Message to the House of Representatives Returning Without Approval an Act Removing All Duties on Articles in the Metal, Cotton, Wool and Leather Schedules of the Tariff Law of 1909

To the House of Representatives:

I return, without my approval, House bill 4413, entitled—

"An Act to place on the free list agricultural implements, cotton bagging, cotton ties, leather, boots and shoes, fence wire, meats, cereals, flour, bread, timber, lumber, sewing machines, salt, and other articles."

This free list covers articles in the metal schedule, the cotton schedule, the wool schedule, and the leather schedule. In a special message returning, without my approval, the wool bill, I have set forth at length the reasons why I think all general amendments to the existing tariff laws should be postponed until accurate and scientific information can be submitted to Congress by a Tariff Board appointed for the purpose of investigating the question of the difference in cost of production of dutiable articles at home and abroad. The same reasons which impelled me to decline to sign the wool bill control me in this case. There are other reasons apparent on the face of the bill, taken in connection with the existing law, which make it unwise to allow this bill to pass.

The bill is so carelessly drawn that it would inevitably lead to the greatest uncertainty as to what articles are or are not covered by its various provisions. This would impose a heavy burden on the administrative branch of the Government, create disastrous uncertainty in commercial circles, and lead to a burdensome amount of litigation. The bill, while apparently very simple and affecting only a few articles, is in reality so loose in its phraseology that it would affect hundreds of items in the existing tariff act. Conceding the wisdom of its general policy, the paragraphs of the bill ought to be rewritten in definite and specific terms.

Take the expression in the first clause, following the specific mention of agricultural implements, "all other agricultural implements of any kind and description, whether specifically mentioned herein or not, whether in whole or in parts, including repair parts." This language is so sweeping that it might be made to cover almost 150 articles used in agriculture, which would affect many sections of the present tariff, and lead to the most injurious uncertainty. Furthermore, it would make it possible to import free many materials now paying a duty, when roughly fashioned into the form of parts of farm implements but actually intended for entirely different uses.

Again, take the general expression in the second clause, the bagging clause, "other material suitable for bagging or sacking agricultural products." It is a serious question whether this section might not be interpreted to make radical changes in many sections of Schedules I (cotton), J (jute and hemp), and K (wool), and it would undoubtedly be open to the same objection of allowing free entry to a large amount of textile manufactures, technically suitable for sacking agricultural products, but intended for entirely different purposes.

Another clause that calls for comment is in the leather paragraph, which reads as follows: "Leather cut into shoe uppers or vamps or other forms suitable for conversion into manufactured articles." The history of this clause is informing as to the method of drafting the bill. The phraseology is found in a proviso at the end of paragraph 451 of the existing tariff. The whole paragraph imposes various duties on different kinds of leather, including many more varieties than are made free by this bill, and the language of the proviso is used in the existing law to impose an additional ad valorem duty on all such leather when cut into forms for further manufacture. The draftsman of the bill now before me took this language, struck out the 10 per cent ad valorem, and left the preceding descriptions of leather out of which the forms were to be cut, dutiable as under the present law. The result is that calfskins tanned, kangaroo, sheep and goat skins, dressed and finished, bookbinders' calfskins, chamois skins, patent and enameled leather, pianoforte leather, and other varieties of leather, when uncut, would pay, under the proposed bill if it became a law, duties ranging from the equivalent of 40 per cent ad valorem down; while the cut forms of such leather would come in free. This imposes a penalty on the domestic labor of cutting and would transfer half the process in the industry of shoemaking and glove making to foreign countries. The result is so unreasonable as to suggest great haste in preparation.

Another clause equally full of difficulty is that admitting free, "Barbed fence wire, wire rods, wire strands, or wire rope, wire woven or manufactured for wire fencing, and other kinds of wire suitable for fencing, including wire staples." This section seems to be drawn with the idea of giving free wire for fencing purposes, but is so loosely worded that it might be taken to include also the highest grades of wire rods and wire rope. This is especially true, because wire rope is never used for fencing, and the words "wire rods, wire strands, or wire rope" are separated by commas from the rest of the section, and it is difficult, with the collocation of terms here used, and in face of the fact that wire rope is not used for fencing at all, to limit "wire rods, strands and rope" here made free to something suitable for fencing.

The truth is that the language of the act is so ambiguous and possibly all-embracing that it is impracticable for the Treasury Department to give an exact estimate as to the diminution in revenue which will follow its passage. The estimates vary all the way from $10,000,000 to $14,000,000, according to the varieties of construction put upon the act and this, although when the bill was first under consideration it was publicly stated by its advocates that the reduction in revenue would not exceed $1,500,000.

