# U. S. Senate Speeches and Remarks of Carl Schurz/Steel Tariff

“The Senate resumed, as in Committee of the Whole, the consideration of the bill (H. R. 2045) to reduce internal taxes ...” (Journal of the Senate of the United States of America, June 29, 1870, p. 914). This excerpt includes Carl Schurz's remarks and some relevant commentary by other senators afterwards. The text of this discussion is from The Congressional Globe, 41st Congress, 2nd Session, pp. 5004-5005.
TAX BILL.
The PRESIDING OFFICER. The Senator's five minutes have expired.
Mr. CONKLING. Then I surrender the floor.
Mr. SCHURZ. The Senator from New York has produced a paper with the names of so many presidents and directors of railroad companies ---
Mr. CONKLING. And superintendents and treasurers.
Mr. SCHURZ. I suppose it has occurred to a great many that the interests of directors and superintendents of railroad companies are not always entirely identical with the interests of the companies. I think it has very frequently happened in this country that the directors and superintendents of such and other companies by joining their interests with those of associations manufacturing and furnishing certain articles to those companies, and getting contracts for that purpose, have advanced their own individual interests very largely, without advancing equally the interests of the establishments of which they were superintendents or directors or presidents. Such things have been known in this country; and I should not be at all surprised if there was a little of that in this instance. At any rate, it is surprising that railroad presidents and superintendents should advocate measures avowedly calculated to increase the price of things needed by the roads.
It has been said that the price of Bessemer steel rails in England has been knocked down by American competition from $150 a ton to seventy dollars, and even fifty dollars. Why, sir, is it not known that the process has been improved and thereby cheapened, and is there no competition in Europe between different Bessemer steel establishments? At this very moment, as I am informed, contracts are made in England at fifty dollars, and contracts are made in France at forty-eight dollars, France underselling England by two dollars; which shows that there is competition in Europe already operating among the different establishments that reduces the prices there. The capacity of the Bessemer steel works in England is about five hundred thousand tons, and the proposed capacity of the steel works here is about thirty thousand tons. Is it imagined that the mere dread of a competition of thirty thousand tons is to have such a tremendous effect upon the price so as to reduce it from $150 to fifty dollars and forty-eight dollars, against five hundred thousand tons in England alone? Is not that absolutely absurd?
The Senator from Pennsylvania has spoken of one hundred and fifty stockholders engaged in these works; he said that those men are trying to build up this industry, not for the purpose of making money, but from simply patriotic motives.
Mr. CAMERON. The Senator will allow me to interrupt him, I did not say stockholders. I spoke of the gentleman belonging to the railroads who had become stockholders.
Mr. SCHURZ. Those who owned the patent right wanted to introduce that process from simply patriotic motives, I suppose the Senator would have us understand, aside from the royalty. I appreciate their patriotism very highly; but I know of another kind of patriotism which I appreciate still more. If there is anything necessary for the people of this country it is cheap transportation, cheap fares, cheap freights; and those we can have only if we have cheap railroads. It is evident, and, indeed, it is admitted, that by this duty the price of steel rails will be greatly increased. Will not the increase of the price of steel rails necessarily have its effect upon fares, upon freights, and upon everything connected with railroads? It is evident, therefore, that the interest of these one hundred and fifty stockholders, and of the three men, or whatever number there may be, who own the patents, is directly opposed to the interests of thirty or forty million people who are greatly concerned in the cheapness of railroad transportation.
Mr. SHERMAN. The Senator, I am sure, does not wish to misunderstand this matter. The statement of the Senator from Pennsylvania was that there are one hundred and fifty stockholders in one establishment at Harrisburg alone. There are a great many establishments scattered over the country.
