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The depreciated currency practically annihilates any Protection afforded by the present Tariff.

What is needed is an emergency bill, substantially on the following lines:

That duties be levied and collected and, in addition to present Tariff, of a further percentage on invoice values, amounting per cent. of depreciation on in the value

to a

of current money of the country of shipment and at the port of shipment on the day of shipment.

Where the duty in the present Tariff is 25%, and currency at port of shipment is depreciated to 70%, then the duty should be 25% on invoice value and also 30% on invoice value. This will overcome depreciated currency and restore values and duties to par and carry out the spirit of the present Customs Tariff.

By the plan proposed, any deviation, whether higher or lower in the current value of money abroad, will be reflected in the additional duty which should be imposed. This to apply on all dutiable merchandise in the Customs Tariff.

Yours respectfully,
THE LINEN THREAD CO.,
A. R. Turner,

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Week ending Weeks corresponding Dec. 30, Dec. 23, to this week

1920 1920 1920 1919 1918 1917 New England 77 13 10 16 40 32 Middle.....128 94 21 32 47 80 West'n 83 55 21 20 58 56 N'thw'st'n .. 46 26 5 5 8 19 South'n .118 120 15 26 33 81 Far-w'st'n.. 18 29 10 6 14 24

Total

470 337

82 105 200 292

Shipowners Versus Shipbuilders.

Shipowners favor subsidies for the protection of American ships in competition with foreign ships. They do this because they think direct gifts are better than indirect Protection, that cash in their hands from the National Treasury with which to enable them to meet the competition of foreign ships, in our foreign carrying, is superior to any preferential (that is to say, indirect) method of ship protection. With the cash in their hands they know precisely the extent that they are favored, whereas, if the Protection is indirect it might not be possible for them to realize as clearly whether or not they could meet foreign competition. It must be manifest that if the shipowner does not earn more than he spends he will not be able to stay in business. The American shipbuilder, therefore, is concerned in the enactment of legislation that will be sure to enable the American shipowner to overcome the effects of foreign competition. But, after all is said and done the shipbuilder is dependent upon indirect Protection, whether subsidies are paid to owners, or the latter are protected by preferences in duties on goods carried or on the tonnage of the ships.

The shipbuilders believe that protection for American ships can be obtained in a manner less obnoxious to the people than through direct subsidies from the National Treasury. They believe in and they advocate the old preferential policy-the policy in force for over sixty years in the United States, under which no money was drawn from the National Treasury to help our shipowners to meet foreign competition-a policy that during the time it was in force gave to American ships the great bulk of American foreign carrying, despite every kind of retaliation that foreign nations and foreign ships could put into execution. The shipbuilders, in what they advocate indirect protection for our ships, that is to say, the same kind of Protection that is accorded to all other American products that come into competition with foreign products in the home market-are likely to attract to their support all the rest of the protected American interests. If Protection is sought for our ships through the instrumentality of our Tariff Act, the same as Protection is sought for all other American interests requiring Protection, how will it be possible for the beneficiaries of Tariff Protection to refuse to support the demands of our shipbuilders? Already we have seen that the influence of the protected interests of the country is sufficient to enable them to cause the committees of Congress that deal with Tariff matters to busy themselves with the details of a Protective Tariff, even in advance of the meeting of the Congress that expects to pass such a Tariff Act. Hearings are to be held during the present short and last

session of the 66th Congress on the different schedules of Tariff legislation, so that the bill can be in readiness for prompt discussion and early enactment as soon as the 67th Congress is called in extraordinary session. The conclusions of the committees will be, in all probability, allcontrolling with each branch of the Congress. If, therefore, the shipbuilders seek to secure the insertion in the new Tariff Act of the discriminatory shipping legislation they believe in, considering the provsions of section 34 of the recently enacted Merchant Marine Act, and the growing sentiment in Congress in favor of indirect instead of direct protection for our ships in foreign trade, then they should not be opposed by the shipowners, then they should receive the support of the Congressional committees and of the Congress, as well as the Executive.

