succession of strikes from trivial cause, many of which have had most disastrous consequences.

In providing by treaty for the exports of the United States, duties in Cuba were so adjusted as to give the trade to this country by differential duties ranging from 20 to 40 per cent. Under this provision our exports to Cuba have shown a most satisfactory growth, and from an insignificant amount under Spanish tariffs they reached the value of $51,300,000 out of a total of $104,400,000 imports for the twelve months ending December 31, nearly 50 per cent of the total. That the percentage was not greater was largely due to the high values prevailing in the United States, owing to control of prices of so many commodities by combinations, and to higher freight rates from the United States than from Europe, due to similar control of steamship lines.

Cuba has unquestionably benefited through United States control, first by securing a market for her sugars, when all others were closed to her, and, secondly, by the maintenance of order through the presence of United States troops during all but four years of the time which has elapsed since our war with Spain in 1898. Millions of foreign capital have been invested in Cuban sugar, tobacco, and cattle industries, in the building of railroads, the establishment of banks, and other important enterprises. But both the consumers and producers in the United States have also benefited, the first through the lowering of the tariff rate on Cuban sugar, the second by an increased foreign market for their goods.

The political overturn in Cuba in August, 1906, with the threatened destruction of foreign property, forced the United States to again intervene by authority conferred by both governments under the Platt amendment to the Senate army appropriation bill of February 25, 1902, afterwards ratified by the Cuban Congress. This insurrection, which was fortunately checked before much destruction had been accomplished, stopped all agricultural work at a critical period and destroyed confidence, so that very little planting was done for the crop of 1908, and these conditions, followed by a severe drought during the next summer, reduced the sugar crop of 1908 to 925.000 tons against 1,420,000 tons the previous year.

In the early spring of the present year it was announced from Washington that the United States troops would be withdrawn not later than February 1, 1909; further credit was then refused to the planters, imports fell off, and general stagnation followed. These are the conditions prevailing to-day, for there are very few people connected with the business of the island, even among the Cubans themselves, who believe the country is yet prepared for an unrestricted independent government, free from United States control in some form.

The subject of tariff revision will soon be under discussion at Washington. The treaty of reciprocity with Cuba, which went into effect on December 27, 1903, was for five years from that date (to December 27, 1908), "and from year to year thereafter until the expiration of one year from the day when either contracting party shall give notice to terminate."

Already a movement is suggested on the part of our beet sugar producers to prevent any reduction in the sugar schedule and if possible to terminate this treaty. These interests claim that, given a high pro

tection, domestic sugar should, within a few years, supply our consumption at a saving of some eighty million dollars, now sent abroad in payment for imported sugars. They ignored the fact that the greater part of these imports are paid for, not in cash, but in merchandise, the product of our factories, mines, and farms, over fifty millions of which now goes to Cuba alone.

Another argument against reduced duties is that the United States can not spare any of its revenue from sugar; a glance at the following figures will show the effect upon revenue, of the marked increase in domestic production:

Consumption, supply, and revenue from sugar-ten years.

Revenue effected by change in tariff August, 1907.

Temporary increase from heavy Cuban importations previous to June 30. NOTES. Sugar statistics are for calendar years; revenue for fiscal years; figures of consumption and crops from Willett & Gray's reports.

The revenue from sugar and molasses for year ending June 30, 1908, was $50,106,000.

During the ten-year period above given the consumption of the United States increased 991,000 tons, the average annual increase being slightly under 5 per cent; during the same period the supply of free sugar increased 722,000 tons, the Cuban crop 1,198,000, while our requirements from all other countries have decreased 929,000 tons, and the revenue under the Dingley tariff has (if we except the year 1907) not increased since 1899, but has rather diminished in face. of the steady increase of consumption.

Following these figures to a logical conclusion, and barring partial crop failures, such as occurred in Cuba the present year, when the crop is reduced to 925,000, the present tariff rate would first shut out sugars from all foreign countries, other than those from Cuba, then check, and afterwards reduce, the Cuban production, for the reason that sugar paying a duty of 1.35 cents per pound can not compete with that paying no duty.