Mr. SCHURZ. We will say, if the Senator pleases, for argument's sake, taht there are fifteen hundred men interested in this as stockholders. Then there are fifteen hundred men on one side and forty millions on the other. I go still further: the Senator from New York has informed us that there will be nine thousand workingmen engaged in this business. Then there are nine thousand men on one side and there are forty million people on the other. Now I think that while those men who own the Bessemer patent are impelled by patriotic motives to introduce that system here, we ought to be impelled by higher patriotic motives to furnish cheap rails, cheap railroads, and cheap transportation to the country, which will be a blessing to all.
Mr. SHERMAN. This is a question which should be governed by the interests of the people of the United States in a large sense, and not by the interests of the stockholders in any particular company; and I submit to every Senator that the only question is whether the interests of the people of the United States will not be best promoted by developing a new industry in which our citizens have been tempted to invest more than five millions of capital, by giving them a temporary specific duty in order to enable them to compete with a better fortified production in Europe?
Mr. SCHURZ. Permit me to ask my friend from Ohio whether by making railroad fares and railroad freights cheap all the industries of the country are not benefited?
Mr. SHERMAN. In regard to the general question I have conversed with a great many railroad men, who have no interest directly or indirectly in the manufacture of steel, and I have not seen one of them who has conversed with me who does not say that it is better for the interest of the railroads and of the people that we should maintain this industry for a while under the peculiar circumstances by which it is surrounded. There is only one Bessemer steel manufactory in the State of Ohio, and that is owned mainly by Mr. Stone, of Cleveland. I think it is located in Cleveland, though I am not quite sure about that. Although in one sense he alone in Ohio is affected by this matter, the railroad men of Ohio generally desire to see a specific duty of a reasonable amount put upon this article, merely to encourage the production and maintain its manufacture in this country.
The question of the precise amount of duty is a question about which men may well differ, whether it should be a cent a pound or a cent
and a half; but the House of Representatives after a debate running through several days, when long speeches were made, presenting all the views of the question, fixed the rate of duty at a cent and a half a pound, that being considerably less than was insisted upon by the owner of the steel manufactories. My own impression is that they put it at about the right figure.
Mr. CORBETT. My friend from Missouri ridicules the idea that the establishment of Bessemer steel factories in this country producing a few thousand tons should have brought down the price to fifty or sixty dollars a ton, whereas it was $140 a ton in former times. I do not know what price we were obliged to pay for this steel heretofore, but I do know that whenever a new interest arises in this country, English manufacturers ship their surplus stock here with a view of breaking down this new manufacture of ours. When these new establishments were put up here I have no doubt the English manufacturers would have been willing to sell rails at half or three fourths their cost for one or two years, for the purpose of getting this large market for all time to come.
The probability is that America now is the largest market in the world for this production. I know that upon the Pacific coast we attempted to establish a furnace for the manufacture of pig iron in my State at one time. From sixty to sixty-five dollars a ton was then being paid in California for pig iron. We invested one hundred and ten or one hundred and twenty thousand dollars in gold in a furnace, being satisfied that we could produce the iron there for about thirty-one dollars in gold. The British iron-makers at once put down their price, so that we had to stop manufacturing. They put down the price in California to about thirty-five dollars a ton; and as we shipped it down there at a cost of five dollars, and paid commissions, the result was a loss, and we had to lie still. I know they put down the price to break up that industry there, and I have no doubt that they have shipped to this country Bessemer steel rails at a low rate for the purpose of breaking down this very interest that we are trying to protect.
I am in favor of protecting this interest. The manufacturers have to pay, as I understand, five dollars a ton royalty to the owners of the patent. We have to levy a higher rate of duty in consequence of that. We have to levy that five dollars, besides a sufficient amount of duty to protect them against the shipments from England, where they throw their surplus upon our market here to break down our market. I shall support the rate fixed by the House of Representatives.
Mr. FOWLER. One fact stated by the Senator from Pennsylvania furnishes me with more information on the subject than any other statement that has been made. I understand from him that the English will furnish us with iron and steel rails at a difference of thirty per cent. That seems to me to be the very point. We want to determine how much duty we should levy to protect these interests sufficiently. Thirty per cent., then, is adequate for that purpose.
