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PARAGRAPH 639-OILS.

receive tariff treatment by foreign countries equivalent in all respects to any and all of the other edible oils with which it competes; and that new markets should, if possible, be found for it, as well as old ones retained.

It is a well-known fact that cottonseed oil is now the cheapest and quite the best edible oil available and is the one saving grace in keeping the market for edible fats well below the comparative price of other items which make the high cost of living.

The farmers and oil millers of the South have patriotically undertaken the task of supplying to the world the very cheapest and at the same time the purest and best edible oil available. The degree of their success is one of the marvels in the industrial development of the present time. One fact, among many, making possible the low price at which this oil can be manufactured and sold, is the broad export market permitting a long division of fixed charges in the industry. With unstinted expenditures in scientific investigation, the quality of our product has been greatly improved. But with a broad export market bearing a proportion of fixed charges, the prices of the finished and greatly improved article still remain the lowest, although the price to the farmer for cottonseed has steadily advanced from $5 per ton in 1898 to above $30 per ton the present season. To interrupt or curtail this market must of necessity increase the proportion of fixed expense and correspondingly increase the cost of the finished product, and at the same time lower the price possible to the farmer who produces the raw material. To broaden the export market must necessarily enable further division of fixed charges, cheapen the cost of finished product, and at the same time further increase the demand for the raw material from the farmer.

But vital as is this question to our own industry, it concerns us in no greater degree than it does every other exporting industry or interest in this country. Any article going to export trade is liable to be, and doubtless many are, similarly discriminated against in foreign markets. And unless the law is amended and strengthened, the discriminations will naturally increase as one after another of the foreign countries discover the vulnerable point in our situation.

So, while we are vitally concerned and are commissioned to speak primarily for our own industry, we are also interested as citizens of this great country in seeing all industries provided with necessary means for protecting their just rights in the markets of the world.

Therefore repeating, that while we express no preference of method by which the end desired shall be reached, we strongly urge your honorable committee to provide in the tariff bill which you shall report some adequate means of reaching and controlling specific individual discriminations against American articles imported into foreign countries without the necessity of interrupting or breaking off all trade relations with such foreign country, as is the case with the present law. Respectfully submitted.

C. W. ASHCROFT,

President.

J. J. CULBERTSON, Chairman, Legislative Committee, Interstate

Cottonseed Crushers Association.

EXHIBIT А.

ARGUMENT FOR PUTTING OLEO STEARINE ON FREE LIST.

Oleo stearine is an edible fat, rendered from the choice parts of beef fat, first in the form of oleo stock, which is granulated, then pressed and thus separated into a soft fat called oleo oil, which is used for making margarine, and into a very hard fat called oleo stearine.

Oleo stearine and cottonseed oil combined make lard substitute which is a palatable, wholesome, and nutritious article of food.

Oleo stearine made in this country is manufactured by a few large meat packers who, until the enactment of the existing tariff law, dominated the production and sale of all animal foods. The makers of lard substitutes and the producers of cotton oil appealed to Congress to discontinue entirely the duty upon oleo stearine.

Cotton oil is a comparatively recent addition to the world's supply of edible fats (it now amounts to about one-fourth); and notwithstanding that it is now produced in such large volume, say, 2,500,000 to 3,000,000 barrels per year, the prices of edible fats have been maintained at about the same level as previously. This shows that

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cotton oil is a necessary and important addition to the world's supply, without which prices would have become very much higher and oppressive to consumers.

One of the most important uses of cotton oil is in lard substitutes, for which there is a large demand; therefore, the cotton growers and the cotton oil manufacturers are as much interested in this question as the manufacturers of lard substitutes. This country manufactures about 600,000,000 pounds of lard substitutes (of which about 82 per cent is cotton oil), exporting about one-sixth, while the rest is used in the United States, thus enabling us to export about an equal quantity of hog lard. The price of lard substitute is about 2 cents per pound less than hog lard, and

represents a saving to consumers of $10,000,000 per annum.

For years previous to the enactment of the existing tariff law the manufacturers of lard substitute felt themselves at the mercy of the packers.

A duty on oleo stearine would enable the packers to again take advantage of their monopoly. The manufacturers of lard substitute would find themselves, not only in a position where they would have to pay whatever the packers pleased to ask for oleo stearine, but also under the necessity of accepting whatever price the packers pleased to name for lard substitute, because they also are large manufacturers and distributors of this article.

The packers would thus be in a position, not only to regulate the price of oleo stearine, but also in a large measure to regulate the price of cotton oil, because they would have the ability to fix the price of lard substitute by selling price, and to fix the price of oleo stearine by asking price.

We claim, therefore, there should be no duty placed on oleo stearine.

