<. C CCt v'c • ca«src ■ C' ■ js <^*«< *• • 3c < c <.<:c <- «; .^U>9^-^i»» - *- *"^*' *^ C ct etc C c C '?«:c\C'' ■ •' ■<<-. '.'C.Ct C (, K ■ CCC' 'CCC v; ■' « 1 ffi rtc c ' • f c-o; ^ ^ ate. ,- TC ' ■ CO.C ' < c < * tAC,o: c I. c" • c <' 1 I. t Co c ■■■■ c ' ct;cr.j.c: C That statement by Mr. Curtis is followed by a question mark, you see, so that I understand it was meant by Mr. Curtis to be only a ques- tion as to whether it did apply to his whole crop or only to the molasses. Mr. Curtis. This morning 'you gave us the cost of shipping sugar to New York. Mr. Hathaway. No, sir ; I beg your pardon ; I did not say to New York. Mr. Curtis. I understood you to say it would cost tlie same to ship the sugar from the Philippine Islands to New York as it cost to ship it from Michigan. Mr. Hathaway. No, sir; I said it cost nearly the same to ship it from Michigan to Minneapolis, St. Paul, or Duluth, or to the interior points in Wisconsin, viz, 22 cents a hundred. Mr. Curtis. Not to New York. Mr. Hathaway. No, sir ; and I made a further statement that the rate from New York to Chicago was 24 cents. Mr. Curtis. But 4one of your sugar goes to New York, as a mat- ter of fact? Mr. Hathaway. Not a pound of it. Mr. Curtis. How much of the beet is cut off by the sugar factory before the test is made ? Mr. Hathaway. There is none of it cut off. The contract under which the farmer grows beets provides that he shall cut off the tops to the lowest leaf scar. Mr. Curtis. Is that the practice? Mr. Hathaway. I do not know whether it is the universal practice. Mr. Curtis. I asked the question because I heard that they re- quired one-third to be cut off. 44 PHILIPPINE TAEIFF. Mr. Hathaway. I never heard of such beet proposition anywhere in the world. Mr. Curtis. The gentlemen from Nebraska gave me the facts and asked me to ask you that question. What part of it is cut off? ' Mr. Hathaway. No part of it is cut off at the factory. Mr. Cuetis. The farmer cuts off a part ? Mr. Hathaway. Yes, sir ; the farmer cuts off a part of it, and he uses that part to feed his stock or to. fertilize his ground. It has been found by chemical analysis that three-fourths of the chemical salts that are taken out of the ground by the beet are in the top, and consequently if you fertilize with these tops you are putting back most of the salts that the beet crop takes from the soil. There is very little sugar in the part cut off. Mr. Curtis. Now, you say you were not in the hemp-producing districts of the islands ? Mr. Hathaway. I was not. Mr.' Curtis. Do you not think that if there was a change in the production of the sugar, and machinery was iinported and great plan- tations were established there, that there would be an increase in the price of labor there ? Mr. Hathaway. Yes, sir ; I do. May I say something further on that? Mr. Curtis. Certainly. Mr. Hathaway. But the introduction of that kind of machinery would enable you to get three or four times as much sugar with the employment of the same number of laborers as you now get from those laborers. Mr. Curtis. That is your opinion. Mr. Hathaway. I know it. Mr. Curtis. Now, when you use this machinery and get this in- creased production, you would also have to import mules and horses instead of using the carabao? Mr. Hathaway. They would probably be obliged to import mules and horses. Mr. Curtis. You would also have to have a different class of labor ? Mr. PIathaway. A different class? Mr. Curtis. Yes. Mr. Hathaway. I do not think so. Mr. Curtis. A little better class ? Did you not find any improved conditions on the sugar plantations ? Mr. Hatha Av AY. Not on the sugar plantations, except at La Granja, where they are paying from 45 to 75 centavos a day. But I would say that nearly every planter I interviewed in Negros complained that the government was paying too high a wage. That was the only place I found the improved condition in that respect, except on the plantation of Domingo, where he was paying 25 centavos. Mr. Curtis. Is it not true that where you found this number of ratoon crops — four or five or six ratoon crops — was up where they had new lands ? Mr. Hathaway. Those were all points except 2 or 3 miles from the west coast of Negros and in Pampanga. ^r. Curtis. Away from the coast? PHILIPPINE TAEIPF. 45 Mr. Hathaway. Yes, sir. You find the ratoon crops, as I speci- fied, except along the strip of 2 or 3 miles wide along the west coast •of Negros and in Pampanga. Mr. Curtis. You told many of these planters that you were there "with the idea of settling and buying land ? Mr. Hathaway. I would not say that I told many of them that. Mr. Curtis. It was indefinitely so understood ? Mr. Hathaway. I do not know whether it was understood or not; I told some definitely. Mr. Curtis. I wanted to know how it was understood there. You also stated that one or two of the gentlemen who appeared before our ■committee did not make the same statements there as they did to you. Mr. Hathaway. I did, sir. Mr. Curtis. And one of the gentlemen whose attention was called to it denied that he had made the statement. Mr. Hathaway. Where is there any reference to that? Mr. Curtis. I say I think so. Mr. Hathaway. It is not found in your printed proceedings. I do not know where any man ever denied a statement that I said he made to me. Mr. Clark. If these carabaos there are so slow what is the reason they do not use mules ? Mr. Hathaway. I made an investigation of that, and as near as I remember the propositioin as given to me by Commissioner Wor- •cester, about 60 per cent of the mules imported there die from 'diseases contracted soon after importation, which makes the expense of the first cost on new mules too high for the present planter, and he must content himself with buying the condemned a^my mules that have been acclimated, and are not quite as efficient as new mules. Mr. Clark. What is the matter with the mules' feet over there ? Mr. Hathaavay. They get lame. Mr. Clark. T\^y do they not shoe them ? Mr. Hathaway. I think they do. Mr. Clark. What is the cost of a carabao ? Mr. Hathaway. I think that would be about $100. I will ask Mr. Wright if that is not correct. General Wright. Yes, sir ; I think so ; $100. Mr. Hathaway. It is from 150 to 200 pesos for a good carabao. Mr. Needham. What is the cost of refining this sugar when it gets here ? Mr. Hathaway. It has been stated that the maximum cost was five-eighths of a cent when it gets here. Mr. Needham. What is the average selling price for sugar land in the islands? Mr. Hathaway. Of the sugar lands? Mr. Needham. Yes. Mr. Hathaway. The highest value I found anywhere put on the land for purposes of taxation in the island of Pampanga was $40 per acre. No. 2 lands running down to $18 per acre. In Binalba^en the assessed valuation is as high as $20 gold per acre, and Mr. Yulo told me he considered it worth more. The land in the upper part of that valley is held at about $10 per acre. Mr. Needham. What did you buy it for? 46 PHILIPPINE TABIFF. Mr. Hathaway. I had quite an extensive tract offered me at $5 an acre. . . • General Wright. How do jou account for a man who is making $100,000 gold a year being willing 'to part with his land, and also willing to borrow at from 2 to 10 per cent a month on them ? Mr. Hathaway. That is a natural question to ask. In the first place, the man who made that amount of money I do not think had to borrow any money at all. He is one of the richest planters in the island, Mr. Yulo. As far as the price of his land is concerned, he fixed it before this committee at about $100 gold per acre. General Wright. Yes; but you speak of the entire island of Ne- gros, and what Mr. Yulo can do somebody else can do ; and if you can buy land as cheap as that it seems to me it would be a very profitable investment. Mr. Hathaway. I said that this was unimproved land. General Weight. The improved lands ? Mr. Hathaway. When they charge $40 an acre I thought that was a good price. I think that is the highest valuation on the tax rolls anywhere. Mr. McCleaey. Did you buy any of this land ? Mr. Hathaway. I did not. Mr. McCleaey. Why not? Mr. Hathaway. I did not think it advisable for two reasons, and I so reported. Mr. BouTELL. What are those reasons? Mr. Dalzell. You said that you would give us those reasons be- fore you got through. Mr. Hathaway. Yes, sir. The first reason that I reported to the gentlemen who sent me over there was this, and I will read it to you from my diary : Before any person embarks in a Philippine industry he should carefully Investigate the legal safeguards that would necessarily protect such an invest- ment In the opinion of many who feel competent to judge on such matters the constitutional safeguards are too few, while altogether too much depends upon the personal integrity of the members of the Philippine Commission. And I would say that of the Commission at the present time I have the highest respect. The above observation means simply this, that when a man invests in the Philippines it is a permanent invest- ment, and he should look out for the future. Mr. Geosvenoe. Name the condition that you have described there that does not apply to the purchase and sale of farming land in any State of the Union. Mr. Hathaway The question of title, first. Mr. Geosvenoe. Is not that a question that is very important every- where ? Mr. Hathaway. It is more difficult to secure a gopd title there — unless you buy friar land — ^than anywhere else I know of, Mr. Geosvenoe. You can buy land through there? Mr. Hathaway. Friar land ; yes. Mr. Geosvenoe. What is the next difficulty— the integrity of the government ? Mr. Hathaway. Yes, sir. Mr. Dalzell. The constitutional safeguards. Mr. Geosvenoe. Constitutional safeguards? PHILIPPINE XAEIFF. 47 Mr. Hathaway. Yes, sir. Mr. Gkosvenoe. Is there not some trouble about constitutional safe- guards everywhere? Mr. Hathaway. I think so. Mr. Grosvexor. Is it not as important to protect property in this country as it is there ? Mr. Hathaway. I think so. Mr. Grosvenor. The third question is the question of the integrity of the government? Mr. Hathaway. No, sir ; I did not say that. Mr. Grosvenor. What was it you said about that ? Mr. Hathaway. I said that you should carefully investigate the legal safeguards that would necessarily protect such an investment. Mr. Grosvenor. The legal safeguards ? Mr. Hathaway. Yes, sir. And please notice the word " neces- sarily." In the opinion of many who seem competent to judge of such matters the constitutional safeguards are too few. As I under- stand, too much depends upon the personal integrity of the members of the Philippine Commission. Mr. Grosvenor. Yes, sir. Mr. Dalzell. You have another reason there. Mr. Hathaway. That was my first reason. The second reason was not brought out, and I promised Mr. Needham and Mr. Dalzell that I would give it. It is that it would depend somewhat upon the action of this committee and Congress. I wish to read here from my diary again. While at Hongkong, on June 9, I talked with Mr. Merill, the head of the Taikoo Sugar Refining Company, which is the largest sugar refiner in the Orient, and I think, without preju- dice, Mr. Me'rill is the best sugar expert in the Orient. I was with him the larger part of two days. Mr. Merill himself brought up this point, and I did not ask him for it. I believe it will set you gentle- men thinking. Mr. Merill states that the passage of the proposed law by the United States greatly reducing the tariff on sugars coming from the Philippines to that coun- try, or allowing the same to enter free of duty, would in point of practice force all Philippine sugars to enter the United States. He states that under the terms of the Brussels convention if such a law were passed he, as an EJnglish refiner, would be required to pay on refined sugar made from Philippine raws a countervailing duty equivalent to such reduction, provided he sold such re- fined sugars in territory belonging to a power signatory to the Brussels con- vention. In his markets this would include English, French, and German China, also English India, or, in other words, all of the leading Asiatic markets. This would practically result in excluding refined sugar made from Philippine raws from all markets in this part of the world and would dump the output of those Islands into the United States, the very country that does not need this sugar. Mr. Hill. I understand that he is against the -proposition as an English refiner in Hongkong ? Mr. Hathaway. I do not know. Mr. Hill. Would you not think so ? Mr. Hathaway. He was simply telling me what would be the result. Mr. Hill. Did you not draw that inference as a general inference ? Mr. Hathaway. No, sir; I did not. Mr. Hill. What was the inference that you drew ? 48 PHILIPPINE TABIFF. Mr. Hathaway. I did not draw an inference either way. He has jiot since the passage of that law reducing the tariff from 100 to to per cent bought a pound of Philippine sugar. He indicates this as the result of the countervailing provision of the Brussels convention. When I came home we submitted the question to one ot the best •sugar experts in Germany, and, he made the same statement that Mr. Merrill made, viz, that under the terms of the Brussels convention we would have a countervailing duty on Philippine sugars m every refining country other than the United States and possibly Japan. The Chairman. Under what clause do these gentlemen say that "would take place ? Mr. Hathaway. Clauses 1, 5, and 7. The Chairman. If that is correct, why does not our present reduc- tion of 25 per cent have that result now ? Mr. Hathaway. By the terms of the Brussels convention there is a surtax of one-half cent allowed before the countervailing duty shall begin. The surtax by the Brussels convention is 5^- francs on raw sugar on 220 pounds, or 100 kilograms. Five and one-half francs on 2?0 pounds is half a cent a pound. The countervailing duty shall not obtain until after the reduction in tariff passes the limit of surtax. The Brussels convention treats all raw sugar alike and operates independent of polariscope test. Your present law reduces the tax 42 cents. You have got 8 cents more to go before the countervailing duty will be attached, but having passed the 50-cent mark in reduction the countervailing duty will be applied. You can get a copy of the Brussels convention in the State Department. The Chairman. They allow the New Orleans sugar to go into the State of Louisiana free. Mr. Hathaway. Certainly. The Chairman. Why does not the Brussels convention regulate that? Mr. Hathaway. The point involved, I think, is simply this : The law which you originally passed applying the whole Dingley tariff to the products coming from the Philippine Islands, and the law which you next passed, saying that the rate should be 75 per cent of the Dingley rates, and the law which you now propose to pass, say- ing that the tariff shall be 25 per cent of the Dingley rates, all are un- doubtedly constitutional, and they establish that, for purposes of taxation, the Philippines are a colony of the United States, and the Brussels convention covers just such cases as that. A similar case has arisen between England and English India. The Chairman. Then we will go off into Porto Rico, where the sugar comes in free to the United States, and the status is similar to that in the Philippine Islands. Mr. Hill. And -Hawaii. Mr. Hathaway. Do Porto Rico and Hawaii each have a separate tariff law of their own, like the Philippine Islands, or do^ the Dingley law apply to imports at Porto Rico and Hawaii the same as in the United States? The, Chairman. In Porto Rico we have extended the tariff laws of the United States, and in the Philippine Islands we have eiven them a tariff law by themselves. ° Mr. Hathaway. Yes, sir. PHILIPPINE TABIFF. 49 The Chairman. Of course we can extend the tariff laws of the United States to the Philippine Islands? Mr. Hathaway. Yes; but you can not do it very well before 1909. The Chairman. I do not see how Mr. Grosv^nor. Why can we not repeal the Dingley tariff law as it IS applicable to the Philippine Islands? Mr. Hathaway. How will it affect our relation to Spain in the treaty which closed the Spanish war, and how also will it affect the fact that there is a separate tariff wall around the Philippine Islands? Mr. Geosven(5r. It will not affect either one of them. ^ Mr. Hathaway. Either of those propositions continues to estab- lish that this Congress has recognized that for taxation purposes the Philippines are a colony. Mr. Grosatenoe. Very well. Mr. Hathaway. The Brussels convention looked at it in that way. Mr. Gros-^-enoe. Then if we take the tariff entirely away the Brus- sels convention will not be interfering with our .business? Mr. Hathaway. Provided you extend the Dingley tariff around the Philippine Islands. Mr. Gros\'enoe. In regard to everything else except Spain ? IMr. Hathaway. That is the point. You can not. Spain is one of the signatory powers to the convention. Mr. Grosatinor. But they have not any sugar to bother us with. Mr. Hathaway. They are raising it now; they are beginning to raise it. Mr. Grosvexor. Every time a man plants any sugar you begin to tremble. Is that it? Mr. Hathaway. No, sir; I am not trembling in the least, Mr. Grosvenor. ]\Ir. Grosvenor. The United States is not one of the signatory powers to the Brussels convention? Mr. Hathaway. No, sir; it is not; and we have no voice in deter- mining its findings. The Chairman. If we extend the Dingley law around the Philip- pine Islands and give the Philippine Islands iree trade from the United States, Spain can not complain until she gives the Philippine Islands free trade into Spain. Mr. Hathaway. Very well. The Chairman. So that there is no difficulty so far as that matter is concerned — ^that is, we are satisfied on that thing? Mr. Hathaway. Do the people of the Philippine Islands desire to have the Dingley law extended around those islands ? The Chairman. That is a matter for us to consider. Mr. Hathaway. Certainly. The gentleman asked me why we did not wish to go into the market under the existing conditions, and I told him that it depended largely on what you were going to do right here, and I and my business associates are hesitating on that very thing. Mr. McCleary. What would be the decision if we should pass this law? Mr. Hathaway. I would not dare to invest in those islands if this law passes. P T — 05 M i 50 PHILIPPINE TABIFF. The Chairman. If you are going down there, either to get into the islands and invest capital, there is not much danger in this buga- boo you have heard about of the Americans going over there and flooding the country with sugar, is there ? - . Mr. Hathaway.. I do not know whether you appreciate this propo- sition or not, but if the Filipino, whether a native man or an Ameri- can or an Englishman, going in there to raise raw sugar, finds that he can not market it in any of the world's markets except under the disadvantage of a heavy countervailing duty, and then he brings it to the United States and offers it in the United States where the num- ber of buyers is decidedly limited, those buyers will say to that man who has his raw sugar from the Philippines : " How much can you get for that in the world's market? " "I can get, say, 3 cents a pound, minus the countervailing duty, which I must stand." " Very well, I will pay you, not the price ior other American sugar in tlie American market, but I will pay you a very few cents per 100 pounds above what you can get in the world's market." Mr. Underwood. Why should he say that? Mr. Hathaway. He has got the raw sugar market in that way. Mr. Underwood. He might say that here. Mr. Hathaway. Does he not say it? There has not been a time in the last ten years when that has not been the situation. Mr. Underwood. Why should not the farmer in the Philippine Islands get the price? Mr. Hathaway. On raw sugar ? Mr. Underwood. Yes. Mr. Hathaway. There is only one producer of raw sugar in the United States, and that is the Louisiana planter. The Louisiana planter never yet has been paid the full price for his su^ar. Mr. McCleary. What is the reduction that you would have to suf- fer on account of the Brussels convention ? Mr. Hathaway. About a half a cent a pound. Mr. McCleary. You could lay this sugar down at New York for a cent? Mr. Hathaway. I judge it is about that. Mr. McCleary. And another half cent would pay for this diminu- tion on account of the Brussels convention ? Mr. Hathaway. Yes, sir. Mr. McCleary. That would make it 1^ cents that it would cost? Mr. Hathaway. Yes, sir. Mr. McCleary. That is a pretty good profit yet, is it not? Mr. Hathaway. The point is this, that he does not and will not pay the Filipino producer half a cent below the price of Ameri- can raws, but half a cent below the world's raws, the price of which is not fixed by our high tariff on raw sugar. Mr. McCleary. What is the Hamburg price ? Mr. Hathaway. I do not know. I can not give it to you. Mr. McCleary. Could you not approximate it ? Mr. Hathaway. No, sir ; I can not. A ^Bystander. It is 8s. 4d. Mr. Hathaway. It is not the handicap under the American price as fixed by the high protective tariff, but a handicap under the world's price which is fixed without such tariff. PHILIPPINE TABLPF. . 51 Pl^-r ' ^^'^^'^^^OE. We understand that you would rather go into the J;'hilippine Islands and buy sugar lands under present conditions than under the conditions as they will be under this bill. -Mr. Hathaway. That is true. ^Ir. GEosraNOR. That is, you think that the business over there will be practically destroyed by this bill? T^^^^: Hathaway. I would not say that. T sav you are putting the l*ilipino producers at the disadvantage of having to pay that coun- tervailing duty whenever they attempt to market their sugar. Mr. Geos\-exoe. Then you are anxious for their protection ? AiT. Hathaway. No, sir ; I am not arguing the matter one way or another. One of the members of the committee asked me point blank why we did not wish to invest, and I told you. I submitted this proposition to the best sugar expert in the Orient, and I submitted it to another expert in Germany, and he said, " They will counter- vail against it as sure as the world." I have answered your question. Mr. Geosvenor. Has not half of the product that has been exported been sold in Hongkong? Mr. Hathaway. The total Philippine export for the calendar year 1904 was 1,306,000 piculs, of which China and Japan together took 902,000 piculs, a little more than half. There are m Hongkong two distinct sugar markets. The first market is that fixed by the three great refineries which are located there. There are two sugar-refin- ing companies in Hongkong, one called the China Sugar Refining Company (Limited), which has two factories, and the other the Taikoo Sugar Refining Company, which has one factory. The one factory of the latter company has about double the capacity of the two factories q^f the other. Those people constitute a certain market. There is, in addition to those people, another market, which is the market for raw sugar to be consumed as raw sugar in the interior of China, which market takes up the most of that which is being sold there at the present time. Bearing on the question of the extent of the raw-sugar market in Hongkong, I inquired .of Mr. Merill, and from him obtained this answer : There is an erroneous impression concerning the increase of the sugar con- sumption in China. The tendency at the present time is to substitute refined sugar for raw sugar, and statistics as to the consumption of sugar here might lead one astray. The marl^et for the consumption of raw sugar is steadily decreasing, and the demand for raw sugar is being replaced by a demand for refined sugar. The Chaiejiax. The refined sugar furnished in the Philippines is furnished by Hongkong? Mr. Hathaway. Yes, sir. The Chaiemax. From these three refineries ? Mr. Hathaway. Yes, sir. The Chairjian. There is also a large market for the raw sugars in Japan ? Mr. Hathaway. Not very large. There are only two refineries in Japan. The Chaiemax. The reports say that is an increasing market. Is that an erroneous report, as well as that about the Chinese ? Mr. CoLCOCK. Last year Japan took 63,000,000 pounds. In 1905 Japan took 10,000,000 pounds, according to the figures of Col. Clar- ence R. Edwards, who is now present. , 52 • PHILIPPINE TABIFF. The Chairman. I think that is correct; but that trade was inter- rupted by the war with Russia. Mr. William Alden Smith. Did the powers signatory to the. Brussels convention impose any countervailing duties against the Cuban sugars by reason of our favoritism ? Mr. Hathaway. I can not say definitely, but I understand that thev did so, but that they subsequently took them off. I have a state- ment in regard to that in my trunk at the hotel, but I have not got it here. . • Mr. William Alden Smith. Do you know what proportion of the Cuban sugar production has gone onto the world's market since the passage of our law ? Mr. Hathaway. Either three or four cargoes of Cuban sugars have gone on the world's market since you reduced the tariff 20 per cent. Mr. William Alden Smith. Practically nothing has been sold? Mr. Hathaway. That is the idea. Mr. William Alden Smith. It comes to the United States? Mr. Hathaway. Yes, sir. Mr. William Alden Smith. And would you give the idea that it was because of the countervailing duty, or because of our reduction ? Mr. Hathaway. Both. Mr. McCleaey. What would be the effect on the sugar-beet indus- try, the sugar-producing industry of the United States, of the passage of this act? Mr. Hathaway. I consider that it would be the most serious blow you could give us. Mr. McCleaey. How? Mr. Hathaway. Because of the ultimate possibilities over there. If you can find any way out of this Brussels convention proposition, the sugar possibilities of the islands are practically unlimited, the wage rate is so small and there is such a vast opportunity for improve- ment in the methods of agriculture and milling. Mr. Geosvenoe. Surely that would be a good place to go and buy that land. Mr. Hathaway. If you will keep this tariff rate where it is now, and if you will agree to keep it there for a term of years. Mr. Geosvenoe. But if we take the tariff off, it will destroy that business? Mr. Hathaway. I do not know. Mr. William Alden Smith. I would not vote for this bill if it was going to send you to the Philippine Islands with your industry. Mr. Needham. They will go now unless you do pass it. Mr. William Alden Smith. My idea was that you were contend- ing that if it was kept as it is now your industry would go on and be developed. Mr. Hathaway. Yes, sir. Mr. William Alden Smith. And we would get the benefit of the employment of the labor and of the investment. Mr. Hathaway. That is true. But it is also true that there is an opportunity for development in those islands if things remain in this way here. It gives an opportunity for the development in the islands as well as m this country, provided you do not reduce that tariff so ttiat you drop below the sur tax of SJ francs f o.r 220 pounds • and whien you do that you are dropping into trouble. ' PHILIPPINB TAEIFF. 53 Mr. Xeedham. Suppose we should have this bill so amended as to provide that all refined sugars should go into the Philippines free — for instance — what effect would that have? Mr. Hathaway. On what ? So far as the advantage of this coun- try is concerned it would not amount to anything. Mr. Needham. It would be of no advantage to this country at all? Mr. Hathaway. No, sir. Do you want to know why ? Mr. Needham. Yes ; I would like to have you state that. Mr. Hathaway. The Taikoo and the two other refineries at Hong- kong are refining sugar there at the present time at a total cost for refining of 60 to 70 cents Mexican per 100 pounds, which is equal to 31 to Z7i cents gold. They are paying their laborers $5.40 a month gold. They are refining sugar at a little less than one-half what the evidence shows is the cost of refining in this country. The Chaikman. Does that include the waste? ^Ir. Hathaway. That includes the total cost. The Chairman. The waste? Mr. Hathaway. The general manager of the Taikoo refinery gave me that as the cost of refining sugar. The Chaiema>-. I know, but there is a cost of refining sugar and a cost for refining sugar. One might include the work and the waste, and another might include also the wear and tear on the plant and interest on the investment. ilr. Hathaway. I can not answer that question. I am simply giving you the information that he gave me. Now, the point in- volved is simply this, that the freight from Hongkong to Manila is from 7 to 9 cents a hundred pounds. If you are trying to ship your sugars that is what it will cost you from Hongkong to the Philip- pines, and the cost of freight from this country is more than that, and the great source of raw sugar, Java, is nearer to Hongkong than it is to this countrj'. Mr. Needhaji. You do not think they would get the market even with that inducement? Mr. Hathaway. No, sir. There has not a single pound of sugar gone there yet. Mr. GKOSVEXfiR. They can not get our market and we can not get theirs, even if this bill passes. Mr. CocKRAX. Your idea is that there would be such a production of sugar in the Philippine Islands that it would swamp this market ultimately ? Mr. Hathaway. I think so. Mr. Cockrax. Then it would benefit the islands Mr. Hathaa\'ay. Provided this Brussels convention does work the other way. Mr. CocKRAN. Then what would be the result? Mr. Hathaway. It would be a positive detriment to the Philip- pine Islands, because they would have to meet this countervailing duty. I think, as gentlemen who have the interests of this country at heart, it is well worth your while before you pass any law which makes a remission of duty of more than 5i- francs per 220 pounds for you to take that into consideration. Mr. CocKEAN. But, waiving the countervailing duty, this measure would be of benefit to the Philippine Islands ? Mr. Hathaway. Undoubtedly it would. 54 PHILIPPINE TABIFF. Mr. William Alden Smith. And a corresponding detriment to ourselves. Mr. Hathaway. Yes, sir. Mr. CocKRAN. If we were holding the islands for the benefit of the islands alone it would be the obvious thing to do ? Mr. Hathaway. Yes, sir; if you were passing legislation solely for the benefit of the islands and irrespective of the effect on this country. Mr. CocKEAN. If you do not benefit the islands, you are depriving them of that benefit that you could give them ? Mr. Hathaway. Yes, sir; provided the countervailing duty were out of the way. The Chairman. The cost of raising sugar is like the cost of raising potatoes — it varies with the management of the operation in the same locality; and one man will introduce economies while another man rushes work, and another man may do neither; so that it is pretty hard to give an estimate of the cost of producing sugar, is it not ? Mr. Hathaavay. I think that is true. The Chairman. And is it not true that too many of the gentlemen coming before this committee take, some of them the high cost and some of them the low cost, and trot them out before the committee as fair samples, when it does not give the committee the correct idea? Now, I am reflecting upon nobody, but I am saying that some do that. Of course you do not, but some people do. Mr. Hathaway. I understand.- The proposition is this: When it comes to the question of producing sugar on the plantations in Ife- gros, the lowest cost that I have noted in the Iloilo warehouse is IJ pesos per picul. The highest cost given by any planter is 2.52 pesos per picul. The average price given by me ranges between those limits. The Chairman. There is a difference between the production of sugar in the factories in Michigan, and some of them produce it much cheaper than others? Mr. Hathaway. There is not much difference at the present time, the way we are working. The Chairman. There is not much difference now, but there has been? Mr. Hathaway. That is true. The Chairman. And there is a difference between the cost in Michigan and that in Colorado? Mr. Hathaway. Not very much. I have obtained what I con- sider the most authentic statements that can be found anywhere. At the factories in Colorado the cost f. o. b. cars at factory is $3.71 per 100 pounds. I gave you the Michigan cost as $3.90. That was the minimum cost f . o. b. cars ready for shipment. The Chairman. The total cost of refining the sugar ? Mr. Hathaway. Yes, sir ; that is in the best factories in Michigan at the present time. I have obtained from Colorado the staten^nt that the total cost of refined sugar f. o. b. cars, ready for shipment is $3.71 a hundred. Colorado has a freight handicap on Michigan which a trifle offsets the difference in the cost of production which gives practically the same ultimate cost, whether in Colorado or Michigan. The above cost does not include in either case interest on investment or depreciation of plant. PHILIPPINE TABIFF. 55 Mr. Geosvenoe. My recollection is that some expert testified here last year that they were producing sugar in Utah for 1 cent a pound cheaper than you were doing it in Michigan. Mr. Hathaway. I do not remember such testimony. _ Mr. Geosvenoe. I am not sure who it was, but I am quite sure that it was so stated. The Chaieman. I think some gentleman stated that the cost of refining sugar in Colorado was 3^ cents, and at that time you gave your Michigan cost as 4 cents. Mr. Hathaway. Yes, sir; and we have made some improvements in the operation of our factories which enables us to cut down the cost from $4 to $8.90 this year. ^ (Thereupon, at 5 o'clock p. m., the committee adjourned until 10 o'clock a. ra. December 14, 1905.) Committee on Ways and Means, Thursday, December Uj., 1905. The committee met at 10 o'clock a. m., Hon. Sereno E. Payne in the chair. Members present: Messrs. Dalzell, Grosvenor, McCleary, Hill, Boutell, Watson. Curtis, Needham, Smith, Williams, Robertson, Clark, Underwood, and the chairman. STATEMENT OF MR. F. M. HATCH, OF HONOLULU, HAWAII. (See also page 272.) Against the Mil. ilr. Chairman, on behalf of the sugar growers of Hawaii, I wish to express their earnest protest against the entire remission of duties which is proposed in this bill in regard to sugar from the Philippine Islands. It appears to us that it is a most serious menace to the prosperity of the Hawaiian Islands, and this is based upon the almost self-evident proposition that this great encouragement which this bill proposes to the Philippine Islands will lead to a development of the sugar industry there to such an extent as will very seriously impair our industry. Hawaii is a part of this country, in a sense in which the Philippine Islands never can be. We do not begrudge assistance to be extended to the Philippine Islands, but we do earnestly make this suggestion: Can not the desired assistance, to a sufficient extent, be given to the Philippine Islands by something short of the extreme measure which is pro- posed here in regard to sugar ? This is a very serious matter to Ha- waii, because Hawaii has but the one crop. It is an unfortunate posi- tion for Hawaii to be in, but natural conditions there are such that our development has been on the line of the sugar industry alone. There is no other crop there ; no other industry of importance. The Chaieman. The committee is aware of that. Mr. Hatch. We stand or fall on the sugar industry. Now, the prosperity of Hawaii can not be a matter of indifference to the com- mittee, and I wish to express the apprehension which is felt in Ha- waii that great damage will be done by this extreme measure. 56 PHILIPPINE TAEIFP. When I have said this, I have said all that can possibly be said. We know that in matters of general policy the local interests of Hawaii have to yield to the interests of the country at large ; but it strikes me that in this instance the local interests of Hawaii, are very much in harmony with the interests of the whole country. The Chairman. You have been enjoying free trade with the United States for about twenty years in Hawaii ? Mr. Hatch. Yes, sir. Mr. Dalzell. Longer than that. , The Chairman. For twenty years or more. You have stimulated the sugar industry so that you have gotton up onto the hill lands and the mountains in the cultivation of sugar, and you have taken up all the lands in the Hawaiian Islands to such an extent that you find some places that do not pay. Is that true? Mr. Hatch. That is true. The Chairman. And notwithstanding that, according to the re- ports of your own association, when sugar was at its lowest, in 1903 and 1904, you made a profit of 7.2 per cent on all the stock as capital- ized in all those sugar corporations, did you not? Mr. Hatch. I am not aware of that fact. (See p. 272.) The Chairman. Well, I am. Do you not think that it is a little presumptuous, in view of all these circumstances, for you to come here and attempt to prevent free sugar for the Philippine Islands, especially as you have free entry into the islands for your refined sugar ? Mr. Hatch. We think that it is not presumptuous for us to pre- sent our view of the situation, and to tell you how we think we are to be affected by this proposal. We hope that we are' mistaken in our apprehension, but we think that it is our right to protest. Almost every family in Hawaii is dependent directly or indirectly on the sugar industry. The Chairman. We know that. Mr. Clark, of Missouri. Can not they do anything out there but raise sugar ? Mr. Hatch. There is no money there in anything else. We have not been able to get hold of any other industry. Our capital has o'dne into this industry, as the chairman, says, during the last twenty years, and the development has been along these lines. All the capital we could get hold of has gone into it. It is a legitimate business. It has led to very considerable prosperity, and we should be very unwill- ing to see that prosperity jeopardized. That is all that I have to say, unless there are some further ques- tions to be asked me. Mr. Clark, of Missouri. This has nothing to do with this sugar business, but I want to ask you if there are any more Americans out there now than when those islands were annexed ? Mr. Hatch. I think so. Mr. Clark, of Missouri. Any considerable number more? Mr. Hatch. There was a great increase in mechanics after the annexation, because there was a building boom; but when that was over there was no further increase in that class of population Manv of those who came then returned to the mainland. We have not been able to attract as many farmers as we desire. That is what we need PHILIPPINE TAKIFF. 57 JMr. Needham. Could you tell us the proportion of refined sugar and the proportion of raw svxgar shipped from Hawaii? Mr. Hatch. "We have never refined any sugar until just a year ago, when one plantation commenced to refine sugar. That is the very beginning of it. Mr. Needham. You ship all your product to the United States, do you? Mr. Hatch. Yes, sir ; the largest part comes to New York. STATEMENT OF MAJ. AARON GOVE. (Against the bill.) Major Gove. ]Mr. Chairman and gentlemen, perhaps it is proper that I should state to the committee in the first place my position and relation to the main issue before you. I was asked early in the year to accept a commission to visit the Philippine Islands with a view of inspecting and determining, as best I might from my own judg- ment, what were the present conditions of the industry of the growth of sugar and what, perhaps, would be the future outcome of that growth. My purpose also was quite as largely along educational lines as along the sugar-industry lines. Having been connected with public education during my entire life, I interested myself particularly in the islands in regard to the plan of education in the provinces. My concern in the Philippine Islands was quite as much with the educa- tion department as, or more than, with the sugar department. However, I willingly accepted the commission, and accidentally, with- out any prearranged plan, met on the ship for the first time a stranger who was before you yesterday, Mr. Hathaway, from whom I learned, after conversation, that our quest was largely identical so far as sugar was concerned, and I was fortunate in having him for a companion during much of the time I was there, the months of June, July, and August, because his expert knowledge of the subject was of great service to me. However, I proceeded along ordinary lines of inves- tigation of a new subject. I found it extremely difficult to obtain information in the Philippine Islands from any one or two or three parties. I found on landing in Manila that I was accorded the most courteous and kindly reception from everybody, from the govern- ment, from the army especially, and from the educational department particularly. The information obtained from these three parties was so varied that I was forced to conclude that the final and ultimate parties, namely, the planters themselves, at their homes, were perhaps the most responsible informants that I could get. First, I would say with regard to the government and government officials in Manila that we have in the Philippine Islands, as the com- mittee knows, one of the most remarkable governments in the world, one of the most successful, and one that is performing an experiment never before known in history. We have been so fortunate in the selection and appointment of a Commission, so absolute in its gov- ernment, independent of every power on earth except Congress and its own Supreme Court, a Commission which is permitted and which is able to make laws in the evening and to enforce them the next day without recourse, except when Congress vitiates or vetoes or turns 58 PHILIPPINE TABIFF. down a law, which Congress has never done. The remarkaWe prog- ress of that colony is one of the events, in my judgment, in the his- tory of the world. With such a body of men as has been sent there, conscientious, powerful, intelligent, and able, with all that goes with experience and erudition, the Philippine Commission have accom- plished and is accomplishing more than any other colonial govern- ment in the history of the world, so far as I know ; and so long as that condition continues everything is all right. But I find that the Commission and the government employees, which furnish a large proportion of the intelligent inhabitants of the islands, are in that condition, as you might expect, where anything objectionable occurring, any criticism regarding their work, is viewed with suspicion and immediately receives rebuttal, and ' immediately receives an expression of disagreement, an expression perhaps of " You are here for the purpose of finding fault with us, and we will have to watch you." I have found that feeling, that sentiment. However, I will repeat again, the courteous treatment received by me from the government of the Philippine Islands, from the Commission and the government employees, was exceedingly happy. Then again, my army acquaintances and associates, to whom I appealed next, gave me other views of the condition of the country and the agricultural resources, from the standpoint of the soldier. I found the army in the Philippine Islands not altogether — those with whom I mingled — occupying the same position with regard to the government in Manila as the garrison in a fort near one of our cities occupies in this country, and although always remembering the dis- cipline of a soldier, when asked somewhat confidentially what they were doing there the usual reply was — and I had it many times — " We are just sitting here waiting for the Commission to tell us what to do." " What are you doing? " "Nothing." " What do you ex- pect to do? " " Nothing." "How much did you cost last year? " " General Corbin's report says that we cost $14,000,000 last year, in- cluding $4,000,000 for transportation." But nothing came from any army officer that was disrespectful or harmful. A third party in the Philippine Islands to whom I looked for in- formation on the purpose of my quest was what is known here as the Filipinos. I believe that the notion of the Filipinos, as represented by those from whom you hear and those who participate in requests and in debates and who make speeches, is true of a very small number of the Filipino people, and that one is likely to get wrong impres- sions, because there are so few of them. You will notice in your own reports and hearings the same names occurring frequently, and a very limited number of names; the same witnesses, the same men in the sugar business, come before you, who are very well prepared to speak. I should like to say that these people, a very few people, a very few hundred of them, have a vety fair education, and they are generally blessed with poetry and imagination. The Filipino native is a poet from the ground up, and will say the most beautiful things, and will say them in the most beautiful way and sometimes I seemed to notice that even inaccurate and erroneous expressions are given based upon the virtue of a vivid imagination Lastly, the fourth party on whom I depended most before I got through, was the Filipinos themselves at their own homes. I soon PHILIPPINE TARIFF. 59 learned that the best information would be gathered not from the town, but from the country, and I spent most of tlie time for from two to three montlis in the provinces between the natives in their homes, always seeking for a sugar plantation, and with the sugar planters, and with the laborers who worked on the sugar plantations I learned what I may be able to state to you, the condition of labor in the Philippine Islands about which something has been said which may well be repeated, learned by actual contact. The most I have to say this morning verifies to a very great extent the figures and facts that were presented to you yesterday. ^^liile my companion Avas with uie, as he intimated, the day's work was carefully reviewed every evening, and the facts and incidents and conversations committed to the written page immedi- ately, which written page he now preserves for reference, for your information. I think perhaps errors may arise in speaking of the pay of the laborer in'the Philippine Islands. My impression is that he receives no pay; that he handles no monej^; that he has his living and that is all. And I believe that is all that he wants at present. In the latter part of my stay there I sought for an inter- view, having made a pleasant acquaintance with a native Filipino, ■with eight years' residence in Europe, born in Pampanga Province. Through him I asked if I might be permitted to go into the back country and interview a Filipino laborer on a sugar plantation, who was born there, whose father and mother were born there, and whose grandfather was born there. He told me it would be very easy to do that, and accomjDlished his purpose by making an appointment with me in Pampanga with three men of this character. I will take time to tell you of one of the first interviews. This man was GO years old, a fine specimen of a human animal, with a clear eye. a beautiful face, an erect form. He had been married twice. * His first wife was dead, and left him with four children, the youngest of whom was now 25 years old. Those four children were laborers, and M^ere prosperous and happy, as he believed. He mar- ried again, a widow with one daughter, by whom he had a second daughter. His family now cohsists of his wife and two daughters. He had lived where lie was living for thirty years, working for the same landlord. I said to him, " ^"^Tiat are you doing? " " I am raising rice and sugar."' •• How much rice and how much sugar land are you using?" " I am working on 5 acres of rice and 10 acres of sugar." " You have been doing that all these thirty years?" "Yes, sir." "How much pay do you get?" " For my rice I get half." " Do you get half '. ■' ■■ I think I do. I don't know whether I get more or less, but I get all I want. I get all the rice my family needs, and I am satisfied." "' How do you get the pay for your sugar ; do you get the half sugar in payment?" Yes; he said he supposed he did, but he didn't get his pay in sugar, but in money. " Do you get your full pay for your year's crop in money? " '' I don't knoAV Avhether I do or not. I get all I need. I have all that is necessary, and that is all I want." " How much money did you ever have in any year of your life that you can remember, real money in your hand ; ho w much money have you ever in one year handled?" After a few minutes' hesitation, he believed that he remembered that one year he 60 PHILIPPINE TABIPF. had 10 pesos— $5. " You never in any one year had more money than that? " " No, sir; I never; I don't very often have that. " What did you do with all that money ? " The district treasurer of the province listened to the conversa,tion and seemed to be surprised, while my interpreter was not surjorised. The interpreter had been, by the way, secretary to Aguinaldo in the earlier years, and was now working for himself in the provinces. "What did you do with that money? Did you spend it on cock- fights? " He said, " No, sir; I do not indulge in cockfights; " and the interpreter told me that that was true; that the man did not par- ticipate in cockfights. "What did you do with the money? " "I spent it on my family." " What do you own ? " He said that he did not know thait he owned anything. He looked at the chickens, and he said: "Yes; I think these chickens are mine." "Do you own the house in which you have lived for thirty years ? " He thought he did. " How do you know you own it? " " I do not know that I own it, but I paid a tax of 15 centavos in 1902 on this place." I found that to be verified when I looked at the books of the district treasurer at San Fernando. After that he had fjaid no tax, because in the earlier days of the land tax they had regulations which they found quite too severe, and after that they did not presume to collect a tax as small as that. I asked him if he owned the land on which the ho'use was. He said he thought he did. " How do you know ? " "I do not know." " Could you move away from here, if you chose, and go some other place? " "Yes; I could, because I owe the landlord nothing? " "How do you know you owe the landlord nothing? " " Because he has never spoken to me about it, and I know he is fond of me and would like to have me stay here." After more extended conversation than I have related to you, I asked him : " How would you like to have 10 acres of land — 2 hec- tares — of your own, to plow and to plant it and to reap and sell the crop just as you please, and be all by yourself? " And the man said he would not like to do that. He said : " Why should I do that ? I have all I want, and my father had all he wanted. We are living comfortably. ; we have all we need to eat, because we have all the rice we want, and we have all the clothes we need, and if there is anything more we want all we have to do is to ask for it." He had on a clean, pretty nice, white shirt. He didn't have on much else. I asked him : " Where did you get that shirt? " He got it from the landlord, and it developed that that shirt had been given to him as a hand-me-down. I asked him: " How much did you give for it? " " I don't know." " It is charged up to you, I suppose ? " " Yes, sir." That man I am telling you about was a beautiful character, clean in every way, as I learned, in other ways a fine man, and as intelli- gent as it was possible for a human being to be who had never been 5 miles from home in his life and never expected to be and never wanted to be, and had no desire in the world except to live no ambi- tion to own anything. That man represents the laborers of the prov- ince of Pampanga. I talked to two others. One was 35 and the other 32 years old. In the province of Pampanga, as I learned later the natives have a very much more attractive appearance than in Negros, where I spent much more time. However, in Negros the con- dition is the same, only more so. The men are not paid in money PHILIPPINE TAEIFF. 61 they aro paid in kind. I was told by Juan Araneta, whose name is often mentioned here, and who is an eminent gentleman in that coun- trv, that he thought he had about a thousand people around about him. and when asked if any of them ever left him he said, " No, they never leave me unless I drive them away. If one behaves badly 1 make him go, but they usually come back and beg to have me retain them." He told me how much he paid the laborers, and he also told me, in the presence of Representative Hill, how much he paid them, when we met him in the grand city hall in Manila. It is no reflection upon the man, because he is a poet, to say that the accounts were not quite the same. They did not quite agree. ^Ir. Hill. About double, was it not, when we were together? Major Gove. "Well, it was more. \^1ierever I was in Negros and Panay. and I traveled in Panay some 150 miles in the interior and then all along the Xegros country about which you were told yes- terday, my chief entertainment was with the American school-teacher. The American school-teacher I found to be the chief manager in the village always, and that American man teaching school really was more powerful in that valley or in the village than the padre. He was more powerful and more influential, and Avas the man who held the lines and to whom we must look always for the improvement over there, I believe. The figures that have been given you with regard to the production of sugar I wish to verify, without going into unnecessary detail. The figures in many cases were given in my presence. The statement of the conduct of producing sugar can not be too heavily emphasized. There is no plowing except on the government farm. The ground is scratched and tickled for 2 or 3 inches. We would hardly call that plowing in this country. There is very poor tilling, and, as you have been told, when the cane is planted that is all that is necessary except to tickle between the rows two or three times during the sea- son, and then cut off the harvest. The next year not even the ex- pense of plowing pertains to the growing of the crop. When asked by my own people on my return what in my judgment was the pros- pect for the future of the sugar product in the Philif)pine Islands, I was obliged to say that the amount of the output in the future is truly incalculable; that the statement of the Secretary of War early in this work that the Philippine Archipelago can produce many times more sugar than the world can consume is verified by my inspection ; and the knowledge I obtained there was that thousands, and even millions, of acres of land, arable land, stand ready for the plow, not even to be cleared of the cogon grass or timber, most of it. All that is necessary is for a man to go to work, having the proper tools, and turn the soil and raise the crop, with an incalculable out- put from that crop. I have no doubt that Java ultimately will be second to the islands in the production of sugar. I have no doubt of the ability of the American, or any other exploiter, to go to the Philip- pine Islands with money and proceed to raise sugar, from which he would begin to get returns surely within four years and possibly within three years, and an immense crop in five or six years. Fer- tilization was never known there, so far as I could learn, and irriga- tion, so essential to a sure crop in any country, and particularly there, can be introduced at very little expense. Most of the plantations on 62 PHILIPPINE TARIFF. the island of Negros, Occidental Negros, lie in an inclined valley, in- clined toward the sea, the water being abundant in streams and riyers from 10 to 20 miles apart, and it is certain that irrigation on the island of Negros will be ever so much easier and more possible than irrigation in my own State— Colorado— where it costs so much money to do the irrigating. Then with plowing and fertilization and with irrigation, I conclude my statement again, that the output for the future of sugar in the Philippine Islands is incalculable ; beyond the comprehension, almost, of any man. I know of no power that can stop it. The province of Pampanga commenced the raising of sugar one hundred years ago; there was no sugar production of any great account much more than fifty years ago. Sixty years ago a Chinaman, who is now living and very rich, went from Panay across to Iloilo and planted sugar cane, and those worn-out lands which constitute that little strip of about 1 to 3 miles wide along the western shore of Occidental Negros have been cropped for fifty years regularly without other attention except the cropping. This old Chinaman is still living and is very wealthy, and enjoys what he is enjoying both in money and situation from his early enterprise in his youth in starting those sugar plantations. Only in the last fifty years has the sugar amounted to much; they have had nothing to help them only this primitive farming which we know so well. If that can be accomplished in fifty _years under those circumstances, I believe that I have a right to conclude that with these added instrumentalities the production of the Philippines in sugar can not be estimated by man. I shall be glad to be jjrompted now by questions. Mr. Curtis. Who was your interpreter on the island of Negros? Major Gove. We had various men as interpreters. Mr. Curtis. You had an interpreter by the name of Nolan? Major Gove. I do not know him; I never met him. Mr. Curtis. He was interpreter for Mr. Hathaway? Major Gove. I do not know ; I never knew him. Mr. Curtis. You stated that you had looked into the labor ques- tion in the island of Negros and it was worse than on the other islands ? Major Gove. I do not know whether I used the word " worse " or not. It was lower ; not of such high character. Mr. Curtis. Is it true that it is hard for them to get enough labor in the island of Negros to run their plantations? Major Gove. In a few places. Some planters told me that they occasionally went to the northeast coast of Panay and got boat loads of workmen to help them, but it was not a paying proposition usually. Mr. Curtis. Is it true that they have to pay those men about 30 cents a day in gold ? Major Go^'E. I do not know. The Chairman. Do I understand you to say that this man of whom you have given us this little biographical sketch is a fair representative of the laborers there on the sugar plantations ? Major Gove. In Pampanga? The Chairman. In that province. Major Gove. Yes, sir; he lived 5 miles from San Fernando. The Chairman. If that was the class of laborers they can o-et on PHILIPPINE TARIFF. 63 those plantations, it would look like this grand development that you look for was almost hopeless, would it not — if that man was a fair example, a man with no ambition, who did not care for getting any- thing but what he ate and a few dollars a year? It would look like the situation for development was pretty much hopeless, would it not, unless they can get those men to work? Major Gove. I do not understand that that is the purpose of the United States, to hold the colony of the Philippines where they are now. I understand we are spending money for the purpose of teach- ing them and creating the desire. That man's children are in school. Those children's children will be at school. When they get to school and have the desire for something, it will probably come. In these early days of talking about our position we seem to have undertaken to civilize those people from the outside. But you never can civilize a humian being by teaching him to wear a hat or to wear stockings. The civilization must be from the inside and work out, and the motive must be planted in the younger people or we have little hope of the development to-day. The younger people will grow into it if we succeed. The Chairman. You have hope of elevating these people and kindling in them some ambition by means of the schools ? ]Major Gove. Yes, sir. The Chairman. I agree with you on that. That is a great com- mon point that we can go on from. Now, in addition to that, do you not thinlc that the government should do its duty by giving them some opportunity for material development and a chance to get the rewards of their labor? Major Gove. Yes, sir; when they want it. The Chairman. When they want it ? Is it not a thing that is apt to produce a want, a desire in that respect; and if the laws are so framed and the encouragement is so given that that will help to pro- duce the desire ? Major Gove. Xot at present.* The Chairman. How is that? Major Gove. Not at present. The Chairman. Now, a very careful observer in the Philippine Islands, who has been there and who had more opportunities than you or I had, an American living right among the people, says that if we can secure to these men the results of their labor, so that instead of getting 5 or 6 pesos they will get what they actually earn, the people will do the work. Of course they will not do as much as a white man or as much as an American, but they will do a fair man's work if they get the rewards of their labor. If we hold those islands — and there does not seem to be any question about that — and it is our desire to develop the ambition of those people, is it not our duty to do some- thing to encourage them and put them on the basis of other people that are under our jurisdiction ? I am not speaking from an econom- ical standpoint, but from the standpoint of ethics. You have been a school-teacher and are familiar with such ideas and have been all your life. Do you not think that it is our duty to treat them in that way ? I did not mean to cut you off in your answer. •• Major Gove. I make a distinction between what is our duty and the method in which our duty shall be performed. The Chairman. Yes. 64 PHILIPPINE TABIFP. Major Gove. We agree that it is our duty to take every possible measure for improving those poor miserable human animals over there. I insist that it is too soon to undertake to elevate that people by these measures we are taking now ; that we must wait ; that it must take time ; that the adult population of the Philippine Islands to-day will never be moved. And so far as laws are concerned, the great mass of the Filipinos know nothing and care nothing about laws. They do not know anything about law. They are in the mental con- dition of a 6-year old child; and it must take ten or twenty or twenty-five years before the younger people have been aroused to the realization of life, and where they live ; and that will not accomplish it. Their children must accomplish it. i The Chairman. You would put off this legislation for twenty or twenty-five years ; is that the idea ? Major Gove. '\Vhat legislation? The Chairman. Giving them the same advantages under our reve- nue laws as other people have. Major Gove. I would put off all legislation except that which would be of immediate or fairly immediate assistance to the Filipino people. The Chairman. The schools are fairly successful, are they not? Major Gove. The schools are the first thing to-day. The Chairman. They are fairly successful ? Major Gove. Yes, sir. The Chairman. And the young people are learning eagerly? Major Gove. Yes, sir. However, that is an experiment. They are learning those things which pertain to imitation. The Chairman. Of course, one who has been there for several years would have .better opportunities for judging of these matters than one who was there only for a few days? Major Gove. Yes, sir. The Chairman. And you would have more confidence in the judg- ment of such a man? Major Gove. Yes, sir. The Chairman. The Manila training schools are successful? Major Gove. Yes, sir. The Chairman. And is it not true that the adults are anxious to go to school? Major Gove. Yes, sir. The Chairman. And they are making fair progress; the adults are making fair progress in the schools? Major (tove. Not very fair; no, sir. The Chairman. In the night schools? Major Gove. They are usually not 20 years old. Mr. Curtis. There are over 10,000 young men over 21 years of age attending the schools in lloilo and in the other islands of the Philip- pine Islands. Major Gove. Yes, sir; I have seen them and spoken to them all Mr. Curtis. The 10,000? Major Gove. Not so many. I never passed a schbolhouse and never allowed a school to come within reach of me without going into it and all around it and climbing upon it and asking questions of the scholars. The Chairman. Were you in Manila when the Taft party was there ? PHILIPPINE TAEIPP. 65 Major Gove. I reached Manila from my summer tour about the time that your party reached Manila, and I remained in Manila while you were on your way about. I enjoyed very much the execution of the most beautiful, tactful, and instructive schemes about which I have ever read, and I wish very much that I could have been one of the party to go about and touch the high places and have every bit of money possible appropriated to my entertainment, and study the people and have them present — which was perfectly right and good — the very best possible thing they had at every point. The Chairman. When you were present at these hearings you did not give us the benefit of your observations on your tour, which would have helped us, you know, in our investigations. ^Nlajor Gove. JNIy dear sir, I want to remind you that those hearings were so unsatisfactory to me that I was compfetely unhorsed. I was surprised at the utterances of those people, and I feared that I "had been misled, and that I myself was in error as to what I had ob- served in the provinces, because the stories were so different, as I said to the honorable Secretary at the time, that I begged to be excused until I had the opportunity of digesting some of those things on the one side which were so different from those things that I had seen on the other side. The Chairman. Now, you had had the benefit of your whole tour, and yoiir excuse for not making a statement then was that you were unsettled in your mind and not prepared to make any observation; but you have braced up your views since then ? Major Gove. I have had ample time to study and mix with my fellow-citizens and appreciate the pondition of my neighbors in the arid West and to learn how anxious they are to learn about the pro- duction of sugar in the Philippine Islands. The Chairman. You had to do that before you could make any statement before the people who are to legislate upon the subject? Major Gove. I would not put it that way, exactly. The Chairman. Of course you are not an expert on sugar? Major Gove. No, sir; I do not use it, and I prefer to drink my coffee without it. The Chairman. And what you learned was from personal inter- course with these Filipino people ? Major Gove. I have lived with them. I have eaten with them as far as I could. I have slept with them — on the floor. The Chairman. And drank with them, I suppose, the water which they presented ? Major Gove. No, sir; I did not. The Chairman. You did not? Major Go'VE. No, sir ; I carried bottles of water with me. The Chairman. That is fortunate, perhaps, or you might not have been here to-day. It came very near destroying the usefulness of Mr. Hathaway when he was there. Mr. Clark. Suppose you educate all these Filipinos ; then who is going to raise the sugar ? Do you think you can get an educated man to work over there in the sugar fields ? Major Gove. All I need to get some one to raise the sugar is a dol- lar in my hand. p T — 05 M 5 ■ 66 PHILIPPINE TABIFF. Mr. Claeb;. After you get them educated do you think you can get them to work in the sugar fields ? Major Gove. If I have the money I can get the labor. Mr. Clark. Where are you going to get the labor ? Major Gove. The Orient is full of it. Mr. Clark. Is it to the interest of the Filipinos and the American people to introduce another cheap set of fellov?s in there,, then, to be educated, from somevsrhere else ? Suppose you get them all educated ; they -will not work in the sugar fields ; that is dead certain. Major Gove. That is not what I mean by education ; not book knowledge, 'in my conference with the minister of public instruc- tion, General Smith, and the superintendent. Dr. David Barrows, they have made me understand — and I agree with their views and they agree with my views — that education in the Philippines does not mean education in geometry and algebra and other branches of polite learning. We will teach those people first to work with their hands. They are already being taught to do work with their hands in the shops. Two thousand of them are doing good work at Cavite. They built the improvements at Manila Harbor without much trouble after they found out how to manage the Filipinos, and also the railroad. Those people will learn how to work. But a man would not give 15 cents for $5 unless he knows what to do with the $5 ; and they do not know what $5 is. They have a cedular tax, and many of them never han- dled or looked at a dollar and do not know what a dollar is. I sat in the. window one day with a boy about 15 years old, and who was just learning how to read and write, and I said, " Look out of this windoAv, and write on this paper 'everything which you can see here which is good to eat." He wrote for ten or fifteen minutes, and he gave me a list of 45 articles which he could see or think of, looking out of that window, which that country grew for the people to eat, iind only seven of them required cooking. So that when the old fellow in Pampanga said " I do not have to work, because I get all I want to eat," that is the condition of the adult to-day. The children will come home from school, and they will say " Papa, this is not the way to cook this rice; " or a boy will say, " I can raise a half a ton more of sugar on this plantation, ajid I want to tell you how ; " and that is the education I mean when I speak of education in the Philippines. The Chair-man. All those schools are teaching that kind of thing? Major Gove. They are going to. The Chairman. "WTien are they going to begin ? Major GovB. I do not know. The Chairmatst. '^Vhat are they learning? Major Gove. Just to read and pronounce the English language and little calculations. Do you know that the white Filipino has no power of calculation, and there is nobody over there handling or trading goods except Chinamen? The Filipino has no calculfSing ability and can not keep his own accounts. The Chairman. The Filipinos are acting as street-car conductors Major Gove. They are gaining. The Chairman. They are gaining ? Major Gove. Yes; they are improving. The Chairman. Certainly they are improving. People can not PHILIPPINE TABIFF. 67 learn everything at once. They learn the English language. That is an advance. That brings them together, and they can communicate M'ith each other, and they get some money. I think it would be an excellent thing if we should establish a system of savings banks. I understand the savings bank in jManila has been very successful the short time that it has been established. I think it would be a good idea if we should establish savings banks, so that they can have a little naoney in the bank for a rainy day. It will take them years to get a sugar industry there that amounts to anything, and this would bene- fit them in other ways. It is a slow process, the issue of which is well in the future, and j-ou need not be alarmed about any competi- tion that will come from that industry. Major. Gove. With the average enterprise of the American as I know him, and with the million that is behind him, as some of them have nowadays, it will not take very long to make immense and pro- ductive sugar plantations. The Chaiejian. It took twenty years in Hawaii. Mr. Williams. On this question of education, is it true, as I have read, that we are attempting to teach the Filipino children altogether in English? Major Go^^;. Yes, sir. ;Mr. WiLLiAJis. They take the Filipino children and start in to teach them their arithmetic, and how to read and how to spell in English. Is that the case ? Major Gove. Yes, sir. ^Mr. WiLLL^Jis. Give us your opinion of that course. It is a little unprecedented. 5lajor Goat;. It seems to be necessary, because the people of very few provinces are able to converse and talk with each other understand- ingly. The young people of Iloilo would fail of bfeing understood — the servants and common people — by the people of Manila. The dia- lects are so different that a conversation in good Spanish fails to be understood in Iloilo or Manila or Bacolod by anybody but a Spaniard. 3Ir. Williams. But there is a dialect which the Jolo child under- stands and one which the Manila child understands? Major Gove. Yes. sir. Mr. Williams, ^^^y could they not be taught in that language ? Mr. CuETis. There is no common language. Mr. Williams. But the child of Jolo speaks Jolo and the child of ^Manila speaks Manila, and why should they not be allowed to learn in their own language, instead of being compelled to learn a different language before they can learn how to multiply and add and divide? Major Gove. We "have 2,000 Filipino teachers and 1,000 American teachers. The American teachers are teaching the Filipino teachers. Those Filipino teachers are teaching little schools — Avho six years ago could not speak or read English. I have been in a barrio 75 miles from Iloilo where a white man was not supposed to be anywhere near, except he was a member of the constabulary or a government employee, and I could not make the natives understand me, could not even get an answer to a question, and a little child 12 years old came along and spoke to me in English. The power of acquisition of these children is wonderful. I doubt whether it indicates any great mental power, but the power of imitation of those children is remarkable. For that reason I think they will do well in working in shops with their hands. bo PHILIPPINE TARIFF. I think it will be impossible to teach the dialects in the schools, to say nothing about its use in the courts. Mr. Williams. I am not criticising teaching them English. Un- doubtedly they should be taught English if we are to have anything to do with them, but I am trying to get at the reason for teaching them arithmetic in English, for instance, instead of in their own tongue. Mr. Curtis. Is it not true that the parents want them taught in one common language ? Major Gove. I am trying to intimate that what the parents want is not worthy of the consideration of anybody. They do not know what they want. Mr. CtTETis. We found some pretty bright parents there. Major Gove. You did. You touched the high places. Mr. Curtis. They want a common language, and they complain about Spain because Spain never allowed them to have a common language. Mr. Hill. You said the hearings at Manila were not exactly satis- factory to you, and for that reason you did not see fit at that time to participate in them when you were asked to do so. Those hear- ings were held in the city hall, were they not ? Major Gove. Yes, sir. Mr. Hill. In the presence of a very large company of people ? Major Gove. I do not know how many. Mr. Hill. I say it was a large place — large enough so that anybody could come in ? Major Gove. Yes, sir. Mr. Hill. As a rule 500 to 1,000 people were present most of the time. Is that not so ? The audience room was filled ? Major Gove. There were many people there. Mr. Hill. That audience consisted of the governors of all the provinces, in part, and merchants from all over the island ? Major Gove. I do not know to what extent that is true. Mr. Hill. To a general extent they were. You know that such were present during the hearings. Major Gove. Probably you know more about that than I do. Mr. Hill. The statements made there differed materially from the information that had been given to you and Mr. Hathaway while you were going around the islands? Ma] or Gove. I did not say materially; they differed. Mr. Hill. I think Mr, Hathaway quoted yesterday the figures on wages given to him by Mr. Aren?,ta. Do you remember the incident of you and myself differing as to the wages paid in the islands, as we came out of the hall one day, and we met Sefior Arenata and jokinglj' I asked him what wages he paid ? Major Gove. Yes. Mr. Hill. And he gave us the figures. Did the figures he gave us correspbnd with what he had told you as to the wages he paid ? Major Gove. No, sir. Mr. Hill. How much was the difference ? Major Gove. I do not remember. Mr. Hill. Fully half? Major Gove. I don't remember; probably. PHILIPPINE TABIFF. 69 ^Ir. Hill. Fully as much as the wages stated by gentlemen in the nearings which surprised you ? Major Gove. I do not remember exactly; I think so. Mr. Hill. I want to read this from the hearings and ask you about it. On page 181 of the hearings Mr. Ricardo A. Nolan makes this statement : Xes ; I was here at constabulary headquarters, and at the suggestion of Captain Smith I acted as interpreter for Mr. Hathaway with the governor and with Mr. Aniceto and Mr. Mariano Lacson. Mr. Lacson is the largest sugar planter in Negros, is he not ? Major Gove. I know him. Mr. Hill (reading) : He was ti-ying to get the governor to fix a figure at which sugar could be l)roduced, and when he could not give him what he wanted he said, " Now, look here, governor, suppose a haciendero has ail liinds of cattle and all kinds of machinery and everything else, what will a picul of sugar cost? " and Governor Jayme said, "About 2 pesos ; " but he said — and I was acting interpreter for him — that he had never produced any sugar and was only giving his opinion. Mr. Hathajvay made everyone believe with whom he spoke that he was here to improve the situation in Negros, and that he was ready to build a big sugar refinery, and everybody helped him because we need a sugar refinery here. Is that correct ? Major Gove. I do not know. Mr. Hill. You were with Mr. Hathaway, were you not, during the trip through the islands ? Major Goat:. I will tell you ; it is an interesting incident. I started from Bacalod with Mr. Hathaway and the lawyer with him • !Mr. Hill. Just a minute. You were with him, were you not? Major Gove. Yes, sir. Mr. Hill. Is this statement correct as to the time you were with him? Major Gove. I was not with him all the time. Mr. Hill. During the time you were with him did you hear him make such statements ? Major GoA'E. I never heard anything of the kind. I would like to tell the incident, because it is funny to you — I know it is. We started from Bacolod. I was behind a pair of horses that I had to get out and push, and one of the others was on a carabao, I believe. "VVe stopped at this man'g establishment. It was one of the finest mills that I saw over there. We went into the house and were politely re- ceived by two daughters of the gentleman, and I sat there for two hours and a half and the father did not come, but they entertained us by playing and singing. Finally I said, " I do not propose to stay here any longer," and I started to the north, to Bacolod. At Bacolod this man Lacson, or whatever his name is, came down to Bacolod to say, as Mr. Hathaway told me, that he was very sorry about the day before, but that we came while he was at his siesta, and he did not allow himfeelf to be disturbed at his siesta for anything, and when he got up we had just gone. And Mr. Hathaway wanted to know whether I wanted to go and see him, and I said, " No ; he will have to come where I am if I see him." That is the time that that interview took place, I suppose. Mr. Hill. You have stated that the possibilities of the Philippine Islands are illimitable; but under the conditions that exist among 70 PHILIPPIITE TAEIFP. those people, the lack of draft animals and all that, the tendency is rather to a decrease in production thaia an increase, is it not? Major Gove. Yes, sir. . . Mr. Hill. Do you believe it is possible to change those conditions in anything like a generation ? Major Gove. Yes, sir. Mr. Hill. By education? Major Gove. I would change those conditions by sending some money over there. Mr. Hill. Do you mean for this Government to send money ? Major Gove. This Government or anyone else. Mr. Hill. Do you believe there is any attraction for anyone else to do it under existing conditions ? Major Gove. Yes, sir. Mr. Hill. Would you recommend it, and did you recommend it to your people, when you came back, to make investments there? Major Gove. My people never talked to me on that. "When I went over there I did not know why I was going. Only one sentence was pronounced to me when I left this country. They said : " Mr. Gove, go over there and find out the truth and tell it to us." I did not know that there was any financial interest in sugar. Mr. Hill. Did you know that Mr. Hathaway was going over there ? Major Gove. No, sir. Mr. Hill. You did not expect to meet him there? Major Gove. No, sir. Mr. Hill. Do you think that the Philippine Islands as they stand to-day in their production of sugar or tobacco, or either one, are any- thing of a menace to any American industry? Major Gove. I think they are the greatest menace that was ever held over us. Mr. Hill. As they staiid to-day? Major Gove. No menace; no harm to-day. Mr. Hill. Do you believe it possible to develop them without con- tract cooly labor ? Mr. Gove. Yes, sir. Mr. Hill. With the population that is there now? Major Gove. Yes, sir. Mr. Hill. How long a time would it take before you could o'et a practical change of conditions? Major Gove. On the railroad and at Manila and at Cavite I should say those in doubt could be put to work in eighteen months ; millions of them could be put to work in two years. Mr. Hill. Have you considered at all the available area on the island in your consideration of the possibilities as to the cultivation of sugar ? Major Gove. I have read a report of the department of aoricul- ture' there. I think it is thefe stated that the sugar lands amount to 8,000,000 acres. Mr. Hill. The census report of the Philippine Islands givfes the entire surface of the islands to be 9 per cent of that area, with only about 4 per cent now cultivated. Major Gove. I have read more than once that there are probably 30,000,000 acres of available lands in the Philippine Islands. PHILIPPINR TAEIFP. 71 Mr. Hill. Have you any idea that the cultivation of sugar is about to crowd out the cultivation of hemp in the proportion of four to one ? jNIajor Gove. I do not know anything about hemp. Mr. Hill. Or tobacco either ? Major Gove. About tobacco, I will have to ask you. Mr. Hill. Did you find any tobacco in cultivation in the Visayas or anywhere else? INIajor Gove. Xo, sir ; I would not have known it if I had seen it. Mr. Clark (addressing Mr. Hill). I would like to ask you, for in- formation, is there not any way of finding out how much land there is over there available for hemp and how much for tobacco and how much for sugar? You keep on talking about the whole thing being illimitable. I don't believe it. The Chaiemax. How much is under cultivation? 3Ir. Clark. No, sir ; how much can be put under cultivation. The Chaiejian. That is left to the fruitful imagination of every gentleman that visits the islands. Mr. Clark. It looks to me as though there should be some one somewhere who knows the actual available area for that purpose. ilajor Go'\'E. I believe Commissioner Worcester's statement, which was read to vou yesterday, as to the island of Mindoro gives you more than that. If I was permitted to make a plea at the proper time, the plea would be, if you have any money to send over there from the United States Government send it, and a large portion of it should be for the department of education of the Philippine Islands. ilr. Hill. AATiy is it necessary, if there is such an enormous area of sugar lands ? "VVhy does not the natural desire of the human mind for money prompt people to go over there and develop it ? Have you seen any American who has made a success at all of it? You did see Americans who were engaged in the sugar plantations there, did you not? Major Gove. No, sir., Mr. Hill. Not one ? ;Major Gove. Except Mr. Rothrock. !Mr. Hill. Did he make a success of it ? Major Gove. 1 es, sir. Mr. Hill. Where was he, in Negros ? Major Gove. In Iloilo. His plantations are in Negros. Mr. Hill. You did not see any others ? Major Gove. Except our old friend Sergeant Heil, on the govern- ment plantation. Mr. Hill. He was not conducting operations on his individual account, was he? Major Go^'E. No, sir. Mr. Hill. He was working for the government? Major Gove. Yes, sir. I found a man whose acquaintance I very pleasantly made, who has a concession for timber on Negros, who told me that he -was w'orking 100 Filipinos at his sawmill, and is increas- ing that all the time. But that is far aAvay. Mr. HiLi,. I want to ask you this one question — you know that I have confidence in your judgment: Do you not think it is a work of wonderful patience for the United States Government to help and 72 PHILIPPINE TABIFF. educate those people and lift them up, and that with all we can do the progress will be very, very slow ? Do you not believe that? Major Gove. Yes, sir. . , The Chairman. You spoke about the Filipinos learning to work. Take, for instance, the navy -yard there at Cavite. Major Gove. Yes, sir. The Chairman. Is it not true that the wages have advanced there under American occupation from about 20 cents a day to 65 cents a day? Major Gove. Yes, sir. The Chairman. So that the more efficient they become the more they charge, and the more they get the more their desires increase? Major Gove. Yes, sir. The Chairman. They have the same feeling in that regard as other people in other parts of the world ? Major Gove. Yes, sir. The Chairman. If the industry becomes prosperous their wages correspondingly advance. Is not that true ? Major Gove. Yes, sir. The Chairman. And that is also true in regard to the hemp region, is it not? Major Gove. I do not know anything about that. I want to inter- ject this, though, that the character of the worlonen at Cavite is of a much higher order than the character of the average citizen of the archipelago. They have lived about the town. It is very unfor- tunate that so much information is credited to Manila, where the conditions are not the normal conditions in the Philippine Islands. The Chairman. I understand, on the contrary, that those men were picked up promiscuously, the same as the laborers on the gov- ernment works under the employ of White & Co., moving their fam- ilies in, and taking anyone they could get, and as they become more efficient and proficient they gbt their wages advanced. Then the men in the Bilibid prison, when they come out, demand and receive higher wages; and as their effectiveness for labor increases their wages have to increase. Is not that true of your observation of those men? Major Gove. I did not go out there. Mr. Patterson told me all about that. I did not go to Cavite. There was no sugar plantation at Cavite. The Chairman. You were looking after educational interests as well as sugar interests? Major GovB. Yes, sir. The Chairman. And there were some educational interests there, were there not ? Major Gove. Yes, sir. Mr. McCleary. When you came back did you recommend to those who sent you an investment of capital in the islands for productive purposes ? Major Gove. No, sir ; that subject was never referred to in my presence. I tried to say that nothing concerning finances was ever mentioned to me. I was asked quite suddenly if I would accept a commission to the Philippine Islands to inspect the sugar plantations and sugar growing and come back and tell the truth. Mr. Morey of the Great Western Sugar Company said : " We want to know the PHILIPPINE TAEIFF. 73 truth. We do not know anything about it. "We know you and we have been living with you all our lives, and we want you to go out and see what you can do and some back and tell us the truth." Noth- ing concerning finances was mentioned or was connected with my business in any way. Mr. McCleaet. Have the gentlemen for whom you went now un- der consideration such an investment ? Major Gove. I do not know, and should not be likely to know if they had. I am not intimate with their business management. Mr. Clark. I wotild like to ask you two or three questions about this matter of the available area. On page 10 of these hearings it is said that there are 73,000,000 acres of land over there, of which 50,000,000 acres are forest and mountain lands. Now, when the for- ests are cut off is the land susceptible of cultivation or not ? Major Govi^. I do not know. Mr. Clark. Here are 23,000,000 acres remaining for all purposes whatever. That is 35,937 square miles. That is about half as big as the State of Missouri. Major Gove. Allow me to suggest that Mr. Welborn is coming before this body, and he is the minister of agriculture, and his utter- ances are official and authoritative, I suppose. Mr. William Alden Smith. I understood you to say that you did not hold out to the people with ^hom you came in contact the idea that you were there to make any investment ? Major Gove. Not the slightest; no, indeed. Mr. William Alden Smith. So that the information you got was not prejudiced by that fact? Major GoATE. I think I was regarded more as a schoolmaster inter- ested in schools than as an agent for agriculture. I admitted both of them. Mr. William Alden Smith. You were with Mr. Hathaway a con- siderable time ? Major Gove. Yes, sir. ifr. William Axdex Sjiith. Did you hear him hold himself out as one likely to make investments there Major Gove. Never; no, sir. , Mr. William Alden Smith. In his conversations with the people ? 