The Tariff in Our Times

by Ida M. Tarbell

The absurdity, even criminality, of these methods, which have persisted so long, was completely demonstrated in the course of the Payne-Aldrich Bill in the making of the schedule which for twenty years has been the most important in our tariff, from a doctrinal and a political point of view, and that is K, the wool schedule. When the late revision was undertaken duties were in operation which had been forced from a reluctant Congress in 1897, solely by the political power of the combined Wool-Growers Association and the National Association of Wool Manufacturers. In the decade following the adoption of the Dingley Bill the power of the former organization waned. The members of the “wool trinity” who had held so strong a whip over Congress were dead. Ohio, which had been their headquarters, no longer felt the life-and-death interest it once had in prohibitive wool duties. But the second association was as alive and ready for action as ever, and in the fall of 1908, when Mr. Taft’s promises of tariff revision became reasonably convincing, the head of the Association, Mr. William Whitman of Boston, called together those in the business whose interests were identical with his, and they sought counsel with the growers of wool in the far West. In October of 1908 the two interests met in Chicago. Mr. Whitman says that this conference was called at the suggestion of the wool-growers. For people who had taken an initiative the wool-growers were very modest. They said frankly they were not prepared to talk extensively on tariff questions, that they had come to listen. Mr. Whitman did the talking, and to such good effect that the conference decided: “it is the sense of this meeting that in the coming revision of the tariff the present duties on wool and woollen goods be maintained without reduction.”

Some two months later Mr. Whitman appeared before the Ways and Means Committee with an elaborate argument for preserving the wool duties. He made a particular point of defending the duty on raw wool. “Fair Play for All Interests” is the subhead under which Mr. Whitman asked that the tax on his raw material be continued. The Bulletin of the Wool Association puts the principle this way: “The traditions of the association all condense themselves into the Golden Rule”—“Do unto others as you would have others do to you; between grower and manufacturer and as between one manufacturer and another, that has always been the guiding principle.”

Before Mr. Whitman was excused from cross-examination, however, a serious questioning of his interpretation of the Golden Rule was introduced into the testimony. It came from a maker of carded woollens as distinguished from worsteds, Mr. Edward Moir, of Marcellus, New York. The carded woollen manufacturers, like many other innocent Americans, took the results of the presidential election of 1908 as evidence that the tariff was to be thoroughly revised. “At last,” said they, “we shall get relief.” Accordingly, soon after the election, Mr. Moir, learning that there was to be a meeting of the National Association of Wool Manufacturers, and supposing that the revision of the wool schedule was to be discussed, presented himself at the gathering. To his surprise he found that some weeks before the election, about the time, indeed, that Mr. Taft’s promises of downward revision were most definite and vigorous, representatives of this association had met representatives of the wool-growers of the far West, and the two had made what they called a “solemn compact” to resist all changes in the wool schedule! The inequalities were to stand. The carded woollen mills were to be fed carpet wool and cotton if they could get them, the man on small income was to continue to wear cotton worsteds and sleep under cotton blankets, the well-to-do were to continue to pay $1.50 for cloth they could buy in England for seventy-five cents. When Mr. Moir protested, he found he stood alone; i.e. he found that the National Association of Wool Manufacturers apparently represented the worsted industry. A little later, when the Ways and Means Committee began its hearings, Mr. Moir found that this same association was giving information on what the wool schedule needed, and that it did not include help for him. Outraged, he went to work to organize the carded woollen men. Over one hundred were soon in line, and this body carried its grievance to the Ways and Means Committee. The reports of the tariff hearings contain some very interesting explanations from Mr. Whitman of the points of which the carded woollen men complained. Take the matter discussed in the last chapter, of collecting 11 cents on every pound of grease wool imported into the country, regardless of quality or value, or whether it shrinks 15 or 80 per cent. How did Mr. Whitman defend this duty, which is, as one can see, the very foundation of his advantage over his competitors? He defended it almost hysterically by the claim that it is only a specific duty, which will prevent undervaluation at the customs. Mr. Whitman buys his wool according to its value. He does not insist upon paying a fixed price through fear of misrepresentation. Wool is a standard like wheat and corn. Centuries of experience have made men expert in judging its value. Undoubtedly there would be efforts at undervaluation if the duty were according to value. But a specific duty does not prevent fraud—witness the Sugar Trust. Everybody knows that such cheating is dangerous work. Even the Sugar Trust, with all its cunning, has not escaped entirely. There would be little chance for the regular importer to do much cheating, and if there was a percentage of fraud, what could it amount to compared with a duty which is always unfair, which is actually a legalized fraud?