The difficulty with the bill is that in the sections above referred to it purports to secure a free list for the benefit of a certain class of users; but to classify articles by their use or their suitability for a certain use is so contrary to the methods of classification in the existing tariff law that its adoption would create the utmost confusion. The danger is not so much that the class of users in whose favor the classification purports to be made will receive more benefit than the framers of the law may have intended, but it is that many who do not belong to the class intended to be favored will import articles suitable for the prescribed use under the general terms of the statute, but will use them for other and general purposes. The effect will be to break down altogether the classification upon which the arrangement in many of the present tariff schedules is based. If there were no other reason for withholding my approval from this bill, this one would be all-sufficient.

But there is another, and a very important, reason why the bill ought not to become a law, and that is that in many instances it adopts the principle, rarely permitted in any revenue system, on whatever theory constructed, by which the finished product is made free from duty, and the raw material and the machinery necessary for its production are kept on the dutiable list. Even the most extreme free trader, or advocate of tariff for revenue only, has never before sought an adjustment of the duties which subjects the manufacturer to a burden in his manufacture by imposing a duty on the machinery and raw material he uses, and involves him in unrestricted foreign competition as to the finished product. This is true with reference to leather and shoes, with reference to material for bagging, with reference to cotton ties, and wire for baling and for fencing, and indeed for the agricultural implements included in the catch-all clause to which I have referred.

A third objection to the bill is that, without in fact reducing the price to the consumer of the articles admitted free in a number of the paragraphs, it gives an advantage to Canada, our neighbor on the north, which by withholding we might well use in the future to secure further concessions for us in the reciprocity agreement, which the present Congress has requested me to expand.

Let me give the instances: Agricultural implements specifically mentioned in the bill are shown by a report of the Bureau of Trade Relations of the State Department to be cheaper in this country than anywhere in the world. This is confirmed by the fact that under existing law all countries admitting our agricultural implements free can have free access to our markets for the same articles. Great Britain is the only country whose present laws entitle her to this privilege, and which exports such articles in great quantity and yet she exports practically none to this country. We urged Canada to consent to free trade in these articles in the reciprocity agreement, but she declined. Now it is proposed to give her free trade in them while she retains a duty of 15 per cent ad valorem on our agricultural implements. To admit her manufactures will not lower our prices, but it is giving her access to our markets for nothing, while we might use this privilege to secure some concession from her.

The same thing is true of that part of the present bill in which meat and flour are put on the free list for countries with whom we have a reciprocal agreement, and which receive free our agricultural products. This limits the admission of free meat and flour to Canada only. Meat in Canada and flour in Canada are as high as they are in the United States, and in many instances higher. We asked to have free trade in these two articles under the reciprocity agreement, but Canada declined, for the reason that she feared the effect of the competition of our meat packers and our flour mills with her packers and millers.

Now it is proposed to open this market to the Canadian packers and millers without our having access to the Canadian market. Such action will not reduce the price of meat or flour in this country. That is shown by the fact that they were afraid of our competition. In normal times their importations will have no effect on our markets, and hence the admission from Canada of meat and flour will be of practically no benefit to the consumer, but will offer an inducement to capitalists thinking of building mills or packing houses to put them on the Canadian side of the border where they can have the advantage of both markets free. This is another instance in which the bill takes away from the President, in dealing with the matter of reciprocity, something that he might use in a trade to induce further reciprocity.

Another instance is in reference to the more finished kinds of lumber. Under our reciprocity agreement, rough lumber enters both countries free. Canada imposes 25 per cent duty on the more finished article, and we impose a duty of a different amount. If, now, we take off all duty on the finished product, we are giving her our market in this lumber for nothing, while we do not secure the benefit of hers; and we give to her Provinces a very strong motive for imposing restrictions and limitations on the cutting and export of rough lumber to this country in order to induce the transfer of the whole lumber manufacturing industry to Canada.

I withhold my approval from this bill, therefore, for the reasons, first, because it should not be considered until the Tariff Board shall make report upon the schedules it affects; second, because the bill is so loosely drawn as to involve the Government in endless litigation and to leave the commercial community in disastrous doubt; third, because it places the finished product on the free list, but retains on the dutiable list the raw material and the machinery with which such finished product is made, and thus puts at a needless disadvantage our American manufacturers; and fourth, that while purporting, by putting agricultural implements, meat, and flour on the free list, to reduce their price to the consumers, it does not do so, but only gives to Canada valuable concessions which might be used by the Executive to expand reciprocity with that country in accordance with the direction of Congress.

WILLIAM H. TAFT.

The White House, August 18, 1911.