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(Defendants' Exhibit No. 31.) Cost to land lemons in various markets from California versus imports via New Orleans
and Mobile. Assuming cost of landing lemons in New Orleans and Mobile at $3.14 per box (see other table) and excepting California growers figures of production cost as $1.48 per box on cars, the cost of landing a box of lemons in following points from California versus foreign is shown.
in favor in favor Destination. rates
charges. Anniston, Ala. $1. 40 $2.656 $3.493
$3.636 $0.527 $0.95 $1.15 $1.26 Albany, Ga... 1. 40 2. 656 3. 585 3. 745
1. 089 1.29
1.41 Atlanta, Ga... 1. 40 2. 656 3. 493
1.30 Augusta, Ga. 1. 40 2.656 3. 493 3. 636 .827 .880 1. 19
1.30 Bessemer, Ala.. 1. 40 2.656 3. 451 3.560 .795 .904
1.22 Chattanooga, Tenn 1. 40 2. 656 3. 493 3.636 .827 .98
1.30 Birmingham, Ala... 1.40 2. 656 3. 451 3.560 . 795
1.22 Chicago, Ill. 1. 15 2. 446 3. 476 3.560 1.030 1. 114 1.32
1.43 Columbus, Ga. 1.40 2. 656 3. 493 3. 636 .827 .98
1.30 Cleveland, Ohio... 1. 15 2. 446 3.560 3. 726 1. 114 1. 282 1. 49
1. 60 Detroit, Mich. 1. 15 2. 446 3.560 3. 728 1. 114
1.60 E. Birmingham, Ala. 1. 40 2. 656 3. 451 3.560
1. 22 Eufaula, Ala.. 1. 40 2. 656 3. 493 3. 636
1.19 1.30 Florence, Ala. 1. 40 2. 656 3. 408 3. 526 . 752 .87
1. 19 Gadsden, Ala.. 1. 40 2. 656 3. 493 3. 636 .827 .98
1.30 Harriman, Tenn. 1.40 2. 656 3.948 3. 636 .827 .98
1.30 Huntsville, Ala..
1. 40 2. 656 3. 408 3. 526 . 752 .87 Kansas City, Mo.. 1. 15 2. 446
1.08 1.19 Little Rock, Ark.... 1. 15 2. 446 3. 476
.03 1.534 Minneapolis, Minn.. 1. 15 2. 446 3. 686 3. 854 1. 24 1. 408 1.74
1.85 North Birmingham, Ala.. 1. 40 2. 656 3. 451 3.560
1.61 1.73 Omaha, Nebr. 1. 15 2. 446 3.72
1.22 Sheffield, Ala.
1.40 2. 656
3.526 .753 87 1.08 1. 19 Talladega, Ala 1. 40 2.656 3. 493 3.594 .837
1.26 Washington, Ga. 1. 40 2. 656 3. 484 3.585
Southern Railway Mobile tropical fruit tariff No. 2, I. C. C., 9117.
(Defendants' Exhibit No. 32.) Cost to land lemons in southeastern markets from California versus imports via Baltimore.
Baltimore rates are lowest to southeast. Assuming cost of landing lemons in Baltimore at $3.14 per box (see other table), and accepting the California growers' figures of production cost as $1.48 per box on cars, The cost of landing a box of lemons in following southeastern cities from California versus foreign in shown. Carload
Differ- Corrected Corrected Foreign distrib
ence difference difference from
in favor in favor
in favor with Cali
of Cali- of Cali-
freight entry down in
fornia less than
Cali- rate and per
port in market.
(car- (less than carloads.
fornia auction hundredcarload
loads). carloads). lemon. charges. weight.
$1.40 $2.656 Atlanta, Ga..
2. 656 Augusta, Ga..
1.40 2. 656 Bessemer, Ale.
1.40 2. 656 Birmingham, Ala... 1.40 2. 656 Chattanooga, Tenn.. 1.40 2. 656 Columbus, Ga.
1. 40 2. 656 East Birmingham, Ala...
1.40 2. 656 Florence, Ala..
1.40 2. 656 Gadsden, Ala..
1.40 2. 656 Harriman, Tenn.