The revenue from sugar under the present tariff has apparently reached and passed its maximum point, and any increase in tariff rates would soon decrease it by artificially stimulating the domestic production for which consumers are already paying some one hundred million dollars annually, but little more than half of which reaches the United States Treasury.

Under the treaty of Paris, 1898, and the provision of the Platt amendment, 1902, the United States first made themselves responsible for and afterwards assumed the right to protect life and prop

erty in Cuba. In case of further trouble following the contemplated withdrawal of United States troops, either we must return promptly or so far abandon the Monroe doctrine as to permit the landing of troops by the European governments for the protection of their citizens whose interests there are large and steadily increasing.

While the present differential duty of 0.34 cent per pound has proved sufficient to protect Cuba in the United States markets against the lower cost of sugars of Europe and Java, she can not long compete with our domestic sugars against the duty she is now paying of 1.35 cents per pound. As long as the island is prosperous and under some form of United States control, a republican government may be maintained; but should her great sugar industry be made unprofitable, either by cancellation of the treaty or by long continuance of the present high duty against her sugar, revolution, fed by her unemployed, is sure to result in the future, as it has under similar circumstances in the past. Revolution would be followed by a third and final occupation by the United States, by annexation, and finally by abolition of all duties. Whether such a condition is desirable in the near future, either for the United States or for Cuba, is open to grave doubt, but no government in any form, other than one of military force, can be maintained unless the people are given a square deal" and allowed to benefit through their own industry.

To put the sugar industry of Cuba upon a sound basis does not require the removal of duties here, or such drastic measures as would prevent a fair and just return to our beet sugar and other producers upon their invested capital. But these interests are no longer dependent upon the present high Dingley rates a liberal reduction can now be made in our sugar schedules; and by continuing the present differential of 34 cents per 100 pounds, our large and increasing export trade to the island can be held, through maintaining its leading industry in a sound and healthy condition.

Will our domestic producers allow such reduction, or will they, by pursuing the former policy of Spain, risk all, and bring about the very conditions of free trade which they are so anxious to avoid?

STATEMENT OF MR. CLAUS A. SPRECKELS, OF 138 FRONT STREET, NEW YORK CITY, REPRESENTING THE FEDERAL SUGAR REFINING COMPANY.

Mr. SPRECKELS. Mr. Chairman and gentlemen of the committee, I appear before your committee as the president of the Federal Sugar Refining Company of New York, an entirely independent concern, with no direct or indirect affiliations, understanding, or agreement of any kind whatsoever with the sugar trust, and in order that you may understand my exact position and know that I am asking for no favors, would state that I would be perfectly satisfied if you should finally decide to agree upon free trade in both raw and refined sugars. I would, of course, appreciate and think we are entitled to a moderate protection on refined sugars, but would prefer absolute free trade to the present schedule, under which the sugar trust is the principal beneficiary and enabled to exact special privileges and conditions on sugars produced in Louisiana and the Hawaiian Islands. It is evident that the country desires a revision of the tariff, and expects a reduction of duties whenever it can be shown to be reasonable,

feasible, and advantageous. Personally, I take no stock in the old and threadbare theory that the duty on sugar can not be abolished on account of the Government requiring the revenue, and have full confidence that your committee and the Senate Finance Committee can, after your years of experience, raise the necessary revenue from other sources.

As far as the production of the domestic sugar is concerned I claim that beet sugar factories located in proper localities, such as Colorado, California, Utah, Idaho, and Oregon, should, and I am informed, can produce granulated sugar at 23 cents per pound. Of course, if it be the purpose of this Government to impose a tariff which will enable the production of articles in unsuitable localities at the expense of the American public, then an import duty is necessary and will always have to be maintained.

As far as Louisiana is concerned, I contend that the sugar trust is in a position to seize at its discretion a large share, if not all, of the benefit of the protection granted.

As far as our colonies are concerned, they to-day are able to produce sugars in competition with the rest of the world.

Under the circumstances, I believe the sooner our Government reduces and gradually wipes out entirely the duty on sugar the better it will be for the country and all concerned. Of course bearing in mind that the differential afforded refiners should be reduced in proportion to the reduction in duties on raw sugar.

The CHAIRMAN. I understand that what you recommend is that sugars be absolutely free, excepting refined sugar?

