Tariff primer; a graphic presentation of the Fordney-McCumber tariff, what it is, how it works, whom it benefits

Front matter

Class Book.

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Preface

Can a people be enriched by their own taxation? That is the question now confronting the American people.

If a people can be enriched by the simple process of taking hundreds of millions of dollars annually out of the pockets of the Many, and pouring them into the huge pockets of the Privileged Few) then the Fordney-McCumber Tariff is the most beneficient piece of legislation in the History of the Republic. If it be true that a people can be prospered by so sin^)le a method, then will the new Tariff lift our toiling millions out of the perils of penury and want, up into the happy realm of abundance.

Were the Tariff Issue so clear and definite as above stated, it would of course have disappeared long ago from our political history. No question about that. But it is not. On the contrary, it is an issue so complex and involved, so mixed up and confused by the multiplied relations sustained even by the average citizen in the complex financial and industrial life of today, that after generations of discussion, we know but little more about the Tariff than we did at the beginning.

The heroic and independent spirit of our "Sires of '76", would not have considered the toleration of so monstrous and extortionate a measure as the Fordney-McCumber Tariff for a single minute. Their fight was against Taxation : we fight/or Taxation.

But the real facts in the case — and the dire consequences to the consuming public — were far easier to see then than they are today. Amidst the complexities of our modern civilization, the fact as to who pays and who gets — as to who are the Tariff's beneficiaries and who its victims — can now be disguised, confused and hidden in a thousand different ways.

The Author's interest in this subject began far back in boyhood days, when a student in the High School. More years of my life have been given to the study of the theory and the effects of a Protective Tariff — and of that universal thing, called Trade, which the Tariff seeks to obstruct — than to any other one problem connected with the general welfare.

Added to these years of study and investigation has been the advantage of presenting the Tariff to Lyceum and Chautauqua audiences — composed of men, women and children. Long ago, from this most valuable experience, I learned that the thing most needed by the people in order to understand just what the Tariff is, how it works, and whom it benefits, is not Argument but Analysis — a division into classes of the persons and things affected at each step in the unfolding of the problem.

The sole aim and purpose of the TARIFF PRIMERistoclarify and simplify the Tariff Issue. The method of working has been simply to analyze, and then classify in opposite groups, all the elements in each stage of the problem — taking them up carefully, just one at a time. A classification once made, or a principle once clearly established, is never abandoned. From the beginning to the end of the book I trust the reader will find that all the lines of reasoning run clear and straight. My endeavor has been to fully and logically think out each problem for itself; seel<ing always to find the principle involved, using details and statistics only for illustration.

Thus do we advance steadily from the first chapter to the last, following the definite plan of taking up and discussing just one thing at a time, always striving to so clearly and definitely state facts and conditions that the reader can think them out for himself — and find pleasure and entertainment in doing it.

The cartoons and illustrations have been carefully designed in order to give the reader the imagery, the mental pictures, the concrete symbols, absolutely necessary for the mastery of the subject. Realizing that at least 80% of all our knowledge comes thru the eyes, an abundance of charts and diagrams has also been used, based wholly on Official Government Statistics.

With all the vital questions and problems of the Tariff Issue clearly analyzed and definitely stated for the American people, this age-long superstition, this gigantic delusion that a people can be enriched by their own taxation, will go the way of all the other delusions and superstitions of the past.

Mifflinburg, Pa.

October 12, 1922.

Appendix

A — Imports and Exports from 1790 to 1921 82

B — A Study in World Commerce 89

C— Effects of War on Prices 91

D— Price History from 1850 to 1920 93

E — Tariff Rates from Custom House Reports 95

F — ^25 Leading Products Both Exported and Imported 96

G— Fordney Tariff at Work 96

H— Wool Prices from 1880 to 1921 96

I — Payne-Aldrich, Underwood and Fordney Tariffs 97

J— The Scramble Begins for Still Higher Rates 100

CHAPTER I. Home Goods, Foreign Goods and the Tariff Wall

For untold centuries the word "foreign" has filled mankind with fear, because "foreigner" and "foe" meant the same thing. And the fear that there was some subtle danger, some hidden evil, even in "foreign goods" has continued through all the long and bloody centuries of war and hate and strife. This vague fear and indescribable dread of "foreign goods" still exists — ■ and that, too, among so-called "civilized" nations. If this were not true. Protective Tariffs would have disappeared long ago with the other superstitions of the past.