A duty on oleo stearine was not and would not be a revenue producer. In the history of the past it did not produce enough net revenue to pay the expense of collection,

Consumers would not be helped by a duty, because dutiable and consequently high oleo makes higher lard substitute. The only beneficiaries of the duty, therefore, would be the packers.

That an artificial price was maintained by the packers previous to the enactment of the existing law is proven by the fact that while all other meat products were higher in Europe than in the United States, oleo stearine was very much higher in the United States than in Europe.

Producers of oleo stearine can not claim that the high prices asked were due to relations between supply and demand, because the supply in this country, as handled by them, was too small, and because consumers were deprived of the foreign supply by the duty. BRIEF OF H. T. MCKERROW.

JANUARY 6, 1913. Mr. O. W. UNDERWOOD, Chairman of Ways and Means Committee, House of Representatives, Washington, D. C.

to 639. This law provides for the free entry of cottonseed oil and soya-bean oil.

If the law is modified, we suggest that sunflower-seed oil be included in the same classification as cottonseed oil. The two oils are of the same nature and are used for the same purposes. As the law stands at present, sunflower-seed oil not being specially provided for is assessed 25 per cent ad valorem duty.

We also call attention to oleines manufactured by destructive distillation of wool grease. According to the Payne law, these oleines are dutiable in paragraph 3 as veing distilled oils not specially provided for and are assessed 25 per cent ad valorem duty.

Oleines such as we refer to are not made in this country, consequently no protection is necessary. Furthermore, it is an unnecessary hardship for the textile trade who consume these oleines in the manufacture of yarn and cloth.

It is probably unnecessary to say that the distillation of wool grease in any form is not engaged in at present in this country. Respectfully, yours,

H. T. McKERROW.

PARAGRAPH 639-OILS.

TESTIMONY OF B. A. LEVETT, NEW YORK, N. Y.

The witness was duly sworn by Mr. Harrison.

Mr. LEVETT. If the committee will permit me, I want to talk for a minute or two on peanut oil, and then on the administrative.

In the House bill that was introduced at the last session and passed, peanut oil was taken off of the free list and put on the dutiable list, under the chemical schedule, at 10 cents a gallon, and I want to call the attention of the committee to the fact that this peanut oil is, so far as we are able to understand, not made in this country. It is an oil which is made from the African peanut, and is used in the manufacture chiefly of butterine, which is in turn used in the making of cheap bread and food stuffs, in place of the poorer oils which would be used if we could not get this peanut oil.

It is different from the oil which could be extracted from the peanut of this country, in that the African nut is a peculiar species which has very little flavor. It is what they call neutral, so that this oil can be used in the making of the butterine, because it has no flavor whatever. If it is not used, the poorer oils—in fact, cottonseed oil—is used when they can not get this peanut oil. I presume the oil was taken off the free list as a revenue proposition.

Mr. HARRISON. Do you maintain that it is used only in the manufacture of butterine ?

Mr. LEVETT. I think that is its chief use; I won't say the only use. I know they did try to introduce it as a substitute for salad oil, but it is not going. The quantity is decreasing, as people find they do not liko it. I know I tried it at home, but I could not get my wife to use it. Mr. HARRISON. It is your contention that it is used only in food ? Mr. LEVETT. Chiefly in food; yes, sir. Mr. HARRISON. Not in manufacture?

Mr. LEVETT. Not so far as I have been able to find out; and I have tried to find out if there is any manufacturing use.

Mr. HARRISON. Suppose we did not have a duty of half a cent on peanuts, could we make that peanut oil in America ?

Mr. LEVETT. If they brought in the African peanut, undoubtedly they could.

Mr. HARRISON. Can they not make oil out of the American peanut?

Mr. LEVETT. Yes; but the American peanut oil, so far as I know, would not serve any purpose which would not be fulfilled by the cheaper oils---cottonseed oil and the like. That is the reason they do not bother with peanut oil in this country.

Mr. HARRISON. Would the African peanuts compete as a food product in the American markets with the American peanuts?

Mr. LEVETT. I think not; I don't think you would care to eat an African peanut; they are very small and tasteless.

Mr. HARRISON. Not fit for food, really?
Mr. LEVETT. Not as you and I would eat peanuts.

Mr. HARRISON. What is the bulk of these peanuts that come in? Are they African peanuts?

Mr. LEVETT. I can not tell you.
Mr. HARRISON. Japanese, aren't they?
Mr. LEVETT. I am not informed.

PARAGRAPH 639-OILS.

Mr. HARRISON. If they were put on the free list, do you believe it would start an industry in making peanut oil here?

Mr. LEVETT. If you will look at the statistics, and look at the small quantity imported, I doubt whether any industry here would find it worth while to start in. They can accomplish the purpose with the other oils which are manufactured here so much more cheaply; and if you will look at the statistics that you have before you, you will see what a small increase in the price of peanut oil does to importations. In 1910, when the price was 47.6 cents, importations were 3,284,064 gallons; in 1911 the average price was 60.2 cents and the importations were 1,121,097 gallons, a little over onethird; in 1912 the price increased to 65.8 cents and the importations were 878,659.57 gallons.

