The Tariff in Our Times

by Ida M. Tarbell

The best detailed evidence of the difference between home and foreign prices which we have, comes in the price lists which are prepared for foreign trade-lists, which are not circulated in this country, of course. In 1906 the Tariff Reform Committee of New York City issued a pamphlet made up from discount sheets by Byron W. Holt. It is a beautiful study in gratitude! Mr. Holt names over 250 different articles on which at that date discounts of from 10 to 66 per cent lower were quoted to foreign than to home buyers! An American dealer paid $5.50 for potato hoes which a foreigner could get for $4.75. All farm tools, indeed, were sold abroad far lower than at home, thanks to the Farm Tools Trust. He paid $16.00 a dozen for wooden wheelbarrows for which the foreigner paid $14.50. He paid $20.00 for the incubator which to the dealer over the border was quoted at $15.00. He paid $30.24 per gross for soap which the foreign dealer bought for $20.48, and so one might go on with scores of articles of daily use in farming, in housekeeping, in all sorts of trades. In 1909 the same committee published a similar exhibit showing that equal advantages were still regularly offered on a great variety of articles. It sometimes seems as if the great American system for making the foreigner pay the duty had resulted in presenting it to the foreigner. He buys our goods cheaper than we can buy them, and, like Mr. Coats, establishes his factory here, and, protected from world competition, drives our own manufacturers into his combination, runs the business from the other side of the waters, and charges us twice as much as he can his countrymen!

The protected manufacturer does not always export at a discount. Very often he follows Mr. Coats’s lead and establishes himself abroad. He finds it more advantageous to do this because in most civilized lands the materials of industry are free. Many years ago the duty on nickel drove the Meriden Britannia Company to build in Canada and there they still manufacture for export. In 1906 Mr. James J. Hill, commenting on the rapid multiplication of American industrial plants in Canada, said: “A few years ago there was not a smelter on Canadian soil west of the Rocky Mountains. To-day there are six in British Columbia and these are largely occupied with the reduction of American ores. Commerce will go her own way even though she must walk in leg irons.” Curious and unnatural alliances have already begun to arise from this effort of industry to escape her leg irons. Take the case of the International Harvester Company, which has been much abused, and unjustly, for selling abroad at prices lower than at home. Whatever may have been its practice in earlier years, it has been well established by the recent investigation of a government agent that the prices of its machines are lower in this country than they are abroad. The reason seems to be a rather nice little combination of tariffs and price fixing. For instance, the binder which in the United States sells for $125.00 at retail sells in France for $173.70. The reapers, mowers, and rakes are proportionately dearer. There are two reasons for this: In the first place France has been applying her maximum tariff to our exports, by way of meeting our high duties on her products. But after the harvesting machines get into the country, they meet another hindrance to a natural price; the importers of agricultural machines in France are organized into a general syndicate, which consists of French, German, Canadian, and American firms. These gentlemen have combined to prevent price cutting. Judging by the comparative prices of the machines here and in France, they have succeeded admirably. The Americans, in spite of the large advance they get on their goods, have not been satisfied, and the International Harvester Company has erected factories at Croix. If the reciprocity agreement with France negotiated in 1898 had been put into effect, the company claims that it would not have taken this slice of its capital and product out of this country.

Again, it is the tariff which has induced this same company to construct factories in Canada, Sweden, Germany, and Russia. In Germany, the binders which they sell here for $125.00 are selling, according to consular reports, for $203.00. The German tariff on a binder of this kind is about $12.00. It would seem that the company ought to be able to manufacture in the United States, pay this duty, and still make good profits on the $125.00 binder. If tariffs did not have the tendency to increase rather than decrease, this might be so. Experience seems to prove that where tariff exists the manufacturer is safer on the inside of the wall, even though it may be that it costs him as much or more to manufacture there than it does at home. The Harvester claims that in spite of the difference of wages, it has no hope of being able to manufacture more cheaply abroad than at home. This is no doubt due to a factor which protectionists unite in ignoring,—the greater productivity of the American workman.

The whole situation is an excellent example of the unnatural and uncertain relations into which tariffs thrust industry. Moreover, it is an illustration of the way tariffs in the long run defeat their own purpose. The International Harvester Company did a business of $90,000,000 in 1910, over one-third of which was outside of the United States. Its future depends largely on the development of this outside market, and tariff conditions are such, thanks mainly to our own policy, that they find it advantageous to establish factories in the very countries which are our best customers!

