1st Session No. 7 TARIFF READJUSTMENT-1929 REPORT TO ACCOMPANY A BILL To provide revenue, to regulate commerce MAY 9, 1929 UNITED STATES WASHINGTON: 1929 TARIFF READJUSTMENT-1929 MAY 9, 1929.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed Mr. HAWLEY, from the Committee on Ways and Means, submitted the following REPORT [To accompany H. R. 2667] The Committee on Ways and Means, to whom was referred the bill (H. R. 2667), a bill to provide revenue, to regulate commerce with foreign countries, to encourage the industries of the United States, to protect American labor, and for other purposes, having had the same under consideration, report it back to the House without amendment and recommend that the bill do pass. TARIFF ACT OF 1922 The Tariff Act of 1922 was passed while the unsettled conditions following the war still prevailed both at home and abroad. It effected a change from a tariff made under the general free-trade theory to that made under the protective theory-the historic policy of the Republican Party. Speaking generally, it has served the country well. The past six years have been years of unprecedented development, not only in our own country but in other countries. It has fully justified its existence. It has restored confidence, rehabilitated industry, fostered agriculture, provided millions of wage earners with employment at higher wages than ever paid in the history of the world, and brought an unprecedented prosperity generally to our people. For the great majority of the articles for which it provided protection it is still efficient and sufficient. However, many new products have entered the markets since 1922, new conditions have arisen in production, new and active competitors have entered the field, the duties on some goods, wares, and commodities as provided in the tariff of 1922, enacted before conditions here and abroad had attained a normal peace time basis, were placed too low, and for other reasons readjustments have become necessary. The proposed legislation is early fulfillment of promises made in the recent campaign. 3 REASONS FOR THE READJUSTMENT Since 1922 conditions in business, in industry, and in agriculture have materially changed. New products have been added to the list, improved machinery has been adopted both here and abroad, foreign competition has attacked production in new ways, and new lines of products are being manufactured destined primarily for the American market. New competitors have entered the field seeking markets in the United States and the competition has been vigorous and insistent. Two of the countries whose newer development has been important are Italy and Czechoslovakia. The labor cost in production is an essential factor. The average rate of wages abroad is 40 per cent or less than that in the United States. While the effectiveness of foreign labor is increasing, their wage scales have not increased in proportion. This creates a serious situation not only for the manufacturer but for the laborer. It is the desire in the United States to maintain wages consistent with the American standard of living. The opportunity of labor to secure employment and of the employer to pay wages depends upon the ability of industry to market its products. Naturally, foreign products seek our market because it is a cash market. Being enormous in size and varied in demand, it absorbs products in great variety. Speaking generally, values represented in invoices should be multiplied by three to represent American values. Imports and exports under the Act of 1922 have been twice those for the years under the Underwood tariff exclusive of the war and immediate postwar years. The protective policy, which has resulted in increased prosperity in this country, has increased the value and desirability of American trade. The protective policy does not exclude and is not intended to exclude foreign products from our markets, but does propose that such products should not come into this country to the detriment of the American producers and wage earners. Moreover, it can be safely stated that under the protective system domestic competition more than foreign imports is the most important factor in regulating prices which consumers in this country pay for the products they consume. Imported articles are sold here at whatever prices may be obtained, irrespective of the cost of producing such products abroad. They may be offered at prices a little below those of competing American products, in order to obtain control of the market. Also they are sold at prices greatly in excess of the foreign cost, because buyers are unaware of the great profits being made on them, or because of representations made that they are imported articles with the inference that they are therefore better. AGRICULTURE AND INDUSTRIES Industries generally in the United States are in a sound and prosperous condition but there are a number of instances where the foreign competition is being sharply felt. There is a slackening in. these, loss of employment, and a number of instances were presented at the hearings showing that enterprises had been abandoned or are in serious straits. Only a part of an industrial system may be affected, yet the foreign competition may be important. Agricultural products as a whole have been more generally affected. In order to make the tariff meet modern conditions the present readjustment is undertaken. Under the Underwood Act of 1913 agricultural products generally were put on the free list. The restoration of these products to a dutiable status where they properly belong by the Tariff Act of 1922 has been of immense advantage to the agricultural industries. In recent years, however, there has been some depression in agriculture and in some industries. In the present bill increased protection, which in a number of instances is very material, is proposed for them. It is essential that we provide for our people the basic necessities of life, of which food and clothing are among the most important. Moreover, the protective theory has always assumed that political freedom and economic independence are inseparable. This was indicated in the first act of general legislation signed by President Washington, and the Republican Party has been a consistent supporter of this policy. PROMPT ACTION During the campaign of 1928 the Republican Party proposed to the country that a readjustment of the tariff would be effected, and special reference was made to a readjustment of the tariff as a part of the program of relief for agriculture. The country responded by the election of President Hoover with a tremendous vote and by a greatly increased Republican membership in this body. Construing the result of the election as an authorization and direction to this Congress to readjust the tariff duties, upon its assembling in December, 1928, it was decided to begin promptly this work. The initiation of revenue legislation is confided by the Constitution to the House of Representatives. The Committee on Ways and Means is its agency for the preparation of such legislation for its consideration. Early in December, 1928, the members of the committee of the 70th Congress, all but one of whom had been reelected to membership in this Congress, met and arranged for the work. Following the precedents, notice was given through the press of the country, and otherwise, that hearings would begin on January 7, 1929. The entire committee was present at the hearings, which covered more than six weeks. The committee sat mornings and afternoons and many evenings. Over 1,100 persons were heard orally and some 300 more submitted briefs without entering a personal appearance, and some 11,000 pages of testimony were taken. Each witness was assigned a definite time for uninterrupted statement, and after the conclusion of such statement the members of the committee questioned the witnesses. PRECEDENTS FOLLOWED According to the practice in such matters, the Republican members, being the majority of the committee, undertook the preparation of the bill during the interim between the Congresses, under authority granted in Public Law 1034, 70th Congress. Preliminary to this work, early in December, subcommittees were created, consisting of three |