Mr. Whitman’s defence of the amount of compensation allowed manufacturers for the duty on grease wool was interesting also. It will be remembered that this duty on wool worth over 40 cents a pound is 44 cents; that is, it is reckoned as if four pounds of grease wool were used in making a pound of cloth. Mr. Whitman defends this ratio, so rarely correct, by using the same argument with which Mr. Aldrich met the attack upon it in 1890 when the McKinley Bill was making.

“It is true that certain wools do not shrink so much, but whether they do or not is not the point. The American manufacturer must be reimbursed on the basis of the shrinkage of wools used by his foreign competitors or available for the latter’s use.”

This is as hard to follow as the long-standing consolation offered to the complaining consumer that “the foreigner pays the tax.” However, it is hardly more away from the point than Mr. Whitman’s second defence of the 4 to 1 ratio, which, in essence, is that it must be right because it was so fixed in 1867! Curiously enough, while Mr. Whitman defends the 4 to 1 ratio because it was decided on by the compact of ’67, he insists that 55 per cent ad valorem on cloth is none too much, although in 1867 the manufacturer considered 25 per cent sufficient!

But the carded wool men were not the only branch of the industry which disputed the soundness of Mr. Whitman’s “fair play for all” schedule. A few weeks after his hearing, it came out that one great branch of the woollen industry, the carpet manufacturers, had left the National Association in a body. They had wakened up to the fact that for some twenty years or so they had been serving largely as cat’spaws for the worsted makers’ chestnuts. They had refused to contribute further to the organization, and frankly bolted Schedule K, asking for a common-sense adjustment of the duty on carpet wools.

The most sensational and serious attack on Mr. Whitman’s testimony was made, on the very day he appeared, in a pamphlet distributed to the committee. It bore an ugly title, “How an exorbitant duty on wool tops was concealed in the Dingley law by the cunning manipulation of S. N. D. North and William Whitman.” The name attached to the pamphlet as author was that of a man well known in wool circles, the editor of the American Cotton and Wool Reporter, Frank P. Bennett. In proof of the charges he made, Mr. Bennett offered documentary proof of the first order. Nothing less than extracts from letters which had passed between Mr. North and Mr. Whitman at the time of the “cunning manipulation.”

To those familiar with the personal relations of the three gentlemen the substance of the charges was not new. They had been first made by Mr. Bennett the year after the passage of the Dingley Bill (1898) and in very precise form. What they amounted to then was that Mr. North, although the paid secretary of the National Association of Wool Manufacturers, had worked on Mr. Aldrich’s Finance Committee while it was busy with the Dingley Bill, as “the paid lobbyist of William Whitman and one other manufacturer,”—that he had secured benefits for them “regardless of other interests,” and that “these gentlemen now (1898) aimed at the control of the United States Census, which they proposed to secure by having Mr. North (their agent) made director of the Census!” It was an ugly looking accusation, and naturally the association appointed a committee to look into the matter. Both Mr. North and Mr. Whitman made statements. They amounted to a complete denial of all the charges, and particularly of any tampering with the top duty. Mr. Whitman showed by the documents he presented that the duty on tops as it finally appeared in the Dingley Bill was the same as that fixed by the McKinley Bill. He also showed it had been retained at the request of the wool-growers. He said that when he discovered this duty was in the Dingley wool schedule he wrote a letter of protest to Mr. Dingley, in which he said:

“As tops now stand in the proposed tariff bill, the duty is absolutely prohibitory.... This places me in a very awkward position before the community. Nearly everybody in this part of the country is aware of the fact that the Arlington Mills, of which I am the treasurer, has just completed an enormous plant for the manufacture of tops, and everybody will say that, through my influence, there has been secured upon tops prohibitory duties. Yarn spinners and weavers will complain, although they may not be directly affected; but everybody who is at all jealous or envious will charge that this duty has been imposed at my solicitation.... The objections, then, that I have to the top rates as now incorporated in the bill are: