« AnteriorContinuar »
even at the price asked abroad; it is part of a remnant or bargain sale; it is surplus product dumped abroad, a custom practiced by all manufacturing countries, whether with a high tariff or no tariff; it is a consignment of goods at cost or sometimes even below cost in an effort to win a footing in a foreign market against keen competition, or the reported transaction is an isolated and infrequent one or a gross exaggeration, misstatement, or imposture.
It is a credit to our manufacturers that they are able to supply the needs of the home market at reasonable prices and have begun to invade foreign countries with goods "made in America” and the policy which enables them to do this should be conserved and not destroyed. Respectiully,
THOMAS 0. MARVIN, Secretary Home Market Club, Boston.
A PLEA FOR THE ULTIMATE CONSUMER.
JANUARY 15, 1913. Oscar W. UNDERWOOD, Chairman Committee on Ways and Means,
Washington, D. C. GENTLEMEN: No day having been set apart by your committee during the current tarifi hearings for the case of the ultimate consumer-who has a general and vital interest in all that is to be done as a result of these hearings—the accompanying schedule has been prepared in the interests of the said ultimate consumer. This schelule represents a painstaking attempt to find out the amount which each one is tared annually because of the existence of the protective tariff system. The customs duties on imports are only a very small part of the total tax on the consumer, by far the largest part of this tax going into the pockets of the producers as a Government bounty.
The approximate result as nearly as the writer can arrive at it with the limited data at his command shows that the average family man with five to provide for is taxed by our protective tariff system about $248 annually, and that only $17 of this goes into the United States Treasury, whereas a man with ten to provide for is taxed $496 annually, of which only $34 goes to the Government. A critical examination of the accompanying schedule will show that these results are exceedingly conservative minimizing rather than exaggerating the effects of the system. It is time to register a protest against such a system of taxation, and to demand a reduction of this tax to the amount which is taken for the support of the Government only.
To explain how this result is arrived at let us refer to the left hand vertical column of the schedule which contains a list of seven of the principal staples of trade. These He (1) cereals (including corn, oats, rice, and wheat only), (2) manufactures of cotton, (3) hay, (4) manufactures of iron and steel, (5) manufactures of silk, (6) sugar, (7) manufactures of wool, for all of which the total annual value consumed in the United States is about $7,128, 257,864, as is shown in the column marked “I” of the schedule. The portion of this consumption which is imported from foreign countries is given in the column marked "II" of the schedule, and these are foreign valuations to which the amount collected by the Government, shown in column III, must be added. Column IV shows the average ad valorem rate of duty collected by the Government in each case.
The items in Column V are made up in two different ways, some in one way and some in the other. The first item, for instance, is made up by multiplying the different quantities of cereals consumed in the United States by the tariff rate in each case, the result representing the advantage which is given to the domestic producer in meeting the foreigner. Items 3 and 6 of this column are made up in the same way. Items 2, 4, 5, and 7 are made up by dividing the total consumption values in Column I in the ratio that the duties paid to the Government bear to the sum of said duties and the foreign valuation given in Column II. In other words, if items 2, 4, 5, and 7 of Column V be subtracted from the corresponding items in Column I, they will be found to be in each instance the same percentage of this remainder as is indicated in Column IV. The total, then, of Column V is the excess which the people of the United States pay out annually for these seven items on account of the protective system, and amounts to $2,051,974,544. Each item in Column V divided by 92,000,000 will give the corresponding item in Column VI, which represents the total paid out per capita of population for these seven items. The portion of each item in Column V which
goes to support the Government is given by Column III, and its percentage is in Column VII. The percentage of V which goes into the pockets of the protected producer is given in Column VIII. The corresponding items in Columns VII and VIII should, when added together, make 100 per cent.
If by the adoption of a balanced tariff and excise law which permitted the Government to collect the same rate of tax on the total consumption of the article in question, whether it be produced at home or be imported, the ad valorem rate of tax would then be as given in Column IX instead of the present existing rate as given in Column IV. This would permit a saving to the people, as shown by Column X, amounting for the seven items to $1,911,148,473 without making any reduction in the Government's income. Per capita of 92,000,000 population the saving would amount to $20.81, as shown by the figures in Column XI, and the actual amount of the per capita tax would then be the small sum indicated by the figures in Column XII, having a total of $1.51.
