63/ 8tCOoa

8} HOUSE OF REPRESENTATIVES NNO.R

REPORT
[To accompany H. R. 3321]

A BILL
TO REDUCE TARIFF DUTIES
TO PROVIDE REVENUE FOR THE
GOVERNMENT .

AND FOR OTHER PURPOSES

TOGETER WITH

VIEWS OF MINORITY AND

STATISTICAL DATA

APRIL 21, 1913,-Committed to the Committee of the Whole House on the

state of the Union and ordered to be printed

WA8HiXGTN
GOVERNMENT PRINTING OPP03O
1918
63D CONGRESS, I HOUSE OF REPRESENTATIVES. § REPORT
18t Ses88in. No. 5.

TO REDUCE TARIFF DUTIES, TO PROVIDE REVENUE FOR THE

GOVERNMENT, AND FOR OTHER PURPOSES.

APRIL 22, 1913.--Committed, to the Committee of the Whole House on the state of
the Union and ordered to be printed.

Mr. UNDERWOOD, from the Committee on Ways and Means, submit,.

ted the following
REPORT.,
[To accompany H. R. 3321.]
The Committee on Ways anid Means to whom was referred House
bill H. R. 3321, having had the same under consideration re ort i'tback
to the House without amendpient and recommend that the bill do pa8s.
URGENT NEED OF TARIFF REVISION.
I'-
In returning this measure to the House of Representatives the com-
mittee expresses its deep sense of the urgency of the tariff question,
its belief in t,he necessity of prompt and thorough action and its cer-
tainty that a remedy for existing conditions is earnestly demanded
by the public. The present condition of the revenue legislation of
the United States is the result of many years of adherence to the
protective-tariff policy. This tariff policy is the result of peculiar
circumstances and in no way representsfthe choice of thei people.
At the beginning of the Civil War the United States found itself with
little other taxation than a low revenue tariff. The expenses of the
war made necessary the establishment of heavy internal-revenue tax-
ation and along with it the imposition of correspondingly heavy cus-
toms duties, primarily designed to place domestic producers upon a
basis of equality with foreign producers, who would otherwise have
had the advantage, owing to the 'burden of domestic taxation under
which the hiome producers were laboring.
Despite pledges made by representatives of the people to remove
the excessive protection at the close of the Civil War, thils promise was
never redeemed; the internal-revenue taxation was largely reduced
after peace was restored, but tariff taxation was never retuirned to
its antebellum basis. As a result of the unfortuinate political situa-
tion of thle times, interested persons succeeded in continuing the duties
uponl the abnormnlly high level. . Except for sporadic and usually
unimportant changes made at long intervals, the general system of
high tariff taxation has been maintained from the close of the Civil
War to the present time save for a brief interval during 1894-1897
when thie Wlsbon tariff biil was partially in effect.
II TARIFF DUTIES AND REVENUES.

AOT -OF 1909 FOUND WANTING,

The tariff situaAtion resulting from 50 years of high protective rates,

had gradually' become intolerable; and five years ago the dissatisfac-
tion with prevailing dutles expressed itself in so unmistakableI a man-
ner as to lead to a revision of rates: Twelve years of experience
since the revision in 1897 had shown many points aat which bad or
erroneous work had been done during' the hasty 'process of framing
and passing the Dingley Act. Conditions of production and of busi-
ness organization had greatly changed. so that the old rates upon
many commodities, even if at first defensible, had become obsolete.
A ver great and increasing dissatisfactio n the part of the con
suming masses, due to an advance in prices and in the cost of livimg,
constituted the important factors m the situation. Tariff revision in
1909 was therefore politically unavoidable, and the country had rea-
sonx to demand of tie party then in authority a modification of the
extreme policy which had for many years been creating and aggra-
vating tariff abuses.
The expectation of redress was blasted by the tariff act of 1909.
This measure, if anything, made worso the conditions which had
given rise to its passage. It brought no real reduction in the level
of rates of duty prevailing, and for some commodities resulted in
advances, due largely to reclassifications which concealed the
real rates. The attitude of the public ever since its passage fully
attests that the measure has been most unsatisfactory. Two years
ago it became quite apparent that in the opinion of the country
the time. for ai substantlal change had arrived, and that a revisilon
of the duties designed to restore some measure of equity in taxation
and to eliminate the abuses which had flourished under the act of 1909
as well as under its predecessors, was inevitable, A number of bills
were prepared and presented to the House of Representatives during
the summer of 1911. These were duly passed, sent to the Senate,
ind in modified form certain of them were ultimately adopted by
Congress and presented to President Taft, only to be vetoed bv hi'm.
Impatient to obey the mandates of the countr, the House of Repre
sentatives during the winter and spring of 1912 repassed these
measures, with others, and again transmitted them to the Senate,
only to be met ultimately by the presidential veto.
Again commanded by the electorate in the autumn of 1912 to renew
the effort at tariff revision, and encouraged by a sweeping victory at the
polls, which placed every-branch of the Government in the control of
the Democratic Party, the Ways and Means Committ,ee, after due
deliberation, have completed a mea'ure H. R. 3321, coverin not only
the ground which hxd been traversed by the bills passed uring the
Sixt.y-second Congress, but dealing also with the other tarif schedules
and itended to revise the whole of the existing system of tariff rates.
The bill H. R. 3321 is therefore the outcome of lonig deliberation and
study. Not satisfied with the extensive hearings which were con-
ducted by the committee prior to the tariff act of 1909, the com-
mittee has devoted much ' time and attention to' further evidence
gleaned from all possible sources, and has during the past winter
ifforded extended hearings to all those who chose to present arg=iment
or testimony before it.
Table: Table 1.- Relative wholesale prices, and per cent of increase over 1897.

TABIY DUTY" AND BRVENUN. III[

In the committee's judgment there are imperative reasons for

adopting' at the earliest possible moment a thoroughgoing revision
of the present rates of dity. That there `are deplorable conditions in
the present economic situation in the United States, and that these
are in many instan es directly assignableAto the tariff, is a fact which
can not be successfully denied. This could not be otherwise in view
of longi-continued high protection and the peculiar alliance that has
existed between the interests. profiting by unreasonable :duties
and the political party imposing such rates. It is a striking fact
that during the years subsequent to the renewal of the policy of
high protection in 1897, there has been a radical transformation of
American economic life in many directions and that in most cases
a connection between the rates of protection and the development
of unfair or objectionable conditions has been fullv established.
Certain distinct economic developments between the years of 1897
and 1913 must be studied in close connection with the working of
the tariff law. It would be too broad a statement to assign these
developments exclusively to the tariff act. But we do say that the
excessive protection granted by the act of 1897 and continued-
under Republican rule, together with the practical reservation
of the home. market in many important lines to a relatively
small number of selected individuals or corporations, has tended
to aggravate conditions which had previously been a source of serious
regret, as well as others which have during the period developed under
tho new economic influences at work.
INCREASE IN COST OF LIVING.

Probably the most striking eccuomic change since 1897 has been
the tremendous increase in the cost of living-a situation which has
attracted the anxious attention of economists the world over. The
following figures represent the relative advance in living costs that
has taken place during the critical part of the period in question in
the United States:
TABLD L.-Relative wholesale prices, and per cent of increase over 1897.

Commodity. Price,
1897.
Price,
1900. Increwse
over 1897. Price,
1910. Inorease
over 1897.

Per cent. Per cent.

F m PrOdut ...................................... 8.2 109.5 28.5 164.6 93.2
Fo o.87.7
Clothlng.91.1
104.2
106.8
18.8
17.2
128.7
123.7
46.7
35.8
Metals and imPlement8 .............
. .............. 86.6 120.6 39.1 128.5 48.2
Drupg adohomicals ................................ 94.4 115.7 22.5 117.0 23.9
Hou=0furnishng goods .89.8
celaneoois ........................ 92.1
106.1
109.8
18.1
19.2
111.6
133.1
24,2
44.5
All commodities.......... , 89.7 110.5 23.1 131.8 40.7
Table: Table 2.- Increase in prices of selected staple com odities.

Table: Table 3.- Name of company, date of organization, number of plants control ed, and capital represented.

IV TARIFF DUTIES AND REVENUES.

TADLn 2.t-Increaec in pricem of sel.cted g8aple commOdite..-

I Price'
Price Price Increase A 1I Increase
1897. 1901. over 1897. Bra- .over 1897
street.
Per cent, Per cent.
iron, No. I foundry,ton
PPIPig lroni, per ton .$12.10 $15.87 31.1 516.00 32.4
gray forge, per i 10.48 14.08 34.3 ' 14,4.3 37.7
13ar iron, best refined' ....
.

