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As already shown, there is an acknowledged scarcity of "skilled," and, to a certain extent, of unskilled labor in the country. An increased production, therefore, necessitates an increased demand for labor, which, in accordance with the universal law of supply and demand, must be followed by an increase of wages, even if the advance of prices on which the increased production is based did not itself compel the workman to this course. A general advance in the tariff, as a measure of relief to the manufacturer, must, from the very necessity of the case, therefore, in a short time neutralize itself and Icave the producing interests in a condition no better than before. That such was the result following the great advance of the tariff of 1864 is almost the universal testimony received by the commissioner from all parts of the country, and is indirectly substantiated by the fact, that notwithstanding the advance then given was regarded as highly protective, the representatives of the producing interests of the country, although the taxes have since 1864 been to a considerable extent decreased, and an additional supply of labor through the disbanding of the army been rendered available, are now more urgent than ever before for a further increase in the rates of duty.

The following table illustrates the extent of the advance of the tariffs of 1864 and 1865, as compared with the tariff of March 2, 1861, on some of the principal articles of importation :

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Tariff of March 2, 1861. Tariffs of 1864 and 1865.

Specific.

Specific. Cotton, plain, unbleached.

per sq. yard. 1 cent

5 ceats. spool..

30 per cent

6 cents per dozen and

30 per cent. Iron, pig...

per ton.... $6..

$9. railroad

.do..
$12.

$15 68. rolled or hammered

per cwt.. $1.

$1 40.
boiler or other plate
per ton.. $20.

$33 60. locomotive tires, or tire iron,.

it cent.

3 cents. cables and chains...

do..
17 cent.

2 cents.
anvils

17 cent.

2 cents. Linens, brown and bleached.

25 per cent.

35 per cent. Potatoes

per bush..
10 cents

25 cents. Rice, cleaned.

1 cent.

2 cents. Salt..

per 100 lbs. 7 cents..

18 cents. Silk, in the gum...

15 per cent.

35 per cent. floss

20 per cent.

35 per cent. Silks, not over $1 per square yard.

20 per cent.

60 per cent. Silk ribbons and various manufactures of silk.

30 per cent.

60 per cent. Tapioca...

10 per cent.

20 per cent. Woollen cloths and manufactures, value $1 and under, 12 cents per lb, and 25 24 cents per lb, and 40 per square yard.

per cent.

per cent. Wool, value 18 to 24 cents per pound....

3 cents per lb.

6 cents per lb. Delaines, cashmeres, &c., (gray or uncolored,) exceeding in value 40 cents per square yard...

25 per cent.

45 per cent. Flannels, valued above 30 cents per square yard

30 per cent...

24 cents per lb. and 35

per cent. Bunting and manufaciures of wool not specified.. 30 per cent...... 50 per cent. Carpets, Wilton, Saxony, Axminster, &c., value $1 25 or under per square yard.

40 cents per square yard. 70 cents per square yard. Carpets, Wilton, Saxony, Axminster, &c., value over $1 25 per square yard.

50 cents per square yard.' 80 cents per square yard, Carpets, Brussels and tapestry.

30 cents per square yard, 50 cents per square yard. treble ingrain and worsted chain..

25 cents per square yard. 40 cents per square yard.

AVERAGE RATES OF DUTY UNDER EXISTING TARIFF.

The commissioner would next ask attention to the average rate of duty imposed by the present tariff (in gold) on the invoiced value in gold of the dutiable goods imported into the United States during the fiscal year ending June 30, 1866. This will appear from an examination of the following table to have been 48.58 per cent. :

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+Iron, pig,

66

Amount of duties received ...

$179, 046, 630 Percentage of duties to dutiable imports 48.58* per cent. Percentage of duties to total imports 43.19* per cent.

On many of the articles of ordinary consumption the rate of duty imposed is considerably in excess of the general average, as above given.

The following table shows the relation of the rates at present levied and collected on a variety of leading importations to the invoiced values : Silks, and various manufactures of silk ,

60 per cent Spool cotton, equivalent to..

64-74 per cent Gum copal, equivalent to.

over 100 per cent. Files,

52 to 581

.52 bar, (common,) equivalent to

.681 small, round and square, equivalent to.

..77 hoop,

.73 band,

..64 refined,

.58 to 861 best Yorkshire,

.361 to 403 best English boiler plates,“

33 sheet, No. 11 to 20 wire gauge, equivalent to.

.55 Steel, extra cast, equivalent to..

415 blister

.33 to 44. third quality spring, equivalent to.

.691 tyres for locomotives,

. 45. To these rates, freight, insurance, commission, &c., must be added, thus to some extent increasing the duties above the rates here given.

