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PARAGRAPHS 220_222—WRAPPER AND FILLER TOBACCO.
appeal to you for support before the Committee on Ways and Means at the hearing to take place on January 17, 1913. Very respectfully,
THE SEED LEAF TOBACCO BOARD OF TRADE.
Whereas Schedule F of the tariff act of 1909 provides for a duty of $1.85 per
pound on wrapper tobacco imported into the United States; and Whereas this rate of duty is not only an exorbitant one, but is oppressive to
more than 90 per cent of those engaged in the growing, packing, and selling of cigar leaf tobacco and to all those engaged in the manufacturing of cigars in the United States : Therefore be it
Resolved, That the Cincinnati Leaf Tobacco Board of Trade respectfully ask that the Ways and Means Committee of the House of Representatives recommend to the Congress of the United States a reduction in the rate of duty on imported wrapper tobacco to $1 or less; and be it further
Resolved, That your honorable committee also recommend that the assess. ment of duties, where such duties are assessed on the weight of merchandise, shall be assessed on the weight of such merchandise at the time of its withdrawal for consumption.
The cigar industry of the United States centered in two general divisions a small number of large capitalistic manufacturers built up largely by merger; the other division (about 90 per cent), individual and partnership manufacturers employing from one cigar maker and up.
For years, ever since the enactment of the $2 and then the $1.85 duty on imported wrappers, the condition of and number of small manufacturers has steadily decreased.
Whilst America produces ample cigar leaf tobacco for binder and filler purposes, it does not produce, with the exception of a small per cent of Connecticut broad leaf, a desirable wrapper leaf.
Sumatra-grown tobacco is recognized all over the civilized world as the standard cigar wrapper, so much so that it has brought about results as follows:
The capitalistic manufacturers, by reason of their resources and large output, very largely use the Sumatra wrapper on 5-cent cigars, and the great bulk of cigars are what are commonly known as nickel or 5-cent cigars. They would naturally be averse to a decrease in duty, as it would stimulate competition from the much larger number of smaller manufacturers.
The extreme high protective tariff on imported wrappers of $1.85 per pound has stimulated growers in Connecticut, Georgia, and Florida to produce an imitation of the Sumatra wrapper as a substitute. However, if the duty were a just and reasonable one, there is not one manufacturer, from the smallest to the largest one, who would not prefer to use the imported article. This long. existing state of affairs has steadily militated against the smaller manufacturers, so much so that their number is decreasing from year to year, and the business of those that remain shows a steady decrease in the number of employees, and this condition has become a crying evil in the industry.
If any leaf tobacco can be considered a luxury it is Cuban-grown tobacco, of which over 98 per cent imported into this country is used as filler tobacco, and its use as such is no hardship to those who can pay the price.
A uniform duty of 50 cents per pound on all foreign leaf tobacco has long been held by those engaged in the cigar industry as just, equitable, and most advantageous to the Government from an income-bearing standpoint.
Feeling that our trade is entitled to long-deferred justice we also recognize that a tariff for revenue only must pay the necessary expenses of the Government, and therefore we ask that the tax on imported wrapper leaf be $1 or less per pound, which would still be ample protection to the domestic article.
The tax as suggested would prove a boon to the army of small cigar manufacturers, vastly increase the importation of Sumatra wrappers, and more than compensate in increased revenue for the decrease in the rate now levied. PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO.
DOCK WEIGHTS ON IMPORTED MERCHANDISE.
This feature of the customs administration applies with absolute injustice to cigar wrapper leaf especially. Formerly the duty was levied on tobaccos when withdrawn from bond; for some few years past the entry weights have been the basis of duties up to the time of three years--the bonded limit.
Tobacco contains moisture, and the maximum when landed in American ports. During the bonded period it steadily dries out; result—the importer or manufacturer is compelled to pay duty on moisture, which entails an absolute loss to him which he can not recover.
