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PARAGRAPH 559_CRUDE DRUGS, ETC. Mr. HARRISON. We propose to put a tax of 20 per cent ad valorem on it.
Dr. BAER. The price of lemon oil to-day is $3.25.
Mr. HARRISON. So that, as a matter of fact, you are in no worse a position so far as the internal-revenue tax is concerned than you were before.
Dr. BAER. No, sir; 54 per cent on a gallon of lemon extract.
Mr. HARRISON. So far as your exporting trade in flavoring extracts is concerned, our chemical schedule contained a drawback clause to reimburse you for the internal-revenue tax.
Dr. BAEŘ. In this country on a gallon of lemon extract that costs $3.35 there is an internal-revenue tax of $1.83. That makes 54 per cent of the cost of the lemon extract. If you put on a 20 per cent ad valorem duty at the present price of lemon oil, you will bring the cost up to 61 per cent, which is a higher tax, I am informed, than any industry with exception of cigars and liquors.
Mr. HARRISON. So far as I am concerned I think the internal revenue tax on alcohol where it is used in manufacturing, where you can not use denatured alcohol is disproportionate, but you can not touch that without cutting down the internal revenue from alcoholic drinks.
Dr. BAER. By putting on an increased tax, you make the manufacturer bear the burden of that tax. Take a 10-cent bottle, which is the size purchased by the average person. We sell a hundred gross to one gross of 25 cent. On a bottle of vanilla extract that would make a difference of 2 cents, and on a bottle of lemon extract probbly 5 cents on a 10-cent bottle. Is it right that a little article like vanilla extract of which the average housekeeper will use from four to six bottles a month should carry that enormous tax?
Mr. HARRISON. So far as I am concerned, the proposed tax upon lemon oil was primarily imposed because lemon oil is also used in the manufacture of perfumes.
Dr. BAER. Very little. The amount that goes into perfumes is very small. The part that goes into a bottle of perfumery will not amount to 1 drop. We are not allowed to reduce the strength of the extract, and if we did the consumer would eventually pay for it, and if you would investigate the data which we have submitted to you we believe you will see the wisdom of eliminating these duties as applied to vanilla beans and the essential oils of cassia, lemon, lime, and anise.
The CHAIRMAN. The committee will consider your suggestions very carefully when they come to frame the new bill.
Hon. 0. W. UNDERWOOD,
Chairman Committee on Ways and Means. SIR: Supplementing the remarks of Dr. S. H. Baer on the subject of vanillin, and in order that the nature of this article may be thoroughly understood, I beg to advise that vanillin is the flavoring principle of the vanilla bean, or that which gives the desired flavor to the so-called vanilla extract.
The synthetic vanillin on the market is made from cloves and is identical in every respect with the vanillin in the vanilla bean.
Therefore, synthetic vanillin being a chemically pure product, when used in the manufacture of flavors makes a purer product than that made from the vanilla beans, by reason of the conditions under which the beans are gathered and cured in the tropical countries where they are grown. The term “pure extract of vanilla,” as PARAGRAPH 559—CRUDE DRUGS, ETC. applied to extracts made from beans only, is the result of regulations issued by the Bureau of Chemistry, which prohibit that term being applied to flavors made from synthetic vanillin, although the latter is by far the purer product. Respectfully,
JNO. F. QUEENY, President Monarch Chemical Works, St. Louis.
St. Louis, Mo., January 30, 1913. Hon. Oscar W. UNDERWOOD, Chairman Ways and Means Committee,
House of Representatives, Washington, D. C. GENTLEMEN: We thank your committee for the courtesy extended to us in the bearing on the proposed duty on vanilla beans and essential oils of cassia, lemon, time, and anise.
We come simply as representatives of the trade to present our views upon this subject from the standpoint of the consumer and the manufacturer.
It is to the consumer that the manufacturer must look for the use of his products, and we are, therefore, more solicitous about the consumer's interests than those of the merchants who handle our goods. The ultimate consumer is the factor which keeps the wheels of industry in motion.
Your attention is called to four ways in which the proposed duties will affect the people as a whole:
First (and most important). It will raise the price to the American consumer, and add to the present high cost of living.
Second. It will curtail export business. Third. It will put an excessive tax on flavoring extracts. Fourth. It will not promote any industry in this country. Raise prices.- Vanilla beans are practically used exclusively for the making of vanilla flavoring, and vanilla extract constitutes nearly 80 per cent of the extracts used by the housewife in the flavoring of puddings, cakes, desserts, ice cream, confectionery, etc., and, together with the other flavors, is a household necessity.
The addition of a duty of 50 cents per pound on vanilla beans would entail such an increase in the cost of pure vanilla extract as would necessitate the raising of the price to the consumer, either by charging more money for the goods or by reducing the size of the bottle.
The result of this would be to practically force the mass of consumers to the use of imitation flavors, and this we do not believe it is your desire to do.