That the items selected for this illustration are the most important ones affected by our tariff system is shown by their character and also by the sum which the Government collects on them. The total collected by the Government on these seven items is $140,826,071 annually, whereas the total collected on all merchandise is only $309,965,692. That is, these seven items furnish about 45 per cent of the total collected by the Government on merchandise under our protective system. The amount paid out by the individual on account of the system, as given in column VI, is consequently only about 45 per cent of his total, which would make the total individual tas under the present system $49.60. Of this there would be saved under a balanced tariff and excise system $46.20 (which now goes into the pockets of the domestic producers and manufacturers), and the individual tax would be only $3.40 annually to maintain the Government's income, just the same as it is now.
This means that the total saving to the American people under a balanced tariff and excise system would be $4,246,996,600 annually, and that the people are now handing up this stupendous sum to the beneficiaries of the present system in return for nothing whatsoever.
Lest it should be argued that our domestic prices do not warrant the assumption above made that the ultimate consumer is paying a price for everything he buys, which is higher than the foreign price by the amount of the tariff, there is appended to the accompanying schedule a list of some of these prices affecting the principal staples of consumption, compiled from data for 1909, 1910, and 1911, which are the latest years for which the figures are available. It should be remembered that with those commodities which we export heavily, as corn and wheat, prices fluctuate with the world's market and with the ratio of our supply in any one year to that market. For this reason it is necessary to observe averages.
For the three years 1909, 1910, and 1911 the average foreign price of corn or maize was 69.1 cents per bushel, and the domestic price to the consumer was 92 cents. The rate of duty by our present tariff law is 15 cents a bushel, which, added to the foreign price, would make the price of imported corn only 84.1 cents as against 92 cents which the consumer was paying. If Indian corn were not such a distinctively American product, this difference in prices would probably result in greater importations were it not for the control exercised over the American market by the combinations of middlemen in the grain and commission business.
During the same three years the average foreign price of oats was 39.5 cents par bushel and the domestic price to the consumer was 48.5 cents. The rate of duty is 15 cents a bushel, which, added to the foreign price, would make it 54.5 cents a bushel. This is enough above the domestic price of 48.5, so that the in perts in this commodity do not amount to much.
The foreign price of rice averaged for the same period 2.69 cents a pound, and the domestic price to the consumer was 4.62. The taríff rate of 2 cents being added to the foreign price would make it 4.69, so that the domestic price 18 seen to be just enough under the foreign to take full advantage of the protection offered, but at the same time to keep imports down to a minimum.
For the same period the average foreign price of wheat was 91.6 cents a bushel, and, the duty being 25 cents per bushel, this would make the domestic price of imported wheat $1.166. "Domestic wheat was offered to the consumer at an average of $1.11 per bushel, which again is seen to be just enough under the importer's price to compete with it and yet to take full advantage of the protection offered.
It will be observed further by consulting the list of prices that the domestic producer-that is, the American farmer-received for his corn an average price of only 55.9 cents a bushel, which was 13.2 cents under the foreign price. Of course, if the farmer were to get the benefit of the duty on corn he should be receiving as much for his corp as the foreign price plus the duty paid to the Government, but not only was this not the case during the three years mentioned, but the farmer was getting 36.1 less than the consumer was paying. In other words, the consumer was paying for his corn 33 per cent more than the foreign price, and 65 per cent more than the American farmer was getting.
In the case of oats it will be noted that the farmer received only 39.9 cents a bushel, which was about the same as the foreigner's price, 39.5.
In the case of rice, the farmer was getting an average price of 2.73, which was practcally the same again as the foreigner was getting-namely, 2.69. And in the case of wheat, the farmer received 91.5 cents as compared with the foreign price of 91.6.
In no one of these cases can it be said that the American farmer is getting any benefit from the protective feature of our tariff system, but that whatever advantage was to be had from the system was absorbed by the middleman. It is true that the middleman should be allowed something for his work and for the expense of transportation, but for the commodities mentioned he would be well repaid both for his services and the cost of transportation with a remuneration of 5 per cent on the domestic producer's price, instead of the 21 per cent he now gets in the cases of wheat and oats, the 60 per cent he gets in the case of corn, and the 70 per cent he gets in the case of rice.
The foreign price of potatoes was for the same period 80.9 cents per bushel, which is seen to be below the consumer's price of $1.05 by just about the amount of the tariff, 25 cents. But the American farmer who gets only 63.2 cents a bushel is very far from being the beneficiary of the tariff rate which was imposed to protect him. The truth is in all these and in many other instances that the wrong man is being protected, and there is no way to prevent it except by changing the system.
Again it will be noted that the foreign price of hay averaged $8.23 per ton for the period under examination, and the ultimate consumer was paying $19. The tariff rate is $4 per ton, which added to the foreign price would make it $12.23. In this case the farmer gets an average of $12.51 per ton, which gives him the full benefit of the protection as intended; but there is the same wide discrepancy between the price paid to the farmer and the price paid by the ultimate consumer, which is unreasonably excessive.
