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such regulations been in existence during the past two years they would have saved to the public hundreds of millions of dollars invested in stocks of corporations whose shrinkage in value, as estimated by the Wall Street Journal, October 26, 1903, amounted at that time to $1,753,959,790.

Sales Abroad at Figures Below Home Prices.

It is doubtless true that occasional sales of American manufactures are made abroad at less than the established and regular prices at home, just as the manufacturer or merchant frequently sells below his regular prices in the home market, for the sake of gaining new customers or of disposing of his surplus products at cost, rather than close down his factories and deprive his workmen of employment. A very careful estimate of the value of American manufactures exported at less than the current prices charged in the home market was made by the Industrial Commission, an official body of the United States Government, composed of members of both parties, having power to call before it witnesses, to administer oaths, to take testimony, and to punish witnesses for refusal to answer such questions as it might choose to put to them. That inquiry extended over a long period of time, and was very far-reaching. Inquiries were sent to a large number of manufacturing establishments in all parts of the country and the replies received came from manufacturers of all classes, including iron and steel, machinery and metal products, typewriters, engines, agricultural implements, vehicles, leather and its manufactures, boots and shoes, manufactures of wood, paper and pulp, textiles and manufactures therefrom, flour, provisions, canned goods, condensed milk, chemicals and drugs, optical goods, manufactures of glass, clay and stone products, and numerous other classes of products. Much attention was given to an examination and discussion of the replies, which were received from hundreds of manufacturers in every part of the country, and the Commission, discussing these replies, says: "A great majority of the answers indicate that prices are no lower abroad than they are for domestic consumers, and a considerable number indicate that foreign prices are higher." This would indicate that but a small percentage of the 400 million dollars' worth of manufactures exported annually is sold at less than domestic prices, and when it is remembered that the gross value of the manufactures of the country in 1900 was 13 billions of dollars it will be seen that the share of that product sold in foreign markets at prices less than those charged at home must be extremely small.

It is urged by the Democratic free traders that because of these sales abroad at prices less than those charged in the home market the tariff on the class of articles so sold abroad should be removed. As these sales are liable to occur in any ass of manufactures under the conditions above suggested this remedy would mean the removal of the duty on all classes of manufactures. Would it be worth while to destroy our home manufacturing industry, which employes 51⁄2 million wage-earners and pays to them nearly 3 billion dollars per annum for their services, just because the manufacturers choose to sacrifice their profits on a very small percentage of the value of their products for the sake of keeping labor employed and of increasing their employment of labor through the added markets which they expect to obtain by such sales?

A PRACTICE PREVAILING IN ALL COUNTRIES.

While the statements obtained by the Industrial Commission indicate that but a small percentage of the manufactures exported are sold at less than domestic prices, other testimony obtained by that Commission, and statements obtained from other sources, show that the custom of selling merchandise abroad at less than home prices is one which exists and always has existed in freetrade England as well as in all other countries attempting to cultivate markets abroad. Mr. C. R. Flint, of the great exporting firm of Flint, Eddy & Co., of New York, in his testimony before the Commission said:

"There are times when there is a surplus, when manufacturers will seek a foreign market at a concession. This is true in all manufacturing countries. It does not apply especially in the United States, but it is true in all countries. It is true in England. where there is free trade.

Being asked if there was any difference in that particular between trust-made goods and goods made independently of trusts, he replied that:

"There was far more of a disposition to make concessions before these combinations, from the fact that individual manufacturers were under more pressure of necessity to realize on their investments. The great industrial combinations, by reason of the great advantage they have in regulating production, avoid excessive production, and therefore are less likely to be under financial pressure.'

Mr. John Pitcairn, president of the Pittsburg Plate Glass Co., in his testimony before the Commission, said of plate glass exportations:

"Various manufacturing powers in Europe have combined into one strong international syndicate in order to regulate and divide among themselves the world's markets. Only the United States is left out of this protecting combination. This market (the United States) is therefore a desirable dumping ground for the surplus of European production, and exceptionally low prices are being made by the foreign manufacturers for glass intended for the United States. For example, the present European price for polished plate glass cut to size is, for the United States 40 and 50 per cent discount from a certain price list; for England, 10 per cent discount from the same price list, which means a difference in price of 58 per cent. European discounts for stock sizes of polished plate glass are, for the United States, 30 per cent off the list; for England, 5 per cent off the same lists, which shows a difference of 36 per cent."

