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PARAGRAPHS 220-222-WRAPPER AND FILLER TOBACCO.
gets the better grades of leaf, and we in the United States-well, do the best we can with the remnant; but, in any event, whether the American importer, manufacturer, or both, is mulcted by an unjust tax, or the attempted injustice failed, solely because it was consumed in a "seed and Havana ” factory it must be all filler tobacco. Not an ounce of it is wrapper in Connecticut, while all of it is wrapper (or appraised as wrapper) in a Tampa or Key West factory. In Tampa ind Key West it is "wrapper,” in a Connecticut “ seed and Havana” factory it is all filler. Now, the question arises, What is the legal status of wrapper tobacco ? The law plainly enough contemplates quality, as it is specifically defined in the law, “suitable for,” but as now construed it seems to be more a matter of locality.
Now, in all seriousness, it appears to me to be a tremendous strain on the “scales of justice,” as well as credulity, to decide the status of “wrapper tobacco on locality, especially so when penalized by a tariff tax of $1.85 a pound. Now, as we have seen, and as a matter of fact, the crucial test or decision of what constitutes a “Havana wrapper" is made in Cuba, always will be (just the same as what constitutes a “ Connecticut wrapper " is—must be decided in Connecticut). A custom established from time immemorial, especially in a foreign country, made so, too, by its method of manufacture there, can not be changed by United States tariff laws, no more than the latter can change the habits and customs of foreign peoples. In Cuba a wrapper leaf is a choice article; the most valuable leaf in the world, therefore, is always put into a wrapper bale of all wrapper leaf along with other of like quality of leaf; all the rest, not being “ suitable for cigar wrappers” (I am using United States tariff term now), goes into other—"all other (United States tariff law says)-bales, to wit, of binder and filler bales, and (as previously shown) under United States tariff law is dutiable as filler, not wrapper, the law being fully as mandatory in that wording, to wit, “ all other," as it is when reading “suitable for.” Indeed, is far more so, because, as we have seen, the words “suitable for " are capable of innumerable different constructions indeed, they might well have ended with an interrogation point-while “all other " leaves not a shadow of doubt or question as to its meaning. While on this question of "evolution," I might be permitted here a brief illustration by a short statement of facts. This past year, as for many years previously, crop after crop of Connecticut tobacco was bought of farmers at binder and filler prices, all of it classed as “binder and filler" solely because "evolution" in trade and manufacture demand has so raised the standard of “ wrapper leaf” there was not enough of that grade of leaf (“wrapper") to “pay for assorting " it. In Hartford, Conn., is packed a whole warehouse full of that grade of leaf-no wrapper leaf” in it, all binder and filler; just sized (not assorted) and packed in boxes according to lengths, not quality; not a wrapper leaf "sorted out or classed as wrapper"; in that respect exactly duplicating the long-established Cuban custom or practice. How utterly absurd it would be to assume that wrapper leaf” was “mixed" or “packed ” in that tobacco! How much more absurd to talk about “wrapper leaf” (Havana), worth in Cuba three, five, perhaps ten times as much per pound as Connecticut wrapper, being “ mixed” or “packed " in Havana “ binderand-filler ” bales! Indeed, the very idea seems too preposterous, too ridiculous for contemplation ; but it is exactly from this grade of leaf (in Cuba), of “binder-and-filler" leaf, that the “clear-Havana " manufacturer must of neces. sity in the factory pick out enough leaf (not over one-tenth of the whole) to cover a large portion of his cigar output. Why should he pay $1.85 as "wrapper” rate of duty on the other nine-tenths of the bale, 84 per cent of it being admittedly filler tobacco? Worse yet, why should the “seed and Havana manufacturer pay $1.85, or wrapper rate of duty, on the same identical grade of leaf, not one ounce of which can or does he ever use as a wrapper? All of it-100 per cent-used solely as filler, inside the cigar; none of it on the outside, as of necessity the “ clear Havana" manufacturer must do, except, of course, his highest priced cigars, for which he must buy a “ wrapper bale," paying thereon, of course, the full • wrapper rate" of duty of $1.85 a pound. Why is it, may here be asked, that the “clear Havana ” manufacturer can use a binder leaf for a wrapper? The answer can be summed up in just one word—"quality." Because it is all Havana tobacco; because of its unequaled aroma and flavor. which the Havana devotee thinks has no equal in the world (so do I) ; because the smoker who demands that quality in his cigar must, will have it, without much regard to its outside looks or appearance. This applies, of course, to by far the larger number even of Havana smokers--not to the millionaire consumer,
PARAGRAPHS 220–222_WRAPPER AND FILLER TOBACCO.
