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SCHEDULE F.-TOBACCO, AND MANUFAC

TURES OF.

COMMITTEE ON WAYS AND MEANS,

HOUSE OF REPRESENTATIVES,

Friday, January 17, 1913. The committee met at 10 o'clock a. m., Hon. Oscar W. Underwood (chairman) presiding.

Present: Messrs. Harrison, Brantley, Shackleford, Kitchin, Rainey, Dixon, Hull, Hammond, Peters, Palmer, Ansberry, Payne, Dalzeil, Hill, Needham, Fordney, and Longworth.

The CHAIRMAN. The committee will come to order.

Gentlemen, we have two schedules set down for to-day-the tobacco schedule being the first one. We have not assigned any particular time to the witnesses on our calendar, and can go through the list of names as they come, if desired, or might have some agreement as to dividing up the time. PARAGRAPH 220.

Wrapper tobacco, and filler tobacco when mixed or packed with more than fifteen per centum of wrapper tobacco, and all leaf tobacco the product of two or more countries or dependencies when mixed or packed together, if unstemmed, one dollar and eighty-five cents per pound; if stemmed, two dollars and fifty cents per pound; filler tobacco not specially provided for in this section, if unstemmed, thirty-five cents per pound; if stemmed, fifty cents per

pound. PARAGRAPH 221.

The term wrapper tobacco as used in this section means that quality of leaf tobacco which is suitable for cigar wrappers, and the term filler tobacco means all other leaf tobacco. Collectors of customs shall not permit entry to be made, except under regulations to be prescribed by the Secretary of the Treasury, of any leaf tobacco, unless the invoices of the same shall specify in detail the character of such tobacco, whether wrapper or filler, its origin and quality. In the examination for classification of any imported leaf tobacco, at least one bale, box, or package in every ten, and at least one in every invoice, shall be examined by the appraiser or person authorized by law to make such examination, and at least ten hands shall be examined in each examined bale,

box, or package. PARAGRAPH 222.

All other tobacco, manufactured or unmanufactured, not specially provided for in this section, and scrap tobacco, fifty-five cents per pound.

WRAPPER AND FILLER TOBACCO.

TESTIMONY OF HON. S. M. SPARKMAN, OF FLORIDA.

Representative SPARKMAN. Mr. Chairman, I am here to present several gentlemen who have been commissioned to represent the Florida clear Havana manufacturing establishments, most of which are located in Tampa and Key West. As I can remain only a few PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO. minutes, I merely wish to say to the chairman and to the committee that these gentlemen will not require a great deal of time unless the questions propounded should take quite a wide range. They will be brief in their statements, perhaps not taking in all more than 10 minutes. They may, however, wish a little more time. If so, I trust it may be given.

As I understand the arrangements, Mr. Edgar J. Stachelberg will represent the Tampa and Key West manufacturers, perhaps the State of Florida, in the few words he will have to say. I should like to remain myself during the entire hearing, but am compelled to be in attendance at the House to-day, at least a part of the time, and I do not know just how soon I may have to go there. I know, of course, that we are here primarily for the purpose of raising revenue, and the tobacco and cigar schedule produce a great deal of that. The gentlemen of the committee know about how much the income from that source has been and how much it is now. Some two or three years ago, as I recall, it was about $25,000,000, and I fancy it has not fallen off any since, so that it may readily be seen that the Government is dependent quite largely upon that schedule for much of the revenue that goes to support the Government. Incidentally, of course, there is some protection afforded to these industries, both the cigar and the tobacco industry. Indeed, the clear Havana cigar industry in Florida has been built up largely, perhaps almost exclusively, by the tariff laws, as but for the protection thus afforded it could not easily exist in this country. When I say easily I mean it might exist but could not prosper in my city or anywhere else in the United States. As it is, a very great industry has been built up in Florida. We produce in that State more clear Havana cigars than are made anywhere else in the world.

