the nitrogen not recovered in the milk when fed to cows, approximately 90 per cent would be returned to the soil to reappear in increased fertility. The large quantity of feeding material and fertilizing element which have gone abroad annually in our surplus wheat is clearly shown in the accompanying table and represents a constant and alarming drain upon our fertility. The computation is made on the basis of 60 pounds to the the feed content of the wheat being 30 per cent of the total. the short ton of 2,000 pounds. bushel of wheat, The ton used is Supplementary note No. 7.-Comparison of United States, Canada, and world's prices. A comparison of Minneapolis and Winnipeg prices (based on an equal rate to Liverpool) over a number of years shows that these follow in general Liverpool prices, and both are influenced by practically the same forces. The price at Winnipeg, however, has been consistently lower than the Minneapolis price. From 1906 to October, 1913, when an import duty of 25 cents per bushel was in force, Minneapolis cash prices were on an average of 6 to 10 cents per bushel higher. The fact that we have a very large home market (80 per cent) for our wheat, with the competition that must result in the procurement of such a large proportion, is sufficient in itself to account for the difference in price, regardless of the existence of a tariff. The outstanding fact is that the cash price in the home market was higher than the world's price. It is therefore apparent that every bushel of wheat milled and exported as flour pays a relatively higher price to the United States farmer than the same amount of wheat exported. The decreasing percentages of flour exports reflect directly back to the disadvantage of the price situation which the tariff in effect aims to improve. Price of wheat. [Roman figures indicate that Minneapolis price is greater; italic figures that Winnipeg price is greater.] 1 From January, 1917, to March, 1919, inclusive, the quotation is for No. 1 Northern. Beginning with April, 1919, the quotation is for No. 1 Dark Northern. Prices quoted are averages of daily quotations. Conversion of Winnipeg prices into American money is made according to average rate of exchange for each month. In differential column, Minneapolis price is compared with Winnipeg price in American money. Supplementary note No. 8.-Decreasing supplies of mill feed. "During the period from 1899 to 1920, while flour output and the accompanying production of feed increased only 15.9 per cent, the population increase was 39.2 per cent." This increased population represents a greater demand for dairy products, which are so dependent upon mill feeds, and these, as are clearly shown, have suffered a sharp decrease in proportionate supply. Canada, on the other hand, has a surplus of feeds. Other countries are acquiring such surpluses through replacing former importations of flour with importations of wheat, grinding same in their own mills and making these feeds available. The effects of ample supplies of mill feeds are shown by the following table of butter imports: Imports and exports of butter, 1903–1921. [Compiled from reports by Department of Commerce as given in Monthly Summaries of Foreign Commerce.] Supplementary note No. 9.-Note re compensatory or commensurate duty on flour. A commensurate or compensatory duty on flour conceives a wheat rate applied to the number of bushels actually used to produce the grade of flour imported. It assumes that labor costs in the country of export are the same as in the country of import. Some grades of flour can be produced from 4 bushels of 60-pound wheat, other grades take 5, 6, and even 7 bushels. Canadian labor costs involved in the manufacture of a barrel of flour are less than the United States. It would be impractical to incorporate into the present tariff act a schedule adequate to cover all the differences of grades and costs. A simple method to meet these variations would be to adopt a rate on flour sufficient to allow for differences in grades and labor costs. To do otherwise the effects of the wheat tariff are discounted, our labor is handicapped. A rate on flour of five or six times the wheat rate would be sufficient to meet these inequalities, or a rate of four and one-half times plus 50 cents a barrel, as suggested, would be fair and reasonably protective, not prohibitive. Inequalities of present wheat and flour schedule as proposed in H. R. 7456, title 3, section 1, paragraph 730, page 90, show advantage to Canadian flour imports as compared with flour of United States production and render inoperative the aims of the wheat duty. This comparison assumes cost of production to be the same in both cases. Canadian production costs are actually less than in the United States. It is clearly shown in the above that the Canadian miller, in addition to the advantages of the lower wheat prices and lower production cost, is given further preference in meeting competition of Canadian wheat in the United States to the amount of 52 cents per barrel for the grades and kinds that would be in greater demand. Not only is the United States manufacturer and laborer thus discounted by that sum, but every barrel of Canadian flour so imported means that the benefits to the farmer in the wheat tariff are rendered inoperative in a like amount, since he has thereby lost the sale in the United States of an equivalent number of bushels at the better price which the duty aims to maintain in the domestic market, but is obliged to sell for export at the lower world's price level. Moreover, and of greatest significance, is the fact that Canadian flour imports represent a kind and grade of bread wheat that the consuming public holds in highest esteem. These are the kinds and grades produced in the United States, but which, through the ravages of a plant disease, are diminishing rapidly in quantity and faced with possible, even probable, extinction. Supplementary note No. 10.-Drawback provision: This clause provides that if certain products made from imported duty-paid material are admitted free, that drawback should be satisfied upon the exportation of those articles produced therefrom which are dutiable, permitting the retention, without customs complications, of those articles so produced which are admitted free. Provisions for manufacturing under drawback: Suggested amendment to section 316 (or such similar section as may have been provided for by the Senate committee), on page 225, line 4, insert after word “provided": "Provided, That where two or more products result from the manipulation of imported material, the drawback shall be distributed to the several products in accordance with their relative value at the time of separation. If, however, no duty is assessable on the importation of similar products, then upon the exportation of such products as are subject to duty there shall be refunded the drawback accruing to the whole of the imported material.” Supplementary note 11-A and 11-B.