MONDAY, JANUARY 10, 1921. UNITED STATES SENATE, The committee met pursuant to call in room 310, Senate Office Building, at 10.30 o'clock a. m., Senator Porter J. McCumber presiding. Present: Senators Penrose, Smoot, McCumber, La Follette, McLean, Calder, Sutherland, Simmons, Thomas, Gore, Nugent, and Jones. Senator MCCUMBER. Senator Ransdell, did you wish to be heard this morning? Senator RANSDELL. Mr. Chairman, yes; the Louisiana sugar growers would like to be heard. Senator Gay and myself are here with them, and if the committee is ready now I would like to present Mr. Robert E. Milling, who is himself a sugar grower and thoroughly familiar with the Louisiana sugar situation, and who will state the case briefly. Senator MCCUMBER. We will be glad to hear from you, Mr. Milling. STATEMENT OF MR. ROBERT E. MILLING, NEW ORLEANS, LA. Mr. MILLING. Mr. Chairman and gentlemen of the committee: If there is no objection on the part of the committee, I wish to make a brief statement, and if any member of the committee desires thereafter to ask me any questions I would be pleased to answer them. Senator MCCUMBER. Very well. Mr. MILLING. As I understand, the only question so far as the sugar interest is concerned, is as to whether or not the amendment proposed by Senator Gay of Louisiana to include sugar in the emergency tariff be adopted. We will not go into discussion of the necessity of the bill, because it seems to be universally conceded that the agricultural interests of the United States are in such depressed condition on account of the decline in prices that it is imperative that some remedial legislation be enacted. This bill has been presented to you from the House. It failed to include sugar. Upon its presentation to the Senate an amendment has been offered to include within its provision a duty upon sugar, and the question presented to you is, shall this amendment be reported as part of the bill? To determine this question the committee will necessarily determine— 151 First, Are the market conditions of sugar such as to justify the imposition of the tariff? Second, Would the tariff be fair to the consuming public? Third, Would such tariff yield substantial revenues. to the Nation? Senator MCCUMBER (interposing). I would say that as to reporting this bill, I do not think any of the committee have any consideration whatever for the question of revenue. That will be taken care of in a new revenue bill. The whole purpose of introducing this bill, in the first instance, in the introduction of it in the House and as presented by certain members of the committee, was to take care of certain agricultural products that they felt could not properly await the revision of the revenue laws. Mr. MILLING. Certainly. I only conceived the idea of discussing that phase of the case and showing the material benefits in the way of increased revenue to the Nation because of the difference in opinion between members of the two great parties on the question of tariff. We understand that it is the theory of the Republican Party to impose a tariff on commodities that will protect and foster the industries of the United States, whereas the other party adheres to the theory that no tariff should be imposed except to yield revenue, and that a tariff should be imposed upon those commodities which produced the greatest amount of revenue without regard to the protection of the industry. If this latter class could be appealed to and shown that this emergency tariff would likely, in the next 10 months, yield from $75,000,000 to $100,000,000 in revenue, it might have the effect of causing some Senators to support the measure who otherwise would not do so. But, accepting the suggestion of the honorable chairman, I will not discuss that phase of the question further, but will confine myself to answering the first two questions propounded. First. Are the market conditions of sugar such as to justify the imposition of the tariff? To answer this question it will be necessary to take into consideration the market price of that commodity at the time of planting and cultivating the present crop, and the costs incurred in producing same. When the 1920 crop was planted, and during the whole time it was growing, all costs of production had reached the maximum, which was the highest, perhaps, known in the history of the United States. In order to successfully grow a sugar crop it is necessary that there be rapid and thorough cultivation, liberal application of fertilizers, and the purchase of all things necessary to promptly and efficiently operate a large plantation. Those costs in 1920 were three times their cost prior to the breaking of the World War. For example, the cane producers of Louisiana paid $65 to $85 per ton for fertilizers, which prior to the war cost from $18 to $25. They paid $6.25 to $6.50 per bushel for clay peas, which are used at the