like articles imported from foreign countries: Provided, That all articles the growth and product of the Philippine Archipelago coming into the United States from the Philippine Archipelago shall hereafter be admitted free of duty, and all articles the growth and product of the Philippine Islands admitted into the ports of the United States free of duty under the provisions of this act, and coming directly from said islands to the United States for use and consumption therein, shall be hereafter exempt from any export duties imposed in the Philippine Islands."

If the substitute herein proposed is voted down we will support H. R. 17752, on the principle that it is a step in the right direction.

JOHN S. WILLIAMS.
CLAUDE A. SWANSON.

S. B. COOPER.
CHAMP CLARK.

W. BOURKE COCKRAN.

Conditions have not been materially changed since the date of the foregoing report. The additional facts laid before the committee on the recent hearings not only confirm the facts stated in the report last February, but tend to show a greater cost in the production of Philippine sugar. The weight of evidence fixed the cost at not less than 1 cents per pound delivered at Iloilo and Manila, the sugar ports of the islands. This cost is without counting anything for interest on the plant or depreciation of the property. Freight to New York, insurance, waste, loading, and unloading are more than three-tenths of 1 cent per pound. On account of the low grade of Philippine sugar, the sales in this market for the past year have been at a price 1 cent per pound less than the price of 96 cane sugar. The difference in price in the United States between 96 raw sugar and refined is 1 cent per pound, making the cost of the Philippine sugar refined laid down in New York 3.8 cents per pound, without adding any thing for the duty. Adding to this the omitted items of interest on plant, wear and tear of the same, and interest on the value of the cargo in transit brings the cost of Philippine sugar laid down in New York to about 4 cents per pound.

Last winter the representatives of the beet sugar placed the cost of the refined sugar at the Michigan factory at about 4 cents per pound, and at the Colorado factory at about 34 cents per pound. The repre sentatives from Michigan this year place the cost of Michigan sugar at the factories at 3.9 cents per pound, and at the Colorado factories at 3.71 cents per pound. The freight on sugar from New York to the markets of the country will certainly average as much as the freight from Michigan or Colorado to the markets. Thus it is seen that free sugar from the Philippine Islands would only equalize conditions. The duty left in the bill of 30 cents per 100 pounds until April, 1909, leaves the Philippine sugar at a great disadvantage.

Nor can the Philippine sugar become a menace to the domestic article in 1909 when admitted free of duty into the United States. Even were the contentions of the American sugar producer correct and should there result a slight advantage to the Philippine producer under a condition of free trade, still the development of the sugar industry in the Philippine Islands must be of very slow growth. The working animal for the sugar plantation is wanting. It is estimated that 75 per cent of the carabao have died of the rinderpest within a few years. This disease is not yet stamped out. The process of increasing the herd has proved a very slow one. It will take years to make good the loss, to say nothing of the increase which would render a larger production of sugar indispensable. No other animal has been found to

take the place of the carabao which is capable of standing the climate. All experiments in this direction have proved unsuccessful. Then there is a lack of labor. This industry must depend upon the Filipino. He lacks the vigor and energy of our people in the Temperate Zone. Even at the present wage it is doubtful if labor which costs $1 in the islands is equal to the labor which costs $1 in Michigan.

Nor will the Filipino laborer easily learn the new methods necessary for the working of an up-to-date plant. If it takes a Michigan farmer years to learn how to cultivate beets for sugar, it will take as long at least for the Filipino to learn the use of improved machinery and better methods for cultivating cane and the manufacture of sugar. While he is learning this he will learn even more rapidly the increased value of his toil. He has already learned the latter in the sugar industry without having found out how to make himself more efficient. In other industries, such as hemp, copra, etc., and in labor in cities, he has increased his wage at a rate more rapidly than his advance in industrial education. When we see what has resulted elsewhere in increased sugar production on account of free entry into our markets from tropical countries, it is impossible to imagine any increase that will keep pace with the steadily increasing consumption in the United States.

If the statement made by the gentleman representing Hawaii is correct and the sugar planters there are making only 3 per cent on the capital invested, it would seem that there will be no inducement on account of free trade to attract outside capital to the Philippine sugar industry.

If the proposition of the secretary of the American Beet Sugar Association is correct and the producers of beet sugar are to have a singlegerm beet seed in the next three to five years, saving $5 an acre in labor; if seed for a better quality of beets is being developed, which will yield 400 pounds of sugar per ton, a net gain of 179 pounds to the ton; if "concrete" can be shipped from factory to refinery, enabling the latter to run the year around, and if the other new processes mentioned by him are to be used, and if his prediction of refined beet sugar, produced at a cost of about 2 cents per pound before the year 1910, is correct, it follows that cane sugar produced anywhere will be no menace to the product of the sugar beet.

