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In further reply to Mr. Lewis' question, I might say that this applies just as much to the hard spring wheat of the Northwest as it does to the hard winter wheat in the Southwest, and it is just as much of a discrimination against the hard spring wheat grower of the Dakotas, Minnesota, and Montana, as it is against the winter-wheat producer. There is absolutely no difference in the nature and the quality of the spring wheat grown in the Dakotas and in Kansas. They are identical variety of wheat.
Mr. DICKINSON. What about the soft wheat?
Mr. HOPE. The soft wheat, I understand, does not enter into this situation particularly; at least, I have never heard that the soft winter wheat people were directly interested in it. As I understand it, the flour that goes to Cuba is manufactured from either hard winter-wheat or hard spring wheat. The soft wheats, as I understand it, are used more for the making of pastry and biscuit flour, and not for the manufacture of bread, as we manufacture it in our modern bakeries. It takes a peculiar type of wheat to stand up under the process by which we make bread in bakeries at this time.
Mr. DICKINSON. The Larrabee mills out through our section, do they grind soft wheat and hard wheat both?
Mr. HOPE. I think they do both. We have the Larrabee mills in Kansas City.
Mr. DICKINSON. They have it in my section.
Mr. HOPE. Yes. I think they are located in both the hard and soft wheat sections. I presume they make both kinds of flour. But in the South particularly, where they use the hot bread to a greater extent than in the North, they prefer the soft wheat. It makes better flour for making hot bread, biscuits, pastry, and that sort of thing, while the hard wheat is considered by bakers as being better for commercial bread making.
Mr. HILL. Do they mix soft wheat in with this hard wheat in producing the flour on which they get this preference?
Mr. HOPE. Not that I know of. As I understand it, this is all Canadian wheat.
In the manufacture of flour from hard winter wheat out in our State, they do not mix in soft wheat with it, because we produce practically none. All the wheat that is milled in Kansas is hard winter wheat. The same thing is true of the wheat in the Northwest. There may be some particular blends of flour in which they do mix hard and soft wheat; but I do not understand there is any soft wheat used by the Buffalo mills in manufacturing this flour which goes to Cuba.
Of course, I might say it is to the advantage of these mills to use Canadian wheat, because almost invariably the price is lower than the price in this country. At the present time it is much lower, but it is unusually low now; about 25 cents a bushel lower in Canada than it is in the United States. So they have that advantage, of course. Now, that differential does not obtain always.
Mr. Hill. Under the provisions of the tariff act as it relates to wheat, we have 42 cents a bushel on wheat in the tariff. Mr. HOPE. Yes.
Mr. HILL. Take the Minneapolis mills, for instance, those along the Canadian border. Of course, it might apply to Buffalo and other border mills.
Mr. HOPE. Yes.
Mr. HILL. There is a provision in the tariff act that if they bring over a certain amount of wheat from Canada, hard wheat, and mix it with, I believe it is 30 percent, is it not, of American wheat, they can then ship it for export out of the country, and draw down 99 percent of the tariff?
Mr. HOPE. That is the drawback provision; yes.
Mr. Hill. But the condition of that is that they must mill in with that flour 30 percent of American wheat.
Mr. HOPE. Yes. There might be some such provision. I am not sure as to the percentage, but there is some such provision.
Mr. Hill. That has no relation with this?
Mr. HOPE. No. That has no relation with this, because in Buffalo the practice is to bring that in in bond, mill it under bond, and then ship it out as American wheat. They rise no American wheat, that I have ever been informed of, at least.
Mr. LEWIS. Do you know what the Cuban tariff on that is?
Mr. HOPE. I am sorry I do not know what it is. It is high enough so that there is a considerable advantage given to these Buffalo mills, I know that.
I have a letter here which refers to a 35-cent advantage. That would mean that the tariff must be pretty high. I had not thought it was that high, but it may be. The letter I have says that there is an advantage on 100 pounds of flour of 35 cents to the Buffalo mills, if this provision is disregarded.
Mr. LEWIS. That would mean a tariff of $1.75 a bushel?
Mr. HOPE. It is not a bushel; 100 pounds of flour, which is about two bushels of wheat. I had not thought it was that high, but it may be. I do not know. It is quite high, however, and it is quite a substantial item, I know.
Mr. SHALLENBERGER. You know that almost every nation has been applying greatly increased duties and taxes on wheat from what we used to have, so it might well be 35 cents.
