tariff history by the act of 1922. For Section 315 the claim is made that it lays the foundation of that "scientific tariff " of which those who believe in a protective tariff have dreamed for half a century. Section 316 undertakes to inject into international relations the principles upon which the Federal Trade Commission works for fairness and decency in domestic business. Section 317 inaugurates a revised version of equality as a principle in international commerce. All three depend for their motive power upon a shifting of import duty rates, supplemented, in the case of the latter two, by prohibitions, the initiation and amount of which is to be determined, within statutory limits, by administrative authorities of the government acting in a quasijudicial capacity. The Congress lays down a principle—as that protection should just equal the difference between cost of production at home and abroad. The administration is charged with the duty of making the principle effective. Tariff rate-making would seem in a measure to be removed from "politics "- from the policy-determining branch of the government-and to have become a recognized administrative function.

While the present study is concerned with Section 317 alone, the relation between it and the other "flexible" sections must not be lost sight of. An underlying unity of purpose in the three sections is indicated by the following passage from a letter which President Harding addressed to Representative Mondell shortly after the passage of the law:

In a time when wide differences in producing costs and a well-nigh universal tendency to erect barriers against international trade were menacing our commerce and industry, we have passed tariff legislation which first protects our own producers, and second, through its provisions for administrative adjustment of duties to changing conditions, makes it possible

to adapt them to shifting economic relations and enables us to encourage foreign trade. In the present disturbed condition of money, exchanges and world trade, I believe that by inaugurating this policy of flexibility and elasticity we have set an example which the commercial world will accept as a truly constructive foundation on which to rest our commercial policy. The first duty is to protect our national interests, but in many ways real protection comes from cooperation with other nations. The best intelligence of the day recognizes the need to encourage intimacy and understanding in the social, economic and political family of nations; and it recognizes that, in thus inaugurating a plan which looks to intimate consideration of the facts, we are offering a means of true unification and solidarity among the interests which make up our industrial civilization, and we are taking a step toward the solution of some of the most perplexing economic problems which confront the nations. The last thing in our thoughts is aloofness from the rest of the world. We wish to be helpful, neighborly, useful. To protect ourselves first, and then to use the strength, accruing through that policy, for the general welfare of mankind, is our sincere purpose.1

With this the consideration of Sections 315 and 316 ends, except for an added word in regard to the ascertainment for rate-making purposes of relative costs of production at home and abroad. Dr. Culbertson strongly contends that the thing is practicable and that results will be sufficiently accurate for the purpose.' On the other hand, Professor F.

'Quoted by Dr. Culbertson in the address referred to above.

2 In his address just adverted to, Dr. Culbertson said:

"The criticism is occasionally heard that costs of production cannot be found and that if they could be, they would not form a sound basis for tariff making. . . . It is true that costs of production are often difficult to find, but every business man knows that the finding of them is the basis of successful business. Costs are no more uncertain nor do they vary more than industrial life as a whole. Variety and difference are inherent in the problem. Cost accounting is an attempt to measure scientifically the un

W. Taussig, first chairman of the Tariff Commission, asserts in no uncertain terms that the proposition is not only unsound in theory but almost impossible of accomplishment.1 Happily there exists no such divergence of authori

certainty and change in industrial life. To reject it would be to abandon the most effective means of measuring actual and potential competition. Considering the purpose for which Congress has laid down the rule, the term 'cost of production' will undoubtedly be broadly construed. In determining these costs we shall take into consideration all conditions of production including wages and other cost items, wholesale selling prices, and advantages and disadvantages in competition. This method will disclose, as no other can, the competitive strength of industries in the United States and competing foreign countries, and will thus provide a sufficiently accurate basis for tariff making."

'In The Tariff History of the United States (7th edition, revised and enlarged; New York, 1923), pp. 480-481, Prof. Taussig says:

"The notion of equalizing costs of production had become a sort of fetish among the protectionists. I say nothing here of its weakness from the point of view of economic principle, having indicated elsewhere that it seems to me fatally unsound as a matter of tenable or consistent theory. It is the question of practicability in administration that was now raised by its being set up in the tariff law. The rule was proclaimed, and an endeavor was made to apply it, quite without regard to the most obvious realities. It is difficult enough to ascertain costs of production in the United States. True, with compulsory adoption of uniform methods of cost accounting by American establishments; with a large staff of accountants to examine books and check returns from a considerable number in each branch of industry; with some careful procedure for arriving at a mean between the high cost and the low cost producers-representative figures can be secured for American articles of a standardized sort. But can it be imagined that any officials in the United States could do this sort of thing for foreign products? that foreign producers would permit such a control of their accounts and figures as alone would make it possible to ascertain trustworthy comparable figures for the competitive articles in foreign countries? These difficulties, great enough in case of standardized articles, obviously become immensely greater with specialties, and perhaps most difficult of all with goods produced at joint cost (by-products'). These classes include many of the contested items for which resort to the flexible powers was likely to be sought. A biased or subservient Tariff Commission might make a pretence of V having found accurate figures. A basis of well-ascertained fact is almost impossible to find, or if found, to keep up to date. Those who advocated

tative opinion concerning either the underlying conception or the practical advantage of Section 317.

this as a scientific' solution of the tariff question were obsessed by formula and surprisingly unable to face the realities.”

In regard to the immediate conditions of the enactment of the 1922 tariff law and the character of the debates in the Senate and the House, Prof. Taussig (ibid., p. 487), says:

"Perhaps most noteworthy in the debates was the constant insistence by the sponsors of the act on the principle of equalizing costs of production. As I have already remarked, it was embodied for the first time in statutory language,-declared by Congress to be the principle on which the tariff system is founded. Talk of this sort was more to the fore than at any previous time. And not only this; it was pushed to further extremes than ever before, both in the rates themselves and in their advocacy or justification. There were not wanting Senators who expressed their willingness to impose a duty of 500 per cent. or 1000 per cent. if such rates were necessary for the sacred purpose of equalizing costs of production."

CHAPTER II

HISTORICAL DEVELOPMENT OF THE PRINCIPLE UNDERLYING SECTION 317

II. EARLY FORERUNNERS

The provision for defensive duties in the Tariff Act of 1922 is, as has already been intimated, an heir in the direct line to certain provisions in the Payne-Aldrich Tariff Act of 1909. The development of principles, and even the enactment of specific measures, that bear a relation to the policy of Section 317 can be traced far back in American tariff history. Stated reversely, the same principle is found in a little act approved March 3, 1815, the complete text of which is as follows:

So much of the several acts imposing duties on the tonnage of ships and vessels, and on goods, wares, and merchandise, imported into the United States, as imposes a discriminating duty of tonnage, between foreign vessels and vessels of the United States, and between goods imported into the United States in foreign vessels and vessels of the United States, be, and the same are hereby repealed, so far as the same respects the produce or manufacture of the nation to which such foreign ships or vessels may belong. Such repeal to take effect in favour of any foreign nation, whenever the President of the United States shall be satisfied that the discriminating or countervailing duties of such foreign nation, so far as they operate to the disadvantage of the United States, have been abolished.1

1 Tariff Acts, p. 56. The Act of 1815 may be said to have constituted 271] 61