By the acts of July 14, 1870, May 1 and June 6, 1872, important reductions in tariff rates were made and the free list greatly enlarged. It was officially estimated at the time of the passage of the various acts that these changes would result in a reduction of the revenue from customs of $57,227,510. The revenue from this source in 1869 was $176,114,904, and in 1873 it was $184,929,542, or an increase of $8,814,138, instead of a reduction of $57,227,510. This increase took place notwithstanding the fact that free importations increased in value $157,707,264 between 1869 and 1873. Similar results may be reasonably expected should the House bill become a law.

If foreign manufacturers should, through the changes made in the cotton and woolen schedules, secure a quarter of the market now held by our cotton and woolen manufacturers-and this is certainly a very conservative estimate-the additional amount of duty collected from increased importations would amount to at least $60,000,000 annually. The expansion of imports which would surely follow the reduction of rates on china, porcelain, common window-glass, manufactures of iron and steel, flax, jute, hemp, and a large number of minor manufactures, would greatly augment the revenue.

(2) It provides no remedy for undervaluations, but, on the contrary, it invites and gives immunity to unlimited fraud by the substitution of ad valorem for specific duties.

(3) It does not remedy any of the inequalities or anomalies, or cure any of the defects of existing law. While it perpetuates existing infirmities, it creates, by its obscurities of purpose and phraseology, and by its faulty construction, doubts and ambiguities which must multiply indefinitely the confusion now existing. The bill does not preserve the classification of dutiable articles in schedules, and it is impossible to say in many instances to what clause of existing law the amendments proposed by the bill were intended to apply, or what their effect would be. Although the different paragraphs in the various schedules have been numbered for reference at the Treasury Department, they have never received any such legal designation as would permit accurate description or identification for purposes of amendment or repeal, and the difficulties which would certainly arise in the interpretation of various provisions of the bill would unavoidably lead to endless litigation and serious loss to the Treasury. Some of the defective provisions now in force have caused great injury to important industries. For instance, the paragraph fixing rates on hat materials, reads as follows:

Hats, and so forth, materials for: Braids, plaits, flats, laces, trimmings, tissues, willow-sheets and squares, used for making or ornamenting hats, bonnets, and hoods, composed of straw, chip, grass, palm, leaf, willow, hair, whalebone, or any other substance or material, not specially enumerated or provided for in this act, twenty per centum ad valorem.

This has been construed by the Treasury Department and the courts to admit silks, satins, laces, and a large variety of other expensive ar

ticles as "materials for hats," which are really used for other purposes, at the low rate of duty of 20 per cent. ad valorem, when for other uses the same articles are dutiable at 40 to 50 per cent. ad valorem. The clause in the bill under consideration which provides for the duty on hat materials reads as follows:

Hats, materials for: Braids, plaits, flats, willow-sheets and squares, fit only for use in making or ornamenting hats, bonnets, and hoods, composed of straw, chip, grass, palm-leaf, willow, hair, whalebone, or any vegetable material, not specially enumerated or provided for, twenty per centum ad valorem.

It was probably the intention of the framers of the bill to remedy the defects alluded to, but it is clear from a comparison of the two paragraphs that the provision of existing law in regard to materials for hats, composed of "any other substance or material" than straw, chip, etc., would still remain in force and unrepealed, and the practice of importing silks, laces, etc., as hat materials, at 20 per centum ad valorem would continue. Similar failures of amendments to amend are found in all parts of the bill. To illustrate cases of this kind we have appended to our report (Appendix F) a list of paragraphs of doubt. ful meaning, together with some of those where any probable interpretation would increase existing confusion.

The results, however, which would flow from the failures of the bill as a corrective measure would be much less disastrous to the material interests of the country than those which must surely follow the adoption of its vicious affirmative propositions.

AD VALOREM DUTIES.

The feature of the bill which most clearly indicates its purpose is the proposed substitution of ad valorem for specific duties. This substitution could have no other result than to change rates now protective for others which would not protect. The promoters of this bill must have been familiar with the testimony submitted to Congress by Secretary Manning disclosing enormous frauds upon the revenue and honest merchants through the use of ad valorem rates. The frequency and notoriety of these frauds and the wide-spread demoralization resulting from them should have prevented any attempts to extend the system.

The use of ad valorem rates has been condemned by the experience of every commercial nation in the world, by the judgment of those who have been intrusted with the responsibility of customs administration, and by honest importers and merchants, as well as by intelligent political economists and legislators of every shade of economic belief. The reasons for this general and sweeping condemnation are obvious; ad valorem rates are equally unsatisfactory and uncertain whether levied for revenue or for protective purposes; duties based on foreign market value are, even under the most favorable circumstances, with honesty of purpose on the part of the importer and the highest degree of knowledge

and unquestioned integrity on the part of the appraising officers, necessarily uncertain and unequal; but when, as now, many foreign importers deem the successful evasion of our revenue laws by unscrupulous methods the highest evidence of business capacity, ad valorem rates fail lamentably of their purpose. They greatly exaggerate variations in foreign prices. When business is depressed and foreign prices are abnormally low, when foreign competition is most to be dreaded, and when a defensive barrier is most needed by domestic producers, then ad valorem rates are lowest, protection is reduced, and depression is intensified. On the other hand, when foreign values are highest rates are highest, and restriction enlarges into prohibition.

