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.
THE STATE OF THE AMERICAN WOOL INDUSTRY
AFTER enjoying for nearly half a century a protection averaging forty-five per cent. and amounting to from one hundred to five hundred and fifty per cent. on the cheaper grades of wool, the American wool-grower is not able to satisfy as great a part of the national demand for his product as he was at the time of the Civil War. During the sixties we had to depend upon imports to the extent of little over one fourth (26.8 per cent.) of our total consumption of wool. To-day nearly one half of our needs have to be covered by foreign wools (about forty-five per cent. in 1910). When wool was placed on the free list under the Wilson Bill in 1894, it was charged that the abolition of the duty was responsible for the increase in our imports. But our growing dependence on imported wool despite the restoration of the duty under the Dingley Act, in 1897, goes to show that the tariff is no remedy for the shortage.
The wool-grower argues, however, that wool can be produced so much cheaper in Argentina and Australia that, if admitted free of duty to the United States, it would bring about the total disappearance of the American wool industry. The latest available figures given in the report of the Tariff Board show a world production of about 2,500,000,000 pounds of wool, of which the United States produces about one eighth. The world supply would furnish less than a pound of clean wool per head of population, not enough to give each of us more than one suit in three years. Of course the latter estimates are only approximate, but they are not far from the truth. If it were not for the plentiful admixture of cotton and shoddy to the annual stock of new wool, there would not be enough wool to clothe the people of the earth. Under these conditions, there is no danger of the world failing to make use of American wool. Any considerable curtailment in the production of American wool would have the tendency of raising the world’s price of wool to such an extent as to offer renewed encouragement to the American wool-grower. So much for that. But is it true that it costs so much to raise wool in the United States?
The Tariff Board reported that the average cost of production of wool in this country is about three times as high as in Australia and about double that in South America. On that basis our present duty is ridiculously low, and it is a wonder that our wool industry has not long gone out of existence. What is the secret of its miraculous escape from total extinction?