24.73 40.38 3. 3 t31.t55 27.6

Steel billets, per ton .. 15.08 24.13 60.0 21.60 42.5
Steel ralls, per ton .18.75 27.3.3 4.5.7 28. 0 49,3
Nails, ci't 1. 47 --2.29 55.8 2 2.02 37. 4
Nails, wire '. 1.:46 2.41 05.1 1.89 20.4
Tlin plate, Amer .e..eer,
100-pound ox 3.05 4. 00 :11.1 :3. 60 14 7
I'ig lead, per p doun'd. . (37 . 0435 17.6 047j 27.7
Quiclksilver, per flask .39. 00 47. 0() 20, 6 42.U0 7.6
Linseed oil, per gallon 3.. :o . .61 103.0 .70 133.3
Olive oil per gallon$ ..64 .62
. 14.8 .72 33.3
Lard prime city, per galloni 3... (1N7 .0845 125.3 .1065 184.0
Textilei, stndard sheetings .. .13.
. .(i 04f 20.6 07t. 0 3
Bricks per thousan(d 4 .4.76 11.00 26f3 6.50 36.8
lime, iarrel4. .75 .80 61 l .92 22.6
0las, window 1.50 i1.65 0.f0 2.01 21.8
:i'ork, mess, banrrel'.9.00 1.. 2 .. 9. 4. 20..X_ 12.2.0
I Uniled States. Statistical Abhstntet, 3 ('oniinercial Year look.
2 l'rices. Stattlllcal Abstract, pp. 6W0 o 552. 4 llratdlstriet.
I)EVELOPMENT OF COWIBINATIONS.
In close 0emijuim tioi, with the ft(dvance in cost of living and( with
thle practical reservationl of the fi(ld of d1omestic )roduction to the
Inalulfacttull'rs ill te more111'0 important lines, sh3ould(I b)e Considered thle
developienGit of idl(ltIStriaI Combin)fif timOis or trusts Which haS is been SO
active (lll'i l((l1t -years. In thle following outline, l)repared( by
John Moodly, itt well-known auttloi'ity, is furnished a suminmarized state-
ment of thle growtl in the numberlI)er of st(ch combinations which has
occurreddr(inii g selected years of the period:
TAB[,g -3.-- Vamre o/f company, datte of' ory(meizatiofl, numlber of )plan coWntrolled, aind
ra(lJtUIl repre8ented,
[3y John Moody, Now York I
ate In of
Number ou C
Name
Nume ofof
company.
Company. ~~~~~~~~~~~~~~~~~~~~~~co
~~~~~~~~~~~~~~
rated. plants or (stocks1ongt
quired ac-
conitrolled.
adid bonds).

Alabamai Cosolidated S;teel & C

Iron Co , .1912 10 $45 000,001
Allegheny teel Co.1905 4 3, 600, 000
AllIs-Chalmers Co... ., 1901 6 50, 000,CO
Alpha 'ortland Ccnion(t C. 1910 8 10,000,000
Aluminum Co. of AWea.107 8 25,000, 300
Amalgamate(d Copper Co.1899 18 198, 000, 000
AmalgamnuoI
American Suga!r Co .190.................
,
grlcuI lurl heIcal Co.1899
12 4
46
2,551,000o
47,000,000,
Americant1Beet Sugar Co . 1899 8 W20,911,000
American B3rakkoShoe &- Found(Iry Co .,, 1902 8 8,380,000
American B3rass Co ..................... 1903 12 16,000,000
Americn Cahn Co.. 1901 . 1;30 82,400,600
AmericanfCi r &'Founm(lry Co. 1899 18 00,000,000
AmericanC'aretnol Co ................ , 1898
.... 6 2,325,000
American Cemn it Co .1899 8 4,101,750
Ameriean Chilckle Co...... 1899' 7 9,000,000
American Coal Products Co.1903 3 10,600,000
American Cotton Oil Co ., 1889 60 40,435,700
American D)yewood Co .1904 4 2,144,000
American Fork & lloe Co .1910 13 0, 194, 400
American Fruit IProduct Co. 102 16 2,760,000
American Clue Co. l9 10 3, 650, 000
American IHardwvare C'orportion.1902 3 9,920,000
I About.
 TARIFP DUTIES AND REVENUES. V

TABLE 3. Name of company, date of organization, number of plants controlled, and

capital represented-ContinUed.
[By John Mood,, New York .1

Date in- Number of Capital out-

Name of company. corpo- plants g ac- standinlg
rated. quired or (stocks and
controll4 ld. bonds).
'
American hide Let her Co......................................... 1899
1902
22 $30,62,000
American Ice
HomlnyNC.................C. ,.. 10 4,000,000:
American
American Iron' & eitlas
Stel Manufacturing
.

Co. .........................................
Co.............................
1905
1899
I 45
5
28,000,
5,650,000
American La Frnce Fire Engine Co.................................
American Laundry achinery Co....................................
1904
1909
6
7
2,900,000
7,225,000
American Linsd Co . .............................................. 1898 30 33,500,000
American Locomotlve Co............................................
American Malt'Cororation.
1901 12 68,892000
1906 10 1,00O
Amerlban' 6kLi4&
American Milinig Co Co,,;......I.......................................
Americ OakLac`ther Co...........................................
1909
1881 4 4,832,800
Americlan iao Co.- h Ui 1908 3 7,000,0
American'
Amelican Pipe&
C6nstructlon Co ................................. 1899 18 t6,700t002
Pneimatio Service Co.....................................
American 17adlator Co.
1899
1399
28
12
19,665,000
9,150,OW
American 1Rolling Mll Co ..................................... 1899 3 6,0000,0
Amer ca1 sb'rew^('
Amer c6ficnHeating C
............................................... 1860
1906
2
10
3,000,000
3,970,00
Amercn Seeding MAhine ...................................... 1906
AmericanSh we Pipe Co Co......................................... 1900
10
34
7, 0,00
8,3030,60
Amerlica hlpbll -& ........................................... 1899 9 16,600,
American
American
Smelting lefining
SnuCo..............
Co. and subsidIaries..................
`

......
1899
1900
1 42
10
181,000,
23,000,0
American Steel Fudres.
Amer¢wnStoeic .................. 1902 12 23,600,000
American Stv
^ ................::...............................
Co.... 1lV1 II 9 6,600,000
American huger Refinig Co......................................... 1891 70 142,000,000
AAmerican
mer l 9i,aU
American hradCo
Tobacco , adCo............................ ................
subsidiares...............................
1898
1904
13
80
16,290,000
660,000,000
AmericanT peaounderss
..lass M.achine Co......
AmericanW dow Co,............................. 1892 38 7,900,000,
........... 1903 25 27,600,000
American Woolene
American Wringer C:o. 1899 32 64,000,000
1891 2 1,760,000
American Wood Working Machinery Co.............................. 1901 11 1,860,000
Amerlean
Ames Shovel Writing Paper Co..........................................
& Tool o .............................................
1899 30 39,000,000
1901 7 5,000,000
Ans¢oCo . 1907 8 1,700,000
Armour & Co- and .................................... 1900 10 50, 000,000
Associated 0il'Co.I)fCalifornia. 1901 10 69,000,000
Atlantio'Codast LumfbarCo.
Atlantic Terra Cotta Corporation..................................
.............. .... 1903
1907
10
6
4,000,000
2,900,000
Autoinatlo Electric Co ,.....' 1908 3 6,226,000
Autosales Gum &Choeolato Co...................................
Baldwin' i.eoomotlve 1911 30 10,000,000
Works.......................................... 1911 I, 4 60,440,000
Barnhant43ros, & Spindler.......................
BethlehemSteel Corporatlon.....................
1911
1907
4
12
3,000,000O
47,000,000
Bishop-Babook-kBocker
E. W. Bliss Co...
Co...........................................
-
1911
1892
5
5
7,484,700:
3,250,000
Booth-Fisherles Co..................................................
Borden's Condensed Milk Co.......................................
1909
1899
7
7
11,300,000
28,760,000
Brill (J, (I,) Co.
13run ~wlok-13alkeCollend. r Co. 1906
J}orsCo,, 1907
IlcrusC .o\..................................... ..:: ......... 1911 4 8,000,000
Callforn1a& 1lawallan SuigarItefnery Co...........................
Callforia Wlino Association.......................... 1899
1894
2
25
6,390,00
7,900,000
Cambria Steel Co.................................... 1898 12 60,00,000
'aseln Co.Coof America................................................ 1900 60 , 487,000
Celluloid
CentrI Coal.......................................................
& Coke Co..............................................
1890 8 6,925,000
1893 8 9,400,000
Ceotral
CetalF Fire 'WorksCo Co............................................... 1890 9 2,700,000
vi
Central Foundry, Co.
Central LeatherdCo.'....0
.................................................
.............................................
1911
1905
14
40
9,200,000
112,620,200
Chanpilon
Chicago CoatedPaper Co..
P'nematic To olmeCo. .........................................
1902
1901
3
12
0,100,000
8,985,000
Chicago Ralllway, jfqfil t Co......................................
Cleveland-A kron3Bag Co..............................................
Co.............................................
+1892
1903
8 2,485,000
2,000,000
Cleveland-lliffs Iron 1891 4 7,500,000
COlevelaid &a3nndiIsky B3rowing Co...................................
Colorado Fel &Iron Co.............................................
1898
1892
12
10
11,400,000
105, 600,000
Computing-TagCoalulatbng-Rccording Co ...........................; 1911 9 17,800,000
Consolidated
Consolidated Indlia
Co. &.fe..o ........................................
Coal ....................................
1890
1905
13
8
3,626,000,
6,173,000
Consolidated Naval Stores Co..................................... 190 8 3,300,000
Consolidate Itubber Tire Co.....................................
Conslidalon('oa Co ............................................... 1899 4 8,000,000
Consolidation Co0al Co. 1800 1 .18, 780,000
Continental Coal (Corporation.........................................
Continental Cotton Oil Co(............................................ 1911
1899
11
7
6,000,000
3,260,000
Continental Gin Co................................................... 1899 7 3,474,000
I About.
VI TABIFF DUTIES AND BEVENUES.

TABLE 3.-Name of company, date of organization, number of plants controlled, and

capital represented-Continued.
[By John Moody, Nw York. -
Date in Number of Ca1 out
Name of company. %ratd.
co plants
quired ac-
or sdingand
(stocks
_ controlled, bonds).

CorPrdut RefninCo1906 1 22 89, 300, 600

Crocker-Wheeer Co. ..... 1893' 3 2,200,00
Crucible Steel Co. of(America......................1900 19 58,500,000I
Cuban-American 'Sugar Co.......................1906 9, 25, 0000, 000
CudahyPack1ing Co... ............. ...1887 5 16,538,~000
Cumberland Corporation .190................6 L 10 40,6000,000
1)eere&Co49..,........I......1911 22 52,375,000
DiamondC Ma0c
Diamonid Rubberi
Co.....1889
.........1905... o
1 20
3
18,000,9
10, 000,00
Distillers' ,Sectirities Corporation....................1902 1 95 59, 000;000,
Du Ponit d6Nemour's Powder Co.....................1903 154) 70,000,000~
Easterni SteelO~ C............................1903 4 gso o,oo
1sstman iKodak Co .........................1901 120 25,68,0
OlcrcBat Col.1899 7 8,000
Electric' Sto'rage B4 ter Co..................... 1888 12 18,20,0
Empiret61 & ironCo ........................1899' 19 8,80,0
Fedrl=ia Reflilfig Co ........7...............1907
Four StatesCot)& cote co ......................1910
3
-3
10,00,0
10,00,0
Garlsand Corpraio.1906....................... o 5 3,96,0
a e DrIApbltCo...........................1903 89 33,500000
General Bakihk Co ~..........................1911 20 10,225o00
G eneral Chemilcal Co ..........................1899 30 20,61,000
Oeneral Electiro (Jo, and subsidiaries..................1892 1 30 88,50000
General Fire Eflinguisher Co......................1892 6 5,000000
General uotors Co. ....1908 27 47,80000
Geonerial R Alw0Ay8Signal Co.-O.1904 3 5,592,000
G oodroh '(B. F,Co ........................1912 a 16,000,000
Great~Lakes Coa Co........................ 1902 5 6,803, 000;
Great NorthernIroni Ores .1906............... g 1 10 150,000,000
reat We,
No04rthr Paper Co .1899................ ...i I 5 11,000,000
Grea trnSugar Co. I......................1905 12 2,4,174,000~
Hale~& K(ibhr Clo...........................1911 17
4 9,000,000
28,885, 000
Harbison-W6lker Rlefractories Co....................1902
Hilton-Dodge iLumiber Co .......................1911 - 9 13,378,000
9,200,000
Hoster-Columb'us Associrated Breweries .................1904 5
Houston Oil co .........1901 4 36,000,000
ndpnntBreoweries Co.......I................1907 10 15,000,000
ndpnntBrewin'g Ce, of Pittsburgh.................1905 16 13,500,-000
In ersoll.Rand Co.~~~~~~~~~~~~~~~~..1905 6 1 1, 000, 000
Intercontinental RUbber Co.~~~~~~~~~~~1906 8 30,280,000
Internationa "AgricUltural Corporation .1909........... w '15
21
27,600j,000
Intemnationl 'Cottoni Mills Corporation.................1910 2300,0
International Jarveter Co.......................1902 33 154,0000
International Nickiel..........1902 8 2,0,0
International Paper'cC..........1898 24 5700000
Interhational4 SaltCCo.........................1901 5 2620000
Internationhal Shoe Co....................1911 20 2,0,0
International SilverCC..............1898 19 1180000
1nternat6ionalSmeting &ik Refining Co .................1908 6 10000, 000'
International SteamP i ump Co.....................1899 12 4,0,0
KesoeCa & Coke Co .......................1902 8 7,500
KnicerbokercoCo........I.................1885 '20 11,30,00
Blle ronWorks..........................1875
La 4 12,0k
Lackawanna Steel Co .1902......................I 7 77,00
moline Plow CO ............................1870 3 9,00,0
morris &Co i-4 ..%.........................1903 7 24,00,0
National'Biscuit'Co .1........................898 20 64,000,0
National Canidy'Co....1902 20 9,000,000
National!Carbon Co ...1899 '10 10,000,0100
...................:........1899
National Casket Co
Nationa Ename ling & stamping co ..................1899
5
15
6,000,000
27,668,400
Pn~roofng
National IFire
National Lead Co.7
Co .......................1899
I........................1891 ~ 11
30 13,621,80
566,00oooj
National Pacoking Ce..........................1903 10 16,201,000
Nation'al Silk D)Veing Co........................1908 8 7,360,000
~iefining ......................1900
Nationasl Co................
Sugar' Co 4 20,000,000
Now Rive 1906 27 31,987,000
Niles-Be ent Pon Co...... 1899 10 12,600,000
Otis Elev0ator Co-,.............. 1898 9 16,339,000
Parker Cotton 'Mills Co.1911................... ll 16 11, 775,800
Pnnsylvania Steel1 Co.........................1901 12 52,000,000
Pec, Butler & Pierce Manufaoturing Co................1886 4 2,858,000
Pttsburgh Brewing Co.........................1899 16 18,400,000O
PittsbughC al Co..................... 1899 ' 200 83,472,000
PitsurhPlate Gla'ss. Co:.1883............... :
PitsurhSteel Co .1901:::
PresdSeel Car ...o.
.

..
lo
1900
9
8
5
22,.75,000
13,500,000
26,00,000
I Abou.
 Unoit
StandardtO1I
Standard'Roller
8ulzbei,
SundayCre'ek

Unio S tocYardso

Unite Coal
UnitedvBox
''
Bearing Co
Standard'Siniyi' Manufacturing Co
Standazd Srew Co..o1900
Studebakejr Corporation
SnsCoCo.
ulbergerCrSun

Texas( oY;f.'i...

P lrI
"

Board Co..1908
Unittd Dry'Goo;ds
United FitC o..,.
United Iron & Steel Co
United Shoe Machinery
United
Irone
United,StatesCas
Sta, #tesEV
United SFptes qy'psum
United StateIs Li.ht
p
-

XOmaha
TARIFF DUTIES AND

Name of DBfo

PullijianCo..~~~~~~~~~~~~~~~~....1899
Rep'ub1

.............,

United Cgar anufaturersCo.........

Co;4 ..............1901
&'l.e.ting
United Sta 'sMetalProducts Co.
United State MtrCO
UnitedSttes Reduotlon&Refining
United S Iates Rubber Co .
Co
..................
United bStateM'aLhlno0ph Co...........

United Stas Steel C orporation .

UtahIdaho ugar
VirlSatCarolnaC
WestinghouseAir Brake Co...1869
Date n
a- plants

IIrn & teel Co ..........................

ac-
rompany.a%d . controlled.

Rogers-Brown Iron Co.................................................

RRVENUES.
TABus 3..-Name of company, date of organiztion, number of plants controlled, and
capital repre8ented-Uontinued.
[By John Moody, New York.J

ustandig
quired or (stocks and
bonds).

Rail'way StelSprlng-Co ...................................................

Royal liPPowder Co ................................................... 1899

-Sehic etCo .
Singer Msnulaotauring Co
SolvevPros6 P
Southern Po'rt;Rictan Sugar Co .
Standa;rd Miling Co
Standard Ofl cloth Co.-.,
.............................................. 1909
i....

-.
..
..1881
...........

................1900
...

............................

Co.and ..........suid...1909
United Engneerng & Foundry Co
i
;.

d Co o Pnnsylva................................190

....................
...............................
............

190d15
Co.

I
..

& Foundry....................................
Pipe
o..-1898
Co

F d.......................... 1911
....................................... 1908
Co.............................. 1901
.................
....................
Co......................................
c Cio . .........................

Westinghouse Electric & Manufaoturing Co .................

I About.

REDUOTION OF RESOURCES.
The rapid growth In population and the failure of donmestic re-
sources to meet the demand for an increased supply of agricultural
products, and in some respects for manufactured goods, have been
most noteworthy during t-he years under consideration. That the
......

I.............................
Co. Xf New'Jersey and subsidiaries ........

....................1
.............................................
.

Co ................................................. 190
swift' "CO-..1886
.. 1901

.. t.M>.-. * . . - - - - - - - - - - - - - - - - - - - - - -
Trentox'Portt4desCo **......t........ 2
Union'Bag&h PaperCo ........................................

190
199

1908
.

.............................. 1901

1892
1901
1907
...........

1896
1872
Number of Capital out-

.....................
............................

................................................
.

72812 46,00,000
1901 7
1899 16

11
4
38,000,000...............................
10 1
7
2,700,000
6,600,000
42,00, 000
4,000,000
38, 000,000
26,00ooo

to
3

36
4
7
10
10
7
22
$120,oo;o
1902
1899
1910

1863

1900
1907
1882
1899
1911
'10........................ 110

1902
1892.
18
1883
VII

15
1 45

'200
7

15
7
12
10

10
5
5
6
4

8
4

5
109

6,900000'
7,000,000
15,100,000
9,000,000
8,216,4000
29,784,000
12,000,000
114,000,000
'8007 1,489,837,900
10,456,000
57,305,400
32
15
114,000,000
71,000,000
34,172 000
70,000,000
13,845, 000
20,000,6000
6,697,0000
60,000,000.
19,000,000'
7,700,
17,000,000
6,000,000
317,715,000
4,000,000
9,232,000
6,100,000
56,000,
3, 14k o000
5a20,1000
10
6
3
20,000,00000
80,i000,00
42,000, 000'
.......
5
10
1,700,000
30
8,200,000
20,000,000
13,00,000

speedy exhaustion of many natural resources is to be 'feared un-

less access to a fresh supply is gained, no one who considers the sub-
ject from an unbiased standpoint can doubt. This is notably true
m the case of such articles as timber, ores, minerals, and other sub-
stances whose supply can not be increased and whose exhaustion is
merely a question of the rate at which they are taken from their
original sources. That the protective system has been greatly influ-
ential in maintaining a too rapid rate of depletion of natural re-
sources in order to satisfy the constantly increasing deman&ds of a
rising population is an unmistakable fact. Responsibility for this
 VIII TARIFF DUTIES AND REVENU ES.

unwise and wasteful condition of affairs must, therefore be directl

assigned to the authors of the economic policy which has cut off the
Un'ited States from the sources of supply to which it would otherwise
have resorted in the natural course of eventb.
IMPAIRMENT OF IND'USTRY.
There' is another serious condition which must be directly
attributed to the tariff, but of which little is usually said. This
is the existence of obsolete plants and methods in many lines
of industry, old machinery and out-of-date methods bemg contin-
ued in operation for years after they havo been practically elimi-
nated elsewhere. President Taft's Tariff Board, for example, showed
that the paper-making machinery of the United States is less
efficient than in Canada, owing to rapid advances in industrial
methods, and that this is sufficienit to put us at a disadvantage with
our greatest competitor; necessitating, from the protective point of
View, the maintenance of an offsetting tariff which would enable the
payment of imterest upon machines that should, have been long-,since
relegated to the scrap heap. III the cotton textile industry the Tariff
Board found some machineiy still in operation which was fully 60
years old, while in the woolen industry a similar buit far, worse
condition existed. The informatioii in the hands of the Ways and
Means Committee strongly confirms the belief that there is rarely
highly protected industry in which a considerable p arcentage
of the plants and machinery - are not hopelessly behind t'e
times. Theedemand for high protective duties is necessarily based
upon the supposed requirements of these plants, for in nearly every
lino of business tho modern an(d most efficient establishments are
able to hold their own against any foreign competition. These con-
ditions constitute one of the strongest argLments in favor of rectify-
ing the conditions comrplained of by applying the impetus of moder-
ate competitioni. The bill H. R. 3321 seeks to accomplish this.
PREPARATION FOR II. R. 3321.
Built on the founldation of work donduriig the ast two years
in the tariff bills relating to individual tai'Vff-schedu ls, which were
passed by one or both branches of Congress, ultimately to be vetoed
by President Taft, mianyfeatures of the present measure, H. R.
3321, have already stood the test of public opinion. It follows in its
outlines the principles laid (lown in the former bills on chemicals,
metals, toxtiles, and sugar. The bill has not followe(d the provisions
of theso ol(der measuros in any slavish way, but the constant attempt
has been ma(lde to improvo upon and strongthen the provisions of
the earlier proposals, while at the same time preserving the general
purpose by which they were throughout inspired. Suich changes as
were Ina(le have been the resuilt of evidence submitted to the Committee
on Ways and Means (luring the past eight months andl carefully con-
sideredf by it, under the actvice of experts familiar with the several
schedules. In no case has a change beeni ma(le upoIn any basis other
than that of the dlesiro to make proper adjustmnents and to carry
out more fully the ultimate purpose of the original tariff-revision
bills presente(i (luring the past Congress.
Table: Table 4.- Comparison by schedules of rates upon luxuries under the act of 1909 and H. R. 3 21.

TARIFF DUTIES AND REVENUES. IX

This has beendone as a result of further study and inl tile desire
to carry out m(ore closely the principles upon which the original
tariff measures were framed. those principles- were the same as
sketched int this report. The alterations incllude some increases in
rates of duty annd some reductions. An exam ple of the former is seen
in a variety of items included in the cheineal schedule, while an
example of the reductions is afforded by: placing rawvwool on the free
list. O;ther changes have been introduedpourposes
for the of im-
proing defective classifications. Perhaps tho best histalnce of this
latter tvpe of change is seen in the classification of aotton cloth,
which has been su divided inlto seven groupings in order to establish
a more cartefully graded system of duties upon fabr6.s ma(Ie of yarns
of different degrees of fineness, this change being similar to one wlich
was variously urged upon the committee. Some sirnilai' regro 1 )ings
have likewise been made in the chemical sohe(lule with a view to
carrying still further the general plan of reorganiizing the irates, a
lan formulated when the revision of the chemical schedli le was first
Eeguii.
These alterations have resulted from data. not available.at the tilme
the revision was first undertaken an(d mateially imprIove the- opera-
tion of those variou.s measures Inow incorporate(d as pat'ts of olle geni-
eral tariff bill.
NECESSARIES AND LUXURIES.

In its tariff-revision work the conmmittee has kept in imiind the dis-
tinction between the necessaries and the luxuries of life, reducing the
tariff burdens on the former to -the lowest possible point commen-
surate with revenue requirements and making the luxries of life
bear their proper portion of the tariff responsibilities.
In the following table are presented comparative rates in the act
of 1909 and H. R. 3321 levied uipoIl articles which may be properly
classed as luxuries:
TABLE 4.-CompariwOn by schedules rates upon luxuries under the act of' 1909 and
R. Y821.

Act of 1909. IT. R. 3321.

Item. qla Eqitiva-

Rate. lentad Rate., lentad
valorem,
1912. vaioroum.
Schedule A: Per cent. Per cent.
Attar of roses .Free . *
. .. . .20 per cent ., 20.00
Perfumery, including cologne .......00o cents per pound, 72.08 40 cents per pound, 74.29
plus 60 per cent. plus 60 per cent.
AmbeigrL9 ..............Freoe............. . 20per cent ...... 20.00
sp,erfumed toilet .50 per cont ....... .0. 40 per cent . 40.00
Schedule :
China, porcelain, parlan and crock 60 per cent ........... 60.00 M5 per cent .65.00
ery ware, palnted or decorated.
Manufactures
of glass, ornamented. do ..........
..... 60.00 45 per cent. 45.00
manufactures of marble, onyx, ala- 60 per cent . 60.00 ..... do. 45.00
baster, and jet.
Schedule C:
Automobiles h............l;. 45 percoent .......... 45.00 .3f (lo.. ; 45.00
Shtns, breech-loading, ceeach, ptis 35 per 4 p t
0Sowah.
ato cent.
X TARIFF DUTIES AND REVENUES.

TABLE 4.-Comparison by schedules of rates upon ltuxuries under the act of 1909 and
H. R. 8321-Continued.

Act of 1909. H. R. 3321.

Item. Equiva- Equiva-

Rate. lent ad Rate. lent ad
valorem, valorem.
1912.

Schedule C-Continued. Per cent. Per cent.

Gold leaf........................... 35 cents per 100 38.77 35 per cent.......... 35.00
leaves.
Tinsel wire........................ 5 cents per pound.... 10.59 10 per cent.......... 10.00
Aeroplanes . 45 per cent.......... 45.00 25 per cent.......... 25.00
(3old) manufactures of, n. s. p. f..... .....do. 45.00 50 per cent.......... 50.00
Silver manufactures of, n. s. p. f .... .do
..... . 45.00 .d . ..... 50.00
Schedule D
Briar root or briarwood ............ 15 per cent.......... 15.00 10 per cent.......... 10.00
Bamboo porch or window blinds, 40 per cent.......... 40. oo 25 per cent.......... 25.00
dyed or polished.
Schedule F.1
Schedule G::
Fancy cakes...................... 50 per cent.......... 50.00 25 per cent.......... 25.00
Mushrooms and truffles............ 2i cents per pound.. 17.33 2i cents per pound.. 17.86
Caviar:.+....; .................... 30 per cent.......... 30.00 30 per cent ........ 30.00
Coinflts and fruits of all kinds, pre- $2.50 pa.r proof gal- 90.98 $2.60 per proof gal- 70.00
served, containing over 10 per lon, plus 35 per lon, plus 20 per
cent of Ialcohol. cent. cent.
Olives, n. s. p. f................... 15centspergallon... 32.66 15c ents per gallon... 32.14
Game, except birds................ 2& cents per pound.. 10.61 1* cents per pound.. 10.29
Schedule H. . . ( 2) ....6..6... ..........
Schedule I, Nottinghfanm lace window 52.04 35, 49 and 45 per eent ..........
curtains etc., containlng 9 points.
Schedule 1, pile fabrics................. 60 per cent......... 60.00 .d
..... 45.00
Schedule K, oriental rugs and carpets, 90 cents per square 58.10 50 per cent. 50.00
and those woven whole for rooms. yard plus 40 per
cent.
Schedule L:
P'ile fabrics................. 53.64 .d ..... 50.00
Handkerchiefs or mufflers, hem- 60per cent......
-...................... 60.00 .d ...... 50.00
stitched, etc.
Articles of wearing apparel of silk. . .....do . 60.00 ... do............. 50.00
Schedule Al:
Decalcomanlas backed with metal 65 oents per pound.. 63.34 20 per cent.......... 20.00
leaf.
Albuins ........... . . 35 per cent.......... 35.00 25 per cent.......... 25.00
Schedule N:
Beads and spangles............... ......do. 35.00 35 per cent.......... 35.00
Trimmed hats or bonnets.......... 50 per cent. 50.00 40 per cent.......... 40.00
Dice, chessmen, billiard and pool ......do. 50.00 50 per cent.......... 50.00
balls.
Firecrackers . 8 cents per pound... 125.13 6 cents per pound ... 98.00
Artificial or ornamented feathers. 60 per cent.......... 60.00 60 per cent.......... 60.00
fruiits, flowers, etc.. n. s. p.- .
Fans.............................. 50 per cent.......... 50.00 50 per cent.......... 50.00
Jewelry ............................ 75.74 60percent.......... 60.00
Laces and embroideries, silk........ 63.52 .. do. 60.00
Gloves ............................. ...................... 44.15 ...................... 31.77
Ivory tusks........................ Free ....... ... 20 per cent.
......... 20.00

I No change In rates except in scrap tobacco, which was reduced from 55 cents to 35 cents per pound.
