This volume of purchases of domestic merchandise places Porto Rico eleventh among those countries that buy American products and manufactures, and should it be curtailed the resultant loss and suffering would be as keenly felt by the many manufacturing industries of the United States who have in the Porto Rican markets such a large outlet as it would be by Porto Rico itself.

Porto Rico exceeded in its purchases from the United States such countries and groups as Austria-Hungary, the Russian Empire, the Turkish Empire in Asia and Africa, Spain, Persia, all of China, all of India, Siam, all of the countries of Africa combined, all of South America except Argentina, all of Central America, all of the West Indies except Cuba, all of the islands of the Pacific except Australia, and all the other insular possessions of the United States.

In merchandise shipped to the United States Porto Rico was exceeded by only 10 countries of the 103 enumerated.

The external trade of the island, which amounted to $92,678,304, shows an increase of 17 per cent over the previous year, thus evidencing a condition of continuing progress and development.

Of this trade, 87 per cent was with the United States.

By the assistance of your protective tariff the island of Porto Rico found, fortunately, strong credits with your merchants, bankers, and manufacturers, who saw the opportunity to invest their money with us. In the short period between 1901 and the present time all our efforts, all our actions, have been directed to create new fountains of production and wealth, employing and putting back into the sugar factories, for their development, all our profits and most of the existing credits to enlarge, develop, and cheapen the sugar production. Unfortunately, we have not been able as yet to pay back entirely our debts to your own merchants, bankers, and manufacturers. We have a right to expect that this protection shall be kept for same years yet, and in that hope we expect to have time to pay up all of our obligations. Should any reduction take place now in the sugar tariff, this would put upon us, as we said before, a great hardship and would affect our sugar industry to such an extent that it would ultimately be destroyed, leaving us for the moment unable to meet our obligations with the American friends who have helped us so far. We respectfully call your attention, also, to the many industries which are in close relation to and whose success depends largely on the sugar industry, and we will refer particularly to the four or five steamship companies that ply now between the United States and Porto Rico, carrying backward and forward our mercantile interests. These lines, having started with almost nothing in the early days of free trade to-day own good ships that show that this business has been profitable.

The whole economic situation in Porto Rico depends on the success of the sugar industry. Our taxes, which are quite high, we pay willingly, because we know they go to sustain a good government, to keep a very large number of schools, to maintain good roads; everything proclaiming daily the excellence of American administration. Take away, however, the protection that this sugar industry is enjoying and you will administer a fearful blow that will bring everything down with us, destroying the happiness, contentment, and prosperity that you have built up in this island. The sugar industry in Porto Rico is to-day divided between centrals who cultivate their own canes and colonos who sell their canes to the centrals, receiving an adequate price for their canes. The greater the number of colonos that exist the greater the

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division of the property that takes place. These colonos are able to-day to live, cultivating their sugar lands and being small proprietors without large means; every one of them would have to succumb should this protective tariff be reduced or taken off. By having colonos, the wealth of this island is better divided: so many more colonos means so many more well-to-do families into whom the benefits of this industry go; they at the same time giving life and work to so many other families of the workmen and common field laborers; and, as we have said before, the colonos would be the first ones to disappear.

Actually we are engaged in improving our lands for the cultivation of sugar cane. We have created the Associaion of Sugar Growers, and we contribute liberally to sustain it. We spend thousands of dollars yearly in American experts and chemists who study our lands, improve our fields, combat the diseases of the canes, etc., and all this work is being paid for by the sugar industry; not a cent of it has cost the National Treasury, as was the case when the British Government a few years ago sent a royal commission to do that same work in the British West Indian Islands, when it cost the British treasury hundreds of thousands of pounds sterling. We are doing that willingly to improve our lands and be able to compete with the virgin soils and fields of Cuba, Java, and Formosa, where they have, besides, cheap labor.

