In all probability, at a later time, your committee will be requested to increase the duty on corn so that the corn grower may receive a better price for his crop, and the importation of foreign corn decreased. While it is not within our province to discuss this question, such action seems entirely proper, and we wish to take this opportunity to go on record as not opposed to increasing the duty on corn. However, it should be borne in mind that 65 per cent of the corn grain is starch, and that corn, or the equivalent of corn, may be imported as starch, no matter what the corn duty is, unless the starch duty is fixed proportionately not only on all starches but on all articles substantially starch, or fit for use as starch. Starch, no matter from what source, may be used as the crude material for dextrins, burnt starches, British gum, etc.; corn, therefore, may be imported in the form of these products unless the duties thereon are fixed proportionately. The tariff act of 1922, paragraph 86, provides: "Dextrin made from potato starch or potato flour, 22 cents per pound; dextrin, not otherwise provided for, burnt starch or British gum, dextrin substitutes, and soluble or chemically treated starch, 114 cents per pound." Comparing paragraph 85 with paragraph 86, it will seem that the dextrin duty is 25 per cent higher than the starch duties. This ratio is based upon the loss incurred in manufacturing starch into dextrin. This ratio is justified and should govern in fixing the respective rates for starches and dextrins. Generally speaking, dextrin manufacturers do not manufacture starch. There are sound commercial reasons for this practice. Dextrin manufacturers purchase starch from American starch manufacturers, from importers of foreign starch or import starch on their own account, according to market conditions. Dextrin consumers as a rule purchase from American dextrin manufacturers. This condition is entirely upset when and if the duty ratio between starch and dextrin is contrary to manufacturing conditions. Manifestly, the duties on starches and dextrins must be properly correlated. Materials, substantially starch and fit for use as starch, may be used for starch purposes in general, and as a crude material for the manufacture of products in which starch is also the crude material. It is quite evident that any imported material which may be so classified displaces starch of American manufacture and American-grown corn as well. The tariff act of 1922, free list, schedule 15, provides in paragraph 1654 for the free entry of "sago, crude, and sago flour"; and in paragraph 1680 for the free entry of "tapioca, tapioca flour, and cassava." The sago palm, grown for commercial purposes almost exclusively in foreign tropical countries, by the lowest paid labor, produces a form of starch known as sago or sago flour. The product from this plant is prepared in marketable form likewise by low-paid foreign labor; and for all intents and purposes is starch and fit for use as starch, either as received or after simple and easy manipulation for purification. Manihot, manioc, a perennial plant of foreign tropical countries, produces a tuberous root, usually designated as "cassava." The principal and almost sole constituent of this root, apart from a certain amount of fibrous material, is starch. This starch is known commercially as cassava, cassava starch, starch, tapioca, tapioca starch and tapioca flour-a product, like sago essentially starch, fit for use as starch, and used as starch both for food and industrial purposes. The following table shows the increasing importations of sago and tapioca for the past eight years: Importations of sago and tapioca starches [Report of Bureau of Foreign and Domestic Commerce, 1921-1927 inclusive] Practically speaking, this amount represents a displacement of an equal amount of starch of American agriculture and American manufacture. On the basis of 30 pounds of starch per bushel of corn, the importation free duty of 175,000,000 pounds of tapioca and sago in 1928 represented the importation of about 6,000,000 bushels of corn. Manifestly, no duty on corn, starches, and dextrins can give adequate protection to American agriculture and industry as long as tapioca and sago remain free of import duties. We, therefore, respectfully request your committee to give due consideration to the plea that "sago, crude, and sago flours," and "tapioca, tapioca flour, and cassava," be stricken from the free list and made dutiable in like and the same manner as starches from other sources which compete with American agriculture and American industry. JAY CHAPIN, Secretary. 