They do ask now, however, to be relieved from the burdens which the tariff lays upon their industry.

Why should not the country be permitted to expand its industrial life along the line of least resistance, and why should not these shoe and leather industries be allowed full scope for the growth and development to which they are invited by natural conditions and the genius of our people, and thus be enabled to give profitable employment to many thousands more of our citizens?

WHAT OUGHT THE TARIFF RATES TO BE ON PAPER

AND PULP?1

BY CHESTER W. LYMAN, M. A.,

Assistant to President, International Paper Company, New York.

The Republican platform promises revision on the basis of "such duties as will equal the difference between the cost of production at home and abroad, together with a reasonable profit to American industries." The paper industry is quite satisfied with this principle, and it asks for itself only the same application that is accorded to other industries.

Importations of paper and pulp during the past few years should be considered and if there were some kinds extensively imported that are, or might be, made in this country the corresponding duties should be increased, not for the sake of the manufacturer but to build up the country. Also articles made from paper should be so protected as to create a maximum demand for home-made paper. No duty should be lowered simply for the sake of increasing revenue, as the first and foremost object of the tariff is to build up the staple industries of the country by conserving the home market. Let revenue come from luxuries and from articles which cannot be made here.

We ask only enough protection to enable us to meet such conditions imposed on our industry by nature or law as we cannot overcome by capital, energy and brains. We want merely a duty that will make it unremunerative for foreign manufacturers to sell in this country at our rock-bottom prices. We want the existing business and we want the increment that is bound to come with the further development of the country, but we are not averse to the duties being so low that some inconsiderable quantity of paper may come into this market, believing as we do that the stimulus of potential foreign competition is not a bad thing for the industry, and that high duties invite criticism and attack.

In fact, we believe that when business is good and the demand

While the following article is an expression of the writer's individual views, he believes it fairly represents the prevailing opinion held by paper and pulp manufacturers.

is equal to the supply, the tariff has little or no direct influence upon prices, and that its chief function is, during times of depression, to prevent outside supplies coming into a market already congested. Then it is that every ton of paper or pulp imported increases our unemployed labor and capital. There is now coming into this country a large quantity of Canadian pulp and paper. There are shipments also from Germany, Norway, and elsewhere, although many of our paper and pulp mills are shut down from lack of orders. When consumption falls off, the manufacturer must curtail production, which increases the cost. This increase he cannot overcome without reducing wages. At such a time he can ill afford to compete with foreigners for the scanty home demand. It would certainly tend to revive business to have a maximum tariff to apply in bad times and a minimum for good times; to exclude importations when we can make more than we can use; to admit them when we cannot.

Pulp, paper, and manufactures of paper are covered in the Dingley tariff by Schedule M, which is the result of gradual growth and is not laid out on any systematic plan. It is a question, however, whether it is worth while to destroy the continuity of growth by any rearrangement on more logical lines. This is a matter that those charged with revision will have to consider in connection with the tariff as a whole.

The duties on paper are substantially the same as they were both under the so-called "Wilson revenue" act and under the avowedly high-protection McKinley act, and are, on the whole, very much lower than the general average. The duty on ground wood pulp, reduced to an ad valorem basis, amounts to from 8 to 13%, according to market prices; on chemical pulp, about the same; on news paper it amounts to about 15%; on book paper to from 15 to 20%, according to grade; on writing paper it varies according to weight and quality from 25 to 32%. A few high grade papers and specialties have higher duties, but the average duty, reduced to an ad valorem basis, on all imports of paper during the year ended June 30th, 1907, was only 27.63%, whereas for all merchandise it was over 40%.

The total value of paper and manufactures of paper imported increased from $2,838,738 in 1898 to $10,727,885 in 1907; and of pulp from $601,642 to $6,348,857. It is certain that with higher

duties much of this paper and pulp could have been displaced by domestic product. This is particularly true of pulp.

Some European countries make various grades of paper requiring great skill and experience and the application of much labor, the manufacture of which could doubtless be established in this country by means of higher duties. However, it may come about that these papers will be made here without additional protection in the natural evolution of the industry, which, like many others, started with the lower grades but has been working up to the higher grades most promisingly.

Capital is turned over in the manufacture of paper more slowly than in most industries, which means that the profit on the output ought to be correspondingly larger to make a fair return. This would entitle paper to higher duties than other commodities rather than lower, if the attempt is to be made to protect a "reasonable profit." This important fact, we believe, has been entirely overlooked in the past.

While the industry has grown enormously, as a whole it has never been extremely profitable, competition frequently having been so fierce as to be destructive. Even before the prevailing depression most branches of the business had reached an acute state of unprofitableness, and it is safe to say that the lowering of tariff rates, extending as it would the scope of competitive production, would prove very disastrous.

Capital employed in the paper business has been frightened by the attacks which have been made upon it under the leadership of some of the newspaper publishers, and the Republican party, if it remains in power, should deal with the revision of the paper schedules in a liberal and reassuring manner. The opportunities for further development in this country have by no means been exhausted, but progress is certain to be retarded by hostility manifested in any manner, particularly through legislation.

The proposition to reduce or repeal the duty on pulp has no more merit than the similar proposition in reference to paper. The fact is ignored that pulpwood is on the free list. We do not need to import both pulp and pulpwood. It is certainly better for the country to have the latter imported and manufactured here into pulp. The pulp industry is in itself an important one, the amount of pulp made to sell amounting in value to many millions of dollars a year.

Pulp is therefore far from being a raw material and it would be manifestly a discrimination against pulp manufacturers to deny them the same kind and degree of protection accorded to other industries. Morever, pulp-making is a most important part of the process of paper-making where the two processes are combined in one plant, as in the majority of cases. It requires proportionately as much capital and labor as the after-process of converting the pulp into paper. It would be extremely illogical to cut the process of paper-making in two in the middle and provide less protection for one half than for the other.

The Republican platform proposes minimum and maximum schedules, the latter being intended "to meet discriminations by foreign countries against American goods entering their market." This feature of the tariff would not be available in case Canada should continue or extend her discrimination against this country in connection with the exporting of pulpwood. Therefore it would be safer to frame the paper and pulp schedule with the particular end in view of meeting Canadian efforts to transplant the industry from the United States to its own borders.

We would like to see in our tariff an "anti-dumping" provision such as Canada has, which practically makes it impossible for foreign manufacturers to sell their surplus in her market at lower prices than those prevailing at home; and the countervailing or retaliatory clause which is now a feature of our paper and pulp schedules, providing an increase in duties corresponding to discriminations by foreign countries in restricting pulp and pulpwood exportation, should certainly be modified to render impossible certain evasions which now are practiced.

In marked contrast with the Republican program, the Democratic platform singles out the paper industry for attack in this plank:

Existing duties have given to the manufacturers of paper a shelter behind which they have organized combinations to raise the price of pulp and paper, thus imposing a tax upon the spread of knowledge.

We demand the immediate repeal of the tariff on wood pulp, print paper, lumber, timber and logs, and that these articles be placed upon the free list.

It is well known that this plank originated with certain newspaper publishers who tried to get Congress last winter without investigation to place paper and pulp on the free list. Having failed