George B. (George Boughton) Curtiss.

The industrial development of nations, and a history of the tariff policies of the United States, and of Great Britain, Germany, France, Russia and other European countries online

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per cent higher than in August, 1908, 7.5 per cent higher than in March, 1909, 21.1
per cent higher than the average yearly price of 1897. Wholesale prices in Decem-
ber, 1910, however, were 1.4 per cent lower than in December, 1909, but they were



TARIFF AGITATION.



567



still 304 per cent higher than the average price for the 10 years 1890 to 199, and
45.4 per cent higher than the prices of 1897.



The figures published by the Bureau of Labor Statistics showed that
while the wholesale prices of certain commodities had advanced during
the period covered, the prices of sugar, kerosene, eight-penny nails, steel
rails and many other commodities had declined. The prices of drugs and
chemicals showed a very trivial advance. Men's cotton half-hose showed
an advance from the standard 82.1 to 95.4, and women's cotton hose a
decline from 102.7 to 99. The prices of cotton goods, such as ginghams,
sheetings and shirtings, showed an advance, but not so great as the in-
crease in the price of raw cotton.

The Richmond (Ind.) Palladium contended that the high cost of liv-
ing is due somewhat to extravagances in these words:

High Cost of Living Is Dub Somewhat to Extravagances.



Modern retail business is not conducted along the same lines it was a dozen
years ago — or twenty years ago. The housewife no longer takes her basket and
journeys to the grocery, selects her food, pays for it and acts as her own delivery
boy. She uses the telephone. She insists upon fruit and vegetables out of season;
she has it charged; she has it delivered to her back door. For these luxuries — for
luxuries they are — she must pay. If the fruit is out of season, then it must have
been ripened artificially or kept in cold storage, and this work is done by commission
men who charge the groceryman, who in turn adds the charge to his customers.

Look into every detail of modern living. How many men to-day shine their own
shoes? How many men who live over ten blocks from their places of business
walk instead of riding on a street car? How many go home for the midday meal?
How many shave themselves ?

Whence comes the money for the manicurist? For the countless shining par-
lors? For the multiplying barber shops? Why the ever increasing automobile
trade? Twelve million people rode on Indiana interurbans last year. Twice that
number rode on local street car lines within the State. The man to-day who wears
a "hand-me-down" suit is the object of derision. He at least must have it made
to measure. Who pays for the moving picture shows? Who makes the vaude-
ville a profit? A hundred thousand stand in line to buy seats in the bleachers
prior to the world's baseball championship series. The number of pianos sold on
the installment plan would reach twice around the equator. We have more saloons
than we have groceries and more cigar stores than either.

We demand hot and cold water, a bath, electric lights, janitor service, with
an ice chest and a range thrown in. Where is the family who would put up with
the "good old days" when we jumped out of bed and had to break the ice in a
pitcher in order to perform our morning ablutions? Where is the family who is
content to "wash off" in the family tub, a la Diogenes? What proud head of the
household is content to do without hardwood floors and submit to the indignity
of the old-fashioned rag carpet?



An

editor's

view.



TARIFF QUESTION IN TEE UNITED STATES.



Opinions
of eco-
nomists.



High cost of living is due to many factors, and it is too high. But is it due to
the greed of those who sell, or to the extravagance of those who buy?

While an official investigation has not been conducted on the subject,
it is safe to say that the material advancement of which the consumers
complain has taken place in retail prices of manufactured articles rather
than in the prices obtained by manufacturers.

The Depreciation of Gold.

Comment on this branch of the subject would be incomplete with-
out a reference to the opinions of scientific men who believe that the in-
crease in the supply of gold has been a prime cause of the advance in
prices. It is argued that the upward price movement must be influenced
by some great, universal, underlying cause ; for the advance in prices has
been world-wide. In free-trade England, in the protective countries of
Europe, under high tariffs, low tariffs, as well as under free trade, the
price movement has been the same.

In February, 1910, the Journal of Commerce published the views of
many distinguished economists on the causes of high prices, from which
the following extracts are taken :

M. Guyot, editor of a Paris economic journal, believes currency infla-
tion a minor influence, but holds that the principal causes are inadequate
crops, world-wide development of new resources, advance in lands, and
higher standards of living.

