The Democratic advocate., 1908-08-28
FINANCE
How a Revision of the Tariff Would
Effect Securities.

Byron w. Holt in Harpers Weekly.
The values of all securities OF corpora :
tions doing business in this &C. country y de- De,
rates of duties collected on imported goods:
A tariff increases the values Of some and
decreases the values OF other seearities; r esoss
paper, and lead, enhance the values OF the
stocks of the corporations producing these
stocks of corporations which buy these
articles and consume them as raw ma
terials for more highly manufactured
products.
Tariff duties are effective only as they
increase the prices of products. in the
home market. Because of tariff duties
per cent. higher in our markets than in
foreign ones; sugar about eighty per cent:
higher; tin plate forty per cent cent. HIGHER higher
printins wihdGM Ss paper 1 fteen PEE per cent higher
lead eighty per cent. higher. These pro
ducts are the raw materials for railroads.
carriages automobiles, newspapers. can
ming and preserving Industries, etc.
Thus. the same duties that protect the
lead producers, increase the prices of these
materials by fifteen to eighty per cent.
The industries that use them can often ar ar
their materials. for they can pass the
charges along to the consumers of their
goods They are. however. greatly handl-
capped by high priced materials when
they attempt to manufacture for export.
Whether or not the protective policy =
wise or uEwise need not be discussed here
change of tariff duties affects some Securi-
ties favorably ard some adversely.
general change in tariff schedules affects
directly or Indirectly. every industry in
the country. 1t changes the cost OF con
structing railroads and houses, and. there
fore. of transporting and handling pro.
living. and thus necessitates higher wages,
or makes lower money wages possible.
To such an extent are our Industries
based upon tariff duties that the mere pos
sibility of tariff changes, next year. shocks
business. and sends cold chills up and
down the backs of thousands of manufac-
so well-nigh universal is the demand for
lower duties that both of our leading po--
litical Parties have declared for general
The Republican, party declares uneqaiv
Ocally for revision of the tariff by
special session of Congress in 1909. Pre-
sumably the Republicans intend to revise
downWards, though their platform prom
ises only revision along protection lines
and with maximum and minimum tariff
duties.
The Democratic party fayors ''immediate
revision of the tariff by the reduction of
import duties" by putting trust st-controlled
ally reducing duties on the necessaries Of
life and on goods sold cheaper for export
than at home.
Should the Republican party be sue
cessful, it is fair to assume that the tariff
would be revised dOwnwards in many and
upwards in some instances, as has been
would not much hurt the securities of the
protected corporations, the prices of which
would be likely to rise rapidly after. if
not before, the election.
cessful. the prices of the stocks Of many
leading industrials would be likely to de-
after the election They
auguration Day. but business would be
curtailed and disturbed until the. tariff
schedules were changed. or until it was
changes were possible. Republican
Senate might not be able to withstand the |
pressure for lower duties: The number
large and is increasing.
While the probability of Democratic sue
cess is lessened by the existence of the In
cal precedents, the administration in pow |
be defeated CONSERVATIVE investors will
not overlook or underestimate these facts
The common stock of the United States
Steel Corporation would probably suffer |
stock by reason of the radical tariff revis- |
on such as the Democrats would, if pos
sible, put through The tariff struggle |
steel corporation. Hundreds of important |
Industries manufacturing farm and other
Implements and machinery, and tools are
% their foreign competitors. They know |
that iron and steel are produced cheaper
n \ this than in any other country. and
shadows the world" in the language of
David Star Jordan a few days ago. The
armers, through their national grange
'ecently become advocates of lower duties,
Trust"
Based partly upon the tariff duties on
IF thn n
erence between the prices of steel at home
ind Tor xport, We can estimate. fairly
the tariff profits of the Steel
he, average difference between the home
md export prices of steel rails. the duty
on on 1.733.S14. the unmber Of tons pro
We have $12,136.6 COS as the tariff profits on
otal tariff products of the Steel Corpora
ion are about $SO.0OOOOO.
NJ As SO the net profits in 1907 were $780,,
Profits will exceed s5O,O6O,OOO year, or
ully ten per cent. of the common stock.
As the dividends on this stock have never
Exceeded four per cent and are now only
wo per cent. it is clear that reduction
II $oOOO0O0O in net earnings would leave
stock.
1t is not however, likely that the Dem
,crats would. if successful, have sufficient
1ower to abolish all of the duties on steel
GUS and would leave the common stock
yorth more than it is now selling for,
even an average cut of sevetny five per
'ent. would leave considerable value in
he common stock. Should there be a
andslide in favor of the Democrats. in
Testors should, however. figure on one
hundred percent. cut.
1t should not he forgotten that the de-
,reciation of our gold dollar is shrinking
he bonded Indebtedness of the Steel cor
DOration rapidly and swelling the values
of its plants and mines. This double .
benefit would partially offset the loss from |
reduced duties
OF course the stocks of other steel cor
Dorations would be affected greatly by the
removal or reduction of duties on steel. /
Speaking broadly. the common stocks Of
most such corporations would then have
only nominal values.
On the other hand. the stocks of the
American Car and Foundry, American Lo- /
International Harvester. and Of
of other similar corporations, /
would benefit materially by free steel |
900, 600 a year. This would be as good to
them as a general advance Of six or seven /
per cent. in freight rates. 1t would en-
able them to pay present wages and main
several years leeway before the increasing
cost of Operation-due 10 gold deprecia-
ton ana rising prices+Wouid ICES MAKE 1t
for if it a6an
not increase the total of goods transported
would add something like ten per cent
to the value of the common stocks of rail
roads. Free ores. lumber, coal. lead and
paper. and reduced duties on finished pro-
ducts. would not only further add directly
to the value of railroad stocks, but would
add indirectly by giving the railroads more
goods to carry. Commerce might not
increase so much with us as it did in