On this subject, Prof. W. J. Ashley, former professor of economic history in Harvard University, and now professor of commerce in the University of Birmingham, England, in a work entitled "The Tariff Problem," issued in London in 1904, says:

was

"This dumping of which we have heard so much is nothing new. It is the ordinary outcome of mercantile ethics-the ethics of industrial war. The policy of selling abroad for a time cheaper than at home was naturally resorted to, when it seemed expedient by English manufacturers in earlier decades, just as it later by German manufacturers to secure sale in Russia. Indeed, a German economist, writing in 1897, before we in England had begun to complain of being dumped upon ourselves, expressly designates the policy of low foreign prices as 'the German-English system.' * It has long been realized by economists that in times of depressed trade, when the market is glutted, it is often expedient to sell goods abroad at 'slaughter prices.' It may be well to dispose of them abroad at any price which will get rid of them, in order to prevent their continuing to press on the home market. * From an economic and from a business point of view there is no unfairness in the matter. Exceedingly low prices are made for a certain time and for certain markets simply because this is expected to inure to the best financial result over the whole range of transactions or over a period of years. And it is necessity that drives, in most cases, and not the free will of the exporter. * * The abolition of the protective tariff on the too-cheaply exported goods is an improbable result. The combinations which are complained of can reply with much reason that their export policy is for the good of the_country_as a whole. The subject was thoroughly discussed in the German Reichstag in November last; and Dr. Moller, the Prussian Minister of Commerce, summed up the prevalent opinion in official circles. He could not but rejoice to see that the exportation of great quantities of iron, etc., to the United States and to England had alleviated the crisis in Germany. True, this would not suffice to put the whole of the German production into a healthy condition; but if this outlet had not been found, the burden of over-production would have weighed upon the country for years. The motion that the import duties should be lowered on goods produced by syndicates and sold more cheaply to foreigners was thereupon defeated by 166 votes to 68."

SECRETARY SHAW'S VIEW.

As bearing upon this subject, the following quotation from a speech delivered by Hon. Leslie M. Shaw, Secretary of the Treasury, at the Auditorium Opera House during the session of the Republican National Convention, is submitted:

"Our opponents lay much stress upon the fact that some American manufactures are sold abroad cheaper than at home. Our friends sometimes deny this, and they sometimes apologize for it, and a few, in times past, have joined our opponents in recommending a removal of the tariff from all such articles. It is useless to deny, and, in my judgment, unwise to apologize and little short of foolishness to attempt to remedy the assumed evil in the manner proposed by the opposition.

"A nonpartisan commission appointed by Congress to investigate the subject, with authority to compel the attendance of witnesses, made a careful and detailed report. Basing his computations upon the facts set forth in that report, Senator Gallinger, of New Hampshire, in a speech made in the United States Senate on

such regulations been in existence during the past two years they would have saved to the public hundreds of millions of dollars invested in stocks of corporations whose shrinkage in value, as estimated by the Wall Street Journal, October 26, 1903, amounted at that time to $1,753,959,790.

Sales Abroad at Figures Below Home Prices.

It is doubtless true that occasional sales of American manufactures are made abroad at less than the established and regular prices at home, just as the manufacturer or merchant frequently sells below his regular prices in the home market, for the sake of gaining new customers or of disposing of his surplus products at cost, rather than close down his factories and deprive his workmen of employment. A very careful estimate of the value of American manufactures exported at less than the current prices charged in the home market was made by the Industrial Commission, an official body of the United States Government, composed of members of both parties, having power to call before it witnesses, to administer oaths, to take testimony, and to punish witnesses for refusal to answer such questions as it might choose to put to them. That inquiry extended over a long period of time, and was very far-reaching. Inquiries were sent to a large number of manufacturing establishments in all parts of the country and the replies received came from manufacturers of all classes, including iron and steel, machinery and metal products, typewriters, engines, agricultural implements, vehicles, leather and its manufactures, boots and shoes, manufactures of wood, paper and pulp, textiles and manufactures therefrom, flour, provisions, canned goods, condensed milk, chemicals and drugs, optical goods, manufactures of glass, clay and stone products, and numerous other classes of products. Much attention was given to an examination and discussion of the replies, which were received from hundreds of manufacturers in every part of the country, and the Commission, discussing these replies, says: "A great majority of the answers indicate that prices are no lower abroad than they are for domestic consumers, and a considerable number indicate that foreign prices are higher." This would indicate that but a small percentage of the 400 million dollars' worth of manufactures exported annually is sold at less than domestic prices, and when it is remembered that the gross value of the manufactures of the country in 1900 was 13 billions of dollars it will be seen that the share of that product sold in foreign markets at prices less than those charged at home must be extremely small.

It is urged by the Democratic free traders that because of these sales abroad at prices less than those charged in the home market the tariff on the class of articles so sold abroad should be removed. As these sales are liable to occur in any class of manufactures under the conditions above suggested this remedy would mean the removal of the duty on all classes of manufactures. Would it be worth while to destroy our home manufacturing industry, which employes 51⁄2 million wage-earners and pays to them nearly 3 billion dollars per annum for their services, just because the manufacturers choose to sacrifice their profits on a very small percentage of the value of their products for the sake of keeping labor employed and of increasing their employment of labor through the added markets which they expect to obtain by such sales?