Professor Taussig of Harvard University, a distinguished advocate
of free trade, expressed the opinion that the fundamental cause is the
recent increased supply of gold. He mentions contributing causes
which have exerted minor influences, such as the advance in the cost of
living, increased cost of production, and the fact that the people are be-
coming more fastidious as to food ; and hence the demand for more and
better food tends to higher prices. He shows that land is not relatively so
plentiful in the United States as it was twenty years ago, and that the
cost of cultivation has increased.

Prof. W. G. Sumner (an advocate of free trade) of Yale University
says:

The increased production of gold and the increase of currency are the only
things known to me which would cause a general rise of prices.

Prof. Clive Day of Yale University expresses the opinion that in-
creased supply of gold is the chief cause. He says :

I should pick increased gold supply as the chief cause of the rising prices.



TARIFF AGITATION.



569



Other influences affect particular commodities in various ways, of course; but this
one factor seems the chief cause of the current change in the price level.

Professor Seligman of Columbia University, considering many
phases of the question, writes:

If all commodities in the world tend to rise in price at the same time it is
obvious that there is some cause at work which cannot be explained by the condi-
tions of any particular commodity. The progress of invention, for instance, often
tends to reduce the cost, and therefore the price, of particular manufactured com-
modities; and the pressure of population and the means of subsistence frequently
tend to increase the cost of food and other raw materials. But if we find that the
prices of all foodstuffs and of all manufactured commodities tend to rise together
for a long period, or to fall together for a longer period, it is clear that some other
explanation must be sought. Thus all the current particular explanations are in-
sufficient. To say that the present high prices are due to trusts will not explain the
similar rise of prices in cases where there are no trusts in those particular com-
modities in this country, or no trusts at all in other countries where the rise of
prices is also well marked. To say that high prices are due to the tariff does not
explain the similar rise of prices in England, where there is no protective tariff. To
say that high prices are due to labor unions or to the associated action of labor
does not explain the rise of prices in the Orient, where there are no labor unions.
To say that rising prices are due to the growth of population does not explain the
falling prices of a decade ago, when population increased at virtually the same rate.

On the relation of gold to prices as the standard of values of the
civilized world, and on the effect upon its value of an enormously in-
creased production, Professor Seligman said :

Gold, in other words, is being turned out in such enormous quantities that it
is falling in value. But a fall in the value of gold, other things being equal, is tan-
tamount to a rise in general prices. Money, or purchasing power in its broadest
sense, includes, however, more than the mere money metal. Business transactions
take place not alone for cash, but also for credit. In considering the question of
the supply of money or of purchasing power, we must therefore look not alone at
the coin or cash, but also at the credit which is based upon the coin. Now it is
very clear that with every increase in the quantity of gold in the reserves of the
banks, the power of extending credit grows enormously. It is a well known fact
that banking and credit facilities throughout the world have recently augmented in
a far greater degree than the increase in the output of gold. Hence, the secondary
and additional reason for the general rise in the price level has been this augmen-
tation in credit facilities.

If we combine these two factors — the increase in the gold supply and the re-
sulting increase in the use of credit — we see that we have at once an adequate
explanation of the general rise of prices. During the nineteenth century we have
had several such cycles in the general price level. Between 1790 and 1810 prices
rose about 80 per cent, due to the conditions of the war period in Europe. Between
1810 and 1850 they fell about 60 per cent, the supply of silver being cut by the politi-



World-

wide

causes.



Increased
produc-
tion of
gold.



570



TARIFF QUESTION IN TEE UNITED STATES.



cal disturbances in South America and that of gold not increasing sufficiently to
keep pace with the expansion of industry. From 1850 to i860 came a rise of prices
of about 20 per cent, owing to the gold discoveries. From i860 to 1873 prices re-
mained relatively stable, apart from the speculative movement culminating in the
prices of 1873. From 1873 to 1898 prices fell almost 60 per cent as a result of the
relative diminution in the output of gold and of the demonetization of silver. Since
1896 the prodigious increase in the production of gold has caused another era of
rising prices, which by this time amounts to over 50 per cent. Notwithstanding the
temporary recession of prices during the panic of 1907, the level is mounting
steadily.