In fact there are more of that class of cigars made in the city of Tampa, in which I live, than anywhere else, either in or out of the United States. In the cities of Tampa and Key West we produce something like 300,000,000 clear Havana cigars each year, perhaps 350,000,000, so you may see at a glance that it is a very important industry. It gives employment to at least 20,000 people, and it is safe to say that one-third to one-half more are dependent upon that industry for support. In addition to this perhaps fully one-third of the people of the State are directly or indirectly benefited. The city of Tampa alone by reason of this industry has increased very largely in population, adding much to the consumption of farm and other products within range of 100 miles or more of that city. Vegetables, , oranges, cattle, and poultry are increased in price by reason of the demand in that one city. So that the committee may readily see that the farming industry of Florida, or at least the southern portion, is very much interested in the maintenance of the clear Havana business in our State. In the matter of revenue I would say that cigars and tobacco alone coming into Tampa add quite a considerable sum to the revenues of the Government. The customs duties and internal revenue taxes, as I recall, amount to something like $2,700,000.

The gentlemen who are here representing that industry in the State will have soine suggestions to make to the committee. In the main they wish the law to remain as it is, but they also desire some changes,

PARAGRAPHS 220–222_WRAPPER AND FILLER TOBACCO. not so much for the purpose of increasing the duty, but for the purpose of removing some hardships which they think they should not continue to bear, the elimination of which will not materially if at all curtail the revenues of the Government. They, for instance, would like to have the 15 per cent clause as it applies to wrapper tobacco changed so as to read, “25 per cent" instead of “15.” They would also ask to have the clause in the old law, “suitable for wrapper, changed so as to read “what is commercially known as wrapper, or words to that effect. Perhaps one or two other slight changes will be suggested, together with the reasons therefor. While, as I stated at the outset, they will not take up much of the time of the committee in presenting their views and wishes, yet they are deeply in earnest in making the suggestions they propose to make and will be very glad to answer any questions that may be propounded to them.

Mr. Chairman and gentlemen of the committee, I thank you for permitting me to say these few words, and I bespeak for the gentlemen who are here representing the clear Havana cigar industries that careful and patient hearing you always accord parties appearing before you in behalf of the great and important industries of the country.

The CHAIRMAN. I would like to divide the time. I want to finish this hearing if possible before we adjourn for lunch, so as to give witnesses on the other schedule—Schedule M-a chance to be heard. I do not know exactly how to divide the time on the tobacco schedule, as there are probably a number of conflicting interests represented by the names appearing on the calendar, so I now suggest that the committee allow each witness 10 minutes.

Representative SPARKMAN. May I ask how much time the clear Havana cigar people will have in all?

The CHAIRMAN. I do not know how many witnesses they have. We have 14 witnesses on the calendar under the tobacco schedule, and 10 minutes might be given to each, and the time taken up by members of the committee in cross-examination not to be taken out of that time.

Representative SPARKMAN. That will be ample for the clear Havana cigar industry.

John H. Buck. Before the committee begins, if I may be permitted, I would like to make an inquiry: Will those persons who represent the paper schedule but do not desire to make any argument other than to name the paragraphs they refer to be permitted to file their briefs now rather than wait until this afternoon or to-morrow?

The CHAIRMAN. Yes; any gentleman appearing on behalf of either of the schedules on to-day's calendar and who does not desire to make an argument in person may turn over to the clerk of the committee his brief and it will be printed in the proper place. Such persons may come forward now and file their briefs with the clerk if they do not wish to remain for the hearing.

Mr. Buck. So I can go ahead now?

The CHAIRMAN. No; the tobacco schedule comes up now, and we must hear those gentlemen first, and if anyone on the paper schedule wishes to submit any remarks he must wait until his schedule is reached.

PARAGRAPHS 220–222—WRAPPER AND FILLER TOBACCO.

Mr. Buck. All right. My brief sets forth the schedules as to which I appear, and I will just file the brief with the clerk at this time.

Representative SPARKMAN. Mr. Chairman, you asked if anyone else desired to file a brief?

The CHAIRMAN. Yes.

Representative SPARKMAN. Mr. Edgar J. Stachelberg, who will represent the clear Havana cigar industry of Florida, will file a brief, but he also wishes to make a statement to the committee.

The CHAIRMAN. Very well; he may do so just as soon as we reach him on the calendar. I am now speaking about those gentlemen who wish to file briefs and get away without submitting any oral statement.

Now, gentlemen, without objection we will allot to each witness 10 minutes to speak to the tobacco schedule. [No objection was heard.)

TESTIMONY OF JOHN R. YOUNG, REPRESENTING THE PHILA.

DELPHIA LEAF TOBACCO BOARD OF TRADE.

