THE DUTY ON CLOTH
SO much for the raw wool, which does not concern the consumer directly, but which he must consider in order to understand the conditions under which the woolen manufacturer is laboring.
When we come to cloth, the discrimination against the woolen manufacturer and the burden imposed upon the consumer is no less striking.
On the theory that all wool in this country is enhanced in price to the extent of the duty,—a theory, by the way, which every protectionist stoutly combats when discussing the effect of the tariff on domestic prices,—the manufacturer of cloth is allowed not only a protective duty of from fifty to fifty-five per cent. of the value of the imported cloth, but, in addition to that, a “compensatory” duty on account of the duty on raw wool. This compensatory duty is fixed at forty-four cents per pound of cloth on most of the cloths imported into this country.
It is based on the assumption that it takes four pounds of raw wool to make one pound of cloth. This compensatory duty adds to the discrimination against the woolen manufacturer in favor of the worsted manufacturer in several ways.
In the first place, as already explained, the wool used by the worsted manufacturer does not shrink as much as that which goes into the cloth produced by the woolen manufacturer. Yet the compensatory duty is fixed at a uniform rate for both cloths, which is equivalent to giving to the worsted manufacturer about twice as much “compensation” as to his less fortunate rival, and giving him, in most cases, compensation for a greater loss than he actually sustains.
In the second place, the law takes no account of the admixture of materials other than wool of which the cloth is made. A cotton worsted may contain cotton to the extent of one half or more of its total weight, yet the worsted manufacturer is allowed forty-four cents a pound “compensation” on the entire weight of the cloth. Mr. Dale, editor of “The Textile World Record,” quotes a typical instance of a cotton worsted. In turning out 8750 pounds of this cloth, 3125 pounds of raw wool were used, the remainder being cotton. Assuming that the price of the wool in this country was enhanced to the extent of the duty of eleven cents a pound, the manufacturer would be entitled to a compensatory duty of 3125 times eleven, or $343.75. But the law, on the four-to-one theory, allows a compensatory duty of forty-four cents per pound of cloth, or 8750 times forty-four, which is equal to $3850. The manufacturer is thus granted an extra protection of more than three and one half thousand dollars in the guise of compensation for the duty on wool which never entered the cloth.
In the discussion of the question in Congress, the stand-pat senators stoutly maintained that the four-to-one ratio was only a fair compensation to the American manufacturer. But the report of the Tariff Board, which no one has yet accused of being unfair to the manufacturers, has settled this point authoritatively by sustaining in most emphatic terms every charge made here against the system of levying duties under Schedule K.
In addition to the so-called compensatory duties, the tariff provides a distinct protective duty of from fifty to fifty-five per cent. on cloths. High as this duty appears in comparison with protective duties in most of the European countries, it is not exceptionally high as compared with the rates under other schedules of our tariff. It is only when taken in combination with the compensatory duties, which the official report of the Tariff Board has shown to be largely protective, that the prohibitive character of the duties in Schedule K comes to light. The figures of annual imports published by the Bureau of Statistics throw an interesting light on this aspect of the case. They show, for instance, that the duties on blankets in the fiscal year 1911 ranged from sixty-eight to one hundred and sixty-nine per cent. of their foreign selling price; on carpets, from fifty to seventy-two per cent., being the lowest duties imposed on any manufactures of wool; on women’s dress-goods the duties varied from ninety-four to one hundred and fifty-eight per cent.; on flannels, from seventy-one to one hundred and twenty-one per cent.; on woolen and worsted cloths, from ninety-four to one hundred and fifty per cent.; on knit fabrics, from ninety-five to one hundred and fifty-three per cent.; on plushes and pile fabrics, from one hundred to one hundred and twenty-two per cent.
None of these rates tells the whole story: they all understate the duties to which foreign goods are subject under the law; for they represent the duties on goods that were able to get into this country over our tariff wall. In some cases the imports represent vanishing quantities, only a few dollars’ worth, being probably the personal purchases of returning travelers. The duties that are high enough to keep foreign goods out of the country naturally do not find their way into the returns of the Bureau of Statistics. An illustration of this feature is furnished by the report of the Tariff Board. The duties upon woolen and worsted cloths just cited from the report of the Bureau of Statistics are shown to vary from ninety-four to one hundred and fifty per cent. The Tariff Board, in making a comparative study of the industry at home and abroad, obtained a set of representative samples of English cloths with prices at which they are sold in England, the duty they would have to pay if imported into the United States, and the prices at which similar cloths are sold in the United States. Sixteen of the samples, representing the cheapest cloths sold in England at prices of from twelve to fifty-four cents a yard, are not imported into the United States at all, owing to prohibitive duties ranging from one hundred and thirty-two to two hundred and sixty per cent. Thirteen out of the sixteen samples would have paid duties higher than the highest rate of one hundred and fifty per cent. given in the report of the Bureau of Statistics for cloths actually imported. This illustration will suffice to explain why the rates quoted above for various woolen products from the report of the Bureau of Statistics are understatements of the duties imposed under Schedule K.
An invariable feature of this schedule is that the duties rise in inverse ratio to the value of the commodities, so that the poor man’s grades pay the highest rates, while those intended for people who can best afford to pay the duties are subject to the lowest rates. In the set of English samples collected by the board, the cheapest cloth selling in England for twelve cents a yard would pay a duty in the United States equal to two hundred per cent. ad valorem, while the highest-priced fabric selling at $1.68 a yard would pay a duty of only eighty-seven per cent.
Small wonder that under the fostering care of Schedule K imports have been reduced to next to nothing. With a total domestic consumption of women’s dress-goods valued at more than $105,000,000, we imported six and one third million dollars’ worth of these goods in 1911. The imports of woolen and worsted cloth were only two and one half per cent. of the total domestic consumption. We imported blankets and flannels in 1909 worth $125,000 as against a domestic production of more than $10,500,000, making the imports only slightly more than one per cent. of our total consumption; even in carpets, which are subject to the lowest rates of duty imposed on manufactures under Schedule K, our imports were only $195,000 worth against a domestic production of $45,475,889, making the imports less than one half of one per cent. of our own production.