3fajor Gove. I never heard him give that expression. I have heard it stated, indeed, liy other parties that Mr. Hathaway assumed that position ; but our relations were somewhat confidential and we were together many nights and in conversation over long journeys, and I never heard that gentleman refer to that part of the business to which I hear reference made here and in other quarters. I never heard it before, and did not know it before. Mr. Hill. How do you account for the differences between the statements made to you and to myself and the statements made to you personally? Major Gove. I account for that on the ground, as I have said, that those people are poets. Y4 PHILIPPINE TAEIFF. STATEMENT OF MR. W. S. HUMPHREY, OF SAGINAW, MICH. Against the Mil. The Chairman. The committee will hear you, Mr. Humphrey. We do not want to go over the ground that we went over last year. Mr. Humphrey. I have no desire to do so. I would state to the committee that what I have to say' is entirely based upon evidence from the Philippine Islands, and I wish to say at the outset it ap- pears from the statements made by members of the committee and by those who have been before the committee at this hearing that you can get in the Philippine Islands nearly any kind of testimony that you are looking for. Mr. BouTELL. In other words, they are experts ? Mr. Humphrey. In other words, they are poets, to put it in the words of Mr. Gove.. I understand that to be a very polite term for men who allow their imaginations to supply the facts. The Chairman. That class of people is not confined to the islands. Go on.' Mr. Humphrey. I am trying now to bring to your attention some statements from people who, I hope, will not be classed as " poets." I once heard Hon. Henry B. Brown, who is now one of the justices of the Supreme Court of the United States, in an important ad- miralty case where the testimony of the witnesses called on each side was about equal, and after hearing the testimony, he called for the protests which had been noted at the time of the accident and read them Avith great interest. He said, " I always like to read the testi- mony of the witnesses before they have had an opportunity of being adulterated by the advice of counsel." I think that it would be a good plan to examine the testimony of the witnesses in the Philippine Islands before it had been warped by their interests in obtaining this legislation, and I first want to refer briefly to the report which I hold in my hands, which is from the Bureau of Agriculture. Mr. Wm. Alden Smith. Pardon me a minute. Will you tell the committee* whether you are connected with the beet-sugar industry in Michigan ? I want it on the record. _Mr. Humphrey. I would say that I am, and have been connected with the beet-sugar industry of Michigan for several years. I think, perhaps, first I had better refer to a document that was handed to me yesterday afternoon by Colonel Edwards; there are some things in that report to which I wish to refer. This is the report of 1905 from the Chief of the Bureau of Insular Affairs. We have been told at this hearing, and at other hearings, it was not intended by this legis- lation to in any way injure our industry. I understand that it is not the intent of Congress to either destroy or injure; and the theory upon which the advocates of this measure go is that it will not hurt us, and this is very concisely put by Colonel Edwards on page 7 of this report. The Chairman. We have that report, of course. Mr. Humphrey. Then I will refer the gentlemen of the committee to page 7, where it is stated that this legislation is not going to hurt us. That is what the dentist always tells us when we get into the PHILIPPI^TE TARIFF, 75 chair, that it Avill not hurt, and it does not hurt — the dentist. But it does hurt the patient. I also wish to call your attention to this report of Colonel Edwards, page -2-2 of the record, on this point. You gentlemen this morning have been interrogating Mr. Gove as to whether or not under present conditions the production of sugar is going to be materially increased! Colonel Edwards gives here some statistics as to the sugar business in the Philippine Islands. I want to call your attention to page 22, where he says that among the exports of the leading articles in 1904 was sugar, 165,709.000 poimds. In 1905 it was 250,504,000 pounds. In 1904 there came to the United States, in competition with our sugar industry, 25,632.000 pounds. In 1905 there were 127,000,000 pounds, or over five times as much as the year before. The Chairman. The price was up 2 cents a pound, was it not ? Mr. Htjjiphrey. I think that pretty conclusively answers the ques- tion as to whether they are going to increase this product, an increase in one year of over 100,000,000 pounds — the whole hundred million, and a litle over, coming into the United States. The Chair JEAN. I suppose it is true that the crops of sugar vary from year to year on the same area, is it not? Mr. Humphrey. I have no doubt that is so; but I have not any doubt that immense increase may come from other circumstances than an added area cultivated. Xow, the gentlemen want to remember this one proposition, which has been very thoroughly stated to you by Mr. Hathaway, and I want to call attention to this report as verifying everythng that Mr. Hathawaj' said to you, that with the improved methods of cultivation the sugar lands in the Philippines now under cultivation will quad- I'uple the production of sugar; and I want to call your attention to this report of the bureau of agriculture for the year ending August 31, 1904, printed at the Manila bureau of public printing in 1905. I find that this report is signed by a gentleman who, I imderstand, will appear before you — at least I hope he will — Mr. W. C. Welborn, chief of the bureau of agriculture of the Philippine Islands. I want to refer first to the labor conditions as reported by Mr. Welborn before his testimony had had any chance — or his opinions had had any chance — of being warped. On page 24 I call your attention to what he says with reference to the condition of labor. Mr. AYelborn says: Labor about Mureia is abnii;l;int and cheap. Natives work for a fraction over 30 cents gold a day and board themselves. They have proved good teamsters and do satisfactorily all of the more eonunon kinds of work on the farm, One year ago. when the writer of this said that Filipincis must drive the teams and do the plowing on the government farms, he was called all sorts of an idiot by Americans claiming sjiecial knowledge on amiunt of four or five years' resi- dence here. The J'ilipinos are now doing this work on the rice farm and every other farm under the control of the bureau ; they have been doing it for very nearly a year ; they are doing it as well as Americans ever did, and at prices about 6 to 10 per cent of what it formerly cost to get Aniericans to do it. There is your labor cost, according to Mr. Welborn. On page 45 Mr. Welborn says : The native teamsters accomplished .iust as much work and took as good care of their stock and implements as did the Americans. During the month of January one of the American teamsters resigned his position, and I was left with but two Americans, who, in the capacity of fore- 76 PHILIPPINE TABIFF. men, did better work than as teamsters. The natives were assigned exclusively as teamsters, and in view of the fact that they were anxious to learn I have been most successful in handling American stock and American machinery. During the month I employed 35 native laborers. On page 47, under the head of " Labor," he says : • We have experienced no difficulty in securing all the help we wanted. The wages are at present 31 centavos each per day. We at first paid 26 centayos, but the natives were not able to work more than six or seven hours per day. This we found very unsatisfactory, and in order to obtain the required results and necessary help we increased their wages 5 centavos per day each. This enabled us to increase the number of hours from six to seven hours to nine hours, and also to accomplish about one-fourth more work per day. On page 57 he says : All v.-orkers on haciendas receive both board and salary. The board usually costs the haciendero 1 peso a week per man. The salary of the capataz is 45 pesos per month, that of the cabo 22 pesos, the mill hands 8 pesos, and the field hands 6 pesos per month. The capataz is the overseer of the plantation, and his salary is 45 pesos. The cabo gets 22 pesos, and the field hands 6 pesos a month, which is 11 cents a day. For the mill hands it is about 12^ cents a day. Then he says : In spite of all that has been said of the Filipinos as inefficient, we must bring in a minority report. Some, it is true, are found to be averse to labor, and their services are quickly dispensed with ; some are unfit for any but the commonest manual labor, while there are others who quickly learn to handle horses and to perform the usual farm operations. In short, we observe the same charac- tertstics among laborers here that appear in laborers in the United States, except that a Filipino is unskilled at first and does not work as many days a month as the laborers in the United States do, this latter probably due to the fact that he has fewer wants. The laborers on La Granja are not contracted for, as is the custom among hacienderos, the rule among hacienderos being to pay some labor contractor 10 pesos for each native laborer, the contractor securing the laborers on some other island. These men must work through the entire sugar season, and a cer- tain amount of their pay is always withheld in order to keep them at work. At La Granja we have not yet experienced any trouble in getting all the employees required. Each native on La Granja is given a small plot of ground upon which to raise his camotes, corn, and other necessaries of life. The natives are much better cared for at La Granja, and we have less friction with native help than the hacienderos have. I now call your attention to the question of fertilizing. You will find that on page 58. Mr. Welborn there says that no fertilizers are used on the islands, and there is scarcely such a thing heard of. I am not going to read that. I now call your attention to the sugar conditions of the islands, as given by Mr. Welborn in this report for 1904, as the head of the bureau of agriculture of the Philippine Islands. On page 26 he says, in a letter which is printed on that page, written by him to the bureau of agriculture, and which is signed " W. C. Welborn Chief of Bureau," and dated Manila, July 19, 1904 : If the bureau had from 2,500 to 4.000 acres of this land it could, in my opinion, be made the prettiest proposition in the Philippine Islands, excepting perhaps, a model sugar plantation and an up-to-date sugar factory. That would be the prettiest thing that Mr. Welborn ever heard of. PHILIPPINE TARIFF. 77 On page 28 Mr. Welborn says : The islands export ?4,000,000 gold worth of sugar per annum. The majority of this conies from Occidental Negros, and La Granja is near the center of this large industry. An object lesson in up-to-date sugar methods is sorely needed. The mills generally in use are fifteen to twenty years behind the times. It is variously estimated that only 50 to 60 per cent of the juice is extracted by these miserable excuses for mills. The entire juice, after liming and a little skimming, is boiled down into a solid mass, and is powdered up and called sugar. That is, there is incorporated in this sugar 20 to 25 per cent of molasses that could not be crystallzed, and hence has to be thrown out at the refinery. Three samples of Negros sugar sent us by the government laboratory for analysis showed air^verage of 78.7 sucrose, or crystallizable sugar ; 7.2 glucose, or noncrystallizable sugar, and 1.41 per cent of ash. When it is remembered that every pound of gluco-e prevents from 1 to 2 pounds of cane sugar from crystallizing and every pound of ash from 4 to 5 pounds, it can be seen why this so-called sugar is low in price. It will fully explain why this sugar is worth only l.S cents gold in Iloilo, while 96° centrifugal sugar should be worth 2.6 cents gold for shipment to the United States. A modern sugar factory turns out 90 per cent of its product polarizing 96°. So the sugar planters undoubtedly lose over one-half of the possible values of their sugar cane. Mr. Hathaway 's statement to the same effect coincides with Mr. Welborn's. On page 5i we have this statement with regard to the sugar situation : The sugar machinery installed here was the best obtainable, and experiments with different kinds of cane and different methods of planting and fertilizing were constantly in progress. The mill is still good, but entirely out of date and inadequate. Five hundred of the 750 hectares of this station might be planted in sugar cane to furnish revenue in whole or in iiart for the maintenance of the argi- cultural college about to be es?tablished here. This is at La Granja. They thought with that sugar there they could run a whole agricultural college, if they had it in sugar. Mr. Haile, Mr. AYelborn's man in charge of La Granja, continues: At present about 45 per cent of the juice is ^vasted, and hundreds of laborers on a hacienda are frequently employed to subdry the bagasse (waste) that should be ready to burn on leaving the rollers and passing over the furnace. On page 56 I want to call your attention to the condition of the sugar industry under those conditions there, Avhere they lose one-half the juice and where the cultivation is poor : We pla!nted 40 acres of sugar and 40 acres of hemp, and would recommend that these acreages be largely increased in the future. The hemp, excepting 20 acres not included in the above, will not yield a reve- nue for two years, but next year's sugar crop should be 5,000 piculs. That is on 140 acres. Xow, this 5,000 piculs of sugar is one-half of the product they should get, so that under improved methods they should get 10,000 piculs Avith modern machinery on that government farm in charge of Mr. Welborn, who makes this report. On page 56 Mr. Heil says, as reported by Mr. Welborn : Fields are planted from .January until May, so that they ripen in rotation, and thus furnish a continuous supply for the mill. At La Granja it will not be necessary to plant new tops for the next five to fight years, I am informed by my neighboring hacienderos. The soil is very rich. Where will he get the sugar for five to eight years without plant- ing a new crop at La Granja unless it is from the ratoon crop, Avhich he says will grow there for the next five to eight years ? 78 PHILIPPINE XAEIFF. I next take up the report on animals given in this volume. This report I have just read you is the report from the superintendent of the farm to Mr. Welborn. printed by Mr. Welborn in his report as the chief of the bureau of agriculture. The next subject discussed by Mr. Welborn is that of animals. The question was asked me— I think by Mr. Clark — as to why mules could not be used there, and I wish to call the attention of the committee to the fact that Mr. Wel- born says not only that they can be used, but that there is no danger to them. I read now from page 13 of this report : Since the last report the Bureau has received 8 Australian mares, 33 native pony mares, 40 mares from Kentucky, 13 stallions. 10\jac"Es-, 5 head of Jersey cattle from the United States, 4 Berkshire hogs, and representatives of three breeds of American chickens, besides 10 Australian work horses. Thus far no epidemic disease, generally so prevalent and fatal here, has attacked these animals. There is another part of the report, to which I have lost my ref- erence, in which he says that they have npw succeeded in conquering the difficulty that the animals Avere at first subjected to from these diseases in the islands and have found a way to thoroughly over- come it. On page 24 he goes on with his report as follows : It is found that horses and mules can stand the work here fully as well as in the Southern States. That answers Mr. Clark's question. He continues : With us four mules and one native teamster break 4 acres of land a day. With the native farmer one man and two carabaos break 1 acre in five days. There are your present condition and your future condition of sugar. One man and two carabaos break 1 acre in five days, and one native and four mules break 4 acres in one day. He continues : The reason for having two carabaos is that a carabao must spend half the time wallowing in mud an^ water, and hence two must be had so as to change every hour or two. * H i! * * * ,1 With some Chinese oxen with which we have been experimenting, four oxen and a native plowman have been able to plow 2J acres a day. These oxen can work ten hours a day without suffering from heat. We have tried them in the mud and they appear to do as well as carabaos. I call your attention next to page 27, with respect to these animals. This is the place that I said I had lost my reference to. This is in regard to infected animals: These infected animals have now been cleaned out and twenty oxen have been sent there, which certainly can do as much work as fifty carabaos. On pages 10 and 11, I wish to refer to one thing— as to the price. There was something said about the price of mules, and Mr. Wel- born had recommended to his bureau of agriculture that a" large herd of Jersey cows be brought over to the Philippine Islands. He thought that it would be a good investment, and he made that invest- ment. He says : Young cows and heifers of three-fourths to thirty-one thirty-seconds breeding- springing with calf from pure bulls, will cost there not over ,¥27.50 each put on cars. I estimate that $12.50 each will put them on boat at San Francisco PHILIPPINE TAKIFF. 79 And he continues: These recommendations ave based on the supposition that they can come on the Dix at its sailing. May Id, and if so, can be delivered here within $50 gold each. That is, he proposes to bring them from the Southern States by rail to San Francisco, and from there by boat to Manila, at $22.50 a head. "\Miy not mules ? ^Ir. A"\'n:.LiAMS. Are you aware of the fact that mules were brought over, as a matter of fact, and that every one of them died? Mr. Humphrey. I will read from Mr. Welborn on that subject. Mr. Grosyenoe. ^Aliat is the use of that? Prove by some living man who has traveled in the Philippine Islands if he saw a single cow there. ]\Ir. Humphrey. I will read from Mr. Welborn. ;Mr. Gros\"enor. I do not care for Mr. Welborn. The facts are what I want. ]Mr. Humphrey. I understood that he was one of the witnesses be- fore the Commission. On page 11 Mr. Welborn says : Sixty-four co^vs and one bull were bought at the price mentioned. Sixty arrived safe in Manila after a trip occupying two months of time and over 10,000 miles of distance. Milk is already being delivered twice daily in the civil hospital, and a largely increased supply is expected in the near future as the cows come fresh in milk, Xow, he states* that these cows and these cattle were shipped over there within the price mentioned — that is, $50 apiece — and there were 60 of them arrived safe and sound, and the cows were being milked and the milk furnished to the hospital. Mr. Grosvenoe. That milk at the civil hospital is being imported now in sealed packages from Australia, and the most wealthy families in Manila use the imported milk. 'Sir. Humphrey. I want to call the attention of the conmiittee to these facts ]Mr. Grosvexoe. The facts are as I have stated them to you. Mr. Humphrey. I supposed, of course, that if anything coming from the Philippine Islands could be believed it would be an oiScial Government report. ;Mr. Williams. I think observations of that sort are a little unnec- essary. Mr. Welborn was the chief of the bureau of agriculture. He was at the experiment station at La Granja, and he did think that he could bring these cows and other animals over there and that they would succeed, and, as was his duty, he tried it; and I am informed that all, or nearly all, of them died from climatic reasons, so that Mr. Welborn is telling the truth there in that report at that date. The Chairman. They have died since. There are two cows now in Manila. p ,, n -,• -■ , Mr. Grosvenoe. There were three, and one ot them has died, and there were two left, and they are kept with about the same amount of care that an ordinary person uses in keeping his baby. The Chairman. And as for the mules, this infection broke out among them and they died by the score, and the experiment has not been successful which Mr. Welborn wanted to try in the summer of 1904. That fact developed there. That question was asked of Com- missioner Worcester, who had charge of that part of the report, and 80 PHILIPPINE TAEIFF. he SO stated in the presence of a number of gentlemen there, and there did not seem to be any dissent from that statement. Mr. Humphrey. I am very glad to be corrected, of course. Mr. Claek, of Missouri. Does not the Army use mules? Mr. Hu3iPHREY. Yes, sir ; as I understand it, they do. The Chairman. The mules have died about as fast as we have been bringing the troops back, and so we have not had to replenish the supply of mules. The army mule on a good road will do very good work there ; I know that from my own personal observation ; but so far as the infectious diseases are concerned, I do not know. I rode after them on a number of occasions. Mr. Humphrey. I want to call the attention of the committee to one fact that I do not think can be gainsaid. Mr. Heil has been on that government farm for two years, working mules all the time, and he had only one dead mule during the whole time; and those were army mules which he bought at auction. He tells you what they can do. The Chairman. That looks like a case of the survival of the fittest. Mr. Humphrey. Those mules have been working three seasons, and they do five and six times the work of a carabao. Mr. Hathaway re- ferred to the money conditions in the Philippines, and I want Mr. Welborn to add his testimony, as shown on page 57 of this report, where he says : , The rates paid for money with whicli to harvest sugar are as follows : A firm in Iloilo advances a credit of about two-thirds of the probable value of flie next crop, the money to be drawn as needed. This is usually done in May, and 15 per cent is paid from that date for money that will not be drawn until- the following December or May. The haciendero is required to consign his crop to the firm as security, accept their classification, pay them for the sunning and resacking — although the latter is not necessary — pay 2 per cent per month for storage in the firm's warehouses, ship his sugar in the firm's lorcha, and purchase all his hacienda supplies from the same firm, and pay 25 per cent on the money loaned. That, I understand, was the information received by Mr. Hathaway as to the way they did business. I wish next to call the attention of the coixmiittee to the fact that some question was raised as to whether timber lands in the Philip- pines would grow sugar. I would say that every pound of sugar grown in Michigan is grown on timber lands, and I do not know why ■ the timber lands in the Philippines would not grow sugar. The Chairman. The committee or anybody would not controvert the fact that the timber can be cut off and that land would grow sugar. Mr. Geosvenoe. It was testified yesterday that one of your sugar factories had been removed from the place Vhere it was established because there were so many stumps on the land. Mr. Humphrey. Because it was poor land. You do not under- stand that term. " Stump land " in Michigan means pine land from which the timber has been cut, and the land is absolutely worthless for any purpose. It is a pine barren. The stump lands of Michigan are the worthless lands of Michigan. Mr. Geosvenoe. The same may be true in the Philippines ; I do not know. PHILIPPINE TAEIFF. 81 Mr. HuMPHEET. I do not know. You must remember that applies to only one kind of timber. I understand there are innumerable classes of timber in the Philippines as there are quite a number in Michigan. We would not class beech or elm lands in Michigan as stump lands. What we call stump land is the poor, barren, pine land. Those are the stump lands surrounding that factory. Mr. Geosvenor. The stumps were there when the factory was built? Mr. Humphrey. The stumps were there when the factory was built. But I wish to say to the gentleman that the State of Michigan has been carrying on experiments and has been appropriating a large amount of money for experimentation with those various stump land's, and they have a theory that they will be brought into a high state of cultivation and will be very productive lands in time. There is a commission in the State of Michigan having that in charge. These people who built that factory were a little too en- thusiastic over the subject of those lands being brought into that condition and they put their factory there a little too early, and the anticipated results did not come to pass ; they did not materialize. Mr. Wm. Alden Smith. That factory has been removed to Minne- sota, I believe. Mr. Humphrey. Yes ; within 30 miles of Minneapolis. Mr. Wm. Alden Smith. And Mr. Wallace, who was connected with it in Michigan, is now connected with it in its new location. The Chairman. We understand that, I think. Thereupon, at 12 o'clock m., the committee adjourned to meet De- cember 15, 1905, at 10 o'clock a. m. Committee on Ways and Means, Friday, Decernber 15, 1905. The committee met at 10.15 o'clock a. m., Hon. Sereno E. Payne in Members present: Messrs. Dalzell, Grosvenor, McCleary, Hill, Boutell, Watson, Curtis, Needham, Smith, Williams, Clark, Under- wood, and the chairman. The Chairman. The committee will be in order. Mr. Humphrey, you may proceed. STATEMENT OF ME. WATTS S. HUMPHREY— Continued. Mr. Humphrey. Mr. Chairman and gentlemen of the committee, before taking up the discussion of the Brussels agreement, I wish to call attention to page 8 of the report of the Chief of the Bureau of Insular Affairs to the Secretary of War, for 1905. ' The document was handed to me by Colonel Edwards. . „ , What I wish to call the especial attention of the committee to is the subject of the land laws, the laws relating to agricultural lands. I need not read the whole of this article. It calls attention to the ex- isting laws limiting the area of a homestead to 40 acres, and 2,500 acres as the maximum allowed to be purchased by an individual. Then comes the recommendation of the War Department, through its PT — 05 M 6 82 PHILIPPINE TARIFF. Chief of Bureau of Insular Affairs, who makes the following recom- mendation to Congress : It is believed that these limitations should be increased to at least 160 acres for a single homestead entry and materially increased for corporations in the less populated islands, especially in the islands of Mindoro, Palawan, and Min- danao, where only adequate inducements to capital will ever reclaim valuable lands from the jungle and savagery. I also wish to call the attention of the committee to the figures as given by Mr. Welborn, the chief of the agricultural bureau in the Philippine Islands, and also to the estimated quantity of sugar land in the archipelago, and to refer to the reason why the sugar interests of this country are alarmed at free trade in the Philippines, or at the prospect of free trade in the Philippines. It was said yesterday by the chairman of this committee, during the time that the gentleman from Hawaii was addressing the com- mittee, that after free trade had been established in Hawaii the American speculators and others had gone into the Hawaiian Islands and had not only put into sugar all the lands in the Hawaiian Isla.nds that were fit for sugar culture, but they had also gone away up into the mountains and had planted their sugar cane on lands that were not fit for sugar raising, and expected to make a profit not only out of the good land fit for sugar, but out of the lands that never ought to have been planted in sugar cane. Now, that is exactly what wfe ex- pect that free trade with the Philippines will do. It will not only plant all the good lands with sugar, but it will be such an inducement that they, the planters, will flock onto land of all kinds and descrip- tions just as they did in Hawaii. The Chairman. If it does not hurt you more than the operations in Hawaii did, it won't hurt j'ou much. It took about twenty or twenty-five years to do it. Mr. Humphrey. The importations of Hawaiian sugar, as I under- standj in the last four or five years have been enormous. My under- standing is that 400,000 tons of sugar comes into the United States from Hawaii to-day. Now, let me call the attention of the committee to this fact — that the estimated area of sugar lands in Occidental Negros, in the island of Panay, and in the province of Pampanga, on the island o£ Luzon, is 2,431 square miles or, in round numbers, 1,555,000 acres. The Chairman. Who estimates that? Mr. Humphrey. That is Mr. Hathaway's estimate, made from actual observation and from the maps furnished him when he went over those islands. Now, I want^ to call the attention of the committee to this fact that the Binab'agon Valley is 10 miles widie on the average and 30 niiles long. These lands in the island of Negros, in the island of Panay, and in the province of Pampanga, on the island of Luzon are among the most fertile sugar lands in the world. If it is true that there is that acreage of 1,555,000 acres, all sugar land of first quality then 1 ton of sugar to the acre on those lands would amount to eiibugh to supp^ly the entire needs of the United States outside of home prbductibh; that is, outside of the production from the island of Porto Eicb and from thfe Hawaiian Islands and from the cane and beet sugar interests of the United States. Assuming, for the sake of argument, that there are 80,000,000 of people in the United States PHn.TPPIITE TABIFF. 83 and that thejr use 70 pounds of sugar per capita, that would be two and one-halt millions long tons o± sugar consumed. But a million long tons of sugar are produced now in Porto Eico and Hawaii and by the beet and cane sugar producers of the United States, leaving but 1,500,000 tons of sugar on that basis for transportation from other countries. The Chairman. How many years do you think it would take to develop that in the Philippine Islands, if the conditions there are what you assimie them to be ? Mr. Humphrey. I only assume that what has happened in other countries will happen in this country, when the gates are let down and the bars are opened in the Philippines. The same would hap- pen, I think, as has happened in consequence of the reduction of duty on Cuban sugar ; just the same as has been done in Cuba. The Chahiman. But Cuba years ago produced almost as much sugar as she produces now. Mr. Humphrey. My understanding is that the highest produc- tion of sugar in Cuba prior to the rebellion was 800,000 tons, and now the production is 1,300,000 tons. That is the estimate made by the Cuban Government. Of course you can not believe all you see in the papers, but that is the published report in the papers. I would dislike to have the committee believe everything they see in the newspapers. The Chairman. I should put more reliance in a report of Govern- ment imports than I would in other matters not governmental. Mr. Humphrey. If it is true, as I say, if there is that much land in these two islands and this province of the island of Luzon, then 1 ton per care on those lands will supply the entire sugar need, out- side of our own production. But it is said by Mr. Welborn in this report that on the government farm, where they use better methods of culture than are generally used, they will produce this year 2^ tons to the acre. At 2J tons to the acre they will produce, on these lands alone, more sugar than the entire consumption of the United States, and 500,000 tons for export besides. But Mr. Welborn also says that with the culture that they now have on these lands at Pampanga and on the islands of Negros and Panay, their machinery is such that thejr lose one-half of the juice out of the cane on account of their old mills. The superintendent of the farm estimates their loss from that source at 45 per cent. Now, assume that they continue the same mode of agriculture that they have now, with stick plows and carabaos, and all that, and just give them modern mills to extract the juice from their cane, and what do you get? You would have a tonnage of 4 tons to the acre simply by putting in the machinery for extracting the juice from the cane, the same as they have in the Hawaiian Islands and in Louisiana. They tell me that in Louisiana the loss is about 3 per cent in their mills, and in Hawaii they lose aboilt 5 per cent. Here is a loss, according to Mr. Welborn, of over 50 per cent, or according to the superintendent of the farm, a loss of 45 per cent. Now, simply by changing the mills and putting in modem mills instead of the old ones, and letting them cultivate the land in the old way, you will have 4 tons to the acre in Pampanga, Negros, and Panay; and what would your 1,555,000 acres produce? It would 84 PHILIPPINE TAEITF. produce you 6,000,000 tons of sugar, or over double the entire con- sumption of the United States. But it is said by Mr. Welborn in this report that these provinces that I have named to this committee, and according to the census report of the Philippines that is only 61 per cent of the lands that were in sugar in the Philippines during the last year — 39 per cent of the sugar from the Philippines was produced in other provinces. If that is true, and the area of productive sugar lands compared with the area under cultivation is the same as it is in those provinces, then you have a million more acres to add to the sugar land of the Philippines. Now, mind you, we have not taken into account the large island of Mindanao and we do not go on the other islands. We simply con- fine the discussion to the provinces where they now raise sugar. And taking those only it is seen that you would produce the world's sup- ply of sugar on those lands by simply putting in the modern machin- ery for extracting the juice from the sugar cane. Suppose, in addition to that, they should have agricultural methods such as we have in the United States. Suppose they plowed with the same plow — a gang plow — and suppose they used the spring- tooth harrow and used the modern implements for subsoiling down deep in the ground, you can see that the production of sugar in those islands would be enormous upon the lands that are now known as sugar-producing lands, and without going, as the War Depart- ment here says, into those islands and introducing capital, or induc- ing capital to go into the islands of Mindoro, Palawan, and Minda- nao and reclaim them " from the jungle and from savagery." The War Department not only proposes that they shall exploit the sugar lands in the Philippine Islands now known, but that you will fix it so that they can go into the unexplored islands, and, by giving them large concession in their land laws, fix it so that they will reclaim these other islands and put into sugar what are now " in the jungle." The Chairman. Have you made any calculation to see how many laborers would be required to produce this 6,000,000 tons of sugar ? Mr. Humphrey. Yes ; I think it is very simple, from the statement given in this report, that one man — one of these natives — ^will culti- vate two and one-half acres. The Chairman. That is only cultivation. Then it goes to the man- ufacturer afterwards? Mr. Humphrey. Yes; manufacturing and milling the sugar, and it is very easy to ascertain the number of people who would be en- gaged in that. It takes a large number of people to do any business, and as the needs of the business require I notice they find the laborers to do the business. For instance, there is Japan, a short way from the Philippine Islands. I know of no reason why, out of forty mil- lion odd people in Japan, there can not be a million of laborers given to the Philippine Islands. The Chairman. The sugar people of 'Hawaii say they have got some there and they are going back. I am talking about the sugar planters of Hawaii when I say that, not about these gentlemen. Mr. Humphrey. I do not Imow much about the conditions there in Hawaii, but I know there is a means of supplying an immense amount of labor in the Philippine Islands. PHILIPPINE TAEIFF. 85 , ^}^® Chairman. In Hawaii they are clamoring against letting down t^e bars. They were not able to get any labor. Mr. Hill. Why have not the Japanese gone into the Philippines now and taken up these lands and cultivated sugar? There is no restriction. Mr. Humphrey. The attraction is not there now. Jlr. Hill. They might do it just as well by going to the mountain tops. Mr. Humphrey. You put Americans in there, investing in sugar lands m the Philippines, and see what will happen if this act be- comes a law. Laborers will go in there. Mr. Hill. Why have not Ainericans gone in there during the Amer- ican occupation? Mr. Humphrey. If I should forget to answer that, I hope you will call my attention to the omission. Just now I desire to say this, that if Philippine sugar is allowed to come into this country free, why can not they pay $2 a day in the Philippines and make sugar in com- petition with us who pay $1.50 a day? If you bring it in with duty free, why can not they pay $2 a day for labor and make sugar in competition with the whole earth, and put the very best skilled labor in the world upon the Philippine sugar plantations ? They can make sugar and pay $2 a day as against our $1.50 a day in Michigan, and put the sugar down here for one-half what it costs us. Why can not they offer inducements to labor that will take the laborers out of America and put them on the plantations in those islands? Why can't they do that if the sugar is to be admitted free so that anybody can invest his capital and can go into business there? They can in- duce the labor of the world to go there if it is opened up to free com- petition arid without any restrictions. Mr. Clark, of Missouri. Mr. Humphrey, can a white man work out of doors in the Philippines, or do you know ? Mr. HuJiPHRET. Look at what the white men do now in the Phil- ippines. Take the men that march and ride and are in the saddle all day long; take the workmen; take such men as Mr. Heil, superin- tendent of the government farm; take the teamsters, the American teamsters, who, as the reports show, are employed there driving their teams. The reports say they work there without difficulty ten hours a day. I notice also that the soldiers seem to do fairly well in the Philippines, practically as well as they do in Cuba. The Chairman. They send most of them home after they have been there two years. . Mr. Humphrey. Is not that true also on our western plains « The Chairman. Not for the same reason. Mr. Humphrey. On our western plains our Government used to take the soldiers from New Mexico and Arizona and bring them up to Mackinac Island to recuperate. The island was kept as a sanitary Mr. William Alden Smith. And after they had been there for a little time they would want to leave there. Mr. Humphrey. Yes; they would want to leave after being there a while. Now, Mr. Chairman, I wish briefly to call attention to the Brus- sels treaty, what is known as the Brussels agreement, respecting 86 PHILIPPINE TAEHT. sugar, and in doing so I shall take as little time as possible and give the committee fully my views in regard to the agreement. Now, this agreement, the first paragraph of it, is as follows : Aetiole I. The high contracting parties undertake to suppress, from the date of the coming into force of the present convention, the direct and indirect boun- ties by which the production or export of sugar might benefit, and not to estab- lish bounties of such a liind during the whole duration of the convention. For the application of this provision sugar products — such as preserves, chocolates, biscuits, condensed milk, and all other analogous products containing In a notable proportion sugar artificially incorporated — are assimilated to sugar. Reading further, I quote : The preceding paragraph applies to all advantages resulting directly or indi- rectly for the different categories of producers from the fiscal legislation of the States, including : (o) The direct bounties granted to exports ; (6) The direct bounties granted to production; (c) Total or partial exemptions from taxation granted for a part of the manufactured output ; (d) Advantages derived from excess of yield; (e) Advantages derived from the exaggeration of the drawbacks; if) Advantages derived from any surtax in excess of the rate fixed by Article III. Mr. William Alden Smith. What are you reading? Mr. Humphrey. From the Blrussels agreement, signed now by twelve pp'vrers. At first there were ten powers who signe(i it. Two iaave come in since. IVIr. McCleakt. "What is the date of the signatures ? Mr. Humphrey. This is March 5, 1902, and the agreement took effect on the 30th day of September, 1903. Mr. MoCleary. How long is it effective for ? Mr. Humphrey. For all time to come, unless put an end to under the terms of the agreement. That is, the agreement is perpetual unless, under the terms of the agreement, one year before the expira- tion of any given period one power gives notice that it desires to withdraw from the agreement. Then the other powers may go on continuing the agreement in force and allow the other to withdraw, or may put an end to the agreement. Unless prior to the fixed period some power gives notice of an intention to withdraw, this agreement goes on perpetually. Mr. McClbaey. ^Hiat do you mean by the fixed period ? Mr. Humphrey. The first fixed period is five years from its date. Mr. William Alden Smith. That is for meetings, I suppose ? Mr. Humphrey. No ; for times when it can be put an end to. It is the agreement that it can not be put an end to for five years; it is an agreement in force without power to be set aside until 1908. But one year before the 30th of September, 1908, any power may give notice of withdrawal. If any power does give notice 6ne year before that time then that power may either be permitted to withdraw or the agreement may be terminated entirely at the will of the other powers. If that time passes it comes one year further on, and then a year's notice has to be given, and each period thereafter ending at that date, a year prior to that date the notice must be given in order to put an end to the agreement. Mr. McCleary. And after the first five years the period is one year? PmLIPPINE TABIFP. 87 Mr. Humphrey. Yes; and after that the agreement is kept in force by the powers giving no notice of any intention to withdraw. In the absence of notice indicating an intention to withdraw the agi-eement is continued. Mr. William Alden Smith. You are reading from the agreement, are you ? Mr. Htjmpheet. Yes; from the agreement itself. This article 3, to which attention is called in the first article, I will explain to the committee m this way: Article 3 is the one that provides for the surtax. This copy is torn so that I can not read it very well; but in that agreement, by the terms of that article, there is allowed what IS known as the surtax, the maximum of which is 6 francs per hun- dred kilograms on refined sugar and 5| francs on raw sugar. A kilogram is 2.2 pounds, and a hundred kilograms of sugar would be 220 pounds of sugar. On refined sugar the surtax may be imposed of 6 francs per 100 kilograms. On all sugar below refined sugar the surtax can not exceed 5| francs. That is the maximum. Now, the surtax is explained in the agreement, and it is explained to be the difference or the advantage given to domestic sugar over for- eign sugar. They allow an advantage to be given to domestic sugar of 6 francs per hundred kilograms on refined sugar and 5 J francs on raw sugar without imposing any countervailing duty; but when it is in excess of that, then the countervailing duty goes on, as explained in this subdivision /, which I have just read, and it is calculated on the advantage derived from the surtax. Mr. William Alden Smith. Do you mean by cartel or bounty that they may aid up to a certain point ? Mr. Humphrey. I mean this : Say we have the Philippines. Say they belong to us as a dependency of this country. It is territory belonging to the United States. We may give to the Philippines an advantage over sugar from other countries equaling 5^ francs on a hundred kilograms of raw sugar without imposing upon ourselves the countervailing duty or without bringing that condemnation upon us for these products. Mr. William Alden Smith. Or France may do that with respect to the island of Martinique, or Great Britain any of her provinces? Mr. Humphrey. Yes; England may give to her provinces, and France, Germany, and the other powers the same. After they ex- ceed that allowed surtax then immediately they exceed the. limit the Brussels agreement will allow, and at once the countervailing duty goes on. Mr. Clark, of Missouri. Now, Mr. Humphrey, if these Philip- pine Islands are really part of the United States it would be none of the business of the Brussels conference at all, would it? Mr. Humphrey. Let me show you how that is. Mr. Clark, of Missouri. If it were a bona fide part of the United States? Mr. Humphrey. Yes; if it were a bona fide part of the United States, and at the time the Brussels conference went into effect there was a duty imposed on the Philippine Islands sugar coming into the United States, and afterwards you would attempt to change that relation, while that difference existed they would say you were in- directly giving a bounty on that sugar and you are attempting 88 PHILIPPINE TABIPF. to supply your market with a bounty-fed sugar, and that amounts to a direct or indirect benefit to that country. Now, Porto Rico and the Hawaiian Islands, that the chairman called attention to: At the time the agreement went into effect these islands brought their sugar into this country absolutely free of duty. Mr. William Alden Smith. If I do not interrupt, I would like to ask a question. Mr. HuMPHEEY. It will not interrupt me at all. Mr. William Alden Smith. The status of the islands is fore- shadowed somewhat in the treaty of peace by which Spain gets a decided preferential in that market for many years ? Mr. Humphrey. Yes. Mr. William Alden Smith. And you rely upon that distinction as taking this territory out from under our flag ? Mr. Humphrey. Yes. I will call your attention to that in a few minutes. If the powers signatory to this agreement say at any time that an undue advantage is given domestic sugar over foreign sugar, by the agreement any power signatory thereto has a right to abso- lutely prohibit the importation of sugar from that country. We made a concession to Cuba— at once a countervailing duty has gone on against Cuba, and is on to-day, and it is over 1 cent a pound as against Cuban sugar. Some gentlemen have wondered why all the Cuban sugar comes into the United States. It is because it costs Cuba $2.27 of countervailing duty for every 220 pounds of sugar that she attempts to put in any country signatory to this Brussels agree- ment. The Chairman. And we are importing so much less sugar from the parties who are signatory to this Brussels convention ? Mr. Humphrey. Yes, so much less from the parties to this Brus- sels convention. Mr. Clark, of Missouri. Your contention then is that if this bill is passed under the operation of that Brussels agreement or treaty or whatever you call it, all the Philippine sugar will be forced into the United States? Mr. Humphrey. Yes, every pound of it; that is what I mean. We were told here last year that the object of this bill was not to open the markets of the United States to the Philippine sugar, but the object of this bill was to pry up the market for Philippine sugar in China and Japan. That is exactly the statement that was made a year ago. Mr. Clark, of Missouri. That is what Secretary Taft said. Mr. Humphrey. The situation now developed is that when this bill is passed and a preferential is given it is a surtax pure and simple under the Brussels agreement, and that the maximum allowed surtax is 5^ francs per 100 kilograms of raw sugar, or exactly one-half a cent a pound. Now you can allow the one-half cent a pound surtax or preferential without incurring a countervailing duty under the Brus- sels agreement, but the moment you exceed one-half cent a pound your countervailing duty goes on. You have now given your prefer- ential on sugar from the Philippines by making the duty 75 per cent of the Dingley tariff, but that does not come up to the allowed sur- tax which brings forth the retaliatory measures provided for in the Brussels agreement. PHILIPPINE TABIFF. 89 Now, the matter has been before this Brussels conference as to whether they could not put a countervailing duty on, as against the Philippines, and they were strongly in favor of doing that. They held a meeting in October. A copy of the proceedings of that meet- ing had not been received by the State Department a week ago, when their proceedings were furnished me, and the proceedings I have only include the meeting of April, 1905. The State Department makes this comment: "A session of the permanent commission was held in the month of October, 1905, the proceedings of which have not yet been received in this office." So, as I said, I have the proceedings of the commission up to that last meeting, but we have the publication in the Paris papers as to the measures considered at that meeting, and briefly they were these: The first thing considered was as to sugar coming from Bolivia. The second matter under consideration was' Guatemalan sugar, and the third was sugar from Honduras. The fourth was sugar from Paraguay. Number five was relative to the Philippines. _ " There exists a surtax." That shows you what this will be con- sidered to be. But the commission had decided that this can not be construed to mean a bounty on either raw or refined sugar. Number six concerned Nicaragua. They received a bounty, and the counters- vailing rate fixed by the commission should be maintained. Mr. Needham. Do they tell why that should not be considered as a bounty ? Mr. Humphrey. No. Mr. Needham. Have you any evidence to that effect ? Mr. Humphrey. This is all the evidence. I think I know why, and that is that wherever the amount of surtax of any nation does not exceed the allowed surtax there is no countervailing duty imposed. Mr. McCleart. Pardon one question, please. Are China and Japan signatory powers to this conference? Mr. HusiPHREY. No, sir. I am very glad you spoke of that, be- cause it is assumed that China and Japan are large markets for Phil- ippine sugar. The real facts of the case are that during the present year Japan and China will take but a small amount of Philippine sugar. The amount of Philippine sugar that came into this country in the past year was over five times as much as it was the year before. And why? The Hongkong refineries, which are the only refineries in China, are upon English soil, upon English territory. England is a signatory power to the agreement. Every pound of refined sugar, refined from the Philippine raw sugar, will have this Brussels agreement enforced against it when imported into a country signatory to the agreement, and the countervailing duty will be put upon it. Now, the only sugars that will go from the Philippines to China are sugars sold in the raw state. Mr. Wm. Alden Smith. You mean from the Philippines to China ? Mr. PIuMPHREY. Yes ; from the Philippines to China. Mr. Hill. You are aware of the fact that China and Japan have taken three-fourths of all the Philippine sugar for three years past? It is right here in the official report. Last year, 1904, China took a hundred million pounds and Japan 33,000,000 pounds, and the rest of the exports were 37,000,000 pounds to the United States. - Mr. Humphrey. I am glad the gentleman called my attention to 90 EHILIPPIITB TABIPF. it, because the market for 1904 differed from that of 1905. That difference is what I want to call attention to. What did they do m 1905? The total exports from the Philippine Islands were 260,254,- 000 pounds, of which 127,000,000 pounds came to the United States. Mr. Wm. Alden Smith. What are you reading from ? Mr. Humphrey. From the report of the Chief of the Bureau of In- sular Affairs to the Secretary of War, in 1905. That Mr. Hill stat.n[( I'olioe. Manila, San Enrique. Oci^'ho- io. 190.',. Seiior Don Esteban de la Rama, Iloilo. JIy Distinguished Feiend : After expressing to you my beaitltlt pleasure and enthusiasm upon lieariug your final acceptance of the duty of representing us in the national capital and of devoting your energies for the benefit of our agri- cultural interests, I wish to send my little suggestion in case it may be of use to you. For the three farms \Yhich I operate under lease I have obtained in the last five years the following crops : Some of the lands near the sea have yielded in that period only three crops, and those nearer the interior five, v/hile those next to the mountains by means of ratoon crops have yielded seven. As to the cost of labor per picul from the time of plowing the land until the raw sugar is placed on the market in Iloilo, counting all expenses, including the rents paid on the leases of the estates, I estimate that it averages between $1.75 and $1.88 United States currency, the variation from year to year depending on the rainfall. In view of the epidemic of rhinderpest, which for the last five years has prevailed in these islands and bids fair to annihilate our cattle, would it not be advisable to suggest to some manufacturing concern to invest in a small steam plow-, say of two, three, or six horsepower, which will.be put on the market at a price within the reach of the average planter? Very respectfully, Yictoeiano Rooriguez. . And it can not be believed that this gentleman worked with more facilities than the other planters, because the government says the sugar produced there costs twice as much as it does elsewhere. The ratoon crops have had to be abandoned on land which has already been in use some time, because it has been observed that it exhausts the. land very much. It is contrary to anj' agricultural principles that any piece of ground should be planted in the same crop two successive seasons, as it exhausts the land too much. It has been observed in the Philippines that the plantations that adopt the ratoon crop system produce less than those thai do not fol- low that system. They produce less than those which have done nothing but use the new plants. Another disadvantage of the ratoon crop is that it can not stand the inclemencies of the weather as well as the new plant. When the rainfall is excessive the production falls off. Whether we use the ratoon or the other, the fact is that the cofrt of sugar put in Iloilo, without considering loss of cattle, is li cents gold per pound. If we add to that a cent and a half, the 90-cent tariff which we have to pay, and 50 to 60 cents for the expense of placing it on board, such as insurance, transportation, freight, etc., we would get the result of 3 cents per pound for our sugar put in New York f. o. b. This sugar is one-eighth, 87 to 88 degrees; two- eighths, from 84 to 85; five-eighths, from 79 to 80, making an average of about 84 degrees. Sugar of this grade in New York is now quoted at less than 2 cents a pound. Now, then, in that, case, when our sugar costs us 3 cents f. o. b. New York, how can we afford to send it there? How could we place the sugar in New York when the price in New York is 2 cents or less and ours is 3 cents, and how can we place it in New York, paying the tariff and the other consequent charges? Even if the sugar did not cost us anything to produce we would not be enabled to place it 180 PHILIPPINE TARIFF. in New York, because if required to pay 90-cent tariff and 60 cents freight and insurance and other charges, we would only have 40 or 60 cents left to cover the losses and pay the commission charges, and I do not believe that under such conditions we would send our sugar. Or, again, another one of the reasons adduced by the opponents of this measure is the low price of labor in the Philippines. They say that the wages in the Philippines are from 15 cents to 20 cents gold per day, and that the wages of the United States are from $1.50 to $2 gold — that is to say, ten times as much as the labor in the Philippines. But, now, let us examine this. The American laborer can work 40 acres of land per year, while the Filipino laborer can not work more than two acres and a half — that is to say, one-sixteenth of the land worked by the American laborer. So that if we compare what the American laborer can work with what the Filipino laborer can wo"rk, we will see that the price of Philippine labor is six times dearer than that of the American labor. Referring to the report of the manager of the plantation in Ha- waii to which I have referred, he stated that in the crop of 1904 they employed 240 men, that in that year they expected a crop of more than 32,000 tons. I will now take the liberty of submitting to the com- mittee a statement of properties belonging to the firm of Hijos de la Kama, one of whom I am. Total area, 10,000 acres; 3,500 acres of land for cane; 4,500 acres rice land; 1,500 acres pasture land; 400 acres for cocoanuts and bamboo; 100 acres for hemp and other products. Of the 3,500 acres of land for cane not more than one- half is cultivated, leaving the other out — ^that is to say, 1,750 acres producing an average of 1 ton per acre. Last year on account of the climate this crop was below this average, and it was not possible to have it more than 1,600 tons, as can be established by the books of the firm. This firm employs machinery on said plantation for the exclusive manufacture of sugar, five machines of 12 horsepower, at 10,000 pesos conant, 50,000 pesos. It employs 2 machines of 8 horse- power at 8,000 pesos, 16,000 pesos; 8 machines of 6 horsepower at 6,000 pesos, 48,000 pesos; 1 machine of 4 horsepower, 4,000 pesos; 1 mill moved by animal power, 1,000 pesos. The value of build- ings is estimated at 100,000 pesos conant. About 1,200 head of cattle. 150,000 pesos; tools, agricultural implements, and so forth, 10,000 pesos; total, 379,000 pesos conant. Mr. William Alden Smith. Where is this land located ? Mr. De la Rama. In Negros. We employ on these plantations ex- clusively for the cultivation of sugar cane 600 persons, and during the grinding time we need, more or less, 600 persons more — that is, when the product is about 1,700 tons. Now, then, in Hawaii, with a crop of 32,000 tons, they only need 242 persons for its cultivation, while we need 600 men to produce 1,700 tons. Is this the kind of agriculture that you want to be protected from? Mr. William Alden Smith. What is the wage ? Mr. De la Rama. Twenty cents United States, 40 conant. Mr. William Alden Sbiith. A day? Mr. De la Rama. Yes. Me. Wilijam Alden Smith. And found? ' Mr. De la Rama. Yes ; we feed them. PHILIPPINE TARIFF. 181 Mr. William Alden SsriTH. "iVhat does it cost to feed a man a day? Mr. De la Rama. About 10 cents gold. During the grinding time it costs more, about 5 cents more. To sav that the cost of labor in the Philippines is lower is an absurdity. " If less were paid them it would be impossible for them to live, where meat costs 50 cents a pound and everything a great deal more than it does here. We are obliged to import everything we use. Mr. McCleaey. Do your workmen eat meat? Mr. De la Rama. If they do not eat meat it is because they can not get it. If they have the money they eat it or if it is given to them. Mr. William Alden Smith. I want to be sure I understand you. You say that the laborers get 20 cents a day ? Mr. De la Rama. Yes. •Mr. W1L1.1AM Alden Sbiith. And that you feed the laborers, and that costs about 10 cents a day. That is correct, is it? Mr. De la Rama. Yes. With the resources at our command now and the cattle which have been left us after the epidemic of rinderpest it Avould be impossible for us to produce more than 100,000 ton?. Mr. WiLLiAJt Aijjen Smith. What is the value of this land per acre? Mr. De la Rama. A hectare is worth from $75 to $100 gold — 2| acres. Mr. WiLLiA3i Alden Smith. That is the price you put upon it, but is that the price you paid for it? Mr. De la Rama. These lands were gotten from the Spanish Gov- ernment. The cost of clearing that land is quite high. It costs as much as the price of the land. Even if we should have no more trouble from the rinderpest, to produce the 200,000 tons, which we produced formerly, would take us at least fifteen years to replenish the cattle which we have lost. We never produced 400,000 tons, as Senator Xewlands yesterday stated. Our highest production was in the year 1893, when it was 300,000 tons, and our exportation in that year was 260,000 tons, 40,000 tons being used at home. Mr. William Alden Smith. If they pay 20 cents a day for their labor, would it make the island prosperous — the employment of labor at that figure ? Mr. De la Rama. That is why sugar costs a cent and a half per pound. Mr. William Alden Smith. But does that make the labor pros- perous there ? Mr. De la Rama. It just gives them a living. Mr. William Alden Smith. Does it furnish them the necessities of life? ,,./ Mr. De la Rama. Just the necessities of life ; yes, sir. Mr. Robertson. How are Philippine sugars graded according to the Dutch standard, above 16 or below 16 ? Mr. De la Rama. Below ; much below. Mr. Robertson. I want to ask you if you do not know that the difference between the tariff on sugar coming from the Philippine Islands under the concessions already made works out so that you get 182 PHILIPPINE TARIFF. the difference between 126 a hundred and 94 ; that you get a prefer- ence over any other sugars coming into the United States ? Mr. De la RAjrA. I have not made that comparison, but what I know is that it costs our sugar 94 cents Mr. Robertson. And the tariff on sugar under 16, Dutch standard, polarizing at 84, coming in without this concession, would pay_, as well as I could make the calculation here now — and I am sure it is right — 126 a hundred, while your sugar, the same grade of sugar, polarizing the same, would pay 94 cents. You would have the prefer- ence, then, between 126 and 94 already, as against any other sugar coming into the United States ? Mr. De la Rama. No ; I have not made that comparison. Mr. Robertson. But I have made the comparison, and that is a fact. Mr. De la Rama. Mr. Welborn will be able to answer. Mr. Welb(jrn. I will be glad to look at that. Mr. Robertson. The difference between 126 and 94, the preference in favor of Philippine sugar coming into this country. Mr. De la Rajia. Senator Newlands said yesterday that Cuba pro- duced a million tons of sugar and we could also produce a million tons in four or five years. Cuba produced a million tons ten years ago, and now they produce about a million tons also; and they have had in Cuba for a good many years modern machinery. Now, then, we who do not produce but 200,000 tons arid who have lost so much capital with rinderpest, are we going to produce 1,000,000 or 2,000,000 tons a few years hence? In Louisiana they have been unable to increase their production more than 100,000 tons in ten j^ears, and the producers of beet sugar have not been able to increase their production more than 200,000 tons. Now, then, if it has been impossible for you to increase your pro- duction more than has been stated, how are we barbarians going to increase our production five or six times as much in four or five years ? That would be to put ofir ability on a much higher level than that of any other country in the world. Are you not ashamed to place your- selves on a lower level than a barbarous people ? One of the fears of the opponents of the reduction of the tariff is the recommendation that the law be changed, and instead of 2,500 acres that 25,000 acres should be granted. I do not believe that this fear has any foundation, for it is nothing but a recommendation to the Commission, and when a bill to that effect is presented it would be time to discuss it. Mr. Robertson. One of the reasons why the beet-sugar industry of the United States and the su^ar industry in the United States has not increased is on account of the continued agitation of the tariff question and concessions to the Philippines and Hawaii. Now, we are trying to prevent further destruction of our industry by tryino- to prevent further reductions. That is all. ^ Mr. De la Rama. So that would be a kind of a dog-in-the-manger policy ; that you can not supply the consumption of the United States yourselves, and you do not want anybody else to supply that con- sumption ? Mr. Robertson. Yes ; we will supply it in the course of time. The beet-sugar industrj" was rapidly reaching a point where it would sup- ply the home consumption, but here comes Cuba and here comes the Philippines and the Hawaiian Islands, and we grant them conces- PHILIPPINE TARIFF. 183 sions, and that is what has kept the industry in the United States back. Mr. De la Eama. I do not wish to discuss anything about Hawaii or Cuba, but we will not produce more than 200,000 tons in fifteen years from now. I do not believe that 200,000 tons can injure any industry m the United States, especially fifteen years hence. Mr. EoBERTSON. Are you talking about the Philippines now ? Mr. De la Eama. Yes. Mr. EoBEETSON. Did they not produce 300,000 tons in 1893 ? Mr. De la Eama. But that was before the loss of the cattle, when we had more money. We have had seven years of bad crops now. We have lost 90 per cent of our Qattle, instead of 50 per cent as Sen- ator Kewlands said yesterday. Now, are we going to produce 300,000 tons of sugar after having lost our cattle, and with our miserable condition as Senator Newlands stated it ? Mr. EoBEETSON. I suppose steam plows will be invented, and that will enable you to increase your production enormously and save great expense. Mr. Undekwood. Can any of the Philippine laborers cultivate the sugar plantations, or do they have to be specially educated for that purpose ? Mr. De la Eama. We have to educate them. ]Mr. Underwood. How long does it take to educate them ? Mr. De la Eama. Not very long. Our system is very primitive. Tt is not very difficult to teach them. If we had to teach them the new system — ^the system with modern machinery — it would take a long time. You Americans have stated that to teach your laborers to raise beet sugar you have to take a good many years. How long do you think it is going to take our barbarous people to teach our laborers to change their system and to adopt another kind of a sys- tem than that employed at the present time ? To return to the recommendation that the holdings be increased to 25,000 acres, this was done only in favor of Americans. Our ambi- tions are not that high; we do not have the imagination of large enterprises such as Americans have. We have not got to the point of Avanting such large holdings yet. "Why should any measure be feared that is simply going to be in favor of the Americans? So that you are going to be scared of yourselves. I do not understand this, and if to protect an industry which is not threatened in any way an attempt is going to be made to paralyze the glory of Americans in other countries, then my understanding of the matter is still less; because the glory of Americans in other countries is the glory of America, especially in a country where the same flag waves that flies in the United States. There has also been a doubt expressed as to our statement that our market is China, but that is an absolute fact. It has been' established that the greater amount of our sugar is sent to China, and that the Chinese, when they-are forced to do so by competition, also pay good prices, as was the case last year. The greater part of our sugar, which is sent to Hongkong, is not sold to the refineries, as has been stated before the committee, but is sold directly to the consumers there. It has also been asked why we do not change our crops; but this question of changing the kind of crops is an easy thing to speak of. 184 PHILIPPINE TABIPF. but it is a very difficult matter in practice. It is the belief of some that the soil in the Philippines is adapted to any kind of crops. Now, this is a great error. Hemp, for example, we can only plant in certain kinds of soil. It is only possible to plant hemp in soft and volcanic soil, in soil through which the water filters with ease. The cocoanut tree can be planted only in sandy soils, and rice can only be planted in heavy soil, through which the water does not filter. After all the calamities we have suffered, we have endeavored to plant other crops in all the lands except in the sugar-cane lands, but to grow hemp or cocoanut it is necessary to wait many years. Mr. Underwood. How much sugar land have you got there — land you call sugar land ? Mr. De la Eama. Three thousand five hundred acres is the pro- portion of sugar land in 10,000 acres of our property. Mr. Underwood. That is on your plantation ; I mean in the whole Philippine Islands. Mr. De la Eama. Nobody can give an estimate of the amount of the sugar lands in the Philippine Islands without going there and ex- amining it himself, because anybody making a statement thstt any land that is clear would be suitable for the purpose of cane is mis- taken. It is impossible for us to plant sugar cane on the sides of hills or on inclined land, because the rains are so heavy that the soil falls down. In Hawaii, on the contrary, they can plant on the sides of the hills, because they have no water to wash their land down. It is also true that there is a good deal of land in the Philippines which can only be used for pasture, which can not be cultivated at all. So in these' 10,000 acres of land owned by my firm, which is selected land, even in that land there are about 1,500 acres suitable only for pasture. We can not plant on that land at all. It has also been stated that last year we imported into the United States a good deal more sugar than in previous years. This can be very easily understood. This does not mean that last year our pro- duction was greater. On the contrary, the production of last year was smaller, and instead of 79,000 tons, as we had exported through the port of Iloilo, last year we only exported 66,000 tons, of which 39,000 tons came to the United States and 26,000 tons went to China. The year before last we sent to the United States 20,000 tons. Now, then, our production was really smaller. The reason that this ex- portation was larger was that the United States, being a country where the largest deficit existed, it was the natural market for that sugar. It naturally needed it more than any other country, and it found an easier sale in that country. That is the reason why the ex- porting houses over there last year bought a larger amount and im- ported more sugar, which they did for speculative reasons, believing that the price would rise. As Mr. Peabody said yesterday, the greater part of that sugar has not been sold, because while it was en route the price had decreased. Now, speaking of the investigation made by Mr. Hathaway in Ne- gros, on account of the precarious state of the country in the Philip- pines, when anybody goes there and makes inquiry we usually state things much better than they really are, so as to induce a little capital in if possible ; but we have realized that the Americans have nothing foolish about them, because up to the present time no capital has come. [Laughter.] PHILIPPINE TARIFF. 185 Mr. Hathaway says he was told by Mr. Eegalado that a picul of sugar was sold in Iloilo at one j&fty, and that that gave a large profit. Now, if Mr. Eigalado really believed what he said to Mr. Hathaway, he would be a planter himself instead of an interpreter at $1,000 a year, which he has been since the American occupation, and throwing away his time miserably. Mr. Estavanes has stated that his ground would produce ten years of ratoon crops. And yet I know that Mr. Estavanes has been ex- ceedinglj anxious to sell his land. He told everybody a whole lot of things about his land to see if he could not get his price, but Mr. Estavanes has sold most of the land he has, not at his price, but the price they gave him. Mr. William Alden Smith. In what province ? Mr. De la Rama. In Negros. Mr. WrLUAM Alden. Smith. If it will not interrupt you, I would like to refresh your memory. In your testimony you gave before the gentlemen over there you were asked what the price of land was in Negros, and you replied, " I hardly Imow how to answer ; it is held at all prices." Somebody, answering for you, Senor Heras, replied, " From 30 to 50 pesos per acre." Now, I understand you to say that your land is worth $40 an acre ? Mr. De la Rama. In gold, yes. Well, it is just about what I state now. Mr. William Alden Smith. This Mr. Heras answered the inquiry put by Mr. Scott when you failed to answer it. Mr. De la Rama. Mr. Heras comes from another province. Mr. William Alden Smith. He is talking about Negros. Mr. De la Rama. He can not talk about Negros. Mr. William Alden Smith. This is what he says. He says, in answer to that question — after you had said you hardly knew what the prices were — " From 30 to 50 pesos per acre." Mr. De la Rama. In his province ? Mr. William Alden Smith. No, no ; in Negros. He says that in the province of Pampanga the best sugar land is worth a great deal more; that the average price in Pampanga might be placed at 58 pesos per acre. That would not bring it up to your figure. That is what he says on page 36. There is a wide discrepancy between his estimate and yours. Mr. De la Rama. It is not, of course, very easy to estimate it. The land sells according to the necessities of the holder. If you buy land at auction, of course you may get it very cheap. There is much land now sold at auction there on account of the bad conditions, and you can get it for low prices. Mr. William Alden Smith. Another thing, while we are on that point, while we are on the question of wages, which I asked you about a moment ago, you said that the average wage is 20 cents a day. Mr. De la Rama. Yes, sir. Mr. William Alden Smith. I noticed you were examined over there by Representative McKinlay, of California, and when you were asked what the wage was by him, his question being to give him the number of pesos per month before the war paid in wages, you said, " For field hands we paid before the war 3 pesos to 4 pesos per month." Mr. De la Rama. Yes, sir. 186 PHILIPPINE TARIFF. s Mr. William Alden Smith. Then Eepresentative McKinlay asked ou, "And their food?" and you replied, "No, sir; without food. Jow we pay a little, or twice as much, and feed them." Is that cor- rect? You paid before the war 3 to 4 pesos per month; that would be $1.50 to $2 a month? Mr. De la Rama. Yes. Mr. William Alden Smith. Without food. Now, since the war you say, " We pay them a little over twice as much," which would be $3 a month? Mr. De la Eama. Twice as much. Mr. William Alden Smith. You say, " We pay a little over twice as much and feed them." Mr. De la Rama. Then it would make three times as much. Mr. William Alden Smith. If you paid a little over twice as much as 3 pesos or 4 pesos, taking'the maximum, and the maximum wage, you would get it to about 10 cents a day. Mr. De la Rama. And to feed them? Mr. William Alden Smith. For the wage altogether. In other words, you make it out about twice as much now as you did when you gave your testimony over there. I am quoting your language on page 42. That is what you say about it. You say here (reading) : " For field hands we pay from 3 to 4 pesos per month." That is $1.50 to $2 a month. Now, since the war, you pay a little over twice as much. Is that correct ? Mr. De la Rama. I must study that up. Mr. William Alden Smith. To what is that increase of wage due ? Mr. De la Rama. Of course we now pay in the Philippines 20 cents, it must be a mistake Mr. William Alden Smith. You can think it over and make any correction you desire to make. Mr. De la Rama. Those pesos there are pesos gold. Mr. William Alden Smith. I was talking about gold. Mr. De la Rama. I say 3 or 4 pesos per month. Mr. William Alden Smith. I am trying to fix the maximum wage and reconcile your statement now with your statement made before these gentlemen at Manila, if I can. Mr. De la Rama. My testimony referred to pesos in gold. Mr. William Alden Smith. My only point was that it was a little less, or seemed to be, than the wages you give now. Mr. De la Rama. We are speaking there of pesos gold, not silver pesos. Mr. William Alden Smith. My only object is to understand you perfectly, if possible. Mr. De la Rama. Now, with regard to the statement of Mr. Lacson, to whom Mr. Hathaway has referred in his statement, if what Mr. Lacson said to Mr. Hathaway is true, he would not have abandoned his cultivation as he did, and as some of the members know who saw it when they were over there. With regard to the statement of Governor Jaime, Mr. Noland has said that Mr. Jaime was induced to believe by Mr. Hathaway that Mr. Hathaway wanted to buy some land. Mr. Jaime was anxious to sell some land which he held there which was not cultivated. The only American who holds some land in Negros is Mr. Eothrock Now, if Mr. Rothrock holds any lands there it is not because he wants PHILIPPINE TARIFF. 187 them, but because he was obliged to take them. Mr. Rothrock is a lawj'er, and when a client has no money to pay over there he gives the lawyer the land. That is the reason Mr. Rothrock holds some land there. Mr. Rothrock did not want this land, because he has stated that the land gave him more trouble than his legal work. It has also been asked whether it is possible to find a substitute for the carabao in the Philippines. The United States Army has lost a good deal of money in importing mules and horses. The American Army can afford to lose that money, but we planters, who have not the money, can not afford to experiment, especially knowing that an experiment has already turned out badly. It has also been said that the American laborer would work as much in the Philip- pines as he does in the United States, and that a mule would be able to do as much. Now, I do not believe there is anybody who believes this. The climate of the Philippines can not be compared with that of the United States, and I do not believe that an American could work as much over there as he does in the United States on account of the climate. It is really impossible. Proof of this is that the Americans in the Philippines who do not do any hard labor, even then have to take little trips to the United States to recuperate. The Brvissels convention has also been spoken of before this com- mittee. Xow, I ask myself the question, what have we got to do with the Brussels convention? Is the United States one of the signers of the convention ? Are Japan and China signers of the con- vention? TVHiat do we care if the signers of this convention prohibit that we import our sugar into their country, when we do not do it anyhow? Statistics show that for the last eight years we have sent sugar nowhere but to China and the United States, and a little to England when, notwithstanding the conditions of the Brussels con- vention, they were obliged to buy some. So that the Brussels con- vention has nothing to do with the question of the abolition of the tariff with regard to us. It has al^o been said that the only market we would find would be the refineries of the United States. We do not believe this. We think that our market would have to be partly in China and partly. of course, the refineries of the United States. It has been stated here that the refineries of the United States would not buy our sugar. I ask why ? If the refineries after buying all the sugar they can in the United States can not supply the consumption they must buy it somewhere, and if we came into the United States with more ad- vantages than the other countries could come, of course they would buy our sugar. That is, if they could not buy it at a greater ad- vantage from others of course they would buy it from us. There is no reason why they should make any distinction in our regard and not buy our sugar. Mr. 'Hathaway has also said that I stated before the Congressional party that the only purchasers of sugar in the Philippines were the Chinese. Mr. Hathaway further says that last year in addition to the Chinese there were some other foreigners who bought sugar. Mr. Hathaway is right, but I also am right. Last year was an exceptional year on account of the deficit of 1,000,000 tons. Now then, if Mr. Hathaway, who says that there would be a deficit of a million tons every year, if he assures us that we would get the same price that we 188 PHILIPPINE TARIFF. got in Iloilo last year, then in that case we would not have to come to the United States and molest you with a statement of this kind. It has also been said that from an economical standpoint the admis- sion of 300,000 tons of sugar free of duty into the United States would make it incur a sacrifice of $7,000,000, and that this sacrifice or loss would not be offset by the profit from the products exported by the manufacturers into the Philippine Islands from the United States. Notwithstanding the calculations which are made in this connection, I will bother the committee now and show that there is some com- pensation, and that this is offset to a certain degree. Mr. William Alden Smith. If it will not interrupt you, I under- stood you to say that the buyers of sugar in the Philippines were who — Japan and China and England ? Mr. De la Eama. And the United States. They have sent sugar to this country for the last years in the hope that the tariff will be abolished. Mr. William Alden Smith. In his testimony before the Taft party, at page 35, this gentleman was asked to whom they sold sugar, and his reply was : " There are no buyers in the islands at present except Chinese buyers ; they buy all the sugar for those islands." Mr. De la Rama. I stated that ; and at present there is nobody but Chinese. Last year we exported to this country and to China on account of the deficit. So we had other buyers, but at the present moment we have no buyers but Chinese buyers. I stated that in the present moment now we have not any buyers but the Chinese buyers ; we have no buyers from New York and England. Mr. William, Alden Smith. "\^Ti€n you say the present moment you mean this period ? Mr. De la Eama. Yes. Mr. William Alden Sjiith. Now, then, sugar that is in bond in New York was bought by these Chinese people ? Mr. De la Rama. No ; last year it was an exception. , Mr. William Alden Smith. Who bought it, then ? Mr. De la Rama. The foreigners, the English. Mr. Peabody stated yesterday about that. Mr. WiLLiAJi Alden Smith. I simply wanted to understand it. There was a little conflict there. Mr. De la Eama. Now, I am going to show that the sacrifice is worth the while, or will be offset by the benefits to the American manufacturers. It has been estimated that the importation into the Philippine Islands of foreign manufactures amounted last year to $28,000,000. Now, suppose there was free trade between the Philip- pines and the United States and we got from the United States $20,000,000 of that $28,000,000. Estimating the profit of the Ameri- can manufacturers at 20 per cent on this $20,000,000, that would be a profit of $4,000,000. Four million dollars would compensate the loss in duty on less than 100,000 tons of sugar, which we might send dur- ing the next few years. Naturally the exportation of sugar into the United States would increase yearly, but by the time that, we should export 300,000 tons of sugar and the Treasury of the United States had lost $7,000,000 we would already have put a good profit into the hands of their manufacturers. This profit of 20 per cent has been estimated without considering the profit which would be derived by the steamship PHILIPPIJSTE TARIFF. 189 agents and the commission merchants and other gentlemen. Under the law that nothing could be shipped except in an American bottom, it would be natural that the American shipowners would profit thereby also. Mr. Ctjetis. "Would there not be some profit in giving up the duty you now have on hemp ? Mr. De la Rama. There is no duty in this country. Mr. Curtis. I mean they would open up and exchange in the bringing over of hemp to this country and that they would buy more hemp than now if we bought sugar, and it would increase the trade. If they removed the duty on our products, the chances are that would bring more of their products over here in the bottoms that carried our goods over there — American bottoms. Mr. De la Rajia. Yes, sir. Mr. Curtis. Is that not a fact? Mr. De la Rama. It would increase the trade; yes. There is no doubt about that. It would naturally be, if duties were taken off on products which came from the Philippines here to the United States, that they would buy more products from the United States than they have heretofore. I do not believe that the American manufacturers have goods which are inferior or which could not compete with other foreign manufac- turers, especially if they had the advantage of free entry to the Phil- ippines. I will read now to the committee a letter from the General Tobacco Company, which was given to me. The CiiAiRMAX. Right there I will ask you how much longer you desire ? Mr. De la Rama. I have very little more. (See page 200.) The Chairmak. I think we should hear Mr. Willett now for a' few moments. STATEMENT OF ME. WALLACE P. WILLETT, OF NEW YORK, PUB LISHER OF THE STATISTICAL SUGAR TRADE JOURNAL. Mr. Willett. Mr. Chairman ^nd gentlemen, I have been asked to e;5plain to your honorable committee the working of the Brussels sugar-bounty convention, which was signed March 5, 1902, and went into operation September 1, 1903. The signatory powers are Germany, Austria, Bohemia, Belgium, Spain. France, United Kingdom (which included Great Britain, Ire- land, British dominions, and India), Italy, Netherlands, Sweden, Norway, and probably Roumania. The authority from which I draw the facts and conclusions which I present are mainly derived from the official correspondence relating to the Brussels sugar-bounty conference, presented to both Houses of Parliament by command of' His Majesty, April, 1902, after the sign- ing of the convention. (Pamphlet, Miscellaneous, No. 6, 1902.) By this convention the high contracting powers undertake to sup- press the direct and indirect bounties by which the production or export of sugar might benefit, and agree not to establish bounties at any time during the whole duration of the convention. These direct and indirect bounties are specified as follows: The direct bounties 190 PHILIPPINE TARIFF. granted to exports; the direct bounties granted t© production; total or partial exemptions from taxation granted for a part of the manu- factured output; advantages derived from excess of yield; advan- tages derived from the exaggeration of the drawback, and advantages derived from any surtax in excess of the rate fixed by the convention. The high contracting parties undertake to limit the surtax to a maximum of 6 francs per 100 kilograms for refined sugar (63 cents per 100 pounds) and to 5 francs 50 centimes for raw sugars (49 cents per 100 pounds). They describe the "surtax" as the diiference between the rate of duty or taxation to which foreign sugars are subject and that imposed on the national product. This interpretation applies to all countries within or without the convention. The high contracting parties agxee to impose a special duty on the importation into their respective territories of sugars from countries that grant bounties, either on production or export, which duties shall not be less than the amount of the bounty, direct or indirect, granted in the country of origin, reserving the option to prohibit the importation of bounty sugars. In order to calculate the amount of the advantages derived from the surtax of any country the figure fixed by them — say, 53 cents per 100 pounds on refined and 49 cents per 100 pounds on raw sugars — is deducted from the amount of this surtax. The half of the diiference is considered to represent the bounty. The high contracting parties establish a permanent Commission charged with watching the execution of the provisions of the present convention. One of its duties is to ascertain whether any bounties exist in nonsignatory states and to estimate the amount for the pur- pose of assessing a special duty thereon. Also, to pronounce an opinion on contested points. This commission shall have only the duty of examination and report, reports to be made to the Belgian Government, which shall convoke a conference to take such decisions or measures as the cir- cumstances demand. Their decision to take effect within two months time at latest. These are the main features of the Brussels convention which in- terest us. I will give you an illustration of their application. Mexico, up to March, 1904, assessed a duty of 15 cents per kilogram- Mexican money, equal to $3.39 per 100 pounds United States money. Mexico for many years produced less sugar than it consumed, but in 1903 it reached the point where it produced more sugar than it con- sumed. Looking for an outlet for this extra production they were confronted with the Brussels convention, which interpreted their im- port duty of $3.39 per 100 pounds as an excess of $2.89 above the about 50-cent maximum limit of the convention. One-half of this — $1.45 was called surplus surtax and the other half — $1.45 — was called bounty. The countervailing duty which the convention would assess against Mexico was equivalent to $1.45 per 100 pounds, which, of course,, was prohibitive. . To come within the provisions of the Brussels convention, the minister of finances of Mexico last year, at the request of the Sugar PHILIPPINE TARIFF. 191 Association, so as to enable the Mexican sugar makers to export their production to England, and benefit by the convention of Brussels, reduced the import duties on sugar going into Mexico to 6 francs 'per 100 kilos of 220 pounds, say 53 cents per 100 pounds United States currency, the same amount of duty now being assessed by Mexico, as the amount of surtax allowed by the convention. This example shows clearly the application to any other country. The import duty on sugars into the Philippines is 73 cents per 100 pounds, which is 20 cents per 100 pounds surtax, less the 2 cents per 100 pounds charged on the exportation of sugar from the islands, say 18 cents per 100 pounds. Under the ruling of the convention one-half of this amount, say 9 cents per 100 pounds, is excess surtax, and the other half, 9 cents per 100 pounds, is bounty, but the per- manent commission, in their discretion, have recently decided that the Philippines have a permissible surtax .and no bounty. Their decision reads as follows : '• Regarding the Philippines there exists a surtax, but the com- mission has decided that this surtax can not be construed to moan a bounty for raw or refined sugar." Hence, at the present time, Phil- ippine sugars can be exported to the United Kingdom or Europe, notwithstanding the fact that the Philippines receives from the United States a gift of duties or a partial exemption from taxation granted for the manufactured product of 33.9 cents per 100 pounds for 84-test sugar, which being less than the limit of 49 cents per 100 pounds on raw sugars, is not taken cognizance of by the permanent commission, but should this 33.9 cents per 100 pounds be increased to above the 49 cents per 100 pounds allowed by the convention, the per- manent commission would undoubtedly consider such excess as being an indirect bounty granted the Philippine Islands by the United States and assess duties against it accordingly or prohibit their importation. Perhaps it might be interesting to the comimittee to see how the convention decided upon sugars from some other countries. The entire decisions were, first, that Bolivia does not produce or export sugar; second, that Guatemala has neither an agreement or associa- tion to maintain prices sufficient to favor exportation; third, that Honduras does not export sugar — the domestic production is very small and the needs of the country are covered by the importation of sugar from the United States; "fourth, Paraguay does not export sugar; fifth, regarding the balance there exists a surtax, but the commission has decided that this surtax can not be construed to mean a bounty for raw or refined sugar; sixth, the countervailing duty already fixed by the commission should be definitely maintained. The countervailing duties applied to numbers 1 and 5 should be sup- pressed. Five is the Philippines. There has been a countervailing duty against the Philippines that should now be suppressed, the com- mission say. Mr. Underwood. Does the countervailmg duty apply to the free ports of Great Britain and Germany in the Orient? Mr. WiLLETT. India has the discretion of applying it or not. Mr. Needham. How would it be at Hongkong? Mr. WiLLETT. That is not in the convention. Mr. McCleary. Say that again, please. 192 PHILIPPINE TARIFF. Mr. WiLLETT. Hongkong is not a signatory power. Mr. Underwood. But I asked you about the free ports. Hongkong is a free port. Mr. WiLLETT. It is not within the terms of the convention ; no. Mr. Dalzell. What is the date of the Brussels convention ? Mr. WiLLETT. This last one ? Mr. Dalzell. Yes. Mr. WiLLETT. It came by the last mail from Europe, the latest de- cision made in regard to these countries — the last decision. Mr. Dalzell. That the Philippines are exempt ? Mr. WiLLETT. Yes ; they have been charged with that bounty, but now they are exempt. Hence, at the present time Philippine sugars can be exported to the United Kingdom or Europe, notwithstanding the fact that the Phil- ippines receive from the United States a gift of duties or a partial exemption from taxation granted for the manufactured product of 33.9 cents per 100 pounds on the 84-test sugars, which is the sugar of the Philippines, which being less than the limit of 49 cents per 100 pounds on raw sugars, is not taken cognizance of by the permanent ■ Commission, but should this 33.9 cents per 100 pounds be increased to above the 49 cents per 100 pounds allowed by the convention, the permanent Commission would undoubtedly consider such excess as being an indirect bounty granted the Philippine Islands by the United States, and assess duties against it accordingly or prohibit their importation. The Chairman. Your idea is, then, that the question of the bounty depends on the amount of the concession ? Mr. WiLLETT. Yes ; anything that exceeds 50 cents above is a direct bounty ; anything below 50 cents is an indirect. Mr. Curtis. Then, if your argument is true, why do they not apply to Hongkong? Mr. WiLLETT. Hongkong is not within the convention. Mr. Curtis. But it is a colony of England. Mr. WiLLETT. Canada is not included either, and Canada is an English colony. India has discretion. The states I have mentioned have no discretion whatever. Others outside are subject to the deci- sion of the convention. Mr. Underwood. Then the decisions of the Brussels conference do not apply to any countries in the Orient, or China or Japan ; they are not affected by it in any manner ? Mr. WiLLETT. No; unless they produce sugar and give a surtax. They are only affected by it if they produce sugar and come within the law. Mr. Underwood. The English or German colonies in China and Japan Mr. WiLLETT. Are at liberty to import sugars from the Philip- pines. It does not follow that if it was undertaken to import sugars into India that carry the bounty with them that the English Govern- ment would countervail against them. Very likely they would ; but they are not doing it at present. Mr. McCleart. If this bill should pass, do you hold that the Philippine sugar could still go into Hongkong without being subject to this Mr. WiLLETT. What bill do you refer to ? PHILIPPINE TARIFF. 