at a low rate of duty, the importation of much manufactured iron would be rendered unnecessary, inasmuch as many kinds of such iron could then be made cheaper at home than they could be imported.

At present nearly all the scrap-iron which accumulates in various parts of the world finds its way to Great Britain, because it is there admitted free of duty; and the direction thus given to this material is not unimportant in determining the course of commerce as respects other and more valuable products.

Instances have been brought to the attention of the commissioner where contracts for machinery for the West Indies and South America have been diverted from the United States by reason of the inability of the American manufacturer to receive old iron in part payment on account of the existing high rate of duty upon it. Cases have also been brought to his notice in which American ships have been obliged to take in ballast at an actual expense, when they might have earned freight by carrying scrap-iron.

STEEL-On steel much higher rates of duty than those recommended upon iron are submitted. Although these rates seem much higher, and are protested against by not a few American consumers of steel, yet the evidence presented to the commissioner tends to establish the fact that if any less are granted the development of a most important and desirable branch of domestic industry will, owing to the present currency derangement and the high price and scarcity of skilled labor, be arrested, if not entirely prostrated. This is claimed to be more especially true in regard to steel of the higher grades or qualities. It is also represented to the commissioner that since the introduction of the manufacture of these grades of steel in the United States, or since 1859, the price of foreign steel of similar qualities has been very considerably reduced through the effect of the American competition; and that the whole country, in this way, has gained more than sufficient to counterbalance the tax levied as a protection for the American steel manufacture which has grown up under its influence.

Under these circumstances, therefore, the commissioner submits to Congress the increase of duties asked, and the general argument in support of the same, without making any recommendation.

COAL.

The cost of its coal is one of the most important economic questions in any country. Upon it mainly depends the cost of warming, cooking, and illumination; while in a commercial and manufacturing country it regulates the cost of steam and of iron. It is, therefore, for the interest of the great mass of the people that coal should be cheap and plentiful. On the other hand, the interests of the coal owners and miners, and of the persons and corporations engaged in transporting it to market, are not to be overlooked or disregarded. It is, moreover, of no practical importance how great is the number of square miles of coal-fields contained in any region, unless labor and capital can obtain a fair return for the work of developing them; besides which, in order for mining to be profitable, the coal must be within reach of a market.

The material prosperity of Great Britain, it is admitted, depends substantially upon her coal-fields, and is involved in their duration. They cover an area of twelve thousand square miles; but of these only six thousand one hundred and ninety-five are reported as workable. The product of the British coal mines for the year 1865 was about ninety-three millions of tons.

The area of coal-fields in the United States is upwards of two hundred thousand square miles, yielding a product in 1865 of about twenty-two millions of tons. Of this product about one half may be considered as anthracite and one half bituminous coal.

The price of coal in Newcastle, England, is now about two dollars per ton, gold, delivered on board of vessels. The average price of coal at Pittsburg,

Ex. Doc. 2- -5

Pennsylvania, a city similarly situated for supply, from 1859 to 1866, has been as follows: from 1859 to 1862, one dollar and twelve and a half cents per ton, (gold;) 1862 to 1864, one dollar and ninety-six cents per ton, currency; 1864 to March, 1866, two dollars and eighty cents per ton; while from March, 1866, to the present time, the price has averaged about two dollars.

So far as the general interests of trade are concerned, anthracite and bituminous coals may be grouped together. The price of one to a great degree regulates the price of the other, because for manufacturing iron, generating steam, and for household purposes, either will be used indifferently, according to the cheapness of its cost. We have already stated that the production of each of these coals in this country is about equal. In anthracite there is no competition: the whole country must look to Pennsylvania for its supply. But in bituminous coal the conditions are different. New England depends mainly on the adjacent coal-fields in the British provinces; New York receives a portion of her supply from the same quarter, the balance being obtained from England, and from Pennsylvania and Maryland; Philadelphia and Baltimore are substan tially stocked from the mines of the states in which they are respectively situated; and the Valley of the Mississippi, as far down as New Orleans, is mainly furnished from the coal-beds of Pennsylvania and Western Virginia.

