PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO. TESTIMONY OF S. A. WOODARD, WILSON, N. C. Mr. Woodard was sworn by the chairman. Mr. WOODARD. Mr. Chairman and gentlemen of the committee, this is the first time in my experience that I have ever had to swear to a speech. I have been in the habit of having considerable latitude when I do speak, and I will have to restrict myself, I guess. I represent the eastern North Carolina tobacco growers, who grow almost exclusively what we call bright or cigarette tobacco. This tobacco is used in the manufacture of cigarettes, and about 50 per cent of it is used in the manufacture of smoking tobacco. It is largely shipped to England. Because of the competition here the price is so cheap that we are unable to sell our product in this country. Now, I believe I am the last official speaker on the program, and I have not heard one word up to this time as to the schedule on Turkish tobacco. That is a tobacco that comes directly into competition with our tobacco. In the Payne-Aldrich Tariff Act, in schedule "F," it is put in as a joker, because it says there, "all other tobaccos, including filler tobacco, 35 cents unstemmed and 50 cents stemmed." Now, that 50 cents, so far as Turkish tobacco is concerned, does not mean anything at all, because no Turkish tobacco needs to be stemmed in order to be manufactured. Then it says on scrap tobacco 55 cents. We do not understand why it should be that Turkish tobacco should only bear a tariff of 35 cents and ordinary scrap tobacco, which is the cheapest form of tobacco produced here, should bear a tariff of 55 cents of the American Tobacco Co. and its allied-I suppose you would call them-distributors; I believe that is the expression the Supreme Court has applied. They have agents over there who live there all the time and loan money to the farmers of Turkey without interest, not a cent of interest, in order to encourage and increase the production of this tobacco, and the result is that in 1910 there was 9,250,000 pounds sent to this country, in 1911, 13,600,000; in 1912, 22,601,000; an increase in two years of from a little over 9,000,000 to 22,000,000 pounds, directly coming into competition with our tobacco, and will, in the course of time, seriously injure and cripple this industry in North and South Carolina and in Virginia. And we raise down in those three States about one-third of the entire tobacco raised in the United States. Now, this Turkish tobacco is blended with ours, and it is a fact our tobacco is as good as that, but it is a fact-you know that anything foreign has a glamour about it and they use that in getting up their packages. They have a mosque on it, or a picture of Hassan, an officer, an Egyptian temple, the pyramids, or some other glamour in order to get our people to use that tobacco. Right here in the center of the Capital we have a tremendous sign, "Fatima cigarettes." The Turks may lose their capital of Adrianople, but Turkish cigarettes are liable to take the Capital of the United States. Now we ask that this be increased, this 75 per cent revenue duty on cigarettes, to a figure in keeping or in proportion to the value of the duty that is imposed on cigars. Cigars are worth 5 or 10 cents apiece, but cigarettes are worth about half a cent apiece, about one-tenth of what cigars are. I believe this is the first time PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO. we have ever troubled you about the matter, but we feel seriously about it. We feel that there ought to be some legislation in order to force the tariff higher, in order that the cigarettes should be sold for more money, so that our domestic cigarettes could be sold to the average man at more cost. They are blending these cigarettes now so much that you can buy them sometimes as cheap as domestic cigarettes. Also, the Turkish tobacco does not have to be stemmed, and our tobacco does have to be stemmed in order to be manufactured into cigarettes, and we lose about 25 per cent in stemming. So they have at the start an advantage of 25 per cent, because, as I say, the Turkish tobacco is manufactured unstemmed. Now, we have to send 75 per cent of our tobacco to England, where the tariff on stemmed tobacco is 86 cents per pound, and unstemmed 88. That is the first time in my knowledge that England in her tariff laws has ever had any protection against its laboring people. Mr. HARRISON. I understood you to say you sell about 75 per cent of your tobacco in England? Mr. WOODARD. Yes. Mr. HARRISON. If you can sell 75 per cent of the output over there in competition with Turkish tobacco, why do you need protection against Turkish tobacco here? Mr. WOODARD. Because it is a tax on the rich. Because the Turk ish tobacco costs more money. It is valued at the customhouse at 50 cents per pound and the tariff is 35 