Bill Out

Twofold were Herbert Hoover's promises to U. S. farmers in the 1928 campaign. One was relief by means of a new Federal agency to assist in crop marketing. The other was relief by means of increased tariff rates on agricultural commodities, to protect the U. S. husbandman from foreign competition, to put him on a parity with U. S. industry.

After four months of mulling, the Ways & Means Committee last week delivered to the House a ponderous Bill to revise the tariff for the benefit of the farmer--and others. Farmers, through their Congressional representatives, surveyed the measure suspiciously, expressed strong disappointment, began to kick dirt. Great was their surprise when other interests affected by this 85,000-word measure were, for different reasons, no more pleased than they.

For Farmers. Conforming to the Hoover promise, agricultural duties were raised by the proposed Bill, but not so high as the farmer had demanded and expected. The wheat rate remained pegged at 42-c- per bushel, to which point President Coolidge had raised it from 30-c- under the flexibility provision of the tariff law. Wheat raisers could hope, however, that by the same process President Hoover might some day advance the duty to 63-c-.

The corn duty was moved up from 15-c- to 25-c- per bushel (30-c- was the farm demand). Beef went up from 3-c- to 6-c- per pound (farmers wanted an 8-c- rate). Butter was left at 12-c- per lb., whither President Coolidge had temporarily raised it from 8-c-. Tariff duties on milk and cream were doubled. Poultry & eggs, lard & swine, vegetables & fruits all moved up proportionately on the new tariff scale.

Farmers looked at what they got, at what they had asked and frowned. Flaxseed had been held at 56-c- per lb. when they had demanded an 84-c- duty. Their 15-c- butter rate had been spurned. They found hides still on the free list and no provision for obstructing the free importation of vegetable oils from the Philippines. Where they had asked for an 8-c- duty on casein, the House Committee gave them a 2 1/2-c- duty. The U. S. husbandman's representatives were loud with the U. S. husbandman's disgust.

Discrepancies might have been accepted without loud complaint had the House tariff-makers ceased their activities with Schedule VII (Agricultural Products). But tariff-making is the oldest U. S. political game next to taxation. Every U. S. producer claims special consideration, paints a terrifying picture of his ruin by cheap foreign competition. Under insist ent pressure, the Ways & Means Com mittee as usual broke, gave ground, widened tariff revision to include many a nonagricultural product. It was these other increases which chiefly distressed the farmer.

Building Materials. On farms are houses, barns, outbuildings, for which a husbandman must buy bricks, cement, lumber, glass, shingles. By its committee the House was asked to increase tariff rates on these building materials. From the free list brick was made dutiable at $1.25 per 1,000. A tax of 8-c- per 100 Ib. was laid on cement. While fir, pine, spruce and hemlock were retained on the free list, other kinds of lumber were put under the tariff, with cedar shingles paying 25% ad valorem. The Oregon shingle industry asked for protection against Canadian imports. Chairman Hawley of the Ways & Means Committee, also of Oregon, saw that it got what it wanted. Quick came the claim that the farmer's new profits under the bill would be immediately absorbed by increased costs in building material, paint, clothing, special foods and the like.

Sugar. Around sugar revolved a bitter controversy. Western beet sugar producers, representing themselves as infant-industrialists, had demanded higher tariff rates aimed at Cuban cane, and a limitation on the free importation of Philippine sugar. The House bill raised the world raw sugar duty from $2.20 to $3 per 100 Ib. which would make Cuba, which already enjoys a 20% differential, pay a tariff of $2.40 per 100 Ib. instead of the present $1.76. Swayed by the protest of Secretary of State Stimson as a onetime Governor-General of the Philippines, the House committee placed no limitation on free sugar imports from the Pacific Islands.

New England representatives, fondly eyeing their huge candy industry, cried out in protest against the higher sugar duties. It was recalled that in 1924 the U. S. Tariff Commission advised President Coolidge to reduce the sugar duty to $1.23 as ample protection for domestic producers. With an election approaching, the President refused to act. Cane-growers in Cuba (75% of whom operate on U. S. capital) foresaw disaster for themselves, predicted a 2-c- rise in retail sugar prices, urged a "battle of the American sugar bowl." The House was told by Chairman Hawley of the Ways & Means Committee that the new sugar duty would encourage domestic production, free the U. S. from dependence on foreign cane crops, eventually bring down the price of sugar.