193 ^r. McCleaey. The bill now pending. Mr. "WiLLETT. It depends on the rate. I will explain that right 'lei-c. A reduction in the present Philippine tariff to 50 per cent of the Dingle^' bill would mean an indirect bounty to the Philippines of about 65 cents per 100 pounds, or 18 cents in excess of the per- missible surtax. The permanent commission, in their discretion, might not consider this moderate excess of indirect bounties, having overlooked a similar excess of surtax, but should the duty on the Philippine sugars be reduced to 25 per cent of the Dingley law, giv- ing the Philippines an indirect bounty of 97.1 cents per 100 pounds, which is 48.1 cents per 100 pounds in excess of the 49-cent surtax, there is a positive certainty that the permanent commission would assess against this a countervailing duty of Philippine Island sugars, thus shutting them out from European markets. Mr. McCleaey. Plow about the Japanese and Chinese markets? ^Ir. WiLLETT. They are not Avithin the convention. Mr. Curtis. Would Hongkong be ? jNIr. "WiLLETT. No ; unless they produce sugars. You mean whether sugars can be sent into Hongkong. Mr. CcETis. Yes ; from the Philippine Islands. Mr. AViLLETT. They can be up to this date, unless the commission makes a new decision. ]Mr. William Alden Smith. And without any countervailing duty ? Mr. WiLLETT. Yes, they can. I have given you the names of the countries they can go into. INIr. Dalzell. If the tariff on Philippine sugars were reduced to 45 per cent of the Dingley rate, the Philippine sugar could still come into Hongkong and China and Japan and the United States ? jMr. WiLLETT. Yes ; as the convention now stands. It does not fol- low that they might not take up the question later. This committee, as I said, is a permanent committee, and their duties are to watch. Mr. Dalzell. How did that convention originate ? Mr WiLLETT. Here is the correspondence relating to the Brussels conference. It is a long story, but in a few words it originated Mr William Alden Smith. It originated to offset the bounties and cartels of those sugar-producing States in Europe. Mr. WiLLETT. Yes; that was the object. 'Mr. Dalzell. It originated, then, by correspondence between the parties affected? Mr. WiLLETT. Yes ; it was started by correspondence, and the pow- ers got together in Brussels and agreed on this. Mr. McCleaey. What is the date of that ? Mr. WiLLETT. It was signed March 5, 1902, and went into operation September 1, 1903. Mr William Alden Smith. If it does not interrupt you, I would like to ask you a question. The effect of that countervailing duty has been to decrease the bounty- fed product of Germany and France, has it not? Mr WiLLETT. It has the effect of doing away entirely with the bounties of this country. Mr. William Alden Smith. The cartel ? Mr. WiLLETT. The cartel was a bounty. It did away with the cartel, it did away with the bounty. Wliile those countries had a p T— 05 M 13 194 PHILIPPINE TARIFF. bounty the United States countervailed against those countries. To- day there is no countervailing. To explain the surtax a little more definitely, perhaps, I should say that the 50 cents surtax allowed by these countries to their re- finers on their domestic product as against sugars imported into the country is what we in this country call protection — 50 cents a hundred pounds protection for them. We give our refiner, for instance, 13.6 cents protection, the difference between what he has to pay for raw sugar and the duty on refined sugar ; 43 cents a hundred our refiners have, and the German and Austrian has 50 cents. It happens at the present moment that Mr. Leake, the great German expert, has within three days increased his estimate of the European beet sugar 175,000 tons, making a beet crop of this year 6,875,000 tons, which is 100,000 tons larger than any previous crop. Mr. William Alden Smith. That does not include the United States? Mr. WiLLETT. That is the European beet crop alone ; yes. The Chairman. The duty on sugar imported into the Philippine Islands is $1.62 per 100 kilograms, is it not? Mr. WiLLETT. Yes. The Chairman. And the export duty is 5 cents on 100 kilograms? Mr. WiLLETT. Yes ; equal to 2 cents per 100 pounds. The Chairman. The difference in favor of the Philippine Island sugar, then, is $1.57 per 100 kilograms? Mr. WiLLETT. A difference of 71 cents. The Chairman. The countervailing duty on Philippine sugar was imposed by the Brussels conference in the first place ? Mr. WiLLETT. Yes, sir. The Chairman. And had no relation to the action of the United States in giving us 25 per cent of the duty ? Mr. WiLLETT. Yes ; and will not have any until the United States infringes their convention — — ■ The Chairman. And that was immediately suppressed ; it was not enforced. Mr. WiLLETT. It was not enforced; no sugars went there, and no sugars attempted to go there. The Chairman. I want to say right here, and put it in the record with your remarks, that here is a cable from Wilson, who is charge d'affaires of the United States in Brussels, October 31, 1905, to the Secretary of State : Permanent sugar commission sitting at Brussels suppressed compensating duty on sugars imported from Philippine Islands until new examination of Philippine regulations is made in conjunction with the legislation of the United States of America, Cuba, and Porto Rico. Question believed to be definitely- settled as regards Philippine sugar. Mr. WiLLETT. That is the exact position. The Chairman. That is signed Wilson." Mr. WiLLETT. They are waiting to see what this committee does. The Chairman. I am not permitted to state the source of the information, but it was on a high authority in Brussels that that information was obtained. So this conference regards the question as to Philippine sugar and the concessions made and the tariff on that sugar coming to the United States as on the same plane as the PHILIPPINE TARIFF. 195* concessions made by the United States in giving free sugar to the Porto Ricans ? Mr. WiLLETT. Exactly. Porto Rico could not ship sugars into any of these countries. The Chairman. "What is that? Mv. WiLLETT. Porto Rico could not export sugar into any of these countries. The Chairman. Because they have failed to charge any counter- vailing duty on the sugar from the island of Porto Rico by any prin- ciples of this convention, although that free trade has been in opera- tion now for three or four years? ]Mr. "WiLLETT. Ye?. ISIany countries never put a law into action until the occasion is required for using it. If anyone should attempt to export Porto Rico sugars to either of these countries they would not be admitted, they would be turned back. ]\Ir. Xeedha^i. I understood from that cablegram that they are now investigating the subject. Mr. "WiLLETT. No ; they are waiting to see what we are doing . !Mr. Xeedham. It is not a final action, then, as I understand it. ]Mr. "WiLLETT. Not at all; it is a waiting action to see what we do here. ;Mr. Xeedhaji. They are considering our action not only with ref- erence to the Philippines, but with reference to Hawaii and Porto Rico — all three? ]\Ir. "WiLi^TT. This cablegram is especially in regard to the Philip- pines. I think. It relates to future action, and not past, as I under- stand it. The Chairjian. Oh, no; the cablegram refers to the past legisla- tion in regard to Porto Rico, Cuba, and the Philippine Islands; that thev are considering that question, and they have suppressed any countervailing duty; that the question is regarded as permanently settled, although they have left it for future action. They have sup- pressed it. Mr. "WiLLETT. It seems to me it is decidedly open. Mr. Needham. I do not see how you can reach that conclusion. The Chairman. Porto Rico is past action, certainly. Mr. "WiLLETT. Porto Rico sugars are free. There has been no action taken against their coming into those countries on the other side; no bounties assessed against them. The Chairman. "Well, the cablegram speaks for itself. Mr. "WiLLETT. Yes ; and will any of these beet sugar gentlemen say that they had any idea that they could export beet sugars against any of these countries, although no action has been taken against them? Could they export their beet sugars to any of these signatory coun- tries even, although no action has been taken? The action does not take place until you trv to infringe. Lots of sugars come into the United States to test. They go to the board of appraisers. The Chairman. There must have been something or they would not have the question up. ^ ^i. -du-v Mr. WiLLETT. The only question up has been relating to the Philip- ^^The Chairman. They considered it and suppressed it; in fact, they 196 PHILIPPINE TAEIFF. ordered it in the first place so far as the Philippine Islands are con- cerned. Mr. Needham. Then the effect is, about which there can be no question, that this legislation would confine the Philippine market exclusively to the United States, Japan, and China practically ? Mr. WiLLETT. Practically. Mr. Underwood. It is confined there now, according to the testi- mony. Mr. Needham. They would not have any opening then. Mr. WiLLETT. One-third as much went to the United Kingdom as came to the United States from the Philippines. Forty per cent reduction of the Dingley bill would be 50 cents, and you can reduce your tariff to 40 and have no trouble — • — Mr. Dalzell. You refer to any other country shipping sugars into any one of these signatory powers ? Mr. WiLLETT. Yes, sir. Mr. Dalzell. But that has nothing to do with shipping sugars from the Philippines to Hongkong or Japan or China or the United States. Mr. Wallett. No. Mr. Needham. It might also be, might it not, the denial eventually of the Hongkong market ? Mr. WiLLETT. I don't think so. It is sometimes said that a few tons more of sugar, more or less, coming into the United States will not interfere with the domestic beet-sugar industry or any other in- dustry. That has been said now for a great many years, and it is reaching a point at last where it can not be said very much longer, and for this reason: That the consumption of sugar in the United States to-day per annum is 2,767,000 tons. This year the crops of the Hawaiian Islands will give us 370,000 tons — they are long tons — or 420,000 short tons. Porto Rico will give us 210,000 tons this year. Right here please note the increase of production in the island of Porto Rico since the duty was taken off. The average crop of Porto Rico was 54,000 to 60,000 tons. The year following the taking off of the duty the crop was interfered with by a hurricane and was 35,000 tons. Note that in six years it has risen to 210,000 tons. The Chairman. It appeared in the hearings, as I recollect it, that it had been 100,000 tons before the duty was agitated. I suppose your figures for the crops this year are merely estimates. Mr. WiLLETT. These are the latest estimates of crops harvested or being harvested. The Chairman. Practically not harvested ; yes. Mr. WiLLETT. Porto Rico, 210,000 tons. Domestic cane, 300,000 tons; that is harvested and known. Domestic beets, 265,000 tons: that is harvested and known. Hawaii, that is harvested and known. The only crop that is uncertain is Porto Rico. That last year was 185,000. So that there is only an uncertainty, of 20,000 or 30,000. The total supply from those countries is 1,145,000 tons, to meet a consumption of 2,765,000 tons. The difference is 1,662,000 tons, which is the supply from other "sources, of which Cuba is estimated to give 1,300,000 tons this year The Chairman. How much was that last year? Mr. WiLLETT. 1,063,000 tons last year. Mr. Curtis. The crop has not been harvested in the South, has it? PHILIPPINE TARIFF. 197 Mr WiLi.ETT. It is pretty nearly harvested now; it is through far enough to enable us to give the figures. I am giving you the figures ■which we get from our correspondents. Our man visited all the plantations m Porto Eico before he gave this estimate, and we have advices from Cuba every Aveek showing the progress of their plan- tations, the same as we have from beet-sugar factories, showing their progress. Cuba. 1.300,000 tons. Now, please note that after Cuba, Hawaii, Porto Eico, and domestic sugars there is left 352,662 tons open for the concessions of duties. That is all that remains. Mr. RoBEKTSON. ^V\vAt proportion is that of the amount consumed? yiT. WiLLETT. Out of 2,667,000 tons, that is a little over 10 per cent. The Chairman. Is your statement of consumption a statement of the actual consumption? ^Ir. AViLLETT. Yes. The Chairmax. "\"\liy do you not compare the actual consumption last year Avith the actu;il product? Do you not think that would be a fairer comparison ? The consumption increases every year, does it not? yiv. WiLLETT. Xot always. The Chairmax. Since 1898 it has increased every year. ^Ir. WiLLETT. Yes. The Chairman. "Wlien there is a general slump, of course, there is no increase. ^Ir. WiLLETT. These figures are approximately correct. I merely call attention to them to say that we are gradually using up our coun- tries to which we can make these concessions. For instance, a few years ago we imported several hundred thousand tons of beet sugar into the United States. Beet sugar is now entirely out of the question, and we only imported 5,000 last year into four ports, and 20,000 into Xew Orleans, which they did not want. That is virtually out. "When that 362.000 tons is made up, and plus, as the chairman suggests, in increased consumption from year to year, as it will undoubtedly be made up by these countries right here mentioned long before the Philippines ever reach that amount, there will be no open- ing for the Philippine Islands sugars into the United States probably. Mt. "\YinLiA3r Alden Smith. There would be no market? ilr. WiLLETT. There would be no market from the Philippine Islands to the United States, and some country would have to give away. The first country to give way would be Cuba, because it has to pay the largest duties. And, by the way, if the Dingley bill was reduced to 40 per cent in favor of the Philippines the Philippines would be having just double the benefit that Cuba gets. Cuba gets 20, and that would be giving the Philippines 40. The Chairman. But you do not take everything into consideration ; you do not take their crude methods into consideration, and the distance the Philippine Islands are away. Mr. "WiLLETT. The distance is no greater, scarcely, between Cuba and New York than it is between the Philippines and San Fran- cisco — thirteen or fourteen days. The Philippine Islands sugars would undoubtedly go to the Pacific coast, if they came into the country at all. Mr. WiLLiAiNi Alden Smith. How much can we reduce the Dingley tariff on sugars without coming in contact with the countervailing duty? 198 PHILIPPINE TARIFF Mr. WiLLETT. Fortyper cent. Mr. William Alden Smith. And would that be helpful to the Filipino at his distance from this country? Mr. WiLLETT. I think it would. I think the Filipino's trouble is lack of labor. If he can supply the labor as it was ten or fifteen years ago, it will enable them to jproduce sugars as they did then, and then those sugars would come into the United States under any tariff arrangement we might have in competition with foreign sugars, sugars from other foreign countries. The closest compe'-ition would be with Cuba. If you grant them 20 per cent advantage over Cuba it seems to me it is all they require. I have a letter from a gentleman who is in the Philippines, a man who has been there twenty years working on the sugar plantations and hemp plantations. He does not say a word about the reduction of duties as being what they need over there. What he says is that they want laborers. The Filipino will not work. He can work, but he is not disposed to work. His suggestion is — which I do not agree with entirely — ^that we should admit coolie laborers to do the work that the Filipinos will hot do. Mr. William Alden Smith. Y6u have given this a great deal of thought, and I would like to have your opinion on this: Suppose we give these Filipinos the maximum concession which will not bring them in conflict with the Brussels convention; would we help them more by doing that than to run counter to the Brussels convention a.nd.have the benefit offset by countervailing duties which will keep them out of the European market? Mr. WiLLETT. Most decidedly yes. That is all they require, in my judgment. As I say, when they reach a normal crop of 200,000 or 300,000. I do not agree with the gentleman that preceded me at all, and if he is no more accurate in what I do not know about than in his state- ments that I do know about, then his testimony is not worth reading. He states the cost of Philippine sugar to-day is over .3 cents a pound ■ The Chairman. Before that, if you will excuse me, how much did we actually import for consumption last year, excluding the importa- tion from Cuba — I mean how much from foreign countries ? Mr. WiLLETT. Last year the consumption of sugar was 2,767,162 tons. We imported The Chairman. I do' not care for all the figures, but I want the total importation from other countries outside of Cuba. Mr. Curtis. We have it here. Here is the consumption of sugar — 2,767,162 tons. Foreign product consumed, including Philippine sugar, and 1,151,145 tons of Cuban sugar, 1,798,381 tons. That in- cludes the Cuban sugar. Mr. WiLLETT. I was on the point of stating a few facts as against something that the gentleman preceding me said. Mr. Curtis. Can you not come back here Monday morning ? Mr. WiLLETT. Yes, sir. Mr. Curtis. Then I' move that we adjourn until Monday mornino-. The Chairman. Have you anything else to present ? "' Mr. WiLLETT. Only about three minutes. Looking at the beet-sugar men in Chicago, for instance, as against an increased production possibly from the Philippine Islands which PHILIPPINE TARIFF. 199 naturally should go to the Pacific coast, that are not by any means having a very good time at the present moment, the price of centrif- ugal was m New York a week past 3i for 96 test, and it has not advanced a little because it is between seasons. After the 1st of January it will go back to 3| cents again. That is 3^ cents in New York, and that means 3^ cents in San Francisco, that duty being taken off to coyer freight to New York, because the amount imported from the Philippines and Hawaii is much greater than they can consume on the Pacific coast. Mr. EoBEETSON. Is not that very cheap for sugar ? Mr. WiLLETT. That is a fact. Mr. Robertson. When was it that price before, if you remember? Mr. WiLLETT. Two years ago, when the Cuban bill was up. Mr. Curtis. AVhat does it cost those Hawaiian planters to get their sugar into New York and into San Francisco? Mr. WiLLETT. It depends on how they ship it; whether they ship it around by the Horn or by the Southern Railroad to New Orleans and then by steamer to New York. It costs about 27 cents a hun- dred, but the contracts allow them 25 cents. Mr. Curtis. Does not that make it about $10 a ton ? Mr. WiLLETT. No ; it doesn't amount to that much. They get $3.25 for their sugar and 65 cents for refining; that is, $3.90 for turning it into granulated sugar. ' Freight from San Francisco is 50 cents. That makes $4.40 for granulated sugar made out of cane sugar from the Hawaiian Islands, at the Missouri River. There is 10 cents reduc- tion to be made in that to equalize its selling values with beet sugars. Consequently the values on that would be $4.30 for beet sugars at the Missouri River from San Francisco. The freight from Colorado to the Missouri River is 25 cents; 25 from $4.30 would leave the value of Colorado $4.05, f. o. b. Colorado. Manufacturers in some States, Michigan, for instance, and possibly Colorado, can not manufacture beet sugar at less than 4 cents a pound, and that basis means, instead of being $5 to $5.50 to the farmer, that they will have to come down to $4 a ton, and that would mean that the farmer would refuse to raise beets, in my opinion, at $4 a ton. He would raise something else in their place. That would be a blow, certainly, to the beet-sugar industry. If in addition to this we pro- pose to bring in 100,000, 200,000, 300,000, or 400,000 tons from the Philippines it makes the situation so much the worse. The gentleman before me said it would take fifteen years to increase the Philippine crop to 200,000 tons. Our estimates from the Philip- pine Islands are that they will make 120,000 tons this year, against 85,000 tons last year. Placing that against his statement it does not look just right, exactly. He said that the cost of sugar in the Philip- pines is 3 cents a pound, whereas the price here, according to him, was' 2.14 cents per pound. He also said the price of Philippine sugar,- 84 test, in New York, is $2.56 per 100 pounds. If his other statements were no more accurate than those they would not seem to have very much value. Mr. Needi-iam. A short time ago you said even if this bill passed you did not think it was possible for the Philippines to lose the Hongkong market. Mr. WiLLETT. There is no indication that they will. 200 PHILIPPINE TARIFF. Mr. Needham. Did you answer that with a full realization that Hongkong is under England ? Mr. WiLLETT. Yes ; because India is under England, too, and there is that market open. They do not raise those questions until they are confronted with them. When the question comes up they meet it. They are now discussing the question with Brazil, and they have not decided whether Brazil pays a bounty or not. The Chaieman. Are Willett & Gray's circulars reliable ? Mr. Willett. I think they are. The Chairman. If you compare those from year to year you will see that the Cuban price and the Hamburg price the year before the 20 per cent reduction and the year after bear about the same relation to each other. Mr. Willett. Yes; exactly. Two years ago we were receiving 200,000 tons of sugar from Europe, and the price from there governs the price here. To-day we are receiving nothing from Europe. Beet sugar is virtually non est so far as the United States is concerned on raw sugars. The Chairman. The committee will have the prices given by Wil- lett & Gray's circulars before them before we get through. Mr. Willett. And please consider the one published two or three weeks ago. That shows what I have stated — that they received 21 cents of the amount. In my judgment the consumer would receive the other 13. The United States has gained 13 cents a hundred pounds and the Cuban has gained 21 cents by means of that reci- l^rocity treaty. Thereupon (at 5.25 p. m.) the committee adjourned until Monday, December 18, 1905, at 10 o'clock a. m. Committee on Ways and Means, Monday, December 18, 1905. The committee met at 10 o'clock a. m., Hon. Sereno E. Payne in the chair. Members present: Messrs. Dalzell, Hill, Boutell, Curtis, Need- ham, Smith, Williams, Eobertson, Clark, and Underwood. STATEMENT OF MR. DE LA RAMA— Continued. (See also page 176.) Mr. De la Eama. I have here a letter from the manager of the Iloilo branch of the Tabacalera Company, of Manila. [Translation of letter above referred to.] Your favor of the 20th received, and I take pleasure in answering. Convinced that vt'hatever data I might send you regarding the production of sugar in Negros is perfectly known to yourself, I do not consider it necessary to indicate details of the cost of production nor figures with which to demon- strate the absolute necessity to secure from the American Government the sup- pression of the Dingley tariff. Neither is It necessary to demonstrate the fact that while that tariff exists the Philippine production will be dependent on the Chinese market, and the dam- age occasioned to the Philippine production by the continuance ' of said tariff PHILIPPINE TARIFF. 201 fnvr'*^®"* ^^°'" "" viewpoints and is of such importance that if continued in ,°'7,,?f.° °®ytJ" "icrease the production of the islands in excess of the reduced necessities of the Chinese Empire. r.nnfi,f °^^lZ°^l l?^ ^^^ coiuiug crop could not be more disconsolate. The Chinese, nf H,o ^- ', . American Government will refuse to concede the suppression °t ™f_PV°S'^y tariff' already indicate that prices for the new crop will 0]ien „-in k'"Vu • P^r picul of assorted sugars. These prices, as vou well know, )Vi f ®* ™'° °*. ^^® planters, and which can onlv be avoided by obtaining the free entrance of our sugars in the United States. Ihe Japanese market must be considered as lost to the Philippine sugars owing to the exceedingly high duties on the higher grades, or Nos. 1, 2, and 3. Ut the lower grades of sugar one shipment has been made this year with poor results, owing to the competition of the Formosan sugars, which enter Japan free of duty. The prices in Europe give no hope of being able to place our sugars, as the last quotations are very low, as already indicated by the quotations offered by the Chinese for our coming crop. ily opinion concerning all the points covering the production of sugar in Xegros I have already expressed in my answers to the questions of "Agricultural Association of Panay and Negros," which, under date of August 7, I remitted to the secretary of said society. In the hope that your efforts will prove of great benefit to the interests of this region, I remain, (Signed) . ]Mr. Willett stated Saturday that the sugar in New York of 84° was worth more than 2 cents a pound. I will now submit a report which I have of sugar, giving the price from October to December, 88°, at 8 shillings 8i pence. This is equivalent to 2 cents gold per pound. So when I made the statement that sugar was worth in New York less than 2 cents it was perfectly substantiated by this. This statement here shows 88° sugar to be worth 2 cents. Hence 84° sugar must be worth a lower price. Mr. Dalzell. What is the date of that report? Mr. De LA Rama. It is dated September 21, 1905. Mr. Dalzell. September 21 ? Mr. De la Rama. Yes, sir. Mr. Dalzell. Those figures must be for 1904, are they not? Mr. De la Rama. These are the estimated prices for October to December of this year. ]\Ir. William Alden Smith. That is on the raw sugar? Mr. De la Rama. Yes, sir; raw sugar — 88°. My statement to the effect that we could not have a crop exceeding 200,000 tons fifteen years hence has also been questioned. I wish to state that when I say anything before the committee here I take facts as a basis, and not fantastic estimates. The facts are that before we suffered the rinderpest we did not produce an average of more than 200,000 tons ; so that if we only produced 200.000 tons before we had the rinder- pest, and before we suffered all the calamities that we had fall upon us, and now we produce 100,000 tons, I estimate that it will require fifteen years at least to replenish our stoclc of cattle and attain the same figure that we, had before we suffered these calamities. And 100,000 tons is not a very small matter for us there, as we use all primitive implements. I have already stated that Louisiana, with its modern machinery, has required ten years to increase its production 100,000 tons. And I do not believe that it is an exaggeration to state that we would require fifteen years to replenish our stock of cattle and our other resources and attain that increase. 202 PHILIPPINK TARIFF One of the members of this committee, speaking of my statement regarding the cost of labor, said that there was a discrepancy between the statement I made in Manila and the statement I had made before the committee here. After having carefully studied my statement made in Manila, and having compared it with that which I made here, I find that there is absolutely no discrepancy between the two. In Manila I stated that during the tinae of the Spanish Government we usually paid from 3 to 4 pesos per month, and then when I was asked the question what we paid now I said that we paid more than double what we had paid during the Spanish regime. Now, our labor costs us, or rather we' pay, 10 pesos per month. That is twice, or two and a half times, as much as we formerly paid. This equivalent is $5 gold per month. Now, if we consider that each month has an average of four Sundays, without considering the feast days, we would get about twenty-five working days per month ; so that if you consider the month as having twenty-five days and the wage as $5, my calculation is correct; just 20 cents, gold a day. The Chairman. Who boards the man; does he board himself, or does his employer board him, at that rate ? Mr. De la Eama. The employer boards the man. It has also been stated that sugar could not be refined in the Philippines. This is a statement which shows the absolute ignorance which prevails regarding conditions in the archipelago. Before the war there was if refinery in Malabon, which supplied all the refined siigar which was consumed in the Philippines. This refined sugar was as good as the refined sugar of any part of the world. The war caused this refining to cease, but now it has been resumed. Before closing I wish to inform the committee of the last recom- mendation which I received before leaving the islands from our people. I was asked to say to the lawmakers in the national capital that it may be possible that we may be mistaken in some statements which we make, and that it might be possible for us to invade the market in the United States; but it may also be that we may have some reason for not doing so, and it may also be possible that the opponents of this bill may make statements which may be correct or not. This, nevertheless, is a very important matter. It is a question on one side of the prosperity and the felicity of a country under the American flag, while on the other side of the ruin and continual misery of the same country. We believe that the matter is of sufficient importance, so that an effort should be made by prac- tice to show who is in the right. If, after some length of time of prac- tice or practical application, it should be found that we have been mistaken, and that we really can only prejudice instead of benefiting this country, we ask ourselves in such case. Is there any power which could prevent Congress from reestablishing the tariff? Then, in such case, we would not oppose the measure, because, although we are a barbarous people, we have sufficient intelligence to understand that charity begins at home. Mr. William Aldbn Smith. To what do you attribute the in- creased wages of the Filipino ? Mr. De la Rama. I attribute it to the fact that all articles of prime necessity have risen in cost price. Mr. William Alden Smith. Is it in any degree owing to American occupation? PHILIPPINE TARIFF. 203 Mr. De la Ea3ia. Partly so. jMr. William Alden Smith. Then to that extent American occupa- tion has improved the condition of the working people ? Mr; De la Rama. I do not think so, because while the cost of labor has increased the cost of commodities has also increased. Mr. William Alden Smith. So that they are practically in the same situation that thej- were in before the American Government went there ? Mr. Tfk la Kama. It may be said that the condition is worse than it was, because if the condition of the planters and their plantations is worse, then necessarily the condition of the laborers must be worse. Mr. WiLLiA3i Alden Smith. Mr. Chairman, this is the first Fili- pino I ever saw, and I would like to ask him how old he is. I am a little curious to know. Mr. De la Eama. Thirty-six years old. Mr. William Alden Smith. What is your business ? Mr. De la Rama. Planter and merchant. Mr. William Alden Smith. Where were you educated? Mr. De la Rama. In Paris, France. Mr. WiLLiA5i Alden Smith. In Paris? Mr. De la Rama. Yes, sir. Mr. Hill. You speak French, do you ? Mr. De la Rama. Yes, sir. Mr. Hill. And Spanish and English, of course. Mr. William Alden Smith. I think that is all. Mr. De la Rama. I thank you, gentlemen. STATEMENT OF MR. W. C. WELBORN, CHIEF OF THE BUREAU OF AGRICULTURE, PHILIPPINE ISLANDS. (See also pages 257 and 273. ) Mr. Welborn. Mr. Chairman and gentlemen of the Ways and Means Committee, I am glad to have the opportunity of coming before you. I have been seriously discussed and " cussed " and dis- puted, and my statements picked to pieces and made patchwork of again. Before proceeding in a regular way I would like to call atten- tion to one or two little things. I want to call attention to Mr. Hath- away "s quotation from Senor Luzuriaga in the Philippine census. Senor Luzuriaga says in that census that most of the cane planted in the Philippine Islands is on high, dry land. But he says that on " alluvial land, some of which occurs in the island of Negros," they need not replant oftener than once every five, seven, or even ten years. Now, Mr. Hathaway has done this sort of thing a dozen times in quoting from me and from others. Not only is part of Mr. Luzuri- aga's paragraph left out, but where Luzuriaga says some of which (land) is found in Negros, Mr. Hathaway leaves out the qualifying word some, making Hathaway's garbled quotation of Luzuriaga appear that Luzuriaga said all the land of Negros is alluvial and need not be planted often, etc., so that he, in effect if not from inten- tion, really misquotes Mr. Luzuriaga, and by quoting a half truth he tells something that is not true at all, as to what Mr. Luzuriaga said. I repeat that there are a dozen places where he has done that very sort of patchwork business. Here is another piece of patchwork that he makes on one of my statements. I am going to read now from Mr. Hathaway's evidence 204 PHILIPPINE TARIFF. given before this committee the other day. Here he puts two state- ments of mine, made at Manila, together. He takes two parts of a sentence, far removed from each other, and puts them together in one sentence, as if I had made that statement, and then he does not use my words after all. He says, " Let us clinch this matter; " and he purports to quote from me. He makes me say : Are these the pigmies that the beet-sugar people in the United States are afraid of when they have in the United States one man to every 40 or 80 acres? I made no such statement in that connection. At Manila I was quoting from the Philippine census, giving information for 1902, and I brought out the fact there that the average farm in the United States is 146 acres ; that the average farmer and farm laborer in the United States cultivates 40 acres, and the average laborer in the Philippines cultivates 2.56 acres of land ; and that statement has no connection whatever with whether a man in the United States cultivates 40 acres of sugar beets or not. I knew that he could not cultivate 40 acres of celery and supposed he could not cultivate that much sugar beets. I simply made the statement that the farm laborer averaged that much cultivation in all products in the Philip- pines and so much in the United States. Mr. Hathaway has taken two of my sentences, far removed from each other, and given an en- tirely false impression. I know that he did not mean it, but it amounts to a falsehood. That is all there is to it. Mr. Humphrey has really offended worse in this particular than has Mr. Hathaway. He has done this same thing time and again. His testimony begins on page 74 of your printed testimony. The first criticism that I will make on Mr. Humphrey's statement is in regard to page 75. He purports to .prove that the Philippine Islands are increasing rapidly in sugar production by taking the figures of the last two years' exports. The last j'ear showed a larger export than the year before, which was very small. Now, the truth is that, as I happen to know, the last crop was shorter than the one before the last, but the prices were very low for 1903-4 season and the peo- ple held over much of their sugar, so that they exported only 80,000 tons from the Philippines, or about that, in the 1903-4 season. They held that sugar until 1904-5, and then they exported about 125,000 tons. There is nothing more to it than that. You will notice that Mr. Willett gave you here the yield of 1903 as greater than that of 1904, and I know that to be a fact. The two years equalized a little bit and averaged about the same as the 1902-3 season. There is really nothing to that matter of showing that the exports to this country are increasing so rapidly. Prices were higher on this side of the water last year than they were on the other side, or rather prices were so high that the poor Chinese people who consume our low grade of sugar could not buy it. That thing happens almost every other year in regard to cotton goods. When cotton goes too high, the Chinaman will go naked almost. They could not buy this sugar and consume it, and hence those who held it sent that sugar over here to find a market for it. That is all there is to that. That is perfectly reasonable and. absolutely true. Now, I am quoted here as saying that labor at Murcia, one of the government farms, is abundant and cheap and that it is good, well treated, and well paid. I am here to stand by that statem^t to-day. PHILIPPINE TARIFF. 205 It is good, and it is cheap. That labor is good so far as its strength ana training go. That same report goes on to say that this labor was paid over 30 cents United States currency at that time per day. I never made any statement in conflict with that; and if it is true, as Mr. -tlathaway s authorities in the Philippines -seem to think, that it takes two and a half of the Filipinos to equal one American, then we nave got labor there away above mv eastern Mississippi cost on the cotton, corn, and hay plantations. I was paying when I left there, on my plantation, 60 cents a day gold. We were raising corn then, and It is a wonder that the Iowa people had not come up and said, VV e want a duty against Mississippi corn or a bounty on Iowa corn, because we can not compete with their 60-cent labor." There is not so much difference as there appears to be between cheap and high- ^^^IT i,^"°^'- I^abor comes pretty near earning what it is paid. Mr. Clark. When you say 60 cents, does that mean 60 cents and board or without board ? Mr. Welboen. Sixty cents, and the negro boards himself, univer- sally, in eastern Mississippi. It is not so in western Mississippi. The Chairman. Corn grows in the Philippines readily ? Mr. Welborn. It groAvs readily and well and quicklv, but it does not make big crops. I have seldom seen crops of above 15 bushels to the acre. Mr. Hill. Is it not necessary to get Temperate Zone seed to con- tinue tha,t ? Does it not deteriorate if the island seed is used over and over again ? Mr. Welboen. I would not say that as a matter of knowledge. People generally say that, but I do not know it to be a fact. Mr. Hill. We were told so. Mr. Welboen. Yes ; but I do not know that Jhere is such a rapid deterioration as you speak of. Mr. Clark. In connection with that, if you take the Mississippi corn and plant it over and over, does it peter out or does it continue good? Mr. Welboen. No, sir; I believe that it continues good. I would not say. I think there has been a misapprehension about that. We have not got to renew our seed often, as we used to think, in that State. As a matter of fact, the cotton planters of the Mississippi Delta have come to the conclusion that the corn grown about New Madrid, Mo., is about the best they could get. Mr. CuETis. Mr. Clark thinks so. We would pick out Kansas corn. You have not tried Kansas corn ? Mr. Welboen. No, sir ; we have not gotten that far west as yet. The Chairman. Do not go too far into the corn question. Mr. Welboen. I will show you a little distortion of facts and fig- ures that amounts to something false — but I know he did not mean it — on page 76 of Mr. Humphrey's statement, where he quotes from page 57 of the 1904 Agricultural Bureau Eeport of the Philippines, where he quotes me as saying : All workers on haciendas receive both board and salary. The board usually ♦•osts the haciendero 1 peso a week per man. The salary of the capataz is 45 pesos per month, that of the cabo 22 pesos, the mill hands 8 pesos, and the field hands 6 pesos per month. The capataz gets 45 pesos. Then comes the cabo. He is the fore- man over about 10 men. Then come the mill hands and the field 206 PHILIPPINE TARIFF hands. All of them get four and a quarter pesos per month for board, as he says here, a dollar a week. Now, Mr. Humphrey figures that out to mean that they are getting 11 cents a day. You take the lowest man there— that is, the field hand— and count the board m, and you can not get it below 20 cents gold a day. Just verify those figures, if you will. Then, if you take into your average these $45 men and the cabos, who are over 10 men each, you can not make it below 25 cents gold a day. Now, you see that that statement there is rather higher than the other statement in the same report,' which says 16 cents a day. I do not claim that those rates are uniform. There is no understanding in that country about what rates shall be. But I will tell you another thing, that as little Spanish as I speak, and as little Spanish as Mr. Heil speaks, and as little Spanish as the natives speak, we are under great difficulties in getting accurate and certain information; and not only that, but we are under the same danger of getting into a whole nest of poets and sirens that Mr. Hathaway and Mr. Gove suffered from. So that you will see this statement is absolutely wrong, and there is a whole lot of others of the same sort. Mr. William Alden Smith. You are reading from page 76 ? Mr. Welboen. Yes, sir. Mr. William Alden Smith. Which pretends to be a quotation from your report ? Mr. Welbokn. It is from my report, or, rather, it is from one of the subreports embodied in my report. Mr. William .Alden Smith. I wanted to know whether Mr. Hum- phrey had misstated it. Mr. Welborn. Now, in the next paragraph he says that that amounts to 11 cents a day, whereas it amounts to a good deal over twice that much. Here is another statement. In that report I said that it was vari- ously estimated that the people were losing from 50 to 55 per cent of the cane juice in the mills. At a later time, in Manila in last August, I made the rather more positive statement that they are losing 40 per cent of the cane juice in the mills. I did not explain it at that time, but I had had occasion to go to the mills to make tests, and I found that that 50 to 55 per cent loss of the mills seemed to be a mis- take, and I made it more positive at 40 per cent. Now, these people come in and say, if the Filipino is losing ha^f of his cane juice in -the mills, if you get good mills his production will double. Let me show you that conclusion is wrong. They ought to have sent a sugar chemist here, and he could have told you in a moment that that is not true. The fact is that that whole products- sugar, molasses, dirt, and everything — is all boiled down to a solid mass and is weighed in as sugar, and that is the reason that that 40 per cent is almost nlade up in the dirt and molasses, and if we had good mills grinding the cane we would not make substantially more tonnage than we make now, but we would get a better value for it. Eeally, instead of getting 100,000 short tons of sugar a year, so far as value goes, we do not get over the value of 60,000 or 70,000 tons of good sugar a year. So you see there is no contradiction in my state- ment that they seemed to be losing half the value of their cane. The Chairman. Is it not true that the best mills do not get all the sugar out of the cane, as shown by chemical analysis ? PHILIPPINE TARIFF. 207 Mr. Welboen. That is a fact, that the best mills in the world do not recover more than about 88 or 89 per cent of the total sugar in the cane. Now, from the 1904 report is quoted here an estimate of Mr. Heil and jNlr. Harry Anthony that they had planted 40 acres of cane and were going to make 5,000 piculs of sugar. You must remember that Mr. Heil and Mr. Anthony were new there at that time. So was I. \Ve were all subjected to those poets and sirens, and they sang to all ot us. So that in the light of the report of 1905 that statement was ridiculous. The truth is that Mr. Heil on 150 acres of cane the next year made 2,700 piculs of sugar, and made a little more than the census average of 1902. Let me tell you another thing. These people put up my statements made in the summer of 1904, and they want to make them coincide exactly with every statement I made in the summer of 1905. Now, I want to 'say to you that two or three things might happen in that length of time. A man might become a very big liar or conditions might change a great deal in that time. Mr. Hill. You just said that from 150 acres of cane Mr. Heil made 2,700 piculs of sugar? Mr. Welborn. Yes, sir. That comes out in his testimony further. That is an actual fact. I could not afford to "misstate the facts that are on the books of the auditor in Manila. I could not afford to do it, and I would not do it if I could afford to. Let me say to you another thing. According to Mr. Heil's last report there — and they are careful to bring that out — sugar was the principal business there, and everything else on the place was made to help to raise that. I asked him particularly if that was so, and if so, what was the cost, and he said 3 cents gold a pound as a final con- clusion. As a matter of fact we never tried to make that an experi- ment station. We do not call it an experiment station, and we do not accurately measure or weigh anything there. It is simply meant to open up that big farm there and get it in better shape and put that modern sugar mill there and show those people something pretty. That has been my ambition, and we have not tried to run an experi- ment station in any sense of the word. On page 77 Mr. Heil goes on to say, in 1904, that the people had told him that he would not have to replant that cane in five or. six years. Now, it looks to me very much like some of those poets got in again. At any rate, he did not have that experience and did not know that to be a fact. That was simply a forecast of what he thought he would be able to do. That is all there is to that. Mr. William Alden Smith. Whom were you speaking of there ? Mr. Welborn. I was speaking of what Mr. Humphrey quoted from ]Mr. Heil's subreport, embodied in my report of 1904. Mr. William Alden Smith. Your criticism was of Mr. Heil's statement? Mr. Welborn. I do not know that I made any criticism, except to tell the truth. Mr. William Alden Smith. Excuse me. I did not understand vou. Mr. Williams. Mr. Humphrey quoted it as though it was an abso- lute statement, whereas it was simply an estimate or a forecast. 208 PHILIPPINE TARIFF. Mr. Welboen. Yes. Mr. Underwood. What is the truth about the ratoons? Is it cus- tomary for that land to produce a number of ratoons? ■ Mr. Welboen. It is not customary. It may be that I did not give the whole facts, because some of those alluvial lands do make several ratoon crops, it seems from later testimony. Mr. De la Kama, who is that gentleman at La Granja that you quoted from? Mr. De la Kama. Kodriguez. Mr. Welboen. Yes ; Kodriguez. Now, it seems from his testimony that he does sometimes grow two ratoon crops. But let me tell you that Mr. Hathaway has got 'all his distances and areas in the Philippines vastly exaggerated. For instance, the distance from La Granaja to the sea coast he has gotten very much exaggerated. Mr. Hathaway. I rode over it, and I think I know about how far it is. Mr. Welboen. I have ridden over it a dozen times, and it has been accurately measured. It is lOJ miles to San Enrique and 8^ miles from the coast. That is exactly the distance to the coast. You have got all your distances wonderfully exaggerated, and thus make out the sugar belt twice as large as it is. The Chaieman. Please address the committee, instead of Mr. Hathaway, Mr. Welborn. Mr. Undeewood. On the question of ratoon crops, you have had experience in handling crops on the government experiment station, for the government. I want you to tell us, if you can, what is your estimate of the ratoon crops there. Mr. Welboen. I will tell you the whole truth about the ratoon crops. They do not make ratoon crops to any extent, hardly, in the Philippines. Mr. Underwood. How much experience have you had there? Mr. Welboen. I have not been there long enough to have had much experience. We are taking off a ratoon crop about now, but that is the first one that I have had time to experience. Mr. Claek. But what is the whole truth about that now? Mr. Welboen. So far as every cane country goes, at least so far as I know, with the exception of Cuba, the more ratoon crops they grow the less yield they get. After they pass one or, at most, two ratoon crops it ceases to be profitable to grow ratoons. That is the real truth about it; and I never have given it as my opinion just why the people in the Philippines do not grow ratoon crops. I tried to lead Colonel Hill up to ask me why at Manila, but he thought that I was after something else and cut me off and would not allow me to do it. The main reason is, as I have stated, if they should grow more ratoon crops than that, with their poor, slow methods and no fertilizing, their yields would go too low to be profitable. Actually, the sugar country of the world that grows most sugar to the acre, next to Hawaii, plants every year. Mr. William Alden Smith. That is the Hawaiian Islands? Mr. Welborn. No, sir ; Java. Mr. William Alden Smith. The Hawaiian Islands grow no ratoon crops ? Mr. Welborn. Yes, sir; they do; what they call short ratoons— first ratoon — and very often second ratoons. But every time the PHILIPPINE TARIFF. 209 yield decreases, and soon they get to where it is not profitable to grow ratoons. ^ATiether we can grow ratoons in the Philippines or not, it does not cut any figure in the case. It would probably be more profit- able not to do It so far as that part of it goes. Mr. William Alden Smith. Because it exhausts the land? Mr. Welboen. Yes, sir; because it exhausts the land. Now, let me tell you another thing about the land in the Philippines and all tropi- cal lands. ^■^ e get very exaggerated ideas about the fertility of the tropical lands. Land that has from 100 to 125 inches of rainfall a year can not be very fertile land and remain so. It will wear out. The dry lands of the world when watered are the richest lands, be- cause they have not been leached out through all the past ages by constant rainfall. ' , The Chairmax. To what extent do they have an intervening crop- one year sugar and the next something else— on those lands? Mr. Welboen. Let me say another thing to you about that strip of land in Occidental Negros spoken of by Mr. Hathaway — that mys- terious coastal plain. He did not stay long enough there to know any- thing about it. There is no real coastal plain there. The mountains come down right to the seacoast for a distance of several miles in that range of coast, and in fact a great deal of that land along the coast between the coast and the mountains is rich land, where they are rais- ing rice, and it is only now and then that the mountains- will come down just far enough to make a little strip, and there is no definite coastal plain about it. Excuse me, Mr. Chairman, for not answering your question immediately. I will answer your question now. In the province of Pampanga and throughout Luzon, so far as I could learn, thej' do not grow a ratoon crop, but the land is so poor that thej' do not grow but one sugar crop at a time, and then they plant a crop of corn or camotes or let it lie fallow and put it back in cane again the next year, and they get only one crop every two years. That is the truth about Luzon. That is also true of the older, poorer lands in Negros, without reference to this imaginary coastal plain, which does not exist as anything distinct and wellmarked. Mr. Clark. There is nothing in the nature of that soil ov6r there that prevents it from being fertilized profitably, is there ? Mr. Welboen. Nothing that I know of. I will give you my opinion somewhat as an expert agriculturalist on this. I do not imagine that you can use as much fertilizer as Hawaii uses on any .«oil profitably where they have very heavy rainfalls. The fact is that you would lose the fertilizer, and the wind would tangle up your large cane and greatly injure your crop. The amount of fertilizer that they use now on the dry side of Hawaii is something new in cane culture. Mr. Clark. It is because the land is dry that they can use that ? Mr. Welboen. Yes, sir. The land is dry, and the wind does not tangle the cane up. They give just the right amount of irrigation, and they can afford to fertilize and grow better crops, and they make more sugar on the dry side of Hawaii than anywhere else in the world. The wet side of Hawaii makes about 2| tons per acre. That looks like 6 to 8 tons in the Philippines, does it not? The Chairman. They claim that in Hawaii they produce from 8 to 10 tons on the average. p T — 05 M 14 210 PHILIPPINE TAEIFF. Mr. Welboen. Well, on the dry side they produce something like that, but not on an average. The Chairman. They say they even produce as high as 12 tons. Mr. Welborn. They have averaged as high as 10^ tons on just one plantation. That is only one plantation, mind you; -the at-erage of the whole dry side of Hawaii is about 6 tons. General Wright. The wet side averages about 2| tons. Mr. Welborn. Mr. Humphrey quotes from my report of 1904: Since the last report the bureau has received 8 Australian mares, 33 native pony mares, 40 mares from Kentucky, 13 stallions, 10 Jacks, 5 head of Jersey cattle from the United States, 4 Berkshire hogs, and representatives of 3 breeds of American chickens, besides 10 Australian work horses. Thus far no epidemic disease, generally so prevalent and fatal here, has ' attacked these animals. That was written in the summer of 1904. I rather regret to have to say it here, but I do say it in my reports and I am not afraid to say it, and it is true, and is no criticism, at any rate, of ours, that we have had three epidemics of surra, and have lost 60 horses since that time. At another place, where we had these 40 Kentucky mares, we had lost nearly half of them when I left the Philippines. The Chairman. From surra, or what? Mr. Welborn. Surra. The Chairman. That same disease affects the mules? Mr. Welborn. Yes, sir. Horses and mules and burros. The Chairman. As stated by Commissioner Worcester. Mr. Welborn. Yes. Then he quotes further from my report as follows : It is found that horses and mules can stand the work here fully as well as In the Southern States — I will stand by that statement according to the light before me in 1904. It is not as hot, and never does get as hot there as in Missis- sippi. Mr. Clark. How long have you been there ? Mr. Welborn. Two and a half years. Mr. 'Clark. When you made your first statement you had been there that long? Mr. Welborn. No, sir ; I had been there about a year when I made the first report. The Chairman. When was this importation made? Mr. Welborn. These importations were made at different times, but we had them at the time that report was written, in the summer of 1904. Some of them we had not had long, and some of them we had had a longer time. Mr. Hill. Then the conclusion which Mr. Humphrey draws on page 78, that you have now succeeded in conquering the difficulty that the animals were at first subject to from these diseases in the islands and have found a way to thoroughly overcome it, in the light of the last year's experience, is not correct now, is it ? Mr. Welborn. There is the statement that I wanted to get to a while ago. Any statement that I may have made, reading that way, has been misapplied. I never made any such statement about horses and mules, but he lets it follow this other matter about horses and mules just as though I had applied it to horses and mules. This was another statement entirely in another connection and was made about PHILIPPINE TARIFF. 211 ■cattle entirely, if made at all. There is where his misquotation comes in. I have never said, nor has anybody else ever said, that they had round a remedy for surra. air. Hill. Is that the fact, from your additional year's experience, that you have not succeeded in conquering that difficulty? ilr. ^\elboen. That was never my experience, that of conquering the disease. That work was done in a different bureau. Whatever I said about conquering disease was about rinderpest of cattle. I have that work now as a recent thing. The other bureau did claim there was a discovery to prevent the rinderpest in cattle, and I did believe that, and I may have quoted it. I do not believe I ever quoted it to the extent of saying so positively. I believe Mr. Hum- phrey has entirely misquoted me in effect. Mr. WiLLiAjr Alden Smith. You meant what you said there, where you are quoted as saying that it is found that horses and mules can stand the work there fully as well as in the- Southern States? Mr. Welbohn. Yes, sir; I repeated that. It is never as hot there as it gets in the Southern States for a while, but I did not say that they were as free from liability to disease. Mr. Williams. You mean they can stand the conditions in the Philippines as well, or stand the Philippine climate as well ? ]Mr. Welborx. If these diseases get among them, of course they do not stand it. Perhaps I should have made myself a little clearer. Perhaps I should have said, " If the disease does not get them — if the surra does not get them — they stand the work as well as in the South- ern States." I did not qualify that statement, but it is easy to infer the meaning. Mr. William Alden Smith. They are liable to have the glanders in Mississippi, are they not ? Mr. Yv'elborn. Yes, sir; but the surra cleaned out these horses at Murcia. The Chairman. The rinderpest carried off the carabao ? Mr. Welborn. Yes, sir ; and the cattle. The Chairmax. Is not there a dispute among the scientific people as to whether there has been discovered any remedy, so that many people refuse to have them treated? Mr. Welborx. I know there is a good deal of difference of opinion. But, anyway, if Mr. Humphrey had taken a little trouble to find out the developments, he need not have quoted this. When Secretary Worcester's report was written a little later those cattle were nearly all dead. I do not see how that bears on the cultivation of sugar, but if he had taken the trouble to get Mr. Worcester's report he would have found out that he was losing his thunder. The Chairman. Did you not import oxen from China ? Mr. Welborn. Yes, sir. The Chairman. What was the result of that experiment ? Mr. AVelborn. Those cattle brought surra in there and spread it abroad, and it killed them all, and a good many more, too. The surra take horses and mules, and also carabao. The rinderpest never attacks horses and mules. They think they have a pretty good serum for the prevention of rinderpest, but the scientific world acknowledges no remedy against the surra. Mr. Clark. That is, it does not acknowledge that they have found any yet ? 212 PHILIPPINE TABIFP. Mr. Welborn. It acknowledges that they have found nothing yet ; yes, sir. Mr. Clark. Have you gentlemen over there ever inquired into the history of the efforts of the Spaniards to take horses and mules to those islands ; or did they ever try ? Mr. Welborn. The Spaniards never tried to do anything, so far as I know, in the way of taking horses and mules there. They did not do any scientific work there, and while I could not speak of my own knowledge, I do not think they ever left any reference as to what they did. Mr. Clark. I should think they would just incidentally have taken a lot of horses over there, to ride. They are great hands to ride horses. Mr. Welborn. Yes, sir ; they did, and it seems that the surra was introduced from Java, or some of those places. They have it there perpetually. I would no<>speak positively. Mr. Clark. Is it the sum and substance of your statement about horses and mules and carabaos, that you can not use anything over there successfully but carabaos? Mr. Welborn. I would not say that. Those animals are so slow and it takes so long to break land with them that if I went into the business over there I would certainly want to use something better. I can not say whether I would take the risk on horses. I don't know about that. The Chairman. You made that experiment for the government over there when you did it ? Mr. Welborn. .Yes, sir ; that is right. Mr. Dalzell. Is this surra like the disease they have in Louisiana, the churbon ? Mr. Welborn. It is a microbe disease and it gets ijito the blood and they can find it with the microscope, and whenever they find it under the microscope they shoot the animal. ■ Mr. Dalzell. It is a species of glanders, is it not? Mr. Welborn. I do not know about that of my own knowledge. Mr. Clark. There is no cure for glanders, is there ? Mr. Welborn. No, sir; there is simply an indication when the animal has it, and the best thing would be, when you find it for cer- tain, to shoot the animal. Mr. William Alden Smith. From your present information, what animals would you use there? Mr. Welborn. From my present information I would rather try oxen, but they are subject to rinderpest, with a very good chance, I think, that we can save most of them by the serum inoculation— that is, the Chinese oxen. The people having this in hand have not been successful with American or Australian cattle, that is a fact. An- other illustration of that is- found in southern Europe, where some cattle can be immunized and others can not. Here is a little state- ment picked out somewhere in this report of mine and quoted by Mr. Humphrey on page 58 : These infected animals have now been cleaned out and 20 oxen have been sent there, which certainly can do as much work as 50 carabaos. Now, from this you would infer that it was connected with these other quotations. As a matter of fact, it is related of another place PHILIPPINE TARIFF. 213 111 a different island, under different conditions and circumstances, and when he quotes me as sajdng that the infected animals have been cleaned out. what does that mean ? It means and did mean to people who knew the facts there and to the man to whom I was writing that those animals had been shot because they had the surra. Mr. William Alden Smith. '^'^Iiere does this appear in your for- mer statement ? ^Ir. Welboen. That is taken from page 27 of my report. You can see just the sort of little crazy-quilt business that has been done with my statements here, and that there is absolutely nothing of a contradictory character that I have ever said. That leads me to believe that I must have said something in Manila, and I am going to say something more before I get through. Here is another little sentence about those dairy cows. I did not plow any dairy cows, and did not mean to plow any, and never dis- cussed it in that connection, and these people have brought this dairy discussion into the business of sugar cultivation. He quotes me as saying that cows will cost only $50 each delivered in Manila. He says if cows can be delivered Jor this, why do mules cost so much. As a matter of fact, some mules came on the same boat, and actually cost, delivered in Manila, $276 each. That was with free transpor- tation, too. Of course there had to be attendance and feed and veterinarj- service. Mr. "Williams. Is the mule that is used for cultivating cane in Louisiana the same character of mule, the same muscle, and the same price, as the mule that is used in cultivating cotton in Mississippi ? Mr. Welboen. Only the best cotton mules are equal to the sugar mules. Mr. Williams. It requires a larger mule, with better muscle, and he costs more ? Mr. Welborn. Yes, sir ; that is my opinion. I am better acquainted with sugar cultivation than some of these people from Louisiana think that I am, too. Here is another quotation, on page 80, to the effect that the rates on money advanced are very high. I have often made that state- ment. I have found it so, and I try to tell the truth; and that the Chinese buyers and others take advantage of the rise in prices when it comes, and they get out in the country and buy up the sugar as quick as they can, before the fellow over the country knows about the rise. That is all true. They charge a very high rate of inter- est for money. But a firm like Smith, Bell & Co., who have been in the islands a long time, told me that they could not afford to loan any money at all. That puts the business of loaning money into the hands of little scalpers that scalp off a plenty, I tell you. This is the very condition we are asking help to correct. We want to make the best grade of sugar that we can, and create a demand for it, and have better warehouses and better mills and better con- ditions in every way, so that the security will be better for those people who loan the money. Mr. Needham. How about the statement that they can only get 1 cent a pound for their sugar at Iloilo ? Mr. Weijjorn. One cent? 214 PHILIPPINE TAEIFP. Mr. Needham. Yes, sir. Mr. Welboen. I do not think I ever made a statement that they da not get any more than that. The lower grades of sugar often do not bring more than that. I said in my Manila statement that it is my belief now that the prices have averaged for the last few years — that is, before this last year — IJ cents a pound. Mr. William Alden Smith. The statement was that these loans- were repaid in sugar at 1 cent a pound. Mr. Hill. That was Mr. Hathaway's statement. Mr. Welboen. Yes, sir. I can not coyer everything that has been said here. I am touching them in the high places. Mr. Hill. That is an important fact. Have you any distinct, means of knowing whether that is true ? Mr. Welboen. Substantially these statements are true — ^that some- body is charging a very high rate of interfest, and the people came so near being broken up that the larger firms do not loan at all now^ and that puts it into the hands of the Chinese almost entirely. Mr. Claek. What is the rate of interest over there on good secur- ity ? Suppose you wanted to loan $5,000 for twelve months on good security — such security as you call good security here — how much would you get for it ? Mr. Welboen. I have been told that on Manila real estate you can loan large amounts on good security at 12 per cent. The Chaieman. I want to put in a statement right there myself. Mr. Clark. Let us hear it. The Chaieman. I was told by a couple of bankers at Zamboanga that they loan their money to the growers of cocoanuts, so much for the fruit of a tree, which they said was worth 6 or 8 pesos a year, and they would generally loan from 1 to 2 pesos on the fruit of a tree, and they had an absolute assignment of it, and that the rate of in- terest was 3 per cent a month ; and they said they never had lost a dollar of principal or interest. That was the rate they got — 36 per cent a year. That was told me by the president and another officer of that bank. Mr. Claek. Can that sort of a contract be enforced ? The Chairman. They said that they never had lost a dollar. I do not know whether it can be enforced or not. Mr. Claek. Are there any usury laws there? Mr. Welborn. They have not any such law as yet, but they have it under consideration. Now, the cocoanut tree when it comes in bear- ing will last for a hundred years, and nobody can hardly kill a cocoa- nut tree, and a man knows that he has got good security. But one man will have a hundred trees and another will«have 50 trees, and the loans are small, and you must sit around and watch them. ' Mr. Clark. If that is true, and it is good security, and a cocoanut tree will not die, how does it happen that those fellows can keep up those interests at 36 per cent a year, and all that sort of thing? Why does not somebody over here go over there and loan them all the money they want at a reasonable rate ? Mr. Welborn. That is what puzzles me about the sugar if they can make sugar at a cent a pound — why the whole world does not go over there and raise it. PHILIPPINK TARIFF. 215 Mr. Clakk. We have the authority of the chairman of the commit- tee to show that you could get 36 per cent interest on your money there. The Chairman. That was what was stated to me. Those men were both Americans who stated this. JNIr. Welboen. Perh.ips it is lilie this : When I was a younger man than I am now and I saved a little bit of money out of a small salary, I did not have enough to loan to a white man or to a man of con- siderable means, and so I loaned to the colored people on rather doubtful security at a high rate of interest. One of them came to me one day and he said, '' Boss, I hears you is helping the colored people a little these days, and T am thinking about getting married and need some clothes and a pair of licenses. You know Sally, as lives across the creek here, and as soon as Lawyer Magruder gets me dat divorce, I want to get married again, and I want you to help me a little." I said : '' Yes, I am helping the colored people a little, with good security. Wliat security have you got ? " He says : "Well, the woman I am going to marry has got a cow, and I will give you security on that." I am afraid much of the security is like that cow. Mr. Clark. The legislatures in the United States have been trying to break up these pawnbrokers. When I was in the legislature I helped to pass a law against them in Missouri. But it seems unrea- sonable, if that security is good, that the fellows over here don't go right over there and break up that rate of interest. Mr. Welboen. That is what puzzles me, why men didn't go over there and make sugar, and loan money on sugar. Mr. Dalzell. You forgot the lack of constitutional guarant3^ Mr. Clark. I know the Constitution does not go over there until the Congress sends it. The Chairman. About the only constitutional guaranty that is lacking is trial by jury. Mr. Welboen. Now, T will submit to you gentlemen if there is anything contradictory in these statements of mine that have been so .variously quoted and misquoted. Is there anything wrong in any of them ? Mr. William Alden Smith. Eight on that point, this statement as to the rates for money, which Mr. Humphrey pretends to quote from vour report on page 57, is admitted to be a correct statement, is it not ? Mr. Welborn. Why, yes, sir. Mr. William Alden Smith. And he did not misrepresent you at all in this report ? Mr. Welborn. So far as any statement like that goes. The rates of money are ridiculously high there on account of the great needs of the people and the great scarcity of money. Mr. William Alden Smith. The reason I call your attention to that is that Mr. Humphrey is not here. Mr. Welboen. Yes, sir. He could not misquote me as to high rates of money, because I have known people that said they got 10 per cent a- month. i Mr. Claek. Over there or here ? Mr. Welboen. In Negros. Now, I wish to repeat what I have already said, that the Philippine Islands, and their sugar industry in particular, are in a desperate plight, and a few more years of low 216 PHILIPPINB TABIFP, prices and poor metliods, scarce money, and other misfortunes, will certainly almost wipe that industry out. So far as I can learn, the opposition now concedes that this is a fact, and they are willing to propose all sorts of expedients to help these people in another way. Those who visited the islands last summer know that these statements are not overdrawn. The opposition openly says that it is not afraid of the Filipino or anything he may do now or hereafter, but they are afraid of the American. They are dealing in futures on this proposi- tion. Mr. William Alden Smith. I suppose you mean by " the opposi- tion " the domestic producers ? Mr. Welboen. Yes ; they are all here, I suppose. Then they have a vague fear that Chinese labor may figure in this proposition, and that Japanese labor may figure in it, and all that sort of thing. I will again state that about half of the land as cultivated in 1902, the total -being 3,200,000 acres, was in rice, and most of the balance in cocoanuts, hemp, bananas, and other crops that have long life, like an orchard, and hence sugar could not encroach upon these. I have heard it stated that two-thirds of the population of the Philippine Islands will be found living within 3 miles of the seacoast. This is generally out of reach of sugar or tobacco plantations, or the pos- sibility of farming these profitably without moving, and this the Filipino does not do to any considerable extent. It is shown by the census returns that the average Filipino farm is about one twenty- fourth as large as the average American farm, and that the average Filipino laborer works about one-sixteenth as much as the average American laborer ; and this does not refer to the sugar industry alone, but to all industries. And I never said anything, here or elsewhere, that could be so construed to apply to the sugar industry on both sides of the water. It was asserted that the Filipino does not readily sell his land, and since corporations are not permitted to own more than 2,500 acres it would be difficult to organize plantations or large central mills. Men on both sides of this question here to-day have had occasion to« know this from experience within the last year. We — or I do, at least — believe that there is enough land in the Philippine Islands to grow a large amount of sugar, but I do not believe that it is all as good as the best, or that the great body of it is capable of becoming profitable sugar land under present or early prospective conditions. Land as measured by the surveyor is never the limit of production. Louisiana has 12,000,000 acres of alluvial land, half of it lying within the region now producing sugar. If all these 6,000,000 acres should ever be planted, according to present yields of Louisiana " cane it would make 90 per cent as much sugar as the whole world now makes. I saw it stated in a New Orleans paper as I passed through that Texas has enough sugar land to produce the sugar crop of the world. I expect it is a wonder to certain English spinners that Texas does not some year plant 20 per cent of her area in cotton and make 10,000,000 bales. Your sugar-beet areas in the West look about like flyspecks on a wall map, and yet you are persistently claiming that labor is scarce, which means that your industry must grow gradually with the increase of population and the improvement in methods. PHILIPPINE T.\EIFF. 217 The amount of land has never imposed a limit on production, so far as i lalo^T but the quality and location of land often have. Do you know, gentlemen, how much land in Louisiana is under cultivation in all crops ( Louisiana has been raising cotton and sugar and rice and corn and vegetables for a hundred years, and she has in cultivation 12 per cent of her entire area, and there is not a hill in the whole State o± Louisiana, I believe, which is over 300 feet high. Sugar could be grown on every solitary acre of the State of Louisiana, but, mind you, not profatably. Sugar could be grown on every acre of every Gulf btate east of Louisiana, but not profitably by a good deal. The great and wealthy State of Texas has been advertised ever since I can re- member, but she cultivates only 9 per cent of her total acreage in all crops. Occidental Xegros, which is the great sugar producer of the Philippines, cultivated in 1902 160,000 acres, in round numbers, or 9 per cent of her area. Mr. Hill. Is that in all crops or sugar ? Mr^ Welboen. In all crops. Somebody told me that the Enaineer- ing Xews has made an estimate that the Philippines will never cul- tivate profitably over 9 per cent of her total area. Forty per cent of the cultivated land of Occidental Negros is in sugar. I have not been able to find the facts, but I will venture to say that Texas cul- tivates no more than that percentage in cotton. The Chairman. Is not that the statement in the census, that 9 per cent of the lands in the Philippines is susceptible of cultivation suc- cessfully ? Mr. Welborn. Not exactly that. Mr. Hill. It says 9 per cent of the agricultural lands, of which 4^ per cent hr.ve at some time been cultivated. Mr. Welborx. I do not remember that fact just now. The CsAiRaiAN. I want to put in that statement from volume 4 of the Philippine Census, which I have here. It is on page 181. This shows that the agricultural land in the islands is 9^ per cent of the whole. And on the following page — page 182 — it reports that 45.9 per cent of the agricultural lands are now actually occupied and used. Mr. Hill. In view of the prominence of Occidental Negros in sugar planting, I would like to call attention also to the census report to the effect that only 21.9 per cent of that province is agricultural land, and that 41 per cent of this agricultural land is under cultiva- tion. Mr. Clark. The whole area of the Philippine Islands is given at 73.000.000 acres? Mr. Welborn. Yes, sir; about that. Mr. Clark. There are 50,000,000 acres in timber, and so forth? Mr. Welbokn. Yes, sir. Mr. Clark. That leaves 23,000,000 acres? Mr. Welborn. Yes, sir. Mr. Clark. What is the reason that the whole 23,000,000 acres can not be cultivated successfully ? Mr. Welborn. What is the reason you can not cultivate the entire apple belt of Missouri ? Mr. Clark. That is what we can do. Mr. Welborn. No ; you have mountains there. Mr. Clark. We have hills which are called mountains. But the rockier the land is the better it is. 218 PHILIPPINE TABIFP. Mr. Welboen. That may be so to a certain degree, but there is a limit there. Mr. Claek. That is what I wanted to find out, why, out of 23,000,000 acres, you could not cultivate more than 9 per cent. Mr. Welboen. I did not say that. I merely said that I had been told that the Engineering- News so estimated. Mr. Williams. In order to cultivate all of the land in a certain product, you would have to put none of it in other products to start with? Mr. Welboen. Yes, sir ; that is true, of course. Mr. Williams. People must raise their food; that is one proposi- tion. Mr. Welboen. Yes, sir. Mr. Williams. Then, in order to cultivate the land you must have the labor to do it. That is true ? Mr. Welboen. Yes, sir. Mr. Williams. Is it not in Mississippi, Louisiana, and Texas, and in the Philippines, more a question of labor than a question of land? Mr. Welboen. Always so. Mr. Williams. Could not the Mississippi Delta alone raise all the cotton crop of the world if the labor was there to do it, from Memphis to New Orleans, on both sides of the river ? Mr. Welboen. I have forgotten the acreage. Mr. Williams. Take the alluvial lands there, down to New Or- leans ? Mr. Claek. Mr. iJill, did you say there was only 9 per cent of that area available? Mr. Hill. Nine per cent is the possible agricultural area. Mr. Claek. That is the whole agricultural area available ? Mr. Hill. Yes, sir. General Weight. It is the same character of country as in Japan, and every inch of that ground in Japan is cultivated" by a teeming population. The Chaieman. And after they have cultivated the land in Japan for 2,600 years that is the best they can do. There is not a piece of land as big as your hand that is not cultivated with something. Mr. Welboen. And in order to get at some of it they have ter- raced the hillsides, and they have to have bamboo ladders to climb up from one terrace to another. They have used up the resources of that country to suCh an extent that the women and children actually hunt the forests to get little twigs for fuel. Mr. Claek. How many people have they in Japan ? Mr. Welboen. About 45,000,000. The Chairman. Forty-eight millions. Mr. William Alden Smith. And yet only 10 per cent of the land is under cultivation ? Mr. Welboen. I am told so. Mr. Undeewood. Is it not true that all the agriculture and develop- ment depends on finding the capital and the men that want to so into it? * Mr. Welboen. That, and your labor; but if you had the labor and all the other conditions combined the transportation would set a limit and would tend to keep you from overrunning the world with any extraordinary production. For instance, the sugar-beet business PHILIPPINE TABIFP. 219 ^oRKn^ growing any now to amount to anything. Mr. Willett said ib5,000 tons, this year's crop, and last year they made 260,000 tons. Ihey are growing, but they told me they are depending on the Rus- sian and Bohemian and other foreign immigration for their labor, "^M^ w^^ not grow to amount to anything. Mr. William Alden Smith. Might that not be due to the uncer- tainty of our laws ? Mr. Welborn. I will tell you what I think it is due to, and that is tne selfashness of the factories in not giving the farmer what he thinks he ought to have, which would be a fair division of the gross proceeds of the crop. Mr. William Alden Smith. How much do you think he ought to have? -^ ^ Mr. WelboSn. I can show you a thing you never thought of in that sugar-beet industry. Mr. William Alden Smith. I am waiting to hear it. I have not heard it yet. Mr. Welbokn. Yes, sir. I was giving figures about Occidental Negros. It alone is perhaps making for export about 75,000 tons of this low-grade sugar. Is it likely that she will in a short time culti- vate as large a percentage of area as Louisiana, which has not a mountain within its borders ? Gentlemen, you are scaring yourselves with a shadow ; I say it in all sincerity. You talk to me about per- sonal observation and the best maps available showing one-third of the Occidental Xegros land cultivable. Cultivable when — one hun- dred years from now? These gentlemen want to count productive possibilities for all the balance of time, and set the figures up by the side of present-day consumption of sugar to frighten themselves and the country with. Of the thousand mills in the islands in 1902 just about half of them were animal-power mills — carabao mills. The average-sized area in cane, as I remember it, was 176 acres, counting one mill to the farm. The industry of the Philippines will have to start where that of Java and Cuba did forty and fifty years ago. I admit it as my belief that the sugar industry in the Philippine Islands will not develop so slowly as that of Cuba and Louisiana have done. If so, we would not have much excuse for being here. We would not be benefited much by reduction in duties. Taking this year's estimated production as a basis for Louisiana, Louisiana has multiplied her production by two in the last fifty years. The United States im- ports have multiplied by over nine in that time. Of course the period of a great war, and all that sort of thing, had its influence. Cuba has done better than this. She has multiplied her yield by three in twenty-five years. Mr. Underwood. What do you mean by " three ? " Do you mean 3 per cent ? Mr. Welborn. Three times as much. Productioil in Java has mul- tiplied by three in just about the same time. Java has done better and multiplied her yield by three in the last twenty-four years. But the Dutch Government built every mill and turned them all over to the people. The consumption in the United States, has multiplied by three in twenty-five years. I believe it possible to multiply our yield in the Philippines more rapidly than this, but I can not see how the neces- 220 PHILIPPINE TAEIFF. sary railroads and dirt roads and bridges and boats and warehouses and machinery and all the things necessary to handle a large produc- tion can be put in commission so soon as these people think. Then we have a raw labor supply that we must pick and train and educate, and we have to excite in them the need and the desire for money in order to get large numbers of good laborers. It has been well proved that the small wages paid by the small sugar planters are not sufficient to attract enough labor for large enterprises, and I have no complaint to make against the Philippine planters for pay- ing low wages. The Philippine planter is starving along with his laborers. In fact, I fully believe that if the laborer should be better paid and better fed, he would earn more in proportion than he does. The Philippine farmer, perhaps, has been shortsighted in not paying more when he was able to do it. So have the beet-sugar manufac- turers been shortsighted in not giving the farmers mqre of the gross proceeds of their product. And that is the reason that their big mills run on short time and have to close up, and the reason that they have constant warfare and all that sort of thing. I hope I may be permitted to indulge in these predictions as to Philippine production, since the opposition fears nothing but the future, and all their arguments are based on what may happen. That is all these gentlemen are afraid of. They admit they are not afraid of the past or the present, but they are afraid of the future. Believ- ing, as I sincerely do, that our production can not be so rapid as they think, I foresee a market large enough for all the States and all our colonies for a long time. Speaking roundly, the United States is using 3,000,000 short tons of sugar a year, and importing, in found numbers, two-thirds of this amount, besides what comes from the home territories — ^Hawaii and Porto Rico. I do not consider Cuba, which is getting a concession. That concession with Cuba is by treaty, and need not continue. Our consumption has about multi- plied by three in twenty -five years. We are yet 25 per cent per capita short of the consumption of Great Britain. Mr. William Alden Smith. Wha.t is their consumption ? Mr. Welborn. About 91 or 92. Ours is about 71 or 72. It will naturally be a little less in this year of high prices. Mr. William' Alden Smith. Those are this year's or last year's figures ? Mr. Welboen. The last available year's figures, which would be last year's, or at least the last report. Those figures are substantially correct — 70 or 71 or 72 and 90 to 91 and 92. That is, our per capita consumption is 25 per cent behind theirs and we are able to buy more good things to eat than they are. We have more wealth and the wealth is better distributed here than in England. Should we suddenly commence to use as much sugar as the English people we would demand 3,750,000 short tons of sugar. If present low prices continue, I predict our people will overtake Great Britain's per capita consumption in three years' time. Should we multiply our consumption by three in the next twenty- five years— and we have multiplied rather faster the last half of that twenty-five years than we did the first half — and our production should multiply by three — and that is better than our production has done, perhaps — we will need to import between five and six million short tons of sugar instead of a little less than 2,000,000 tons, as now. PHILIPPINE TAEIFF. 221 Are you afraid of conditions like that? Is there the slightest show that the Philippines will ever be able to do more than supply a small part of this demand in any time that we can reasonably foresee? 1 here is nothing in the history of any cane-producing country to The cane-sugar production of the world has multiplied only 350 per cent in fifty years, and the world's consumption has multiplied over twice this fast in fifty 'years. Mr. "\^lLLIA3^s. That difference has been supplied by beet sugar? Mr. A^ELBORN. \es, sir; the cane-sugar countries have moved slowly almost everywhere. Suppose we take a ten-year period just ahead and see what the probabilities are. With the rate of increase of consumption now going on, or which is proved to have gone on during the last twenty-five or thirty years, we will have an increased consumption at the end of ten years of a million and a half more tons. If we now need to import 2,000,000 tons, at the end of ten years there will be a demand for 3,500,000 tons. And who on earth will supply that, with Louisiana moving at a snail's pace and with the beet-sugar growers wa.iting for the Russians and Bohemians to come in, and with Hawaii already climbing up so high on the mountains that she will have to come clown again because she can not make profits ? It would seem that the people of this country would be dependent on poor little Porto Rico to supply the bulk of this three and a half million tons of sugar. Our friends on the cither side are still strenuous in insisting that we have very cheap production, but our production does not seem to be so cheap as it was. A year ago United States sugar people were circulating literature over the country saying that the Philippines had 6-cent labor ; but now they come in, in the census of 1902, and ' say that we paid 17 cents then. At that time I did not know the figures, and I made a somewhat lower estimate than that; but I am willing to yield to better authority, and say that the labor in Negros must have been 17 eents in 1902. And it has been going up all the time since; so I will say that I was rather under the mark in 1904. And this rise in wages has come about without much business, too. You let us get some business like we are looking for now and you will see labor go up, and see much better conditions. The only man in Occidental Negros who is working as many as 250 hands gave me a letter to the effect that he is paying 60 to 75 centavos a day and furnishing houses for his people to live in and furnishing land for the families of his people to work, and hiring them first in the island of Panay, because he could not get them in Negros. That is Mr. Charles E. Wheeler, known to some of you. He is hauling their rice free to them and hauling all their supplies free to them, so that his labor must be costing him, all told, 37-J cents a da3^ If, then, it takes two and a half of these natives to equal one American, you have your labor cost above a dollar a day, which is above the pay of the Louisiana field hands. Now, this matter of cheap labor is only apparent. These people do not deny any longer that our sugar people are poor, but they say that it is owing to poor methods. Well, I admit that this is very largely the case. But why have not American capitalists, then, gone in and improved these methods and taken the profits ? I admit that that is rather a strange 222 PHILIPPINE TABIFF. problem to me, because I can say to you here to-day in all candor that J believe I could pit;k out two or three locations in Negros where moderate-sized mills could perhaps skin the world in cheap sugar production. But I do not believe that you could find more than that, and I do not believe that you can start that thing all over the country and all over the hills and mountains, and flood the world's markets with sugar. Mr. Clark. How much does it cost to get a real good sugar mill? Mr. Welboen. A million dollars. Mr. Clark. The cane oflf of how much land will one of these mills use? Mr. Welborn. About 7,000 to 10,000 acres in Hawaii; probably 30,000 acres in other sugar countries. They have a million-dollar mill, which I visited, in Hawaii. That is about the biggest mill, you know. Mr. Clark. It is possible to get a smaller mill as good as these large ones, to grind a less quantity of cane, is it not ? Mr. Welborn. Yes, sir. Mr. Clark. How much is the smallest cost for a good mill ? Mr. Welborn. You mean the smallest mill that would have the best ability for the extraction of sugar ? Mr. Clark. That is what I want. Mr. Welborn. That would cost about $250,000, according to a sugar engineer who figured it for me. Mr. Clark. That would use the cane off of 1,025 acres? Mr. Welborn. You are speaking of this plantation that makes the highest yield in the world. That more than quadruples the average yield of the balance of the sugar world. Probably 6,000 or 7,000 acres of average sugar land. Mr. Underwood. To fix that figure give it in tons. How many tons of raw sugar is that, and how much cane would a million-dollar mill consume ? Mr. Welborn. That would depend a good deal on the length of your run. If you were to do like the beet-sugar manufacturers do and get in a row with the farmers and not get any beets and cane and only get a forty-day run each year, then you would have a heavy- cost ; but if everything is well proportioned and the weather is good and all that — you make all the cane you can grind — you would have, as in the Philippines, about 120 days' run of that mill, and a mill that costs $250,000 ought to turn out 60 tons of sugar in twenty-four hours, and 60 times 120 would about give you the capacity of a $250,000 mill, as best I know it. The Chairman. That would depend upon the richness of the cane ? Mr. Welborn. In a measure. The Chairman. If an acre produced but a ton of sugar from a given weight of cane, of course it would be a much less product than it would if it produced 8 or 10 tons from the same weight of cane that is, the production of the mill would be less, because it would require almost as much time to grind a cane of low sweetness as of greater sweetness, would it not? Mr. Welborn. Yes, sir. I was taking the analysis of the wet and dry countries of the West Indies, and taking about an average, where they have their stormy season, and all that, not as rich as the dry side of Hawaii. PHILIPPINE TAEIFP. 