Why should this not appeal to the shipowners? They are to enjoy so-called subsidies-really compensation for carrying the mails-wherever they carry the mails, as already provided for in the Merchant Marine Act of 1920; and there is no limitations placed upon those who have the authority to fix the amounts of the compensation for carrying the mails. Fortified with this provision in existing law, and further aided by the reapplication of the old policy of discriminating import duties and tonnage dues favorable to the goods carried in American ships, and the ships themselves, respectively, the shipowners should be satisfied to at least remain passive while the shipbuilders seek to secure the application of indirect Protection to our ships through the same instrument that gives indirect Protection to all other American industries requiring such Protection.

As a matter of fact, there should be the most cordial co-operation between the shipowners and shipbuilders in the securing of national legislation for the protection of our ships upon the seas. If they disclose a schism, if the owners oppose the builders, then the jig is up, because probably the other protected American interests, the Tariff-making committees and the Executive, will refuse, one and all, to take sides between the occupants of a "divided house." The interests of our shipowners undoubtedly will be served by the enactment of preferential shipping legislation. Why not get it, while it still is possible to get it?

We recently saw a melodrama in which a fond grandfather was forced to take the offspring of an unhappy alliance of his daughter with a renegade husband, and bear the trouble and expense of rearing the child. We were reminded forcibly of the Protective Tariff party's burden in having to care for the illegitimate offspring of the absconding Free-Trade party.

Make Model Dresses Dutiable.

The case of Louise & Company et al., appellants, vs. the United States, appellee, scheduled for hearing before the Court of Customs Appeals in Washington on January 18th, emphasizes the need for a change in the existing regulations governing the entry into the country, free of duty under bond for exportation within six months, of models of women's wearing apparel. The model provisions, contained in paragraph J, subsection 4, section 4, of the Tariff Act of 1913, were enacted by Congress for the purpose of stimulating the manufacture in this country of women's wearing apparel. Importers, under the present law, are permitted to bring any number of models into the country for copying purposes on the stipulation, agreed to by the importers, that the models are to be shipped out of the country within the period provided for in the statutes.

It is a matter of common knowledge in import circles that this privilege, extended by the American Congress to importers, has been shamefully abused and taken advantage of. The law, until very recently, was absolutely ignored and regarded by these importers as a mere convenience to use or not to use as their inclinations dictated. With the ruling by the Board of United States General Appraisers, however, the unlawful practice of bringing models into the country and using them for the purpose of obtaining as many and as high rental figures as the traffic would bear has been somewhat curtailed. Unless the customs court reverses the findings of the lower customs tribunal, which is believed to be highly improbable, importers who bring models into the country must agree to use them in their own establishments and to export as many models as they enter, if they expect to obtain duty refunds. To bring fifty models into the country without payment of Tariff charges and to sell as many as can be advantageously disposed of, the remainer to be exported, is a practice that will no longer be tolerated by the customs appraising officers throughout the country. The sale of one or more models from a shipment entered free of duty, under bond, now subjects the entire consignment to the payment of duties.

This line of reasoning is correct and should, as is expected, be upheld by the customs court when the issue has been reviewed by that tribunal.

The better method, however, and one that should seriously engage the attention of the Ways and Means Committee when that body undertakes to remodel the existing customs administrative laws, is to eliminate the model provisions from the new Tariff act. If our women must have frocks copied from the latest Parisian creations, importers can well afford to pay duty on the models brought into this

country. This will eliminate all incentive on the part of certain importers to hold Uncle Sam in contempt. Fabulous prices are asked and obtained for these models. Importers here are perfectly willing to pay these prices, knowing the weakness of many American women for any article of apparel marked "Made in Paris." It matters not, it seems, whether our imported styles border upon indecency so long as they originate in Paris. Some day this appetite for styles created by foreigners may be satisfied, or, maybe like the saloonkeeper and the brewer who was warned that unless he dispensed his wares with moderation he would bring prohibition upon his head, the importer will continue to foist ridiculous fashions upon the women of our country, until those with better judgment and tastes arise in wrath and induce a sympathetic Congress to bar all foreign models from our shores. Be that as it may, it is high time that importers who insist upon bringing models into the country be compelled to pay their share into the United States Treasury. In addition to eliminating the free privileges embraced in the existing Tariff Law it would be a good idea to increase the duty on models of women's wearing apparel from 60 to 100 per cent. ad valorem.

The Tariff An Issue.