In view of this statement, it would seem obvious that an increase of duties, carrying up the rates, average and special, to a greater degree than those now

As a matter of interest in this connection, the following table, showing the average rates of duty on dutiable importations under the various tariffs from 1821 to 1861, inclusive, together with the gross revenue derived therefrom, is presented:

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1 These estimates are based on gold prices on board ship at Liverpool, October, 1866. exchange being reckoned at ten per cent. premium.

existing, and contributing thereby to an increase of prices, must give to any tariff such elements of weakness as to render it unstable, thus exposing the manufacturing and producing industry of the country to an evil which past experience has taught it specially to dread ; for certainly, next to positive hostile legislation, nothing is more damaging to the manufacturing interests of the country than instability in tariff legislation.

Finally. The investigations of the commissioner tend to the conclusion that an increase of the rates of duty on importations, equivalent to those given in the House Bill No. 718, would reduce, through a prohibition or reduction of importations, the gold resources of the national treasury to a point beyond what it would be either safe or expedient, and militate against the practicability of a continued reduction of internal taxation.

It may, however, be urged that an increase of the tariff at the present time, even if it should benefit the manufacturers to a less extent than what is expected and desired, would nevertheless, by increasing wages, increase the ability of the laboring classes to consume, and would also stimulate an emigration of skilled labor from other countries. To this it may be replied that the facts submitted in this report fully confirm a generally acknowledged principle in political economy, viz., that an increase in the price of labor follows and rarely or never precedes an advance in the price of commodities; and that although there has been a large absolute advance in the prices of labor since 1862, yet the advance on the whole has been greater during the same time in the price of commodities; and that through the decrease in the purchasing power of wages thus occasioned, the American laborer has not been relatively benefited by his increase of wages, but is in reality in a worse condition than he was before the war. *

The commissionner further maintains that a continuance in the present condition of things, so far from holding out any inducement to an emigration of skilled labor from other countries, in fact tends to repel such emigration. Investigations made under his direction indicate that skilled labor, taking the relative prices of commodities and of rents into consideration, is equally well or better paid in many departments of industry in Great Britain at the present time than in the United States. In some instances the evidence to this effect is conclusive.

Further confirmation of this point is also to be found in the fact, that within a comparatively recent period skilled laborers in the manufacture of metals have visited the United States with a view of engaging in their special industries, but after investigation have returned, feeling convinced that the wages obtainable at home, though nominally less than in this country, were, taking all things into consideration, in reality equal, or greater.

The question at issue, in the opinion of the commissioner, is not one legitimately involving any discussion of the principles of either protection or free trade. On these points the policy of the nation may be considered, for the present at least, as definitely settled. With a tariff averaging nearly fifty per cent. in its rates, free trade in any form is simply an impossibility. Neither is it believed that any considerable portion of the people of the country are in favor of the adoption of “free trade” in the European sense, even were the necessities of the treasury far less urgent than at present. But the simple question now at issue is, what course of policy can best be pursued which will bring back most rapidly the country to its normal condition of industry and development. If it be urged that an increase of tariff is calculated to effect this result, it is replied, first, that the present tariff rates are already of an extreme character, and that any legislation in the same direction must necessarily soon reach a limit, unless the country is prepared to adopt the policy of entire prohibition and commercial non-intercourse ; and, secondly, that if a tariff whose average rates (nearly fifty per cent.) are higher than have ever been levied by the United States, or by any other civilized nation in modern times, fails to be reasonably protective, the remedy should be sought in removing the causes which have neutralized its protection, rather than by increasing the average of the duties.

* In confirmation of this statement, the commissioner would refer to the results of a careful examination, made at his instance, into the relative advance in the price of commodities and of labor, in a manufacturing town in the centre of a large agricultural producing region-the town of Canton, Stark county, Ohio. This result showed that while the advance in wages employed in the manufacture of agricultural machinery was from fifty-five to sixty per cent. in November, 1866, as compared with the same month of 1860, the advance in the cost of living, as deduced from the prices of sixteen of the leading articles of domestic consumption, viz., flour, corn-meal, buckwheat-flour, beef, butter, eggs, lard, potatoes, apples, chickens, dried apples, coffee, sugar, sirup, calicoes, and muslins, showed an average increase of about one hundred and thirty per cent.

Improvements in the processes of manufacture and agriculture ought, and in a normal condition of affairs would, tend to increase the comfort and add to the prosperity of the mass of the people. It has been proved that in no other recent period have there been so many of such improvements. They should give to the country the power of increasing its production so much per capita as to enable each producer, with the expenditure of the same time and amount of labor as in 1860, to realize for himself the same amount of comfort and prosperity, and at the same time to pay his proportion of the taxes. That such has not been the result can be attributed only to the unwise legislation by which the burden of taxation has been unequally distributed, and the problem now to be worked out is to distribute the burden so as not to impede that absolute increase in the production of the country which should be the result of improved tools and better methods.