1.40 2. 656 Huntsville, Ala..
1.40 2. 656 Johnson City, Tenn. 1.40 2. 656 North Birmingham,
1.40 2. 656 Sheffield, Ala
1.40 2. 656 Talladega, Ala.
1.40 2, 656 Washington, Ga..
2. 656 Sup. 70 to B. &0. R. R., 1. C. C., 5405.
1. 46 1. 40 1. 46 1.39 1.40 1.36
1.46 1. 40 1.43 1.43
REPLY BRIEF ON LEMONS.
To the honorable members of the Ways and Means Committee,
House of Representatives, 'Washington, D. C.: While the importers of lemons do not desire to take up the time of the committee unnecessarily commenting on the arguments made by Mr. Powell and in the briefs filed by the Citrus Protective League of California at the time of the hearing on lemons, the importers feel that they should call the attention of the committee to several statements made in Mr. Powell's remarks and in the briefs of the Californians.
Californians' argument for protection fatally defective.—The Californians' main argument for protection is based on the statements that they make as to the cost of producing lemons in California and in Sicily. This argument is fatally defective, because the production cost of lemons in Sicily does not fix the cost of buying lemons for export from Sicily to the United States or to any other country. Therefore the argument of the Cailfornians as far as concerns their statement of costs in Sicily is based on a theoretical cost and not on the practical and actual cost of procuring lemons than exportation from Sicily, and their argument is therefore fatally defective unless they can show that California is entitled to protection by comparing the actual cost of growing lemons in California with the actual cost of buying lemons in Sicily for export to the United States. This they have utterly failed to do.
Lemon growers of Sicily do not export.-—The growers of lemons in Sicily do not export them. Lemons are purchased by the exporter to America on the market in competition with exporters of lemons to other countries, and the price of lemons for export from Sicily is not based upon their production cost, but is determined by the competition between the exporters to the different countries of the world.
The pamphlet filed at the hearing on lemons by the Citrus Protective League, **The Italian Lemon Industry," at pages 32 and 33 contains admissions that the importer of lemons to the United States is obliged to pay a higher price for Sicilian lemons than the production cost when he purchases his lemons for export to the United States, as is shown by the following extracts:
“The producer, except in rare instances, has nothing to do with the packing, distribution, or marketing of the crop.
“The exporter does not often purchase the fruit from the producer. The purchase is usually arranged through a broker or through a series of brokers, who after the bargain is arranged often acts as the agent of the exporter in the grove during the harvesting and preliminary grading and packing of the fruit. The exporter sometimes purchases the fruit from a middleman or speculator, who in turn has arranged through a local broker for the crop. This system of doing business has given rise to a horde of brokers and country speculators who represent the exporters in their dealings with the producer and in turn the producer in his business relations with the exporter, and who usually receive a commission from both the producer and the exporter at the consummation of a sale.”'
Comparison of actual cost of lemons in Sicily with estimates of California cost.The statements from the books of the importers which were filed with the committee, and printed as exhibits at the hearing, show that the average cost per box f. o. b. Sicily for lemons exported to New York during the period covered by the statements was $1.90 per box. They also show that the average landing cost per box at New York during that period was $3.69. These costs are the ones which the Californians should make their comparison with, because they represent the actual cost to the importer when he imports lemons into the United States. At the hearing the importers showed that the freight rate from Sicily to New York was now 7 cents more than at the time covered by these statements, so that the landing price would now be $3.765 per box, and if you deduct the duty of $1.17 it leaves as the cost of landing a box of lemons at New York, without the payment of any duty, $2,595. This figure compared with the various California estimates of cost given for the years 1903, 1908, 1909, 1910, and 1913 (if instead of giving estimates which at the best are very unsatisfactory, the Californians had submitted extracts from the books of their representative companies as to cost, the committee would have had more reliable sources of information than they have now) shows that according to the estimate of 1903 (cost per box f. o. b. California 75 cents, freight 84 cents) California had an advantage landed at New York of $1.005; according to the estimate given in 1908 and 1909 cost per box f. o. b. California $1.48, freight 84 cents) California had an advantage landed at New York of $0.275; according to the estimate of 1910 (cost per box f. b. California $1.83 and 84 cents freight) Sicily had an advantage landed at New York of $0.075; and in the estimate of 1913 (cost per box f. o. b. California $1.88 and
84 cents freight) Sicily had an advantage landed at New York of $0.133. The advantages of the Sicilian lemon in the California estimates, of 1910 and 1913, are more than overcome by the difference in price of 25 cents to a dollar which the California lemon box brings over the Sicilian lemon box at New York. To this should be added the further advantage that the Californians have in the local freight rate that the Sicilian box pays as it moves inland from New York.
