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PARAGRAPHS 216-219-BEET SUGAR.
Not only has the delivered price of beet sugar throughout this great interior district been lower this year than the price of cane sugar at the very doors of the Eastern refineries, but beet sugar has been sold all this season in every State in the Union except six or eight, and in nearly every market it has entered the delivered price of beet sugar has been from 40 to 50 cents per 100 pounds below the delivered price of cane sugar in that same market.
Were there time I could show you that this is no unusual condition. I could show you that a year ago the advent of beet sugar not only checked the arbitrary high price of cane sugar fixed by the very refiners who are here asking for free trade or low duties, but forced these same refiners to drop their prices from 1} to 2 cents per pound throughout the entire United States.
Now, why has this condition prevailed ? Because there are seventy odd beet sugar factories competing with each other in this territory, and there have been only three potent cane refineries competing with themselves on the selling price of cane sugar. There is the reason that the prices of beet sugar during the beet-sugar season in which we are now engaged have been made independent of the price of cane sugar; and the low quotations that I have just given you are brought about by this competition between the beet sugar people themselves. That is what I am getting at, and I bring it out for this purpose, that if you wish to throttle that kind of competition and to turn this market over to the three gentlemen who have come here this morning and asked for a low tariff on sugar, you will introduce into the economic policy of this country the absence of that competition which you are trying to give to the people of the United States in order to regulate the price of foodstuffs. [Applause.)
Now, you have your choice between facing this matter of the price in the hånds of a great number of people who are competing for the market or putting it in the hands of three concerns. There is the whole question in a nutshell. Why! This honorable committee, in the report of the majority members of the committee accompanying their last bill on sugar, said that the cost of sugar in Germany-raw sugar-ranged from 1.96 to 2.07, and that the cost of refined sugar in Germany was 2.41}. The Michigan Sugar Co., of which I have the pleasure of being secretary, I think buys its sugar as cheaply as does any other company, and the Michigan Sugar Co., has paid for the extractable sugar in the beet during the time that it has been in operation $2.62 a hundred before we began the process of manufacture.
Gentlemen, raw material before we touch it in our factories costs us $2.62 per hundred, and the cost of the sugar in Germany-rawready for the refinery, or refined sugar ready for the table, is the price I have indicated, and there is but one thing for us to do if we compete without a tariff with the foreign sugar.
To drive it further home, Cuban sugar is selling to-day in New York for February delivery at 2 cents per pound in bond. You add 1.35 (round numbers), the Cuban tariff on that sugar, and you get 3.41, but leave out the tariff and that Cuban sugar laid down in New York at the present daily quotation costs but $2.06 per hundred pounds. I say that with that cost on foreign sugar we must go out
PARAGRAPHS 216-219_BEET SUGAR.
of business unless something stands between us and that cost of foreign sugar, and when the domestic beet sugar goes out of existence you come to this one thing, that you have removed the only competition that stands between those three men and feeding 90,000,000 people with a necessity of life.
I thank you for your kindness. [Applause.)
The CHAIRMAN. I understand that arrangements were made whereby Mr. Oxnard was to have 20 minutes to yield to farmers this after
Mr. OXNARD. Mr. Chairman, I think we have 30 minutes left on the regular schedule now.
The CHAIRMAN. Let me see. Mr. Oxnard. He only took 10 minutes, the last witness, and we had 40 minutes.
The CHAIRMAN. They started at 2.10, and it is not 3.45.
Mr. OXNARD. Mr. Chairman, there were some questions which were asked.
The CHAIRMAN. I took the time of questioning out of Mr. Lowry's time, as we always do.
Mr. OXNARD. If you take it out of his time, would not you take it out of ours?
The CHAIRMAN. I say I did take it out of his. Most of the time of Mr. Lowry's statement was taken up by questions of Mr. Fordney. I did not take it out of his time, but I mean it was added to his time.
Mr. OXNARD. Mr. Chairman, can not we get two witnesses that will take five minutes ? Then I would like to have three farmers to
The CHAIRMAN. You have consumed, according to my figures, 1 hour and 35 minutes.
Mr. FORDNEY. There are three gentlemen, I understand, here from Colorado who would just like a few minutes; these are the men Mr. Oxnard speaks of. Owing to the fact that they have come so far, we ought to give just a few minutes to them.