A PRACTICE PREVAILING IN ALL COUNTRIES.

While the statements obtained by the Industrial Commission indicate that but a small percentage of the manufactures exported are sold at less than domestic prices, other testimony obtained by that Commission, and statements obtained from other sources, show that the custom of selling merchandise abroad at less than home prices is one which exists and always has existed in freetrade England as well as in all other countries attempting to cultivate markets abroad. Mr. C. R. Flint, of the great exporting firm of Flint, Eddy & Co., of New York, in his testimony before the Commission said:

"There are times when there is a surplus, when manufacturers will seek a foreign market at a concession. This is true in all manufacturing countries. It does not apply especially in the United States, but it is true in all countries. It is true in England. where there is free trade.'

Being asked if there was any difference in that particular between trust-made goods and goods made independently of trusts, he replied that:

"There was far more of a disposition to make concessions before these combinations, from the fact that individual manufacturers were under more pressure of necessity to realize on their investments. The great industrial combinations, by reason of the great advantage they have in regulating production, avoid excessive production, and therefore are less likely to be under financial pressure."

Mr. John Pitcairn, president of the Pittsburg Plate Glass Co., in his testimony before the Commission, said of plate glass exportations:

"Various manufacturing powers in Europe have combined into one strong international syndicate in order to regulate and divide among themselves the world's markets. Only the United States is left out of this protecting combination. This market (the United States) is therefore a desirable dumping ground for the surplus of European production, and exceptionally low prices are being made by the foreign manufacturers for glass intended for the United States. For example, the present European price for polished plate glass cut to size is, for the United States 40 and 50 per cent discount from a certain price list; for England, 10 per cent discount from the same price list, which means a difference in price of 58 per cent. European discounts for stock sizes of polished plate glass are, for the United States, 30 per cent off the list; for England, 5 per cent off the same lists, which shows a difference of 36 per cent."

On this subject, Prof. W. J. Ashley, former professor of economic history in Harvard University, and now professor of commerce in the University of Birmingham, England, in a work entitled "The Tariff Problem," issued in London in 1904, says:

was

"This dumping of which we have heard so much is nothing new. It is the ordinary outcome of mercantile ethics-the ethics of industrial war. The policy of selling abroad for a time cheaper than at home was naturally resorted to, when it seemed expedient by English manufacturers in earlier decades, just as it later by German manufacturers to secure sale in Russia. Indeed, a German economist, writing in 1897, before we in England had begun to complain of being dumped upon ourselves, expressly designates the policy of low foreign prices as the German-English system.' that in times of depressed trade, when the market is glutted, it is often expedient to sell goods abroad at 'slaughter prices.' It may be well to dispose of them abroad at any price which will get rid of them, in order to prevent their continuing to press on the home market. From an economic and from a business point of view there is no unfairness in the matter. Exceedingly low prices are made for a certain time and for certain markets simply because this is expected to inure to the best financial result over the whole range of transactions or over a period of years. And it is necessity that drives, in most cases, and not the free will of the exporter. The abolition of the protective tariff on the too-cheaply exported goods is an improbable result. The combinations which are complained of can reply with much reason that their export policy is for the good of the country as a whole. The subject was thoroughly discussed in the German Reichstag in November last; and Dr. Moller, the Prussian Minister of Commerce, summed up the prevalent opinion in official circles. He could not but rejoice to see that the exportation of great quantities of iron, etc., to the United States and to England had alleviated the crisis in Germany. True, this would not suffice to put the whole of the German production into a healthy condition; but if this outlet had not been found, the burden of over-production would have weighed upon the country for years. The motion that the import duties should be lowered on goods produced by syndicates and sold more cheaply to foreigners was thereupon defeated by 166 votes to 68."

* It has long been realized by economists

*

SECRETARY SHAW'S VIEW.

As bearing upon this subject, the following quotation from a speech delivered by Hon. Leslie M. Shaw, Secretary of the Treasury, at the Auditorium Opera House during the session of the Republican National Convention, is submitted:

"Our opponents lay much stress upon the fact that some American manufactures are sold abroad cheaper than at home. Our friends sometimes deny this, and they sometimes apologize for it, and a few, in times past, have joined our opponents in recommending a removal of the tariff from all such articles. It is useless to deny, and, in my judgment, unwise to apologize and little short of foolishness to attempt to remedy the assumed evil in the manner proposed by the opposition.