Essential oils.-What we have just said in regard to the proposed duty on vanilla beans applies with equal force to the proposed duty of 20 per cent ad valorem on oils of cassia, lemon, lime, and anise.
Export trade.-We call your attention to the effect upon export trade of the placing of the proposed duties. From Government reports we note that our exports are increasing, but when analyzed they show that it is export of raw material that is increasing and not that of finished products, whereas our imports show the reverse condition.
The addition of these duties on vanilla beans and essential oils would practically cut off the American manufacturer of flavoring extracts from any participation whatever in the export trade. At this time the American manufacturer is sadly handicapped in his fight for a share of the flavoring extract business in the markets of the world, by reason of the internal-revenue tax levied on domestic alcohol used in the manufacture of these goods for export trade.
Foreign manufacturers of flavors do not have to pay any tax on the alcohol used in their manufacture when the goods are shipped abroad, whereas the American manufacturer starts with a tax of $2.09 per gallon on domestic alcohol used, thus enabling foreign manufacturers to undersell him.
In this connection would say that there are now bills before Congress to provide for the rebate of the internal-revenue tax on domestic alcohol used in the manufacture of flavoring extracts and like products for export, but the addition of 50 cents per pound on vanilla beans, and 20 per cent as valorem on essential oils of cassia, lemon, lime, and anise would debar the American manufacturer from any participation in the export business, because, even if Congress relieved him of the internalrevenue tax on his export goods, the addition of the proposed duties would kill his chance of any considerable share of foreign business.
PARAGRAPH 6694CRUDE DRUGS, ETC. It is needless to point out to you that if we can get our share of the export trade in extracts, it would amount to an enormous sum, which would benefit every class of industry in the United States allied with the extract trade, among whom we might mention manufacturers of bottles, cartons, labels, lumber, packers, and the farmer as well, because it would make a market for hundreds of thousands of additional bushels of grain.
The exportation of soda fountains and appliances, ice-cream machines, etc., is growing very rapidly, but the American shipments of flavoring extracts, soda-water Havors, etc., by reason of the taxes assessed against them, are not only not keeping pace, but are practically nil.
The rapidly growing use of flavoring extracts, snda-fountain supplies, confectionery, ice cream, etc., abroad opens a most inviting field to American enterprise and skill in furnishing flavors which enter into these things, and no handicap should be put upon the American manufacturer which would prevent him from securing his fair share of foreign trade, thus providing work for his countrymen, and a larger market for the products of the American farmer.
If the Government will give the flavoring-extract manufacturer the proper opportunity, and not so tax his products or the raw material which enters into their manufacture that he can not meet his foreign competitor on an even basis in the foreign markets, he will, within the next few years, dominate the export trade on this class of goods.
Excessive tar.-In the manufacture of vanilla extract at least one-half gallon of high-proof spirits is used, and you, of course, realize that the internal revenue tax on 1 gallon of proof spirits is $1.10 of the $1.35 we pay for a proof gallon of spirits, or a tax of $2.09 of the $2.60 we pay for the high proof. On the cost of a gallon of vanilla extract then the revenue tax on the spirits alone is 25 per cent of the cost of the product. This tax, of course, the consumer eventually pays.
A gallon of standard extract of lemon contains 111.8 fluid ounces of 190 proof alcohol (83 per cent absolute alcohol) which costs $2.28, with 190 proof alcohol at $2.60 per gallon.
A gallon of this extract contains 6.4 fluid ounces of oil of lemon (5 per cent by volume) which costs $1.07 at $3 per pound for oil of lemon (the present price).
This makes the total cost of raw material in a gallon of standard lemon extract $3.35. Of this cost $1.83 represents the internal-revenue tax on the alcohol used.
In other words, 54 per cent of the present cost of a gallon of lemon extract is tax. Now, if you add a duty of 20 per cent ad valorem on the oil of lemon used to this, 61 per cent of the cost of the material will be tax, and this tax the consumer would
We do not believe this further taxing of the consumer, thus adding to the present burden he bears, will commend itself to your good judgment.
There is no other industry in the United States, except tobacco and whisky, which pays the Government so large a proportionale tax as flavoring extracts.
Promote no industry. - The placing of these duties on these items will encourage no American industry, because no vanilla beans (except in an experimental way by the Department of Agriculture) have been or are being grown in this country in a commercial way. Labor as well as climatic conditions are an almost insuperable barrier.
None of the oils referred to (with the exception of oil of lemon and oil of orange) has ever been produced in this country, and can not be under existing climatic and labor conditions. Lemon and orange oils have been produced in an experimental way in California, but at such high cost that it would require a duty of $2 or more per pound to in any way foster the industry in this country.
Then the demand for the American fruits themselves is so great as to take up the entire output in this country.
We are advised that the quality of lemon oil produced in California is not up to the standard, and does not meet the requirements of the Department of Agriculture in its citral content.
The American-grown fruits are not suited for the manufacture of these essential oils, and hence no American industries can be benefited by the imposition of the proposed duties.
