surfaceone
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While searching for information on Parker/Forest Wanderer's Lovers' Leap, I started reading the hearings on proposed taxes to support the United States' entry to the First World War. I know, right, sounds fascinating, but it was.
Please direct your attention to the testimony of Mr. Candler, and just who all he was "representing:"
"The Chairman. Is there anyone else who desires to be heard on the subject of sirups, extracts, and soft drinks?
Mr. Candler. Mr. Chairman, I desire to be heard with reference to sirups and soft drinks.
The Chairman. You will be allowed 15 minutes, and other gentlemen interested in this same subject will be allowed 5 minutes each. We will first hear Mr. Candler.
Sec. 308. SIRUPS AND SOFT DRINKS.
STATEMENT OF MB. JOHN S. CANDLER, REPRESENTING THE COCACOLA CO., OF GEORGIA, AND THE PEPSI-COLA CO., OF NORTH CAROLINA.
Mr. Candler. Mr. Chairman and gentlemen of the committee, I represent the Coca-Cola Co., a corporation of the State of Georgia, and the Pepsi-Cola Co., a corporation of the State of North Carolina, and a large manufacturer of sirup, and I represent the Virginias. North Carolina, South Carolina, Alabama, and Georgia Bottling Associations, and I wish to cover two sections of this bill—that is. sirups and soft drinks.
Mr. Chairman, I have heard many things to-day that I possibly could with justice repeat. Of course we all think we are going to be ruined. Some of us are. We all are told that no one wants to pay any tax. But, so far as my clients are concerned, they are willing to pay a tax, they expect to pay a tax, they have no desire to dodge a tax. They are willing to pay every dollar that they ought to pay. They are in this war and they know it takes money to run it, and whole lots of it. They expect that everybody in the country is going to have to pay for it. So far as I am personally concerned, I do not hear very patiently the proposition that some of us are not patriotic. 1 have given a year to the service of this Government already. I have but one son, and he is now in a military camp.
All that we ask is that we be not destroyed. All that we ask is that you only put such a tax upon this industry as it can stand and put all on it that you in your conscientious judgment believe it can stand when you know the facts, and we will abide by it—we will have to.
There is no subject upon which there is a greater ignorance than that of the soft-drink industry of the United States. It is a large one and practically enters into the business of every town, hamlet, and city of the United States.
This bill proposes to place a tax upon all prepared sirups or extracts intended for use in the manufacture or production of beverages, commonly known as soft drinks, by soda fountains, bottling establishments, and other places sold by the manufacturer, producer, or importer thereof equivalent to 10 per cent of the price for which so sold.
The provision is subject to the criticism of lack of clearness. There are certain, in fact many, large concerns who manufacture soft-drink sirups and extracts, but probably three-fourths of the sirups used in the United States are manufactured by the dispensers at the fountains. These fountain dealers buy concentrated sirups and extracts, add to them various quantities of simple sirup, and thus manufacture their own sirups for their daily use in their fountains.
How the machinery of the Government can ever with any sort of impartiality collect this tax is a question difficult of answer; but without reference to the phraseology of the section I wish to earnestly call attention to the fact that the tax places a burden upon every manufacturer of sirups, whether large or small, in excess of any possible profits that he can make on the sale of the goods manufactured.
We are already good taxpayers. There is not an ingredient, with possibly one exception, that enters into the manufacture of these sirups that has not been paying taxes to you all the time and that this bill does not increase at least 10 cents a gallon more if you do not touch us at all.
I have been furnished with an itemized and accurate statement of the cost of the ingredients entering into the two soft drinks made by the companies which I represent. This cost, taking the wholesale price of the ingredients entering into Coca-Cola, was on last Thursday approximately $1.02 per gallon. The average selling price of Coca-Cola is $1.11 per gallon.
This bill places a tax upon nearly every ingredient entering into the manufacture of soft-drink sirups. It is a very conservative statement to say that the ingredients entering into these sirups will be increased as a whole not less than 10 per cent in cost by the passage of this bill. It will only be necessary to call attention to certain of the ingredients with the prices of which you are all familiar and which are increased in price necessarily by this bill, r Sugar, which is scarcely obtainable at this time, has an increased tax of 10 per cent placed upon it. Alcohol, which is necessarily used in the manufacture of flavoring extracts which enter into these soft-drink sirups, is increased in price. Tea, the alkaloid of which enters into them, furnishing the stimulating quality of the same, has a tax upon it of 2 cents per pound. By reason of the fact that all the countries at war are using tea as the sole stimulant for their armies at the front it has become very scarce and very high. While this fact is a commendation of the healthfulness and food value of our sirup, it is a very expensive item now entering into the manufacture. Phosphoric acid, lime juice, and other ingredients all carry increased difficulties of obtaining and consequent increase in cost.