2 No change in rates from those of the act of 1909 except in mineral waters.
The complement of the preceding table is one which deals with the
necessaries of life and which indicates the consideration the com-
mittee has given to the question of the relation of the tariff to the
cost of living.
 l
Table: Table 5.- Comparison by schedules of rates upon neces aries under the act of 1909 and H. R. 3 21.

TARIFF DUTIES AND REVENUES. XI

TABLE 5.-Comparison by schedule. of rates upon necessaries under the act of 1909 and
X. R. $821.

Act of 1909. H. R. 3321.

Equiva- Equiva-
Item. lent ad lent ad
Rate. valorem Rate. valorem
1912 (per
(per cent).
cent).

Schedule A:
Cream of tartar.................... 5 cents per pound... 25.45 2i cents 'per pound.. 17.80
Medicinal preparations............. 55 cents per pound.. 58.95 10 cents per pound 31.11
+ 20 per cent.
Castor oil......................... 35 cents per gallon... 35.20 15 cents per galion... 15.00
Wash,blue..
WashSlue........................ 3 cents per pound... 23.59 per cent.... 15.00
Saltpeter........................... cent per pound.... 9.27 7 per ton........... 6.88
Common soap...................... 00 per cent......... 20.00 5 per cent........... 5.00
Saleratus or bicarbonate of soda.... I cent per pound .... 21.54 cent perpound.... 8.60
Sal soda, washing soda............. icent per pound .... 20.93 $.centper pound.... 16.25
Borax refined..................... 2cents per pound ... 21.22 .... . 1.31
Schedule'A.
Lime............................ S cents per 100 lbs ... 9.17 25 ercent.......... 6. 00
Earthenware and crockery, not dec- 55 per cent.......... 65.00 35 per cent.rcent.. 35.00
orated,' etc.
Grindstones....................... $1.75 per ton........ 9.22 $1.50 per ton..... 8.33
ScheduleC:,
Bicycles.......................... 45 per cent.......... 45.00 25 per cent...... 25.00
Pocket knives .........' ...................... 77.68 35 and 55 percent... 35 and 55
Razors .... ...................... 72.36 .....do. ;. 35 and 55
Scisq0rs and shears................ ...................... 53. 7 30 per cent.......... 30.00
Knives and forks.................. ...................... 41.9S 2;5 and 30 per cent. . . 25 and 30
ScheduleWD:
Boards, planks, deals, and other 7. CO Free ....... I.....
lumber, planed, tongued and
grooved, etc.
1:lapb6ards ......................... 51.25 per M.......... 3.85 .....do .......... ...~.......
Ilathds.. 20 cents per M ....... 7.98 .....do . ..........
Shinles ........................... 50 cents per M..... 21.29 do .
..... .....
i....
Furniture .......................... 35 per cent .......... .35.00 1.5 per cent .......... 15.00
Schedule E:
Sugar.............................. 48.4_.. 36.25
Schedule G(:
Swine .............. t1.50 per head....... 13.81 Free ..........
'
Cattle........
Catl.............................. .......... . . .. . . 27.08 10 percent.......... 10.00
20. 00 Free................ ..........
Bran'. : 20 per cent..........
Bread'and biscuit, not sweetened.. 20.00 Free................ .........
Buckwheat flour...' 25 per cent.......... 25. 00 Free.............. .........
Macaroni, etc ........... ; :Ij cents per poiund.. 34.25 1 cent per pound.... 23.81
Rice, cleaned....................... 2 cents per pound... 54.05 ..... 33.33
Wheat flour....................... 25 per cent........ 25.00 Free................ ..........
Rtye flour.......................... j cent per pound.... 13.69 Free................
Eggs... 5 cents per dozen.... 36.38 2 centsper dozen.... ..........i
14.28
Stocks, eto., of ifruit trees........... S2 per M ............
.

Fish, fresh, dried, smoked, salted,

64.44 F1
12.71 Freee
pere ............ 27.59
................ ..........
or pickleda
Meats fresh beef veal, mutton, 21.88 Free................
lamb, and pork. bacon and hams,
meat of all kinds, n. s. p. f.
ScheduleWH
Mlneral waters..................... 40.26 30 per cent.......... 27.41
Schedule I::
Spool thread...................... ...................... 22.95 15 per cent.......... 15.00
Cotton cloth..................... ...................... 42.75 ...................... 20.44
Cotton clothing.................... 50 per cent.......... 60.00 30 per cent.......... 30.00
Stockings, hose, and half hose, sel- ...................... 75.38 40 and 50 per cent... 40 and 1'0
vedged.
Men's and boys' cotton work gloves. 50 cents per doten 89.17 35 per cent.......... 1.00
pairs plus 40 per
cent.
Knit shirts, drawers, etc., and un- 60. 28 3J 0per cent.......... 31). CO
derwear.
Schedule J:
Bagging for cotton, etc............. % cent per square 9.53 Free................
yard.
Collars and cuffs................... 40 cents per dozen 49.10 30 per cent.......... 30.00
plus 20 per cent.
Schedulle K:
Blankets ........................... ...................... 72.69 25 per cent. 25.00
Flannels ........................ ...................... 93.29 25 and 35 *eroent.. 25 and 35
Clothinq, ready-made... ...................... 79.60 35 pdo
)er .......... .35.00
Women s and children's ...................... 99.70 . . . . ...... 35.00
XII TARIFF DUTIES A.ND REVENUES.

TABLE 5.-Compario8n by schedules of rates upon neessaries under the act of 1909 and
H. R . J21-Contimued.

Act of 1909. H. R. 3321.

Itenm. _ _ __ Equlva-_ Equlvaw

Rate. valorem
1912 Rate. valorem
(per (per
cn)
cent).
c,nlt).

Schedule jl, I
Sewvig silk..*...* . ..... 25. 00 15 perceint.......... 15.00
Schedifle, M
Pri:ifing paper niot valued above 2 . .14.01 Free ..........
cents per pountid.
I 35per cent .
WVrapping paper ........... 35........ ......... 3 00 25 per cent. 25.00
Books ........ 25 per cent 25.00 15 per cent 15.00
Schedule N:
Brooms . 40percnt
.........cen 40.00. do 15.00
Matches .... 6 cents per gross..... 27.59 3 cents per gross 14.62
Boots and shoes .......... 10 or 15 per cent . 12.14 Free ..........
Ilarness ald saddlery of leather.... 20 per cent .......... 20.00 Free .............. ..........

Harness and saddlery, other ....... 35 per cent .......... 35.00 20 per cent ........ 20.00
In(ia rubber, manufactures of ..... do
...... .. 35.00 10 per cent ........ 10.00
,ead pencils ....... 45 cents per gross 38.88 25 per cent ........ 25.00
plus 25 per cent.

-COST-OF-PRODUCTION THEORY RE.JECTED.

The so-called theory of cost of production as a regulator of rates was

fully discussed at the time-tariff revision:bills were introduced by the
Ways and Means Committee during theSixty-secondCongress. It will
be recalled that muchwassaid by protection advocates insupport of ihe
view tiat itwasincumbentupon the United States to maintain a system
of tariff rates that would cover differences in cost of production be-
tween the United States and foreign countries, in addition to-a
reasonable margin of profit. That doctrine became the basis of the
work of the Tariff oard which furnished reports to the Presi-
dent, later transmitted by the Executive to Congress, concerning
wool and woolens, cottons, pulp aild paper. Many manufacturers
have presented arguments based on the doctrine of comparative
costs. The statement is therefore made that no part of the commit-
tee's work has been founded upon a belief in the cost-ofrproduction
theory and the theory is absolutely rejected as a guide, to tariff mak-
ing. The general basis for this position the committee gives in its
Report No. 455 (62d Cong., 2d sess., to accompany H1. R. 22195),
stating that the view thiat the proper basis for tariff duties is
found by comparing money costs of production, is based upon the
idea tlhat money costs represent the relative (legrees of sacrifice
involved in tuirning out commodities of a given kind in various
countries. For instance, if it is assumed that a given unit of a
certain commnodity can be, produced in England at $1, or the equiva-
lent of that sum, while in the United States the money expenises of
production are $1.25, it is necessary to have a tariff duty equal to
the difheren-ce in these money expenses of producetion, or certainly
to the difference in money expenses minus the allowance for varia-
tions in freight rates, ill order to place the producers in the two
 TARIFF DUTIES AND REVENUES. XIII

countries upon an equal market footing. Continuing the assump-

tion, if this is not done, it will be possible for tlle producer in the
country wlhere money expenIses are lowest to drive olut of business
tlle produicer in, the country wlhere mnoney expenses are highest. This
assumption is based upon ain erroncouEs view of internationial trade,
an(1 finids no0 warranit whatever in economic reasoning.
TIn certain classes of goods, prices or selling values nre fixecl not by
the cost of )ro(lucing at the point of lowest cost, but by th1e cost of
prodlucing at tlh point of hiiglhest cost. Ilhis is true of every comn-
mo(lity sub)ject to the law of (linUiiishIing returns. In thle case of
such 'coniimio(lities thle price is universally a(tmitte(1 to be fixed
ultillately by the cost of pro(lucifg that l)ortion of tile stulpply which
is broughlt ilito. existence iin(iler the least favoral)le con(Iltions, pro-
vi(l1d thiat all portions of the sup)ply are, necessary to satisfy a given:
denian(l. r' mis, if tlhe price of whlet is 75 cents a bushel, wheat will
cominalii( tllat figure in(lelendlent of wlletlher it is pro(luce(l at 25,,50,
75 cents, oi1 $1 per busshel. The price is fixed by a comlparison of
demandl an(1 sup)p)ly, and cost of productionInmerely affordls the limait
which (letermlines tlhe range of prices. Tr11j is a familiar con(lition
in connection witlh agricultural commo(lities, in whiclh proluction
continues on Lunfertile land1s even tlhoughli veIy mnuItch better soil may
be in uise. Tlie better soil does not drive the poorer soil out of
cultivation, unless there is so muclh of theo better that it is unnecessary
to cultivate the poorer soil. Where soils of (lifferent gra(les are
onmployed, the price of tle l)roduct has inOthillg to (lo wlth cost of
pro(luction, btut is determine(d ultinmately by the cost of l)ro(luction
of the most exp)ensive. unit of the (lesire(d sup;ply. It is evi(Ient in
these cases that a stu(dy of the (lifference in cost of prodIuction would
have no relation to the amount of tariff nee(le(d to p)rotect in(Iustries
in one, country against the competition of those in anothier.
There are also numerous comrnmodities whose production is carried
on in countries which have a muuch smaller natural aptness-for them
than do others, because the latter; which might compete successfullyr
with them, have a far greater advanitage in producing some other
commodity. Thus, if State.No. 1 can produce both corn and wheat
more cheaply than State No. 2, it does not follow that it will do so.
If its advantage in the production of wheat is disproportionately
greater than its advantage in the production of corn, it will devote
attention chiefly or wholly to that commodity in which it has the
greatest surplus of productive power. In this case, a study of the
difference of money expenses of production will throw no light what-
ever upon the amnount of tariff needed in order to equalize coniditions
of production. There are numnerous instances in which a condition
of this kind exists-a country having the decided advantage in a
certain coinmodity, but producing it only to a very linited extent,
because there is a greater field for its capital in other directions. In
such cases ascertaming that the money cost of producing a given
article in tho country of great advantage is lower than in the les
favored country, does not mdicate the necessity of a tariff duty upon
this article in the less favored country, because the more favored will
not produce it to aniy considerable extent in any evenit.
Even in those instances where two countries are actively and exten-
sively engagel in producing a manuifactured article, whlose price is
H. Relp. 5, 63-1--2
XIV TARIFF DUTIES AND REVENUES.

determined by cost of production under the inost favorable condi-

tions, as is the case with many largely manufactured articles such as
shoes, cloth, and the like, a difference in money cost of production
is no indication of comnparative competitive power. In order to have
it do so, there must be an ascertainment of the relative efficiency of
labor, as well as of the extent to which given money expenses are the
result of already existing tariff duties. If expenses of production
have been rendered higher by tariff duties, so that the cost of pro-
ducing an article whose raw material is increased in price by tariff
duties, the fact of higher money expenses of production does not
necessarily indicate in eriority in productive power as to that par-
ticular article.
It should also be noted that in every countr there is a great
range of difference in cost of production. ScarcelTy any:commodity
has a uniform cost of production. There is more difference, as a
rule, between factories in the same country, than between the best
and poorest factories in one country and those of corresponding grades
in another. In the report of the Tariff Board on pulp and paper,
little difference was found in money cost of production between the
United States and Canada in the best mills, but a very great dif-
ference in expenseS of production was found betweeni the best and
poorest mills in the United States. The conclusioln would have been,
therefore, that while protection was not needed by the best factories
in the United States against the Canadian factories, it was needed
by the poorer factories in the United States against the better fac-
tories, but not againist those in Canada. Owing to this variation in
cost of production within the same country, it is not possible to com-
pare in absolute terms the productive power of one country with that
of another.
Only averages can be taken, and these show nothing as to any
given case. In order to have the cost of production theory mean
anything, it must be qualified by provisions showing whether it is
intended to apply to differences between the best factories in two
countries, or the difference between the poorest factories in one
country and the best imn another. Otherwise it will indicate nothing
since a tariff which would protect the best factory in one country will
not protect the poorest factory there, or perhaps even the average
factory. A duty which will equalize the average difference in cost
of production between two countries protects n10 one, since it is more
than is needed by the most efficient producer and less than is needed
by the least efficient producer.
The following are some of the reasons why costs are not obtain-
able:
1. Money expenses of production must be ascertained from books
designed to show manufacturing costs. There is no uniformity in
methods of cost accounting, and many factories employ no cost-
accounting system. Cost figures obtained without cost books are of
very little servce. Such figures obtained from sets of books which
are kept in dfflerent ways are of equally little gervice. This is true
in the textile industries to a very great extent, a condition admitted
by the Tariff Board throughout their report.
 TARIFF DUTIES AND REVENUES. xv

2. Even if money costs could be actually ascertained on a com-

parative basis in an unquestionable manner, they must be secured
not merely from olle country but from every competing country, so
that the extent or scope of competition against which the United
States must exert itself Imay be known. ' It might very well be that
one countr would have a low money cost of production, but this
would be of little significance, as that couintry couild not indefinitely
increase the amount of its production.
3. Even if the facts coluld be ascertanine(d In albsolutely accurate form
for all competing foreign countries, the figures would be of little
service as a guide *in fixing tariff duties .because it would not
be known in any given case whether stuch costs afforded the basis
for fixing prices. They do not invariably affor(d such a basis.
Wherever monopoly' conditions exist, wherever the export price
system exists, and wherever patents are an inmportant factor in
roduction, the mere ascertainment of the cost of production is of
little importance. It is far more significant in such cases to know
the range of actual selling prices over a long period.
4. Inasmuch as variations in money cost of production have no
particular significance unless they correspond to relative sacrifice of
labor and capital, and inasmuch as they do not so correspond
except in countries whose price levels are about the same, no safe
conclusion can be drawn from differences in cost regarding the extent
to which a country with a low money cost will bie:0able to undersell
or compete with a country subject to a high m;oney cost.
The siltuation is exeemplifted in the case of railroad rates, where the
constant effort is to fix the rates upon a reasonable basis; yet this
almost invariably results in giving to thle well-built and efficiently
managed roads too large a margin of profit, while it does not give
sufficient margin to those overcapitalized, badly constructed, or
inefficienwtly managed. The addition of a "reasonable profit" over and
above the difference iin the cost of production very greatly compli-
cates the problem and makes the impossible in theory positivelry
absurd 'in application.
THEORY OF TARIFF REVISION.
In the presidential campaign of 1912 the Democratic platform
included the following statement:
We decl.re it to be a fundimental principle of the Democratic Party that the
Federal'Government under the Constitution has no right or power to impose or collect
tariff duties, except for the purpose of revenue, and we demand that the collection of
such taxes shall be limited to the necessities of government honestly and economically
administered.
The high Republican tariff: is the'. principal cause: of the unequal oistribution of
wealth; it is a system of taxation which makes tho rich richer and the poor poorer;
under its operations the American'farrmer and laboring man are the chief suffe'rers-
it raises the cost of the necessaries: of life to them, but does not rotect their product
or wages. The farmer sells largely in free, markets and, buys almost entirely in the
protected markets. In the most highly protected in(dustries, such as cotton and wool,
steel and iron, the wages of the laborers are the lowest paid in any of our industries.
We denounce the Republican pretense on that subject and assert that American wage
are established by competitive conditions and not by the tariff.
We favor the immediate downward revision of the existing high and, in many
cases, prohibitive tariff duties, insisting that material reductions be speedily made
 XVI TARIFF DUTIES AND REVENUES.
upo thle nececssaries of life. Articles iiterinig iltO co01ni)etition with truist-controlled
products anld articles of Americall ilianufacture. wvhichl are sol(1 abroad more cheaply
thaui at home should )bo put uiponi t.he free list.
AN'e recogniize that ouir systehmof tariff taxation is itilitately connlecte(l with the
busilness of tlle colntry, and we favor the uiltimiate :ttainlent
l)rincilles
of the we
advocate by legislation that wvill nIot injure or destroy legitimate industry.
WN'e denloun61ce the action of Presidelt Taft in vetoing the bills to reduc'e t.he tariff
in the cotton, woolen, metals, an(l cheitiical schedules, and(I the farmers' free-list bill,
all of which wsere designe(d to give iiiiiie(liate relief to the miiasYSes from (lie exactions
of the trusts.
The Repuiblicani Party, while promising tariff revision, has showji by its tariff
legislationi that such revision is Jnot to be ill the people's interest; ani( having been
faithless to its, pledges in 1908, it should nIo longer enjoy the confidenlce of the Nation.
We appeal to the Americani people to support u1s in our (leman(l for a tariff for revenue
only.
We believe thlat this pledge containss two essoential idceas, both of
which have, been applied in tlhe formidatlioi of It-. R. 3321 ats follows:
1. The eS;tablishment of duIities designle(d primarily to produce rev-
enuic for the Governmenit and witholut thouight of protection.
2. rThle attainmient, (of this end( by legislation that will niot injutre or
destro)y legitim-ate indtustry.
It is a fact that in many lines of b)usiness thle systom of Pro(Lectioni
has been carried to stuelh a point as to l)ut business into ain artificial
condition. anid to ind(uice the upbuilding of mainy establishments not
needed and so uneconomically conducted as to preclude thom from
doing bulsilness except by virtue of special favor granted them through
Goveriiment action. If these establishmenits stoo(d alonie to-dlay, there
wolild be no reason why the special privileges accorded to therm should
not be instantly wiped otut. If as a result of the elimination of exces-
sive protection, ill-equipped anld badly organized factories should find
-it necessaly to discontinui e operations, the country wouild be the
richer onl that accouint, since its capital woulldi be diverted into pro-
ductive channels, and it would be enlabled to devote itself exclusively
to healthy enter)rises yielding a reasonable return.
The business enterprises which have been artificially created at anr
unwarranted expense (lo not stand alone, but have staffs of employees
who are immediately concerned in their maintenance and to whiom
the necessity of shifting their occupationllwould be a hardship. There
arc complex commercial relationships partially developed under or
depOn(lent uponi the existing tariff which it would be unfair and
unwise suddenily to disturb. This does not mean that there should
never be a beginning in the task of eliminating these evils. On
the contrary, it shows the necessity of beginning the task promptly.
It, however, emphasizes the necessity of carrying through the transi-
tion to a state where b siness enterprises will be obliged to rest upon
their own bases without Governiment support, in such a way as to
avoid unnecessary jars to trade and to give every opportunity for
reasonable aljust.mient, so that the shift may be made withouit unnec-
essary.displacements of labor and capital. The committee has had
these facts in mind in the preparation of H. R. 3321 anid the attempt
has been made-
1. To eliminate protection of profits and to cul off the dcuties which
enable industrial managers to exact a boinuis for whiclh nio equivalent
iFl rendered.
 TARIFF DUTIES AND REVENUES. XVII

2. To introduice in every line of industry at competitive tariff basis

providing for, a suibstantial amounit of importationi, to the end that no
concern shall be able to feel that it has a monopoly of the home
market gained other than through the fact that it is able to furnish
better goods at lower prices than others.
It is felt that tariff schedules aiming at these two conditions can
dlamage Ino legitimate indlustry and is thle least that can be asked by
those who desire the consumer to be safeguarde(d in some measure
against exploitatioin by monopolies that now practically (lictate prices
in the domestic field.
THEORX OF A COMPETITIVE TARIFF.
The dividinog lile betweeni the positions of the two great parties on-`
this question is very clear aIi(l easily ascertained in theory. Where
the tariff rates balance the dlifference in cost at home an(i abroad,
including an allowance for 0:the difference in freight rates, the tariff
must be competitivo, and from that point do-vlnward tto the lowest
tariff that can be levie(d it will continue to be competitive to a greater
or less extenit. WAhere competition is not interforod with by levying
the tax above the highest conmpetitivo point, the profits of tho manu-'
facturer are not protected. On tho other hand, when the duties
levied at the customhouse are high enough to allow the Ameriean
manufacturer to make a: plprofit before his competitor can enter the
field, we have iinvaded the (donlain of, the protection of profits. In
our judgment the protection oif any profit must of necessity have a
tendency to (destroy competition an(F create monopoly, whether the
profit protected is reasonable or unreasoiiable.
We should bear in mind that to ostablish a buisiness in a foreign
country requires a vast outlay, both in time an(l capital. Should thfe
foreign manufacturer attemiipt to establish himself in this country, he
must advertise his goods, establish selling agencies- and points of dis-
tribution before he can successfully conduct his business. After he
has done so, if the home producer is protected by a law that not oinly
equals the difference in cost at home and abroad, but also protects a
reasonable or unreasonable profit, it is onlly llecessary for him to lower
his prices slightly below the point that the law has fixed to protect
his profits and his competitor must retire-from the country, or become
a bankrupt, because he; would then have to sell his goods at a loss,
and not a profit. 1 he foreign manufacttirer having retired, the home
producer could raise his prices to any level that competition would
allow him, and it is not probable that the' foreigner, who had already
been driven out of the country, would return, no matter how inviting
the field, as long as the law remained on the statute books that wouldL
enable his competitor to put him out of business.
Thirty or forty years ago, with a large number of small manufac-
turers, lonest comp4etition, no attempt to restrict trade, and a home
market more than able to consume the production of our mills and
factories. the danger and the injury to the consumer of the country
wvas neither so great nor so apparent as it is to-day, when the control
of many large industries has been concentrated in the hands of a few.
Domestic competition then regulated prices to a reasonable extent
xvm TABIPF DUTIES AND BEVENUES.
even where foreign comTetition was prohibited. Wbhn we ceased
having competition at ome, and the law prohibits competition
from abroad by protecting profits, there is no relief for the consumer
except to cry out for Government regulation. There is no more rea-
son or justice in having the Government attempt to protect the profits
of the manufacturers and producers of this country than there would
be to protect the profits of the merchant or the lawyer, the banker or
the farmer, or the wages of the laboring man. By reason of the
'efficient use of American machinery by American labor, in most of
the manufactures of this country tie Iabor cost per unit of produc-
tion is no greater here than abroad. It is admitted, of course, that
the actual wage of the American laborer is in excess of European
countries, but as to most articles the labor *age in this country is
not more than double the labor wage abroad.
When we consider that the average ad valorem rate of duty levied
at the customhouse on manufactures of cotton goods, for example,
is 45 per cent of the value of the article imported and the total
labor cost of the production of cotton goods in this country aver-
ages only 21 per cent of the factory value of the product, that the
difference in labor cost at home and abroad is about as 1 is- to
2, ancd that 10 or 11 per cent of the value of the product levied at
the customhouse would equal the difference in the labor wage, it
is apparent that our present tariff rates have been misused for the
purpose of protecting profits for the home manufacturer. This is
not only true of the manufacture of cotton goods, but of almost
every other schedule in the tariff act. To protect profits, of neces-
sity means to protect inefficiency. It does not stimulate industry
because a manufacturer, standing behind a tariff wall that is protecting
his profits, is not driven to develop his business along the lines of
greatest efficiency and greatest economy. This is clearly illustrated -in
a comparison of the wool and iron and steel industries. Wool has had
a specific duty that when worked out to an a(d valorem basis amounts
to a tax of nearlv 90 Jer cent of thQ average value of all woolen goods
imported into the T)nited States, and the duties imposed have re-