--Bonding provisions: Clause A, permitting withdrawal of flour made from bonded wheat upon payment of duties equal to that imposed upon imported flour, is conceived with the expectation of a compensatory duty on flour. If the duty on flour is not compensatory, then the tariff works an injustice upon the United States manufacturer and United States labor. If the duty is compensatory, as it is reasonable to expect, then the clause is justifiable from every standpoint. Clause B provides that if certain products made from imported material are admitted free the charges against the bond of the imported material should be canceled upon the exportation of those articles produced therefrom which are dutiable and the retention without customs complications of those articles so produced which are admitted free. Provisions for manufacturing wheat in bond: Suggested amendment to section 314 (or such similar action as may have been provided for by the Senate committee), beginning on page 221, line 8, after the word "vessel": "Provided, That wheat flour or wheat products produced from imported wheat, or any portion thereof, may be withdrawn for domestic consumption, or transferred to a bonded customs warehouse and withdrawn therefrom, and the several charges against the bond canceled, upon payment of duty equal to the duty which would be assessed and collected by law if such flour or wheat products were imported from a foreign country. 66 Provided further, That where two or more products result from the manipulation of an imported article and only certain of these products are subject to duty, the several charges against such bond may be canceled upon exportation or upon delivery to a bonded warehouse, of those products which are subject to duty." Supplementary note No. 12.-Bonding provisions. Attention is called to the fact that under this proposal the identity of the wheat is not required. It may be argued that this would permit substitution of cheaper grades of American wheats or lower grades of flour produced therefrom. While this may be true in theory, it is not in fact or practice. Canada is now the dominating factor in the world's export flour trade, if not in volume at least in the prestige which formerly was possessed by the brands of this country. Meeting the world's competition means we meet Canadian grades and qualities. The kind and character of their wheat grades are not as wide as our own. They set the standards of price and quality and we must follow. We must meet kind with kind if we are to compete successfully. Under the proposal advanced we have undertaken to incorporate into this imported Canadian wheat 43 per cent of American wheat and with it to compete against Canadian flour made from 100 per cent of their wheat. We can not otherwise cancel the charges against the bond. Even if the miller did substitute 100 per cent, he would still be under an obligation to purchase 43 per cent of United States wheat at the domestic price, thus increasing the home market for that proportion, which would otherwise find its way abroad at the world's price level. The essential question is not one of substitution, but whether the miller can compete successfully using such a large percentage of different wheat at a higher price. It is certain that he could not use a higher percentage of domestic wheats. To do so would further increase his cost and widen the differences in grades which he must meet in competition. In the The loss of identity is something which need occasion no anxiety. first place, it is ineffective, and, secondly, competitive conditions would eliminate it far better than any legislative feature. Loss of identity is not essential to the success of the plan, other than that it involves its operation in many complications which arise from Treasury regulations properly designed to comply with the requirements of the law. This robs business of that elasticity of operation which aids in meeting competition and, furthermore, involves delays and increases costs, which must be added to the exportable commodity, already laboring under a handicap of price disadvantage. The preservation of identity under legal requirements means special bins, special supervision, and involves mechanical details with which many mills could not comply. It should be noted that European countries desiring to foster and encourage the milling industry have in their customs regulations permitted not only the retention of the offals, or feed, but have specifically allowed loss of the identity in the imported wheat; in fact, in many instances have refunded the duty on the amount of wheat required to manufacture the unit of flour exported. Supplementary note No. 12 A. P.-Provisions for manufacturing wheat in bond. Suggested amendment to section 315 (or such similar section as may have been provided for by the Senate committee, beginning after colon on line 10, page 224, by addition of the following: 66 Provided, That the works of manufacturers engaged in milling wheat flour may, upon giving satisfactory bonds, be designated as bonded flour milling warehouses. Wheat may be removed from the vessel or other vehicle in which imported, or from a bonded warehouse, into a bonded flour milling warehouse, without the payment of duties thereon, and be there manufactured or milled, together with wheat of home or foreign production: "Provided, That where domestic wheat is used in conjunction with such imported wheat in the manufacture or production of flour, the quantity of such imported wheat used shall be ascertained and the facts of the manufacture or production of such flour in the United States shall be determined. 66 Provided, further, That the bonds shall be charged with the amount of duties payable upon such wheat at the time of its importation, and the several charges against such bonds may be canceled upon the exportation or delivery to a bonded manufacturing warehouse, established under section 314 of this act, of an amount of flour sufficient to equal in weight such imported wheat." Supplementary note No. 12-B.-Drawback provisions. The proposal made here is identical with that made in the bonding clause, supplementary note No. 12-A, and the arguments are the same. It is merely a difference in procedure and not one in principle. Provisions for manufacturing under drawback: Suggested amendment to section 316 (or such similar section as may have been provided for by the Senate committee), page 225, by a separate paragraph to be inserted between lines 16 and 17, reading as follows: 66 Provided, however, That upon the exportation of wheat flour manufactured or produced in the United States in whole or in part from wheat of foreign origin, upon which customs duties have been paid, there shall be allowed drawback of duties equal to the duties paid upon a like quantity, by weight, of wheat of foreign origin, less 1 per cent of such duties, under such regulations as to such allowance, claims, and payment thereof as the Secretary of the Treasury shall prescribe: "Provided, That when filing such claims for drawback, there shall be presented by the claimant thereof certificate of duty issued by a collector of customs |