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.361,920,000 $12,476,800

..3,500

-$1,638,500

..$1.50

Annual capacity, pounds of starch
Value of starch produced annually
Laborers employed in factories .....
Amount of wages paid annually..
Average rate of wages per day..
These figures can be elaborated so as to include the people and other industries in-
directly furnished employment and support by reason of the domestic starch manu-
facture. The factories above referred to are located in the States of New York, Ohio,
Indiana, Illinois, Kansas, and Iowa.

The public prints have informed me that one object of your bill, as voiced by the majority of the Committee of Ways and Means, is to assist our export trade by furnishing us convenient foreign markets for our surplus products. I can not conceive how this object is to be attained unless foreign countries change and materially lower their existing customs duties upon imports from the United States. The subjoined compilation of foreign customs duties, as found in Ex. Doc. No. 58, Forty-ninth Congress, second session, January 5, 1887, is my authority for the statement:

Customs duties levied and collected in foreign countries upon starch produced in the United States from corn (maize) or from potatoes.

[Compiled from consular reports, as contained in Ex. Doc. No. 58, Forty-ninth Congress, second ses

Country.

Argentine Republic....
New South Wales..

sion, January 5, 1887.]

Duty per pound, cents.

2.25

3

.72

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1.68

.24 1.3

2

1

.2

.3

1.7

.53

.97

1.56

1.6

2.6

2.7

4

1.6

1.1

1.2

1.7

.1

.8

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As appears by the above statement, eight countries or colonies levy a duty of 2 cents per pound, or more, upon starch made from corn produced in the United States, the average for these countries being 2.84 cents per pound. The average rate of duty imposed by the thirty countries enumerated which levy a duty upon starch is a trifle in excess of 14 cents per pound, or about one-half cent per pound more than is proposed in your bill. Seven countries, viz, Great Britain, Belgium, Denmark, Hawaiian Islands, Hayti, India, and The Netherlands, impose no duty upon imported starch. Salvador is not rated, and in Venezuela the importation of starch from the United States seems to be prohibited. In China, Corea, and Siam the rates of duty are the lowest; while in the British colonies of Canada, New South Wales, and Victoria the imposts are among the highest.

To many of the countries mentioned we do not now and can not export starch by reason of their high rates of duty. If we can not export now with our domestic starch industry in its present condition, I do not perceive how we can export when

foreign competition shall have closed the doors of very many of the corn-starch_factories now in operation in this country. We shall not only lose our home markets, but fail to find the foreign markets which are delusively offered to us, unless perchance the Congress of the United States proposes to legislate for other countries than our own.

The starch factories in this country consume annually about one-third as much corn as we export. Some political economists have urged that the price of our surplus products for export, and especially of cereals, was the principal factor in determining home-market values. If this is true it becomes a serious question as to what effect a curtailing of the consumption of corn by our starch factories would have upon the price to be received by the farmer for his crop of corn. The element of uncertainty is so great that it seems dangerous to speculate as to what the price of corn may be, and as to how little the farmer may receive, and how much he can afford to lose. This aspect of the case is referred to simply on the ground that the interest of the farmer who produces the corn ought to be considered as well as that of the manufacturer who uses the corn as raw material in the production of starch.

One object of the bill seems to be to admit raw materials free. Our raw material is Indian corn, of domestic production, upon which the existing rate of duty is 10 cents per bushel. Your bill does not propose to change the rate. If, as your bill proposes, the duties on wool are to be reduced or abolished, why should not the duty on Indian corn be reduced or abolished? The principle in favor of free raw material, which is claimed to underlie your bill, ought to apply to Indian corn and wheat, in my opinion, as well as to wool and potatoes. The duty of 10 cents per bushel on corn is equivalent to an ad valorem rate of 16 per cent. with corn at 60 cents per bushel in New York; with corn at 40 cents in Chicago, 10 cents per bushel equals an ad valorem rate of 25 per cent., and with corn worth 20 cents per bushel in Nebraska, the duty on corn is equivalent to an ad valorem rate of 50 per cent.

The average rate of wages prevailing in starch factories in Germany is not more than 60 cents per day, as against $1.50 per day in this country. Germany, with her high protective tariff, far more than England, is to be feared on account of her competition in all branches of trade and manufactures. The Germans make starch from potatoes and rice, but principally from potatoes. Potato starch is used for the same purpose as starch made from corn. The price very largely governs the use of the one or the other product. Unless a duty of 2 cents per pound upon corn and potato starch is allowed to remain, foreign-made starch will dominate our markets.