We believe if you will investigate carefully the data herewith submitted, you will see
SAMUEL H. BAER,
Chairman Legislative Committee. 78959–
-VOL 613 8
have to pay
Eggs of birds, fish, and insects (except fish roe preserved for food purposes): Provided, however, that the importation of eggs of game birds or eggs of birds not used for food, except specimens for scientific collections, is prohibited: Provided further, That the importation of eggs of game birds for purposes of propagation is hereby authorized, under rules and regula
tions to be prescribed by the Secretary of the Treasury. PARAGRAPH 561.
Emery ore and corundum. PARAGRAPH 562.
Ergot. PARAGRAPH 563.
Fans, common palm-leaf, plain and not ornamented or decorated in any manner, and palm leaf in its natural state, not colored, dyed, or otherwise
advanced or manufactured. PARAGRAPH 564.
Felt, adhesive, for sheathing vessels. PARAGRAPH 565.
Fence posts of wood. PARAGRAPH 566.
Fibrin, in all forms. PARAGRAPH 567.
Fish, fresh, frozen, or packed in ice, caught in the Great Lakes or other fresh waters by citizens of the United States, and all other fish, the products
of American fisheries. PARAGRAPH 568.
Fish skins. PARAGRAPH 569.
Flint, flints, and flint stones, unground. PARAGRAPH 570.
Fossils. PARAGRAPH 571.
Fruits or berries, green, ripe, or dried, and fruits in brine, not specially provided for in this section.
TESTIMONY OF J. L. SLATTERY, REPRESENTING JOHN NIX &
CO., CHICAGO, ILL.
The witness was first duly sworn by the chairman.
Mr. SLATTERY. Mr. Chairman and members of the committee. I perhaps owe you an apology for appearing here to-day with a brief or an argument on the subject of cantaloupes on which there never has been a duty coming into this country, and on which there probably never will be a duty. The excuse I offer is that in one of the trade papers published the latter part of November a statement was made that an effort would be made at this meeting to have a duty placed upon these cantaloupes, otherwise I should not have taken up your valuable time and attention. I beg to advise you that I have filed a short brief, which I would ask permission to have printed, and I would state that the company, which I represent, John Mix & Co., of New York and Chicago, have found it necessary to cross the boundary line and to grow cantaloupes in Mexico, not because they desire to go outside of the United States, but because
they were forced to do it. The conditions in the Imperial Valley, Cal., were such that they were unable to procure a supply of cantaloupes, and found it necessary to go across the border. Mr. HAMMOND. Why was it necessary to do that?
Mr. SLATTERY. The combination of growers and shippers was such we were unable to secure cantaloupes for our home use.
The company which I represent have been accustomed to handle cantaloupes from that section ever since they were grown about 9 years ago until last season. I myself went into the Imperial Valley to secure the cantaloupes, but was unable to get them, and found it necessary to make a contract with an American company, which owned the land in Mexico. We are growing the cantaloupes there, using American labor and American box shooks, American paper, and the only labor not American which is used in the cultivation of those cantaloupes in Mexico will be the ordinary farm labor in that country, but all of the skilled labor for picking, packing, and inspecting, and the other high priced labor is American, and brought into that country by ourselves. The food products they consume are all brought in from America. If there is a duty placed on cantaloupes we could not ship any into this country. It would not increase the revenue at all; it would simply keep them out, and that I believe would not be desired, as the conditions there are not such that this country would care to foster them.
Mr. Palmer. Is that the California Fruit Exchange?
Mr. SLATTERY. No; this is another exchange, it is called the "Cantaloupe Exchange.”
Mr. Dixon. Where is it located ? Air. SLATTERY. The business is done in the Imperial Valley, Cal. The exchange is composed of persons located in different localities, who have control of the majority of the acreage in that district. By the way, I forgot to state that the cantaloupes grown in the Imperial Valley are grown very largely by Japanese labor.
Wr. Dixon. Those cantaloupes come to the Middle West, do they not?
Vr. SLATTERY. They come to all parts of the United States; in fact, the most of them are being marketed in the East, in New York, Boston, and the other large cities. Their cantaloupes are produced during the month of June, principally, and partly during July when prices are very high and there is no competition; that is, they do not compete with any of the cantaloupes grown in the Middle West, or in any other section, perhaps, than in the Imperial Valley, Cal.
Mr. PALMER. How much do you get for cantaloupes that sell at a hotel for 65 cents for a half portion?
Mr. SLATTERY. Mr. Chairman, the price of the cantaloupes varies very much.
Mr. Dixon. He does not handle those. Those come from Indiana. Mr. SLATTERY. Some very good ones come from Indiana, occasionally. In the early part of the season cantaloupes from the Imperial Valley, Cal., and from other districts have been known to sell for as high as $5 to $7 a crate for a standard crate of 45 melons. Mr. PALMER. That would be about 15 cents apiece?
Mr. SLATTERY. Well, between 10 and 15 cents. I have known of cases where a single crate would be received by express and sold to