On the opposite page our artist has given us the three elements essential to a complete discussion of the Tariff. In this picture we have the whole foundation of the subject. These three elements are: Home Goods, Foreign Goods, and the Tariff Wall between.

Radical and far-reaching as is the distinction which all nations make between Home Goods and Foreign Goods, and profoundly as does this distinction effect the economic welfare and happiness of all mankind, yet the reader needs to realize at the very outset that it rests upon nothing more permanent and substantial than national boundaries. On this boundary all Tariff Walls are built. National boundaries are wholly a matter of accident and chance, of whim and caprice, of war and treaty. As we learned in geography, national boundaries are not "natural" lines but "imaginary" lines drawn upon the surface of our earth.

The 49th parallel of latitude forms the larger part of the boundary which separates us from Canada. All products coming in from beyond that parallel are "foreign", and if allowed to come in "free" it is supposed would destroy our great agricultural interests. By all means wheat from Alberta must be kept out. For twenty-four years has Mr. Porter J. McCumber been defending North Dakota from the disasters of such an "invasion".

And yet the political slogan of an early Presidential campaign was: "54-40 or Fight!" They did not get either. But if the parallel of 54-40 had been established as our northern boundary, the wheat fields of Alberta and of all northwestern Canada, would now pour their golden harvests into the granaries of Chicago and Minneapolis as freely as do the wheat fields of the Dakotas and Minnesota. What makes it injurious in the one case, but beneficial in the other? Merely the accidental location of a national boundary. Therefore, it is not the nature of the goods, or the character of the people producing them, but those "imaginary lines", called national boundaries, which divide all the products of human toil into Home Goods and Foreign Goods.

We are not the only people who have a Tariff Wall, though from Protectionists' speeches in Congress, one would infer that this is our distinctive and exclusive creation. There are as many Tariff Walls on this planet as there are Governments. Canada, Mexico, the Republics of Central America and the countries of South America — all have Tariff Walls. Crossing the ocean, Tariff Walls and lines of fortification mark the boundaries of all the countries of Europe. Every government on the continent of Africa is encircled by a Tariff Wall. The same is true of Asia, of the distant Orient, and of many of the islands of the sea. In short, wherever there is a Government on this earth there also is a Tariff Wall.

Nor is that all. "We the people of the United States", now have but one Tariff Wall. But before the formation of the Federal Constitution in 1789, each of the thirteen colonies had a Tariff Wall around it. Connecticut, Massachusetts, New York, Pennsylvania, North Carolina — all had Tariff Walls. Wherever there was a boundary line separating two colonies, there also was a Tariff Wall.

How history does persist in enacting over and over again its ancient follies! The same bickering and haggling and "logrolling" which occupied the American Congress for nearly two years; also occupied the legislatures of the Colonies. Furthermore, the same "arguments" which seek to justify the existence of the one Tariff Wall around the entire Union of 48 states, would also justify the building of a Tariff Wall around each state. Therefore, if these "arguments" of Fordney, McCumber and their followers are true, then we should have 48 Tariff Walls instead of one!

In Europe, a century or so ago, there was a Tariff Wall around each county, principality, dukedom, and feudal estate. It is said that a French peasant in going from Versailles to Paris, with his cartload of garden products had to pass through eigh-

Home Goods, Foreign Goods and the Tariff Wall . 3

teen Tariff Walls, paying toll at each wall, before he reached the gates of Paris — and still had one more toll to pay before he could get inside the Tariff Wall around that city! And so the idea is not modern. It is centuries old.

Senator Calder, of New York, recently claimed, before a labor audience, that the reason wages are higher in this country than in any other is because we have a Protective Tariff — implying, of course, that other countries have not. Nothing more ignorant or deceptive could possibly have been uttered. Whatever the reason, it is not this. Practically all countries on earth have a Protective Tariff. And statistics show that, as a general rule, the higher the Tariff the lower the wages of labor, and the more impoverished the people.