rate of 14 bushels per acre in sowing one-third of the plantation, to be plowed under the following fall as a fertilizer. These peas prior to the war cost $1 to $2 per bushel. They paid for the necessary mules upon the plantation from $350 to $450 per mule, whereas prior to the war such mules cost from $150 to $225 each. They paid from double to treble the price for plows, gear, implements, and all kinds of wagons and machinery of every description. They paid a heavy increase in freight rates in transporting all of these commodities to the plantation. These costs being enormous, nothing short of a full crop and a price based upon production costs-in fact, a price of from 15 to 18 cents per pound-would have brought the sugar producers out without a loss. But instead of having a full crop they harvested hardly a half crop, and instead of the price being from 15 to 18 cents it is less than half that amount. So with these statements, which can and will be substantiated by figures given by Mr. Chaffe, who will follow me, it certainly is proved beyond controversy that the sugar producers of Louisiana are a class of agriculturists that are suffering as much as, if not more than, any other agriculturist in the United States from the rapid decline in price. In fact, gentlemen of the committee, you can hardly conceive of the conditions. They are appalling. We have faced floods from the Mississippi River; early freezes; seen the crops of whole plantations destroyed by these disasters; but never in the history of the industry has it been in the condition that it is to-day. This is easy of illustration. For example, take a place that in 1913 cost $100,000 to grow the crop up to harvest time. Suppose that crop had been destroyed entirely so that not one cent had been derived therefrom. The loss would have been $100,000. That same crop this year has cost about $300,000, and, harvesting only a half crop, the gross returns from the same will not amount to over, say, $100,000 to $150,000, so the owner of that plantation, instead of being in debt to the extent of $100,000, the amount he would have owed in 1913 if his crop had been entirely destroyed, does, at the end of this, the 1920 season, owe a much greater sum. And what further confronts him? Will he be able to discharge this debt in the future by receiving high prices? No. Virtually we are back to prewar prices, and he is confronted with a heavy debt that has been contracted on the basis of expecting to receive a high price for his product and paying a correspondingly high price for the production. We have understood that the argument has been made by some that the imposition of the proposed tax would have the effect of simply benefiting the manufacturer of sugar and not the grower of cane. That is not true with reference to Louisiana, for by agreement in the early part of the season when they were confronted with no market and an absolute sacrifice of their cane based upon the price of sugar if forced upon the market, agreed with the manufacturers that they would deliver the cane to the factory, receive an advance thereon, and would accept settlement in full based upon the actual amount received for the sugar when sold. The contract entered into is usually to give the cane producer the value of 100 pounds of sugar for a ton of cane. Senator SMOOT. You are very fortunate as compared with the beet-sugar manufacturers? Mr. MILLING. Yes. I understand that they bought at a fixed price. Senator SMOOт. They had a contract? Mr. MILLING. They had a contract at a fixed price. Senator SMOOт. And that contract of all the growers was to pay a minimum of $12 a ton? Mr. MILLING. The manufacturer, however, is much better off than the grower, for he is purely a manufacturer, and in our section Senator SMOOT. Yes; I say he is. Mr. MILLING (continuing). Pays for the cane on the basis of the market price of sugar. The trouble, however, is that almost every manufacturer is also a grower of cane. For example, take a plantation that has raised, say, a half crop in 1920. The cost is anywhere from $10 to $14 a ton, whereas the value of that cane is only $5.50 to $6 a ton based on the price of sugar. The situation, gentlemen, is simply that the sugar industry of Louisiana is in dire distress. Men who have been in the business for a lifetime and who have encountered every conceivable disaster that has ever befallen a sugar crop and who have successfully combated all such obstacles are unable to finance themselves for the coming crop. I know of farmers who have passed through all these disaster without being forced to the necessity of executing a mortgage upon their plantation. Such plantations are still unencumbered, though the indebtedness of the owner is very heavy. Taking into consideration the debts that are owed, I doubt if such plantations could even finance themselves by executing a mortgage if