Ken Conklin at 20:09, 24 December 2005

2005-12-24T20:09:54Z

Jere Krischel at 04:35, 9 December 2005

2005-12-09T04:35:48Z

New page

the merchandise had to pay an ad valorem duty they would put the
invoice value as low as possible in accordance with the actual export
costs.
(2) Liabilities of the islands to the United States.—The sugar crop
is an enormously expensive one to raise. It requires fifteen to sixteen
months to mature, and employs hundreds of laborers to each plantation
and sugar mill. The planter must, therefore, borrow large amounts
of money to mature it, giving a lien upon the crop as a security to his
factor. The factor in turn borrows the necessary amounts from the
San Francisco banks. On an average this lien amounts to nearly or
quite half the market value of the crop. I have estimated it for safety
at about one-third that value, or $3,000,000.
(3) Many plantations have also mortgaged debts held in San Francisco.
The amount of these is not fully known; but I am sure of at
least $2,500,000, and believe the real amount to be much more than
that.
(4) The value of the plantation properties held by Americans was
assessed by the Hawaiian Government in 1883 at $10,180,104. This
was assumed to be about two-thirds the real value. This value has
been created almost wholly since 1876 out of the ground, buildings, and
machinery.*
(5) Other productive properties held by Americans are the interisland
mercantile marine, two railroads and equipment, a marine railway,
warehouses, etc., all of them the creation of the treaty. The estimate
of $1,500,000 is a very low one. The value of these properties far
exceeds the sum of their mortgages and capital stock indebtedness.
No man is rated in this argument as an American citizen unless he has
the right to vote in the United States without naturalization and has the
right to the protection of our Government under public law.
The most striking feature of this exhibit is the very large profit to
the United States—so large that it seems at first unaccountable; but
the great discrepancy between the exports and imports will vanish
when we take full account of the fact that the whole carrying trade and
mercantile business is ours in both directions. All economists regard
transportation and mercantile functions in the passage of commodities
from the purchaser to the consumer as a part of the production. To
the value of our produce at San Francisco must be added all further
accessions of value until it finally leaves our hands and passes into
those of the Hawaiian. Add, then, to the invoice value of our exports
the cost of transportation, commission, and insurance until we have put
the produce into the Hawaiian's hands, and the $36,000,000 becomes
not far from $44,000,000. It costs the Hawaiian not far from one-sixth
of the value of his crop to get it to San Francisco. Deduct that from
$54,000,000 and we have $45,000,000. Thus if we reckon Hawaiian
values against Hawaiian values the exchange becomes less unequal, as
it should, for the real exchange takes place in Hawaii. It is there that
* This is reckoned as profit for the following reasons: Among the commodities
which we send to the islands, and also among those which we buy in Europe and
send there on Hawaiian account, are machinery, building materials, etc. These are
used in construction. The labor which is employed, the improvements which come
from cultivation, and the natural appreciation of land make up together the final
value of the property. The cash outlay directly applied to the creation of this value
is, of course, small in comparison with that value. Whatever cash value has been so
applied is already accounted for and included in the table showing values delivered
to Hawaii. The value of the properties thereby acquired should of course appear
on the other side of the account, and also in the list of profits, for such it clearly is.
It pertains, however, to the capital-stock account and not to simple mercantile profit
The figures here given largely understate the value of these properties.

our own products finally leave our hands, and it is there that Hawaiian
values first come into our hands.
The Committee on Ways and Means, seeing that our exports in nine
years have shown on invoice value of $23,000,000, while our imports
show $54,000,000, have hastily concluded that the apparent balance of
trade against us of $31,000,000 had to be liquidated in coin and exchange.
In fact, only about $13,000,000 is liquidated in that way, and the
$18,000,000 remaining is paid over to our own people and may be reckoned
as a gross profit already realized. Over $9,000,000 has gone to
American shipping, nearly $3,000,000 to San Francisco commission
houses, nearly a million to the banks, over $2,000,000 for interest on
loans and advances, and over $3,000,000 as dividends and miscellaneous
profits.
In addition to this we hold $6,500,000 of Hawaiian debts which
they must liquidate out of future shipments, and have created
$15,000,000 worth of magnificent productive properties in the islands
out of the soil by the combined action of capital and labor. It would
be difficult to find in all the annals of trade and production a result
more gratifying.
The Committee on Ways and Means have taken it for granted that
the loss of revenue to the Treasury is equal to the computed remission
of duty. This is a grave error.
First. The tariff on sugar for more than twenty years has been so
graduated as to become more and more forbidding, and, finally, prohibitory
as the grade and quality of raw sugar increases. This excludes
all eatable raw sugar from the grocery trade and makes it more profitable
to the refiner to buy the lowest grades he can get. But if raw
sugar is duty free, it is the interest of the refiner to buy the highest
grades and the interest of the planter to make them. Accordingly the
Hawaiian planter makes the highest grades, not exceeding No. 20,
above which grade he must pay duty.
But without the treaty he would do as the Cuban does, i. e., make
them of as low grade as possible, so as to pay the minimum duty. The
Committee on Ways and Means has computed the remitted duties on
Hawaiian sugar as actually imported in the highest grades at $3.18
per cwt. prior to June 30, 1883, and $2.40 per cwt. subsequently; but
Hawaiian sugars, which would have been imported had the treaty never
existed, would have been in lower grades and paying presumably the
same average duty as all imported sugars. This was, prior to 1883,
about $3.41 per cwt. and about $1.96 subsequently. Of course we can
not reckon a duty we never could have collected as a loss of revenue.
Instead, therefore, of losing on sugar $23,000,000 in nine years the
loss has not been over $18,000,000.
Second. Butthis loss must have had very large compensations to the
Treasury. Fully five sixths of the Hawaiian crop has been bought and
paid for by exports, transportation services, and otherwise, for which
the treaty has created a demand, and for which no demand would have
existed elsewhere without the treaty. Our exports to third countries
could not possibly have been diminished by it. Now, the free entry of
Hawaiian sugar has no doubt caused us to purchase from third countries
less dutiable sugar. Obviously the exported values withheld from
the purchase of dutiable sugar remain available for other purchases.
The full value of our exports must come back to us somehow, and if we
get less dutiable sugar we must get .just so much more of something
else. The only question is whether this " more of something else" pays
as much duty as the sugar would have paid. Probably it does not;
and so far there is a loss, because some of these residual values come

Template:468-469 - Revision history

Ken Conklin at 20:09, 24 December 2005

Jere Krischel at 04:35, 9 December 2005