Mr. Archibald Coats, the head of the Paisley concern, when twitted with using his monopoly to put up the price of thread, insisted that the advance was due entirely to the higher costs of materials. Moreover, he said, the concern was not a monopoly, that there were in the world 180 thread concerns outside of those in which he was interested. Mr. Coats’s materials were higher—cotton, fuel, spool-wood, had advanced, but on the other hand, Mr. Coats himself called attention to the savings he and his colleagues effected by their combination, both in manufacturing and in selling. These economies the representatives of the American end of the Trust told the Industrial Commission in 1900 were “immense,” “tremendous.” Mr. Coats stated in his report of 1906 that the profits of his concern in the second five years of the combination—that is, after the price of thread went up, and also after the price of materials had gone up—were nearly a third greater than in the first five years. They certainly were highly satisfactory,—a profit of $12,636,000 a year on a capital of $48,600,000 is doing well! The fact seems to be that through a monopoly in this country which it was possible to perfect only because of the high tariff on spool cotton which had cut off all competition from the 180 concerns which in free-trade England might affect him somewhat, Mr. Coats was able to sell his thread here at a higher price than he did in England and to increase his profits in five years by some 33½ per cent, and this in a time when his materials had largely advanced. That is, Mr. Coats and his friends had been able to make the millions of this and other lands bear all the fluctuations and vicissitudes of the thread trade. Whatever happens, he could protect himself and his favored workmen from sharing any of the losses of his business; he could even increase his profits.
One of the necessary articles which steadily advanced in price after the Dingley Bill passed, was shoes. It was an advance which was particularly hard on the poor, for shoes are one of the heaviest expenses in clothing a family. One of the budgets reported in a recent investigation of living expenses in New York City was that of a family of four persons, respectable, hard-working, and anxious to get ahead. Their total income was $600. These four persons kept themselves “neat and clean” on $40.00 a year. Out of this $40.00, $11.81, or over one-fourth of the total, went for shoes and mending shoes. In another budget of a larger amount ($895) $61.90 was spent for clothing in a family of eight persons, and out of this $8.00 went for shoes for the father, $1.25 for the mother, $8.33 for the six children, or $17.58 of the entire appropriation for clothes and shoes. In the budget of a shop girl there is perhaps no one item which costs more anxiety than that of shoes, none more important. She must have them. They should be strong and weather-proof, for she must go and come in pouring rains and drifting snows. They should be well fitting, for she must often stand in them all day. The amounts spent in keeping themselves shod vary greatly, of course, according to the care of the girls, the distance they walk, the quality of the article bought; but when compared with the total allowance for clothes, the result is something appalling. Among the budgets of a recent investigation, was one of a woman forty years old, who had worked sixteen years at $6.00 a week in a well-managed New York factory. She sat at her work. She could have earned $8.00 a week by taking a place at the counter, but argued that the better clothes required and the wear and tear of standing would be really more expensive, so kept the $6.00 place. By limiting food she could save $1.00 a week. This gave her $53.00 a year for doctor, dentist, amusements, clothing, and “extras.” She spent $22.05 for clothes the year her budget was examined, and of this $7.16 went for shoes and rubbers. This woman was an especially careful person. Usually the sum credited to shoes is larger. They range from this one of $7.16 up to $26.60 spent by a girl who said she could not keep her feet dry on less than a pair of $2 shoes per month—$24.00 a year—with one pair for dress at $2.60; $26 for shoes on an income of $9.00 a week, cut down the year of the investigation to an average of $7.50 by illness!
It was hard enough for the poor to buy shoes before the Dingley tariff, but with every year since it has been harder. In woman’s ordinary shoes there was an increase of something like 25 per cent in the years from 1890 to 1899. There was a corresponding increase in all varieties of boots and shoes. Say that it has been 20 per cent and see what that means to your family of four which can spend but $40.00 a year on clothes and must put $11.81 of it on shoes.
But why should the price of shoes have increased? Under the extraordinary advance in shoe machinery, it should have decreased. The shoe was pinched by a combination of tariffs and trusts which can hardly be matched in any other industry in the country. First, there was the tariff laid on hides in 1897. For twenty-five years hides had been free and cheap, for South America sent us large quantities. The shoe dealers were taking all both markets offered. But the cattle-growers of the West raised a cry that they should have more money for their hides, that Congress should pass a law which would compel the people to give it to them. In 1890 a strong appeal was made to Mr. McKinley for such a duty and it is probable that he would have granted it, so great was his reverence for the doctrine, had not Mr. Blaine interfered. The duty was not granted in 1890, but in 1897 it was given. The effect was immediately to raise the price of sole leather. In June, 1906, W. L. Douglas, ex-Governor of Massachusetts, a shoe manufacturer, said in a public speech that since 1897 the increase to his company in the price of sole leather in a single pair of shoes had amounted to 17½ cents. Mr. Douglas figured that the tariff on hides and soles caused the people of this country to pay $30,000,000 a year more for shoes than they otherwise would. They paid this tax that perhaps 85,000 stock-raisers, herders, and drovers might get more for their cattle. It was argued that with the duty they could monopolize the domestic trade and cut off the South American trader, but that gentleman sent us more hides in 1906 than in any year since the duty was imposed! Moreover, it was not the cattle raiser who was chiefly or proportionately profited by the higher price. It was the Beef Trust, as Mr. Blaine said it would be. The cattleman received no such increase in the price of his steers as the beef men did in the price of hides. In November, 1907, the Hide and Leather Journal, commenting on the good thing the Trust had always made out of this particular duty, declared it was paying stock-raisers $12.50 apiece for cows, and selling the hides alone for $9.00 apiece!