The administrative regulation formerly in vogue should be restored as an act of justice, as the Government has no more right than the individual to treat the citizens with injustice.
In this respect the Canadian and British customs regulations are far ahead of ours.
A concrete example will best illustrate this. A box of cigar leaf tobacco is exported to a Canadian port; the customs officer draws 8 ounces from the interior of the package; this is thoroughly dried and then weighed again; the resultant dry weight becomes the basis of dutiable weights of the entire package.
PETITION FOR LOWERING OF DUTY.
St. Paul, MINN., January 11, 1913. The COMMITTEE ON WAYS AND MEANS,
House of Representatives, Washington, D. C. GENTLEMEN: For some time we have been paying an excessive duty on imported leaf tobacco mentioned in paragraph 220 of Schedule F, act of August 5, 1909. We hereby petition your honorable body to strike out the words, “One dollar and eighty-five cents per pound and insert in place thereof the words “ One dollar per pound.” This excessive duty does not benefit anyone except a few tobacco growers in New England, Georgia, and Florida. The excessive duty now paid raises the price to the consumer and restricts the manufacturers of cigars, owing to the large capital necessary, and of necessity limits the number of cigar makers employed. If the duty was twice as much as it is at present, it would be impossible for the growers in this country to produce the same type of tobacco which is imported, owing to the fact that climate, soil, and other conditions in this country are not conducive to the growing of tobacco of the necessary type. Trusting that this petition will meet with favorable consideration, we remain, Yours, very truly,
KUALES & STOCK Co.
BRIEF OF HAVANA TOBACCO IMPORTERS' ASSOCIATION.
THE HAVANA TOBACCO IMPORTERS' ASSOCIATION,
New York, N. Y. The COMMITTEE ON WAYS AND MEANS,
Washington, D. C.: The Havana Tobacco Importers' Association respectfully ask that that part of Schedule F referring to tobacco should read:
“ 220. Wrapper tobacco and filler tobacco when mixed or packed with more than 25 per cent of wrapper tobacco, and all leaf tobacco the product of two or more countries or dependencies when mixed or packed together, if unstemmed, $1 per pound; if stemmed, $1.35 per pound; wrapper tobacco when mixed with 75 per cent or more of filler tobacco, and filler tobacco not specially provided for in this section, if unstemmed, 20 cents per pound; if stemmed, 30 cents per pound.
* 221. The term wrapper tobacco as used in this section means that quality of leaf tobacco which is commercially known as cigar wrappers, and the term filler tobacco means all other leaf tobacco. Collectors, etc. (as in present tariff).
222. All other tobacco, manufactured or unmanufactured, not specially provided for in this section, and scrap tobacco, 32 cents per pound.”
A reduction in duty means an increase in the cigar makers' wages.
PARAGRAPHS 220_222-WRAPPER AND FILLER TOBACCO.
Havana tobacco is essentially a filler tobacco. Owing to its nature, it is packed differently from any other tobacco in the world, and less than 3 per cent of it is wrapper tobacco. The best available statistics place it at only 2 per cent. It does not compete with Sumatra tobacco coming to the United States, which is essentially a wrapper tobacco, containing from 90 per cent to 100 per cent wrappers.
When the 15 per cent clause was inserted in the McKinley bill, we believe it was done with the idea that those 15 per cent bales would contain enough tobacco that could be used for wrapping the Havana cigars made in this country.
When a bale containing more than 15 per cent of wrappers is appraised at full wrapper duty, it is a very great injustice to the importer. Very few of the finest bales of so-called wrappers contain more than approximately 50 per cent to 60 per cent of wrappers, and when an importer pays the full wrapper duty on a bale which contains from 20 per cent to 40 per cent, or 60 per cent wrappers, he then pays about two to four times the amount of the actual duty on his wrappers, which seems to be a great injustice. As stated above, Havana tobacco is selected and packed differently from any other tobacco in the world; and being packed by so many different farmers and packers in an uncured condition, it is impossible to change the mode of packing. Havana tobacco on account of temperature and on account of the damage by the tobacco beetle can change so quickly that no experts will be united on the wrapper percentage, nor will any one expert put the same standard on tobacco at different times.