Thus do Tariff Walls, separating Home Goods from Foreign Goods, exist everywhere — and have existed for centuries. They are as universal as greed; as persistent as Selfishness and Plunder.

Chapter II. Motive That Builds Tariff Walls

In the lowest stages of human society all the products which enter into the food, clothing and shelter of the people of the tribe are found within the narrow circuit of their own immediate neighborhood. And nothing better indicates, the steps in the Intellectual Progress of the race than the ever increasing distance, over sea and land, from which their daily supplies are drawn. When we reach the highest civilization we find the articles consumed even by "the common people'* are drawn from every country, zone and clime.

Thus does the March of Progress, through the instrumentality of International Trade, enable the humblest citizen or subject in any nation to levy upon the vast variety of products of every sea and land, of every mountain range, valley and plain of the whole round earth, to satisfy the hunger and needs of his life — unless prevented by a Tariff Wall.

Whoever would form a true mental picture of Trade must encompass the whole earth in his imagination. The comparatively few whose intellectual development makes such a vision possible, believe in Trade. The unnumbered millions whose narrow and provincial minds make a conception of such magnitude impossible, believe in Tariff Walls. It is all a matter of imagination, of mental capacity — of Intellectual Development.

Back of that towering Tariff Wall, in every nation — under every form of government — are two classes of people: The Producers of Home Goods and the Consumers of both Home and Foreign Goods. In this we have the Motive which in all lands and nations builds Tariff Walls.

It is quite natural for local Producers everywhere to object to this intrusion of Foreign Goods into the Home Market. And the cause of this universal — and we might say international — objection of all local Producers to the importation of Foreign Goods is easy to discover.

It is found in the fact that they must compete with these Foreig^n Goods in what they would like to consider their own exclusive market. And in order to compete they must keep their prices down to the prices of the Foreign Goods offered.

Motive that Builds Tariff Walls 5

Otherwise, local consumers will naturally, and rightly, buy the Foreign Goods.

From this vital fact comes a clear vision of the purpose, the motive, the function, of a Tariff Wall: THE OBJECT IN BUILD- ING A TARIFF WALL AROUND ANY COUNTRY IS TO ENABLE LOCAL PRODUCERS OF CERTAIN PRODUCTS TO COMPEL THE LOCAL CONSUMERS OF THESE PRODUCTS TO PAY MORE FOR THEM THAN THEY WOULD HAVE TO PAY IN THE OPEN MARKET.

In other words, the Producer has carried his conflict with the Consumers of his products into the Halls of Congress. He has succeeded, by means of campaign contributions and other forms of "influence,'' in securing from Congress such laws — called Tariffs — as enable him to compel the consumers of his products to pay him more than they would otherwise have to pay — were it not for these laws.

When we reflect on the matter, however, we see that there is no more reason — in fact, there is not as much reason — why the Producer should have a law compelling the Consumers to. pay him more than the Market Price for his products, than, that Consumers should have a law enacted by Congress which would compel Producers to sell their products for less than the Market Price. Had you ever thought of that? If not, then here is a chance to do some real thinking for yourself.

You would not vote to build a Tariff Wall around your town, giving your merchants a monopoly of the Home Market; thus preventing you from going to any other town or city to buy any part of the necessities of life. Nor would you vote to build a Tariff Wall around your county, or even around your state. Since you demand an Open Market for the people of your town, an Open Market for the people of your county, and an Open Market for the people of your state, why do you not also demand an Open Market for the hundred and ten Million people of your nation?

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The World Price Level and the Tariff Price Level 7

Chapter III. The World Price Level And The Tariff Price Level

In the illustration on the opposite page, our artist has given us a symbol of the machinery which Congress has put into the hands of the Producer to enable him to get from the Consumer higher prices than the Consumer would have to pay in the open market. It shows how a Tariff Wall raises the PRICE LEVEL of the goods and products it ^'Protects." The illustration tells the whole story. Look it over and think it out for yourself.

