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PARAGRAPHS 220–222-WRAPPER AND FILLER TOBACCO. Mr. McFarlin. A pound and a half, the same as Sumatra. There is no difference.
Mr. SHACKLEFORD. Is there anything further ?
Mr. McFARLIN. I believe that is all I have to say. To the Committee on Ways and Means, House of Representatives,
Washington, D. C. GENTLEMEN: My name is John L. McFarlin, and I am a grower and packer of leaf tobacco in Quincy, Gadsden County, Fla. I come before your honorable board, representing the growers and packers of tobacco in the State of Florida. They have requested by resolutions that the tariff in Schedule F of the act of 1909 in regard to leaf tobacco remain to read just as it does at present.
There is no question but what those casting votes from our section for the coming administration did so with the understanding that the tariff would be reduced on necessities, and that there would be a tariff for revenue only. On the other hand, I do not hesitate to say that in casting their votes, they did so expecting the luxuries imported to sustain the greater part of said revenue. Therefore, in asking you to leave the tariff in Schedule F in regard to leaf tobacco to read the same as it does to-day, they are not asking for anything more than was set out in your Democratic platform.
In attempting to present arguments in favor of leaving the tariff on leaf tobacco to read just as it does to-day, we take the position
I. That tobacco is a luxury and should be taxed.
II. That there will be no increase in importation from any reduction, and therefore no increase in revenue. (This applies principally to imported Sumatra tobacco.)
III. That neither the consumer nor small manufacturer will be benefited by any reduction, and possibly no one in this country.
IV. That any reduction will be a detriment to the farming industry of the United States.
I will confine my remarks strictly to Sumatra and Cuba tobacco, as these are the countries from which tobacco is largely imported.
Tobacco is a luxury from the simple fact that there is no one but who can do without it. Is there a father who would induce his child to smoke? And further, not 1 per cent of the female population use tobacco. Its use by the majority of people is simply a habit, and there is no doubt that it gives the average person who smokes considerable contentment and satisfaction. Its effect is acknowledged the same as whisky or any other narcotic that tends to soothe the nerves and please the taste.
In further evidence you will find that 90 per cent of the average smokers do not know the kind of wrapper, filler, or binder used in the manufacture of a cigar; and in most cases they are governed in their purchases of cigars entirely by the looks. If blindfolded, no one could tell the color of a wrapper used on a cigar. Therefore the whole idea of a manufacturer in producing a cigar is to please the eye of the average smoker.
We argue, therefore, that if 90 per cent of the cigar smokers do not know the con-, tents of a cigar and the same are sold principally by their looks, and the public demand a certain looking cigar, it certainly is a fad, and I have not the slightest doubt that every smoker in the United States could be satisfied and pleased without the importation of a pound of tobacco, as their taste and ideas would soon become accustomed to the tobacco grown here. You are doubtless aware of the fact that the island of Cuba raises tobacco for Cuban consumers and allows the importation of no tobacco.
II. In our opinion, there will be no increase in the importation of leaf tobacco, and especially of Sumatra tobacco, by a decrease of duty. In such case there certainly will be a loss to the Government in revenue and possibly a benefit to no one except to the growers of tobacco on the island of Sumatra. If you will investigate the conditions of the tobacco industry on the islands of Sumatra and Java you will find that they have organized themselves into a trust, and I do not hesitate to say that it is one of the best organized trusts in the world for the control of their product. Not only can they increase or decrease the production at will, but they can increase or decrease the selling price at will.
From the simple fact that the tobacco grown on the island of Sumatra is sold in a different market from where it is raised, not one pound can be purchased outside of this market. Their tobacco is sold by inscription, which virtually means an auction where no bids are accepted for less than a stipulated sum. With such conditions, you can readily see that it is in the power of this organization to stipulate at
PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO.
their inscriptions any price that it may demand for its tobacco. Should you lower the duty on tobacco, it is possible that this organization will increase the price of tobacco at its inscriptions just enough to take a part or the whole of said reduction. In such case there will be no one benefited in the United States, and those clamoring for a lower duty will not be benefited one iota.
No doubt it will be argued that a reduction of revenue will increase the importation of Sumatra tobacco. If the duty was lowered to such an extent that the inferior grades of Sumatra tobacco could be purchased and sold at a profit in the United States, there might be an increase in importation. However, owing to the kind of goods that are demanded by the manufacturers to-day, the lowering of the duty, in our opinion, will not increase the importation for the reason that there is now a scarcity of tobacco in the market of the United States suitable for their use. There are years when importers find it impossible to obtain a sufficient amount of the right kind of tobacco to supply their trade at prices that will be profitable.
