A tariff is not a tax / by Gilles B. Stebbins.

. > > . :r ■,-y *&, \ *4 UNIVERSITY OF ILLINOIS LIBRARY Class Book Volume 3 "31 S' t 3«t Ja 09-20M t uv/”” Iml 1 UO N • ,JL*- U‘i?: ' * o ^ TARIFF TRACT No. 3. 1880. Published by The American IRON AND STEEL ASSOCIATION, at No. 265 South Fourth Street , Philadelphia, at which place copies of this tract may be had free, for distribution, on application by letter. A TARIFF IS NOT A TAX. .V6 - By Giles B. Stebbins, of Detroit, Michigan. “A tariff is a tax,” we are told, added to the price of the arti¬ cle, not only domestic but imported, and hence is an unjust burden on the people, helping the few at the expense of the many. This is a false statement, as facts which can not be denied will show. A few brief observations will open the way for the facts. If a tariff is a tax, unjust yet sometimes inevitable, it should be assailed, in detail or as a whole, and broken up and put aside as rapidly as possible. Theorists filled with abstract ideas of Free Trade ; importers who would enlarge their business ; and foreign manufacturers (especially British) wrho would supply our markets and discourage our manufacturers join in this false outcry, mak¬ ing it the pretext for reckless attacks on our tariff, either on sin¬ gle items or otherwise as may seem best to serve their end of its destruction. On the other side, if customs duties really serve the two-fold pur¬ pose of protecting and building up home manufactures, and thus improving their quality and decreasing their cost, and of raising revenue for the Government, they are useful and for the common good, and should be regulated and kept up for these objects. "With the falsehood of this pretense that a tariff is a tax made apparent, our system of customs duties becomes a positive benefit and an imperative need, to be made as permanent as possible for the sake of business stability, and to be revised only in a broad and comprehensive method and spirit and in view of the interdepen¬ dence of different industries, the relations of raw materials and of partly and wholly manufactured products to each other, the rates of wages in our own and other lands, and our revenue needs. 2 A TARIFF IS NOT A TAX. Each nation, in view of its own condition and resources, and prompted by an instinct of self-preservation and self-justice, will aim at a fair industrial and financial independence, without which pros¬ perity in peace, defense in war, or any permanence or power for good is impossible. Its duties on imports and its internal revenues must be adapted to its own condition — to the development of its own resources and the encouragement of its own skill and labor. No one country can be an exact model for another. The tariff, for instance, which is fitted for France might be too high or too low for us. There is no principle at stake : it is simply wise expediency for the nation’s good, which the government owes to the people. History tells the same story in different countries — the building up of vast industries by Protective tariffs. In England the woolen and iron industries had tariffs almost prohibitory for three centuries. A score of times the duty on iron was raised, from $2.50 up to $35 per ton, and iron grew cheaper all the time. When England felt able to undersell the world her high duties on manufactures were repealed and the Free Trade cry was raised ; while she still levies a good duty on the sugar and tea and coffee her people use, and gets some $20,000,000 yearly from duties on the tobacco we send her ! Let us look at home for more facts and so find stronger refuta¬ tions of a falsehood. Cottons, imported at fifty cents a yard before our mills were built, have been exported at six cents under a high tariff and of a better quality. Cotton hosiery was reduced in price nearly one-half from 1860 to 1868. Delaines, formerly imported at 35 cents to 50 cents, were made here in 1868 at 20 cents of equal quality. Wool¬ ens grew cheaper under a tariff that built up mills and improved their machinery. In 1869 the great New Yotk importers, A. T. Stewart & Co., gave the United States Revenue Commission their prices of flannels and cassimeres in 1860 and 1869, the list opening with cadet cloths, Government standard, at $2.75 in 1860, and $2.71, gold, in 1869, and a score of items showing a decrease in price of from 5 to 25 per cent. Nails, axes, saws, and carpenters’ tools are lower under a higher tariff than under the low tariffs of 1846 and 1857. We export axes and shovels and hoes, and a British Par¬ liamentary report tells of our cutlery gaining on theirs in the world’s markets. Cast steel of English make had been sold here for twenty years at 18 cents or over per pound, and none was made here. Under a high tariff' our steel makers began work at Pittsburgh and else- A TARIFF IS NOT A tJx. 3 where, and the same quality came down to 13 cents and 15 cents. In the late civil war our cast steel was sold at 32 cents while British steel was held at 45 cents, thus