Estimators could show that the new rate would add 100 million dollars to the country's retail sugar bill. The sugar schedule immediately added to the disgruntlement of U. S. farmers who do not look upon the beet sugar industry, with its roaming alien labor, as a legitimate form of U. S. husbandry.

Blackstrap. The close interrelation of Industry and Husbandry is clearly set up in the case of blackstrap--a by-product of molasses and cane sugar, used chiefly for making industrial alcohol. The present duty on blackstrap is about 1/4-c- per gallon. The new duty would average between 1 1/4-c- and 2-c- per gallon, depending upon the sugar content. Farm groups forced this increase on the Ways & Means Committee by the argument that a higher levy on this imported article would turn the alcohol manufacturers to domestic corn as a base for their product.

But alcohol manufacturers say they have no intention, if raw molasses becomes more costly, of making more alcohol from corn than they now make. Blackstrap is far cheaper than corn. Manufacturers predict they will continue the use of blackstrap, meeting the tariff boost by adding about 5-c- per gallon to the cost of their product. The farmers will pay these additional pennies (which they forced upon themselves) when they paint their barns, buy medicine, put anti-freeze in their cars.

If, and when, a prohibitive duty is placed on blackstrap, alcohol makers say they will turn then, not to corn but to synthetic alcohol, now developed to a point where only the cheapness of blackstrap delays its perfection.

233 out of 626. No group was completely satisfied with the House bill. The schedules on tobacco, wines and spirits alone escaped some sort of alteration by the committee. Out of the 626 paragraphs in the 1922 Tariff Law which this measure amends and replaces, 233 were changed. President Hoover's insistence upon "limited" tariff revision produced shifts in about one-third of the rates, practically all of them upwards. In the chemical schedule, for instance, there were 39 changes--33 up, six down.

For Manufacturers. Chairman Hawley explained that, when the base rates on raw materials were revised upwards, it was necessary to give a higher "compensatory" rate to manufacturers using the raw material in their production to keep the proper balance of protection. The rate on high-grade raw wool was jacked up from 31-c- per Ib. to 34-c- with corresponding increases on finished woollen articles running through the whole schedule. These increases to manufacturers made the farmer rage, since they tended to continue the existing tariff disparity between Husbandry and Industry.

The textile industries received added protection--approximately a 10% increase over present rates. In New England, gratification at this benefit was tempered by disappointment at the bill's failure to shift leather shoes from the free to the dutiable list. The House committee was pressed by the farmers for a duty on hides, which was rejected and with it New England's plea for a shoe duty. Committeemen felt they could not "defend" such an increase on the House floor.

From Pennsylvania had come the loudest demands for added protection for industry. Joseph R. Grundy, president of the Pennsylvania Manufacturers' Association and G. O. P. campaign cash-collector extraordinary, had been in the forefront of an old-style drive for higher rates (TIME, March 25). He had secured duties on brick and cement, had permanently pegged pig iron at $1.12 1/2 per ton. But he still sounded dissatisfied when he said: "The few raises fall short of meeting the requirements ... of Pennsylvania's industries along lines indicated in the Republican platform adopted at Kansas City." He intimated that provisions for valuation (see below) were "scandalous." Philadelphia upholstery and drapery manufacturers flayed a 10% duty increase accorded them as "wholly inadequate."

Commission Changes. Changes were proposed in the Tariff Commission to bring it under close Presidential control. The old membership would be swept out of office. Seven, instead of six, new commissioners would be appointed, at higher salaries. Two-party representation on the Commission would be abolished. With this new Commission, the President could utilize the flexible provision of the tariff law (50% changes in tariff rates at a stroke of the pen) with great facility.

The present Commission, to recommend a change in rate, must conduct a long investigation into foreign production cost. When the inquiry is over, the need for the change has generally passed, or increased beyond the Commission's measurement. The new bill proposes that the Commission accelerate its work by studying only the "condition of competition" in the domestic market and making its recommendations thereon.