Mr. Young. Mr. Chairman and gentlemen of the Ways and Means Committee, the tariff relating to tobacco is contained in Schedule F of the act of 1909, beginning with paragraph 220 and running through 224. That portion of the act which I propose to consider is as follows:

Wrapper tobacco, and filler tobacco when mixed or packed with more than fifteen per centum of wrapper tobacco and all leaf tobacco, the product of two or more countries or dependencies when mixed or packed together, if unstemmed, $1.85 per pound.

And also that portion of the administrative section of the act read. ing:

When duties are based upon the weight of merchandise deposited in any public or private bonded warehouse, said duties shall be levied and collected upon the weight of such merchandise at the time of its entry.

First I ask your consideration of rate of duty on wrapper tobacco, but before doing so desire to say that I have the honor to represent the Philadelphia Leaf Tobacco Board of Trade, of Philadelphia, and a large number of the cigar manufacturers of the great State of Pennsylvania, but my appeal is made not as a paid attorney, nor in the interest of any man, class, section, or special interest, but as a plain merchant engaged in the tobacco business for over 40 years, whose only motive is the betterment of existing conditions and what I consider the best interests of the entire industry and the greatest good for the greater number engaged in that industry.

Prior to 1883 the great States of Connecticut, Massachusetts, New York, Ohio, Pennsylvania, and Wisconsin were growing tobacco, a large percentage of which was suitable for and accepted by the cigar manufacturers as wrapper tobacco, and the tobacco schedule of the act of 1883 was enacted entirely in the interest of the growers of all these States, they claiming protection against the foreign wrapper then being imported into the United States. Between 1883 and 1890, in spite of the then seeming high rate, which was a maximum duty of 75 cents per pound, the imports of Sumatra tobacco largely in

PARAGRAPHS 220–222-WRAPPER AND FILLER TOBACCO.

creased because it had become an actual necessity in the manufacture of cigars and, owing to the largely increased importations, the McKinley bill was passed, increasing the rate to $2 per pound. The Wilson bill reduced this rate to $1.50, but it was again advanced to $1.85 by the Dingley bill, and in the administrative section provided that the duty should be assessed on the weight at time of arrival instead of at time of withdrawal.

The expected benefits to those who advocated the high rate in 1883, 1890, and 1897 were not realized, the proof of this being found in a comparison of the prices obtained by the growers in 1883, in 1893 (two years after the passage of the McKinley bill), and in 1912. I have been unable to secure from the Bureau of Statistics prices obtained by the farmers prior to 1893, but it is a well-known fact in the trade that in the years 1879–1882 the farmers of Pennsylvania, Wisconsin, Connecticut, and Massachusetts received high prices for their product because of the large proportion of wrappers produced in these States and accepted by the manufacturers as the only wrapper tobacco obtainable.

The farm value of tobacco crop per pound December 1, 1893, with the McKinley bill in force was:

Cents.
Massachusetts

16
Connecticut..

14 New York

15 Pennsylvania

131 Ohio

61 Wisconsin

61 These, as compared with the prices in 1879-1882, show a very large decrease th all States excepting Massachusetts and Connecticut, they being the only States benefited by the increased duty, but at the expense of the growers in all of the other tobacco-growing States. In December, 1900, the values were:

Massachusetts, 15 cents; 1 cent less than in 1893.
Connecticut, 15 cents; 1 cent more than in 1893.
New York, 8 cents; 7 cents less than in 1893.
Pennsylvania, 6 cents; 74 cents less than in 1893.
Ohio, 7 cents; } cent more than in 1893.
Wisconsin, 7 cents; } cent more than in 1893.
In 1912 the prices obtained in these same States were as follows:
Massachusetts, 23.9; gain of nearly 8 cents per pound over 1893.
Connecticut, 24.1; gain of over 10 cents per pound over 1893.
New York, 12.6; loss of 24 cents per pound from 1893.
Pennsylvania, 8.5; loss of 5 cents per pound from 1893.
Ohio, 9.1; gain of 24 cents per pound over 1893.
Wisconsin, 11; gain of 4; cents per pound over 1893.

In explanation of these figures and comparisons, the facts are that the increase in value in Ohio is due alone to the fact of the increased demand for that State's product for filler purposes and that of Wisconsin because of the excellent crop and an increased demand for binders at present, owing to the poor crops from that State during the previous five years; hence these are both increases in value from natural causes, and the plain fact remains that the only States in the

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