These figures show that the California lemon needs no tariff protection from the Sicilian lemon, and this is true even if the California estimates of 1908, 1909, 1910, and 1913 are correct. In our opinion, founded upon such facts as we have been able to learn, and such evidence as we can procure, and from our general knowledge of the industry, we believe that the estimates of 1908, 1909, 1910, and 1913 are altogether too high, and our opinion is substantiated by the report of the Limoneira Co. as of January 1, 1910, filed by us as an exhibit at the time of the hearing, which shows that the cost of the average box of lemons f. o. b. California of this company in 1907 was $1.21809, in 1908 $1.31433, and in 1909 was $1.27765. These figures do not represent charges for taxes, deteriorations, cost of bookkeeping, and maintenance of office and other general expense items incident to the proper conduct of the business, but these charges can only amount at the outside to a few cents per box. The Limoneira Co. is undoubtedly one of the most efficient producers of California lemons, and its cost of producing a box of lemons f. o. b. California is undoubtedly somewhat lower than that of corporations or individuals that are not as efficient, but efficiency should be a basis for an estimate of cost on which to base a tariff law. The Californians are asking that a tax be placed on a necessity of life, the burden of which has to be borne by the whole American people for the exclusive benefit of a few counties of southern California, so that California is not justified in claiming protection on inefficiency, but should only ask for protection, if required, on efficiency.
The importers' figures of cost substantiated.-While the production costs of Italy are not important, for the reasons given above, it is only, just to the importers to call attention to the fact that the price which the importers paid for lemons for export to the United States, as shown in the statements from their books which are filed with this committee, are substantiated by the report of cost of producing lemons in Sicily, made by Mr. Nicolo Marasa, one of the most noted pomologists of Italy, which report was filed with this committee, and also by the estimates of cost of growing lemons in Sicily given in the brief of the Italian Chamber of Commerce of New York, filed with this committee; and these prices are further corroborated in the report of the United States Consul De Soto, given in the United States Daily Consular Reports, dated January 16, 1913, at page 286.
Fluctuations in prices of lemons. The prices of lemons in the United States are determined by the law of supply and demand. Owing to the frequent scarcity in the supply, the demand causes the price to rise rapidly and then drop just as quickly as soon as the deficiency in the supply is made up. The California remedy to stop the sudden rises in price is to cut off more of the supply (thereby keeping up the constant shortage, with the consequent high prices) by shutting out the foreign lemon in the expectation that some day in the future California will produce enough lemons to supply the full demand. The importers' remedy is to increase the supply by a constant even importation coming in, thus keeping the supply equal to the demand and in that way prevent the sudden rises in price. We are fully satisfied to leave the decision as to which method is more desirable to the judgment of your committee.
In conclusion, we desire to state that the evidence adduced at the hearing conclusively showed the existence of a California fruit trust without domestic competition, controlling its product absolutely and obtaining for it the highest possible prices through the operation of a prohibitive tariff on its products. We therefore feel that it is time the American people were freed from the exactions of this trust and that can be best accomplished by placing lemons on the free list. Respectfully, yours,
Counsel. JANUARY, 1913.
TESTIMONY OF G. HAROLD POWELL, LOS ANGELES, CAL.,
REPRESENTING THE CITRUS PROTECTIVE LEAGUE OF
Mr. POWELL. Mr. Chairman and gentlemen, I represent the Citrus Protective League of California, which is an organization that represents the growers and shippers of citrus fruits in handling the general questions which affect the industry. The Citrus Protective League of California recommends that no change be made in the rates of duty under Schedule G, agricultural products, etc., of the tariff act of 1909.