While the fullest tabular statements can be obtained in relation to anthracite coal, it is not easy to obtain reliable tables of the value of bituminous coal in these various markets for a series of years. Coals of the same grade, in the year 1865, cost eight dollars and fifty cents in Boston, nine dollars in New York, cleven dollars in Philadelphia, seven dollars in Baltimore, and two dollars and eighty cents in Pittsburg; but during the past year the price in all of the Northern seaboard markets has been somewhat affected by the duty, in goid, of one dollar and twenty-five cents per ton levied on provincial coals by the expiration of the reciprocity treaty in March, 1866. In Boston, provincial coal has averaged, during the past year, about eight dollars and fifty cents per ton; while Cumberland coal (Maryland) in the same city has been worth about eight dollars and twenty-five cents. In New York, provincial coals have averaged nine dollars and a half, and Western Pennsylvania about ten dollars per ton. The cost of freight of Western Virginia coals has been from eight to ten dollars per ton to New York. It should be here noted, however, that coastwise freights have ruled at so low a rate during the past season that the legitimate effects of the duty levied on provincial coals are not yet apparent. In Philadelphia and Baltimore prices have ruled lower than in 1865, while, in respect to the Valley of the Mississippi, the rates, beginning at Pittsburg, are reported as follows: Pittsburg, two dollars per ton; Cincinnati, three dollars and thirtyeix cents per ton; Louisville, Kentucky, three dollars and fifty cents; Cairo, Illinois, four dollars and forty-eight cents; New Orleans, six dollars and seventytwo cents per ton.

The great difference between the prices of coal in the interior and on the seaboard is caused by the superior facilities for distribution afforded by watercarriage. No Pennsylvania or Maryland coals can be distributed on the seaboard without in the first place paying large tolls to the railroads which transport them. By a recent report of the trustees of the Philadelphia gas-works it appears that, upon a purchase of coal amounting to upwards of one million of dollars, more than six hundred thousand dollars of the amount was paid in tolls to the Pennsylvania railroad company; while, during the past year, the Peunsylvania Westmoreland mines, situated west of the Alleghanies, have paid for the transportation of their coals to the city of New-York not far from eight dollars per ton.

Proceeding to our analysis of the items which make up the cost of coals at these various points, it may be sufficient, without entering into further particulars, to examine prices in New York and Boston. As regards Boston, taking the average of the present season, we find that Cape Breton and Pictou coals

have cost at the mines an average of two dollars in gold per ton; to this add for duty, also payable in gold, one dollar and twenty-five cents, and we have a cost of three dollars and twenty-five cents goid, which (at fifty per cent. premium) is equal to four dollars and eighty-eight cents per ton; add further to this amount three dollars and sixty-two cents for commission, freight, and insurance, and we have the price as before stated. In New York, taking the same provincial coals at the same cost for coal and duty, we have for freight, insurance, and commission, a currency-margin of four dollars and sixty-two cents. With the Pennsylvania coals, costing ten dollars per ton, we have two dollars as the original cost of the coal, with eight dollars for carriage and expenses. Newcastle coals selling for ten dollars and fifty cents we have the original cost of the coal, two dollars in gold, and the duty one dollar and twenty-five cents in gold, leaving a balance of five dollars and sixty-two cents for freight and other charges.

It is apparent, therefore, from these figures, that the American coal-miner obtains less for his coal than the foreign coal costs at the port of shipment, and that the large cost of the article at the seaboard is caused by the expense of transportation.

The following table exhibits the course of trade in foreign coal from 1855 to 1865, inclusive, and covering the period of the reciprocity treaty with Great Britain:

During this period the production of domestic coal has rapidly increased, and has amounted (as has already been stated) during the year 1865 to about twenty-two millions of tons.

We come now to a consideration of the important question whether the cost of the coal mined in Pennsylvania, Maryland, and Virginia, should be enhanced by the amount of duty to be levied upon foreign coal? Will such a duty inure to the benefit of the coal-miner and owner, or to the persons employed in the transportation of the coal to the market? or will it have the effect to extend the use of those coals to new markets heretofore beyond reach?

Again is the present duty of one dollar and twenty-five cents in gold oppressive to the great interests of the country?

Or, supposing that the rate of one dollar and twenty-five cents in gold is insufficient to extend the use of the coal mined in the middle states over the whole length and breadth of the Union, is it for the advantage of the great mass of consumers and tax-payers that a rate of duty should be levied sufficient for that purpose?

In illustration of the points here stated, let us consider the manufacture of iron. Foundries and other iron works have been built in most of the States of

the Union. Is there any reason why a furnace in Maine or Georgia should have the cost of its iron increased by a duty on the coal which it consumes, or by the cost of transportation from Pennsylvania, while the Pennsylvania manufacturer has his coal at his own door, cheaper, at least, by the cost of its transportation? Is it wise to adopt a policy which inevitably tends to concentrate so important a manufacture as this in a single section of the country?

That the American coal proprietor obtains a sufficient price for his coal is evident from the prices which prevail in the markets where there is no competition. He supplies the Ohio and the Mississippi and their tributary streams, and through all the territory which they water, with coal at a less expense than on the seaboard. He received no more for his coal at the mine in 1866, with a duty on foreign coal of a dollar and twenty-five cents in gold, than he did in 1865, when provincial coal was free. It has been no boon to him that New York and the New England States have had the cost of their bituminous coals increased more than one-half a million of dollars in currency value paid in the form of duties.