to whom the factor of cost is of little or no moment, who must have the best regardless of cost; therefore, of course, he must have in his “ Havana " the best in looks as well as quality, but he has to pay for it, “because" (again) it is “ wrapped" with a “ Havana wrapper" (not binder) out of a “ Havana-wrapper bale," not (again) a binder-and-filled bale, and because it is imported, entered, declared as a wrapper bale, and “because” (for the last time) it had to pay (as it should do, or the importer did) the “ wrapper rate of duty of $1.85 a pound—"good American money," too. Now, again, I ask, in all seriousness, How can any industry long exist in the United States under the unjust, inconsistent conditions I have delineated in this paper? Of one fact there can be no question. It would not be tolerated, so could not long exist, in any other civilized country in the world.
Moral: It should not, can not, much longer in the United States, for I am confident that a careful, judicial, unbiased investigation of this perplexing question in all its bearings, and keeping always in view ultimate results, not only to the great trade, industrial, manufacturing, and agricultural interests involved, but its ultimate effect upon revenue from leaf tobacco imports, will result in a wise decision that the obsolete methods in vogue of past Havana leaf tobacco appraisements (as the natural sult of a defective law) will be remedied by making (as far as possible) the bale the unit of value for Havana leaf appraisements, the same as it has so long been for Sumatra leaf appraisements. Respectfully submitted.
H. S. FRYE, Windsor, Conn. FEBRUARY, 1912.
[March 18, 1912.)
(1) During the McKinley tariff (1890) all Havana bales having 15 per cent or less of leaf appraised as wrapper was passed at filler rate of duty, in accord with the true intent and meaning of the law.
(2) The practice now is to appraise as wrapper any percentage of binder leaf found in a bale that the examiner says is wrapper, a clear violation of the law, nullifying as it does the 15 per cent provision inserted in both the Wilson and Dingley tariff laws.
(3) Four hands of tobacco make a carrot, 80 carrots make a “ tercio” or bale.
(4) Havana wrappers are worth in Cuba from $4 to $12 a carrot, about three-fourths of a pound.
(5) None of the better grades of wrappers are ever imported into the United States.
(6) I am, informed on the best of authority now that “the officials (Treasury) seem to be figuring on about 40 cents a pound as a rate that would produce a revenue equivalent to what they are getting now and such additional amount as they believe the Governnient should get from Havana tobacco over the amount they now collect." In other words, my informant means a uniform or fiat rate of duty on all leaf tobacco (including Sumatra of course) of 40 cents a pound.
(7) Comments on the above conditions and facts I leave to the Connecticut Valley tobacco farmer.
PARAGRAPH 224-CIGARS, CIGARETTES, ETC. PARAGRAPH 223.
Snuff and snuff flour, manufactured of tobacco, ground dry, or damp, and
pickled, scented, or otherwise, of all descriptions, fifty-five cents per pound. PARAGRAPH 224.
Cigars, cigarettes, cheroots of all kinds, four dollars and fifty cents per pound and twenty-five per centum ad valorem, and paper cigars and cigarettes, including wrappers, shall be subject to the same duties as are herein imposed upon cigars.
CIGARS, CIGARETTES, ETC.
UNION DE FABRICANTES DE TOBACCOS Y
[Schedule F, paragraph 224.)
The WAYS AND MEANS COMMITTEE,
House of Representatives, Washington, D. C.: The undersigned, counsel for the Union of Havana Cigar Manufacturers, earnestly requests consideration of paragraph 224, of Schedule F, with a view to the reduction of the present rate of duty thereunder.
This paragraph imposes upon cigars, cigarettes, and cheroots a duty of $4.50 per pound and an addition of 25 per cent ad valorem; and the official figures show the duties collected thereunder to have fallen off in 1912 as compared with 1911 the sum of $239,080.37 and to be only $24,769.02 greater than in 1910.
