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ample preparation. As has been so frequently stated, this law was enacted by the Republicans in complete power after a notable victory in a national election, and should therefore be considered the best that that party can do or is willing to do toward tariff revision.
SCHEDULE K ADMITTEDLY INDEFENSIBLE.
The utter failure of this act to effect a revision in the interest of the people is universally recognized and has been repeatedly admitted by high Republican authorities. In no respect is this failure more noticeable than in that affecting wool and its manufactures, and, since the passage of the act of 1909, public sentiment has been persistently calling for an honest revision of this schedule. The President himself has been obliged to admit that Schedule K, of the act of 1909, is intolerable. In an address delivered at Beverly, Mass., he is reported to have said:
The woolen schedule is indefensible, and I propose to say so.
And, again, in a public address in New York, on February 12, 1910, the President said, as officially reported:
The one substantial defect in compliance with the promise of the platform was the failure to reduce woolens.
In his well-known address at Winona, Minn., on September 17, 1909, the President said, as officially reported:
With respect to the wool schedule, I agree that it is too high and that it ought to have been reduced, and that it probably represents considerably more than the difference between the cost of production abroad and the cost of production here. The difficulty about the woolen schedule is that there were two contending factions early in the history of the Republican tariff, to wit, wool growers and the woolen manufacturers, and that finally, many years ago, they settled on a basis by which wool in the grease should have 11 cents a pound, and by which allowance should be made for the shrinkage of the washed wool in the differential upon woolen manufactures. The percentage of duties was very heavy-quite beyond the difference in the cost of production, which was not then regarded as a necessary or proper limitation upon protective duties.
Again, in the same address, the President was reported to have said:
It (the failure to revise Schedule K) is the one important defect in the present Payne tariff bill, and in the performance of the promise of the platform to reduce rates to a difference in the cost of production, with reasonable profit to the manufacturer.
And, again, in the same address:
When it came to the question of reducing the duty at this hearing in this tariff bill on wool, Mr. Payne, in the House, and Mr. Aldrich, in the Senate, although both favored reduction in the schedule, found that in the Republican Party the interests of the woolgrowers in the far West and the interests of the woolen (worsted) manufacturers in the East and in other States, reflected through their Representatives in Congress, was sufficiently strong to defeat any attempt to change the woolen tariff, and that had it been attempted it would bave beaten the bill reported from either committee.
These are admissions by the highest Republican authority that Schedule K of the the act of 1909 was not a revision at all, that the rates in this schedule are too high, going beyond any difference in the cost of production including protection of profits to the manufacturer, and that these rates should have been reduced, but that the Republican Party broke its promise to the people and failed interests. These admissions are belated, as were the promises of
. tariff reform in the Republican platform of 1908. Had the President made these public admissions earlier, while the tariff law of 1909 was under consideration by the Congress, his declarations would have been a real service to the people and would have enabled them to protest against the betrayal of the public welfare to private greed. The President's silence at that time and his approval of the act of 1909, make it impossible for him to evade his full share of responsibility for the failure of revision which he now admits. His public statements, however, are an authoritative Republican admission that Schedule K in all the Republican tariff acts was never framed or intended to be for the public welfare, but simply to satisfy the demands of the wool-growing and wool-manufacturing interests in the Republican Party.
For the reasons stated, the demand of the people for an immediate revision of Schedule K is abundantly justified. The present House of Representatives has given prompt attention to this demand. It would be trifling with the people to give further consideration to Republican counsels of more delay in this matter, whether with regard to statistical data concerning cost of production, promised at a future date, or for any other reasons. Such data, evidently being prepared for the purpose of defending high tariff rates, as far as possible, is likely to be inconclusive and of questionable value. It is very difficult to determine costs of production by even the most scientific and disinterested investigation, and even if determined, they are constantly fluctuating. As the President himself well said to the chairman of the Republican congressional committee in his letter of August 20, 1910:
The difficulty in fixing the proper tariff rates in accord with the principle stated in the Republican platform is in securing reliable evidence as to the difference between the cost of production at home and the cost of production abroad. The bias of the manufacturer seeking protection and of the importer opposing it weakens the weight of their testimony. Moreover, when we understand that the cost of production differs in one country abroad from that in another, and that it changes from year to year and from month to month, we must realize that the precise difference in cost of production sought for is not capable of definite ascertainment, and that all that even the most scientific pierson can do in his investigation is, after consideration of many facts which he learns, to exercise his best judgment in reaching a conclusion.
