INDEPENDENCE FOR THE PHILIPPINE ISLANDS MONDAY, JANUARY 25, 1932 HOUSE OF REPRESENTATIVES, Washington, D. C. The committee this day met at 10.15 o'clock a. m., Hon. Butler B. Hare (chairman) presiding. The CHAIRMAN. The committee will come to order. When we recessed on Saturday, Speaker Roxas was presenting his testimony. We will be glad to have him continue at this time. STATEMENT OF HON. MANUEL ROXAS, SPEAKER OF THE HOUSE OF REPRESENTATIVES OF THE PHILIPPINE ISLANDS Continued Mr. Roxas. Mr. Chairman, in reply to a question propounded by Congressman Thurston last Saturday, as to the total favorable trade balance of the Philippine Islands since the establishment of free trade with the United States in 1909, I mentioned the invisible items of trade which should be taken into consideration. I would like to supplement that statement with the fact that the proportion of United States products enjoying direct preference in the Philippine Islands under duty-free trade relations has never been less than 97 per cent of the total imports from the United States, whereas Philippine imports into the United States so favored have varied from only 22.5 per cent to a maximum of 77.8 per cent. Mr. UNDERHILL. Does that answer Mr. Thurston's inquiry? Mr. Roxas. It supplements my reply. I mean that in determining the advantages the Philippines have received from present trade relations with America we should take into consideration the fact that 97 per cent of the products exported from the United States into the Philippine Islands are protected in our market, whereas only between 22.5 per cent and 77.8 per cent of our exports into the United States are so protected. Let us take copra, for example. It is on the free list in this country. If the American tariff were determined, not as it is now, solely upon the basis of American domestic interests, but also with the interests of Philippine producers in mind, copra should be protected in this market; but it is not. Why? Because the United States does not produce copra. The same is true of Manila hemp. We are not considered as within the tariff walls of the United States for protective purposes, though we are a part of the United States. If America should like to grant us the same protection that the Philippines grant American goods, hemp should be protected by your tariff laws. Referring to sugar, it is protected in the United States. However, Philippine sugar is protected in this country, not because the United States wants to grant protection to Philippine sugar, but because by mere accident it occupies the same position as American domestic sugars. The point I am trying to make is this: That we enjoy American tariff protection only incidentally with the protection accorded American domestic interests. Mr. KNUTSON. You mentioned copra. We produce its equivalent in vegetable oils and animal fats which the extract from copra actually competes with. For example, I may cite cottonseed oil and animal fats. Mr. ROXAS. I am sure I would not be able to finish this morning if I should go into that subject, but I offer for the record extracts from an illuminating pamphlet on this subject, published by the Philippine-American Chamber of Commerce of New York. Mr. CROSS. Just a question on the Philippine-American Chamber of Commerce of New York. That organization has been issuing propaganda in opposition to independence of the Philippine Islands, has it not? Mr. Roxas. It has issued propaganda against immediate independence. I am not able to determine exactly what its position is now, but in the Philippine Islands we have always considered the Philippine-American Chamber of Commerce as an opponent of independence. The publication I refer to shows that Philippine copra or Philippine vegetable oil does not come into competition with dairy farm products or with cottonseed oil. That is shown in this (indicating) pamphlet. The CHAIRMAN. If there is no objection, that will be admitted to the record at this time. (The document in question reads as follows:) FACTS RELATING TO COCONUT OIL-COCONUT OIL IS AS INDISPENSABLE AS RUBBER Coconut oil is really a vegetable fat. We think of oil as being liquid, but coconut oil must be heated to 76° F. before it becomes liquid. This quality of "hardness" is not possessed by any domestic oil or fat. Coconut oil only has certain other characteristics, which are explained later. Those interested will find all technical assertions made in this pamphlet corroborated in any standard work on the chemistry of fats and oils. Coconut oil, exactly as in the case of rubber, possesses inherent qualities which make it an indispensable ingredient in the manufacture of a number of products of basic necessity in our modern mode of living. As in the case of rubber, a duty on coconut oil would not make other facts and oils suitable as substitutes for coconut oil for these purposes. Let us examine the principal products made of fats and oils and see how and why coconut oil is employed as an ingredient, and to what extent, if any, it competes with any domestic fat or oil. These principal products are: 1. Soap, toilet and laundry. 