This astonishing change in the relative use of the two materials is not all due to the tariff on raw wool. Cotton is gaining the world over. The general tendency to lighter clothing, the demand for a larger number of garments, and so cheaper prices, the failure of the world’s wool production to increase and consequently its higher price—all have encouraged the change, but it is certain that the great determining factor in the United States had been this duty combined with a second mischief-maker—the ratio used in estimating the compensatory duty on all products of wool imported.
If the maker of woollens had a sufficient supply of free wool—that is, if the price of his raw material was not raised by a duty—all the protection he could rightfully ask against his foreign rival would be the difference in the cost of production here and abroad. But his wool costs him more than his foreign rival’s. If he is to meet him on a level, he must be protected against wool as well as production; that is, there must be two duties on cloth which is imported—one a duty to make up for the higher price he has had to pay for his raw material, the other for the higher price of manufacturing.
These two duties vary with different grades of woollens. The schedule is highly complex—a matter for experts only. Its results, however, are simple—and hard—enough, for what they amount to is that the cheaper the blanket or the dress goods, the HIGHER the duty! On many materials and articles suitable for the slender purse these duties are so high that none of the goods can be imported. On cloth, for instance, worth not more than forty cents a pound, the duty averages over 140 per cent; on cloth worth more than seventy cents a pound, it averages about 95 per cent.
We shall notice here but one item of the taxes which bring about this unjust discrimination, and that is the duty allowed to make up for the higher cost of the raw wool. This duty is reckoned on the number of pounds of wool in the grease supposed to be used in making a pound of cloth. Where the goods are worth less than forty cents a pound three pounds are allowed; where they are worth more, four pounds. As the duty on this wool is eleven cents, the compensatory duty on a pound of cloth is thirty-three or forty-four cents. Take the latter as an illustration, it applying to the only grades imported in any quantity. This is an out and out swindle, for the simple reason that few of them contain this amount of grease wool.
When the discussion of the wool schedule was going on in Congress in 1909, the Textile World Record, a remarkably able, and fair-minded Boston trade journal, published the result of a series of analyses of cloth which its editor, Samuel S. Dale, had made personally, in order to discover the actual protection each was getting under the Dingley law. The estimate in each case was based on a large quantity, 10,000 yards. Here are samples of the results. The first fabric was a worsted serge, weighing 11,500 pounds. Mr. Dale found that 21,941 pounds of grease wool had been used in this piece of cloth. Now, according to a rational and honest application of the protective principle, one would expect the compensatory duty, in case such a piece of cloth was presented for import, to be eleven cents on each 21,941 pounds, or $2413.51; but as a matter of fact, it would be $5060! That is, forty-four cents would be charged on each pound of cloth; as if four pounds of wool had been required to make it, while as a matter of fact, less than two pounds had gone into it.
A cotton-warp dress goods was analyzed in which but a trifle over one pound of grease wool had been used for each pound of cloth. Mr. Dale calculated the compensatory duty on the 10,000 yards should be $496.65. But that cloth actually receives $2595.63! In the case of a piece of cotton warp casket cloth made of cotton, wool, and shoddy, the compensatory duty under the law is reckoned at $4262.72, while actually it should be $2238.15, and so it went. But two of the eleven fabrics contained over half of the four pounds on which the duty would be reckoned.
In addition to the compensatory duty of forty-four cents is the duty to protect from difference in the cost of production, which is 50 or 55 per cent of the value of the cloth. There is probably no doubt but this duty is all out of proportion to the actual difference. Forty-four years ago, when practically the same duties now in force on wool were wrested from an unwilling Congress by a combination of wool-growers and woollen manufacturers, all that the latter asked was 25 per cent to cover difference in the cost of production. American labor has advanced, but so has European labor—and still more has machinery increased the output.
Of course these high duties make imported cloth very expensive, and enable American manufacturers to hold up their prices. As a matter of fact, the duty makes the American consumer of woollen goods pay just about double what his English cousin pays. In 1908 I was shown by a gentleman who has for years been at the head of one of the best of the wholesale cloth houses of New York, a bundle of matched samples of woollen goods—American and English—with carefully worked out statements of cost here and abroad. The goods had been matched by one of the leading woollen experts of England. I was unable to detect any difference in quality, and only the slightest in finish. There was practically no choice, so slight was the difference. But note the price. For an American serge costing $1.37½ a yard the price of the matched English goods in Bradford was 67 cents. The English equivalent of an American fabric costing $1.50 was 78.05 cents. Beautiful blue light-weight serges, such as are used for men’s summer suits, cost in America $1.80, in Bradford 81.2 cents. The mohair which is used so much in this country for women’s summer travelling suits can be bought in Bradford for 27¼ cents; here it is wholesaled at 70 cents and costs at retail $1.00. This was the showing over a large range of goods. It amounted to this, that the English price was only about half the American.
An example of the difference in cost of woollen goods was given in 1909 in Boston, where the cost of living was being investigated. Mr. Dale, of the Textile World Record, was being questioned on the comparative costs of American and European goods. “You can make comparisons in two ways,” Mr. Dale answered; “first, by comparing prices at which the same grades are sold, and, second, by comparing the grades that are sold at the same price. For example, here are two fabrics, one made and sold in this country, and the other made and sold in England. The English fabric is sold at 3s. 6d. (84 cents) a yard, 55 inches wide. The American cloth is sold for 77½ cents per yard, 55 inches wide. So that the two are sold at approximately the same price. The difference is represented by the difference in the two fabrics. The English cloth is a fine worsted weighing 10¼ ounces per yard, 55 inches wide; the American fabric is made with a cotton warp and a mixed cotton and wool filling. The cloth consists of 30 per cent wool, 70 per cent cotton. It weighs 9.6 ounces per yard, 55 inches wide.”
In addition to this increase in prices, a most exasperating practice developed after the passage of the Dingley Bill in many protected industries—selling goods abroad at prices from 10 to 70 per cent lower than they were sold at home. The Dingley Bill had not been long in operation before the administration itself warned the iron and steel people officially that they were in danger of giving the game away if they continued to sell steel rails, for months together, to foreigners for $22.00 a ton, while they charged their compatriots $35.00. But the warning seems to have had little effect. Frank manufacturers like Mr. Schwab said, Of course we sell cheaper to foreigners; not only that, but we sell materials to our fellow manufacturers cheaper when they are to be turned into goods for foreigners than we do when they are to be turned into goods for our own people! Mr. McKinley’s Industrial Commission of 1900 found considerable evidence of discriminating export prices. The contention of the corporations which admitted the practice was that it was necessary to work off surplus, and to keep factories going on full time. Mr. Thomas W. Phillips of the Commission, in commenting on this explanation in a minority report, said, “This argument overlooks the fact that their surplus product could also be worked off by lower prices at home, and that it is the tariff which encourages them to create a domestic surplus by restricting domestic consumption through high prices.”