This may be a moot case I am arguing. It may be that in less than 90 days we will not any of us be able to get any ingredients that enter into these sirups at all.
We can, with reasonable certainty, then say that the cost of manufacture of all of these sirups will be at least 10 per cent additional, and of course this 10 per cent increase is a tax as well as the specific tax of 10 per cent.
By the addition of this increased cost of ingredients and the 10 per cent tax these sirups can not be manufactured and put upon the market at less than $1.2*2 per gallon. So we find that without the tax we will be manufacturing at a price less than we are selling for, and when you add 10 per cent tax we will be selling our goods at a price of at least 11 cents less than we can possibly manufacture them at. The result will be that few of the companies will try to carry on their business, and instead of the Government obtaining reasonable revenue, which we all recognize it must have and which every good citizen of this country is willing to pay, it will actually receive far less income from the manufacture and sale of these sirups than it is now obtaining, and certainly much less than it would receive were the tax placed at such a figure as it can be paid without destruction of the business.
A tax of 10 per cent on the selling price of these sirups is out of all just proportion either to the cost of manufacture or the. selling price. With the additional tax upon the ingredients entering into them this bill will place a gross income tax on the soft-drink business of at least 20 per cent, and without reference to the added cost of the materials a flat 10 per cent gross income tax. It would mean more than a 100 per cent net income tax.
To state the case, the facts being absolutely correct, is to my mind all the argument necessary to make against it.
It will be said, however, why not pass this tax along to the middleman and to the consumer? In the case of the Coca-Cola Co. and the Pepsi-Cola Co., by reason of their method of doing business, which method has been in operation for nearly 30 years, the tax can not be passed on either to the middleman or to the consumer'.
The companies that I represent entered into contracts with their bottlers in the beginning of their careers, agreeing, in consideration of these bottlers building plants of certain character and conductingtheir business under certain rules and regulations, to furnish sirups for putting up the carbonated drinks at a fixed price. Most of these contracts are for indefinite periods and they are absolutely binding, and good morals as well as the law will compel these companies to J, furnish these sirups if they stay in business at the price agreed uponj It has long been the custom for the manufacturers of bottled soda water, flavoring extracts, and sirups to solicit orders and contract for future delivery of their products with the wholesaler or middleman. This method of doing business has been a necessity on account of the conditions surrounding this business for many years. In all such contracts definite terms and prices are specified. Such contracts are held valid and binding and in such cases delivery must be made in accordance with the terms of agreement. So but a small part of the business of the companies that I represent can be passed along, even if it were desirable to do so. At this time a manufacturer depending largely upon the good will of the trade for the proper handling of his goods would be greatly embarrassed to raise his prices on the small men, who already has more burdens than he can carry.
We feel that we are better able to carry this loss than these small men, and however unjust it may be, it is the purpose of the companies whom I represent to carry whatever burden this Congress thinks in justice and fairness they should carry. Doing business over the whole country, we know probably better than the members of this committee the heavy burdens that the people are carrying already. There is scarcely an article that the retail druggist handles that has not increased in price from 25 per cent to 1,000 per cent since this war started. There is not an ingredient entering into these softdrink sirups that has not increased in price since the war began from 50 per cent to 1,000 per cent. It is time for all business to "stop, look, and listen" and begin to take greater pains to preserve the small man than has been customary in the past.
It is impracticable for the bottler or the retail druggist or sodafountain dispenser to pass on to the consumer any part of this tax. These drinks, whether at the fountain in a glass or at the corner grocery store in a bottle, are universally sold for 5 cents. The people are accustomed to a character and quality of the goods and "the gruel can not be made thinner " to cheapen and damage the character, nor can the quantity be reduced without serious damage to the business.
As said before, if the purpose of this act—and we can not imagine any other purpose—is to obtain revenue to carry on a war in which the country is engaged, then fix these taxes at a figure that can be met. Don't kill the business if the object is revenue. To do that will bring a decreased revenue and in addition will put many men out of employment and will increase the number of those already seriously involved.
This bill deals in many rates of per cent on income with excess profits. I tell you that if other manufacturing interests are to be crippled as this bill now proposes to cripple the retail druggist, the patent-medicine manufacturer, and the soda-fountain bottler, there will be no excess profits. There will be but small net profits. As the little country boy said when asked for the core of his apple, " There ain't a-gwine to be no core." From 1917.
