tariff controversy. And yet, impartially considered, and assuming consistent application, they would seem to come to very much the same thing. The notion underlying equalization of cost of production is that of enabling the domestic producer to compete on even terms with the foreign producer. This would seem to be essentially the notion of a "competitive tariff." It is true that in the statements of the principle of equalization, something was always said of a "reasonable profit " to the domestic producer; whereas the Democrats, when explaining what was meant by a competitive tariff," poohpoohed reasonable profits, and intimated that the competition should be such as to cut down domestic profits, and perhaps wipe out some of them. Yet a reasonable profit is obviously to be considered among the normal expenses of production, even tho it be not so reckoned under the usual methods of cost accounting. A competitive tariff" would seem to be one under which domestic and foreign producers could compete in such manner that both should get reasonable profits. Fairly and consistently applied, therefore, the principle of a competitive tariff cannot be said to differ in essentials from that of a tariff equalizing cost of production.

In discussing the Tariff Act of 1909, I took occasion to point out the obvious fact that universal equalization of cost of production means universal application of protection. However high cost of production may be in the United States, duties must be made high enough, on this principle, to offset the difference. Anything and everything is to be made at home. The principle of a "competitive tariff" perhaps does not go quite so far, especially if applied with a less generous

In this Journal for November, 1909; cf. also my Tariff History of the United States, ed. of 1910, p. 363.

reckoning of the domestic producer's expenses. None the less, under that principle also duties should be made high on commodities produced in the United States under disadvantagous conditions and therefore at heavy expense. The notion of the "competitive

tariff is no less inconsistent with the principle of free trade than is the rival one. Under consistent free trade, the competition between the foreign producer and the domestic producer would not be a weighted one, with handicaps in favor of the domestic producer; it would be quite an even one. The principle of a competitive tariff" would seem to mean merely that protection should not be unnecessarily high, yet high enough to ensure the maintenance of domestic production.

Another phrase much used in the debates of the current session was that of a "legitimate" industry. No legitimate industry, it was said, would be endangered. What is an illegitimate industry? One that cannot maintain itself without some sort of legislative prop ? or one that has lost the right to a prop because of the methods by which its promoters have sought to influence legislation in the past? or one that has secured unusual profits through monopoly or semi-monopoly? Perhaps legitimate industries are those which, under protection, have been securing no more than normal or reasonable profits. Perhaps the phrase refers to industries which could hold their own under a comparatively moderate scale of duties, but rules out industries depending upon a range of duties distinctly high. Or it may mean that vested industries should not be disturbed, - industries established on the supposition that the policy of protection, maintained for so many years, would be continued indefinitely. Hardly any intimation was given that an industry was illegiti

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mate merely because dependent on protection. Neither phrase, "legitimate" industries nor competitive industries, - was used in such a way as to commit its advocates to the abolition of protection or to a consistent application of free trade.

All such catchwords, however, are less important in their strict and consistent meaning than in what they imply to the average voter. Their implications are by no means the same. They suggest very different points of view. The Republicans, when they professed to be desirous of merely equalizing costs of production, made it clear that they meant duties to be kept amply high enough to leave the domestic producer in command of the situation. The Democrats, when they spoke of competition, meant that duties should be kept below the point of prohibition. The Republicans wished to make sure of keeping imports out; the Democrats wished to make sure of letting some in. And further, the Democrats, however, they might speak of competitive rates and "legitimate" industries, reserved the alternative, where political or economic expediency prompted it, of throwing these principles to the winds and of fixing duties quite without regard to competition or legitimacy.

None the less, there was occasional discussion that implied the orthodox free trade reasoning. "Legitimate" industries were sometimes described as those economically legitimate; that is, such as could hold their own without protection. It would follow that every industry dependent on protection was illegitimate. From still another point of view the illegitimacy of protection as such was implied. Mr. Underwood presented, in a widely circulated speech,' some esti

1 The speech was made in the House, April 23, 1913, and widely circulated in pamphlet form.

mates of the taxes which the consumer paid under the tariff, and reckoned among these the amounts paid in the form of higher prices on commodities produced at home. Calculations of this kind call for the greatest caution. There are but few commodities, sugar and wool might be instanced, for which it can be figured out with any accuracy how great is the rise in price which the duties cause, and how great is the total burden on the consumer if both domestic output and imports be considered. In most cases figures of this sort rest on guess work. Such, for example, is the case with calculations of the total burden from the duties on cottons, silks, woolens, glass ware, manufactures of iron. This much, however, is to be said: one who parades such figures uses the essential argument for free trade. He can hardly admit the stock protectionist pleas, under which it is not admitted for a moment that there is a real tax on the consumer, still less a net loss to him, because of higher prices of commodities produced within the country. One who argues after this fashion would seem not to be able to use the principle of a "competitive tariff," which assumes a partition of the market between the domestic producer and the foreign; or at the most he can use it only as a sort of stopgap, a rough and ready expedient for keeping duties within the bounds set by regard for vested interests.

Perhaps no topic brought into clearer light the mode in which the two parties approached the tariff question than that of the expediency of maintaining a tariff board. Unless the principle of free trade is to be fully and consistently applied, there is ground for detailed inquiry on the facts of each particular industry. Under free trade, such inquiry is superfluous. All that needs then to be done is to treat the imported and domestic

supply on the same terms: either tax both at the same rate, or free both from taxes, and let the results of completely equal competition work themselves out. But this drastic treatment no one proposes, at least for immediate general application. Now if the basis of adjustment is to be that of making conditions competitive, or that of equalizing cost, or that of regarding most established industries as legitimate, on any such basis the question in each particular case must arise what precise rate of duty brings about the desired adjustment. Hence the Republicans had much to say about the need of an expert board of investigators and the recklessness of disturbing the foundations of industry without painstaking examination. That the Ways and Means Committee of the House, or the Finance Committee of the Senate, was not in position to make such investigation was now freely admitted by the Republicans. They did not deny their own sins of the past in this regard, but urged improvement for the present and the future. There was much complaint that the Democratic Ways and Means Committee had proceeded roughshod, arrived at duties by guess work, and fixed rates on materials and half finished commodities that were inconsistent with rates upon finished or nearly finished commodities. The new tariff, it was said, was not a "scientific " tariff.

In this there was not a little truth. The duties were, in fact, settled in more or less rough and ready fashion. Doubtless the exact rates in many cases were the results of compromise, not of any close calculation or accurate information. Beyond question the same sort of thing had gone on in previous years, and even more flagrantly. But the Republicans could maintain that since 1909 the Tariff Board had