mained practically unchanged for 40 years. During that time the
wool industry has made comparatively little progress in cheapening
the cost of its products and improving its business imethods. On the
other hand, in the iron and steel industry the tariff rate has been cut
every time a tariff bill has been written. Thirty years ago the tax
on steel rails amounted to $17 a ton; to-day it amounts to $3.92.
Thirty years ago the tax on pig iron was $6.72 a ton; to-day it is $2.50.
The same is true of most of the other articles in the iron and steel
schedule, and yet the iron and steel industry has not languished.
Which is the wiser course for our Government to takel The
one that demands the protection of profits, the continued policy
of hot-house growth for our industries-the stagnation of develop-
ment that foiows where competition ceases-or, on the other hand,
the gradual and insistent reduction of our tariff laws to a basis
where the American manufacturer must meet. hornest competition,
where he must develop his business along the best and most eco-
nomical lines; where, when he fights at home to control his market,
he is forging the way in the development of his business to extend
his trade in the markets of the worId. In our judgment the future
growth of our great industries lies beyond the seas.
Table: Table 6.- Comparison, by schedules, of rates on 10 selected articles under the act of 1909 and H. R. 3 21.

TARIFF DUTIES AND RE'VENUES. XIX_

REPRESENTATIVE REDUCTIONS.

In the following table are p'resented the rates dutyelevied

of by
the tariff act of 1909 and by'the bill herewith presented upon about
100 articles selected from the several schedules as representative.
The latter have been chosen from the several schedules with a view
to giving a clear illustration of the revision effected by H. R. 332'1.
TABLE 6.--Comparison, by scWedules, of rates on 100 selected articles under the act of
1909 and H. R. 3.521.

Act of 1909. H. R. 3321.

Item. Eqtiva- Equliva-

Rate. leint ad Itate. lent ad
valorem. valorem.

Schedule A-Chemicals, oils, and paints: Per cent. Per cent.

Boracic acid..... 3 cents per pound.. 78.70 * cent per pound... 21.43
Medicinal preparations not contaiing 26 per cent. 25.00 15 per cent........ 15.00
alcohol, n. s. p. f. do.
Alum ................... 3eentperpound... 40.62 ...... 15.00
Cream of tartar ................... Scents per pound.-. 25.46 2-cents per pound. 17.86
Blacking ......... : 2S per eent........ 25.00 16 per cent. 15.00
Drugs.................................. t cent per pound 12.54 10 per cent...... 10.00
+ 10 per cent.
Glue, valued between 10 and 26 cents 25 per cent...... 25.00 15 per cent........ 15.00
or pound.
Olive oil. 60 cents per gallon. 35.18 1 30 cents per gallon. 21.05
Red lead. 21 cents per pound. 60.351 25 per cent........ 25.00
Borax, nrened........................ 2 cents per pound. 21.22 t cent per pound.. 1.31
Schodule B-Earths, earthenware, and
glassware: 10 per cent........
Fire brick, not glazed, weighing not $1.26 per ton...... 31;.07 10.00
more than 10 pounds each.
Quarry' tiles .................... 45 per cent ........ 45.00 20 Per cent........ 20.00
China clay or kaolin.................... $2.0 per ton...... 38.51 81.25 per ton...... 19.23
50.00
Fluor spar............................ $3 per ton......... 107.94 S1.60 per ton......
Earthenware-
China, painted, etc................. 60 per cent ....... 60.00 65 per cent........ 55.00
Commons............ 26 per cent.. 25.00 15 per cent. 16.00
Window glass, not exceeding 150 square
inches, valued at more than Ij cents
1I cents per pound. 38.12 i cent per pound.. 25.00
per pound.
Plate glass, cast, polished, above 720 223 cents per 78.17 12 cents per square 42.67
square inches. square foot. foot.
Schedule C-Metals and manufactures of:
Pig Iron............................... .................... 9.03 8 per cent......... 8.00
Slabs ... coent per pound. 17.79 .....do. 8.00
Beams, girders, joists, valued above , ..do. 23.18 12 per cent........ 12.00
cent per pound.
Antifrltion balls, ball bearings........ 46 per cent. 45.00 35 per cent........ 36.00
Tin plates............................. *centsperpound 26.74 20 per cent........ 20.00
who. 4 per cent........ 37.64 .....do. 20.00
Wbo...................................
Motor cycles........................... 45 per cent........ 45.00 40 per cent ......: 40.00
Razors and parts of................... ........ 72.36 35 and 65 per cent. 35.00
............ 56.00
Copper in plates, sheets etc............ 2 centsperpound. 10.82 5 per cent. 5.00
LeaT in sheets, pipes, ei............... 21 centsperpound. 40.70 26 per cent........ 25.00
Schedule D-Wood and manufactures of: 15.00
Veneers of wood........................ 20 per cent........ i per cent........
20.00 5I
Casks, barrels and hogsheads, empty...
Toothpicks.............................
30 per cent .......
2 cents per M+15
30. 00 J.do
46.04 25 per cent........
15.00
I16.00
5.00
per cent. 15.00
oIouse furniture........................ 36 per cent........ 35. 00 15 per cent ........
Schedtle E:-Suigar, molasses, and manufac-
tures of:
48.54
Sugar.................................. 65 cents perpound.
Saccharine............................ 7V9.64 1. Ocentsaperpo und . 76.47
Candy and contectionery- 20.00
Valued at not more than 15 cents 4 cents per pound 5.44 2 cents per pound.
per pound. +15 per cent.
Valued at more than 15 cents per 60 per cent........ 60. 001 25 per cent........ 25.00
pound.
XX TARIFF DUTIES AND REVENUES. -

TABLE 6.-Conaparison, by schedules, of rates on 100 selected articles under the act of 1909
and H. R. 3321-Continued.
Act of 1909. H. R. 3321.
Item. Equliva- Equiva-
Rate. lent ad Rate. lent ad
valoren. valorem.

Schedlle F-'I'obiacco ati(l maui factures of: Ier cent. Per cent.
Wrapper and filler tobacco, when mixed $1.85 per pound... 164. 29 $1.85 per pound ...I 169. 1l
or packed withimore than 15 per cenit
of wrapper tobacco.
F'iller, n. s. p). f.--
Unstemme(d ........................ 35 cents per potin(l. 56.79 35 cents per poin(l. 59.14
stemmed..... 50 cents per pot n(. (I1. 54 50 cenits per pouind. 63.40
Man fact"red tobacco.. 55 cents per pound. 104.60 55 cents per pound. 137.50
Schedutle G-A grieilttiral products and
provislons'
Cattle, 1 year old or over-
Valled at not more than $14 per $3.75 per head..... 27.58 10 per cent........ 10.00
head.
Valuted at more than $14 per headl.. 27i per cent ...... 27.50 .....do. 10.00
Horses-
'alitied at $1110 each or less......... $30 per head...... 32.93 $16 per head...... .........
Val ued at over $200 each........... 25 per cent........ 25.00 10 per cent........ 10.00
Shee
She.ss than 1 year old................ 75 cents per hea(l. . 18.78 .do........:
10.00
1 year old or over.................. $1.560 per head. 14.13 10.00
Barley................................. 30 cents per bushiel 43.011 15 cent per bu'shel. 23.08
Macaroni, vermicelli, etc............... 1I centts per pound. 34.'25' 1 cent per pound.. 23,81
1? ice, cleaned .......................... 2 cents -per oInd.
Wheat ................................. 25cents per bushel.
54.05
35.65
.10 centsi
.do- 33.33
14.29
perpiishel.
I3utter................................. 6 cents per pbund . 25.51 3 cents per pound. 12.00
Cheese ................................ ..... do. .
31.79 20 per cent..... 20.00
Eggs................................... S cents per dozen.. 36.38 2 cents per dozen.. 14.28
IlIay ................................... $4 per ton. 43.21 $2 per tOnl..... 26.67
I l'etis (lrie(l......................... 25 centis per bushel. 14.36 15 cents per bushel. -9.55
Appies, peaches, quinces, cherries,
plums, and pears, green or ripe....... .... do. 20.23, 10 cents per bu'shel. 8.33
F'igs ..-............................... 2i ceuits per pound. 51.'53 2 cents per pound. 42.11
Walnlts, not shelle(d................... 3 cents per pound.. 40.55 .....do ........... 28.66
Pouiltry live. .....do . 13.10 I cent per pound... 6.67
Mulstar(i ............................ 10 cenits per pouind. 37.60 6 cents per pound.. 23.08
Vinegar...... 7. cents per gallon. 33.03 4 cents per gallon .. 17.39
Schedulle 11-Spirits, wines, aud other bev-
erages:
Brandy ................................ $2.60 per proof gal- 101.84 $2.60 per proof gal-
lon. lon.
ChhampNgne in bottles containing not $9.60) per dozen.... 58.72 $9.60 per dozen.... 61.94
more than 1 quart and more thian I
pint.
Malt liqtiors in bottles or j1gs. 45 cents per gallon . 47.14 4S cents per gallon. I .. ......

Scheduile l ICotton manufacttures:

Colton tiiread ........................ 31.54 19.29
cotton clothl........'.. ........I............ 42.7S 26.44
Waterproof cloth composed of cotton or 10 cents per square 50.56 -.-5 .: -: I
-

25.00
otiler vegetable flber whether com- yard plus 20 per
posed in part of inila rubber or cent.
otherwise,
Nottingham lace window cutrtains, 52.04 35, 40 and 45 per 1 35,40
nets, nettings, etc. cenL, and 4A
Clothiing, ready-made.................. 60 per cent....... 50.00 30 per cent....... 30.00
Shirt collars and cutffs.................. 45 cents per dozen 64.03 25 per cent........ 25.00
plus 15 per cent.
I'lushes, velvets, etc................... 61.16i 40 per cent........ 40.00
Handkerchiefs. i .. . ................... 19.27 30 per cent........ 30.00
Stockings hose and half-hose........... ..........I.......... 75.38 40 and 50 per cent. 40 and 50
Men's and boys' knitted gloves......... S P0 cents per dozen 89.17 35 per cent........ 35.00
plus 40 per cent.
Underwear of every description ....... .................... 60.28 25 per cent........
Cotton table dainask.................. 40 per cent ........ 40.00 ......d 25.00
All other manufactures of cotton..... 45 per cent........ 45.00 30 per cent........ 30.00
fcbedule6 J -Flax, hemp, and Jute, and
manufactures of:
Ylax, not hackled or dressed . .... $22.40 per ton .... 7.21 $11.20 per ton. 3.67
Hemp, not hackled or dressed ..... $22.50 per ton.... 10.45 do.......
.,. 6.40
Single jpite yanis not finer than 5 lea or I cent per pound 26.90 15 per cent........ 115.00
numbxer. plus 10 per cent.
Cables' or cordage of hemp, tarred or tm- 2 cents per potnd. 17. F3 1 cent per
pound..1 9.23
tarred.
hlose, hydrauille or flume............... 15 eents per pound. 15.37 7 cents per pound. 9.23
Oileloths for floors...................... 44.29 20 per cent ....... 20.00
Handkerchiefs composed of flax, hemp, 50 per cent........ 60.00 35 per cent........ 35.00
etc.
All woven fabrics, n. s. p. f............ 45 per cent ....... 46.00 40 per cent ........ 40.00
 TARIFF DUTIES AND REVENUES. xxI
TABL.E 6.-Comparison, by 8chedules, of rates on 100 selected articles under the act of
R.
1909 and H. A.21--Continued.

Act of 1909. H. R. 3321.

Item. Equiva- I
Equiva-
Itate. lent ad Rate. lent ad
valorem. valorem.

Schedule K-Wool, awd manufactures of: Per cent. Per cerd.

Raw wool.............................. .................... 43.61 Free .............
Yarns ................................ .................... 79.44 20 per cent........ 20.00
Blankets............................... .................... 72.69 25 per cent........ 25.00
25.00
Flannels for underwear................. I.................... 93.29 25 and 35 per cent. and
35.00
Women's and children's dress goods.... 99. 70 35 per cent........ 35.00
Ready-made clothing and wearing ap- 79.66 ......do
parel.................................. . 35.00
Webbings, suspenders, braces, etc ..... 50 cents per pud 82.07 .do.
..... 35.00
plus 60 per cent.
Aubusson; Axmlnster, etc., carpets..... 60 cents per square 64.62 .do.
..... 35.00
yard plus 40 per
cent.
Saxony, Wilton, etc., velvet carpets....
.o 69.38 30 per cent........ 30.00
Brussels carpets........................ 44 cents per square 69.45 25 per cent........ 25.00
yard plus 40 per
cenit.
Tapestry velvet carpets................ 40cents'per square 62.05 30 per cent........ 30.00
yard plus 40 per
cent.
Tapestry Brussels carpets.............. 28 ceints per square 88.53 20 per cent ........ 20.00
yard plus 40 per
cent,
Treble ingrain carpets.................. 22 cents per square 60.94 .. do. 20.00
yar(d plus 40 per
cent.
D)ruggets.i ........................ ..... do. 68.17 ..... .do
: 20.00
ScheduleL--. Silk and sUk goods:
SiIk, partly man"tIc urea............. 35'cents per pound. 21.01 15 per cent........ 15.00
Spun silk or Schappe sl k yarn......... .................... 37.09 35 per cent........ 35.00
Sewing silk, twist, floss, etc. 25.00- 15 per cent........ 15.0o
Silk goods'hn. s. p. f., woven in the piece..................... 54.89 .................... 50 00
Handkerohiefs or mufflers, hematit.:hed. 60 per cent ........ 60.00 50 per cent ........ 50.00
Ribbons, (n.s. p. f.) bandings......... 50 per cent ........ 60.00 40 per cent ........ 40.00
Artificial sllk yarns................... 41.75 35 per cent........ 35.00
Schedule JM-Pulp, papers, and books:
Printing-p aper, valued at over 2j cents 15.80 12 per cent........ 12.00
per pounC.
Copying paper, stereotype paper, etc... .................... 42.33 30 per cent........ 30.00
Bags, envelopes, etc.................... 5 cents per pound 49.92 35 per cent........ 35.00
plus 30 per cent.
Surface-coated aer.............. .................... 50.00 ..... do . . . . . . 35.00
Parchment and lmitation parohment 2 cents pr ond 47.94 35.00
pape'rs.-."'t i. plus 10per cent.
Potograph .................... .................... 28.99 25 per cent........ 25.00
W per....................... ......... ........ 45.13 25 per cent........ 25.00
W p p . S. p. f.............. 35 per cent..... 35.00 ..... .do. 25.00
Schedule N-Sundrie:
rimnid hats....................... 50 per cent........ 50.00 40 per cent....... 40.00
Brooms ......... 40 per cent........ 40.00 15 per cent........ 15.00
Gunpowder (unider 20 cents per pound). 2 cents per pound. 18.31 t cent per pound.. 4.67
Matches, friction or lucifer, in boxes 6 cents per gross ... 27.59 cents per gross... 14.52
containing not more than 100 matches
per box.
Furs not on the skin... ........ 20 per cent........ 20.00 15 per cent...... 15.00
Haircloth known as hair seating cloth.. 20 cents per square 14.25 15 ents per square 10.71
yar(l. 2yard ., 5e
Indurated fiber ware.................. 35 per (ent........ 35.00 25 25.00
Jewelry ......... .................
I .................... 75. 74 60 per cent. 60.00
Precious stones, uncut.-.. Free.............. ........ . ........ 10 per cent. 10.00
Manufactures of leathern s, p. f........ 40 per cent........ 40.00 30 per cent....... 30.00
Manufactures of straw and grass....... 35 per cent........ 35.00 25 per cent.. 25.00
Manufactures of India rubber........... ....do 35.00 10 per cent... 10.00
Matting made of cocoa flber or rattan.. 6 cents per square 21.41 5 cents per square 19.35
yard. yard.
Pencils, lead........................... 45 cents per gross 38.88 25 per cent........ 26.00
plus 25 per cent.
xXII TARIFF DUTIES AND -REVENUES.

REVISION EXPLAINED.

As already stated, the committee has in the main followed the

policy set forth in the revision bills heretofore reported at the Sixty-
second Congress. A brief discussion of some of the changes will
suffice to furnish a general idea of the character of the new tariff
measure.
CHEMICALS, OILS, AND PAINTS.
As representing the chemical schedule the rates bn certain com-
modities show heavy reductions. For instance boracic acid.is cut
from 78.70 per cent, computed on imports of 1912, to 21.43 per
cent, glue from 35.06 per cent to 14.29 per cent, and red lead
from 60.35 per cent to 25 per cent. Moderate reductions have
been made on medicinal preparations, which are cut from 25 per
cent to 15 per cent, blacking from 25 per cent to 15 per cent,
drugs from 12.54 per cent to 10 per cent, and olive oil in bottles
from 35.18 per cent to 21.05 per cent. The schedule contains a
number of articles on which either no reduction has been made or
an advance provided for. In each case the effort has been to con-
sider not only the character of the article, whether a necessity, a
comfort, or a luxury, but also the amount of its probable importa-
tion and its relation to the revenue-yielding power of the schedule.
In every case the action taken has thus been the result of complex
factors, the prime motive being that of granting to the public as
much relief as was practicable, while at the same time conserving
the incomes of the Government to the necessary extent.
EARTHS, EART11ENWARE, AND GLASSWARE.
Rates on all brick have been cut on the average from 30.23 per
cent, computed on- imports of 1912, to 10.28 per cent, tile from 47.84
per cent to 23.38 per cent, asphalt from 35.05 per cent to 9.62 per
cent. Ordinary earthenware, which was: already relatively low, be-
ing subject to an average duty of 24.67 per cent, has now been
cut to 15 per cent, -while window glass has been given an average
reduction of from 46.38 per cent to 28.30 per cent. On the other
hand, plate glass, which may be considered a luxury, still retains a
dutyof nearly 40 per cent, the average being 38.45 per cent in place
of the duty of 63.95 per cent in the law.
METALS AND MANUFACTURES OF.
In iron, steel and their products, and other metals, there have been
important extensions of the free list, including iron ore and steel rails.
Pig iLron and slabs, which were 16.35 per cent and 17.79 per cent, have
been cut to 8 or cent in each case; beams from 23.20 p cent to 12
per cent, and forgings from 30 per cent to 15 per cent. On the other
hand, bicycles, a much more highly manufactured product, are
dutiable at 25 per cent as against 45 per cent, and razors at 35 and
55 per cent as against 72.36 per cent. Many items of manufacture
controlled by monopolies have been placed on the free list.
 TARIFF DUTIES AND REVENUES. XXIIII

WOOD AND MANUFACTURES OF.

The idea of the large extension of the free list for the un.manufactured
products has been the fundamental conception, while the effort has
been made to improve the status of the manufactured lumber.
Thus sawed boards other than cabinet wood have been carried to
the free list, while sawed cabinet woods, which were 12.75 per cent, are
now 1O per cent; casks, barrels, etc., which were 30 per cent in 1912,
are now 15 per cent; and house furniture, which was 35 per cent,
is now 15 per cent.
SUGAR.

The action of the committee with regard to sugar shows an

appreciation of the commercial conditions involved and the com-
mittee's desire to respond to the public demands for free sugar.
The plan as provided in the bill is to reduce with its passage the pres-
ent sugar rates by 25 per cent, with the further provision that May
1, 1916, sugar goes on the free list.
TOBACCO AND SPIRITS.

Schedules E and F have ,been found to be good producers of

revenue, are sufficiently adjusted to the internl-revenue duties of
the United States, deal entirely with articles not to be classed as nec-
essaries,- and have, with the exception of scrap tobacco and mineral
waters, been left at the same rates as in the present law.
AGIUOULTURAL PRODUCTS.
In the effort to relieve the consumer and to. mitigate the high and
rising cost of living, Schedule G, whici deals with agricultural prod-
ucts, has been thoroughly revised and important reductions have been
made. For instance, horses valued at more than $150 have
been cut from 25 per cent to 10 per cent, cattle from 27.07
per: cent to 10 per cent, sheep from 16.41 per cent to 10 per
cent, barley from 43.05 per cent to 23.08 per cent, macaroni
from 34.25 per cent to 23.81 per cent, hay from 43.21 per cent to
26.67 per cent, dried fruits from 27.21 per cent to 15.38 per cent,
figs from 51.53 per cent to 42.11 per cent, lemons from 64.85 per cent
to 24.03 per cent, live poultry from 13.10 per cent to 6.67 per cent,
and vinegar from 33.03 per cent to 17.39 per cent. Other changes
are in proportion, and the general effect has been to reduce in a very
*material proportion the heavy taxes upon imported foodstuffs.
COTION MANUFACTURES.

During the past few years Ilar part of the discussion of the tariff
has borne upon the textile schedu es which, it has been felt, were
unduly high. Particular attention has therefore been paid to the
revision of these sche(lules in the effort to adjust them more equitably
both to the needs of the consumer and to the condition of the manu-
facturing industry in the United States. In Schedule I, dealing with
cotton, comparisons of the principal iteris show reductions on cot-
ton thread from 31.54 per cent to 109.29 per cent, on spool thread
 xXIV TARIFF DUTIES AND REVENUES.

fromii 22.95 per cecnt to 15 per cent, on cotton cloth from 42.75 per cent
to 26.44 per cent, oII Waterp)roof cloth from 50.56 per cent to 25 per
cenlt, on rea(dyma(Ie clothing from 50 per cent to 30 per cent, on
collars an(d cuffs from 64.03 per cent to 25 per cent, on plushes from
51.14 per cenit to 40 per cenit, on handkerchiefs from 59.27 per cent
to 30 per cent, oni stockin;,, selvedged, etc., from 75.38 per cent to
40 and 50 i)er CbnIt, accor(ding to value, on gloves from 89.17 per cent
to 35 per cent, oii un(lerwear frolmi 60.28 per cenlt to 30 per cenit, and
on cotton damniask froml 40 per cent to 25 per cent.
FLAX, llENIMP, AND JUTE, AND MANUFACTURES OF.
Schedldel J, (lealinig wvith flax, help, anid their products, has been
similarly (lealt wvith. Raw flax anii(l raw lhemi1) hliave been reduced
from $92.4() and $22.50 )er ton, resl)ectively, to $11.20 each, jute
yarnis not finler than 5 leat hiaXve beemi Clut from 26.90 per cent to 15
per cenIt, cal)les aii(i cordage of istle, etc., from 6.43 per cenIt to 4.55
per cent, oilcloths for floors fromi 44.29 per cent to 20 per cent, han(l-
kerclhiefs fromii 50 })er cent to 35 per cent.
MANUFAC'riJRiES OF WOOL.
Schde(lul K, (dealinig with wools and woolen manufactures, has
been the dcnter of criticismn for many years and the commlittee has;
given it veiy careful stucly. The result has been to make raw wool
free of duty, and reduce ya.rins fromli 79.44 per cenIt to 20 per cent,
blankets from 72.69 per cenit to 25 per cent, flaninels from 93.29 per
cent to 25 and 35 per cent, according to value, (dress goods froimi 99.70
pe' cenIt to 35 per cent, clothing from 79.56 per cent to 35 per cent,
webl))ings, etc., frolmi 82.07 p)er cent to 35 per cent, and carpets from
rates rang10ing fromi 50 per cenit to 88 per cenIt to rates ranging from
20 per cenit to 50 per cent.
SILK MANUFACTURES.
In Schedutle Ii, relating to silk anid silk goods it hals been sought to
convert tho schedule, previously almost wholly specific, to an ad
valoreii basis, thereby placing it upon an equality of treatment with
the other schedlules aflied( to it aind eliminating the possibility of
conceale(d protectioln. Inasmuch, however, as silk an(d silk goods are
distinctly to be cla1ssed( as luxuries, it has been (deemed wise to make
only very mo(lerate reductions in the rates of (luty. Partially
manufactuire(d silk has b)een cut from 21.01 per cent to 15 per cent,
spunl silk yarn fromi 37.09 per cent to 35 per cent, sewing silk from
25 per cent to 15 per cent, silk velvets aniid J)luslles fromi 53.64 per
cent to 50 per cent, silk haindkerchiefs (plain) from 50 per cent to 40
per cent, ribbolns from 50 per cent to 40 per cent, woven fabrics
from 54.89 per cent to 45 per cent, artificial silk yarns fromn 41.75
per cent to 35 per cent, an(d braid(s, embroi(leries, an(d the like of
artificial silk fromii 68.48 per cent to 60 per cent.
PAPElt AND BOOKS.
Schedule M, which (leals with apier, books, and(l allied( articles, has
becit subjected to the geiieral oporation of the. samne principles that
apply throuighout the tariff. l'rint papel, the cost of pro(letioni of
which is as low in this country, tinder favorable coniditions, as it is any-
Table: Table 7.- Articles exempted from duty by H. R. 3 21, with the value of imports and duties col ected thereon in 1912.

TARIFF DUTIES AND REVENUES. xxv

where in the worild, has beeii transferred to tho free list when worth
less thaii 21 colets peir pound, whilo the higher grades have been given
a tariff of 12 per cent in place of 15.80 per cent. Copying paper has
been Cult fromi 42.33 per cenlt to 30 per cent, bags, envelopes, etc., froIn
49.92 per cenit to 35 per cent, parchmenit Pal)prs firom 47.94 per cent
to 35 per cenlt, photographic paper frolmi 28.99 per cent to 25 por
cent, writinig paper fromn 45.13 per cent to 25 l)r Celnt, common wrap-
pinlg paper fromn 35 per cenit to 25 per cOnt, anid books fromn 25 por
cent to 15 per coent.
SUNDRIES.
Scheduile N, which (leals with a variety of slln(lries, calls for com-
paratively little commneCnt, except to say that the general ])rifcilples
of tariff re(luctioni have becen applied to each of the itemlns caririied in
the schedule accor(ling to the peculiarities of each. Thlus trimmed
hats aro giveIn oIlly a mo(lerate rolduction, beiivt cut fromii 50 per cent,
to 40 per cent, while broomns are substantiali'y reduiced, beilng cut
fr-om 40 per cent to 15 pOe' cenIt. Jewelry has been but sliglhtly
reduecd, falling fronm 75.74 per cont to 60 per cenIt. A gro(l u1111s-
trationi of the attituldle ado1)td(l WiUl resl)ect to the application of
the tariff is seen in the itemi, pirecious-stonies unicut, which are given
a rate of 10 por doiit iotwitlhstandiinig they wer1e on the free list uinder
the act of 1909.
The changes eIffected by l-I. R. 3321 are containted in (letail in the
appendix of this report.
FREE LIST ENLARGED.
As indicated by the followinlg table, the froe list of the present
law has been materially extended, carrying ouit the )rincil)le of tariff
revision followed by the committee thlouighi its initerpretation of the
Democratic Platform of the responsil)ility place(d upon it throiugh the
results of the Federal election of 1912:
TABL,E 7.-Articles exemptedfrom duty by H. R. 3321, with the valile of imports and duties
collected thereon in 1912.
Imports in 1912.
Itoni. r1uis
| V\alle's. Dluties.

SCIIEDULE A.-Chemical8, oila, and palrI8.

Acids:
Acetic or pyrolieous..... 5,882 $1,549
Chromaic .................................. 1,407 157
Suilphticle, or oil of vitriol ...39 122
Albuumen, blood .........................'25,200 4,994
Alcohol, methyl or wvood .......................... .1..5 1 37 ;

Ammonia, nitrateof .........................(1( t( )

2)
AntitoKins.. . (2) (2)
B3lue vitriol, or sullphate of copqier ..................................... &52 30
Borax, crulde an(d unmanufactured ............................ ... (I)
. (I)
Borate
crid
inmaso
of.............................................................,.6
lim, a, an other borat mterial, an factred 456
Calcimn, acetate of, brown and gray, ai(i clildori(ld of, eni(lo-........
Charcoal'..
Bone char....20,414
:1,722 6,344
4,083
Blood char . .....
Chromium, hydroxi.ld
. . . . .

of,eni(IL ....................... ,.-......

colperas, or sulphate of iron ....................... 12 1
Indigo extraots or paste ........... . . . 45.9 1,078
Indigo, carrnine( ....... . . . 5,903 4 5
Iodtne, resublimed .................... . ............ .............!.111...a
Lubricatingoils n.S. P. f... .............. (') ()
I
Includeslwetie. aoid. 3 Not septirately reported.
 orse
XXVI TARIFF DUTIES AND REVENUES.
TABLE 7.-Articles exemptedfrom duty by H. R. 3321, with the value of imports and duties
collected thereon in 1912-Continued.

Imports in 1912.
Item.
Values. Duties.

SCREDULE A.- Chemicals, oils, and paints-Continued.

IParis green and London purple .............. $4,783 $717
Phosphorus .............................................................. ' 5,074 2,094
Radiumin salts, radioactive stubstitutes, thorium, and selenium salts for medici-
nal use...() (l)
Santonin .39,956 1,545
Sodas:
Arseniate of ..................... , . ........... 11,195 3,566
Salt cake or nitcr cake .............. 8,394 659
- Ash .............. 33, 459 7, 264
Silicate ... : . 8, 870 3, 00
Strychnia, or strychnine and its salts .252 46
Sulphurrefi,e(l ........................................
....................... 35, 448 5,671
Sulphuir, sublimc(d, or flowers of.............................. 87,062 16,686