Please direct your attention to the testimony of Mr. Candler, and just who all he was "representing:"
"The Chairman. Is there anyone else who desires to be heard on the subject of sirups, extracts, and soft drinks?
Mr. Candler. Mr. Chairman, I desire to be heard with reference to sirups and soft drinks.
The Chairman. You will be allowed 15 minutes, and other gentlemen interested in this same subject will be allowed 5 minutes each. We will first hear Mr. Candler.
Sec. 308. SIRUPS AND SOFT DRINKS.
STATEMENT OF MB. JOHN S. CANDLER, REPRESENTING THE COCACOLA CO., OF GEORGIA, AND THE PEPSI-COLA CO., OF NORTH CAROLINA.
Mr. Candler. Mr. Chairman and gentlemen of the committee, I represent the Coca-Cola Co., a corporation of the State of Georgia, and the Pepsi-Cola Co., a corporation of the State of North Carolina, and a large manufacturer of sirup, and I represent the Virginias. North Carolina, South Carolina, Alabama, and Georgia Bottling Associations, and I wish to cover two sections of this bill—that is. sirups and soft drinks.
Mr. Chairman, I have heard many things to-day that I possibly could with justice repeat. Of course we all think we are going to be ruined. Some of us are. We all are told that no one wants to pay any tax. But, so far as my clients are concerned, they are willing to pay a tax, they expect to pay a tax, they have no desire to dodge a tax. They are willing to pay every dollar that they ought to pay. They are in this war and they know it takes money to run it, and whole lots of it. They expect that everybody in the country is going to have to pay for it. So far as I am personally concerned, I do not hear very patiently the proposition that some of us are not patriotic. 1 have given a year to the service of this Government already. I have but one son, and he is now in a military camp.
All that we ask is that we be not destroyed. All that we ask is that you only put such a tax upon this industry as it can stand and put all on it that you in your conscientious judgment believe it can stand when you know the facts, and we will abide by it—we will have to.
There is no subject upon which there is a greater ignorance than that of the soft-drink industry of the United States. It is a large one and practically enters into the business of every town, hamlet, and city of the United States.
This bill proposes to place a tax upon all prepared sirups or extracts intended for use in the manufacture or production of beverages, commonly known as soft drinks, by soda fountains, bottling establishments, and other places sold by the manufacturer, producer, or importer thereof equivalent to 10 per cent of the price for which so sold.
The provision is subject to the criticism of lack of clearness. There are certain, in fact many, large concerns who manufacture soft-drink sirups and extracts, but probably three-fourths of the sirups used in the United States are manufactured by the dispensers at the fountains. These fountain dealers buy concentrated sirups and extracts, add to them various quantities of simple sirup, and thus manufacture their own sirups for their daily use in their fountains.
How the machinery of the Government can ever with any sort of impartiality collect this tax is a question difficult of answer; but without reference to the phraseology of the section I wish to earnestly call attention to the fact that the tax places a burden upon every manufacturer of sirups, whether large or small, in excess of any possible profits that he can make on the sale of the goods manufactured.
We are already good taxpayers. There is not an ingredient, with possibly one exception, that enters into the manufacture of these sirups that has not been paying taxes to you all the time and that this bill does not increase at least 10 cents a gallon more if you do not touch us at all.
I have been furnished with an itemized and accurate statement of the cost of the ingredients entering into the two soft drinks made by the companies which I represent. This cost, taking the wholesale price of the ingredients entering into Coca-Cola, was on last Thursday approximately $1.02 per gallon. The average selling price of Coca-Cola is $1.11 per gallon.
This bill places a tax upon nearly every ingredient entering into the manufacture of soft-drink sirups. It is a very conservative statement to say that the ingredients entering into these sirups will be increased as a whole not less than 10 per cent in cost by the passage of this bill. It will only be necessary to call attention to certain of the ingredients with the prices of which you are all familiar and which are increased in price necessarily by this bill, r Sugar, which is scarcely obtainable at this time, has an increased tax of 10 per cent placed upon it. Alcohol, which is necessarily used in the manufacture of flavoring extracts which enter into these soft-drink sirups, is increased in price. Tea, the alkaloid of which enters into them, furnishing the stimulating quality of the same, has a tax upon it of 2 cents per pound. By reason of the fact that all the countries at war are using tea as the sole stimulant for their armies at the front it has become very scarce and very high. While this fact is a commendation of the healthfulness and food value of our sirup, it is a very expensive item now entering into the manufacture. Phosphoric acid, lime juice, and other ingredients all carry increased difficulties of obtaining and consequent increase in cost.