Let us call your attention to the fact that sugar can never be considered in the many articles of daily need to the people as regards cost. Sugar is the only article that in the last 10 years has declined 7 per cent in value, according to the figures of your own Department of Commerce and Labor; and in these last 10 years potatoes have increased 14.40 per cent, beans 14.40 per cent, codfish 21 per cent, onions 22 per cent, bread 25 per cent, fresh beef 27.50 per cent, milk 34 per cent, butter 36.70 per cent, cheese 39 per cent, mutton 50 per cent, coal 64 per cent, and so on; and these figures plainly show that sugar can not be counted among the high-priced commodities which the poor people count as oppressive. Sugar costs just as much in the United States as in England, and is cheaper than in any other country of Europe, and we feel positive that, were sugar to be placed on the free list or were present duties reduced, very little, if any, would be the benefit to the people, the amount of the duties would remain with the refiners, wholesale grocers, jobbers, and retailers. The much-heralded 2-cent reduction per pound would result in a myth. The many manufacturers in the United States who use sugar in their products, such as candies, biscuits, cakes, condensed milk, etc., if sugar were cheaper, on account of reduced duties or no duties at all, would surely be able to purchase at wholesale cheaper sugar, but do you think for a moment that a pound of candy, a can of condensed milk, a package of crackers, a piece of cake would be sold at retail cheaper than to-day? Certainly not. Then this reduction would go to the manufacturers, and not to the people, and as many thousands of tons of sugar are used in all these industries the amount per capita that is calculated as used in the United States, upon the basis of importation, would come to quite a lower figure. Would it be worth while for the little saving that the American families would have by changing the sugar tariff or suppressing it entirely, would it be worth while, we ask again, to destroy this great industry, worth millions and millions of dollars, that cultivates millions of acres of sugar cane and beet root in your own Western and Northern States, in Louisiana, Texas, Hawaii, and Porto Rico? We believe not. In our opinion the surest way to cheapen sugar would be to encourage the domestic production, but never to destroy it. The value of domestic sugar was plainly shown when in the summer and fall of 1911 the price of sugar went up in the markets of the world on account of the scarcity of sugars because of the drought in Europe; the prices only begun to drop when the American beet sugars and Louisiana sugars were marketed.

What would be the economic situation of Porto Rico should the sugar industry be left without protection, while everything that she consumes and needs remains more or less included in your protective tariff? You will easily see that our situation would be unbearable.

Congress has always been just, and it can not now, with a stroke of the pen, destroy the best work that any colonizing country has ever done, having built up, as the Americans have done in Porto Rico in the course of 10 years only, a prosperous and happy community.

We respectfully submit all these considerations for your perusal and trust that no bill that will destroy Porto Rico will be recommended by you. R. ABOY BENITEZ, President.

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BRIEF OF J. K. KALANIANAOLE, DELEGATE FROM HAWAII.

The chairman and members of the Ways and Means Committee:

As the official representative of the Territory of Hawaii in Congress, I would like to present some reasons, that seem to me important, why the tariff on sugar should not be abolished.

The considerations which I shall urge upon your committee relating particularly to the Hawaiian Islands are not merely economic and financial; they go beyond that to questions of statesmanship concerning the attitude of a strong Nation toward its insular Territories; they vitally and fundamentally affect the future of an island people who voluntarily surrendered their own sovereignty to become a Territory of the United States.

I do not appeal to you primarily on behalf of the sugar planters, who have the largest amount of capital invested in that industry. As Delegate from that island Territory my purpose is to show you the inevitable effect of this legislation on our community as a whole, and particularly on the Caucasian and native Hawaiian citizens of our islands.

Capital has its rights and is entitled to fair consideration; but, after all, the man of wealth can always take his money and go elsewhere to enjoy it, even though, as in the case of Hawaii, he would lose a large part of his capital in making the transfer and would leave our island community impoverished. But with the mass of our citizenship whom I represent the case is different. My purpose is to show you what the effect of this legislation would be on the rank and file of those who constitute the citizenship of our Territory.

Congress has the power to enact legislation that will paralyze the industrial life of its island Territory and insular possessions; but I do not believe that it ought to do so without at least frankly facing the probable results and recognizing what it is about to do. Hawaii under its own independent government was a prosperous community. It voluntarily ceded its sovereignty to this country, believing that Congress, as the arbiter of its destiny, would always give fair consideration to its welfare. When, therefore, one House of Congress looks favorably, as I believe, toward the abolition of the tariff on sugar, the effect of which will be to wipe out four-fifths of the main and well-nigh sole industry of that country, I deem it my duty to place the facts before you, so that the Congress shall act with full knowledge of the conditions and with undivided responsibility for the results that must follow.

If this were merely a question of cutting down the profits of the sugar planters, I would leave it to their attorneys to argue the questions of comparative costs and the proper tariff rate to best maintain the relatively low price of sugar which the American consumer has enjoyed during the past 20 years, while still building up a large American sugar production. But the question now before Congress is the total abolition of the sugar duty. It is admitted that this radical reversal of the long-established policy with respect to sugar will greatly lessen and undoubtedly eventually destroy the sugar production of Louisiana, will destroy four-fifths of the plantations in Hawaii, will greatly reduce the production of Porto Rico, and will wipe out most of the beet-sugar industry of the United States. It is the resulting conditions in the Territory of Hawaii that I wish to make clear to your committee.