Tanning materials ............. ..... . 2,754,822 698,767
Total ... 3,131,282 659,776
SCHEDULE B.- Earth, earthenware, and glSsware.
Bauxite or beauxite, crude ............ 107,815 29,198
Burrstones, manufactuired or bound up into mlstones ..................... 46 70
Freestono, granite, sandstone, limestone, unmanufactured, not suitable for use
as monutimental or building stone .........................;.(.) l (l)
Total ........................ ' 108,081 29,268
SCitEDUaE C,- Metals, and manufactures of.
Iron ore, including manganiferous iron ore, and the dross residuum from burnt
pyrites ..............................................*.............. 6,139,360 263,767
Iloop or band iron, for baling cotton or other commodities .. 16,094 2,480
Cut nails. 474 64
Horseshoe and hob nails ..1,325 221
Wire nails ..723 52
S ikes ........1, 620 149
an(lfi`le shoes14, 453 3,187
Tacks and' brads ...........--.. 6
Barb wire ..6
Wire for fencing, balilg hay or other commodities ........ )) (
Iron and steel rails ........ 103,623 15,446
Tungston-bearing ore of all kinds ........ 184,518 18,452
Cash registers...4,836 1,451
Linotype and typesn"gIng achines' maehincs.........
.

148 44
Sewing maclines ........ 70,146 21,044
v Typewriters ........ 401 120
Total ........ 6,535,633 326,479
SCIIEDULE D.- IfIood, and manufactures of.
Boards, planks, deals, and other lumber. 16,500,856 1,178,015
Broom handles ....................................................... . . . ......

Capboards. .16fi...... ....

Hlubs for wheels, posts, heading bolts stave bolts, last blocks, wagon blocks,
oar blocks, heading blocks, and all like blocks or sticks, rough hewn, sawed,
orbored ... 14,889 2,978
ILaths .1,620, 517 129,359
Pickets and palings .157,120 15,712
Staves .... .................................. 32,412 3,241
Shingles .... : 1,194, 114 254, 223
Timber, hewn, sided, or squared .164,692 3,260
Round timber used for spars or in building wharves .22,574 567
Total .18,879,931 1,693,778
SCHEDULE (l.-Agricultural products and provisions.
Meats:
Bacon and hams ............... : 157,104 26,262
13eef veal, mutton, lamb, and pork, fresh .136,814 21,760
FreshI-water flsh, n. s. p. f .1,263,548 84,923
Ilerring fresh, pickled, or salted, smoked .2,691,722 346,023
Eels ana smelts, fresh or frozen 447,488 57,232
Fish, fresh, smoked, dried, salted, pickled, frozen, packed in ice, or other-
wise prepared for preservation, n. s. p. f . .2,442,607 325,418
Mackerel, halibut, or salmon, fresh, pickled, or sated . .1,620,334 262,665
Meats-of all-kinds, prepared and preserved, n. s. p. f .. 623,040 130,765
' Not separately reported.
 TARIFF DUTIES AND REVENUES. XXVII

TABLk 7.-Articles exemptedfrom duty by H. R. 8821, with the value of imports and duties
collected thereon in 1912-Continued.

I Imports In 1912.
Item.-__ _
Values. Duties.

SCHEDULIH G.-A grfultural products and provision8-Contlnued.

Lard. S583 $66
Tallow"..'. 25,703 1,745
Dairy P"r'qducits:
Milk;
fresh .................................... .....................

Preserved, or condensed, or sterilized ...............

. 6,283
49,955
936
13,964
Cream ........................... . 923,787 56,012
Breadstufls:e
Bread, biscuits, wafers, etc., not sweetened . 103,709 20,741
Sweetened ... ....... ............
. .

Buckwheat flour 844

15,7 211
Buckwheat.. ... 16 967 3,025
Broom corn . 157,969 4,024
Corn or maize . 47,858 8,008
Corn meal . 217 25
Oatmeal and rolled oats . 40,400 6,768
Oat hulls 343, 834 47,458
Wheat flour' 6656,445
Semolina . 1,725 431
Rye. 111,323 13,395
Rye ou652 89
Potatoes.7,175,376 3,434,535
Salt .291,902 155,933
Swino .............. 10,832 1,498
Soya beans .......... (2) (2)
Slugar of milk ........ 1,731 135
Total .................... .................................... 19,259,085 5,190,482
SCHEDULE I.-Flax, hemp, and jute, and manufactures of.
Bagging for cotton ............................................................ 363,751 34,672
Flax straw .6,990 853
Total .............. ................................................ 370,741 35,525
SCHEDULE K.- Vool and manufactures of.
Rlaw wool ................................................................... 33,141,408 14,454,234
'ress cloth for oil milling purposes ............................... (2) (2)s
WVoolen rags and wastes ........................... . .16., 007 868
Total ........................... 33,30.;1,416 14,518,102
SCHEDULE M.-Pulp, papers, and books.
ooi pulp, mecha nicallyground ......641 ......................................644,741 67,168
Chemical-
Unbleached ............................................... 6,696,580 745,188
Bleached ............................................... 3,145,221 382,425
Plrinting paper, suitable for printing books and newspapers, valued at not
moro than 2 cents per pound ......................,,,,.,... 940,299 131,691
ibles .. ...... -.-..--
Total .. 11,426,841 1,326,472
SCHEDULE N.-Sundries. -
Bone meal .................... ......... ............

Bran . ............................................................ .............. ...

W heat screenings ............ 231,083 23,108
Coal. bituminous and shale ................................................... 2,859,140 390,546
Coke . . . .. 275.563 55,113
Compositions used for fuel .................................................... 10,134 2,027
...............
Slack or culm of coal I...............................................850,693 64,457
Cork waste, shavings, and cork refuse .. (2)
Gloves, made oi horse hides, pig skin, and cattle hides .............. (2)
Boots and shoes of leather ............................ 230, 362 27,967
llarness5 saddles and saddlery of leather .. 58,391 11, 677
Agricultural implements .. ..................... 22.070 3,311
Leather and tanned skins ..................................................... 4,976,021 460,241
Total ............................................................. 9,513,457 1,038,447
Grand total ...... 102,534,466 24,718,329
I Flour dutiable at 10 per cent from countrles Imposing duty on United States flour.
$Not separately reported.
XXVIII TARIFF DUTIES AND REVENUES.

SOME FREE ARTICLES MADE DUTIABLE.

In linoe with the policy of making an equitable adjustment of the

tariff-keeping in miind revaiiue requirements and thle competitive
policy, as well as cndeavoring to equitably adjuLst ttariff burdeis-
the commiittee has seen fit to transfer the articles of Table 8 to tlhe
dlutiable list and assign them tlhe rates there indlicated.
Table: Table 8.- Quantity and value of imports of articles transfer ed from the fre list of the act of 1909, and made dutiable by H. R. 3 21, with rates of duty, estimated quantities and value of imports, and duties for a 12-month period under H. R. 3 21.

TABLE 8.-Quantity and value of imports of articles transferredfrom the free list of the act of 1909, and made dutiable by H. R. 3321, uith rates of duty,
estimated quantities and value of imports, and dutiesfor a 12-month period under H. B. 3321.

Imports for 1912.- Estimates for a 12-month period under H. R. 332L

0 Articles.
Quantity. Value. Quantity. Value. Rate. Duties.
0t
ScUEDuLE A.-CAemaUs. and paint.
Acids:
Benzoic (pounds) ................-...................
Picric or nitropicric..........................................-----------........ $95,740
470,005
9,233
50,061 ... . ....
400,000 $85,000 15 per cent
9,000 15 per cent.
.................. $12,750
1,300
Alizarin, natural or artificial, and dyes derived from alizarin or anthracln (pounds).. 5,463,096 1,385,529 90A000
20 per cent .-------------.
I . . . .. . . 10 per cent
Ambgris- 17 4,624 5,000 . .. 1,000
Aniline: bzJ
Oil.. 1,843,443 . 175,120 150, 000 10 per cent. 15,000
slts -4,831,075 386, 656 ............ 400,000 dOO.
......... 40,000
Balsams: ... . . . . .

Copalia ..................................... -....do..159,172 50,969 50,000 5,000

Fir or Canada ...................-..... 3,741 1,741 .. ... 3,000 do-
.
300
63 00 -... ...
.................-... .....

Pe ru ...................-..... 47,862 50,0no .do ......

.
5,000
Tolu
------------------------------------------------------- 30,970
- 7,256 5,OCO ... do......... 500
Storax
All other,
styrax
or
crude
..........-..... 19,139
30,391
2,325
12 885
2,500 ..do.--
12,000 . do.
- 250
1,20o
02-
,ivet,crude
coal-tar Droduct-.
......................

............................
.........................................

.................. . ......5,039 6,725 5,000 20

.............. ... 1,000
Dead'and creosote oil (gallons) .-... ....-.-.-.-.. 50,319,736 2,284, 845 2,300,000 5 percent 115,000 -
All other, not medicinal, and not colors or dyes, known as benzol, toluol, nph--
thaline, xylol, phenol, etc. 945,894 . 1:.:.: 10 per cent 900,000 -----------. 90,000
Ergot .............-.............-.-
- ---.-.-.-.-.-.--.-.-.-.-.-.-.-.-.-.-. 207,138 187.500 100.000 30, 000 10 cents per pound .-. 10,000
Bucbu leaves (pounds) ..-. -181,121 160,608 65,000 600 00- .do ............... 6.50
Grease. enfleurage, (pounds)- ---------------------------- 72,196 110, 824 110, 000 20 per cent . -..-.-.....
........... 22,000
Gums, not elsewhere specified:
Amber and amberoid (pounds).-.........................-.-.-.-.-.-.-.-.-.-.-...35,663 33. 821 35,000 310.000 $1 per pound... 351000
Arabic (pounds) --------------------------- 6,586.737 568.631 5,000.000 380.000 j cent per pound- 25.000
Camphor, crude (pounds)-.- 2.155.751 682.748 2.300.000 640,000 I cent per pound. 23.000
Lime, citate of(pounds)-I -do
.......................................................... 5,903.501 791.416 4,400,000 607,000 ---- .------------.--- 44,000
Musk, crude1,;ln natuiral pods (pounds)-5,232 40,720 50,000 20 per cent
.... .. . ........ 10,000
Oils:
Fixed or ex ressd-
Almond, sweet (pounds) .-................................-...-.-. .. . 110. 927 41,294 100,000 37,000 5 cents per pound-.......... 5, 000
eesame or mum seed or bean (pounds) . 1,380,637 109,173 1,000,000 80,000 I cent per pound 10,000
 Lvime_VW,~w.-:_ . . . .- .:
TABLE 8.-Quantity and value of imports of articles transferred from thefree list of the act of 1909, and made dutiable by H. B. 3321, with rates of duty,

Oils-Continued.

Cedrat (pounds).94
Fennel----
Jasmine...
Juniper.

Thyme_; :----
Valerian.-

Licorice (pounds);.
estimated quantities and value of imports, and duties for a 12-month period under H. R. 3321-Continued.

Volatile or essential and distilled-

Almond, bitter (pounds).--
Amber.
Anise or anise seed (pounds) .
Articles.

Bergamot (pounds) ........................................................

Camomile (pounds) ............................
Caraway (pounds).---------------------
Cassia and cinnm on (pounds)............................................
..........................................................
Citronella orlemon grass (pounds) .
...........
............................
...
Flower essencesAliquid and solid primal, not compounded ...................
W................................................
......................

Lavender and aspic or spike lavender .......................................

Lemon (pounds) ...........................................................
_if.aw............. .......... ...................................----

.__......................................................

Neroll, or orangeeflower (pounds) ............................................

Origanum, red or.wh.ite. (pounds).....
Rosemary, oranthoss (pounds)' - ..........................................
-fi':0;----i---'-
Roots in a crude state.:
Gentian (potnds).-.7
.. .___._

-------------
............................................

---
Sarsaparilla (pounds) ............ -------
Tonquin tonquatorWnoLkabeans .(pounds) .
.----------------.-----
Saffron, safflowe'r, and extract o and saffron cake.............................
Tea, impure, waste, siftings, and sweepings (pounds) ...............................
.........................................
.
-- -- --

5,994,507
91,024
841, 639
Imports for 1912.

27,315
15,493
77,454
67,526
31
30,373
142,182
424
1,104,968
6,895
11,586
2,074
20, 808
162,920
400,424
12,821
1,944
17,437
718
153,592
109, 065
66,039
18
1,58&5,612
74,680,270

Tota-......................................................................... __________. 15,062,409

SCHE!DULE G.-A gricutural products and provrIsons.
Cream sand Brazil (bushels) .... 21,601,008 1,092,C71
452,917

1-I
f
Quantity. I' Value.

$25J657 1
86,207 .

9m - 1,000
Quantity.

315,227 .......
394
21,412
1,329 ...... ...
281.577 .......

71,054 ......
645 ..
62,369 ...........
.
--------

..............

25,0O0
101,056 .......'

2, 946 ..............
205,376 .--
29,6200 ...... .
10.620- ...
268,347 .
491,690 .. ..
9,165.

580,783 .............
47,862 .............
55 ..............
67,837 ..............
1,309,819
51, 42R
91,203
161,540
201,131
2,025,153
80,000,000

...
430,000
6,000,000
50, 0OO
i, o000, oo

20,000,000
-

..
Estimates for a 12-month under R. R. 3321.

Value.
--

$15. 000
1.000O
s0 000
220,000
300
18,000
57,000
500
190.000
2,400
100,000
2.5,000
5 1000
180.000
350,000
5,000
460
49,000
300
42,000
400,000
36,000

1,540,000
1,400,000
50,000
75,000
10, 000
88,000
2,000,000
14.305,510

1,0A0,000
50
120 per cent .
.do
.do
.do
do.
.do
.do

.....do
.

.
.

.-
Rate.

.................
.....................
do ......................
-.. -------------
------.-..-----
.do ..................
.. ...do .................
.. do ...------------
.do..---------------
. do .............
10 lper cent
20p°Ier cent ............
,6 cents per pound....
I percnt..
20
!do.
I.
do......
do.----------------
do.
------
--do

---ent
- ------- ---

I.d......................

per pound.-

25 centsper
1
poundc

cent.pepo
.-..---
---
1 cent per pound ......
I cent per potnd_
1cent pound.........
-

...........

.n...

eent pwr pound ...

$3i000
200
16,000
44,000
3,600
11,400

1,000
9, 80
8,400
-

80,000
7,200
60

100
38,000 H
480
20,5,000
000
1,000
.

36,000
35,000
....... ..........

60
60

3,850
200,000
4,300
7,500
60 000
12,500
30 centsper poun ...... _ 300,000

.....
O-E
02

N
- -
Duties.

10

1,483,r720

200, 0DO
x
;C
z

cc
 Palm and palm nut kernels (poundsou----------------
Spices:

Cloves (poun
Clove stems (pon)ds)

Nutmheg.s
. .
s)---------------.
d
Cassla buds (pounds)...........................................................
Cassia and cas5ia vera (pods.................................................
Cinnamon, and chips of (pounds) ...............................................

d
...................................s

(pounds)... ...................................................

ScHEDUL N.-Sundrlu.
)

Diamonds, rough oruncut, and not advanced in condition or value from their natural
state by ele=aing splitting, cutt;ing, etc.........................
diamona dust...........................................................
:
Diamonds, miners, natura or broken, glaziers', and engravers', not set,bort, and
Other precious stones, rough and uncut .--------------------------------------------
Furs and fur skins, not dressed ... .... .. .. .................................
Ivory tusks In natural state ..... ............. ..... .........................
Total ...
Grand total ....
................... ...... --.-.-...-.---.-
.514,
..........
Gng root, not preserved or candied (pounds).................................
Mace ( ..s. .................................................
26,267
6,880,723
1,013,348
6,414,363
....................................................... ..............
5,994,564
403,355
2,097,422
Pepper, blaick :or'hlte (pounds)............................................... 26,450,845 2,617,440
P imento (pounds)- -_---.-----------------..---

Totald.......................................................................... ..

..............

i.
......
*
7,970 1............
3,418
521,104
1'9,215
713,230
368,193
168,086
304,757

6,043,330
25,000 4 3,000
5,5000
830,000
5,000,000
3,50(
5,000,000;
350,000
2,00 ,000
O0,000
DO,
6500I
...

---

&3,000
-

24,000,000 2,200,000 ..doo.

33;444665 137 246 4,500 000 180,000 centperpou
:
..............

112,957 ..............
17,404,722
71 i1,332,015

I.-------49,0886,077
......

28,790,338.
5,190,000D ........

9,484,04 .............. 7,500,000 10 -percent-

456,595 .------------- 350,000
100,000
14,000,000
do
do
-----------------

... do .
--.- do

.do.
.
000 2 cents per pound ...........
1. 500 1 cent per pound ..........
60,000 .do
17,000 8 cents

10.0do
. do.
..do.
450,000 1,150,000 20 per0cent 000
---------------23,100,000. 2,425,000 hd
42,595,510 ..
per pound
--
..

. . :
...........
2 O0,000 1 cent per pound ........... 1 20, 000
3,000
250
55,000
8,300
100,006
o................. 50 000
35
28,000
............ 1 240,000
n.e ...0.

.................
:. l 00 bzj
:

02
U12
738,335

750,000
35,000
40,000

4,647,05
H

p-3
H

t!v
XxxII TARIFF DUTIES AND REVENUES.

AD VALOREM DUTIES.

Throughout the schedules of H. R. 3321 the effort has beenl made by

the committee to base as many rates of duty as possible upon the
ad valorem priniciple. Some exceptions are found to the general ap-
this idea, notably, in the chemical schedule anid in that
,plicatioen ofof Schedule
portion B which relates to win(low and plate glass.
:Such exceptions have been made for special reasons in cases where
oither (1) the commodity in question was of a staple and unvary-
ing character so that the question of value was not likely to be of
fundamental importance in securing uniformity in the workin' of
duties or (2) the commodity was of a nature whose actual composition
and hence value could not be ascertaine(l without difficult analyses
to determine the extent to wlhich given constituent elenients appeared
in it. In such cases it was deemed wiser to assume that the com-
modity upon which duties were levied was of a standard grade and
value so that a given rate of (luty could safely be assessed in the belief
that it would correspond roughly to the or(linary commnercial require-
ments of the situation.
The adoption of ad valoremii rates in the majority of cases
is the result of a definite policy on the part of the commit-
tee, which has thought best to minimize so far as possible the
injustice which results from the use of a specific-duty system, or a
system wherein specific and ad valorem dtuties are combined to form
a composite rate. The specific-duty system fails to take account of
fluctuations in value, and it therefore imposes a relatively low rate
when prices are high and a relatively high rate when prices are low,
notwithstanding the undesirability of such a method. Moreover
it is believe(d that the specific-duty svstem strongly tends to mask
the real character and burden of the tariff, and thereby to keep the
consumer who pays the cost in ignorance of his real contributions.
Over and above these considerations, is the fact that the use of the
specific system of duties necessitates classifications and descriptions
of goods which open the way to fraud and evasion, and which would
in many cases perinit slight changes in industrial processes made for
the purpose of shifting goods from one classification into another,
and thereby avoiding the necessity of paying a higher rate of duty.
'This simplification of the classifications of the tariff is considered
highly important and would alone justify any difficulties that miglt
inhere in the extended use of the ad valorem system. It is believed,
however, tlhat the application of ad valorem duties will not cause
seriouIs dlfficuilty if the customs administrative provisions undler which
they are appliedi are properly adjuistedl so as to avoid dangers that
have in the past presented themselves as a result of undervaluation
and improper application of rates.
CLASSIFIOATION.

Few changes have been made in classification. Ad valorem rates,

liowever, have been substituted for specific rates and for the comn-
plicate(l, intricate, andc cumbersome compoound raf;es of the Act of
1909. This is particularly truie of the textile schedulles-cotton, flax
silk, and wool-in which schedules thie present Classifications derend
,upon various conditions suich as the count of the thread, the condi-
tion of theyarns, and the weightand value of thefabric per square yard.
 TARIFF DUTIES AND REVENUJES. XXXIIX
The division of. classifications by values of the articles has been
eliminated a.j far as possible. It was found necessary in a few
instances, in order to place a low rate of duty on a common or cheap
article of ordinary use, to make the classifcation dependent lipon
the value and place a higher rate upon the more expensive article of
the same character and descrip'tion. This is true in seven paragraphs,
with a total of ten classifications according to value as against more
than one hundred in the Payne law.
In the Payne law the common earthenware used on the
table of the poorest family is taxed at the same high rate as the
most expensive and luxurious china. The earthenware, crockery,
granite, and semiporcelain wares have been placed in one classi-
fication with a moderate rate of duty, while the fine china and
porcelains have been only slightly reduced from the rates in the
present law.
Steel ingots and other forms of steel not otherwise provided for
are separated into two classifications, namely, those made by the
Bessemer Siemens-Martin, open-hearth, or similar processes without
the use of alloys carrying one rate, and thosic made by the crucible,
electric, or cementation processes with or without the use of alloys
another rate-2 rates against 14 in the corresponding paragraph of
the Pay-t. law.
The change of classification in Schedule I[ was fuilly explained in
the committee's report on H. R. 12812. The classification by count
of thread, weight, and value has been changed to a classification
accoiding to the size of thle yarn used in theo construction of the
fabric. A differential has been added- to compensate for coloring,
dyeing, mercerizing, and figuired weaves.
The hosiery paragraph contains only two divisions based on
value instead of six, as in the present law.
In Schedule J, the flax threads and cords are still classified according
to size, but only two divisions are used-those of thread, not finer than
No. 5 being put in one class and all finer than No. 5 in the second
class. Under the present law tlhe statisticsgshlow that flax threads as
fine as 230 were imported, making 223 rates uinder this paragraph.
rThe classification of linoleumns an(d oileloth has been change(d to
eliminate the provision for wi(dths an(d one a(l valoreiii rate provided
for the plain, painted, or printe(l, tandl another rate for the inlai(.
The oilloths fave been classific(l at a single rate. Classification
accor(ling to weight and count of tlhrea(ls hasf been entirely (liscon-
tinnied.
Gill nets, webs, and seines have been given a straight a(d valorem
rate instead of the compl}icate(d rate according to the nuimber of the.
threa(ds or yarns of wlich they are composed.
In Schedule K, all of the rates lave l)een mia(le a(l valorem an(d the
classification according to tho weight anl value of the fabric have
beeni abolishe(l.
In Sche(lule L, the classification of silk fabrics base(l in the present
law upon the weight of the thread, the codl(lition of the yarn, the
percentage of silk and the vallue of the completed fabric, and, whether
printed or plain, has been reduced to a simiple a(I valorem rate on all
woven fabrics of silk or of whichl silk is the component material of
chief value.
Table: Table 9.- Comparative sum ary showing total revenue by schedules for the fiscal year ending June 30, 1912, and as estimated for the first 12-month period under H. R. 3 21.

xxxiv
XXXIV ~TARIFFDUTIES AND REVENUES.

No chaiige in classification has been made in Schedtile M, but

sinigle ad valorem rates have been provided in place of the miany
compound and seclific rates.
in Schedule N,the most important; change in classification in this
schedule is that of leathe'rgloves. Instead of'four different classifica-
tions accord'ing to the kin andfinish of the leather, with aseparate
rate in each case and for men's gloves, only two divisions have been
m-ade, oefr schmaschen gloves of glace finish and another for all
other l=eathr gloves except such as are made fromn the hieavy leathiers,
such as horse-hide, pigskin, and cattle hides, which latter class are
made free of duty.
Cumulative dutit'es f'or lining aind prix and pique seams have 'been
retained, but the addition for embroidery has been dropped as being
the source of co-nstant litigation. oie o nti ceuehv
The metal buttons previously provddfri hsshdiehv
been transferred to the metal schedule and, instead of the old classifica-
tion accordiing to line measuirement, have been placed under a straight
ad valorem rate of duty, and the buttons remaining in this schedule
are also provided for at a single ad valorem rate.
*The jewelry paragr-aphi has been simplified and the complicated,
cornpound rates elimninated and a single ad valorem provided for all
jewelr and similar ware.
The laces, embroideries, and similar articles of whlatever mater'ial
composed halve been taken ouit of the various schedule's in~whichl they
formrl appeared and combin"ed in a single paragraph in this schedule.
Thlpe ftollowing table shiows the imports and revenue by schedules
for the fiscal year 1912 under the present law and the estimated im-
prsad duties for the first 12-monthi pe'rio ne .R 31
This table indicates a-n estimated loss in customs reveniue under
H. lR. 3321 of $37,896,000:
TABLE 9.-Cioniparative summary showing total revenue by schedules for the fiscal year
ending June 80, 1912, and as estimated for the first 12-month period under HI. R. 8321.
Imports.
Estimates
Schedule. Item. for a 12-
11. monith
11. period un-
dr H1. R.
3321.

A .......Chemiceals, oils, anid painits: () 8,3,0

Values ..................... dutibie~1 $47,23~5,041 1 $62,969,000
.............8...............
Duties
Equivalent ad valorem (per cent) .............
. 25.91i 119.04
12,239,742 812,985,000
ID.......Earthis, eartheniware, and glassware:$0800
Values.~~~~~~~~~~~dtitlable.
D)uties ............................$11,166,221
$21,994,265 $28,469,000
89,478,000
E'quivalent ad valorem (per cent)............. 50.72 33.17
.......Metails anid inaniufactures of:
Values .....d......tia.......... l~re.....$,300
Duties
i16ii87
EquIvalent advvalo'reom' '(p'e'r cen`t')'.a
..34.35
S~~~~~~~~~ulai':
70,030,000
20.19
aThe valueo the Imports for 1912 transferred from the free 1Wt of the act e!1~09 to this schedule by
B. B. 3321 wa 15,052, 409.
I The decrae tin the estimated valute of Imports and the increas in the equIvalent ad valorem com-
pared with the chemical bill1 vetoed by President Taft Is cauised by the transfer to the free lis't of tannhing
eKtracts, barks anid woodis, oils uisei fin soap-making, varnitsh guims, anid also the Incereased rates on vart.
ow articles suich as coal-tar dyes and colors, licorice root, etc.
 alues
TARIFF DUTIES AND REVENUES. XXXV
TABLE 9.-Comparative summary showung total revenue by 8chedu les for the fiscal year
ending Jtne 30, 1912, and as estimated for the first 12-month period utnder H. R. 8321-
Continued.

Imports.
Estimates
Schedule. Item. for a 12-
1912 inmonth
period un-
der H. R.
3321.
D .Wood, and manufactures of:
Values ofree .... .. 80..S8 O00 ,
....... .
dutisbi e $24,943
S6,110,000
Duties3..$3,042,834 . $S98,Coo
Equivalent ad valorem (per cent) . .12.46 3.59
E .Sugar, molasses, and manufactures of:
Values......$105,744,619 $111,866,000
Duties..$............................................t50, 951, 199 $40,196000
Equivalent ad valorem (per cent) .............. 48.18 35.93
F .Tobacco, and manufactures of:
Values .........................$............. £31,116,052 $30,695,000
Dtes.-........$2,5,571,508 $26,0"0'2,000
D utita ......................... '....$5 2,02

Equivalent ad valorem (per cent) .............. 82.18 84.99

a .Agricultural products and provisions:
V a us..........................................
Values.X~~~~~~~~~~~~~dutiable.
Vfree (I) S19,259,000o
......

.117,711,166 5108,488,000
dtal ...S1,1,6fS0 8,0

Duties ... . .. ..........$.....

. S34,146,071 $21,667,000
Equivalent ad valorem (per cent) . .29.01 16.87
H .Spirits wines, and other beverages:
Vlues ..$20, 731,233 ' $25,195,000
Duties ..$17,409,815 $20,987, 0O
Equivalent ad valorem (per cent) . .83.98 83.30
I. Cotton manufactures:
Values ......... $24,358,360 $36,927,000
-Duties .................................. $11,085,150 $11,267,000
Equivalent ad valorem (per cent) . .45.51 30.48
. Flax, hemp, and Jute, and manufactuies of:
Vfree
Values ................ 6........................dutiable.. 371000
..................

Duties ..........$......
$108,698,102 3 $60,941, 000
S49,062,348 $15,977,000
Equivalent ad valorem (per cent) ...... 45.14 26.06
K .Wool, and manufactures of:
Values.{.......................ab..........ee...
.....................................
dutiable
. $33,309,000
4883 361,4374 S35,745.000
Duties .............. $27,072,116 $12,774,000
....

Equivalent ad valorem (per cent) .55.98 18.60

L .Silks and silk goods:
Values .$26,671,610 $36,861, 000
Duties ..$;................................... S 13,695, 239 $16, 212,000
.
Equivalent ad valorem (per ont). 51.64 43.98
M Pulp, papers, and books:
Values free. . $11,427,000
v
Duties ..$..........
.. ... .. .......
Idutiable $22, 828,121 $13, 6,34, 700
S4,886,671 $2,957,130
Equivalent ad valorem (per cent) . .21.41 11.85
N. Sundries:
Values ..........................................- fr- e . (4) $9,382,000
SW 000
Duties. idutiable...5108,952,769 G$170.
526,931,900 $59,952,000
Equivalent ad valorem (per cent) .24.72 33.26
Total dutiable:
Values.. f(free .........6.. $102,403,000
Duties ................................(dutiable 597035 $798,696,000
$759,209,916 $266,701,000
Equivalent ad valorem (per cent) .................. $304, 40.12
..
9. 60
I The value of the importg for 1912, transferred from the free list of the act of 1909 to this schedule by
H. R. 3321, was $6,043,330.
'1Though the -rates are tiot increased, the estimated Imports show an increase over 1912 becalise the"lat-
ter was a year of ablnormal importations due to the termination of the reciprocity agreements with coun-
tries produingceommodities dutia)le under Schedule If. In anticipation of the higher rates of duty effec-
tive after the terminatioon of these agreements the importations were Increased. Normal imports under
existing rates of duty may inow be expeeted since the overstock Is practically consumed.
aThe estimated Imports under Schedule J show a large decrease from the year 1912, beeause all laces
and embroideries included in thils schedule tunder the law of 1909 lhave been transferred to Schedule N in
11. R. 3321.
4 The value of the Importa for 1912, transferred from the free list of the act of 1909 to this schedule by
HI. R. 3321, wau $28,790,338.
' The estimated Imports under Schedule N show a large Increau caused by the transfer of articles to It
from other schedules, chiefly laces and embroideries that were fo(merly included In Schedules J, K, and L.
Table: Table 10.- Receipts and disbursements of the Government for the fiscal years ending June 30, 1910 and 1912, and estimates for first fiscal year after pas age of H. R. 3 21.

2xxvi TARIFF DUTIES AND REVENUES.

GOVERNMENT REVENUES.
The probable income-producing power of H. R. 3321 has been
computed by the Treasury experts as follows:
TABTLE 1O.-Receipts and disbursement8 of the Government for the fiscal years ending June
30, 1910 and 1912, and estimates for first fiscal year after passage of H. 1?. 3321.
rstatistics of the ordinary receipts and expenditures of the Government incltuding those of the Post
Office Department, but excluding those for the Ilanama Canal, the sinkihng fund, and the national
bank-note relemption fund, which take care of themselves.]

Estimate for
first flscal
Item, 1910 1912 year after
passage of
HR. 3321.

Cutoms.................................................. $333, 683 445 $311,32,7 2 7, ,

Internal revenue .1 289, 933, 619 321, 612,199 s322,0 000
Sales of publle lands .6,355,798 5,392,797 6,000,000
Miscellaneous ............................................. 45,538,953 53, 451797 52, 000,000
Postal revenue . 224128,658 240, 744,016 280, 000, 000
Total .899,640,373 938,522,481 926,000,000
Disburseir ents:_
Civil &.nd miscellaneous. 171,680,830 172,256794175000,0004
War Department ............. 155,911,7060 148 795,422 109,000,000
Navy Department....................................... 123,173, 717 136, 691, 956 148,000,000
Indian service ............................................ 18,604,131 20,134,840: 20 000 000
Pensions................................................ 1060690 410 163,590,456 180,000,000
Interest on public debt................................... 21',342,979 22,616,300 22,790,000
Postal service ........................................... 232,624,270 248,312,211 280,000,000
Total................................................... 883,834,049 901,297,979 994,790,000
Surplusp15,
Defcit to be cared for by income tax ...............
80, 3241
37,224,602. 1,335, 000
............................. 68,790, 000
- Inclu(les $20,951,781 corporation tax. Includes $30,000,000 corporation tax.
2 Includes $28,583,304 corporation tax.

From this brief surivey it will be seen that according to expert

computations H. R. 3321 will probably fail to produce the amount of
customs revenue realized in 1912 by $37,896,000. The saving thus
made in revenlue collections is only slggestive of the immensely
greater saving secured to the public by the probable change in prices
resulting from the reinoval of the excessive rates of the present law.
Inasmuch, however, as the general level of expeiilcituires of the Federal
Government has not decrease(1 a meanis mnust be provri(le(i for restor-
ing the total receipts of the Treasuiry to their present level.
INCOME TAX.
Section 2 of the bill imnposes a tax upon the annual net incomes of
individluals and corporations. This is in response to the general
demand for justice in taxation, and to thie long-standing need of an
elastic and p'roductive system of revenuc.
 TARIFF DUTIES AND REVENUES. XXXVII

For 25 years a contest has been waged throughout the country in

behalf of the adoption of a national income tax as a permanent part
of our fiscal system, and the sentiment in favor of this movement
finally became so strong that the people overturned a decision of the
Supreme Court of the United States by writing into the Constitution
the first amendlment within 40 years.
For the fiscal year ending June 30, 1912, the Government derived
$311,000,000 from tariff taxation, and $293,000,000 from internal
revenue proper. These taxes rest- solely on consumption. The
amount each citizen contributes is governed, not by his ability to
pay tax, but by his consumption of the articles taxed. It requires as
many yards of cloth to clothe, and as many ounces of food to suistain,
the, day laborer, as the largest holder of invested wealth; yet each
pays into the Federal Treastury a like amount of taxes upon the food
he eats, while the former at present pays a larger rate of tax upon
his cheap suit of woolen clothing than the latter upon his costly
suit. The result is that the poorer classes bear the chief burden of
our customhouse taxation.
The tax upon incomes is levied according to ability to pay, and
it would be difficult to devise a tax fairer or cheaper of collection.
This-tax is now in effect in 52 foreign countries and States, and laws
differing in name but similar in their effects are in operation in France
and Russia. When once enacted and given a reasonable trial, this
law has never beenl repealed by any foreign country or State. In
connection with our legislative work of readjutsting the old and
adopting a new fiscal policy, Congress should eliminate the inequiali-
ties and abuses of the existing system of tariff taxation, reduce the
customs rates to a sounnd revenue basis--placing maximum rates on
luxuries and minimum rates, or none at all, on the necessaries of
life-and levy an income tax to equalize the tax bturden and to give
elasticity and productiveness to our revenue system. From the
beginning of the Government, our chief source of revenuie-tariff
taxation-has been fluctuating, inflexible, unstable, and oftentimes
unproductive thus exposing the Government to deficiencies or ex-
cesses with ail their attendant embarrassmhents. A Treasuiry deficit
suiggests a bond issuie, while a surplus produces extravagances. The
great fiscal problem in government, therefore, is to secure a systen
of taxation adjustable enough to ineet the Treasury's varyinig de-
mands to maintain an equilibrium between governmental receipts
and expenditures.
The revenues from all income taxes readily respon( to changes of
rates, and the latter can be raised or lowere(d vithin a few days'
time without buisiness disturbances such as general tariff chanlges
occasion. It is believed that a budget or other effective system by
which Congress may be able closely to calculate and( determine in
advance forthcoming expendituri es will soon be devised, in whichi event
it should become easy to mainitain a close balance between expoidli-
tuires and revenues sulch as is practiced ill most other civilized coun-
tries. With other sources of revenuie revise(d to an honest and fixed
basis, and the income tax a permanent part of our revenue systemn
and at all times affor(ling a substantial amount of revenue, Congress
couild, and if necessary shouijd, annually raise or lower the income tax
rates in such manner as woutld prevent eitlher a deficit or a suirplui
in the Treasury. This combinedl tax system- would afford justice in
XXXVIII TARIFF DUTIES AND REVENUES.

taxation!, flexibility and stability of revenue, and rigid ecoiioiimy in

ex xnd1iturles.
The objection is sometimes offered that an income tax is inquisi-
torial and vexatious. The answer to this is that either the tariff; the
internal reventue, or the general property taxes of the States, when
enforced, are even more inquisitorial.
Probably two-thirds of the income tax proposed as to individuals
woluld' be deducted and witliheld at the source of the inicome and paid
in full to the Governmnent. This method of collection saves the tax-
payer annoyance and at the same time practically doubles the aniount
of revenue the Government would otherwise receive. By this method
the amount of tax due or to become due upon every fixed or determi-
nable annual income is witlhlheld and paid to the:Government before
the income roaches tlhe taxpayer. All annual gains, profits, and other
fixed anid determinable annual income derived from salaries, rent, in-
terest, etc., whetlher payable annually, or semiannuallv, or quarterly,
or monthly, each constituting a transaction and business rerationshilp
running through tle year, would be withheld at the source. Without
classifying the taxpavers whose tax will thus be paid at the source, th4e
method and rtule are defined in the proposed law and thie matter of
proper classifications of those whose taxes will be tlhus withheld and
paidl and those wlho slitall make personal return of their income for
taxation, will be containied in the regulations to be prepared by the
Secretary of tlle Treasury.
This method of collecting as .much of the tax as possible at tlle
source rather than by personal return precludes strictly accurate
graduation of the rates, for the reason that in cases where a person's
incoml-e is derived from a number of different sources the persons
required to wlithllold and pay tax upon the same would not know
what the aggregate amount of the taxpayer's income would be, and
lhence would not know which rate slhould apply to the income upon
which the tax is to be witlhlheld.
An able parliamentary commission in England recently made
an exhaustive investigatioin and report on the question whether
England should abandon collection at the source in order to ado t
an accurate graduation of rates, and the commission unanimously
reported against the proposal. The resuilt was that the nearest
approaclh to accurate graduation in the usual way was effected by
the inethod wlichl your committee has adopted in the proposedl
measure. This proIposal, tlherefore, embodies thle best judgmenit an(d
the longest experience of the oldest income-tax country.
The bill woutldk imnposo a normal tax of 1 per cent per annum uipoii
tlhe net income of all persons, over an(l above $4,000, and upon all
corporations, joiint stock companies, and insuranco companies, with-
out exemption. For the purpose of graduating the tax iInposed
upon indivi(duals, in addition to thle $4,000 exemption allowed, an
additional tax is imposed upon all individuals whose net income
from all souircos, includ(ling corporate dividen(ds, excee(ds $20,000.
Youir committee lhas endleavored to retain tlhe a(dministrative
features of the present corporation-tax law in fll essential respects.
In the light of tll experience of otlher couintries, we recommendl
the passage of this incomne-ttax provision, in the confi(IOIlt b)elief that
as soon as this tax and( its adminiistrative macllinery become fairly
un(lerstoo(d by tho people an(d a(ljuisted by tlho country its operation
 $4,0SrOt5o.ld .
Table: Table 1 .- Estimated incomes and revenue therefrom for the first year under H. R. 3 21.

TARIFF DUTIES AND REVENUES. XXXIX

and effects vill meet with as muclh general satisfaction as any tax
law. The tariff taxes, being invisible an(d intangible, are paid into
the Treasury without any accurate knowledge on the part of the
taxpayer, either as to the amount he pays to the Treasury or the
much larger amount he at the same time pays to the protected
manufacturer. It is well, therefore, that the people should know,
at least as to a substantial portion of their taxes, the true amount
paid. All taxes, National, State, and local, come alike off the Amer-
ican people.
A personal knowledge of the amount of taxes required of tlhe people
would more closely enlist their interest and active cooperation in all
the affairs of government, and especially with respect to revenues
and expenditures. Tho adoption of the proposed tax, therefore,
would assist in arousing and sustaining general public interest in
blehalf of economy at all times.
In view of the many valuable government.al purposes to be sub-
served,timethose citizens required to do so can well afford to devote a
brief during some one day in each year to the making out of a
personal return of income for purposes of taxation. This is done
without complaint under the operation of all the general property
tax laws of the States. All good citizens, it is therefore believeT,
will willingly and cheerfully support an(l sustain this, tlle fairest and
cheapest of all taxes, in order to secure to the largest extenit cquiality
of tax burdens, an a(ljustable system of revenue, and in all respects
a modernized fiscal system.
The demand for this tax is so universal that its adoption in the
United States can not and should not be longer postponed.
It is estimated tlhat, exclusive of the corportation tax, the tax
un(ler the rates proposed will yield revenueo or tio first year under
the operation of the bill as follows:
TABLE 11.-Estimated incomes and revenue therefromfor the first year under H. R. 8321.

Incomes, amount. incomes. Tax rate. Revenue.

84,000 toi $5,00.16,0

120, {000
1pe en
1per cent
. 000
.............. C;,X
$3,
$5,000 to 100178,000. o.l5,310,000
10,000 to ..................................... ,00 ...do..4,24000
.
$16,000 to $20,000. 24, 500 . do..... do.. :i,00 1&5
$20,000 to $25,000 ..................................... 10,500 I and 2 per cent., 2,100,(00
$25,000 to $0,000. .......... 21, 00. do ..... 9,6c0,00. .

8,500 1, 2, and 3 per cenit ....! 11,50,,000

$50,000 to $100,000 ........................................
$100,000 to ...................................... 2,00 1, 2, 3, and 4 per cent..l 11,050,000
8500,000 to ..soo.5...do
3 M to 6,r......do 6,
~~3150 ..:.do.........
3r*--(-------- 91,0
. 743, 000
9,191,600
Over$1,000, .................................... 100 ..... do 5,826,0V0
Total ............................. 425,000 .... 70,125,000
NOTE.-$4,000 is exempted in all inicomes.

TARIFF RELATIONS WIThI OTHER COUNTRIES.

The question of tariff relations with other couintries was (lealt with in
the tariff act of 1909 und(er section 2, which provided wlhat nvas tanta-
mount to a threat (lirectedI against all the countries of thle world. In
tlhe section reforred to tlhese otlher couintries were informed that unless
they wouil(d conseiit to grant to the prodlucts of tho United States
admission to their ports upon terms filly as favorable as those
XL 'TARIFF DUTIES AND REVENUES.

accorded to the goods of any otlher countries, an iiierease in all thie

rates of dluty levied uinder the act of 1909, anmounting to 25 per cent
ad valorem, WoUld be imnposed upon their products. Immediately
after the act of 1909 had become effective the so-caLled Tariff Board
was organize(d and was requested by President Taft to consider the
tariff relations existing between the United States and all foreigil
countries with a view to applying tho higher rates of duty in the event
they weie not granted the advantageous terms thiat were conceded
to any other country, irrespective of what those other countries
might hatve given in exclhange for the favorable termiis referred to.
The notice to other countries thus given involved the abrogation of
the whole list of commercial arrangements then in force and resultecl
in destroying many very satisfactory adjuistments of trade wlich had
proven universally acceptable. The work of the Tariff Board did
not succeed in suLbstitutinig anything better, or even as good, in place
of these coimmercial agreements.
On the contrary, it brought us ilnto a humiliating position with
regard to Canada, wherein we wero practically obliged to recede
from the extrome3 (lemands we had made of the Cana(lians, and
instead of getting as good terms as were granted by Canada to such
coll tries as France, England, and others, we were obliged to accept
a very small list of nominal concessions in order to avoid the embar-
rassin ent of failing to apply the maximum rates which we had
thlreatened to assess. The failuire of this negotiation with Canada led
to an attempt oIn the part of the administration then in charge of the
Government to secure the adoption of a reciprocity agreement, bills
to plit it into effect being ultimately passed by Congress but rejecte(d
by the Canadians in a sharply contested election which turned otut of
ofrice the administrative officials who had committed themselves to
these proposals. Nor did wve fare much better in ouir relationis with
Germany nld Franice. The former coulntry nominally granted uIs a
slight imn)rovenient in the position we had previollsly held1 with respect
to the termnis of entry into German markets, bult retained the express
right to make new and( discriminatory treaties with other countries
withIo It, 1egar(ling( the arrangement with the UJnited States. France
refuse(d to glive uis mnore tlhan a relatively small p)roportion of her
minimulm rates. In practically all of those countries wvhere ain adjust-
ment was arrived at without difficculty there were either no seriotus
points at issule oIr the aidministration reached a settlement by givinga
up most of its contentions. Wlhile, however, the act of 1909 has
broulght uIs nIo improvement in our tariff relations with other coulnl-
tries, it hias very seriously embarrassed us from timne to time owing
to the uinworka'ble character of its terms and the fact that it held
ouit a )ossibility of trouible throuigh threats directed against other
natiolns which couldk not be carriedl olut. The well kniown controversy
with Germnllly in respect to the so-called potash contracts affords a
case in )oint, the German Government having beeni threatened to
nio purpose with tlhe application of our maximum rates, notwith-
stan(ling that the action of thoEle vho made this thireat was suibse-
quently (lisavowedi by the De)artmnent of State. (-);her inistances of
the sarne kind. might be cited, and so deeply did the Departmelnt of
State become impressed with its own failures that Secretary Knox
requested the Ways andc Mteans Committee to relieve it of the inciblus
afforde(d by the section in question by enacting substitute legislation.
 TARIFF DUTIES AND REVENUES. xLI
In facing this state of things the coimmittee lhas hiad in mniild tWo
prineipal considerations:
i. The existence of a difference of policy among foreign nations,
some of whom are given to a retaliatory tariff policy while others,
notsbly Great Britain, are opposed to it.
2.The danger of creating unnecessary and purely artificial diffi-
cul ties through the adoption of legislation calcutlated to provoke
foreign nations and to afford a basis for tariff warfare.
Desiring to a-void embroilment with foreign countries im regard to
commercial matters and believing that the limitation of opportunities
for difficulty is the surest means of reducing the chance of such diffi-
culty, the committee has abandoned the maximum-tariff policy car-
ried in tho act of 1909 by eliminating the so-called maximlum section.
It has moreover been thought best to include authority for the
President of the United States to negotiate trade agreements with
foreign countries upon condition that the same shall be submitted to.
Congress for ratification. The reciprocity treaty with Cuba has been
maintained intact, while entire freo trade with the Philippines is pro-
vided for, subject to an adjustment of internal-revenue rates designed
to place producers in the two countries upon a similar footing. The
principle of countervailing duties to be levied for the purpose of
offsetting export bounties when the latter are granted by any forei n
country, thereby preventing the olppression of American prodlicers by
fore]in competitors who might be aided throuigh an ulnwise Grovern-
ment policy in their own countries, has been considered harmoniouis
with the principle of revenue reform andl has therefore been retained.
A phase of the question of international trade that hias received
ain insufficient amount of attention heretofore is seen in the lpractice
which prevails in some couintries of "dumping" goods abroad at a
low export price when a surplus production at home pormits of the
exportation of a surplus or renders it desirablo to shitp stlch surplus
in order to avold breaking the home market, freqiu0ently safeguiardle(d
by protective duties. The committee is of the opinion that such
competition is illegitimate and that domestic producers ought not to
be subjectedtoit. Itlhas,ttherefore,incluide(linH. R. 3321 a"duml)-
ing duty" equal to the difference between the lhomo and foreign value
of goods exporte(d to the United States an(l sol(l here at exp)ort prices,
such duty, however, not to excee(d 1;5 per cent adl valorem. If the
rate of duty upon sIIch articles is alrea(ly 50 por cent no such duty is
to be aclded as it is believed that the rate already collected is sufficient
for all purposes. As Ia further safoguard against the irregular working
of duties whose effect can Inot be precisely p)redicte(l, there hias been
includled in HI. R. 3321 a provision requiiring the President of the IJnited
States to ascertain the amoount of importation anid consuimption of
each product enumerated in tie (lutia.ble list eachi year, and w1he'iover
in any case the percentage of goo(ds imiported is less thain 5 per cant
of the domestic consumption thereof to a(lvise-Congress iit a special
message relating thereto.
XLII TARIFF DUTIES AND REVENUES.

CUSTOMIS ADMINISTRATIVE CHANGES.

The, general extension of comnmerce and the dlevelopment of trans-
portationi facilities and means of communication have brought new
diflicultles inlto the a(dministration of our customs laws. r?he pro-
visions for ascertainiing the market values of the merchandise im-
porte(I should be strenigthened and the powers of tho customs officials
extenided so that the Government may be assured of receiving from
importations the revenues to which it is entitledl.
The customs administrative situation has long been unsatisfactory
under existing enactments and is regardedl as being of primary imi-
portance, for the reason that rates of duty in theniselves are not con-
clusive unitil they have been interpreted and applied to actual im-
portations through classification and appraisemlent. The tariff act
of 1909 made considerable changes in the previously existilg system
.of administration and abrogated a number of useful modifications
which had been introduced into previous practice as a result of the
commercial agreements negotiated (luring the second Roosevelt
administration.
That it is necessaiy to take steps to strengthen the administrative
featuires of the customs laws has been recognized by the Treasury
Department, and two commissions have alreadly been appointed
an( have made reports in this connection. The President of the
Ulnitedl States aplpointed a committee to inquire into the practice of
procedure and *tho adlministrative methods of Boar(ds of General
Appraisers. Tho Secretary of the Treasury appointed an appraise-
ment commission "to investigate and report on both the principles
aid practices of the sppraising work of the Government."
The reports of botlh of these committees were before us and were
given careful study. The provisions recommended by us follow in
a large measure the changes suggested in one or the other of the
reports referred to. These reports were made by officials of the
Government charged with the collection of the customns, and repre-
sent the views of persons of experience. To their conclusions we
have given much weight.
In addition to these reports we have heard witnesses on the custolms
features of the bill, and we have carefully compared their suggestions
with the objects which we seek to carry put and with the views
expressed in the reports of the two commissions.
It was thought inadvisable at this time to entertain the changes
proposed in the Board of Gelleral Appraisers. The changes recoin-
menided in this administrative section are confined to alterations and
extensions of the present customs provisions wherever needed to meet
changed coimmercial conditions and the authority of the Treasury
Department is strengthened wherever we believed that more power
should be given to carry out the purposes of the tariff act. It is ex-
pected that the changes indicated wlfl tend to leAsen the number of
undervaluations and fraud and to assist the officials &f the Treasury
Department in the collection of the import duties.
Paragraph B takes the place of subsection 1 of section 28 of the
present law. It rovides that all merchandise imported into the
United States shall be held to be the property of the person to whom
it is consigned or who holds the bill of lading.
 TARIFF DUTIES AND REVENUES. Xt.III
There is added at the end of this section the words:
That for the purposes of this act bringing or causing merchandise to be brought
within the temrtorial limits of the United States shall be construed to be an attempt
to enter o;r introduce the same into the commerce of the United States.
It was found that in some cases merchandise is brought into the
port and unloaded on the dock, the importation being made with the
clear intention of defrauding the Government. If by any chance the
importer learns that his attempted fraud has been discovered he
proceeds to make the' proper enty and thereby avoids prosecution.
Paragraph C takes the place of subsection 2 of section 28 of the
present law. . It provides that the invoices shall be made out in the
currency of the country where the merchandise is made or purchased
and shall contain a description of the merchandise.
We recommend inserting the words "or agreed to be purchased,"
and make a similar change where necessary in other parts of the
paragraph. This change is recommended in order to do away with
one of the most recurrent abuses of the present law. The existing
customs laws require invoices to be made in two forms, either a form
