Show favors OF RATES P RESIDENT PRESIDENT TAFT IN N MESSAGE TO CONGRESS ADVOCATES REDUCTION OF DUTIES SCHEDULE K UNDER FIRE in communication to congress C chief IJ e f executive indorses endorses Indor ses conclusions at by the recently created tariff board washington in transmitting to congress tho the report of ozithe ahe tariff board on schedule K the president accod panted it with the following message mes saget to the senate and house of representatives in my annual message 0 to o congress december 1909 1 I stated that under section I 1 of the act of 0 august 5 1009 1000 1 I had appointed a tariff board of three members to cooperate co operate with the state department in the administration of the maximum and nd minimum clause of that act to make I 1 glossary or encyclopedia of the existing tariff so BS as to render rander its terms intel ll gible to the ordinary reader aila then to investigate industrial conditions and costs coad of production at home and abroad with a view to determining to what extent existing tariff rates actually exemplify the protect protective ivo principle viz that duties should be made adequate and only adequate id equate to equalize the difference in cost ot of production at home and abroad 1 I 1 further stated that I 1 believed these investigations would be of great value as ag a basis for accurate legislation and that I 1 should from time to time recommend nd to congress the revision of certain schedules in accordance with the findings of the board in the last session cession of the sixty first congress a bill creating a permanent tariff board ot of five hi In embers of whom not more than three should be of the same political party passed each house but failed ailed of enactment because of slight dif ferenc eson which agreement was not reached before adjournment an appropriation pria tion act provided that the permanent tariff board it if created by statute should report to congress on schedule IC in december cem lier 1911 1911 presidential appointments therefore to carry out so BO f far ar as lay within rny my power the purposes of this mil bill for a permanent tariff board I 1 a appointed P in march 1911 a board of five adding two members of such party alfill won as would have fulfilled the statutory requirements and directed them to make biake a report to me on schedule K of the tariff act in december of this year in ny my message bf be august 17 1911 accompanying compa nying the veto of the wool bill I 1 sald laid that in my judgment schedule K should be revised ani the rates reduced my veto was waa based on the ground that since ince the tha tariff board would make in december a detailed report on wool and wool manufactures with special reference to therel the relation atlon of the existing rates of duties to relative costs here and abroad public poll policy y and a fair regard to the interests of the producers and the manufacturers on the one hand and of the consumers on tile the other demanded that legislation should not be hastily bas enacted in the hoi absence of such information that I 1 was not myself myel possessed at that thai time of adequate knowledge of the facts to determine whether or not the proposed act was waa in accord with my pledge to support a fair and reasonable protective policy that such legislation might prove brov s only temporary and inflict indict upon a great industry the evils of continued uncertainty advocates reduction of rates I 1 now herewith submit a report of the tariff board on schedule K ac the board Is unanimous in its findings on the basis of these findings I 1 now recommend that the congress proceed to a consideration of this schedule dute with a view to its revision lon and a general reduction of its ita rates the report shown that the tha present method of assessing the duty on raw wool this la Is by the specific rate on the grga leMund 1 e unsecured operates to exclude wools of high shrin shrinkage kige in scouring but fine quality from the american market and thereby lessens the range of wools available to the tha domestic manufacturer that the duty on unsecured wool of 83 cents per pound Is prohibitory and operates to exclude the importation of clean low priced foreign wools of inferior grades which are nevertheless valuable material for manufacturing and which cannot be imported in the grease because of their heavy shrinkage such wools if imported might be used to displace the cheap substitutes now in use to make the preceding paragraph a little plainer take the itte instance of a hundred dr pd pounds of first class wool imported under tile the present duty which la Is 11 cents a pound that would make the duty on the hundred pounds 11 the tha mer chati dise part of tile bool ool thus imported in ported Is tho the weight of tile the wool 01 0 this hundred pounds ands after scouring if tile iho wool L shrinks SO per cent na as somo some wool woo does doe a then iho tie duty in such a case wound would mount amount to 11 on oil 20 pounds of scoured wool this of arse would be bt bl tory if the wool shrinks only so 60 per cent it would be 11 on bo 60 pounds of wool and this la Is nem near to the average of the great bulk of wools that are imported from f rom australia Aus which Is IR tile the principal B source oure ot 0 our bur imported wool these theae discriminations could be overcome by assessing a duty in ad valorem valoree terms but this method la Is open to the objection j jec tion first that tha it increases administrative difficulties and tends to decrease dec rensa reve revenue nife through and second that ns as prices advance the ad valorem valoree rate increases the duty per pound at the time when the consumer most needs relief and the producer can best beat stand competition while if prices decline the duty Is decreased at tile the time when the consumer la Is least burdened by the price and tho the producer most needs protection method that meets difficulty another method of 0 meeting the difficulty of taxing tile the grease pound Is to as aa cess a specific duty on grease wool in terms of its scoured content this obviates tile the chief evil of the present system namely the discrimination due to diff different er shrinkages shrink ages and thereby tends greatly to equalize the duty the board reports that this method Is feasible in practice and could be aar adr administered without great expense the report shows in detail the difficulties involved in attempting to state