The estimates of the Committee of Ways und Means indicate that, by a reduction of one-half in the rate of duty on corn or potato starch, the importations would remain the same as last fiscal year, and that the revenue from starch would thus be reduced one-half. Such an assumption is not tenable. On the contrary, if the duty on starch is reduced to 1 cent per pound the importations of foreign-made starch will be ten or twenty, or fifty times more than last year, and the revenue derived by the Govern ment correspondingly greater.

If there has been a demand upon the part of any class in the community for a reduction of the duty on starch, I have not heard of it. The value of the corn starch annually consumed in the United States amounts to about 6 pounds per capita, valued at about 24 cents. The by rden of the existing rate of duty, therefore, can not be very great or extremely harmful. Rather than run the risk of imperiling an important industry, and probably of working great injury to many thousand farmers, sound policy would seem to dictate that the duty on corn or potato starch should not be reduced.

Instead of the provision in your bill relating to starch, I respectfully recommend that "root flour" be stricken from the free list, and that the following amendment be inserted:

"Corn starch, potato and rice starch, and all other starch, or substances fit for use as starch, or intended for such use, two cents per pound."

I am, very respectfully, your obedient servant,

8. D. PHELPS.

CORN STARCH-WHY THE EXISTING DUTY SHOULD NOT BE REDUCED-PROPOSED AMENDMENT TO THE MILLS BILL-CONSUMPTION OF STARCH PER CAPITA IN THE UNITED STATES-DUTY OF TEN CENTS PER BUSHEL ON INDIAN CORN-CHEAP CORN FROM THE ARGENTINE REPUBLIC-HOW THE FARMER IS PROTECTED ON HIS AGRICULTURAL PRODUCTS-THE DUTY LAID ON STARCH IN FOREIGN COUNTRIES-forEIGN COUNTRIES TO HAVE NOT ONLY FREE TRADE, BUT PROTECTION AGAINST STARCH PRODUCED IN THE UNITED STATES.

[Letter to Hon. William McKinley, jr., June 14, 1888.]

Hon. WILLIAM MCKINLEY, Jr.,

House of Representatives, Washington, D. C.:

NEW YORK, June 14, 1888.

DEAR SIR: Pursuant to your request I submit a few additional remarks relating to starch.

The Mills bill (Fiftieth Congress, first session, H. R. 9051, Report No. 1496, April 2, 1888), in lines 364 and 365, provides as follows:

"Potato or corn starch, rice starch, and other starch, 1 cent per pound."

Under "Schedule G-Provisions" of the existing law, the duty on starch is as follows:

"Potato or corn starch, 2 cents per pound; rice starch, 24 cents per pound; other starch, 24 cents per pound.

In other words, the Mills bill proposes a reduction in the duty on starch made from Indian corn or potatoes of 50 per centum, or from 2 cents per pound to 1 cent per pound. Why this reduction was inade or proposed in the bill I do not know. Perhaps Mr. Mills, or some of the other members constituting the majority of the Committee on Ways and Meaus, can tell. So far as I know there has been no complaint upon the part of consumers of starch, and no demand made by them for a reduction of the existing rate of duty.

If the present law is to be changed, I propose as an amendment to its provisions and also to the Mills bill the following provision relating to starch:

Starch: Potato and corn starch, rice and other starch, including all preparations or manufactures from whatever substance produced, in a condition for use as starch. or intended for such use, whether under the name "root flour," "sago," "sago floar," "potato flour or farina," 2 cents per pound.

Such an amendment would eradicate many of the evils which now militate against the domestic starch industry, and would prevent the introduction duty free, as now, of many articles falsely invoiced as something else, but really starch, and imported and intended for use as starch.

By referring to the Congressional Record, May 15, 1833, page 4341, in the tabulated statement given in order to show how the farmer is injured by the duty on starch, Mr. Martin, of Texas (quoting Mr. Stewart, of Georgia), claimed.

That a farmer's family, consisting of a husband, wife, two sons and two daughters six persons in all, consume annually $4 worth of starch, upon which a duty of 94 per cent. ad valorem is levied, amounting to $3.76. Under the Mills bill it is proposed to reduce the duty one-half, or to 47 per cent., which would amount to $1.88, thus mak ing a saving of $1.88 per annum to the farmer and his family.

