the Commissioner of Agriculture and Commerce of Puerto Rico sent to Washington by the Governor of Puerto Rico in his activities in behalf of that and other objectives that favor the country. MIGUEL A. GARCIA MENDEZ, Speaker.

Mr. CHAIRMAN. I am also in receipt of a cablegram from the president of the Association of Sugar Producers of Puerto Rico, Mr. Ramon Aboy Benitez, and another cable from the Speaker of the House of Puerto Rico relative to the subject matter under consideration, and I ask permission to have it made a part of the record and also a list of average wages in several sugar areas.

HON. SANTIAGO IGLESIAS,

Puerto Rico Resident Commissioner,

SAN JUAN, PUERTO RICO..

House Office Building, Washington, D. C.:

At special general meeting held by the Association of Sugar Producers of Puerto Rico it was voted to bring to your consideration the fact that we have several objections to the administration sugar bill introduced by Senator O'Mahoney. We wish now to emphasize that through such bill the excise tax will be collected on Puerto Rican sugars since April 1, but no compensation will be paid from that money on any cane harvested to make the 1937 sugar crop which usually ends by June, inasmuch as sec. 303 of the bill provides that compensation payments shall be effective with respect to sugar beets and sugarcane harvested after June 30, 1937. We are already suffering the immediate effect of the proposed tax, having sold as low as 3.45 when quotations were over 3.90 before a tax was suggested on sugar. If no compensation is provided in the bill on behalf of Puerto Rican cane growers, the whole people of the island shall go through very heavy losses on account of this particular discrimination.

I thank you.

RAMON ABOY BENITEZ, President.

Mr. CUMMINGS. The committee will stand adjourned until 1:30 p.m. tomorrow.

(Whereupon, at 4 p.m., the committee recessed until 1:30 p. m., tomorrow, Thursday, Mar. 18, 1937.)

areas and other countries, and we will make it possible for you to reach 500,000 tons." I am willing to trust the Secretary of Agriculture and the gentlemen in the Department. They have been fair until now; we feel certain that upon your recommendation they will make proper adjustment. I am trying to find a way to do this, and am appealing and begging you, the Secretary of Agriculture, and the other gentlemen, to put your heads together and do something for us, and not impose that cruel small quota on Louisiana and Florida. When President Wilson was elected President of the United States, under the Fordney Tariff Act he put sugar on the free list. Senator Broussard of Louisiana was then in the Senate. Senator Broussard voiced objection in a speech, saying "that he regretted to see that area in Louisiana, where the old kettle produced the first sugar from cane in America, was going to grow up in weeds.”

After that speech the President sent for Senator Broussard, and President Wilson said to him (so I am informed), "I believe you are wrong in that statement; I think you are unduly alarmed. I am going to see that those areas shall not grow up in weeds, and I am going to send the Department of Agriculture there to investigate and see what other crops you can raise in lieu of sugarcane."

That was what President Wilson said, and since that time there have been many investigations and surveys of the soil in that area and the final conclusion is that it is practically impossible to find a substitute for sugarcane.

I want to impress upon you that when you deny to us the right to plant sugarcant you are putting about 15,000 families with children out of employment by fixing this quota at 360,000 tons for Louisiana and Florida. Now, you do not want to do that. Give a chance to the boy who wants to plant 10 acres in sugarcane. Of course, you are going to ask me, "Where are you going to take it from, Congressman?" Oh, well, now listen: I know all about that. That is an old story. When you want to do anything you can do it. Mr. BIERMAN. How do you suggest doing it?

Mr. DEROUEN. I will answer that in this way, Mr. Congressman. I want you to legislate and to tell these gentlemen, the Secretary, and these economists, to find the way to increase this quota and take care of all continental-producing areas in the United States. The Congress owes this to the citizens of this country, since you are now placing a tax on sugar. Why not give the United States a continental quota of 2,050,000 tons; it's only 140,000 tons more? I do not care who participates in that; let everyone participate-beets and cane sugar-if they will. I do not care whether you divide that among all producers with a fixed quota, provided we all participate in deficits of all areas; but my thought is that we ought first take care of American producers.

