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COLLECTION AND PUBLICATION OF TOBACCO STATISTICS

THURSDAY, MAY 10, 1928

UNITED STATES SENATE,
COMMITTEE ON AGRICULTURE AND FORESTRY,

Washington, D. C. The committee met, pursuant to call, at 11 o'clock a. m., in the committee room, Senate Office Building, Senator Charles L. McNary presiding.

Present: Senators McNary (chairman), Capper, Gooding, Norbeck, Frazier, Smith, Kendrick, and Shipstead.

Present also: Senator Frederic M. Sackett, of Kentucky, and Congressman Ralph Gilbert, of Kentucky.

The CHAIRMAN. The committee will please be in order.

I have called the committee together this morning to consider House bill 53, to provide for the collection and publication of statistics of tobacco by the Department of Agriculture.

The bill and the report thereon are as follows:

(H. R. 53, Seventieth Congress, first session)

AN ACT To provide for the collection and publication of statistics of tobacco by the Department of

Agriculture

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Secretary of Agriculture be, and he is hereby, authorized and directed to collect and publish statistics of the quantity of leaf tobacco in all forms in the United States, in the possession of dealers, manufacturers, growers' cooperative associations, warehousemen, brokers, holders, or owners, other than the original growers of tobacco. The statistics shall show the quantity of tobacco in such detail as to types and groups of grades as the Secretary of Agriculture shall deem to be practical and necessary for the purposes of this act, and said statistics shall show the stocks of tobacco of the last four crop years, including therein the production of the year of the report, which shall be known as new crops, separately from the stocks of previous years, which shall be known as old crops, and shall be summarized as of January 1, April 1, July 1, and October 1 of each year: Provided, That the Secretary of Agriculture shall not be required to collect statistics of leaf tobacco from any manufacturer of tobacco who in the preceding calendar year, according to the returns of the Commissioner of Internal Revenue, manufactured less than fifty thousand pounds of tobacco, or from any manufacturer of cigars who during the preceding calendar year manufactured less than two hundred and fifty thousand cigars, or from any manufacturer of cigarettes who, during the preceding calendar year, manufactured less than one million cigarettes, or from any dealer in leaf tobacco who, on the average, had less than fifty thousand pounds in stock at the ends of the four quarters of the preceding calendar year.

SEC. 2. The Secretary of Agriculture shall establish standards for the classification of tobacco. He shall specify the types and groups of grades which shall be included in the returns required by this act. Such return shall show the quantity of tobacco by such types and groups of grades for new and old crops separately. The Secretary of Agriculture shall prepare appropriate blanks upon which the returns shall be made, and shall, upon request, furnish copies to persons who are required by this act to make returns.

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Sec. 3. It shall be the duty of every dealer, manufacturer, growers' cooperative association, warehouseman, broker, holder, or owner, other than the original grower, except such persons as are excluded by the proviso to section 1 of this act, to furnish within ten days after January 1, April 1, July 1, and October 1 of each year, completely and correctly, to the best of his knowledge, a report of the quantity of leaf tobacco on hand, segregated in accordance with the blanks furnished by the Secretary of Agriculture. Any person, firm, association, or corporation required by this act to furnish a report, and any officer, agent, or employee thereof who shall refuse or willfully neglect to furnish any of the information required by this act, or shall willfully give answers that are false or misleading, shall be guilty of a misdemeanor, and upon conviction thereof shall be fined not less than $300 or more than $1,000 or imprisoned not more than one year, or both.

SEC. 4. The word “person” as used in this act shall be held to embrace also any partnership, corporation, association, or other legal entity.

Sec. 5. The Secretary of Agriculture shall have access to the tobacco records of the Commissioner of Internal Revenue and of the several collectors of internal revenue for the purpose of obtaining lists of the persons subject to this act and for the purpose of aiding the collection of the information herein required, and the Commissioner of Internal Revenue and the several collectors of internal revenue shall cooperate with the Secretary of Agriculture in effectuating the provisions of this act.

Sec. 6. The returns herein provided for shall be made under oath before a collector or deputy collector of internal revenue, a postmaster, assistant postmaster, or anyone authorized to administer oaths by State or Federal law.

Sec. 7. That the information furnished under the provisions of this act shall be used only for the statistical purposes for which it is supplied. No publication shall be made by the Secretary of Agriculture whereby the data furnished by any particular establishment can be identified, nor shall the Secretary of Agriculture permit anyone other than the sworn employees of the Department of Agriculture to examine the individual reports.

SEC. 8. The act approved April 30, 1912, providing for the collection of tobacco statistics by the Bureau of the Census is hereby repealed.

Sec. 9. If any provision of this act is declared unconstitutional or the applicability thereof to any person or circumstance is held invalid, the validity of the remainder of the act and the applicability of such provisions to other persons and circumstances shall not be affected thereby.

