.A4 EMERGENCY TARIFF. THURSDAY, JANUARY 6, 1921. UNITED STATES SENATE, The committee met, pursuant to call, at 10.30 o'clock a. m., in room 310, Senate Office Building, Senator Boies Penrose presiding. Present: Senators Penrose (chairman), .McCumber, Smoot, La Follette, Dillingham, McLean, Curtis, Calder, Sutherland, Simmons, Williams, Thomas, Jones, Gerry, and Nugent. The committee thereupon proceeded to the consideration of the bill (H. R. 15275), an act imposing temporary duties upon certain agricultural products to meet present emergencies, to provide revenue, and for other purposes, which is here printed in full, as follows: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That on and after the day following the passage of this Act, for the period of ten months, there shall be levied, collected, and paid upon the following articles, when imported from any foreign country into the United States or into. any of its possessions (except the Philippine Islands, the Virgin Islands, and the islands of Guam and Tutuila), the rates of duty which are prescribed by this section, namely: 1. Wheat, 30 cents per bushel. 2. Wheat flour and semolina, 20 per centum ad valorem. 3. Corn Corn or maize, 15 cents per bushel of fifty-six pounds. 4. Beans, provided for in paragraph 197 of the act entitled "An act to reduce tariff duties and to provide revenue for the Government, and for other purposes," approved October 3, 1913, 2 cents per pound. 5. Peanuts or ground beans, 3 cents per pound. 6. Potatoes, 25 cents per bushel of sixty pounds. 7. Onions, 40 cents per bushel of fifty-seven pounds. 8. Rice, cleaned, 2 cents per pound; uncleaned rice, or rice free of the outer hull and still having the inner cuticle on, 14 cents per pound; rice flour, and rice meal, and rice broken which will pass through a number twelve wire sieve of a kind prescribed by the Secretary of the Treasury, one-fourth of 1 cent per pound; paddy, or rice having the outer hull on, three-fourths of 1 cent per pound. 9. Lemons, 14 cents per pound. 10. Oils: Peanut, 26 cents per gallon; cottonseed, coconut, and soya bean, 20 cents per gallon. 11. Cattle, 30 per centum ad valorem. 12. Sheep: One year old or over, $2 per head; less than one year old, $1 per head. 13. Fresh mutton and lamb, 2 cents per pound. 14. Cotton having a staple of one and three-eighths inches or more in length, 7 cents per pound. 15. Manufactures of which cotton of the kind provided for in paragraph 14 is the component material of chief value, 7 cents per pound, in addition to the rates of duty imposed thereon by existing law. 16. Wool, commonly known as clothing wool, including hair of the camel, angora goat, and alpaca, but not such wools as are commonly known as carpet wools: Unwashed, 15 cents per pound; washed, 30 cents per pound; scoured, 45 cents per pound. Unwashed wools shall be considered such as shall have been shorn from the animal without any cleaning; washed wools shall be considered such as have been washed with water 3 only on the animal's back or on the skin; wools washed in any other manner than on the animal's back or on the skin shall be considered as scoured wool. On wool and hair provided for in this paragraph, which is sorted or increased in value by the rejection of any part of the original fleece, the duty shall be twice the duty to which it would otherwise be subject, but not more than 45 cents per pound. 17. Wool and hair of the kind provided for in paragraph 16, when advanced in any manner or by any process of manufacture beyond the washed or scoured condition, and manufactures of which wool or hair of the kind provided for in paragraph 16 is the component material of chief value, 45 cents per pound in addition to the rates of duty imposed thereon by existing law. SEC. 2. The rates of duty imposed by section 1 (except under paragraphs 15 and 17) in the case of articles on which a rate of duty is imposed by existing law, shall be in lieu of such rate of duty during the ten months' period referred to in section 1. SEC. 3. After the expiration of the ten months' period referred to in section 1, the rates of duty upon the articles therein enumerated shall be those, if any, imposed thereon by existing law. SEC. 4. The duties imposed by this act shall be levied, collected, and paid on the same basis, in the same manner, and subject to the same provisions of law, including penalties, as the duties imposed by such act of 1913. Passed the House of Representatives December 22, 1920. Attest: WM. TYLER PAGE, Clerk. The CHAIRMAN. We have met this morning to hear gentlemen who appear in relation to the consideration of H. R. 15275, which has been referred to this committee. Mr. Hagenbarth, do you desire to proceed now ? The CHAIRMAN. If you will proceed, then, Mr. Hagenbarth, the committee will be very much interested in what you have to say. STATEMENT OF MR. F. J. HAGENBARTH, SALT LAKE CITY, UTAH, ON BEHALF OF THE WOOLGROWING INDUSTRY. Mr. F. J. HAGENBARTH. I am appearing here, Mr. Chairman, on behalf of the woolgrowing industry. I am president of the National Wool Growers' Association and the executive officer of the National Live Stock Association. I will try to make my statement as brief as possible. I would like to have the committee understand distinctly at