I want to go a little further into that. I am going to answer that very definitely before I finish.

Mr. HOFFMAN. What was the last statement?

Mr. DEROUEN. I say I am going to answer it very definitely.

Mr. HOFFMAN. I thought you said you would not answer it very definitely.

Mr. DEROUEN. No; very definitely.

Now, I want to go back into the reason why this quota for our State should be increased. We attempted to go into rice culture in that area, without success. Then, we attempted to go into the dairy and cattle business, also without success on account of ticks.

area.

We wanted to see if we could successfully go into the dairy business and cattle-feeding business thereby reducing our sugarcane But unfortunately at that time we were in the tick-infested area. This year the United States Government gave us a clean sheet and said we were free from ticks and to go ahead and raise all of the dairy cattle we wanted; that, however, will take several years to develop the industry.

I am saying this to show you that we did not stop; we have been continually driving and driving to save ourselves; working for the salvation of our section.

Mr. DEROUEN. Now, I have tried to show, Mr. Chairman, we attempted to place a part of this area under rice culture and what did we get? We found out that our nearest neighbor was Cuba. Cuba was buying 95 percent of its consumption. On top of that, after we had put that land into rice, the Congress of Cuba in 1932 placed a consumption tax on rice which made it impossible for American rices to compete with rices from other countries. In 1933 I delivered a speech in Congress and I pleaded with the State Department and Cuba to find some way to let us have a little leeway and give us the privilege of shipping some rice into Cuba. It finally worked out that Cuba imports about 18 percent of its consumption. In the years 1933-34, they bought $45,000,000 against $78,000,000; and $60,000,000 against $104,000,000. These figures are from Department of Commerce tables.

I am not criticizing the bill; nor am I criticizing the gentleman who drew the bill, because all of us want to get along and cooperate with you, but we are appealing to you to increase our quota, give us a larger quota so we will be benefited to the extent that the beet States will, under the law of averages, in any deficits in their area. I am sure that you will find some way to raise our quota so that we may ultimately grow as much as we ought to. But we of Louisiana and Florida will never be satisfied until we can participate in the benefits just like every other State, and I repeat that I do not want to take a pound of sugar away from any of the other States. That is not the meaning of my plea; I want you gentlemen to raise our quota, as I said a while ago. I am for continental United States, first, last, and all the time.

Mr. Chairman, if the question before the committee is merely one of telling you where we are going to get that quota, then I am through. I do not think that is a fair question; I do not think anyone should be asked that question. I say if that is the only question, then I leave it to you.

Mr. Chairman, I thank you.

Mr. CUMMINGS. Just keep your seat; we are not limiting you to that, of course.

Mr. DEROUEN. Thank you, Mr. Chairman.

Mr. CUMMINGS. Call your next witness.

Mr. MOUTON. Mr. Bourg. Apparently he is not here.

Mr. CUMMINGS. Is there anyone else?

mittee a few days ago and paid what I consider a gracious tribute to my State of Louisiana. I rather feel as though I should like to see his remarks used as a slogan, on the part of the Members of Congress, representing all of the States of the Union, and I think should give that statement of his some consideration, the statement made by my colleague from the State of Massachusetts.

I want to assure him of my appreciation and I feel that I am voicing the sentiments of my constituents back home when I say that.

If you gentlemen will permit me, I would like to read just a few lines from the editorial page of the January 31, 1937, issue of the Sunday Item-Tribune, New Orleans. This little insertion which I want to read is like this:

Money which goes to Louisiana sugar farmers is scattered all over the United States. It gives employment to manufacturers of machinery and to supply merchants in New England, New York, Pennsylvania, and the Middle West. Millions of dollars of the money which goes for wages on Louisiana cane-sugar plantations are spent for other food products and manufactured goods.

Proof that Louisiana lands are adapted to sugar production is evidenced by the fact that they have been in continuous sugar production for over a hundred years. The industry has survived adverse conditions which confront any industry in a period running over a hundred years.

