PARAGRAPH 290-WOOL GREASE. Mr. HOBBS. Not with small mills. It would affect a great many mills, though, throughout the whole country. Mr. HARRISON. Naphtha is on the free list, is it not? Mr. HOBBS. I said no change in the tariff would affect our cost of niaking the degras, that it would remain just as high. Yes, it is on the free list. With reference to Mr. Harrison's question, I call attention to the fact that Mr. Hartley uses sulphuric acid in his process. We do not use sulphuric acid, but use naphtha, so that any change in the duty can not help us in any way, for naphtha is already on the free list. I wish to hand in a petition from a large number of mills on this same subject. The COMMITTEE ON WAYS AND MEANS, House of Representatives, Washington, D. C. JANUARY 14, 1913. GENTLEMEN: We, the undersigned, American manufacturers of a product commercially known as wool grease or degras, respectfully and earnestly request you to increase the duty now levied on this product under paragraph 290, Schedule Ğ, of the tariff act of August 5, 1909, from one-fourth cent per pound to one-half cent per pound. Wool grease, as its name implies, is a grease that is in wool as it is sheared from the sheep's back and which is later recovered and made a merchantable grease by expensive processes of manufacture. The domestic production of wool grease is about 17,000 barrels, or 6,500,000 pounds, per year, and the importations average a little over 12,500,000 pounds, so that the total annual consumption is about 19,000,000 pounds. It will be noted from the above that the imports are about 65 per cent of the total consumption. Domestic prices, on account of the great amount of imports of foreign grease, have ruled so low that the American manufacturer has been compelled to sell his grease at a loss. The cost of recovery is much greater in this country than abroad, on account of the much higher cost here of plant, materials, and labor, and the present duty is actually too low to enable the domestic manufacturer to sell his grease at a price that will repay him for its recovery. We believe that public policy justifies this duty, and, if it is increased as requested, so that the business can be carried on without loss, it will induce other manufacturers to put in plants for the recovery of what has hitherto been waste and will also be a public benefaction in encouraging action for the purification of the rivers which will necessarily follow. The amount of the duty proposed will be neither a burden nor a hardship to the domestic consumer of wool grease, but, small as it is, it is an important matter to the manufacturer, and we trust and pray that our petition will be granted. (Signed:) PARAGRAPH 291. PARAGRAPH 291-CHICORY ROOT. Chicory root, raw, dried, or undried, but unground, one and one-half cents per pound; chicory root, burnt or roasted, ground or granulated, or in rolls, or otherwise prepared, and not specially provided for in this section, three cents per pound. CHICORY ROOT. BRIEF SUBMITTED BY E. B. MULLER & CO., PORT HURON, MICH. The WAYS AND MEANS COMMITTEE, PORT HURON, MICH., January 16, 1913. House of Representatives, Washington, D. C. GENTLEMEN: We are interested in the proposed revision of the present tariff act, Schedule G-agricultural products and provisions, paragraph No. 291; item, chicory root dried and chicory root roasted, granulated, in rolls, and otherwise. We object to any reduction of the present duties on any of the different forms of chicory. We have been engaged in the chicory business in the United States continuously for a period of about 22 years, first as importers and representatives of foreign chicory manufacturers, and the past 15 years as growers and manufacturers of domestic chicory. During the earlier years of our experience in the chicory business all chicory consumed in the United States was imported. During the administration of Grover Cleveland a duty was placed upon chicory root, which made it possible to start the growing and manufacture of chicory in the United States, and the production of domestic chicory has been continuous since that time, although not to the exclusion of foreign chicory. The present duty on chicory root, raw, is 14 cents per pound. This duty upon raw root is immaterial. The largest producing country of chicory root is Belgium, and it would not be practical to ship the raw root from Belgium to the United States, as the freight rate and cost of handling of the raw root would be prohibitive, and in addition the root would rot in transit. The only effect of removal of the duty on raw root would be to permit Canadian farmers to grow chicory root in competition with the American farmers, as some raw root could be produced in Canada near the border and shipped into the United States. It is really immaterial, therefore, what action is taken in regard to the duty on raw root. The present duty on dried chicory root is 14 cents per pound. Dry chicory root is produced from the raw chicory root by cutting up the latter