cents per pound, which makes the whole thing 85 cents per pound. Our tobacco in England sells for 20 cents a pound less than Turkish tobacco, and in that way we can compete with them. Mr. HARRISON. If it does not compete in England, why does it compete here? Mr. WOODARD. Because those people have such a tremendous tax to pay, 86 cents per pound on the raw material, and in this country they can get tobacco 20 cents per pound cheaper than they can get Turkish tobacco, and that is quite an object to them. They are burdened with very large taxes anyway to start with, and if they can save 20 cents a pound they are going to do it. That is the difference. Now, as to the increase in the production of this Turkish tobacco, it is bound to increase greatly when the allies go to Turkey and lend the farmers money to produce this tobacco and not charge them a cent of interest on it. Mr. PAYNE. I do not understand about the joker in the bill four years ago. Mr. WOODARD. It is a joker because it says "all other," "all filler tobacco." Mr. PAYNE. I have been reading over the language of it, and it seems to be perfectly plain. It has been in the law ever since the Wilson Bill at least, and nobody ever discovered the joker before. Now we had a proposition four years ago to put a special duty on Turkish tobacco, what you are talking about now, but the difficulty was it was putting a duty on the production of a single country, and that we could not do. PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO. Mr. WOODARD. They do not allow our tobacco to be brought into Turkey at all. It is absolutely prohibited. Mr. PAYNE. As I understand it you are appealing for protection, you are not appealing for greater income for the United States? Mr. WOODARD. I think, if you please, that luxuries ought to be taxed. Mr. PAYNE. It is producing a pretty big income now, is it? Under the present law the importation is growing very largely? Mr. WOODARD. Yes; because these allies go over there and stimulate the production. Mr. PAYNE. There was some evidence before the committee that this was the poor man's smoking tobacco, and we had always looked after the poor man when we had an opportunity. Mr. WOODARD. Yes; always remember the poor-we are here to-day. Mr. PAYNE. You are still raising a good deal of tobacco in North Carolina? Mr. WOODARD. Yes, sir. Mr. PAYNE. You are a North Carolina protectionist, I understand. Mr. WOODARD. I would hardly say that. Mr. PAYNE. On tobacco? Mr. WOODARD. I do not-no, sir; we raise a good deal more cotton than we do tobacco, and I think when the cotton schedule comes up we will not bother this committee very much. Mr. PAYNE. You want to be remembered on cotton, tobacco, and lumber, don't you? Mr. WOODARD. No, sir; we won't open our mouths on cotton. Mr. WOODARD. We have some lumber down there. Mr. PAYNE. But you want to take tariff off of lumber, don't you, because that is in the Democratic platform? Mr. WOODARD. There are a great many platforms. You asked one of the others to look over that way, but I do not know which way to look. Mr. PAYNE. You are for a duty on tobacco, but for free lumber? Mr. WOODARD. No, sir; I am not. Mr. LONGWORTH. But the Democratic platform provides for free lumber. Mr. WOODARD. I do not believe so. I think you had better read it. Mr. LONGWORTH. I have read it. Mr. WOODARD. You have read it wrong, then. Mr. LONGWORTH. Ask any member of the committee what it says. Mr. WOODARD. I believe the committee will say the Democratic platform does not say anything of the kind. Is that true, Mr. Underwood? The CHAIRMAN. The committee is not testifying. Mr. HILL. I would like some information without reference to politics. What duty is the Turkish tobacco paying now? Mr. STODDARD. Thirty-five cents a pound. Mr. HILL. Under the first clause of the act? Mr. STODDARD. Under Schedule F. Mr. HILL. The first clause of the schedule. Under paragraph 225 it is 55 cents. PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO. Mr. WOODARD. No, sir; that is scrap tobacco. Mr. HILL. Cuban tobacco pays 25 cents? Mr. WOODARD. That is under the reciprocity treaty, and then they have an ad valorem tax of 20 cents a pound in addition. Mr. HILL. Cigarette tobacco from Turkey is then really 7 cents a pound more than ordinary filler tobacco under the clause in which it comes. Now, how can this committee or Congress divide or separate Turkish tobacco from any other filler tobacco? They can not do it, except by putting a duty on all filler tobacco at the same rate you are asking for Turkish tobacco. Mr. WOODARD. As I understand it, filler tobacco from Cuba is under a special treaty. Now, we have no treaty with Turkey, because they will not permit us to bring our tobacco in at all, and, as I understand, the Cuban treaty is so many cents a pound specific and then 20 cents ad valorem