In its issue of December 28th, the New York Journal of Commerce says:

"It should be fairly clear that the Tariff was in no sense an issue in the last election." We expect Free-Trade editorials from the Journal of Commerce, so we are never surprised when one appears, but even a Free-Trade paper should be consistent with itself. However, that is too much, perhaps, to expect of a paper of heretical tendencies. In its issue of December 6th it said:

"One of the pledges given during the recent political campaign was in effect that the farmer should have as much Protection as the manufacturer. The pledge was seriously taken. and now there are many plans afoot among farm interests for the adoption of Tariff measures. Duties on wheat, grains in general, wool, hides and various other products of the farm are advocated, and there will be urgent demand for action this winter. It is not likely that any bill applying Tariff duties on these commodities will go to the statute books before spring, but the new Administration will, of course, have to give some thought to its promises in the matter."

One does not have to be above average intelligence to perceive the inconsistency of the two statements. If the Tariff was not an issue, then why any "pledges" and why were those pledges "seriously taken" and why will "the new Administration" "of course have to give some thought to its promises in the matter?" It would appear to people of ordinary intelligence that the giving of pledges which have to be redeemed because they were taken seriously and acted upon made the subject of such pledges, the Tariff, "an issue in the last election." There was no more important issue before the voters and the voters themselves realized that the Tariff was to

them a vital issue, and that is the reason why they voted out the Free-Trade Administration and voted for one "pledged" to Tariff Protection.

North, South, East and West the people are demanding an adequate Protective Tariff and Congress is preparing to give them one, because the Tariff was one of the dominant issues in the last election.

Propaganda for German Scientific Instruments.

An anonymous circular, signed "Friends of Science, Interested in Its Development," and purporting to be a plea for the defense of scientific and educational institutions in America, has recently been issued.

It asks, "Why should the duty on scientific instruments be increased? Why should educational institutions be deprived of importing scientific instruments free of duty?" The answer to both questions is simple-Because the prosperity of the United States depends upon the advancement and stability of American labor and industry, and not on that of foreign countries. Cur country will not sacrifice one class of people in order to satisfy the pecuniary whims of another class.

The United States is not depriving its educational institutions of anything to which they are rightfully entitled. It is well able to supply, from its own resources, the wants of its institutions in this direction. We have a domestic source of these instruments. During the war, when the demand for scientific instruments for use in the army and navy was at its peak, the United States was forced to look to its own to satisfy that demand. At great expense, that industry was developed and brought to a stage where it could satisfy the demand for its output, and it must now be protected. That or any other of our industries cannot be properly maintained and developed while exposed to unfair competition of cheap foreign labor.

If the instigators of this circular were as much interested in the advancement of science and education as they would have us believe they are, then why make an anonymous plea? If the intentions of these self-styled "friends of science" are sincere and can bear the test of publicity, then why hide behind a nom de plume? Surely anyone undertaking an honest mission need not hide or camouflage his identity.

The fact is, more likely, the authors of the above propaganda are importers of microscopes and kindred instruments who are thriving at the expense of American labor.

We doubt very much whether the authors of the circular are in fact "Friends of Science." Rather they should sign themselves, "Friends of German manufacturers." Like many importers who took advantage of the free entry provisions of the Tariff law, they are dishonest. The importers in many instances misrepresented the facts of the case in order to avoid the payment of duty. We have known of specific instances of such evasion of the law. In any event, it is more important that we should have a stable domestic industry in the lines or production in question than that educational, scientific and philosophical institutions should be given the privilege of importing German goods free of duty.

To allow the present provisions of the statute to remain in force, is to destroy the domestic industry which has grown up under the promise of Governmental support. Were the institutions in question the sole beneficiaries, and did the law affect only the instruments and utensils supposed to be covered by the provisions in question, there would be more to be said in favor of the law. As it is, the law is used to build up foreign production. Importers of scientific and educational instruments and utensils are informed by the German manufacturers that, if they want to buy such goods for the institutions who are entitled to import them duty free, they, the importers, must also buy other goods which are dutiable. If the American importer should prefer to buy American-made goods he is not permitted to do so, for he would lose the market for the duty-free goods which, under absolute Free-Trade, would not be made in this country.

It is also true that there has been a great deal of irregularity in the importation of such duty-free goods, for the reason that the importations are so often made by importers and not by the institutions direct. The result is that the real beneficiary in this country is not the institution sought to be benefitted, but the importer himself. Small orders are sometimes placed for free goods under the exemption provided by the statute, and the importer multiplies his importation manyfold and all the goods come in duty free.