into chunks of approximately the size of an egg and evaporating the water in a dry kiln. The dried chicory root may be safely transported and stored for an indefinite length of time. Formerly the duty on dried chicory root was 1 cent per pound, but this duty was found by experience to be insufficient to permit of the continued growing of chicory root in the United States. The acreage and production of chicory root under the former duty gradually declined, while the importation of dried root increased, because the dried root could be imported from Belgium into the United States, duty paid, at a lower price than that at which the domestic root could be produced. The increase of cent per pound in the duty on dried root resulted in an increased price for the raw root to the American farmer and an immediate increase in the acreage and production of chicory in the United States. The maintenance of the present duty on dried chicory root is necessary for the continued production of chicory root in the United States, because the growing of chicory by the American farmer is an industry requiring a very much larger proportion of labor to the acre than the ordinary crop. A chicory crop after planting requires continued cultivation, hoeing, and thinning by hand, harvesting by hand, and the cutting of the tops from the root by hand. In the employment of this labor in the growing of chicory root the American farmer has to to pay the American scale of wages in competition with the Belgian farmer who can obtain an unlimited supply of farm labor at a compensation of from 10 to 20 cents per day. This Belgian farm labor works from daylight to dark and is furnished with the cheapest possible food at an expense of a mere fraction of what it costs the American farmer to board his labor. For this reason-the difference in the cost of labor-the American farmer can not compete with the Belgian farmer without the present protective duty. The present duty on roasted and ground chicory root is 3 cents per pound, or 14 cents per pound higher than on the dried root. Dried chicory root may be called PARAGRAPH 291-CHICORY ROOT. the raw material, and the roasted and ground chicory the manufactured product. The maintenance of the present protective duty of 14 cents per pound is absolutely necessary to the preservation of the chicory manufacturing business in the United States, chiefly on account of the difference in factory labor in the United States and in Belgium, and also to some extent on account of the higher carrying charges on the raw material in this country, owing to the higher cost of the raw material which must be accumulated during the fall months of the year and carried as the source of supply for the balance of the year. Factory labor employed in the chicory factories in Belgium receives a compensation of from 40 to 50 cents per day, as compared with $2 to $2.50 per day in the United States. The American factories have no advantage over the Belgian factories in the matter of production, as the Belgian business is very much larger than the American business and consequently improvements in machinery and methods of manufacture usually originate in Belgium rather than in the United States. The present duties are not prohibitive, as the importation both of dried root, which is the raw material, and the manufactured product have continued with the present duties. It is necessary in this connection to call your attention to the fact that the season of 1911-12 in Europe was one of practically failure of the chicory crop, and that prices for chicory in Europe were higher than in the United States. In fact, European prices were so high that it would have been possible, had there been a surplus in the United States, to have exported chicory from the United States to Europe. This condition, however, is not normal, and with the return at the present time to low prices in Europe importations into the United States will resume normal proportions. The present duties upon chicory have no effect upon the American consumer. The American consumer does not buy chicory as such, except in a very limited way in the form of roll chicory. Roll chicory is the powder or by-product from the manufacture of granulated chicory and is sold in the United States as a by-product as low as it would be sold if imported. The granulated chicory is universally sold when blended with ground coffee. Any change in the price of chicory, to the extent of even two or three cents per pound, makes but a fraction of a cent difference in the cost of the blended coffee, and this fraction of a cent is absorbed by the dealer and never reaches the consumer, either as an advance or a decline. We submit that in the growing of chicory root and the manufacture of granulated and roll chicory in Belgium, the scale of wages in Belgium is so low as to absolutely prohibit the production of the root or the manufacture of the finished product in the United States without the retention of the present tariff duty. We beg to submit the