If it is desirable that a sliding scale of duties should be adopted, rates should increase as foreign prices diminish. Ad valorem rates afford facilities for the grossest frauds upon the revenue; through undervaluations they invite evasions of the law and reward dishonest importers, while they destroy the business alike of honest importers and of domestic manufacturers. The foreign manufacturer practically fixes the duty which he is willing to pay, and in many cases the only limitation upon the amount of foreign importations is the extent to which the fear of detection influences the persons who make the invoices. The evils which flow from ad valorem rates are so great and so manifest that this plan of collecting duties has no advocates but professional and political revenue reformers and dishonest consignors.

In illustration of the effect of the House bill to increase importations and break down domestic producers, we cite the application of ad valorem rates to the manufacture of fine cotton cloths. The specific rates now levied upon cotton cloths furnish no reasonable grounds for adverse criticism, either by the producers or consumers of cotton manufactures. The inevitable effect of the substitution would be to largely increase the importation of all the finer and more expensive classes of these goods, and to produce disorganization and depression in this important industry. The uniform rate of 40 per centum proposed, bears very unevenly upon the various grades of goods. It would be, if collected upon an honest valuation protective upon the coarser and commoner kinds which are largely consumed by all classes of our people, but it would encourage the importation without restraint of those fine fabrics which may be properly designated as luxuries.

The leading cotton manufacturers of the country joined in an emphatic protest to the framers of the bill against the adoption of ad valorem rates, and submitted the following strong statement of their objections to the system:

While the ad valorem method seems to theoretically have the merits of simplicity and equity, it is in practice found to be unreliable, a prolific source of undervaluation, false invoicing, and false oaths, and a premium upon commercial disonesty, and to tend toward a transfer of legitimate business from honorable importers to the most irresponsible and unscrupulous class of foreign traders. A reference to the records of revenue from the customs department and the United States courts, or in

quiry among importing houses, will convince you, it is believed, of the truth of the foregoing assertion, and that the gravity of the danger inherent from the ad valorem system is not exaggerated.

It is therefore thought to be proper to call your attention to this proposition of the adoption of ad valorem rates pure and simple, and to urge in the strongest manner that no such backward step be taken, however enticing it may appear theoretically, but that the ad valorem rates be used only where the specific form is inapplicable, or to supplement the latter in order to better equalize rates, as it is wisely applied in the present tariff.

While no classification of cotton cloths can be equitable, and discrepancies will from time to time appear and disappear, consequent on changes in processes and the fickleness of fashion, these inequalities are found in practice under the specific form to be so inconsiderable in amount as to have but an insignificant bearing upon the principle and a trifling effect upon the revenue or volume of business, and any objection based upon such inequalities would be found to be imaginary rather than real.

The proposal to apply this principle to all manufactures of wool would be equally unsatisfactory and destructive. The rate proposed in the woolen schedule would prevent importation of the low grades of flannels, blankets, and hats of wool, and all low and medium grades of cassimeres and other cloths which enter into the clothing of the great mass of our people, but would be insufficient upon all the finer classes of dress goods and cloths for men's wear. All the articles in both these schedules which could be classed as necessaries of life, and which are worn by our working men and women, would be protected by the rates proposed to the extent of exclusion of the foreign article, while upou all the finer and more expensive products, which are in the nature of luxuries and purchased largely by the rich, the rates would place no restraint upon importations and would furnish no protection to the American producer.

Specific duties have been advocated by all our Secretaries of the Treasury, with one notable exception, Mr. Robert J. Walker, from Hamilton, to the present incumbent of the office. The opinions of these officers are given in Appendix A. All the leading statesmen and financiers of Europe, and all acknowledged authorities on taxation on either side of the Atlantic, have advocated specific duties. They have been commended by all the principal administrative officers of customs, by the leading merchants, and by the chambers of commerce, in all of our large cities, for their simplicity and certainty in execution. No expert knowledge is required for their enforcement by customs officials, as the articles upon which they are levied have only to be counted, weighed, or measured. While specific duties are less liable to evasion and are certain and uniform in their operations, giving greater stability to the revenues, they also have the beneficial tendeny to exclude from the country inferior, adulterated, and worth less goods.

INJURIOUS REDUCTIONS IN RATES MADE BY THE HOUSE BILL.

That the Senate may be fully advised of the injurious character of the radical reductions in rates which are proposed by the House bill, a

table is appended to this report (Appendix G) which shows in parallel columns existing rates, the rates proposed, and the percentage of reduction in each case.

The rates proposed in the schedules imposing duties on silks, wines, liquors, and tobacco are not changed by the terms of the House bill, and but slight reduction is made in the rate of duty on sugar.

With the exceptions named, every tariff schedule is invaded by alterations made with the hostile spirit which pervades the bill, and nearly all of our industries would feel the blighting effect of changes which are either inconsiderate or purposely destructive. The following list contains a statement of some of the manufactures which would be seriously injured by these reductions:

Articles on the dutiable list injuriously affected by the Mills bill.

The committee estimate the value of the annual product of these industries to be at least $2,000,000,000, and that in their prosecution employment is given to not less than 1,250,000 persons, while at least 5,650,000 are directly dependent for support on their continued existence and prosperity.

The testimony taken by your committee and herewith submitted to the Senate contains abundant evidence in detail from manufacturers and workmen alike of the destructive results sure to follow the adop tion of the House bill.

From the representatives of imperiled industries a voice of universal protest has been raised and the action of the Senate has been earnestly invoked to preserve great enterprises from ruthless and unnecessary ruin.

For weeks we have patiently listened to persons employed in the various pursuits and from every section, and with doors open to all, we have