Mr. HOPE. Yes. Well, I have no reason to doubt it is that high, although I was a little surprised.
Mr. McCLINTIC. Could you give me an estimate as to the amount of hard wheat we produce in the United States, or name the States that produce a lot of hard wheat?
Mr. HOPE. The States which produce hard winter wheat are Texas, Oklahoma, Kansas and Nebraska. All the hard winter wheat in this country is practically produced in those States. Montana, North and South Dakota and Minnesota, and I think a little part of northeastern or northwestern Iowa, perhaps, produce hard spring wheat. I think there is possibly some hard spring wheat produced in Nebraska. Governor Shallenberger can advise you on that, no doubt.
Mr. McCLINTIC. What is the difference between spring wheat and the wheat that we find in the fall, as far as classification of the product is concerned?
Mr. HOPE. There is practically no difference. As far as milling quality is concerned, it is practically identical. At least that is what the millers tell me. I know those wheats are interchangeable. There is a great difference between hard wheat, both spring and winter, and the soft wheat that is produced east of the Mississippi River, or in the
Mississippi River Valley, a very great difference in the nature and quality of the wheat.
Hard wheat, both spring and winter, has been grown much more extensively in this country in recent years, since the American people began using baker's bread and discontinued the making of bread at home. The bakers say the reason for that is that hard winter wheat and hard spring wheat have a peculiar quality which enables them to use machinery in the
mixing, and for that reason they are able to use it. Mr. McCLINTIC. Under the present conditions, is it not true that a large amount of flour that is produced from wheat is now going to Cuba; that is, the flour that is manufactured of wheat that is grown in our section of the country?
Mr. HOPE. I think some is going now. It should be going now, because the purpose of this amendment in 1930, was to give that market to American wheat, and take it away from the Canadian wheat.
Mr. McCLINTIC. In other words, we can produce flour that would be acceptable to the Cuban people?
Mr. HOPE. There is no question at all about that, no question whatever.
Mr. McCLINTIC. That is the main point.
Mr. REED. But under the theory under which we are proceeding here under this bill, we ought to take the Canadian wheat in preference to our wheat, because it would stimulate business.
Mr. HOPE. It will not stimulate any business out in the wheat fields of Kansas to take Canadian wheat.
I might say, Mr. Chairman, if I may conclude, that I am a member of the committee on agriculture. We have had before that committee a bill which had for its purpose allocating quotas of sugar to the various producing areas in this country and abroad, including Cuba, and one of the arguments which is made for giving Cuba a fairly large quota of sugar, in that bill, is that if we take Cuban sugar, Cuba is going to be in a position to buy American flour and other agricultural products. Yet if we do that and you leave this provision in this bill, we are making it absolutely impossible for the Cuban people to buy American flour.
Mr. CHAIRMAN. My good friend from New York suggests that we should take some outside wheat in order to aid business. But I am sure he has read the bill, and knows that the first thing mentioned, so far as the benefits of the bill are concerned, is agriculture, then industry. It could not be expected that it would be intended to help agriculture by opening the door to foreign wheat or other agricultural commodities. That would hardly be expected.
Mr. HOPE. I would not think so, yet this provision that I am objecting to makes me rather suspicious; if this provision remains in the bill, it is going to have that effect.
The CHAIRMAN. If that provision were out of the bill, would you have any objection to the bill?
Mr. HOPE. That is all I am objecting to at this time. I am not committing myself on the bill, you understand.
The CHAIRMAN. You are here now as a witness.
Mr. Hope. I am here representing the millers and the wheat producers out in my country. I will say this to the committee, that the letters and the wires which I have here state in general that these millers are in favor of the purpose of this bill. I will say that to the committee. But they do not see how it is going to help them if this provision is retained.
Mr. Vinson. I did not hear you give any figure as to the amount of flour that is made from domestic wheat that would be exported to Cuba. If you are talking about hurt, there is a difference between an actual hurt and a fear of being hurt. I am very sympathetic to American agriculture. Nothing has been said yet that the President of the United States is figuring on using wheat detrimentally in any foreign-trade arrangement or agreement. The gentleman was not able to tell us how much flour that was manufactured from American hard wheat went to Cuba.
Mr. HOPE. I can get those figures. I might say to the committee that I received these letters and this wire this morning, and I immediately got in touch with the Chairman and asked him if I might appear before the committee. These letters do not contain that information. I have been on the floor all afternoon, because of the fact that the Bankhead cotton bill has been before the committee. I can get those figures very easily, and shall be glad to insert them in the record
Mr. LEWIS. You can get them from the Tariff Commission.
