HOPS. [Paragraph 248.] HERMAN KLABER, OF PORTLAND, OREG., ASKS THAT THE DUTY ON HOPS BE DOUBLED AS A PROTECTIVE MEASURE. THURSDAY, November 19, 1908. Mr. KLABER. Mr. Chairman and members of the Ways and Means Committee, I come before you as a representative and on behalf of about 3,500 hop growers of this country, and also on behalf of 150,000 to 200,000 laboring people who are engaged in the cultivation of hops, to submit to you some facts and figures in verification of the appeal they have presented to you in the form of a memorial submitted by Senator Woodward, of California. I do not desire to trespass upon your valuable time by burdening you with any unnecessary collection of statistics relating to hops, because these are at your disposal at the office of the United States statistician and are not necessary just now in the presentation of our general statement. The hop growers of the United States are in great and dire distress, and I desire to emphasize their prayer and their appeal to you for aid and protection in these times of their financial adversity. But few people except those directly interested have any conception of the importance of the hop industry. Hops rank fourteenth in point of importance in the United States agricultural products, according to the report of the United States Secretary of Agriculture, but no other crop disburos so great a percentage of its cost for labor. The capital invested in this industry is far greater than is generally known. Without going into detail, I am prepared to give you the interesting information that we have about 3,500 growers of hops in the United States and have about 53,000 acres in cultivation in hops, and upon the basis of over $400 an acre as actual outlay for the equipment, it represents a total capital investment of $20,000,000 to $25,000,000. This does not cover the value of the land upon which the improvements have been made. The cost of raising hops is about 15 cents per pound, of which over 85 per cent is spent for labor. 1906 we raised about 380,000 bales in the United States, which represents over ten millions disbursed for labor. In Our hop growers are appealing to you for an advance in the tariff on foreign hops from 12 cents per pound to 24 cents per pound, and I shall endeavor to submit to you substantial reasons why we require this increase to save the industry from ruin. The CHAIRMAN. In 1906 the production of hops in this country was 48,000,000 pounds, of which 16,000,000 pounds were exported, and the importations were only 5,000,000 pounds. Please answer the proposition contained in those figures before you get through. Mr. KLABER. In 1906 the United States produced about 65,000,000 pounds. We exported about 18,000,000 pounds from September 1, 1906, to September 1, 1907, of 1906 hops and imported for the same period about 6,000,000 pounds, but in the year following, that is, ending June 30, 1908, our importations were 8,500,000 pounds, and the average imports for the past three years were 8,300,000 pounds, which is an increase of 175 per cent over the average of the previous ten years. On its face it appears as an excessive advance, but a study of the facts will at once dissipate this idea. Our position is this: The American brewer who uses imported hops uses them only in small proportion to the use of American hops. In other words, he uses only 1 pound of imported hops to make a given quantity of beer where he uses 2 pounds of domestic hops to make the same quantity of beer. Hence you will see that a pound of foreign hops displaces 2 pounds of American hops. According to this, the present specific duty of 12 cents per pound on foreign hops is in reality only a protection to the American grower of about 6 cents per pound, or the ratio of two to one. The CHAIRMAN. One pound of imported hops will go as far as 2 pounds of domestic hops in making beer? Mr. KLABER. The brewers use them at about that rate of displacement. The CHAIRMAN. Who is your authority for that statement? The CHAIRMAN. It is very strange that statement should appear to-day, when we have had hearings for years before this committee and no intimation of that kind was ever made before. Mr. KLABER. The brewers make that claim, and some brewers have claimed even as high as 3 pounds of domestic hops to 1 pound of imported hops. Mr. CLARK. That is when they are trying to buy the hops from you? Mr. KLABER. It is an established fact in the hop trade that brewers use only one-half as many imported hops as American hops and in some cases only one-third as many. Mr. CLARK. Who is there that knows that? Mr. KLABER. I know it and the United States Department of Agriculture knows it. Mr. CLARK. You take it by hearsay, but who knows it? Mr. KLABER. All hop men know it, besides which I am interested in a brewery in Seattle, and I know that we only use in our brewery one-half as many imported hops as American hops. Mr. CLARK. You run a brewery and hop field, too? Mr. KLABER. Yes, sir. Foreign hops are not necessary to make the highest or any other grade of beer. However, some of the American brewers believe it pays them to buy the foreign hops, and they use them upon a basis of 1 pound of foreign hops against an average of 2 pounds of domestic hops. We need a duty of 24 cents per pound on foreign hops to offset this displacement, and which in reality would only be a duty of about 12 cents per pound, figuring pound for pound. The average price on foreign hops the past five years in New York has been about 44 cents per pound. The maximum price of imported hops for the past five years was 60 cents per pound. Therefore the present specific duty of 12 cents per pound is only equal to about 20 per cent ad valorem. The CHAIRMAN. Twenty per cent ad valorem? Mr. KLABER. Yes, sir. The minimum price of imported hops for the past five years was 20 cents per pound. Therefore the present specific duty of 12 cents per pound reduced to ad valorem basis equals only 60 per cent. So 75941-H. Doc. 1505, 60-2-vol 4- -17 you will observe that the duty imposed is not excessive when compared with other articles we import into this country of similar character, namely, luxuries. Taking the average of the prices for imported hops for the past five years, which is about 44 