as an appendix to this chapter which emphasizes the distinctions in commercial policy. The first division is on the basis of the dependency of the United States upon foreign sources. The second division is between reproducible and non-reproducible' raw materials. The former are those which can be reproduced over a comparatively brief period of time by cultivation or breeding (e.g. cotton or rubber). The latter are those raw materials which once consumed are not at all replaceable by man (e.g. minerals), or at least not within a brief period (e.g. forests). Minerals are classed as nonreproducible with a full appreciation of the fact that prospecting may result in the discovery of new reserves. High prices or national necessity may thus bring out new supplies, but the distinction still remains and the possibility of exhaustion is merely removed to a later time. Any classification of this character is necessarily a rough approximation. Admitting that different opinions may place a given product in different groups, the broad classifications are of significance in analyzing the general problem. This classification places raw products into three groups: 7 See page 189. The Practical Need for International Conservation of Minerals. Mr. C. E. Julihn, Bureau of Mines. The following classification was adopted by the British Dominions Royal Commission in its report in 1917 (Cd. 8462), pp. 66, et seq.: MATERIALS OF WHICH THE WORLD'S REQUIRE MENTS ARE MAINLY OR WHOLLY PRODUCED We doubt whether it was realized before the war, that the Empire had substantially a monopoly of the world's production or distribution of certain most valuable commodities of commerce. Even if the fact were dimly recognized, no effort had been made by the Governments of the Empire individually, or in coöperation, to use these commodities to their commercial advantage. Canada produces much the largest proportion of nickel, cobalt and asbestos, and, in conjunction with India, of mica. I. Practical Total Dependence of the United States on Foreign Countries. II. An Adequate Domestic Supply and in Some Cases an Exportable Surplus. III. Not Produced in Sufficient Amounts in the United States to Satisfy Home Consumption, and Domestic Supply Must Therefore Be Supplemented by Imports from Foreign Countries. Each of these classes is subdivided into reproducible and non-reproducible raw materials. No useful purpose will be served by a detailed discussion of the raw materials listed in this classification. Many of New Zealand produces practically the only supply of Kauri gum and phormium fibre. The Union of South Africa has the virtual monopoly of diamonds and ostrich feathers. India has a monopoly of jute, whilst the West African Colonies yield the major portion of the world's supply of palm nuts and palm kernels, and the Eastern Colonies of plantation rubber, The British Empire produces about 40 to 45 per cent of the world's total supply of wool. If merino wool only is taken, the proportion is much higher. The Empire also produces over 60 per cent of the world's output of gold. MATERIALS OF WHICH THE EMPIRE'S REQUIRE MENTS ARE APPROXIMATELY EQUALLED BY The second category embraces many staple foodstuffs and commodities of which the production is widespread both in the Empire and elsewhere. In many cases the position is that whilst the Dominions are self-supporting, the United Kingdom is not. Wheat, meat, butter, wool and cheese are examples of this kind. ARTICLES MAINLY PRODUCED AND CONTROLLED OUTSIDE THE EMPIRE It is in this group of articles that the possibility of economic pressure from foreign countries controlling supplies of raw materials requires especially to be provided against, and that Government action is most needed in order to promote economic independence. In our opinion no general remedy applicable to all classes of goods exists; the action needed must vary in character with each article and the precise line to be taken in each case can only be suggested to the Governments interested after careful examination by the best expert authorities. them will be referred to in subsequent chapters to illustrate different commercial policies. Only a few will be discussed at this place for the purpose of bringing out the principles involved in levying import tariffs on raw materials. General theories do not help very much in tariff making, but there are certain broad principles which help to define the field. This is the purpose which led to this classification. I. RAW MATERIALS FOR WHICH THE UNITED STATES IS TOTALLY DE PENDENT. In the first place, then, consideration will be given to raw materials for a supply of which the United States is totally or almost totally dependent on foreign countries. Three important textile fibres are not produced in the United States-sisal, jute and silk. Yucatan dominates the world market in sisal, but manila from the Philippines is a substitute limiting the control of the sisal producers. India's position in jute, and Japan's in silk are almost monopolistic. No satisfactory substitute has been found for jute, but artificial silk is becoming an important competitor with natural silk. Rubber is another product of which we must get our entire supply from abroad. Certain branches of the American vegetable oil industry are largely dependent upon foreign sources of raw material. Notable among these is the copra-crushing industry. Our supply of copra, the raw material of coconut oil, comes chiefly from the Philippines. None is produced in continental United States. Coconut oil is used principally in the soap industry and to a less extent in oleomargarine and lardsubstitute manufactures. The product of domestic crushers comes into competition with imported coconut oil and indirectly with other foreign and domestic vegetable oils and animal fats. Tin is the only major metal not found in the United States in deposits of sufficient purity and extent to justify a domestic mining industry. Small deposits have been found at widely separated