THE TARIFF COMMISSION AND ITS WORK BY WILLIAM S. CULBERTSON HENRY GEORGE used to say that the way to solve the tariff problem was to abolish the customs houses. He thought that a tariff for revenue was only a degree less obnoxious than a tariff for protection. But the tariff problem is not-shall we say unfortunately?—so simple of solution. The abolition of the customs houses, or even the abandonment of a general tariff, is not regarded by any influential group of men as practicable or desirable for this country. It is now generally agreed that the tariff in some form has become a permanent part of the fiscal and industrial policy of the United States. Just what form the tariff shall take, and upon what principles it shall be formulated, will continue in this country to be matters of political controversy. That group of public men which regards revenue as the primary purpose of the tariff will be set against that which regards its primary purpose to be the protection of American industries, and the final arbiter between them will always be the American people. The growing desire in this country, however, that tariff making should be more scientific, and that Congress should have a permanent and reliable source of tariff information at its disposal, has led to the advocacy of a tariff commission. All the political parties have urged the creation of such a commission, and from time to time many bills have been introduced into Congress providing for its establishment. Even before any of them became law the country received the services of a tariff board, through the action of President Taft. President Taft was authorized by the Tariff Act of 1909 "to employ such persons as may be required" to assist him in carrying into effect certain pro visions of that Act. He appointed three Republicans, and this board became the nucleus about which grew up the first genuine, although temporary, tariff commission this country ever had. Their first work was the administration of the maximum and minimum clause of the Payne-Aldrich Act. They then began the preparation of what Mr. Taft called the "glossary or encyclopedia of the existing tariff so as to render its terms intelligible to the ordinary reader." It also undertook the study of industrial conditions and the costs of production at home and abroad. In March, 1911, the board was increased by the addition of two Democratic members. Congress appropriated substantial sums for its work, and in a comparatively short time it published reports on chemicals, news-print paper, Canadian reciprocity, raw wool, manufactures of wool, and manufactures of cotton. In many ways the work of this board revealed the value and the need for a permanent tariff commission. Its investigations were conducted scientifically, and its experiences furnish many valuable suggestions for the new tariff commission in its work of organization and investigation. The present Tariff Commission, established by an Act of Congress approved September 8, 1916, is the first permanent government body in this country whose sole purpose is the scientific examination of the tariff question. Its six members were appointed by the President in March, 1917, and it was organized for business on April 1, 1917.1 It is not the policy of the Tariff Commission to bolster up any particular tariff theory. It is strictly non-partisan. Its aim is to secure data which may be utilized both by the advocates of tariff for revenue and by the protectionists, but as a commission it advocates the policy of neither. It proposes to examine the effects of tariff rates from every angle. Its duties include the study of the fiscal effect of the customs laws and their relation to the Federal revenue. Customs duties have always been an important source of Federal revenue and, for this reason, the Commission may be expected not only to assist Congress in studying the revenue producing power of the tariff but also in suggesting how the income and expenditures of the Government may be properly correlated. 1 The members of the United States Tariff Commission on the date of its organization were: F. W. Taussig, Chairman; Daniel C. Roper, Vice Chairman; David J. Lewis; William Kent; William S. Culbertson; and Edward P. Costigan. No phase of the tariff is more a subject of controversy than its effect on prices. Since very little concrete information exists on the subject the discussion has been largely confined to theoretical deductions either to prove or to disprove that a tariff on imports increases prices. As a help to our theorizing we need a full examination of the facts. Only a governmental body with power to demand information and facilities to cover a wide field can make an investigation that will be of value. There is every reason to think that the Tariff Commission can throw real light on this dark corner of the tariff controversy. Another phase of the tariff which the Commission is to investigate is its industrial effect both on the manufacturer and the laborer. The relation of tariff duties to competitive conditions has been of supreme importance in American tariff controversies. In their platform of 1908 the Republicans declared that "In all protective legislation the true principle of protection is best maintained by the imposition of such duties as will equal the difference between the cost of production at home and abroad, together with a reasonable profit to American industries." "We believe," the Progressive platform of 1912 says, "in a protective tariff which shall equalize conditions of competition between the United States and foreign countries." The Democrats, in framing the Tariff Act of 1913, claimed to have been guided by the principle of a "competitive tariff." These three declarations