The Germans are, at the present time, flooding our markets with various surgical instruments, chemical glassware and porcelain, and other articles, some of which are entitled to free entry, but the bulk of which fraudulently escape the payment of duty. Domestic manufacturers of such articles have been obliged to close their factories and have been forced to become importers of the German products, or go out of business entirely. Under presnt conditions the Germans can sell in this country at a very low figure. The depreciation of the German mark permits that, and the privilege of free entry helps still more. When German currency shall have returned to par value, unless the domestic production shall have been given the benefit of Protection, the Germans will have full control of the

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TARIFF REVISION BEGINS.

Tariff Hearings by Ways and Means Committee Commenced -Emergency Agricultural Bill To Fail in Senate-Repassage of Payne-Aldrich Tariff Foreshadowed-Schedule of Tariff Hearings-Rules To Be ObservedNo Hearings on Special Tariff Bills Passed by House-New Tariff by September-Importers of Italian Products to Protest Tariff Increase.

Correspondence AMERICAN ECONOMIST, WASHINGTON, Jan 5. The real work of revising the nation's Tariff law will begin tomorrow at the hearings which are to be held by the Ways and Means Committee of the House of Representatives. Although much pressure has been brought to bear upon the Senate to induce its acceptance of the Fordney Emergency Agricultural Tariff bill there is still no sign of favorable action there and every indication promises that the measure will die on the floor of the upper House.

Senator Penrose of Pennsylvania, chairman of the Finance Committee of the Senate, returned to Washington last week after a long and trying illness. He is still unable to go to his committee room and probably will not appear upon the Senate floor for some time. He has installed offices, however, in the Wardman Park hotel, where he is living, and will be in constant touch with the progress of Tariff and tax legislation. Efforts to induce him to co-operate in the passage of the Fordney emergency measure have proved fruitless, and this is taken as a deathblow to that bill. Behind all, however, is the fact that the Democrats of the Senate will not support the measure. With only fifty legislative days remaining and a pile of other work to do, only the passage of a cloture rule could make possible the adoption of a contested Tariff bill. As this would require a two-thirds majority and the Republicans have a majority of only one in the Senate and all of these are not in favor of the bill-such a course is out of the question.

Senator Penrose and Senator McCumber of North Dakota, vice-chairman of the Committee, have promised that the bill will get a fair hearing from the Committee, but that is as far as they are willing to do. It is probable that the bill will receive a favorable report from the Committee and that it will be put on the Senate calendar with that report. But there is little likelihood that the measure will receive actual consideration on the floor of the Senate. The fact that the Senate still has a long list of appropriation bills before it which must be passed by March 4 -is largely responsible for the likelihood that there will be no time for Tariff legislation.

There is still considerable discussion over the suggestion that Congress re-enact the Dingley or Payne-Aldrich schedules as a temporary makeshift until a complete revision of the Tariff can be put upon the statute books. Neither of these measures would fit any too well, as both were written before the war, and the readjustment of American industries has changed a lot of things from the conditions of 1897 of 1909. It is doubtful, however, whether either could prove so dangerous to American industry or so empty of revenue as the Underwood-Simmons law that now decorates the statute books.

The following is the schedule of the hearings which will begin tomorrow before the Ways and Means Committee: Schedule A- Chemicals, Oils and Paints, January 6, 7, 8.

Schedule B-Earths, Earthenware, Glassware, January 10, 11,

Schedule C-Metals, and Manufactures of, January 12, 13, 14.

Schedule D-Wood, and Manufactures of, January 15, 17.

Schedule E-Sugar, Molasses, Manufactures
of, January 18, 19.
Schedule F-Tobacco, and Manufactures of,
January 20.

Schedule G-Agricultural Products and Provisions, January 21, 22, 24.

Schadule H-Spirits. Wines, and Other Beverages, January 25.

Schedule I-Cotton, and Manufactures of, January 26, 27.

Schedule J-Flax, Hemp, Jute, Manufactures of, January 28, 29.

Schedule K-Wool and Manufactures of, January 31, February 1, 2.

Schedule L-Silk and Silk Goods, February 3, 4.

Schedule M-Papers and Books, February 5, 7.