The principal merit of Havana tobacco is its quality, differing from and conceded to be superior to all other tobaccos, and it is in consequence indispensable in the manufacture of the better grades of cigars, especially the “ seed and Havana " cigar, a cigar the filler or inside of which is of Havana tobacco, with a domestic binder and either a domestic or Sumatra leaf as wrapper. We believe that fully 75 per cent of the entire imports of Havana tobacco is used in the “mixed” or seed and Havana " cigar, which helps the grower of domestic wrapper tobacco.
Prior to 1883 the term "wrapper tobacco " was unknown in any tariff law, all leaf tobacco imported paying one rate of duty, and no domestic interests bad up to that time asked for or considered necessary any protective tariff rate against Havana tobacco. These interests did, however, at about the above date ask for and receive a protective rate of duty against Sumatra tobacco, which is essentially wrapper tobacco and used as such; none of it is or can be used for any other purpose in this country. It is true that the tariff did not refer to Sumatra tobacco as such, the treaty with Holland prohibiting the discrimination involved by such designation, but did apply the higher or "wrapper” rate 'to tobacco of a certain description, which practically excluded all tobaccos with the exception of Sumatra tobacco from the higher rate of duty and admitted all other tobaccos, including Havana, into the United States at the lower or “filler" rate of duty.
In the subsequent tariff law, known as the “McKinley tariff," the tobacco schedule underwent a change, the rate of duty on “wrapper" tobacco being increased to $2 per pound, but the “filler” rate remained as in the previous tariff. A clause known as the “ 15 per cent clause" was inserted in the new tariff as a result of representations made to Congress by the Havana tobacco interests, and without opposition or objection on the part of any domestic interests--as a matter of fact these latter interests favored said clause. This clause, it was fully believed at the time by all interested parties, would permit of the entry at the “filler” rate of all Havana tobacco with the exception of the fine "wrapper" bales, and it is our firm conviction that had the Havana interests at that time foreseen the present state of affairs, they would have asked for and, we fully believe, obtained from Congress 35 per cent, or even more, instead of the 15 per cent, which works a great hardship on the Havana tobacco interests, as the following examples will show you :
No. 1, 70-pound bale (50 per cent wrappers) contains 35-pound wrappers and 35-pound fillers.
PARAGRAPHS 220_222-WRAPPER AND FILLER TOBACCO.
Pays duty as wrappers at $1.85 per pound on entire bale: 70 pounds at $1.85 per pound.-
$129.50 Credit with what the duty on the 35 pounds of fillers would be at 35 cents per pound
Which would leave the duty against the 35 pounds of wrappers.. 117.25 Or the amount of duty which the importer or manufacturer must charge against the actual wrappers in the 70-pound bale, 1/35 of $117.25_- 3. 35
No. 2, 80-pound bale (20 per cent wrappers) contains 16 pounds wrappers and 64 pounds fillers.
Pays duty as wrappers at $1.85 per pound on entire bale : 80 pounds, at $1.85 per pound..
$148.00 Credit with what the duty on the 64 pounds of fillers would be at 35 cents per pound--
125. 60 Or the amount of duty which the importer or manufacturer must charge
against the actual wrappers in the 80-pound bale, 1/16 of $125.60--- 7.85
No. 3, 80-pound bale (16 per cent wrappers) contains 12.80 pounds wrappers and 67.20 pounds fillers.
Pays duty as wrappers at $1.85 per pound on entire bale: 80 pounds, at $1.85 per pound..