are merely different ways of stating the same principle. They show how very important competitive conditions are in the enactment of tariff legislation. In addition to its plenary power to get information in this country the Tariff Commission has power to investigate conditions, causes, and effects relating to competition of foreign industries with those of the United States, including dumping and cost of production. Still another phase of the Tariff Commission's work, to which the war has given far-reaching importance, is its power to investigate the tariff relations between the United States and foreign countries, commercial treaties, preferential provisions, such as bargaining tariffs, bounties, and economic alliances. In the past the tariff laws of the United States have been framed chiefly with domestic conditions in mind, and reciprocity and bargaining features have been tacked on as afterthoughts. Commercial treaties-and the bargaining aspect of the tariff will be of supreme importance after the war. This country has taken a leading and permanent place in international affairs. By giving the Commission comprehensive powers to investigate treaty and foreign tariff problems, Congress recognized the necessity of information which will enable this country to meet the new international problems which will confront it. The Tariff Commission has an important part in the current work of government. Less than three weeks after its organization it submitted to Congress its first report, which recommended the enactment of a so-called " padlock law" for the purpose of conserving revenue from customs duties and internal taxation during the time a revenue bill is being debated in Congress. In order to simplify the administration of the customs it has drafted a revision and codification of our customs administrative laws. Existing statutes-many of them antiquated and confusing-and the new code will be submitted to Congress in parallel columns for consideration. If enacted into law, this revision will make customs administration fairer and add to the revenues of the Government. The Commission and its members have also been called upon by Congress for assistance and advice in framing war revenue legislation. Business men have brought to the Commission their war time problems. An interesting case was that of the producers of ocean pearl and fresh water pearl buttons, who claimed that their industries are being seriously affected by the rapidly increasing imports of pearl buttons from Japan. The sugar interests of the country are furnishing the Commission with data which bring up to date existing reports. The producers of glass, pottery, textiles, and, above all, chemicals, have been in touch with the Commission. The chemical industries are of the greatest importance in modern warfare. Remarkable advances have been made in this country in the production of explosives and of such related products as nitric, picric, and sulphuric acids, benzol, toluol, and acetone. The most striking progress has been in the production of intermediates and dyes. While the investigation of the Tariff Commission on chemicals is general, it is placing particular emphasis upon coal tar products. The intermediates, from which dyes are made, are also the raw materials for explosives. Factories which produce dyes, can with comparative ease turn a part of their plant to the production of explosives. War disturbances in industry and trade are being considered by the Commission in order to assist both in mobilizing our economic forces against our common enemy and in enabling the country to meet more intelligently the problems which will arise after the war. By means of hearings and field work information is being obtained from representatives of industry, foreign trade and labor. Among the questions considered are the interruption of supplies of raw materials, substitutes adopted, present conditions and tendencies in industries, expansion of industrial plants due to war conditions and their plans for readjustment to normal times again, the effect of the war on labor conditions, and the development of our foreign trade during the war. This brings us to the most important aspect of the work of the Tariff Commission. The Commission was created as a part of a program of preparedness for peace. The European War had been in progress more than two years when Congress, in September, 1916, passed the Act creating the Commission. World conditions were not changed essentially between that time and April 6, 1917, when Congress declared a state of war to exist between this country and Germany. The effect of the war on the economic life of our nation was evident to Congressmen. It must be so to every other thoughtful student of our times. Now is the time for observation. War is modifying our views of labor, of distribution, of public finance and production. In fact, it is shaking the whole traditional structure of our economic life. The Tariff Commission is fully aware of this situation. It is now directing a large part of its energies to the consideration of after-the-war problems. No industries have been more profoundly revolutionized by the war than those relating to chemistry. Peace will bring with it for them serious problems of readjustment. Under war demands such stable industries as those which produce caustic soda and bleaching powder have increased their production. So with the electro-chemical industries. New supplies of potash have been developed. Congress, in the same Act by which it created the Tariff Commission, enacted increased protective duties on coal tar products. Our supply of coal tar dyes, which before the war came almost wholly from Germany, is now largely produced in this country and we are |