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All figures in these tables taken from Department of Commerce and Labor. 1 Equals 11,220 tons.
: Equals 25,510 tons.
An analysis of these figures will show that although the quantity imported varies from year to year, according to the amount of potato starch manufactured either here or abroad, the total importations in the last five years exceed by over 100 per cent the total importations for the five years immediately preceding, viz, 25,710 tons were imported during the last five years while only 11,220 tons were imported in the previous five years.
Considering the above figures, it is apparent that not only has there been during every year of the past 10 a substantial importation of the foreign product but also that the extent of the importation shows a remarkable increase.
During the fiscal year ending July 30, 1912, the total importation was 7,005 tons, which would show the amount considerably above the average for the last five years, but as these figures may be somewhat exceptional we have here given the average instead of the figures for that year alone.
Reference to the above table will show that the amount of revenue contributed by potato starch under the present rate of duty is very considerable, as compared with the total annual consumption in the United States. It has, of course, increased in exactly the same ratio that the imports have increased, the total of the last five years being over 100 per cent greater than the preceding five years, viz, $772,779 being collected during the last five years and $336,606 during the five years immediately preceding
The consumption of potato starch in this country in the last 10 years has been 136,930 tons, an average of 13,693 tons per year. Of this amount consumed the proportion of imported has gradually increased until it has reached, during the year 1912, the amount of 7,005 tons, paving a revenue of $210,158.
If the duty is reduced to one cent per pound, the imports must be increased to 10,507 tons to maintain the present revenue, leaving only 3,186 tons for the American production.
If any potato starch is to be produced in this country it will be far in excess of 3,186 tons, necessarily reducing the importations of this article, with a corresponding reduction of revenue.
If the duty is reduced to three-fouths cents per pound, thereby forcing the American manufacturer entirely out of this industry, and the present consumption continues, the revenue from imports would be $205,395, or a loss in revenue of $4,763.
This industry is of peculiar value to the farmers of the sections where the factories are located, in that potato starch being made from small and partly affected potatoes, in years when, by reason of adverse conditions, the quality of the crop is poor, the factories make use of large quantities of these potatoes. In such years the money paid for starch potatoes materially lessens the loss caused by the quality of the crop.
In conclusion we would urge that, inasmuch as there is no trust, combination, or monopoly of any kind in this industry; as there is already an active and growing PARAGRAPH 296–CORN STARCH, importation; as none of the product is exported, substantially none is used for household purposes, and as potato starch already yields its fair proportion of revenue to the Government-no valid reason exists for the lowering of this duty, with the injurious results necessarily entailed to the manufacturers engaged therein and the farmers benefited thereby, especially as the only requests for a reduction in the duty come, not from consumers of the product but from representatives of German factories and American dextrine manufacturers.
PETITIONS OF CITIZENS OF MAINE CONCERNING POTATO
To the honorable chairman and members of the Ways and Means Committee:
We, the undersigned, residents and farmers of Easton, Me., Democrats, Republicans, Progressives, without regard to party, our common desire being to save the potato starch industry for our town and State, and knowing that a reduction of the present duty on potato starch would destroy the industry, thereby depriving us of a much-needed market for a portion of the potatoes annually raised, and that portion being an absolute loss without the starch factories, respectfully request you to recommend no reduction in the present duty on potato starch.
FRED R. WHEELER
(And 707 others).
Petitions identical with the above were received from the following places in the State of Maine and placed in the files of the committee: Ashland, Castle Hill and Mapleton, Caribou, Daigle, Danforth, Easton, Fort Kent, Fort Fairfield, Frenchville, Grand Isle, Houlton, Limestone, Mars Hill, New Sweden, Presque Island, Van Buren, Washburn, and Westfield.
TESTIMONY OF JOHN A. T. HULL, REPRESENTING HULL &
REEVE, MANUFACTURERS OF CORN PRODUCTS, METROPOLITAN BANK BUILDING, WASHINGTON, D. C.