$148.00 Credit with what the duty on the 67.20 pounds fillers would be at 35 cents per pound.-
124. 48 Or the amount of duty which the importer or manufacturer must charge the actual wrappers in the 80-pound bale, 1/12.80 of $124.48_- 9. 73
We also desire, by a few figures which will stand the scrutiny of any fairminded and practical clear Havana manufacturer, to give you an illustration of the relative duties which the percentage system on Havana tobacco produces, as compared with the duties on Sumatra and Havana filler used in the so-called seed and Havana cigar.
170 pounds Sumatra, at $1.85, $314.50, will yield 85,000 cigars, duty per 1,000, $3.70.
The selection of Sumatra imported into the United States will cover any kind of cigar both as to size, color, and texture.
An equal selection of Havana wrappers weighs per bale about 70 pounds, at $1.85, $129.50; and its maximum yield would be 16,000 cigars, duty per 1,000 cigars, $8.937.
The average weight of tobacco used in a clear Havana cigar is about 22 pounds per 1,000. The average amount of duty paid, by the clear Havana interest, is about 43cents per pound; 22 pounds at 137 cents per 1,000 cigars, $9.621.
We attach a brief by Mr. H. S. Frye, of Windsor, Conn., for many years president of the New England Tobacco Growers' Association, and as such represented the growers at Washington during the enactment of the various tariff laws. Respectfully submitted.
JOHN W. MERRIAM,
PARAGRAPHS 220–222_WRAPPER AND FILLER TOBACCO.
SUPPLEMENTAL BRIEF SUBMITTED BY THE IMPORTERS OF
HAVANA TOBACCO AND AMERICAN MANUFACTURERS OF HAVANA CIGARS.
[Filed by Harrison Osborne, 34 Nassau St., New York City.]
JANUARY, 1913. The COMMITTEE ON WAYS AND MEANS,
House of Representatives, Washington, D. C. GENTLEMEN: The undersigned, a committee of the Havana Tobacco Importers' Association of the United States, present this brief on behalf of the importers of Havana tobacco and the American manufacturers of Havana cigars. This brief has also been adopted by the Havana Tobacco Importers' Association of the city of New York by resolution passed January 27, 1913.
We ask for the following changes, indicated below, in Schedule F, tariff act of 1909.
First. Paragraph 220: A change from 15 per cent, filler tobacco mixed with wrapper tobacco, to 20 per cent. A reduction on cigar fillers from 35 to 25 cents per pound, if unstemmed, and a reduction from 50 to 40 cents per pound, if stemmed.
Second. Paragraph 221: A change in the meaning of the term “Wrapper tobacco," defining clearly that grade of leaf suitable for cigar wrappers, and also indicating the difference between cigar filler and other filler tobacco.
Third. Paragraph 222: A reduction on scrap tobacco from 55 to 45 cents per pound. These paragraphs to read as follows
Paragraph 220: “Cigar-wrapper tobacco, and cigar-filler tobacco when mixed or packed with more than 20 per cent 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; if stemmed, $2.50 per pound. Cigar-filler tobacco, if unstemmed, 25 cents per pound; if stemmed, 40 cents per pound.
“All other filler tobacco not specially provided for in this section, if unstemmed, 35 cents per pound; if stemmed, 50 cents per pound."
Paragraph 221: “The term cigar-wrapper tobacco as used in this section means that quality of leaf tobacco which has the requisite color, texture, and burn. and is of sufficient size to be suitable for wrapping cigars. The term cigar-filler tobacco means all other cigar leaf tobacco, 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 invoice of the same shall specify in detail the character of such tobacco, whether cigar wrapper, cigar filler, or filler its origin and quality. In the examination for classification of any imported leaf tobacco, at least 1 bale, box. or package in every 10, and at least 1 in every invoice, shall be examined by the appraiser or person authorized by law to make such examination, and at least 10 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, 45 cents per pound.”
INCREASE TO REVENUE.
The increase in internal revenue receipts from all sources over last year has exceeded $12,000,000, and the increase in tobacco receipts represents more than one-fourth of the total increase from all sources of internal revenue.