STATISTICAL DATA ON COST OF PRODUCTION.
When statistical data as to cost of production have been obtained by the diligent efforts of well-trained and disinterested governmental agents, the Republican Party has treated them with neglect and contempt, and has gone on framing tariff acts to please private interests at the public expense, without any consideration whatever of ascertained facts as to the differences in cost of production. The Republican Party declares that the differences in the cost of production in the United States and other countries are due to the higher labor cost in the United States, and that high protective tariff duties must be levied to equalize these differences and provide a reasonable profit for our manufacturers. In May, 1892, President Harrison submitted to Congress a comprehensive report by the Commissioner of Labor, Carroll D. Wright, on the cost of producing textiles and glass in the United States and in Europe. This report showed
that for 70 establishments, of which 38 were located in the northern · portion of the United States and the remainder in the southern, the total cost of producing cotton fabrics was $23,494,056, involving labor costs to the amount of $6,447,653, or 27.44 per cent of the total cost of production; for 5 establishments shown in this report, in Great Britain, the labor costs were 20.53 per cent of the total cost of production.
The cost of producing woolen fabrics in 30 establishments in the United States for the periods reported by the Commissioner of Labor amounted to $4,705,112, the labor cost being $982,981, or 20.89 per cent of the total cost of production. The labor cost in producing these fabrics in Great Britain, as brought out in the testimony before the British tariff commission and published in its report in 1905, ranges from 14 to 24 per cent of the total cost, according to the character of fabrics.
If foreign cotton goods had no labor cost whatever, 27 per cent would have been the maximum average rate required to equalize the labor cost of production at home and abroad. If the labor cost abroad were one-half of the labor cost at home and the most careful estimates in manufacturing concerns indicate that the home-labor cost can not possibly be more than twice the similar cost abroad—then the rate of duty required to prevent the foreign manufacturer from securing an advantage from cheaper labor would have been as to cotton manufactures, 27 per cent, the American cost, less 13} per cent, the European cost, or 13} per cent. Notwithstanding this statistical data from a government report of the highest standing for accuracy and disinterestedness, the Republican Party, in passing the tariff acts of 1897 and 1909, paid no attention whatever to differences in cost of production and, instead of establishing equalizing duties of any sort, protected cotton manufactures by duties ranging from 33 to 51 per cent on cotton cloth and from 57 to 63 per cent on handkerchiefs, and so forth, and protected woolen and worsted cloth by duties averaging over 100 per cent, these figures being the official averages on the imports of the year ended June 30, 1899.
WORK OF THE TARIFF BOARD.
The President, recognizing this situation, has now admitted publicly that the tariff rates in Schedule K of the act of 1897, which rates his party refused to reduce in 1909, were considerably higher than any differences in cost of production with a reasonable profit for manufacturers. It is clear, therefore, that the Republican Party has not intended to reduce tariff duties according to differences between home and foreign costs of production, and would not if it had the power to do so, when such differences, if ascertained, may be available. Moreover, it is apparent that the statistical data on this subject, now being collected by the Tariff Board, recently organized by the President, is not to be communicated frankly, unreservedly, and promptly, as it may be useful, to the Congress or to the present House of Representatives, alone authorized by the Constitution and delegated and expected by the people to initiate and enact legislation revising present import duties.