Mr. Hull was sworn by the chairman.
Mr. Hull. Mr. Chairman, I hardly know whether to consider myself a witness or as an agent. I want to thank the chairman and the gentlemen of the committee when the sugar schedule was up for merely saying that I might submit a brief covering these different subjects that are affected in the corn products manufacturing industry of the United States, for the reason that they are so related to each other that it seemed to me a brief could be more intelligently prepared and submitted to the committee in a way that the individual subjects would be considered as related to each other, because they are all successive steps in manufacturing from the same products. You have a great many of these products in the sugar schedule and in the agricultural schedule, and I think that in a bill to this Congress the proposition was made to take one of the products and put it in the chemical schedule. I have, in this brief, gone to some extent into the question of tapioca and sago flours as starches, believing that they are as truly starches as any product of corn or potatoes, but we desire to go into that question more fully, Mr. Chairman, when the question of the free list is reached, because these items are now upon the free list. I do not conceive that it is necessary to take
PARAGRAPH 296-CORN STARCH.
the time of this committee to read from the brief, and I desire simply to express to the committee the thanks of these gentlemen, who represent 9 or 10 companies, for their courtesy in receiving us and permitting me to make this explanation of the brief.
Mr. Hull (of the committee). What is it that you wish to do?
Mr. HULL. We seek to have it put upon the dutiable list as starch and put upon the free list as to that imported for food purposes.
Mr. Hull (of the committee). Is this tapioca used entirely for starch?
Mr. Hull. I think it is used entirely for starch purposes. I do not think there is a pound of tapioca or sago flour, as such, imported to the United States for food purposes.
Mr. Hull (of the committee). How many companies are involved ?
Mr. Hull. I think there are nine of them involved. We have them all on the list, but I will not be positive of the number.
Mr. HULL (of the committee). What is the total capitalization ?
Mr. HULL. I have not gone into that. That I presume the committee could find out. I think the capitalization is quite large on some of them, and on others not so large.
Mr. Hull (of the committee). Do they have any trust agreement among themselves affecting their trade?
Mr. Hull. Not among themselves; no, they are all independent companies.
Mr. Ilull (of the committee). They are independently owned ?
Mr. Hull. Some are larger than others, but there is no trade agreement with them, as I understand it, at all, and I think I am safe in saying that there is not one of the companies that I represent that will not welcome the full investigation of this committee, and give the committee every facilty for an examination of their books and for any information they may desire.
Mr. Hull (of the committee). They made this same contention, I believe, in the hearing four years ago, did they not?
Mr. Huli. I think they did, in the Senate, and I think I am not violating any confidences when I say, in addition to that, that it was understood by these companies, some of them, through the chairman of the Finance Committee of the Senate, that it would be fixed so that there would be only food products admitted free, but in the fix up of the bill, I understand, it was changed so that it was not done that way. I am only giving you the information that was given to me.
BRIEF OF THE COMMITTEE OF MANUFACTURERS OF CORN PRODUTCS OF THE UNITED
Composed of: American Maize Products Co., Roby, Ind.; Clinton Sugar Refining Co., Clinton, Iowa; Corn Products Refining Co., Argo, Waukegan, Granite City, and Pekin, Ill., Davenport, Iowa, and Edgewater, N. J.; Douglas & Co., Cedar Rapids, Iowa; J. C. Hubinger Bros. Co., Keokuk, Iowa; Huron Milling Co., Harbor Beach, Mich.; National Starch Co., Oswego, N. Y.; Piel Bros. Starch Co., Indianapolis, Ind.; A. E. Staley Manufacturing Co., Decatur, Ill.; Union Starch & Refining Co., Edinburgh, Ind.
Represented at Washington, D. C., by Messrs. Hull & Reeve, Metropolitan Bank Building
PARAGRAPH 296–CORN STARCH.