in terms the cost coit of it wool production and the great differences in cost as na between different regions and different types ot of wool it Is found however that taking all varieties in account the average cost of production for the whole american clip Is higher than the cost in the duct chief competing country by an amount somewhat less than th the e present duty the report shows that the duties on wool wastes and shoddy which are adjusted to the lie rate of 33 cents on scoured wool alre are prohibitory in the same measure that tile the duty on scoured wool Is prohibitory in general they are ai aa bessei at rates as high as or higher than the duties paid on th the clean oclean content of wools actually imported they should be reduced and so adjusted to the rate on wool as to bear their proper proportion to the real rate levied on the actual wool imports some duties prohibitory y the duties on many classi classes of wool manufacture are prohibitory and greatly tn in excess of the difference in cost coat of production aucion here and abroad this Is true of tops of yarns with the exception of worsted yarns of a very high grade and odow 0 low and medium grade cloth of heavy weight on tops topa up to 62 52 cents a pound in value and on yarns of 65 cents in value the rate Is per cent with correspondingly higher rates for lower values on cheap and medium grade clochin cloths the existing rates frequently run to per cent and on some borne cheap goods to over per cent on the other hand the findings show that the duties which run to such high ad valorem valoree equivalents are prohibitory since the goods are not imported but that the prices of domestic fabrics are not raised by the tha full amount ot of duty on a set of one yard samples of 16 6 english fabrics which are completely excluded by the present tariff rates it was found that the total foreign value was 1184 the duties which would have been assessed had these fabrics been imported the foreign value plus the amount of 0 the duty 74 or a nominal duty of isa per cent in fact fact however practically identical fabrics oi of domestic make sold at the same bame time at showing an enhanced price over the foreign market value of but 6 67 per cent would reduce duties although these duties do not increase prices price of domestic goods by anything like their ull full amount it Is none the less true that such prohibitive dutes eliminate the possibility of foreign competition even in time of scarcity so that they form a temp to monopoly and conspiracy to control domestic prices that they are much in excess of the difference in cost of production here and abroad and that they should be reduced to a point which accords with the principle the findings of the board show that in this industry the actual manufacturing cost aside from the question of the price of materials la 19 much higher in this country than it Is abroad eliat th at lit in tho the making of yarn and cloth the domestic woolen and worsted manufacturer has in general no advantage in the form ot of superior machinery or more efficient labor to offset the higher wages paid laid jn in this country the finds show that them the cost of turning wool into yarn in this coun country tri Is about double that in the leading competing com petin g country and that the cost of turning yarn into cloth ts is somewhat more than double under the protective policy a great industry involving the welfare of hundreds of thousands of people has been established despite these handicaps in recommending revision and reduction I 1 therefore urge that action be taken with these facts in mind to the end that tin in important and established indus try may not be jeopardized the tariff board reports that no culta ble method lias has been found to levy hively specific duties on oil woolen and worsted fabrics and that excepting tor for a bompensa com pensa tory duty the rate must be ad valorem valoree on such manufactures it la Is important to realize however that no flat ad valorem valoree rate on such fabrics can be made to work fairly and effectively A any y single rate which Is high enough to equalize tile the difference in cost at home and abroad on highly finished goods involving such labor would bo be prohibitory to ry on cheaper goods in which the labor cost Is a a smaller proportion of the total value conversely a rate only ad adequate aunte to equalize this difference on cheaper goods w would uld remove protection from the fino go goods manufacture the increase in which has been one of the striking features of th the e trade development tn in recent years I 1 therefore recommend that in any revision the importance of a graduated scale of ad valorem duties dillies on cloths claths lie be carefully considered and applied I 1 praises work of Committee I 1 venture to say eay that no legislative body has ever had presen presented fed to it a more complete and exhaustive report than tabo on so difficult and complicated a subject as the relative costs of wool and woolens the world over it Is a monument to the thoroughness industry impartiality and accuracy of the men engaged in its malting making they were chosen from both political parties but have allowed no partisan spirit to prompt or control their inquiries they are unanimous in their findings I 1 reel feel sure that after the report has beer been printed and studied the value of such a compendium ot of exact knowledge in ro re to this schedule of the tariff will convince all of the wisdom of making makind au such ch a board permanent in order that it may treat each schedule of the tha tariff as it has treated this and then keep ltd its bureau of information up tip to date with current cu arent changes in the economic world it Is no part of the function of the tariff board to propose rates of duty their fun function ebion la Is merely to present findings of fact on an which rates of duty may be fairly determined in the light of adequate knowledge in accordance with the economic policy to be followed this Is what the present report does the findings of tact fact by the board show ample reason for the tha revision downward of schedule dulo K in accord with the protective principle and present the data as to relative costs and prices from which may be determined what rates will fairly equalize the difference in production costs I 1 recommend that such revision be proceeded with at once signed WILLIAM 11 TAFT the watte home dec 20 1911 |