223 ^Ir. Clark. Why is it necessary for each particular sugar planta- tion to have its own mill ? Mr. WELBOEisr. It is not necessary. Mr. Clark. Why could not one" mill locate in a certain place and grind cane for divers and sundry people, iust as one flour mill does in this country? J f if : J Mr. Dalzell. As sugar mills do in Cuba. Mr. Clark. Exactly. Mr. AVelborn. So it can; but you will there encounter some diffi- culties that others have met, perhaps in an exaggerated degree, be- cause the people of the Philippines are not so well educated and have not had so much experience. The other people have had from forty to one hundred years' experience. The Filipino, excellent man as he is. because he is an excellent man, and always polite, if he is a poet, is slower about doing things than most men. Mr. Clark. I am supposing that a number of men go over there andeach buys his small tract, you buy 50 acres and I buy 10 acres, for instance. Mr. Welbokx. Yes, sir. Mr. Clark. AVliat is the reason that one mill could not grind all that cane at a fair rate of toll ? , Mr. Welborn. There is no difficulty at all about that if you get the cane. But a central mill, depending on the cane from the lands as they are now, would find difficulty in making connection between the cane and the mill, on account of the slow methods of the people. (Thereupon, at 12 o'clock, the committee took a recess until 1 o'clock.) AFTER recess. The committee (at 1 o'clock) resumed its session, Hon. Sereno E. Payne in the chair. Members present : Messrs. Dalzell, McCleary, Hill, Boutell, Curtis, Needham, Smith, Robertson, and Clark. The Chairman. Mr. Welborn, you may proceed. STATEMENT OF MR. W. C. WELBORN— Continued. Mr. Welborn. I stated this forenoon that I would be glad to an- swer all the little quotations that have been made from me and explain them. There is one particularly that I thought of, and that is where I am quoted as saying, while making the report of the Murcia rice farm, that the average labor cost was over 30 centavos gold in 1904. There is another reference in the same report, disconnected from any other statement in the report and brought into this record, which says that we are paying 31 centavos, I believe, for transplanting rice. It is clearly stated in that report, in that same connection, that this 31 centavos for transplanting rice is the wages which the women and children get. The people in that country, women and children — little tots from 5 years old and upward— all bunch together and work together in a crew of 40 or 50, or 60 it may be, and have a kind of fiesta, and they will go and transplant rice and have a kind of a ball, or expect to have it, at the same time. 224 PHILIPPINE TABIPP. It ought to have been stated by the side that brought this in here, stated clearly as a fact, and something which is well known to any- body who would read the report through, that there is no conflict at all between that statement and the other. One refers to women and children and the other refers to men. Now, I want to refer to the question which Mr. Williams asked in regard to the necessity in the rural districts of the Philippines on the part of the people to grow their own food supplies. I want to say that of all the people I have ever seen in the world the Filipino comes nearer having no intercourse at all with the outside world, and comes nearer raising everything of every kind which his wants require than any other people, and that fact alone would be a great factor in keeping down any immense production of sugar there to the exclu- sion of other things. But, again, the opposition admits that it is the prospect that they are afraid of. Now, I want to show them some pretty good prospects on both sides of the water, when you come down to that. The sugar interests have been working considerably in the direction of cheapen- ing the production in the last few years. We have that from the tes- timony of all of them — that they are anxious to cheapen production so that the consumers of the United States can get cheaper sugar and the producers still be able to get their profits. One of the Louisiana delegates last year told your committee that if your cane needed four hoeings it got it. Doctor Stubbs told me the other day in New Or- leans that hoeing is a thing of the past in the cane fields of Louisiana. Doctor Stubbs is the greatest authority on cane sugar in the world, I believe, to-day. I saw a great number of sugar-cane loaders in the fields in Loui- siana, and Doctor Stubbs told me they were effecting a geat saving in the cost of handling.^ This is the first year they have been gener- ally used. I think they have been able to cut down their cost of production a great deal this year. I asserted in my testimony last summer in Manila that if the cost of producing Louisiana clarified sugar were 3 cents, as Colonel Hill stated, his calculation based on a yield of 20 tons of cane to the acre and 125 pounds of sugar to the ton of cane, as he stated, then the actual cost must be much less, because I have here a Government pub- lication giving the average production of cane sugar in Louisiana for the last ten years at 146.5 pounds of sugar per ton of cane, and it also gives the yield of cane as a fraction over 20 tons to the acre. If, then,, that statement is correct, if 3 cents is the correct cost of Louisiana clarified sugar on Colonel Hill's basis of yields, and if the Louisiana people made the actual yields, as shown by the Govern- ment publication, it will bring the cost below $2.70 per hundred pounds, as a simple calculation will show, and then you count nothing for the molasses. So far as my information goes, yellow clarified sugar will be worth to-day, or should be worth to-day, 1 cent a pound more than Philip- pine concrete sugar in New York or New Orleans, or Philippine 84° sugar. Add to this difference 31 cents duty, according to this bill, and a half cent freight, and insurance and commission and stor- age, and all that sort of thing, and we have $1.81 handicap against the Philippine sugar. And let me say just here, now, that this matter of shipping Philjp- PHILIPPINE TARIFF. 225 pine sugar to the United States and selling it at a quarter of a cent a pound is a mistake. We had testimony to the contrary at Manila, the testimony of Mr. Lowenstein, who actually does that business. I have personally visited Smith, Bell & Co., and they have shown to me the items that go to make up the cost, and these gentlemen here have left out some material additions to that cost. There is a loadmg charge from the warehouse in Iloilo, and there is a storage charge, and there is an insurance charge in the warehouse in Iloilo, and there is an unloading charge at New York or Philadelphia. There is also a storage charge there, and a selling expense there, and I can estimate it and prove that it will take $10 to ship and sell every ton of Philippine sugar in New York that we grow. Talk about shipping sugar to San Francisco. Why should we ship to San Francisco, when the beet people, as a matter of fact, have that market full? Why does not Hawaii send her sugar to San Francisco ? She sends most of it to New York. jNIr. Needhasi. I wish you would put that in your evidence in the record, if you can — the proportion of Hawaiian sugar that comes to New York and that which comes to San Francisco. That which comes to New York comes through San Francisco, does it not? Mr. Welboen. No ; most of it comes around the Horn. Some of it, however, comes to San Francisco. I read half a dozen reports of the Hawaiian sugar plantations for the last four years, and when I get those reports I can prove to you the marketing expense of every ton of Hawaiian sugar, and can prove that it ranges from $10 to $14 a ton. Mr. Willia:ji Alden Smith. You quoted Mr. Lowenstein, and yet before the Taft Commission, so called, he said that Mr. L. Locin Rama, who preceded you, had made two errors in his estimate of the cost of sugar laid down in New York. He figured the freight from Iloilo to New York at 24 centavos, whereas the rate is $6 a ton of 2.240 pounds, or 27 cents for 100 pounds. That is Mr. Lowenstein's evidence. That shows a wide discrepancy between his statement and yours. Mr. Welboen. No; I made the statement that there were some items which Mr. Hathaway did not bring in — the storage charge and the insurance charge at Iloilo and an insurance charge en route, a considerable one, too, on the sugar shipped over from Iloilo to New York. It is a high insurance charge for a sailing vessel and a high freight charge on a steam vessel, and it is lower insurance and higher freight charge on a steam vessel. Then if you add to that your unloading and storing and commissions, I think it could not be less than $10, inasmuch as I know from memory that the Hawaiian reports show that their marketing expense runs from $10 to $14 a, ton, including all items. That is an actual fact. Mr. Atkinson is here and no doubt remembers enough of the conditions there to know that I am telling you the facts. The Chaiemak. Mr. Lowenstein said it was the freight. Mr. Welboen. Yes ; but he left out material items in this cost. Mr. William Alden Smith. Yes ; that is the statement. Mr. Claek. Why would it cost more for Hawaiian sugar in New York than for Philippine sugar? p T — 05 M — —15 226 PHILIPPINE TAEIFF. Mr. Welboen. It costs more, perhaps, because our coastwise laws have not been extended to the Philippines, whereas they have been extended to Hawaii. The Philippines as yet have the competition of the English and other foreign vessels. I think that would explain it, but I don't know about that. When our coastwise laws are ex- tended to the Philippines, everybody there believes that that will still further raise the cost of freight. But I am not a shipping man, and could not say for certain. Now I will try to get at this matter of the Louisiana man's cost, based upon an estimate that they seemed to agree upon a year ago. If their cost was 3 cents, based on a yield of 20 tons cane per acre and 125 pounds sugar per ton cane, then their actual cost must have been 2.67, since they made 146.5 pounds sugar per ton. One of the gentlemen who appeared a year ago, a Mr. Munson, said that in addition to his 125 pounds of sugar per ton of cane, he got about $10 worth of molasses in addi- tion to each ton of sugar. It is curious that nobody is saying anything about this big by- product. Nobody from Louisiana is emphasizing that very much. Still it is a very considerable item in the profits of the business in Louisiana. Take this half a cent a pound, now, that he seems to get in the molasses, and I do not know that this is a representative plantation. I doubt it for the reason that the same Mr. Munson had his mill cost so high, and his field cost of cultivating an acre so high, that I knew that they could not be average or representative conditions. But if it should be an average condition, then taking this by-product from the cost of turning out the sugar, about $2.67, you will have a cost of about 2.17 cents a pound for the Louisiana yellow, clarified sugar. Recollect I am using averages now, so far as I have been able to learn the facts. Now, suppose you make a comparison, between that and Philip- pine sugar. The Philippine sugar would seem to be worth about a cent a pound less that the clarified. It would certainly cost a half a cent a pound to bring the Philippine sugar to this country. It would cost 0.31 cent to pay duty, if the bill passes. Mr. Hill. Under this proposed bill, you mean ? Mr. Welboen. Yes. That is what the cost woiild be under these conditions. Now, Philippine sugar as now made will have the fol- lowing handicaps as compared with Louisiana yellow, clarified : One cent a pound less value in American market, 0.50 cent a pound freight and selling expense, 0.31 cent duty under this bill, or total 1.81 cents disadvantage. Since the Louisiana product appears to be turned out at 2.17 cents cost, to put the Filipino sugar on the same basis of opportunity for profits as you have he would have to orow his cane, make his low-grade sugar, and put it in Iloilo for 2.17 cents less 1.81 cents handicap, or just 0.36 cent. So, then, in order to put ourselves on an equal industrial opportunity with each other • that is between the Philippines and the Louisiana people — and I am taking averages now, so far as Louisiana goes — the Filipino would have to make his sugar and mill it and put it into Iloilo at thirty-six one- hundredths of a cent a pound. These are the people who raised this question last year, of equal industrial opportunity, so as to give us all a fair show. That is what we are all after. Thirty-six one-hundredths of a cent a PHILIPPINE TABIFF. 227 pound would be what the Filipino would have to make his cane and cut and mill it and put it into Iloilo for. Let me tell you something. This thirty-six one-hundredths of a cent a pound is only about 23 per cent of what the beet-sugar men claim it costs them m the factory alone to turn out their beet sugar. It is exactly 30 per cent of what Mr. Munson, of Louisiana, said it cost him in his factory — the factory cost alone of turning out cane sugar last year. The Filipino must do it all for 23 or 30 per cent of what the other fellow says it costs him in the mill alone, and I submit that there is not so much difference in this matter of labor cost and all that sort of thing to frighten ourselves with. Now, I want to make the suggestion to my Louisiana friends who are conscientiously striving to reduce the cost of production, as I believe they are. I doubt a little bit the motive that causes that striving — whether it is for themselves or for the other fellow — ^but I wish to make a statement that will help the situation quite a good deal. I learn that cane factories in Louisiana are willing to hiij Louisiana cane when yellow, clarified sugar brings 4 cents a pound at $3 a ton delivered at the mill. As a matter of fact, at this time the only people getting $3 a ton for cane in Louisiana were those who made a flat contract when sugar was high. All the others get lower than that, and those who are getting $3 a ton are very happy. Mr. Clark. That is, where they raise the cane and take it to you ? Mr. Welboen. Yes ; where they sell it to th^ factories. Mr. Claek. How much cane can you raise on an acre of ground? I mean on the average ? Mr. Welboen. ASaut 20 tons. Mr. Claek. That is $60 an acre for the cane ? Mr. Welboen. Yes, sir. Well, now, let me show what the mill is getting out of this ton of cane. You already know what the fellow that grew it gets under this flat-rate contract. If this is not a fair statement of what the business conditions are in Louisiana I would like somebody to cor- rect me. Let us get at the truth. That is the truth as I got it. I believe it to be true. Cane enough to make a ton of sugar, then, at 146.5 pounds of sugar to the ton of cane, it seems to bring the farmer $42 under conditions that seem to actually exist now in Louisiana — or not exactly that, either, but as they would exist if yellow clarified sugar was worth 4 cents. It has been that high, but is not quite that now. The manu- facturer is getting $38 for putting it through the factory, and I be- lieve the farmer now, under that arrangement, has to deliver the cane at the mill, so that the mill seems to get more than the farmer gets out of the gross proceeds of the cane, and I know he does if we are allowed to add to what he gets that $10 worth of molasses to the ton of sugar, which I mentioned a moment ago. He gets consid- erably more. This $88, then, plus the value or molasses, whatever that is, seems to represent the manufacturing cost and the profit, and so on, alone, in the Louisiana sugar industry. Now, gentlemen, it is v^ell known that the Hawaiian factories — some of them — work at a cost of $4.50 to $5 per ton of 96° sugar. That is well known, and will not be denied. I have some government reports here from Queensland, Australia, showing the factory cost to be about $6 per ton of sugar there, and the 228 PHILIPPINE TAEIFF. mills and factories there are about the same size as the Louisiana mills, and each one has to pay a fuel bill in addition to the cost of the cane, just as the Louisiana factories have to do. Mr. William Alden Smith. It may be interesting for you to know, Mr. Welborn, that a consular report 'that I received yesterday shows that the beet farmer of Canada in many instances has got as high as $50 an acre for his beets. Mr. Welborn. Why, sir, Michigan and Colorado farmers have many times obtained a hundred dollars to $12'5 an acre. Mr. William Alden Smith. But this is in the new territory, where they are just experimenting. Mr. Clark. I want to ask you a few more questions. I want to get at the facts of this. The Chairman. These reports as to Canada also show that they are making a big profit. Mr. Clark. Do you know whether it takes any more per acre to raise an acre of sugar cane iij Louisiana than it takes to raise an acre of corn in Missouri or Kansas ? Mr. Welborn. Yes. Mr. Clark. What about it? Mr. Welborn. The cost of raising sugar cane is considerably greater at planting time, because they have to have the cane to plant, you know, and the cost would be greater by the value of the seed, because an acre of corn does not cost anything hardly to seed it.- Mr. Clark. How much does an acre of seed cost ? Mr. Welborn. I could not answer that for certain. Mr. Clark. Then how much does an acre of sugar land cost ? Mr. Welborn. Possibly $40 or $50. As to the cane seed, I think . I can give you an approximate value. I think Mr. Munson, in last year's statement, gives a valuation. I think he said it was somewhere near $10 or $12 in Louisiana. They generally fertilize cane land more than they do corn, and after you get it planted, since they have done away with hoeing entirely; 1 should say that the culture of it after that, up to the gathering time, will not be greater, or much greater, than corn. It will not be appreciably greater. The Chairman. While the committee desire you to present fully your views, I would suggest that you do not take up too much time in these side remarks — ^these remarks aside from what you have in writing there. We are anxious to get through these hearings, you know. Mr. Welborn. I am anxious to answer all the questions that the committee may ask me. If the committee would be kind enough, then, not to ask so many questions until I get through with my state- ment, I will not make any side remarks or need to make answers. The Chairman. I was not speaking of that so much — your answer- ing questions — as of your volunteering so much. Mr. Welborn. When a man honors me by asking me a question, I want to give him extra measure of good, honest information. The Chairman. All right ; go ahead. Mr. Welborn. Now, then, I could never understand why it ought to cost a Louisiana factory $38 or $48 for its actual milling cost, when the Queensland factories, working nearljr under the same conditions, give a cost of $6 a ton. I can not reconcile it. I have but one state- PHILIPPINE TARIFF. 229 ment where it gives the cost as high as $24 a ton. That is Mr. Mun- son's statement last year. In buying the cane straight and at a price that satisfies the farmer, if it costs $40 to $48 in the mill alone to make each ton of sugar, I can not see how Australia vcan do it for $6, where they have higher labor than Louisiana ever saw. Here is the opportunity to cut off a cent and a quarter, all at one whack, in the cost of producing sugar in Louisiana. That is a suggestion that I think will be very helpful to them, if adopted, because they can cut off a cent and a quarter from the cost of production under these con- ditions and then have $17 or $18 for manufacturing. And since that is three times the cost of production in the Queensland factories, working under the same conditions, or under conditions not far differ- ent, I can not see how in the world $17 or $18 is not an exorbitant estimate of cost. ^ Here is an opportunity to save which means something. It is nothing like a 10 cents a year business. I wish to explain that manu- facturing sugar in Louisiana is necessarily more expensive than in Queensland, for the reason that Queensland has a sweeter cane, but it could not be greatly more expensive. It ought not to be as high as $17 or $18. and I believe that if the matter were rightly inquired into, it could be well established that this is an exorbitant estimate of legit- imate cost and profits. Now, I have some figures regarding the manufacturing expenses of beet sugar. I have a Government report — a report of the United States Government — that shows that in the years 1897 and 1898 — I say I have it now, but I haven't it right here, but will furnish it — that shows that in 1897 and 1898 the German beet-sugar factories worked at a factory cost of $5 per ton of sugar turned out. I have here a later report, for 1901 and 1902, and they had then gotten it down to a factory cost of from $4 to $4.50 per ton of 88° sugar. The Chairman. That sugar is not refined, is it? Mr. Welborn. No, sir; I will explain that difference a little bit further. Now, the American factory that buys beets at the flat rate of $5 per ton and gets 240 pounds of refined sugar per ton, worth $4.25 per hundred pounds, which would approximate the present conditions — and if that is not true to-day it was true at the timg I wrote it ; pays the farmer forty-one and two-thirds dollars of the final value of the ton of sugar, while the factory gets forty-three and one-third dollars as its share in the transaction. The only time Mr. Hathaway ever paid the farmers 2.30 for the sugar recoverable from the T3eets is when they are working on a graduated contract and the beets prove unusually rich. Then I count in another important item. The beet people have a very valuable by-product which they get. I suggest that if you want to find out the truth about this business you should ask somebody con- nected with the Alma, Mich., sugar factory, to see if they have not an opportunity, for every ton of sugar they turn out, of making a ton of dry mixed molasses and beet-pulp feed, which retails in New Eng- land at about $20 per ton. Mr. Hathaway. I am connected with that factory, Mr. Chairman, and I would like the privilege of saying just one word. The Chairman. If you get into a general debate it might last some time. 230 PHILIPPINE TABIFF, Mr. William Alden Smith. He spoke of asking a manager of that factory, and Mr. Hathaway is the manager. Mr. Welborn. I spoke of somebody else asking him, not asking him myself. I. wanted somebody to ask him, if he is not doing it, why he is not doing it, and whether there is not that actual potential value of foodstuff in that by-product, and is it not a fact that the farmer is not hearing anything about this value, which I should judge might net the factory $iO for every ton of sugar which it turns out ? I do not state that for a fact, because I am not on the inside of that business. Now, Mr. Hathaway says that my statement, made at Manila, about the amount that the farmer and the factory get out of the gross pro- ceeds of the beet sugar is so ridiculous that he can hardly restrain /himself and keep himself within the bounds of courtesy. I believe I can always do that when I am telling the truth. [Laughter.] At the price of sugar prevailing at that time I told the absolute truth, and nothing but the truth, supposing the $5 flat rate. I don't know anything about his graduated contracts or anything like that, and I think the $5 flat rate has been rather above than below the average. The Chairman. You took the price of sugar when it was abnor- mally high ? Mr. Welborn. Yes ; it is abnormally low now, and it still looks as if the beet-sugar factory is getting about 55 or 60 per cent and the farmer about 40 or 45 per cent. The Chairman. Do not prolong that disucssion, please, to any great length, Mr. Welborn, because this bill does not seek to regulate that matter. Mr. Welborn. Yes, Mr. Chairman; but they seem to be getting into our back yards and finding out all the mean things that they can about us, you know, and I must convince them they can make sugar cheaper than they think they can. The Chairman. You have already been over it. Mr. Welborn. Now, about the old similie that the butcher is will- ing to butcher the cattle for the oifal, it seems under this flat-rate arrangement that the factory gets the hide, and the hair, and the tallow, and the blood, and the bone, and the hind quarters, at least, of the product when they butcher the sugar beet. [Laughter.] I have seen ifc stated in the papers that Mr. Havemeyer has gone over to Colorado to cut down the price to be paid to the sugar-beet growers or farmers. Now, nobody can find out much about the cost of refilling sugar in this country. Taking the average difference between the cost of raw and refined sugar as 60 cents per hundred pounds, I conclude that" the loss in weight by refining represents 40 of this 60 cents difference, and that the actual work and material and profits of refining represents 20 cents. Since the loss in weight is not to be considered in this case, as we are dealing with refined sugar, it would seem that the extra cost of making refined over making raw sugar would be about $4 a ton. Since the German factories turn out raw sugar at a manufacturing cost of $4 a ton, surely our beet fac- tories, which are uniformly larger and newer than the German fac- tories, could turn out the raw sugar at $6 a ton, or at an advance of about 30 per cent over German cost. If these suppositions should prove true, as I believe they will if the truth can be learned, the beet factories should be able to turn out PHILIPPINE TAKIFF. 231 refined sugar at a cost of $10 a ton, dnd here is a chance to save a cent and a half per pound in refined beet sugar and still leave the factory $13| per ton for all costs and profits, instead of $10, which would seem a fair charge for the work. This would make refined beet sugar at $2.75, after paying the farmer a flat rate of $5 a ton for the beets. Putting the handicaps on Philippine sugar up against that cost,' supposing them to get together in the market of our country, then the Philippine farmer and manufacturer combined has to make his sugar and put it into Iloilo at 49 cents per 100 pounds to have that opportunity for profit which the beet-sugar men would seem to have ; and I am taking averages now on the $5 rate. Mr. Hill. That is per 100 pounds? Mr. Welbork. Yes. Now, I am not alone in picturing success for American beet sugar in spite of all competitors. I understand it is a matter of record, or it will be made so, that one high in the councils of beet sugar and in opposition to the Philippine sugar has made predictions due to come true in a very few j^ears from now that would make my calculations look like 30 cents. jNIr. "William Alden Smith. You mean yours would look like 30 cents then or now ? Mr. Welboen. Now. Now, it is in evidence that the Wisconsin Experiment Station raised beets for eleven years and averaged a 3deld of over 16 tons per acre. They give $30 as covering all the cost of producing the- beets. This is a farm cost of less than 1 cent a pound for the sugar in the beets. With a farm cost of 1 cent a pound and a manufacturing cost of two- thirds of a cent you can see what you might be able to do under favor- able conditions where you own farm and factory. I have been taking average conditions. Those other conditions would be very favorable, and poetic conditions such as these gentle- men found in the Philippines. If you turn out beet suarg at If cents a pound, Philippine sugar would have to come in free and have a bounty in order to be on an equal footing with you. It seems that Mr. Saylor, Government expert on beet sugar, and Professor Wing and Professor WoU and Doctor Kedzie all unite in giving $30 an acre as a fair estimate of farm cost and 12 tons as a reasonable expectation of yield. Under conditions like these the farm cost will be only slightly over 1 cent a pound. This should make the cost of iiugar to the farm and factory combined a little less than 2 cents, and this would be about the figures put in evidence as predicted by the lead- ing authorities on beet sugar in the United States, due to come true now in some four years. Now,, my belief is that the United States market would absorb the Philippine production without even feeling or knowing it, even though her production should increase twice as fast as Hawaii's has done. Even though her production could by any miracle increase more rapidly than beet sugar has increased, with its beautiful chances for profit that I have shown you, still the market would not be affected in the least. You will all admit, and it has been admitted, that the Filipino must wipe off his slate and begin ail over again. He has nothing worth while in the way of equipment, or knowledge, or anything else to start him in the production of sugar. It has taken the beet-sugar industry in this country fifteen years to pass the quarter-million-ton 232 PHILIPPINE TARTT"'F. point in production. I verily believe that the Cuban crop, with its 20 per cent reduction, along with all the Philippine crop, may con- tinue to be absorbed indefinitely without filling our great and grow- ing market. If by any chance the market should get full enough to reduce the prices all around by 20 per cent of the duty, why, by that time so many improvements will have been made and we can all make sugar so cheaply that all of us engaged in making sugar will want to make this trifling concession to the consumer, who is a very large and re- spectable party. Such a condition would come about by natural process and not by any attack on the tariff laws. I was asked last summer by Senator Newlands what compensating advantages would be made to the United States in case her Treasury should be called on to lose this revenue which we are asking to have taken off of Philippine sugar. What we are asking at present on the present production would entail a loss of less than $2,000,000. I would hope and believe that getting a better market price for the sugar and finding this market largely in the United States would stimulate trade enough to more than meet this. As our production grows the trade would grow. Even if Philippine sugar should ever hurt our home sugar market, we would come as near benefiting all the people of the United States by building up general trade as we do now by fostering sugar. And yet I contend that we can build up the trade and still foster sugar. Particularly tan our trade be ex- tended three years from now, when our tariff laws can be extended around the Philippine Islands. Without a great enough expansion of our sugar and tobacco busi- ness to hurt the producer of the United States, I believe we might be able to buy and sell from the United States $100,000,000 worth in twelve or fifteen years of development. I have been greatly surprised by some statements made by Mr. Humphrey and Mr. Hathaway. Mr. Humphrey says nobody would invest in Philippine sugar growing, and that we will put the Filipino on his knees to the trust. The statement that sugar can not be re- fined in the Philippines is absolutely wrong. Hongkong is a trop- ical country and one of the wettest places in the world. Hawaii is refining sugar; Egypt refines; Java is refining one- fourth of her crop; Peru has refinery interests, and Mexico has refineries. I made no such statement as Mr. Hathaway attributes to me, that beet- sugar farmers cultivate 40 acres to each laborer. I was simply giving statistics that in all agricultural pursuits in America the average sized farm is 146 acres, and that each agricultural laborer averages working about 40 acres. Of course I know a man does not cultivate 40 acres of celery, neither have I ever believed a man culti- vates 40 acres of beets, and I did not say so. Neither did I say any- thing that could be so construed. The Philippine census is quoted by Mr. Hathaway to prove that the wages of labor on sugar estates was 17 cents a day in 1902. Everybody says that labor has steadily advanced since then. When the currency was changed from Mexican to Conant, the wages went up some 15 to 18 per cent with tiiat change alone. I am quoted as to what I have seen some laborers do in the island of Negros. I made that visit to Negros in August, 1903, and I saw these laborers, and they were getting the price I stated. The fol- PHILIPPINE TAEIPP. 233 lowing year I mentioned tliis incident to connteract that general statement which everybodj^ was making, that the Filipino would not work. I still believe that the Filipino is a better laborer than he gets the credit of being, and I believe he will work better if he is better fed and better paid. I say to you now that I have kept in touch' with this problem, and I will say to you that the labor that cost 16 to 20 cents in 1903 will generally cost 30 cents and above now. The same report says that labor was costing us over 30 cents at one place, and that laborers who were learning to be good teamsters in Negros were being paid from 30 to 50 cents per day in Negros in 1904. You [addressing the beet-sugar representatives] did not quote that part of the 1904 report. I might add now that we are paying 50 cents at one of our places for all laborers, and $1 at another, where we have to use Japanese labor. Here is another little matter that I did not mention in regard to Mr. Hathaway's figures. Mr. Hathaway attacks my quotation of census returns as to sugar yields. He quotes from information of a general character to indicate the yield I stated as not being more than half of the actual. This alleged general information must have been erroneous. We shipped almost precisely the same amount of sugar that season that we have shipped since, and I think the acreage was never reduced, but rather increased. In fact, looking up the matter 'further shows 64,000 hectares planted in the census year and 72,000 planted the next year. I personally observed the crops of 1903, 1904, and 1905. I believe from those observations that Negros's yields per acre have been declining and Pampangas's gaining. It seems that Mr. Hathaway admits further on that in 1902 a slightly bigger crop was made than has been made since. To be entirely fair, and not to allow the truth to be concealed, even though less favorable to my argument, I will say that the ehtirei 180,000 tons produced in 1902 was confused with the exports of other years. I think each year since has shown substantially the same yield — that is, about 100,000 for export and about 80,000 for consumption. But I am sure there has been a little increase in acreage, so that my census figures of low yield per acre are more than borne out. Mr. Hathaway purports to find proof that the census figures were wrong, because he takes the average of the years from 1891 to 1902, both inclusive, and then he adds them up and gets an immensely larger average yield than the crop of 1902. Why on earth did he go back eleven years and take the production when we made two and six -tenths as much sugar as we have since American occupation? Why take any of the years of the revolution? And then why not take 1901 and 1903 and 1904, every one of which shows a smaller yield than 1902? Why did he not take those years on each side? I would not present such a set of figures nor such an argument. I would be afraid it would discredit my intelligence and my sincerity. Take the years on each side, and you will find that everything I said is more than borne out. • Now, Mr. Hathaway rather misquotes me about my statement at Manila, Avhen I was under fire, to the effect that I was a Mississippi Democrat and had a good deal of respect for the interests of the con- sumers of the country. Now, Mr. Hathaway, as usual, goes on and 234 PHILIPPINE TARIFF. makes a crazy quilt of what I said by adding something I did not say and putting it in as a quotation with what I did say. That is not fair fighting at all, it seems to me. I did not say I was not in favor of protection. In fact, I think I have discovered that the Democrat likes a little protection about as well as the Republican does. [Laughter.] The Chairman. I think that will be universally admitted. [Laughter.] Mr. Welboen. When I was rather a young man Mississippi was trying to get up some sort of a constitution that would get rid_ of the ignorant negro vote. Of course they had to get up something entirely fair on all hands, and they seriously discussed the desira- bility of putting in a clause to disfranchise a man for whipping his wife. I had lived in the white belt when I was young and was liv- ing in the black belt then. I said to an old negro that I knew, " Uncle Jeff, is it true that nearly all colored men whip their wives'? " He scratched his head a moment and then said : " Well, I believes dey all gives dem a little now and then when dey needs it." [Laughter.] And I might add that' in that sense I will take a little protection when I need it. The Chairman. Mr. Welbom, please leave out the women folks in your discussion and confine yourself to the question in hand. [Laughter.] Mr. Welboen. I will. I would like to state one more thing not- quite in line and then I will resume the thread of my argument. I want to say that I do not see so much difference nowadays between a Republican and Democrat anyhow. I don't know that I am sure now just where a Republican leaves off and a Democrat begins. I was in Mississippi the other day and I said to an old-line, red-hot Democrat : " I hear that you are liking a Republican President a good deal better than you did when I left here two years ago." " Well, sir," "he said, " if he keeps up the gait he is going, if he keeps going after the trusts, the railroad combines, and keeps turning the rascals out, I'll be gol darned if we wouldn't be willing to nominate and elect him again on the Democratic ticket." [Laughter.] I am confronted with Mr. Heil's testimony, which seems to conflict with mine in certain material matters. I believe I will just skip this, because you will put it in the record anyway. The Chaieman. All right ; we will put it in the record. Mr. Welboen. What I said in reality does not materially conflict with anything that Mr. Heil says in his later statement. Mr. Heil first said that ten rattoon crops could be grown, and tha,t rattoons would yield more than first-year cane, and that he could make sugar for half the cost of the native planters, and that mules to do this work could be bought for $100. He testified, too, that by deep plow- ing he could grow much better cane, etc. This correspondence brings out the following facts : That 15 acres rattoon found on the place, found there when Mr. Heil went there and supposed to have been planted in 1898, made in 1903 and 1904, Mr. Heil's first year, $54 worth of sugar, or $3.60 worth per acre, and that when it was cut the stand was so nearly gone that new taps were filled in, amounting to almost a new planting. He said that the horses he had known to be bought for $100 were condemned army stock. PHILIPPINE TARIFF. 235 He said further that he produced slighth' less than 200 tons of sugar from 150 acres, or 1:\ tons per acre, at a cost of 9.50 pesos a picul, or $3 gold, not including the freight to Iloilo, which was paid out of the proceeds of sales of sugar. He said in his first statement liat he was paj-ing from 50 to 75 centavos a day for labor, but I believe Mr. Hathaway did not quote this. Mr. Heil had also said that rattoon crops made a better yield than first-year cane. He answered that he had not tried it, but that people told him so. I wrote him again to find out if there had been a misun- derstanding, and I got a reply this morning saying the people there say that they get more No. 1 sugar, but no lower grade. In other words, they get less sugar, but sugar of a better quality. We all knew this before. ^Yhat I said at Manila seems to be entirely supported by Mr. Heil's last statement, except it seems that in isolated cases planters get two rattoon crops except one, as I have stated. That is substantially the truth. I verily believe. I had been over the sugar district for more than two years, and I had never been told otherwise than as I have stated, and the universal statement was that almost always just one crop was gotten, but sometimes two. Now, ilr. Hathaway again attempts to go behind the census re- turns in the Philippines with the ^ield estimated by individuals. T can show you right here by a Government report from Wisconsin the names of 35 men who average over 20 tons of sugar beets to the acre; and with the average cost of growing of $30 an acre it makes the farm cost on these beets two-thirds of a cent per pound. Add to that a factory cost of two-thirds of a cent a pound and you have about 1| cents a pound for the total expense of growing beets and making sugar. These statements, however, were not made to people going to buy beet land, but they were made to Government officials. I do not care how much the Filipino makes per acre, or how little the wages he works for; he could never compete with these possible prices of beet growing under the exceptionally favorable conditions. As to the yield which Mr. Hathaway thinks the Philippine Islands might make, he says 6 to 8 tons of sugar to the acre. Let me re- mind you that the wet side of the Hawaiian Islands makes an average of 2| tons. The whole of the West Indies do not average over 2 tons. Egypt and Queensland do not average over 1^ tons ; and what on earth would ever lead one to believe that we would get u.p to the average of 6 and 8 tons ? There is nothing on record to indicate such a thing. It is very likely that with the little that we know about it, with everything to start from the beginning, and all that sort of thing, it would be many years before we would succeed in getting 2 tons on the average. When we speak of a loss of 40 per cent in the mill it does not mean the present yield of cane under modern milling methods would yield this difference in higher-grade sugar. Philippine sugar is not pure sugar. It has all the molasses boiled dry with the- sugar, and this adds nearly as much weight as the mill loses. Now, these are the most remarkable people I ever heard talk. A year ago they said we were going to flood the world's market if this bill, or a bill similar to it, were passed, and they said we would do so in three years' time. Now they come and say that this bill 236 PHILIPPINE TAEIFF. will ruin the Filipinos themselves. Mr. Hathaway heard and be- lieved so much about cheap production in the Philippine Islands that he went there to invest, but he came away deciding not to invest, and now he says he would sooner invest under present conditions than under the proposed bill, and yet he is here, philanthropically it would seem, spending his good money to keep the Filipinos from breaking their fool necks with this bill. If this bill is going to hurt the Philippines, what are you here for ? If you really want to help us, pray do so in our way. I know this is not the spirit in which to pray, but we have not the faith to pray to you in any other spirit. I was again greatly astonished at this countervailing proposition. I have not had an opportunity to find out the facts, but I do not be- lieve the provisions of the Brussels convention extend to British colonies at all. I believe, I know in fact, that Russian sugar is being sold to-day in India, and also in Hongkong. I think we can well afford to take this risk, because I have always believed myself that the reduction in duty which we ask for will send a large part of our sugar to the United States, where there is and always will be a market for much more than we will ever grow. Of course the China- men will always buy some of our sugar in its crude state, and especi- ally when the prices are low en^gh to suit his lean purse. I say so because they have the habit of doing so, and when a Chinaman fets a habit it takes about one hundred years to change it. But so ar as sugar for refining goes it would certainly send our sugar here, and send the Hongkong refiners to Java or elsewhere for supplies. If the trust is as powerful as our sugar friends claim, I do not see how they could hurt you worse by also getting us. I do not see how they could choke three of us worse than they now do two of us. So far as that proposition goes, if we still have the British colonies market, that is the only market we have now that amounts to any- thing, and we have still got Japan and her market. I think the sugar trust is a very dangerous enemy, but it is also a splendid ally. I do not know whether the lamb and the lion, the beet-sugar factory and the sugar trust, have lain down together; but unless all signs fail I should say they have, but whether the lamb is inside the lion or not is also doubtful. [Laughter.] As to whether or not the trust gets 13 cents of the Cuban reduction and the Cuban gets 21 cents, why does not the trust take it all ? Would not that same difference have occurred if Cuba had no reduction? It is not a, matter of merely paying Cuba enough to keep her from shipping to Europe. Should we expect the refiners of the United States to pay Cuba as much as they would have to pay to ship her sugar to Hamburg and back to them ? Is it not a fact that Cuba never did get the Hamburg price, except when we were also buying large quantities of sugar from Hamburg ? If Mr. Willett is here, I would be glad to have you ask him if America ever paid Cuba the Hamburg price, and if so, why ? Again, referring to the labor cost in the Philippines for growing cane as compared with that for growing beets, I wish to say that it is in evidence that a Filipino cultivates 2} acres of cane, with some extra help of a man and a carabao doing "the planting, manufactur- ing, and marketing. It is also in evidence that a beet farmer culti- vates 5 acres of land, and gets one dollar and a half a dav and PHILIPPINE TABIFF. 237 upMai'd, while the Filipino gets 16 cents and up. I am quoting to you the substance of what Mr. Hathaway brought out. But there is another fact that he has evidently lost sight of, and that is that nearly all beet farming is let out by contract; the man — or the men, women, and children, rather — getting $20 an acre for growing and harvesting the beets. This would mean, then, that 1 acre Avould require a man thirteen and one-third days at one dollar and a half a day. The Filipino works all the year and has some extra help ; but we will be liberal and count only three hundred days, which he puts in on '2i acres, or $19 an acre. So the labor cost per acre appears to equalize. But let me show you another thing. Mr. Hathaway said that he learned that a carabao costs from $75 to $100. I am surprised that he got that straight, but he did. [Laughter.] The statement is about true — in spi"te of the fact that he said it. [Laughter.] In the cotton States we are not willing to buy mules and horses and rent them to tenants or other farmers for less than 25 per cent of their cost, for risk, interest, taxes, and wear. In the Philippines I would not buy a carabao under the same conditions and rent it out for 40 per cent of its value. If the carabao there costs $75, there is another $S0 charge on the hectare, or $12 an acre, to be added to this cost. The milling expense, sacking sugar, hauling, and shipping would easily run the cost to over 2 cents a pound on the average yield of the country. You can see from this that a low daily wage does not necessarily mean cheap labor. It would mean that if you could get efficient labor and still keep the wage down. I want to remind yoii or another thing, and that is a well-known principle in manufacturing economics, that the larger your factory the cheaper your cost of manufacture per unit of production. The largeness and completeness of manufacturing plants will more than offset any possible labor or other saving in a very small plant. If, then, it costs the small, Filipino mill man as much per pound of sugar as it does the beet-factory man, according to the beet-factory man's statement, then the manufacturing cost alone will be over l'^ cents a pound on Philippine sugar. If the Filipino's cost is as great as the Louisiana sugar man claims his is, then the Filipino's milling cost is still 1\ cents a pound. If the Filipino's whole cost is as little as you say, and your cost in the mill is as great as you claim, we had better get back to primitive methods of sugar making. I can show you every time, per unit of production, five Filipinos working in the Philippines factory for every American you can find in the Ameri- can factories, so that the labor cost is not the thing. That is about all I have to say. If anybody has any questions to ask I would be glad to answer them. The Chairman. Do any gentlemen desire to ask him any questions ? If not, that is all, Mr. Welborn. 238 PHILIPPINE TAEIFF. STATEMENT OF MR. GEORGE BRONSON REA, OF MANILA, P. I. Editor of " The Far Eastern Review." {For the Ull.) The Chairjian. Gentlemen, we will now hear Mr. Rea. Mr. Rea, please give your name to the stenographer. Mr. Rea. My name is George Bronson Rea. The Chairman. How long have you resided in the Philippines? Mr. Rea. Two vears. The Chairman"; And before that where did you reside? Mr. Rea. Thirteen years in Cuba as a sugar engineer and manager of an estate. The Chairman. "Were you engaged in the sugar business m Cuba? Mr. Rea. Yes. The Chairman. In what capacity ? Mr. Rea. In all capacities, from engineer up to manager of the estate. I was also representative of one of the largest sugar machin-. ery houses in New York. The Chairman. Go on and make your statement. Mr. Dalzell. Before you go ahead, let me ask what business are you in at Manila ? Mr. Rea. At present I am engaged in publishing an industrial and trade paper, called " The Far Eastern Review." It has a wide cir- culation all through the Orient. I am making a st)idy of trade questions there. I went over there to go into the sugar business primarily, but conditions were not favorable, and instead I went into the newspaper business. The Chairman. Go ahead. Mr. Rea. I want to be very brief in presenting this statement, and dwell upon one or two points which the opposition has pointed out strongly against us — the possible low cost of production in the islands and the effect it might have on home industries later on. In placing before your consideration my reasons and arguments why the Philippines should be conceded the benefits of a reduction in the tariff as embodied in the Payne bill, I want first to take up and analyze the statements and opinions so glibly presented in opposition by our friends Major Gove and Mr. Hathaway. The trend of their argument, if their private opinion may be dig- nified with that expression, is to the effect that the conditions in the Philippines as to labor, soil, production, and yield are such that, if permitted to develop, they will ultimately swamp not only the Amer- ican beet-sugar industry, but also the cane-sugar industry of Louisi- ana, Hawaii, and Porto Rico, and seriously handicap the industry in foreign countries. These gentlemen have appeared before this committee, after a brief trip through the islands, and posed as authorities on a subject which has been the bane of Congressional legislation for several years. In a matter which so seriously affects the industrial development of the islands and the future of our insular possessions, it is only fair to presume tliat persons appearing before this committee should be qualified by experience to vent their views and opinions, especially where absolute data are lacking and where we have to rely on per- sonal deductions. PHILIPPINE TAEIPF. 239 ^lajor Gove, one of the so-called experts who has regaled the com- mittee with his views on the Philippines, was sent out to the islands to fand out the truth about the situation. Now, it appears that Mr. (jove IS a school teacher, a professor, or in some way connected with the educational department of his State, and has a fair knowledge of raising beets ; yet without any previous training or knowledge of the cane-sugar industry he departs for the other side of the world to find out the truth about something he does not understand — something which has puzzled experts for the last ten years. Mr. Gove, in his lack of knowledge concerning tropical agricultural conditions — you will 1-emember that he wouldn't recognize a tobacco plant if he saw one — was distinctly handicapped when he set out on his journey, and doubly handicapped" after his arrival by his ignorance of the language, which forced him to rely entirely on the garbled statements of native interpreters, who probably didn't know what he was talking about, anyhow. Yet the gentleman traveled around the islands, gathering ideas, information, etc., on which to base a conclu- sion. He was forced, through his ignorance of the industry, to accept whatever was told him, and this same inexperience prevented him from delving into and analyzing the things which he heard. Yet Mr. Gove formed an opinion, and he comes before this commit- tee to unbosom himself of the great discovery that the Philippines can produce sugar cheaper than any other place in the world, and if this bill passes they will produce it cheaper yet and swamp our home market. Mr. Gove could not for the life of him get up here and explain by actual figures how this can be done, yet he takes up the time of the committee by telling it in so many words that he thinks it can be done. Not one single detail of cost has he put forward on which to base his deduction so that he can prove his assertions, yet he comes here as an authority and endeavors to sway this committee against the proposed bill. We find in his companion, Mr. Hathaway, a gentleman of the same type. Mr. Hathaway, however, tells us that he went there in the guise of a promoter, to obtain options on lands, etc., and gather data for others who intended to start a sugar factory if his reports were favorable. Now, do not mistake me in that T doubt the veracity of Mr. Hatha- way's statement in regard to this, but it is fair to say that it is highly improbable that his mission was a serious one, for again we find that Mr. Hathaway is a beet-sugar man with no previous knowledge of tropical cane-sugar conditions, and whose opinion or report before a body of capitalists would be considered worthless. It is logical to presume that when capitalists seriously contemplate investing any- thing like a half to a million dollars in an industrial enterprise, es- pecially on the other side of the world where they have to rely on expert reports, they will pick out a man who thoroughly understands that particular line of business. When the sugar people on lower Wall street want information about cane lands and the prospects of making an enterprise pay they don't select and send out a beet-sugar man, but look for the best cane-sugar expert available. Neither do they give a cane-sugar man a commission to investigate lands and 240 PHILIPPINE TAEIPF. conditions in the beet districts. They get a beet expert to handle this matter. Now, Mr. Hathaway also operated under the same handicaps as Mr. Gove, but with the further disadvantage that he represented himself as wanting to invest in sugar lands and erect a large factory. Now, you can imagine the kind of information he obtained from a bunch of planters, loaded down with debt and worked-out lands, all anxious to get in on the band wagon. [Laughter.] You can bet that human nature in the Philippines is exactly the same as it is here, only a little more so in that one particular ; and lands that would grow 1 ton of sugar suddenly increased in fertility, without the application of irrigation and fertilization, to 3 and 4 tons, and prices of lands rose in proportion. Mr. Hathaway just reveled in the kind^ of data he was looking for, and swallowed it all. As some of the plant- ers told me afterwards, he looked such an easy mark that we " tomo el pelo," or, in the English, " "We took his scalp." Now, if Mr. Hathaway knew anything about the cane-sugar busi- ness he could by simple observations have sized up conditions and seen when the statements were exaggerated. If he ever had any extended experience on a cane-sugar plantation he could, by riding round a cane field, arrive at a fair estimate of the tonnage; and similar Icnowl- edge of the mechanical equipment of the sugar house would enable him to know just how much sugar could be' extracted. But Mr. Hathaway in his apparent ignorance of the most rudimentary facts about cane sugar accepted the statements rendered him, and was unable to analyze or digest them after he absorbed them. Yet Mr. Hathaway also comes before the committee and says in effect the same as Major Gove. This may be called expert testimony, but, gentlemen, it would never be accepted by a body of business men as a basis for an investment. On its face it is absolutely worthless, and, ta,ken together, the entire statements are the finest exhibition and collection of hot air that I have ever seen published. We are not going into details in what I say, gentlemen, but we will take the general outlines. We are all tired of statistics. They state, in effect, that sugar can be produced from a cent a pound down — the cheapest production the world has ever seen. Now, when we make a definite statement of cost, that cost is open to analysis, for it is made up of many items. To make such a statement one ought to be able to prove it by figures. There are many minor details which go toward making that cent or less, such as plowing, harrowing, drilling, planting, cultivating, cutting, seeding, haulins, milling, boiling, and other items ; and when the assertion is made'"that sugar can be produced at a cost of a cent downward it requires elaboration. Now, I may state for the benefit of the committee that I spent over a month m Pampanga and Negros devoting my time to ascertaining the cost of a picul of sugar, by following each stage of the work from the time the plow was put in the ground to the time the sugar was handed to the local market, and my investigations bear out the state- ments presented by Mr. De la Eama and others, that the average cost price, without including interest, loss of cattle, depreciation etc is about $4 per picul, or, roughly, IJ cents per pound, or, includino- everything, about 21 cents. " The Chairman. Is that without any depreciation? PHILIPPINE TABIPP. 241 Mr. Eea. Yes ; without including that. The Chairman. Sugar delivered where? Mr. Eea. In Manila, from Pampanga. It is the bare mill and :field cost, delivered either at Manila or Iloilo. It is about the same thing from either place. Now, when persons who admittedly know little or nothing about the conditions in the islands, except by hearsay, coupled to their anexperience with the industry, endeavor to inflict their private views before a committee of this standing, and in contradiction to the statements of those who should know what they are talking about, it is surely permissible to request that they submit an itemized -statement of cost, bearing out their views, so that we can see whether they are right or not. Now, I am intensely interested in this subject myself, and am desir- ous of finding out just how this low cost is arrived at. It must be remembered that the movements of all farm laborers, especially those employed in plowing, cultivating, hauling, etc., are regulated entirely by the sweet will of the frisky and swift-moving carabao. The cara- Tjao sets the pace, and when we stop to think about the time necessary to plow a field we can not calculate on harnessing up several horses and mules to a big disk plow, but have to take as our basis the pace of the carabao and his one little 6-inch plow ; and if we add two or more -carabao with the hope of making them go faster, they refuse to work together. [Laughter.] Some of the gentlemen comprising the committee have seen the carabao on his native heath and admired the celerity of his move- ments. [Laughter.] People wonder why the Filipino is slow in movement, especially the countryman. If I may venture an opinion, I think that the natural development of centuries of following the carabao has something to do with the movements of the natives. I think that for the full information of this committee our friends should be called upon to produce their figures on which they base this low cost of production. If it is permissible, I would like to have these figures now, as the gentlemen are present and must have them about their persons somewhere. If the honorable chairman will call for these figures, I will conclusively prove to the satisfaction of this com- mittee that neither of the gentlemen referred to knows what he is talking about ; or if they will take the standard wage of 20 cents per day and a yield of 1 ton to the acre and bring that cost down to less than a cent, I stand ready to hand them over $100 for the information. If it is permissible before the committee, I would like to have the facts known. But they can not produce them, anyway. Neither Mr. Hathaway nor Mr. Gove can stand up and give you an itemized answer as to the cost of a picul of sugar. I would like to have that information now. I will give them a hundred dollars for it. It is worth that to me for an article. I can use that for my paper, and would be glad to pay it, so as to show the Philippine planters just how they can do it. Mr. Hathaway. You will get it. Mr. Eea. And you will get the money, too. Mr. Hathaway. I need it. Mr. Eea. But it must be made up of real figures, based on an actual calculation. p T — 05 M 16 242 PHILIPPINE TABIFP. ' Now, gentlemen, it has been repeatedly asserted, though no definite figures have been placed in evidence, that if this bill'is passed capital will be forthcoming, and under modern methods of cultivation and manufacturing the industry in the islands, like the pipe dreams of Colonel Sellers, will develop to such an extent and so rapidly that in about two years we will produce 10,000,000 tons of sugar. The pro- duction of the lands will quadruple, the rattoon crops will live for- ever, and the yield from the mill will be so great and the cost of pro- duction so low that the profits will be enormous. The bill, like Aladdin's lamp, will be sufficient for everything. Now, in all the comparisons of the tropical cane-sugar industry made by the opposition great care has been maintained to take the most favorable phase of the industry in Cuba and Hawaii to show what can be accomplished in the Philippines. The following is a sampile of this nature. It is a short quotation from my paper. The Far Eastern Review, which I have cut out [reading] : PHILIPPINE SUGAE INDUSTRY. In the Senate debate on the Cooper bill of December 16 Senator Dubois, of Idaho, a champion of the beet-sugar trust, made the following biased remarks : "There are in the Philippine Islands some 72,000,000 acres of land,' only 5,000,000 acres of which are in the possession of individuals or corporations. The other 67,000,000 acres are public lands, and, as a general thing, they are exceedingly rich for agricultural purposes. Some 50,000,000 acres of land in the Philippine Islands are susceptible to the highest cultivation, and this is especially so in regard to sugar. In Louisiana, in Texas, and in other favored spots of this country they have raised from 1 ton to IJ tons of cane sugar to the acre ; in certain other favored portions of our country they raise from 1 ton to li tons of beet sugar to the acre; in Cuba they raise about 4 tons to the acre; in Porto Rico, about 4i tons ; in the Hawaiian Islands, 4 to 44 tons, and on some plantations in Hawaii they raice as high as 10 or 11 tons to the acre, and the Philippine Islands are more productive for sugar than the Hawaiian Islands." Mr. Dalzell. When were those remarks made ? Mr. Rea. They were made on the 16th of December last year. Mr. Dalzell. In 1904? Mr. Rea. Yes. This was taken from the Congressional Record. (Continuing:) This is an excellent example of the tactics of the opposition, showing, as it does, the unwarrantable exaggeration of everything connected with the tropical cane-sugar industry and conveying a false idea of the possibilities of the Philippine yield. Broad, unqualified statements of this nature operate against us and are taken for gospel truth by the uninitiated. The main points in the statement are fairly correct, although the figures are stretched to the fullest yield under the most favorable conditions and can not be accepted as normal or average. It is, however, the unfair comparison of the closing words of the paragraph to which objection must be taken. All tropical sugar lands under natural conditions — that is, without the aid of scientific fertilizing, cultivation, or irrigation — will produce an average of 2 tons of sugar to the acre, or rather 20 tons of cane. The best virgin lands will run about 4 to 44 tons for the first two years, and then dwindle down to 14 to 2 tons. It is true that on some estates in Hawaii 10 to 12 tons of sugar are produced from an acre of cane; but to state immediately afterwards, with- out any qualifying remark, that the Philippine Islands are more productive than Hawaii demonstrates a dense ignorance of the subject-matter or a willful attempt to distort the facts in favor of the beet-sugar industry. The Hawaiian plantations producing 10 tons to the acre are very few, and to secure this phenomenal yield the most modern scientific methods are em- ployed from the time the cane is planted until the sugar is turned out of the PHILIPPINE TABIPF. 243 centrifugals bagged for market. Fertilizing on a large scale is necessary, and tJie most elaborate and costly systems of irrigation are employed. It Is a mooted question whether the increased yield compensates for the enormous capital outlay and operating expenses incurred. The irrigating plants alone are valued at more than the immense mill plants and cost more to operate in propor- tion to the power used. We have in mind a contract for the erection of a Hawaiian sugar house where the mill plant cost $450,000 and the pumping plants for the required acreage $550,000. I just vranted to show the exaggeration of that statement, because all the arguments seem to be built on such air castles as those com- paring our yield in the Philippines vsrith the most phenomenal arti- ficial yield in the world. _ The Chairmajj. I understand that the yield at the Ewa planta- tion in Hawaii was between H and 12 tons to the acre. Mr..REA. Yes; that is the Ewa plantation. But it is operated at such an enormous cost that one of the stockholders told me, " We don't know, Mr. Rea, whether it is profitable for us to continue along those lines or not." (Continuing:) The Hawaiian plantation depending for its water upon the natural rainfall will yield the average of 2 to 2J tons of sugar per acre. To state that the Phil- ippines are more productive than Hawaii, in comparison wiiih the yield of 10 to 11 tons, is grossly incorrect, and even when we talie the normal average under natural conditions of 2 tons to the acre, we are confident that the Philippines can not pass much beyond it except on virgin soils, and by virgin soils we mean cleared forests and not the grassy bottom lands. Granted that the islands can produce 2 tons of sugar to the acre. To secure this yield the most modern machinery and mills must be employed. At present not 2 tons are produced. This constant struggle of the home sugar industry to preserve the home mar- ket for its own tardy development appears to us somewhat like the little boy whose eyes were bigger than his stomach. It is a commercial impossibility for the beet industry to keep pace with the increase in consumption, let alone trying to hog the whole market. For several years we have heard the crying and yelling of the infant above all other sounds in the national legislative chamber. " Protect us from the bugaboo man in the Philippines ! " has been the constant cry. " We can supply all the sugar needed for the home consumption if you wilt only put a high fence around the littje brown ogre, so he can't eat us up." And the baby has been petted and given its sugar pap, and has clapped its hands and goo-gooed in glee. But it has not made good. Although the consumption of sugar in the United States increased over 500,000 tons in the five years from 1898 to 1902, the baby only contributed 100,000 tons to the increase. In 1900 the consumption increased nearly 90,000 tons over the preceding years. The " kid " contributed with 20,000 tons. The consumption nearly doubled in twelve years from 1890 to 1902, or, to be more exact, it jumped from 1,476,377 tons to 2,566,108, and the demand is steadily Increasing. Of the latter figure only about 500,000 tons were produced in the United States ; the balance imported. > To return to the question. I ask you, gentlemen, is it fair to com- pare the Philippines with countries lying on the other side of the world, and ignoring the differences in race, climate, and location? Because 10 to 12 tons can be produced by artificial stimulation in Hawaii, is it fair to assume that it can be done in the islands ? Is it not a fact that only in a few places in Hawaii is this extraordinary result obtained, and is it not clearly apparent that it is due entirely to purely local conditions of soil and climate? If not, would not the same yield be secured in other parts of the same islands ? Is it not a fact that under normal conditions in Hawaii, without the aid of fertilization or irrigation, the yield per acre is about the 244 PHILIPPINB TABIFF. same as it is in other tropical cane-sugar countries? To assume that the same climatic and soil conditions exist in the Philippines as will yield 12 tons of sugar per acre, without the slightest attempt at ex- periment or investigation, and to stand up here in our national legislative halls and pronounce it a fact, is, in my mind, the limit. I know that some of you will say that the climatic conditions must be the same, as the islands are just under the Tropics, the same as Hawaii and Cuba. But it don't follow. Just the same. Why is it that hemp will grow only in the Philippines, despite the many at- tempts to force its growth in other nearby islands ? Soil conditions can be chemically corrected by modern scientists, so that it can't be attributed to that cause, and we are left with the only logical expla- nation that the climatic conditions in the Philippines are peculiar to themselves. The Chairman". That is the only place in the world where hemp will grow, that kind of hemp, the abacca ? Mr. Kea. Yes. Can our friends explain why it is that ordinary lands in Cuba will grow six rattoon crops and new virgin lands fifteen, while in the adjoining island of Porto Eico they only secure two rattoon crops and a lower tonnage per acre? Or why is it that in Hawaii, with all modern aids to cultivation, they can secure only two volunteer crops? Gentlemen, I think I can safely take the stand that the climatic conditions in the islands are such as make it impossible to grow more than two rattoon crops," and these only on new lands in the interior, where the extra cost of transportation to the coast more than counter- acts any benefits "which might be saved in the cost of a yearly planting. When our poe'tical experts of the opposition stand up here and state that 10 or more rattoon crops can be secured from lands in the Phil- ippines they give voice to an opinion which has no foundation in fact, or any possible explanation to justify it in the future. Hot air, gentlemen, pure and simple ! Now, again, I will show to the satisfaction of the committee and to the satisfaction of any cane-sugar expert just why, under existing conditions, it is impossible to grow profitable rattoon crops in the Philippines, even if we allow that the lands could produce them. I don't suppose Mr. Hathaway or his friend noted these facts, for if they did and kne"w their business they would have seen what the trouble was immediately. Now, in Cuba, where cane grows like a weed, and where they hold the record for rattoon crops, the cane rows are at least 6 feet apart and 3 to 6 feet between seed or hills. • You want to remember that, gentlemen. That is an important Item. This gives ample space for the roots to spread and absorb nourishment from the soil. After the first cutting the root has a further chance to spread until it reaches its maximum. As all the mills are modern, employing green bagasse furnaces under the boil- ers, they have an ample supply of fuel from the crushed bagasse, so that in cutting the cane in the fields the green tops are cut off and left to lie on the ground. These tops form a carpet of several inches in thickness and are allowed to lie there and rot, fertilizing the soil, and by covering the ground as they do they help to retain the moisture and prevent the growth of grass and weeds. PHILIPPINE TABIFF. 245 This is one of the conditions which go toward assisting in the growth of profitable rattoon crops in Cuba. Now let us look at the fields in the Philippines, bearing in mind that the mills are of the crudest type and that the bagasse after milling has to be dried in the sun before being employed as fuel, and where they have to employ, in addition, the dried green tops also for fuel. In the Philippines the system employed is to plant in rows averag- ing 3 feet apart, and some as near as 2| feet, and 1 foot between seed. You want to remember that, too. It is clearly apparent that the root has not sufiicient space to expand in or sufficient soil to give it the necessary nourishment after the first year; and it also explains why the yield per acre is as low as "it is. It also explains why in the few cases where rattoons have been grown they have had to be abandoned as unprofitable after the second year. Now, that, gentlemen, is an explanation that I will hold up here, and stand for against any cane-sugar expert in the world. Mr. Ctjetis. Why can they not plant the crop there the same as in Mr. Rea. They do not. Mr. Curtis. But if they did could they not get more crop ? Mr. Rea. I think they might get two crops. I will come to that later. Mr. Curtis. I beg pardon. Mr. Rea. I am trying to explain the difference': Now, in cut- ting the cane for the mill, a man goes ahead cutting off the upper part of the cane for seed and carefully gathering all the tops and leaves. These are all carted to the factory, where the part for seed is cleaned and prepared for planting by immersion in water to cause the eyes to sprout a little, and the leaves are carefully spread out to dry for future use as fuel. Now, it is again apparent, under these conditions, when the field is laid bare to the sun that the moisture is more rapidly absorbed, taking it away from the new sprouts, and the grass and weeds given free rein to grow, thus necessitating the same amount of cultivation and hoeing as the initial crop. With the decreased yield per acre, owing to insufficient nourishment to the root, and the increase in cultivation, it will be seen that the saving in a rattoon crop is hardly sufficient to induce the Philippine planter to continue the practice. It must also be borne in mind that these rattoons are only grown in the newer lands, removed from the coast; for in the older lands they not only can not grow rattoons, but are limited to one crop of cane every two years. That is a point that the baet-sugar people have never dilated on here. They have never brought it to the attention of this commit- tee that the average crop is grown every two years. Mr. Clark. Why is that? Mr. Rea. Because in many places the soil is so poor that they can ijot do it. In some places the soil is not a foot deep. I turned it over to see myself. Mr. William Alden Smith. Suppose it was fertilized. What effect would that have ? Mr. Rea. I do not think it would have any effect at all. The enormous rainfall would wash it out. 246 PHILIPPINE TABIPF. Mr. Clark. Do these rains come all at once, or are they distributed somewhat evenly ? Mr. Rea. They come along six months in a year pretty regularly. Mr. Clark. Do they have six months wet and six months dry ? Mr. Rea. Yes; sometimes it rains for four or fivB days at a time, and it simply floods you out. In Manila you have to go around in a casco at times. Mr. Clark. What is a casco ? Mr. Rea. A little dugout boat. Now, a question arises here* which the gentleman has asked me and which seems to bother many in the Philippines : Can Philippine virgin land grow more than one rattoon crop under an improved system of cultivation? I assert, gentlemen, that the question is one which must be left to time to decide. Mr. Clark. Why couldn't you find that out by inquiry? Surely some people have been there quite a long while, and some srurely ought to be worthy of belief. "V\Tiy can't you ascertain that from these people over there just as well as by staying there yourself? Mr. Rea. I could never find out that they got more than one rat- toon crop. Mr. Clark. Is that your opinion, sir, that they can not get more than one? Mr. Rea. I think they might get two. That is my private opin- ion, based upon 'my observations as a cane-sugar man. I would like to be able to state that in my opinion they could get more, but, unlike our friends, I value my opinion and do not care to have it challenged later on ; but if, instead of comparing the islands to Cuba, Hawaii, and other parts of this continent, we take "a more liberal view and compare them with adjacent lands in the same part of the world, having the same general characteristics and geological formation and origin, a more common-sense idea can be formed of what the possibil- ities are. Mr. William Alden Smith. You are giving your information as an expert? -* Mr. Rea. Yes. I have been in the sugar business for quite a while, and expect to remain in it. Mr. Clark. Suppose this land over there plays out, is there any way of restoring that land, as there is down in Virginia, by fertiliz- ing and cultivating and sowing cowpeas, etc.? Mr. Rea. I do not know about that. It has never been tried there It remains to be proven. Mr. Welborn can give us more light oii that than anybody else. The Filipinos never use fertilizers. That is a question, however, that has got to be developed by actual practice. Suppose we take a more liberal view. Let us leave Cuba and Hawaii out of the question, and make our comparison with the Malay Peninsula and Java, which all belong to the same group and are washed by the same sea. The same race' inhabits them, and m all general characteristics they are the same What do we find is the case in Java? Here they have no rattoons but plant their cane once a year, and their average cost of produc' tion IS about 1^ cents per pound, or, despite the difference in loca- tion, climate, soil conditions, and cheaper wages, about the same cost PHILIPPINE TABIFF. 247 as obtains in the best-equipped centrals in Cuba. It will be seen that the advantage enjoyed by Java in having cheaper labor, as compared with Cuba, is entirely offset by the climatic and crop conditions, which force their planters to plant once a year instead of every six years as in Cuba. Now, it is generally conceded that the manufacture of cane sugar is at its highest development in Java, leading the world in its mill and sugar-house results, though behind Hawaii in the development of soil conditions. In Java they have their forced-labor system, and also are free to import labor from China or India. In fact, all con- ditions there are ideal, but their cost is about the same as Cuba, or IJ cents per pound. One and a quarter cents per pound for 96° sugar. Mr. Curtis. Ninety-six? Mr. Eea. Yes; 1| cents per pound for 96° sugar. Now, if we are going to deal in futures is it not more to the point to accept Java or the Straits Settlements as our standard of com- parison ? If in the dim and distant future capitalists can be induced to go into the sugar business in the Philipj:ftnes, installing modern, up-to-date plants and equipments, is it not just to comj)are their probable results with what is being accomplished just across the Sulu Sea with a similar race and lands geologically and geographically similar ? Mr. BouTELL. Have you been in Java? jNIr. E.EA. No, sir; but I am fairly conversant with the conditions there. I have correspondents in Java who keep me posted on condi- tions there. The tendency in the Philippines is toward a higher rate of wages, and the wages, which now average 25 cents, will increase to the wages paid in the cities, or 50 cents. At the present time the average wage paid to the laborer in the Philippines is more than is paid to the Javanese. What is the sense in comparing us with the best results in Cuba or Hawaii ? Let me read you a recent clipping on this subject, which will shed more light on the subject. This appeared in the Louisiana Planter and Sugar Manufacturer of November 12, 1904. It is pretty nearly correct, because I compared that with data contained in other letters which I got, and which I published in my paper, from people who are interested in sugar whom I met at Hongkong and at Shanghai. Tliis gentleman writes from Java. I would like to read to you half a column of this, because it is pertinent to the point I want to bring out. Mr. William Alden Smith. What are you reading from ? Mr. Rea. From the Louisiana Planter and Sugar Manufacturer, the official organ of the Louisiana sugar interests, under date of November 12, 1904. This correspondent says — coming right down to the point — he says [reading] : So far I have not discovered trades unions in Java, and tlie contrast Ijetweeu wages here and in Australia is painful. Tt is difficult to find a man in Australia and New Zealand who is not making .$2 or more for eight hours' work. Here there are millions who are glad to get 20 cents for ten hours' work. It is only in the cities that the men receive as much as this. In the mountainous resions of the Preanger I saw men and women laboring for less than a cent an hour, and in the tea plantations the regular wages are 7 cents a day for six hours' work On the railways the trackmen get 14 cents gold a day, and on the gov- ernment farms they receive less. Hpre in Soerabaya some common laborers get 16 cents a day, and this is considered high wages. 248 PHILIPPINE TABIFP. I simply wanted to bring out that point of wages, because it corre- sponds with other data that I have secured on the subject. Now, it. stands to reason, gentlemen, that the wage rate of Java will never ascend higher than it is at the present time. Mr. William Alden Smith. On that point of wages you admit, if we are to have a domestic sugar industry, we will have to have protec- tion against that kind of a condition ? Mr. Rea. That all depends on the cost. Mr. William Alden Smith. I do not want to interrupt you, but I want to know if we must not have protection against that kind of labor? Mr. Rea. No; I do not think you need it, according to state- inents already published by your people — ^by the beet-sugar people, L mean. Pardon me Mr. William Alden Smith. Those are iny people. Mr. Rea. I say it stands to reason that the wage rate in Java will never ascend much higher than it is at present, for the population of" the island numbers over 28,000,000, packed in an area of 50,000 square miles, while the Philippines, with an area of 122,000 square miles, has a population of only 8,000,000. I merely cite these figures to show that while we may look for an increase in the Philippine wage in the- future, thus increasing the cost of making sugar there, as compared with our next-door neighbor, the wage in Java will undoubtedly drop lower, placing the Philippine Islands at a disadvantage; so that, when the experts of the opposition presume to come before this com- mittee and state that with the passage of this bill and the reduction of the duties and under modern methods our cost will go down below 1 cent, they are talking without a thorough study of the subject. Now,' I am not going to finish this phase of my argument without giving the committee actual proof that what I am stating is correct^ and what we may reasonably expect will happen in the Philippines- under a system oif modern culture and manufacture. I think no one here will contradict me when I state that the Malay of the Straits Settlements or the peninsula is of the same race and' nature as his brother in the Philippines, and we know from observa- 1 tion that his aversion to work is quite as strong. The Straits Settle- ments, for industrial purposes, are in a class by themselves. The ports- are free and open, and they are not hampered by any exclusion laws. The planters there apparently have their pick of labor, but it is nevertheless a fact that, owing to the low rate of wages offered for work in the fields, the natives refuse to enter into the employ of the- planters, and take to the more remunerative and less arduous work of the tin mines. The Chinese will not work for the wage offered, ap- proximating 36 cents Mexican, or 18 cents gold per day, so the plant- ers have to import their labor from India, under contract for three- years, paying their passage both ways, and even then they find the labor question confronting them at every step. Mr. Clark. Will it interrupt you to ask you a question there? Is it true that all the American citizens in the Philippine Islands are clamoring for the Chinese coolies to be let in there ? Mr. Rea. No, sir; they are not; none that I have met. A few of them may be who probaljly do not understand the situation. PHILIPPINE TABIPF. 249^ Now, I would like to submit for the study of the committee the last years report of the Perak Sugar Cultivation Company (Limited). This IS a stock company with a capital of 350,000 taels with a par value of 50 taels each, operating under the corporation laws of Hong- kong. Its shares are listed on the Far Eastern exchanges, and their value at the last quotation was above par, or 68 taels. Their prop- erty IS located at Perak, in the Straits Settlements, and consists of two sugar estates, one operating as a muscovado estate and the other equipped with a mill, evaporating apparatus, vacuum pan, and cen- trifugals, making centrifugal, or about 96°, sugar. Their last report, dated November 1, 1905, which I received in Shanghai from the secretary of the company, states that the crop of centrifugal sugars from the Gula estate totaled up 39,485 piculs, for Avhich they received an average net price of $6.58 per picul, and the output of their Klompong estate, making basket, or brown, sugar, was 27,199 piculs, for which they received an average net price of $3.89 Mexican. The total produ Mr. Rea. There is the machinery to be installed. Mr. Clark. You do not need any but the ax. Mr. Rea. You asked me how long it would take to start a moderr* plantation there ? Mr. Clark. How long it would take to skin off the timber and start the first crop ? Mr. Rea." About eighteen months for any extensive area of land. Mr. William Alden Smith. The sugar land is not timbered land, is it? Mr. Rea. "What the people call " sugar land " is not timbered. If I were going into the sugar business in the Philippine Islands, I would buy timber lands, and I think in our experience in Cuba after / the war sugar men gave the go-by to the old worn-out lands in Matan- zas and Habana provinces and went to the eastern end of the island and bought new virgin lands covered with forests — at least the gen- tlemen I represented. We had a large contract with Mr. Havemeyer for the erection of a sugar mill. Mr. Clark. You could not raise but one crop in two years, because the land was not rich enough ? Mr. Rea. Yes, sir. Mr. Clark. How does it help the land any to give it a rest for a year? Mr. Rea. It gives it a chance to recuperate. Mr. Needha3i. How much did vou have to pay for that sugar land in Cuba? Mr. Rea. I do not think I am at liberty to say what we bought it for, but I can state that lands can be bought for less than $5 an acre. It has been repeatedly urged that immediately on the passage of this bill the American capitalists are going over into the islands, down into the island of Negros, and buy up those old worn-out sugar lands, which their owners hold at $40 or $50 gold per acre. That is their assessed value. Is it reasonable to suppose that sugar men will buy that land when they c&,n go down to Cuba and secure the best lands in the world for $5 or less an acre ? I know it can be bought in Cuba for that price and is being bought now, while in the Philippines if we can induce any of our capitalists to go out and buy the abso- lutely virgin land in some of the near-by islands it will take time to develop it — at least four or five years. Mr. Palmer spoke about the great fertility and possibilities of the island of Mindanao. I do not know whether Mr. Palmer knows it or S56 PHILIPPINE TABIFP. not, but our labor question in Mindanao is very acute and, as a matter of fact, we can not get the Filipinos — that is, the Christian native — to go down there and work. The Mindanao Moro has a very effective method of dealing with his Christian brother. They do not migrate down there and you can not induce them to. The Chairman. There is a very strong prejudice and there would be a war in a minute. Mr. Rea. The war would be one-sided, to the detriment of Filipino labor. The Chairman. There would not be any more Filipino laborers? Mr. Rea. No, sir. Mr. Clark. Perhaps we had better send them all down there; I dp not know. Mr. William Alden Smith. How long have you been in the Phil- ippines ? Mr. Rea. Two years. Mr. William Alden Smith. Where were you before you went to the islands ? Mr. Rea. In New York, and previous to that I spent four months in Porto Rico helping to make contracts for the location of a large sugar factory there. Previous to that I represented Mr. O. B. StiU- ,man in Cuba as his manager. He is one of the largest cane-sugar men in the island. He has offices in New York and in Habana, and also represented 'the Havemeyer interests in Cuba. He is general manager of the Trinidad sugar plantation, one of the largest in Cuba. Mr. William Alden Smith. What is your business in the Philip- pines? Mr. Rea. I am, publisher of the Far Eastern Review, published in Manila. Mr. William Alden Smith. That paper is for absolute free trade /between the Philippines and the United States? Mr. Rea. Yes, sir. Mr. William Alden Smith. You are a free trader yourself, are you not? Mr. Rea. I am like Mr. Welborn. I believe in good protection -occasionally. Mr. William Alden Smith. But on general principles you are a free trader? Mr. Rea. No ; I am a Republican and a protectionist. Mr. William Alden Smith. Your paper advocates free trade? Mr. Rea. Yes, because it is just. It is justice to the Philippine planter and to your fellow-countrymen who are out there doing their country's work trying to educate these people, and who are bearing the brunt of the struggle. They should be given fair play. Mr. Rea. Yes, sir. I am a newspaper man and receive all the newspapers. I have read these things and know what was said. Give us a square deal. That is the only thing that one American can ask from another. Mr. Hill. You said that you had been several months in Porto Eico. Do you know of any reason, from your experience in both countries, why the United States should not extend equal treatment to both countries? Mr. Rea. I see no reason whatever. PHILIPPINE TAEIPP. 