asks that for to-morrow his taxes be made $3 less per $100 than in that same year 1881, he is met with the cry of free trader, and that is considered argument enough.

FREE WOOL.

The minority are firmly convinced that besides the incalculable advantage to the whole country which would result from the placing of wool upon the free list, it is easily demonstrable that no class will suffer, but that each will reap his share of the benefit.

With a consumption of 600,000,000 pounds of raw wool in 1887 and a population of sixty millions, the average per capita consumption is easily reckoned at 10 pounds, or 50 pounds to the average family of five persons, and the northern farmer, constantly exposed to the rigors of our winters, consumes something more than the average.

It requires from 3 to 4 pounds of raw wool to make a pound of cloth, so that from 12 to 16 pounds of woolen clothing for the family will be seen to be a low average. This is now taxed from 55 to nearly 90 per cent. The manufacturer is not benefited, because his finished product comes into competition with the foreign product made not only from untaxed wool, but cheaper wool.

It is reckoned that 3 pounds make a pound of cloth, and when the manufacturer pays 10 cents per pound duty he is supposed to be compensated therefor by the specific duty of 35 cents per pound on his woolen goods. Now, this is on the assumption that 3 pounds of raw wool make one of scoured wool; that is, that the wool shrinks in the cleaning not above 663 per cent.

But many South American and other wools contain more than that proportion of foreign matter, running as high as 75 and 80 per cent. This wool our manufacturer can not buy, because his tax on the cloth would then run from 45 to 60 cents per pound, and his compensatory duty is only 35 cents. Therefore for these wools the foreign dealer finds no American competitor in the market and buys them at his own price, and these cheaper wools, untaxed and manufactured abroad, compete here with unfair advantage with our own heavily handicapped woolens, and successfully, too.

Now, if the tax be taken off wools our manufacturers at once become bidders for this wool against the foreign manufacturer, and as a certain consequence the price will rise, and this operates doubly against the foreign manufacturer. He buys his wools dearer and meets untaxed in our markets corresponding grades.

We will import more wools, of course, and in no other way can our great factories prosper, because their capacity is beyond our own wool production. When the factories are turning out more product the employés have steadier work and better wages and indirectly, of course, the whole country is benefited.

Under the House bill the manufacturers, with free wool, secure even a higher competitive advantage over the foreign than under the present

law or the substitute. The manufacturers will export woolen goods as we now export cotton and leather, and the demand for the wool will better the wool market and encourage increased production, while the average wool-grower himself will reap from cheapened clothing more benefits than he ever did from a tax on his product, which he must himself pay.

The minority, therefore, dissenting from the report of the majority, commend to the Senate and the country the bill of the House of Representatives, No. 9051, as a measure for the reduction of taxes based alike upon justice and good policy.

As the best exposition of the effect of bill H. R. 9051 upon taxation and revenue, the report of the majority of the Committee on Ways and Means, submitted with the bill to the House of Representatives, is hereto appended, with our concurrence.

ISHAM G. HARRIS.
Z. B. VANCE.
D. W. VOORHEES.

I concur in the above report, indorsing the House bill in respect to articles placed upon the free list, but desire some modifications in the dutiable list.

J. R. MCPHERSON.

House Report No. 1496, Fiftieth Congress, first session.

TO REDUCE TAXATION AND SIMPLIFY THE LAWS IN RELATION TO THE COLLECTION OF THE REVENUE.

APRIL 2, 1888.-Committed to the Committee of the Whole House on the state of
the Union and ordered to be printed.

Mr. MILLS, from the Committee on Ways and Means, submitted the following report (to accompany bill H. R. 9051):

The Committee of Ways and Means, to whom was referred the annual message of the President, calling the attention of Congress to the large surplus now in the Treasury, daily growing larger on account of the excess of receipts over expenditures, have given to the subject that careful consideration which its importance demands, and in response to his recommendations beg leave to report to the House a bill to prevent the accumulation of surplus revenue by reducing the present excessive and unjust rates of taxation imposed upon the people.

Our revenues for the fiscal year ending June 30, 1887, amounted to $371,403,277.66, while our expenditures for the same time, including interest and sinking fund for the public debt, amounted to $315,835,428.12; leaving a surplus of $55,567,849.54 over and above all requirements for current expenditure. The receipts for the current year up to March 1 amounted to $253,905,890, and the estimates for the remaining four months are $136,094,110; making total receipts for the year $390,000,000. The expenditures for the current year to March 1 amount to $180,594,915, and the estimates of expenditure for the remaining four months amount to $128,405,085; making a total of expenditures of $309,000,000; leaving a surplus of $81,000,000.

As our customs and internal taxes are levied on articles which go into consumption, we may expect our revenues to increase with the increase of consumption, which must keep pace with the growth of popu lation and wealth. On the other hand, with an honest and economical administration of public affairs, our annual expenditures may be expected to decrease. The large surplus now in the Treasury, which it is estimated will exceed $150,000,000 by the 1st day of July next, together with such as may thereafter be in the Treasury, may be applied to the reduction of the debt and the payment of annual interest charge on the

same.

It is, then, safe to say that the above surplus, together with the yearly purchase of bonds required by law for the sinking fund, which is an expenditure included in the annual estimates of expenditures, and not in the estimate of the surplus, will extinguish by the date of their maturity in 1891 all the outstanding 4 per cent. bonds, amounting at this time to $234,427,250, and still leave over $60,000,000.