points and attempts have been made to develop them, but up to the present time the domestic output has been absolutely negligible. None of these developments justify any hope that the United States can ever become independent of foreign sources of supply. The countries of largest production in order of their importance are the Malay Peninsula, Bolivia, Dutch East Indies, China and Nigeria. British interests have prohibited the exportation of tin ore and concentrates from British possessions, and we are dependent upon British territory for much of our supply of refined tin. There is, as a matter of fact, no economic justification for the smelting of imported ore in Cornwall, where most of the British works are located. Not only is there no good port, but both fuel and raw materials must now be brought from a distance. The location of this business is a survival of the days when the Cornish mines were able to produce a large output. The British smelting interests have attempted to hold control of this industry by the imposition of differential export taxes on tin ore and concentrates in the colonies. Unless it can be proven to the satisfaction of the Government that such ores or concentrates are to be smelted and refined in England or a British possession a prohibitive surtax is levied. In spite of this limitation of raw material American smelters have recently invaded the field of tin reduction, and it is this branch of the industry in which the United States may become a real factor in production. The domestic industry depends upon Bolivia for its ore supply. For further discussion see chapter V. The United States is practically totally dependent on outside sources for its supply of platinum. In the years before the European war 90 per cent of the world's supply came from Russia. Since 1914, at first due to the war and later to the general disorganization, the production of this metal at least for export ceased. As production from the Russian field fell off, the Colombian deposits (controlled by American capital) were developed until they supplied the bulk of the world's needs. These deposits are not as extensive as those in Russia, and the great demand has seriously depleted their reserve. Three big corporations control the entire world's production of nickel. The largest of these is an American company-The International Nickel Company-but its mines are situated in Canada. A French company, Société Anonyme de Nickel, has plants in England and France operating on ore from New Caledonia. The only other important producer is the Mond Nickel Company, which sends its Canadian ore (matte) to Wales for refining. The country of largest production is Canada. Her great ore bodies at Sudbury, Ontario, furnish fully 60 per cent of the world's output. New Caledonia, a French colony in the South Pacific, supplies most of the remainder. The deposits in the United States are low grade, scattered, and unimportant as compared with the enormous ore deposits of Canada and New Caledonia. Until recently most of the world's nickel was refined in American plants, but as a result of increasing agitation in Canada for the home refining of the Sudbury matte a refinery was erected at Port Colburn, Ontario, during the war and the American plant has been dismantled. There is also some agitation for protection either in the form of a bounty or an export tax on the ore and matte to foster the industry in Canada. It is fairly certain that in the future we shall be wholly dependent on foreign sources for our supply of nickel except a sporadic output at one smelter in Missouri and from another in New Jersey, the latter utilizing New Caledonian matte. Domestic deposits of antimony are of both high and low grade, but are widely scattered and of doubtful importance. Previous to the sudden stimulation in 1915 and 1916, antimony mining in the United States was insignificant. In 1918 some half-dozen mines maintained operations, but they contributed less than 2 per cent of the domestic requirements. China has large, easily mined and rich deposits, which, with cheap labor, make that country foremost among the sources of the world supplies. Deposits in other countries, notably Mexico, Canada and Bolivia, are much superior to those of the United States, but China can furnish the antimony supply of the world at costs that are extremely low. It is unlikely that American mines could furnish any large supply except at a very high cost. The amount of asbestos consumed by the United States annually exceeds the combined consumption of all the other countries of the world. For our supply of raw material we are dependent upon Canada, which supplies about 95 per cent of our total annual imports. Known deposits of asbestos in the United States are entirely inadequate to supply our domestic needs, and although efforts are being made by the Government to discover additional areas, it is probable that no very large deposits of this mineral exist in this country. Since the United States is the largest manufacturer of asbestos products in the world, a part of this product finds its way back to Canada. As a result of this, there has been in recent years agitation for the enact ment of an export tax or embargo having for its purpose the establishment or transference of this industry to Canada. Obviously, such products as copra, tin ore, platinum, nickel, antimony and asbestos, of which practically our entire supply comes from foreign countries, present many serious problems (e.g., the problem of military needs), but at least they present no protective import tariff problem. No American producers exist to ask for protection, and American consumers desire to get their raw materials from abroad as cheaply as possible. Revenue needs might lead to the imposition of a duty on these products, but usually they are on the free list. II. RAW MATERIALS OF WHICH THE UNITED STATES HAS AN ADEQUATE DOMESTIC SUPPLY In striking contrast with our natural poverty in the raw materials classified under