I ask permission to file a brief and also to file a supplementary statement entitled the “Lemon industry of Italy, Bulletin No. 10 of the Citrus Protective League of California,” which sets forth the results of an investigation of the citrus fruit industry of Italy.
The CHAIRMAN. Do you want those simply filed or printed?
Mr. POWELL. I would like to have them filed and printed in the record.
The CHAIRMAN. They will be printed in the record.
Mr. POWELL. I would like to speak of the box shook question that the last speaker touched on. The use of American box shooks has not followed the fluctuations in the current of imports of Italian lemons into the United States, nor has it fluctuated with the different rates of duty established by Congress. In 1906 the exports of lemons from Italy to the United States amounted to 137,968,259 pounds. The duty collected on American-grown packages was $22,166.40. In 1908 the exports from Italy to the United States increased to 178,051,782 pounds. The duty collected on American-grown packages decreased to $10,241.25. The increase in the imports of lemons in the two years was 29 per cent. The decrease in the duty on American-grown packages was 53.8 per cent, though the duty on both the lemons and the packages remained the same.
In explaining the decreased use of American box shooks the American consul at Palermo has the following to say:
Upon looking into the reason of the falling off of the use of American box shooks for the manufacture of boxes, which is pointed out in your letter of July 11, American beech wood has been found too soft and less durable than the Austrian.
Mr. POWELL. A speaker this morning referred to a report by Mr. Powell, of the United States Government, appearing in the Yeai book of the Department of Agriculture for 1907 in which it was stated Mr. Powell showed that the cost of producing lemons in California was $1.06 a box. The report contains no such statement.
It gives the cost of producing lemons in a certain individual grove, and the statement has been made out by taking an individual grower's account with general returns and making out an account of that kind.
Mr. HARRISON. You are the Mr. Powell to whom you refer?
Mr. HARRISON. For how many years were you connected with the Department of Agriculture?
Mr. Powell. About 10 years.
Mr. HARRISON. When did your connection with the Department of Agriculture terminate? Mr. POWELL. Two years ago.
Mr. Harrison. When did you become connected with the California Citrus Protective League ?
Mr. POWELL. The 1st of January two years ago.
Mr. HARRISON. At the time you became connected with that league you severed your connection with the Department of Agriculture?
Mr. POWELL. Except as consulting pomologist.
Mr. POWELL. I am not; no. I severed my connection with the Department of Agriculture a short time after I became manager of the California Fruit Growers' Exchange.
Mr. HARRISON. Are you not still carried on the rolls of the Department of Agriculture ?
Mr. POWELL. No, sir; I am not.
Mr. HARRISON. And you are not now receiving a salary from the Department of Agriculture ?
Mr. POWELL. No, sir.
Mr. POWELL. Not in any amount; no, sir. In leaving the Department of Agriculture I was requested, as many employees are, to remain on the rolls as consulting experts of some sort or other, and I remained at $1 a year--which is the usual way of handling matters of that kind—as consulting pomologist of the United States Department of Agriculture.
Mr. Harrison. And you still occupy that position?
Mr. POWELL. When I became manager of the California Fruit Growers' Exchange, this commercial organization, I resigned as consulting pomologist of the United States Department of Agriculture, and I have not been carried on the rolls since.
The report of Mr. Teak, which was referred to this morning, is an unusual report. That is a historical document back from 1909, and the figures shown in there include, in addition to lemons, 500 acres of walnuts, 500 acres of corn land, 200 acres of alfalfa, and 2,000 acres of cattle land.
The report that was referred to of the cost of producing lemons in California, $1.48 per box, as above, is before this committee for you to see the result of an investigation of selected groves, made at about two weeks' time before the hearings of the committee. That report showed about $1.48. The first comprehensive investigation of the cost of producing lemons in California was made at the time of the hearings before the Interstate Commerce Commission, and as the result of a very exhaustive investigation the commission found it cost $1.83.
Mr. McCall. Is that on the farm as they are, unwrapped, or is it ready for shipment!
Mr. Powell. That is ready for shipment.
Mr. McCall. The distinction was made this morning between those two different conditions.
Mr. Powell. That covers the cost of production, handling, etc. The commission established at this investigation that it cost $1.83