208 La Salle Street, Chicago, Ill. POTATO STARCH [Par. 85] BRIEF OF HON. GODFREY G. GOODWIN, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF MINNESOTA MR. CHAIRMAN AND GENTLEMEN: In paragraph 85 of Schedule 1, in Public Act No. 318 of the Sixty-seventh Congress, under title 1, dutiable list, the potato starch is listed under the heading of Chemicals, oils, and paints," and the duty on potato starch is placed at 14 cents per pound, and all other starches, not specifically provided for, 1 cent per pound. Potato starch is essentially an agricultural product, and I believe, except by technicians, so considered and acknowledged. The same, I believe, can be saisi of sago, tapioca, cassava, arrowroot, and other starches produced from all farinaceous products. In paragraph 1654 under title 2, Schedule 15, sago, crude, and sago flour are admitted exempt from any duty. Under paragraph 1680 of the same title and schedule, tapioca, tapioca fiour, and cassava are admitted equally exempt from duty. In paragraph 1511 under the same title 2, Schedule 15, arrowroot in its Batural and manufactured state is admitted exempt from duty. All these items are used in the textile industry in the United States in competition with starches produced from potatoes and in my judgment should be included as agricultural products. The sources from which they come all have their origin in the soil, subject to planting, cultivation, and harvesting and from the raw material are manufactured into starch. Potato starch, by reason of its greater power of penetration into cloth, is preferable to the other starches, although these other starches are used in large volumes for the same purpose as potato starch in that industry. In years past the starch manufacturing industry was of sizable proportions, but since the tariff act of 1922 became effective and the American market has teen flooded with potato starch from foreign countries, with starch manufactured from sago, tapioca, cassava, arrowroot, and other farinaceous products, the potato-starch industry in the United States has languished, and unless Some relief is afforded by and through tariff protective legislation the domestic potato-starch industry is doomed and headed for extinction. The greatest producing States in the Union are Minnesota, Michigan, New York, Pennsylvania, Colorado, Maine, Wisconsin, and the two Dakotas, Idaho, and in which States potatoes are produced in quantities so as to create a surplus in some years. In order to get the right picture of the situation it is necessary for me to inform the committee that to protect the farmer it is necessary to promote and protect the starch-producing feature of potato products. In the last few years the grading of potatoes has become increasingly effective and stringent, and now a more uniform grading is effective than in former years. This results in a large part of the crop being unsalable in the market. The culls and small unmerchantable potatoes are excellently suited to starch production. A small portion of the culls may be and are utilized in feeding to stock, but even with this diversion of a part of the crop to stock-feeding purposes there are still a large amount of culled potatoes that are absolutely wasted and the only recovery from which is in converting them into starch. In the State of Maine there are from 30 to 35 factories manufacturing potato starch and a few of these can not be operated at this time without a thorough overhauling. Some 9 or 10 of these factories are fully equipped and able to operate, both under winter and summer conditions, and all but one are located in Aroostook County. I am unable to furnish the committee with any figures upon the number of potato-starch factories in any other State, except Minnesota. In 1900 there were, in Minnesota, 11 potato-starch factories and all in a prosperous condition, making money and returning dividends to the owners, who were mostly farmers. To-day, according to the information I have, there are only two in operation this season, and on account of the low price of potato starch, due largely to the entirely inadequate tariff protection against foreign potato starch and the free entry of sago, tapioca, cassava, arrowroot, and the other raw commodities manufactured into starch, and this, too, notwithstanding the fact that the price of potatoes in the present crop season is less than they have been for years, and potatoes selling on the market in Minnesota at approximately 30 cents per hundred pounds. I contend before this committee that all the starches herein mentioned are purely agricultural commodities and that in providing adequate protection to the potato growing industry by the operation of the tariff that the farmers producing potatoes are entitled to the fullest protection of the tariff by an increase in the tariff on potato starch from 14 cents per pound, under the provisions of the act of 1922, to 6 cents per pound, and coordinately therewith there must be the same amount of tariff duty on all other commodities of a farinaceous origin, including those specifically mentioned heretofore. By the imposition of an adequate protective tariff duty on these starches a twofold purpose is obtained. First the farmer will enjoy an adequate protection on potatoes and potato starch, and secondly in case of importations of these several commodities the Federal Government will be the recipient of the amount of the duty, and which duty now includes the importer as the sole beneficiary, because with a duty of 14 cents per pound on potato starch the amount of that duty is added to the price of the starch that is sold by the brokers. I append hereto a table showing the imports for consumption, quantity, and value of potato starch, years 1919 to 1928, as Exhibit A: I also append hereto Exhibit B, which is a comparison of production and imports of potato starch, showing the domestic production, imports for