XVI.

THE POWER OF TAXATION,

WHAT IT COSTS THE PEOPLE UNDER THE WORKINGS OF THE PRESENT LAW TO

MAINTAIN TRUSTS AND MONOPOLIES.

James D. Richardson, May 8, 1888.

Whence comes the power to tax the people to build up monopolies and make rich certain special interests by subsidy? I remember one argument I have heretofore had to meet, and I have heard it repeated on this floor, that all high protective duties or taxes are paid by the foreigners who manufacture goods and bring them here to market. How is this? Recently I read this statement:

In 1881 the duty on the best plate glass was 112 per cent. Glass of this kind selling in Belgium for $386,000 was imported here, and, at 112 per cent., duty or tariff was paid on it to the amount of $437,000. It was then sold here in the United States for $850,000. Now, who paid this duty? Did the Belgian manufacturer? If he did, then out of the $386,000, which was all he got for his glass, he paid $437,000 to our government for the privilege of sending it here. In other words, he gave us his glass for nothing when he could have sold it at home for $386,000, and he gave us $51,000 more for leave to do so.

If this glass only sold for $336,000 in Belgium, when it was brought here and sold to our consumers for $850,000, of which $437,000 went into the Treasury as taxes, I want to know if the consumers here did not pay this tax? But for the high tariff of 112 per cent. on the glass our consumers here would have been able to buy it at $386,000, and the transportation added. There can be no answer to this argument. In many instances, however, the tariff is laid so high that it amounts to a total prohibition of the importation of the goods so taxed. Then what is the inevitable result? If the goods are not imported, you say of course the Treasury gets no tax or tariff. This is true; but while that is true, our people who have to buy these goods from American manufacturers, thus prohibited from importation by reason of high duty, pay the increased prices all the same. Not that it goes into the Treasury, for in this case it goes into the pockets of the American manufacturer in the shape of subsidy or increase in profits. Many of the cheapest of woolen goods are thus taxed so high they are not imported. The duty on them varies from 115 to 200 per cent., and they cannot be brought here by foreign merchants and sold after paying this high rate of tariff duty. The American manufacturer, however, knowing this, charges from 75 to 150 per cent. more for these goods than the foreigner, and is secure against his competition.

ALL A TAX PAID BY THE CONSUMER.

Who pays this increased price to our manufacturers? Not the foreign importer, for we have seen he does not in this case import on account of the high duty, but it is all paid by the poor consumer in our country who is compelled to buy these cheap woolen goods. And even in cases where the foreigner imports his goods, if he pays duty upon them he is not at least the party who suffers most under this tariff for protection. The best statistics we have sbow that the proportion of American goods we use to foreign goods is about five to one; so that the tariff raises the price of goods to our people about five times where it places the tax once upon the foreigner who brings his goods here for sale. Therefore when $1 is paid into the Treasury for tariff our people have paid $5 to the American manufacturer in the shape of subsidy. As we raise every year about $200,000,000 by the tariff, it follows that to do this the people pay five times this sum, or ten hundred millions in subsidy. Such a law for taxation is not right and cannot be defended on any just or equitable

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principle; yet any propositions which look to any reduction of taxes or the giving of any relief to the people are met by the cry of "free trade," and that an assault is being made upon the great American system of protection.

Whence, I ask again, comes the authority to Congress to lay any duty which does not look simply to raising revenue? Congress has no more authority under the Constitution to take money from me which it does not need for the Government, under the guise of a revenue law, with the view of aiding or benefiting some other citizen or class of citizens, than it has to take my horses, mules, sheep, or other property for a like purpose.

According to the logic of the argument of protection Congress can levy a tax upon the people to raise $101,000,000, of which one million will go into the Treasury as taxes and the remaining one hundred millions will go into the pockets of a benefited class. Such a proposition, I submit, is monstrous. Who contends that the tariff is not a tax? I have heard that there are some who make this contention. Hear the great Western lawyer and orator, Mr. Storrs, on this point. He said:

Finally, what is a tariff? It is a tax. It is nothing less and nothing but a tax. It is a tax which we do not pay to the Government; for where protection begins revenue ceases. The consumer is impoverished, the Government is not aided.

This is an honest statement. A protective tariff laid upon four thousand articles of daily consumption by our people means a tax laid upon these articles, not for revenue, not for any purpose of government; for as quoted above, "where protection begins revenue ceases." I have heard it gravely argued here and elsewhere that the high tariff reduced the price of every merchantable commodity, and that all profits are raised by this system. If this be true it opens up a new way for us all to get rich, and it is to be recommended as a popular panacea for poverty. We need only keep on piling up taxes, increase the protection, make the tariff altogether prohibitory, place restrictions upon trade until profits are carried up 300 or 400 per cent., and when all trade has ceased everybody's profits will be increased.