Professor Jenks of Cornell University mentions several principal
causes as follows :

First, increased gold supply; second, increased cost of production, depending in
part on the above ; third, advance in rents and land, likewise in part dependent up-
on the others ; fourth, in certain cases, probably, tariffs ; fifth, in certain cases also,
short crops.



Not due
to truss.



Prof. J. W. Crook of Amherst College mentions the increased supply
of gold as the most far-reaching cause, and says:

That the advance is due neither to the trusts nor the tariff seems clear from
the fact that rising prices is a phenomenon of all civilized nations, whether they
have trusts and tariffs or not.

Professor Kinley of the University of Illinois attributes the advance in
prices to the increased cost of raw materials, the increased gold supply
and the credit currency inflation based thereon. He, however, is of the
opinion that the maximum point will be reached within three or four
years and that we will then see a reaction in prices.

Prof. Irving Fisher of Yale University expresses the opinion
that the increased gold supply is by far the most important influence
causing high prices. He believes that it is high time we should appreciate
the fact that gold is not a stable standard any more than is any other metal
or commodity, and thinks that extravagance, increasing population, trusts,
tariffs, short crops, short hours of labor, etc., are insufficient to explain the
advance in prices.

Prof. Walter E. Clark of the College of the City of New York
names several causes, the fundamental of which is the increased volume
of gold. He mentions the increase in credits and the rapidity of currency
circulation resulting therefrom. As secondary causes he points to the
growth of population, exhaustion of the more productive lands, and
monopolies, legal or capitalistic.

Professor Carver of Harvard University mentions as the chief cause
of high prices the increased supply of gold. The next most important
cause he thinks is the exhaustion of free public lands in the West and the
growing scarcity of good land.



TARIFF AOITATION.



571



Joseph F. Johnson, dean of the New York University School of
Commerce, attributes the cause entirely to the unprecedented increase
of the gold supply and to the resultant expansion of credit. He says :

It is impossible for trusts, tariffs, labor unions, taxes, extravagance, high rents,
short crops, etc., to bring about an elevation of the general level of prices. A trust
or a change in the tariff may cause certain commodities to rise in price, but the
prices of all commodities cannot thus be affected. There has been no real in-
crease in the cost of production. Money costs have risen, but the real costs — the
amount of labor and capital necessary to produce goods — have been steadily declin-
ing for the last twenty-five years. As for such circumstances as industrial and trade
activity, invention, the development of new resources, and the growth of popula-
tion—these all tend to lower the level of prices and would have had that effect in
recent years but for the counteracting influence of the increasing stock of gold.

The foregoing opinions of the effect on prices of a sudden and
abnormal increase in the precious metals, are in harmony with the views
held by eminent statesmen, economists and financiers for many years.
The influence of an increase in the supply of the precious metals on prices
is exerted in two ways : ( 1 ) It tends to stimulate business activities, and
thereby operates on the law of supply and demand of commodities in gen-
eral. (2) As the supply of gold is greatly increased, especially by a
reduction in its cost, it depreciates in value as compared with other com-
modities. The grain of gold being the par of exchange in the interna-
tional trade of the world, a depreciation in the value of that par of
exchange would raise prices in every market of the world. The opinions
expressed are based on experience. The advance in prices has attended
every period of an increased supply of the precious metals, and prices
have fallen correspondingly with a decline in such supply. Between 1492
and 1805 the supply of gold and silver from the mines of America in-
creased from $270,000 in the former year to $43,000,000 at the beginning
of the nineteenth century. The quantity averaged $38,000,000 annually
from 1750 to 1805. This was attended with an advance in prices. On
account of the South American revolutions the supply was greatly dimin-
ished from 1810 to 1850, and prices fell during these years 60 per cent.
Following the gold discoveries in Australia and California in 1849 and
1850, prices rose 20 per cent during the next ten years. From 1873 to
1898 prices fell more than 50 per cent, and the production of gold also
declined. Beginning with 1895 the world's production of gold increased
from $198,763,600 in that year, to $454,422,900 in 1909. The following
table, copied from the Statistical Abstract of the United States for 1910,
should be carefully studied :



Com-
ments.



572



TARIFF QUESTION IN THE UNITED STATES.



Production of Gold and Silver in the World Since the Discovery op America.i

[From 1493 to 1885, from a table of averages compiled by Dr. Adolph Soetbeer;
since the later date, the estimates of the Director of the Mint.]



