will get all the benefit from "free sugar," or a reduction in the tariff rate on raw sugar, with a corresponding reduction in the rate on refined sugar. Those in the sugar trade fully recognize this. It is also shown by the domestic producer's anxiety. He well knows that a reduced tariff rate means that he will have to sell his product at a lower price. If it were not so, he would not be working so hard to have the present rate maintained, but in the hope of confusing the issue, he does a lot of talking about it being useless to reduce the rate because the "consumer will not get the benefit," knowing that this is "rot." This is not a question that should be settled only on what this or that "interest" wants, but let us see who it is that wants the present rate maintained, so that consumers will continue to be taxed for their benefit? First, we have the American Sugar Refining Co., commonly known as "The Sugar Trust." Their interest in the matter is clear. PARAGRAPHS 216-219-CANE SUGAR, ETC. The Hardwick committee developed the heavy interest which the Sugar Trust has in the domestic beet sugar industry (Hardwick hearings, pp. 58, 100, 2884 and 2992). These factories obtain a heavy indirect bounty through our present high tariff on sugar, and the trust, becoming fond of the Government "pap" fed to its offspring, naturally desires it to be continued. They are clearly on record to this effect; as reference to the Payne-Aldrich tariff hearings, 1909, shows a brief, pages 3430-3440, filed by the American Sugar Refining Co., urging that the present tariff rate be maintained. This is the official position taken, and it has never been changed. To insure this they have worked mainly through their domestic sugar allies. The American Sugar Refining Co. also profits by a contract which it has with the Hawaiian planters, which insures their getting all the sugar produced in Hawaii, with the exception of that shipped to the C. & H. Refinery in San Francisco, which is said to be controlled by the Hawaiian planters. (See Hardwick hearings.) The American Sugar Refining Co. also profits by very favorable contracts which they have been able to make with the Louisiana planters. (See report of Hardwick committee, p. 19), which enables them to purchase Louisiana sugars below the ruling market in New York. As the price of all sugar in this country is based on the in-bond price of foreign sugar, plus the duty and cost of refining, it is apparent that the value of all sugar produced inside our tariff wall, Porto Rico, Hawaii, Philippines, Louisiana, and domestic beet, is enhanced "to the extent of the tariff on sugar," naturally these interests desire that the present rates be continued. The free sugar bill, passed by the House of Representatives, brought forth the usual wail from these interests, who claim that "ruination" stares them in the face if the bill became a law. They did this when the Hawaiian sugars were admitted free, and a similar cry arose when the Porto Rico sugars were admitted free, and was repeated when Cuba sugars were admitted at a 20 per cent reduction, and was again repeated when Philippine sugars were permitted to come in free up to 300,000 tons. For the present tariff to be reduced 1 mill would bring forth the same outcry. INTERESTS FAVORING REDUCTION AND WHY. A material reduction in the tariff on sugar would reduce the price. It therefore would be to the advantage of the consumers, manufacturers, and dealers handling sugar. They have sent thousands and thousands of petitions to the Ways and Means Committee asking for a reduced rate. A few independent cane sugar refiners have declared themselves in favor of lower duties. A lower tariff rate would reduce the price of sugar, resulting in an increased consumption, which means an increased business. In addition, the independent refiner would, no doubt, be glad to have the Government discontinue the heavy subsidy which their chief competitor, the Sugar Trust, is now receiving from the indirect bounty which the present tariff grants to the beet-sugar plants. The National Canners' Association has passed resolutions in favor of a reduction in the duty on sugar and the American Bottlers' Protective Association has passed resolutions in favor of "free sugar." Thousands of petitions have also been sent to Congressmen signed by individuals, firms, corporations, granges, etc., asking that the tariff rate on sugar be reduced. When the tariff on sugar was removed in 1891 the consumption increased in one year 23 per cent. Such an increase would be double last year's production of beet sugar in the United States. Consider what an advantage this increase in business would mean to jobbers, retailers, manufacturers, refiners, transportation companies, etc. The United States, because of its proximity to Cuba and its insular possessions, Porto Rico, Hawaii, and the Philippines, as well as from the fact that beet sugar can be produced in our Western States at a very low cost should have cheaper sugar than any nation in the world. From these sources, with the natural advantages, we are assured not only of an ample supply of sugar, but this supply can be obtained at a minimum cost if it were not for the high duty which enhances