"A nonpartisan commission appointed by Congress to investigate the subject, with authority to compel the attendance of witnesses, made a careful and detailed report. Basing his computations upon the facts set forth in that report, Senator Gallinger, of New Hampshire, in a speech made in the United States Senate on

April 23rd, last, placed the value of exports sold at a lower price abroad than at home at $4,000,000. I cannot find that the substantial correctness of this estimate was ever questioned by the opposition. But in any event the amount is so small as compared with the aggregate output of our factories as to be unworthy of consideration. The report of the Industrial Commission shows that some of these articles are protected in this country by patents, and are not so protected in the foreign market. If the supposed evil as applied to patented articles is worthy of drastic remedial measures, the most feasible would be the repeal of our patent laws.

"There is one other important feature not often recognized. The Republican party has always provided a method whereby a manufacturer can have the benefit of free raw material for the production of merchandise actually exported. Under regulations prepared by the Secretary of the Treasury, the consumer of im'ported material is allowed to recover back the duty paid thereon whenever he exports the same or any article manufactured therefrom. During the fiscal year 1903, the amount of drawbacks thus actually paid exceeded $5,000,000. A portion of this was upon goods exported direct from warehouses and upon which no labor had been expended. But if Senator Gallinger's estimate, based upon the data furnished by the Industrial Commission, be correct, that only $4,000,000 worth of merchandise is annually sold abroad cheaper than at home, then the annual drawback on imported material would seem to remove any presumption that an injustice is being perpetrated upon the American consumer. A very small portion of the $5,000,000 drawback would cover the difference between the price at which this merchandise is sold abroad, and the domestic price.

"The United States Census reports our aggregate manufactures of 1900 at $13,000,000,000. It is doubtless somewhat larger now. $4,000,000, the amount estimated to be sold abroad cheaper than at home, is therefore only one-thirtieth of one per cent of the aggregate. In other words, out of every one thousand dollars' worth of manufactures produced by American labor, something like thirty cents' worth is sold abroad cheaper than to our own people; or, stated in yet another form, every time our shops and factories pay five hundred dollars to labor, and therewith produce one thousand dollars' worth of goods, they sell thirty cents' worth abroad for twenty-nine cents.

"Whether this practice is defensible or not, foreign producers very generally and almost universally do the same thing. Nearly every class of goods imported into this country is obtainable for export to this country below the regular foreign market. And this is as true in free trade England as in protection France or Germany. Our tariff law provides that imported merchandise shall be appraised at its regular market value at the place whence it is imported and at the time of importation, and a penalty is provided for undervaluation. To avoid this penalty the importer adds to the invoice what he admits to be the difference between the regular foreign market value and the price actually paid. During the eleven months of the present fiscal year over 6,000 invoices entered at the one port of New York have been thus advanced by the importer to make market value, and the aggregate of the advancements thus made upon these invoices exceeds $1,200,000. During the fiscal year 1903, $32,000,000 worth of merchandise was imported at New York admittedly below the foreign market value, and the importer voluntarily added $1,500,000 to the invoice to make market value as the confessed difference between the price actually paid and the regular foreign market value; and Treasury officials added thereto an additional $400,000 and imposed and collected a penalty of $400,000. The goods thus sold by the foreign producer cheaper for exportation to the United States than for home consumption include woolen goods, cotton goods, silk goods, and linen goods of all kinds; umbrellas, ribbons, trimmings, velvets, hosiery, rugs, furs, cutlery, glassware, jewelry, furniture, saddlery, guns, wool, hides, chemicals, machinery, iron and steel products generally, and groceries. In fact, they include about everything and from all countries.

This

"So universal is the practice of selling goods for export to the United States cheaper than for domestic consumption that a very large and influential association of importers have sought for years to have our tariff laws amended so as to authorize the assessment of ad valorem duties on the foreign market value for exportation to the United States instead of as now upon the regular foreign value at the place whence the goods are imported. association of importers thus recognize and confess the fact that there are two foreign market values of merchandise, one the market value for domestic consumption and the other the market value for export to the United States. They also recognize and confess that a change of the law permitting the assessment of ad valorem duties on the market value for export to the United States would be as advantageous to them as a reduction in the rate of duty.

"It is a well known fact that sugar which sells in the United States, duty paid, at five cents per pound retail, is worth in the country of production, seven and one-half cents per pound wholesale. The very men who grow the beets from which this sugar is made, pay ten cents per pound retail for the same sugar which we get at five cents per pound, and the foreign beet grower is statesman enough to approve the policy. He is willing to pay a higher price for the small amount of sugar which he consumes, on condition that the product of his field shall supply the American table. Speaking for myself alone, I am willing to pay any reasonable price for the small amount of barbed wire which I consume, pro

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