The CHAIRMAN. Mr. Oxnard, you have already consumed 1 hour and 35 minutes of your 1 hour and 45 minutes. That leaves but 10 minutes of your original time. I do not like to cut you short, but other gentlemen are waiting here. We have another hearing. I do not want to intrench on them, but how much time do you want?
Mr. OXNARD. Say half an hour.
TESTIMONY OF R. G. WAGNER, PRESIDENT WISCONSIN SUGAR
CO., MILWAUKEE, WIS.
The witness was duly sworn by the chairman.
The CHAIRMAN. Do you want to be stopped at the end of five minutes yielded to you?
Mr. WAGNER. Yes. Mr. Chairman, I represent four beet-sugar companies in the State of Wisconsin that are all separate, independent corporations, and I come here to protest against any reduction in the existing tariff for the following reasons:
PARAGRAPHS 216-219-BEET SUGAR.
We need protection simply because of the higher cost of labor in our country compared with the foreign countries. I have personal knowledge of that because I have personally investigated it. I know that labor in European factories is paid less than one-half of what is paid in our factories, and less than one-third on European farms what we pay on our farms. I know that from actual personal investigation. The profits in our business are now so moderate that the industry can not exist with lower prices. This is the statement that I make, and I make it under oath, and I make it subject to any verification in books or anything that the committee may want to make. I have not time enough to bring figures to prove that.
The first of the four companies in Wisconsin was organized and commenced business in 1901 and the last one in 1906. The four companies represent an investment of $3,000,000. None of them is capitalized for more than the actual investment; in other words, there is no water in the stock of the companies. 'On account of the pioneer work, largely educating farmers to grow beets, none of these companies have paid dividends for the first three or four years, and since that time none of them have paid to average over 7 per cent. This is all subject to verification, gentlemen.
I also, from personal knowledge of the industry in general, know that there was a certain number of failures, that at least 10 cent of the factories that were organized and built in the United States in the past 15 years were failures, and I know that 75 per cent pay not to exceed and earn not to exceed 7 per cent, and that of the remainder only a few would earn more than that or what might be termed excessive profits.
I bring this matter out, gentlemen, to show that there are not excessive profits in the industry, and that the tariff is not making the people interested in this industry unduly wealthy at the expense of the public.
I also want to bring out the fact that we buy a lot of machinery on which there is a duty. We buy a lot of supplies—as, for instance, we buy a lot of cotton and jute--on which there is a duty, and that if the duty should be taken off the sugar or reduced it will necessarily follow that the duty on these other things should be taken off, to put us in the same position as we were before.
From the standpoint of the public the price of sugar in this country to the consumer is lower as compared with the price of sugar in the other countries, and also the price of sugar in this country since the advent of beet sugar 15 years ago has steadily declined. This is evidence that further development of the beet-sugar industry will further reduce the cost of production and will further reduce the price to the consumer. The fact that 10 years ago the cost of producing sugar was just about a half cent on the average higher throughout the United States than it is to-day can be taken as evidence that further development of the industry will improve farm and factory machinery so that eventually the industry can compete with foreign countries without any protection.
As an economic proposition, it has been brought out that heets are a benefit to agriculture in general. It is an undisputed fact in Europe when one asks the question over there whether beets are
PARAGRAPHS 216-219-BEET SUGAR.
good for agriculture, it has been known there so many years, and it is also an established fact in this country where sugar factories have existed for the past 10 years.
It has also been brought out that the production of beet sugar distributes about $75 per ton among the American people, while the refining of imported raw sugar distributes less than $10 a ton. That also should be considered as a question of great economic value.
The effect of the tariff reduction on sugar prices
Mr. WAGNER. Free sugar means the absolute destruction of the beet-sugar industry, and the slightest reduction means to retard development. A lower tariff, therefore, means lower prices for sugar only until the existing beet-sugar industry is destroyed or until further development of the industry ceases. After that decreased production and lack of competition will tend to increase the prices.