(House Report No. 778, Seventieth Congress, first session)

COLLECTION AND PUBLICATION OF TOBACCO STATISTICS

The Committee on Agriculture, to whom was referred the bill (H. R. 53) to provide for the collection and publication of statistics of tobacco by the Department of Agriculture, having considered the same, report thereon with a recommendation that it do pass.

Sec. 9. If any provision of this act is declared unconstitutional or the applicability thereof to any person or circumstance is held invalid, the validity of the remainder of the act and the applicability of such provisions to other persons and circumstances shall not be affected thereby.

This bill meets with the approval of the Secretary of Agriculture, and also with the tobacco trade, and in the opinion of the Secretary of Agriculture and this committee will be of material aid to the grower. The report of the Department of Agriculture is as follows:

DEPARTMENT OF AGRICULTURE,

Washington, D. C., February 21, 1928. Hon. GILBERT N. Haugen, Chairman Committee on Agriculture,

House of Representatives. DEAR MR. HAUGEN: As requested in your letter of December 19, I submit herewith a report on H. R. 53, introduced by Mr. Gilbert, which provides for the collection and publication of statistics of tobacco by this department.

This bill is the same as H. R. 16350 of the Sixty-ninth Congress, which was passed by the House on February 28, 1927. The purpose of the bill is to make available to farmers, cooperative associations, and the tobacco trade generally

more definite information as to the character and quantity of unmanufactured tobacco held by dealers and manufacturers. This seems desirable. Tobacco is ordinarily carried over for a period from two to four years in order to age properly, and the lack of accurate statistics of stocks thus accumulated has an unfavorable influence on the market. Without definite information as to these stocks, it is difficult, if not impossible, for tobacco farmers to regulate their planting.

Under an act of April 30, 1912, which would be repealed by H. R. 53, tobacco stocks have been reported by types. The type basis is too broad to give very definite or useful information on the quantity and possible usage of the tobacco. Each type has a limited number of natural divisions, recognized by the trade, which are known as groups or groups of grades. The present bill contemplates reports by groups of grades as well as types. This would improve the value of the information.

The segregation of stocks as to the years of production, as provided in the bill, should prove desirable. It is considered that tobacco of the last four crops will be in direct competition with the crops to be produced, whereas the tobacco produced previously is not so considered. Such segregation in the reports published should assist farmers in marketing their tobacco and making their plans for future crops.

The bill also provides for the establishment of standards for the classification of tobacco. This is necessary in order that the provisions of the bill may be properly carried out and also that farmers and members of the trade may clearly interpret the information to be secured. Sincerely yours,

W. M. JARDINE, Secretary. Submitted to the Bureau of the Budget, pursuant to Circular No. 49 of that bureau, and returned to the Department of Agriculture under date of February 3, 1928, with the advice that the legislation proposed in H. R. 53 is not in conflict with the financial program of the President.

The hearings disclosed without controversy that the present law requiring statistics on tobacco is now of no value either to the growers, manufacturers, or consumers. The present law really operates to the disadvantage of the grower, in that under it quantities of tobacco unfit for manufacture have been stored and kept from year to year for the purpose of showing a large surplus on hand, when, as a matter of fact, much of it is worthless for consumption.

Such statistics as are now being obtained are through the Census Bureau. This bill transfers this activity to the Department of Agriculture, because the Department of Agriculture is now obtaining many statistics of similar nature, and particularly as to tobacco, and in addition the growers naturally feel more at home in the Department of Agriculture, where their affairs generally are conducted.

The Department of the Census is making no objection to the transfer and the Bureau of the Budget states that is it not inconsistent with the President's economy program.

There is no subsidy or bonus or other thing asked for in this bill from the Treasury. By it the growers simply obtain information of the great industry of which they are a part, to enable them to intelligently conduct their business and regulate to some extent the production so as not to create an unwieldly surplus.

The tobacco-growing industry is one of the greatest agricultural industries of this country, and this bill will afford relief in a substantial way to the many hundreds of thousands engaged in it.

Under the peculiar circumstances existing in the tobacco industry, the manufacturers and dealers derive greater profits than those of other industries, yet the producer of the product is the poorest paid of all laborers. Although the grower is engaged the entire year and toils 12 hours a day, his yearly return is less than $900, on an average.

This bill is indorsed by the tobacco cooperative marketing associations.

The CHAIRMAN. I observe the presence here of Senator Sackett, of Kentucky, who wants to be heard on this matter. We would be very glad to have you make a statement, Senator.

STATEMENT OF HON. FREDERIC M. SACKETT, UNITED STATES

SENATOR FROM THE STATE OF KENTUCKY

Senator SACKETT. Mr. Chairman and gentlemen of the committee, I am here interested in the passage of this bill. I have asked Congressman Gilbert, who has fathered this bill for several years, to present its real reasons, as he is much more familiar with the tobacco trade in Kentucky and other States than I am.