In the case of sugar there is some excuse for the middleman, as he not only distributes the product but refines it. Practically all the sugar imported into this country is known as raw sugar. The average foreign price for this was for the period mentioned 2.45 cents a pound, and the average duty collected is about 1.3 cents, which added to the foreign price makes the domestic price of imported raw sugar 3.75 cents per pound. The domestic producer received an average of 3.79 cents per pound, which gives him the full benefit of the protection as intended, but the refiner adds on 1.23 cents more for the cost of refining and distribution, making the price to the ultimate consumer 5.02 cents. In this case the domestic sugar planters do really get the protection they were meant to have, but the refiners have so combined and dominated the market that they can and do “tax the traffic for all it will bear.” If a balanced tariff and excise duty were placed on sugar there would be some inducement for the foreigner to send us refined sugar, which he could and would do at a price very much less than the trust now compels us to pay. Why is not the ultimate consumer of more consequence to the welfare and prosperity of the country than the Louisiana planter, and therefore why should not this be done?
Column III of the main schedule shows that the Government collects comparatively little income from cereals and hay, and yet the very existence of the tariff on these items compels the consumer to pay an excess price to the domestic producer or the middleman amounting to 66 per cent and 50 per cent, respectively. The same income could be collected for the Government by taxing the total consumption of these items at the rates of seven one-bundredths per cent and four one-hundredths per cent, respectively (as shown in Column IX), which tax would amount to 1 cent per capita in each case (as shown in Column XII) instead of $7.82 per capita and $2.66 per capita, respectively (as shown in Coulmn VI). On items where the rate is so small it would seem wise to remove the tariff entirely and to levy the amount of income thereby lost to the Government on some other commodity which is already returning a substantial income. The cost of collecting these taxes will be much less if collections are concentrated on a comparatively few items or commodities than if they are scattered over many. By adopting a balanced tariff and excise system it will make no difference to the domestic producers whether their particular commodity is one to bear a tax or not, since all will be on the same footing with regard to competition with the foreigner.
This whole question is practically summed up in the last two columns of the Schedule, XI and XII. Each individual consumer is paying annually for the support of the Government the amounts opposite each item in Column XII, and is further taxed to provide a bounty for certain domestic manufacturers or producers the amounts opposite each item in column XI. Because the Government collects 1 cent per capita on the importation of cereals our grain and commission merchants are enabled to collect for their own pockets $7.81 per capita; because the Government collects 39 cents on the importation of manufactured cotton goods the baron manufacturers in this line (who now hold in reserve an average of surplus 63 per cent on their total capitalization) are enabled to collect for their own pockets a bounty of $2.43; because the Government collects 1 cent per capita on the annual importation of hay, our farmers and those who handle the product are thereby enabled to divide a bounty of $2.65; because the Government collects 13 cents per capita on the annual importations of steel and iron manufactures, our captains of these industries are thereby enabled to collect for their own pockets $4.05; and because the Government collects 22 cents on the annual importations of manufactured woolens, the domestic manufacturers in this line are enabled to collect for themselves $2.60 per capita of the population.
Will anybody dare say, after the recent revelations of conditions existing in the cotton and textile industries of this country, that the workers themselves receive even the remotest benefit from the tariff schedules designed to uplift them? In fact, is there one single industry in this country, or any country, where workmen are voluntarily paid one penny more wages than their employers are compelled by one means or another to give them? Does anybody at this late date cherish the delusion that, because a protective tariff permits protected industries to pay higher wages than are paid in industries that are not protected, or where there is no tariff, the captains of these protected industries are voluntarily doing it?
But the actual situation of the ultimate consumer is much worse than is here indicated, because of the opportunity for combination which the protective system affords. The prices he pays are in most instances considerably higher than the foreign prices with the duty added. Everybody is familiar with cases in the steel industry, the machinery business, the typewriter trade, the clock and watch business, the beef trade, the hog trade, the oil trade, and many others where the American manufacturer or producer is plying a highly remunerative trade by selling his product to the foreigner in a foreign country at a price much below that which he charges his own neighbor. It is not for us to blame these individuals for taking advantage of their opportunity to control the domestic market. The ultimate consumer has no grievance against the protected manufacturer or producer-his complaint is against the system. Our Government led the way by eliminating foreign competition, and the monopolist is merely following along the same path in trying to eliminate domestic competition also. The time has come to change the system. Very respectfully, yours,
WM. W. CREHORE, 30 Church Street, New York City.