You will no doubt review the importations of tobacco for a number of years. This year there was imported 30,267 bales, and the highest importation since 1903 was 41,044 bales. In our opinion such importations are governed entirely by the condition of the crop. If there is a poor crop, the importations are small; and if there is a good crop, the importations are large. This year, had there been sufficient tobacco suitable to the manufactures of the United States, there would have been a larger number of bales imported. This can be proven from the fact that several thousand bales of Java tobacco was imported to take the place of Sumatra; and Java tobacco is considered inferior to the Sumatra tobacco.
We earnestly request you to make a very careful examination of the conditions under which tobacco is marketed on the island of Sumatra, and should you find that the Dutch syndicate can increase or decrease the price of tobacco at will; and should you find also that there will be no increase in importation, therefore no increase in revenue to the Government, there can be but one loser, and that is revenue to the Government, and possibly a benefit to no one except the growers of tobacco on the island of Sumatra. It is barely possible that any lowering of duty might be divided between the importers of the United States and the growers of tobacco on the island of Sumatra.
Havana tobacco is marketed in a different manner from the Sumatra, and the price is governed the same as in our country by supply and demand. Owing to the peculiar manner in which their tobacco is packed, it is almost impossible to say whether there would be an increase in importation or not. Of course if more wrappers were allowed to come in as fillers, there would naturally be an increase of fillers imported into the United States.
In further explanation, the Government allows 25 pounds of tobacco to make a thousand cigars. If 25 per cent of this 25 pounds is allowed to come in as fillers, the said 25 pounds would contain 67 pounds of wrappers, which is more than enough to wrap a thousand cigars. Therefore, the Government could expect nothing but revenue from fillers from the island of Cuba. Besides, the other countries importing their tobaccos could change their method of packing in such a manner that there would be no wrappers imported into the United States, as each 25 pounds of tobacco would contain sufficient wrappers to cover 1,000 cigars. Therefore, the Government would receive no revenue from wrappers whatever.
We can not understand why, when we have a reciprocity treaty with the island of Cuba, we can not export into their country tobacco at the same duty at which their tobacco is imported into the United States. In Florida we are growing a wrapper tobacco which resembles their Cuban production to such an extent that were we allowed to export into their country at the same duty that they import into ours, we could find a large market.
In presenting to you the argument that neither the consumer nor the small manufacturer will benefited, you will realize from the statements made before that any reduction you make upon the duty on Sumatra tobacco may be divided between the Dutch syndicate and the large manufacturers and importers of the United States. The large combined manufacturers to-day control 75 per cent of the manufactured cigars of the United States, and this clearly shows that if there is any benefit to be derived from reduction, they would be the largest beneficiaries.
It may be argued that the smaller manufacturers will be benefited by the reduction of tariff on Sumatra tobacco. We do not believe this to be true, for it is an established fact that the large buyers of commodities of any kind obtain them at a cheaper price than the small buyers. In such case, the duty being lowered, the large manu
PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO.
facturers would still buy their tobacco at a cheaper price. Besides, running their business on a large scale would naturally cheapen their product. Therefore, the same competition that the small manufacturers have to-day under the present duty, they would have under a lower duty.
It is also our opinion that the lowering of the duty will not in any way benefit the smoker or consumer of cigars. For your information I will state that it takes only 14 pounds of imported Sumatra tobacco to wrap 1,000 cigars. (I shall confine my figures to 5-cent cigars, which greatly outnumber any other cigar manufactured in the United States.) Any decrease in duty on 2 pounds of tobacco, when divided up on 1,000 cigars, would be such a small fraction of a cent that the smoker would have to pay the same price as before. It may be argued that a better class of cigars would be made. To an argument of this kind, there is but one answer, and that is, that the manufacturers do not give anything away. Therefore, if the consumers and small manufacturers do not get the benefit of any reduction, it is but natural to suppose that the largest beneficiary, if any, in the United States would be the large manufacturers and wholesale dealers of cigars.
The various 5-cent cigars are sold by the manufacturers to the wholesale dealers usually at from $25 to $28, and in turn they are sold to the retail dealers at from $32 to $35 per thousand; and the consumers in most cases pay 5 cents each, and sometimes six for 25 cents. Therefore, this goes to show that any reduction in Sumatra tobacco will eventually be divided between the Dutch syndicate on the island of Sumatra and the large manufacturers and importers of the United States.