cents per pound, the duty amounts to less than 30 per cent on the ad valorem basis. The CHAIRMAN. In 1903 it was 40 per cent, the next year 24 per cent, the next 26 per cent, the next year 50 per cent, and the next year 37 per cent. That is what the government statistics will show. Mr. KLABER. Ad valorem? The CHAIRMAN. Yes, sir. Mr. KLABER. I have mentioned 30 per cent ad valorem as the average. That is the average. I have not gone into details. The importance of the hop industry is very great since, as I have indicated, the principal cost of its production is for labor, and all of the material used except the burlap, which we import from India, is the product of American labor. Now, in view of these very important facts, our growers of this country believe that they are entitled to protection and a right to proceed with this industry unmolested, and not be forced to plow up on account of foreign imporations. I have said to you that foreign hops are not necessary for the improvement of the quality of our beer. In exceptional years when the German or Austrian crops are light, and they have only sufficient for their own requirements and are consequently unable to ship any to the United States, the American brewers use American-grown hops exclusively, and no objection is made as to their brewing qualities. In further verification of this fact I have the authority of Dr. W. W. Stockberger, expert of the United States Department of Agriculture, who made a special study of American and foreign hops, to repeat his opinion on the subject that the indications from his expiriments, although as yet incomplete, are that imported hops are not necessary for the highest class of beer. I have no doubt that if you so desire Doctor Stockberger will be pleased to appear before your honorable body and verify these statements. It is quite true that we export large quantities of our hops to England, and they are admitted free of duty. I will also inform you that Australia and New Zealand impose a duty of 12 cents per pound on the hops which we ship to those countries. There is only a very limited area adapted for hops in those countries, and they must therefore import most of their requirements. Yet they impose a duty as great as we now have in this country to protect their few growers and their very limited industry, while in this country where we have sufficient area to supply the whole world with hops we are being forced out of business because of lack of protection from foreign importations. It has been said that the European countries will retaliate in the event we increase the duty. That is the contention of all the New York importers. I can not see how Germany or Austria can expect to retaliate, since these countries purchase no hops from us. If they see fit to impose a higher duty in retaliation, we are perfectly willing that they impose a duty of $1 a pound if they so desire. It could not possibly affect us, since we ship no hops to their markets, because their cost of production is less than ours, and they have further fortified themselves against the invasion of foreign hops with a duty of about 7 cents per pound in order to prevent us from shipping into their market our surplus that results from their flooding our market with their hops. It is positive that England will not retaliate by the imposition of a prohibitive duty, as England is not at all interested in our duty on hops, because she sends no hops to this country whatever. Besides which, England is a free-trade country and she must therefore be consistent in all lines with her general policy. Even though England should impose a duty on hops she would not be doing any injury to the American Government, but only to our growers personally. So far as the American. hop growers are concerned, I can speak for them that they are perfectly willing to take their chances on this score. It is quite evident that the present tariff on hops does not protect, since our growers are becoming bankrupt, and no matter how high a tariff may appear to you we feel justified in appealing to you to have it adjusted so that our great hop-growing industry should suffer no further decline. We believe 24 cents per pound duty will protect our industry, but if it does not, and the importations should continue as large as at present, then our Government has at least been benefited by increased revenue in compensation for the ruination of an industry so hugely important to the United States and a large number of laboring people in this country. The increase in the tariff can not injure the brewers or the consumer, since the quantity of domestic hops used is only five-eighths of a pound to the barrel and of imported hops only one-half of this quantity, or five-sixteenths of a pound to the barrel; and as a barrel of beer contains about 650 glasses you can readily see how insignificant and infinitesimal is the increased cost to the consumer. The increase would mean not over 5 cents per barrel of 650 glasses, yet if we keep out some of the imported hops it will save our presently declining industry. Now, gentlemen, in conclusion I wish to emphasize the fact that our growers have suffered immensely the past few years, and the startling condition confronts us that we are constantly plowing up our hop yards while the importation of German and Austrian hops is continually increasing, and therefore it seems absolutely necessary that the Ways and Means Committee should come to the relief of the American grower, otherwise it will eventually revert to the proposition of "the survival of the fittest," and I am indeed sorry for our poor American hop grower and our American laborer if we are compelled to continue in competition with foreign labor. Mr. UNDERWOOD. What are the importations to foreign countries? Mr. KLABER. They vary every year. Some years they are high and some years low. Mr. UNDERWOOD. Give us the average. Mr. KLABER. Fifty thousand, 60,000, and 70,000 bales. Mr. UNDERWOOD. How many pounds in a bale? Mr. KLABER. About 185 or 200 pounds probably 10,000,000 pounds; something like that, I guess. Mr. CRUMPACKER. Exported? Mr. KLABER. Yes, sir. Mr. CRUMPACKER. Then one-third of the entire production of this country is sent over to compete with the foreign product? |