The object of the bill is to provide a series of statistics which shall enable the grower of tobacco to know the existing stocks which affect his market. The grower of tobacco has been for many years at a great disadvantage, especially in Kentucky, because there are very few purchasers of tobacco.

It is sold in the loose-leaf warehouses now, which is a change from the old system, and there are comparatively few people to buy. The price of tobacco, like agricultural commodities, depends upon the supply of the article which is available.

The bill is aimed primarily, in my judgment, at a practice which has grown up for a good many years of carrying stocks of tobacco which are practically worthless on hand to create the impression of a large supply. In the manufacture of various articles made from tobacco, cigars, cigarettes, and plug and smoking tobacco, there is a certain amount of chaff and waste, and that can be carried simply as tobacco on hand, which causes a very large supply and necessarily depresses the price.

The object of this bill is to collect statistics in such form that anybody can know what is the actual tobacco that can be manufactured that is on hand. There is no attempt in any way to do anything else under this bill except to secure the actual statistics.

This bill requires the manufacturers to furnish the amounts of tobacco which they have on hand according to certain grades which will be set up by the Secretary of Agriculture. The amount would be shown, I presume, that would be suitable for being manufactured into cigars, that which would be suitable for manufacturing into cigarettes, etc., and the amount in the hands of the manufacturers that would not be usable in those various lines of trade.

Like all agricultural questions, it is very difficult for a small grower to get hold of the information necessary to control his judgment as to what the future market is going to be. The object of this bill is to put him in possession of that information. It necessarily makes a certain amount of work on the part of those who hold stocks of tobacco in furnishing to the Government the necessary information which this bill requires. Whether that is the sole opposition to the bill or not I do not know; but if it is it is simply a question of furnishing such information which will permit a small grower, or a large grower, and the marketing associations, to obtain the information on which they can base their judgment as to whether tobacco should become in the future more valuable or less valuable, and it enables them to determine their sales policy.

The bill has met the approval of the Secretary of Agriculture in its present form. It is definitely urged by the cooperative tobacco associations which have existed for the last few years and by the leading dealers as a protection to the tobacco grower.

With that short statement, which does not indicate a very wide knowledge of the subject of tobacco on my part which I know from my contact with the tobacco people in my State, I am going to ask Congressman Gilbert to give you a more definite statement on the subject.

Senator NORBECK. I am convinced.

The CHAIRMAN. Your statement is very conclusive, Senator Sackett. There is a unit in the Department of Agriculture and in the Bureau of Economics known as the crop statistics unit. Its duty is to gather information of this kind.

Senator SACKETT. It has gathered information heretofore but not in the detail which is necessary. If you say there are a hundred million pounds of tobacco on hand, there may be fifty million pounds of this refuse which has been held purely for the purpose of creating a market interest and which is not available for actual manufacture, according to our understanding, but which loads the market.

The CHAIRMAN. This bill does not provide for an appropriation. Is it your thought that there is sufficient money available for this purpose?

Senator SACKETT. There is no money needed.

The CHAIRMAN. And this bill has the support of all the tobacco growers, as far as you know?

Senator SACKETT. It has the support of all in my section. I am not acquainted with what may be the situation in other sections. I think it has the support of tobacco growers pretty much over the United States. I think the bill does nothing more than provide for the necessary statistics which these growers want. Is not that right, Mr. Gilbert?

Representative GILBERT. Yes.

The CHAIRMAN. Senator Swanson spoke to me yesterday about Mr. Carrington who wanted to appear in opposition to the bill. I thought it might be well to hear him at this point before we call upon Congressman Gilbert. Mr. Carrington, if you will occupy a seat there and give the reporter your name and address and occupation, we will hear you now.

STATEMENT OF T. M. CARRINGTON, CHAIRMAN OF THE TOBACCO

ASSOCIATION OF THE UNITED STATES, RICHMOND, VA.

Mr. CARRINGTON. Mr. Chairman and gentlemen, leaf tobacco dealer is my occupation. We have come here in opposition to this bill because we do not believe it will accomplish any good purpose and will entail a good deal of work on the dealers and manufacturers. We have already got a considerable amount.

The CHAIRMAN. Mr. Carrington, what connection have you with the tobacco industry?

Mr. CARRINGTON. I am a leaf tobacco dealer and am chairman of the Tobacco Association of the United States.

The CHAIRMAN. You are not a grower or a producer? Mr. CARRINGTON. I grew tobacco one year and I quit after that. I have a farm.

Senator NORBECK. There is more money to be made in farming than raising tobacco, is there not?

Mr. CARRINGTON. Yes.

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