Mr. McCLINTIC. Is it not a fact that in as much as these millers have expressed an intense interest in this particular subject, that that is indicative of the fact that they either have a lot of business with Cuba, or they think they are going to have when this bill is enacted into law?
Mr. HOPE. There is no question about that.
Mr. VINSON. That may be, and they may have hope of getting the business. I am perfectly willing for them to have the hope. I am perfectly willing for them to get the business. But from your remarks I infer that you were saying that a substantial loss was going to be suffered if this did not go out of the bill, and I did not hear the figures to support that.
Mr. Hope. That is my opinion. I might say this, however, that at the present time there is an unusual situation as far as wheat is concerned, and that is on account of the great differential existing between the price of wheat in Canada and the United States. It is a very extraordinary situation. It may be that for the past year or so since that situation has existed, in spite of the fact that Buffalo millers have not been able to claim this preferential on their Canadian wheat, they have been able to mill Canadian wheat and export it to Cuba without the benefit of this preferential because of the great differential in the price of wheat in Canada and the United States.
I do not have the figures right up to date as to those prices, but just as I left my office, I picked up this bulletin, which is entitled “World Wheat Prospects, issued by the Department of Agriculture every month. This one is dated January 31, 1934, and gives wheat prices in the various markets of the world.
I call your attention to the fact that on January 20, which is the last date on which wheat prices are quoted here, the prices of comparable grades of wheat in Kansas City, Minneapolis, and Winnipeg are as follows:
Kansas City, 85.8 cents per bushel; Minneapolis, 91.1; Winnipeg, 60.6.
There, you see, is a difference of 30% cents a bushel between the prices of wheat in Winnipeg and Minneapolis.
Mr. LEWIS. Is this hard spring wheat?
Mr. HOPE. Yes. The Kansas City is hard winter, the Minneapolis is hard spring, and the Winnipeg is hard spring.
Mr. VĪNSON. Instead of their being afraid of something being taken away from them, what it boils down to, if I understand you, is that if this language is retained, their hope may be blasted as to the securing of Cuban business.
Mr. HOPE. No, it is not a hope at all, as I understand it. As I say, this is an unusual situation, and they have dislocated the direction in which imports or exports have been going in the last year or so. If you look back over the comparison of wheat prices in the United States and Canada over a period of years, you will find that there has never been a time when there has been this much difference in price for any considerable period of time. This is a situation which exists now, and which I am unable to explain except on the theory that American wheat speculators just cannot think wheat is worth as little as it is in the world market, and have kept the price up above that market.
Mr. VINSON. I want to say to the gentleman that I do not want to be a party to anything that would be hurtful to the American wheat grower, but we have been hearing so much the last 2 or 3 days
, about hurts to business if this and that happened, that I just wanted to know whether this was an actual hurt or a prospective hurt, or fear of hurt.
Mr. Hope. The gentleman will agree with me, will he not, that assuming the price in Canada and the United States is approximately the same, wheat can be brought into Buffalo in bond and milled, and sent down to Cuba as American wheat, and receive there the American preferential, and that wheat does displace a comparable quantity of American wheat. Does not that logically follow?
Mr. Vinson. If they would buy flour that we make, you say it is comparable flour, certainly they would be affected.
Mr. HOPE. Yes.
Mr. Vinson. But under the present condition that obtains, now, does the gentleman hope that we are going to get some business with Cuba, or added business from Cuba, from American-produced hard wheat?
Mr. HOPE. My fear is, not a hope, that we are going to get some. It is a fear we are going to lose some business if this provision stays in the bill.
Mr. VINSON. You have not told us that we have any.
Mr. HOPE. I will say to the gentleman that we have some. Now, I cannot give the exact figures. I will get those figures from the Tariff Commission and insert them in the record here as a part of my remarks. I want to get them back for a period of 3 or 4 years, because I think the situation has been unusual during the last year, although it may be we have sold considerably more flour in Cuba during that period.
Mr. VINSON. We had a gentleman here for 3 hours whose whole argument was based upon fear. When he got down to the end of the thing, he was asked if he favored reciprocal trade agreements at all, and he said no.
Mr. COOPER. I am entirely in sympathy, of course, with the purposes the gentleman has in mind. Of course, it is vitally important