THE TARIFF: Show Is Over

One morning last week Chairman Reed Smoot of the Senate Finance Committee, distressingly fatigued after months of tariff-writing, was marched to the front portico of the Capitol by a dictatorial movietone cameraman. He was instructed to make a speech on the Hawley-Smoot (tariff) bill. For an audience the cineman commandeered Senator William Edgar Borah, hastening by to the barber shop for a much-needed haircut. Senator Smoot extolled his bill. Senator Borah looked glum. When the speech ceased Senator Borah turned, walked away. Cried the cineman, no student of tariff politics:

“Hey, Senator! Come back here! The show isn’t over. I want you to shake hands with Senator Smoot and say loudly ‘That’s fine!'”

Replied Senator Borah: “No, I won’t. The show is over.”

It was an epitome of the strained feelings engendered by the tariff bill which the Senate Finance Republicans last week finished drafting. Best Democratic comment was by Representative McClintic of Oklahoma: “The working man may worry because his shoes will cost a dollar or two more but truffles for his paté de foie gras are on the free list. . . . His sugar bill goes up as does his milk bill and his meat bill but he can get Gobelin tapestries for his humble home duty free. . . .”

Such sallies caused no flicker of a smile on Senator Smoot’s worn face. Like a litany he repeated the statistics of the new bill: “… 431 changes . . . 177 increases … 254 decreases … 13% of all increases in agricultural schedules. . . . Revenue under present law: $516,581,344; under the House bill: $646,014,545; under the Senate bill: $605,498,469. . . .”

With rates finished, the Finance Committee Republicans last week wrote the administrative features of the new bill. Chief changes:

Valuation. The cost of an article abroad (foreign value) is now used to assess ad valorem duties. The Finance Committee voted to change the system to domestic or U. S. valuation—then crossed its fingers and postponed the effective date to Jan. 1, 1932. Domestic value is “the price at which imported merchandise is freely offered for sale in the principal markets of the U. S. in wholesale quantities.” The committee’s purpose was to change the system of valuation without changing the scale of protection. The Tariff Commission was ordered to calculate the conversion and submit to Congress the new ad valorem rates (percentages) necessary to maintain the tariff level established by this bill. Then Congress would have to vote again to put them into effect.

Chief advantage of domestic valuation: to prevent fraudulent undervaluation of imports. Example: A shotgun sells abroad for $18.18. Its U. S. selling price is $43.30. The duty in the present bill is $6 plus 45% ad valorem. Valued at its foreign selling price, it will pay a duty of about $14.18. By applying U. S. valuation ($43.30) and maintaining the duty at $14.18, the ad valorem rate would be scaled down to about 18.89%. The remoteness, the complexity, the juggling opportunities of this valuation plan weighed heavily against its ultimate adoption.

Commission. The Tariff Commission was changed back into a bi-partisan organization responsible to Congress, contrary to President Hoover’s wishes.