But it takes something besides leather to make shoes. For one thing it takes thread—and thread, linen thread particularly, so advanced in price that it added perceptibly to the cost of making a pair of shoes. But why had thread advanced? It is a pretty study of combined tariff and trust manipulation. To begin with, we do not and never have raised in this country any flax suitable for making linen thread. In spite of this fact the Dingley Bill put a duty of $22.40 a ton on flax not dressed, and of $67.20 per ton on that which had been dressed. These were the rates of the McKinley Bill. Of course the avowed purpose of this duty was to protect the “infant industry” of raising flax for use in manufacturing. We have a good flax acreage in this country—though it has decreased by over 1,000,000 acres since 1902. But this flax is grown not for the fibre, but for the seed, being used for making linseed oil. It is the custom not to harvest it until the seeds are fully ripe, and when that time comes the straw is too old for fibre. It is true that in the Northwest a few tons of flax are used annually for making twine, upholstering tow, and insulating boards, but practically none of this is fit for making thread,—that is, in spite of the fact that we have been steadily paying from $20.00 to $22.00 a ton on undressed flax for many years, we have scarcely ever produced a ton fit for thread.
Of course the thread itself is protected, and this protection has worked in the linen thread industry very much as that on cotton thread. Seeing the tariff trend here, the great linen thread manufacturers of Great Britain followed the example of the Coats’s and Clarke’s cotton thread makers, and came here many years ago to produce under the protection of the tariff the thread they had been exporting. This went on until the Barbours of Lisburn, Ireland, had a branch at Paterson, New Jersey; the Finlaysons of Johnstone, Scotland, at Grafton, Massachusetts; the Dunbar Co. of Gilford, Ireland, at Greenwich, New York; the Marshals of Leeds, England, at Newark, New Jersey—all of the great British companies were here to preserve the market for themselves. Most efficient masters of their business—the Barbours were a century-old house—they grew rapidly under the high protection they enjoyed. The logic of their privilege was of course what it has been in all our highly protected industries—a trust. This came about a few years ago—the Linen Thread Company of which the president is Mr. William Barbour, and the vice-president A. R. Turner. The formation of the trust did wonders for the linen thread business. They were able to make large economies. Instead of separate mills making all the products each mill was assigned to do the work it could best do. At the same time the marketing expenses were reduced. In one of the communications to the tariff hearings of 1908–1909, a writer familiar with the industry says of these economies:
“One mill which, while independent, used to make $400,000 worth of thread per annum now makes $600,000, and another which made $250,000 now makes $400,000, an increased turnoff of about fifty per cent, and this without hiring an additional hand. This, of course, lessens the cost of manufacturing considerably. When the four mills were selling independently on this side, each of them carried stock in New York, Boston, Chicago, St. Louis, and San Francisco, and each had travelling men going over the territory. But with the advent of the combination all the stores in the various cities were turned into one, and a much smaller force is used to sell the products of the various mills.”
Now of course if the theory of the trust is sound, we should get some benefit from this combination on shoe thread, the only one of its products which we consider here. But what happened to shoe thread? In the last few years every variety has advanced rapidly. Increase in cost of materials—increase in rents—rapacious dealers—the trust people tell you. But the facts are these according to an expert authority: the linen thread trust were selling their shoe threads in 1909 for at least 50 per cent more on an average than they cost them, and they were able to do this almost entirely because of the duty which protected them from foreign competition. The cost of producing in Ireland a shoe thread known in the trade as No. 1 is 40 cents a pound. In the United States it is 47 cents. The duty on this thread was 19¾ cents a pound—12¾ cents more than was necessary to cover difference in cost—and the trust sold the thread 71 cents net a pound! No. 4 shoe thread cost 53 cents to make in Ireland. It cost 64 cents here. There was a duty of 25 cents a pound on it, and it sold at $1.20 a pound, nearly twice what it cost! In two years (1907–1908) its price jumped three times.
And what is the attitude of the Linen Thread Trust toward the protective tariff? Its members signed a petition to the Ways and Means Committee in 1909 in which they prayed that the duty be kept on flax. They wished to “encourage the fibre-producing industry,” they said—although they knew, nobody better, that no flax fibre for thread has ever been grown here, in spite of more than thirty years of tax-paying. Of course they asked that the duty on thread be untouched!
But a high protection tariff and a trust agreement are not the only advantages the Linen Thread Company enjoys. It has an alliance which gives it a commanding strategic position in the business, and that is with the organization popularly known as the “shoe-machinery trust.” This company began its life twelve years ago in New Jersey like so many of its kind. At that time, 1899, it was capitalized at $25,000,000, divided into preferred and common stock, the first at six per cent, the second at eight per cent. Six years after its organization the company underwent a reorganization. This reorganization seems to have been a way of getting rid of its extra earnings, for it presented its stockholders with comfortable extra cash dividends as well as a fifty per cent common stock dividend. According to the last report to which the writer has had access, 1907–1908, the capital of the company had in eight years increased from $17,250,000 to nearly $32,000,000, its surplus from $1,355,914 to over $13,500,000, and the net earnings from $1,770,110 to over $4,500,000.