2. Table fats, oleomargarine. 3. Confectionery and fancy biscuits. 4. Cooking fats, shortening, frying, etc. 5. Paint, varnish, linoleum, drying oil products. 1. SOAPMAKING Sixty per cent of all of the coconut oil consumed in the United States is used in the manufacture of toilet, laundry, and chip soaps, and other cleansing products. Does the use of this coconut oil in soap making injure our domestic oils and fats? A study of the functions of coconut oil in soapmaking shows con clusively that it is absolutely indispensable and not interchangeable with any fat or oil used in the production of modern types of soap. There is no fat or oil produced in the United States which will impart the necessary lathering and cleansing qualities to our modern types of soap. These essential qualities in soap can be produced only by the liberal use of coconut oil. None of the modern varieties of white laundry soap, soap flakes, beads of soap, and soap powders for washing dainty fabrics, dishwashing, laundering, and other household purposes could be made without large proportious of coconut oil. None of the well-known types of toilet soap would have their present superior qualities without the proper proportion of coconut oil. All No American farmer is intentionally producing 1 pound of any fat or oil for use in the manufacture of soap. All of the domestic oils and fats produced by American farmers, except linseed oil (for paint making), when recovered in their natural prime condition, find a more profitable outlet in the manufacture of edible products, and are completely absorbed in the field of edible usage. domestic oils and fats, which are used in the manufacture of soap in this country, are incidental by-products which result from the processing or refining of our primary fats and oils for edible usage. In the United States, there is a great shortage of fats and oils for soap-making purposes, necessitating the importation of about 43 per cent of the total quantity used. Since we must import for this purpose huge quantities of material, why not import coconut oil, universally acknowledged the most indispensable material for soap making? Why put a duty on it, and inflate the price of soap, an article of prime necessity and universal use? Even if we could increase our domestic production of fats and oils for soapmaking purposes, we still must import coconut oil to make the soap our customs demand, for we could not grow coconuts in any section of our country. According to the United States Bureau of the Census for the calendar year 1929, the production of soaps in the United States was approximately 3,300,000,000 pounds, or over 26 pounds per capita. In the production of this huge quantity of soap, using a total of 1,618,953,000 pounds of all kinds of fats and oils, coconut oil constituted 393,914,000 pounds, equivalent to 24.2 per cent of the total. Almost a billion pounds of low-grade refuse oils and fats of domestic origin were made far more serviceable for soap making, chiefly because of the 393,914,000 pounds of coconut oil mixed with them. Does this look like coconut oil hurts our domestic fats and oils? On the contrary, is it not rendering them an outstanding service? We are confident that the agricultural chemists, associated with any agricultural college in the United States, will be glad to bear out the facts herein stated, that the coconut oil we use in the manufacture of soap can not be replaced by any fat or oil of domestic origin, and that modern types of soaps, with their highcleansing qualities, could not be made without it. 2. TABLE FATS, BUTTER, AND OLEOMARGARINE On the coconut oil going into butter substitutes (oleomargarine) the dairy interests base their complaint that the competition between butter and oleomargarine could be greatly minimized by placing obstacles in the way of the free importation of coconut oil from the Philippines. Again we shall see that coconut oil is no factor in the limitations on the price of butter. The price of foreign butter, plus the duty, and the over or under production of butter in the United States, are the factors which control the price of our butter. If the production of domestic butter is below domestic requirements, the price of butter tends to advance to the cost of foreign butter delivered to New York, plus the duty of 14 cents per pound. If the production of domestic butter exceeds the domestic demand, then