The farmer and mechanic. [volume] (Raleigh, N.C.) 18??-19??, 1909-07-13
WILL DEFOREST
OUR TIMBER LAND
Iniure Our Water Powers
and Watersheds
EFFECT Of LUMBER TARIFF
Mr.. John S. Henderson, Dr., III
to Captain Ashe on the Lumber
Tariff Aside From Party Declara-
tons and Asks Some Questions.

To the Editor: In Captain Ashes
reply to my communication on the
lumber tariff, he makes two general
points:
% That a $500 tax is not nrotec-
tive. but does produce revenue. That
a $500 tax, therefore, will not IN
crease the cost of lumber to the con-
sumner.
CD That there is no available lum-
Der that can compete with our hard
woods because of prohibitive freight
rates. That, therefore, a tax of 81. 90
will not effect deforestation of the
watersheds of our streams. Therefore
water powers and bottom ands will
not be hurt.
Let Us admit for the sake of argu-
ment only that there is no lumber to
the forests on our watersheds. With
this assumption, let US discuss some
elementary business principles.
In general, every manufacturer, esti-
mates his selling price on the actual
cost to hin of his product delivered
at an average distance from his dis
tributins point. Suppose this manu-
facturer's cost per taxed unit Of meas
ure for lumber is $4,000. If there
is q tax of $500 per unit, and If
there is no foreign competition, the
home manufacturer adds the $500
tax to the $500 base cost, making a
new manufacturers base cost of
$17.00, i. e.. the manufacturing cost
(15.00} plus the tariff (2.O0). To this
$4,000 base cost. there is added the
desired normal profit, 10 or Is per
cent as the case may be-
The manufacturer thus has two
profits-the $500 tariff (about - 1-3
per cent of his base cost) plus the
normal profit. The consumer pays to
the hone manufacturer n extra
profit-the $500 tariff (13 ID per
cent of the base cost, which the gov
eminent gives the manufacturer who
has no foreign competition. This is
ID 1-3 per cent protection.
This s2.0O tax per unit (13 1-3 per
cent protection) produces ven
from only the very small amount of
Canadian lumber used in this country.
paragraph 10, lines 9, 10 and II, Of
Captain Ashes letter.. This $500 tax
brings in little
This $500 tax per unit (13 1-3 per
cent protection) enables the manufac-
turer to charge the $500
more per unit on u native lumber,
which has no competition. This $2.OO
tax increases the cost of lumber to
the consumes.
Having answered Captain Ashes
first argument, let US consider his
defOreStatiOn argument.
Will this $500 tax per unit Oh Is
per cent of the base cost, which is q
gift from the national government to
the individual manufacturer out of the
consumers pocket, stimulate the man.
~ufacturer's misunderstanding lumber
from our watersheds?
If the manufacturer makes money
with a $500 base cost, will he not
make 13 1-3 per cent more on his in
vested capital if. the national govern
ment makes his bas cost $500 by a
gift of $500 per unit? In such a case,
will he not extend his operations as
long as he can borrow at 6 per cen
and as long as there is a demand for
the article, with which there is. nc
competition. al home and abroad?
If capital is given a Is 1-3 per ccHI
i%nducemcnt to deforest our timber
lands. Will not do so more actively
than if the IS Ia per cent i~nduceHnent
were no offered?
Does not section 2 of the tariff bill
provide that % per cen ad va1orem
tax shall be added to the specific tax
of $500 for all foreign governments,
unless the President lis satisfied that
such governments do not discriminate
against our lumber In case this $500
additional (25 per cent ad valorem)
is added to the $500 minimum tax,
will not this specific tax become $500?
And will not h base cost be $4,000
instead of $17.00? If 50. would there
not be Il 46 2-3 per cent inducemen
to capital to defOrest our timber
lands?
SO much for Captain she second
argument that a protective tariff Will
not promote deforestation.
Cantaio hSha has a1r,itto1 tIot
with the premises III my original COM
munication, my conclusions are cor