Abilene weekly reflector., 1921-07-28
FORDNEY EXPLAINS TARIFF
Says Its Only Way to Eqsaiize Ex'
change

Says It's Only Way to Equaiize Ex-
change
Washington, July 25.-Explana-
tiOn of the provision in the new tarin
bill which taxes imports at the rate
Of American valuation SO as to give
full protection to American industry
In spite Of the decline In European
money is made by Chairman Joseph
w. FOrdney, Of the House Commit
tee on Ways and Means. He says:
''In further reference to American
valuation as q basis for assisting ar
vaiorem rates. There are two prtn-
cipal reasns for that change at this
particular time. First Of all when
we collect the ad valorem duties on
the foreign valuation we must de-
pend very largely upon the honesty
Of the exporter in the foreign coun-
try to name in the invoice the cor
rect foreign value Of those goods. A
German manufacturer before the
Board Of Trade Of Berlin pointed out
that 1t was the purpose and right and
duty Of the foreigner to undervalue
as far as possible the goods which he
exported to this country.
Secondly, my friends, because OF
the conditions brought about by the
war the rates Of exchange OF the
money Of the different cuntries vary
extremely. Today Canadian money
Is worth 85 cents OH the dollar In
our money. The English pound with
/ par value of $486 has an>exchange
value In our markets Of $500, per-
haps a little above or a little below
that. Today the French franc with a
par value Of 1913 cents has an ex-
change value here Of about Z cents.
The German mark with a par value
Of 23.S cents has an exchange value
here Of 1.75 cents or thereabOut. The
best obtainable information is that
the mark has a relative purchasing
power In Germany of cents, but the
duty is paid upon the exchange value
here. Now for the purpose Of equal
izing these various exchanges of for
eign money we found no other prac7
ticable or equitable way except to
make all countries In the world pay
tHC uuty uDOh thC nmChASoh
ton, and all alike.
II have drawn a conclusion for the
purpose Of giving you an example Of
the various valuations. We know
that the highest production cost
country that we deal with is Canada,
just across the border. We know
that Germany's cost Of production is
far below that Of Canada, and we
know that the cost Of production Of
the same article in Japan is far be-
low the cost Of production in Ger
many. SO that l have taken this
example. Suppose that a merchant
purchased identical articles, both in
quantity and in quality, in Canada,
in Germany, and in Japan, and all
three shipments were imported into
the port Of New York on the same
day. Here is what they would pay
under existing law. Suppose the ar
ticles purchased in Canada cost ST.
900. The same goods could be pur-
chased in Germany for $500 and the
same goods could be purchased in
Japan for $500. l know that there
is q greater margin Of difference than
the one l am giving. Suppose the
duty was an ad valOrem duty Of 25
per cent. Goods coming from Can
ada wuld pay 25 per cent on $500,
or $500; and the goods coming from
Japan wuld pay 25 per cent on their
value in Japsn, $500 or 1925. There
fore Canada, the highest cost produc-
tion, would pay a higher ad valorem
duty that Japan paid, and that Is the
existing difference right now: Nov Nc"
let us put it the other way. Under
the American valuation the duty Will
be added to the foreign value; In
other words, we must assume that
the 25 per cent imposed viii offset
the difference between their cost and
our cost. Therefore, in order to OBJ
tain the American value Of the Cana
dian goods, 20 per cent ad valorem
makes the American value $1,250.
Now 20 per cent advalorem on ST.
$50 will yield the same amount Of
revenue that 25 per cent will yield
on the Canadian value Of 81 ,25O. But
the German goods must pay under
the terms of our bill 20 per cent on
$1,25O, the same as the Canadian, or
$3.50.
"The japanese goods when
brought in must pay 20 per cent on
$1,25O and not $500, and therefore
they will pay exactly the same duty !,
as when imported from other coun-
tries
"Our present systems widens the
margin of cost between these coun-
ties when the goods are laid down
here and pay ad valorem duties on
foreign values. Under our PROPOSE
tion of the American value all coun-
tries alike must pay duty assessed
ON the American value. No matter
what the foreign cost may be, they
must pay exactly the same amount
Of duty here.
MANY people came before our
and presented arguments
for and against the American valua-
tion. Invariably the importer op-
posed the change from collecting
ad valorem duties on the foreign
value to the American value. Why?
Because, my friends, there is no op-
portunity for the dishonest importer,