If the miner has not received the benefit from this protection, it must have inured to the benefit of the transportation arrangements. If, however, neither the miner nor the transportation company has derived any benefit from it, the duty has been of no avail as protection.

The object of a duty is either revenue or protection. A smaller duty would increase the revenue by increasing importations. The present duty does not seem to have afforded protection.

It is, perhaps, unnecessary to recapitulate here the well-known arguments for making coal free of all duty. The manufacturing industry of any country, to be permanently successful, must be based on cheap raw materials; and if there be any article, then, that should be exempted from taxation-both internal and customs and afforded at the cheapest possible rate to all consumers, it is coal. Every person in this country has a direct interest that his house shall be warmed and lighted at the lowest cost and that his food shall be cheaply cooked; while cheap steam and cheap iron are essential if the country is to maintain its position with other and competing commercial and manufacturing nations.

The commissioner, therefore, having in view the general welfare, rather than any special interest, recommends that the duty on coal be either entirely removed or placed at the lowest point consistent with the requirements of the treasury for revenue.

drugs, dyes, CHEMICALS, PAINTS, OILS, AND MEDICINAL PREPARATIONS.

On no portion of the tariff has there been a greater necessity for careful revision than the department which includes drugs, chemicals, paints, oils, &c., and upon none has greater labor been bestowed. Many hundreds of articles have been carefully examined in respect to their prices, sources, and nature of supply, and their relations to the industry and wants of the country. The new arrangement which has been adopted in the classification of these articles will also, it is believed, tend to facilitate reference, both on the part of the officers of the revenue and of the public interested in their importation. Specific duties have also been substituted for ad valorem to a very considerable extent.

LUMBER.

The principles recommended as the basis for determining the duties upon railway iron and coal apply with equal or even greater pertinency to lumber, it being for the interest of the great majority of the people that their houses, factories, fences, vehicles, furniture, cars, ships, and machinery should be cheap rather than that the lumber production should be especially favored. Besides, the acknowledged fact that the sources of supply of American lumber are diminishing

with ominous rapidity is in itself a demonstration that no special protection is needed for this interest; for from this cause prices must continually tend to increase, and will probably never fall below what is sufficient to afford a fair remuneration to those engaged in this industry. A wise foresight would, therefore, seem to dictate that we should now husband our national resources of this raw material, and look to other countries to as great an extent as possible for supplies, rather than hasten by legislative stimulus the period when the domestic supply of this indispensable article shall be exhausted.

The commissioner would, therefore, recommend that the principle of exempting lumber from taxation, which has from the outset been observed under the internal revenue system, be applied to the customs, and that manufactured lamber be hereafter admitted free, or at very low rates of duty.

SALT.

An increase of duties on salt, with higher prices for this article, must directly affect the packing and preservation of beef, pork, and fish, increase the price of food to the masses, and further restrict the exports of these great staples of our commerce. It is, therefore, recommended that the relief needed by the salt manufacturing industry be given by a repeal of all internal revenue taxes on the same, rather than by an increase of the tariff, which is now nearly one hundred per cent. in advance of the tariff rates of 1861. A reduction of the rates of duty on lumber and on coal would also undoubtedly prove of marked advantage to this special industry.

FLAXSEED, AND LINSEED OIL.

On flaxseed, or linseed, and on linseed oil, a large advance is respectively asked. Without going into a detailed examination of this subject, the commissioner would call attention to the following facts: For some years previous to the war, the price of flaxseed averaged from one dollar to one dollar and twentyfive cents per bushel; the same article now readily commands in the New York market three dollars per bushel. Linseed oil, which previous to 1860 ranged from sixty to sixty-five cents per gallon, now sells at one dollar and forty cents. The commissioner has seen no evidence which induces him to believe that the business of growing flaxseed, especially when coupled with the demand which now exists for the lint of flax, is not remunerative; while on the other hand the high price has restricted the consumption of oil, and tends to a great enhancement of the prices of the manufactured articles of which it is an essential component. It is his opinion, therefore, that the interests of the revenue and of the country generally would be best promoted by leaving the existing tariff rates on flaxseed, and linseed oil, unchanged.

PAPER.

No change in the existing duties on paper is recommended, except the equalization of the duty on printing paper, sized and unsized. Although the manufacture of paper has been probably one of the most profitable industries* in the United States during the past four years, yet the existing rates of duty do not, at present, forbid large importations, both of writing and of printing papers.

*An examination of the returns of the incomes paid by persons and firms interested in the manufacture of paper, in a single collection district of the United States, for the year 1865-'66. gives the following results:

Total income of ninety-nine persons, firms and corporations, $948,988. Of these, one corporation reported an income of $178,000, and ten individuals an aggregate of $314,000; being an average of $31,430 each.