consumption, each in pounds, ratio of imports to production in percentage, value of imports for consumption and amount of duty for the years 1919 to 1927. These figures and data obtained from the Bureau of Foreign and Domestic Commerce in the Department of Commerce. I also append hereto, as Exhibit C, the imports for consumption, quantity, and value into the United States for the years 1919 to 1928 of sago, tapioca, cassava, and arrowroot, including sago flour, tapioca flour, and arrowroot (natural state). From the table labeled "Exhibit B," while the domestic production for the years 1920, 1922, and 1924 are nonavailable, I wish to call the committee's particular attention to the ratio of domestic production and imports for consump tion of potato starch in the years 1923, 1925, and 1927. In 1923 the domestic production was 4,689,751 pounds; in that year the imports for consumption of potato starch was 11,981,565 pounds. In 1925 the imports for consumption were only slightly in excess of the amount domestically produced, but in 1927 the domestic production was. 7,078,425 pounds, while the imports for consumption increased tremendously and to 27,272,048 pounds, which, I think, gives the committee a very fair picture of the situation in which the American farmer is confronted by severe foreign competition in an item that can and should be produced domestically, and would be if afforded fair protection. The potato-starch industry may be considered an infant industry and one that has never had a fair chance from a competitive standpoint. In Germany a potato has been developed that contains a higher starch content than is usual in the United States; their means of production by improved machinery and by cheaper labor, by greater average acreage production is all to the advantage of the foreign starch producer. The cost of transportation enters nto the picture largely, especially from the Middle West where high freight charges prevail and from which there is no escape. The committee may obtain a fair idea of the situation of the Minnesota farmer who raises potatoes when I say that the present market for potato starch at Cambridge, Minn., which is 42 miles north of Minneapolis, is 3%1⁄2 cents per pound. That was the situation on January 23, of this year. During the war, when all importations were shut out, potato starch was at its highest level in the United States, and that year sold at 11 cents f. o. b. Cambridge. The freight from Cambridge, Minn., to Boston is 821⁄2 cents per hundredweight, and from Cambridge to Chicago 23 cents per hundredweight. From Hamburg, Germany, to New York the transportation charge is $5.50 per 1,000 kilo, or less than one-third the rate from Cambridge, Minn., to New York. (A kilo is 2.204.62 pounds.) At the same freight rate, without regard to difference in distance, the freight from Cambridge, Minn., to Boston, at 822 cents per hundredweight, means a freight charge of $18.15 per ton of 2,200 pounds, as against $5.50 per 1,000 kilo from Hamburg to New York. The committee may be interested to know the amount of starch produced from a bushel of potatoes. The average is from 14 to 17 pounds of starch to the bushel, as supplied by the Tariff Commission, although figures I have received from authentic sources from the starch manufacturers of Minnesota, indicate that the yield of starch from a bushel of potatoes is but 8 pounds. On April 12, 1926, the Cambridge Starch Co. sold 750 tons of potato starch to a concern at Wollaston, Mass., at 42 cents per pound, less Boston rate of freight and 2 per cent commission on six months' time. The dealer at that time advised the starch company that "unfortunately foreign starch is coming in here and every week or so they reduce the price." In December, 1926, potato: starch was sold at Wollaston, Mass., at 5% cents per pound, delivered New England rate, and the imported starch at that time could be purchased at Wollaston for $5.10 per hundred pounds, and duty paid, landed on the dock. On April 1, 1926, a Chicago dealer notified the Cambridge concern on its offer to sell 200 tons of prime potato starch as follows: "The market on imported potato starch has dropped off to such an extent as to make a fairly reasonable offer out of the question. We are very much afraid that the im ported potato starch will replace the domestic entirely, at least as long as present conditions exist. Frankly, we believe the longer you hold this starch the less you will get for it, for there is a tremendous supply of this starch in Europe and very low prices are being made on imported potato starch." * * On September 22, 1924, exchange of correspondence between the same concerns indicated the following: "We can lay down in Chicago to-day the highest quality superior Dutch imported starch at $5.50. Your price of 6 cents Cambridge would be prohibitive." In November, 1928, potato starch was sold at Cambridge, Minn.. at 3% cents per pound, less 2% per cent commission, which with freight added the committee can readily see leaves no marginal profit to the manufacturer of potato starch, and a price so ridiculously low as to be entirely negative to the farmer who has a surplus of potatoes, and for which he can find no mar ket even to limited extent to the starch factories. At the same time the |