From 1896 until 1905, a period of nine years, the increase in value of importations under this paragraph was nearly $800,000 and the increase in duties about $1,250,000; but a comparison between 1905 and 1912 shows an increase in value of dutiable importations of only $150,000 and an actual loss of revenue collected of more than $278,000; this during a period of seven years when, if the ratio of increase which existed from 1895 until 1905 bas been maintained, there should be an increase of dutiable imports under this paragraph of at least $750,000 and an increase of revenue of over $1,000,000.
This without consideration of the increase in wealth and population, which always tends to an increased consumption of cigars.
A reduction of the duty rate under this paragraph would beyond any question increase importations and largely augment the revenue. While cigars, cigarettes, and cheroots may be regarded as luxuries, it is well known that the use of the same is well-nigli universal and that the citizens of the United States prefer to consume the best cigars, cigarettes, and cheroots obtainable within their means. A reduction of the duty upon these goods, which come almost entirely from Cuba. would enable the great mass of Americans to enjoy the highest grades obtainable, while at the same time the largely increased consumption would produce a marked increase in the duty collected thereupon.
No question of protection enters into this, since domestic goods of this class differ so essentially from the imported that the demand for the one can never be supplied by the other, and the paragraph in question has nothing to do with rates of duty upon the raw material imported for use by American manufacturers. All of which is respectfully submitted.
PARKE & TILFORD AND OTHER IMPORTERS,
By FRANCIS E. HAMILTON, Counsel. JANUARY 14, 1913.
PARAGRAPH 224-CIGARS, CIGARETTES, ETC.
BRIEF OF IMPORTERS OF HABANA CIGARS.
PARK & TILFORD, 225 FIFTH AVENUE,
New York, January 25, 1913. Hon. Oscar W. UNDERWOOD, Chairman Ways and Means Committee,
House of Representatives, Washington, D. C. My Dear MR. UNDERWOOD: I greatly dislike to trespass upon the time of a busy man, especially one with manifold responsibilities like yourself, but I am asking in behalf of a great business—one in which my personal interest is large--that you may find time to give the accompanying brief a thorough and careful perusal.
I feel confident that you will recognize its fairness to all parties concerned, both as regards the Government and the importer.
That it will receive your earnest consideration, I know full well; that it may win your individual support as far as consistent, I respectfully ask as a personal courtesy to myself. With all kind wishes, believe me, Very truly, yours,
The WAYS AND MEANS COMMITTEE,
House of Representatives, Washington, D. C.: We, the importers of Habana cigars, desire to present this supplementary brief relating to Schedule F, and submit for your consideration facts that uphold our claim for a fair treatment of these goods-we do not consider them luxuries-which thus far have been treated by recent tariffs not as luxuries, but as pernicious articles that should be barred from the people of the United States.
We have before us the data as to importations of Habana cigars, furnished to us by the Treasury Department, covering the last 30 years, in which four different schedules have been in effect, and in all of which it will appear that the duty exceeds the value, and it only decreased to 81 per cent of the value under the reciprocity treaty which went into effect with Cuba a few years ago. This fact is what leads us to make the statement that the Habana cigars we have been dealing in for many years past are not even considered a luxury but pernicious goods deserving to be shut out of our country. Nevertheless, the Habana cigar made in the island of Cuba is recognized by the civilized world to-day as being the standard for all smokers, and that it can not be equaled by any other manufacturing or leaf-producing country.
'We beg to submit certain figures in a condensed form taken from the annexed detailed memorandum. These figures we will divide into four periods, each one covering a different duty levied on imported cigars:
Pirst period.—The five years from 1886 to 1890 when the duty was $2.50 per pound
The average annual number of cigars imported, computed at 12 pounds per thousand, 94,069,000.
Second period.--The three years from 1892 to 1894, when the duty was $4.50 per pound and 25 per cent ad valorem:
The average yearly importation was 561,013 pounds.
The average annual number of cigars imported, computed at 12 pounds per thousand, was 46,751,000.
Third period.—The two years 1896 and 1897, when the duty was $4 per pound and 25 per cent ad valorem:
The average yearly importation was 435,102 pounds.
