Name.

Price per yard of Leeds (England) woolen and mixed goods, duties, etc.

This table is well worthy of careful study. In examining the figures given in the column headed "Price at factory" and the column headed "Per cent. of price at factory," which the total duty amounts to, the startling inequalities in the rate of duty to be paid in this country becomes apparent. The highest-priced goods named in the table is West of England broadcloth, worth $3.60 per yard in Leeds, the specific duty being 35 cents per pound and the ad valorem duty 40 per cent., making a total duty of 50.3 per cent. on the value at the factory. This is on a high grade of goods. In looking at the bottom of the table the last entry is for cotton-warp reversible cloth, made in imitation of a better kind. It is worth but 45 cents per yard at the factory. The specific duty is the same as on the West of England broadcloth, 35 cents per pound, the ad valorem duty is 35 per cent., but the specific duty and the ad valorem duty together make the rate on the price at the factory 180.7 per cent. That is to say, the cheaper the goods at the factory the greater is the proportional increment of duty. The column headed "Per cent. of price at factory," which shows the percentage that the duty is of the factory price, brings this out clearly.

The above table shows the true nature of specific duties, and the consumer can see why it is that manufacturers clamor for them. They know the different values of these goods, and what apt words will embrace the high and low priced together, and make the poorer people pay the same tax for a yard of cloth worth 45 cents that the wealthy do for a yard that costs $3.66; but that fact the specific tariff conceals. The ad valorem rate taxes everything according to its value. A duty of 40 per cent. ad valorem would have imposed a tax of $1.44 on the yard of broadcloth and 18 cents on the cotton-warp cloth that cost 45 cents, and the duty would have been fair to both. As it is, the tax is 180 per cent. on the cheap cloth and 50 per cent. on the high-priced broadcloth.

In the cotton-goods schedule we see the same "vicious, inequitable, and illogical" results of the specific duty. As an illustration, we refer to the report of the Secretary of the Treasury on the revision of the tariff, February 16, 1886, pages 84, 85, 86, and 87. It will be seen in his report, by the tables sent to him by persons dealing in cotton goods imported into the United States from foreign countries, that cheap goods costing 3.55 cents per yard pay 176 per cent. duty, while those costing 8.12 cents per yard pay 77 per cent. duty; and goods that cost 4 cents per yard pay a duty of 94 per cent., while those that cost 2 cents per yard pay a duty of 208 per cent. These inequalities run throughout the whole specific system. It is that feature that specially commends it to the manufacturer of the competing article. As these excessive rates are thought to be more hurtful in cotton and woolen goods than in the articles embraced in the other schedules, the committee have substituted the ad valorem for the specific duties as to all articles in the woolen schedule, and in all except yarns in the cotton schedules.

In 1789 a duty was imposed on imported hemp, and in 1828 on imported flax, and while at intervals these fibers were imported free without harm to the American producer, yet since 1842 American flax and hemp have been "protected," and this necessitated the imposition of duties upon all manufactures from these and like fibers.

In spite of these duties American hemp has decreased in the amount of production from 74,493 tons in 1860 to 5,025 tons in 1880, as shown by the census reports of those two years, and flax from 7,709,676 pounds in 1850 to 1,565,546 pounds in 1880. But the demand and necessity for the products manufactured from these and similar fibers has greatly increased, and the importations of the raw material and of the finished product have necessarily equally increased. Formerly every pound of American cotton was covered with bagging and tied with rope made from American hemp; now over 50,000,000 yards of cotton bagging manufactured from imported jute butts are used to cover the 7,000,000 bales of American cotton which are tied with iron cotton ties, while the present mode of harvesting the immense grain crop of the country requires about 33,000 tons of twine, nearly all of which is made from imported material. So that, in the effort to "protect" probably 8,000 tons of American hemp and 1,500,000 pounds of American flax, a tax larger than the entire value of both these products is imposed on cotton and wheat, whose price to the producer is fixed in the foreign market, where they come in competition with cotton raised in India and wheat raised in foreign countries.

Your committee have put all these fibers upon the free list, thereby relieving the goods manufactured in America of the tax, amounting last year to $1,930,340 on raw material. It has also put on the free list burlaps not exceeding 60 inches in width, none of which is made in

$4,766,846.88.

America, and of which last year there was imported $3,260,117.40 worth, upon which were levied and paid $978,035.22. It has reduced the duties où all the manufactures from these fibers, so that, except on a very few articles, no duty is higher than 25 per cent., and some as low as 15 per cent. The aggregate estimated reduction on this schedule is Your committee feel assured that no industry will be injured by this reduction of taxation, while it will enable the American manufacturer to compete on equal terms with his rivals, will reduce the cost of production of cotton and wheat, and will cheapen to the consumer the goods which he must purchase.