the price. The question is, Are the people to receive the benefit of our natural advantages or are they to be exploited for the benefit of the promoters of our domestic beet and cane sugar industry? The present high tariff means the latter. ANALYSIS OF POSITION OF TARIFF-FAVORED INTERESTS. Analyzing the domestic sugar producers' position we find that, aside from the fact that the present tariff rate helps them to make enormous profits, to overcapitalize PARAGRAPHS 216-219-CANE SUGAR, ETC. (Hardwick Report, p. 26), to pay dividends on "watered" stock, to locate plants where nature never intended sugar to be produced economically, their claim that they must have the present rates has no merit. Porto Rico, Hawaii, the Philippine Islands are natural sugar-producing countries. In the past they have worked successfully without tariff protection. While the industry has received enormous benefits from our sugar tariff, no one attempts to justify the continuation of a policy to tax consumers in the United States over $125,000,000 each year so that these interests can make excessive profits. Hawaii which boasts, and with reason, that its sugar industry is operated in the most scientific way of any industry in the world, whose cane yields 14 to 15 per cent sugar (much better than Cuba), produces raw sugar at a cost of about 2 cents per pound for 96° test. Messrs. Willett & Gray show that the average duty-paid price of raw sugar, 96° test, which is the basis on which Hawaiian sugar is sold, for the last 10 years has been 3.97 cents per pound. Is it necessary that the Hawaiian sugar manufacturers, who employ almost entirely Japanese labor, should make such excessive profits? It is commonly reported that the crop of 1911 was sold for $52,000,000, with the planters' profits about $20,000,000, or 38 per cent of the total sales. Our consumers are being taxed nearly 2 cents per pound in order to produce this result. Similar conditions exist in Porto Rico, where enormous profits are being made in the same way. A reduction in the tariff to the rate we urge would only mean that these abnormal profits would be reduced. It also would no longer be profitable to grow sugar on the tops of mountains, where nature never intended sugar should be produced, or to pay Spanish landlords the annual rental of $20 per acre, as is done in some cases. It is not our understanding that the American people desire to be taxed so as to produce either of these results. The Philippine Islands have many times been referred to as the greatest natural sugar-producing country in the world. They are a part of the United States, just as is Porto Rico and Hawaii. Why should not the people of the United States benefit by these great natural advantages? The greed of the domestic sugar producer will not permit this. Our beet-sugar producers are afraid that the Philippines may attempt to sell sugar too cheaply to the American consumer some day, and had a clause inserted in the Payne-Aldrich tariff expressly drawn to hamper the production of sugar on a large scale in the Philippine Islands. (See Senate hearings, p. 445.) "Let us produce our own sugar" is the cry of the domestic beet-sugar men, but they add that they must be the dictators of where that sugar is to be produced, and they try to hamper the production in that section which nature has equipped for doing that particular work at a minimum cost. They know Porto Rico and Hawaii have reached their limit of production and so do not fear this competition, but in the Philippines possibilities have almost no limit if properly encouraged. It is the old story. Are the people to receive the benefit of our natural advantages or are they to be exploited for the benefit of promoters? LOUISIANA SITUATION. This leaves only what is called our "home" product to be considered. Louisiana produced in 1894-95, 319,000 tons; 1910-11 only 300,000 tons. Domestic beet production in 1906-7 was 433,010 tons. Last year it was 455,220 tons. Our consumption in 1911 was 3,351,391 tons. (See Willett & Gray.) Louisiana tells us it is good business for the Government to tax consumers nearly $140,000,000 each year so that they may produce a crop the annual value of which is about twenty-five million. If evidence were needed to show the fallacy of the claim that it is good business for the Government to foster an industry, under unnatural conditions, by a high-protective tariff, we have a clear example in Louisiana. They have presented the strongest possible indictment that could be drawn against them when they stated that it costs them about 3 cents per pound to produce raw sugar, while the cost of production in Cuba is about 2 cents per pound. They can not show that this difference in cost is due to the high price of labor. The negro men and women of Louisiana are not highpriced labor. A reference to pages 1816 and 1817 of the Hardwick hearings will show that Mr. Wilkinson testified that in Louisiana male laborers were paid from 75 to 85 cents per day, and $1 and board in harvest time, and women were paid 75 cents per day. That 75 cents per day was paid to the women in the grinding season, and less at other times. He also said that 25 per cent of the labor in the grinding season was |