Period

1493-1520
1521-1544
154S-1560
1561-1580
1581-1600
1601-1620
1621-1640
1641-1660
1661-1680
1681-1700
1701-1720
1721-1740
1741-1760
1761-1780
1781-1800
1801-1810
1811-1820
1821-1830
1831-1840
1841-1850
1851-1855
1856-1860

1861

1862 ....

1863 ....

1864 ....

1865 ....

1866

1867

1868

1869

1870

1871

1872

1873

1874

1875

1876

1877

1878

1879

1880

1881

1882

1883

1884

1885

1886

1887

1888

1889

1890

1891



Gold.

Annual

production.

Value

Dollars

3,855,000

4,759,000

5,656,000

4,546,000

4,905,000

5,662,000

5,516,000

5,828,000

6,154,000

7,154,000

8,520,000

12,681,000

16,356,000

13,761,000

11,823,000

11,815,000

7,606,000

9,448,000

13,484,000

36,393,000

132.513,000

134,083,000

122,989,000

122,989,000

122,989,000

122,989,000

122,989,000

129,614,000

129,614,000

129,614,000

129,614,000

129,614,000

n5,577,ooo

H5,577,ooo

96,200,000

90,750,000

97,500,000

103,700,000

113,947,000

119,092,800

108,778,800

106,436,800

103,023,100

101,996,600

95,392,000

101,729,600

108,435,600

106,163,900

105,774,900

110,196,900

123,489,200

118,848,700

130,650,000



Silver.

Annual average

for period.

Coining value

Dollars

i,954,ooo

3,740,000

12,952,000

12,450,000

17,413,000

17,579,000

16,361,000

15,226,000

14,008,000

14,212,000

14,781,000

17,924,000

22,162,000

27,133,000

36,540,000

37,168,000

22,479,000

19,144,000

24,793,000

32,440,000

36,834,000

37,618,000

45,772,000

45,772,000

45,772,000

45,772,000

45,772,000

55,663,000

55,663,000

55,663,000

55,663,000

55,663,000

81,864,000

81,864,000

81,800,000

71,500,000

80,500,000

87,600,000

81,040,700

94,882,200

96,172,600

96,705,000

102,168,400

111,302,300

115,297,000

105,061,400

118,445,200

120,626,800

124,281,000

140,706,400

155,427,700

163,032,000

177,352,300



TARIFF AOITATIOV.



573



1892 146,651,300 198,014,400

l8 93 157,494,800 213,944,400

!°94 181,175,600 212,829,600

'SpS 198,763,600 216,566,900

1890 202,251,600 203,069,200

l8 97 236,073,700 207,413,000

1898 286,879,700 218,576,800

»99 306,724,100 217,648,200

1900 254,576,300 224,441,200

I9 01 260,992,900 223,691,300

I9° 2 296,737,000 210,441,900

1903 327,702,200 216,810,300

1904 347,377,200 212,292,900

I9°5 380,288,700 222,794,500

1906 402,503,000 213,403,800

1907 412,966,600 238,166,600

1908 443,006,200 262,770,900

I9°9 454,422,900 273,086,900

Total 13,392,328,200 13,488,125,500



The production of gold in the United States has increased from
$46,610,000 in 1895, gradually year by year, until it reached $78,666,700 in
1900, $88,180,000 in 1905 and $99,673,400 in 1909.

Of the world's product of gold in 1909, $313,242,714 was coined at
the mints and $145,000,000 was consumed in the arts and industries.

In the light of these circumstances and conditions, it would be the
commission of an inexcusable blunder to overthrow our protective system
upon the assumption that it is responsible for the high cost of living.



The im-
possible.



CHAPTER XI.

The Tariff Board — The Tariff Commission Convention — Biu, To
Create a Permanent Tariff Board Defeated — Authority For
Appointing the Tariff Board — Report of the Tariff Board on
the Woolen Industry — President Taft's Message Recommend-
ing Revision of Schedule K.

The Tariff Board.