The duty on sugar is nearly a revenue tax, about 85 per cent. of it being purely a tax paid into the public treasury; and all the sugars used in America are refined in this country. Your committee desired, in reducing the revenue received from this source, not to endanger the profitable production and refining of sugar here, and yet to prevent oppression by trusts and combinations. After much consideration, we now recommend that the revenue received from sugar be reduced by reducing the rates 20 per cent.

This reduction of rates on all sugars above No. 13 will render possible the importation of foreign refined sugars, so as to prevent exorbitant prices and protect consumers against combinations.

In the earthen and glassware schedules we have made fair reductions, the larger part of these articles, such as common earthenware and window-glass, being necessary articles of consumption by the great body of the people, and especially the laboring classes. Örnamented china and decorated earthenware we have reduced from 60 to 45 per cent., common earthenware from 60 to 35 per cent., and window.glass from 93 and 106 to 62 and 68 per cent.

In the metal schedule the most important reduction is in steel railway bars, which are now dutiable at $17 per ton, and by the proposed bill at $11 per ton. This is a reduction of about 35 per cent. ad valorem. This reduction will be of great value in promoting and cheapening the construction of railroads and lowering the rates of transportation of freight. Two years ago steel rails sold in this country at $27 a ton. The manufacturers during last year ran the price up to $40. The present price is $31.50. Last year 12,724 miles of raisoad were constructed in the United States, which required 1,300,000 tons of rails. It is therefore patent that, by reason of the present exorbitant duty of $17 a ton, the manufacturers were able to raise the price more than $8.50 a ton. They were therefore able to realize, over and above a legitimate profit, more than $11,000,000. This sum was an increase in the cost of construction, upon which the farmers must pay interest and dividends by way of increased freights upon their wheat, cotton, corn, and other products. The price of rails on board of ship in Liverpool last year was $21; adding freight, the cost of same, without duty, in this country, was $23.50. The duty fixed by the committee, $11, would increase the price to $34.50, or $3 above the price for which American rails are now selling. It is therefore apparent that the rate of duty allowed by the committee is more than enough to compensate our manufacturers for the difference in cost between the American and foreign product.

While we have been constrained to leave high duties on almost all the articles we have touched-duties higher than any necessity either of revenue or of difference of cost of American over foreign products required-we have felt that we ought to give some relief to other

branches of industry not benefited by high duties imposed for private purposes. A large number of our people are interested in manufacturing tin, and others in putting up meats, fish, fruit, vegetables, oils, and other articles in manufactures of tin. Many of these products are exported and many consumed at home. During the last fiscal year there were imported into the United States 570,643,389 pounds of tinplate, valued at $16,883,813.95, on which duties were paid amounting to $5,706,433.89.

We are informed that the value of the salmon caught in the Columbia River, Oregon, and canned and exported during the last fiscal year, amounted to nearly $2,000,000, while the lard that was canned and exported exceeded $14,000,000, and the fruits and meats exceeded $4,000,000. We believe that the removal of the duty on tin-plate would reduce the cost of these and other canned goods now being exported, and give to our people engaged in that trade such an advantage in the foreign market as would effectually overcome all competition, and enable them to hold the market and build up a large foreign trade.

The exporter, under existing law, has a drawback of 90 per cent. of the duty paid on tin-plate, but the repeal of the duty would give him. the remaining 10 per cent., and enable him to sell so much lower and give him additional advantage over his foreign competitor. Besides this, the consumers of canned goods at home would obtain them at a reduced price.

The manufacture of tin cans is growing into an extensive industry in the United States. More than 150,000,000 cans are made per year in the city of Baltimore alone, while New York, Philadelphia, Chicago, and other northern cities produce large quantities of articles manufactured from tin-plate.

We have placed cotton ties also on the free list. The duties received from them during the last fiscal year were $121,098.99. Cotton is our largest exporting product. The price is so low, and has been for a number of years, that it hardly pays the cost of producing it, and the committee felt that it was a proper subject for consideration while they were repealing taxes and reducing the surplus revenue of the Government. To our farmers in the Middle and Northern States, engaged in raising hogs and selling their products, we have made salt free of duty and released revenues amounting to $676,865.50. To the people who are settling up the vast prairies of the West, inclosing their lands and building farm-houses, we have made lumber free, and removed duties amounting to $1,039,207.35.