These billions of dollars' worth of Foreign Goods which every year we ourselves demand, need and consume, flow directly across the ocean to our shores down at the WORLD Price Level. There they are — down there. But we cannot get them — down there. Before we can reach them, or they reach us, they must flow up over the towering Tariff Wall — to the cost-plane of the TARIFF PRICE LEVEL.

All goods shipped to us from any part of the world — Europe, Asia, Africa, Canada, South America, Mexico, Australia — must pass thru one of the scores of Custom Houses along the boundary separating us from the rest of the world, be inspected by custom house officials, and a Tariff Tax levied on them — unless specifically exempted by being on the Free List.

Therefore, in each Custom House this Taxing Machinery must be set up and a separate Tariff Wall built for each class of articles, in order to compel us to purchase them — not at their normal price in the Open Market — but at the "Price Increased by the Tariff."

In order to thus systematically tax everything that labor has produced, our Tariff Makers — beginning as far back as 1883 — have divided all material substances and products which satisfy the desires and needs of human life into Fourteen Classes — called Schedules.

There is absolutely no form of wealth which the genius of man has created, no product or invention which his skilled hands have fashioned, that does not fall within one of these Fourteen Schedules. A mere enumeration of their titles, together with a few items under each, will give the reader some conception of the vast multitude of products in the huge stream of life's necessities, which it is now proposed shall be made to pass over "the highest Tariff Wall in our history."

(1) A— Chemicals, Oils and Paints: All forms of medi-

(2) B— Earth, Earthenware and Glassware: All

(3) C— Metals and Manufactures of Metals: Nuts,

(4) D— Wood and Manufactures of: Furniture, porch

(5) E— Sugar and Molasses: Cane sugar, beet sugar,

maple sugar, syrups, candies and all other forms of confectionery.

(6) F— Tobacco and Manufactures of: Wrapper and

(7) G — Agricultural Products and Provisions: Live

stock, meat, fish, vegetables, milk and cream, butter, cereals, fruits, nuts, flours, bread, preserves, seeds, etc.

(9) I— Cotton and Manufactures of: Cotton staple,

cotton yarns, sewing thread, tire fabrics, table covers, cotton gloves, cotton clothing, bedspreads, sheets and pillow cases, collars and cuffs, cotton cloth, cotton sheeting, pile fabrics, shoe strings, lace curtains, etc.

(10) J— Jute, Hemp and Flax: Flax straw, fiber towels,

bags and bagging, table damask, linoleum, floor oilcloth, sheeting, straw mattings, etc.

(11) K— Wool and Manufactures of: Wool and hair of

sheep, goats, alpaca and like animals, wool yarn, blankets, robes, webbing, belts, hose, gloves, knit fabrics, underwear, all carpets and rugs, all clothing, wearing apparel, etc.

The World Price Level and the Tariff Price Level 9

( 12 )Lr— Silk and Silk Goods : Sewing silk, plushes, velvets,

ribbons, gloves, handkerchiefs, hosiery, underwear,

all wearing apparel, all other silk manufactures.

( 13 )M— Paper and Books: Printing paper, letter paper,

carbon paper, wall paper, paper board, wrapping

paper, books of all kinds, leather-bound books,

photograph albums, all other manufactures of

paper.

forms of buttons, all manufactures of leather, all

embroideries and everything else not previously

mentioned.

Look about you in your home. There is scarcely a single

article on which the eye can fall that does not bear a Tariff Tax,

Even your sewing machine has been taken off the Free List

and given a Tariff Tax. There is a Tariff Tax on practically

every article of food on your table. This is true also of your

dishes, silverware, cutlery, napkins and tablecloth ; as well as the

table itself, the lighting fixtures above it, and the chairs upon

which you sit. There is no article of clothing on your person

down to the minutest detail which does not bear a Tariff Tax.

The same is true of the house itself and of all the furnishings,

ornaments, and kitchen utensils which it contains — from the

cement in the foundation, the carpets on the floor, the paper

and pictures on the wall, the glass in the window^ the curtains

and shades, the tile in the fire-place, on up to the nails in the

shingles on the roof — all bear a Tariff Tax.