With absolute free trade both ways, it would seem that American tobacco is more likely to go to the Philippine Islands than that their product should come here. They are unable to produce a light-colored wrapper, so essential to our trade, and which their own export trade is demanding. The Georgia and Florida growers claim that they are now producing in large quantities under shade a wrapper equal in every respect to the Sumatra leaf and at a cost of 75 cents per pound to the trade. The real Sumatra wrapper imported into the United States costs $1 per pound, with the additional $1.85 duty added. The Philippine Islands are now importing from Sumatra leaf tobacco of a quality inferior to that imported by us and at a cost of $1.50 per pound, including the duty. They have experimented with our Connecticut wrapper in manufacturing cigars, and believe that it will take the place of the Sumatra wrapper which they are importing when we remove the duty on the Connecticut wrapper going into the Philippine Islands. Even with the prospect of cheaper wrappers from this country the Manila cigar manufacturers are not enthusiastic over the prospect of

the passage of this bill. They believe, and rightly, too, that the result will be a growing demand for an increased wage which they must meet. They will be unable to produce a cigar which will find an extensive sale in this country, as both the inferior quality of their tobacco and the effects of a long ocean voyage render their best brands unpopular here. The passage of this bill is no menace to the cigar or the tobacco interests in the United States.

The representatives of the American Cane Growers' Association, who appeared before the committee, favor the plan suggested by Collector Shuster, of Manila. This plan is that the United States restore the full duty on Philippine sugar and turn the money over to the Philippine Commission, and that the Commission pay to the producers of sugar the amount of the duty as a bounty. He says that this will avoid injury, or even apprehension of injury, to our domestic producers. He cites the effect of the bounty given under the McKinley bill upon domestic sugar.

As a matter of fact, the bounty given under the McKinley bill was a greater stimulus to the production of sugar than there has been under any duty imposed. It would certainly prove a much stronger inducement to the increase of the sugar crop in the Philippine Islands than would the present bill. The producer would be sure of the $1.20 per 100 pounds, the equivalent of the duty. For, under this system, it would be paid to him directly by the insular government. If this method will avoid injury to our domestic producers there is no reason why the present bill should furnish any excuse for apprehension of injury.

The Shuster plan would divert the revenue from the treasury of the Philippine Islands to the planters there. The insular treasury would be depleted and more serious competition to our sugar growers would result.

It developed on the hearing that there is from 30,000 to 40,000 tons of Philippine sugar now in bonded warehouses in this country which has not been entered for consumption and on which the duty has not been paid. Should this sugar be entered under the reduced rates of this bill the loss in duty would amount to about $12 per ton. From $360,000 to $480,000 would be lost to the insular treasury and would go into the pockets of the speculators who own this sugar. When the price went up last winter a cent and a half a pound, this sugar was purchased and shipped to the United States. Before it arrived here the price had fallen again to the old figure. The purchasers found that they had incurred an enormous loss on the purchase. It seems they are waiting for a reduction of the duty. It is not believed that the bill as originally drawn would have enabled these importers to enter this sugar at the lower rate prescribed in the bill, but lest there should be any mistake the committee have added section 2.

It is quite certain that, regardless of any opinion that may be entertained with reference to our entrance into the Philippine Islands, we are there to stay. We have undertaken to educate these people and lift them up to a plane where they will be fit to govern themselves. We must teach them the lesson of industry and thrift. We must give them a common language and an intelligent understanding of the ordinary affairs of life and the first principles of business. It is quite evident that they will not reach this condition during the present generation. These islands are a part of the territory of the United States. The people are the wards of the nation. Their relations differ in no

sense from that of the people of Porto Rico. To teach them the lesson of industry we must furnish opportunity. The free interchange of commodities among all the people under the American flag is one of the fundamental principles of our Government. It is as much our “plain duty" to grant free trade to the people of the Philippines as it ever was to the people of Porto Rico. There is no excuse to continue our tariff against them except for the purposes of revenue.

The low rates of duty proposed in this bill, with their other sources of income, in connection with the revenue from the insular customs and internal taxes, will for the next three years give them sufficient revenue to support their government and develop their educational system. As early as 1909 it is expected that the internal-revenue system will have become so efficient in its operation as to produce sufficient income without the aid of any duty on articles interchanged between the islands and the United States. They will be prepared for free trade when it comes about under the provisions of this bill. The committee recommend the following amendments, viz:

Page 2, line 13, after the word "articles," insert the word "wholly." Page 2, line 18, strike out the word "Provided" and the remaining lines of said page and line 1 of page 3 and insert in lieu thereof the following words, viz.: "Provided, however, and in consideration of the rates of duty aforesaid sugar and tobacco, both manufactured and unmanufactured, wholly the growth and product of the United States, shall be admitted to the Philippine Islands from the United States free of duty."

Page 3, lines 15 and 16, strike out the words "purchased and," and in line 17, after the word "procured," insert the words "by purchase. At the end of the bill insert:

SEC. 2. That on and after the day when this act shall go into effect all goods, wares, and merchandise previously imported from the Philippine Islands, for which no entry has been made, and all goods, wares, and merchandise previously entered without payment of duty and under bond for warehousing, transportation, or any other purpose, for which no permit of delivery to the importer or his agent has been issued, shall be subjected to the duties imposed by law prior to the passage of this act, and to no other duty upon the entry or the withdrawal thereof: Provided, That when duties are based upon the weight of merchandise deposited in any public or private bonded warehouse said duties shall be levied and collected upon the weight of such merchandise at the time of its entry.

The committee recommend that the bill as amended do pass.