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sary to include such farm costs in the costs of production of butter. (See pp. 5 to 8, 19, and 22, and 23 to 26.)
The cost of butter produced by the large western centralizers of the United States (for which the price paid for butterfat and not the farm cost of production of butterfat is included as the cost of the raw material) are not included in the average domestic butter-production cost for two reasons: First, only a very small part of the butter produced by them is of a quality comparable with the Danish butter, and second, representative farm costs of production of butterfat were not ascertained in the areas which supply cream to these large western centralizers. (See pp. 23 to 26.)
Had the farm costs of production of butterfat been ascertained in the areas that furnish cream to the large western centralizers, such costs would, probably, have been found to be higher than the farm cost of production of butterfat in the cooperative and independent territory. This is indicated by Table 15, page 36. In that table columns 2, 3, 4, and 5 show the costs of conversion of the large western centralizers combined with the farm costs of production of butterfat as ascertained for the cooperative and independent territory. These butter-production costs are slightly higher, regardless of the farm cost used, than are the butter-production costs for the cooperative and independent territory.
Because of the type of farming practiced there, the Nebraska area, for which farm-cost data were obtained by the commission, is probably representative of a greater part of the large western centralizer territory than all the other cooperative and independent areas included in the investigation combined. The Nebraska area is characterized by more general and less intensive farming, low costs of butterfat production per cow, and high costs of butterfat production per pound of butter, which is the result of low production per cow. This indicates that, if representative farm costs of production had been ascertained in the centralizer territory where conversion costs were obtained, the result would have been a higher cost of butter production per pound than in the cooperative and independent territory.
The farm and factory costs for the Nebraska area, for which both farm and factory costs were ascertained, are included in the average cost of the domestic butter, because in the judgment of the undersigned commissioner they represent the costs of the butter produced by the independent creameries located in that area and are directly comparable with the costs of production of the independent creameries located in Indiana, Ohio, and Michigan.
Nebraska ranks fifth among the States of the United States in butter production, with a factory output of 81,000,000 pounds in 1924. That is more butter than was produced in either Indiana or Ohio. The average output of the factories for which the commission obtained cost data in the Nebraska area was considerably less than the average for the large western centralizers, and in the judgment of the undersigned commissioner was more representative of the independents than of the centralizers. The fact that the Nebraska costs per pound of butter are slightly higher than costs in the other independent territory is not a sufficient reason for excluding the Nebraska costs from the final cost comparison.
The cost of production of butter in the United States for the cooperative and independent areas in Minnesota, Iowa, Wisconsin, Michigan, Indiana, Ohio, and Nebraska, including farm costs of production of butterfat, for the farm-accounting year 1923–24 is 54.65 cents per pound, not including transportation costs, and 56.06 cents per pound, including transportation costs to New York. (See Table 32, p. 58.)
The costs of procluction of butter per pound in Denmark, including farm costs of production of butterfat, for the farm-consuming year 1923–24, converted at the average exchange rate for that year, was 39.61 cents per pound of butter on board ship in Danish ports and 41.11 cents per pound, including ocean freight and other expenses to New York (c. i. f., New York ox, duty, see Table 32, p. 58.)
The costs of production of butter per pound in the United States are higher than in Denmark by 15.04 cents per pound, not including transportation costs, and by 14.95 cents per pound, including transportation costs to New York, of both the foreign and domestic butter.
This difference in costs of production warrants a maximum increase in the duty on butter, or an increase from 8 to 12 cents per pound, irrespective of the factor of transportation. Respectfully submited.
E. B. BROSSARD, Commissioner.
Chairman ROBINSON. Very well. That will conclude the proceedings of the committee for the present, at least until after the adjournment of Congress, unless the committee finds it convenient to call one or two other witnesses prior to that time, with respect to the sugar-beet investigation. I am not impressed at this time that we will be able to have any more, on account of the pressure of other public business.
The committee will stand adjourned, subject to the call of the chairman.
Whereupon, at 11.30 o'clock a. m., the committee adjourned, subject to the call of the chairman.)
