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making its budget for the purpose of its appropriation bill and has a commodity such as sugar on the dutiable list for a specific tax per pound, and knowing that under normal conditions a certain number of pounds will be imported, it knows almost with certainty what revenue will be received. But where there is an ad valorem duty imposed, the amount of revenue is uncertain. If the foreign commodity is sold upon a cheap market, the revenue is less; if sold upon a high market, it is more. To illustrate: In the year 1903 the average cost per pound for raw sugars in foreign countries was 1.71, whereas in 1905 the average cost in foreign markets was 2.65 per pound. Now, suppose there had been an ad valorem duty of 80 per cent on sugar at that time. Then the ad valorem duty in 1903, if converted into a specific duty, would have been 1.368 per pound and in 1905 it would have been 2.02 per pound, a difference of 65 cents per 100 pounds, and on 4,200,000,000 (about what was imported into the United States in 1905) there would have been a difference of $13,000,000 in the revenue between the two years, presuming the amount imported would be the same.

With reference to the sugar producer, the ad valorem tax benefits him most when he needs it least, and benefits him least when he needs it most. The example above given illustrates this: In 1903 under an ad valorem duty of 80 per cent he would have sold his sugar at 3.07 per pound, and in 1905 at 4.73 per pound, making a difference of $1.66 per 100 pounds, whereas, under the specific duty of 1.685 he sold the crop of 1903 at 3.39 and the crop of 1905 at 4.33. He, therefore, gets a little more in bad years and a little less in good years than if the duty were ad valorem instead of specific.

Let us ask the further question, Is the price of sugar too high? Is the consumer paying too much for his sugar? Why, sir, sugar is the cheapest necessity of life, if such it is classed, that is produced by the American people. It is the only necessity of life which has not increased by leaps and bounds in the last decade. Instead of increasing, however, it has decreased, and it, perhaps, is the only article that can be thus classed. We have had the pleasure of examining certain charts prepared by Mr. Palmer, of the beet-sugar people, and the statistics secured by him show the increase in the value of products consumed in the United States from 1900 to 1910, and the following table will give that increase:

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Whereas sugar has decreased 7 per cent, raisins 19.5 per cent, and molasses 22.4 per cent.

In concluding this argument we desire to urge upon your honorable committee that you consider seriously if you did not commit a grave error in reporting a free-sugar bill at the last sitting of Congress. We ask you again to read the Democratic platform and see if the leaders of that great party have not practically so declared in the platform.

We ask, Do you feel the weight of responsibility resting upon you as Democrats in running the affairs of this Government? and will ask you to scan the field and see if there is another commodity that can be placed on the dutiable list that will yield one-half the revenue that is produced by sugar and the burden be as equally distributed among the inhabitants of the United States.

We will ask you to consider further the Democratic platform, and in doing so remember that the cane growers and the manufacturers of Louisiana believed what was asserted in that platform. Our Congressmen and Senators and our political leaders told us that the promises therein made could be relied upon; that this declaration was a recognition of error on the part of the Ways and Means Committee in reporting a free-sugar bill to Congress last spring; and that the sugar producers of Louisiana could absolutely rely upon the promise that the tariff would be so adjusted as not to injure or destroy their industry. Believing this, they voted for Gov. Woodrow Wilson, and Louisiana stood where she has always stood-in the Democratic column. When we placed Louisiana in the Democratic column we believed you would carry out your promises, and our faith has not yet been lost.

Mr. Chairman and gentlemen, I desire to submit certain exhibits and to file an abstract of certain evidence referred to in this discussion, and also a brief in support of our position.

I thank you.

TESTIMONY OF EDWIN F. ATKINS, VICE PRESIDENT AMERICAN SUGAR REFINING CO.

Mr. ATKINS. Mr. Chairman, owing to my defective hearing, I ask your favor to allow my secretary to be near me, so that he can repeat any questions that you wish to ask.

The CHAIRMAN. Very well.

Mr. ATKINS. Gentlemen, in connection with the consideration by your committee of the tariff on sugar, this company desires to submit the following statement:

STATEMENT BY THE AMERICAN SUGAR REFINING Co.

The COMMITTEE ON WAYS AND MEANS,

JANUARY 15, 1913.

House of Representatives, Washington, D. C. GENTLEMEN: In connection with the consideration by your committee of the tariff upon sugar, this company desires to submit the following statement:

The American Sugar Refining Co. wishes to be recorded in favor of a reduced tariff upon sugar. It is our belief that a moderate reduction which is not so great as to endanger the domestic and insular industries or to reduce such sources of supply would

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accrue to the benefit of the consumer, and would neither increase foreign values on raw material nor increase the refiner's margin of profit per pound.