257 ADDITIONAL REMAEKS OF MR. WELBORN. (Also pages 203 and 273.) Mr. William Alden Smith. I would like to ask Mr. Welborn a few questions. You say that it has taken the sugar-beet industry fifteen years to "obtain its present output? Mr. Welborn. Yes, sir. Mr. William Alden Smith. And you draw the conclusion that it would take the people over in the Philippines an equal length of time, perhaps, to get upon a reasonably prosperous basis? Mr. Welborn. I did not draw any direct conclusion. Mr. William Alden Smith. Do you know, as a matter of fact, that in Michigan there is a large number of beet-sugar factories to- day and there was none prior to 1889 ? Mr. Welborn. I did not know that, but I have a recollection — I looked this matter up — that the beet-sugar industry was thriving many years before and that it has been steadily growing for about fifteen years. Mr. William Alden Smith. But it is only fair to say that the movement is rather a recent thing ? Mr. Welborn. Yes ; about fifteen years, as I gather from reading. Mr. William Alden Ssiith. But is that true as to Colorado and Michigan ? Mr. Welborn. I am not particularly familiar with the conditions there, but you mention sixteen years for Michigan. Mr. William Alden Simith. What was your business before you became identified with the Philippine government? Mr. Welborn. I was a college professor and later a cotton planter. Mr. William Alden. Smith. What position do you hold in the PhiKppine administration ? Mr. Welborn. I am the director of agTiculture. Mr. William Alden Smith. By whom were you appointed? Mr. Welborn. I was appointed by the Philippine Commission, or the governor-general of the Philippines, and the appointment was approved by the Philippine Commission. I do not know just what the machinery is. Mr. WiLtiAM Alden Smith. You hold that position still? Mr. Welborn. I have a higher position now. They found that I was a great deal better man than they thought I was. I hope next year that they will know still more about me. Mr. William Alden Smith. As a matter of fact, you are in favor of free trade between the United States and the Phihppines ? Mr. Welborn. Oh, yes. Mr. William Alden Smith. You are in favor of free trade every- where ? Mr. Welborn. No, sir ; I can not say that. Mr. William Alden Smith. Then you have been a free-trader most of your life ? Mr. Welborn. Perhaps I voted with a party that leaned that way. Mr. William Alden Smith. Have you not been a free-trader and a critic of the Republican policy of protection ? If you do not care to answer, I will waive the question. I do not care to embarrass you. p T— 05 M 17 258 • PHILIPPINE TAEIFP. Mr. Welboen. As a .matter of fact, I have always accepted pro- tection as a settled principle, and have thought rather well of it as a national policy. Mr. William Alden Smith. But you are a free-trader in practice? Mr. Wblborn. No; not at all. We consider that the Philippines have about the same rights as Porto Rico and Hawaii. Mr. Curtis. What is the attitude over there in regard to the admis- sion of Chinese to the islands ? Mr. Welboen. So far as I know, from such opinions as I have heard, we should have the same labor laws as the United States, Hawaii, and Porto Rico, and the same tariff laws as well. That is certainly consistent. Mr. CiTETis. At the meeting at Manila was it not the almost unani- mous opinion of the Filipinos that they did not desire it ? Mr. Welboen. The Filipinos are afraid of the Chinese. The state- ment made then was that they did not want the Chinese there; but it would certainly be inconsistent, gentlemen, for us to ask to be put on the same tariff basis and at the same time not be willing to be put on the same labor basis. STATEMENT OF GEN. LUKE E. WRIGHT, GOVERNOR-GENERAL OF THE PHILIPPINE ISLANDS. {In support of the Mil.) Mr. Weight. The chairman has informed me that this hearing has already taken up very much more of your time than you can very well afford to give, and it is not my purpose to advance any argument which has already been made by the gentlemen who have appeared here in behalf of the passage of this bill, nor do I expect to go into any detailed examination of the various estimates as to the cost per pound at which sugar can be produced in the Philippine Islands, for two reasons: First, you have. heard the opinion of an expert; and, in the second place, I am not an expert. I suppose it is fair to say that when doctors differ it is permissible for a layman to express an opinion. There has undoubtedly been very great conflict of state- ments as to the wages in the Philippine Islands and the efficiency of the labor in the Philippines as compared with the United States. There are, however, a few fundamental facts which have appealed to me and which I ought to mention to you. The first is that the people engaged in raising sugar in the Philippine Islands are prac- tically in a state of despair at this time. I know that they are mortgaged to the point where it impossible for them to get any more money. I know from personal conversations with the managers of the Hongkong Bank, the Chartered Bank, and other large concerns which are in the habit of advancing money to sugar planters to raise their crops that they now refuse absolutely to lend them a dollar. In some instances the mortgages on sugar estates have been foreclosed, but in a large majority of instances they have not been sold out, because the mortgagees see no advantage in taking over the land and prefer to have the mortgagors remain in possession and keep the places in some sort of condition. Now, we can not get away from that. As to the moral side of this question, I do not intend to speak beyond saying this, that when PHILIPPINE TABIFF. 259 President McKinley sent Secretary Taft and the Philippine Com- "^ission to the islands he sent them there with certain injunctions, which we have endeavored to comply with, and among them was the one to educate, build up, and develop that people. Now, we have introduced American school-teachers there. We are trying to edu- cate them. We have introduced American methods there in the ad- ministra,tion of government, and I hope I may say without the impu- tation of egotism or vanity we have tried to give them an honest and economical administration ; but it has always been perfectly obvious to me, as I think it has been to Secretary Taft and my colleagues, that it was idle to hope to accomplish anything of a substantial character in that direction so long as the great majority of them were miserably poor and absolutely without opportunities to better their fortunes. "What is the use of giving a man an education when he can not put it to practical use ? My judgment is that unless you are really going to develop the resources and improve material conditions in the Philippine Islands you had better leave them alone, just as they are, because it seems to me self-evident that when you educate a man and show him the possi- bility of better things and yet take away from him opportunity you make him a dangerous man and a bad citizen. Therefore I have believed that, perhaps, our paramount practical duty was to raise the scale of wages and the scale of living and widen and broaden the horizon of the people. It is always more or less embarrassing to talk publicly about people with whom you are in personal and official relations, as I am. What is said goes back to them and injures their pride to some extent; but the real truth must be told, and in order that you may understand the situation I will understate very much more than overstate condi- tions. The great mass of those people to-day are in a state not only of ignorance, but they are in a state of industrial dependency and depression. T\Tiat Mr. Hathaway said about peonage is to some extent an exaggeration now. No doubt in the past it was literally true. Under the Spanish regime the great mass of the people were as completely under the control of the principal men of the islands as the peons of Mexico. They had a system of laws which practically carried the debt' of the father over to the children and which imprisoned the laborer if he attempted to leave his employer without working out his debt, which he rarely, if ever, did. Those are simple truths. The American administration has changed that state of affairs so that the proprietor no longer has any legal control over his dependents. The latter are beginning to understand that they have the rights of free men, but that knowledge is of no value to them. It simply makes them discontented and unhappy, unless you give them an opportunity to earn something. Now, that applies, of course, to the labor of all the islands, not only to agriculture, but to every other form of labor in the islands, es- pecially, however, as to tobacco and sugar, which are the immediate subject-matters of investigation. The tobacco raisers are confined practically to the provinces of Cagayan and Isabela, in northern Luzon, in what is known as the Cagayan Valley. It is a great valley, watered by the Cagayan River. The lands are periodically enriched by the overflow of the river, but the population is not great. It is 260 PHILIPPINE TABIPF. very remote. It is a journey of two weeks, possibly, from Manila to the capital of either of these provinces under the most favorable con- ditions and frequently it takes a month if winds and tides happen to be adverse. The principal crop of the inhabitants of these two provinces is tobacco. The fact is that the tobacco which they raise is not very much more than enough to meet the local demand in the islands. There is a small export of that tobacco in the form of cigars which goes to Europe. The tobacco manufacturers in the Philippine Islands are not particularly anxious to have free trade with the United States. I think, Mr. Chairman, you will recall the fact that you did not have any tobacco manufacturer come before you while in the islands* ' The Chairman. They did not think it would be a good thing. Mr. Wright. I have talked with several of them about it. They are very frank in saying that if we have free trade with the United States it would be a good thing for the whole country in a long run. as it is going to raise the prices of wages to the tobacco growers and they will have American competition in the market for the purchase of their raw tobacco. As it stands now the manufacturers, who are few in numbers, practically fix their own prices in purchasing from the small farmer. A few weeks before I left the islands two delegations came to Manila, one from each of those provinces, stating that the prices which they were being paid by the manufacturers were ridiculously inadequate^ did not enable them to scarcely more than live, and asking the Phil- ippine government to advance them money to live on so that they could hold their tobacco and break the combination. We could not do anything like that, but it illustrates the situation. What we hope to do with this legislation is not so much to send any considerable quantity of tobacco to the United States from the islands as to make it possible for the people engaged in its production to get a better price for their crops. Now, a word more as to the situation of the sugar planters and their employees. The proprietors pay very low wages, but even with this apparent advantage they are not making money. They did make some money last year, but it was a very exceptional year, as the price was exceedingly high — more than double that of recent years — brought about the Brussels convention, which resulted in the abolition ' of bounties for beet sugar in Germany and other countries in Europe, and a supposed decrease in production. But the event has shown there was no substantial decrease, and the price has practically o-one back to where it was before. The Manila and Iloilo merchants 'who bought Philippine sugars at high prices have lost heavily. Some of them, I understand, have shipped a part of their purchase to the United States, hoping to get the benefit, doubtless, of any law you might pass reducing the duty on sugar. Those men have nearly been ruined, are in a state of suspended animation, and very nearly dead. Those are simple facts. So much for the shipment of sugar from the islands to this country, which has been the subject of comment and which, with this explanation, may be dismissed from further consideration. Now, as to the ridiculously small wage paid by the planters, about which much has been said, I agree that their condition is lamentable. Before any real prosperity or growth can come to them they must be in position to earn more and live better. PHILIPPINE TABIFF. 261 But in breaking the chains which have hei:etofore bound them to their masters we have done them no real service unless we give the latter at least some part of the advantages of our markets so that they may pay their labor at least a living wage. Until we increase the price of labor in the Philippine Islands there will be no general pros- perity and no real development there, and that to my mind is the chief motive of our existence there and the justification of our being there. It is impossible to elevate the great mass of the common peo- ple of those islands, and until you have done that all the discussion we hear about the future of the Philippines and their relation to the United States seems to me not only academic but harmful, both here and there. It was said, I believe by Senator Newlands, that it is generally conceded that the United States got a " gold brick " when it got the Philippine Islands. I do not agree in that view; but even if it be true, it furnishes no reason why, when we .boast of our benevolent and disinterested motives in being there, we should hand the " gold brick " out to those people, and just so long as you make these discrimina- tions, so long as you treat the Philippines not as a part of the United States, not as American territory, but the territory as foreign and the people as aliens, just so long is it idle to hope to do any real good for them, because you have to convince them by practical acts of kindness that you mean what you say. When you give them naviga- tion laws which increase their freight rates, when you give drawbacks to American purchasers of their hemp, thereby imposing a burden upon Filipinos, and when you build up tariff walls against them and treat them differently from what you do Hawaii and Porto Rico, such acts as those give the lie to our operation of disinterested and benevolent purposes. In short, I submit there should as an act of simple justice be free trade between the islands and the home land as soon as possible. Mr. McCleaey. "VA-Tiat about revenue for the Philippine govern- ment if the tariff be all taken away ? Mr. Weight. I do not mean that it should be taken away at oiice. It could not be, because we have a treaty with Spain which would jnean free trade everywhere, and that would cut off our revenue, but T think we can ultimately, when the tinie comes, through a system of internal-revenue laws, properly administered, raise revenue enough to support the insular government with proper economy and not ask you for anything. Mr. McCleary. That was one purpose of my question. The other was, the retention of the revenue was not directed against them, but for them — that is, to furnish revenue for them. The intention of the retention of whatever tariff may be retained had their country in mind. Mr. Weight. We are perfectly convinced that this Congress and the people of the United States as a whole mean well by the I'ilipino people. I think they are in good faith endeavoring to carry out the beneficent plans of Mr. McKinley, but good intentions, it is said, pave a certain country that is warmer than the Philippines, and I submit that the practical way to show your good intentions is really to give, them a " square deal." 262 PHILIPPINE TABIFP. Just one more word. I feel I am trespassing upon the patience of the committee eA^en in addressing you, but this is a subject about which I have felt very deeply, and I therefore offer that as my ex- cause for speaking further. The idea that if you give absolute free trade, and certainly if you give them the very moderate benefits which this bill contemplates, you will endanger any American in- dustry is absolutely without any foundation for its support. These gentlemen who see in the immediate or dim future Philippine tobacco and sugar flowing into this country in such quantities as to ruin domestic producers are simply frightened without the least cause for it. It is simply impossible, gentlemen, for you to imagine, without having come in actual contact with it, the force and strength of habit and custom as it exists among the Filipino people. I think Mr. Secretary Taft will bear me out in saying that some of the very best laws which the Commission has enacted, and which would not provoke discussion here for a moment, have been received by them with wailing and gnashing of teeth simply because it was opposed to what they call " custumbre." They could not understand it. It was not what they were accustomed to. We found even that in in- troducing our public school system many viewed our action with suspicion because it was an innovation, and, as they said, put fool notions into the heads of the plain people, although I am glad to say they later have eagerly seized the opportunity offered them. Now, when it comes to breaking up an established industrial sys- tem it is the work of years. I remember after our great civil war in the South, when the old system was uprooted suddenly and violently, how immensely difficult it was to change from the old methods to the new, and how slow was the process. Notwithstanding that the south- ern people, living in the Temperate Zone, were educated and indoctri- nated with all the traditions of the Anglo-Saxon, it was many, many weary years before they reached the point where they could see the dawn of prosperity. It was a horrible, weary struggle. How can it be expected, when .we come to deal with the Filipino, living as he does in a tropical climate, slow to change, viewing with suspicion every new proposition presented to him — how can we expect in a decade or even a generation to convert him to up-to-date methods? Why, it is ridiculous to talk about it. I know that the Secretary and his colleagues all thought when we went over there that we would finish the work in the islands in eight- een months or two years and would come home. We have not gotten through the rind of the problem. We have made a beginning, and we can see encouraging signs that the mass is being leavened and the augury of better things, but that is all. I do not mean to tell you that the islands as a whole are in a state of industrial ruin. That is not true. The islands are slowly righting themselves and are making^ a substantial if gradual advance. Last year our exports were $2,500,- 000 in excess of the previous year. Our imports fell ofi' slightly, but the falling off was much more than represented by the falling off in the import of rice, which is 'the principal food supply of the islands.. In other words, they imported $4,000,000 less of rice than the year before. They are now taking off a rice crop which, I am informed from a good many sources, will cut down again one-half the rice imports, and possibly more than that, so that they will nearly or quite PHILIPPINE TAEIFP. 263 raise their principal food supply at home this year. All this means advance, but it is slo"*. So far as the sugar industry is concerned, that is in a terrible state. Now, you may say, Why don't they go at something else? They can not go at something else. For better or worse, they must remain rooted to the soil and their present vocation. It has been already stated — and I shall go over it again, as it is well to keep that fact in mind — that it would take, at the best, several years to introduce, even with all sorts of pressure, the modern methods of agriculture in the sugar industry or any other industry in the Philippine Islands. How would it be done ? We have been trjwng with a substantial bonus for a long time to get capital to come over and build railroads. Have we done it? The bids that have been offered are simply bids for certain portions of the islands which are densely populated and where they can see that they will make a profit from the beginning. It is but the simple fact to say American capital and foreign capital generally do not find the Philippines quite as inyiting a field as many men imagine it to be. The Filipinos therefore must depend, at least largely, upon their own capital and resources, and perhaps it will be just as well in the long run that it should be so. If we were to increase the sugar output at the rate of 100,000 tons a year, which is impossible, beginning with three years from now, it would not meet the increased demand in the same period here in the United States and would leave the situation relatively just what it IS now — that is, with a large foreign demand which could only be met from abroad and upon which a large tariff duty is paid. It is therefore utterly impossible that any real harm can come to the sugar interests of the United States, and it is on that ground that I appeal to these gentlemen who represent the beet and cane sugar industries to support the pending bill. I do not complain that a man follows a line of intelligent selfishness ; that is natural enough ; but I do ob- ject to what I may without disrespect term pig-headed selfishness. There is no ground for the alarm which seems to exist. I was look- ing over not long since a table showing the annual exports of sugar from Hawaii from the first to the past year, and I saw that it has taken them fifty years to build up their sugar industry to the present point. It is necessarily a slow business. Yet in Hawaii the American missionary and the Americans gen- erally have been in charge of things during that entire fifty years. They have had no terrible calamity in the way of pestilence or war or anything of that sort. They have had up to a very recent time the population of the world to draw their supply of labor from, and yet with all these advantages in fifty years they have not been able, under the most favorable circumstances, to exceed 360,000 or 370,000 tons of sugar. I believe that is the amount. In the Philippines, as has been already stated, there is no superabundance of labor. The great mass of the people are engaged in raising rice, hemp, copra, and tobacco on a small scale. They have tremendously strong local attachments. You never saw a people who hate to leave their homes, as they do. It is almost hereditary with them, because they have been taught by the people who governed them to cluster close around the church. They live in villages, and some portions of the islands are very densely populated and other portions sparsely populated or not at all. The 264 PHILIPPINE TABIPF. labor supply, therefore, can not be readily increased except by in- creasing tremendously the wage of the laborer. • That is the only way you ever get one of them to move out of his tracks, and so when you increase wages — which I hope to heaven may be the case, and if I did not hope so I would not be here talking to you — ^when you do raise the rate of wages, which means so much to them, you destroy the enormous margin of profit which has been spoken of. In other words, you get it down to a basis very much like it is here in the United States. One word more in answer to the chairman's question about the Chinamen. While there is a good deal of Chinese blood among their principal and most intelligent men, the great mass of the population, who are pure Malays, dislike the Chino, as they call him. The Chinaman marries readily with the Filipino. The women like him because he is a good provider and a kind husband and father. But there are a good many towns in the islands where a Chinaman can not live at all, and the principal crin;es of violence even in the cities to- day are crimes committed by Filipinos against Chinamen. If any- thing would produce a revolution in the islands it would be the wide- open door to cooly labor. I take it that the United States is not going to change its policy of exclusion. The Chairman. That is so remote that it is hardly worth while to discuss it. Mr. Weight. I think the Commission did recommend that skilled Chinese laborers be admitted for five years with the understanding that each one coming would take as an apprentice a Filipino, so that they might be taught the trades. That proposition was not even considered by Congress scarcely. It fell dead. Now, we can not go to Japan. Our contract-labor law makes it impossible. We are compelled to enforce that law just as rigidly there as it is enforced here. So for labor we must depend upon the Filipino himself, and our hope is if you will give us a chance that we will develop him into a fairly good laborer. The whole question, it seems to me, is whether or not you want that done. I regret to see running through a good deal of the discussion here a disposition rather to throw off the Fili- pino, to treat him as a foreigner, and to sever the relation now existing as speedily as possible, but that is not the policy of this Government nor of the great body of the American people. Certainly if this is their feeling they have been most unfortunate in their selection of representatives in the Philippines. The Chairman. You do not object to the revenue ideas of this bill running for the next three years? You need all the money that will come from it ? Mr. Weight. Yes, sir. The Chairman. And just now you are somewhat crippled in your efforts to extend education because of being crippled in the matter of revenue ? Mr. Weight. Yes, sir. The Chairman. You would like to extend the school system as fast as possible in the islands? Mr. Weight. Yes, sir. I think we have only 500,000 children in school now, whilst we have perhaps 2,000,000 of school age. PHILIPPINE TAEIFP. 265 The Chairman. Is it your opinion that by the time free trade is provided for in this bill you will be able to extend the revenues so as to be sufficient to provide for the government? Mr. Weight. I believe we can do so ; and I think another thing will make it comparatively easy, especially if you give us what we ask here ; and that is that it will create everywhere in the islands a very much better feeling and will aid the rehabilitation of the people there, so that without increasing our tax rates at all we will get a very largely increased revenue. Mr. William Alden Smith. I want to say to you that I agree with your statement and your interest in the Philippines; so that there is no hostility to begin with between the position you take and the posi- tion I take. The only question is one of remedy. Now, I understood you to say in the opening, in commenting on Senator Newlands's state- ment that we got a " gold brick," that you did not want to turn around and give them a '" gold brick." Are you very sure that this proposi- tion which is now pending is not a " gold brick " so far as any prac- tical realization of a permanent benefit to the islands is concerned? Mr. Weight. I do not think so, Mr. Smith. I have heard the argu- ment advanced by Mr. Hathaway or Mr. Humphrey, I am not sure which, probably both of them, that in view of the Brussels treaty the signatory powers will regard the reduction of the tariff here as a bounty to the Filipino sugar growers, and therefore will impose a differential against them. I am not prepared to say — of course we must be frank about these matters — that the result of passing this bill will not be very largely to cause the sugars that grow in the Philip- pine Islands to come to the United States. I rather think, and cer- tainly hope, this will be so. So long as they come here, no question can arise about differentials. As to exports from the Philippines to England or to Europe, it is purely a local matter. Mr. William Alden S>iith. You are going to take so many years to build up this industry ? Mr. Weight. Yes, sir. Mr. William Alden Sjiith. If by the time you get the industry built up the domestic production of sugar has increased very largely, the production of sugar in Cuba, Porto Rico, and Hawaii has in- creased largely, and you find no market here for the industry you have cherishedVwhat is to become of that product? Mr. Weight. My dear sir, until the beet-sugar and cane-sugar people of the United States have raised enough sugar to supply the demand in the United States that question can not arise. Mr. William Alden Smith. They are doing it gradually. Mr. Wright. Yes, sir; gradually. In the course of twenty or thirty or fifty years, if such a condition should arise, Congress is in session every year, and it could deal with the question when it came up. ^ „ , , , . . „ , . » , , Mr. William Alden Smith. I favor the diversification of the employment of labor in the Philippine Islands. Any scheme of this Government or your Commission which will diversify the production and employees I will readily cooperate with. Do you beheve this will tend in that direction ? Mr. Wright. I do, Mr. Smith ; most emphatically so. 266 PHILIPPINE TAHIPi'. t Mr. William Axden Smith. Do you believe that it will stimulatt? immigration to the Philippines? Mr. Weight. No, sir; I can not say that I do. I have never be- lieved that there would be any great foreign immigration there. I think those people have got to work out their own destiny, and what- ever good really comes to them will come from the natives and not so much from foreigners, except in the mere matter of showing them new methods and improving their condition. I do i;iot think it will ever be what is termed " a white man's country." I think there is a fine opening for men with some little means who will go there and start cocoanut plantations and sugar estates and hemp plantations, nothing very extravagant. Mr. William Alden Smith. It has been suggested, Governor, that if you stimulate the sugar industry in the Philippine Islands and make that the predominant production there you consign the Philip- pine workmen on the sugar plantations to semislavery. Mr. Weight. Will you let me answer that ? Mr. William Alden Smith. Yes, sir. Mr. Weight. I am glad you mentioned it. In the first place, the great mass, three-fourths of the Philippine people, are engaged in other pursuits. You take the hemp industry. There is a great de- mand for hemp. There is no duty between the United States and the islands on hemp. Wages have risen tremendously for laborers in the hemp fields. Thpy have there the " hemp puller," as they call him — the man who pulls it through the knife to cut away the pulp from the fiber in the leaf. He is given about 2 pesos — about $1 in gold. There is a scarcity of them. They will not leave their present voca- tion. It is very difficult to make them migrate from their homes when needing work and when even all sorts of advantages are held out to them. They distrust the stranger, and this can best be illustrated by relating an incident that came under my observation. You gentlemen who were out in the Philippines will remember that they had a terrible drought in the island of Cebu. It ruined the crops and turned the island as brown as a berry. They lost practi- cally their entire rice and corn crop. There was a great deal of distress, and the government — the Com- mission — started public works. Now, the provincial supervisors in charge of these works, and the American ladies there, who had started a voluntary relief organization to protect the women and children who came into the city of Cebu from starvation and who asked for aid found that the men were unwilling to work on the roads, where they could get rice and money for their labor to support themselves and their families, because they said they were afraid to go; that their neighbors and kinfolks were not there and they did not know what would happen to them. The unknown is horrible to the ignorant man He does not like to go among strangers and he will not go among them! So you will not find it such an easy matter to get labor engaged in rice and hemp and cocoanut raising to abandon the pursuits in the neigh- borhood in which they are accustomed and go to raising sugar and the only way to get them to go is by hanging up such a dazzling reward in the form of increased wages as will overcome their tenden- cies and sympathies. I do not see, if you give a large wage to them— and they are much in demand— how you are going to make slaves of them. PHILIPPINE TAEIFF. 26T Mr. William Alden Smith. I hope not. Mr. Weight. It is not possible. The truth is there could not be 1 fu ^^^^^^ of things any enormous increase no matter what stimu- lus they have in sugar raising. XI. I" ■,.^^^^*^ Alden Smith. That is practically true in Cuba in the nelds. Mr. Wright. Is that their condition ? Mr. William Alden Smith. Practically. , ^^-^"i lyHiGHT. No such state of affairs could, in my opinion, exist in the Philippines. Mr. William Alden Smith. Oh, certainly. Mr. Clark. I was reading a statement in the newspaper by Sen- ator Dubois. He says that the natives over there will not take these public lands and perfect title to them and live on them. ^Vhat is the reason? Mr. Weight. I am glad you asked me that question. I have been studying that question a good deal. We passed what I regard as an extremely liberal public-land law, following out, of course, the gen- eral lines that Congress laid down. ilr. Clark. It seemed to me so. Mr. Wright. And approved afterwards by Congress. Mr. Clark. I think it is a good law. Mr. Wright. It has all sorts of provisions intended for the benefit of the people. There is a short proscription. Most of the people there are living on lands without any paper title whatever, probably 95 per cent of them. We said in this act that a man who had been there, either himself or his ancestors, for ten years should have a title, and the squatter should have lands to the extent of 16 hectares — 40 acres — and we would give him a title without expense. All he had to do was to just come up and make a request for it, our purpose being to settle the titles and to scatter the population more than it was under existing circumstances. We, I believe, had one man to come up and ask for the benefits of that act. '\¥hat we are doing now as to the latter provision, which will expire in another year, is that we are printing circulars in all the native dialects and in Spanish and having them scattered broadcast, and are also sending them out to the school-teachers in eve^'^ town and barrio to give to the chil- dren. We find it a very efficient way to get the children in the schools to take them home to their parents. We hope in that way to very largely overcome this inertia. Mr. Clark. That is the reason they will not get homes of their own? Mr. Weight. Yes, sir. Mr. Clark. They are not akin to the white people? Mr. Wright. No, sir. You must remember that they have been accustomed to live in villages all their lives. They have none of the aggressiveness and the disposition to pioneer tlffit the American has. Mr. Clark. We have been in possession of the islands — that is, since the Taft Commission was appointed — about six years? Mr. Weight. About five and a half years. Mr. Clark. How many Americans, adults, males or females, who are there living have gone over there, barring the official classes ? Mr. Wright. I should say probably 10,000. 268 PHILIPPINE TABIFF. Mr. Clark. A very small immigration. Mr. Weight. Yes, sir; a man without means and not holding an official position would not find a very wide field for his energy. The man with some money who goes there has fine opportunities. You in your wisdom fix it so that a man can not get very much land. You can not form a corporation in order to secure capital sufficient to engage in sugar raising and the other industries. Some parties who have settled in Mindanao are farming on a small scale. They are planting hemp and cocoanuts. I would like to see more of it. Mr. Clark. If the sugar industry presents such a good opportu- nity, why do not the American capitalists rush over there ? Mr. Wright. There is no bonanza. The truth is it is utter failure as things stand. The statistics show that the production has gone from 300,000 tons down to 100,000 tons, and it is because of that we are here. If I may be permitted — it is entirely germane and worth consider- ing in connection with this general discussion — I believe myself that with just fair play to these people you will see a steady improvement in their economical conditions. I think the hemp output is steadily increasing. The copra they have planted largely, but it takes aboiit «even years to obtain the first crop. That is a slow business. They are still planting largely. Now, if we give a reasonable stimulus to sugar so as to bring it up to a couple of hundred thousand tons in the next five years that would greatly help, and possibly in the next fif- teen or twenty years it might reach, say, 400,000 tons as a maximum, and realizing at present prices, say, $25,000,000. So that in that period we may hope for, say, $100,000',000 exports and like imports. The truth is, as stated, that we have not touched the material re- sources of those islands. These gentlemen are in some degree right about that, but there is not going to be any phenomenal increase. It is not possible. It is going to be gradual and very slow. The day of miracles is past, and the most we can hope for is to give them good laws, preserve order, educate them, improve their material conditions gradually, and let the country develop with the growth of popula- tion. I hope very much that you gentlemen who seem to be fearful of the consequences of reducing the tariff will revise your opinions, because I assure you, if it is of any weight, there is not the slightest danger to any industry here, not the slightest, and there is very much less danger than there was in Hawaii or Porto Eico, and so far as I have been able to observe it did not hurt anyone when sugar came in from those islands free. I am much obliged to you. FINAL STATEMENT OF ME. F. E. HATHAWAY. (See also p. 8.) Mr. Hathaway. I do not wish to trespass on your time. I appre- ■ciate fully the fact that I have not had very much time to prepare anything in rebuttal to the argument that has been presented here. I want to say in the start that there are very few men in public life to-day for whom I have a higher regard than I have for the gentle- man who has just taken his seat. I realize quite fully, as does he some of the difficulties which beset him and his colaborers in the PHILIPPINE TAHIPF. 269' Philippine Islands. I realize also, gentlemen, that this is not a prop- osition to be approached with anything but seriousness, and that it is not a, proposition in which funny stories or sarcasm or anything of that kind has any weight whatever. It is a proposition which should engage and is engaging some of the best intellects in Congress— a proposition that is worthy of the most serious consideration which you and your colleagues can give it. Now, I would not for anything misquote the last gentleman, and I think that you will give me credit in all the remarks I have made here, notwithstanding the statement that one gentleman has made, that I have not attempted to misquote anyone. I could not help but think, ds the Governor was speaking, of the newspaper report ot the speech he made at the banquet in Hollo. I do not say that it is his speech, but simply that it is the newspaper report of his speech in which he advised the people, according to that report, to base their claims here for a reduction of this tariiTupon an appeal to the sympathy of the American people. Mr. Wright. Are you referring to me ? Mr. Hathaway. Yes, sir. Mr. Weight. I simply say that that is the newspaper report. The Chairman. I heard the speech and I do not remember any- thing like that. Mr. Hill. I heard the speech of Governor Wright and he did not say that. Mr. Hathaway. Just one or two words further. Governor Wright states that the United States is not a party to the Brussels conven- tion, and consequently that its findings will not operate with reference to sugars entering the United States from the Philippines. It has appeared in this evidence, and it has not been controverted, that there is but one buyer of Philippine sugars in the United States. The Brussels convention operates on the other markets and causes a coun- tervailing duty to be attached to the price of sugar in the world's markets, and causes the planter to take less than the world's price for his sugar.' "^Vhy will this one buyer in the United States pay any more for that sugar than the sugar will bring under a countervailing duty in the world's markets ? Now, with reference to this enormous wage rate that must be paid to those people, I have it from the people who are employing the men on the government work at Gpbu at Iloilo that the rates of wages are 20 and 25 cents American money. The next thing that I want to speak about is that I have not posed before this committee as a sugar expert. I never have claimed that I was a sugar expert. The Chairman. A cane-sugar expert? Mr. Hathaway. Nor any other kind. I have spent the last five years of my life in trying to analyze the figures of sugar experts who have been seeking to convince me that they could make any amount of sugar out of any kind of beets, and the result has been that the debit and credit sides of the ledger have not followed the so-called figures of the sugar experts. Of all the people in the world who can make figures to fit either side of every question I never in my experience have found anyone that was quite equal to a sugar expert. With reference to the kind of cane which is grown over there just a word. I showed you the pictures of the cane that I took on the island 270 PHILIPPINE TAEIFP. of Negros. I showed you a picture where a man who was standing by an American horse could not reach the top of the cane. I showed you a picture where a man was standing on the edge of a tenth-crop field and the cane was 10 feet high, though but 8 months old. I showed you another picture where a man was sitting alongside some ^106.45 per ton. The average prices during many years have been between ?=3.60 and ?=5 a pilon, which proves the assertion made in the foregoing paragraph. If the plantations that are still being worked have been able to keep up it is because the owners have not suffered the total loss of their animals. Those that have had the misfortune to lose them have been compelled to suspend all work on their lands, as has happened in the plantations of La Laguna, Ilocos, Batangas, Bataan, and other places. From the above the deplorable condition of agriculture in these Islands can be understood. For this reason we ask that the duties on our product imported into the United States be abolished, as we hope to be able by this measure somewhat to improve our present condition, and with this petition we also ask for legislation that will protect us from absorption by large capitalists and syndicates which may be established in this country. Senator Dtjbois. Is it proper to ask questions now? The Chairman. I would suggest that questions be asked of each speaker while he is on the floor, just before the next speaker begins. Senator Dubois. I notice that this gentleman refers to the dif- ficulty of securing labor, and I presume that other speakers will also mention that as one of the causes of agricultural depression. Now, the last speaker does not think that under any conditions will the production of sugar be very largely increased. I would like for one of these gentlemen to suggest how they are going to remedy the securing of labor to carry on agricultural pursuits. Commissioner Luzueiaga. I think, with regard to improvement upon the labor question, we can go on using the same methods that 12 APPENDIX. we have up to the present time, and get on without the importation of foreign labor. We can continue with the means at hand and import from one province to another the labor necessary for the cultivation of the cane. The important question to us is the question of price the market pays for our product, and we need a new market for our product which will regulate the price which we receive here from the Chinese. We believe that the reduction of the Dingley tariff will accomplish this. Senator Dubois. I understand; but if the present primitive methods are done away with and modern methods of reducing sugar from the cane are adopted, and if the production of sugar were greatly increased, then what would you do for labor? Commissioner Lttzueiaga. But we can not expect, nor do we look for, a large increase in production in the Islands. Wc' consider if there is any increase at all it will be a very slow and gradual one, and we know that it is impossible for the fears that some people have entertained in regard to an enormous production of sugar in these Islands ever to be realized, in view of the fact that we have a law in force here which prevents the acquisition of large areas of land for cultivation upon a large scale, and it would be impossible for us to expect to greatly increase our production. Senator Dubois. I did not get a definite answer. However, we will pass that point and I will ask if the speaker hopes for the investment of much American capital in sugar production in this country; whether American capitalists will invest largely in the industry ? Commissioner Luzueiaga. We would wish and hope for Amer- ican capital, but we do not think it will come under the present circumstances and conditions. Senator Dubois. Suppose we give you free trade in sugar and American capital does come anjd engage in the production of sugar, using the methods which are used in the Hawaiian Islands, then what would you do for labor — where would you get it ? Commissioner Luzueiaga. We would have great difficulty in finding the necessary labor. Senator Dubois. The American capitalist who needs workmen will find them; the question is where will he get them? Will he bring in the Chinese ? Commissioner Luzueiaga. But in order to do that it would be necessary to change existing legislation; it would be necessary to APPENDIX. 13 let down the bars and let in Chinese labor, and that would depend on the action of Congress in the matter. - Senator Dubois. Then, as I understand the gentleman, American capital will not come in, because it will not be able to get labor? Commissioner Luzukiaga. That is the way I look at it; that is the way I have always understood it. It has been my opinion that the careful American business man will always look into conditions carefully before investing his money. Senator Dubois. But if he did come in he would have to look elsewhere for labor ? The Chairman. Just a minute. From the question of the Sena- tor and the point that he is pressing, as I understand it, he is trying to have the gentleman admit that Filipino labor is not the class of labor to do this work, and that it can not be depended upon. Now, does the gentleman want to admit that? Senator Dubois. They have admitted that already; they have explained that. Commissioner Luzueiaga. If the purpose is to increase pro- duction rapidly — say, from 100,000 tons, its present figure, to 1,000,000 tons — it would be necessary to import labor, as it would be necessary to import all the other elements, capital, machinery, etc.; but of course the admission of foreign labor into the Philip- pine Islands meets the bar of present legislation, which prohibits the importation of the labor which would be necessary for that rapid development. Secretary Taft. Will the interpreter please ask Mr. Luzuriaga if he is himself a sugar planter ? Commissioner Luzueiaga. Yes; I have been an agriculturist and sugar planter all my life. Secretary Taft. Will you ask him whether in order to supply all the labor needed upon his plantation and others in Occidental Negros, where his plantations are located, it has been necessary to import labor from other provinces ? Commissioner Luzueiaga. Not for my own estate. I have been able to work my estate with the people I have upon it, but I know of a great many other plantations which have been obliged to import labor from the neighboring Island of Panay. Secretary Taft. Is there every season of cane cutting a general importation of labor from Panay, Cebu, Bohol, and other provinces where they do not grow sugar ? 14 APPENDIX. Commissioner Luzueiaga. Yes, sir; during the time of the grind- ing of the cane people come from Bohol, Cebu, and Panay for the purpose of working upon the plantations. Secretary Taft. Then they return to their homes ? Commissioner Luzueiaga. As a general rule, yes, after the grind- ing, is completed — that is, the majority; there may be a few laborers who remain in the Island of Negros. Senator Fostee. Will you please ask the speaker how often it is necessary to replant the cane ? Commissioner Luzueiaga. We have to do so every year ; our lands are not as rich as those in the Island of Cuba, and therefore we are obliged to plant yearly. Senator Fostee. Ask him if the cane is not ratooned for one, two, or three years. Commissioner Luzueiaga. It is very rare in the Island of Negros to get a ratoon crop. I know of one or two exceptions where they have been able to do so, but they have found great difficulty in trying to get a third crop, and it does not pay for the labor necessary to gather it. The lands upon which this can be done, furthermore, are considered very valuable and are very high priced and very rare. Senator Foster. What proportion of the crop does it require to replant ? Commissioner Luzueiaga. About 80 per cent has to be replanted every year. Senator Foster. But what proportion of the original crop is required to replant the same acreage from which it came ? Commissioner Luzueiaga. The practice in the Philippine Islandsj with respect to replanting is to cut off the last section of the cane, the tops, which are placed in germinating beds and then replanted; that is the practice here; they take the topmost part of the stalks and plant them. Senator Fostee. How many pounds of cane can you get from your new land ? Commissioner Luzueiaga. The average is 1 ton of sugar per acre. There are exceptions ; sometimes newly cultivated land — fresh land- — will produce more, but the general average is 1 ton of sugar per acre. Senator Foster. How many tons of cane per acre ? Commissioner Luzuriaga. It is not the practice here to weigh the cane; I can not answer that question. Agriculture in these APPENDIX. 15 Islands has not reached that point of perfection; I do not know of any farmer who weighs his cane. This fact will forcibly demon- strate to the gentlemen of the delegation the backward state of agriculture and this industry as conducted in the Philippine Islands. Senator Foster. Is it necessary to use fertilizers or irrigation on the land? Commissioner Luztjriaga. No, sir ; neither one nor the other. Secretary Tapt. Senator, will you ask him if that is true in all the provinces? Senator Foster. Yes, sir. Does that apply everywhere ? (Senor Leon Miguel Heras, a planter from the Province of Pam- panga, here arose.) Senor Hekas. I would like to say in explanation of the statement of Commissioner Luzuriaga that it is not necessary to use fertilizers here ; that the reason fertilizers have never been iised here is because the people have not been educated up to the use of them. It is not because fertilizers are not required; it simply has never been the practice to use them. Secretary Taft. How about irrigation? Commissioner Luzuriaga. Irrigation has never been used as yet in the sugar lands, though it is used upon the rice lands sometimes. Secretary Taft. But he does not mean to say that they do not use irrigation in Cavite — for instance, on sugar land ? Commissioner Luzuriaga. Not in the cultivation of sugar; with rice, yes. Secretary Taft. Don't they use irrigation in the cultivation of sugar in Pampanga ? Senor Heras. No, sir ; but in Iloilo they do. Senator Foster. What is the average price paid per day for labor by sugar men? Commissioner Luzuriaga. Field hands are paid from 40 to 50 centavos per day — ^that is, 20 to 25 cents, American money — but the laborers used in the mills get nearly double that; besides they are all provided with their food by the planters. Senator Foster. You say that is 25 cents a day, gold ? Commissioner Luzuriaga. Yes, sir; the field hands get 25 cents, gold, a day and their food. Senator Foster. About what is the cost per day of feeding them? 16 APPENDIX. Seiior Heeas. In my Province of Pampanga it costs from 20 to 25 centavos per day for the food; the food provided is very inferior in quality and quantity. It is not food for an American or European laborer, nor could an American subsist upon it at all. Senator Foster. How many acres of land can one man cultivate per year? Commissioner Ltjzueiaga. One man can cultivate per year 2J acres. Senator Foster. You mean cultivate and harvest? Commissioner Luzurtaga. No, sir; the work of harvesting is separate from that estimate, and, besides, the man cultivating 24 acres must have the assistance of a plow and carabao, and in some cases it is necessary for him to have two carabaos in a year to do that work. Senator Foster. One man and two carabaos will cultivate 2^- acres of cane per year ? Commissioner Luzuriaga. Yes, sir; and in some cases he can do it with one carabao. Commissioner Worcester. Can he also prepare the land for planting and plant it? Commissioner Luzuriaga. Yes, sir; that is one man's work; that is equivalent to 1 hectare of land; but what that man can not do is the work of harvesting; this does not include that nor does it count any of the work of cutting the cane and hauling it to the mill ; it is simply the work of cultivation ; that is all. Senator Foster. What are your sugar-making months — ^the period in which the cane is manufactured ? Commissioner Luzuriaga. From December to March or April. Senator Foster. When do you plant the cane? Commissioner Luzuriaga. The same months are the months for planting for the reason that it is our custom to use the top of each stalk for replanting. Senator Foster. Do you know the largest sugar-producing planta- tion in the Islands; and if so, what is the productive capacity of sugar per day? Commissioner Luzuriaga. Yes, sir; the largest sugar mill in the Islands is located at Talisay, in the Island of Negros, and is owned by Seiior Jocson. This mill will produce, under the above condi- tions, 300 piculs per day — a picul is 137^ pounds. APPENDIX. 17 (Mr. "Welborn, Chief of the Philippine Bureau of Agriculture, liere arose.) Mr. Welbokn. Three hundred piculs are equivalent to about 20 short tons, English measure. Senator Foster. That is about 40,000 pounds ? Mr. Welborn. Yes, sir. Senator Foster. How many men are employed in the field and around the sugarhouse, skilled and unskilled labor, in producing that amount of sugar per day, in such a sugarhouse as that the speaker mentions? Commissioner Luzxtriaga. Conditions vary so much in different sections that it is difficult to state the exact number of men required to produce that amount of sugar. It depends upon the fertility of the soil, the location of the land, etc., but there are gentlemen here who have estimates of the actual cost of production under different conditions, and they may furnish the information required. I have the figures here of one sugar estate in the toAvn of Talisay, in the Island of Negros, which I will read if you desire. The Chair3Ian. I presume the gentlemen would be glad to hear it. Commissioner Ltjzuriaga. The different conditions under which the sugar crop is raised must be taken into consideration. Planters sometimes administer their own estates, and in that case the number of laborers employed is greater than when it is let out by contract; sometimes contracts are given for the cultivation of certain parts of their land to different men, for a fixed price; then the number of laborers employed is less. Senator Patterson. I would like to ask the gentleman whose paper was last read some questions as to the facts stated in his paper. In enumerating the expenses incurred by the planter he spoke of the internal-revenue charge which had reduced something 25 or 30 per cent. ■ What did he mean ? Senor Heras. In the process of sugar making in the Province of Pampanga sugar is made into what is called " pilones," and from that process molasses is formed. Now, molasses was formerly sold, before the enactment of the internal-revenue law, to the alcohol distillers, who paid on an average of PI to f=1.60 for each 4-gallon can; while at present the planter can only get for this molasses product 20 or 30 centavos — ^that is to say, 10 or 15 cents, gold. 18 APPENDIX. Alcohol, prior to the enactment of the internal-revenue law, did not have to pay the internal-revenue tax which it now pays ; the distillers have reduced the price which they pay for their raw material. Senator Pattehson. How much is the price received by the planter for his sugar reduced by this internal-revenue tax ? Seiior Heeas. As the internal-revenue law has only been in opera- tion for about a year, it is not possible for us to make a correct estimate of our loss, and in order to do so it would be necessary to have conditions normal. Now, this year conditions have been abnormal as to the price paid in the market for Philippines sugar, owing to the reduction of the beet-sugar crop in Europe. Senator Patterson. Does he not estimate the loss to the planters at from 25 to 30 per cent by reason of the internal-revenue tax ? Seiior Heeas. The imposition of this tax has made the sugar planters in my province lose from 25 to 30 per cent of their product. As heretofore explained, they got from T'l to ?=1.60 for a 4-gallon can of molasses, before the enactment of the law, while now only 20 to 30 centavos are obtained for the same amount. Representative Curtis. He does not intend that statement for his entire sugar crop ; it was meant to apply only to molasses ? Senor Heeas. I wish to explain what I meant by saying that prior to the enactment of the internal-revenue law the price of sugar per " pilon " was from T'^ to ¥=5, and that in addition to that they got an income from the molasses, their by-product, of ¥=1 to ^1.60, for each 4 gallons, as previously explained; but that now, by the operation of the internal-revenue law, the price obtained for the by-product is greatly less — in fact, amounts to no more than 20 or 30 centavos — and so I make the statement that the loss on the total product has been practically 25 to 30 per cent. Senator Patterson. Do I understand that the best market for Philippine sugar is China and Japan ? Senor Heeas. I do not say the best, but the largest market- that we have at present; in fact, it is about the only one we have at present. Senator Patterson. Are the Philippine planters compelled prac- tically to sell at prices offered by the Chinese and Japanese buyers? Seiior ^Heeas. Yes, sir; for the simple reason that we have no other buyers. Senator Patteeson. If the duty should be removed or reduced upon the introduction of this sugar into the United States, it is APPENDIX. 19 your opinion that China and Japan would still continue to be the best market and that the planter could compel the Chinese and Japanese to pay a higher price— is that correct ? Seiior Heras. Yes, sir; that is very easy to understand. If we can place our sugar in the United States without the payment of customs duties, especially being able to place it at, say, T=5 per picul m the United States, the Chinese purchaser who now pays P=4 would be compelled to meet the price in the United States and would buy himself at ?5. Secretary Taft. Senator, may I ask the speaker this question along that line? How is the price fixed that the Chinese merchant pays? Seiior Heras. In answering that question it is necessary for me to tell the truth and all the truth. If the Chinese buyer finds that the planter is in water up to his neck, he fixes the price fairly high; however, he finds that the poor planter is in water up to his eyes, then he fixes it much lower; in other words, the planter is entirely at his mercy. Secretary Taft. Where is the price fixed for the Philippine Islands? It is at Iloilo ? Senor Heras. No, sir ; in Hongkong. Secretary Taft. Is not the price fixed in accordance with the price in Hamburg or in the New York markets, with the freight added? Seiior Heras. Not now that the production is so small that we only export it to China ; we do not export to Europe. Senator Patterson. How much does the planter himself realize for his sugar ? Seiior Heras. You mean the price ? Senator Patterson. Yes; how much does the planter himself get for his sugar ? How much per ton ? Seiior Heras. That depends upon circumstances; if the sugar planter is in a tight place he will get less for his sugar. .Senator Patterson. Yes; I know, but is there not a reasonably fixed price that the planter himself gets? I do not mean after the sugar passes into the hands of a second party. How much is it that goes to the planter for his production of the sugar? Commissioner Luzuriaga. The price that the planter gets de- pends upon the world market price for the sugar fixed in Loudon and New York. 20 APPENDIX. Senator Patterson. How much was paid locally for the last sugar crop to the planter? Commissioner Ltjzueiaga. The price that was paid this year was an exceptionally high one, such as we do not get once in twenty years. Sugar was worth in the Iloilo market up as high as Pf a picul. Senator Patterson. That is 137^ pounds, it is not? Mr. Welboen. A picul is equivalent to 137^ Spanish pounds, which amounts to about 140 American or English pounds. Senator Patterson. That is, the planter received for his sugar last year in the neighborhood of 3 cents, gold, per pound ? Representative Curtis. No, sir; it is not that much; that makes about 2J cents. Senator Patterson. Well, 2^ cents — that is what the planter received ? Secretary Taet. With the permission of Senator Patterson, I would suggest that we adjourn now until to-morrow morning at 9 o'clock, when we will continue the hearing. The Chairman. The motion is made that we adjourn now until to-morrow morning at 9 o'clock. If there is no objection, the meeting will stand adjourned until that hour. (Thereupon the committee adjourned until 9 o'clock a. m. to- morrow, August 8, 1905.) Manila, August 8, 1905. The committee met at 9 o'clock a. m., with Senator Scott, of West Virginia, in the chair. The Chairman. I suppose we shall proceed with the discussion upon the sugar question where we left off last night. Representative De Armond. Would it not be a good idea to hear these papers uninterruptedly, and then have such examination at the conclusion as might be desired? It seems to me it would save a great deal of time and give an opportunity for those gentlemen who desired, to be heard, without interrupting the thread of their argument. The Chairman. I think that was suggested yesterday, and agreed upon as the course to be followed. Senator Long. I understand, Mr. Chairman, that Mr. De Ar- mond's suggestion is that we refrain from questioning these gentle- men until after all the papers are read. APPENDIX. 21 teenator Newlands. The understanding yesterday, as I got it, was that we should pursue the questioning after each paper was read. The Chairman. "Wliile it was fresh in the minds of the delega- tion. Senator Newlands. Yes. The Chaiejian. If that will be agreeable — ^that after a paper is read to have the questions asked while the cpntents are fresh in the minds of the committee — we will so proceed. Representative De Aemond. I have no particular choice about it, but it seems to me that we are here for the purpose of hearing what these people have to say, and then, after that, discussing the remarks. The questions hardly run into the nature of a discussion, however. They run into argmment with the gentleman who is read- ing the paper, and it seems to me that we have not the time for conducting arguments of that kind. I think the best course is to hear these gentlemen upon a subject, and then have the members of the delegation ask such questions as thought proper. We have but a few days to hear all those who desire to be heard, and if we go into the business of questioning everybody, I think we will go away without hearing a tenth or a twentieth part of what we ought to have heard. The Chairman. Now I will ask the committee whether it is their wish to have the papers read in English, or whether they will be read in Spanish and then interpreted. Several Gentlemen. Read them in English. The Chairman. That appears to be the sense of the delegation. The papers will be read in English only. Senator Newlands. In order to get some understanding along this line, I would like to know how many papers are to be read upon the different subjects; how many upon hemp, tobacco, and sugar? A Gentleman (in the audience). We are not discussing hemp. Commissioner Ltjztjeiaga. We know nothing about tobacco; we are all sugar men. Senator Newlands. Are there any more papers to be read ? Commissioner Lxjzuriaga. There is only one paper which has not been translated into Spanish, but Mr. Welbom, the Chief of the Philippine Bureau of Agriculture, would desire to submit a paper in English. The Chairman. Well, proceed with the Spanish paper. 22 APPENDIX. Secretary Taft. Mr. Chairman, in regard to the question of hemp in the discussion Avhich was had in Washington, the cultiva- tion of hemp and the amount likely to be cultivated in these Islands became a somewhat important question in regard to the land to be devoted to sugar and tobacco, and it seems to me that a general discussion of the hemp industry, which now produces 65 per cent of the products of the Islands, might reflect somewhat upon the discussion of tobacco and sugar. I do not think it is necessary to go deeply into the matter, but just to give to the visiting delegation some information which, I found in discussing with individuals, is not generally understood. The Chairman. That can be taken up another day. Secretary Taft. Yes, sir. I think perhaps Mr. Welborn can furnish the committee with all that is desired on both hemp and cocoanuts. I think that these questions are so related with the questions under discussion that the committee would desire to hear something about them. Representative Scott. I should like to ask Secretary Taft if the gentlemen representing the tobacco industries have been requested to appear this morning. Secretary Taft. I understand that an agreement has been made for them to be present at the hearing. The Chairman. The interpreter will please read the next paper. Senor Esteban de la Rama. I would like to testify before the committee upon the questions discussed by Commissioner Luzuriaga yesterday, in order to throw more light upon those points. The Chairman. I think we had better have the paper first, and then give him an opportunity to be heard. Seiior de la Rama. I should like to make an oral statement in regard to the cultivation of sugar, and the general condition of sugar in the Islands, as an additional and explanatory state- ment to that made yesterday. The Chairman. Well, I have already decided that you can make that statement after the other paper is read. Senor de la Rama. Very well, sir. The interpreter then read the following paper submitted by Francisco Liongson, a sugar planter of Bacolor, in the Province of Pampanga, Island of Luzon : Mr. Chairman and honorable gentlemen of the Congressional joint committee, after greeting you and bidding you a cordial APPENDIX. 23 welcome, I beg to inform you that my aspirations are the same as those of my fellow agriculturists who have preceded me on the floor, and that the arguments which I have to offer in support of the petition for the removal of the Dingley tariff duty from our sugar are nearly the same as theirs. In repeating them, I am impelled by my duty to strengthen the arguments already adduced and to add some other requests, to the end that if we obtain from your generosity and rectitude the desired removal of the aforesaid tariff, this great benefit will not be illusory. The purpose of the Dingley tariff is very evidently to protect American sugar against any possible competition from the imported article, and it is my opinion that this fear is groundless for the following reasons: (1) The free entry of sugar in the sovereign country can not even remotely prejudice the American sugar, because, according to statis- tical data, America consumes three times the amount it produces. (2) Considering that, according to statistics, America consumes 3,000,000 tons, and that its production only reaches 1,000,000 tons, and comparing this production with that of the Philippines, which, under normal conditions, when there are neither locusts nor epi- demics among the cattle nor fires, reaches a maximum of only 300,000 tons, and considering, further, that all this sugar will not go to the sovereign country, for the reason that a large quantity of it, estimated at 80,000 tons, is consumed here, while a portion of it goes to China and Japan — I ask you, gentlemen, whether, in View of these figures, the amount of the Philippine sugar which will be exported to the United States and for which we ask free entry does not appear insignificant, and whether American sugar need fear competition of Philippine sugar, and, moreover, whether the latter can cause the least detriment to the former ? (3) By the free entry of our sugar into the United States we would be furnished another market — a protective market — ^by which means we would prevent our product from being subject to the squeezing monopoly of the Chinaman, our only buyer so far. The only markets we now have — China and Japan — do not in the least alleviate the precarious condition of our agriculture; it is the want of other competitive markets that has made our present buyers the absolute arbiters of the price of our product. Aside from this, Philippine sugar in these markets is subject to a thousand fluctua- tions and calamities, owing to the adulterations and mixtures made by the Chinaman, and for this reason never brings a high price. 24 APPENDIX. (4) The primitive methods and deficient machines used in the manufacture of our sugar, in addition to the high wages paid and the high prices of the materials used in its manufacture, make its production very expensive. If we add the expenses of transporta- tion and insurance incurred in shipment to America we believe that we can never sell at a price lower than the cost of sugar grown and manufactured in the United States. As a further ground for our petition it must be taken into account that you possess many modern and cheap machines, manufactured in America, by the aid of which you can dispense with many laborers and save a great deal in wages. (5) and last. If the Philippine Islands are considered Ameri- can territory, or a dependency, nothing is more just and logical than that they should participate, especially in view of their present state of economic depression, in the protective legislation of the great, rich sovereign country. I therefore petition the Senators and Congressmen to make this protective legislation extensive to the Philippine sugar, for which the people will be eternally grateful to you. The petitions I wish to add to those of my companions are as follows : The admission into the Philippines, free of customs duties, of all agricultural machinery and implements, wherever they may come from, even if for only ten years, in order that they may be within reach of all and that they may supply the lack of laborers an(J work cattle. Material assistance from the Government so that the establish- ment of an agricultural mortgage bank may be an accomplished fact as soon as possible, as lack of capital makes it impossible to work and operate many large tracts of land suitable for sugar culture, and because the impoverished condition of agriculture is as much a calamity as any other, and one, perhaps, whose results are worse, and, further, because there is no Philippine capital to attend to this need. In order that the benefit which the removal of the Dingley tariff will bring to Philippine sugar may not be of an illusory character, as I have previously remarked, no obstacles be thrown in the way of our commerce by the laws governing navigation between the Philippines and America. The Frye bill makes one foresee a ^future monopoly, or may at least give rise to obstacles which could destroy the effects of the removal of the Dingley tariff. The land tax imposed upon land dedicated to the cultivation APPENDIX. 25 of sugar is lacking in equity, for the reason that not all the land is cultivated every year, but only half of it; the other half does not produce on account of its being allowed to rest. It is impos- sible to plant sugar cane on the same land every year. It is there- fore only just that but one-half of the tax now paid should be paid. Lastly, I ask that the Internal Eevenue Act be amended with regard to the manufacture of alcohol, as the closing down of many distilleries has injured the farmers of Pampanga, who have lost 25 per cent of their production. The molasses obtained from the sugar in following the method of packing in use, and the sap of the nipa pahn, both raw materials in the manufacture of alcohol, can not be realized upon because of the lack of demand therefor. We must consider further that the low-grade alcohol commonly called " anisado " in this country constitutes a great help if not the second article of food of the native laborer, who, however, never becomes a drunkard. In view of the high price of this drink, caused by the aforesaid act, the majority of the laborers and agri- culturists have found it necessary to give up the use of this article, and the consequence has been a notable decrease in the amount of work and activity. We may conclude that the Internal Revenue Law has also redounded to the detriment of the agriculturist, be- cause the work done in one day by a laborer having the drink referred to, and without it, is as six is to five, a decrease worthy of being taken into consideration. Eepresentative Cochran. Mr. Chairman, may I ask the gentle- man for a little further information upon the question of agricul- tural banks ? What does he mean by that ? What are the conditions which he seeks to cure, and what are the operations of such banks meant to be ? Senor Liongson. The purpose which I seek to accomplish by this agricultural bank is to establish a means for facilitating money to planters, that they may be able to conduct their farming operations. This would be done by mortgaging their lands, in order that they might get advances of money from this bank. Eepresentative Cochkan. Does the gentleman mean mortgages for any length of time, or advances or loans for planting a crop? Does he simply mean that, or that the loans are for the purchase of machinery and the construction of permanent improvements, etc. ? Seiior Liongson. I would have it either way; either that the bank should advance money upon a mortgage upon the land or P T— 05 M 21 26 APPENDIX. machinery,. or that it should advance money upon the personal note of the planter, to facilitate the planting of his crops. Senator Long. Does he mean that this bank should be conducted by the Philippine Government ? Sefior LioNGSON. I know that the Government is not permitted to engage in private business or invest funds in its hands in private enterprises; but I believe, nevertheless, in view of the present sad condition of agriculture in the Philippine Islands, the Government might very well extend its protection and aid to a bank of this nature, in order to afford some relief to planters. The Chairman. We will now hear the gentleman who desired to be heard orally. STATEMENT OF SENOR ESTEBAN DE LA RAMA, SUGAR PLANTER AND MERCHANT, OF ILOILO AND OCCIDENTAL NEGROS. Senor de la Eama. Mr. Chairman and gjentlemen, before I start I wish to remark that I am entirely wahting in any oratorical powers, and I shall limit my remarks to a few facts. The Chairman. Briefly and to the point. Senor de la Eama. I would not have taken the floor to address this committee of learned gentlemen who have come to |)ur Islands to gain information upon the ground in respect to the d^fciomical and agricultural conditions did I not know that it waii their earnest desire to learn the truth and nothing but the trutM about conditions here; and it is with this understanding thatfl have consented to speak to-day. r Aside from the lack of experience which we farm^s have in speaking publicly, we have always left the representJRon of our wants and needs to the politician who represents us a^di upon whom we have depended to do this work ; but now, after having suffered the consequences of war, rinderpest, and other calamities that have borne so heavily upon agriculture, we can do no less than to come forward in our own defense. It is our purpose now to state before the gentlemen who have come to the Philippines that we hope, and we look upon the Gov- ernment of the United States as the only recourse we have to lift us from our sad and deplorable situation. If this last recourse proves a failure to us, we can not expect but to perish. But to doubt the generosity of the people of the United States, and the success of our desires in this matter, would be to doubt a great people, who have proclaimed to the entire world that they APPENDIX. 27 are the friends and protectors of the Filipino people. Now it is OTir purpose to explain to the representatives of the sovereign nation the grounds upon, which we base our petition for the abolition of the Dingley tariff upon Philippine products, and to prove to them that the abolition of this tariff can in no manner work any harm whatever to American producers of sugar, as some people think it would. At the beginning of the American administration of the Philip- pine Islands there were very few people who paid any attention to the matter of the reduction or abolition of the Dingley tariff as applied to Philippine products. Everyone at that time had their eyes turned toward the matters of independence, annexation, or colonization. The great desire of the Filipino people at that time was a proper form of government at any cost. Later the great aspiration of the people was that the government should be more economical in its administration; and such was the neglect of the Filipino people in regard to industry, commerce, and other material interests that practically no attention was paid to this subject under discussion. I would like to recall, however, that at a meeting which was held in the pueblo of Silay, in Occidental Negros, I was asked by a prominent American who was present and who was then traveling through the country, what means, in my opinion, were necessary to assure the future greatness and pros- perity of the Filipino people, and I answered him that in my opinion the only measure that could be taken to secure this end was the abolition of customs duties upon Philippine products imported into the United States, and that all the efforts of the Government and the people to secure the prosperity of the country would be absolutely of no avail if they were not stimulated by the abolition of this tariff. Up to this time I do not know what opinion this gentleman formed in regard to my statement. It may perhaps be true that he took me to be a visionary man, but facts and the lapse of time have demonstrated that I was right in my opinion, and that the situation has reached that extreme that the clamoring of the people is' general, and that in aU dis- cussions, political and otherwise, the question of the abolition of the- Dingley tariff is the most important one. All of the Americans in the Islands here agree with me that the maintenance of a tariff against Philippine products imported into the United States is the greatest injustice that can be done to the Filipino people. 28 APPENDIX. Our export of sugar, that reached 260,000 tons in the year 1893, was reduced to 92,000 tons in the year 1899, at the beginning of the war in these Islands; and it continued to decline until in the year 1900 it had reached the low figure of 60,000 tons. In the following year it dropped still lower, going down to 56,000 tons. With the reestablishment of peace in the year 1902 our production of sugar began to look up, and we had an increase which gave us a total export of 92,000 tons. Unfortunately, however, just as the industry was beginning to improve, and we looked forward to better times, we had a series of misfortunes and calamities in the way of cholera, rinderpest, locust plagues, and other like evils which made it impossible for conditions to improve. These calam- ities took all our money and exhausted our funds, especially as we had to replace the cattle lost from the rinderpest, the prices of which animals had quadrupled. So, witji the spread of rinderpest among the cattle and the exhaustion of our funds, our exportation of sugar decreased to 84,000 tons in 1904. It is very doubtful if we can reach that figure this year. Our situation at the present time is, therefore, a very deplorable one. Seven years of calamities, with a war and plagues, failures of crops, etc., have reduced us to a state of misery to such an extent that in many plantations of Negros and Panay the cultivation of sugar has been entirely abandoned. Owing to the low price secured by the farmer for his product during the past few years, a great many planters have been unable to meet their obligations and to-day are on the eve of losing their property. This situation has brought on the farmers the further misfortune of entirely losing their credit. They are unable to get credit any longer. It is impossible for us to hope to reestablish our credit with the bankers and money lenders through- out the Islands unless these gentlemen become convinced that the future of this industry in these Islands is such as to secure to them the repayment of their loans. At present the situation is a very deplorable one. There are planters, both in the Island of Panay and in that of Negros, who, having the deeds of their property in their hands, apply to the money lenders and to the bankers for a loan, offering to secure the loan by mortgaging their entire property, and are unable to secure even sufficient money "to attend to their most pressing personal wants. Now, gentlemen, I should like to know if in view of these condi- tions we have or we have not a motive and reason to ask for the APPENDIX. 29 abolition of the tariff upon our products. Will you gentlemen, who represent the United States of America, consent to have a people under the American flag continue to suffer misery, for has it not always been said that under the flag of the United States prosperity and happiness only shall rule? Gentlemen, you have only to turn your eyes in any direction whatever, and you will see that the American flag is in these Islands. Notwithstanding the fact that the national flag flies throughout this land, and that this Govern- ment is maintained by Americans, and that it is American soil, it is considered and treated as a foreign country by the legislators of the United States. You have put up barriers between us and yourselves, as if you considered that there was the same distinction between us and yourselves as there is between you and foreign countries. We are farmers; we are not politicians. We do not understand why you do this. We do not undertstand why we are treated thus. But we do know one thing, and that is that you consider our products the same as if they came from China, Japan, or any other foreign country. The Congress of the United States, in enacting legislation which will compel the products of the Philippine Islands exported to the home country to be carried in vessels under the national flag, have sought to prove that American shipowners should be entitled to enjoy the benefits of being under that flag. Now, I ask, why should not we farmers, being under the same flag, enjoy the same benefits by the abolition of the duties upon our products? If the duties are not abolished, if the Dingley tariff is not reduced upon our products, what benefit can be derived from the extension of the coastwise navigation laws to the trade between this country and the United States? What trade have we to give to your shipowners? If at the present time, when we have a sharp competition Among steamship companies, we are unable to send any of our products to the United States under the existing Dingley tariff, how can you expect us, when competition is done away with, to furnish any goods for the American ships to carry? Gentlemen, there is no use in denying the fact that they would get nothing. The suppression of the Dingley tariff will be a benefit to them, to the Filipinos, and to the Americans. The reasons advanced by those who are opposed to the abolition of the Dingley tariff are, first, the low cost of the production of sugar in this country, which is estimated to be in the United States 1 cent, gold, per pound; and, second, that if the tariff is abolished 30 APPENDIX. or reduced the industry in the Philippine Islands would increase so rapidly that in a few years we would invade the markets of the United States as a dangerous rival. Now, the first of these reasons is in error, and the second is absurd and ridiculous. From statistical data which I have, relative to the cost of produc- tion upon the estates of the Island of Negros, the lowest cost of production of Philippine sugar, without counting the items of interest upon the money invested or commissions, is 2.82 centavos, Philippine currency, per pound, and that is during normal times. Now, counting in the items of interest, commission, etc., it costs the planter in the Island of Negros to place his sugar in the Iloilo market about 3.76 centavos per pound. I wish to add that we have not included in this estimated cost of production the loss in cattle or the deterioration in machinery and mills, because I fully realize that if we should have to count upon the enormous losses in cattle experienced within the psfst few years we should have to give up hopes entirely of ever continuing the industry here. Let us now take the 3.76 centavos that it costs us to place our sugar in the Iloilo market, as a basis. For loading our product on board the ship at Iloilo and to pay the export duty on this article, it costs 0.24 centavo per pound, so that this makes the cost of our sugar, f. o. b., Iloilo, 4 centavos per pound. We must then add to this the amount of 0.24 centavo per pound for freight to New York, and 0.08 centavo for insurance, and 0.88 centavo for duties, and we wiU have upon that basis the price of our sugar, f. o. b.. New York, which is 5.20 centavos or 2.60 cents, gold, per pound, f. o. b.. New York. Now, this does not include commissions, interest, or deterioration on our plantations. This sugar is in the proportion of 1/8 No. 1, from 87 to 88 degrees; 2/8 No. 2, from 84 to 85 degrees; and 5/8 No. 3, from 79 to 80 degrees. Now, according to the latest quotations of centrifugal sugar in the New York market, sugar of 96 degrees is worth 4^ cents, gold, per pound. Considering the inferior quality of our product, which makes a difference of 1 cent per pound, our sugar should sell in the New York market for 3.60 cents per pound; but I wish to state in addition to this, that this price of 4^ cents, gold, for sugar in New York is an exceptional one. It is generally about 4 cents. Therefore, the price of Philippine sugar should be about 3 cents, gold, instead of 3| cents. Now if we add to our price, f. o. b! APPENDIX. ' 31 New^ York, of 3.60 cents per pound the items of deterioration, com- mission, and interest, we would have a price there for our sugar which would prohibit our sending it there. This clearly demon- strates that it would be impossible for us to hope, under present conditions, to market our sugar in New York, and this is also proven by the fact that our shipments of sugar to New York have declined considerably, so that in 1900 we sent but 2,000 tons to that market. In 1901 we sent 5,000 tons, and 2,500 tons the next year, 1902. In the year 1903 we sent 31,000 tons, and 20,000 tons in the year 1904; but I wish to add that these last two large shipments for the years 1903 and 1904 were sent there on specula- tion, in the hope or expectancy of the abolition of the tariff on sugar. Of course, the shipments have resulted in large losses to the shipping houses that have speculated in that manner. Last year centrifugal sugar, owing to the shortage in the beet crop, reached 6^ cents in that market; in view of this high price, and the expectancy of still higher prices, orders were received in this market for large shipments of sugar. However, just as soon as sugar dropped to its present quotation of 4^ cents per pound these orders were canceled, and no further orders have been received. This proves that with sugar in the New York market at 4| cents, it is impossible for us to send our sugar there. It is stated, further- more, that we are going to kill the sugar industry in the United States, because we can manufacture that article here cheaper. Now, if we did not have to pay the items of insurance or interest on our shipments to New York, and if we had to pay no customs duties, and if the tariff were abolished on sugar, of course, then we might possibly compete with American sugar; but competing at such a distance from the market, and after the great expense we have to pay in order to place our product in the market of the United States, it is practically and absolutely impossible for us to compete to the extent of being able to affect the sugar industry in the United States in the slightest degree. Even without the Dingley tariff and with the modern machinery used in the United States and not having to pay the cost of trans- portation, insurance, and interest that we have to pay, America can always produce sugar cheaper than we can. Now, as regards the second reason of argument advanced for the continuance of the tariff upon Philippine sugar entering the United States, I think that I have clearly demonstrated that this is an 32 APPENDIX. impossibility and that the argument is ridiculous. It has been clearly demonstrated and proven that the very largest exportation that we have had was in the year 1893, when it reached the amount of 260,000 tons. It is also known by everybody here that in those years when our production passed 200,000 tons it was necessary for us to leave a part of our crop upon the field on account of lack of labor to collect it. This used to happen to us before the war, the rinderpest, the cholera, and the many other plagues that we have had to contend with had struck us. Now it is supposed that we, labor- ing under all these adverse circumstances, without work cattle, without money or credit, are going to make such a large crop of sugar as to invade the largest sugar market in the world. Quite to the contrary, gentlemen; the question of the abolition of the Dingley tariff is to us a question of life and death, and it is a justice that we expect from the American people. By the abolition of the Dingley tariff you will- once more demonstrate to the entire world that under the American flag none but a prosperous and happy people can live. [Applause.] The Chairman. Does anyone desire to ask the gentleman any questions? I would like to have his name, occupation, etc., so that we can put it in the record. Senor de la Rama. Esteban de la Rama, a member of the com- mercial firm of Hi] OS de la Rama, of Iloilo and Negros, and the owner of agricultural property in the Island of Negros devoted to the growing of sugar. Secretary Taft. I would like to ask Mr. de la Rama if he has not made an error in his estimate in charging the export duties as a part of the cost to the exporter, in this : That in the act of Congress, known as the " rebate act," which really in form is not a rebate act, however, but amounts to that, being made so by regulation, the exporter will be able, on shipment of sugar sent directly to the United States, to secure a rebate of that export tax which he has paid. Seiior de la Rama. But the greater part of the 0.24 centavo that I included as an item of the cost upon sugar at Iloilo included the items of placing the sugar on board the vessel as well as the export duty. Of course, the export duty would be a very small part of that charge. Secretary Taft. I agree; but in order that a statement made by the gentleman should be exact, I want to ask him if it is not true that APPENDIX. • 33 that part of the 0.24 centavo which is paid for export duty, will be returned as a- rebate upon sugar sent directly to the United States ? Seiior de la Rama. I understand that this export duty is collected upon sugar for the creation of a fund for the improvement of harbors. Secretary Taft. Mr. Chairman, I would like to state that I think it is doubtless a fact that the sugar men have exported so little that they are not aware of the operation of that law. The sugar men know nothing practically about this law. A hemp exporter could tell us about it, if there is one here. The export duty on hemp is remitted when it is shown that the hemp has been exported directly from a Philippine port to a port in the United States. There is this to be said, however, about that: Under the regulations he has to pay and recovers it later, and the interest, during the period between the date of shipment and the returr^, which easily is from six to nine months, is lost to him. Senor de la Eama. I have paid such export duties on sugar shipped to Hongkong. I was not aware of the fact that there was a rebate on customs duties made on shipments to the United States. Secretary Taft. Of course, shipments to Hongkong would not come under the same rule. Representative Deiscoll. I would like to ask what price is received for sugar shipped to China and Japan? Senor de la Rama. The present price for sugar, per picul, is ?5f ; this is the price that the farmers receive from the Chinese buyers. It figures out about 2 cents, gold, a pound. However, this year's price is an exceptional one, owing to the shortage in the beet-sugar crop. There has been a little bit of competition this year between the exporting houses which ship to the United States and the Chinese buyers. Senator Newlands. Mr. Chairman, I would like to have one point made clear. I understand the gentleman to say that the exporting of sugar from these Islands to the United States in 1893 amounted to over 200,000 tons. Is that a fact? Several Gentlemen. No; that is the total amount exported for the Islands. Senator Newlands. I would like to ask him about how much of that was to the United States. Senor de la Rama. Some 80,000 or 90,000 tons, I believe. 