Democratic Sentinel, Volume 14, Number 40, Rensselaer, Jasper County, 31 October 1890 — TARIFF LETTERS TO FARMER BROWN. [ARTICLE]

TARIFF LETTERS TO FARMER BROWN.

NO. 5. Who Pays the Tariff Tax? Dear Farmer Brown: The first thing in this letter is to beg your pardon for putting such a foolish question at the top of it. It does not seem possible that anybody could doubt at this late day that the consumer of any articlo t pays all the costs which have accumulated upon it on its way to him. But some men are doubting it; or, at least, are teaching people the contrary while knowing better themselves. Qne of these men has recently said that “by putting our duties on foreign products, the like of which we can produce in the United States, we make these competing foreign producers bear the bqrden and supply the revenue to the public treasury.” The man who said this has a name which is familiar to everybody just now. His name is McKinley. When a man of his prominence disseminates stuff like this it is not remarkable that many people of simple and honest minds are befuddled. As some of the readers of these letters have doubtless been led astray by such talk, I think it necessary to take up the subject here and expose the hollowness of Major McKinley’s pretense that the foreigner pays our taxes. McKinley, then, claims that the foreigner pays our tariff taxes. Before making my answer to him, let me call attention to the fact that McKinley makes this claim with no apparent sense of shame, which is quite remarkable for a man of his reputation for integrity, ite seems to see nothing wrong in forcing foreigners to pay our taxes. One would expect to see an honest, self-re-specting nation not simply paying its own |axes but taking scrupulous care not to lay the burden of theta upon other nation?, for a decent nation must at least be an honest nation. » ' Yet here is a leading American statesman, with prospects and ambition to be President, actually praising his tariil bill because it forces the foreigner, as he says, “to bear the burden and supply the revenue to the public treasury”—a Smart Yankee trick, which, let us hope, Major McKinley would be far too honorable to practice in dealing with his fellowtownsmen at Canton., Everybody says he is a most honorable man—how singular that he should be willing toplace our Government in a situation which he himself would blush to occupy! But let us come now to his claim that “the foreigner pays the tax. ” What answer is to be made to it? I say emphatically, that McKinley does not believe ,it himself. That may seem a rough speech and may Shock you; but listen a moment and I will convict him out of his own mouth. Let me call your attention to several passages in his speech in Congress last May in opening thetariff debate. In explaining the general provisions of the tariff bill, he said: “There has been for taany years a provision in the law permitting the United States to import for its use any article free of duty.” Then he explains what his committee did with that law: “This provision of law has been eliminated in the proposed revision, and if approved by the House and Senate And the President, the Government, its officers, agents, and contractors, will hereafter have to pay the same duties which its citizens generally are required to bay-” In doing this the committee, he said, was actuated by the belief that “the laws which it imposes upon its own people and tax-payers should be binding upon the Government itself.” [Applause.] In other words, the people pay tariff taxes—why should not Uncle Sam do the same? Accordingly, the McKinley bill makes Uncle Sam pay tariff duties from one of his breeches pockets over into the other! And this is done in order that Uncle Sam may bear his part of the burden. How delightfully amusing that McKinley did not see that the old gentleman loses nothing by paying the duties to himself! But, all the same, McKinley here “gives away” his case completely. The consumer pays the tax, and Uncle Sam must do the same, though he pay to himself. This is enough of itself to prove my point that McKinley does not believe that the foreigner pays the tax. But there is a still more fatal admission in that speech of- the Buckeye statesman. It is in reference to rebates, or drawbacks. Here is hrs explanation of what the committee did: “By way of encouraging exportation to other countries and extending our markets, the committee have liberalized the drawbacks given upon articles or products imported from abroad and used in manufactures here for the export trade. Existing law refunds 90 per cent, of the duties collected upon foreign materials made into the finished product at home and exported abroad, while the proposed bill will refund 99 per. cent, of said duties, giving to our citizens engaged in this business 9 per cent, additional encouragement, the Government only retaining 1 per cent, for the expense of handling.” He has the Government, as you see, to pay back the duty on the raw material to the manufacturer in order to put him in a position to compete with foreign nations, by restoring him to the position where he would be if he had not paid the duty. But you see very clearly that the manufacturer is already in a position to

compeX #nd on an equal footing with his competitors In other lands, if it be true that the foreigner pays the duties on the raw materials which the manufacturer buys from him. McKinley goes on to explain how beautifully his drawback will work in the matter of smelting ores, showing that by allowing ores to be admitted free into certain establishments, which are also bonded warehouses, great good will result. Here are his words: “This, it is believed, will encourage smelting and refining of foreign materials in the United States and build up large industries upon the seacoast and elsewhere, which will make an increased demand for the labor of the country.” Certainly. By relieving the smelter of taxes which he says the foreigner pays. McKinley had a deep-laid scheme in all this. It was to rob the Democrats of the “free raw material” argument. See with what innocence he states the motive of his committee: “It completely, if the provision be adopted, disposes of what has sometimes seemed to be an almost unanswerable argument that has been presented by our friends on the other side, that if we only had free raw material we could go out and capture the markets of the world. We give them now within one per cent, of free raw material, and invite them to go out and capture the markets of the world.” [Applause.] But there is another point in this remarkable speech which is equally fatal to McKinley’s claim that the foreigner pays the tax. He says: ‘’Wo have increased the duty, as I have already said, upon carpet wools, and that has necessitated an increase of the duty upon carpets themselves.” This is what is called a compensatory duty; that is to say, an Increased duty on a finished article in order to compensate the manufacturer for the duty he paid on his raw material. Of course this is based upon the idea that the duty on the raw material has increased its cost precisely by the amount of that duty, wnich would be absurd if the foreigner paid the duty The higher duty on carpet wool “necessitates,” as McKinley says, the increase of the duty on the carpets themselves. That was clearly one of his lucid moments when he recognized the simple fact that the foreigner doos not pay tariff tax. Now, old friend, have I made good my case? Have I convicted him out of his own mouth? Either McKinley is an insincere man, or else he can crowd a greater number of inconsistent notions into his cranium than most men of his rank and station. But this is enough; the Lord High Tariff-maker himself admits over and over again that the American people pay their own tariff taxes, and it would be needless for mo to waste further words to prove so obvious a fact. Yours truly,

RICHARD KNOX.