This again is absurd. Take the article of quinine which a few years ago was sold under a high duty. Our people paid $3.50 per ounce for it; the tariff was taken off, and did this "merchantable commodity,' go higher as was predicted? On the other hand it retails at 80 cents per ounce. When it was sold at $3.50 per ounce who paid it? The consumers among our people. Who got the benefit of the 'protection on it? Only two or three manufacturers in the United States. Who gets the benefits now of the reduction to 80 cents per ounce? The question answers itself.

Let us pursue this a little further. To the manufacturer the protectionist says, we give you a protective tariff, that you may get higher prices for your goods; that is the avowed object of it. To the consumer of these goods the farmer, the lawyer, the mechanic, the doctor-he says, we will give you a protective tariff, that you may get goods you buy of the manufacturer cheaper. And to the laborer he says, we give you protective tariff that you may get higher wages from the manufacturer. And the people believe him in each case. Let us suppose the object of the protective tariff was to enable lawyers to charge larger fees for their legal services, and as a lawyer I was to say to my clients, you ought to favor this law, for while it enables me to charge you larger fees it also enables you to get my services more cheaply. Let the miller say to his customers, you should favor this law, because it enables me to take more toll from you and at the same time give you more meal. So with the physician. So with the mechanic who builds your house. This argument would not work at all in any of these cases, but just apply it to the manufacturer and it acts like a charm. It is a wonderful antidote.

WHAT THE TAX PAYER HAS TO BEAR.

To answer, further the contention that this protective tariff lessens the cost of living and cheapens gcods to our people, I will insert here a table which shows the rate of tax laid upon some of the necessaries of life which enter into daily consumption by every family in the land, I care not how rich or poor they may be:

If your woolen suit cost you $10, put it down that $4.80 of that cost is protective tariff tax, and so with each article named in the table. So the laboring man, the farmer, the lawyer, the preacher, the physician, the mechanic, everybody, every day, everywhere in our land is paying this tribute under the present tariff laws. It is an insidious tax. It is an indirect tax.

If a tax collector of the United States stood at the store door and levied and collected the tax upon every article set forth in the preceding table at the rate therein set forth, there would be an immediate outcry, and the gentlemen now on this floor who are defending with their might the present rate of taxation would change their position on this question or they would be retired by the people to the shades of private life While this is true, the very people who would rather fight than pav such a tax as I have mentioned to a tax-gatherer at the store door will uncomplainingly pay higher taxes when they are collected by the storekeeper in the shape of increased prices.

XVII.

THE PAUPER LABOR ARGUMENT.

AN INSULT TO THE FREE AND EFFICIENT LABOR WHICH HAS BUILT UP THIS COUNTRY BY ITS HARD TOIL.

Representative John E. Russell, of Massachusetts, May 28.

A great deal has been said about "pauper labor" and about the workingmen of New England-of Massachusetts, for instance-being unable to compete with it. I scorn that argument. My people can compete with the labor of any part of the world if they have a free field. Let me give you an instance in our boot and shoe industry which will prove that. A few years ago one of the great inventors of the State of Massachusetts, one of the makers of those magnificent automatic machines that play so great a part in the manufactures of our day, invented and took out letters patent all over the world for sewing and heeling machines which turned out the handsomest boots and shoes that can be made. The proprietors of those machines

did not choose to sell them directly to the manufacturers; they preferred to lease them, their use being paid for by a royalty upon each boot or shoe sewed on them, the number being indicated by a device which registered it upon the machine itself.

After that machine was started in this country they went over to Europe with it and introduced it into the great boot and shoe manufacturing establishments not only of Great Britain, but also of Germany, and at the end of the year they were very much surprised to find that their royalties from the machines in use in England reached only 47 per cent of what they collected in the State of Massachusetts. They were alarmed and suspicious. They knew that from the accurate construction of the machine and the certainty of its registering power it could not tell any lie about its own work; so they sent over one of the ablest men in Massachusetts in the examination of patent matters to investigate.

He came back and told them that they were getting an honest return from the foreign boot and shoe manufacturers, and that the explanation was that the best labor of England could not produce with those machines more than 47 per cent. of the amount of work that was produced by the Massachusetts operatives upon the same machine. That meant that the American mechanic, with his enterprise and his ambition, standing at those machines worked more hours a day at a greater rate of speed than did the "pauper labor," as it is called, of Great Britain; it meant that the Englishman quit work on Saturday afternoon and did not come back to work until Tuesday morning; it meant that he would not work as many hours or stand to his work as well as the Massachusetts workman, and there is the whole difference between "pauper labor" and free labor.