Schedule N-Sundries. February 8, 9, 10.
Free List, February 11, 12, 14.
Administrative and Miscellaneous, February
15, 16.

The Committee has formulated the following rules concerning the evidence to be heard:

"Oral Testimony-Those desiring to testify should apply to the clerk of the Committee at least one day prior to the date of the hearing in order to be assigned time on the program from that day. The following information should accompany the application: Name; permanent address; temporary address in Washington; person, firm, corporation, or associations represented; paragraphs of act concerning which he seeks to be heard; and the amount of time desired.

"Briefs-To aid the Committee, witnesses are requested to file copies of their briefs with the clerk in advance of the date of hearing. It is suggested that briefs should follow the outline given below:

"1. Items and paragraphs in which interested; changes in duties recommended; reasons for such recommendations.

"2. Importance of industry; development of industry and future prospects; number of employes affected.

"3. Domestic production costs and wages and comparable costs and wages in foreign countries; also, if available, information concerning dumping, unfair competition, or other practices aimed to impair or destroy domestic industries.

"4. Source of imports, volume and prices at which offered.

"5. Suggestions as to changes in phraseology or classification in the existing law.

6. Suggestions as to administrative features of the existing law with a view to their betterment."

The Committee has already heard several weeks of testimony concerning the dyestuffs industry and does not expect to repeat much of it. It is not impossible that the license project contained in the present Longworth bill will be discussed anew, but there seems less likelihood that the Committee will look upon it with favor as a part of a general Tariff revision measThe Longworth bill is in the Senate

ure.

but there is no possibility of its resurrection at the present session.

The Committee has already heard witnesses with respect to beans, magnesite, tungsten, zinc and graphite. This testimony is not to be given anew, although there is no promise that the rates contained in pending special Tariff measures on these items will not be radically revised.

The Committee wants to conclude the hearings in ample time to permit the printing and indexing of the complete record before the close of the present session March 4. When this is done it will get to work on the rates. These, however, will not be framed by the Committee as a whole but solely by the Republican members of the new Committee. The Democrats as in other years of Tariff revision by the Republicans, will merely be allowed to file minority reports when the measure is presented to the House of Representatives. While some of the more optimistic members of the House talk about the possibility of passing a Tariff bill by July, Representative Forney of Michigan, the chairman of the Committee, is less enthusiastic and holds out no hope of a finished law before September.

It is interesting to note that among the applications to be heard by the Committee is one from the Italian Chamber of Commerce of New York, made up of importers of Italian products, who will file objections to increasing Tariff duties upon olive oil, acids and medicinal products in Schedule A; pumice stone, asphalt, bottles and marble in Schedule B; aluminum and automobiles in Schedule C; briar root in Schedule D; alimentary paste, cheese, preserved and prepared vegetables, dried fruits and lemons in Schedule G; flax and hemp and manufactures of these in Schedule J; silk and silk goods in Schedule L; paper and books in Schedule M; straw braids, plaits and hats and felt hats in Schedule E. OSWALD F. SCHUETTE.

The Dollar and the Foreign

Exchanges.

Editor AMERICAN ECONOMIST.

Sir-Your paper is of such educational value and so correct, it seems to me, in its Tariff views that it is the more unfortunate you publish these rather wild attacks by a correspondent who signs his name fully, on the Federal Bank Act. I have just read the latest to reach me in your issue of October 8th.

After quite misleading remarks on the Spanish exchange the writer assures us that not only in Spain but "in other countries our dollar is at a discount of 25 per cent. The fact which cannot be blinked, means that for every hundred millions spent on foreign products or to settle other foreign debts, we must pay 25 millions more to square the debt" (the italics are mine). But the fact is, your dollar so far from being at "a dis

count," is everywhere at a great and advancing premium! The pound sterling which used to buy nearly five dollars today buys less than $3.50. Thus any debt or any purchase of a hundred pounds due to England you now liquidate with $350. Thus it is England, France, Italy, whose exports are stimulated by the huge premium (not "discount") at which your dollar stands. Hence, as Mr. Schuette points out, your favorable "Trade balance tends to disappear" because of the discount on the pound sterling, the franc and the lira. In my opinion it was, under Providence, your Federal Bank Act which "won the war." Your correspondent may care to read a paper of mine on your new act which will be in the Nineteenth Century Review for next month (November).