This may be a moot case I am arguing. It may be that in less than 90 days we will not any of us be able to get any ingredients that enter into these sirups at all.
We can, with reasonable certainty, then say that the cost of manufacture of all of these sirups will be at least 10 per cent additional, and of course this 10 per cent increase is a tax as well as the specific tax of 10 per cent.
By the addition of this increased cost of ingredients and the 10 per cent tax these sirups can not be manufactured and put upon the market at less than $1.2*2 per gallon. So we find that without the tax we will be manufacturing at a price less than we are selling for, and when you add 10 per cent tax we will be selling our goods at a price of at least 11 cents less than we can possibly manufacture them at. The result will be that few of the companies will try to carry on their business, and instead of the Government obtaining reasonable revenue, which we all recognize it must have and which every good citizen of this country is willing to pay, it will actually receive far less income from the manufacture and sale of these sirups than it is now obtaining, and certainly much less than it would receive were the tax placed at such a figure as it can be paid without destruction of the business.
A tax of 10 per cent on the selling price of these sirups is out of all just proportion either to the cost of manufacture or the. selling price. With the additional tax upon the ingredients entering into them this bill will place a gross income tax on the soft-drink business of at least 20 per cent, and without reference to the added cost of the materials a flat 10 per cent gross income tax. It would mean more than a 100 per cent net income tax.
To state the case, the facts being absolutely correct, is to my mind all the argument necessary to make against it.
It will be said, however, why not pass this tax along to the middleman and to the consumer? In the case of the Coca-Cola Co. and the Pepsi-Cola Co., by reason of their method of doing business, which method has been in operation for nearly 30 years, the tax can not be passed on either to the middleman or to the consumer'.
The companies that I represent entered into contracts with their bottlers in the beginning of their careers, agreeing, in consideration of these bottlers building plants of certain character and conductingtheir business under certain rules and regulations, to furnish sirups for putting up the carbonated drinks at a fixed price. Most of these contracts are for indefinite periods and they are absolutely binding, and good morals as well as the law will compel these companies to J, furnish these sirups if they stay in business at the price agreed uponj It has long been the custom for the manufacturers of bottled soda water, flavoring extracts, and sirups to solicit orders and contract for future delivery of their products with the wholesaler or middleman. This method of doing business has been a necessity on account of the conditions surrounding this business for many years. In all such contracts definite terms and prices are specified. Such contracts are held valid and binding and in such cases delivery must be made in accordance with the terms of agreement. So but a small part of the business of the companies that I represent can be passed along, even if it were desirable to do so. At this time a manufacturer depending largely upon the good will of the trade for the proper handling of his goods would be greatly embarrassed to raise his prices on the small men, who already has more burdens than he can carry.
We feel that we are better able to carry this loss than these small men, and however unjust it may be, it is the purpose of the companies whom I represent to carry whatever burden this Congress thinks in justice and fairness they should carry. Doing business over the whole country, we know probably better than the members of this committee the heavy burdens that the people are carrying already. There is scarcely an article that the retail druggist handles that has not increased in price from 25 per cent to 1,000 per cent since this war started. There is not an ingredient entering into these softdrink sirups that has not increased in price since the war began from 50 per cent to 1,000 per cent. It is time for all business to "stop, look, and listen" and begin to take greater pains to preserve the small man than has been customary in the past.
It is impracticable for the bottler or the retail druggist or sodafountain dispenser to pass on to the consumer any part of this tax. These drinks, whether at the fountain in a glass or at the corner grocery store in a bottle, are universally sold for 5 cents. The people are accustomed to a character and quality of the goods and "the gruel can not be made thinner " to cheapen and damage the character, nor can the quantity be reduced without serious damage to the business.
As said before, if the purpose of this act—and we can not imagine any other purpose—is to obtain revenue to carry on a war in which the country is engaged, then fix these taxes at a figure that can be met. Don't kill the business if the object is revenue. To do that will bring a decreased revenue and in addition will put many men out of employment and will increase the number of those already seriously involved.
This bill deals in many rates of per cent on income with excess profits. I tell you that if other manufacturing interests are to be crippled as this bill now proposes to cripple the retail druggist, the patent-medicine manufacturer, and the soda-fountain bottler, there will be no excess profits. There will be but small net profits. As the little country boy said when asked for the core of his apple, " There ain't a-gwine to be no core." From 1917.