Mr. SPRECKELS. No; both.

The CHAIRMAN. That is, all on the free list?

Mr. SPRECKELS. If you take it off of raw, take it off of refined. The CHAIRMAN. And you think the result of that would be that the beet sugar factories east of the Rocky Mountains could not exist in proper localities?

Mr. SPRECKELS. They are not in their proper localities. If you want to raise beet sugar in Florida, or cane sugar in Michigan, put a tariff of 5 cents a pound on it, but those are unnatural conditions.

The CHAIRMAN. They could not raise cane sugar in Michigan if you put 50 cents a pound duty on it. What effect would that have on the Louisiana cane sugar; it would put them out of business, would it not?

Mr. SPRECKELS. I am not so certain about that. They sold their sugars last year on practically the basis of 80 cents per hundred pounds protection.

The CHAIRMAN. And you propose to take it off?

Mr. SPRECKELS. But the tariff is 1.683.

The CHAIRMAN. You propose to take it all off.

Mr. SPRECKELS. I do not know but what they can produce it when

on the free list, but I have no evidence of that.

The CHAIRMAN. You are not putting it on the ground of what you know, but what you do not know. You say that you do not know but what they could produce it?

Mr. SPRECKELS. I do not think that it requires all the protection that exists to-day.

The CHAIRMAN. Well, Mr. Spreckels, if you take the differential off refined sugar by making all the sugar free, why can not you take

the differential off of refined sugar when there is a tariff on raw sugar, making the same tariff on the sugar after refining, according to the degree of purity that there is on 96° test?

Mr. SPRECKELS. When sugar is selling at 4 cents a pound-take, for example, 96 test sugar will produce about 93 pounds granulated sugar out of a hundred, therefore there is a loss of 7 per cent; 7 pounds out of every hundred pounds is lost.

The CHAIRMAN. After you have made up that loss, what reason is there for any more differential?

Mr. SPRECKELS. If you will allow me to explain, I will proceed. The loss of 4 cents would amount to 28 cents, and if that same sugar is selling at 2 cents a pound the loss is only 14 cents. We do not require that differential, because we do not lose that extra 14 cents.

The CHAIRMAN. You could stand the loss on sugar at 2 cents a pound on refining, but you can not stand the loss on sugar at 4 cents a pound in refining?

Mr. SPRECKELS. That is correct.

The CHAIRMAN. So that the only differential required for refined sugar would be to make up the difference between 2 and 4 cents a pound on a loss?

Mr. SPRECKELS. That is correct.

The CHAIRMAN. Which would be 4 cents on the hundred pounds? Mr. SPRECKELS. No; that would be 14 cents.

The CHAIRMAN. How many pounds would you lose?

Mr. SPRECKELS. Seven pounds.

The CHAIRMAN. Oh, 7 pounds. Well, that would be 14 cents. Then the 14 cents would be sufficient differential on refined sugar over 96 test?

Mr. SPRECKELS. Plenty.

The CHAIRMAN. No matter what the duty is on raw sugar?

Mr. SPRECKELS. Oh, no. If you put a duty on of 10 cents, you lose 7 per cent of duty.

The CHAIRMAN. We have protection now at 4 cents a pound-that is, duty-paid sugar?

Mr. SPRECKELS. Yes.

The CHAIRMAN. And you say that 14 cents would be sufficient to cover it-that is, the difference between the 2 cents and the 4 cents? Mr. SPRECKELS. Yes, sir.

The CHAIRMAN. That would cover the difference on refined sugar? Mr. SPRECKELS. It would.

The CHAIRMAN. What proportion of sugar used in this country do you refine at your refineries?

Mr. SPRECKELS. I must think for a moment as to that.

The CHAIRMAN. Approximately; I do not care about the exact figures.

Mr. SPRECKELS. Of the total consumption of the United States? The CHAIRMAN. Yes; what percentage of the total consumption? Mr. SPRECKELS. About 12 per cent.

The CHAIRMAN. And you have been in the refining business

Mr. SPRECKELS. Let me say that I made an error there; it is not quite that much. About 9 per cent, I should say.

The CHAIRMAN. You have been in the refining business a good many years?

Mr. SPRECKELS. Thirty-three years.