The Hawaiian Islands form an extreme example of a one-industry country. Ninety per cent of the commerce of those islands is based, either directly or indirectly, upon sugar production; necessarily, therefore, the wiping out of four-fifths of our plantations by free-sugar legislation will mean industrial disaster for the Hawaiian Islands.

But the rapid decline and collapse of our present industrial life will not be the worst form of the disaster to Hawaii; the most serious factor in the Hawaiian situation is the inherent obstacles to substituting other forms of industrial life and in making them succeed, under the physical and geographical conditions of those islands.

If the sugar industry of Louisiana is wiped out, while there will be great economic loss, still the land can be used to produce cotton, corn, or rice. When the free-sugar law shall have turned the sugar-beet factories of the United States into junk heaps, the miles of sugar-beet fields surrounding them can be used to grow wheat, corn, or other crops.

The situation in Hawaii is utterly different. We can grow neither wheat nor corn successfully. It is impossible for us to compete with the continental United States and Canada in either cereals or fodders: we can not begin to compete with California in citrous fruits, nor with the Pacific Northwest in potatoes or vegetables. Our area of arable land is very small, is scattered around the fringe of the various islands, and is

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cut up into small tracts by deep gulches. Most of the land requires expensive irrigation. With our remoteness from market and with our limitations of climate, physical conditions, and high cost of transporting freights, it is impossible in Hawaii to successfully produce anything except a relatively high-priced commodity, such as sugar. Hawaii has spent literally millions in trying to diversify her industrial production. At one time it was believed that a large coffee industry could be built up, and more than $2,000,000 was sunk in that effort before the impossibility of competing with Brazil was proven to us. Similar efforts have been made to develop the cultivation of sisal, cotton, and rubber, but they have been commercially unsuccessful. Pineapple growing has been developed to a profit-yielding basis, but for this the market is limited. Aside from pineapples and certain limited areas that will produce tobacco, we have been unable, even by the aid of long and costly experiments, to find other crops to take the place of sugar.

I desire to make it very explicit to Congress that free sugar will mean, in the case of Hawaii, not merely the loss of capital invested in one of several industries and the expense of transferring to other lines of production as here on the mainland; it means for Hawaii the closing down of four-fifths of her industrial unities, with no other crops available for substitution. It must also be remembered that absence of fuel and raw materials make it impossible to build up any manufacturing industries in Hawaii. In making this small statement of fact that free sugar will mean industrial disaster for the Hawaiian Islands, I frankly recognize that Congress would have an excuse for enacting such legislation if it would permanently confer a benefit on the people of the United States. I am not in the position to contend that the 90,000,000 of people in the United States should be taxed to support the sugar industry of Hawaii and the beet-sugar States. But I hold to the fact that this Government, through the power of congressional enactment, will bring disaster to Hawaii without permanently benefiting the people here by giving them cheap sugar.

Sugar now constitutes one of the chief sources of revenue of this Government. I do not believe that Congress should enact a law that will both cause the loss of that revenue and at the same time cause disaster to the entire people of Hawaii and the valuable industries in Louisiana and the Western States, without first having it at least clearly proven that the American people will be assured of an important gain to offset this serious loss.

The economic effect upon our islands of this drastic legislation will be to change Hawaii from a one-industry to a no-industry country; but I wish to go beyond that to point out its probable effect on the future of the citizenship of Hawaii.

During all the years since annexation, the Federal Government has been advocating the "Americanization of Hawaii by inducements to American and other Caucasian immigrants to displace the original population of those islands. Within the last four years the Territory of Hawaii, through its board of immigration, has expended about three-quarters of a million dollars to promote and assist Caucasian immigration. These funds are raised by a special income tax of 2 per cent restricted to persons and corporations with an income in excess of $4,000 per year. In addition to that, the sugar plantations have directly aided the movement to Americanize the islands by voluntarily paying a higher wage to citizen labor and those eligible to become citizens. As a result of this, there is now a steady decline in the percentage of oriental labor engaged in plantation work; there has been no oriental immigration to Hawaii for the past four years, while there is a more or less steady stream of oriental departures. What, then, must be the inevitable effects of a free-sugar law on the labor and citizenship of Hawaii? The weaker plantations the ones producing sugar at the highest cost-will at once be forced to close. This will include not only some small plantations, but two at least of the larger ones which have never paid a dividend. The effect on the stronger plantations will be to compel them to at once discontinue their higher wages to Caucasian laborers. The closing down of many plantations will at once produce a surplus of labor and tend to lower the minimum wage; the inevitable result will be that the plantations in their struggle to continue as going concerns will be forced to employ the oriental at declining wages, and that citizen and Caucasian labor will be forced to leave the country to find profitable employment.