the outset that the woolgrowers are not here pleading for profit. We are simply pleading for preservation, and hope to make a showing that will convince this committee that conditions have reached a point now in the woolgrowing and sheep-breeding industry, in the Northwest particularly, and in the great West, west of the Mississippi River, where we are not only facing liquidation, but we are actually in the process of liquidating our breeding herds, our ewes; the source of our future wool and meat supply are going to market in order to liquidate the expenses and the losses that have been incurred during the last three years in this business. There has been a general supposition that the wool men, in common with many other industries of this country, during the war made a tremendous amount of money. I am sure certain members of this committee will remember that when the war broke out the wool men were called to Washington in 1918 by the Council of National Defense and asked to turn their wool over to the Government of the United States on the plea that it was a war necessity, that there was no shipping, and that the Government needed the wool. The woolgrowers did this, and they not only did it, but they based their prices on which wool was turned over to this Government on the prices obtaining July 30, 1917, going back a year. In the meantime costs continued to advance. Senator LA FOLLETTE. What were the wool prices in 1917 ? Mr. HAGENBARTH. The average price to the grower in 1917 would average around 50 cents a pound, Senator. They were about 18 per cent higher in 1918 at the time this agreement was made with the Government. Now, by doing that the wool growers shut themselves out from the possibility of making any excessive war profits or building up a surplus to take care of the shock which subsequently came about. It might have been very poor business, but it was at least good citizenship. And it is a fact that this was done. In the following year, after the armistice was declared, we found the Government with about 400,000,000 pounds of wool on hand. The Government entered into the market as a competitor with the woolgrowers in the sale of its surplus products, so that the prices in 1919 that were obtained were not excessive. I think you will find in the report of the Tariff Board, if those figures are available, that the cost of production of wool in the West amounted to from 45 to 48 cents a pound, after making all proper credits for the sale of the mutton and by-products pertaining to the industry. Senator LA FOLLETTE. Did you state the price that was realized in 1919? Mr. HAGENBARTH. The price that was realized in 1919 varied, Senator La Follette. Senator LA FOLLETTE. Do you know what the average was? Mr. HAGENBARTH. The merino wools brought very good prices. The average, perhaps, would be around 60 cents per pound. But unfortunately the lower-grade wools, through a peculiar circumstance which was caused by the Government initially, brought very low prices; in fact, some of those wools were unsalable. I would like to know, Mr. Chairman, how much time this committee is going to allot, because if these questions are going to be answered intelligently and fully, I would have to be governed by the time allotted. The CHAIRMAN. Well, Mr. Hagenbarth, you are perhaps just as much interested in brevity as the committee is. Mr. HAGENBARTH. I want to be brief, but at the same time I want to answer fully and intelligently questions that are asked by members of the committee. The CHAIRMAN. The committee is anxious to have this bill reported to the Senate and passed at this session, if possible, and the longer the hearings are prolonged the more difficult it will be to pass the measure. Mr. HAGENBARTH. I might state briefly, in answer to your question, Senator La Follette, so that it will be understood, that the Government served notice on the wool manufacturers and others, that wools suitable for soldiers' uniforms would be used by the Government, and the very fine merino wools in this country were to be used for civilian use only, together with the shoddy and other substitutes. The manufacturers accordingly adjusted their machin ery for the use of fine merino wool, and they developed styles and developed a large trade for these fine merino wools, with a great deal of competition in those fine merino wools for civilian use. When the war was over and the Government began canceling its orders for soldiers' uniforms, etc., there was a large stock of coarse three-eighths wools and quarter-blood wools and other wools thrown on the market for which there was no demand, owing to the fact that styles and everything else had been arranged for the fine merino wools. Those wools sold down to very, very low prices, as low as, for example, 20 cents per pound for quarter-blood wools which cost 45 cents per pound to produce. Now, the emergency feature of this is what I presume this committee is interested in. We are not here to discuss economic principles of tariff; we are not writing a tariff, as I understand, at this time, at all. It is an emergency measure that is being considered, and it is our plan to show the emergency. Now, the wool industry in this country, in common with all industries, is suffering from poor credit