Foreign values are regulated only through the law of supply and demand. Short crops will always advance prices, as excessive crops will depress them, regardless of tariffs. Such conditions can not be regulated by legislation, but a reduction of duty upon imported raw material would be followed by a corresponding reduction of prices in refined sugar in the United States. The benefit to the refiners would arise from increased consumption through a lowering of prices.

We urge the retention of the small differential duty as a protection upon refined sugar, if protection is to be accorded to any industry, and the continuance of the present color standard as the most practicable distinction between raw and refined sugars for customhouse classification. The present differential or protection of 74 cents per hundred pounds is but seventy-five one-thousandths of a cent per pound upon granulated sugar and should be retained, if not increased, in order to cover the waste resulting from the process of refining, as well as the higher cost of labor and materials in this country.

We are opposed to the abolition of all duty upon sugar for the following reasons: It would at once destroy one of the largest sources of revenue, some $50,000,000, for the substitution of which no provision has been made.

It would cause the termination of the Cuban reciprocity treaty, under the provisions of which a preferential rate of 20 per cent is accorded to Cuban sugars, and Cuba gives preferential rates upon goods coming from the United States of 20 to 40 per cent. Under this treaty the United States buys practically all the Cuban sugar crop at a price considerably under the world's parity, and sends to Cuba in exchange upward of $60,000,000 worth of merchandise, the greater part of which was formerly imported from Europe.

Free sugar would open the United States markets to the importation of refined beet sugars from Europe, upon exactly the same terms as raw sugars, in competition with domestic refined, and we should expect to see, as formerly, large imports of this class of granulated sugar from Germany and Austria.

Russia pays a bounty of 71 cents per hundred pounds upon her exports, but as countervailing duties are assessed in practically all countries, including the United States, she can not export beyond a limited amount. The removal of the countervailing duty in the United States would admit Russian sugars to this country at far below their cost of production, to the great injury of all other sugar interests.

In our opinion, the first effect of free sugars, while present production is maintained, would be to drop prices here to, or about, present bond values. So low a price would destroy the Louisiana industry, also the beet-sugar industry in many localities and particularly east of the Mississippi River, which is not protected by a long railroad haul against sugars coming from the Atlantic and Gulf ports. It would carry the price of Porto Rican and Philippine Island sugars far below their cost of production and make Hawaiian production unprofitable. Thus our present sources of supply would be largely curtailed, for under normal crop conditions these domestic and insular sources of production are now furnishing upward of 1,800,000 tons, or half our supply. Once this production was so reduced foreign prices would advance until they reached a point where domestic producers could again enter the field. How long a time this would require is problematical. Meanwhile disaster would be widespread and consumers would get but a temporary benefit.

Respectfully, yours,

THE AMERICAN SUGAR REFINING CO., By EDWIN F. ATKINS, Vice President.

Now, Mr. Chairman, it is not the idea of our company to suggest a rate to you. You have a great deal of valuable information from all sources in regard to production and, I have no doubt, will be able to reach a compromise measure, if that is your wish, by which all interests may be cared for. They all have a right to live; few have a right to demand the present high rates of protection.

Mr. HARRISON. I would like to ask the witness a question. Mr. Atkins, you are the vice president of the American Sugar Refining Co., which is popularly known as the Sugar Trust?

Mr. ATKINS. It is sometimes referred to as that.

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Mr. HARRISON. Do you appear here representing the sentiment of the directors of that company?

Mr. ATKINS. Yes, sir; with their authority.

Mr. HARRISON. Are you in favor of free sugar?

Mr. ATKINS. I am not, and our company is not.

Mr. HARRISON. I wish to ask you further whether you know of the campaign which has been conducted by Mr. Frank C. Lowrey, as secretary of the Wholesale Grocers' Association, in favor of a reduction in the duty on sugar?

Mr. ATKINS. I have occasionally received a pamphlet expressing Mr. Lowrey's views on the subject.

Mr. HARRISON. It has been suggested, also, that the campaign conducted by Mr. Lowrey was at the instigation of the American Sugar Refining Co.; is that true?

Mr. ATKINS. It is untrue. One reason why I appear before this committee is to clear that matter up, not only with your committee, but with the whole country. We are opposed to free sugar, for the reasons that are given here. We are, however, desirous of a reduction in the tariff.

Mr. HARRISON. What is the extent of the interest of the American Sugar Refining Co. in the beet-sugar plants of the United States? Mr. ATKINS. We hold not so much as we had at one time. present I think it is

At

Mr. ATKINS'S SECRETARY. It is given at page 100 of the hearing before the Hardwick committee. Would you like to have it? Mr. HARRISON. No, I will not trouble you for that.