saving our Government large sums in its war consumption, and saving us from dependence on a foreign power, always dangerous in such emergencies. In 1844 and 1846 it was shown in Congressional debates that glass was selling at $3.50 per box, while the duty was $4; that nails sold at 31 cents per pound, while the duty was 31 cents; that cotton cloth sold at 6 cents per yard, while the duty was 7 cents. How can an honest man, in view of these facts, say that a tariff is a tax which is added to the price of the article to which it relates ? The Iowa farmer, cunningly led, as some are, to believe a lie, groans over the moderate duty on lumber, as adding $1.50 per thou¬ sand feet to the price he pays. Had he studied the Chicago prices current he would know that, for the three years from 1863 to 1865, with Canada lumber free, the average yearly prices were not any lower than in the three years from 1867 to 1869, when the duty was 20 per cent. Some times this might be different, but this shows that the duty was not added to the price of the thousands of mill¬ ions of feet of lumber sent over the West in those years. It may be asked, Why then do our lumber manufacturers want a duty on imported lumber? The answer is, Not that it so much affects the price, as they furnish the larger part, but that the duty lessens the imports from Canada, gives them a wider market, and helps to give employment to 200,000 American workmen, at wages 30 per cent, higher than in Canada, and to keep up a home market for $30,000,000 of the products of our farms and $20,000,000 of home manufactures which they consume yearly. Deluded dairymen resolve that the salt monopoly must be de¬ stroyed, and the fearful salt tax, in the shape of a tariff, under which they suffer, must be abolished. An Illinois dairyman said in a convention that three-fourths of an ounce of salt to a pound of butter was enough. Call it six pounds of salt to one hundred pounds of butter, and suppose the tariff of 12 cents on every 100 pounds of imported salt is a tax, and when the groaning dairyman sells his nice firkin of a hundred pounds of butter, and pockets his $20 or more, he has paid a tax of three-fourths of a cent ! But he has sold his salt , which cost him say 9 cents , for over $ 1.20 , and still he groans about the tax! No revenue is more equally paid by all than the million dollars or more which the salt tariff yields to the Government, which averages about five cents per head of our total 4 a Tariff is not a tax. population and oppresses no one, while the price of salt has de-' creased under it, as our home manufacturers have competed to sup¬ ply the larger part of the demand. It is a significant fact that, in 1872, when Congress reduced the duty on salt, British salt dealers raised their prices immediately, to their benefit but not to ours. So in January, 1880, the day that a cable telegram sent word to London that our Congress was discussing a lower duty on steel rails, the price there went up at a leap $12.50 per ton. Break down our power of home competition on any article, as unwise changes of the tariff will, and we are at the mercy of foreigners, who consult their own interest, not ours. Some falsehoods are ludicrously absurd, and that which we now consider is one such. In 1870 we imported 190,000 bushels of po¬ tatoes, and levied a duty on them of 25 cents a bushel, or $46,458. The same year we raised 240,000,000 bushels, and so, if a tariff is a tax, we paid an addition of 25 cents on each bushel raised as well as imported, and the farmers pocketed, at our cost, $60,000,000 as their profits on this horrid potato tax ! Carry out the figures on wheat and flour and corn and the result is far worse. Who be¬ lieves such nonsense? “A tax on knowledge” is what Free Traders call the moderate duty of 20 per cent, on printing paper. A great cry was raised about it all at once last winter. Suppose it is a tax added to the price of paper. At the present price, 71 cents per pound, it would add a little over four cents a year to the cost of a seven-column week¬ ly newspaper ! In war days, with paper at 25 cents per pound, daily papers sold at about their present prices. Have newspapers reduced their rates in the past year, while getting their paper of our manufacturers at less than 6 cents — half what it cost in 1872? In 1872-3 the price was 12 cents; it fell gradually to 6 cents and less in the depression of 1879, rose to 10 cents in “the boom” of 1880, and is now down to 71 cents, with the duty unchanged. If the tariff is responsible for the rise, why not credit it with the fall in price as well ? Such credit would destroy the false theory that “ a tariff is a tax.” The average price of paper for the last four years has been lower than for the four years preceding (1873 to 1876), with the tariff all the time the same. Our home manufac¬ turers are giving us paper at lower rates than in the past. Mechanical wood-pulp, for paper-making, was first made and used here largely in 1873, at a cost