Fourth period.—The last five years from 1908 to 1912, when the duty was $4.50 per pound and 25 per cent ad valorem, less 20 per cent from the reciprocity agreement:
The average yearly importation was 673,157 pounds.
PARAGRAPH 224-CIGARS, CIGARETTES, ETC. The average yearly value, $3,935,088; per 1,000 cigars, $71.21.
The average annual number of cigars imported, computed at 12 pounds per thousand, 56,096,000.
The above figures show to your honorable committeeFirst. That the duty on imported cigars was for the first three periods more than 100 per cent of the value in the country of origin, and that on the fourth period under the reciprocity treaty the duty was 81 per cent of that value.
Second. That in the first period, when the duties were $2.50 a pound and 25 per cent ad valorem, the importation of cigars was almost double what it was during the succeeding periods of higher duty.
Third. That if the duty had continued in the last three periods as it was for the first period of low duty the revenue would have been nearly half a million dollars more annually than it was for the said last three periods; and it doubtless would have been much more in view of the increase in population and wealth for the last 30 years. That revenue was lost through too high a duty.
Fourth. That the reduction of 20 per cent on the duty in the fourth period under the reciprocity treaty with Cuba was instrumental in bringing a greater revenue, and therefore resulted to the benefit of the Treasury.
Fifth. That the average importation of cigars during the last period, about 56,000,000 per year, represents five-eighths of one cigar per inhabitant, or, if out of a smoking population of 25,000,000 men we take 50,000 who smoke three imported cigars a day, they would consume the entire 56,000,000 cigarsin other words, only enough Habana cigars are imported annually to supply three per day to 1 smoker out of 500 in these United States.
Having thus shown by the records that a lower duty on cigars brings a greater revenue, we appeal to your good judgment in asking that the new duty to be levied on Habana cigars be $3 per pound, omitting all duty ad valorem.
We base this request upon the following considerations:
First. It will be the source of a greatly increased revenue, since in the period of a relatively low duty 30 years ago the importations were 94,000,000 cigars yearly, or almost twice as many as there are to-day, and it is only logical to conclude that with a still lower duty than the $2.50 and 25 per cent ad valorem of the years 1886-1890, and also considering the development of our country since then, the imports will naturally be at least twice as much as at present. Therefore, if instead of the 673,157 pounds imported now we were to import 1,500,000 pounds at a $3 rate, there would be a revenue of $4,500,000, or 50 per cent more than the amount we obtain to-day.
Second. The actual importation of 56,000,000 cigars represents seven-tenths of 1 per cent of the 7,300,000,000 manufactured in this country, thus proving conclusively that the present tariff is not competitive, but almost prohibitive, since it prevents competition.
Third. The elimination of the ad valorem duty would do away with the always annoying question of undervaluations often in the minds of the customs officials, and, above all, would relieve the manufacturers of this country of the competition of lower grades of imported cigars.
Fourth. The consumer will profit by the lower duties and consequent lower prices, and an opportunity will be offered to thousands of our people to use the best cigars, which they have not been able to use in the past on account of the cost.
Fifth. The retail dealers of the United States, who number hundreds of thousands, will be able to obtain a fairer profit upon their imported cigars than they do under the present high prices, compelled by high duty.
Sixth. The manufacturers of cigars in the United States will be stimulated to improve their product by the larger distribution of the superior imported article.
Seventh. Such a duty will lead to a larger business with less investment.
With the seven foregoing considerations submitted to your good judgment we have proved that a lower duty will bring a larger revenue and that it will be beneficial as well to the trade in general as to a large body of consumers.
Your honorable committee may wish to know what protection the present tariff rate is giving to our home manufacturers of cigars from Habana tobacco, and how far they will be protected if the new schedule in cigars were $3 per pound as by us requested. To make this clear we will say that the cigar called "Perfecto," which is the most popular imported size in the market, is worth in Habana $95 per thousand, weighs approximately 15 pounds, pays $4.50 per pound and 25 per cent ad valorem on the $95 less 20 per cent on both for reciprocity. The net duty, therefore, on the 1,000 Perfectos is $73. Adding the $3 of internal revenue, plus freight, consular and customhouse charges, this cigar costs landed in New York about $173 per thousand, is sold to dealers at about $180.