A Monthly Magazine for Self-Ein

VOL. XXXIII.

JULY, 1901.

COLLEGE LIBRAN,

JUL 8 1901
CAMBE, MA

No. 4.

Highway

& By wa y

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ily increasing the export trade of the nation. But high tariffs provoke retaliation. The European countries will not open their markets to us except in consideration of substantial concessions from our side. There has been much talk of an anti-American alliance or combination, and while it is not likely to lead to any practical action, it is symptomatic of a widespread and profound sentiment and cannot fail to influence legislation. In Austria and in Germany the socalled Agrarians demand prohibitory duties on American goods.

HERE are many indications that the are vitally interested in retaining and steadnext great issue to be discussed by the people of the United States will be the modification and reduction of the tariff. The Democrats have for some years past completely neglected this once "paramount" question, but it is probable that it will be revived and not by them alone. Among the Republicans significant differences of opinion are developing with reference to the expediency, desirability, or necessity of maintaining the high protective rates now imposed on imported goods. It will be remembered that, as the direct and prompt effect of the steel consolidation, Congressman Babcock of Wisconsin, leading Republican and chairman of the national congressional committee of that party, offered a bill in the house reducing materially the duties on the raw material and finished product of the steel industry. He took the position that protection had become superfluous in that sphere, and that the American steel producers were no longer in any possible danger from successful foreign competition, since they carried their goods to every part of the world, and made serious inroads upon the trade of Great Britain and Germany. This bill was the first symptom of what has proved to be a widespread and important movement.

Several other distinguished Republicans have since openly declared themselves advocates of lower duties and a more liberal trade policy. Protection, they maintain, should not be made a trust bulwark, and any industry seeking foreign markets and defeating the old-world competitors thereby demonstrates its ability to stand alone and dispense with government aid and legal monopoly. To this another potent argument is added. The United States has reached the point where an enormous surplus of manufactured and agricultural goods must be disposed of abroad. The home market is no longer sufficient. Capital and labor alike

There were several reciprocity treaties before the senate at the late session. They were all thrust aside. But it is certain that the next congress will insist on the ratification of some of these treaties. Senators like Cullom, stanch protectionists, have announced their intention to further the movement for reciprocity. President McKinley is evidently in sympathy with the new tendency in the Republican party. His addresses during his southwestern trip dwelt on the economic changes of the past few years and the need of corresponding changes in national policy. In one speech he used the following expressions:

We never had such high credit, such good money, so much business, as we have in the United States in

the year 1901, and it is our business-your business,
it is your business as well as mine to see to it that an
for the public official is but the agent of the people-
industrial policy shall be pursued in the United States
that shall open up the widest markets in every part of
the world for the products of American soil and Ameri-
can manufacture. We can
markets. We have reached that point in our industrial
now supply our own
development, and in order to secure sale for our surplus
products we must open up new avenues for our surplus.

Treasurer Roberts is a convert to a more liberal trade policy. He points out that the heavy balances of trade in our favor — in three years they aggregated nearly $1,500,000,000 and for the present fiscal year the balance will reach $700,000,000-cannot possibly be paid in specie, and that our

exports will be checked unless we take oldworld goods in exchange for our products. Whether a general revision of the Dingley tariff law will grow out of this agitation, it is too early to say. Much will depend on the behavior of the great combinations.

state sell their surplus product abroad below cost in order to avoid closing and temporary cessation of production. He believes that the profit on exported goods is very small or even nil, and that American consumers are in no wise injured by this reduction of prices to foreigners. Since, however, doubt exists upon the point, he has requested the state department to send a circular to our consuls, instructing them to investigate and report upon the prices charged in their respective districts by American traders for manufactured commodities exported from the United States. The suggestion is receiving favorable consideration. If acted upon, the data collected will be used in the discussion of the new phase of the tariff question.