of 41 cents a pound. It was 3* cents in 1877 ; 3 cents in 1879 ; and is now 31 cents, or below its A TARIFF IS NOT A Tlx. 5 cost in 1873. Here again, with the tariff unchanged, the home manufacturer gives this pulp, or raw material for paper, cheaper than formerly. Without this home competition of our thousand paper mills with foreign makers prices would go up, both for pulp and paper. It is said that pulp could be bought in Europe for a cent a pound, while it costs 3£ cents here. If so, the duty and freight could be paid and it would be imported and landed here at 1? cents, giving a profit of over a hundred per cent. It is said, too, that Canadian paper could be bought at 6 cents a pound while it cost 9 here. If so, it .could be imported, duty and freight paid, and delivered here at 7? cents, giving a fine profit. Why were not pulp and paper largely imported ? Such statements don’t “ hold water,” as the phrase is. How came this sudden hue and cry about “a tax on knowledge?” The circulars that filled the land had all the same “ear-marks,” as coming from one centre. A Yankee guess would put it at Free-Trade headquarters in New York. A wisely-adjusted tariff is a shield against foreign goods, which might flood our land at cost or less to get and keep our markets, prevent the growth of our manufactures, and then the makers of these goods would supply us at their own terms. Hon. A. S. Hewitt, of New York, a practical business man, not ranked as a high Protectionist, said lately, while discussing the du¬ ties on iron, some of which he thought might be changed : “ These duties have conferred one great benefit. In the late era of depres¬ sion they have prevented this country from being the sink into which the iron of other countries would be flung. Had the duties been low enough iron importations would have destroyed our busi¬ ness and closed our establishments that have been able to keep above water and can now reap the benefit of renewed prosperity.” With these establishments closed we should soon be in the condition in which 1857 found us. British efforts had reduced our tariff un¬ wisely. British railroad iron flooded the land at $40 a ton until our mills were ruined, and then the English iron men, with no competi¬ tion here, sold us a million tons of rails at $80, and foreign debt and a panic came upon us. The same principle applies to other products. Bessemer steel rails were first made in this country in 1867, but not largely until 1870. Up to the date of the opening of the first steel rail mill here the English controlled our market and prices, charging us $150 in gold per ton. The moment the first rails were made here they were compelled to reduce their prices, and brought them down in 1870 to $50.37 gold, in England, equal to $57.93 in 6 A TARIFF IS NOT A TAX. our currency. At that price they could be sent to New York and freight paid at a cost of $62 per ton, with no duty. Since then our American mills have furnished our railroads with 2,504,763 tons of steel rails at an average cost of $59.69 per ton in currency, their prices going down from $106 in 1870 to $40 in the panic times of 1878, up to $85 in “ the boom ” of 1880, and now stand at $60. This great business employs over 20,000 American workmen, pays over $7,500,000 yearly in wages, and has furnished us steel rails for ten years at an average price a little less than the English price in 1870. How, then, has the tariff on steel rails been a tax added to their price when we began to make them ? Our farmers may well bear in mind the benefits of home manu¬ factures to them, and thus see more clearly the falsehood of this bold assertion that “a tariff is a tax.” The lumbermen of the three States of Michigan, Wisconsin, and Minnesota use yearly some $11,- 000,000 worth of farm products at good prices, and the iron and steel and woolen mills add millions to this home demand. The farmer wants cheap transportation ; and manufacturers, giving large freights to railroads, help this as nothing else can. The steel rail mills of Chicago alone pay some $3,000,000 railroad freights yearly, transporting over 2,000,000 tons of ore, coal, etc. More business means lower rates of freight, and railroad rates are 30 to 50 per cent, less than ten years ago, the farmer sharing this benefit, and his home market, East and West and South, is larger and better than his foreign market. Such illustrations of the fallacy of Free Trade assertions are abun¬ dant. The frequent and ignorant tinkering with our tariff system, stimulated by the falsehood exposed in this pamphlet, is unwise and injurious, and should be ended. Our revenue wants forbid any large reduction of duties. A tariff revision, broad, comprehensive, and promising stability, is not objected to, although not urgently needed, but the sooner we send to the moles and bats this falsehood that “ a tariff is a tax ” the better. A tariff is not a tax added to the price of the article but a means of creating a home competition, giving us fair