The point cannot be too strongly insisted upon that, in order to extend our markets by the export of finished products, rather than of raw materials, and thereby to give employment to the largest amount of labor in our own country, the cost of commodities and of labor must both be reduced, and such direction must be given to the legislation of the country as to relieve from the burden of taxation, as far as possible, the commodities used by the laborer, either for his own consumption or as the tools and implements by which he gains his wages. It has been proved that during the past four years the cost of living has, on the whole, increased in a greater proportion than the wages of labor; no proposition ought, therefore, to be made or entertained for a moment tending to a reduction in wages, unless accompanied by such measures as shall reduce the prices of commodities in a much greater ratio, and thus give to the laborer the power to purchase, with a less nominal amount of money, more of the necessaries and comforts of life.

In view of these several conclusions, the commissioner, therefore, recommends that the relief now unquestionably needed and sought for by the producing interests of the country, should be mainly given by Congress through a reduction of taxation on the raw materials indicated, and on the machinery and results of domestic industry, rather than by an extensive and large increase of the rates of duty on importations. Such legislation, coupled with an early adoption and adherence to some fixed policy, looking, through contraction, to the resumption of specie payments, would, in the opinion of the commissioner, by decreasing the cost of production and increasing the purchasing power of Wages, go very far toward diminishing the evils which now tend to arrest the development of the trade, industry, and commerce of the country.

At the same time, in view of the very decided expression of opinion in respect to the tariff by the House of Representatives at its last session, which the commissioner feels that he has no right to disregard, and in view, further, of the fact that, during the present transition state of the national finances consequent upon funding, and upon the adoption of measures looking to the resumption of specie payments, the industry of the country is threatened with disturbances for which the manufacturers and producers ought not to be held responsible, an increase of the tariff on some articles, as a measure of temporary expediency, is also recommended. Such an increase, in the opinion of the commissioner, should, however, be extremely moderate, and should have regard, first, to the interests of the revenue, and, secondly, to the supplying of such deficiencies in the existing tariff as are due especially to a want of proper adjustment between the rates of imposts and those of the internal revenue, or to a failure heretofore to sufficiently recognize the relation that exists between the market value of certain articles and the cost of the labor entering into their production.

As respects the House bill No. 718, now before the Senate, the commissioner respectfully asks of Congress its reconsideration, inasmuch as he believes it to be exorbitant in its rates, tending to further inflation of prices, destructive of revenue and of what little of foreign commerce yet remains, and prejudicial to the general interests of the country. And, in confirmation of these conclusions, he would add that admissions have been made to him by representatives of many of the producing interests of the country likely to be affected by this bill, that the rates of duty imposed by it are higher than are necessary for the adequate protection of their interests.

In conformity with the principles adopted in this report, and in accordance with the instructions of the Secretary of the Treasury before cited, the commissioner herewith presents the form of a bill, designed to be sufficiently comprehensive and complete, to allow, if adopted by Congress, of the repeal of all the numerous and complicated laws under which rates of duty on imports are now levied and collected.

He would further ask attention to the following statement of reasons for the rates recommended in the form of bill presented, and of the results of his investigations touching the relations of the existing and proposed tariffs and the internal revenue, to some of the great leading industries of the country; the principal classes of articles included under the tariff being considered separately.

TEAS, COFFEE, SUGARS, SPICES, WINES, LIQUORS, CIGARS, AND TOBACCO.

In entering upon a revision of the tariff, the first consideration of importance at the present time “is to provide for a large, certain, and permanent revenue." To accomplish this, it is necessary to select certain articles of extensive and regular importation and consumption, of standard prices, and not easily smuggled, which, through the duties imposed on them, may be always relied on as sources for a definite amount of revenue.

The articles which our own experience, and the experience of other countries, have shown to especially answer these conditions, are teas, coffee, sugars, spices, wines, and liquors. From the first four of these classes of articles, the commissioner estimates that the revenue is now aceruing (and likely to continue to accrue, provided the rates of duty remain unchanged) at the rate of from fortyfive to fifty millions of dollars per annum—the current importations and consumption being in adrance of the estimates made by the revenue commission in their report of February, 1866.

By the House bill No. 718 the duties on tea and coffee are reduced fifty per cent., thus entailing a prospective loss of from eight to ten millions of dollars per annum in the customs receipts from these sources. This measure appears to have been very generally received with favor, on the ground that, as these articles are of almost universal consumption, an abatement of taxation upon them would result in special and direct benefit to the masses. That such a conclusion is fallacious, and that the effect will be in fact the reverse of what is anticipated, is, however, in the opinion of the commissioner, evident, for the following reasons: No principle in the economy of taxation, as has been already

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