Any reduction will be a detriment to the tobacco farming industry of the United States. In arguing this point, we desire to call your attention to the fact that we believe to leave the duty as it is to-day would be a benefit to the Government in revenue; and there certainly can be no injury to the importers and manufacturers to leave the duty just as it is at present. Their business has been run for years based upon the tariff as it stands at present. These manufacturers and importers to-day are certainly among the rich class of people of the United States.
On the other hand, you must admit that any reduction in tariff on tobacco will materially change the conditions that surround the growers and farmers of the United States; and for the reason that they have based their investments on the present tariff, and any lowering of said tariff will compel them to reorganize their business to meet the new conditions. They would naturally have to grow tobacco cheaper than they have in the past. They can not change the amount of fertilizer, nor the price of land; and the only possible reduction that they could make in the cost of growing would be to lessen the cost of labor, as it takes only labor, fertilizer, and land to produce tobacco.
Before speaking of the industry in Florida, 'I beg to call your attention to the fact that there have been large investments made in the States of Connecticut, Massachusetts, Texas, Alabama, Georgia, Florida, and Porto Rico for the production of tobacco to compete with the imported article. Such investments were made after the Government itself had their experts make different experiments to improve the quality. They have bred a different kind of seed, and have introduced new means of saving; and to-day the Agricultural Department has on its pay roll a number of men who are still experimenting for the very purpose of producing an article which will eventually take the place of imported tobacco.
These different States above mentioned, and especially Florida and Georgia, have erected over the land what we term artificial shade for the purpose of producing a finer and thinner leaf. It may also be of some interest to you to know the cost of such artificial shade. When equipped with barn room to save the tobacco, the cost is virtually $1,000 per acre. In Florida alone there are 5,000 acres of such artificial skade to-day, and it is struggling for its profitable existence under the present duty; Any lowering of duty, in our opinion, will virtually be the confiscation of said property:
From the best information that I can obtain, there is about 15,000 acres of such artificial shade in the different States I have mentioned, which investment alone would amount to $15,000,000. Such investment does not include the land and equipments necessary for the producing of the tobacco nor the houses needed for taking care of the necessary labor.
The cost of producing tobacco under these artificial shades, taking into consideration that the shade, when built of wood, lasts only about 4 years, and not this long unless repaired every year, and when built of cloth it has to be renewed every year, from the
PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO.
best calculations that I have been able to make, is about 50 cents per pound in Florida. I have no doubt that this cost is exceeded in other States where the labor is higher.
The finer grades of tobacco grown under this artificial shade are being sold in the markets for $1.75 per pound, but there is only about 20 per cent of such tobacco. The lower grades are marketed at from 8 cents to $1; and it depends entirely upon the percentage of these lower grades whether the crop can be profitably grown or not. The cost of packing such artificial shade is about 15 cents per pound, and the shrinkage is about 20 per cent. By making these calculations you will find that the field cost of 50 cents added to the 15 cents for packing and to the loss from shrinkage of 20 per cent, which amounts to 124 cents, will run the average cost of Florida tobacco packed in bales to virtually 774 cents per pound.
I make this statement for the reason that the Department of Agriculture in their statistics have stated the farm value of Florida and Georgia tobacco for the year 1912 to be 30 cents and Connecticut 24 cents. In making these statistics the Govern. ment evidently calculated the number of pounds of tobacco that were grown of all classes, which included the tobacco grown in the open for fillers and which sells in the market at from 15 cents to 18 cents. As there was grown about an equal acreage of the two classes of tobacco, the average would possibly be from 30 cents to 32 cents. Therefore, no doubt their figures when taken as an entire amount are correct. However, you will find upon investigation that the tobacco which is being grown to compete with the Sumatra tobacco costs, when all repairs and deteriorations are considered, at least 50 cents per pound.
This artificial shade is not the only investment that would be injured materially by the reduction of tariff on tobacco; for there are thousands and thousands of acres of tobacco grown in the United States in the open, which is being improved by experiments; and such experiments are made principally to produce a tobacco that will take the place of the imported. If such investments are compelled to compete with the cheaper labor on the island of Sumatra, and not only cheaper labor, but virtually slave labor, they will find that their profits will be nil, and many will be compelled to cease the growing of this commodity.
In conclusion we trust that you will weigh carefully the matter of any reduction in the tariff on tobacco; and upon investigation, if you find that the principal beneficiaries of such a reduction will be the large manufacturers and importers of the United States and the Dutch syndicate on the island of Sumatra, we pray your honorable board to recommend that the tariff in Schedule F, in regard to leaf tobacco, remain as it is at present, remembering that the source of all revenue of the world is principally through the efforts of the farming industry.
I thank you, gentlemen, for your attention.