Seeing that he blunders so prodigiously in a matter so elementary one is inclined to "verify his references" and I feel it very difficult to believe that Japan, Canada, the Argentine and foreign depositors in American banks have with you any "ear marked" gold deposits, or deposits that demand gold in exchange, such as your correspondent tabulates, nearly $2,765,000,000. He adds that he has made this "statement in numerous articles in the AMERICAN ECONOMIST without contradiction, but after the 25 to 45 per cent. "discount" he detects in your dollar I am, I confess, sceptical, and should appreciate your editorial endorsement. At any rate the new Federal Bank Act which the world primarily owes to the most scientific Protectionist of our generation, the late Senator Aldrich of Rhode Island will function splendidly when the men who operate it move, as with further knowledge and experience they will move, a little more courageously. It is the very Magna Charta of modern finance and we in Great Britain intend to copy it for our Empire system of banking and currency. A dozen "regional" banks in the British Isles in Canada, Australia and Africa and we shall breathe freely and bank safely. Yours faithfully,

(Signed) MORETON FREWEN. Brede Place,

Sussex, Oct. 21st.

Editor of the AMERICAN ECONOMIST.
My articles on

the Federal Reserve act seems to have aroused the ire of Mr. Moreton Frewen of England. Referring to my views on the dollar and foreign exchanges, he says:

"After quite misleading remarks on the Spanish exchange the writer assures us that "not only in Spain but in other countries our dollar is at a discount of 25 per cent. This fact which cannot be blinked, means that for every hundred millions spent on foreign products, or to settle other foreign debts, we must pay 25 millions more to square the debt. But the fact is your dollar so far from being at 'a discount' is everywhere at a great and advancing premium. The pound sterling which used to buy nearly five dollars today buys less than $3.50. Thus any debt or any purchase of a hundred pounds due to England you now liquidate with $350."

"Seeing that he blunders so prodigiously in a matter so elementary, one is inclined to 'verify his references.''

Well now, I can "verify" my "references" by simply referring to my scrap book. In the article to which Mr. Frewen refers I state that "two years ago the American dollar was at a discount of 45 cents in Spain and Spanish bankers actually refused to extend credit to this government without it made a deposit of gold." This was based on the following statement in the New York Times, July 6, 1918:

"Seeks to stabilize Spanish Exchange. Fred I. Kent of Reserve Board Meets Bankers Here. Dollar Discount now 45 per cent.

"The meeting lasted about an hour and a half and the bankers discussed ways and means for stabilizing dollar exchange in Spain.

"At various times the suggesting of floating an allied or American loan in Spain has been considered, but, according to statements of bankers, the Spanish Government officials and financiers have not welcomed the proposal. A plan by which a loan could be amply secured has been rejected by the Spaniards who have stated that they would consider a loan only on the condition that the same were secured by a deposit of gold." (Italics are mine.)

On August 4, 1918, the Brooklyn Eagle announced that:

"Otto H. Kahn had arranged to have Spain grant a commercial credit to America amounting to about $100,000,000."

The truth is that our dollar had been depreciating for months previous. Thus the New York Tribune of July 24, 1917, quotes this from the Lausanne Gazette:

"Not since the Civil War has the American dollar fallen so low. It was quoted here today at 4 francs 46 centimes while before the war it stood at 5.12."

The dollar fell still lower in November of that year. In Denmark, Sweden and Holland it was worth only 75 cents.

A year later the Tribune (November 16) reports that:

"News that the allied nations, including the United States, are negotiating a loan in Holland is not surprising. Probably similar negotiations are in progress in other neutral countries, inasmuch as such credits are needed to rectify the exchanges. All European belligerents have borrowed in neutral countries, and the United States finds it just as desirable to do so as the others."

We also borrowed from South America. In 1918 Argentina granted us credits for $80,000,000 and Peru loaned us $20,000,000.

Now all this borrowing was to stabilize our depreciated currency. If the dollar was worth only 75 cents in Holland or elsewhere, then we would have to pay 25 cents more to square the account. The fact that the "pound sterling which used to buy nearly five dollars, today buys less than $3.50," does not alter the case a particle. The English newspapers are as well posted on this borrowing as our own; and how so astute an observer as Mr. Moreton Frewen could "blunder so prodigiously" as to have overlooked "so elementary a matter" is beyond my comprehension.