Mr. ATKINS. It was $23,000,000, the par value. It is since somewhat reduced. It is approximately $22,000,000, the par value now. We have disposed of some holdings.

Mr. HARRISON. Have you any interest in many cane-sugar manufactories?

Mr. ATKINS. None whatever in any source of production with the exception of the beet sugar already published.

Mr. FORDNEY. I would like to ask a question, Mr. Atkins. You would like to see the differential retained between Cuban and other foreign sugars?

Mr. ATKINS. The preferential, I guess you mean?

Mr. FORDNEY. The preferential; yes.

Mr. ATKINS. Yes, sir; I would.

Mr. FORDNEY. You produce sugar in Cuba, do you not?

Mr. ATKINS. Yes.

Mr. FORDNEY. How much sugar do you produce there annually? Mr. ATKINS. Not very much; about 22,000 tons.

Mr. FORDNEY. How many acres of a plantation have you in Cuba, Mr. Atkins?

Mr. ATKINS. Well, I have between 25,000 and 30,000; much of this is in pasture land.

Mr. FORDNEY. What is your investment in the sugar plant? What does it amount to, if that is a better question?

Mr. ATKINS. Value or cost?

Mr. FORDNEY. Well, put it either way; cost, we will say.

Mr. ATKINS. Well, I suppose possibly a million and a half dollars.

Ι

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Mr. FORDNEY. You would be willing to have free sugar from Cuba if we would retain the duty on sugar from foreign countries?

Mr. ATKINS. I would not ask such a thing.

Mr. FORDNEY. You have asked it, before this committee?
Mr. ATKINS. Never.

Mr. FORDNEY. Did you not ask free sugar at the time Cuban reciprocity was advocated?

Mr. ATKINS. No, sir. I asked for a larger preferential than we got. We got a preferential of 35 cents, but I asked for 50 cents. We could not get that, and we took 35 cents a hundred.

Mr. FORDNEY. It was my recollection that you wanted free trade between Cuba and America at that time, but perhaps you are right. But certainly your interests in Cuba give you some special interest in that preferential with Cuba, do they not?

Mr. ATKINS. The interest of the sugar refiners in this country and the producers in Cuba are identical. The sugar refiners can buy their sugars in Cuba as long as the sugar gets that preferential.

Mr. FORDNEY. Then the small amount of sugar that you produce in Cuba has nothing to do with your advocating a low rate of duty? Mr. ATKINS. I would like to see the preferential maintained, and we all hope it will be, refiners and producers alike.

BRIEF OF FRANK SCHAFFER, NEW YORK, N. Y., REGARDING CANE SUGAR.

Hon. O. W. UNDERWOOD,

NEW YORK, November 29, 1912.

Member Sugar Conference Committee, Washington, D. C.

SIR: Being largely interested in the production of sugar from sugar cane, and believing that the time is opportune to bring before yourself and your honorable committee my views on this subject, which I hope you will have under consideration when discussing the proposition of reducing the present tariff schedule on sugar this coming closing session of Congress and during the following opening session in the spring, before entering into this subject proper, I beg to remind you of the principle of reciprocity which our great and lamented president, William McKinley, so strongly advocated and which met with such universal approval. It was primarily the idea that through reciprocity with other nations the United States would enter into a freer intercourse of trade with such nations who would agree to enter into any reciprocal arrangements with us, and in this manner it was contemplated that the great surplus of manufactured production of the various industries would find its way to other lands, thus relieving any possible overproduction at home or stagnation of trade, and yet make such reciprocal trade profitable to the industries of this country.

This appears very well but it is not just nor fair to all, because to give any one nation a preference over another, even through a reciprocal arrangement, is not a fair way to deal with our neighbors either on this continent or abroad. It may be that some of the countries would be very eager to make some reciprocal arrangement with the United States, but on account of some special environment or other obstacle it might be impossible for them to do so, and hence they would not have the same opportunities as those who would be more free to make such reciprocal arrangement.

Therefore, if reciprocity is not the ideal method for the expansion of our trade and commerce, we must look for other means to accomplish this end, which means can be found only in the revision and material reduction of our present high and extremely overprotective tariff. It is conceded by all political factions, Republican and Democratic, as well as others, and by the majority of the people of the United States as demonstrated this past presidential election, that such reduction is both necessary and urgently wanted. While it has had its good effect in years past in the protection of industries which may then have been in their infancy, tariff has entirely outlived this stage of its existence and does now probably more harm in its economic reconstruction of the country by the gradual concentration of the money power from a large