THE TARIFF: PL R. 2667 Compromise

THE TARIFF

H. R. 2667 Compromise

With their hands now free to give and take, the five Senate conferees on the Tariff Bill last week moved swiftly to a final compromise with the five House conferees on the disputed items of H. R. 2667. The export debenture plan was dropped irrevocably from the measure. The rate on soft lumber, twice free-listed by the House and fixed at $1.50 per 1,000 ft. by the Senate, was set at $1 per 1,000 ft. after the Senate conferees had explained that further recession might cost them the votes of the Senate’s “lumber bloc” and thus imperil final approval of the bill.

Flexibility held up the conference until a technical compromise had been evolved whereby the Senate gave up nine points for every one surrendered by the House. Under the present law the Tariff Commission investigates differences in the cost of producing a commodity here and abroad, lays its factual findings before the President who thereupon is free to flex the rate up or down any amount he chooses within the limit of 50% of the written law. The President thereafter may again alter the rate, with or without additional facts from the Tariff Commission.

The House voted to continue this system. The Senate virtually annihilated it by transferring the flexing power from the Presidency to Congress.

The Compromise: The Tariff Commission would make its factual inquiry, as now, but, in addition, would determine the rate of change, within the 50% limit to equalize production costs. This specific recommendation for flexing the rate would go to the President whose duty it would be to act in 60 days. Instead of fixing the rate change for himself, he could only approve or disapprove the rate proposed by the Tariff Commission. His failure to act in 60 days would automatically put the rate change into effect on the Commission’s order. Once the new rate was in effect the President could not tamper with it without further authority from the Tariff Commission. For all practical purposes the Commission would become a tariff rate-making body.

President Hoover was said to be displeased with this compromise, which decreased his tariff authority. In his Boston campaign speech, as a presidential nominee, he had said: “The American people will never consent to delegating authority over the tariff to any commission.”

Eliminated from the bill was the House’s plan to have the Tariff Commission weigh complex and intangible differences in “competitive conditions” instead of production costs.

Senate Leader Watson hopefully predicted the bill would be through Congress in ten days. First the Senate must approve the conference changes in toto; then the House must sanction the flexibility change and the new lumber rate. That the President would sign the bill and try to flex out its imperfections was a firm congressional conviction.

At the last moment Senator Smoot, in charge of the bill, received a sudden mysterious message from President Hoover on the Rapidan.

Whirlwinds of condemnation of the whole Hawley-Smoot Tariff Bill continued to blow through the public press. President Hoover was implored to use his veto power. Potent businessmen were quoted at length on the economic evils that would follow in the law’s wake. Editorial writers blazed away at it in long double-leaded leaders. The basic economic argument was as follows:

High duties will prevent foreign nations from selling to the U. S. This will reduce their income, hence their buying power, hence their purchase of U. S. goods. U. S. export trade will diminish, with a consequent decline in U. S. production, employment, profits.

Press leaders against the tariff were the Scripps-Howard chain (25 papers) and the Hearst chain (24 papers). By word and picture they flayed “the billion-dollar Grundy Bill.” The Scripps-Howard newspapers interviewed Henry Ford, quoted him as saying the bill would “stultify business and industry and increase unemploy-ment.” Scripps-Howard statisticians in Washington broadcast to all papers in the chain doleful stories of what would happen if H. R. 2667 became law. An example : “The Grundy Tariff Bill will dog Americans’ footsteps from the cradle to the grave—and after. The tomb will be no sanctuary from its depredations. Experts estimate the cost of dying will be increased more than 33%. . . . Rates on coffins . . . shrouds . . . artificial wreaths . . . candles . . . tombstones . . . are all raised. . . .”