Democratic Sentinel, Volume 16, Number 52, Rensselaer, Jasper County, 13 January 1893 — WHAT LOW TARIFF DID [ARTICLE]

WHAT LOW TARIFF DID

GAVE THE COUNTRY UNRIVALLED PROSPERITY. Great Revenues Produced by the Low Ad Valorem Tariffii of 1846 and 1857—Why Farmers Are Dissatisfied—Thj» Potato Tax—Wages in Germany. s Specific and Ad Valorem Duties. Apparently, indirect taxation is fastened to this country for some time to come. An income tax may be levied by our next Congress to enable us to meet our enormous expenditures without increasing any duties, but the bulk of our revenue will continue to come from duties on imports. It is therefore well to consider whether our next tariff bill should be based upon specific or ad valorem duties. In most of our high and protective tariff hills specific duties have predominated. This is particularly true of the McKinley bill. In the proposed Mills bill, and in most low and non-protective tariff bills, ad valorem duties were the rule. In the Walker bill, in force from 1846 to 1857, and in the so-called “free-trade hill” in force from 1857 to 1861, all duties were ad valorem.

Protectionists and makers of hightariff bills naturally turn to specific duties as an easy way of increasing duties on the sly. Thus nearly all of the numerous “jobs” in the McKinley bill were perpetrated by means of specific duties. Nobody except a few interested persons supposed that when the ad valorem duty of 25 per cent, on pearl buttons was increased by a specific duty of 2$ cents per the increase, would amount to much; yet the increase amounted to from 200 to 2,000 per cent., making the actual duty in some cases as high as 400 per cent. In this same tricky way duties on cutlery, gloves, music wire, goat hair and many other articles were greatly increased.

But protectionists also favor specific duties, because they are certain means of preventing the natural decline of prices and of giving increased protection. Thus a duty of 5 cents per yard on unbleached cotton cloth gave a protection of 50 per cent, when this cloth was selling at 10 cents in 1864. Because of improved machinery, this cloth, in 1890, could be sold for 4J cents, and the protection had increased to over 100 per cent. This same process has been going on with sugar, steel rails, structural steel, and in fact with most dutiable articles in the McKinley bill. “The title of the bill should be so changed” (said the Hon. John A. Kasson, in 1866, of a tariff hill), “as to read, ‘A hill to prevent the diffused blessings of Providence from being enjoyed by the people of the United States.’ ” If he had said, “A bill to prevent the diffused blessings of Providence and of improved methods of manufacture from reaching the people and to turn all over to combines, corporations and trusts” he would have accurately described the McEi'nley bill, with its specific duties to prevent consumers from getting much benefit from falling prices abroad, and at the same time giving increased protection to our hundreds of trusts to prevent the natural decline from home consumption.

For these very reasons, makers of the next tariff bill should avoid speciftc duties. There are other serious objections. Specific duties always discriminate against the poor, who 1 ane compelled to use the dheap articles, and in favor of the rich, who l purchase expensive articles. Thus a duty of 44 cents per pound and 50 per cent, ad valorem on West of E»giland broadcloth, that sells for $8.60 per yard, gives a protection of oniy S 3 per cent. The same rate >of duty an diagonal cheviot that soils for 76 aents per yard, yields a protection of 140 per cent. It is safe to say that for every dollar spent by the millionaire or by the day laborer the latter pays five times as much tariff taxes as the former.

Ad valorem duties are «pem to none »f the above objections. If levied equally on cheap aud oostly geode, ■they tax the rich and the poor ait.the -same rate —though, of ■course, the poor must spend a larger psepertion »f their earnings for tariff-taxed (goods than the rich. Ad valorem .duties permit consumers to get the toll benefit of declining prices and they will not subserve the purpose of ithose who wish to put up tariff “j«bs” on fche people. The one grave objection to ad valorem duties is that they lead to undervaluation, especially when the duties are high or when thetgoods are extremely valuable. Thus the duty of about 70 percent, on.most kind of gloves is a strong temptation to importers to undervalue their goods. It is said by good authorities that the undervaluations in this line will average 15 or 20 per cent. The dishonest glove importer then has an advantage of about 10 per cent 'over the honest one in our markets. The temptation to undervaluation decreases rapidly as duties decline, and on most goods practically disappears when duties do not exceed 20 per cent., because an undervaluation of 10 percent then give an advantage of only 2 per cent in our markets—not enough to compensate importers for the risk of being caught. As a means of obtaining revenue, ad valorem duties are as effective as specific. With duties of from sto 30 per cent—except on tobacco and liquors—in the Walker tariff of 1846, the amount of duties collected increased from $28,000,000, in 1847, to $63,000,000 id 1857. The revenues then exceeded the expenditures so much that the rates were lowered about 25 per cent The great increase in revenue from 1847 to 1857, under this comparatively low tariff, came from increased imports due to great prosperity. Imports rose from $116,000,000 to $333,000,000; exports from $150,000,000 to $279,000,000; the price of wheat rose from an average of. $1.02 from 1845 to 184' , to $1.51 J from 1843 to 1856 —a price never equalled before or slnee; prices of corn, cotton, butter, wool and other farm products also increased about 33 percent; farm values Increased about 50 per cent. The “free trade” tariff act of 1857 showed the same general effects. These are some of the aeeompanimints of the low tariffs of 1846 and lBi"!. We hope oor new tariff-mak-

ers will not neglect to study these lessons of history. Let them not forget that the only time the tariff question was ever settled to the satisfaction of all parties, so that neither party mentioned a tariff, was during our “Free Trade” ad valorem tariff period. If an impending war had not necessitated the raising of a great revenue, neither party would have dared to advocate higher duties. The farmers and the hard-working people can stand more of such “Free Trade" tariffs.—Byron W. Holt.