Early in the history of the movement which had for its purpose a
revision of the Dingley law, it was urged that the tariff should be taken
out of politics and dealt with in a non-partisan spirit in such a way as to
conserve the best interests of the country. It was claimed that all prior
tariff bills had been the outcome of dickerings and compromises by those
representing special interests. The idea that our most sharply contro-
verted political question could be taken out of politics and be disposed of
in a way to please everybody, not only assumed the accomplish-
ment of the impossible, but on its face was the height of absurdity. It
was asserted that Congress could not rely upon the statements furnished
by manufacturers to guide them in fixing tariff rates because they were
interested, not at all denying that they alone were in possession of the
facts, but implying or in effect charging that they were not to be trusted.
It has been the practice of the government, beginning as far back as 1830,
to call before Congressional and Senatorial committees, manufacturers,
laboring men, importers, economists, financiers, and all persons who were
possessed of expert or practical knowledge on the subject of the cost of
production at home and abroad; men who were familiar with the rules
and methods of trade affecting competition, rates of wages, the state of
the industries, and all subjects which must be taken into consideration
in determining the rates of duties which should be embodied in a tariff
law designed for revenue or protection.

The credit which should be given to the evidence and opinions of
practical business men on the subject was very well stated by John L.
Hayes, who was president of the Tariff Commission in 1883, in a pamphlet
written by him in 1887 on the dangers and difficulties attending legisla-
tion on the national wool industry. He said :

574



THE TARIFF BOARD.



575



Both political economical parties agree, or profess to agree, that no tariff re-
vision should be permitted to disturb the interests of the great national industries
and of the workmen dependent upon them. Who are so capable of determining
i^the interests of a national industry as the men who constitute it, who live in it,
! are wrapped up in it, who make it a part of their very being, who are masters of
1 all its secrets, whose every-day observations teach them more than ever was writ-
ten in books, and whose daily thought is a series of perpetual questionings and
unconscious judgments as to its interests? The common sense of mankind
recognizes the authority which should be conceded to superior and peculiar knowl-
edge growing out of special study. We do not attempt to build bridges without a
civil engineer, ships without naval constructors, or important edifices without
architects. We trust our lives to the skilled physician, our property to the trained
lawyer, the education of our sons to trained teachers and our armies, in war, to
West Point officers. All the manufacturing nations of Europe have recognized
the authority due to special knowledge and practical experience by the deference
which is paid to manufacturers in all legislative or administrative measures affect-
ing the industries. No popular clamor is ever heard in Europe against the great
national industries. Such a clamor would be held to be nothing less than dis-
loyalty to the nation. The manufacturers of Great Britain themselves dictated
the policy which relinquished direct protection to manufactures for the better pro-
tection, to them, of free raw materials for their mills and cheaper food for their
workmen. The interests of France and Germany demanded the policy of pro-
tection, and the great industries of these countries have literally dictated the tariff
duties required for their interests, in the judgment of the manufacturers.
r~~ While in Europe the judgment of the great industrialists is held to be supreme
and unquestionable in regard to their interests, in the half a dozen or more at-
tempts for tariff revision by revenue reformers within the last ten or twelve years,
the opinions of manufacturers have been practically ignored. In the Wood tariff
revision hearings were directly refused to the industries. Hearings to manu-
facturers were permitted as to the first Morrison bill, but their suggestions were
totally disregarded. What better evidence could we have than this refusal of
revenue reformers to gain wisdom where there is most experience, light where
there is most knowledge, advice where there is the most matured judgment, that
their pretended interest in the prosperity of the industries is a sham and a pre-
tence, and but a thin disguise for a deep seated hostility to the existing organiza-
tions of American industry?

The protectionists did not fear the most open and thorough investiga-
tion of the subject, either by a tariff board or a Congressional committee.
They were, as they should have been, distrustful of all star chamber
proceedings. They saw that a permanent tariff board would result in a
constant agitation of the question, and a never-ending state of turmoil
and unrest; that instead of taking the tariff question out of politics, it
would keep it in politics all the time and prevent that business stability and
permanency of policy which are so indispensable to the general prosperity.
The well-informed knew that the tariff question would never be settled
until the country became all protection or all free trade. They also knew



576



TARIFF QUESTION IN THE UNITED STATES.



Tariff
commis-
sion con-



Online LibraryGeorge B. (George Boughton) CurtissThe industrial development of nations, and a history of the tariff policies of the United States, and of Great Britain, Germany, France, Russia and other European countries → online text (page 72 of 90)