The above statement is fallacious and misleading. The consumption of starch in the United States, instead of being $4 for a family of six persons, or 66 cents pet capita per annum, is only about $1.44 for a family of six persons, or about 24 cents per capita. The total consumption of all kinds of starch in this country is about 360,000,000 pounds per annum, or 6 pounds per capita. At ports on the Atlantic seaboard the best grades of starch for export are worth about 4 cents per pound. In the interior the price will average not more than 3 cents per pound, but for the purpose of the argument I have taken the highest price. The duty of 2 cents per pound imposed upon the imported starch made from corn, if the starch were honestly invoiced, would amount to about 70 per cent. ad valorem, instead of 94 per cent. At least one-half of the starch consumed in this country is used by manufacturers, and in considering the farmer the consumption is not more than 12 cents per capita, or 72 cents per annum for the family of six persons.

But waiving this latter phrase and summarizing, we find that the advocates of the Mills bill, for the purposes of their argument, make the annual consumption and cost of starch three times greater than it is; they make the current rate of duty more than one-fourth greater than it is; and with a proposed duty of 47 per cent. they profess to intend to save to the farmer's family of six persons $1.88 per annum. The farmer's family, however, even with a duty of 94 per cent., can not and does not cousume more than $1.44 worth of starch per annum. Thus the bill of tariff reformation by some occult means proposes not only to give to the farmer his starch worth $1.44 for nothing, but to pay him $1.88 besides. The inconsistency of the proposition is apparent.

The advocates of the Mills bill, perhaps, have stopped short. They may not have thought it necessary to tell the whole story. Certain it is, that in all the speeches thus far delivered in favor of the bill, I have failed to find any reference to the duty of 10 cents per bushel levied upon Indian corn under the existing tariff. Mr. Mills does not propose in his bill to change this duty. The protection to the farmer who raises corn is to remain the same as now. Suppose we change the view from starch to corn. If the same farmer with his "ordinary family" and his two sons to assist him, cultivated 50 acres of corn, yielding 26 bushels per acre, or 1,300 bushels, he would receive as his share of protection at 10 cents per bushel $130, according to the arguments of those who framed and who praise the Mills bill, or $126 more than if he got his $4 worth of starch for nothing. The corn crop of the United States in 1886 was estimated at 1,665,000,000 bushels, or 27.7 bushels per capita. At 10 cents per bushel (60,000,000 population), this would amount to $2.77 per capita, as against 24 cents per capita, which the people of the country, according to free-trade proselytes, have to pay by reason of the duty on starch.

The defenders of the Mills bill, while demanding a reduction of the duty on starch made from corn, deny that the duty of 10 cents per bushel on corn is of any significance whatever, and that it may as well be abolished. Whatever the pretense may be, the bill proposes to retain the duty on corn, which is the starch manufacturers' raw material, and to reduce the duty on starch made from corn from 2 cents per pound to 1 cent per pound. Those who assert that the farmer in this country requires no protection for his corn, because he is so far master of the situation as to dominate the markets of the world, are not well informed or are not honest. Our comparatively small exports of corn last year and thus far this year were mainly due to the fact that Russia and the Argentine Republic can undersell us in European markets. With the duty now imposed removed, corn from Buenos Ayres, and not corn from Chicago and the West and South, would supply the markets on the Atlantic seaboard.

On April 27, 1888, according to the Buenos Ayres Herald, published at the principal city and port of the Argentine Republic, the price of yellow Indian corn (maize), which corresponds to the commercial corn grown in our Western States, was quoted at $2.90, in Argentine currency, per 100 kilos (220 pounds). The paper currency of the Argentine Republic is at a discount of 45 per cent, as compared to our own, so that on the date named the price in Buenos Ayres was $1.59, our currency, per 100 kilos, or seventy-two one hundredths of a cent per pound, equivalent to 40 cents per bushel of 56 pounds. The rate of freight on corn from Buenos Ayres to the port of New York is $4 per ton of 2,240 pounds f. o. b., which equals 10 cents per bushel. Add the freight to the cost of the corn, and we find that on the date named Indian corn from Buenos Ayres could have been laid down in New York for 50 cents per bushel. On April 28, 1888, the price of cash corn (No. 2) of domestic production in New York was 684 cents per bushel. Upon that date, therefore, even after paying a duty of 10 cents per bushel, corn from Buenos Ayres would have cost only 60 cents per bushel, or 84 cents per bushel less than home-grown corn, or 184 cents less per bushel had there been no duty. If, as claimed by the advocates of the Mills bill, the duty raises by so much the price of the article upon which it is imposed, then we are certainly paying 10 cents per bushel more for our corn in New York than we ought to, and we are paying it to the Western and Southern farmers who raise the

corn we consume.