The bill which the committee reports provides for the repeal of all restrictions on the sale of tobacco by the producer, and for the repeal of all taxes on tobacco except on cigars, cigarettes, and cheroots, and of all privilege and license taxes except those for manufacturing and selling cigars, cigarettes, and cheroots. The repeal of special and privilege taxes is also recommended. These taxes have been a fruitful source of the petty prosecutions which have crowded the Federal court dockets in some portions of the country. It is not believed that their retention is essential to the efficient collection of the revenue, and they should no longer be retained.

The changes in the administrative features of the present law are fully shown by the letter of the Secretary of the Treasury, dated March 14, 1888, and the reductions in the internal revenue will be shown by the letter of the Commissioner of Internal Revenue, dated March 12, 1888, both of which are hereto appended.

S. Rep. 2332- -8

TREASURY DEPARTMENT, OFFICE OF THE SECRETARY, Washington, D. C., March 14, 1888. SIR: Mr. Talbott, clerk of your committee, has presented me copies, respectively, of the proposed bill to reduce taxation and simplify the laws in relation to the collection of the revenue," and of the tables relating to the same, with the request that I communicate to you my views as to the probable effect the adoption of the administrative sections of the bill would have upon the revenue, and also that I cause the computations in the tables to be verified, and footings of the column of "values" therein to be made by experts in this Department.

With regard to the effect sections 5 to 23 of the bill would have upon the revenue, I have to advise you as follows:

(1) The proposed substitute for section 2499, Revised Statutes, would not, it is thought, affect the revenue one way or the other further than to prevent loss of duties by securing uniformity of action in the classification of merchandise.

(2) The tendency of the amendment to "Schedule A," respecting "anhydrous alcohol," etc., would be to restrict importations of the article. This would not, however, affect the revenue appreciably, as the importations are trifling in amount.

(3) The amendment to the free list as to "articles of growth, produce, and manufacture of the United States," etc., would not apparently affect the revenue.

(4) The amendment relating to "wearing apparel, personal effects," etc., would naturally result in an increase of revenue. But there is no definite basis for determining such increase. It would probably not fall short, however, of $500,000 per

annum.

(5) While the effect of section 6 would be to increase the dutiable value of merchandise subject to ad valorem duties, its tendency, at the same time, would be to restrict speculative importations, which have been stimulated by the opportunities for evasion afforded by the present law, as interpreted by the Supreme Court and construed by the Attorney-General. The section would not, therefore, in my opinion, operate to increase materially, if at all, the aggregate amount of revenue collected. No better illustration of the unreliability of mere individual opinions concerning the probable effect upon the revenue of tariff legislation can be cited than the estimates given by the customs officers of the amount required to pay refunds due importers under the Oberteuffer decision, respecting coverings, and the annual reduction of duties on this account. These estimates, as to the amount necessary to pay re; funds, were from $3,000,000 to $5,000,000, while the annual reduction of duties was variously estimated at from $6,000,000 to $10,000,000.

It is now practically ascertained that the amount actually paid and to be paid as refunds covering a period of near three years will not exceed $2,000,000, while the importations and revenue have largely increased, due doubtless in some measure to the opportunity for evasions as above stated.

(6) Sections 7 and 8 are calculated to promote orderly administration and the convenience of importers, but will not, it is thought, have any positive effect upon the

revenue.

(7) The effect of section 9 would be (1) to abolish the 10 per cent. additional duty now collected (under sec. 2970, R. S.) on merchandise remaining in bond more than one year, amounting approximately to $35,000 per annum; and (2) to reduce the revenue by reason of the assessment of duties on the quantity of merchandise withdrawn from warehouse instead of on the quantity actually imported and entered originally, as required by existing law (sec. 2983, R. S.). The amount of such reduction can not be estimated. It would certainly be considerable, and might be very large. The tendency of the proposed amendments would be to increase the volume of goods warehoused and the consequent liability of loss of duties thereon.

(8) There is nothing in sections 10 and 11 apparently calculated to affect the

revenue.

(9) Section 12 abolishes fees collected on entry of merchandise only. As these fees are not separately reported to the Department, there is no ready means of ascertaining the exact amount thereof. It may be safely assumed, however, that the reduction on this account would not exceed $375,000 per annum.

(10) The tendency and effect of sections 13 to 18, inclusive, would be to prevent fraudulent attempts upon the revenue, and to insure a more strict and honest enforcement of the tariff laws. Whatever increased duties might result from such improved administration would probably be offset by a decrease of speculative importations made with a view of defrauding the revenue.

(11) SEC. 19. There being no available data for determining the precise amount of duties remitted on account of damage, the exact effect of this section upon the revenue can not be stated. A certain proportion of the merchandise on which damage is now allowed would be abandoned under this section and no duties collected thereon. Another result of this section would be to prevent the importation of any but sound goods, and especially to discourage the shipment, now common, of damaged fruits,