In close connection with the question of foreign trade is the inquiry into the means adopted by American exporters to extend their sales abroad. It has been charged that the prices at which trustcontrolled goods are The long-expected and extremely imporsold in other coun- tant decisions in the insular tariff cases were tries are considerably handed down by the supreme court in lower than those the last week of May, and they proved exacted of American a great surprise to the country. They susconsumers. In other tained neither the "colonial" doctrines set words, the complaint up by the attorney-general in behalf of the Exposition. is that the high duties government, nor the contention of the counwe levy on foreign products enable our pro- sel opposed to the government that "the tected manufacturers to realize large profits constitution goes with the flag" and that on their home trade and to underbid their com- Porto Rico and the Philippines were of right, petitors abroad. This means that the growing as fully annexed and automatically incorpoexport trade is practically subsidized by the rated territories of the United States, entitled home consumer. According to some, this is to free trade with the states and territories. an intolerable and absolutely unfair condition Several cases were decided, but the leading of things, as the American consumer should ones are known as the De Lima case and the be the first to reap the benefits of economical Downes case. The former involved the and improved organization. Others hold question whether duties collected after the that there is nothing reprehensible in this practise of disposing of surplus products, at reduced prices, in competitive markets.

The congressional industrial commission. has been examining captains of industry on this point, among others. President Schwab of the steel combination admitted the facts alleged, but explained them as follows: Operators desire to run their works full and steadily, and as the output cannot all be sold at a fair profit, especially in dull periods, foreign markets are sought at reduced prices. Even when a market is secured, the keenness and vigilance of other nations may render it necessary for the American manufacturer to maintain a low price level in order to hold his ground. The workmen are directly benefited by this, since they are employed the year round at the same rate of wages, and are relieved from care and fear of interruption of work.

Congressman Tawney of Minnesota declares that several milling corporations of that

-Minneapolis Journal.

SOME MORE CREED REVISION.

ratification of the treaty of peace with had been alleged to exist between the old Spain, but before the date of the so-called territories and the newly acquired terriForaker tariff act (taxing Porto Rican exports tories. The power to acquire territory sub from and imports to the United States modo, without incorporation into the United fifteen per cent of our Dingley rates) were States, is thus denied. Porto Rico has the legally levied and collected - that is, whether same status as New Mexico or Arizona or the executive had the constitutional authority Oklahoma or Alaska. It is entitled to all the to impose this tax on Porto Rico. The privileges and immunities which they enjoy latter case turned upon the validity or con- under the constitution and general laws. stitutionality of the Foraker act itself.

By a vote of five to four the court decided the De Lima case against the government. The duties levied prior to the application of the Foraker act were held to have been illegal, the ground for this ruling being that the ratification of the peace treaty made Porto Rico an integral part of the United States, a "domestic territory," and as such subject and entitled to all the general laws of the United States. The government's contention that Porto Rico, though annexed, remained foreign for certain purposes, the court dismissed as wholly without warrant. Justice Brown, who read the majority opinion, declared that it is impossible for a territory to be at the same time both foreign and domestic, and that annexation by a treaty is as absolute as annexation by act of congress.

This totally destroyed the difference which

Having decided that Porto Rico was not " foreign country," but domestic territory within the meaning of the tariff laws and all other general national laws, the question next arose whether congress had the power to exclude that territory from the operation of the tariff laws by specific legislation. The answer depended on the construction of the clause of the constitution declaring that all taxes, imposts, and excises must be uniform "throughout the United States." Was Porto Rico, at the time the Foraker tariff went into effect, within "the United States"? Justices Fuller, Harlan, Peckham, and Brewer, agreeably to their position in the De Lima case, held that it was, and that the tariff law was void. But Justice Brown parted company with them at this point and took the ground that the taxationand-uniformity clause applies to states alone, and not to territories, whether old or new, except as congress may, in its discretion, deliberately extend it to any territory. The term "the United States," according to Judge Brown, was synonymous with the phrase "the states united" and had no reference to the territory of the republic. If no territory is part of the United States within the meaning of the taxation clause, it of course follows that Porto Rico is not part of the United States for taxation purposes, and therefore congress was at liberty to impose a duty on Porto Rican products. shipped to the United States.

Four judges-McKenna, Shiras, Gray, and White, all of whom dissented from the De Lima decision-joined Justice Brown in sustaining the Foraker tariff in so far as it taxes Porto Rican exports to the United States, but without accepting his reasons for the conclusion. In a separate opinion they gave their own reasons for the decree, which not only differed from, but directly conflicted with, those of Justice Brown. They sustained the Foraker tariff act because they regarded Porto Rico as foreign, unincorporated territory. They accepted neither the proposition that Porto Rico was made a domestic territory by the treaty of cession nor the proposition that territories were not