and mighty poor markets, poor consumptive power; the mills that would consume our product are shut down, and we have all the other evils that are afflicting the economic body of the country. But what we want to call your attention to particularly is a condition that is not entering into the situation of any other industry, and that is the physical condition that has entered into this problem, which I will explain to you. In the winter of 1918-19 the West was visited with a drought, all the western country, and the Northwest, resulting in very light snowfall. The largest rivers in the West failed to give their usual supply of water. The Snake River in Idaho, the greatest irrigation stream in the world, not excepting the Nile, was so low that women and children would walk across the river in order to say in future years that they had done so. That resulted in a 50 per cent loss in the hay crop; sugar beets, grain, and crops of all kinds were reduced by about 50 per cent throughout that country. And all during the summer of 1919 there was not one drop of rain, until the latter part of September. And at that time all the accumulated moisture that had failed to come before began falling, and in October we were in the midst of winter. And that winter continued for seven solid months. In October there was 2 feet of snow over a great area in the West and the Northwest, and whereas we usually figured on feeding for 90 days as the extreme maximum, we fed at that time for as much as 7 months, owing to the light crop of hay, which, as I previously said, amounted to only about 50 per cent of the usual hay crop, and so the hay went up in price from $4 a ton to $30 a ton, the average price being from $20 to $25 a ton. Cottonseed meal was shipped in from Texas and Oklahoma to save that stock, which cost us as high as $100 a ton, or 5 cents a pound, and you men who know cottonseed meal know what that means. Corn cost about $90 a ton delivered to the railroad stations. In addition to that, we had the extra cost of taking it out. Now, I am citing all these details so that you gentlemen will understand the statements I am going to make. The live-stock men had to take one of two horns of this dilemma. He either had to refuse to feed his live stock and lose them entirely through starvation, or he had to go to nis bank or his cattle-loan company and mortgage his farm or his ranch and borrow money to buy this feed with, or he had to ship his stock down to Texas, New Mexico, or Arizona by rail, a country where they had good feeding conditions, and winter his stock there and ship them back again in the spring. Most of them chose taking a chance on buying the feed and mortgaging their live stock. We came out of that winter with mortgages on sheep averaging $9 a head throughout the entire West. That is unbelievable, but it is so; and the value of those sheep to-day is not that great, and there is going to be a loss not only to the growers but to the banking structure of that country that will be unparalleled unless something can be injected into this situation to stabilize values. The banks never can liquidate these loans under present market conditions, and you will understand that when I tell you that ewes that are mortgaged at $9 a head are shipped down to Chicago, and if you get a dollar and a half a head for them you are getting a big price. Ewes weighing 93 pounds—and those of you who know sheep know that a 93-pound ewe is a ewe in good, fat, fleshy condition-have sold as low as 33 cents a head. Senator NUGENT. Excuse me a moment. Do you mean 33 cents a head net to the grower? Mr. HAGENBARTH. Thirty-three cents net a head to the grower; yes, sir. Those sheep were shipped from Rock Springs, Wyo., by the Rock estate. They struck the market at a time when there was no demand. There was so much of that stuff coming in for liquidation purposes that the market could not absorb it. Senator NUGENT. Well, isn't it true that the freight charges and the commission charges, etc., amounted to somewhere in the neighborhood of $5 per head on those sheep? Mr. HAGENBARTH. Well, hardly that much. The CHAIRMAN. Mr. Hagenbarth, would this bill materially benefit that condition? 'Mr. HAGENBARTH. It would, Mr. Chairman. Senator SMOOT. It would at least stabilize the market and give you a market that you haven't got now? Mr. HAGENBARTH. Yes, sir. Now, leading up to that question, if the chairman will permit before I answer your question I would like to state two other facts. The CHAIRMAN. We want all the information we can get. Mr. HAGENBARTH. Now, I realize that no business has got a right to come here to Congress and ask for help under ordinary circumstances. If we had an ordinary change of administration, under ordinary circumstances, I feel that the wool industry, or any other industry, could wait in an orderly manner until in its wisdom Congress passed such tariff measures or any other acts as fit the circumstances. But we have an emergency here that demands immediate action. We are discussing the question of a man who is out in the water and has sunk twice and is about to go down for a third time, whether we will throw him a plank to save him temporarily until the boat comes along, or whether we will say to him, "Wait until the boat comes." |