34 • APPENDIX. Senator Newlands. That was the largest export, then, in the history of the Islands, which was made to the United States ? Seiior de la Rama. So far as my memory serves me, that was the largest year. Perhaps, however^ prior to that year there were larger shipments. > Senator Newlands. I wish to ask whether prior to that time there was any duty in the United States upon sugar, and whether or not the McKinley Act was not then in operation, and whether the duties imposed by the Wilson Act one year later had the effect of checking exports from this country to the United States. Senor'DE la Rama. I have no knowledge of any of those laws. Senator Newlands. I would like to ask Mr. Payne when the Wilson Act went into operation. Representative Payne. I think it was in July, 1894. I wish to call attention, however, to the fact that free sugar under the McKinley Act was free entry for all the world, and that this sugar went into the United States upon the same terms as foreign sugar, so that the Philippines had no advantage or preference in the market; they went in upon the same terms as any other country. I do not see how the tariff act in question has any effect upon this subject. Senator Newlands. I simply wished to know as to whether, when the Wilson Act went into effect, the exports from this country to the United States diminished. Representative Gkosvenoe. The law was passed in 1894. Seiior de la Rama. All I can say is that since 1893 the exporta- tion of sugar from the Philippines to the United States has diminished. Senator Newlands. Can you give us the exportation from 1894 to the present? Seiior de la Rama. No, sir. Representative Scott. Are there any sugar refineries in the Islands ? Seiior de la Rama. No, sir. Representative Scott. Well, if there are no refineries in the Islands, where is sugar refined that is used here ? Seiior de la Rama. I was mistaken about that; there is a small refinery at Malabon, near Manila. Representative Scott. Does it produce all the refined sugar used in the Islands ? APPENDIX. 35 JNIr. Welborn. No; it has not been running within the past few years. Representative Scott. Is the refined sugar imported from the United States? Mr. Welboen. From Hongkong. Representative Scott. I have understood this gentleman to say tliat the greater part of the sugar of these Islands is exported to Japan and China, and yet they say that there is no competition in the sale of the sugar. I would like to ask whether or not all this goes to the Chinese buyers and is distributed by them to Japan and China ; if not, why is there no competition ? Senor de la Rama. There are no buyers in the Islands at present except Chinese buyers. They buy all the sugar for those markets. Representative Scott. The gentleman stated that the decline in the exportation of sugar began five years before the war. What cause does he give for that decline ? Seiior de la Rama. No. Five years from now. Representative Scott. I understood him to say that in 1893 the exports were something over 200,000 tons, while now they are something less than 100,000 tons, and in 1898 were something less than that figure. Senor de la Rama. Yes; it fell off greatly on account of the war of the revolution in 1899. Representative Scott. So this period from 1893 to 1899, of six years — during all that time did the exportation of sugar decline? Senor de la Rama. In the year 1893 we reached the maximum exportation for sugar. Since that time it has never reached that figure, and it reached its lowest year in 1899. The year 1893 was an abnormal year. Representative Scott. The point I wished to reach is this: We can imderstand why the exports have decreased since the war; I was trying to find out why that decline began before the war. Senor de la Rama. I simply wish to say that in the year 1893, which was an abnormal year, we had 260,000 tons, and that maximum has never been reached since. I do not mean to say that the decline started prior to the war, however. Representative Scott. What is good sugar land worth in Negros, or in these Islands ? Senor de la Rama. Well, I hardly know how to answer; it is held at all prices. 36 APPENDIX. Senor Heras. From TBO to ¥=50 per acre. In the Province of Pampanga the best sugar land is worth a good deal more. The average price in Pampanga might be placed at about ^58. Eepresentative Scott. What is the land valued at for purposes of taxtion ? Senor Heeas. The valuation placed upon these lands by the provincial boards of tax assessors depends a good deal upon the locality and circumstances of the lands and the opinion of the members of such boards. Representative Scott. Can you give the average valuation in proportion to the value of the land ? Senor. Heeas. The valuation placed upon the land for assessment purposes is nearly equivalent to the actual value of the land. Representative Scott. Then, what is the rate of taxation ? Senor Heeas. Seven-eighths of 1 per cent upon the assessed value. Mr. Matjeice Lowenstein. I believe that Seiior de la Rama made one or two errors in the estimate of the cost of sugar laid down in New York. He figured the freight from Iloilo at 0.24 centavo, whereas, as a matter of fact, the rate is $6 for a ton of 2,240 pounds, or 27 cents, gold, per 100 pounds. Then he stated that the duty is 0.88 centavo per pound, whereas, as a matter of fact, it is about 90 cents, gold, per 100 in New York. Representative Geosvenoe. I would like to have this gentleman who has just spoken tell us the cost of freight to the distributing points in China and Japan on sugar; nothing has been said about that. Mr. Lowenstein. That depends upon the freight market, of course. It is from 30 to 50 centavos per picul of 137^ pounds, depending upon the supply and demand of freight between here and Hongkong and Japan. The Chaieman. Give it to us in gold and in hundred pounds. Mr. Lowenstein. From 12 to 18 cents, gold, per 100 pounds as against 27 cents, gold, to New York. There is another mistake Seiior de la Rama made. I do not think he included enough for waste or for insurance. The average insurance rate is IJ per cent for freight to New York; then, too, some sugar is lost in transit, and he does not take that into account. I should say that there is a loss of about 2 per cent due to shrinkage, which adds to the cost in New York. APPENDIX. 37 Representative Coopek. What would that insurance be per 100 pounds, and what would the other item amount to? Mr. LowENSTEiN. Based upon this cost of 2.60 centavos f. o. b. It would make a cost of 3.86 centavos landed in New York. Then he probahly has not included all the landing expenses at New York, such as dockage and other charges. Senor de la Rama. I gave my price in iSTew York, f. o. b. New York, including the duties. I admit that I left out a great many items of expense. Representative Patne. I would like to learn this gentleman's business. Mr. LowENSTEiN. We are importers and exporters— Castle Bros., Wolf & Sons. Senator Foster. Will you please ask the gentleman what the present agricultural condition of these Islands is? Senor de la Rama. I have already said that it is very deplorable. Senator Foster. Does that include the rice industry, the hemp, tobacco, and other agricultural industries? Senor de la Rama. I believe so, sir, and especially with regard to the cultivation of rice, on account of the shortage of work cattle, making it difficult to cultivate the fields; and also on account of the lack of capital. Senator Foster. Now the tobacco industry — ^how about that? Senor de la Rama. The gentlemen interested in the tobacco question will give information upon that point. Senator Foster. About hemp — ^has there been an increase or decrease in the production of hemp ? Seiior de la Rama. The sugar growers have had so much to con- sider and worry over with regard to their own business that they have not had time to give attention to the business of others, so I can not say anything about the hemp product. Representative Cooper. Mr. Chairman, there is one more question I should like to ask Mr. Lowenstein. Before the war, is it not a fact that due to a preferential tariff the Philippine sugar had a large market in Spain, and is it not a further fact that since the war that market has been lost to the Philippine trade? Mr. Lowenstein. Yes, sir; absolutely. After the war Philip- pine sugar was absolutely barred from the Spanish market. Its former market has been lost in large part, without getting a new one. 38 APPENDIX. Senator Foster. Will the abolition of the tariff, in your judg- ment, upon the part of the United States Government, so far as sugar is concerned, result in an increased production and a develop- ment of that industry in these Islands ? Seiior de la Rama. I believe that it will result in an /increase of the present production; but I also believe that in view of the lack of modern methods, modern machinery, and lack of labor, cattle, and capital, that this production will not reach a figure over 200,000 tons. Senator Foster. Are not your figures based upon the present primitive system of cultivation and manufacture of sugar ? Seiior de la Rama. Well, even if we were to introduce modern methods of manufacture, by bringing in modern machinery, it would, in my opinion, take at least five years before we could get the plants properly established in these Islands. I believe, further- more, that it would take fifteen years longer to be able to get aU conditions so favorable as to make a crop in the Philippine Islands which would aggregate 300,000 tons; so that counting in the five years taken to construct modern machinery and the fifteen years that the industry would need to develop to the point of producing 300,000 tons, and we have twenty years as the period which would be required to reach that figure. It is estimated that the cost of machinery capable of producing 300,000 tons of sugar would be $20,000,000, gold; this, of course, must be considered as a mere estimate, but I consider that sum to be the cost of machinery neces- sary to produce 300,000 tons ; if we take that as a basis in the length of time required before we could reach that production which I have above cited, the markets of the United States, in the meantime, would have a shortage of double what it now is, or 4,000,000 tons, and against that the 300,000 tons produced in the Philippine Islands would be of no consequence whatever. Senator Foster. Can they use mules, horses, and oxen here in the cultivation of their fields, not only in sugar but in other agri- cultural pursuits ? Seiior de la Rama. It would be very difficult to introduce that sort of work animals in our fields, for the reason that mules or horses cost a great deal of money here and the native is not used to handling them— he does not know how to manage them nor care for them. In the second place, many of the lands can not be worked at all with any cattle except the carabao, for the reason APPENDIX. 39 that, as in rice, they make their plantings in the mud, and it is necessary to plow in the mud; the mule or horse can not do that, and only a carabao can be used for that work. Commissioner Worcester. Now, Mr. de la Rama, excuse me for interrupting, but there is another reason why American horses and mules can not be used in the Philippine Islands. We have quite recently introduced here a number of contagious diseases, which take horses and mules off by the drove, such as surra, which occurs in an epidemic form throughout the Islands. The Government has recently been importing draft animals in the hope of relieving conditions here, and these diseases have caused great loss among the animals imported also. When one takes into account the difficulties that have to be met and the possible loss by surra, the heavy cost of bringing in new animals, and the lack of money of these people, it is practically impossible for these people to get the necessary animals to cultivate their fields. Senator Foster. Just one more question Eepresentative Grosvenor. If one of these Senators will kindly yield a moment to one of the members of the- House, I would like to ask a question. I would like to ask this gentleman whether he knows if there has a been a steady increase in the demand for sugar during the past five or ten years in China and Japan; and if so, whether he can give us a statement upon that point. Sefior DE LA Rama. During the past five years the demand from the countries you mention has been steady. Representative Grosvenor. Now, as to refineries in Japan and Hongkong, where are they located and where do they get their supply of raw sugar ? How many refineries are there ? Senor de la Rama. I .do not know how many refineries there are in those countries; but I wish to state, by way of information, that the Philippine sugar sold in those markets is generally consumed as exported, without being refined. I have seen the retailing of sugar going on in Japan in the same condition as exported from here. Representative Curtis. It is not true that the Chinamen have just begun to use sugar within the last few years ? Senor db la Rama. I do not know as to that. Senator Patterson. How many companies or individuals grow and cultivate sugar in the Islands now ? Senor de la Rama. With regard to the companies, there are not 40 APPENDIX. more than one or two that I know of; I am unable to state the number of individuals engaged in the industry in the Islands, but Commissioner Luzuriaga has some information upon that point, I believe. Commissioner Luzuriaga. Before the war there were throughout the Islands about 3,000 sugar estates or plantations, but this number has been greatly reduced, and I should say that there is now not more than one-half that number. Eepresentative Scott. Can you state about how large the average plantation is? Commissioner Luzueiaga. It is rather difficult for me to say, in view of the great variety of sugar estates, as to size. The largest plantations are from 1,000 to 1,200 hectares, and there are some of from 600 to 800 and 500 hectares. They are of all sizes, and run down to as low as 30 hectares. Representative Sheeley. I wish to ask a question as to labor. A gentleman made the statement that the labor was much higher and that there was a marked limitation upon it. How far does he consider that condition as temporary and how far does he think the labor could be increased ? Seiior de la Rama. I have already said that prior to the war and prior to the time that we had to contend with these difficulties and calamities our production reached over 200,000 tons, and that when we reached that production it was necessary to leave a portion of the crop in the ground because of lack of hands to collect it. Representative Sherley. Does he think that is a condition that could be changed in the future? Seiior de la Rama. No, sir; I do not believe that it could be changed, and that it will not change until our population in- creases very materially. Senator Dubois. I would like to ask a question here. The sugar planters in Hawaii are asking us to amend the laws so as to allow Chinese coolie labor to come into that country, claiming that other- wise they will be unable to work their plantations; now I would like to know whether there would be any objection by the sugar planters here if we should amend the law so that Chinese coolie laborers could come in and work on their plantations. Seiior de la Rama. That is a question that I would rather not answer, for the reason that there has been a great deal of difference APPENDIX. 41 of opinion among our political leaders in these Islands with respect to the advisability or inadvisability of the admission of Chinese labor. To them the theory of " the Philippines for the Filipino " appears to be a very beautiful one, but as far as material condi- tions for some of us are concerned it is a question whether the importation of a large number of laborers into the Islands would not improve our conditions here. It is a delicate question to deal with, however — that of the importation of Chinese into these Islands — for the simple reason that the Chinese laborer entering the Islands very soon becomes the Chinese merchant, so that instead of becoming a producer and a benefit to the country he becomes the opposite. Representative Sherley. How is it that, with the people com- plaining that they can get no labor, they are starving? If you make a statement that you have an industry that can not find labor and that there is a limit upon the amount of labor available, I want to understand why it is that you can not get Filipinos to make your crops — why can't you get labor in the sugar fields ? Seiior de la Rama. The difficulty with us is not that the people will not work, but that there is not a sufficient number of people to do the*Svork. The very primitive appliances we use here require a great many more laborers than are required in Hawaii, where they have modern machinery. Representative Sherley. Does he mean that there are not enough laborers in that province, or in the entire Islands ? Seiior de la Rama. I believe that there is a lack of laborers throughout the Islands. Secretary Taft. Well, Seiior de la Rama, allow me to ask one or two questions. I think you were present in 1900 when the Commis- sion went to Negros, were you not ? Seiior de- la Raima. No, sir ; I met you at Iloilo. Secretary Taet. We held a meeting at Bacolod; were you not present ? Seiior de la Rama. No, sir ; I was not present at Bacolod. Secretary Taft. Well, there were many sugar planters there, and they recommended that we impose a poll tax upon every laborer in the province, for the purpose of giving him a motive for working upon the plantations. Seiior de la Rama. Well, it is a theory with some people that the imposition of a personal tax, like the old Spanish prestacion p T— 05 M 22 42 APPEKDIX. personal, like the old Spanish system, will enable more work to be gotten out of the native ; however, I am not of that opinion. Secretary Taft. Let me ask him if this is not true, that the development of industries in these Islands, whether it be in the agricultural fields or in the factories or on the railroads that are to be constructed, depends not only upon the natural conditions in these islands but also upon the training of those who would elsewhere be laborers? We have got to train and educate them for that purpose. I do not mean in universities ; I mean a training and organization for the purpose of teaching them how to work, and that the growth of any industry depends upon that kind of development here. Senor de la Rama. Yes, sir; that is true. It is for that reason that I have always advocated the establishment of manual-training schools ; we need them here very badly. Representative McKinlet, of California. Figures were given yesterday as to the amount of wages paid to the laborers on the plantations at the present time. What wages were paid before the revolution, or during the revolution, when the industry was in a prosperous condition as compared with now? Senor de la Rama. It is estimated that the wages paid at the present time are from two to three times as high as they were before the war. Representative MoKinley, of California. Give us the number of pesos per month before the-war. Senor de la Rama. For field hands we paid from ¥=3 to ?=4 per month. Representative McKinley, of California. And their food? Senor de la Rama. No, sir; without food. Now we pay a little over twice as much, and feed them. Representative McKinley, of California. And the kind of labor— was that native labor, Chinese, or Japanese ? Senor de la Rama. Native labor. Representative McKinley, of California. What proportion of labor do you lise on the plantations now, between Chinese, Janapese and natives? Senor de la Rama. We have never used any Japanese or Chinese, or any other labor than Filipinos, upon our plantations. Representative McKinley, of California. Why were they not used — because they wanted higher wages, or why ? APPENDIX. 43 Seiior de la Rama. For the reason that such labor was not here. Representative McKinley, of California. Have you ever had Chinese labor offer to work upon the plantations? Seiior de la Rama. No, sir ; never. Secretary Taft. They have attempted to get Chinese labor to work in the fields in Borneo, and they have not succeeded in getting them into the fields. Representative McKinley, of California. Now, where do you expect to get your future labor — from the training of your own people or the bringing in of Chinese or Japanese ? Seiior de la Rama. We have no option in the matter; we must rely upon the native ; Chinese laborers can not come into the Islands under the law. Representative McKinley, of California. Suppose you got Chi- nese, would you still rely upon the natives or would you employ the Chinese ? Seiior de la Rama. We would like to rely upon both of them; but in the long run we would have to fall back upon the native, because a Chinaman, although he comes here as laborer, soon becomes a merchant ; he will not continue as a laborer. Representative McKinley, of California. Then if you got free trade with the United States for sugar, you expect to increase your acreage and you expect to train your Filipinos to labor upon the plantations — that is it? Senor de la Rama. Yes, sir. Representative McKinley, of California. That is all. Senator Newlands. There is one question that we should clear up, and that is this: In America, when the laborers are generally employed at good wages, we consider that a condition of general prosperity; now I want the gentleman to state how it is that the laborers of the Philippines are generally employed at good wages and yet there is such a condition of general depression in the industries of the Islands as he has referred to. Seiior de la Rama. Well, it is true that the laborer to-day gets a great deal more than before, but his wants have increased at a much greater rate, proportionately, than his wages. They are accordingly no better off than before. For instance, meat used to be worth 10 centavos a pound, while now it is worth 50 centavos a pound. This country has become one of the most expensive countries to live in in the world. 44 APPENDIX. Senator Newlands. Why have the prices increased here ? Seiior de la Eama. The price of meat has increased to such a large extent on account of the death of cattle by the plagues. Senator Newlands. How about other things ? Senor de la Eama. The decline in the price of silver also worked a great hardship upon us, for the reason that the articles we bought in this country we had to pay for in silver which had a depreciated value; this made a great difference in the prices where the foods were imported from abroad and had to be paid for in gold. Senator Newlands. Now, as to meat, is it not a fact that the average laborer in the Philippines uses very little meat ? Seiior de la Raka. I siinply mentioned meat as an example; of course, that is not a general article of diet of the Filipino laborer; but along with meat every other suitable article of food has in- creased in price. The loss in the work cattle of the Philippines has resulted in such a decrease in the cultivation of rice that we have been obliged to import large quantities of this article. As a result the price of rice rose in the Islands and is much over double what it was prior to the American occupation. Senator Newlands. We will assume that the tariff on Philippine sugar is removed, and we will assume that these planters in Hawaii who are accustomed to produce sugar under almost the same condi- tions as to soil and climate that prevail here, form a corporation with ample capital, which corporation acquires the control of a large area of land, putting in a central sugar factory, and which corporation puts in a railroad connecting with ' all parts of its • plantation to bring the cane into the factory, and which corporation has its own irrigation works where necessary, and uses all the advanced machinery and employs Filipino labor — now, I ask whether under these conditions the production of Philippine sugar will not exceed the 300,000 tons he has referred to as the limit within the next twenty years ? Seiior de la Eama. Well, in answer to that question, I would like to state that it took the Hawaiian planters fifteen years to reach a production of 200,000 or 300,000 tons. Now, I have calculated that it would take us five years to secure the necessary modern machinery in these Islands and fifteen years longer to reach the same produc- tion as Hawaii— that is, 300,000 tons. Now, I do not say that after twenty years the production would not go beyond 300,000 tons. 1 realize that it would go beyond that amount; but I also realize APPENDIX. 45 that the shortage which amounts to • 2,000,000 tons to-day in the United States would more than double in that period of time, so that when we shall have reached a production of 300,000 tons the shortage in the United States would be over 4,000,000 tons. Senator Xewlands. But the witness has not answered my ques- tion. My assumption was that the Hawaiian planters should organize corporations with ample capital for the immediate develop- ment of sugar plantations in these Islands, and I asked whether under these conditions the production of 300,000 tons would not be greatly exceeded and a large increase made over that limit. The Chairman. It is now after 12 o'clock. To what hour shall we take a recess for this afternoon ? Seiior de la Rama. I believe it would take fifteen years before they could reach a production of 300,000 tons, because it took Hawaii that long with the same machinery. Senator Newlands. Does he believe that the large plantations of 5,000 or 10,000 acres or more are best adapted to the economical production of sugar, or that small holdings, with individual owners, having not more than, say, 50 to 100 acres, would be best? Senor de la Rama. I have never studied that question. I do not consider myself competent to answer it. Senator Newlands. Will you ask him whether, as a inatter of fact, the majority of the sugar plantations are below or above 100 acres in area? Sefior de la Rama. The average sugar estate is over 100 acres. Senator Newlands. How many acres are there now planted in sugar ? Mr. Welboen. One hundred and eighty thousand in the wholfe Islands in 1902, according to the census report. Senator Newlands. In 1903, how many? Mr. Welboen. Well, we have no figures for 1903. Senator Xeavlaxds. Will you ask him whether the acreage was not larger in 1903 than in 1902 ? Sefior DE LA Rama. It was a little larger. Commissioner Ltjzuriaga. Yes, sir ; it was larger. Senator Newlands. Wliat is the average size of sugar planta'' tions in these Islands ? Commissioner Ltjzuriaga. In Pampanga the average size of the suo-ar plantations is from 200 to 300 acres; the size throughout thie Islands varies very much; I should say that possibly 10 per cent were of 1,000 hectares or over. 46 APPENDIX. The Chairman. It is proposed that we take a recess until 4 o'clock and then hear the tobacco men. Secretary Taft. Mr. Chairman, I only wish to say that the new street railway has offered the party a trip on its new lines over the city, starting from the Binondo Church on the north side of the Pasig River near the old Oriente Hotel, at 3.30 this afternoon. The Chairman. Well, what is the pleasure of the delegation? Shall we take this trip or continue the hearing ? Representative Grosvenor. I move that we adjourn until to- morrow morning at 9 o'clock. Senator Dubois. I second the motion. Commissioner Worcester. Before adjourning, I would like to state that the Chief of the Bureau of Agriculture has some more facts to present upon the question of sugar before the sugar question is considered as closed. The Chairman. Well, we have given a very full investigation to the sugar question. Representative Cochran. I think we had much better discuss one subject thoroughly than to skim over three or four subjects. I believe we will get much more out of it. Secretary Taft. Mr. Chairman, I am anxious to go around on that street railroad, but I really think that it would be better to consume the time this afternoon in continuing the hearing rather than to take the trip. I would also like to make a suggestion (I am one of the chief offenders and I presume it can come from me with good grace) that the questions hereafter to be submitted should not be argumentative or discussing economic principles, but confined to facts submitted by the witnesses. The Chairman. The motion is made to adjourn until to-morrow at 9 o'clock. Representative Grosvenor. I will amend my motion to the effect that we adjourn until to-morrow morning at 9 o'clock, that we give the sugar men one hour, and then take up the tobacco question. Representative Cochran. I move to amend by providing that we meet this afternoon at 3.30 o'clock. The Chairman. The motion is made to amend the motion to adjourn by providing that the adjournment shall be until 3.30 o'clock this afternoon. Secretary Taft. Mr. Chairman, to-morrpw morning has been APPENDIX. 47 fixed for an expedition to Fort William McKinley. As the con- struction of that post has been discussed in Congress and perhaps the members would like to see it, to learn what has been done with our appropriations, I therefore presume that the party will desire to make this trip. (The motion to adjourn until 3.30 this afternoon was then adopted, and the meeting adjourned to that hour.) AFTER RECESS. The committee met, pursuant to adjournment, at 3.30 p. m. The Chair3ian. The hearing will proceed. Representative Curtis. I should like to ask the gentleman who gave us some information this morning a question or two. I see he is here with us. I should like to ask his name. Mr. LowEXSTEiN. M. F. Lowenstein. Representative Curtis. What is your business? Mr. Lowenstein. Importer and exporter. Representative Curtis. How long have you been in the Islands ? Mr. Lowenstein. Five yea^ s. Representative Curtis. In one of the statements this morning it was disclosed that the sugar trade by the Chinese was in the raw sugar. I wish you would state to the members of the party, if you can, what fixes the price of raw Philippine sugar at Hongkoiig. Mr. Lowenstein. There are two classes of buyers in Hongkong; one class is formed by two refineries, the Tui Ku Refining Com- pany and the Chinese Sugar Refining Company, Limited, of Hong- kong. They buy Philippine sugar for refining purposes. They give the preference to the Java sugar, but at times they will buy the Philippine sugar. Their prices are always based upon the market price of London and New York, and if the price in market on Philippine sugar, owing to a reduction of the duties, should be advanced so as to make it high as compared with Java sugar, then these refineries would no doubt discontinue using Philippine sugar. Now, the other class of buyers are the Chinese merchants who buy and distribute the raw sugar in its raw state as it is produced here. These merchants do not depend so much upon the markets of the world, but are more or less affected by conditions ruling in these Islands; therefore, if we had a more favorable market, produced by a reduction of duties in the United States, no 48 APPENDIX. doubt they would have to pay more for our. raw sugar, as they can not supply these grades of raw sugar which are very popular not only in China but also in Japan with the raw sugars from other points. They can not get these raw sugars from Java or elsewhere. Eepresentative Cuktis. Well, they give as the opinion of one of the witnesses before the committee last winter that these people would pay the price of sugar in New York less the freight from Plongkong to New York. Mr. LowENSTEiN. Well, I should say that the second class would. I think so. Eepresentative Cuktis. Well, as I understand the statement this morning, the large part of the sugar used by the Chinese is this raw sugar, and therefore if the duty were reduced and the Filipinos could get the higher price in New York they would get a higher price in Hongkong. Mr. LowBNSTEiN. Yes, sir. The Chairman. Now we are ready to hear from the Chief of the Bureau of Agriculture. STATEMENT OF PROF. W. C. WELBOlfN, CHIEF OF THE BUREAU OF AGRICULTURE. Mr. Welborn. Before proceeding I promised some gentlemen to give some figures out of the census returns which I got when I went to lunch. The question was as to the size of the sugar estates in the Islands. There are 916 sugar mills in the Islands. About one-half of this number are animal-power mills and the other one-half steam mills. Five hundred and sixty-nine of these mills are in the Island of Negros, the island which produces perhaps eight-tenths of all the sugar exported from the Philippines, and practically all the rest are on the Island of Luzon. Assuming that each mill serves one estate, the estates average for the two islands 176 acres planted to each estate ; for Negros 127 acres planted to each estate. Now, I shall not consume time in arguing the political or legal questions concerning the Philippines and the United States. I am here to testify somewhat as an expert concerning agricultural and business conditions in the Islands and at home. A little sugar is raised in most of the Islands, but as a com- mercial product in only three or four. I find from the census returns recently arrived that Occidental Negros has been producing about eight-tenths of the sugar for export. Only 180,000 acres APPENDIX. 49 were planted in cane in 190:i and the average yield was 2,200 pounds per acre— the lowest for either cane or beet sugar made on the face of the earth. The average yield in Occidental Negros was 2,800 pounds per acre. The average yield for Pampanga, the next largest sugar-producing province, was about 1,100 pounds. For 1903 and 1904 I am sure, from personal observation, Negros has fallen off in yield and Pampanga has gained. I find, in fact, that only 3,200,000 acres of land in the Philip- f)ines were cultivated in 1902. One-half of the whole is in rice. One-third of the balance is in hemp, 267,000 acres are in corn, about 375,000 acres are in cocoanuts, and about 80,000 acres only in tobacco. Most of the land planted in cane in Luzon is poor and sandy, and probably does not average over 1,500 pounds of low-grade sugar per acre. Only one crop is gotten every two years. The land is too poor to grow a rattoon crop and is allowed to lie fallow a year, when it is again plowed up and planted. In the older lands of Xegros the same method is used; but on the fresher lands one rattoon crop is often grown — never more — and then the land lies fallow a year. One reason for low yields and poor quality of product in the Philippines is the very old and poor machinery in use. In Luzon there is nothing larger than a 3-roller mill in use, and I do not exaggerate when I say that at least half of the mills are driven by carabaos. In Xegros there is one 5-roller mill of a pattern of twenty -five years ago; all the rest are 3-roller mills, and perhaps average a loss in the total juice of the cane of about 40 per cent. There is not a vacuum pan in the whole Archipelago, and not one pound of centrifugal sugar is made. The cooking is done in the old Jamaica train in vogue in other sugar countries forty years ago. The sugar, molasses, and all are boiled down hard and beaten up with spades and called sugar. It is a brown, lumpy, scorched sugar, polarizing about 84 degrees and containing a large amount of glucose, ash, and other impurities that prevent much of the indicated 84 per cent of sugar from being recovered at the refinery. Scarce and high in price as fuel is in the Philippines, no one has ever attempted to crush cane well enough to burn the bagasse with- out first sunning it. I have seen fifty men engaged in spreading the bagasse out over an acre of yard, raking it over to dry, and carrying it back to the furnace. 50 APPENDIX. With every other method about the mill and plantation just as crude, and with the period of low prices prevailing for several years past, there is no wonder that the sugar industry has almost starved to death, and with it the laborers working for the proprie- tors. With the carabao as the draft animal, any great expansion of the industry is impossible. The carabao works half the time and wallows in the mud the other half. He walks half as fast as a horse with a heavy load. With the native plow a man and the carabao will scratch over an acre of land in five days. It nevef takes less than three of these scratchings (called plowings) to put the land in shape for planting, and it often requires five. In order to grow 1,000 acres of cane, 400 carabao must be kept and ■too acres of land used for grazing them. Since the surra and rinderpest and other contagious diseases have become prevalent in the Islands it is impossible to keep even 100 carabaos bunched together without disease cleaning out the whole of them perhaps before a single crop can be grown and harvested. In making sugar in a tropical country planting must, of course, go on with the har- vesting and grinding. Notwithstanding the ridicule the American sugar men offered Colonel Colton's statement — that the cane is planted once a year and cut at twelve months of age — such is the truth and the whole truth. So, at the present time, the mills in the Islands — many of them now twenty to thirty years old — are becoming worse and worse worn, the mill buildings are falling down, and the people are without money and without credit to renew them. They do, it is true, get some credit from Chinese who do a scalping business all over the sugar districts, and, to my own knowledge, have loaned money to planters at 10 per cent a month. When the high prices of the recently passed grinding season came the people were (most of them) not in position to be much benefited. The dealers of Iloilo and the Chinese everywhere knew of the rise in price first and, by making advances to help along the harvesting, con- tracted for the output at much below its value. For the years 1887, 1888, and 1889 some three-fourths of all Philippine sugar went to the'United States, and the production of that period was substantially twice what it is now. For the year 1902 it seems not a pound of Philippine sugar went to the United States. In 1903 the United States took about 35,000 tons of our low-grade sugar and imported from other foreign countries about APPENDIX. 51 •i,000,000 tons of sugar. This importation was exclusive of Hawaii and Porto Rico, which are regarded as United States territory, just as we believe the Philippines ought to be regarded. Philippine sugar, in other words, made up about 1^ per cent of the value of the home country's import of sugar. In 1904 about the same relative showing is made. The mother country, then, seems to be spending 3 cents for sugar from her Philippine colony every time she spends a dollar for Cuban sugar. If the United States took all our sugar, the bill would now amount to just 6f per cent of what she is spending for this article in Cuba, or just about 3f per cent of what she is spending in all foreign countries, including Cuba, for sugar. These calculations take into account the low grade of Philippine sugar and its smaller market value. In the last twenty-five years Louisiana has multiplied her sugar yield by three, counting that the extra large yield given by the last exceptionally favorable season will be kept up. The beet-sugar industry is really less than fifteen years old as an industry, and in that time has attained a production of about a quarter of a million tons of sugar. In the meantime Hawaii and Porto Rico have been added to the United States, with the production of substantially a half million tons. In spite of all this, the United States has multiplied her importation in twenty-five years by more than two. Her consumption of sugar has multiplied by three in the same period of time. Let this rate of increased consumption go on for another quarter of a century, and the home beet-sugar crop may be nmltiplied by three ; the cane-sugar crops of Louisiana, Hawaii, and Porto Rico may multiply by three, and still there would be room for the Philippine crop to multiply by sixty and all go to the United States. It is true we need not expect our home consumption to increase threefold in the next quarter of a century, but it is entirely reasonable to expect it to double, bringing the total requirement to 6,000,000 tons. Nor will anyone acquainted with the Hawaiian situation be found to predict an increase in output of 100 per cent in twenty-five years, or even in one hundred years. The land and water are not there to double with. Nor will Louisiana likely more than double her product in twenty-five years — and these two sources make up about two-thirds of the present domestic supply. If consumption should double, and the present domestic supply should double, our present importation would have to double exactly, and this importation 52 APPENDIX. would require 4,000 per cent more sugar than the Philippines now produce. Is it reasonable to believe that the" Philippines could ever produce as much sugar as all the balance of the tropical world now produces ? I think not. Should consumption remain stationary and home production double, there would still be need for a million tons of sugar, which is twice as much as the Philippines have prospect of ever producing. There is room for considerable increase in sugar output in the Philippines, but the capital and the initiative and the organizing ability must largely come from the outside and join with the people here who own the lands. The people own the sugar lands, however, always in too small bodies to justify large factories. They generally have very little desire to sell their holdings, and still less to organize and cooperate in a way to make central mills a success. They are generally suspicious of each other and of outsiders, making business discouragingly slow. There are no ports on the west side of Negros, and all sugar has to be hauled out of the interior and sent to Iloilo on small sailing craft that can come up to the coast with the tide. Until railroads are built no very great things in expansion need be looked for, and it is estimated to require five years to complete a railroad. The laws applicable to the Islands do not allow a corporation to own land enough to justify even a medium-sized central mill. The sugar interests in the States have been pleased to speak of 70,000,000 acres of fine sugar lands in the Philippines and their enormous possibilities for production. By the same course of reasoning we may convince ourselves that the South will produce 100,000,000 bales of cotton, and the whole country 10,000,000,000 bushels of corn. Why, Louisiana has 12,000,000 acres alluvial land. If she should plant, all this some year she would probably make 18,000,000 tons, or nearly twice the world's present supply. There is just about as much prospect of planting 1,000,000 acres in the Philippines as these 12,000,000 in Louisiana. There is certainly more than three times as much waste moun- tainous land in the Philippines, in proportion to area^ as there is m the cotton, corn, and sugar belts of the United States. Some 50,000,000 acres of land in the Philippines are in forests and the laws do not permit forest lands to be sold or leased until the valuable timber has been regularly cut under license, measured. APPENDIX. 53 and paid for. Even then a corporation can not own more than 2,500 acres, which is not regarded as sufficient to induce capitalists to invest in large factories. As a matter of fact, not a dollar of American capital has been invested in sugar growing in the Islands during these six years. In fact, if suitable organizations could be eifected so as to control the necessary acreage, I believe that a few central factories could do well in the Philippines. Laborers are not ambitious to work at the prevailing rate of wages, but there is little doubt that, with some better inducements offered, a limited number of concerns could get the labor needed and make money. The price of labor is certain to advance with the building of the railroad system in the Islands, and this resuk will still be more marked if roads, bridges, schoolhouses, and other public works, badly needed, are constructed. This industry must begin, however, just where Cuba began forty years ago and where Java began fifty years ago. Now, I wish to state a fact that will surprise you. The farmers and farm laborers in the Islands cultivate 2.5G acres each. In America each farmer and farm laborer cultivates 40 acres. Pray tell me, are these the industrial giants that Colonel Hill, Mr. Colcock, Mr. Hathaway, and other sugar people predicted would blot two great industries off the American map in three years ? As you gentlemen can plainly see for yourselves, the great body of the present generation of Filipino people is without muscular development, without the habit of sustained industry, and lacking in that acquisitive ambition to make them steady laborers. People that have lived content for years working no more than 2^ acres to each actual farm laborer need not be expected suddenly to do great things in an industrial way. I believe * fairly good supply of labor for a limited number of enterprises can be had with a reasonable advance on present rates of wages; but the next generation must be looked to for the best results. In the discussions before the Ways and Means Committee last winter a great deal was said as to the cost of production of sugar. The truth is, it costs every man a different price from every other man. Every different system shows up a different cost for each man. Matters of average cost are extremely difficult to determine, especially if that cost must be traced through field, factory, and through the markets. I have personally known the cost of raising cotton to range all 54 APPENDIX. the way from 3 cents a pound to 20 cents a pound, and the cost of raising corn to range from 10 cents a bushel to $1 a bushel, depending more on the yield per acre than any other one factor. I do not know what it costs to make sugar here for certain, and no one else does. I do not know what it would cost if the best condi- tions were provided; but I do know that, for the very low yield obtained in Pampanga as shown by the census returns, I could not produce it for twice its price. I know that the sugar people of these Islands have lost money till the industry is in the worst state of want and wreck and ruin that I have ever seen in any country. I know that they have lost this money while selling sugar at about IJ cents, gold, a pound in Iloilo, the prices received for three years previous to the past. Say, if you will, that this statement can not be true, because people will quit a losing business. Just as well say a man quits drinking when liquor begins to affect him or quits gambling when he begins to lose. I do not care what one individual may have thought he could do, or thought he did do, the great majority of the. sugar growers have lost, and lost enormously. Say, if you will, that this great body of sugar growers should do like the few,, and raise sugar cheaply and make money. I will reply, in behalf of the Filipino people, that your great body of beet growers should raise 25 tons of beets per acre at a cost of 55 cents per 100 pounds for the sugar in the beets, like a few showed you how to do; and that your great beet-sugar factories should extract raw sugar, from the beets at a factory cost of a quarter of a cent per pound, as the German factories have shown you how to do, instead of charging about a cent and a half per pound for this service. I 'will reply further, on behalf of these people, that we have the same right to ask why Louisiana . cane growers do not, all of them all the time, average 28 to 30 tons of cane per acre, as they did in 1904 and 1901, and why they do not all make 40 tons of cane per acre as some did, in which case the cost of sugar would come below 2 cents per pound. In other words, if you ask why these people are not prosperous and progress- ive so they would not need help, I will ask why you are not more progressive so you will not need so much protection. Now, I read a great deal in the hearings about examining into the statements of the witnesses. I wish to be permitted to do a little of this examining this morning and to apply a little of APPENDIX. • 55 the same system of mathematics that the sugar representatives in the States used so freely. Mr. Colcock, of Louisiana, predicted that the passage of the Curtis bill would suddenly stimulate production in the Philippines until 1,300,000 tons of sugar would be produced in three years. I -will undertake to say that a single factory could not be built and a single crop from such a factory marketed in that time. I would remind him that it has taken Louisiana ten years to increase her production 50 per cent. Hawaii has increased only 40 per cent in six years of absolute free trade. Java multiplied her yield by three in twenty-five years, while Cuba has multiplied hers in the same time by two and one-half. The world's cane-sugar production has multiplied by three and one-half in fifty years, and during this period the world's consumption has multiplied by seven and one-half. I mention these statistics to show that cane-producing countries move slowly, and especially tropical cane-sugar countries. There is not the history of one tropical country on earth to justify us in believing that the Philippines will make 500,000 tons of sugar at the end of ten years from the time this tariff concession is made. Now, let me examine into another statement of one of the wit- nesses before the Ways and Means Committee. Colonel Hill, of Louisiana, told the committee that his people had been making heroic efforts to carry out their oft-made promise to develop the infant — to increase their industry and to reduce the cost of pro- duction. He said they had knocked off a half cent a pound in two years. If they do that well this year they will have the cost reduced 17 cents per 100 pounds more than the concession the Phil- ippines ask for. If you say the Filipinos do not need to ask for anything, I again say you do not need to keep all you have in the way of protection. The beet-sugar people, through Mr. Hathaway, said they had whacked off 68 cents in cost of production, all in one year. Surely, they are almost out of the woods already and can stand a little less protection. Colonel Hill said they had gotten the cost of cane sugar down to about 3 cents, based on a yield of 20 tons of cane and 125 pounds of sugar per ton. I find the average yield of sugar per ton of cane in Louisiana has been, for ten years — from 1892 to 1901 — 146.5 pounds. If 20 tons of cane and 125 pounds of sugar per ton of cane cost 3 cents, then 20 tons of cane and 146.5 pounds 56 ♦ APPENDIX. of sugar per ton of cane will bring the cost a little below 2J cents per pound. Now, these sugar representatives from the States talked over- much about the amount of reduction in duty to allow the Filipino in order to give him an equal business opportunity with sugar growers in the States. That seems about what we are after. So, to begin with, we are to meet the American grower in his market — say, in New York. We send a sugar there that sold this year frequently for just 1 cent, gold, a pound less than 96-degree sugar. That gives $0.01 advantage to the American grower. We pay $0,005 in freights, insurance, commission, etc., $0.0029 for duty on this low-grade sugar — ^$0.0179 in all; we have the disadvantage. You make sugar for 2.50; take 1.79 from the 2.50 and we have 0.71 cent of the total farm and manufacturing cost for our low- grade sugar. It looks as if you will have to take all the duty off to give us an equal showing. If 20 tons of cane and 146.5 pounds of sugar bring the cost down to 2.50 cents per pound, how about last year's 28 to 30 tons' yield per acre? I can demonstrate that it will bring the cost below 2 cents per pound. Suppose we compare a few Louisiana planters who made 40 tons of cane per acre with the few isolated cases the opposition picked out in the Philippines. The man who got 40 tons of average cane under average work- ing conditions brings his cost of production down to about 1.80, if Colonel Hill's first statement is correct. Under an exceptional condition like this, our Filipino farmer would have to make his low-grade sugar for one one-hundredth of a cent per pound to be on an equality with the Louisiana farmer. ' But I further wish to question the evidence of the witnesses on the other side as being ex parte statements, whatever that means. Colonel Hill's items of cost supposed five to six plowings, and "//," he says, "the cane needs five hoeings, it gets it." I never knew the word if to have quite so much meaning. I have cultivated cane all my life, and two hoeings are what it generally requires, and three to four plowings. Dr. W. C' Stubbs, of Louisiana, told the Industrial Commission, about 1900, that improved cultivators had about supplanted the use of the hoe in cane cultivation. Out- side of planting, fertilizing, and handling the mature crop the cost is less than for cotton, acre per acre. APPENDIX. 57 It is impossible to get a bill of cost for an average acre of Louisiana cane of $75 if the mill itself is operated under anything like normal, economical conditions. Mr. Munson, of Louisiana, testified as to the cost in his case. He gave the cultivating expense of cane, including cleaning of drains, as $20 an acre. I know that can not be a normal condition, as I know $6 or $7 will pay every cent necessary to cultivate any average acre of cane in Loui- siana. He gave $24 a ton as the factory Cost of making sugar. The Hawaiian factories turn out sugar at about $4.50 a ton cost, the Queensland factories at about $6, and every one of these latter has a fuel bill. I know the factory cost in Louisiana should be higher than a tropical mill of equal grade, but you will have to show me before I accept $24 as a normal factory cost of turning out sugar. You can not show the items and prove that such a cost is not abnormal and unreasonable in the operation of the excellent mills you have in Louisiana. Dr. Wiley, Chief of the Bureau of Chem- istry, told the Ladustrial Commission in 1900 that Louisiana planters were then selling sugar at 2f cents and making more money than ever before. Colonel Hill said the cost of 3 cents did liot include interest and depreciation. I beg to suggest that, like the drummer's suit of clothes, it is in that bill of cost, but you can't see it. Now, I want to look into the back yard of the beet people a little. Mr. Colcock further says, on page 127 of the hearings before the Ways and Means Committee, that German and Austrian factories were then contracting for beet roots for 30 cents for 110 pounds, or $6 for a ton of 2,200 pounds, and that this will bring the cost of sugar at the factory to 12s. 3d. per hundredweight, or $2.63 per 100 pounds. The New York price, based on the above and figuring freights, duties, etc., will be 5gV cents per pound for 96-degree sugar.. He reasons that, with the next crop of sugar at such prices, the Philip- pines do not need any concessions. " The figures given by Mr. Colcock , prove another, thing that he was evidently not looking for. They prove that, even supposing the German fabricant thought 96-degree centrifugal would be worth 5^ cents in New York, duty paid, he was still willing to do business on a basis of charging 31.5 of the gross value of the beets. Now, the average price of beets in the United States per short ton is rather under than over $5. Putting the American beet-sugar p T— 05 M 23 58 APPENDIX. factory on a basis .of 88-degree raw sugar worth five-eighths cent less than 96-degree sugar, and supposing his beets to turn out the same as German beets (which is about a fact) — in other words, putting the American factory on a parity with the German factory — we find the American factory charging 62.7 per cent of the final value of the sugar and giving the farmer 37.3 per cent for his share. I am not under the necessity of taking Mr. -Colcock's figures to prove a much .worse case for the American beet-sugar factories, which are now said to belong to the Sugar Trust or to belong in sufficient part to the trust to enjoy a perfect understanding with that institution. I have undisputed information that, away back in 1901 and 1902, thirty-one German factories working on beets that yielded 14 per cent of sugar ran at a factory cost of 64 cents per short ton of beets, or about $4.50 per ton of 88-degree sugar. The Germans now have the yield slightly above 15 per cent, and the cost should as a consequence be about $4 per ton of sugar. Will anyone tell me the factory cost of making 96-degree Louisiana sugar can be $24, when Germans turn out beet sugar at $4 to $4.50 a short ton? Will anyone say again that factory expenses in America for turning out refined beet sugar are $34 per ton of sugar ? It is said the great packing houses butcher cattle for the offal as profit. It seems that these beet factories, when they go to butcher the sugar beet, take all the offal and nearly two-thirds of the carcass. Do these constitute the infant industry, so much needing protection? I must say it is a lusty infant, and has the finest appetite and the loudest voice I ever heard of. Let us look at the agricultural side of the beet-sugar business. If the beet farmers can find any way to force the factories to give them a fair share of the gross product they wiU be well off; indeed, they need not bother themselves about Philippine sugar. No less authorities than Prof. F. W. "WoU, of Wisconsin, and Professor Kedgie, of Michigan, said the average cost of raising an acre of sugar beets is $30. I have abundance of evidence to support this view, in Special Report No. 80, Department of • Agriculture. The average yield appears to be 12 tons, and the Germans have their average about 13 tons. This is a farm cost of $2.50 a ton. The price being $5 a ton, the farmers seem to make clear 100 per cent. If the American beet factories worked APPENDIX. 59 within 30 per cent as cheap as the German factories, I should say the beet farmer would make 250 per cent clear. If a ton of beets will turn out 250 pounds of sugar, the average farm cost would appear to be 1 cent a pound for the sugar. If the factory's cost should be $20 a ton for turning out refined sugar, then the cost of the sugar to the factory also owning the farm would be 2 cents. Let us compare this with our sugar according to last quotations : Our sugar is worth 1 cent less in New York than 96-degree centrifugal, and refined was worth on July 3 one cent more than 96 degree. Therefore, our sugar is worth 2 cents less in New York, duty paid, than the beet factories turn out. Add to this all ex- penses of moving sugar from the farm in the Philippines to New York — 0.50 cent, plus 0.29 cent duty — and we have a difference of 2.79 cents advantage that the beet industry has over our industry here. Starting with a handicap of 2.79 cents, that means that, in order to put the two industries on the equality insisted on by the sugar attorneys who went to Washington, Philippine sugar would have to be grown at a cost of 0.46 cent a pound. The same Professor WoU quoted produced sugar at a total pound cost of 0.55 cent a pound for the sugar recovered at the factory. I can give you a list of a dozen men in beet-sugar States whose farm cost all told amoimted to no more than 66f cents per 100 pounds for the sugar of the beets, on the assumption that the farm cost is $30 an acre. I can take special cases like these and show you that, to put us on an equality, we would have to have all duties removed and be given a substantial bounty. And these special, isolated cases are the ones so freely quoted to prove cheap production in the Philippines. Let me examine a little further into one of Colonel Hill's state- ments, made in January, to the effect that 20 per cent off the tariff did not and would not help Cuba, but would all be appropriated by the trust. I wonder if Colonel Hill will now insist that was a profit? He said, furthermore, that any reduction made would not help the Filipinos. Now, as a matter of fact, Cuba has received exactly 20 per cent of the duty more for sugar than other West Indian and South American countries selling in New York. Of course, she has not received the Hamburg price, because that would be equivalent to shipping the Cuban sugar to Hamburg and back to 60 APPENDIX. New York. "Whether it would benefit the Philippines or not, the Filipinos would like to try it. I myself have believed the sugar business may be a pretty good thing in the Philippines if gone about in the right way, but found the half had never been told when I read the reports of the testi- mony of these sugar people in the States. American capitalists must know those fellows who testified as to our cheap cost of pro- duction, for not a dollar of capital has come to the Philippines yet to be invested in sugar. One gentleman, Mr. Hathaway, seems to have believed what he preached, and has been out here for two or three months trying to buy sugar land. I am sorry he has not succeeded in buying what he wants, for he intimated to me that, if he succeeded in finding a suitable investment, he would join with us in asking to have duties removed against Philippine products entering the United States. But that is only another illustration of the fact that tropical countries generally do business " manana," and next year instead of to-day, and it will probably be 1910 before Mr. Hathaway gets his first Philippine sugar crop on the American market. Now, I have devoted a good deal of attention to proving that American sugar interests could still prosper under less protection than now enjoyed; but I did not and do not ilow admit that the entry of Philippine sugar in the United States will create the slightest effect on the market values there. Just as certainly as history repeats itself, the consumption in the United States will outgrow the production in the States and in all the colonies. The various figures presented concerning the very complicated matters of cost of production and distribution, both here and in the States, may be confusing; but one main fact must be evident to everyone, and that is that the sugar interests in the States have prospered while the industry here has starved almost to the point of obliteration. Your beet-sugar people say it takes a long time to educate American farmers up to the new industry of growing beets. That is very true, but, pray tell me how much longer it will take to educate a people like these to up-to-date methods when their present generation has little or no education, no idea of progress, no money, no credit, and no meins of improvement. If it will not tire you, I will tell a short story— a true one— that will illustrate somewhat the matters under consideration. One of APPENDIX. 61 these sugar witnesses at Washington said, "Grant this concession and immediately the acreage in cane will double, each acre will jield double, each ton of cane will make double the sugar," and so on in a sort of geometrical progression of affairs. Many years ago a wealthy young Kentuckian moved down in the Mississippi delta and bought a cotton plantation. He let the negroes and mules run the plantation while he ran the races and played poker from New Orleans to Memphis. Soon he had lost all, and was very much down on his luck, though he would scrap the biggest man in town if he intimated he had gotten to be poor white trash. At last one day he brightened up and said to a friend : ". I've got it at last. I'll be a rich man in five years." "Why, what is it?" " Well, I am going to buy 100 cows and put them out on Island No. 37. Before the year is out these cows will have 100 calves; before the second year expires they will have another 100 calves, making 300 head all told. By the end of three years the 100 old cows will have their third 100 calves and the first 100 calves born will themselves have 100 calves, giving a total increase for the third year of 200 head. The next year the increase will be 300 ; the next year 400, and so on." " But," said the friend, " half of all those calves are entitled to be bull calves." " Well, damn the luck again ! Luck has always been against me ! Those damned infernal bull calves have knocked me out of another fortune ! " [Laughter.] I want to say there are plenty of bull calves, and barren cows, too, in all the calculations about a tropical country. [Applause.] Senator Newlands. Mr. Welborn, what legislation would you advise regarding the area of land that a sugar corporation should own? Mr. Welboen. Legislation is not my specialty; I am studying the agricultural side of it. Really, that might be a little embarass- ing question for me; I would rather leave that to the Governor- General and the Commission. If I endeavored to answer that, the Governor-General and the members of the Commission might charge it up against me some time. Governor-General Weight. That is all right, go ahead. 62 , APPENDIX. Senator Newlands. The Governor-General says he acquits you and gives you a free hand. Mr. Welborn. "Well, these are my personal views only; the Government is not responsible. Personally, I should like to see less restriction than we have now. I do not say that the restric- tions should be taken away altogether, but I think they should be made easier. Senator Newlands. What sort of a restriction .would you suggest? Mr. Welborn. Well, say a restriction of 5,000 acres; that would support a fair-sized factory. I would favor safeguarding the people here in every way consistent with a fair development of the industries. Senator Newlands. That would permit the best modern devel- oped sugar plantation ? Mr. Welborn. I think it would enable the plantation to be worked all right. Of course, the mill could always bring cane in from the outside. I wish to say here, however, that I know some- thing about the difficulty of getting these people to organize. It is almost impossible to get them to do so or to pull together at first ; every man is against the other. Senator Newlands. Do you think that if the same methods of organization, production, and of manufacturing sugar were employed here as in the Hawaiian Islands, under similar conditions as to capital, etc., that the industry Avould be a prosperous one? Mr. Welborn. Well, I believe so; I have no reason to think otherwise. Senator Newlands. Now we will assume that this duty is abolished, and Hawaiian capitalists who are famUiar with this business should conclude to start a plantation here, should organize a corporation and secure 5,000 acres of sugar land — they could do that easily, I presume — and they purchased this land Mr. Welborn. I don't know about that. It would be a slow process. I have known people here who have been trying to buy lands for six months or more, and they have had a hard time. It is hard to get the people to part with the lands, and still I presume it could be done. Senator Newlands. You say the people are unwilling to sell the lands? Mr. Welborn. Well, they hold on to them pretty well. APPENDIX. 63 Senator Newlands. Assuming that it would be possible to purchase 5,000 acres in one holding, has the Government 5,000 acres here which it could turn over to such a corporation? Mr. Welboen. Possibly so. Senator Newlands. Are there any lands under Government ownefthip capable of being used for sugar plantations, as are the existing plantations ? Mr. Welboen. I should say yes. However, the Government has no land on the Island of Negros, but the Government has public land which I think would do fairly well. Governor-General Weight. Where are these lands? Mr. Welboen. The only land I know of personally is in the Island of Mindoro, but you would have to get the people to go there, because that is all a wild country. Secretary Taft. Have you been over the land ? Mr. Welboen. Well, in part; yes, sir. You would have to clear it, as people here understand clearing. It is all grown over with the toughest kind of grasses and other shrubbery. It is a wild country and the problem of labor would be a rather difficult one; it would all have to be taken there. Senator Newlands. There ar^ about 150,000 to 200,000 acres of sugar land under cultivation here, are there not? Mr. Welboen. One hundred and eighty thousand acres in 1902. Senator Newlands. How many more acres of land are there, in your judgment, in all the islands that are adapted to sugar cultivation. Mr. Welboen. My judgment upon that would not be worth much. Senator Newlands. Is there anyone here who can answer that ? Mr. Welboen. Well, perhaps not; we have had no surveys made here yet. Senator Newlands. Would you say that the sugar area could be doubled? Mr. Welboen. Yes; there is plenty of land for that. Senator Newlands. Plenty of land; well, is there plenty of land to treble it? Mr. Welboen. Yes, I should say so. Senator Newlands. To quadruple it? Mr. Welboen. I should say so. 64 APPENDIX. Senator Newlands. Is there plenty of land to multiply it ten times ? Mr. Welboen. I do not know about that. You are getting up pretty high now ; but I say that just the same as there would be land enough to multiply the plantings in Louisiana by twenty, you might do the^ same here, and it is just about as probable that it will be done. • Senator Foster. Now you have made a number of remarks about the possibilities of production in Louisiana. Do you know just what kind. of land it is that you are talking of putting into sugar? Mr. Welboen. Well, I merely referred to the report of Dr. Stubbs, who said that there were 20,000 square miles of alluvial land in the State of Louisiana. Senaitor Foster. Don't you know that only a small portion of that could be put into sugar ? Mr. Welboen. Of course, and the same thing is true in the Philippines. I merely made that statement to call attention to the absurdity of the arguments made in regard to the enormous prob- ability of Philippine sugar growing. , Senator Foster. You have never seen cane growing in the Tensas- district? Mr. Welboen. No; but I have seen it growing as far north as Alexandria in the Ked River Valley, in the northern part of the State. Senator Foster. Yes; but don't you know that was an experi- ment, and that all that has been changed into cotton land ? Mr. Welboen. Well, I was in Louisiana three or four years ago. 1 have not been there since, however. Senator Newlands. Well, now, Mr. Welborn, you understand my question in regard to the lands here, do you not? There has been in. Hawaii an absolute limitation upon the amgunt of land available for sugar cultivation, has there not ? Mr. Welborn. Yes, they have climbed the mountains almost to the top and put every acre under cultivation that they can. Senator Newlands. Yes, but that there is no immediate limit to the land here ; is that correct? Mr. Welborn. Yes, I presume that is true. Senator Newlands. Do you regard the land in Hawaii as better adapted to sugar than this? APPENDIX. 65 Senator Foster. So far as climate is concerned, Hawaii and the Philippines are about the same, are they not? Mr. Welborn. No other country will ever make the same yield per acre as the dry side of the Hawaiian Islands. Senator Foster. Have you no land located here in these Islands as those lands are located — Elands which will permit of irrigation and are on the dry side of the mountains? Mr. Welborn. No, we have no lands free from a very destructive typhoon season. Every part of the Islands is more or less visited by these typhoons. Senator Newlands. So that you have a disadvantage with Hawaii. Now you are aware that in Hawaii they use a great deal of fertilizer? Mr. Welborn. I know that the planters spend nearly $50, gold, a year per acre for fertilizer. Senator Newlands. Could they not employ the same fertilizer here and increase the production ? Mr. Welborn. Of course, but my judgment is that you could not expect anything like the production that they get in the Hawaiian Islands. You could not expect the large yield which they get there. Senator Newlands. Now I understand from your statistics that about one-third of the sugar consumed in the United States is produced in the United States? Mr. Welborn. In the United States and her dependencies; yes, sir. Senator Newlands. Now, then, the duty on sugar is about $35 a ton? Mr. Welborn. You mean 96-degree sugar or this Philippine iugar ? Senator Newlands. Well, say, your Philippine sugar- Mr. Welborn. Well, it would be three times 29 and a little frac- tion—about 88 cents, gold, per 100 pounds. Senator Foster. On that quality ? Mr. Welborn. Yes, on the Philippine article. Senator Newlands. And what would it be on 96 degree ? Mr. Welborn. For other countries that produce 96-degree sugar it is about $1.68. Senator Newlands. $1.68 in one case and here 88 cents? 66 APPENDIX. Mr. Welbokn. Yes; but that presumes that the 25 per cent tariff is off; otherwise it would be something over $1.20 for the low-grade Philippine sugar as against $1.68 for the 96-degree sugar. Senator Newlands. Then, if "you should produce 300,000 tons annually, what would that amount to in the remission of duties in the United States, if the duty is entirely abolished ? Mr. Welborn. That would be about $7,500,000 per annum, providing it all went to the United States. Senator Newlands. Now, that is what American consumers, then, would pay to the Philippine producers for their sugar above the international price. What would be the compensating advan- tage to the Americans for paying this ? Mr. Welboen. Well, I don't know how much trade that would stimulate. Of course, we are under some limitations here at present, and will be up to the year 1909; but I had thought that afterwards we might put up the bars against foreign countries and take about $8,000,000 worth of trade in cotton goods and other goods in proportion. Now, this has not been my field of study, but I should not be surprised to see America sell $100,000,000 worth of goods here in ten or fifteen years from now. Senator Newlands. Well, you seem to have a number of figures here, and I would like to have you put in this record the amount the United States is remitting to its insular possessions. I under- stood you to say that Porto Rico and Hawaii are producing 500,000 tons ; that is 96-degree sugar, is it ? Mr. Welbokn. Yes, sir. Senator Newlands. And the duty is $35 a ton? Mr. Welboen. Well, it is about $35 a ton. Senator Newlands. And that, for 500,000 tons, would amount to $17,500,000 per annum; is that correct? Mr. Welboen. That seems to be nearly correct. Senator Newlands. Then you add to that $7,500,000 remitted 4o the Philippine Islands, and you have $25,000,000 that the Ameri- can consumers pay to their insular possessions — to the producers of sugar therein; now what compensating advantage is there for them? Mr. Welboen. Well, would the American consumer pay any more for sugar afterwards than he does now ? Senator Newlands. Well, then, we come to the question as to whether the duty should be as high as it is now ; what do you think about that? APPENDIX. er Mr. Welboen. Well, I must admit that I am a Mississippi Democrat and have a good deal of consideration for the interests of the great body of consumers of sugar. Representative De Aemond. Would the remission of the duty on Philippine sugar operate any more disastrously to the Treasury of the United States than did the reihission of the taxes on Hawaiian sugar under the act which permitted that sugar to come in free — ^would it affect the Treasury any more in the one instance than in the other? Mr. Welboen. No ; I think not. Representative De Aemond. I would like to refer that question to Senator Newlands, as to where the difference in effect is. Senator Newlands. Well, the difference is in the fact that I think the Hawaiian Islands are necessary for our coast defense, and I am willing to pay anything for them. •Mr. Lowenstein. The United States controlled practically all of the trade of the Hawaiian Islands when the Hawaiian Islands were annexed. We do not begin to possess 25 per cent of the trade of the Philippine Islands. Therefore, if you take off the duty , on sugar and' establish free trade with the Philippine Islands, all of this trade, amounting to between $30,000,000 and $40,000,000 per year, would probably come to the United States, and the more you develop the material interests of these Islands the more trade will go to the United States, and in that way the merchant and producer of the United States would be more than compensated. Senator Newlands. Now that is the information I wanted. Now, assume that the United States got all the trade of the Philippine Islands, what would it amount to ? Mr. Lowenstein. About $40,000,000 a year, I believe; I have not the exact figures. Secretary Taft. It was $36,000,000 imports and $33,000,000 exports last year. Senator Newlands. How much of that has the United States now? Mr. Lowenstein. It has about $6,000,000, I believe. Senator Newlands. Do you think if this tariff concession is made we will get all this trade ? Mr. Lowenstein. Well, I take it that eventually free trade will be established and that then we will get nearly all of it — say, at least 80 per cent of it, which would be about $28,000,000— but do 68 APPENDIX. not forget the fact that immediately upon your taking down the tariff barrier against these Islands the trade of this country will increase enormously. Our industries will develop; the Islands will produce more, their purchasing power will increase, and the market for American goods in these Islands wiU be very much more than it is at present. I think that the exports to these Islands from the United States would double in less than no time; I should say they would double in five years. These people adapt themselves very quickly to American goods; I have been here five years and I have noticed that. Senator Newlands. Let me ask you this: Assuming that we get $28,000,000 of the present imports of this country, about what would be the profit on that $28,000,000 to the merchants of the United States? Mr. LowENSTEiN. Well, that is hard to say. Those articles exported by the trusts would yield more than the products of the farm, such as wheat, oats, etc. Senator Newlands. Can you form any idea what it would be — 10 or 15 per cent? Mr. LowENSTEiN. I should say 20 per cent. Senator Newlands. That would make $5,600,000. ' That would scarcely offset the $7,500,000 paid by the American consumers? Eepresentative Cochran. Oh, well, let's not thresh that old straw over again ; we can do that back home. Secretary Taet. I have no question to ask the gentleman, but I met a gentleman here who told me that he had been investigating the sugar question in the Islands and had given three or four months' study to it. He is present in the room, and I suggest that he be called to give his views upon the subject. I understand that he has been making the investigation for the purpose of advising the beet-sugar interests in the States as to the facts. Now, I suggest that he might give us his views. I do not know whether he would object; of course, if he would, the committee would not probably desire to call upon him, but I suggest that this gentleman be given an opportunity to present his views. Mr. Aaeon Gove. I thank you very much, Mr. Secretary Taft. I am not here for the purpose of testifying. I am here as a free lance. I have been doing a little investigating here, but I am iiot ready to make any statements as yet. I have been greatly interested in a good many things I have seen here. I am, first. APPENDIX. 65> a schoolmaster, and am largely interested in the education in the Philippines; and as a secondary measure, I have asked some ques- tions about agriculture, especially hemp and sugar, but I am not ui condition to make any sort of report. I know less now than I did a week ago; I know much less than I did two days ago. I have been much interested in this discussion, and when I have had time to digest what I have heard I should be glad to be given the privilege of being heard, but at the present time I am not ready to make any statement. Secretary Taft. Well, I only desired, if it- is possible, to have all the evidence here on both sides brought forth, so that we can examine and weigh witnesses. If the gentleman is not able tO' testify, I do not want to press him. I should like, if possible, to bring before the committee all the facts available. Eepresentative Geosvenoe. I should like to ask Mr. Welborn if there is any disposition on the part of the farmers, especially the sugar growers in the Islands, to have the bar against imported labor taken away, or whether they would prefer to continue the employ- ment of Filipino labor, and prefer that rather than making use of another kind such as we have heard of ? Mr. Welborn. I have not tried to sound the sentiment upon that point here. However, so far as I have observed, the people here are rather afraid of the Chinese; they rather fear that if the Chinaman is brought in as a laborer he will not continue to labor, but will soon be a merchant. So far as I am concerned, I am not so discouraged with Filipino labor as many people seem to be. I believe the planters here have followed poor methods and gotten> low results in their plantations so long that they have been starved into the necessity of starving their labor, or nearly doing so — that is, paying such low wages that they can not get labor. I am sure that with a reasonable advance in wages you can get a reasonable amount of labor. I am particularly hopeful for the coming genera- tion of Filipinos. They seem to learn very rapidly and to develop their muscles and acquire a respect for labor. I am very hopgful that the young men and boys that we have now in the schools will be a great improvement over any labor we have had before. The schools here are the biggest things we have in the Islands to-day. We have something like 400,000 pupils in the schools to-day, and they learn very quickly and attend very punctually, I understand. The Chaieman. Have you any manual-training schools ? 70 APPENDIX. Mr. Welborn. Yes, sir; we have some, and there is quite a good deal of agricultural work and school gardens in all the provinces, and the people are taking a great deal of interest in this work. Keally, I feel that the Agricultural Bureau can not do its best work in spreading information until the education of the people pro- gresses a little further. These schools will be a great means of imparting better methods to the people. Representative Cochran. I have been somewhat mystified by some of these statements as to labor. Why should there be a shortage of labor in the Philippines ? Mr. Welborn. Well, I think it is largely due to the low wages, and these in turn are due to the fact that the planters can not pay higher wages owing to poor methods, misfortunes, and low prices. Representative Cochran. Well, there is no lack of human hands, is there ? Mr. Welborn. No; there is not, but there is lack of human muscle and industry. Representative Cochran. Well, we can start here. There is no lack of human hands, if they can be made effective. Mr. Welborn. That is true. Representative Cochran. It is not the question of getting men so much as making the men effective? Now, is it not a fact that for more than three hundred years the government of these Islands has been such that the productive efficiency of labor was dis- couraged by the onerous and practically confiscatory taxation which was maintained by the government ? • Mr. Welborn. Yes, sir; it must have been true, if history can be believed. Representative Cochran. You have, practically, then, a condi- tion of industrial demoralization. Now, from your observation, have you any doubt that under favorable conditions this labor could be greatly improved and encouraged ? Mr. Welborn. I believe so, and I believe that the man who would teach these people to take care of themselves a little better and feed them better and pay them better would get very much better results. These people do not know how to take care of themselves or to preserve their health; it is a big task, teaching them, and it would be a gradual process, but I think much can be done in that line. APPENDIX. 71 Representative Cochran. The labor is very primitive, I under- stand, and yet the Islands have 7,000,000 people who are supported by this labor which is almost barbarous in its simplicity. The ques- tion is, then, how to obtain the capital and means of reenforcing the industrial eiRciency of these hands? Mr. Welboen. Yes, sir ; that is the question, as I see it. Eepresentative Cochkan. They can not get plows, machinery, etc., without capital ? Mr. Welboen. No, sir; and there is a total lack of improved agricultural macliinery in these Islands. If capital were brought into these Islands for those purposes, there is no doubt that there would be a great increase. Representative Cochean. Now, your suggestion here to abolish the tariff on these particular articles going inlo the United States is to stimulate production in the Islands and therefore encourage capital to engage in agricultural enterprises here, and the more production increases the more successful you are. Commissioner Woecestee. Will you state what your practical experience has been in the use of Filipinos as laborers ? Mr. Welboen. Well, we have never employed labor by the thou- sands, as they do on the sugar plantations of Hawaii, but we have tried native labor by the hundreds in at least two places, and we have always gotten it by paying 50 to 60 centavos per day. In the Island of Negros there is much malaria and sickness, and one reason, I think, is that the people do not know how to take care of themselves. I should try to teach these people to feed themselves better if I was running a large estate there, and to care for them- selves. It would greatly increase their efficiency; but we have always been able to get all the labor we wanted by paying a little better wages than was usual. Governor-General Weight. If you had a largely increased de- mand for labor there, could you find it ? Mr. Welboen. Well, my own opinion is that we would possibly have to go up to 75 centavos a day to get a large number of laborers of the best class and hold them steadily. Eepresentative Cochean. Would not a few good plows and the means of propelling them add greatly to the eflSciency of the farm labor ? Mr. Welbokn. Yes, of course, if you use judgment in selecting such plows as the people can use successfully. 72 ' APPENDIX. Secretary Worcester asks me to state how well we have suc- ceeded in getting natives to use large plows — gang plows. Now, with more superintendence than we have in the United States we have taught natives to run gang plows very well. They do it in a first-rate manner, but lack somewhat in judgment and need more foremien than are necessary in the States. Secretary Taft. Mr. Welborn, can you give a statement as to the experience with labor in the hemp fields and the cost of labor there ? Mr. Welboen. I know that in the hemp fields labor has become very high. There has not been labor enough to strip the hemp. An average day's woi^k is to strip 25 pounds of dry hemp, by the method shown on the float which passed the reviewing stand in the parade yesterday. I say 25 pounds is an average day's work. Only one man in ten is strong enough to strip hemp at all; it takes a strong man to do it, and one whose muscles are well developed. Therefore, in order to get it done they have to pay half the hemp. A man stripping 25 pounds of hemp would make ^3 about. Some- times an extra good man can strip 40 pounds, and he would make ^^4 or P5 a day. Vice-Governor Ide. What is the relative importance of hemp, sugar, and tobacco in the production of the country ? Mr. Welboen. Well, I believe about 65 per cent of the whole is hemp; then comes copra, and then sugar and tobacco. Tobacco is a minor export as compared with the others. Sugar and copra are about equal. However, there is quite a good deal of sugar used in the Islands. Practically all of the hemp is exported. Secretary Taft. Well, in considering the question of the spread of the sugar industry, the profit to be derived from the hemp industry must cut some figure — ^is not that case ? Mr. Welboen. Certainly, because you can not take labor from the hemp fields. The only American capital which has gone into agricultural enterprises in the Philippines has gone into hemp. You could not take any of this labor out of the hemp fields and use it in cultivating sugar. Senator Fostee. Mr. Welborn, if the duty was removed from sugar and from tobacco, do you think the people of the Islands would go into sugar at the expense of the other industries of the Islands, in preference to raising hemp, cocoanuts, etc. ? Mr. Welboen. No; they could not go into it at the expense of APPENDIX. 73 hemp. Hemp is like an orchard; it stays there after you have put it in; it is like an apple orchard. Cocoanuts are the same; they last a hundred years. Nobody would want to cut down a grove of cocoanut trees. Hemp is also permanent; all you have to do is to gather the leaves each year. So sugar could not encroach upon these industries. Every Filipino here would also tell you that sugar will never encroach upon rice, because rice is grown upon land which they say they can not gxow good sugar upon. Secretary Taft. I ask that Colonel Hill be permitted to cross- examine the witness. Colonel Hill. You have been through the sugar plantations of the Islands yourself? Mr. Welborn. Yes, sir. Colonel Hill. And during all seasons of the year? Mr. Welbokn. Yes, sir ; more or less. Colonel Hill. In the cultivation of sugar cane, you say they never use anything except the tops in planting? Mr. Welborn. No, sir. Colonel Hill. When you prepare your fields for planting, how deep do you plow ? Mr. Welborn. I don't know about that; they have to plow the land three to five times and I suppose go 4 or 5 inches. We have a great deal of Johnson grass, Bermuda grass, and nut grass, but they are minor pests as compared with the other grasses we have. They are much worse than anything you have in Louisiana. The native plow is a very crude affair, and a man takes a carabao and scratches over the ground, probably going about an inch deep in the first operation. If he goes over the ground three times, he will get an inch deeper each time. If he goes over it five times, I should say he would get about 5 inches deep. Colonel Hill. Do you not think they would average more than 5 inches deep? Mr. Welborn. No, sir ; I think not. Colonel Hill. What other instruments do they use for cultivation besides the plow ? Mr. Welborn. Well, nothing at all, except the simple little plow, Nothing but that, except when they are clearing off these heavy grasses; then they use a cane hoe. The grasses are very trouble- some; that is one reason why it takes a man to cultivate one hectare of land here, whereas in the States he can cultivate ten or twenty times as much, p T — 05 M 24 74 APPENDIX. Colonel Hill. What is the last operation ? Mr. Welboen. The last thing is to drag up dirt with hoes from the middles and heap it up in the drill to cover the grass and to make ditches out of the middles to stand our wet season. Colonel Hill. Now, in order to have a hectare of cane cultivated by one man, how many carabaos are necessary ? Mr. Welborn. Well, two carabaos are necessary to keep a man busy — one in the mud wallowing while the other is in use. They are changed about once every hour. A man should have an extra carabao ; he can not work them steadily. Colonel Hill. Is there any scarcity of hands when the grinding season begins ? Mr. Welborn. Yes, sir ; they get labor from the other provinces during that season. Colonel Hill. How many tons of cane would be cut by one of your workmen? Mr. Welborn. I could not say about that. Nobody here weighs cane. Colonel Hill. Have you ever made any estimate as to the tonnage per acre ? Mr. Welborn. Yes, sir; it has been my opinion that the yield in Negros was about 2 tons of sugar to the acre ; that would require 20 tons of cane under the methods here. But when the census report came, however, I found that in 1902 they made only 2,800 pounds to the acre in Negros, and that was a better year than we have had since, so I must reduce my figures. Colonel Hill. I understand you to say that there is no explana- tion of the necessity of having cane replanted year by year ? Mr. Welborn. Well, T would not make so sweeping a statement. In some places in Negros they do get one rattoon crop, but never more. The third crop would not pay for the gathering. Colonel Hill. Is that the practice throughout Negros, or on the coast only ? Mr. Welborn. Well, the lands are poor on the coast; they get better as you go inland. They do not get a rattoon crop on the coast lands at all ; that is only done upon the new and fresher lands farther inland. Colonel Hill. You never get more than one rattoon crop? Mr. Welboen. Never to my knowledge; everybody here agrees upon that. APPENDIX. 