TARIFF SCHEDULES.

COMMITTEE ON WAYS AND MEANS,
HOUSE OF REPRESENTATIVES,
Friday, January 31, 1913.

The committee met at 10 o'clock a. m., Hon. Oscar W. Underwood in the chair.

Present: Messrs. Harrison, Brantley, Kitchin, James, Rainey, Dixon, Hull, Hammond, Peters, Palmer, Payne, Hill, Needham, Fordney, and Longworth.

FREE LIST, ETC.

The CHAIRMAN. The committee will come to order. The first witness will be Mr. E. W. Durkee, representing the American Spice Trade Association.

TESTIMONY OF MR. E. W. DURKEE.

The witness was duly sworn by the chairman.

Mr. DURKEE. Mr. Chairman and gentlemen of the committee, subsequent to the hearing on January 20, at which I appeared as one of a committee from the American Spice Trade Association, I filed a further statement with the members of this committee; this statement was made as if in the presence of the committee under oath. There is not much that I can add to this statement except to repeat that the spice association urges the retention of whole spices on the free list on the ground that they are actual necessities of life at this time and distinctly not luxuries; that on the contrary they contribute to cheaper cost of living by making cheaper foods palatable; that a duty on spices would add to the cost of living, which high cost of living, it has been promised, would be reduced under the new tariff.

That a duty on the landed weight of whole spices by reason of shrinkage, loss in grinding, and in putting up, would be greater than the rate of duty by whatever the percentage of shrinkage and loss may be, and this loss is in some cases considerable, and this would still further add to the price paid by the consumer.

That the price paid by the consumer is not due to excessive profit, but largely to labor cost.

I tried to show as well that while 3 cents per pound would prohibit the importation of some spices in bulk it does not prohibit the importation of all spices even in bulk, and that there is actually some spice in small packages imported under this rate of duty, and that ground mustard even at 10 cents per pound duty shows an average increase in importation.

Under the provisions of the bill as passed last spring spices made dutiable at 1 cent per pound would yield $488,363.42; cloves, at 2 cents per pound, would yield $128.287.26; pimento, at three-fourths

of a cent per pound, would yield $25,834.99; sage, at one-half cent per pound, would yield $7,590.62; mace, at 8 cents per pound, would yield $32,268.40; mustard, at 6 cents per pound, would yield $84,003.97; all other, at 20 per cent ad valorem, would yield $2,114.40; total, $768,462.06.

The spices dutiable under the present tariff yielded $318,209.33; the increase under the bill of last spring would be $450,252.73.

This estimate is based on the quantities imported for the year ending June 30, 1912.

Deducting from the amount raised under the provisions of the bill of last spring the cost of collection, the net revenue, would not be great, while the increased cost to the consumer occasioned solely by this duty would be an everyday cause of complaint from every person in the country.

Besides, if there was the same rate of duty as this bill provides on both whole and ground spices, the bill passed last spring would practically destroy the spice-grinding industry in this country and injure all classes of labor employed in this industry, and the only increased revenue derived under this bill would be an increase in duties of $450,000. Is it worth while to do this for such a sum?

If the policy of this committee is not to impose prohibitive duties, the spice trade would prefer free whole spices-their raw material— and a lessened duty on ground spices.

The duties on spices by bill passed last spring would be as follows:

Above figures are from quarterly statement imports entered for consumption.

The Monthly Summary of Commerce and Labor gives total spices for year ending June 30, 1912:

The CHAIRMAN. Of course, you understand we levy this duty purely for a revenue; it could not be a protective duty because there are no spices grown in this country. At what price does a manufacturer or grinder of spices sell them to the middleman?

Mr. DURKEE. The spices to-day are sold in small packages. The profit of the manufacturer, as the statement which I filed with the committee shows in detail, is about 10 per cent; less than 10 per cent; a little over 9 per cent.

The CHAIRMAN. You would have to carry that tax down to the middleman. of course?

Mr. DURKEE. We would have to increase our price.

The CHAIRMAN. That is what I mean; you would put it on. Now, take an ordinary package of spices. What is a typical package?

You can tell me better than I can state one. Would a package of cloves be a typical package, or what would you call a typical illustration?

Mr. DURKEE. Pepper, I would say, is the spice that is in greatest

use.

The CHAIRMAN. At what price do you sell an ordinary package of pepper?

Mr. DURKEE. We sell it at 36 cents a dozen, that is, 3 cents for a can holding an ounce and a half.

The CHAIRMAN. That is, 3 cents apiece?

Mr. DURKEE. Yes, sir.

The CHAIRMAN. What does the middleman sell that to the consumer for?

Mr. DURKEE. He sells it at 45 cents a dozen, and the retailer sells it for 60 cents a dozen, and the consumer pays 5 cents a can.

The CHAIRMAN. There is a difference between your price and what the consumer pays of from between 36 cents and 60 cents?

Mr. DURKEE. Yes, sir. But that difference is not absorbed by the seller. Out of that difference has to be paid the freight and the cost of doing business, leaving a profit to the wholesaler of about 10 per cent, and the profit to the retailer, the gross profit, is 33 per cent, out of which comes his cost of doing business.

The CHAIRMAN. He gets 33 per cent and he sells a package at 5 cents?

Mr. DURKEE. Yes.

The CHAIRMAN. And he would have to continue to sell that package at 5 cents?

Mr. DURKEE. No; I do not think he could continue to sell it at that price. He would either have to pay more for the same weight of package or would get a lesser quantity in the package.

The CHAIRMAN. What did you say the imported price was?

Mr. DURKEE. The cost to the manufacturer?

The CHAIRMAN. No; I mean the imported price, where a tax would be levied.

Mr. DURKEE. The cost of whole pepper, for instance, is about 10 cents a pound-103 cents.

The CHAIRMAN. What would be the cost at the customhouse for the importation of the pepper; that is, one of these 5-cent packages? Mr. DURKEE. Well, there being an ounce and a half to a package, a dozen would hold a pound and a quarter.

The CHAIRMAN. And what is the price per pound?

Mr. DURKEE. Ten cents; that would be, say, 12 cents, at to-day's market, for the contents of a package. But the cost of putting the stuff in the package, grinding, labor charges, and so forth, is 19 cents and a fraction.

The CHAIRMAN. But the tax, carried down to the retailer, would not amount to more than about one-fourth of a cent, or less than one-fourth of a cent, on a package of pepper, would it? It would amount to less than that?

Mr. DURKEE. I think it would not amount to very much, sir.
The CHAIRMAN. Therefore the consumer would not pay it ?

Mr. DURKEE. Well, for instance, the contents of a dozen packages would be something like twelve sixty-five. These goods are sold on a percentage basis, and, for instance, if the whole pepper is worth 10