With each year that passed after the Dingley Bill became a law, the burden of increased prices became heavier, the restraint on commerce more unendurable. There were other causes at work besides prohibitive duties, but in certain cases these very causes could be weakened by revising the tariff. It was an obvious way of easing a bad situation, though by no means a cure-all. Through the whole citizen mass irritation at the reluctance of politicians to touch the subject, existed, and with time found varied expression. Unfortunately the leader of neither party had ever really sensed the enormity of the protective system, and consequently he could not sense the strength of the revolt which had begun. Neither Mr. Bryan nor Mr. Roosevelt had ever found in the tariff a sufficient cause of the evils they attacked so valiantly to arouse their indignation. Neither of them had ever been genuinely stirred by the unsoundness of the doctrine or by the vicious practices for which it was responsible, or by the heavy burdens it laid “where every penny counts.” By all the signs Theodore Roosevelt should have been the Richard Cobden of our tariff reform, but he did not see it as a dragon worthy of his steel.

But the issue was there deep in men’s minds; something oppressive, puzzling, and complicated, but not to be avoided for that reason. So strong and genuine was this popular conviction that the Republican party was forced in 1908 to declare for a downward revision of the tariff, and because of that declaration chiefly, it was able to elect its candidate for the presidency, William H. Taft.

CHAPTER XII
THE MAKING OF THE BILL OF 1909

No one can study the drift of public opinion in each of the great agitations of the tariff question in the last fifty years without realizing that at least nine-tenths of the people have stood only for such duties as would produce needed revenue and would give industries which were trying to prove their ability to exist in the United States, protection through a limited period. But when it came to the point the people have never had such duties. To those familiar with the methods of tariff-making which have prevailed over this half-century, it was obvious that the bill of 1909 would result as had the bills of 1883, of 1890, of 1894, and of 1897. There were optimists who said that this could not be. This time the “voice of the people” was too clear, this time the game was too apparent. But the game was no more clear and “the voice of the people” no louder than in other years. The preparatory work for the bill was preceded as always by long months of “Hearings.” The absurdity of this method of seeking facts on which to frame a bill would be obvious enough if the country had not grown so accustomed to it. The reports published of the hearings before the Ways and Means Committee for the last bill cover something over 8725 pages. It is unbelievable that any serious body of men would consent to sit day after day to listen to such a conglomeration of narrow and selfish notions of what the witnesses’ personal enterprises need to help them along—much less consent to print them at public expense. White-haired men came to repeat the pleas that we heard in war times—sons repeated the jargon they had learned from their fathers. And never has the “infant industry” argument been more alive. All sorts of little trades sought help; for instance, from New York State came a cry for duty on basket willows; the suppliant (a woman) complained that she was obliged to compete with foreign-grown willows sent into the country by the shipload and sold far below what willows can be grown for in this country. From Virginia came a cry that mountain ivy root for making pipes be protected from the competition of brier wood. There were many more industries like these which in the nature of the case could affect but a small number of people that asked that the whole country be taxed that they be taken care of. There has never been a completer demonstration of how general the notion has become that no matter how few are benefited by a duty, it is fair to ask the whole mass to subscribe to the fund. Hundreds of pages of testimony are given to requests not to disturb the present schedules unless it be to increase the duty, and when sifted down the reason of the requests is not protection, but prohibition. How ridiculously lacking the testimony was in anything like satisfactory proof of the cost of production here and abroad, one has only to read to see. It was evident that almost none of the manufacturers knew the facts the committee needed. All that the great majority could offer were the phrases they had learned in their youth or had been taught by their predecessors in business. They were men influenced by a superstition, and it is probable few, if any of them, will escape from its influence until, like Mr. Carnegie, they retire from business. Then we may expect some of them to come, as Mr. Carnegie has done, with ridicule and derision for the whole system,—to say, as he did, of the duty seekers:

They are incapable of judging. No judge should be permitted to sit in a cause in which he is interested; you make the greatest mistake in your life if you attach importance to an interested witness.

But it was not the character of the information presented which was the most sinister phase of the “Hearings”; it was the pressure which one felt the informer could exercise on Congress when the time came. These hundreds of witnesses, organized or unorganized, all possessed more or less political importance. They had it in their power to upset local machines, displace local bosses, defeat Congressmen, hold back campaign contributions, make endless mischief. They had been trained for years to expect reward for political support in the shape of duties. They were not going to give it up in a day. They had behind them bodies of favored workmen trained to believe that high wages depended on protection, and these favored workmen were not going to give up their creed in a night. Congressmen knew this well enough. They knew in 1909, when they began work on the Payne-Aldrich Bill, that they were in the position they had been for forty years and more—forced to make a bill with a divided mind—to fix duties with an eye to what effect it was going to have on the fall elections in their districts—on campaign funds for the next presidential election.