And this further statement:

Missouri, Kentucky, and Tennessee mule dealers will be interested to learn that Louisiana will buy $4,000,000 worth of mules if her larger sugar quota is allowed.

Now, gentlemen, I just want to remind you, to refresh your minds, to the effect that I introduced the Mouton bill in the House of Representatives, H. R. 5321, which has been referred to this Committee on Agriculture, and I know, of course, it is not meet or proper for me to offer my bill as a substitute for this particular bill you are considering, the Jones bill, but I would appreciate indeed if you gentlemen would give a certain amount of consideration when you come particularly to the sugar-quota provisions that I have inserted in my bill, given to the continent, quotas that will take care of all of the sugar produced in the continental United States.

I am very happy to make this announcement that I have three substantial witnesses here this afternoon that are weevilproof, and I might say committeeproof, and are absolutely well versed with conditions as they exist in my State. I represent the Third Congressional District, as I told you gentlemen a while ago, the biggest sugarcane producing area in the United States.

The crop's netted production last year in the State of Louisiana amounted to 383,000 tons of sugar. You people understand in order for Louisiana to have that crop, even before the harvesting of its product, those people have to spend the latter part of September and the entire month of October planting sugarcane. After the Agricultural Adjustment Act had been discontinued and we had unlimited. production of sugarcane, we took it for granted that we were not going to have any provision made for quotas, so far as the 1937 crop was concerned, and the amount planted for 1937 means the crop is going to net us at least 425,000 tons.

I want you gentlemen to please interrogate these friends of mine who are going to appear before you and who are very well versed

for the manufacture of candy during the calendar year 1937 at the base prices of 4.70 cents and 4.85 cents, plus carrying charges of 21⁄2 cents each quarter.

Similar contracts were entered into by many other industries consuming sugar, such as fruit canners and fruit preserves, manufacturers of bakery products, of ice cream, of soft drinks, of chocolate, of chewing gum, and of table sirups. These contracts prohibit resale of the sugar by the purchasers.

These contracts were entered into as a matter of sound business policy to secure a stable price during 1937 and thus protect their own costs on contracts for delivery of their own products during the year. At that time there was no expectation by the industries using sugar that an excise tax would be imposed on the manufacture of sugar during 1937.

The refiners' contracts, however, contained a clause which provides for the addition by the refiners to their contract prices of the amount of any excise tax which might be imposed during the term of the contracts. Candy manufacturers sell their products at definite prices and are obliged to determine their costs by purchasing materials far in advance of delivery of candy to their customers. Candy manufacturers cannot change the prices at which they have already contracted to sell their candy for future delivery.

The result is that, as introduced, the pending bills will increase the price of cane sugar contracted for by many candy manufacturers to the extent of the amount of the excise tax which may be imposed by Congress, although it is our understanding it is not the intention of the administration to increase sugar prices to consumers on the average.

The Jones-Costigan Act, approved by the President on May 9, 1934, section 17, provided that any sugar held on April 25, 1934, to be delivered on a bona-fide contract of sale entered into prior to that date to any manufacturer or converter for use in the production of any article, except sugar, should be exempt from taxation, but this provision was interpreted by the Internal Revenue Bureau to exempt only sugar actually in the possession of vendors on April 25 for subsequent delivery on contracts made prior to April 25, 1934.

The amount of cane sugar contracted for prior to January 13, 1937, by all industries has been estimated at 450,000 tons. Accurate figures are not available to us but may be obtained from the refiners.

In order to protect manufacturing confectioners and other industries similarly situated, who entered into contracts with the refiners prior to January 13, 1937, against the payment of increased prices for such sugars on account of the proposed excise tax, it is requested that consideration be given to the following clause to be added to section 401, line 20, page 23:

Any sugar delivered or to be delivered prior to December 31, 1937, under bona-fide contract of sale entered into prior to January 13, 1937, to any manufacturer or converter for use in the production of any article, except sugar, and not for ultimtae consumption as sugar shall be exempt from taxation under this act.

I thank you.

Mr. CUMMINGS. Just one or two questions. That means $6,750,000? Mr. HEIDE. I should say approximately $6,000,000.