Some rhymester, with a keen sense of the humor and absurdity of the whole situation, has stated the case quite fully in poetic form:

"We are taxed on our clothing, our meat and our bread. On our carpets and cupboard, our table and bed; On our knives and our spoons, on our fuel and lights — We are taxed so severely we can't sleep o'nights.

We are taxed on our hats, our shoes, and our shops, On our blankets and stoves, our brooms and our mops; On our rice and our sugar, and when we must die. We'll be taxed on the coffin in which we shall lie.

We are taxed on all wants by Providence given. We are taxed on the Bible which points us to Heaven; And when we ascend to that heavenly goal.

They will if they can, put a tax on our Soul."

Putting Foreign Goods Over the Tariff Wall 11

CHAPTER IV. Putting Foreign Goods Over the Tariff Wall

The picture on the opposite page gives us a "snap shot" of the importer of Foreign Goods in the act of shifting the Tariff Tax over on the American Consumer.

The Tariff Tax of 100%, which we have assumed our Government had levied on his goods, has already been paid by the importer. He had to pay that before he could land his goods. The foreign cost of his goods, by the time he gets them to our shores, is assumed to be $400 per package. Our importer now has $800 capital invested in each package — $400 in the goods and $400 more in the tariff on the goods.

Now what will he do? We know exactly what he will do. He will add the cost of the Tariff to the cost of the goods — making the price to us $800 instead of $400 — and shove the goods over the wall. He will also add two profits — one on the goods, and the other on the tariff.

This process of shifting the cost of the tariff over on the Consumer holds to the last detail of the billions of dollars' worth of commodities which we annually import. In reference to each bill of goods, and each separate item imported, THE TARIFF Tax Levied by the Government Is Paid by the Merchant Who Brings the Goods Over— and by Him Is Added to the Cost of the Goods— and so is Paid by THE Consumer of the Goods.

Thus do we see that it is not the importer, but the Consumer, who pays the Tariff. And on scores of articles, under the new Profiteers' Tariff, the cost of the tariff will be higher than the cost of the goods. But it will not be listed on our bill as a separate item — so much for the goods, so much for the tariff. If this were done, the inordinate rates in the Fordney-McCumber Tariff would not last a month without producing a revolution. It is a secret, hidden mode of taxation. The people pay it without knowing that it is being paid. Fordney goes on Shakespeare's theory:

"He who's robbed, but knows not of it, IS NOT ROBBED AT ALL."

Price-Fixing Inside the Tariff Wall 13

CHAPTER V. Price-Fixing Inside the Tariff Wall

Having shown that on the outside of our Tariff Wall the first act of those who bring over Foreign Goods is to add the cost of the tariff to the cost of the goods, our artist here shows us what is also taking place on the inside of the Tariff Wall. Therefore, no matter on which side of this towering structure you cast your gaze you behold the same little game — ADDING THE Cost of the Tariff to the Cost of the Goods.

The Only Object in Building a PROTECTIVE Tariff Wall Around This Country is to Increase the Price of Foreign Goods to American Consumers, so that THE American Producer Can Also Increase the Price of His Goods to these Same American Consumers.

If it were not for the fact that High Tariffs, by increasing the price of Foreign Goods to American people, also make possible a parallel increase of price in the competing Home Goods, There Would Be No Protective Tariff Wall Around This Country, or Any Other Country.

Now let us get an exact, scientific statement of the effects of High Tariffs on these two classes of goods. It is this: First, High Tariffs necessitate an increase in price of the Foreign Goods on which they are levied. Second, they make possible an increase of price on similar Home Goods which compete with them. They necessitate the one — they make possible the other. And it is for the sole purpose of making possible an increase in the selling price of Home Goods that all Protective Tariff Laws are passed.

What other purpose could they have in levying such extortionate rates? They are not for the purpose of raising money for the Government. Low-rate Revenue Tariffs do that. Therefore, High Tariffs are levied solely for the purpose of raising revenue for private pockets. And to do this they must increase the price of Foreign Goods, thus making possible a parallel increase of price of the competing Home Goods.