TESTIMONY OF J. W. ALSOP, REPRESENTING THE NEW ENGLAND
TOBACCO GROWERS' ASSOCIATION.
Mr. Alsop was sworn by Mr. Shackleford.
Mr. Alsop. Mr. Chairman, I represent the New England Tobacco Growers' Association, and I simply wish to file their brief here to-day. This brief also contains resolutions passed by the Connecticut Leaf Tobacco Board of Trade. The resolutions of the New England Tobacco Growers' Association were passed at their recent meeting, and there accompanies it nearly 500 signatures of growers who met at this annual meeting in this one hall and signed their names to this petition. They represent some 10,000 acres of tobacco, or very nearly so. The brief which I wish to file also contains a petition from the Jewish Farm Association.
As the arguments which we wish to present are exactly the same for all the Connecticut interests, I would like to give way to Mr. Floyd, who is to be heard on this matter and who represents the Connecticut Leaf Tobacco Association.
PARAGRAPHS 220–222_WRAPPER AND FILLER TOBACCO. RESOLUTIONS AND BRIEF OF THE NEW ENGLAND TOBACCO GROWERS' ASSOCIATION,
THE CONNECTICUT LEAF TOBACCO ASSOCIATION, AND THE CONNECTICUT JEWISH FARM AssociATION, RELATIVE TO PROPOSED CHANGES IN THE CUSTOMS DUTIES, AS PROVIDED IN SCHEDULE F, PARAGRAPHS 220 AND 221, OF THE ACT OF CONGRESS APPROVED AUGUST 5, 1909.
New ENGLAND TOBACCO GROWERS' ASSOCIATION,
East HARTFORD, Conn., January 11, 1913. The following resolutions were adopted at the annual meeting of this association, held at Unity Hall, Hartford, Conn., January 10, 1913:
Resolved, That we, the growers of tobacco in New England, here assembled in our annual meeting, representing the agricultural crop of New England, which as a money crop ranks first in value for this section of the United States, makes use of more than 20,000 acres of land of great value, but valuable only for this one purpose, engaged in by between four and five thousand farmers, who give employment to many thousands more of men and women, at wages of from $1,50 to $3 per diem, and who have invested in this industry more than $20,000,000, do earnestly protest against any reduction of the present rate of duty of $1.85 per pound on wrapper tobacco.
Resolved, That Mr. J. W. Alsop of Avon, Conn., Mr. C. M. Hubbard of Sunderland, Mass., Mr. M. L. Floyd of Tariffville, Conn., Mr. Nathaniel Jones of South Windsor, Conn., Mr. Geo. Mitchelson of Bloomfield, Conn., Mr. Edmund Halladay of Suffield, Conn., and Mr. T. J. Kearney of Windsor, Conn., are hereby appointed as delegates to represent us before the Committee on Ways and Means at Washington, D. C., and that they are instructed to use every honorable means in their power to defeat any reduction of the present rate of duty.
Resolved, That we petition our Senators and Representatives in the Congress to use every effort to protect our interests in this respect and that a copy of these resolutions be forwarded to them. Attest:
W. K. ACKLEY, Secretary New England Tobacco Growers' Association. The above is a true copy of the original resolutions passed at the annual meeting of this association, held January 10, 1913, at Unity Hall, Hartford, Conn.
W. K. ACKLEY, Secretary. We, the undersigned members of the New England Tobacco Growers' Association, in convention assembled, do hereby individually indorse and ratify the action of our association, taken this the 10th day of January, A. D. 1913, relative to the customs duty on cigar leaf wrapper tobacco, and do hereby subscribe our names and append our addresses, together with the number of acres of tobacco represented by us at this convention.'
(Signed by 500 tobacco growers.)
CONNECTICUT JEWISH FARMERS' ASSOCIATION.
We, the undersigned members of the above organization (whose membership is 45), in a meeting holden for the especial purpose, have
Resolved, That we agree with the New England Tobacco Growers' Association in protesting against any reduction in the tariff on wrapper leaf tobacco; and it is further
Resolved, That this resolution be presented to the New England Tobacco Growers' Association, to be filed with their regular protest against tariff revision on tobacco.
Harry M. Kamp (chairman), Joseph Bermant, Abraham Rosenberg, Isaac
S. Levine, s. Zipkin, Ch. Levine (secretary), S. Samuel Compaine,
THE CONNECTICUT LEAF TOBACCO ASSOCIATION.
HARTFORD, Conn., January 13, 1919. I hereby certify that the following is a true copy of a resolution adopted at a meeting of the Connecticut Leaf Tobacco Association, held at the Allyn Îlouse, Hartford, Conn., December 19, 1912.