75 Colonel Hill. Have you visited the Island of Negros yourself? Mr. Welborn. Yes, sir; three or four times. Colonel Hill. What is considered the dry side of Negros — Occi- dental or Oriental Negros? Mr. Welborn. Well, I have never been in Oriental Negros; I do not know enough about that. There is no sugar grown in Oriental Negros. The conditions are about the same on both sides of the island ; however, I should say one side is as dry as the other. Colonel Hill. Why is there no sugar grown in Oriental Negros? Mr. Welborn. Well, I do not know; probably it is poor land; in fact, I have been told that the land over there is poor. Colonel Hill. Is that due to lack of water ? Mr. Welborn. Possibly so, but I rather think it is due to the fact that the land is not fertile ; I have heard so. Colonel Hill. Have you never heard it compared with Hawaii as being similar to the dry lands in Hawaii ? Governor General Wright. My information is that there are no arid lands in the Philippines. The northeast monsoon affects the lands during one half of the year and the southwest monsoon during the other. Commissioner Worcester. There are no arid lands in the Island of Negros. The rainy season comes at opposite times on the two sides. However, there is a small district near Bais, in Oriental Negros, where cane is grown and where the conditions are about the same as at Bacolod. There is no irrigated sugar land in the Philippine Islands, and never has been. Mr. Welborn. As proof that it is not arid, there is a good deal of hemp grown there. Commissioner Worcester. One reason why there is more sugar in Occidental Negros than in Oriental Negros is that in the latter there are large amounts of timber land. The cost of clearing is very high — in fact almost prohibitive. The last time I was in Oriental Negros, some thirteen years ago, there were very extensive forests to the east of the mountains between Bais and Dumaguete. Colonel Hill. In regard to the expected return to be made to the United States by reason of the remission of duties— that is, by the increase of trade to the extent of many millions — what do you mean by that? Mr. Welborn. Well, I had in view the United States increasing her exports of cotton goods, iron products, food stuffs, etc. 76 APPENDIX. Colonel Hill. Well, do you know whether, in the Philippine Islands, any effort has been made on the part of the American manufacturer to find out the style of article desired by the Filipinos? Mr. Welbohn. Well, I believe that to be a great difficulty with many of them. Colonel Hill. They are following the same practice here that they did in Cuba ? Mr. Welboen. Yes, sir; they think that the American style is the best in the world. I think that they should begin to study the wants of the Filipinos, so as to be ready to extend their trade here by 1909, when the ten years' clause of the treat}^ of Paris will have expired and the bars can be put up against foreign countries. Colonel Hill. In regard to plows; have you ever tried to introduce the " Fowler " plow from England ? Mr. Welboen. No, sir. Colonel Hill. Do you know what effect deep plowing of the land would have in producing rattoon crops? Mr. Welboen. I became interested in that subject this year and'had one piece of cane land trenched 18 inches deep. I have a standing reward of $5 for anyone who can show me the trenched land from that plowed 5 inches deep, by the growth of cane. Nobody has gotten the reward. The deep plowing seems to be no better than the shallow plowing. Colonel Hill. When was that done? Mr. Welboen. In December, just before planting. Colonel Hill. You do not know whether that would produce a rattoon crop or not? Mr. Welboen. No, sir. Senator Newlands. Mr. Welborn, in your observation of the agricultural holdings of the Philippines, have you noted whether the land is held in very large estates and leased to tenants or whether it is held in small holdings and cultivated by the owners ? Mr. Welboen. Well, it is in all sorts of ways. In Pampanga T believe the prevailing system is to have tenants and divide the crop— give each man a tract of land and have him cultivate it and then divide the proceeds. Senator Newlands. That is the case with sugar lands? Mr. Welboen. Yes, sir. APPENDIX. 77 Senator Xewlands. Will you please specify what the rule is as to large or small holdings of the different classes of agricultural lands, sugar, tobacco, and hemp ? Mr. Welborn. Well, so far as I know and believe, there are two extremes. There are perhaps 10 per cent of what you would call large estates, and then 10 per cent of medium-sized estates, and the balance very much split up, so that the average-sized farm in the Philippines is about 6 Jbres, and 45 per cent of the farms is cultivated. The average-sized farm in the Philippines is the small- est of any country I have ever heard of. Senator Newlands. Now you suggest that a corporation should be allowed to own 5,000 acres for a sugar estate. How many work- men would be needed on such an estate ? Mr. Welboen. I do not know, because I have never run a planta- tion of that size. Senator Newlands. You estimate one man to the hectare, do you not? Mr. Welboen. That is the way they work now ; but if I had that plantation and one man did not work more than a hectare of land I would get out of the Islands. Senator Newlajstds. Is it your understanding that a corporation having 5,000 acres would employ 3,000 men? How many would be needed on an estate of that size in Hawaii ? Mr. Welbokn. The Hawaiian reports never make statements upon that point. They say how much it costs to plant, cultivate, and grind the cane, but they never make a statement as to the number of hands. Senator Xewlakds. How many men would you expect to employ on an estate of that size ? Mr. "VYelboen. It would be a mere guess ; I could not say. Senator Newlands. Well, the purpose of my question is this: My observation in the Hawaiian Islands has been that there is a very large population attached to each estate — a large number of Japanese and Chinese — who occupy small villages upon the estates. Now these men have no interest in the soil; they are employed there in a capacity that does not train them for the duties of citizen- ship. Now, with our plans for these natives — the plans we have for bettering them — I ask you whether, were Ave to permit these large plantations and large numbers of laborers attached to the soil, we would develop them in the duties of citizenship and in 78 APPENDIX. their capacity for self-government — and let me call your atten- tion to the fact that for every laborer employed you will have a wife and a family of three or four at least — so for 2,000 laboring men you would have a population of 7,000 or 8,000 people. Mr. Welboen. My own view is that sometimes you have to take the least of two evils. These people cultivate land now in smaller parcels than I have ever heard of elsewhere. I have inquired particularly with reference to investmeift, and I have not found people particularly anxious to sell; they seem to want to hold on to what they have. They have gotten an idea, I think, that we Americans have got a lot of money, and as soon as anyone talks about purchasing their prices go up. Secretary Tapt. I should like to ask, if a company came in here to manage 5,000 acres and did not lift up and improve their laborers and treat them with consideration, whether they might not count on losing money ? Mr. Welborn. Well, I certainly believe in that principle. I should certainly feel that I was putting money into my pocket to care for them properly and feed them well, with a view to making a profit in the long run. I would teach them means of keeping well and of improving themselves. Whether every proprietor would feel like I do upon that point, I' do not know. I am certain that you would not be able to buy np the whole country, however. These people hold on to their lands. / The Chairman. Any further questions ? Kepresentative Grosvenor. Mr. Chairman, I move that the meet- ing now adjourn until 3 p. m. to-morrow afternoon, and that we then take up the tobacco question. The Chairman. It is moved that we adjourn until 3 p. m. to- morrow afternoon; if there is no objection, adjournment will be taken until that hour. (The committee then adjourned until 3 p. m. to-morrow, August 9, 1905.) TOBACCO. Manila, August 9, 1905. The committee convened at 3.30 p. m., pursuant to adjournment. The Chairman. What is the pleasure of the committee ? Eepresentative Curtis. I suggest that since we have finished hearing the sugar men, the tobacco men now be given an op- portunity to be heard. APPENDIX. 79 The Chairman. If there is no objection to that, the suggestion of Representative Curtis will be considered as a motion and as having carried. Mr. P. Krafft, representing the firm of Baer, Senior & Co., then took the floor. STATEMENT OF MR. P. KRAFFT, OF THE FIRM OF BAER, SENIOR & CO. Mr. Krafft. I have prepared a paper which I would like to read to the committee. Representative Curtis. Will the gentleman please give his name and business? Mr. Krafft. My name is P. Krafft. I am of the firm of Baer, Senior & Co. We are general merchants, planters, and manufac- turers. Mr. Krafft then read from his paper, as follows : When discussing in Washington the proposal of law to reduce the Dingley tariff on Philippine sugar and tobacco to 25 per cent, the opponents in refuting the arguments brought forth in favor of a reduction laid special stress on the following points: A menace would be constituted to the home industry by the following : That the tobacco cultivation of the Philippines would be stimu- lated and such enormous quantities of good and fairly good leaf tobacco would be grown to form a serious competition to the cul- tivation in the United States. That the Manila cigars could be laid down at such a low price that an enormous demand would spring up to the detriment of not only the home cigar makers but also to the cigar-leaf-producing farmers. Both arguments can be proven to be exaggerated by the following facts : (1) CULTIVATION OF LEAF TOBACCO. I have drawn a map showing the actual regions under cultivation, the various colors representing the different grades of the quality. 1 also marked those regions which some time ago were under cultivation and which now are deserted on account of want of demand. A single glance at the map will give ample explanation that the fear in this direction has no reason to exist. It is an absolute fact, which can not be refuted, that all tobacco grown on the seashore or in the vicinity of it is of bad burning, be it grown 80 APPENDIX. here in the Philippine Islands, Sumatra, or in Java. I marked the bad quality, which is of no use, in blue. This is tobacco which burns black ashes only, and which is very inferior in quality. The map which I have prepared is over there [pointing to a map which had been placed upon the rostrum] . (The map submitted by Mr. Krafft was one with the tobacco- growing sections shown in different colors to indicate where those sections were located and the quality of the leaf grown in each region. The different sections were colored in accordance with the following schedule : Eed : Section growing tobacco of good quality. Yellow : Tobacco of satisfactory quality, a small proportion being fit for cigars. Green: Tobacco of inferior quality and doubtful burning; not fit for cigars. Blue : Tobacco of bad quality, bad burning ; not fit for cigars. Blue inclosed by a circle: Tobacco of bad quality; very inferior; cultivation discontinued last year. The regions colored in accordance with the above schedule are as follows : Red: A strip along the Cagayan Eiver in Isabela Province down to a little north of the Cagayan boundary. Yellow: Along the Cagayan Eiver from a little north of the Cagayan boundary line down to Amulung and along the Chico Eiver to a little below Santo Nino — all in Cagayan Province. Green : Along the Cagayan Eiver, from Amulung to a little below Nasiping, Cagayan Province; also small sections in the interior of the Provinces of Ilocos Norte, La Union, Pangasinan, Nueva Ecija, and Cebu. Blue: Small sections in the Provinces of Abra, Ilocos Sur, and La Union along the seacoast, and along the west coast of Cebu. Blue inclosed in a circle: Small sections in Batangas, Capiz, and Eomblon.) Eepresentative Cooper. Mr. Chairman, will you permit me to suggest that the gentleman point out on the map and explain these different sections devoted to tobacco growing? Mr. Krafft. Yes, sir; here is the map of the Island of Luzon, showing where lands are used for tobacco culture, the quality of the leaf being indicated by the coloring. You will notice that the only section where a good quality of leaf tobacco is grown is in APPENDIX. 81 Cagayan Valley, in this section here [pointing to the section colored in red]. Everywhere else the tobacco is of more or less inferior quality, while in Batangas it is so poor that the cultivation was abandoned last year. Representative Cooper. About how many acres devoted to this inferior quality of tobacco is represented in Batangas, which you say was abandoned last year? Mr. Krafft. a very few acres; in former times they produced from 5,000 to 8,000 quintals. Senator Long. Is the land shown on that map as colored the only land upon which tobacco is grown ? JNIr. KJJAFFT. Yes, sir; there are no other lands, except those I have marked. This shows that the area under cultivation in the Islands is very small, as you will see. Mr. Krafft again reads from his paper, as follows : The area marked in green shows a somewhat better quality, but still remains unfit for making cigars, and only those regions which are marked in red and yellow represent a quality fit for cigar leaf. Looking over the map, there is only the Island of Luzon, and particularly the valley of the Cagayan River, which produce this tobacco. All other islands show a poor opportunity to raise good tobacco. As far as Mindanao is concerned, I am not able to give reliable information. I can only say that in former years tobacco was brought to Manila from there of an inferior quality. It there- fore results that only the Cagayan Valley comes into the question. As the production there only averages 20,000,000 pounds a year, it must be said that in comparison to the cigar leaf produced in the United States, which amounted in 1904 to the respectable number of 140,000,000 pounds, it can not influence the price in the United States. There is still another fact which gives force to my forego- ing assertion. The tobacco grown in the Cagayan Valley is some- times of very different quality, according to the relations of dry and humid weather which exist during the growing. If the weather remains too dry during the months from December to April, without rainfall, the tobacco leaf turns out narrow, small, thick, and charged with gum and nicotine. Such tobacco is only fit for cut- ting purposes for our home cigarettes and for chewing tobacco, and can only be used for cigar making after the lapse of several years. It is, moreover, a fact that out of four crops only one is suitable for cigar leaf, and another fact is that too heavy rains 82 APPEKDIX. produce a leaf which is neither good for cigars nor for cigarettes, as it is completely washed out and exceedingly liable to get worm- eaten and moldy. Moreover, it must be mentioned that tobacco can only be grown during the months of December to April on account of the succeeding inundations of the Cagayan Eiver during the rainy season, which covers the immediate banks of the river, leaving a rich deposit of vegetable manure. It can be proved that the tobacco grown in the upper fields, which are never subject to inundations, shows a poor quality. There are still other arguments to show that the cultivation of leaf tobacco in the Cagayan Valley has to meet with the consequences of typhoons and inundations setting in before the crop is harvested. It must also be stated that the greater portion of the land fit for cultivation is already under cultivation. Mr. Krafft. Now, gentlemen, if you would like, I will show you some of the different classes of leaf tobacco grown in these Islands; I have brought samples of the different qualities. This [holding up a bundle] is a poor quality. Representative Coopeh. How much a pound does that class of tobacco bring? Mr. Krafft. About 9 centavos. Senator Long. To what countries is it exported? Mr. Krafft. It is not exported; it is consumed in Manila. This grade is too poor for export to Europe or elsewhere; it is all consumed locally. Senator Long. What do you use it for? Mr. Krafft. We mix it with other grades of better quality and make cigarettes out of it. (The speaker here submitted to the inspection of the visitors a number of different grades of tobacco leaf, which were inspected by a number of the party.) Mr. Krafft. This piece here [exhibiting a bundle] comes from the Province of La Union ; it is a poor quality ; if you wish to see how it burns, I will light it. The Chairman. Light a piece of it and let us see. (The speaker ignites a leaf.) Mr. Krafft. You will notice a very disagreeable odor. The Chairman. It smells something like a Wheeling stogie. Representative Cooper. What do you use that kind of tobacco for? APPENDIX. 83 Mr. KJiAFFT. On account of its having a poor leaf we send it to the countries having tobacco monopolies in Europe, such as Austria. Representative Coopek. What does it sell for? Mr. Keafft. About 5P10 or ¥=8 per quintal. Representative Payne. Have you any specimens of the best leaf produced in the Islands? Mr. Krafft. Yes, sir; I have some here [exhibting a bundle]. This is Isabela leaf ; it is the best Tve grow. Representative Patne. What does this cost a pound to produce? Mr. Keafft. We are selling it for f=60 or PI'O per quintal. Representative Payne. What percentage of the crop is suitable ^or wrappers ? Mr. Krafft. Only a small percentage; sometimes when the crop is very '• fat " there is no wrapper at all. I think perhaps 5 per cent turns out in such a way that we can use it for wrappers — yes, 5 per cent. That would be a very satisfactory result. Representative Payne. Is there any part of it suitable for binders ? Mr. Keafft. Yes, sir; for binders and fillers. Representative Payne. You say only about 5 per cent is suitable for wrappers. T\'Tiere do the binders or fillers go for consumption? Mr. Krafft. Here in tiie Islands; the greater portion is sold here. Representative Payne. Some part of it goes abroad? Mr. Keafft. In former times, yes; but not now. Now they do not want any of our tobacco except of the cheapest grades. Representative Payne. To what countries was it exported before? Mr. Keafft. We sent some to Holland, to Belgium, and other countries. If you will pardon me, I will continue reading my statement. Mr. Krafft then read from his paper as follows : (2) PRODUCTION AD INFINITUM OF MANILA CIGARS. As a consequence of the facts shown before, the manufacturers' supply of suitable leaf is limited, therefore, the principal element being relatively scarce, the extension of cigar making is also limited. Moreover, it must be borne in mind that cigar making can not be learned from one day to the other. The cigar makers of Manila enter the factory as apprentice boys, and are gradually taught the profession, beginning with stripping the leaf. It requires many 84 APPENDIX. 3^ears of daily occupation to have the fingers drilled in such a way as to be able to make a perfect cigar. In the recent Philippine census the number of cigar makers in the Philippine Islands is given as about 5,000. One cigar maker can turn out about 30,000 cigars yearly, taking as an average 600 per week, and taking the 5,000 men as now existing there would result about 150,000,000 cigars a year if all would or could make better-class cigars. In order to do away with misunderstandings I should like to mention that there exists a divergence of opinion with experts in the United States and here in the Philippine Islands about the quality of cigar leaf, especially as far as wrapper is concerned. What is styled as wrapper in the United States is quite a different thing from what we used to call it here. Our cigar industry has not a necessary quantity of suitable leaf at its disposal on account of the thickness and bad color of the raw material, and often is compelled to fall back on leaf which in the United States would only be employed as bunches or fillers. The wrapper leaf which is exported hardly merits this denomination. Exports to HoUard and Belgium, which countries in former years, before the appear- ance of the Sumatra tobacco, almost exclusively used Manila tobacco for this purpose, have now come to a standstill, and there is now only wrapper leaf exported to Spain and other countries having tobacco monopolies. Moreover, I wish to call attention to the fact that in the United States, as well as all over the world, the consumer has a marked tendency to smoke light-colored cigars, and it is a fact that light-colored wrappers are extremely scarce here in the Philippine Islands. It forms another proof that the fears entertained that Manila cigars with their dark color would probably constitute a serious menace to the home in- dustry are groundless. Sumatra tobacco is imported in large quantities into the United States, which in 1901, as per Bulletin No. 28 of the United States Department of Agriculture, amounted to 6,250,000 pounds, valuing $5,600,000 and being 95 per cent of all the wrapper tobacco imported into that country, the average price of 1 pound being about 90 cents. As $1.85 per pound duty is paid and it requires 1 to 2 pounds of good wrapper to cover 1,000 cigars of average size, the outlay of a cigar manufacturer for this item is $3.70 for duty and for raw material $5.50. For covering 1,000 cigars with Philippine wrappers a cigar maker would probably require 8.10 pounds at least. Taking 8 APPENDIX. 85 pounds and considering the reduction of 25 per cent on duty, he would pay $11.10 for duty and for raw material $3.20, making a total of $14.30. In case of a reduction of 75 per cent we would still pay $3.70 for duty and $3.20 for raw material— altogether, $6.90— so that the American manufacturer would prefer to buy Sumatra leaf, not only for reason of calculation but on the basis of having a light wrapper of uniform color; while employing Philippine leaf he is at a great disadvantage. The Chaiejiax. With reference to the number of cigars made by ii man in a week — what wages do you pay? Mr. Krafft. We pay wages according to the size of the cigar made and the number a man can make; it depends upon the cigar maker's ability. The Chairman. You pay the cigar makers by the piece, then. How much do they earn? Mr. Keafft. Yes, sir; we pay them by the piece. A man will earn ^8 or jPlO a week or more; it all depends upon his ability. Representative Curtis. That is $4 or $5, gold, a week ? ]Mr. Krafft. Yes, sir. Representative Hill. If you can buy Sumatra wrappers at $5.50 and Philippine wrappers cost you so much, how is it that you don't use Sumatra wrappers? According to your data you figure that Philippine wrappers cost $6.90 and Sumatra wrappers $5.50. Why don't you save $1.40 and use Sumatra wrappers ? Mr. EjEtAFFT. Well, there is a reason for that. We have tried to use Sumatra wrappers, but have not made a success of it. The Sumatra leaf is a much more delicate leaf than the Philippine tobacco, and our cigar makers are accustomed to using a strong- leaf; and in handling the Sumatra wrapper, unless a man is very careful he destroys about 50 per cent of it or renders it unfit for use as a wrapper. One pound of Sumatra wrapper ought to cover 1,000 cigars, but I have made trials of it here and have had men ask me for 6 pounds to cover that amount, due to the fact that they spoiled so much of the leaf. Representative Hell. How much Philippine wrapper do you use for 1,000 cigars? Mr. Keafft. It depends upon the quality; the tobacco that we use for wrapper has so many rents and holes in it that sometimes it will take 8 or 10 pounds of it to cover 1,000 cigars. 86 APPENDIX. Eepresentative Hill. Take the ordinary Isabela leaf ? Mr. Krafft. Perhaps 4 pounds would be enough to cover 1,000 of the small-size cigars; sometimes at least 6 or 7 pounds are used. In this connection I would invite you to hear the testimony of Mr. Guido, who represents the Germinal Tobacco Company and is a manufacturer; he can give you more accurate information upon these points. However, I wish to say something more in connection with what I have read ; there are some few additional points which should be mentioned. The methods used in growing tobacco upon the plantations owned by some farmers are very antiquated and exceedingly unbusinesslike; nevertheless they can not be improved by reason of the fact that the native sticks to his old methods and absolutely refuses to make use of better ones. Instead of having (he work systematically done by performing wholesale the several processes of plowing, drying, and fermenting, and thus realizing not only a greater economy and larger output but also a better quality by the easier supervision thus possible — instead of this each family has its own piece of land, its own drying and fermenting siheds, and does its w6rk from beginning to end in its own fashion, rendering the supervision of the expert employee a very difficult if not an impossible task. "What can not be done in the estates is still more impossible with the independent native, who, left to himself, is incredibly careless and is producing a quality of leaf which is getting worse and worse from year to year and therefore less salable in, the open market of the world. The per cent of tobacco grown on the estates is about 15 per cent of the whole output in the Cagayan Valley. This kind of wrapper [exhibiting a bundle of tobacco] would never have been produced under Spanish times. It would not have been permitted ; it is due to the carelessness of the planter — to carelessness in the fields. Representative Hii,l. Do they use fertilizers ? Mr. Krafft. No, sir; the fields are not fertilized. Another point of importance is the transportation from the place of produc- tion to Aparri, the seaport of the Cagayan Valley. During the dry season the Cagayan River upon which the tobacco is trans- ported to market, often gets so low as to paralyze navigation; while, on the other hand, during the rainy season the current becomes so swift as to make navigation extremely dangerous on account of the many hidden tree stumps in the river. So far as I know it is impossible to cover this risk by insurance. The freight charged is very high, so that we pay for transporting tobacco from APPENDIX. 87 Echague to Aparri P4.50 per bale of 21 quintals, or, say, "PIS per ton, while the rate from here to New York direct, per steamer, is about $6, gold, in larger lots; in other words, it costs us more to bring freight from the tobacco fields in Isabela to Manila than it does to send freight from Manila to New York. However, the freight rates from Aparri to Manila have decreased somewhat during the last year, having gone down from 50 to 75 centavos per bale, or ¥=3 per measurement ton. The transportation on the river inland, however, is very costly. Representative Payne. The railroads will remedy that. Mr. Keafft. Perhaps after some years, but it will be a number of years before we have railroads. Another thing which is a great obstacle is the insects which get into the tobacco. In the first place there is a small worm which attacks the leaf, and, unless great care is taken to carefully brush oflf the leaves every morning instead of an entire leaf we get one that is full of holes. Due to the carelessness of the natives in not properly caring for the tobacco, a great deal of the product is thus affected. In fact, I think that out of 200,000 quintals in the Cagayan Valley it would be impos- sible to get more than 10,000 or 15,000 quintals of entire leaves. Representative Payne. I didn't hear all of your statement. Did you give the prices you make at the factories for manufacturing the different kinds of cigars? Mr. Keafft. I can give those prices, but there is a technical man here who will be better qualified to do so. Representative Payne. Well, if there is somebody else who will give the necessary information, that will answer my purpose. Mr. Keafft. There is another worm which develops while the tobacco is in the drying shed and another kind while" the tobacco is fermented; during the fermentation and while the tobacco is packed there is qflite a different insect which attacks it-=-a kind of weevil, which develops inside the leaf. The extent of this weevil pest depends upon the quality of the crop; some crops are almost free from it, while other crops are always attacked by it, especially the crops which are washed out and are of poor color and ^\oak; therefore unless the greatest care is used such grades of tobacco will arrive at the factories in Manila full of worms and insects. The new crop, of which this is a sample [exhibiting a bundle of tobacco], is one of these washed-out crops and is very poor tobacco. The 1900 crop was a very good crop ; it was not worm-eaten. Representative Otjen. Suppose the tobacco is all right and you 88 APPENDIX. manufacture it into cigars; is there an insect that afterwards gets into the cigars unless you wrap them in tin foil ? Mr. Keafft. No, sir; the insect is in the leaf itself; it does not come from the outside; it develops inside the leaf. Here is the new crop of 1905 [exhibiting a bundle] ; this is another specimen of a " fat " crop. Here is a sample of a washed-out crop [exhibiting another bundle]. We had in the beginning on that crop very dry weather, and then when the crop was about to be harvested heavy rains fell and washed it out; this tobacco will prove very bad; it will be useless either for cigars or cigarettes. This other will be ready for cigarettes in two years and for cigars in eight years. Kepresentative Otjen. Eegarding this insect you referred to, do you know whether tobacco raised in Kentucky, in the United States, is subject to the same kind of insect or not? Mr. Keafft. I have heard of it, but I do not know the facts; I don't know whether they have the same thing there or not; it would be very interesting to know. The Chairman. Does any gentleman desire to ask any further questions ? Representative Hill. What is the percentage of wrapper in Isabela tobacco, taking it as a whole — I mean good wrappers ? Mr. Keafft. I would not say that there are over perhaps 1 per cent good wrappers. Representative Hill. What is that — 1 per cent ? Mr. Keafft. Yes, sir ; that is all that can be called good wrapper ; this that I have here is not good wrapper. Representative Hill. How can you afford to pay 40 cents a pound for tobacco that has no good wrappers in it ? Mr. Keafft. We are making cigars out of it. However, com- pared with the Sumatra cigars or cigars made 'in the States, this product makes a very poor showing; the lack of wrappers is a great trouble with us, and the Sumatra leaf is not used here, as I have already stated. The operators here can not handle it. Then, too, during the dry season it can not be used for the reason that it dries out and is very fragile; it is very expensive to endeavor to work it here. Another reason is that if you use the Sumatra wrap- per in making cigars here, and the cigars are packed in a box during the dry climate we have in the dry season here, the wrapper gets torn or cracked open. APPENDIX. 89 Representative Cooper. Can you tell about how many cigars are used in the Islands in a year ? Mr. Keafft. I think it is about 50,000,000. Representative Coopek. Your maximum output would be about 150,000,000; that would leave 100,000,000 for export. To what countries do you export cigars ? Mr. Keapft. Our exports have greatly decreased, but we are still exporting to the East — ^to China, Japan, India, the Netherlands, and to Australia — ^but these exports have decreased greatly on account of the competition we have received from the German manufacturers. The German manufacturers use Sumatra leaf, with German tobacco for a filler which is neither bad nor good. He wraps up a very nice-looking cigar and sells it much cheaper than we can. The people in China want light-colored wrappers; this is true elsewhere also. These German manufacturers give them a light-colored wrapper; furthermore, it must be considered that the German manufacturers have no duty to pay. They import their Sumatra wrapper in bond and then ship their goods out when manufactured; they pay no duty upon this cigar leaf; that is a great advantage which we can not have here. Representative Payne. What do these cigars sell for ? Mr. Keafpt. They put this German cigar on the market there at 28 shillings per 1,000 for the Londres cigar, while we have to charge 44 to 50 shillings, and on top of that can not furnish them with light enough wrappers; they want a light-colored wrapper, so you see we are at a great disadvantage. Representative Hill. "What is the Londres cigar wrapped with? Mr. Keafpt. With Isabela and Cagayan leaf. The Chaieman. We will now hear the next gentleman. Seiior Justo Guido then presented a paper which was read by the interpreter, as follows : STATEMENT PRESENTED BY JUSTO GUIDO, REPRESENTING THE GERMINAL CIGAR AND CIGARETTE FACTORY. To the honorable the Secretary of War, the Representatives of the American people, the Governor-General, and the members of the Philippine Commission ; The arguments that would advise the necessity of the absolute repeal of the Dingley tariff on Philippine tobacco in order that this product converted into manufactured cigars might be introduced p T — 05 M 25 90 APPENDIX. into the markets of the United States of America upon a competitive basis as to price with similar articles of other origin having been exhausted by the gentlemen who have preceded me on the floor, I limit my remarks to supporting these arguments; but, in order to make clear and to demonstrate the representations made by the gentlemen who have spoken, I take the liberty, ivith your acquiescence, of adducing some figures that prove the impossibility of our cigars finding favor in the United States market _with the Dingley tariff in force. The principal districts producing good tobacco in the Philip- pines are Isabela and Cagayan, in the Island of Luzon. Of the tobacco from these districts of the crop of 1900, which was of the best quality, one of the lots purchased by the Germinal factory consisted of 7,932.75 quintals (806,000 pounds avoirdupois, in round numbers) of different classes, from first to fifth, costing ?179,938.56. It was necessary properly to work up this article, on account of its good quality, and for this reason it was only used in July, 1905. From the date of the purchase to the date of manufacture the purchase value increased at this rate: Seven per cent interest for four years and nine months it was kept in the warehouse at the rate of 5P=0.30 per quintal per year and fire insurance at the rate of 1 per cent per year; we must take into account that these 7,932.75 quintals of tobacco, after reassessment and classification, gave the following results: For wrappers, 584 quintals and 94 pounds (59,394 English pounds) ; for fillers, 3,453.83 quintals (350,727 English pounds), for cut tobacco (picadura), 2,821.29 quintals (286,489 English pounds) : sweepings or waste having no application in any of the branches of the manufactures of the factory; 185.03 quintals (18,801 English pounds) of sweepings or waste resulting from the operations re- quired in the manufacture of tobacco; 48.85 quintals (4,923 English pounds) of dust having no application whatsoever; 338 quintals of shrinkage or loss in weight noted when the tobacco was reweighed prior to its manufacture. As is logical, the decline in the value of tobacco, both for fillers and picadura, and the total loss resulting from waste and sweepings as well as from dust and shrinkage, affects the total suitable for wrappers and increases their price. Moreover, the 584.94 quintals selected for wrappers are subjected to a further selection for the brands of cigars known as Perfectos APPENDIX. 91 Londres, and other common brands classified as first, second, and third classes. Of the amount mentioned of wrapper tobacco the results of classification gave 10 per cent for wrappers of first-class brands, 20 per cent for wrappers for brands of the second class, and 70 per cent for wrappers of brands of the third class. The same thing happens with regard to the leaf used for fillers, which has also to be classified in three distinct groups or classes, aiqcording to quality, in order to apply them to the different brands, the selection resulting in that 15 per cent were suitable for the first c^ss, 25 per cent for the second, and 60 for the third; consequently the value of tobacco for wrappers for Perfectos increases to ?=182.50 a quintal (100 English pounds), ?121.70 for brands of the second class, and f=60.84 for ordinary brands; and for fillers of the three classes mentioned the resulting values are ?80.87 for the first class, P53.91 for the second, and ¥=26.95 for the third. Finally, it must be taken into account that for each 100 pounds of leaf tobacco that can be used for cigar wrappers for Perfectos it is necessary to make a reduction of 25 per cent for stems and 10 per cent for waste in manufacture; so that the 100 pounds are reduced to 66, which is the net weight of the leaf that can be used. In the same manner, though in different proportion, the same allowances must be made for leaf for fillers, 25 per cent having to be deducted for stems and waste. To give a concrete example, I will take as a basis 1,000 Perfectos in the manufacture of which enter 20 pounds of leaf tobacco for fillers and 7.69 pounds for wrappers, including allowance for stems and waste, for although it is true that the waste resulting from manufacture from the leaf used for wrappers as weir as fillers is partlv utilized for picadura (cut tobacco), its value is insignificant and scarcely affects the price of wrappers and fillers. If we add to the value of the tobacco that of other necessary materials such as boxes, paper, rings, tin foil for wrapping, paper for interior lining of boxes, interior and exterior labels, and general expenses of manufacture, the value per 1,000 cigars amounts to P=58.92, as appears in the appended table. These 1,000 Perfectos, contained in 40 boxes of 25 cigars each, are sold by the factory at ?60. Xow, then, if to the cost price we add the amount for duties under the Dingley tariff, freight and other minor expenses of packing, cartage to shijD, unloading and hauling to warehouse, etc., the value 92 APPENDIX. of these cigars will perhaps be greater than similar Cuban brands, and in this case, on account of their inferior quality, they would not find favor in the markets of the United States of America. Table No. 1. — Leaf tolacco of the crop of 1900. REASSESSED FOB CLASSIPICATION AND PBBPAEATION. Classification. Isabela. Cagayan. Total. Average price. Value. Wrappers Fillers Picadura Waste Sweepings-- Dust Shrinkage -. Total and average Quintals. 400.33 2,300.31 1,820.27 300.76 102.46 Quintals. 184.61 1,153.62 1,001.02 200.05 82.57 20.77 110 Quintals. 584.94 3,453.83 2,821.29 500.81 185.03 48.86 P60.86 29.32 14.00 6.00 3.00 5,180.21 2,752.54 7,932.75 22.68 ¥-35,597.21 101,283.34 39,498.06 3,004.86 555.09 179,938.56 INCREASE OP VALUE FROM NOVEMBER, 1900, TO JULY, 1905. Classifloation. Interest, 7 per cent per year for 4} years. Insurance, 1 per cent per year for 5 years. Storage, P0.30per quintal per year for 4} years. Total value in July, 1906. Price per quintal. Pll,629.61 33,089.27 12,904.02 PI, 779. 86 5,094.12 1,974.90 P818.92 4,835.36 3,949.81 ¥■49,82.5.60 144,302.09 58,326.79 3,004.86 555.09 Fillers Picadura Waste 20.67 6 00 Sweepings 3 00 Total--- .57,622.90 8,848.88 9,604.09 256,014.43 Selection made of the ahove leaf tobacco for separation into three classes cor- responding to similar groups of select cigars. FOR WRAPPERS. Selection in classes. Proportion of selection. Quintals selected. Proportion of price. Price per class. Value per class. First - Per cent. 10 20 70 68.49 116.99 409.46 8 4 2 ¥■182.50 121.70 60.84 ¥■10,674.42 14,237.67 24,913.51 Third Total 100 584.94 49,825.60 FOR FILLERS. First - Per cent. 16 25 60 518.07 863.46 2,072.30 6 4 2 ¥■80.87 53.91 26.95 ¥■41,895.27 Third 46,557.99 65,848.83 Total- - 100 3,453.83 144,302.09 APPENDIX. 93 Table of cost of production of 1,000 Perfecto cigars having an approximate weight of 20 pounds per 1,000. Quantity. Per cent. Pounds. Leaf tobacco: For wrappers- Available 65 10 25 5 0.77 1.92 Waste.. " Stems.. " Total 100 7.69 Cost of 7.69 pounds, at P-182.50 per quintal ¥"14 03 Less 0.77 pound wastage avaifeble for picadura, at P26 67 per quintal Total cost of wrappers. Forffllers— Available 75 25 15 5 Stems and waste Total amount of ailers 100 20 Cost of 20 pounds, at 1»80.87 per quintal 16.17 Total cost of leaf tobacco 30 04 Materials: Boxes for 25 cigars, 40, at PIO per 100. 4 00 Rings, P1.05 per 1,000 1 05 2.50 35 1.80 9 70 Manufacture: Selectors of leaf tobacco 30 .26 .30 Making, per 1,000 13 20 Putting on rings .15 Wrapping in tin foil, per 1,000. 2.50 Packers, per 1,000 .37 .10 17.18 Qennrftl expoTiRfls 2.00 58.92 Sefior EvAEiSTO Panganiban, of Tagle, Isabela Province. Mr. Chairman, I have carefully read the paper prepared by Mr. Krafft upon the tobacco industry in these Islands, but I would like to ask a question with regard to this entire matter. Is it not true that the territory where this tobacco is grown is a part and parcel of the territory of the United States? If that is true", I consider that we should have the same protection as to tobacco as American- grown tobacco has. Kepresentative Payne. Will you ask him to give us some facts about the tobacco interests ? 94 APPENDIX. Senor Panganiban. I can not furnish any facts. The Chairman. Professor Lyon, of the Bureau of Agriculture, is here and would like to address the meeting. STATEMENT OF PROF. W. S. LYON, OF THE BTJREATJ OF AGRICULTURE. Professor Lyon. Gentlemen, I will tell you in advance that I have nothing to read in the way of a book; I have a book here because I have some figures upon it. I think it is rather too much to expect people who have traveled thousands of miles to listen to too many figures at once; these I have are for my own use; nor am I going to read any long or extended article upon the subject of tobacco. The subjects which I am largely concerned in are the conditions and possibilities of production of tobacco in the Philippine Islands. The statement was made in the memorandum just read, and also it is one that is generally stated, that tobacco of good commercial quality is not produced within 12 to 20 miles of the littoral of any country. That is a very general statement that I am inclined to doubt, however, as applying to the whole world. If it were true in all cases I am afraid that it would rule out the tobacco land of Porto Rico, as the tobacco raised there is raised under just such conditions. I am very sure that it would cut out a great deal of the famous " Vuelta Abajo " district of Cuba, which lies to the east of the city of Havana. I am sure that a great deal of that district lies between 10 and 20 miles of the seaboard. Also in Mexico there is tobacco grown within that distance of the coast. Eepresentative Hill. Do you know of any in Connecticut ? Professor Lyon. No; I can't say that I do; the best regions in the Connecticut Eiver Valley do not begin until you get 30 or 40 miles inland. However, in spite of the above exceptions, I wish to champion the other side of the question to the extent of saying that conditions in the Philippine Islands, as I have observed them and also from the experimental work done by the perhaps sometimes maligned Spanish Government here, the tobacco districts are such as to satisfy me that there is a good deal in this theory as to the growing of tobacco on the coast line in the Philippine Islands. If you take, for example, the Province of Batangas, the line which separates the country in which tobacco will grow from that in which it is a failure is very sharply defined, being located near the town of San Jose, which is probably 10 APPENDIX. 95 or 11 miles from the seaboard. In the Island of Negros the Spanish Government tried to grow tobacco on its experimental farm at La Granja Modelo, 12 miles from the seaboard, but their attempt was without success. They attempted it in Panay unsuc- cessfully; in fact, wherever I have been it seems to be true that tobacco is not grown in these Islands to any practical extent within 10 miles of the sea, and in some places farther, inland. This same condftion is also found in some of the islands in the Sunda Sea to the south of us. Why this should not exist in Cuba and Porto Eico and should exist here I can not tell you; it is one of those problems that has not been solved. It can not be told any more than it can be told about the abaca plant which grows here in the greatest abundance and will not grow in other countries and places where exactly the same conditions as to soil and climate prevail. I can not tell you why that is nor can I terll you why tobacco can not be raised here on the seaboard. Now, gentlemen, if you will take a map of the Philippine Islands and draw a line of 10 miles in diameter along the sea- board around our 1,700 islands — I believe there are about that number — it would wipe out completely the whole number except nine, which would be the Islands of Luzon, Mindoro, Cebu, Samar, Leyte, Negros, Panay, Palawan, and Mindanao. If you take a width of 10 miles around the Islands you may have, of the smaller Islands of Bohol, Marinduque, Masbate, and Jolo, enough in the center to maintain a few Filipino pigs, who are not very fastidious as to the requirements of food. Now, another point: If you were to eliminate this 10-mile strip around the Islands you would cut off approximately 60 per cent of the population devoted to agricultural pursuits. In the moun- tainous interior, which is not included, the inhabitants are largely people who are not, strictly speaking, agriculturists — they are not an agricultural people, having other means of livelihood, and it is doubtful if their services could be made available and profitable upon the farm. Now I will go a step further and say that from a very careful study of the meteorological conditions here as published by the Government Observatory, one-half of these islands that would not be obliterated by the elimination of this 10-mile maritime zone are by climatic conditions unfit for the purposes of o-rowing tobacco. We have on the west coast — and these figures are derived from thirty-nine years' observations — five to six months 96 APPENDIX. of weather which is suitable for the growing and curing and fermentation of tobacco. Upon the east coast of the islands the rainfall is not only more abundant but it is more uniformly dis- tributed. Take the southern end of these islands and the whole of Mindanao on the east coast, and it is very unusual for two weeks to go by without some considerable rainfall; that rainfall runs from 2,500 to 3,500 millimeters per annum. Under such conditions the growing of tobacco successfully is* an impossibility. Now, practically speaking, we have two islands left — ^the Island of Luzon and the Island of Mindanao — which have large interior valleys which may or may not be devoted to tobacco growing. Senator Waeeen. Two thousand five hundred millimeters is about 100 inches, is it not? Professor Lyon. Yes, in round numbers. Of these two islands, Mindanao is practically terra incognita. It is true that tobacco has been grown there, but during the past three years — while the Bureau of Agriculture has made an effort to introduce tobacco and has interested various planters, both natives and Americans, and lias receive reports from them— the reports have not been satis- factory as indicating that the weed or plant is not capable of such development on that island as would induce a man who knew something about the industry to make an investment. I will not say that Mindanao is not capable of such development. At present, however, we only know it is the country where the curio hunter goes to look for his plunder. It is more known as the land of the kris and the interesting Moro cloth than for anything else. There are many things of interest in Mindanao, but I hardly think that the situation as regards tobacco growing in that island would merit serious consideration by a business man who was looking into the prospects of tobacco production in these Islands. Now, we have left the Island of Luzon. Aside from this map which the other gentleman has marked, and marked very correctly, too, I must state, which shows the extent of country that is now or has been in the past devoted to tobacco, there still lies one laro-e valley, known as the Pampanga Valley, extending from Manila toward Dagupan. In that valley tobacco was once grown, but it is not now grown there to any great extent, nor has it been a success. There are still here and there a few farmers who produce a little. They never, however, have raised it in sufficient quantities APPENDIX. 97 or quality to obtain a price for it in the Manila market that would pay them. The Chaikman. How many pounds to an acre can you grow in the Philippines? Professor Lyon. About 900 pounds an acre, which is the yield from the best Isabela plantations, but according to latest census returns the average for the whole Archipelago is under 500 pounds. The Chairman. That sells at $11, gold? Professor Lton. Yes, sir. The Chairman. That is a pretty good crop per acre. Professor Lyon. But it is grown entirely upon shares. The Chairman. But that would not alter the amount of money that is produced by an acre of crop. Representative Scott. How does the crop compare with the yield in Cuba? Professor Lyon. Well, in Cuba we figure on getting about 1,000 or 1,200 pounds. Of course, it is very hard to find averages of any kind as to crop production in the Philippine Islands, owing to the small interests and the lack of statistics. Now, in regard to wrapper tobacco. Wrapper tobacco, as known to the trade in the United States, is practically unknown here. The wrapper tobacco here consists only of those leaves which are selected from the general crop because they are of better quality. No such thing as a wrapper leaf was ever grown here until an effort was made by the Bureau of Agriculture to introduce a strictly wrapper tobacco, and to cultivate it under sheds here. We received from many Spanish and Filipino firms engaged in the growing of tobacco a ready and hearty cooperation and a desire to help. One of these firms has been conducting experiments along the line laid out by us at great expense. For these purposes we introduced the seed of the finest grade of Sumatra tobacco. From a knowledge of the way the thing is conducted in Cuba and the Connecticut River Valley, I will say that the difficulties to contend with are much greater here. So far, the tobacco firms conducting these experiments have obtained no results, and our results have been attained with greater difficulties than are found anywhere else, because of a variety of pests the successful control of which neces- sitates the outlay of a great expenditure of time and money. Accordingly the value of any such wrapper raised in these Islands 98 APPENDIX. will be greatly enhanced. Such as we have produced has that elasticity and smoothness which is desired by the man who under- takes to grow such tobacco. These have been experiments; practi- cally speaking, there is no wrapper tobacco known in these Islands such as is known to the trade in the United States. Representative Hill. Have you tried the Sumatra seed here in the open? Professor Lton. Yes, sir; but we found that it resulted in an abnormal development of the secondary ribs or veins, which can not be used without a great amount of waste in cutting out the wrapper strip. Now, there was a letter published only a year ago in the report of the hearing before the Committee on Ways and Means of the House of Eepresentatives with regard to the tobacco question, and while I am not going to read that letter, I shall call your attention to some extracts from it. It was a letter written by Mr. Welborn, the Chief of the Bureau to which I belong, and when he wrote it, I wish to. state, he had none of the figures which I intend to impose upon you. These were received from the late census. Mr. Welborn states in this letter, speaking of this Pampanga Valley : " The Pampanga Valley is devoted almost entirely to rice, sugar cane, and corn. I understand that it has been so since the recollec- tion of the earliest inhal)itant3. The people in this valley, as else- where, are as conservative as the Chinese about changing their practice. Eegardless of the possible profits in tobacco or other crops, I do not believe fifty years would suffice to bring about any considerable changes in the crops they are producing." Now, my purpose in quoting that is this: I consider that last sentence, in the view of recent developments, almost prophetic. This brings me back to my figures. From the last census, we have the exports of the Islands for the last half century. With the exception of a hiatus of six years, which occurred between 1868 and 1872, and another one or two years, between the change of the government from Spain to the United States, we have these figures complete for the last half century. During all that time the average exportation in gold dollars was $2,114,529, the annual exportation of manufactured and unmanufactured tobacco of all kinds to all parts of the world from the Philippine Islands. Now, in the years 1899 to 1902— four years of American occupation— the average for these four j'ears was $2,196,500, indicating that during APPENDIX. 99 four years of American occupation, up "to the time of which these figures were taken, the tobacco exporting industry has gone forward by such leaps and bounds that it has had the wonderful increase of a total of $82,000. Now, this is in the face of the fact that there is a large number of Americans here striving to introduce and advance and improve the material interests of the country as much as possible. These earnest efforts upon the part of the Americans to improve conditions have resulted in a total increase in four years of $82,000 a year, and that is all. For that reason I consider that this general statement made by Mr. Welborn was fairly prophetic, when he said that in fifty years there would be no considerable changes. From my point of vieWj that is the situation from the standpoint of tobacco in these Islands. It is not susceptible to any enormous increase — far from it. I think that with the slow methods in use here it is impossible that there should be any large increase above our present production worthy of real consideration. Representative Otjen. What is the total cost of tobacco per ton at present ? Professor Lton. I could not say. The export value of all is $2,194,000. You can figure its export value at $200 per ton approximately for the unmanufactured tobacco. The Chairman. Before coming to the Islands, were you familiar with the growing of tobacco ? Professor Lton. I lived in the Connecticut Eiver Valley, and was a farmer. I have also paid some attention to tobacco growing in the Tropics. The Chairman. Do you think the importation of this tobacco or these cigars to the United States would affect the tobacco gro^\•n in Connecticut? Professor Lton. No, sir. I can not see why it should do so. The Chairman. How about Kentucky? Would it interfere with the tobacco grown there ? Professor Lton. No; that is an entirely different class of tobacco. In Kentucky tobacco is grown and used largely for the manufacture of plug tobacco. So far as I know, there is no plug tobacco made in the Philippine Islands. The Chairman. Are you familiar with the tobacco grown in eastern Ohio or West Virginia ? Professor Lton. No; my knowledge is confined to the tobacco 1 00 APPENDIX. grown in the States of Maryland and Kentucky, and in Mexico, Cuba, and the Philippine Islands. Senator Newlands. Do you wish to express an opinion as to how much the exportation to the United States would be increased by the removal of the tariff ? Professor Lyon. I think it would be subject to some increase, provided that it found a market; provided, also, that the cigars could come into favor with American smokers. The extent of that increase I could not predict. The taste for the Philippine cigar is an acquired taste. Many people do not like it at first. The first time I tasted a Philippine cigar I thought it was simply vile, and now I prefer it to anything else. They will have to work up and cultivate a taste for the Philippine cigar. Kepresentative Ctjktis. Does not the fact that the importation of Philippine tobacco into the United States has greatly decreased in the past year or two indicate that there would be no great increase? You know that last year there was hardly any imported. Professor Lyon. I think it would hardly amount to anything at first. The industry here is struggling with many difficulties, and they would have to build up a market in the States. Representative Scott. Do not cigars deteriorate by the long sea voyage in the course of transportation from here to the States ? Professor Lyon. Yes; in a long voyage like that to the States, that would be true. The cigars back in Cuba are packed better than those in the Philippines. That is another point. There is always the danger of them drying out. The Chairman. Is not a great deal of this tobacco shipped to France ? -Professor Lyon. I think very little. We ship some to Spain. There is some leaf tobacco which goes to Spain. The best used to go to Germany, but there is a lot goes to Spain still. I think it is largely due to the fact that Spaniards who lived here many years have acquired a liking for Philippine tobacco and have introduced that taste there. Senator Newlands. There is an import duty upon tobacco which comes to the Philippines? Professor Lyon. I do not know about that. Mr. Welboen. Yes; the duty is $1.85, gold, per pound for the best wrapper and 35 cents, gold, for unmanufactured filler leaf. Senator Newlandsj You mean 35 cents for the tobacco con- tained in the interior of the cigar ? APPENDIX. 101 Mr. Welboen. Yes, sir ; and $1.85 for the wrapper. Senator Newlands. What is that tobacco worth in the market here ? Professor Lyon. The fancy grades here that are used for wrapper by us are worth 65 to 70 centavos or 35 cents, gold. The ordinary No. 1 or No. 2, from the Cagayan Valley, is worth about P30, Philippine currency, per quintal, or 15 cents, gold, per pound. Senator Ne\\'lands. Then, if you get that price, plus the duty in America, what price would you receive there? Professor Lyon. Well, we would hardly expect to get the duty in addition. We would get only direct competition with wrappers imported. We should certainly have to sell the Philippine cigars cheaper than the Sumatra cigars. We would not get the benefit of the $1.85, or of the 30 cents, in that sense. Senator Newlands. You could get the 35 cents, gold, here, and the 35 cents, gold, there ? Professor Lyon. No; we get only 15 cents here for the filler. Senator Newlands. And to that would be added the duty of 35 cents there. That would make 50 cents, then, that would be received in America for the tobacco for which you here receive 15 cents. Now, if that were true, would not all your filler go to America? You would not be able to sell anywhere else in the world at such a price. Professor Lyon. I think possibly not, but I am not willing to state that we could get 50 cents a pound. Senator Newlands. What price could you get? Professor Lyon. That remains to be seen. We would have to enter into competition in the market. It would depend upon the competition with other brands. Senator Newlands. Can you give any estimate as to what price you would receive ? ' Professor Lyon. No; I can not; because there is no tobacco o-rown in the United States that can be compared to this Philippine tobacco. It is a different class. It will have to build up a market of its own. I think its price would depend upon its merits and the demand for it by smokers, and that demand would have to be created. Senator Newlands. You sell it here for 15 cents. If you could sell it there at 25 cents, would not that cause it all to go there? Professor Lyon. Well, there will alwaj's be a considerable demand here. 102 APPENBIX. Senator Newlands. Yes, I understand, but I am referring to your exports. All your exports of filler tftbacco would go to America because of the higher price you could get there ? Professor Lyon. Well, possibly so. Representative Hepburn. How much goes to America now ? Professor Lyon. We are not exporting to America now. We have no wrapper such as is liked there. Any exportation to America would have to be to fill the demand that we could build up. Senator Newlands. Have you some wrapper tobacco to which this duty of $1.85 would apply ? Professor Lyon. No, sir; I think not. We have no wrapper tobacco here as it is known in the States. I would not call this wrapper tobacco. If I were shipping it to the States I would class it as filler tobacco. Senator Newlands. As that it would go in there at 35 cents ? Professor Lyon. Yes, sir. Senator Newlands. Now, with that increased price to the pro- ducer of .tobacco here, don't you think that better methods would be employed, both for producing and manufacturing, as well, as for growing and caring for the plant, than are employed now ? Professor Lyon. Well, such may come in time, but my observa- tion is that these processes move very slowly here. Senator Neavlands. They do under present conditions, but we assumed that the business becomes improved and is taken hold of by some corporation that is familiar with the business both of producing and curing tobacco. Now, don't you think that under these circumstances conditions would greatly improve here? Professor Lyon. I do, but I still think that the limits as to production in the Philippine Islands to which I have referred ai-e with us and can not be greatly exceeded. Senator Newlands. Well, take the land now under cultivation or that has been cultivated, and assuming that no other land is capable of producing tobacco, can not improved methods of culti- vation, fertilizing the soil, and caring for the plant result in a much larger output? Professor Lyon. Yes, sir ; of course. Senator Newlands. How much would that increase ? Professor Lyon. Well, possibly 25 or 30 per cent more than at. present. Senator Newlands. No more than Hint ? APPENDIX. 103 Professor Lyon. Well, possibly it might reach 33^ per cent. Any process which will increase a crop that much would indicate that the man who is in charge is a very capable farmer. Senator Newlands. The present methods are very crude, are they not? Professor Lyon. Yes, sir. Senator Newlands. Very much inferior to those in the United States or Cuba? Professor Lyon. Yes, sir. Representative Ctjbtis. How is the work done on the planta- tions ? Professor Lyon. The cultivating is done by the share system. All the work is done by a man who lives upon the estate owned by a factory or tobacco firm, and cultivates the land, raises the tobacco, and delivers it. He gets a share of the crop. It is divided between him and the company. Representative Curtis. It is cared for by himself and his whole family, is it not? His children help him? Professor Lyon. Yes; I presume so. Representative Curtis. Now, as I understand it, that is partly the reason for this trouble from insects. Professor Lyon. Yes, that is- true. The natives know nothing about combating the insect pest. One of the things which I had in mind when I told the gentleman that the total product of the tobacco might be increased 33^ per cent was that. Representative Curtis. It has been said here that it was hard to get these natives to change their old methods. Professor Lyon. Yes, sir; I can tell you my own experience in endeavoring to get them to harness two carabaos to a cart instead of one. They said it could not be done and would not try, but I showed them that it could be done, and hitched up the two carabaos. That was down in Batangas. But I think if you would go back to that same country now you would not find a single man using anything but one animal to a small plow. Senator Newlands. Can you estimate in dollars what duty would be remitted by the United States if the entire present exports of these Islands went to the United States? Professor Lyon. Why, there would be no duty remitted. We send no tobacco to the United States. Senator Newlands. I mean the entire export to the whole world. Professor Lyon. I do not understand. 104 APPENDIX. Senator Newlands. I understood you to state that with this largely increased price in America naturally all the tobacco pro- duced in these Islands and exported would go to the United States, as the best market for the product. Now, I ask you, upon the basis of the present exports to the entire world, assuming that it would all go to the United States, what the total amount of duty remitted by the United States would be per annum. Professor Lyon. There would be no remission of duty, because we are not exporting to the United States. Senator Newlands. But that tobacco would take the place of other tobacco that is imported into the United States and upon which duty is paid. Professor Lyon. No, sir; I do not think that it would compete with Cuban cigars. The people who are accustomed to smoke Cuban cigars find a great deal of difi'erence between this cigar and the Cuban cigar. I think the Philippine cigar will occupy a field of its own. I do not know any cigar made in the East which is in the same class. I think we have got to build up a demand for them. Senator Newlands. Well, just to the extent that you would build up a market for them they will take the place of the Sumatra cigars. What cigars do they resemble most ? Professor Lyon. Well, they come nearer to certain brands of Key West or Cuban cigars than they do anything else. Representative Cuktis. Can you give me any information as to the cost of making the cigars here and in the States ? Professor Lyon. No, sir; I do not know anything about factory details. Eepresentative Curtis. Can you give the cost of making 1,000 cigars in the Philippines ? Professor Lyon. I think you will find all those figures in the very careful report submitted by the Germinal factory. That is all out of my line. Senator Newlands. I understand that you are not now selling tobacco in the United States. Is that because there is no market yet, or because the prices here, when added to the tariff, make the cigars too high in cost in America ? Professor Lyon. That is the cause exactly. I know a man here who tried exporting certain brands to the United States and he found that they cost, him about llf cents, gold, apiece, laid down there, and it was a cigar which retailed at not more than two for a APPENDIX. 105 quarter. The cigar was not svich as to justify any more; so there was no profit in it. Representative Hepburn. Now, take this Philippine mill price of 15 cents on your filler tobacco and the tax of 35 cents, the assumption would be, it occurs to me, that you don't get the 15 cents because of the 35. Can you tell at what price it would find a ready market now in the United States ? Professor Lton. I think it would net a price slightly in advance of the one received here. I think that it would probably receive a small encouragement in that way. Senator Warren. Have you open markets with other countries? Professor Lyon. The only open markets for manufactured to- bacco we have are Hongkong and Singapore. All other markets of Europe to which we ship our products, as England, France, and Spain, all demand duties upon the product and upon the manufac- tured tobacco also. Senator Warren. You do not think that the market in the United States is such that you would increase the market there largely, even if the tariff were removed ? Professor Lton. No, sir; it would be a question of working up a market for the product. Representative Curtis. One question: At one of the factories yesterday I was advised that the cigar people had to import their cigar boxes from Germany. Now, I would like to. know why it is that cigar boxes could not be manufactured here. I understand you have a very good cedar here. Professor Lyon. Well, one reason is that it costs 25 cents a cubic foot to get the material and an additional 25 cents for interisland freight to Manila, and it costs less than that to get it from Germany. Representative Curtis. Well, these gentlemen told me that they manufactured their own boxes prior to the enactment of this new internal-revenue law. Professor Lyon. Well, I do not understand why the internal- revenue tax would affect it. There is no tax of that kind upon wood. Representative Curtis. I refer to the local tax upon the wood where the Government owns the timber. Professor Lyon. Well, that tax — the forestry tax — ^has always existed here under the Spanish Government, the same as under our p T — 05 M 26 106 APPENDIX. own. I think the high cost of interisland transportation is one thing that causes the timber to be so high here. Senator Newlands. Do you know what the forestry tax is ? Professor Lyon. It varies. I do not recall the rates. It de- pends upon the classification of the wood. Senator Newlands. The tax is a price per cubic foot, as I understand it. Can anyone go to land of the Government and cut down timber by paying that price ? Professor Lton. Well, they have to get a license first. Senator Newlands. Well, after getting the license? Professor Lyon. Yes, sir. Senator Newlands. I move that we adjourn until to-morrow at 9 a. m. The Chairman. The motion is made that we adjourn until 9 o'clock to-morrow morning, and if there is no objection, it is so ordered. (The committee then adjourned until 9 a. m. to-morrow, August 10, 1905.) Manila, August 10, 1905, The committee met, pursuant to adjournment, at 10 a. m., with Senator Scott, of West Virginia, in the chair. Mr. Jose Eosales, manager of the Compaiiia General de Tabacos de Filipinas, said he desired to speak in behalf of the tobacco interests of the Islands. STATEMENT OF MR. JOS^ EOSALES, MANAGER OF COMPANIA GENERAL DE TABACOS DE FILIPINAS. The Chairman. Do you buy tobacco? Mr. Eosales. Yes, sir; buy and sell. I represent the Compaiiia General de Tabacos de Filipinas, a firm of tobacco manufacturers and growers that has been established in the country for twenty-five 3'ears, and I also speak in representation of 6,000 Filipinos engaged in the cultivation and manufacture of that article. I thoroughly agree with and support all of the arguments, facts, and figures that were advanced yesterday afternoon by Mr. Lyon, of the Bureau of Agriculture, and I wish to add to that that there has never been as severe a crisis in the industry in the Philippine Islands as that which at present prevails. The Philippine tobacco industry in cigars has lost the markets of England, India, and Australia on account of the duties imposed upon that article, and I wish to give APPENDIX. 107 these figures to prove my assertion. These figures refer to the exportation of manufactured tobacco. In the year 1901 it was 1,559,780 kilograms; in 1902, 1,063,069; in 1903, 1,235,257; in 1904, 705,827; and for the first six months of the year 1905, 149,828; and the proof -of the decadence of the industry is that at the present day we have but 10 per cent of the number of women formerly employed in our factories and but 50 per cent of the num- ber of men— and in the name of the laboring class of the Philippines engaged in the tobacco industry we ask that the markets of the United States be thrown open to our product. The tobacco fac- tories of the Philippine Islands give a means of livelihood to thousands of native families who are entitled to the protection of the laws of the Government of the United States, and as the pro- duction of high grade of fine leaf in the Philippine Islands is very small, there is no reason to fear any severe competition with the American article in the American market. Besides this, by open- ing the markets of the United States the price of leaf in the Philippine Islands and the price of labor would increase to such an extent that we may assert that the total increase would be 75 per cent of the actual cost of the article. Besides, it is unjust to con- sider the Philippine Islands as part of the territory of the United States and still, at the same time, to refuse free entry of their products into the mainland territory of the United States. The maximum output of cigars in the Philippine Islands to-day assuredly does not reach over 70,000,000, and, though this number were to be duplicated, it would not constitute a menace to the industry in the United States. Besides this, we have already stated and demonstrated, we believe that the production of leaf tobacco in the Philippine Islands is limited, in view of the fact that the lands suitable for its cultivation are limited also. The production of Philippine tobacco is not over 1^ to 2 per cent of the total production of the world. Eepresentative Curtis. I would like to ask about your tobacco boxes — why you import them from Germany. Mr. RosALES. Before the war we were able to purchase a cubic foot of calantas at 30 centavos, while after the war this price has risen to ?1.05. Representative Curtis. Why did the price raise ? Mr. RosALES. On account of the war, for the reason that industry was paralyzed, labor was scarce, there was no security in the forests. 108 APPENDIX. and there M'as a lack of transportation, and besides this the duties or taxes on forestry products and.the utilization of forestry products was also increased; and in connection with my argument, I should likfe to appeal to the members of the Congressional committee, asking them to extend protection to the native cedar by raising the customs duties on imported cedar that is brought into the Philip- pine Islands. Kepresentative Cuktis. If this internal tax were reduced on native cedar, could you make your boxes here ? Mr. RosALES. Yes, provided that the duties on foreign cedar were raised at the same time. Representative Curtis. I wish you would tell the members of the committee something about the difficulties the tobacco growers have in producing tobacco — something about the manner in which it is produced on the farms. Mr. RosALES. The greatest difficulty that the tobacco grower has to contend with is the low price of his product in the market. Representative Curtis. Is not that low price caused largely by the fact that they do not take good care of the tobacco while it is growing, and in cutting it and curing it ? Mr. RosALES. The lack of care in growing the leaf and in curing it, and generally in handling it, is the reason why it finds unfavora- ble acceptance in most markets, and for a low price. It is only the tobacco grown in Isabela that brings a remunerative price to the grower; for instance, the first quality brings ?=35, but to-day we would be willing to pay P60 for the same class of tobacco for the manufacture of fine cigars, if we could find it at all. The Chairman. Let me ask a question. This land that you grow tobacco on — how many crops of tobacco will it grow before it has to be fertilized ? Mr. RosALES. We do not fertilize the land here; it does not need fertilizing. The Chairman. Then can they raise crop after crop of tobacco on the same land and the number of pounds per acre be just as good as the first crop that was grown on that land ? Mr. RosALES. The tobacco is grown in the river valleys, where there is an annual overflow of the river, Avhich enriches the land upon which the tobacco is growh. The Chairman. It is only on ground in the valleys ? Mr. RosALES. Yes, sir. Representative Scott. Did I understand you to suggest that a APPENDIX. 109 tariff ought to be levied upon cedar imported into this country for the purpose of protecting the home timber ? Mr. RosAUES. Yes, sir. Representative Scott. Would that not levy an additional tax upon the manufacturers of cigars, at least for the present? Mr. RosALES. Not if the taxes were lowered on native timber — the internal taxes. Representative Scott. Well, if the internal taxes were abolished altogether on this particular variety of wood, would the native industry then be able to supply a sufficient quantity ? Mr. RosALEs. Yes, sir. Representative Scott. Do you Imow what the result of the reduction of the Dingley tariff to 75 per cent was in the way of promoting the importation of cigars to the United States ? Mr. RosAUBS. It absolutely had no effect whatsoever. Representative Scott. Do you think that a reduction of 50 per cent more, bringing it down to 25 per cent, would have a beneficial effect? Mr. RosALEs. No, sir ; I do not believe it would. Representative Curtis. You want absolutely free admission? Mr. RosALES. Yes, sir; absolutely so. Senator Foster. Since the American occupation of the Islands, has agriculture and the general condition of the Islands improved or not? Mr. Rosales. No, sir; as a consequence of the war, the people have gotten out of the habit of careful cultivation, and it would be necessary to instruct them again. It would be necessary for all the growers to have an association — to come to an understanding— in order to make an effort to improve the methods of cultivation, to make the cultivators more careful than what they are, and they would have to further count upon the assistance of the provincial authorities. There is also to add to this the animal plagues that we have suffered — the rinderpest — and I consider that also one of the results of the war, as it occurred immediately after the war; and the lack of labor also. Senator Foster. I believe you stated that in 1903 the exports of tobacco amounted to 1,235,257 kilograms. That was some time after the war, was it not? Mr. Rosales. Those figures refer to the exportation of manufac- tured cigars, and this table shows that orders for this article from abroad, from foreign markets, have been decreasing. 110 APPENDIX. Senator Foster. If you had received the orders, could you have filled them since 1903? Mr. RosALEs. Yes, sir; we would have been able to do so in current brands. Senator Fostek. Then the decrease in exjjortation of the article has been attributable rather to failure of demand for the article than to the inability of the people of the country to supply it. Is that so ? Mr. RosALES. It is due somewhat to the lack of demand, but it is also due to the inferior quality of our tobacco — to our inability to supply the wrappers for our cigars that the fine markets require. Commissioner Woecbstee. (Interrupting.) • Mr. Krafft has brought a little exhibit here which will further make plain to the gentlemen of the committee just what is meant by mere results in tobacco production. Here is a box of cigars of a quality much in demand, turned out by the La Yebana factory, which has Philip- pine filler and Philippine wrapper ; and here is a cigar the wrapper for which has been imported from Connecticut — ^the lack of wrapper tobacco here having led to the importation of Connecticut wrapper leaf — and you will readily see the difference in the appearance of these cigars ; and any of you who are users of tobacco will know that these cigars with a light wrapper are in much greater demand than those with the dark wrapper. Mr. Krafft states that it is neither the worst nor the best of the wrappers here, but it is the medium wrapper. Representative Scott. How much more would it take to manu- facture 1,000 cigars with the Connecticut wrapper than with the native wrapper ? Commissioner Wokcesteb. I could not state. It merely occurred to me in connection with Mr. Rosales's statement to produce these cigars, and I thought it would interest the gentlemen of the committee. Representative Scott. I thought Mr. Krafft would be able to know that. Mr. RosALEs. It would take P3 to ^^4 more per 1,000 with the Connecticut wrapper. Senator Foster. I want to ask how the production of tobacco in the Islands for the last year compared with the production of tobacco in the year 1903. Mr. RosALES. The production of tobacco in the Philippines is APPENDIX. Ill about the same every year, provided there are no typhoons, but when there are any typhoons they cause such a severe damage and decrease in the crop as may be gathered from the following state- ment of facts: In the year 1886 the crop in the Island of Panay was 30,000 quintals, while in the succeeding year, 1887, owing to a typhoon, it was but 1,800 quintals. This shows the destruc- tion that is wrought here by a typhoon. Senator Foster. But what I wanted to find out was the com- parative production of the tobacco crop in the whole Islands in the year 1903 and the present year. ^Ir. RosALES. I can not recollect the figures just now, but I can give them to you afterwards. Senator Foster. What is the difference in the price of labor per day now and what it was before the war? Mr. RosALES. It is necessary for me to make an explanation, then I can answer that question. As regards labor, we under- stand the wages with us to begin only after we have bought the article from the cultivator. The man who farms the tobacco and grows it with his family — the price of labor does not enter into that item, but only after we have bought from him who culti- vates the tobacco with his family, then does the item of labor come in for us. The price of that labor has doubled since the war. If the gentlemen of the committee have any further ques- tions to ask of me, I shall be very pleased to answer them in writing, if you will kindly make a list of such questions and furnish them to me. Senator Foster. You understand, of course, that these questions suggest themselves just in the course of the investigation, and it would be a little difficult to do that. We just simply want to get at the real facts of the case, and it would be almost impossible, so far as I am concerned, to submit any written questions. Are you a manufacturer or grower of tobacco? Mr. EosALES. A manufacturer, buyer, and grower of tobacco. Senator Foster. How does the price paid for labor in your factory now compare with the price you paid, say, five years ago ? Mr. RosALES. The prices that I pay for labor in my factory have increased about 25 per cent — the cost of manufacturing, that is to say. Senator Foster. Is there any scarcity of labor? Mr. RosALES. There are a few laborers out of work, but they are 112 APPENDIX. cigar makers; but if the production were to increase there would be a shortage of labor, and it would be necessary to employ two or three years in getting the necessary apprentices sufficiently skilled with the fingers to become cigar makers. As the output of the manufacturers has decreased during the past few years, we have had very few apprentices, and if there were much of an increase in the output now there would be a shortage in skilled labor. Senator Foster. Has the home consumption increased or decreased ? Mr. EosALES. The home consumption increased while the forces of the United States Army were here, but it has diminished again. Senator Long. Will you please compare the prices you pay for tobacco now with the prices you paid before the American occupa- tion? Mr. EosALES. I presume you mean the tobacco in leaf. The leaf tobacco is worth now 20 per cent more than before the war. But in 1900 the price of leaf tobacco doubled, on account of the sharp demand which came from all over the provinces when the blockade was lifted in the different ports of the Archipelago. Senator Long. Notwithstanding this increase in price, there has been a decrease in the amount of tobacco grown in the Islands? Mr. EosALES. The production is more or less the same in the Philippine Islands now as it was before. The only element that makes any difference in the production is the question of the order. Senator Long. Have you any trade with Spain at present ? Mr. EosALES. Yes, sir. Senator Long. How does it compare with the trade you had with that country before the American occupation here ? Mr. EosALES. At the present time manufactured tobacco can not enter into the Spanish market in as large quantities as formerly, owing to the increase of the duties on manufactured tobacco, amounting to 3 Spanish pesos, which figures out $2.25, gold, per pound. The Chairman. In your statement of a moment ago, as to the increase of the cost of tobacco, you refer to the fact of the increase in the cost of transportation. Why is the cost of transportation any higher now than it was before the war ? Mr. EosALES. Do I understand you to speak of leaf tobacco? The Chairman. Yes, sir. Mr. EosALES. The cost of transportation of tobacco in the Caga- yan Valley to the seaport at Aparri was doubled, and the freight APPENDIX. 113 from Aparri to Manila was also doubled, until six months ago, when there was a decline in the freight rate on account of com- petition. The Chairman. Another question: Suppose we enact a law taking the duty off of tobacco and making free trade with the Philippine Islands in their production of tobacco. Would that' reduction result in a proportionate benefit to the laborer, or would the manufacturer and the dealer be the men who would receive the benefit? Mr. E.OSALES. Practically, the benefit would accrue to the laborer, because there would be a great increase in the demand for labor, and therefore competition and a high rate of wages. Representative Scott. You said in reply to a question by Senator Foster that the wages now paid the makers of cigars are about double what they were before the war. Was that increase granted voluntarily or did it result from a scarcity of labor or a combination on the part of the laborers? Mr. E.OSALES. The increase in wages is due to a number of contributory causes, the greatest of which is the increased price of all staple articles that the workingman uses, which has had the effect of raising the salaries of all employees and laborers. Representative Scott. I can understand that that would justify an increase in wages. What I was trying to find out was whether the employers voluntarily yielded it or whether is was forced from them. Mr. RosALES. The increased wage was not the result of any pressure brought to bear on the employers of labor by the laboring men. They tried to do that once and they were unsuccessful; but it has been due rather to the reasonable view taken by the employers of labor and their voluntary action in increasing the wages. Representative Scott. As a result of this increase of wages, do the laboring men live better now than they did prior thereto? Mr. RosALES. No, sir; for the reason that everything that they require has advanced in price proportionately. Representative Driscoll. I would like to ask you how much it costs you to make 1,000 Perfecto cigars? Mr. RosALES. Thirteen pesos. I am not sure that I understand vour question thoroughly, but the ?=13 is the item of labor. 114 APPENDIX. Representative Scott. That is what I meant— the item of the cigar makers' wages. Mr. RosALES. That is it— ¥=13. Representative Scott. And you said further that the free entry .of Philippine tobacco into our country would largely increase the demand for labor. To what extent do you think it would increase that demand ? Mr. RosALES. I have estimated that the entire cost of the manu- factured article would increase 75 per cent, and I judge that the price of the raw material would increase to that extent, and I also judge that the labor would increase considerably in price. Representative Scott. Which would increase the more, the labor employed in making the cigars or the labor employed in growing the tobacco ? Mr. RosALES. The wages would increase proportionately in each instance. The principal item in the increase in cost of the manu- factured tobacco would be the increased cost of the fine wrappers that would have to be used, the fine quality of tobacco. Representative Scott. What is the duty now paid on the Con- necticut wrapper tobacco when it is introduced into this country? Mr. RosALES. Twenty-three cents, gold, pbr pound. Representative Scott. And is it your notion that if free trade were established the Philippines would pay any internal-revenue tax on the cigars made here and shipped to our country ? Mr. RosALES. I have not thought on that matter, but I can not quite see what bearing that has on the subject, especially with regard to manufactured cigars. Representative Scott. I just want to ask one more question: How many times the present crop grown in the Philippines is pos- sible under the most favorable conditions as to prices? How many times could it be increased? Mr. RosALES. I have already stated that there is a lack of land in the Philippine Islands adaptable to the cultivation of tobacco. The increase in the production of tobacco could not be over 5 or at the most, 10 per cent. Representative Scott. Then why should there be such a great demand for labor more than now ? Mr. RosALES. But we were speaking of the wages of the opera- tives in the tobacco factories engaged in cigar making. Representative Scott. But you stated that the wages of those APPENDIX. 115 employed in growing tobacco and those employed in manufacturing cigars would be increased at about the same rate. Mr. EosALES. I was mistaken; I did not refer to the cultivation of the leaf, but I referred to the wages that would have to be paid from the time that the tobacco was gathered in the field and put into the curing house, the wages that would be paid for curing the tobacco, and in the cigar factory for the cigar making. Representative Scott. If the possibility of increasing the crop is not more than 5 or 10 per cent additional, why should there be any more demand for extra labor to manufacture that into cigars ? Mr. EosALES. For the simple reason that we would not then have, as we have now, 100,000 quintals of tobacco stored in our warehouses here which is wanting a market; it would find a market and be manufactured into cigars. Representative Scott. If that were once manufactured, would the demand for cigar makers or men employed in the manufacture of cigars and cigarettes be largely increased after that supply is used up ? Mr. RosALES. Yes, naturally there would be, for the reason that there would be an increase in the manufacture of cigars and a decrease in the exportation of leaf tobacco, which is now done at a loss to the growers. Senator Foster. You state that since the American occupation, so far as tobacco is concerned, the price of labor has increased, the price paid for raw material has advanced, and the general pro- duction of the Islands is about the same, and notwithstanding that fact there is an industrial crisis and great depression generally in the Islands so far as this industry is concerned. How do you account for that? Wliat is the cause of the crisis and the de- pression ? Mr. RosALES. Owing to the fact that in spite of the price of the manufactured article having decreased, the cost of its production has increased, and in that the amount exported of the manufactured article has diminished, while the cost of the raw article and the wages have increased. Representative Scott. You did not mean to say, then, that the selling price of the manufactured product has decreased? Mr. RosALES. No, sir. Representative Scott. As the representative of the grower, the buyer, and the manufacturer, you ought to be able to speak the 116 APPENDIX. sentiment of all these classes. I should like to ask you what, in the opinion of these classes, is the reason of the general agricultural, industrial, and business depression that we have been given to understand exists here. Is it due to the natural calamities, rinder- pest, the locusts or droughts that you have experienced, or is it due to mistakes in administration ? Mr. EosALES. We can point to nothing which we might call a mistake in administration; the crisis which we are at present suffering and the general depression in agriculture is due to the calamities through which we have passed, except with regard to the internal revenue on cigarettes. Eepresentative Scott. That is not only your personal opinion but you think it represents the sentiment of all the people ? Mr. EosALES. Yes, sir. Eepresentative Otjen. Do you estimate the payment of wages by the number of cigars or by the number of hours per day ? Mr. EosALES. By the thousand cigars. Eepresentative Otjen. How many hours a day do they work, ordinarily ? Mr. EosALES. From eight to ten hours. Eepresentative Otjen. And how many cigars a day, on the average, does a cigar maker make ? Mr. EosALES. From 75 to 125, according to the size of the cigar. Eepresentative Otjen. And how much do they get for these sizes ? Mr. EosALES. From ?4 or f=5 for the smaller sizes up to f=35 for the larger per 1,000. Eepresentative Otjen. You stated that some make 75 cigars, some 100, and some 125 per day. Now, those that make 75 cigars a day — what would be their wages for a day's work ? The Chairman. Would it not be well for him to give you the average wages paid to a cigar maker a day? Mr. EosALES. The cigar makers are divided into three classes. Those of the first class get ¥=2.50 per day, which is $1.25, gold; those of the second class get P=1.50, or 75 cents, gold; and those of the third class f=l per day, or 50 cents, gold. Eepresentative Otjen. The labor employed in making cigars- is it confined to men, or are women also employed ? Mr. Eosales. Both men and women are employed. Eepresentative Otjen. Are any children employed? APPENDIX. 