During the framing of a Tariff Bill, Washington is over-run with the lobbyists and representatives of the different "interests." They present to those in charge of the bill a statement showing the percentage rate of increase which they desire to make in the selling price of their products to their American Consumers — and which increase they insist they must have in order to continue to do business. And this BECOMES THE Tariff Rate on their Foreign Competitor's Goods.

This gives us a broader and truer vision of the full significance of Protective Tariffs. We have already seen that the whole stream of Foreign Goods, amounting to some five billions annually, must go up over this towering Tariff Wall, with prices increased anywhere from 25% to 150%. Now we are called upon to form a still larger vision of that huge stream of Home Goods — more than ten times greater — which it is the purpose of the Fordney-McCumber Tariff to increase in cost to us Just the Same as if they also Flowed Over the Tariff Wall, Side by Side With Foreign Goods.

The illustration at the head of the chapter might be thought to imply that all commodities can be produced in this country as cheaply as they can be produced abroad. Hence the reason for marking the whole of the increased price of Foreign Goods, necessitated by our High Tariff Wall, as simply so much additional "profit" given to the Producers of similar Home Goods.

On the other hand, our Tariff Makers have assumed just the reverse. They have assumed that we can produce absolutely nothing in this country as cheaply as it can be produced in foreign lands. The proof that this is their supposition is found in the fact that they have put tariff rates — and on thousands of articles high tariff rates — on practically everything that is produced in this country — everything. Had you never thought of that?

Thus would Mr. Fordney and his followers have us believe that with all our supposed skill, knowledge, education, machinery and inventive genius; that with all our schools, colleges and universities; even the most ignorant, degraded, illiterate and unskilled laborers on earth can produce anything cheaper — and therefore more efficiently — than our own laborers can produce it. And for that reason, undersell us in our own markets. Some tribute to American Labor!

My answer is this: WHILE THERE ARE MANY COMMODI- TIES Which We Cannot Produce as Cheaply in This Country as They Can Be Produced Abroad, There Are Vastly More Commodities Which We Can Produce, AND Do Produce, More Cheaply Than Any

Price-Fixing Inside the Tariff Wall 15

Other Country in the World. Therefore, our artist's illustration is true as to principle, and holds as to detail in reference to the big majority of all our productions.

The proof of the above statement is found in the fact that we exported over $8,000,000,000 worth of goods during 1920. If we could not produce and undersell foreign competitors in their own market, they would not have bought these goods. But if we could undersell them in their own market — after paying the cost of transportation and the tariff in their country — surely we can undersell them here. No sane man will deny that.

A profound analysis thus enables us to divide all our productions into two distinct classes: (1) Those which we can produce more cheaply than we can buy from abroad. (2) Those which we cannot produce as cheaply as we can buy them; and, therefore, which we cannot produce at all without the aid of a Protective Tariff.

The question in reference to the first class of productions can have but one answer: The Added Price Which the Tariff Makes it Possible for Their Producers to Get from Us Is Simply a Bounty, a Bonus. It is tribute, graft, plunder — extortion. No man or woman with any intellectual pride will deny that proposition.

But what shall we say of that second class of goods and products which I myself claim, or admit, can not be produced in this country without the aid of a Protective Tariff? To this also there can be but one answer: Any LINE OF GOODS OR Products Which Cannot Be Produced in This Country Without the Aid of a Protective Tariff— Ought Not to Be Produced At All. And that for the reason that all such goods and products are produced at an absolute economic and financial loss to the country.

To illustrate, the same amount of labor expended in Louisiana in producing corn, cotton or any other ''native'^ product, and traded for sugar, would give far more sugar than it now gives by producing sugar direct. Thus by means of Protective Tariffs we are diverting labor to the least productive sources, instead of employing it in the most productive sources. This unfortunate experiment of trying to produce a Tropical plant in the Temperate Zone has been an economic loss of billions of dollars to the American people. And in the new Tariff the stage is again set for the Sugar Trust to collect hundreds of millions more.