of purchase and sale or a form of consignment. Where the form of
purchase and sale is used it is necessary to state the p rices of the arti-
cles. Where the consignment form is used, as title does not pass
and no purchase is made, no statement of the purchase price is re-
quired. -
To avoid stating on the invoice the price at which the merchandise
is purchased there has grown up the custom of large importing houses
establishing branches here and abroad. The importing house,
through its agency in this country or abroad, makes contracts for the
sale in advance of the arrival of the merchandise. The foreign house,
for example, consigns to its branch in this country all the merchandise
which it has collected and which has already been contracted for sale
by the branch of the house in this country. As soon as the goods
arrive in this country they are allotted to the individtual purchaser
here by the branch agency. The declaration shows only a consign-
ment from the foreign to the domestic house, while as a matter of
fact there has really been a contract of sale and a purchase price
agreed upon. The transaction is in reality a purchase and sale, but
under the form of consignment it has been possible to enter the goods
without disclosing the purchase price of the consignment. This is a
fraud on the appraising officers, as they are in no way informed as to
the actual transaction which has occurred, and there has been kept
from them the best evidence of the value of the merchandise, which
is the price the buyer actually agreed to pay.
The changes recommended by us require a statement in the invoice
of the purchase price agreed upon and that transactions which are
actual purchases and sales be entered as such. It is estimated by
the Treasury Department that 90 per cent of the imports that come
in under the consignment form of invoice are not re alconsignments.
Paragraph D takes the place of subsection 3 of section 28 of
the present law. It provides that invoices shall have indorsed
thereon a statement signed by the purchaser or owner setting forth
that the invoice is correct, and if it is a sale the price agreed upon
shall be stated. When obtained in any other manner than by
purchase the wholesale price in the markets of the country of export
shall be stated.
XLIV TARIFF DUTIES AND REVENUES.
This paragraph follows in the main section 3 of the present law,
except for the insertion of the words "or when purchases or agree-
Imlenits for purchase are made in several places, in the consular district
where the merchandise is assembled for shipment," and makes
changes relative to agreements for purchase rendered necessary by
the chianges made in paragraph C and for the reason stated in para-
graph C.
Paragraph E is a reenactment, without change, of subsection 4
of section 28 of the present law. This paragraph requires all imports
to be accompanied by an invoice under oath. The invoice states the
cost of the merchandise or the market value.
Paragraph F takes the place of subsection 5 of section 28 of
the present law. It provdes that whenever merchandise is im-
ported into the United States a declaratiorn upon a form to be pre-
scribed by the Secretary of tfie Treasuryshall be filed with the collector.
IThe present law specifies four forms of declaration to be made out
for the various transactions involved in importing into this country.
The change in the present law recommended by uis substitutes for
the words "one of the following declarations" the words " a dec-
laration u.pon a form to be prescribed by the Secretariy of the
Treasu i.y."
It is proposed by this change to allow the Secretary of the Treasury
to prescribe forms wlich shal be used by the importer, agent, con-
signiee, or ownier. The presenit forms do not cover all the cases, anid
are conspicuously inade(uate in tho case of a transaction where the
title passes while the goods are in transit. It is impzssible at present
for an importer to sign one of tlhe four forms prescribed and tell the
truth. It is thouglit best to allow the Secretary of the Treasury to
prescribe forms fol uise in all cases.
We have also recommended striking out t.he provision whWch re-
quires the invoice to be sworn to before a notarv public desigiiated by
the Secretary of the Treasury. It is thought better to allow this in.-
voice to be sworn to before any notary public.. Sonme abuse of the
present, law has grown out of the importers simnply sending the invoice
to a notary designiated by the Secretary of the Treasury anxd that,
notary takit)g his acknowledpilent oin it without the personal ap-
pearance of the importer. It is thloulght to be more efTective to allow
the Treasury Departimient to go before the State officials appointinig
the niotarv, should he be guilty of the offenso, and have his certificate
revoked by the State.
Paragraphs G and H take the pltace of subsections 6 and 9 of the
presenit law. They refer to the makinig of false itat.ements in regar(d
to an invoice. It is thilought advisable to separate the criminal and
civU liability. Paragrrph G dcontains tlho criminial provisions, anid
the rovisions as to civilliabdility are contained in paragraph H.
We hlave alrea(ly called attention to the lpractice of consigning to
an agenit goo(1s already un(der contract of sale. A ustual practice in
many cases is for the importer to lave thie invoice taken an(d entry
lna(le by soine one totally ignorant of the facts surrounding iniporta-
tion or the value of the meerchan(lise. The report of tle3 Treasury
commission says of this abuse:
Thousands of entries now appoar in our customllouhes, covering merchandise,, thc
sale of which has been contracted for and the price agreed upor where only delivery
or collection and delivery remain to be consummated, as to iac% of which the person
appeanrig tit the customhouse to assime the responsibilities embodied in theo declara-
 TARIFF DUTIES AND REVENUES. XLV
tion and to pport the integrity of the consular invoice submitted with thc entry is
a minor employee of a broker, express company, forwarding agent, or commnreial
bank. This-person supports the integrity of the invoice by his declaration, to the
best of his knowledge and belief, without having the faintest s'mblance of knowledge
or the frailest foundation for belief.
To meet these difficulties the provsion has been added to this
section making its criminal provisions applicable to any person who
shall introduce or attempt to introduce into the commerce of the
United States imported merchandise by means of fraudlulent invoice,
"or make any false statements in the (leclarations * * * without
reasonable cause to believe the truth of suclh statement."
it is expected by this provision that the integrity of the invoice will
be supported by better evidence than the statement of some clerk or
official who has no knowledge of the facts. The TreasuLry can compel
the entry to be made by some one having knowledge of the real
purchase price or circumstances of the entry.
Paragraph H takes the )lace of subsection 9 of section 28 of the
present law. It provides that where anyone soeks to introduce mer-
chandise into commerce by the use of fraudulent or false invoices or
deprives the United States of lawful duties such merchandise or its
value shall be forfeited.
Paragraph I takes the place of subsection 7 of section 28 of the
present law. It provides in cases of uindervaltuation for levying an
additional duty of 1 per cent of the total appraised value for each 1
per cent that such appraised value excee(Is the value declared in the
entry, and if the appraised valuo exceeds the entered value by more
than 75 per cent such entry shall be held to be presumptively frauidu-
lent and the merchandise may be seized.
We recommend substituting for the word " afterwards " the words
"after either the invoice or the merchandise has come under the
observation of the appraiser."
This is in accord with the present practice of the Treasury Depart-
ment. It will give the importers a proper lengtlh of time within w*hich
to correct errors, without extending the privilege to such an extent
as to permit them to be "tipped off" by appraising officers as to the
values about to be set upon their merchandise.
Paragraph J reenacts subsection :8 of section 28 of the present
law. It provides that where merchandise has been conisigned for
sale. or on account of a manufacturer to an agent or partner in this
country in addition to the invoice there shall be a statement contain-
ing a eclaration of the cost of production of such merchan(liso, or
where such merchandise is sent for account, a statement shall be
made setting forth the details of the purchase of the morchandise.
Paragraph K is a reenactment of subsection 10 of section 28 of
the present law. It provides that it shall be the duty of the appraiser
to ascertain the actual market value and wholesale price of the
merchandise at the time of the exportation to the United States in
the principal markets of the country whence the samo has been
imported.
W;Te recommend the reenactment of the section without change.
Paragraph L takes the place of subsection 11 of section 28 of the
present law. It provides that if neither the market value nor the
cost of manufacture of an article subject to an ad valorem duty can
be obtained to the satisfaction of the appraising officer, the selling
H. Rep. 5, 63-1 -4
,XLVI TARIFF DUTIES AND REVENUES.
price in the United States may be taken after deducting from it the
cost incident to bringing the same to this country.
Certain importers make a few wash sales in the country of export
and then come before the board and claim that those sales must
determine the foreign market value, wlhich in turn fixes the value at
which the importation must be made.
V\Te recommend the addition of the following words at the end of
this section:
And with reference to the appraisement; of all imported merchandise, whether
purchased or consigned, the Secretary of the Treasury is authorized and empowered
to determine the existence or nonexistOnce of a foreign market, and suclh determination
shall be binding and conclusive upoIn all persons and itnterests.
The change recommended will allow the Secretary to disregard
sales which are fictitIous.
Paragraph M takes the place of subsection 13 of section 28 of
the present law. It provi(des for authority to the appraiser to revise
and correct the reports of the assistant appraisers, andt to the collector
to appeal from the report of tho appraiser to the general appraiser
for a reappraisemenlt of value of merchandise, an d gives power to
appeal from the genieral appraiser for a ie-roappraisement before the
Board of General Appraisers.
'here is also added to this section a provision which requires a
deposit of a feo of $1 in respect to each appraisomenit objected to.
This provision to require a fee for appeals is made for the reasons
hereafter given under paragraph N.
A new provision is added to the present law which is as follows:
"And no reappraisement, or re-rcappraisement shall be considered
invalid becauso of the absence of the merchandise or samples
thereof before the officer, or officers making the same," which has
been rendered nlecessary by a recent interpretation of the law. It is
ofteni impr-acticablo to have the samples present, anid great expense is
involved to the Government to Ino purpose.
Paragraph N takes the place of subsection 14 of section 28 of
the present law. It provides the conditions under which the decision
of the collector as to the rate and amount of duty may be appealed
from. The time for filing protest has been extended from 15 to 30
days.
Trhis section has been remodeled to provide that protests shall be
in writing and a fee of $1 shall be deposited with such protest. The
present practice tendls to oncouirage litigation. The report of the
Board of General Appraisers for the year ending June 30, 1912, shows
there wore received by the board t.hat year 96,099 protests aind that
there wero penl(niiig 146,153 protests. The imposition of a fee is
recommended by tho Secretaiy of the Treasury in his report. Fully
one-half of tho present protests are estimated to bo fictitious, an(d to
filo, index, anid( keep a proper accounit of each protest ontails a great
amounit of labor an(d expeniso. it is believed that tho imposition of
this foo will elimin6ato the fictitious protests and work a great saving
to the Treasury Dopartmont. The power to appeal is limited to the
appeal against a higher rate of duty. This limitationi is suggested by
us, as it happens that manufacturers have themselves imported an
article similar to one of their own manufacture and have appealed
from the ruling of the collector in order to get a higher rate of duty
fixed on an article which they manufacture.
 TARIFF DUTIES AND REVENUES. XLTN
Paragraph 0 takes the place of subsection 15 of section 28 of the
present law. It provides that authority be given to the general
appraisers to-examine under oath importers and consignees respecting
any imported merchandise.
We recommend the insertion in subsection 15 of the present law of
the words "then under consideration or previously imported." The
courts have ruled that the Treasury Department can not examine the
importer as to previous importations, which very greatly restricts
what is often the best evidence of the value of the merchandise under
consideration. It was undoubtedly the intention of this act to allow
the owner or consignee to be examined as to such previously imported
merchandise, and the change recommended by us will accomplish
this end.
Furthermore the words "and such testimony shal be received in
evidence and given consideration in all subsequent proceedings relat-
ing to such merchandise" have been added. This is in order to avoid,
in cases of classification of reappraisement and re-reappraisement, the
necessity of again taking all the testinmony which has been once be-
fore collected by the department. It often happens that the witnesses
are not available for the later hearings, and the necessity for their
attending the second tinme is a great hardship to the men and an ex-
pense to the Government.
Paragraph P takes the place of subsection 16 of section 28 of
the present law. It provides that if anyone cited to appear before
the Board of Appraisers shall-fail to do so or shall decline to answer,
he shall be liable to a penalty of not less than $20 nor more than $500.
We recommend that the maxinum fine be increased from $100 in
the present law to $500. It often happens that an importer had
rather pay the present maximum fine of $100 than give an answer
which might affect him in a much greater amount in regard to- some
importation. It is to strengthen the power of the Treasury Depart-
ment to obtain this testimony that this increase in the maxiimum
fine is recommended. The provisions of this section and the suc-
ceediing one have been made more severe in order that the officers of
the Government may have greater powers to compel tho production
of books and the giving of testimony in order to bring out al the real
facts concerning any inportation.
Paragraph Q takes the place of subsection 17 of section 28 of
the present law. It provides for the preservation and publication
of decisions by the Board of Genernl Appraisers, anid is reenacted sub-
stantiaUy as it stands in the present law, except thatt we recommend
the insertion of the words "a statement of the facts upon which a
decision is based." This is done for the assistance of other appraisers
and to help the Treasury Department to check up tho witnesses and
see the nature of the testimony presented.
Paragraph R is a reenactment of subsection 18 of section 28 of
the present law. It provides that wherever importedimerchandise
is subject to an ad valoreni duty it shall be assessed at the actual
market value at the point of exportation in the usual wholesale
quantities, and contains a definition of what "value," "actual mar-
ket value," and "wholesale price" are.
We recommend its enactment as in the present law.
Paragraph S is a reenactmont of subsection 19 of section 28 of
the present law. It provi(les that any merchandise in a bonded
XlAVIII TARIFF DUTIES AND REVENUES.

warehouse may be withdrawn for consumption withiin three years,

subject to the duties and charges at the time of such withdrawal.
We recommend no changes.
Paragraph T takes the place of subsection 20 of section 28 of
the present law. It provi(es that where suit is brought against the
Government for the possession of property seized under the rerla-
tions of the customs act, the buriden of proof shall lie upon the cam-
ant. Suit may also be brought by the Government for the recov-
ery of value of merchandise imported contrary to the law.
As the la.w is at present, when the merchandise can be found it is
seize(l by the Government and the importer then has the burden of
proof, but where the importer has moved the merchandise where the
Government can Inot get it the Government has the burden of proof
in a suit for its value. The changes recommended would make the
procedure the same both in suits for value and suits for forfeiture.
Paragraph U is not found in any form in the presenit law. I-
provdes that if any person consigning or manufacturing merchandise
exported to the United States shall refuse to submit his books the
Secretary of the Treasury can exclude any or all merchandise so
shiped or manufactured by such person.
With the ilncrease iII the nutnber of tho ad valoreiim dluties which
this bill carries it is addlitionally necessary that the revenues of the
Government should be safeguarded and that all reasonable powers
should be given to the Secretary of the Treasury to obtain iniforma-
tion needed to arrive at values. It is often necessary for the Treasuiry
Department to find the real manufacturing cost of merchandise, but
under the law at present it,is lifilcult or impossible for them to do so.
The only relative provisioni in the present law is one which authorizes
consuls not to approve an invoice if they are satisfied that the values
stated in it are not correct. With the power herein gi-ven to the
Secretary of the Treasury it is thought that he will be able to gaini
t,he information which will lead our Treasury Department to deter-
mine much more satisfactorily the correct values of imported mer-
chandise.
V is a new paragraph. It provi(lcs that in the event the im-
porter refuses to submit hiis books, recordts, or accounts containing
the value of merchandlise in question to the customs officer the Sec-
retary of the Treasuiry can exciude from entry the merchandise of sai(d
importer. This power is given to the Secretary of tlie Treasury, for
thle reasons stated above, to enable hwim to obtain all informationi as
to values whiich tlhe importer may have in his han(ds.
Paragraph W does not appear in the present law. It provi(les
thiat a register of purchlasing agents sllall be kept by the consuls, and(
that a person to register as suclh must be shown to have authority to
(0o so.
The purpose of thlis paragraph is to secure proof that commissions
appearing on invoices are bona fi(le commissions. Un(ler the guise
of conmmission an imp)orter can put a commission of 5 per cent on
the invoice an(d de(luct it, and there is no way for the Treasuiry Do-
partment to find out wliother a real commissidn was paid.
Paragraph X is a new section, and provides that wlhere mer-
chandise purchased or manutifactured in the differenit consular (iis-
triets is assembled for shipment, the invoice slhall havo the original
 TARIFF DUTIES AND REVENUES. X LIX

bills showing prices actually paid, an(l shall state all charges anid
expenses.
Paragraph Y is a reenactment of subsection 22 of sectioll 28 of
the present law. It provides for an allowance in the liquidation of
duties for shortage or nonimportation caused by destructioin or injury
of perishable articles.
The Committee, recommends its reenactment withouit change. Its
provisions ha've received many juidicial interpretations which have
removed much of the obscurity of its language.
Paragraph Z is a reenactment of. subsectioin 23 of section 28 of
the present- law. It provides that whenever in cases of appeal it
is decided that the importer has been charged a greater duty than
he should properly be requtired to pay, after the final decision the
amouint so overcharged shall be refunnded.
The Committee recommends its reenactment in the present language.
Paragraph AA is a reenactment, except for a minor chanige in
the wording, of subsectioni 24 of paragraph 28 of the present law. It
provides that there shall be no personal liability on any collector
or other customs officer to any importer or agent on account of any
rulinigs or decisions.
Pacagraph BB is a reenactment of subsection 2f5 of section 28 of
the present law. It provides that it shiall be a criminal offenses to
offer a bribe to a customs officer, and we recommend its reenactment
witlhout change.
Paragraph CC is a reenactment of subsection 26 -of section 28
of the present law. It provides that it shall ho a crime for any
employee or officer of thle United States to solicit a bribe, and we
recommend its reenactment withouit change.
Paragraph DD is a reenaotment of subsection 27 of sectioIl 28 of
the present law. It provides that baggage or personal effects of
pnssengers in transit may be forwarded without payment, of duty.
SECTION IV.

Sectionl IV includes the provisions of the bill not included in

Section III, which are generally reforrced to as the adminiistrative
features of the tariff act. Paragr-aph A of this section takes the
place of Section II of the Payne bill, which p)rovidles for a iminimum
and imatlximumllm tariff for the United States.
MAXIMUM AND MINIMUM.

Section II is repealed, and paragraplh A reads as follows:

That for the purpose of readjusting the present dluties on importations into the
United States and at the same time to encourage the export trade of this couintry
the PreFident of the United States is auithorized and empowered to negotiate trade
agreementsS with foreign nations, wherein mutuial concessions are made lookinig
toward freer trade relations and further reciproeal expansion of trade and commerce:
Provided, however, That said trade agreemeints before becoming operative shall be
stubmitted to the Congres9 of the United States for ratification or rejection.
The miniinmum andl maximum tariff provisions adopted in tho Payne
bill have nlot beeni prodtuctive of any effectiveo expansion of our foreign
tra(de tan(d conmmerce. The conventional tariff being the minimum
ratte an(d the President being auithoriize(d to enforceo the maximulm
L TARIFF DUTIES AND REVENUES.

rate against foreign nations resulted in an attempt to expandl our

commerce by force. We went to the nations of the world with the
demand that they standtand deliver or we wouldl puni.sh them.
Many years ago this system of expand ing trade an(l comrmorce was
abandoned by the enlightened natlons. We are of the opinion that
the only true course that can be pursued to expand our foreign trade
along rational lines is through mutual concessions that may prove
benefcial to both of the contracting )arties, free from coercion.
Under the proposed substitute the President of the United States
is authorized to enter into these tra(de agreements without limitation
on his authority to (1o so, excopt that suich agreeiments as he enters
into must be ratified by the Congress before they shall become
effective.
Trhis legislation is new and somewhat along the same line as the
reciprocity treaties that were authorizedf under the Dingley tariff law,
the iffference boing that the reciprocity treaties were required to be
ratified by a two-thirds vote of the United States Senate, whereas the
trade agreements now provide I for will only require a majority vote
of both Houses. As. the Senate is not directly representative of the
miajority of the people of the, Unite(d States, one-third of the Senate
representing less than 10 per cent of the population of the country,
it is deeme(d more in accord with the progressive tendencies of our
people that such agreements shoul(d be ratified, as far as possible, by
the representatives of a majority of the American people.
CUBAN TREATY.

Paragraph B re-lates to the commercial treaty eoncluded between

the Unite(d States andcl Cuba on the 11th (lay of becember, 1902, and
the language of existing law is not changed.
FREE TRADE WITH THE PHILIPPINES.

Paragraph C is a substitute for section V of the Payne tariff law.

The material clhanges in this paragraph provide for the granting of
absolute free trade between the Philppine Islands and the United
States without the limitations that exist in the present law prescrib-
ing the amouint of rice tobacco, and sugar that may be imported
from the Philippine Isiands into the United States free of duty.
Under the present law the imiports from the United States to the
Philippine Islands and from the Philippine; Islands to the United
States are limited to articles the growth, product, or manufacture of
the two countries, except artictes the product of the Philippine
Islands which do not contain foreign materials to the value of more
than 20 per cent were admitted free of duty. At the suggestion of
the War Department the per centum of foreign material that may be
contained in these articles admitted free of duty has been increased
from 20 to 50 per cent to encourage the development of certain lines
of manufacture in the Philippine Islands, notably handmade lace
made by the native women otthe islands.
Section XIII of an act to raise revenue for the Plhilippine Islands
and for other purposes, approved August 5, 1909 is repealed in this
paragraph. This section is a part of the revenue iaws for the Philip-
pins islands, and provides for an export tax on certain articles the
 TARIFF DUTIES AND RBEVENUES. LI

product of the islands. There is lno civilized country in thle world

that to-day -maintains an export tax on the productive energies of
its people. Such a tax is prohibited by the Constitution of the
United States. We feel that in justice to the Philippine people this
unjust tax that rests as a burden on their industriaI growth should
be repealed.
Paragraph D is not contained- in the p resent law, and provides
that articles, goods, wares, and merchandise going into Porto Rico
from the United States shall be exempt from the payment of any
tax imposed by the internal-revenue laws of the United States.
Under existing law articles on which a revenue tax is levied shipped
into Porto Rico4from this country must first pay an internal revenue
tax here and then the tax under the laws of Porto Rico, whereas the
same articles coming from a foreign country pay only internal-reveinue
taxes in Porto Rico. The present law has worked an injustice to the
people of our own country.
Paragraph E is a reenactment of Section VI of the present law
levying a countervailing duty against any country which shall pay
or bestow directly or indirectly -any bounty or grant upon the ex-
portation of any article or merchandise from such countrV.
Paragraph F is the reenactment of Sections VII and VIII of the
present law, relating to the marking, stamping, and branding or
aDeling of imported merchandise.
Paragraph G is the reenactment of Sections IX, X, and XI of the
present law, relating to the importation into the United States from
any foreign country of obscene books, pamphlets, papers, writings,
advertisements, or other articles of an immoral nature.
I?aragraph H is the reenactment of Sections XII andand XIII of the
present law, relating to the importation of neat cattle the hides
of neat cattle from any foreign country into the United States, in-
tended to establish a quarantie protect
to the cattle of this country
from the spread of contagious and infectious diseases.
Paragraph I is the reenactment of Section XIV of the present law,
prohibiting the importation into the United States of goods, wares, or
articles of merchandise, from any foreign country, manufactured