prices, paying Amer¬ ican workers decent wages, giving our farmers larger and better home markets, raising needed revenue, and keeping our wealth at home instead of draining it away to foreign lands and loading us with fearful foreign debts. The philosophy of the whole matter was well given by that great statesman, Alexander Hamilton, in his famous report in 1791, as Secretary of the Treasury: A TARIFF IS NOT A TAX. 7 But, though it were true that the immediate and certain effect of a tariff was an increase of price, it is universally true that the contrary is the ultimate effect with every successful manufacture. When a domestic manufacture has attained to perfection, and has engaged in the prosecution of it a competent number of persons, it can be afforded and accordingly seldom or never fails to be sold cheaper, in process of time, than the foreign article for which it is a substitute. The internal competition which takes place soon does away with everything like monopoly, and by degrees reduces the price of the article to the minimum of a reasonable profit on the capital employed. This accords with the reason of the thing and with experience. This eminent man had not learned that a tariff is a tax ! Wash¬ ington, Jefferson, Madison, Webster, and other great men were in equal ignorance, and so advocated tariffs. The sagacious Franklin urged on farmers the benefits of home manufactures. That friend of the people, Abraham Lincoln, declared himself an advocate of a Protective tariff. Frederic List in Germany, the French statesman Thiers, and other eminent foreigners were and are in the same * ignorance. The great Frenchman urged on the Assembly in 1870 their duty toward the national industry, saying : “ Prosperity con¬ sists in the nation drawing from its own soil and from the genius of its inhabitants the greatest possible amount of well-being.” Even Professor Reuleaux, President of the German Commission at our Centennial Exposition, went home and said : “ The present condi¬ tion of American manufactures shows the fallacy of the Free Trade doctrine that the productions of a country are raised in price by Protective duties.” The London Engineer, devoted to the interests of British skill and manufactures, is compelled by facts to say : “As far as the American consumer of iron is concerned, he is the better off for Protection.” Why should the Cobden Club of London assume to know the in¬ terests of American farmers better than the farmers themselves? The Club has published a pamphlet intended, we are told, to open the eyes of these farmers to the injuries of our Protective system. They probably understand their own business better than their advisers in England, and will not be induced by any number of pamphlets to set aside a system which has raised the United States to the rank of one of the greatest manufacturing countries of the world, and opened innumerable home markets for their agricultural products. — New York Tribune. 8 A TARIFF IS NOT A TAX. The following frank statement is from the London Colliery Guardian of June 18, 1880 : “ Too much importance can not easily be attached by the com¬ mercial and manufacturing classes to the bearing of the fiscal legis¬ lation now being conducted by the British Government. The free¬ ing of the raw materials of manufacture from taxation is one of the cardinal principles which should influence the law maker ; while the effort to secure, at the least possible cost, all attainable freedom in trade intercourse with distant nations should be persistent. It is impossible for legislation with this dual aim to be frequent and undeviating by such a people as the English without most satisfactory issues in the legislation also of other peoples. The working out of new treaty details may well be left in the hands of the men who, as members of the government, have it already in hand, assisted as they will be by the British Iron Trade Association and other combina¬ tions of manufacturers, who have already expressed to the Foreign Secretary their readiness to afford the technical help which falls within their province.” 4 The Cobden Club, of England, is disseminating Free-Trade literature among the Western farmers of this country, with the view of effecting a change in our industrial system. The argument is that by the Protective policy the farmers of the United States are being crushed. The intense sympathy of Englishmen is so ex¬ cited that agitation is entered upon at once to allay the pain of the British bosom and to relieve the distresses of the American farmer. The American farmer, however, is likely to pause awhile before admitting the circumstances in which he is placed by the English. He is not crushed, nor is he distressed in his occupation. The farmer of America is a prince in opulence when compared with his European or English brother. And he knows that he is so because the industrial policy of his country makes possible great prosperity by strengthening all classes of industry. — Cincinnati Artisan.