NEW YORK, January 20, 1913. The COMMITTEE ON WAYS AND MEANS,
House of Representatives, Washington, D. C. GENTLEMEN: On behalf of the manufacturers in the United States engaged in producing various products of shelled corn, to wit, corn starches, corn dextrines, corn sirups, and corn sugars, we present the following requests and arguments. These are divided into five separate heads. We respectfully request your careful consideration of all the facts presented. Respectfully submitted.
COMMITTEE OF MANUFACTURERS OF CORN
PRODUCTS OF THE UNITED STATES. HULL & REEVE
Request No. 1. That your honorable committee consider corn starches, corn sirups, corn dextrines, and corn sugars under the agricultural schedule at the same time with grains and farinaceous articles, including sago flour and tapioca flour, now on the free list.
Argument No. 1.- The manufacturers submitting this brief are engaged in producing corn starch, corn sirup, corn dextrine, and corn sugar, all of which are produced from shelled corn. About 70,000,000 bushels per annum, or 200,000 bushels per diem, of shelled corn are used in making the above products in the United States. The starches, starch sirups, dextrines, and starch sugars competitive with the above corn products can be made from any starch-producing plant, and are made outside of the United States in very large quantities from potatoes, rice, barley, sago, tapioca, arrowroot, wheat, etc. To properly determine the duty that should be retained on all starches, starch sirups (glucose), dextrines, and starch sugar (grape sugar), it is, we submit, essential to consider at the same time the price and import duty on the aboveenumerated raw materials, including coin, from which starches, dextrines, sirups, and sugars, competitive with similar corn products, are being produced abroad. We submit
that if the import duty on any starch-producing raw material, other than corn, is raised or lowered by your honorable committee, there should be a corresponding raising or lowering in the import duty on corn itself-based on the starch content-as otherwise an unfair preference would be worked in favor of the foreign growers of starchproducing raw materials against the growers of corn in the United States. In the same way we submit that an undue preference would be worked in favor of manufacturers using other raw materials than shelled corn to produce starches, sirups, dextrines, and sugars, to the detriment of manufacturers producing these products from shelled corn, unless the same import duty is placed upon all starches, starch sirups (glucose), dextrines, and starch sugars (grape sugar), irrespective of the source from which they are produced. Lastly, we, as manufacturers of starches, sugars, starch sirups, and dextrines, submit that there should be a sufficiently high duty upon these manufactured products to offset the difference in cost of manufacture, and the encouragement and advantages given by foreign governments to manufacturers of these products, as will be hereinafter shown.
We suggest that each one of these products be examined and studied with reference to their apparent adaptability to compete with each other, and that a study also be made of the actual use of them in substitution one for the other. Also, that the products of all of these cereals and farinaceous materials should be grouped according to their strict merit in the matter of competition, and that not one of them should escape from one class into another by reason of an erroneous nomenclature. The department of the Government are fully equipped with data to prove to your committee not only the nature but the use of each one of these products in the United States.
Request No. 2.
That the present rate of duty on corn be retained, except that if any of the products of corn, or products identical with those made from corn, are allowed to enter free of duty, then corn should also be free of duty.
Argument No. 2.-We believe that in a broad sense anything that tends to injure or decrease the production by American fariners of corn will, in the long run, be an injury not only to the growers of corn in the United States, but also to the manufacturers of corn products. We say this notwithstanding the fact that duty-free corn would give our industry a decided advantage for the time being. We believe that we can huy corn in the Argentine in the event of corn being free of duty or carrying
PARAGRAPH 296-CORN STARCH.
a lower rate of duty than the present rate. As an example, one of the members of this committee purchased a million bushels of Argentine corn during 1912 at from 7 to 15 cents per bushel below the price of American corn at the time of purchase.
For comparison of Argentine corn with American we quote extracts from a hearing before the Senate Finance Committee in April, 1912, as follows:
“Argentine corn is quoted for May and June shipment at 53 cents per bushel at Buenos Aires.