Mr. HARRISON. Now, one moment, Mr. Levett. Isn't that probably due to the fact that there was a r se in all kinds of oil here, beginning with the failure of the flax crop ?

Mr. LEVETT. The oils here?
Mr. HARRISON. Yes.
Mr. LEVETT. But this was imported oil.
Mr. Harrison. I say, import more oil but pay the highest price.
Mr. LEVETT. We have imported less oil as the years go on.

Mr. Harrison. The demand sent the price up so that it was not profitable to import peanut oil.

Mr. LEVETT. But if you will look at cottonseed oil you will find the importations went up in proportion as peanut oil went down, showing that cottonseed oil was being used in place of peanut oil. If a duty is put on peanut oil, no man can tell, but I think it is fair to assume that importations of peanut oil will probably be wiped out entirely, because it won't pay to import it.

Mr. NEEDHAM. Four years ago the peanut growers in Virginia, through their representatives in Congress, appealed to this committee very strongly and convinced me that they needed more duty.

Nr. LEVETT. On peanuts, but not on peanut oil.

Mr. NEEDHAM. You can't have the peanut oil if you don't raise the peanuts.

Mr. LEVETT. I can not say positively; I have nothing to say at all about peanuts. Still I can say positively about peanut oil, I am pretty well satisfied that none is produced in this country at all.

ADMINISTRATIVE.

I would like to say a word on the administrative act, especially in regard to subsection 18 of section 28, which fixes the market value of imported merchandise as the usual selling price of the goods-and I quote now-"including the value of all cartons, cases, crates, boxes, sacks, casks, barrels, hogsheads, bottles, jars, demijohns, carboys, ard other containers or coverings, whether holding liquids or solids, and all other costs, charges and expenses incident to placing the merchandise in condition, packed ready for shipment to the United States.” I ask this committee to amend that paragraph by striking out the word "including," and inserting instead the word "excluding": in other words, to make the market value of merchandise imported

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the value of the merchandise and not the value of the packing charges and the cases. There is this

Mr. Hill. What section is that?

Mr. LEVETT. Subsection 18 of section 28 of the act of June 20, 1899, as amended. There is this to say in regard to discrimination. You take goods that pay a specific duty, and their coverings and wrappings are free, except in special instances, such as canned goods, where there is a special provision that cans are to be included, and in regard to bottles, which are specially provided for.

Now, you take the same goods, and if they were free the packing and cases would be free; but place those goods at an ad valorem rate and the coverings pay duty, and it is not a uniform duty. Let us illustrate by a cask of china. The cask is of wood, of course, and inside you will find straw and paper covering this china. If the china is decorated china, it pays 60 per cent, and you collect a duty of 60 per cent on the wooden cask, on the paper and on the straw. If the china is undecorated, you collect a duty of 55 per cent on the cask, the straw, and the paper. If it is Rockingham ware, you collect a duty of 40 per cent on this same cask, paper, and straw. If it is common brown earthenware, you collect 25 per cent, and if it happens to be a certain kind of earthenware tiles, dutiable at a specific rate, you do not collect any duty. If they take a compound rate of 15 cents per square foot and 10 per cent ad valorem; you collect 10 per cent ad valorem on these same coverings. If the goods are free, of course the coverings come in free.

I suggest to the committee that there ought to be some uniformity. If you are going to put a duty on ad valorem containers, there ought to be the same duty on all of them, whether the goods pay a high or a low rate; but there is no really valid reason why any usual and necessary coverings should pay any duty whatever. It has been suggested in former times that this duty on coverings was put on because of the practice of certain importers to bring in fancy cases, in some cases worth more than the value of the goods themselves. But in the very act which provided for coverings-that is, the administrative act of 1890--they had the provision in the very same paragraph that

If there be used for covering or holding imported merchandise, whether dutiable or free, any unusual article or form designed for use otherwise than in the bona fide transportation of such merchandise to the United States, additional duty shall be levied and collected upon such material or article at the rate to which the same would be subjected if separately imported.

In other words, if I brought in a fancy cask or a barrel of decorated china, I would not only pay 60 per cent duty on that cask, but I would pay 35 per cent duty on the cask in addition, as a manufacture of wood. So there was absolutely no reason for this special provision for containers, inasmuch as there was a provision for the containers if they were unusual. There was some talk also, I believe, that importers would give the containers a higher valuation than they really were, thus reducing the value of the imported article. But I will wager that there are not 5 per cent of the invoices that come in to-day-consular invoices, I am not speaking of the little pro forma invoices—which do not separate the cost of the coverings

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