With receipts growing larger and expenditures growing smaller, we must soon gather into the Treasury the larger part of the circulation or

the country to the great injury of its business and the bankruptcy of many of its people. Some method must be adopted by Congress to prevent the congestion which must occur under existing laws. be

There are two ways in which this excessive accumulation may, prevented. We may reduce taxation to the level of expenditures and leave in the pockets of the people all moneys not needed for public pur. poses, or we may raise expenditures to the height of taxation, seeking out new and useless objects of appropriation on which to lavish the great and growing revenues, not needed for any legitimate wants of the public service.

If we adopt the latter course these very objects of useless expenditure will gather upon Congress in such increasing numbers and with such growing demands as to fasten upon the Government a permanent and unchangeable policy of extravagant and reckless appropriations.

This policy once adopted will not only breed corruption in public life and demoralization in private life, but will compel, in periods of depres sion, an increased rate of taxation for the people or an increase of bonded debt for the Government.

There is but one safe course, and that is to reduce taxation to the necessary requirments of an honest, economical, and efficient administration of Government. Having determined upon this course as the one which a wige and just policy demands, we are confronted with the question, Upon what articles shall the reduction be made? Shall we leave our import duties as they are and repeal the internal-revenue taxes on alcoholic liquors and tobacco? Or shall we leave the internalrevenue tax as it is and make the reduction on imports alone? Or shall we reduce the taxes on both?

The committee have determined to recommend a reduction of the revenues from both customs and internal taxes. They have given the whole subject a careful and painstaking examination, and in the revision of the schedules have endeavored to act with a spirit of fairness to all interests. They have carefully kept in view at all times the interests of the manufacturer, the laborer, the producer, and the consumer.

The bill herewith reported to the House is not offered as a perfect bill. Many articles are left subject to duty which might well be transferred to the free list. Many articles are left subject to rates of duty which might well be lessened. In both respects the bill could be improved; but in its preparation the committee have not undertaken or felt authorized to construct a new and consistent system of tariff taxation. They have dealt with the existing system, seeking to free it of much of its injustice, to simplify its provisions, to diminish its complexity, and, as far as practicable, to lighten its pressure on the taxpayer, and make it more contributory to our industrial prosperity and progress.

Furthermore, we have felt constrained to consult the opinions and give weight as far as possible to the views of our associates from different parts of the United States, always subordinate, however, to the paramount consideration of the welfare of the entire country. From the beginning of our Government tariff legislation has been based on the principles of mutual concession. The present bill does not depart from this precedent.

In the progressive growth of our manufactures, we have reached the point where our capacity to produce is far in excess of the requirements of our home consumption. As a consequence, many of our mills are closed, and many of those still in operation are running on short time. This condition is hurtful to the manufacturer, to the laborer, and pro

ducer of the materials consumed in manufacture. The manufacturer loses the profit on his capital, the laborer loses his wages, and the producer of the materials consumed in manufacture loses the market for his products. Manufacturers, in many instances, to guard against losses by low prices caused by an oversupply in the home market, are organizing trusts, combinations, and pools to limit production and keep up prices. This vicious condition of business could not exist with low duties, but is the legitimate outgrowth of prohibitory duties on imports. Prohibitory tariffs surround the country with lines of investment and prevent all relief from without, while trusts, combinations, and pools plunder the people within.

In a country like ours, prolific in its resources, where the rewards of labor ought to be large, the capitalist may by such methods keep his investment secure and still make profits, but what is to become of the laborers who are thrown out of employment by stopping the wheels of machinery and limiting the amount of product? And what is to become of the producer of the materials to be consumed by the manufacturer? When the fires are shut off, the laborer and the materials are shut off at the same time, and the market for both is gone; whether they labor in the factory or the field; whether they produce cotton, wool, hemp, flax, coal, or ore; whether the product of their daily labor is cloth, iron, steel, boots, or shoes, they must have constant employment to obtain for them. selves and families the necessaries and comforts of life.

When out of employment, with earnings cut short, with low prices for their products caused by the closing of the market, they still must pay for whatever their daily wants require the prices which the trusts have fixed. What is the remedy for this wrong? It is more extended markets for the sale of our products and a constant and active competition in business. With active competition combinations and pools are impossible. With the markets of the world open to us our manufacturers may run their mills on full time, give constant employment to their laborers, with a steadily-increasing rate of wages. With the markets of the world open to the sale of their products they will create an active and constant demand for all the raw materials required in manufactures, which will stimulate, promote, and reward the wool-grower and the producer of cotton, bemp, flax, hides, ores, and other materials of manufacture. We are the largest producers of cotton in the world, we are second in the production of wool, we put on the market annually quantities of hemp and flax, and our country is full of ores and coal. What we need is manufactures enough to consume all the annual product of these materials, and create an active demand for them, so that all our workmen may be constantly employed and receive high prices for their labor.

To accomplish this our manufacturers must have markets for the sale of their wares, and these markets are to be found in foreign countries as well as at home. To take the foreign market from the foreign manufacturer, we must produce our goods at a lower cost than he can. The principal elements of cost are labor and material. In many of our manufactures the labor cost is lower than in any country in the world, and if the cost of materials were as low here as in foreign countries we could produce our goods more cheaply than they, and largely increase our exports to foreign markets.

The annual product of our manufactories is now estimated at $7,000,000,000, of which amount we export only about $136,000,000, or less than 2 per cent. If we could obtain free of duty such raw ma terials as we do not produce and can only be procured in foreign coun