INVESTIGATION OF THE TARIFF COMMISSION
MONDAY, JANUARY 10, 1927
UNITED STATES SENATE,
SELECT COMMITTEE ON
Washington, D. C. The select committee met, pursuant to call, at 10 o'clock a. m., in the minority conference room, Capitol, Senator Joseph T. Robinson (chairman), presiding.
Present: Senators Robinson (chairman), Wadsworth, and La Follette.
Chairman Robinson. The select committee will resume its hearings this morning, with the expectation that all hearings will be concluded within a few days.
Is Mr. Fox present?
STATEMENT OF A. M. FOX, CHIEF OF ECONOMICS DIVISION AND
CHAIRMAN OF ADVISORY BOARD, UNITED STATES TARIFF COMMISSION
(The witness was duly sworn by the chairman and was examined and testified as follows:)
Chairman ROBINSON. Senator La Follette, will you examine the witness?
Senator La FOLLETTE. Mr. Fox, will you please state your name and your connection with the Tariff Commission?
Mr. Fox. A. A. Fox, Chief of the Economics Division and chairman of the advisory board.
Senator La FOLLETTE. What education had you had? What was your occupation before you joined the staff of the Tariff Commission?
Mr. Fox. I hold a degree from Cornell University and master of arts from New York University. I have done graduate work in economics at Michigan, Columbia, and New York University.
Senator La FOLLETTE. At what time did you join the staff of the commisison and in what capacity, approximately?
Mr. Fox. Well, I remember it distinctly. It was May 31, 1923. I remember it because I discovered that May 31 was not on the pay calendar of the Government. I joined as an economist imder Dean John R. Turner, chief economist.
Senator La FOLLETTE. How long did you serve before you were promoted to the position of chief economist?
Mr. Fox. I do not holil the title of chief economist. I am Chief of the Economics Division. Dean Turner resigned in September,
1924, and I was acting in charge from September until some time in the spring of 1925, when I was officially put in charge of the Economics Division and made chairman of the advisory board.
Senator La FOLLETTE. What were your original duties?
Mr. Fox. Those of any economist on the staff-studying reports. analyzing reports, preparing statements and reports on various subjects.
Senator LA FOLLETTE. When you were made chief of the Economics Division, was that in the nature of the creation of a new position? As I understand it, Doctor Turner was called “chief economist."
Mr. Fox. Yes.
Senator La FOLLETTE. Is there any difference in the duties which you perform and Doctor Turner performed?
Mr. Fox. None.
Senator La FOLLETTE. Then, as I understand it, it is merely a change in the title?
Mr. Fox. And a difference in salary.
Senator LA FOLLETTE. Would you care to state what the difference in salary is?
Mr. Fox. I receive $6,000. My predecessor received $7,500.
Senator La FOLLETTE. Yet you perform the same functions which your predecessor performed ?
Mr. Fox. I believe I do. I hope I do.
Senator LA FOLLETTE. In the discharge of your duties as Chief of the Economics Division have you had a good deal to do with the supervision of reports made to the commission?
Mr. Fox. Pardon me.
Senator La FOLLETTE. In the discharge of your duties as Chief of the Economics Division have you had much to do with the supervision of reports from that division to the commission?
Mr. Fox. Yes; a great deal.
Senator La FOLLETTE. Could you give a list of the reports which you have supervised the preparation of?
Mr. Fox. Every report?
Senator LA FOLLETTE. You go over every report before it is made to the commission?
Mr. Fox. Not only every report, but every version of it; every draft of it before it reaches its final stage; before it gets to the commission.
Senator LA FOLLETTE. One of the subjects of interest to this commission is the procedure of the Tariff Commission. Has that procedure changed under your supervision as Chief of the Economics Division, as contrasted with the procedure which was in vogue under Doctor Turner as chief economist?
Mr. Fox. Slightly.
Mr. Fox. The rules of the commission call for the composition of the advisory board to be made up of chief of the economics division, chief investigator, chief of the legal division, chief of the commodity division whose subject is being considered, an economist who has been working upon the subject, and another economist who may be assigned. In other words, officially, by the rules, the advisory board consists of six members under the rule of