The Committee on Ways and Means, in their study of the condition of the bill H. R. 11019, requested the Tariff Board to furnish the committee the statistical data thus far collected by the board relating to the cost of raising sheep and producing wool in any part of the United States or elsewhere, or any summaries or conclusions from such data, or any information whatever relating to the cost of production of wool or wool manufactures. The chairman of the Tariff Board replied that the investigations of the board concerning wool and woolen goods had not been completed and that the statistical data thus far collected by the board on that subject would not, in their opinion, be useful for purposes of legislation, and they therefore would not communicate them to the committee. It had been publicly stated by the chairman of the Tariff Board that their investigations into the cost of woolgrowing in Ohio and certain other sections of the United States had been practically completed, and that similar investigations were in progress in the far Western States and in certain foreign countries. It is understood that the plans of the Tariff Board do not contemplate detailed investigations of the cost of woolgrowing and wool manufacturing throughout the United States and in all foreign countries, but, as in other similar work, investigations in selected sections of this country and in selected localities of certain foreign countries, taken as typical and representative of varying conditions in production. It can not be questioned but that the cost of woolgrowing in Ohio, one of our oldest, most thoroughly cultivated, and densely populated woolgrowing sections, must be approximately the maximum cost of woolgrowing in the United States, and hence that statistical data concerning such cost in Ohio ought to be among the most significant and valuable that could be supplied by the Tariff Board, whether for purposes of legislation or otherwise.
The position of the Tariff Board appears to be that they, in conference with and under the sole control of the President, shall be the sole judges as to what part of the data they collect may be likely to be of service for purposes of legislation; and this situation must be considered with reference to the viewpoint of the President concerning tariff legislation. It is therefore not impossible that there may be some such delay in the communication to the Congress of statistical data collected by the Tariff Board concerning wool and woolen goods as there has been in communicating to Congress or making public the data collected by the Bureau of Corporations concerning investigations of the steel and other industries.
In view of the conditions stated, and for other considerations, the Committee on Ways and Means is opposed to any further delay in the long-looked-for revision of the wool and woolen schedule, believing that the public patience has been already too much abused in this matter by the Republican Party, and that immediate revision of this admittedly indefensible schedule at the earliest possible moment is the plain mandate and expectation of the people and the duty of the Democratic Party.
AD VALOREM DUTIES.
The bill herewith reported abolishes all specific and compound duties on wool and woolen goods, and substitutes there for fair and moderate ad valorem duties on all the articles included in Schedule K. The rates of these duties have been determined with regard to the revenue necessities of the present time, and the gradations of the rates from the raw and partly manufactured products to the more highly finished articles have been fairly and justly apportioned according to the general averages of labor and other costs involved in the articles. The highest rates provided for in the bill are on the most highly finished articles, involving the most expensive goods and those in which luxury and ornament most generally prevail. With only one exception, the same rate of duty is applied to all articles of one kind or sort, without change of rates among the articles of one kind according to grades by value or otherwise. The single exception to this rule is for the purpose of securing greater revenue from a higher rate on the costlier flannels used principally by the wealthy, while giving a lower rate to the cheaper flannels used by the poorer people, the importations of which cheaper flannels have in recent years been practically prohibited by the present extremely high rates.
The change from specific to ad valorem duties will in itself correct the special and peculiarly offensive discriminations in the present Schedule K against certain groups of wool manufacturers and woolgrowers for the especial advantage and profit of certain other and more favored groups. In a tariff law intended to be fair and equitable to all interests and under all circumstances, and covering a wide and varied range of articles, where equalization of internalrevenue taxes on competing articles is not involved, every consideration calls for the elimination of all specific duties and the use throughout of duties according to the value of the articles taxed. In no other way can the duties which are determined to be necessary and just be steadily and continuously collected through a number of years of necessarily varying values and changing trade conditions, without involving unfair discriminations and unequal burdens.
The compelling force of this truth is most plainly evident when the tariff law has for its particular purpose the collection of needed revenue with the least possible burdens on the people, and by no means more than a fair and proportionate part of such burdens on the great masses of people of small means. The great evil of specific duties is that they always and inevitably bear more heavily upon the poor than upon the rich. When goods are taxed according to kind, pound, weight, measure, or the like, without regard to value, the coarser and cheaper grades necessarily must pay as much as the finer and more expensive grades, and the taxes fall with most crushing force on those least able to pay.
All experience with specific duties shows the injustice and injury incident to this method. The earliest United States tariffs were crowded with specific duties. These gradually became discredited, and the tariff of 1846, admittedly the wisest and most successful ever framed in this country, was made up entirely of ad valorem duties. Specific duties have been persistently employed in the high protective tariffs of recent years, principally because designing and powerful private interests have found such duties particularly useful for concealing and disguising the enormous extent of the protection usually involved, and various tricks and manipulations for the further private profit of favored rings and groups. The extent of the burden of specific duties can not be determined without accurate