At the present time about 80 per cent or $300,000,000 worth of sugar consumed by the people of the United States must pass through the hands of three separate refining interests, namely, the American Sugar Refining Co., the Arbuckles, and the Spreckels. These people have, through the public press and through manufactured petitions, made propaganda for a lower tariff on sugar. Inasmuch as a high or low tariff has but little effect on their business of refining imported sugar, they can only be interested in a lower tariff for the purpose
of destroying the domestic sugar industry, which is now their only competition.
It is an established business proposition that competition between several hundred beet-sugar factories located over an area covering the greater part of the United States will insure the consumer cheaper sugar than compulsory Sherman-law competition between three sugar refining interests located in a limited territory on the seaboard.
Because the American Sugar Refining Co. or Sugar Trust is interested in some of the existing beet-sugar companies these companies, under the influence of the Sugar Trust, may not object to some reduction in the tariff, but their only object can be to prevent further development of the industry in order to prevent further competition.
The Government will lose all the revenue incidental to a reduced tariff, but the consumer will make no corresponding gain, because about 40 per cent of the sugar consumed in this country goes into manufacture of such articles as candy, confections, chewing gum, chewing tobacco, liquors, condensed milk, and others, the retail price of which will not be affected by a decrease in the price of sugar. This 40 per cent which, under only a moderate reduction, amounts to a large sum of money will go to the manufacturers and distributors of the above articles as increased profits.
Summing up, the present tariff of sugar should not be reduced, because it is building up an important and beneficial home agricultural industry of great value; that with further development can eventually compete with foreign countries; because the existing indus
PARAGRAPHS 216–219_BEET SUGAR. try is not making excessive profits; because it is no burden to the people; because it is a large revenue producer for the Government.
It is unfortunate that this question should be a matter of politics and adjusted by men elected to only a two-year tenure of office, who therefore can not have the knowledge or time necessary to investigate and decide such questions on their economic values to the Nation. There can be no question but what an impartial commission of expert economists would not only decide in favor of retaining the present tariff, but probably in favor of increasing it in order to hasten the development of such an important industry as beet-sugar production.
Mr. Wagner also furnished the following brief: To the Ways and Means Committee, House of Representatives:
On behalf of the four beet-sugar companies in Wisconsin, all separate independent corporations, I protest against any reduction in the existing tariff on sugar for the following reasons:
FROM THE STANDPOINT OF THE SUGAR COMPANIES.
The sugar industry needs protection because of higher cost of labor compared with foreign sugar-producing countries. The profits are now so moderate that the home industry can not exist with lower prices. The first of these four companies in Wisconsin was organized and commenced business in 1901 and the last in 1906. They represent an investment of $3,000,000. None of these companies are capitalized for more than the actual investment in the plants. None of tnese companies have paid dividends during the first three years of their existence and none of them have since paid dividends averaging over 7 per cent. This statement is subject to verification at any time by an inspection of the books of the various companies.
Investigation will show that out of all of the beet-sugar companies that organized and built factories during the past 15 years in the United States, over 10 per cent were total failures, that less than 75 per cent of the factories earned and paid not to exceed 7 per cent dividends on the actual money invested and that of the remainder only a few have earned more or what might be termed excessive profits.
Considering the duty on sugar it should be remembered that the investment in American factories is increased through duty on machinery and the operating cost increased through the duties on supplies, notably cotton and jute, aside from the indirect duty on labor through labor organizations.
FROM THE STANDPOINT OF THE PUBLIC.
The price of sugar in this country to the consumer is low compared to the price of sugar in other countries, and the price in this country since the advent of beet sugar, 15 years ago, has steadily declined. This is evidence that further development of the beet-sugar industry will further reduce the cost of production and will further decrease the price to the consumer.
It can also safely be assumed that further development of the industry in the United States will improve farm and factory machinery, so that eventually the industry can compete with the lower cost of labor in foreign countries.
AS AN ECONOMIC PROPOSITION.
Growing sugar heets, a deep-root crop, in rotation with grain, shallow-rooted crops, improves the soil and increases the yields of the grain crops. This is an admitted fact in European countries where sugar beets have been grown for many years, and is also an established fact in this country in localities where beet-sugar factories have been in existence for 10 or more years.
The cost of producing beet sugar, averaging in this country about $75 per ton, are earnings that are widely distributed among a large number of people, and represents a much larger distribution of wealth among American people than the cost of refining imported raw sugar, which amounts to less than $10 a ton.