“Canada can buy Argentine corn at the same price quoted above, 53 cents per bushel, Buenos Aires, and can land it, presumably, in Montreal, at 68 cents per bushel. There is no quoted rate to-day to Montreal, but the rate quoted from Buenos Aires to New York is 15 cents per bushel, including all landing charges.
Against our price of 75 to 80 cents at Chicago we are paying nearer 80 cents to-day than 75 cents at Chicago.'
We believe that the removal of or a serious reduction in the duty on corn will compel an entire change in the location of factories producing corn sirups, corn starches, com dextrines, and corn sugars in this country. The factories are now mostly located inland, only one being at the seaboard, hence only one in position to take full advantage of foreign-produced corn. This complete change of location would amount to almost a disaster to the industry. The real effect of an abolition or reduction of the corn duty would be that whatever foreign corn is used by the industry would displace an equal amount of American corn.
Request No. S. That all starches, including all preparations from whatsoever substance produced fit for use as starch, be dutiable at the present rates as shown in the tariff, paragraph 296, Schedule G, agricultural products, and that sago flour and tapioca four, since they are starches, be removed from the free list and subjected to the starch duty.
Argument No. 3.—A bushel of corn (56 pounds) of average quality produces from 28 to 35 pounds of commercial starch, the amount varying in accordance with the quality and moisture, so that, stated generally, it takes 3 bushels of corn to make 100 pounds of starch.
Let us see what some of the other countries do to encourage their starch industries. Notwithstanding that some of these countries permit corn to be entered free of duty, they have placed a duty on starch, and either place rice flour, sago flour, tapioca flour, and such other articles as are fit for use as starch in their starch schedules or make them dutiable at about the same rate. In confirmation of this we beg to recite the duties in force in the following countries:
Canada: In one item, 39a, general tariff, starches, rice flour, sago flour, and tapioca flour, 1 cent per pound.
Germany: Starch, 14 marks per 100 kos. ($1.50 per 100 pounds); sago and tapioca flour, whether in crude state or as flour (Mehl), 15 marks per 100ľkos. ($1.62 per 100 pounds).
France: Starch, 18 francs per 100 kos. ($1.58 per 100 pounds); sago, 11 francs per 100 kos. ($0.96 per 100 pounds); tapioca, raw, 12 francs per 100 kos. ($1.04 per 100 pounds); tapioca, granulated, 14 francs per 100 kos. ($1.22 per 100 pounds).
Bulgaria: Starch, sago, and tapioca, 15 francs per 100 kos. ($1.31 per 100 pounds). Roumania: Starch, sago, and tapioca 12 leu per 100 kos. ($1.04 per 100 pounds).
Italy: Starches, 6 to 15 liras per 100 kos., according to grade ($0.524 to $1.31 per 100 pounds); sago and tapioca flour, 6 liras per 100 kos. ($0.524 per 100 pounds).
Russia: All kinds of starch, including potato flour, sago, etc., 2.10 rubles per pound ($2.70 per 100 pounds).
Argentina: Starch of all kinds, 8 pesos per 100 kos. ($3.50 per 100 pounds).
Austria: Starch 16 kr. per 100 kos. ($1.45 per 100 pounds), sago and tapioca 30 kr. per 100 kos. ($2.73 per 100 pounds).
From the above it is very apparent that all of the agricultural countries producing starches have carefully provided for duties upon all grades of starch, including in particular sago flours and tapioca flours, in each instance, and at rates which are mostly in excess of the present rate of duty on cornstarch in the United States.
In presenting our arguments for the retention of the present rates of duty upon starches, we particularly request that the starch forms of sago and tapioca, known as sago flour and tapioca flour, shall also be made dutiable as starch. We submit not only that they are starches, but that all authorities on starch and the action of all countries levying a duty upon starch prove that these products are so clearly of the same class as starches made from other products as to require their classification with the starches in order to make a uniform and reasonable protection to manufacturers of starch using other raw materials.