117 ^Ir. RosALES. A very few. Eepresentatire Otjen. The manufacture of cigars is then mostly confined to those who are grown up. Mr. RosALES. Yes, sir. The Chairman. If there is nothing further before the com- mittee now, we will take up the coastwise subject. Commissioner Worcester. It was the intention of the witness to bring before the committee a full presentation of the very primi- tive methods at present employed in the preparation of the ground for the cultivation of the tobacco itself, and in the harvesting and curing. It is somewhat more difficult to get witnesses to testify to that than it is to get witnesses to testify as to the manu- facture, for the reason that the places from which they must be brought are so remote from Manila and the time so short. The gentleman who prepared the paper on this subject had made a detailed statement, but he is now sick and unable to be here. The Chairman. Let it go into the record. STATEMENT OF ME. MAURO PRIETO, SUPERINTENDENT OF THE GERMINAL CIGAR AND CIGARETTE FACTORY. The statement of Mr. Prieto is as follows : REPORT ON THE CULTIVATION OF TOBACCO IN THE PROVINCE OF CAGAYAN (lTTZOn). Cagayan, situated in the extreme north of the Island of Luzon, enjoys a more temperate climate than the rest of this island and the other islands of the Archipelago. Being surrounded by moun- ' tains covered with vegetation and traversed in every direction by rivers and estuaries, its soil retains the necessary humidity, and because of its natural condition of permeability and the abundant layer of humus deposited upon its surface by. the frequent inun- dations of the river it accumulates fertilizing juices which fit the land for agricultural use. The agricultural implements and methods employed by the inhab- itants of Cagayan are of the most primitive character, as is the case in nearly all the provinces of the Philippine Archipelago with regard to the cultivation of rice, wheat, tobacco, maize, cotton, vege- tables, and alimentary tubers. The implement used for preparing the fields for cultivation is a plow with a narrow, wing-shaped moldboard. Judging by the names of the pieces of which it is composed, and which are of lesser 118 APPENDIX. dimensions than those of Eiiropean plows, this plow is of Chinese model and origin. To it the native hitches a carabao, the only work animal used by the Filipinos, because its strength and endurance is superior to that of the other cattle of this country. Nevertheless the furrow cut by this plow is only 10 centimeters deep when it is used on irrigated land set aside for the cultivation of rice, while dry land and land used for cultivation of tobacco must be plowed over three or four times or oftener, the farmer being obliged to traverse it in different directions with his plow in order to turn the earth to the depth of 25 or 30 centimeters. When the Spanish Government established the Government mo- nopoly on tobacco in order to provide revenue for the State, it spread the cultivation of this article throughout the Province of Cagayan, restricting the cultivating of cereals and other agricultural prod- ucts, and subjected the agricultural labors connected with the growing of tobacco to a rigorous Government inspection. The peculiar and climatic conditions of each locality were not taken into consideration. This lack of consideration has given a useful lesson in agriculture to the inhabitants of Cagayan bj' establishing the fact that in the pueblos subject to the influence of the sea the tobacco, though it grows and develops, is of poor quality and disagreeable taste. For this reason the pueblos situated on the seashore, as far as Lal-lo, were not compelled to grow tobacco, the cultivation of which was confined, as it still is at the present time, to the pueblos of the interior situated on both banks of the Rio Grande de Cagayan and the Rio Chico de Itaves and the estuaries tributary to it. Such pueblos are Gattaran, Nagsiping, Alcala, Baggao, Amulung, Iguig, Penablanca, Tuguegarao, Enrile, Solana, Cordoba, Santo Nino, Piat, Tuao, Mauanan, and Malaueg, which, because of their distance from the sea, produce tobacco of good quality and agreeable taste, though its quality changes with the properties peculiar to its place and locality. In the other pueblos, as Lal-lo, Camalaniugan, Aparri, Buguey, Abulug, Pamplona, Sanchez Mira, and Claveria, the tobacco grown is of very inferior quality on account of the effect of the sea, which is near them. Moreover, in the pueblos and localities where tobacco is grown there is a notable difference between that grown on high and on low land, both in the robustness and development of the plant and in the quality of the leaf. The explanation is that the high land is APPENDIX. 119 some distance from the rivers and estuaries and is not covered by water during the floods, while the low land is in the immediate vicinity of rivers and estuaries and is frequently inundated. The high land does not receive the fertilizer frequently deposited by the water on the low land, and the nutritive juices contained in it are gradually consumed until, in time, the land becomes exhausted and unproductive. The difference between the tobacco grown on high land and that grown on low land is not due to the peculiar qualities of the soil and subsoil, but solely to the consumption and alimentation of the nutritive substance or force of the soil, which is not replaced in case of the former, but is suitably returned in the latter. For this reason high forest lands which have been cleared for the purpose of growing tobacco produce abundant crops of tobacco of good quality during ten or fifteen years or longer, the same as the low lands. The duration of the fertility of these high lands is determined by the peculiar condition of the soil, whether it is clayey, sandy, or cal- careous, the former being the most suitable for the cultivation of tobacco for the reason that is absorbs and detains more fertilizing juices than chalky or calcareous soil which, being compact, absorbs less humidity than fertilizing juices. However, high land of volcanic origin which was formerly covered with timber has one advantage over low land during the time that it maintains its productive force and vigor — the planter is nearly always sure of his harvest and not subject to the contingencies to which the low lands are exposed because of the inundations of the rivers, which sometimes occur prior to the harvest and sweep away plantations, dwellings, and tobacco storehouses, or cover the plants with water for three, four, or five days, which rots and spoils the leaf. It will Jbe seen that there are several different classes of land for the cultivation of tobacco, namely, high clayey and calcareous land, Ingh sandy land of volcanic origin formerly occupied by forests, land at a medium elevation in the immediate vicinity of rivers and estuaries, and low lands. The latter is the most suitable for grow- ing tobacco and produces plants which are tall, abundant in juice, of good quality, beautiful color, and agreeable taste. The next best is land at a medium elevation; then comes land cleared of timber, and in the last place, high land with clayey or calcareous soil. The two classes of land last named have to be fertilized, which involves 120 APPENDIX. an expense to the planter, while the low land receives this benefit without the intervention of the planter, through the mud deposited on it by the water during inundations. The planters on high land usually fertilize their fields with carabao or cow manure, which they mix with the soil by means of the plow, and with maize stalks and leaves which they allow to rot. The latter is done only when there is scarcity of manure, which is the case at the present time on account of the lack of cattle. SEED PLOTS. Seed plots are places where the tobacco is sown, the young plants being afterwards transplanted to land suitably prepared, where they acquire full development. These seed plots must be situated on high land to prevent their being flooded during the great inunda- tions of the rivers, and in the immediate vicinity of the house of the planter in order to make it possible for him to give the tender plants the requisite care. As a rule the place chosen for the seed plot is not shaded by any tree or house, in order to expose the seeds to the action of the wind and the sun which they require for their germination, and to prevent the young plants from becoming weak and delicate. These seed plots are usually established on level land, their length being from 40 to 50 feet and their width about the same, sufficiently large for double the number of plants needed. The plot is surrounded by a small ditch for the irrigation or rain water, the earth excavated being placed within the inclosed space in order to raise its level and prevent the water from accumulating. The planter tills this plot with care until the earth is well pulver- ized, and sometimes he fertilizes it with dry manure. The plot is divided into beds 3 or 4 feet in width which are separated from each other by shallow longitudinal ditches to prevent the rain or irriga- tion water from accumulating and rotting the seeds or injuring the delicate roots of the tender plants. As soon as the piece of land set aside for the seed plot is prepared the seeds are scattered on the bed, an operation which must be performed while the earth is moist either from previous rains or from a moderate irrigation. The tobacco seeds are taken from the fruit of the most robust and vigorous plants chosen by the planter, who leaves their tops uncut and allows them to bloom and produce fruit. These are cut as soon as they are ripe and are put in the sun to dry, in order to facilitate the extraction of the seeds from the pods. The seeds are kept in. earthenware vessels until the time for the planting of the APPENDIX. 121 Peed plot in order to protect them from moisture, which would be injurious to them. Prior to sowing, the seeds are mixed with fine sand which has been well dried, or with ashes, to insure their falling on the ground suitably distributed and separated, then the ground is slightly trampled down until the seeds are about one-fifth of an inch below the surface, where they are able to germinate. There are various classes of tobacco leaf which are the products of divers kinds of seeds. Those usually seen in this province are the kinds known as " catabacuan," " espada," ^' americana," " ha- bana " (also known as " Isabela de corazon "), and " vizcaya." The former produces leaves the maximum length of which is from 35 to 38 centimeters, and has an agreeable aroma, but its cultivation has been discontinued in view of the facts that the plant is only about 33 inches high and produces a scant number of leaves in proportion to its length, and that it requires a good deal of atten- tion for the reason that it is the most attacked by worms. At present only the classes known as " habana " and " vizcaya " are used, which have a height of from 1^ to 2 meters, the longest leaves having a length of 33 inches or more and a breadth of 60 centi- meters. The number of leaves produced by these plants bearing in due proportion to their height, a larger number of leaves is gath- ered from them than from the others, without their lacking a special aroma and agreeable taste, though it is different from that of the leaves of the " catabacuan." The time for making the seed plots depends upon the class of land to which the young plants are to be transplanted. For high land where there is no fear of inundations the seed plots are prepared in July and August and the plants transplanted in September and October, and for low land they are prepared in October and Novem- ber and the plants transplanted in December and January. The diligent farmer usually makes the seed plots for transplan- tation to high land on high land also, and endeavors to have the soil of both similar in qualities, so that the roots of the plants, upon being transplanted, will not suffer from the different properties of the soil. The negligent and less skilled farmer, however, does not pay attention to this detail which is essential for the acclimation and development of the plants. After the seeds have been sown the planter, protects them against heat and rain by means of a roof or cover of bamboo and plantain or palm leaves with which the beds of the seed plot are covered p T— 05 M 27 122 APPENDIX. from 10 o'clock in the morning until 4 or 5 in the afternoon on days when there is much sun or heavy rain. When the seed has come up, then begins the work of the family of the planter, which is kept busy weeding out the plot and removing the worms from the tobacco plants, an operation which is carried on every morning and afternoon until the time for transplanting has come. On dry and very hot days the seed plots are carefully watered in order to prevent their drying up, and if the plants grow too close together some are removed in order to give the remainder suflBcient space in which to grow. The farmer who leaves the care of the seed plot to his family is by no means free from work, because as soon as the plot is sown he commences to prepare the field to which the seedlings are to be transplanted, and for one month he has to plow the land two or three times a week until the upper layer has been well turned over and almost pulverized. Forty-five, or at the most sixty, days later the plants have attained a height of 25 or 30 centimeters and are ready to be transplanted. They are carefully removed, but this is not done long before or after that period, because', if it were done long before, the roots would be weak and lack the vigor necessary for adapting themselves to land new to them, and if it were done much later the primary or vertical roots would be injured when the plant is torn from the soil. The plants to be transplanted are removed from the soil in the following manner: When the weather is dry the ground is first moistened in order to facilitate the extraction of the roots ; then the most luxuriant plant is chosen and the laborer, who has a short piece of bamboo in his right hand, places this beside the plant and plunges it into the soil toward the root; then he makes a slight movement with the hand to bring the end of the stick toward the surface, and the plant, sustained by his left hand, comes out with- out difficulty, without the vertical root and the fine horizontal roots suffering the least injury. This is done during the coolest hours of the day— from 4 to 9 o'clock in the morning and 4 to 7 o'clock in the afternoon, and on moonlight nights from 5 in the afternoon to 10 in the evening. When enough plants have been taken out for one day's worb of transplanting they are well arranged, placed in a basket, covered with plantain leaves, and thus taken to the land on which they are to be replanted, and which has been prepared beforehand. APPENDIX. 123 TRANSPLANTING AND CULTIVATION. Prior to transplanting the tobacco the farmer plows the land m a longitudinal direction, making the furrows deep on high and chalky land and shallow in light and loose soil, 1 meter or 33 inches apart, according to whether the land is low or high. The farmer is followed bj- a member of his family who carries a pointed piece of bamboo with which he makes the holes, in which the plant is placed up to the stem, leaving all the leaves above the soil and taking care that the roots and the stems enter the hole without doubling, to prevent the plants from dying off or sickening. If the soil is rather dry the plant is usually watered, special care being taken that the water does not fall on the leaves, whereby they might be injured, spoiled, or their stems broken by the weight of the water. After the tobacco has been transplanted those of the plants which perish by some accident are replaced, and thus the number of plants in the rows is maintained the same as that of the plants transplanted and no vacant space remains on the field. After the plants have been transplanted three weeks and their vigor and development shows that they are perfectly rooted in the soil, the farmer plows between the rows of plants in order to cover with earth the part of the stalk above the ground. Then comes the most laborious task for the family of th^ farmer. They go through the entire field, from plant to plant and from leaf to leaf, from daybreak until 8 or 9 o'clock in the morning, and again from sunset until 8 o'clock in the evening, or later on moon- light nights, picking off the worms which attack the leaves and destroy the plants. This terrible plague of the tobacco attacks with fatal instinct the best plants and choose those of the leaves which are the most luxuriant, juicy, or gummy. The zeal and activity of these exter- minators is sometimes in vain because it does its fatal work in the dark of the night, when it is absolutely impossible to pursue it. Some of the more active and diligent farmers sacrifice their hours of repose and pursue and exterminate these insects at night, by the light of burning crushed bamboo used by them as torches. However, such farmers are very rare, but this method is regularly used by the rich planters on their tobacco fields. There are three known species of these insects. One is green and eats the tops of the plants, the other is yellow and attacks the leaves. 124 APPENDIX. and the third is black and pierces the stalk until the most vigorous plant falls to the ground. Up to the present time it has been impossible to discover the origin of these insects or a remedy against them. When the leaves forming the top of the plant commence to sprout, which is approximately two and one-half months after the plant has taken root in the new soil, the farmer cuts the top off to prevent the plant from continuing to grow upward. At the same time the interior leaves near the ground are removed for the purpose of causing the nutritive juice to concentrate in those which remain and then the foot of the plant is again covered with earth. These labors promote the growth of the shoots, to which the diligent farmer pays great attention. As soon as he has finished gathering the leaves of the plant he removes those shoots, leaving only two, or at the most three, of the most robust and vigorous, which produce as good leaves as the plant. If this care is taken, both the mother plant and the shoot produce gummy leaves of excellent quality. In. connection with what we have said about the ciitting of the tops, it must be mentioned that the farmer does not perform this operation on all the plants, because then he would be without seeds for the next crop. When the tops are being cut off, some plants are always spared and permitted to bloom and bear fruit, from which the seeds are extracted, as previously described. CUTTING AND DBESSINQ THE LEAVES.' •When the tobacco leaves approach the stage when they are fit for cutting, yellowish spots appear on their surface and gradually spread over the entire leaf, which is mature and ready for cutting as soon as it has acquired this color. The upper leaves mature first. The leaves are removed from the plant in the following manner : One grasps the petiole of the leaf with the principal three fingers of the right hand and removes the leaf, with a slight down- ward movement, without injuring the plant, the left hand support- ing the plant. This work is done between the hours of 8 and 12 in the moriiing and 3 and 5 or 6 in the afternoon. It is not advisable to cut the leaves at an earlier hour, before the dew which has fallen on them during, the night has evaporated, because the latter makes dark-green spots which disfigure the leaf and injure its quality. When the cutting takes place the farmer and his family go to the field with a cart or sled drawn by a carabao, on which they place APPENDIX. 125 the leaves cut or separated from the plant, arranging them in good order, m a vertical position, with the petioles downward, in order not to spoil the points. When the cart or sled is loaded they cover the tobacco with plantain or palm leaves and take it to the curing shed or the house of the farmer, where it is taken off the cart or sled and stacked, care being taken not to bruise or injure the leaves, as this would cause spots and affect their quality. The family of the • farmer fastens the leaves by the petioles to a piece of split bamboo half an inch thick and 5^ feet long or more, Which ends in a point. A space of 1 centimeter is left between the leaves for the purpose of giving all the benefit of the ventilation upon being sus- pended, as leaves which are not given this ventilation acquire green spots which depreciate their quality and give the tobacco a dis- agreeable taste. After the leaves have been hung up on the sticks, these sticks are suspended from the roof of the shed, 20 centimeters apart, both ends being supported by thongs of rattan. The curing shed is a building consisting of a roof of " nipa " or " cogon " grass, which rests from 16^ to 22 feet above the ground on uprights of timber. As a rule there is no floor or walls, though there are sheds with walls of woven bamboo which are not fixed, in order to make it possible to open or close them, according to cir- cumstances. The height, length, and breadth of these sheds vary according to the quantity of tobacco and activity and resources of the planter. During the time of the Government monopoly on tobacco under the Spanish regime the tobacco grower was obliged to erect a curing shed at his own expense, besides others which certain populous barrios built for the Government. Since the cessation of this monopoly the growing of tobacco has been left entirely to the choice of the planter, and the curing sheds have disappeared, so that at present there are very few planters who build curing sheds. Some tobacco powers use in their stead the lower portions and the eaves of their houses, and, if these are not sufficient, their dwellings and kitchens. The advantage of special sheds for curing purposes is the orderly collection of the sticks from 33 inches below the highest portion of the roof down to 1 meter above the ground. In this manner all the leaves are ventilated, because, as I have said, these sheds have no walls and are exposed to all the winds. Those inclosed with walls of woven bamboo or " nipa," which can be opened and -closed like doors, have the advantage over the others that they can be 126 APPENDIX. completely closed during heavy and continual rains, whereby the excessive moisture is shut out and the leaves protected from mold, which would destroy their gummy, elastic, and solid qualities, while during dry weather they can be left entirely open to let the air through from every direction. The sheds without walls, on the other hand, keep the family of the farmer busy wiping the leaves with a cloth during rainy weather in order to remove the moisture. If the tobacco is cured in the dwelling the leaves suspended under the floor receive all the falling dust; those upstairs, in consequence of the constant coming and going of the inhabitants of the house, who have to make their way through them, continually suffer violent shocks which leave stains and defects, and those suspended under the eaves are exposed to sun and rain which destroy their peculiar qualities. According to some planters it is advisable to expose the tobacco leaves to the sun for two or three days before curing them, as thej' acquire a better color after drying, but the experts are of the opinion that this injures the tobacco and gives it a disagreeable taste. The time for the curing of the tobacco varies according to the size and conditions of the locality and the weather. In regular curing sheds the small leaves hanging under the roof need from fifteen to twenty days and the large ones frora twenty-five to thirty; the leaves exposed to the sun dry in less time. In rainy weather, however, more time is necessary for the reason that the humidity prevents the leaves from drying, and if the leaves are not completely dry ferinentation sets in rapidly in the stacks and exposes them to the danger of burning, which means their t(*al loss to the planter. When the leaves are thoroughly dry the sticks are carefully taken down and piled up in stacks 16-;^ to 22 feet in length and 5^ feet or more in height, according to the amount of tobacco on hand, which also determines the number of stacks made. These stacks are covered with " bast " woven in the form of mats from 1 to 25 meters long and 1 meter wide, which are placed on the sides and the top. (" Bast " is the bark of the plantain tree, which is divided into strips 8 centimeters in width and of the same length as the stalk, dried in the sun, and then woven like matting and used for covering the tobacco.) After four days the stack is turned over— that is, the sticks are reversed— in order to make the fermentation equal in all the leaves. This operation is repeated four days later. APPENDIX. 127 "^Mien the leaves are placed on the sticks they are still fresh and green, and for this reason it is impossible to judge their quality at that time. The persons engaged in this work, therefore, pay attention to size alone, placing leaves of the same size on each stick. After the leaves have been turned for the second time they are removed from the sticks and assorted according to their quality, then they are placed by hundreds on shorter sticks, half a meter or less in length, and again stacked. Now they are turned over as many as three or four times for six, eight, or ten days. While this stacking and turning is going on the tobacco leaves gradually acquire color, but before they have the desired color they are again removed from the sticks and tied up in bundles of ten packages, commonly known as "hands." This operation is simple but delicate, because while the hands are being tied with thin strips of " bast," without separating the ten times ten leaves on each stick, the leaves are gently smoothed out in order to remove the wrinkles. The one hundred leaves are then taken off the stick and rolled up, special care being taken to protect the edges of those toward the interior. Each roll is tied with strips of " bast " at three points — ^namely, in the middle and at both ends of the hand — to prevent its becoming untied. These hands are again stacked, the stacks being made very large, according to the capacity of the place, in order to cause the tobacco to ferment. The leaves are arranged with the petioles outside, as in all the stacking operations of which we have spoken, for the protection of the points of the leaves against injury, the only differ- ence being that if the stacks are square, transverse openings called " troneras " are left at certain distances, the object of which is to prevent rapid fermentation which burns the tobacco. If the stacks are round a hole is left in the center running from top to bottom, like a well. The duration of the working of these stacks, called " mandalas " by the tobacco grower, depends upon the quality of the tobacco leaves and the state of the weather. If the leaves are thick and juicy or gummy the stack is turned over after six or eight days in dry weather and after ten or eleven in wet or rainy weather. Fine leaves are given two days longer in each case and are turned two or three times more during the first period, until the leaves acquire a more or less dark chestnut color. The tobacco grower, known locally by the name of " cosechero " 128 APPENDIX. (harvester), and all the persons engaged in the tobacco trade in this province, are familiar with the treatment of the tobacco and have no need of counting the days in order to know when it must be turned, because they know this from the odor issuing from the tobacco. When the fermentation commences one notices more heat than usual if one places the hand in the " troneras " or air holes, and this gradually increases from day to day. After four or five days the tobacco has an agreeable odor of molasses which becomes more accentuated every day until it is so strong as to be almost repugnant. This is the time for turning, and not another day must be allowed to pass because otherwise the hands in the lower portion of the " mandala " are in danger of being burnt. After the hands of tobacco have been turned three or four times in the stacks as described they are ready for sale. We have, spoken of the new shoots issuing from the plant after the top has been removed. In order to cause these sprouts to produce large leaves of good quality after the leaves of the plant itself have been gathered, the planter cuts or separates them from the stalk, leaving only two of the most robust and vigorous, selected beforehand, one of which is near the foot of the stalk and the other 11 inches higher. Then the stalk is cut at its junction with the shoot to enable the fertilizing juices to furnish nourishment to the leaves and precipitate maturity. Ten or twelve days later the tops are cut off, an operation performed in the same manner as described when speaking of the principal plant, only three or four leaves being left on each, which insures full development ,p,nd good quality. If many shoots and leaves are allowed to grow, the leaves produced are scarcely of the third grade, while they are of the second and sometimes even of the first if the method which we have described is adopted. This concludes our description of the cultiva- tion and treatment of the tobacco. It is the prevailing opinion that tobacco is that product which brings most profit to the Philippine agriculturist, and in the endeavor to prove this the high prices paid for it during certain years on the Manila market have been quoted. These high prices, which scarcely lasted two consecutive years — 1900 and 1901 — will not return, considering developments on the foreign markets, and therefore can not be used as a basis for calculating profits. This calculation, in order to be approximate, must be based on the prices usually paid for the article at the locality where the APPENDIX. 129 planters realize on their products, and on the expenses involved. Without these data it is not possible to calculate the profit. In order to appreciate both expenses and gains, one should become acquainted with the manner in which the tobacco grower sells his product. We have already stated that the last operation in the preparation of the tobacco for sale is arranging the leaves in hands of one hundred which are tied together. Each lot of forty hands malies up a bale, and in this form it is offered for sale. The price paid for one bale of tobacco is fixed according to the classification made of the article or agreed upon between vendor and buyer. In previous years, following the abolition of the Gov- ernment monopoly on tobacco, these prices were lower, but subse- qiienth' they advanced and have remained so. The tobacco is divided into five classes, from the first to the fifth. In this classification attention is given to the length of the leaf and its freedom from stains and defects, such as breaks and worm- holes. First-class leaves must be 45 centimeters long from the petiole or footstalk to the point of the leaf; those of the second class must measure 39 centimeters and be clean and without defects like the former; third-class leaves must be without stains or defects and measure 26 centimeters; fourth-class leaves may have stains and some breaks or wormholes, but must measure 24 centimeters, and fifth-class leaves are all those the length of which is 22 centimeters. We must state that hands which by reason of the length of the leaves are entitled to come under the first class, but which have' a certain number of leaves with black or greenish stains, breaks, or holes, are placed in the next class below if the number of such leaves exceeds six. If it exceeds twelve they are placed in the third class, and, if it reaches twenty, in the fourth class. The other grades are appraised in the same manner. With the foregoing data it will be possible to demonstrate the expenses and revenues, taking as a basis 1 hectare of land. The value of 1 hectare of low land is estimated at the maximum price of f=200 and the minimum price of f=100. The land for the seed plot has to be plowed repeatedly in order to be well prepared. This takes one person with one carabao two days and costs ¥=2, at the rate of ?1 per diem, without taking into consideration the work 130 APPENDIX. of sowing the seed, watering the plot if it is on dry land, and fencing it in to prevent the animals from trampling upon it. The preparation of 1 hectare of land includes the work of plowing this area over several times in order to pulverize and stir up the upper layer of soil to the depth of 33 inches or 1 meter. This keeps one man with one carabao busy for twelve days, and at the rate of P=l per diem for the wages of the laborer and his carabao it involves an expenditure of ?12. For the work of transplanting the tobacco on 1 hectare of land the farmer needs three laborers and one carabao. Reducing the number of days of work necessary to five and the hire -of the laborers and the carabao to 50 centavos each per diem, this involves an expense of 1P10. We have already stated that the tobacco plant requires the greatest care on the part of the farmer in order to obtain a good crop. This care involves many different kinds of work and must be- continuous while the plant is developing and in the soil. It commences with the removal of the other plants which deprives the tobacco of the fertilizing juices, then comes the covering of the stems with earth, and then the pursuit and extermination of the worms, the hardest but most important task for the farmer. Supposing that all this work requires the services of four persons, who work five hours daily during the period of forty days and are paid 31^ centavos per diem, we have a total expense of ^50. This does not include the work of cutting off the tops of the plants, of removing the shoots which sprout after the tops have been cut off, and of removing those leaves on the stalk which touch the ground. The leaves being mature, four persons and one carabao and cart or sled are needed for gathering them. These are kept busy three days during each of the three periods when this is usually done. Calculating the wages of the laborers and the hire of the carabao at 50 centavos each per diem, we have a total expense of F22.50. The leaves gathered are placed on the cart or sled, covered with palm or plantain leaves, and taken to the house of the tobacco grower, where they are received by four women, who assort them according to size and place them on a thin piece of bamboo 1 centi- meter thick, one end of which is sharpened. After a sufficient number of leaves has been placed on each stick, the necessary space being left between the leaves to insure equal ventilation for all, it is suspended at the place set aside for airing the tobacco. This APPENDIX. 131 work lasts as long as the gathering of the leaves, and, calculating the daily wages of the hands employed at 50 centavos, the wages of the four women during nine days that this work is going on amount to the total sum of ^18. After the airing the sticks are taken down and stacked. For stacking the leaves produced by 1 hectare of land it is necessary to employ four persons for three days, and the wages of these persons, at the rate of 50 centavos each per diem, amount to ?6. We shall not consider the work of turning the stacks, which is done once, twice, or oftener, according to the diligence and activity of the planter. The turning is followed by the laborious and delicate task of assorting the leaves into five classes, which is done exclusively by women. Suijposing that twenty-five women do this work in one day, which is a very low estimate for the reason that the work is not limited to the classification of the leaves, but includes the tying • together by the petioles in bunches of ten, each ten of which is again tied into shorter bundles, the wages paid amount to ?=12.50 at the rate "of 50 centavos each per diem. These sticks are arranged in stacks which are usually turned once or twice. One operation necessary to place the tobacco in condition to be offered for sale is the moistening of the leaves, which is done -in order to make them elastic and prevent their breaking when they are smoothed and ironed; then they are tied together in bundles of" one hundred leaves, as they were arranged on the stick. The stick is now removed and the leaves are fastened in three places, in order to prevent their becoming loose when these bundles, called " hands," are turned over. The laborers sit down on each of these hands while working on the next, and thus press them by the weight of the body. Supposing that this work can be done in one day by twenty-five women, and that these are paid 50 centavos a piece, which is a low estimate, the wages thus paid make up the total sum of ¥=12.50. The hands are again stacked and the stacks thus formed turned over twice or oftener in order to avoid rapid fermentation, which is liable to bum 'the tobacco. Supposing that the stacks are turned four times, which is generaly done in order to give the leaves a dark chestnut color — each time this work is done by two men in two days; their wages, at the rate of 50 centavos each for eight days, amount to the total sum of T=8. 132 APPENDIX. Th^ figures set forth in the table given further ahead are a low estimate of the expenses of the tobacco grower for 1 hectare of land under cultivation, and do not include the interest on P200, the value of 1 hectare of low lanRi. To ascertain the profit which the*, tobacco grower derives from his product we make the following calculations based on the maximum: Supposing that 10,000 plants have been transplanted on 1 hectare of land and twenty leaves have been taken from each — ■ that is, twelve leaves of the main plant and eight of the two shoots which were left — the total number of leaves gathered from these 10,000 plants is 200,000. These being packed in bales containing forty hands of one hundred leaves each, we have just fifty bales. The price of the bale of tobacco, according to its grade, is deter- mined and established by the custom and changes very seldom, and therefore it is customary in transactions and agreements regarding the sale of this article to make no mention of the price, which is supposed to be according to the tariff. The agreement is therefore limited to the classification and the quantity. The prices paid for the several classes of tobacco leaves are as follows: First class, ¥=14.25 per bale; second, f=9; third, ¥=4.12^; fourth superior, ¥=2; fourth current, 1P1.50; and fifth, 50 centavos. Sujaposing that the. 200,000 leaves gathered give fifty bales of forty hands each, and that one of these fifty bales is first-class tobacco, three second class, six third class, twenty fourth superior, and twenty fourth current, and considering the fifth-class leaves as fourth class, in order to increase the value of the total production (although one would find the correct and true amount by ascertain- ing the number of bales at 50 centavos contained in the twenty bales classified as fourth current), we have the following estimate of receipts and expenses in the cultivation of 1 hectare of land : Hire of 1 man. and 1 carabao for two days for preparation of seed plot, at 50 centavos per diem for tlie man and the same sum for tlie carabao ?2. 00 Hire of 1 man and 1 carabao for twelve working days for plowing 1 hectare of land, at the rate of 50 centavos per diem for the man and the same for the carabao 12.00 Hire of 3 men and 1 carabao for five days for the transplanting, at 50 centavos per diem each 10.00 Wages of 4 persons for forty working days, for seeding and taking care of plants, at the rate of 31i centavos each, five hours of labor being required each day 50. qq APPENDIX. 133 Expenses — Continued. Hire of 4 men and 1 carabao and cart during nine days for gather- ing the leaves, at 50 centavos per diem for each person and the carabao ^22. 00 Wages of 4 women, at 50 centavos per diem each for nine days, for the selection, placing on the sticks, and hanging up for airing of the tobacco leaves 18.00 Wages of- 4 women for three days, at 50 centavos per diem each, for stacliing the sticks with the tobacco leaves after airing 6. 00 Wages of 25 women for one day, at 50 centavos each, for the clas- siHcation of the tobacco leaves and tying them up in " hands " 12. 50 Wages of 25 women for one day, at 50 centavos each, for smooth- ing and tying them up in bundles 12. 50 Wages of 2 women, at the rate of 50 centavos per diem each, for turning over the stacks four times, at two days for each time 8. 00 Total expenses , 153. oo Receipts. Proceeds of the leaves harvested from 1 hectare of low land planted in tobacco, giving maximum estimates for both the number of leaves gathered (twenty leaves for each plant and two shoots) and the quality of the leaves, as follows : First class, 1 bale KL4. 25 Second class, 3 bales 27.00 Third class, 6 bales 24.50 Fourth-class superior, 20 bales 40.00 Fourth-class current, 12 bales 18.00 Fifth-class current, 8 bales 4. 00 f=127. 75 Raising the 8 bales given as fifth-class to the fourth-class current, we have an increase of_' 8.00 Balance in favor of expenses 17. 25 Total receipts 153. 00 As we have stated, the production of tobacco leaves on 1 hectare of land has been calculated at the maximum figure. We have given it as fifty bales, and therefore the number of leaves gathered must be 200,000, which is twenty from each plant. They rarely produce this number, because as not all the plants attain the same height not all can give this number of leaves, and, even if they would, it can not be avoided that some are spoilt or rendered useless. The most approximate estimate is fifteen leaves per plant, which reduces the number of the bales to thirty-six and one-half. The esti- mate is also high with regard to the classification, because it is not common that in a crop of fifty bales there are one bale of first 134 APPENDIX. class or three of second class leaves. As to the proportion of the other classes this is frequently found in a like number of bales. So much about the cultivation of tobacco and its sale in the tobacco- growing pueblos of this province. The tobacco growers having sold their product to the buyers, who are either agents for commercial houses established in Manila — • some of them manufacturers and others merely exporters of this article — or dealers in tobacco who take it to Manila for sale there, both, in order to obtain profits, have to expend more work and money for the purpose of improving the quality of the tobacco, or ,of preserving that which it had when they bought it, and also for its packing for convenient and easy transportation. This work is as follows : The " hands " of tobacco are stacked as they come in and all the sides and the tops of these stacks are covered with " bast " matting, in order to cause the tobacco to fer- ment and acquire a better color. These " mandalas " or stacks are turned twice or three times, according to the qualities of the leaves, because if these abound in gum it is necessary to see that they are sufficiently dry before they are packed. If this is neglected the tobacco, because of its being compressed, is liable to ferment and burn while packed. The gum usually remains fresh if the tobacco grower, in order to save work, has not gone to the trouble of turning the stacks. The tobacco being ready for packing, the dealer reassorts it as he sees fit, always endeavoring to classify it higher than he bought it, because if he did not do so he would lose money. The reassortment being completed, the hands of tobacco are again stacked, the different classes being separated, and the packing for shipment commences. Each 3 quintals of tobacco is enveloped in two "bast" mats lying ready in a press. This press is usually of iron and handled by four persons, and the tobacco is compressed into a bale 1 meter and 10 centimeters long and from 70 to 80 centimeters broad and high. This bale is tied lengthwise and crosswise with rattan thongs before being removed from the press. The packing being completed, the bales are either placed in the warehouse or carted away to vessels which take them to the port of Aparri, and there they are loaded on steamers and carried to Manila. The expenses of the middleman for the improvement and paclring of the tobacco purchased, the hauling from the warehouse to the river for transportation to Aparri, the discharging of the bales at APPENDIX. 135 that place and the storage which has to be paid if there should not be a vessel for Manila in port, the loading on the vessel, the freight TTom Aparri to Manila, the marine insurance, the discharging g-nd storage at Manila, the fire insurance and commission for its sale if It is not sold on board, are estimated at f^ for each bale of from 2^ to 3 quintals. The weight of the tobacco stands in direct proportion to its quality. First-class tobacco weighs more than second class, and so on successively, except in cases where leaves of higher grades have been classified lower on account of defects, in which case the weight of the inferior grade of tobacco is the same as that of the higher grade from which it came. It is not possible to fix the weight of the bale of forty hands of tobacco with exactness, because of the different dimensions and quality of the leaves. The weight of the bale of forty hands ranges from 40 to 60 pounds in first-class tobacco, from 40 to 50 pounds in second class, and from 35 to 40 pounds in third-class tobacco. The weight of tobacco of the fourth-superior class is almost the same as that of third class, on account of the defective leaves from superior classes which it contains. The weight of the fourth- current class ranges from 30 to 35 pounds and that of the fifth class from 20 to 30. When in a lot of 50 bales of tobacco one-third or a little less -is made up of leaves of the superior classes (first, second, and third), the average weight per bale may be estimated at one-fifth of 1 quintal, and the 50 bales therefore weigh 10 quintals, which, if sold at ?20 per bale, brings ?200. However, the price of tobacco on the Manila market fluctuates according to the demand, and at present scarcely reaches !P15 per quintal. When the price of tobacco is low on the Manila market there is a scarcity of buyers of this article in this province, though the agents and buyers of the commercial companies who are engaged in purchasing tobacco from the planters remain. The lack of buyers greatly injures the tobacco grower, not because of a decreas?i in the price paid for his product, as the price is fixed and can not change, but because of the classification made of the tobacco in view of the competition, which, considering the great difference in the prices of the several grades, is more injurious than a decrease of prices. , I now conclude this humble report, or rather sketch, of the grow- 136 APPENDIX. ing of tobacco in the Province of Cagayan (Luzon). It is full of defects and lacks technicality, but your benevolence will be able to fill these deficiencies, considering the fact that in writing it I had no other end in view than that of doing my duty, it being my desire to represent the precarious situation of the tobacco growers to the illustrious representatives of the great and noble North American nation here assembled. Representative Scott. In this connection would it not be well to make an order that any additional statements or evidence which have not been submitted here which those representing these various industries may wish to submit, may go into the record after having obtained the permission of Commisioner Worcester or any other person whom he may designate ? The Chairman. You refer to sugar or tobacco or any other subject ? Representative Scott. Any subject we may designate. The Chairman. Very well. Now, I want to say to our friends and American citizens that I am sure every member of this com- mittee who came out here came with the desire to ascertain the facts and the necessities of the country, and what would be to the best interests of these people to better their condition in every walk of life, and any questions that may seem to indicate that we are trying to find out any man's personal business or the cost of his production and the prices is not put for that purpose; that is not what we are trying to get at, but to see if in any way we can help him and help the people of the Philippine Islands. I am sure that is the sentiment of every member of this committee. The discussion of the tobacco question is now closed, and we will take up the coastwise shipping subject. SHIPPING. Upon the taking up of the coastwise subject, Mr. John T. Macleod said he desired to make a few remarks. The Chairman. Proceed. Mr. Maoleod. I am speaking in representation of the Manila Chamber of Commerce and the Ship Owners' Association of the Philippines, whose report and remarks are indorsed by the Filipino Chamber of Commerce, the Spanish Chamber, the Chinese Chamber, and approved by a good many members of the American Chamber of Commerce, most of whom have instructed me to argue for them, APPENDIX. 137 With a view, not to repeating arguments and tiring the patience of the honorable gentlemen of the committee, but with a view to pre- senting to them the true condition of affairs here. Before touching upon the condition of the coastwise trade we wish to touch upon a few points leading up to it. Mr. Macleod then read the following report: Honorable Secretary of War, Senators, and Eepresentatives, the Manila Chamber of Commerce having appointed Mr. Barry Bald- win, Mr. R. H. Wood, and myself as a committee for the purpose, we now beg to submit our report on the conditions and some of the wants of these Islands : First. The country, generally speaking, is in a state of financial collapse. The agriculturists and merchants are passing through the worst crisis ever known in the annals of Philippine history. A series of calamities has contributed to bring the country to this deplorable state. A state of war existed in this country practically from the begin- ning of September, 1896, until long after the inauguration of civil government on the 1st of July, 1900. The contributions for this war, voluntary and forced, ruined a large percentage of the natives. The farmers suffered more than any other class, because, besides being forced to pay large contributions, owing to disturbed conditions, they were unable to properly cfultivate their lands. This was especially the case in rice and sugar districts. But what brought these districts to their final ruin was an epidemic of rinder- pest, which made universal havoc among the cattle. This caused a ruinous loss to ranch owners and drained large sums of money from the country to import cattle; but these both sank into insig- nificance beside the loss to the farmer through the death of the carabao or water buffalo, the only draft animal in the Philippines available for plowing. The effect of this was that sugar exports fell to less than half of normal years during three or four seasons, while millions of pesos were drained from the country to import rice. In the year 1903 alftne ¥25,000,000 worth of rice was imported. Tobacco and copras suffered to a lesser extent in the same manner. Hemp did not suffer so much because, requiriiig no cultivation, the natives cleaned it as a means of obtaining the ready money they were so badly in need of. Consequent on this ruined state,, the farmers have had to borrow money to live on, money to plant their crops and cultivate their p T— 05 M 28 138 APPENDI?. lands, and money to bring their harvests to market, so that almost the entire agricultural land throughout the Islands is mortgaged for more than its full value. Where the money has been advanced by the merchant or middleman who buys the produce the rate of interest has been 8 per cent, which is considered moderate for this country, but where the farmer has had to have recourse to other sources, the usurer has taken advantage to charge anything from 1 to 3 per cent per month, and the farmer has year by year sunk deeper into the mire. As a natural sequence to the ruined state of the farmers, the merchants and middlemen who acted as bankers have lost many millions by bad debts, and have still many millions outstanding of doubtful recovery. This has naturally turned all their paper profits into real and actual losses, so that, generally speaking, the commer- cial firms are a great deal worse off to-day than they were five years ago. . Second. Following on conditions such as above described, the country was by no means prepared to meet a tax on land already burdened by debt. The people therefore naturally felt very sore when the territorial tax was imposed, to pay which they had in most cases to raise money at usurious rates of interest. There is a provision in the law governing this tax whereby the Government may order the sale of the land for overdue taxes, and we are under the belief that this has happened in several cases where the owners were unable to raise the money. We are strongly of the opinion that the imposition of this tax and mode of procedure has caused and is causing much of the distress now prevalent throughout the Islands. We therefore believe that it would be of the utmost benefit to the country if all the impounded lands be returned with clear titles to their original owners, and the territorial tax abolished or held in abeyance until such time as agriculture is again in a prosperous condition. Too much importance can not be given to the fostering and development of agriculture, which is the back- bone of prosperity in these Islands, and all taxes that tend to hamper it at the outset should be abolished. Owing to the usurious conditions of the country, native produce can better afford to pay a 10 per cent duty on its export than an equivalent 1 per cent on the land before planting. We beg to draw attention to the necessity of rcAdsing the present internal-revenue law. The tax of one-third of 1 per cent on sales APPENDIX. 139 falls unequally, and in the case of sales of native produce there IS a clear discrimination against the middleman, who is one of the most useful and necessary members of the mercantile conmiunity m his capacity of banker and agent for the producer. We consider the present taxation to be excessive for the producing power of the Islands. The amount raised for Insular purposes alone is estimated at ¥=23,000,000 for the present fiscal year. This does not include municipal and other taxes which we have not been able to estimate. Mr. Macleod. (Interrupting the reading of the report.) While we all appreciate the great improvements that are going to be brought about and have been brought about by the American Government, and the policy they have been carrying out, the increase in the budget from what it was in the Spanish times— from ?13,000,000, to approximately ¥=30,000,000— has been too high; the country is not able to support it. Senator Fostee. Do you mean to say that the aggregate of tax- ation has raised from ¥=13,000,000 to approximately ¥=30,000,000? Mr. Macleod. Yes; the Spanish budget of 1894-95, which was the highest ever known in normal times, was ¥=13,579,900. Eepresentative Hepburn. Did that include all of the exactions levied by the Spanish Government upon the people ? Mr. Macleod. Yes; I will give you a list of them. The follow- ing is taken from the report of the Schurman Commission, and all amounts are in Mexican currency : THE AIOnjAL BUDGET OF THE PHILIPPINBS. Expenditures. — It seems desirable to take the figures from the normal times preceding the outbreak of the rebellion against Spain, and for this reason the budget for the year 1894-95 is selected. The estimiated expenses of the year were as follows : 1. General obligations $1,360,506.53 2. State 65,150.00 3. Church and courts 1,687,108.88 4. War 4,045,061.84 5. Treasury , 823,261.95 6. Navy 2,450,176.77 7. Government (gobernacl6n) 2,220,120.98 8. Public works and institutions (fomento) 628,752.46 Total 13, 280, 139. 41 This is the amount which the revenues were required to meet, but before exhibiting the corresponding estimate of revenues it will be instructive to 140 APPENDIX. analyze some of the items embraced in the eight categories of expenditures just given. Items of expenditures. — Under the first head — ^general obligations — it appears that of the $1,360,506.53 specified the sum of $118,103 was spent on the colonial department and connected branches in Madrid; $70,822.73 on the colony of Fernando Po, on the coast of Africa; $718,000 on pensions and retiring allowances, and $367,000 on interest on deposits. Of the $65,150 devoted to the State nearly the whole amount was used toward defraying the cost of Spain's diplomatic and consular service in the Orient, namely, in China, Japan, and the neighboring French and British colonies. Under the third head $1,687,108.88 is charged to church and courts; of this amount $460,315.24 was spent on the courts and the balance on the church, the two largest items being $625,860 for the parochial clergy (whose salaries were $500 or $600 or $800 or in a few cases $1,200, while the four bishops had each $6,000, and the archbishop $12,000) and $419,680 for materials for the ecclesiastical establishments ($360 or $500 or $600 or in a few cases $800 being allowed to each parish). War, it will be seen, ate up nearly one-third of the revenues, and of the enormous sum ($4,045,061.84) provided for that department the salaries of the officials of the administrative bureau consumed $771,043.25, while $1,334,484.32 was spent on materials for, the army and $1,997,649.27 on that body itself. refer to work in the rice fields. Secretary Taft. Is it harder work to work in the cane fields? Senor Yui.o. Very much so. It is especially hard on account of the defective agricultural implements and tools which we use. Senator Waeeen. Colonel Hill, may I ask one question right there? I want to ask how many years out of ten can they get a crop without fertilization. Seiior Yulo. Five years. Senator Waeeen. So that it would take two years for a crop. Is the land sufficiently fertile so that you could depend upon a crop once every two years without fertilizing it ? Senor Yulo. Yes, sir. Secretary Taft. I want to go back to the rattoon crops. He says, as I understand it, that he cultivates very little of the rattoon crop. Senor Yulo. Yes, sir; and I have qualified that by saying that rattoon crops are cultivated only on exceptional lands. Secretary Taft. Well, is it the rule or the exception in the cultivation of lands' in this province to have a rattoon crop? Senor Yulo. It is the exception. Secretary Taft. Now how far does that exception go? Does it go beyond the first crop? Are there some rattoon crops of the second and third years ? Senor Yulo. No, sir; we only have the first rattoon crop. Were we to have a second rattoon crop the expense of cultivating it would be greater than the value of its yield. Secretary Taft. Well, are there no estates in Isabela and Binal- bagan where they have cultivated the second and third rattoon erop? Seiior Yulo. Perhaps there may be a few. If there are it would be the exception that proves the rule. Colonel Hill. To what use is the land put after the crop is taken off before they begin plowing for the next year's crop? Seiior Yulo. The highlands are used for the cultivation of corn and the lowlands for the cultivation of rice, and the rest is used for grazing lands. APPENDIX. 171 Representative Cochran. I would like to get a little light on one thing. I understand he has altogether about 15,000 acres and cultivates about 1,500. Sefior TuLo. My possessions do not reach 15,000, but are between 10,000 and 12,000 acres. Representative Cochean. But you cultivate only about 1,500, do you not? Seiior Yulo. Yes, sir. Representative Cochran. I understand him to say that the reason he does not cultivate the rest of his lands is because of lack of capital. Sefior Ytjlo. Yes; because of the lack of animals, of proper agricultural implements, etc. Representative Cochran. That is all the same— it is a lack of capital. Ask him what is the value of his land as it stands to-day. Senor Yulo. I do not know as I could exactly say. It might depend upon a man's needs, but I might say, roughly speaking, P200 for first-class lands, ¥=150 for second-class lands, and ¥=100 for third-class lands, per hectare. Representative Cochran. Well, what does he value his land at? Sefior Ytilg. Well, I have all three classes. Representative Cochran. Well, the average between them. "What capital would it require to cultivate them ? Senator Warren. The whole 12,000 acres ? Representative Cochkan. You might say per acre if you like. , Sefior Ytxlo. ^200,000. Representative Cochran. That would be $100 an acre. That would be about the value of the land. Then if we had an agricultural bank he would want the bank to loan him about the value of his lands. ' Representative McKinley, of Illinois. Mr. Cochran, is it not only $10 an acre ? Secretary Taft. He said he would want $100,000, and if he has 10,000 acres that would be $10 an acre. Representative Cochran. Ask him again. Sefior Yulo. I was a bit confused by the question. Representative Cochran. Ask him how much per acre is needed to put it into cultivation effectively. Sefior Yulo. About P=100 to cultivate 1 hectare of land. Representative Cochran. But I understand that is about the. value of the land. 172 APPENDIX. Senor Yulo. But I stated that the land was divided into three classes, some of which is worth P=200. Representative Cochran'. Well, is not that the value of the land ? That is what I am asking. Senor Yulo. All I can say is that it takes about PlOO to cultivate a hectare of land and that the land is worth, according to its specification, ¥^200, TWO, or ?100 per hectare. Senator Newlands. Will you ask him where he sells the sugar he produces ? Seiior Yulo. I sell my sugar in Iloilo. Senator Newlands. Ask him what price he received this year, last year, and the year before. Senor Yulo. The average price this year has been P6.25 a picul, an extraordinary price; last year it was P4.50; for the previous year I do not recollect what the price was. It was less than Ti.bO. Senator Scott. A picul of 137 pounds ? Seiior Yulo. Yes, sir; of 137^ pounds. Secretary Taft. Will you ask the witness whether he knows a man in Negros named Serafin Esta vanes? Senor Yulo. I only know him by name. Secretary Taft. Well, is he a haciendero ? Seiior Yulo. Yes ; of the northern part of the island. Secretary Taft. Has he a large estate? ' Senor Yulo. He had a large estate. It was a pretty good-sized estate. Secretary Taft. Do you know how much he raises on a hectare of land? Senor YuLof No, sir ; I do not. , Secretary Taft. Is there anybody here who does know ? Ho lives at Cadiz Nuevo. Seiior Esteban de la Rama. He cultivates very little sugar because he has a very small amount of capital to work with. Lately he sold one of his estates. Secretary Taft. Does Seiior de la Rama know him ? Seiior de la Rama. Yes, sir. Secretary Taft. Does he know his business? Does he sell his sugar in Iloilo ? Senor de la Rama. No ; he sells it right there on his estate. Secretary Taft. Well, I would like to ask, at the request -of one; of .the Senators, Seiior Yulo to tell us again how much the period is from the time they commence to plow until cane is ready to cut. APPENDIX. 173 Senor Yulo. Eighteen months. Secretary Taft. Ask him if, when he gets five crops of sugar from ten j-ears of cultivation, whether in that ten years he also raises corn or rice on the same land. Seiior Yulo. Yes, sir; I do get other crops off the sa^ land'. Secretary Taft. Well, now I want to ask Seiior de la Rama again about this Serafin Estavanes. Does he raise ten rattoon crops upon his plantation? Seiior de la Eama. I have a farm near Serafin Estavanes, and never raised a rattoon crop myself. Secretary Taft. You own an estate in that neighborhood ? Seiior de la Rama. Yes, sir. Secretary Taft. Well, now I want to call Captain Smith. Cap- tain Smith, it has been said that you have made" a good many statements with respect to rattoon crops in this province. Do you know Serafin Estavanes? Capt. W. S. Smith, inspector of Constabulary. Yes, sir. Secretary Taft. Do you know his estate ? Captain Smith. Yes, sir. Secretary Taft. Have you ever been on it? Captain Smith. Yes, sir. Secretary Taft. Do you know whether he raises ten rattoon crops ? Captain Smith. I don't think he raises ten rattoon crops, but I have been told that he raises from four to seven right along. Secretary Taft. Did you not tell Mr. Hathaway so? Captain Smith. I told Mr. Hathaway that there were places here where the cane was cut and would spring up again. Secretary Taft. Well, do you know places in this province where ten rattoon crops are raised ? Captain Smith. No, sir. Secretary Taft. Well, how many crops? Captain Smith. Well, about three. Secretary Taft. Is that a regular thing ? Captain Smith. No; but it occurs at tim^s in Isabela district. They have two rattoon crops and one other crop. Secretary Taft. In Isabela, in the virgin soil of that district? Captain Smith. Yes, sir. Secretary Taft. And generally then, except in this virgin soil, the practice is not to cultivate a rattoon crop, is it not? 174 APPENDIX. Captain Smith. Yes, sir; you will find some virgin soil in and about Isabela and La Castellana, which is in the same valley. Secretary Taft. How long does it take to cultivate a rattoon crop? Captain ,,Ssiith. I can not speak exactly definite on the length of time. It would take about twelve months, and possibly fourteen. Secretary Taft. To cultivate a rattoon crop? Does it take a shorter time for the rattoon than for the original crop? Captain Smith. I can hardly answer you that clear. Secretary Taft. You don't plow a rattoon crop, do you ? Captain Smith. Yes, sir. Kepresentative Curtis, of Kansas. I want to know whether Mr. Hathaway was out here with the intention of buying land or just to investigate the condition of the country. Captain Smith. You would believe that he was here investigating the conditions of property and to put in some capital and build a mill. Senator Newlands. Captain, are you the inspector of Constab- ulary here ? Captain Smith. Yes, sir. Senator Newlands. Is there much distress among the laboring men in these islands ? Captain Smith. In certain places possibly they have not got quite enough to eat, but generally they have sufficient. At the present time they have palay of last year. Senator Newlands. Are they receiving higher wages? Captain SMnn. The " jornal," or day's wage, is higher now than it was before. Senator Newlands. What is the daily wage now ? Captain Smith. From 1 real to 25 cents, and it might go to .35 cents. Senator Newlands. What is 1 real ? Captain Smith. Twelve and a half centavos— one bit. Senator Newlands. Twelve and a half centavos a day ? 'Captain Smith. You have got to furnish the food. They do not pay very much for their labor, as they have not much money. Representative Cochran. What is it now ? Captain Smith. Possibly 12^ cents ; that is the lowest wage. Secretary Taft. Then it costs up to 35 cents? Captain Smith. Yes, sir. Representative Cochran. And his food? APPENDIX. 175 Captain Smith. Yes, sir; you have to buy the rice, and at the present time you have to buy it in Iloilo and pay a big price for it. Senator Newlands. Then the distress is mostly among the landowners and not among the poorer people? Captain Smith. It is among the people who own the land and liave not the capital to raise crops. Senator Newlands. Is it your observation that it would be wise for the Government to establish a farm here with improved ma- chinery and modern methods such as are used in Hawaii ? Secretary Taft. The Government has a farm here now. Senator Newlands. Is that a sugar farm ? Secretary Taft: Yes. Senator Newlands. How big is it ? Secretary Taft. It is about 2,500 acres. Senator Newlands. "Would it be difficult to add 2,500 acres to that? Captain Smith. Yes, sir. Senator Newlands. Is it difficult to get control of the land from the owners? Are they unwilling to sell? Captain Smith. You could get it, but not in one block. Senator Warren. I want to ask one question. Testimony is to the effect that in ten years you get five crops of sugar without fertilization. Now this witness has stated that crops can be grown upon virgin soil. I would like to ask if land upon which crops have been grown for ten years and a crop taken every two years, and other crops of other things in between, whether the soil is as good as new. Senor de la Rama. No, sir; the land wears out. It is not as fertile. It is for this very reason that the lands which lie closest to the seashore are more worn-out than the lands in the interior of the Islands, because they have been cultivated a longer number of years. Senator Warren. Then they must be left fallow a number of years in order to become fertile and bring good crops in other years? Senor de la Rama. Yes, sir ; we have to let them lie fallow, and if you would take a run around in the vicinity of this town you would see that it is precisely for this reason that the lands are not being cultivated, as they are worn-out and are resting. Senator Warren. It is because of the high price of fertilizer, I understand, that it is cheaper to let the lands lie fallow and unfer- tilized. 176 APPENDIX. Seiior de la Rama. Yes; the latter course is preferable — to let the land lie idle. ~ Senator Newlands. Captain, will you please state why it would be difficult for the Government to secure 5,000 acres of land for an experimental station? Captain Smith. Lots of landowners do not care to part with their lands; that is one reason. Then it is difficult for an American to come in here and buy up lands. They say he is going to come in here and buy them out. The other reason is that they expect that some day they will be able to get some capital to float their planta- tions and are holding on to them keeping their people together waiting for this to happen, hoping that some day they will be able to get money to improve their lands. Senator Newlands. Do they hope to introduce the highly improved methods of Hawaii on their sugar plantations here? Captain Smith. They hope to improve their present methods, but whether they will take it as far as Hawaii has done I don't know. Senator Newlands. Has any expert from Hawaii ever been here on the island for the purpose of extending the methods of improved cultivation ? Captain Smith. I think not. Senator Newlands. Have' they ever sent for a man to come here and improve their methods of cultivation? Captain Smith. I think not. Senator Newlands. Take this plantation of about 2,5,00 acres, which you say belongs to the Government ; would it not be possible to arrange in the neighborhood, if the Government operates it as an experimental station, builds a mill, puts in modern machinery, etc., to get cane to crush in the mill? Captain Smith. If you could get proper transportation. Senator Newlands. Is that plantation a good plantation? Captain Smith. Yes, sir. Senator Neavlands. Has it good soil ? Captain Smith. I could possibly name places in the island that have better land. Senator Newlands. Is it land on which steam plows could be used? Captain Smith. Yes, sir. Secretary Taft. Mr. Senator, you can get all these facts by examining the reports of the man who is in charge of that farm. APPENDIX. 177 Inis Witness knows nothing except by casual observation and hearsay. benator Newlands. Has the man in charge of that farm made a careful survey of the land, a careful study of the nature of the soil, in order to determine what soil and what conditions are best for the growth of sugar ? Colonel Edwards. This witness knows nothing about this; he is a captain of the Constabulary. Secretary Taft. I only speak in order to expedite matters. Senator Newlands. I am told, Mr. Secretary, that the man is here who runs that farm. Secretary Tapt. Well, I should be glad to hear him if he is here. Colonel Edwards. Won't you hear Mr. Nolan first? Secretary Taft. Well, we will go on with direct evidence first. Mr. Heil is here. Are you a practical sugar cultivator, Mr. Heil ? Mr. John Heil. I have been raising sugar for the last five years, in the United States, and here for the last two and one-half years. Secretary Taft. Have you been in charge of " La Granja " under Mr. Welborn, and before that under Professor Scribner ? Mr. Heil. Yes, sir. Secretary Taft. How much sugar do you cultivate there ? Mr. Heil. About 150 acres last year. Secretary Taft. And how much do you raise? Mr. Heil. 2,990 piculs. Secretary Taft. How many tons of sugar to the acre? Mr. Heil. Some of it would average 3 tons to the hectare — that is, not all of it ; some of it only about 2 tons. Secretary Taft. Do you have any rattoon crops? Mr. Heil. Yes, sir; I have had rattoon crops for about two years now. Secretary Taft. Will you cut it for the third year? Mr. Heil. Yes, sir. Secretary Taft. How does the product of the rattoon crop com- pare with the original ? Mr. Heil. It is much better for the third year. Secretary Taft. How much is the cost of cultivation ? Mr. Heil. The first year is much more than the second and third years. The third year it will only cost perhaps P=22 a hectare. ] 78 APPENDIX. Secretary Taft. Now I want to ask you as to its product. Does the rattoon crop produce more per hectare than the original crop ? Mr. Heil. Yes, sir. Secretary Taft. How much more? Mr. Heie. Perhaps 50 piculs more. Senator Patterson. How about the third? Mr. Heil. The third will be as good. The first is the poorest crop generally. Secretary Taft. Now, do you know about the production among farmers here generally ? Mr. Heil. Yes; the way they raise sugar it costs about twice as much as at the experimental station. Secretary Taft. Do you know as to the practice in rattoon crops? Mr. Heil. Yes, sir. Secretary Taft. How many rattoon crops do they cultivate? Mr. Heil. In our neighborhood four to seven crops. Secretary Taft. What farmers do you know who cultivate such crops ? Mr. Heil. Cardenas, Eodriguez, and others. Secretary Taft. • Are there any of these planters here to-day ? Mr. Heil. Yes, sir. (Then Seiior Eodriguez came forward.) Secretary Taft. Do you cultivate seven rattoon crops ? Seiior Eodriguez. There have been exceptional cases on certain lands where seven crops are raised, but as a general rule, and I may say almost universally, we raise only three crops, because after the third crop we find that there is a grubworm comes into the cane and we have to make a new planting. Secretary Taft. Now how is it with you, Mr. Heil — do you find that grubworm ? Mr. Heil. Yes, sir. Secretary Taft. Do they limit the number of crops -you can plant? Mr. Heil. I am experimenting on killing that grubworm by distributing lime about. Secretary Taft. Well, you say you raise rattoon crops. Do you raise rattoon crops on all this you cultivate ? Mr. Heil. Yes, sir. Secretary Taft. Does Sefior Eodriguez have three years on every one that he cultivates ? APPENDIX. 179 Mr. Heil. Yes, sir ; I think so. Secretary Taft. Do you, Senor Rodriguez ? Seiior Rodriguez. A great deal of my land does not give rattoon crops at all, but some of it does give rattoon crops for three years — that is, I get three harvests without a new planting, and I find that 1 can get no further than the third crop because of the passages between the cane getting too narrow for the carabaos to go through, so after the third year we make a new planting. On the lowlands we don't make any rattoon crops at all. It is only out near the mountains. Secretary Taft. Wliere is " La Granja? " Mr. Heil. It is up near the mountains and is fresh land. Secretary Taft. Ask Senor Rodriguez if his rattoon crop is better than his original crop. Senor Rodriguez. Yes ; in the fresh land in the hills it is better. Secretary Taft. It is better for the third year ? Senor Rodriguez. It is somewhat better quality, but it does not give such a yield as the first crop. Secretary Taft. But it sells at a better price ? Seiior Rodriguez. Yes; it is a degree or two superior in quality, but you must bear in mind that there is a less quantity. Secretary Taft. Mr. Heil, you say you have 150 acres of sugar. '^Vhat else do you cultivate there ? Mr. Heil,. Rice. Secretary Taft. What else? Mr. Heil. Most everything there is in the United States. Secretary Taft. You have machinery there? Mr. Heil. I have some. Secretary Taft. You have a steam plow? Mr. Heil. No, sir. Secretary Taft. Do you plow deeper than the planters here? Mr. Heil. I plow 10 to 12 inches. Secretary Taft. Is that deeper than they plow ? • Mr. Heil. They don't plow any deeper than 3 to 6 inches. Secretary Taft. What do you use, carabaos or mules? Mr. Heil. Mules. Secretary Taft. Do you find them more effective? Mr. Heil. Yes, sir; they do eight times as much work. Representative McKinley, of Illinois. What do they cost over here? 180 APPENDIX. Mr. Heil. Two hundred pesos. Representative Scott, of Kansas. You get better results than the •native farmer does ? Mr. Heil. Yes, sir. Representative McKinley. How much more does it cost to feed a mule than a carabao ? Mr. Heil. You don't have to feed a carabao, but a mule might cost you about 40 centavos per day. Secretary Taft. Have you 200 acres of cane a portion of which is the tenth crop ? Mr. Heil. Yes; about 10 acres. Secretary Taft. How do you know that it is the tenth crop ? Mr. Heil. The native foreman on the place who was there in Spanish times told me that it was cut off during the time of the insurrection. Secretary Taft. What kind of sugar is it ? Mr. Heil. No. 1 sugar. Senator Patterson. Is the quantity as great as in the first crop ? Mr. Heil. Very nearly. Representative Scott. Well, is it your opinion that that could be done universally ? Mr. Heil. It is peculiar to that kind of land. Secretary Taft. Do you thinli you could raise ten crops on all that land? Mr. Heil. Well, I do not know ; I could not speak for that. This has been my third year on there now. Representative Cochran. You say that this piece of land out of which you took ten crops was not due to the cultivation but to the quality of the land ? Mr. Heil. No, I expect not. Secretary Taft. And have they fertilized it ? Mr. Heil. No, sir. Secretary Taft. Your information is derived from the woman in charge ? Mr. Heil. From the foreman in charge. It is near the side of a hill where the rains have washed away the grass. Secretary Taft. Then you think that the land is peculiarly situated ? Mr. Heil. Yes, sir. Senator Scott. I understood you to say you had been here only three years. Does not it take over a year to raise a crop ? APPENDIX. 181 xMr. Heil. No, sir; I have raised three crops on the farm now and I have not been there quite three years. benator Scott. Then your knowledge as to the ten-year crop is gathered from what people have told you and not from your own knowledge ? Mr. Heil. Yes, sir; from what people have told me. Senator Newlands. Were you engaged in sugar work before ? Mr. Heil. Yes, sir; in Louisiana. I simply worked on a plantation there. Senator Newlands. Were you in a responsible position there ? Mr. Heil. Well, no; I was just a foreman. Senator Newlands. Well, how do the methods which you are using upon this particular farm compare with the methods used in Louisiana? jNIr. Heil. We use about the same machinery here. It was a small farm on which I was on in Louisiana. Senator Newlands> Then were you hot on one of the first-class farms with improved machinery ? Mr. Heil. No, sir. Secretary Taft. There is one question I should like to ask Mr. Nolan. Mr. Nolan, did you act as interpreter for a Mr. Hathaway, who came here to investigate sugar conditions ? Mr. RiCARDO A. Nolan. Yes; I was here at Constabulary head- quarters, and at the suggestion of Captain Smith I acted as inter- preter for Mr. Hathaway with the governor and with Mr. Aniceto and Mr. Mariano Lacson. He was trying to get the governor to fix a figure at which sugar could be produced, and when he could not give him what he wanted he said, " Now, look here, Governor, sup- pose a haciendero has all kinds of cattle and all kinds of machinery and everything else, what will a picul of sugar 'cost ? " and Governor Jayme said, "About f=2 ; " but, he said — and I was acting as inter- preter for him — that he had never produced any sugar and was only giving his opinion. Mr. Hathaway made everyone believe with whom he spoke that he was here to improve the situation in Negros and that he was ready to build a big sugar refinery here, and every- body helped him because we need a sugar refinery here. Secretary Taft. Did he say he wanted to buy some lands ? Mr. Nolan. Yes, sir; and I believe that Governor Jayme told him Murcia would be a good place, because Governor Jayme has some, lands there and he wants to sell them. I have some records in my oiBce, which show that labor costs about 3 pesetas per day 182 APPENDIX. and not 12^ cents as has been said here by some persons. You must bear in mind that the labor has to be brought from Antique and from Capiz; and now let us figure this down and see how much labor will cost. There are hacienderos which I can name— Don Jose Kobles, Felix Robles, and Mr. de la Eama here — I believe who will agree to what I say, that they have lost thousands of dollars in trying to get laborers here. If you bring 100 here and they don't come all together in one bunch, when you have got the last ones here you will have about 25 left on your hands. That is -the trouble the hacienderos have here. > Senator Newi-ands. You think the labor, then, is the most serious problem here in the question of sugar ? Mr. Nolan. Well, it is my opinion that you can buy carabaos, but not laborers. I came here in 1901 and I know a good deal about the situation here, and they have always had this trouble. Senator Newlands. What was the condition then ? Mr. Nolan. I believe they have always had a little of this trouble. The work is not permanent on most of the haciendas here; when they need the largest number of laborers is between November and March. Senator Waeeen. Won't the people who live here work ? Mr. Nolan. The people who live here will work, yes, when they want to. I think the municipal presidents can answer that question better than I can. There is a certain law here which is not enforced. Senator Waeeen. Do you mean that they won't take work when it is offered them ? Mr. Nolan. I have never known a man to come along and ask for work. Secretary Taft. Are you familiar with the methods of sugar planters here ? Mr. Nolan. Well, I have traveled from San Carlos to Hog. Secretary Taft. Do you know what the practice is about rattoon crops ? Mr. Nolan. About rattoon crops? There are haciendas here where you can raise on 10, 15, or 20 acres that kind of a crop because the river washes it. You will find that thing in La Carlota, where this gentleman [Mr. Heil] is working, which is one of the best towns for soil. You can do that there, but even in La Carlota in the lands of Felix Eobles you can not do that. Mr. Heil. You can not do that down in the valley. APPENDIX. 183 Mr. Nolan. I don't believe it is a common thing. Secretary Taft. What do you say, Mr. Heil ? » Mr. Heil. I say if it was worked properly they could raise more crops. In the first place they plant it about 2 feet apart and have done so without fertilizing it for a great many years, and they have got it in such a condition that they can get it back into shape only after ten years. Representative Cochran. I understand from this witness, as far as I can make out what he says, that away from the sea you get a larger yield. Mr. Heil. I get 2 to 3 tons a hectare. Representative Cochran. Well, that is about what the others said. What advantage do you get from the improved machinery you have got over here ? Mr. BbiiL. We have got no improved machinery over here but the plows. Representative Cochran. Am I right in this: You say that you get a crop in one year and the others say it takes eighteen months. Is that due to the improved machinery ? Senator Newlands. What are you paying for labor? Mr. Heil. From 45 to 75 centavos per day. Senator Newlands. Can you get all the labor you want at that price ? Mr. Heil. Yes, sir. Senator Newlands. How do they work? Will they stay? Mr. Heil. No, sir. Senator Newlands. Now take the average man. How many days in the week or month will he work ? Mr. Heil. On an average about two days in a week. Senator Newlands. Have you ever been able to persuade them to work more? Mr. Heil. Well, it does not do much good to persuade them. Secretary Taft. Do you pay them anything in addition ? Mr. Heil. No, sir ; they feed themselves out of that. Representative Cochran. Well, if you paid them only half what you pay them would they work twice as long ? Mr. Heil. Yes, sir. Secretary Taft. Well, the motion is that we adjourn. (The meeting was then adjourned at 12.40 p. m.) 184 APPENDIX. SUPPLEMENTAL STATEMENT. f (See page 25, Ways and Means Committee Hearings.) questions proporrnded by chief, bureau- of agriculture, to joiim heil, re testimony given by him before the congressional party at bacolod, philippines, august 16, 1905." La Caelota, Negeos Occidental, September 2'B, 1906. Sir: I have the honor to make the following reply to questions propounded in your letter of September 11, 1905, with respect to the testimony given by me before the Congressional party at Bacolod, Negros Occidental: 1. You are quoted as saying you " have been raising sugar for the last five years in the United States, and here for the last two and one- half years," and later on " that you worked on a plantation in Loui- siana." I desire to be informed of just what years and months you worked on that plantation in Louisiana; also the name and the post-office address of your employer or employers. Answer. I was employed off and on between 1885 and 1890 by Mr. F. Bossier, 14 miles from Oberlin, Calcasieu Parish, La. I did not remain in Louisiana continuously during this time, but accompanied Mr. Bossier each sugar season, and when he gave up his Louisiana plantation, in 1890, 1 accompanied him West. His present address is, 1 believe, Billings, Mont. 2. You say mules can be bought in Negros for 200 pesos. When, where, and by whom did you ever know any mules to be bought for this sum, and were they condemned army mules or not? Did you know the mules you are using cost, as shown by the records in this bureau, 463 pesos each, delivered in Manila, and that they were second- hand German army mules used in the China campaign? Did you know they cost 18 pesos each additional to ship them to Iloilo ? Answer. The mules to which I referred are condemned Government mules. I have seen them sold at 200 pesos each in Manila and in Iloilo. I did not know that the mules at this station cost 463 pesos each at Manila. 3. You are quoted as saying that a hectare of stubble cane would make about 50 piculs more sugar than a hectare of plant cane. Was this estimate based on experience; and if so, what experience and 1 See Appendix, pages 177-181, 182, and 183. APPENDIX. 185 ]ust what were your nieaaureiuents of land compared and weights of sugar produced ? Answer. My estimate that 1 hectare of stubble cane will make about 50 piculs more sugar than a hectare of plant cane was not based on experience, but on the information received from some of the sugar planters near La Gran j a, and I think the report did so state. 4. You are quoted as saying second rattoons yield as much as first rattoons. Wlien did you ever compare any first and second rattoons, and just what were the details of such experiment? 5. You are quoted as speaking of 10 acres of land that you had heard had been growing rattoon cane for ten years. Did you or not tell Doctor Nesom it had been growing rattoons seven years, or was the report made that the land had been growing cane for seven or ten years ? Were there not 4 or 5 acres more in the cut containing college site that had some poor cane on it in 1903, and how much sugar did you make on the whole in December, 1903, and January, 1904, and how much did the sugar sell for? In other words, how many acres of rattoons did you have in 1903, and how much sugar did the whole make? Answer to 4 and 5. Regarding my statement that second rattoons yield as much as first, same was based on the following : I looked up the report of Mr. Araneta; the land was cut — that is, the cane was taken off — in 1898. Thereafter nothing was done to the land until the present Government took hold of it. I cut it m Feb- ruary, 1903, and got about 65 piculs of sugar, which sold for 105.39 pesos Philippine currency. The acres of rattoons in 1903 amounted to about 15. 6. Is it a fact or not that both pieces in 1903 completely grew up in weeds and grass and really remained fallow all the year, just as if the land had rested ? Is it not a further fact that part of this land was plowed up and planted anew, and that the other had tops or points planted in all the skips, amounting to at least a partial new planting ? Answer. Yes; this plot was planted almost anew. Both pieces of land in 1903 completely grew up in weeds and remained fallow all the year. 7. Is it a fact or not that you and I at last grinding season found the cane on the college-site piece so poor that we quit grinding it and moved the cane in the next cut down the road, that had been planted on fresh land, and that the yield was over twice as great on the latter? Is it not a fact that the last-named cane was twice as good as any p T— 05 M 31 186 APPENDIX. cane you had north of the main road at all, so far as yield in amount of sugar per acre was concerned ? Answer. The cane on the college site was found to be so poor that we quit grinding and moved the cane in the next cut down the road, which had been planted on fresh land, and the gain in sugar was much greater. The last-mentioned cane was twice as good as that on the college site. 8. You are quoted as saying you cultivated cane at one-half the expense of other people. As a matter of fact was not growing 150 acres of cane the principal business carried on there the last year? Were not all other products fed and used in running the place, except some , teosinte seed, and was not the entire product of sugar, after resacking in Iloilo, only 2,734 piculs, or IJ tons per acre? Were not the total expenses of the place 24,390 pesos, plus all shipping and handling expenses to and in Iloilo, making in all an expense of about 9.50 pesos per picul in Iloilo, or over 3 cents gold a pound ? Answer. From the time I took charge of this farm under the pres- ent chief of the bureau the expenses have been about one-half of what they used to be. Sugar may be produced more cheaply with improved machinery and methods. That is what I meant. All other products except sugar were fed to stock. The output of sugar was 2,734 piculs for 1905, or IJ tons per acre; total amount of expense of the place, 24,390 pesos. Thig anjount of money, including expenses to and in Iloilo, which is not included in the 24,390 pesos, makes a total cost per picul of sugar in Iloilo of about 9.50 pesos. Very respectfully, John Heil, Farm, Superintendent. The Chief, Bureau of Agkicultuee, Manila. 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