they covered their present indebtedness. In other words, the country is so demoralized and financial interests are so timid with reference to making advances that there is a poor prospect, so far as the great majority of the sugar producers in Louisiana is concerned, of receiving financial aid for the growing of the coming crop. Senator GORE. What else is that land suited to? Mr. MILLING. It will raise rice, but rice is as bad off as sugar this year, perhaps worse. Those lands are very fertile and will grow almost any crop, but the most successful crop that can be grown on them is sugar cane. While the lands are as fertile, they are not as good corn lands as those of the North and West. Cotton grows to enormous size, but does not fruit. In fact, the experience of 100 years has shown that they are better adapted to cane as a money crop than any other. Senator NUGENT. Is it not true that the conditions you complain of confront practically every industry in the country? Mr. MILLING. I think so; especially the agricultural industries; and for that very reason I think that sugar should be included in the bill and a substantial tariff imposed thereon. Senator SMOOT. Beet sugar is worse off than anything in the United States. But, of course, I am not going to put beet sugar in here. I want this bill to pass as it is. If you load it up with amendment it is gone. Senator RANSDELL. Let me ask if the beet-sugar situation does not apply to the beet manufacturers rather than the growers, and if the growers are not getting from the manufacturers a pretty fair price for their products? Senator SMOOT. Certainly. Senator RANSDELL. And that there are only a limited number of manufacturers? Senator NUGENT. You would not think so, Senator Ransdell, if you should hear the beet growers talk. Senator SMOOT. For instance, if you take a manufacturer and destroy him, how are you going to raise beets? Senator RANSDELL. I do not want to destroy either the manufacturer or the grower. But there are a great many more growers than manumacturers, as Mr. Milling has stated. In our case, nearly all of the manufacturers are also growers; they catch it both ways. Senator SMOOT. In the sugar-beet industry they are in a horrible condition. I am expecting now to call on the Federal Trade Commission to begin action against them for losing money, to see if they can send them to the penitentiary for that. Senator NUGENT. I do not think there is any danger of that. Senator NUGENT. I am not chairman. Mr. MILLING. If Senator Smoot will pardon me, I suggest that it would seem to the sugar producers that it would not be fair to offer the argument that if sugar is included in the bill the same will not pass. If it is just and fair to the sugar producer to include sugar in the bill, and that is the judgment of the committee, then the amendment should be adopted by the committee, the bill reported, including the amendment, and the question submitted to the Senate, and if in the wisdom of the Senate they found that sugar should not be included, they would have a perfect right to strike it from the bill. Senator SMOOT. I know it is not fair; but I know the situation; that is all. Mr. MILLING. I think you are mistaken as to the situation, Senator. I do hope that sugar can be included and that the bill can pass with the amendment. Senator GORE. Do you think the sugar people are in any worse shape than the cotton people? Mr. MILLING. Senator, that is difficult to say. They are not in worse shape than the cotton people who have operated their cotton plantations as most of the sugar planters have theirs. The very small cotton farmer might get along better than the sugar farmer where he has been able to raise everything he needs at home. But the large sugar plantation, like the large cotton plantation, operated on the gang system, takes money every pay day to pay off the hands; whereas I know of some cotton farms that are run by furnishing the tenants something to eat and wear, which the owner furnishes out of the plantation store, and somethimes buys the goods on credit. Senator SMOOT. I do not want you to get a misunderstanding from what I said. I do not think there is an article in the United States that needs to receive assistance for an emergency as does the sugar industry of the country. But I take the position that if we are going to get this bill through and get it into law, we can not begin to load it up with amendments. I have at least a thousand letters and telegrams asking that other items be put in. I make that statement just so that my position will be understood. The CHAIRMAN. Senator, somewhat for my own information, I would like to ask, Is there anything more important than the sugar industry? Senator SMOOT. They say there is not, and that there is not an industry in the United States affected like the beet-sugar industry. Senator GAY. And cane also. |