Who owns our gold?

Mr. Frewen finds "it very difficult to believe that Japan, Canada, the Argentine and foreign depositors in American banks have any 'earmarked' gold deposits or deposits that demand gold in exchange, such as your correspondent tabulates,

nearly $2,765,000,000." Here again I refer to my scrap book for authority. British-owned Canadian banks have been lending money call at New York for at least 25 years. In recent years the sums thus loaned were: in July, 1914, $125,000,000; October, 1916, $189,000,000; January, 1917, $189,000,000; December, 1919, $169,000,000; March, 1920, $189,000,000.

According to the New York Tribune (January 31, 1917), much of the alleged Canadian money was lodged here on account of the British Government. In September, 1917, English bankers had about $110,000,000 invested in southern cotton loans. The Tribune (January 26, 1920), says that Japan had some $700,000,000 invested or deposited in the United States and England. "In one form or another Japan had command over gold in this country to the extent of not less than $400,000,000." But another authority puts the amount here at that time at $500,000,000. In 1919 Argentina was credited with having about $75,000,000 "ear marked gold" deposited in American banks.

The biggest lien on gold stock is held by migratory aliens. In June, 1919, Director Stewart of the Department of Labor estimated this item at $4,000,000,000. It represented the savings of the vast army of alien laborers who were marooned here during the war period. The National City Bank circular (July, 1919), quotes this estimate, but thinks it was too high, so I cut it down to $2,000,000,000. Before 1914 alien savings were estimated at from $300,000,000 to $500,000,000 a year. There was a stoppage of immigration and emigration during the war, but the aliens who remained here earned two and three times as much as they did before. But as they couldn't send their hoards home the estimate that they had a lien of $2,000,000,000 on our gold stock in June, 1919, cannot be far out of the way.

This answers Mr. Frewen's criticisms of my views on our borrowing abroad, stabilizing the dollar, and the foreign lien on our gold stock. What he says about the Federal Reserve Act is a very poor answer to the arguments which I advanced against that measure. It is not necessary for one to repeat those arguments here as he has not even attempted to discuss them. He says the Reserve act won the war and I have no doubt the framers of the measure will agree with him. But I am just stubborn enough to assert that the two million soldiers we sent overseas had something to do with that great accomplishment. He calls the Reserve Act the "Magna Charta of modern finance." But there are not a few people in this country who will indorse the opinion which I expressed in one of my articles, that:

"If ever a people were hornswoggled, flimflammed, double-crossed and camouflaged by an act of legislation, it was the American people when they allowed that measure to become a law."

The Tariff will be a big question be

fore Congress; and the chief argument against higher rates will be the one urged by the New York World, namely-That Europe owes us so much that she is unable to pay cash. Therefore, we must cancel the debt or take it out in trade. That argument has been assailed and disproved by the AMERICAN ECONOMIST. I have sufficient faith in the ECONOMIST'S view to petition Congress to investigate and ascertain which side is right. Does Europe owe us, or do we owe Europe? Are we a creditor, or a debtor nation? Let us have the facts before we begin any legislation on the Tariff.

WILLIAM H. ALLEN.

California Bean Growers.

Their Industry Is in a Bad Way for Lack of Tariff Protection.

Under the patriotic spur of the call to win the war with food California planted 558,000 acres to beans in 1917, and harvested a crop that brought $50,000,000 to the State. In the following year California bean growers raised their plantings to 592,000 acres and threshed a correspondingly larger yield.

But having encouraged the California farmer thus to go in for beans the Administration at Washington proceeded to smash the market by purchasing Manchurian beans for the Allied armies and navies. Oriental growers invited thereto by the trifling tariff of less than half a cent a pound, poured their beans into this country. The result was that California bean acreage fell to 395,000 acres in 1919 and the return therefrom to $19.418,000. The acreage is less and the prospect worse for this year.

Needless to say, Manchuria, Japan. Madagascar, South Africa, the East Indies and South America can produce beans at costs impossible in the United States. So long as the Tariff stands at 25 cents a bushel of sixty pounds they will continue to dump beans on the American market at prices ruinous to the California grower. So long Free-Traders rule in Washington this condition will prevail. San Francisco Chronicle, 10.21.20.

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