following figures in regard to wages in this industry in Belgium. These figures may be confirmed by reference to reports of the United States Government officials. Daily wages of factory labor in the chicory industry in Belgium, 2 francs, or approximately 40 cents, per day. This wage does not include meals or lodging. Farm labor in Belgium, when from day to day, in hoeing, thinning, weeding, and cultivating of chicory crops, 1 franc, or approximately 20 cents, per day. This wage includes meals but not lodging. Meals consist of black bread and beer. Monthly wages for farm hands in Belgium, when employed by the month, 30 francs, or approximately $6 per month, with board and lodging. Labor in Belgium is not scarce but is very abundant at the above scale of wages. The low wages in Belgium permit the production of dried chicory root at very low prices under normal conditions. Dried chicory root can be purchased from Belgium at the present time, exclusive of the cost of the bags in which it is packed, at about $23 per ton of 2,000 pounds c. i. f. New York. Add to this price the present duty of 14 cents per pound, or $30 per ton, and it makes the cost of the Belgian dried root $53 per ton of 2,000 pounds c. i. f. New York. The chicory crop grown by ourselves, harvested in the fall of 1911 and dried during the winter of 1911 and 1912, cost us $52 per ton of 2,000 pounds in our warehouses at Port Huron, Mich. This cost covers only the cost of material and labor and allows nothing for interest on plants and machinery, nothing for depreciation, nothing for taxes and nothing for overhead expenses. The freight rate from Port Huron to New York is 23 cents per cwt., or $4.70 per ton. This crop is harvested in the United States from about the 15th of October until the 1st of January, and it is dried in dry kilns in Michigan, the drying usually being finished during the month of March. The crop, in the form of dried root, has to be held to furnish the raw material for the balance of the season, from March until the following October. The cost of storage of this crop may be placed at 50 cents per ton as a minimum for six months. Insurance for six months would be a minimum of 50 cents per ton. Interest at 6 per cent would figure $1.56 for six months. The cost of domestic dried root, without allowing PARAGRAPH 291-CHICORY ROOT. anything for interest on plants, depreciation, taxes, or overhead expenses, as compared with the present cost of imported root, which may be bought in quantities as wanted, figures as follows: Comparing this price with the present cost of imported root at $56.60 demonstrates the fact that the present tariff duty on dried root can not be reduced without total destruction of the business of growing of chicory in the United States, and that foreign chicory may be imported into the United States in competition with the domestic root. The chicory crop raised in Belgium in the fall of 1911 was an extremely small one, owing to weather conditions, and the price was the highest ever known. The crop produced in the fall of 1911 in the United States was fully sufficient to meet all of the requirements of the trade in the United States. The importation of dried chicory root from January 1, 1912, to January 1, 1913, was therefore necessarily very small, but the above figures demonstrate that importations will again be resumed during the year 1913. The present duty of 3 cents per pound upon granulated, roasted, and roll chicory is not prohibitory. The importation of foreign chicory root under the above classification, under the present duties, has been as follows: July 1, 1909, to July 1, 1910. Pounds. 2, 884, 808 5, 891, 807 634, 597 Chicory in rolls, the only form in which chicory is sold direct to the consumer as such, is used almost entirely by foreigners resident in the United States. These foreigners have learned to use chicory before coming to the United States and persist in the purchase of the brands with which they are familiar. Some roll chicory is actually imported into the United States and sold here, but the large majority of the so-called foreign packages are brands owned by foreign houses, who have the goods put up for them in the United States by American manufacturers. The foreign houses control the sale of these brands through their American agents and maintain the prices regardless of the changing market on chicory. To reduce or abolish the duty on this roll chicory, therefore, would have absolutely no effect upon the consumer, as the foreign houses would maintain their prices regardless of the change in duty and, if the duty were removed, would again ship their own product into the United States instead of employing American manufacturers to put up the goods for them under their foreign brands. The prices on these foreign brands are higher than on the domestic brands owned and produced by the American manufacturers, and the prices on the foreign brands have been maintained regardless of tariff changes. The present price of these foreign