It is a fixed economic law that under sharp competition a cheaper form of labor will always crowd out that which has a higher standard of living. In Hawaii we have been taxing the sugar industry to counteract that law and to purposely reverse it by placing Caucasian labor in place of the oriental; and in addition to being taxed to bring them in the planters have voluntarily paid a higher wage to Caucasian laborers.

The effect of this law, if enacted, will be to stop the process of Americanization and to force a considerable part of the white population now in Hawaii to leave the islands. It will result in having whatever is left of our agricultural industries turned over almost

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exclusively to oriental laborers, they being the only form of labor that can compete in free sugar production, even on our best plantations.

The destruction of the larger part of our sugar industry will work direct hardship on our native Hawaiian people. It will take away the employment of native Hawaiians, whose labor as stevedores, boatmen, railway and plantation employees is based directly or chiefly on the sugar industry. It will greatly lessen and in some cases wholly destroy the value of plantation shares held by school-teachers, clerks, mechanics, and all classes of citizens in Hawaii, representing in many cases their entire savings. To every class that goes to make up the citizenship of Hawaii this bill would mean the loss of their means of earning a living for themselves and families.

To our Territorial government it would mean a tremendous shrinkage in tax receipts and would make it necessary to abandon the building of new roads, wharves, bridges, schoolhouses, and other public works that are absolutely vital to the development of those islands.

The Hawaiian Islands were not secured to this country by either purchase or conquest. They became a Territory of the United States by treaty between two independent nations; and it was both represented and understood by all concerned that the welfare of the Hawaiian people would be protected by this Nation.

If Congress were passing a bill to abolish duties in the United States on all commodities, Hawaii could not well protest, even though she would have to bear an undue proportion of the burden of change. But it is a grave question as to whether it will not in effect amount to a breach of good faith on the part of this Government toward a separate people who voluntarily merged their Government in this to bring industrial disaster to that island community by singling out this one great commodity for transfer to the free list while continuing many other staples and many necessities of life on the dutiable list.

I do not question the right of Congress to readjust the fiscal system of the Government. I ask only that in making such readjustment due consideration be given to sources of revenue and to the proper rights and claims of all Territories, States, and dependencies that go to make up the Nation.

Respectfully submitted.

J. K. KALANIANAOLE, Delegate from Hawaii.

BRIEF OF SIDNEY BALLOU, REPRESENTING THE HAWAIIAN SUGAR PLANTERS' ASSOCIATION.

COMMITTEE ON WAYS AND MEANS, Washington, D. C.

GENTLEMEN: On behalf of the Hawaiian Sugar Planters' Association, comprising practically all the plantations in Hawaii, I desire to submit the following statement relative to the present tariff on raw sugar and the effect upon Hawaii of any material reduction therein. I also beg leave to file, for the information of the committee, a more general brief on the subject of the sugar tariff, based wholly upon the extensive hearings held in 1911 and 1912 by the special investigating committee of the House of Representatives, usually referred to as the Hardwick committee.

Hawaii came to the United States neither by conquest nor by purchase. In 1898 the then republic voluntarily ceded its sovereignty to the United States, and in 1900 was organized as a Territory. Hawaii obtained no tariff concession for its sugar by annexation, as its sugar had been admitted free by treaty since 1876 in exchange for the right to use Pearl Harbor as a naval base.

Prior to annexation Hawaii had an abundance of cheap labor from China and Japan. Following annexation its supply of oriental labor was cut off, first by the abolition of contract labor and the application of the Federal Chinese exclusion act, and, later, by the arrangement between the United States and Japan, which prohibited Japanese immigration. Since the latter date there has been a steady decrease in the number of Asiatic laborers employed.

At the same time the permanence of political status assured by annexation and the expressed desire of successive administrations for the development of the Territory along traditional American lines has led to a continuous effort, against adverse conditions, to supplant the decreasing Asiatic laborers with a Caucasian population. Under the law the Hawaiian Sugar Planters' Association is forbidden to assist in this movement, either directly or indirectly. The Territory of Hawaii, however, with funds raised by public taxation by means of a special income tax, is making every effort to attract and assist European laborers of selected agricultural families. At the same time a splendid public-school system, backed by a law providing compulsory