the competition between domestic butter producers, in their effort to dispose of their surplus production, results in the price of butter declining below the duty-paid New York price of foreign butter, as is the case now (December 1, 1931). The wholesale price of 92 score butter at New York is actually 41⁄2 cents per pound below the duty-paid price of Danish butter, much more than enough to prohibit the importation of this foreign butter. Oleomargarine is not a factor in determining the price of domestic butter. The price of oleomargarine is controlled entirely by the cost of the raw materials from which it is made, whereas the price of butter, as we have just stated, is controlled by two entirely different factors. The farm and creamery production of butter is now estimated by the United States Department of Agriculture to be 2,100,000,000 pounds per annum. The total production of all kinds of oleomargarine in the United States, in the year 1929, was 356,244,000 pounds, or only about 16.9 per cent of the quantity of butter produced in this country. Considering the number of our poor people, who can afford oleomargarine only, or must even do without anything, it is difficult to see how the dairymen can expect a greater percentage in favor of butter. Assuming that it would be fair to American consumers of limited incomes to prohibit their obtaining a normal amount of table fat in their daily diet, this prohibition could never actually be accomplished by imposing any duty on Philippine coconut oil and copra from other countries. To illustrate the futility of accomplishing this objective, it is only necessary to know that 0.53 pound of coconut oil is used in one pound of vegetable oleomargarine, and that if the duty of 2 cents per pound on coconut oil from foreign countries were levied on Philippine coconut oil, it would be equivalent to 1.06 cents on the coconut-oil content of each pound of vegetable oleomargarine. Assuming that a 10 per cent profit on this additional cost of 1.06 cents per pound were added by the manufacturer, then the additional cost, because of this duty, would be 1.16 cents per pound of oleomargarine. For years the price of butter in the United States has been 15 to 25 cents per pound higher than the price of oleomargarine. At present the actual spread is 191⁄2 cents. If this 1.16 cents per pound were added to the price of oleomargarine, the spread between butter and oleomargarine, on to-day's market, would be approximately 182 cents instead of 192 cents per pound. The difference would still be so great, that the millions of smaller budgets of this country, specially after the great depression, would still buy oleomargarine in preference to the much higher priced butter. The insignificance of coconut oil, as used in the production of oleomargarine, is clearly revealed by the fact that during the calendar year 1929 the production of domestic edible fats and oils in the United States was approximately 6,200,000,000 pounds, and the consumption of coconut oil during that year in oleomargarine was only 185,507,000 pounds, or barely 3 per cent. Are the dairymen so credulous as to believe that if that small percentage were eliminated and replaced by domestic oils and fats, it would increase the price of oleomargarine enough to reduce the spread from of from 15 to 25 cents per pound between the butter and oleomargarine prices to make oleomargarine less competitive than it is to-day? If Philippine coconut oil going into oleomargarine paid the present 2-cent duty, that would amount to $3,710,000, which is about one-half of 1 per cent of the market value ($650,000,000) of our butter production. Even if this duty were a factor in determining the price of butter, which it is not, how can the dairymen anticipate any benefit by this drop-in-the-bucket duty? 3. CONFECTIONERY AND FANCY BISCUITS No domestic produced fat or oil possesses the indispensable properties of coconut oil, necessary in the manufacture of confectionery and fancy biscuits. Every household is familiar with the fancy biscuits which are sold to-day by large commercial bakers. Every woman and child knows that many varieties of fancy cookies, with their very palatable cream fillings and frosted icings. These frostings and fillings can only be made from an oil which is solid at normal temperatures, yet will become liquid at temperatures only slightly below that of the human body. Not one of our domestic fats or oils possess these characteristics. Few consumers know that these products could not be manufactured, and would not be obtainable were it not for edible coconut oil and its resultant derivative, commonly described as pressed vegetable stearine. Fifteen per cent of all the coconut oil consumed in the United States is used in the manufacture of confectionery, and fancy bakery products, and no fat or oil produced in the United States can take its place in this field of usage. 