HOW THE QUESTION WAS FORMERLY DEALT WITH.

Gentlemen on the other side of the House declare that the whole prosperity of this country is founded upon the tariff of 47.10 per cent., and, so far as I understand their position, they will not agree that one jot or tittle of what they call "protection" in that regard shall be touched or taken away. That was not the feeling of our people in old times, when the cotton manufacturing industries of Massachusetts were established. It was not the feeling of the House of Representatives when it came to deal with the question of a great surplus in 1856.

We were then living under a tariff averaging 28 per cent., the tariff of 1846, which was made by the greatest financier that this country had seen since Alexander Hamilton. I mean Robert J. Walker. He was not from Arkansas; he was not from Texas: he was not from Kentucky; but he happened to be from Mississippi, and yet the tariff which the Mississippian made brought prosperity to the country. So we may be permitted to hope that a tariff made in part by a Texan (Mr. Mills) may produce the same result. But, Mr. Chairman, in 1857, when the country had a large surplus and we were living under a tariff of 28 per cent., the manufacturers of New England, and especially of Massachusetts, came to this House and asked for a reduction of the tariff. That reduction was 21 per cent., and if the gentleman from Maine will look back at the record of that time he will see nine members of Congress, the whole delegation in this House, and the two Senators voted with the solid South to reduce that to 21 per cent. I regret they were not followed by all of New England.

In 1871 the Treasury showed pretty much the same condition we have to-day. There was a surplus of $100,000,000. Under the administration of General Grant the President repeatedly advised the reduction of the tariff, and no man howled free trade when he made such recommendations to Congress. What did the House do at that time? What did the Republican party in charge of the affairs of Congress at that time do? Did they pass a bill in favor of cheap whiskey and cheap tobacco? Did they pass a tariff taking off revenue taxes and leaving all the taxes on the common articles of consumption? No, Mr. Chairman, not a bit of it; but they passed a bill to reduce the tariff, and they did reduce the tariff under the lead of another Massachusetts man, Mr. Dawes, the chairman of the Committee on Ways and Means, who brought in a bill similar to that which you laughed away from the doors of the House when proposed by the Committee on Ways, and Means by its chairman, Mr. Morrison, a horizontal reduction of 10 per cent.

THE PROTECTION OF NATIONAL HONOR.

CHAPTER XLVIII.

THE PROTECTION OF NATIONAL HONOR.

THE MESSAGE OF PRESIDENT CLEVELAND ON THE QUESTION OF
RETALIATING UPON CANADA.

To the Congress:-The rejection by the Senate of the treaty lately negotiated for the settlement and adjustment of the differences existing between the United States and Great Britain concerning the rights and privileges of American fishermen in the ports and waters of British North America, seems to justify a survey of the condition to which the pending question is thus remitted.

The treaty upon this subject concluded in 1818, through disagreeements as to the meaning of its terms, has been a fruitful source of irritation and trouble. Our citizens engaged in fishing enterprises in waters adjacent to Canada, have been subjected to numerous vexatious interferences and annoyances, their vessels have been seized upon pretexts which appeared to be entirely inadmissible, and they have been otherwise treated by the Canadian authorities and officials in a manner inexcusably harsh and oppressive.

This conduct has been justified by Great Britain and Canada, by the claim that the treaty of 1818 permitted it, and upon the ground that it was necessary to the We deny that treaty agreements justify proper protection of Canadian interests. these acts, and we further maintain that, aside from any treaty restraints, of disputed interpretation, the relative positions of the United States and Canada as near neighbors, the growth of our joint commerce, the development and prosperity of both countries, which amicable relations surely guarantee, and above all, the liberality always extended by the United States to the people of Canada, furnished motives for kindness and consideration higher and better than treaty covenants.

While keenly sensitive to all that was exasperating in the condition, and by no means indisposed to support the just complaints of our injured citizens, I still deemed it my duty for the preservation of important American interests which were directly involved, and in view of all the details of the situation, to attempt by nego tiation to remedy existing wrongs and to finally terminate, by a fair and just treaty these ever recurring causes of difficulty.

I fully believe that the treaty just rejected by the Senate was well suited to the exigency, and that its provisions were adequate for our security in the future from vexatious incidents and for the promotion of friendly neighborhood and intimacy, without sacrificing in the least our national pride or dignity.

I am quite concious that neither my opinion of the value of the rejected treaty nor the motives which prompted its negotiation, are of importance in the light of the judgment of the Senate thereupon. But it is of importance to note that this treaty has been rejected without any apparent disposition on the part of the Senate to alter or amend its provisions, and with the evident intention, not wanting expression, that no negotiation should at present be concluded touching the matter at issue.