There is another consideration. It is stated by certain persons here that the English will necessarily import their goods below the proper cost in order to break down our manufactures. That statement has been made with regard to every tariff and every protective duty that has been levied, from the first protective duty ever assessed up to the present time. Such a statement as that, however, defies and defeats the operation of the laws of commerce, and there is no truth in it.
There is another consideration in regard to this matter. We had the subject of sulphur up here this evening, and were asked to protect sulphur in places where you have nothing to do but dig the sulphur out as you would the earth; and yet we are asked to protect that
interest against sulphur that is three thousand miles off from us. We have more iron ore and better iron ore, and it is easier to procure, in the United States than in any other country on the globe. We have more coal, and it is easier to obtain, than they have in any other country of the world. What is the reason we cannot manufacture cheaper here than elsewhere? There is no reason in the world why the Americans cannot produce iron and steel as cheap as the English, or the people of any other country. We have cheaper lands to support our laborers; and I deny that there is a solitary argument in favor of placing enormous duties upon this particular interest that is worth a moment's consideration.
If this were a vast interest, if there were a vast amount of capital involved in it at the present time, it would be different; then there might be some pretext for even the howl which is always put forth, that these interests are going to be broken down and destroyed. But we have an interest here in its infancy. We do not know whether it is going to be successful or not. Let these individuals prove that it will be successful before we tax one portion of the community, the agricultural portion of the community, to support them in an interest that they have not sufficiently demonstrated to us will be successful. It may be successful — I am satisfied of that — not by protection, but by the fact that they can manufacture it cheaper because they have every article and every item here cheaper than they have in any other country in the world.
Mr. VICKERS. I hold in my hand the memorial of John W. Garrett, president of the Baltimore and Ohio Railroad Company, and P. G. Van Winkle, formerly a member of the Senate, president of the Parkersburg Branch Railroad Company, protesting against the passage of this item of the bill. This memorial was printed by order of the Senate and referred to the Committee on Finance. I suppose the Baltimore and Ohio railroad extends, perhaps, a thousand miles; I do not know the exact length of the stem and branches, nor am I informed of the exact extent of the Parkersburg road. These gentlemen state some important facts. They say:
“The cost annually of iron rails used in the maintenance of our railroads equals ten per cent of the total cost of operating these works, which for the past year equaled $266,000,000.”
One tenth is $26,000,000 for maintaining these roads by laying rails in a single year; $26,000,000 to purchase iron rails to repair and maintain the roads already existing! Now, is it not important that this large sum should be expended in steel rails? They are becoming a necessity. Ultimately all the railroads will be laid with them. They say in this memorial that there is more safety, and that they can transport freight cheaper if they can use these rails. They will last ten times as long as the iron rails. All the railroads must, as a matter of economy, obtain the steel rail. The idea of thirty thousand tons of steel rails made in this country lowering the price is fallacious. The Senator from Missouri stated it correctly when he said that it was the competition in England, where these rails were made, that has lowered the price. The prices are gradually becoming reduced as the memorial states. The idea of thirty thousand tons, the product of American labor, reducing the price, as the Senator from Missouri said, borders upon an absurdity.
We have been donating millions of acres of land to new railroads. It is important that the tracks should be laid with steel rails, that the companies should get the rails as cheaply as they can; it is equally as important that the old roads, when repaired, should be repaired with steel rails. This is the only mode by which the railroads can ultimately become laid with these rails. It is estimated that a railroad needs a renewal of the rails once in ten years.
The petition referred to states that —
“The quantity of freight transported the past year over the railroads of the United States exceeded one hundred million tons, being in value more than one billion dollars.”
Mr. McCREERY. I think the Senator's time is exhausted.
The VICE PRESIDENT. Not quite; the Senator from Maryland has one minute remaining.
Mr. VICKERS. I have no more to say.
Mr. McCREERY. I make the motion that the Senate do now adjourn.
The motion was agreed to; and (at ten o'clock and ten minutes) the Senate adjourned.