additional. Mr. HILL. The 20 per cent is deducted instead of added. It makes it 28 cents. Now, on the question of revenue, on which you and I heartily agree in this schedule, that tobacco now comes in at 35 cents per pound and is used for making Turkish cigarettes. We get $1.25 on that in internal-revenue tax, but if the cigarette itself comes in and the making of the Turkish cigarette is over in this country, we would get three or four dollars revenue. Mr. WOODARD. It does not come in; not 3 per cent. But I can answer your question in this way: If it would be impossible to use the word "filler" without affecting some other country, you could use the words "when more than 10 per cent is mixed in this country." Mr. HILL. That follows it into use, and that could not very well be done. You could not say "especially suitable for cigarettes," because of any particular suitability. I see what you are trying to do, and I am in favor of doing it, but the difficulty is how to do it. Mr. WOODARD. Well, now, gentlemen, that is up to you. Mr. PAYNE. You will have to negotiate a treaty with Turkey on your own hook, and if I have any influence with the next administration, I will do what I can to help you. Mr. WOODARD. I do not think it requires any treaty to get a tariff negotiated or a duty imposed. Mr. PAYNE. I do not see how you can do it without getting the consent of Turkey. Mr. WOODARD. They have consented to this 35 cents, and why couldn't they consent to more? Mr. PAYNE. That was in the tariff law. Mr. WOODARD. I do not think it is fair to tax a domestic cigarette at $1.25 a thousand and a Turkish cigarette at the same price, because the Turkish cigarette is a higher-priced article. Mr. PAYNE. I think the Turkish tobacco could stand it, but I do not see how you are going to get at it. Mr. WOODARD. How about the revenue act? in there? Couldn't you put it Mr. PAYNE. It would not do any good. If we admit tobacco from all other countries at 35 cents, the Turkish Government would immediately go to the revenue officers and get it down to 35 cents. PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO. Mr. WOODARD. Well, this is like the operation that was successful, but the patient died. I am the patient wanting to have something done. Mr. PAYNE. I wanted to do it four years ago. Mr. FORDNEY. The tobacco industry has prospered under the Payne tariff law, has it? Mr. WOODARD. Yes, sir. Mr. FORDNEY. Then, your statement about the patient dying does not apply. Mr. LONGWORTH. Are the Turkish cigarettes in this country generally made from pure Turkish tobacco? Mr. WOODARD. Very few; most of them are blended. Mr. LONGWORTH. Nearly all of them are made with North Carolina tobacco? Mr. WOODARD. Yes; you will notice that the advertisement says "pure Turkish Fatima blend." That means 30 or 40 per cent of foreign and 60 per cent of domestic tobacco; something like that. Mr. LONGWORTH. You are an expert on this subject, are you not? Mr. WOODARD. No, sir; I am not. you not? Mr. LONGWORTH. You make tobacco for cigarettes, do Mr. WOODARD. Yes; almost exclusively. Mr. LONGWORTH. Do you believe in the present policy of allowing cigarette manufacturers to put coupons in their packages? Mr. WOODARD. I think it should be absolutely prohibited. I think it is a menace to all of the small people. This gives the large manufacturers an opportunity to make a different size for everyone and to strike out competition. It is impossible for you to go into my town, for instance, and tell what you can buy cigarettes for at wholesale. They change the price every day. Mr. LONGWORTH. You were speaking of these Fatima cigarettes. Isn't it true that you will buy a package of those in one place, in one section of the country, and find two or three coupons in it, and you may buy the same package in another part of the country and find no coupons in it? Mr. WOODARD. Yes, sir. Mr. LONGWORTH. Now, they put those coupons into the section of the country where competition is strong, do they not? Mr. WOODARD. Yes; and when competition is driven out they take out the coupons. Then they put in college pennants and prizes of various kinds. There is no uniform price, and there is absolutely death and destruction to the small manufacturer. Mr. HARRISON. Mr. Woodard, are you in favor of Congress imposing an internal-revenue tax upon these coupons? Mr. WOODARD. I should be in favor of taking them out altogether, sir, and making a uniform price throughout the country, so that you shall sell cigarettes for $4 a thousand at the factory, and that you shall add the freight to that, and that they should be sold, every pound, at exactly the same price. There is a ques Mr. HARRISON. Well, one moment, Mr. Woodard. tion in the minds of some of the committee as to whether Congress has the constitutional authority to do that; but there can be no |