wholly or in part by convict labor.
Paragraph J is a substitute for Sections XV to XX, inclusive,
of the present law. Subsectionl I of paragraph J is the reen-
actment without change of Section XV of the present law, and
Subsection II of paragraplh J is a reenactment of Section XVI of
the present law without chancre. Subsection III of paragraph J is a
reenactment of Section XVII of the present law without change.
Subsection IV of paragraph J has been substituted for Section XVIII
of the present:law. It has been so amended as to permit the impor-
tation of articles to be repaired, commercial traveler's samples, and
vehicles and horses for exhibition purposes without the payment of
duty under bond for their exportation within six months. Subsec-
tion V of paragraph J is a partial reenactment of Section XIX of the
present law, which authorizes the use of foreign material for the
construction of vessels built in the United States free of duty. The
present law limits the free importation of such material to vessels
built in the United States for foreign account and ownership and for
the purpose of being em,ployed in the foreign trade, including the
trade between the Atlantic and Pacific coasts. The change made in
 LI,I TARIFF DUTIES AND REVENUES.
this section is to strike out the lilitation and authorize the importa-
tion free of (luty of foreign material for the construction of all vessels
built in the Unitedi States for foreign account andl ownership an(d for
the purpose of beinig employe(d in the foreigin an(d domestic trade of
the nited States. The purpose of the change is to liberalize the
law and encourage the building of all classes of ships at our domestic
shipyards.
,Subsectioi VII of paragraph J is new legislation providing that
a discount of 5 per cent of all duties imposed at the clustomhlouses
shall be allowed oin such goods, wares, and merchanidise as shall be
imported in vessels admitted to registration under the laws of the
United States. It is a discrimination in favor of American shippulg,
similar to the provisions of some of the first tariff bills that were
cnacted by the Congress of the United States. Under like legisla-
tion the merchant marine of the United States was encouraged and
developed in the early decades of the last century until our merchant
marinie became the largest carrier of merchanclise in the world. We
believe that to again discriminiate in favor of American shipping will
build up our merchanit fleet and( keep at home millions of dollars
that are inow being paid to foreign vessels to carry the products
of our country to foreign markets.
Paragraph K is the reenactmenlt of Section XXI of the presenlt law,
allowinig the privilege of purchasing supplies from public warehouses
free of dutty anild from bonded manufacturing warehouses free of
duty and( free fromii internial-reveinue tax, as the case may be, to the
vessels of war of ally nationi in the ports of the United States which
may rec-iprocate sueli privileges towardl vessels of war of tlle United
Stattes il itS foreign ports.
Paragraph L is the reenactment of Section XXII of the present
law, re atinlg to the free admission of merchandise removed from ves-
sels wlhich have been sunik in the waters subject to the jurisdiction of
the United States for a period of two years and abandoned by the
owners thereof.
Paragraph M is the reenactment of Section XXIII of the present
law, relatinig to tho manufacture and exportation in bonded ware-
houses of imported materials or materials subject to internal-revenue
tax.
Paragraph N is the reenactment of Section XXIV of the present
law providiing for bonded warelhouises for manufacturers engaged in
smeltiing or refining of ores and crucle metals.
DRAWBACK OF DUTIES. --

Paragraph 0 is a substitute for Section XXV of the present law,

relating to an allowance of a drawback of duties paid on foreign mate-
rial imported into the United States and manufactured and subse-
quently oxported. The p)ortioll of the present law that is amended
reads as follows:
That where itinportedl materials on wlhichl (luties have been paid are ised in thle nan-
ufactuire of articles manuiifactured or )ro(luce(d in the United States there shall lbe
allowed on the exportation of suich articles a drawback equal amount
in to the duties
paid on thc material used less one per ce¢ltlint of suclh dtuties: Provided, That wholn the
articles exported arc made in part fromn (lomestic materials and the imyported materials
 TARIFF DUTIES AND REVENUES. LIII
or the parts of the article made from such materials shall so appear in the completed
articles that the quantity or measure thereof may be ascertained.
This portion of the present law is amended to read as follows:
That upon the exportation of articles manufactured or produlced in the United
States by the use of impo'rtfed'dmerchandise or materials upon which customs dutles
have been paid, the full amount of such duties paid"iupon the quantity of materials
used' inproduicing the exp6rte'd pro'duct shall be refunded as drawback, less 1 per
centum: of such: duties: Provided, Tha:t where a principal product and a by-prodtutct
result from the maniipulationbof importe'd"material, and only the by- roduct is exported,
the proportion of the drawback distributed to such by-product: shall not exceed the
duty imposed by this act on a similar by-product of foreign origin if imported into-the
United :States. Where no dilty is imposed upon theimportation of a corresponding-g
by-product no drawback shall be payable on such by-product produced from the
imported material: Provided, howeter, That where no duty is imposed under this act
on a corresponding foreign-by-pr6oduct there 8hall be refunded as drawback on the
exportation of the principal product the whole of the duty paid' on the imported Inate-
ria used in the production of both the principal and the by-product, less one per cent:
Provided further, That when the articles exported are manufactuired in part from
domestic materials the imported materials or the parts of the articles manufactured
from such materials shall so appear in the completed articles that the quantity or
measure thereof may be ascertained.
The purpose in making this change in the existing law is to limit
the drawback paid on foreign material reexported to 99 per cent of
the amounrt of duty paid on the importation of the material consuimed
for remanufacture.
Under the existing law as construed by the Treasury Department
at the present time the (drawback sometimes amounts to more thlan
the duties paid and sometimes to less tlhan 99 per cent of the dtuties
paid on the material consuimed.
The remainder of the section not quioted above is the samiie as the
existingg law.
Paragraph P is the reenactment of Section XXVI of the existing
law relating to the reimportation of articles once exported of the
growtli, product, or manuifactuire of the Unite( States.
Paragraph Q is the reenactment of Section XXIX of the existing
law relating to the importation of mercharldise oII ani( after the (day
when this act shall go into effect.
DUMIPING CLAUSE.
Paragraph R is new legislation anld provides for a dumping ,duty
to guard the producers of the Unitecd States agatinst the deniorlliza-
tion of Americain markets caused b the exportationi fromn foreign
countries of articles into the United Zates at prices less than the fair
market vallie of the same articles when sold for home consumption
in the uisual and ordiinary course in the country from whence they
are exported to the Unite(l States. We hlave en(deavored to reduice
the duties provided for in the present law to a revenuie basis, exp)ect-
ing reasonable and fair competition at normnal prices, and we are of
the opinion that this paragraph will have a ten(dlency to mainltain
steady and continuous importations all along the line and prevent
the demoralization of Americani markets when abnormal coniditions
exist abroad, and at the same time have a torndenicy to maintaini a
continuous and normnl flov of revenule into tlhe Federal T'reasuiry
at all times.
Paragraph S is the enactmtlient of lnew legislation andi proi i(leS
that tlhe President shiall cauiso to be asevrtainei( eacl Vyeal' the allOilnt
LIV TARIFF DUTIES AND REVENUES.

of imports aind exports of articles enumerated in the various para-

graphs in section 1 of this act, and cause an estimate to be made
of the amount of domestic production and consumption of said
articles, and where it is ascertained that the imports in any paia-
graph amoulnt to less than 5 per cenit of the domestic consumption
of the articles enilmerate'd lhe shall advise the Congress as to the
facts and his concluisions by special message.
The purpose of tha eilactiienit of this paragraph is to call to the
attention of the Congress all cases Where the importation of foreign
merchlandise ainounts to less than 5 per cent of the domestic con-
sumption, in order that they may consider in the futuroe any changes
that it is necessary to make where the proposed rates of duty are
not sufficiently lowN to produce a fair amnioIlIt of importations and
reasonable coImpetition, as comllparecd with the amount of domestic
conlsulm)ption of similar articles ill the Unite(l States.
Paragraph T is a ropealing clause of the present law, which repeals
all the sections of an act to provi(le revenue, equalize duties, and
encouragge the in(lustries of thelJnitecl States, and for other purposes
approvied August 5, ]909, except those sections of the existing law
establishing the Boar(d of General Appraisers of Merchandise; those
sections of said act establishing a United States Court of Customs
A)peals; the section that provi(des for additional Attorneys General
of the United States; the section of said act that provides for the
levying of iiiternal-reveniue tax upon tobacco; and section. 36 of said
act, provi(ling for a tonniage duty to be imposed at the entry of all
vessels which shall be entered into any port of the United States
from any foreign port; section 39,;that gives authority to the Secre-
tary of the Treasury to borrow oIn the credit of the United States
from time to time, as the proceedings may require, to defray expenses
on account of the Panama Canal; and section 40, that authorizes the
Secretary of the Treasury to borrow from time to time such sums as
may be necessary to :nmeet pablic expenditures.
OSCAR W. UNDERWOOD, (0hairman.
FRANCIS BURTON HARRISON.
DORSEY W. SHACKLEFORD.
CLAUDE KITCHIN.
HENRY T. RAINEY.
LINCOLN Di-,o.
CORDELL I-I\ -.L
W. S. HAMMOND.
ANDREW J. PETERS.
A. IITCHELL PALMER.
TIMOTHY T. ANSBERRY.
JOHN N. GARNER.
AUGUSTUS 0. STANLEY.
JAMES W. COLLIER.
 Mr. PAYNE submitted the
VIEWS OF THE MINORITY.
In.this statement we shall Inot attempt to analyze this bill or to
criticize it in detail. Our acquaintance with it is too brief to permit
this. Of course, the debate which is to follow vill bring out some of
its laring defects.
'Ais bill aims at a complete reversal of the economic policy of the
Government. Diuring a period of nearly 50 years we haive had a
protective tariff in this country. Under it we have built up manu-
facturing industries Inot approaclhed by those of any other country.
The farmers have prospered marvelously. In purchasing power, the
only true test, the wages of our laborers have never been equaled
by the wages of any other people. Under the present tariff lawv this
universal prosperity has reached the very highest crest. Every
laborer willing to work is fully employed. :Even the poorest class of
laborers employed at the lowest wages have still been able to send
surplus earnings to their native countries.
The majority party seem to have carried ouit some of the pledges
in their last platform, while they have overlooked others. It has
long been a contention of that party that the Federal Governnment
had no right to impose or collect tariff duties except for the purposes
of revenue; that any other course wras unconstitutional.
In the First American Congress the fathers recognized that tariff
duties might be imposed, not only for revenue, buit to encourage in-
dustries. During the greater part of our history, and always under
Republican rule, an adjustment of duties so as to encourage indus-
tries has been the unitorm ruie. This principle of protection put
into practical force in a. tariff bill has been a sure guarantee of a
larger Treasury income. A glance at the history of the tariff in this
couintry furnishes abundant evidence of this truth.
The present law has demonstrated during the four years of its
existence that, in connection with the internal-revenue system of
taxation, we can collect adequate tariff duties for all the necessities
of the Government.
The Democratic majority of the committee have published a hand-
book in connection with this -bill, which, on pages 480-481, gives for
each year the average ad valorem rate of duty under all tariff bills
from 1850 down to and including 1912. This shows that the average
ad valorem rate of duty on all imports under the present law, for the
fiscal year 1912 is 18.58 per cent lower than during any year of the
entire period except the years 1857 to 1860, and much lower than the
rate under the Dingley law. Another unanswerable proof of the
fact that, taken as a whole, the present law was a substantial revision
downward is furnished by the two statements frorn the Treasury
Department, submitted herewith, one covering the importations for
the six months from October 1, 1909, to March 31, 1910, and the
other covering the importations for the fiscal year ending June 30,
LT
LVI TARIFF DUTIES AND REVENUES.

1911. These statements mark the fact that in the first period the
pIresent law shows at redluction in (dluties of 6.4 per cent and in tlhe
second period 4.05 per cent from the Dingley law. As will be
observed, the figtures of the Treasury Departimenlt tire arrived at by
comptarinig the dluties actuially paid lnder the present law with the
dutites wlhich wlouldl have been paid if the Dingley law had still
been in force. In this connection we call attention to the fatet
tllat on all schedllules embracing luxuries like wvines and spirits, cos-
metics, jewvelry, anid similar articles, the rates were increased in
the present law. Of course all are included in the Treasury statis-
tics above referred to. If the comparison were made on the articles
in all schedules except schedules on luxuries, the percentage of re-
duction would appear much greater. It ought to be added that on
those schedules embracing luixllries the proposed bill retains exactly
the same advanced rates puit there in the present law.
Schedulle K (wool aInd woolenis) was practically unclhanged by the
Payne law. Schedule I (cottoIn and cotton goods) was increased in
a nuimber of different items.
The reports of the Tariff Board on Schedules K and I show that the
duties on these two schedules otught to be revised, but not in accord-
ance with the ill-considered rates provided by the proposed tariff bill,
It. R. No. 3321.
In presenting this bill the committee is met with a threatened
deficit in revenuie of about $100,000,000, which it is compelled to
meet by extraordinary methods of taxation used heretofore only in
time ot war. As a revenue measure the committee at the very outset
confess this ill to be a failure. It would seem as if a party pledged
to a revenuie tariff would strive to make the revenue feature con-
spicllolus.
It was declared by the committee during the last Congress that
in the vaiiouis tariff schediiles presented in their bills the protective
feature was entirely wanting; that so ftar as the committee knew
or intended there was no protection in the bills. The committee
seem to have tried to observe the rule which they laid down then
in the framing of the bill now presented. True, there may be somne
exceptions, but on the great mass of articles no one will acculse the
comrnittee of seekinig to make up the difference in cost here and
abroad, or even of trying to put the induistries here oI1n a "comnpeti-
tive basis " with tle industries abroad.
The majority party declared in their last platform-
W'e recognize that ouir systeIm of tariff t;xatiton is initim:ately coninected with
the business of the cotuntry, and we favor the ultiniiate attainmiiienit of the p1riii-
cil)les we advoctate by legislationi thalt wvil lot inijure or destroy legltimattte
indtustry.
In this bill thatt pledge lhas been lost sight of by the coimmittee in
framing its most important schedules. It has already caused intense
anid widespread alarm in buisiness circles. The Democratic governor
of a great State, in a special message to the legislature, denounces
the proposed act as a ' nonprotective tariff for revenue only Ull-
reciprocal, destructive downward revision." He says in his message:
It is your right, it Is your p)ri0llege, it is youir (Iluty to ineinolalize Congres
in behtlf of this Couinionwealith ntgailiit Such a peril to the interests of
Massachusetts.
 TARIFF DUTIES AND REVENUES.
The proposed bill seems to meet with universal approval on the
other side of the Atlantic.
In the brief time that this bill has been permitted to see the light
of day there has been little opportunity for the minority of the
committee, whio saw it first when it wa's introduced in the House,
to study its provisions. It is easily apparent that many of the
duities have been placed on articles used by our manufacturers, and
imported wholly from abroad as a "tax on the manufacturers;"
that many duties have been lowered so that they are mluch less than-
the difference in cost of labor at hlome and abroad; that many arti-
cles now paying very low rates of duty have been put on the free
list, while the comparative cost of production lhere and abroad is
such that it will be impossible for business to continue without bring-
ing down our scale of wages to the level of the rates paid abroad.
In many cases articles are ptut on the free list, while a protective
duty is laid upon the material used in their manufactulre.
And yet it woiuld be erroneous to charge that all the rates have
been laid with an eye single to revenue only. Some of them carry
'incidental protection," which, on the face of it, shows that " inlci-
dental protection " 'was planned as a part of the scheme of the
framers of the bill. These features are spasmodic and generally
htave a local coloring.
Every Secretary of the Treasury who has declared himself OIn
the subject, except Secretary W'alker, has opposed the ad valorem
rate where the. specific rate was practicable. Two objections have
been urged to the ad valorem: One is that it imposes a greater tax
wvhen prices are high and competition is not so keen and a le.sser
tax when prices are low and competition is keener and much more
injurious to the home producer.
The other objection, and the onie milost important, is that it bears
mnore heavily on the honest imp:orter and favors the man wVho by
perjury and fraud undervalues his goods and escapes his fair share
of taxation. With a single exception every great commercial lintioIn
has discarded the ad valorem dutty and substituited the specific,
wherever practicable. Great Britain imposes her tariff duty " for
revenue only " on articles not produiced within her owvn bord'ers anid
entirely imported from abroad. She has the ad valorem system.
The Tariff Board went into this question very exhaustively in their
report on the woolen schedule and made a strong argument in favor
of specific duties. This seems to be essentially anll " d valorem"
bill. The maniufacturer who may still hope to contilnue his blusiness
without profit under some ad valorem rate imposed in this bill, if
_uch there should be, will find in the end that such dulty is a deluision
;and fa snare as a measure of protection.
There is no provision for a maximum and minimumlii duty in this
bill, andl hence no hope for tlhe Execuitive to obtain tariff concessions
from foreign countries whiclh those salne couintries allow to ouir
rivals in tradc. Unider the working of the maximiim and minimum
rates in the present tariff law these variouis quiestionis have all been
smoothed ouit by negotiations, anid we are getting generally as
good termis as any of oulr competitors in the way of tariff duties and
trade reguilations. This featuire Iias added imuc-1h to ouir export trade
whiel has so rapidly increased during the l)ast fouir years uinder the
1)Iesent law'.
LJVIII TARIFF DUTIES AND REVENUES.

In lieu of the mnaximum and minimum clautse, we have section 4-A

of this bill, which provides-
Tllnt for the purpose of readjuisting the present duties on importations Into
the Unite(l Stattes nnd at the same time' to enicourage the export trade of this
country, the Presidenlt of the United States is authorized and emipowered to
negotiate trade agreemnenits with foreign nations wherein mutual concessions
are malde looking towvaird freer trade relations and further reciprocal expansion
of trade and commiiiierce; Provided, htowever, Thiat said trade tigreements before
becominig operative shall be submittedl to the Congress of the United Staites for
ratificationi or rejection.
The President and Congress have this authority Inow. They do not
need this new section to strengthen or enlarge their powers. By vir-
tue of such powers, already existing, the CLuban reciprocity treaty
was enacted, and so also was the Canadian reciprocity agreement en-
tered into and ratified by Congress. This section gives no new power
to either the President or Congress.
It wvas not until wve enacted section 2 of the present law, with the
maximum and minimum provision, that we were able to make any
headway against the discriminating tariffs of Europe. Under this
provision these unequal exactions upon our commerce have disap-
peared. It is folly to take this backward step.
The maximum and minimuim provision in the present law is now
denounced as a club. We have no denunciations from the same
sources of similar provisions in European tariffs. By whatever name
our provision is called, it can not be denied that during the past four
years it has accomplished the purposes for which it was enacted.
No new administration ever inherited such a full Treasury and
such abundant revenue as this one. At the close of business on March
3 last the total balance in the general fiuind was $149,335,711.78. Mak-
ing due allowance for a. working balance, we have $75,000,000 available
for any deficit in the revenue to meet future expenditures. Although
the revenue from customs has fallen during the month of March
because of the threatened tariff reduction, the indications are that the
surplus to be added at theIend of the present fiscal year, ending June
30, will be at least $50,000,000. In view of the official Treasury state-
ment, all muist admit the prosperous condition of our governmental
finances. The people of the country have been mnore prosperous than
ever before in our history.
There is no excuse for the radicafl chninge in our revenue system
proposed by), this bill. The people have not asked it. The party
proposinyg it is in power, not by the grace of a majority of the
American people, but by a division in the ranks of the majority on
other questions than that of protection. The Administration has the
power to enact this legislation. The aecounting for the abuse of that
power will come later.
SERENO E. PAYNE.
JOsEPH W. FORDNEY.
AUGUSTUS P. GARDNER.
J. HAMPTON MOORE.
SYDNEYr ANDERSON.
WILLIAm R. GREEN.
 TARIFF DUTIES AND REVENUES. LIX
TREASURY DEPARTMENT,
Washington, March 17, 1913.
Hon. A. P. GARDNER,
House of Rcpresentativcs.
Sin: I have the;lholor to ackinowledge the receipt of yolfr letter of the '10th
instant requlestting informiation as to certatin computat,ons made by the Trensury
Depiartmenit in 910, showing i com11palrison of the duities collected under the
tariff act of 1909 with those that wolild have been collectedl oIn the samie in-
portations under the tariff act of :1897.
Youl state that ex-Conigressnmni,E. J. Hill, of Ooinecticlit, made the assser-
tion in a speech that the comIp'tation1Showed that the importations considered
actually 1)aidl into the Treasury unider the Piayne iiiw $11,178,162.021 less than
they woould have paid if no charge of law had been made. You request to be
infornmed as to the followIng poilts:
"First. Is the above differelnce correctly stated?
"Second. What were the months covere(d by the computation?
"Third. What were the aggregate Importations covered by the computation?"
In reply, I have to state that:
First. The figures given are correctly stated, as showvn by the computations
made, which are believed to be correct. The amounit stated represents the nlet
decrease.
Second. The months covered by the compjutations were the six mouths from
October 1, 1909, to MIarch 31, 1910.
Third. The ag?gregalte importaitions covered by the comrputattons hlad a total
value of $804,878,645.46, aind these imiportations conisiste(d of all diltitible items,
Philippine goods, and items in the free list for the periodf nielltioned, with the
exception of various items having a total value of $2.983,830.97, relative to
which the data at hand were insufficielnt to form a satisfactory basis for the
computation of the duties under the tact of 1897.
Respectfully, . J. F. CuRTIs,
Assistant Sccretary.

TREASURY DEPARTMENT,
Vashfngton, Aprl lJ, 1913.
Hon. A. P. GARDNER,
House of Representatives.
SIB: I have the honor to acknowledlge the receipt of your letter of the 19th
instant, further in the matter of computations miade oi immportations receivedl
under:the tariff act of 1909, showing a comparison of the duties collected and
the duties computed on the samie importations under the rates of the tariff
of 1897.
You state tlhat you have been informiied that suich comiipuitationis have been
mnade for the period fromi April 1, 1910, to October 1, 1910, and you request
information tas to the followinig p6oints:
"First. Whether or not a computatlOio has been made by the Treasury De-
partnlent for an entire year showing a comnparlson of the (lutles collected unider
the talriff act of 1909 as compiiiaredl with the Idties thaot vol have beell col-
lected oln the same importations had the tariff aCt of 1897 still beeni In force?
" Seconid. WVhich 12 rmonths wvere coveredl by these imiportationis?
"Third. What resullts appeared?
"(a) As to percentage of increase or decrease und(ler the Paynie law?
"(b) As to the inerease or decrease ini the total amiiouniit collecte(d uinder the
Payne lalw? t"
In reply, I have to state that the department did liot make comnputatiolls
for the six months mouitioned by you, but did for the fiscal year 1911, relative
to which, ii response to your quiestions, you are adviseWd as follows:
First. Yes; the computation als ouitline(d was miad(le.
Second. The 12 months covered were those fromll July 1, 1910, to Julle 30,
1911.
Thlrd. (a) The computations slhowedI a decreas, undi(ler tlie Pan:ye Iaiivy of
4.05 per cenlt. (b) The decreaise unelr the l'nyne linv showni by thle Co11iputa-
tions wvas fouind to be $13,030,875.84.
1A re(luctlon of 0.4 per cent.
LX TARIFF DUTIES AND 1tEVENUES.
As in4the previouis computations, the above fgigres represent' the net decrease
on the items compared, consisting of the dutiable items, Philippine goods, and
Itemiis in the free list according to the importations for the period under con-
sideiation, except anrio'us iteils reltative to which the data at hand were insuf-
ficient to formh a satisfactory basis for a computation of the duties under the
tariff act of 1897. The percentage of decrease is based on the duties com-
puted under the tatiff nct of 1897..,
Writh respect to the hlst paragraph of your letter, requesting information as
to whether the e is any )rilnted publication which cov'ers the points mentioned,
I have to state that the department knows of no printed publiclition covering
the points in question, as the computations were prepared 'in the form of type-
written schedules only, during the years 1910 and 1911, for the use of the
President.
Respectfully, J. F. CURTIS,
As8i8tant Secretary.