brands of roll chicory is 5 to 6 cents per set of five rolls, according to the quantity bought, to the importing or wholesale house. The wholesale house sells to the retail grocer at about 64 cents per set. The retail grocer sells to the consumer at 2 cents per roll or 10 cents per set. The price on domestic brands of roll chicory to the wholesale trade is from 4 to 5 cents per set, according to the quantity bought and the extent to which the brand is advertised and known. In our opinion the bulk of the roll chicory is sold to the wholesale trade at 4 cents as an average. The price on domestic brands of roll chicory has fluctuated from 1 to 1 cent per set, according to market conditions, during the past 10 years, but there has been no change to the consumer, any fluctuation in price being absorbed by the retail grocer. We submit, therefore, that a reduction in the present tariff on roll chicory would result in the destruction of the business of the domestic factories who sell the cheaper styles of roll chicory and the result would be that the trade of the United States would be controlled by the foreign brands who have maintained uniformly a high price, regardless of tariff changes, and that the consumer would find no change whatever in the price of the roll chicory. Granulated chicory is not sold as such to the consumer, but is sold to the coffee roasters who blend chicory with granulated coffee. PARAGRAPH 291-CHICORY ROOT. The production of the foreign granulated chicory sold in the United States is controlled at the present time almost entirely by English chicory roasters, who by Belgian root and roast it especially for the United States trade. These English chicory roasters control the brands recognized by the domestic trade and maintain a uniformly high price. The price of the imported granulated chicory has been uniformly maintained at about 8 cents per pound c. i. f. New York, for a number of years, with the exception of the year 1911, when the price was advanced to about 10 cents, due to the high prices of root in Belgium. Trade in the imported chicory, for a period of over 10 years past, has been controlled by these foreign houses who have shown a disposition to maintain a uniform price regardless of tariff changes or ordinary market fluctuations. A material reduction in the duty would give these foreign houses an opportunity to widely extend their trade by wiping out the American industry. There would be no change to the consumer in the price he pays for blended coffee and chicory, as the following figures will prove. In the Northern States the roasted coffee used for blending with chicory is usually "Santos," which costs the coffee roaster about 20 cents per pound roasted. The mixture of coffee and chicory used in the Northern States contains from 3 to 25 per cent of chicory. The present price of domestic granulated chicory is about 44 cents. If, therefore, we take the average percentage of chicory at 10 per cent in the Northern States and figure the cost of the resultant mixture, we find as follows: 90 pounds of coffee, at 20 cents.. 10 pounds of chicory, at 43 cents.. Total........ $18.00 .45 18.45 If the duty on granulated chicory were entirely removed, it is possible, though highly improbable, that some grades of foreign granulated chicory might be sold as low as 3 cents per pound. The resultant mixture at the present time under these conditions would be as follows: 90 pounds of coffee, at 20 cents... 10 pounds of chicory, at 3 cents. Total....... $18.00 .30 18.30 This shows a difference of 15 cents per 100 pounds in the cost to the wholesale coffee roaster if chicory came in free. If a mixture of 25 per cent of chicory, the extreme quantity, is used, the difference in price would be 37 cents per 100 pounds. In the Southern States the roasted coffee used for blending with coffee is usually "Reo No. 7," which costs the coffee roaster about 18 cents per pound roasted. Å heavier mixture of chicory is used in the Southern States, in some cases the mixture running as high as 50 per cent, although this is the extreme and rather unusual. The average mixture is probably about 25 per cent of chicory. The cost of the resultant mixture to the wholesale coffee roaster would be as follows: 75 pounds coffee, at 18 cents... 25 pounds chicory, at 4 cents.. Total....... $13.50 1. 12 14.62 With chicory at 3 cents per pound, the resultant cost on the identical mixture would be as follows: This shows a difference in cost on 100 pounds of mixture of only 37 cents. If the extreme mixture of 50 per cent were used, the difference in cost would be 75 cents per 100 pounds. The consumer buys the blended coffee and chicory in lots of 1 to 5 pounds. The price to the consumer in the northern States is usually 25 or 30 cents per pound. In the South the price is quite uniformly 25 cents per pound. In the South the price of 25 cents includes the cost of the tin can in which the coffee is sold. This tin can costs from 2 to 3 cents per pound according to the size. |