Ad Valorem. The valuation of imports under the new bill cropped up as a controversial problem. There are two bases of valuation, foreign and U. S. By and large the new bill retains foreign valuation, i. e., the value the foreign producer sets upon his article, or the price for which he sells it in his own country. But cunningly woven into Administrative language is a new threat against foreign producers who undervalue their imports to cheat the U. S. tariff. If the U. S. appraiser is not satisfied with the foreign valuation placed on an article for import, he may apply U. S. valuation, i. e., the value of similar articles produced and sold in the U. S.

Appeals. Importers were irate at a provision of the bill which would take from them the right to carry their appeals on valuation matters before the U. S. Customs Court. The valuations fixed by appraisers were made final, subject to review only by the Secretary of the Treasury (i. e., a staff of clerks in the Treasury Department).

"Revolt." The reception of the new Tariff Bill in the House was so muddled, so many grievances of special groups were so massed together, as to give the appearance of a major revolt against the Hoover-dominated Committee which drew the Bill. The old axiom, "The tariff is a local issue," was never more clearly demonstrated.

G. O. P. Huddle. Republican House leaders--Speaker Longworth, Floor Leader Tilson, Rules Chairman Snell--banded together to praise the bill, to consolidate their voting strength sufficiently to run the legislation through to passage under a special rule barring amendments from the floor. But the discontented Republican element in the House was too large to execute this scheme at once. The leaders had to let the disgruntleds "talk themselves out" first in a shut-door party huddle.

Iowa's Dickinson, erstwhile staunch Hooverite, derided the bill as "one of the worst, from an agricultural standpoint, ever presented to the House." His Iowa colleague, Representative Ramseyer, echoed his sentiments, denounced items in the bill as "indefensible." Chairman Haugen of the Agricultural Committee grew more grumpy than usual over the lumber and shingles duty and the failure of the measure to restrict vegetable oils.

Defense. When debate opened in the House, the bill's principal author, Chairman Hawley of the Ways & Means Committee, gave a three-hour lecture on its meaning. His chief points were: 1) tariff protection means Prosperity; 2) rates on basic commodities (beef, butter, wheat, wool, etc.) were first fixed, then related products were adjusted therefrom; 3) minor crops were given special protection to induce farmers now producing surplus cereals to turn to them as crop variants; 4) "apparent changes greatly exceed actual changes" in the bill; 5) "We should be self-sustaining and self-sufficient."

Perspective. To fit the Tariff into a broader economic perspective, Chairman Hawley pointed out that the total domestic trade of the U. S. averages 90 billion dollars per year, foreign trade nine billions. Of this foreign trade, five billions are in exports, four billions in imports. Of the imports two and one-half billions come in duty free, one and one-half pay tariff. In short, only about 1 1/2% of all U. S. trade is in the form of competing foreign commodities, dribbling over the top of the tariff dam. The dam is important, not because of what comes over it, but because of what it holds out, the domestic prices it impounds and sustains.

Attack. As Mr. Hawley's chief Democratic opponent, Minority Leader Garner took the House floor all abluster to attack, not so much the new bill as the prospective Republican method of putting it through the House under a "gag rule." This method he called "legislative cowardice." He described Speaker Longworth and Leader Tilson as "yellow, legislatively speaking" for fearing a "handful of Democrats." The "most vicious proposal" he could find related to its valuation system.

Tennessee's Cordell Hull alone harked back to the old Democratic dogma of "tariff for revenue only." The proposed increases he said would cost the country 175 millions per year. His Democratic colleagues, pledged to protection at the Houston convention last year and by their presidential candidate, sat silent.

Consumers' View. An immediate question was: What effect will this bill, if and when enacted, have upon the cost of living? Such politicians as Massachusetts' Senator Walsh were quick to raise the old cry of "outrageous and exorbitant duties on food products," to predict direful increases in household expenses. More practical men, outside of Congress and familiar with food distribution and the tariff's effect upon it, were ready to believe that the retail buyer would not see much change in his meat and grocery bills. Operations between producer and consumer by the much-maligned Middle-Man would, experts explained, serve as a buffer between farm prices and store prices. Illustration: The corn duty raise of 10-c- per bushel would affect corn products (flakes, syrup, oil, etc.) by only a fraction of ordinary market fluctuations in corn, which sometimes are as much as 50-c- per bushel in a season without altering retail prices.