the first main division of the classification is the richness of our position in other raw materials represented by those classified under the second and third divisions. Our dominant position in cotton needs no comment in this connection. In our early tariff acts cotton was occasionally dutiable, but with the exception of a duty of 7 cents per pound on long staple cotton in the Emergency Act of 1921 (now repealed) cotton has been exempt from duty since shortly after the Civil War. Canadian competition has resulted in import duties being imposed from time to time on forest products, but in recent years a large percentage of the industry has favored free trade, partly on general principle, partly because of American holdings in Canada. In the case of crude metals and minerals we are absolutely dependent on foreign nations for but few. In times of peace considerable quantities of certain minerals are imported as a matter of economic convenience and price, but if the occasion arises most of the minerals can be produced within our borders to supply domestic needs. Our domestic supply of lead ore is ample for our domestic needs. Chiefly because of competition from Mexico lead ore has been dutiable. Large quantities of lead, however, are imported in bond from Mexico, smelted and refined in American plants, and the pure metal re-exported. In respect to petroleum and sulphur the United States is on an export basis and under such conditions an import duty would not affect the price and would be merely nominal. Although we import large quantities of copper from South America and Mexico, our domestic production is a dominant factor in the world market. Our imports consist of crude metal (containing silver and gold) which is refined in domestic plants and the pure metal exported. Formerly we were dependent upon foreign sources for our supply of molybdenum, but the needs of war developed our domestic resources so that we advanced from a state of almost complete dependence to one of considerable overdevelopment. We have the largest iron and coal reserves in the world. in the world. Imports, when they exist, are to supply local or special needs. The Pacific Coast, for example, is supplied in part by the coal of British Columbia. We import considerable quantities of Swedish, Mediterranean, Cuban and South American iron orein some cases because it is cheap, in other cases because it is free from objectionable impurities, and in still other cases because it contains small amounts of nickel, chromium or manganese. We import from 10 to 20 per cent of our domestic consumption of bauxite, used in the manufacture of aluminum. Both price and superior quality enter into these importations. We have very large reserves of this raw material. We also import considerable quantities of pure aluminum in the form of ingots, sheets and shapes, but this is a matter of convenience or price since plant capacity and ore supplies proved sufficient during the war to satisfy not only our own expanded needs but also a demand for export. Generalizations concerning import duties on products listed under the second division (i.e., raw materials of which we have an adequate supply and in some cases an exportable surplus) is not practicable except within limits. It would not be true to say that these products present no tariff problems. Producers of some of these products have been most insistent for protection. The very fact that the supply is adequate to domestic needs has been urged as a reason for reserving the home market by duties for the American producer. When the export trade is not an important factor in the trade, tariffs will favor the producer and, if he is strong, he will probably get protection. When, however, there is a large exportable surplus, and particularly when the American product dominates the world market, tariff duties are merely nominal when they exist, except that without them there might be small local importations. Products like cotton, petroleum and sulphur are naturally on the free list. Prices are fixed by international competition or by monopoly and a tariff would have no effect if levied. III. RAW MATERIALS OF WHICH THE UNITED STATES HAS AN INADEQUATE SUPPLY The value of the classification of raw materials into reproducible and non reproducible becomes more evident where consideration is given to the import tariff problems in the third division. If the environmental conditions are favorable, the quantity of the reproducible products can be increased by cultivation and breeding. Whether or not they are produced depends on such factors as price and competition with other lines of production (e.g., competition of dairying with sheep husbandry). If, then, a country wishes to encourage the production of these products, it can under certain conditions do so by imposing an import tariff which raises the price. Two very dissimilar cases-tobacco and wool-will be used to amplify the problems presented by products in the third division. Although the United States occupies an outstanding position as the world's largest producer and exporter of leaf tobacco, our manufacturing industries are dependent upon foreign sources for certain particular varieties of leaf required by them. Chief among these varieties these varieties are cigar wrapper, Havana filler, and Turkish cigarette tobacco. Imports supply approximately 30 per cent of the domestic consumption of cigar wrapper. Most of the imports originate in the Dutch East Indies, principally in Sumatra. In addition small quantities of Havana wrapper are imported to supply the demands of our clear Havana industry. Since 1910 imports have averaged somewhat over 5,000,000 pounds, while the duty of $1.85 per pound has been equivalent on the average to over 170 per cent ad valorem. Should imports of cigar wrapper be cut off, the cigar industry would be embarrassed because of the difficulty of substitution of domestic for foreign leaf. Sumatra tobacco is marketed almost entirely in the Netherlands. The |