4. COOKING FATS AND OILS, FOR SHORTENING, FRYING, ETC. Eighty per cent of domestic cottonseed, peanut, and corn oils go into vegetable shortening or lard substitutes, and practically all of the balance, less the loss from refining, goes into cooking and salad oils, and a little in oleomargarine. The chemical characteristics of all the domestic oils and animal fats used in this group are such as to make them highly adaptable for cooking purposes. The chemical characteristics of coconut oil, on the other hand, make it highly undesirable for cooking purposes. Coconut oil does not possess the required shortening properties, is not easily emulsified with other materials, sputters, and foams on heating to frying temperatures. Therefore, it is not used to any appreciable extent for shortening, frying purposes, salad oils, etc., and can not be said to compete in this field. American farmers are producing more hog lard than can be consumed in the United States, with the result that we exported during the year 1929, to the housewives of northern Europe, for cooking purposes, approximately 850,000,000 pounds, or from 30 per cent to 40 per cent of our domestic hog lard production. Europe, paying a much higher price, is a better market for our surplus edible fats and oils than is our own soap kettle. It is better business to complete our soap requirements by importing cheaper inedible fats together with coconut oil. The latter constitutes about half of these importations for soapmaking, and makes possible the quality of soaps, confectionery, and fancy biscuits demanded by the American consumer. The price received for the lard exported to northern Europe determines the price in our domestic market and, therefore, controls the price of cottonseed oil and vegetable lards. Thus the price of hog and vegetable lards are controlled by world prices (this may vary during a shortage of cottonseed just before the new harvest comes in). Even if the small amount of coconut oil going into oleomargarine were eliminated, we still would have to export almost a billion pounds of oils and fats, and the export price of this would still determine the price of the balance. It must be clear, therefore, that even if coconut oil did pay a duty, it would not in the least measure be a factor in determining the ruling prices of domestic oils and fats. The real competition in this group is clearly not between coconut oil on the one hand, and our domestic oils and fats on the other. It is between hog lard and cottonseed oil, and that can not be relieved by putting a duty on coconut oil. Coconut oil from the Philippines, therefore, does not compete in any way with domestic fats and oils produced by American hog raisers, cotton growers, corn growers, or soya bean growers, nor is it a factor in determining the prices of these oils. 5. PAINT, VARNISH, AND LINOLEUM DRYING OIL PRODUCTS Just as actual practice and technical research have proven that coconut oil is indispensable for making soap and for certain confectioneries and cream fillings for biscuits, so it is likewise proven to be wholly unsuitable as a drying oil, and therefore, as Government records show, none whatever is used for this purpose. Mr. UNDERHILL. Mr. Chairman, I do not wish to restrict the gentleman in offering his evidence, but it seems to me that there is a tremendous amount of material being inserted into this record which will amount to a great many pages and entail a great deal of expense. If this information is available elsewhere in printed form, is it necessary to have it reprinted in these hearings? The CHAIRMAN. I think, Mr. Underhill, that if it is printed and available, it would be sufficient to file copies with the committee for its use. Mr. UNDERHILL. Rather than have the references? The CHAIRMAN. Rather than have them submitted in the record. However, so far, there has been no objection. Mr. UNDERHILL. I am not objecting; I am merely suggesting this. PHILIPPINE IMMIGRATION Mr. ROXAS. I shall now proceed with my testimony with reference to the problem of immigration. Before the recess of the committee last Saturday, I gave the number of Filipinos in the United States, those who have come in during the last two years and those who have returned to the Philippine Islands. Mr. WELCH. Is it expected that any other testimony will be heard by the committee to-day except that of Mr. Roxas? Mr. CHAIRMAN. I think not, unless some other representative of the Philippine Commission is heard. Mr. ROXAS. Before I leave this subject, Mr. Chairman, I believe it is of sufficient importance to require that we state frankly our 106240-32-18 |