I find no fault with the protection thus afforded our farmers. They ought to have it, and more if necessary, in order to keep our home markets as far as possible for domestic products, and not bring our growers of corn into direct competition with the peon labor of the South American States. There is not a starch manufacturer in the country, I believe, who begrudges the farmer his protection, and I do not believe there is a farmer in the country who, with the facts before him, asks or would ask that the duty on starch made from corn be reduced as is proposed in the Mills bill. The Indian corn crop of the Argentine Republic for export in 1883 was 18,222 English tons, and in 1887 the crop aggregated 220,416 tons, or a gain of more than twelve times in volume within a period of four years. What this increase means it behooves every revenue reformer and every farmer who raises a bushel of corn to consider. Canada also, along a border line of 3,000 miles, stands as a menace to the farmers of the United States, not only as to corn but as to wheat, barley, oats, rye, potatoes, and hay. The domestic manufacturer and consumer of corn pays a better price to the farmer than any foreign manufacturer or consumer can or will pay.

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The farmer in the United States is protected all along the line. From "animals" to "mustard;" from "wheat" to "potatoes;" from " corn to "pickles;" from "butter" to a pig's tail, he is protected under "Schedule G,” of the act of 1883, and Mr. Mills, with few exceptions, proposes in his bill to continue this protection. Judging from the speeches made thus far in favor of and in opposition to the bill, it would seem that very few members of Congress were aware of the existence of "Schedule G." Without going through the whole farmers' schedule and making the adequate

computations, I have made the following figures as to a few items, based upon & population of 60,000,000, and showing the tax per capita which by the present tariff, according to the Mills theory, is imposed in favor of the farmer, as per the Report of the Department of Agriculture, 1886:

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You will perceive that I have omitted the following, among other articles and items:

..tops.. pounds..

45, 000, 000

*2.00

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1.50

500, 000, 000

1.35

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2.91

§ Pounds.

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And yet the revenue reformers insist that our farmers are not protected. For the five years prior to 1886 our average exports of Indian corn aggregated 56,000,000 bushels per annum, or 34 per cent. of our average total domestic production (see Report of the Commissioner of Agriculture, 1836, page 416).

According to the same report (page 380) our production of all cereals in 1885 was 3,015,439,000 bushels, valued at $1,143,146,759, or 47 bushels per capita, valued at 37.9 cents per bushel, making the total value per capita $17.71, exclusive of potatoes, hay, tobacco, cotton, animals, and animal products. Our total exports of breadstuffs in 1886 (page 432) amounted to $125,846,558. In 1886 (page 435) we exported of all agricultural products except cotton, $279,868,953, and of such products we imported $271,821,231, leaving a beggarly balance of $8,047,722 in our favor. It thus seems that with all the protection now afforded our farmers, and with our unequaled agricultural resources, our imports of foreign agricultural products about equal our exports of similar products. Our farmers need the protection afforded them by our present tariff laws quite as much as our domestic manufacturers, and what they need and get for themselves they ought not to deny to others. If we export only 34 per cent. of our total corn crop we must consume the remainder, and it does not appear plain why we should imperil the 963 per cent. in order to save the 34 per cent. The foreign markets which the revenue reformers prate so much about are a delusion and a snare. It is our domestic markets that we should protect, Undue solicitude for the welfare of an enemy generally results disastrously.

The duty laid on starch made from Indian corn and produced in the United States is, in the Argentine Republic, 2 cents per pound, and in Canada 2 cents per pound. The Canadian duty is the same as ours, or just double that which Mr. Mills proposes to make it; and the duty on starch in the Argentine Republic is higher than ours, and more than double the rate which Mr. Mills advocates. Domestic starch manufacturers are thus confronted with several propositions so far as these two countries, as well as many other countries levying a duty on starch, are concerned:

(1) They must reduce wages, or employ labor, if they can get it, at a much less price than now.

(2) They must get cheaper raw material (Indian corn) from our Western and Southern farmers.

(3) They must reduce the price of their manufactured product 47 per cent. (4) Or they must close their starch factories and allow foreign manufacturers of starch made from corn or potatoes to supply our domestic markets.

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