Message to the House of Representatives Returning Without Approval "An Act to Amend an Act Entitled 'An Act to Provide Revenue, Equalize Duties, and Encourage the Industries of the United States, and for Other Purposes'"

To the House of Representatives:

I return, with my objections, H.R. 18642, a bill entitled "An act to amend an act entitled 'An act to provide revenue, equalize duties, and encourage the industries of the United States, and for other purposes,'" approved August 5, 1909.

This bill provides for a complete revision of Schedule C of the tariff law, relating to metals and manufactures of metals. In committee and in the consideration of the majority who passed the bill the important part of it seems to have been the basic manufactures of iron and steel, and most of the information which was obtained and discussed was in reference to that manufacture. The truth is that iron and steel as primary products are less than one-third in value of the subject matter covered by it; and that there may be no misunderstanding in regard to this, I present, as an appendix, a table prepared by the Census Bureau showing that included in Schedule C are 59 allied industries of sufficient importance to justify separate classification, study, and report by the Census Bureau, all of which are directly affected by the bill under consideration.

If only the primary products of iron and steel were affected by this bill, or if they constituted the larger part of the values involved in Schedule C, the consideration of the bill for purposes of approval or disapproval would be easier, but it is not within my power to separate these various industries. The bill is presented to me as a whole and must be approved or disapproved as a whole.

The table furnished shows that "foundry and machine shop products," which are secondary products of the iron and steel industry, are made by more than 13,000 competing establishments, with an invested capital of more than a billion and a half dollars, with more than half a million wage earners employed, and producing nearly a billion and a quarter dollars in value of products annually. Every dollar of this capital and every workman employed in the industry is directly affected by the bill, and I can not find, either in the report of the Committee on Ways and Means of the House or, to any extent, in the discussion of the schedule, that serious consideration has been given to the effect of this revision on this particular branch of the industry, and the same thing is true of more than two- thirds of the industries covered by the schedule.

It appears in the discussion of this revision now presented to me for consideration that no public hearings have been given by the Ways and Means Committee of the House, on the ground that it would thereby cause delay. The Ways and Means Committee avowed that the principle of protection had not been considered, but that in framing the present revision of the metal schedule the committee had "adopted the general principle of reducing all duties to a revenue basis, so far as practicable, except in those cases where more cogent considerations than those relating to the fiscal policy of the Government dictated the transfer of given items to the free list." This makes a clear-cut issue between the protective policy and that of a tariff for revenue only, and without fuller information, therefore, I am obliged to treat this bill as a revenue bill, and one in which the consideration of preserving the industry by maintaining a tariff necessary to do so had little weight. There is nothing to show me that the duties provided in the bill will equal the difference in the cost of production here and abroad in the great line of industries, and that the wages of workmen will not be reduced by a measure which avowedly discards entirely the principle of fair protection. It should be noted that the labor employed in the secondary industries, which has had so little consideration in this bill, is in a large measure high grade, skilled labor, commanding a high level of wages.

This schedule was included in the general tariff revision of 1909, at which time public hearings were given, attended by importers, domestic producers, employees, and consumers, and the rates then on many of its items were heavily cut, ranging from 10 to 75 per cent, and it would seem now that a thorough study of each one of these separate industries should at least be made, that the Executive and Congress as well might act wisely and intelligently upon them, in order to avoid a further revision at an early date when the facts concerning them could be ascertained.

The products of many of these industries affected by this bill do not enter directly into the daily consumption of the people. The consumers of these products are, to a large extent, manufacturers using these articles in further processes of production. There is no evidence of any widespread demand from such consumers for a revision of the rates on these articles, and for this reason a sufficient time may well be taken to give the study to the respective industries which their importance would seem to demand.

I am not prepared to say that there are no items in this schedule which might not well be reduced, but the general average ad valorem rate of duty under it, taken as a whole for the year 1911, is 32.03 per cent, as against 37.97 per cent in 1896 under the Wilson law, or an apparent reduction of 15.6 per cent of the Wilson duties. The Dingley rates for this schedule in 1909 were 38.09 per cent, showing a reduction in 1911 for the present law of 15.9 per cent of the Dingley rates. Indeed, there is no year since 1883 when the Government statistics show as low an ad valorem rate of duty for this schedule as is shown in 1911, and it does not appear that schedule statistics were kept prior to 1883, so that no comparison can be made prior to that time.

There is little logical relation between the reductions made by this bill in the schedule. For example, steam engines and machine tools in the present law are dutiable at 30 per cent. In this revision steam engines are reduced to 15 per cent, and the whole machine-tool industry is put on the free list, without any reason whatever being given in the report of the Ways and Means Committee in either case for such action.

The term "machine tools" has already been the subject of much litigation, and its scope should be clearly defined before the great variety of articles which it now seems to cover are placed on the free list.

The expansion of our foreign trade would seem to demand that a transfer to the free list, like the one made in this bill, of such an enormous range of undetermined products and the opening of the best market in the world to free and unrestricted competition should not be made without at the same time at least securing, as is the case now of specified agricultural implements, the privilege of a like free entry into the markets of our competitors.

It is further difficult to understand by what process of reasoning it is possible to justify a transfer to the free list of a great line of finished articles, while nearly every one of the crude products from which they are made are retained on the dutiable list.

A bill for a complete revision of this schedule was presented to me a year ago in the extra session of this Congress. Many increases and decreases of rates are now made from those named in the former measure. The changes are not explained and indicate the hasty method pursued in the preparation of both. Is it not fair to ask, either on the basis of protection or revenue, which was right?

On the whole, therefore, I am not willing to approve of legislation of this kind, which vitally affects not only millions of workingmen and the families dependent on them, but hundreds of millions of dollars' worth of stocks of goods in the hands of storekeepers and distributors generally, without first providing for a careful and disinterested inquiry into the conditions of the whole industry.

From the outset of my administration I have urged a revision of the tariff based on a nonpartisan study of the facts. I have provided the means for securing such information in the appointment of a Tariff Board. Their thorough work, already completed on several schedules, has justified my confidence in this method. The principle is indorsed by chambers of commerce and boards of trade in almost every city of importance in the country. The proposed bill has not been framed on the basis of any such study of the industry.

Avowedly its rates are fixed with no consideration of anything but revenue. The principle of protection is disregarded entirely, and therefore it is not too much to say that the effect of these sweeping changes on the welfare of those engaged in these varied industries has been disregarded.

WM. H. TAFT.

The White House, August 14, 1912.