, 1921-06-11
SUBSIDIZED MANUFACTURES.

The relationship which the various governments
have assumed toward the industries of their domain is
in all likeiiSood liable to cause US some trouble, and
call for some ingenuity to offset the effect such 8
partnership may have upon our own industries and
markets, where the policy is the encouragement of
private enterprise.
Prior to the war Germany presented the most nota-
bic instance of a government operating with private
industries TO capture foreign markets, and the sue
cess in that undertaking is a matter of worldwide
knowledge. Apparently no conscionaoie tariff could
prevent Germans from driving out competitors.
As a leading financial writer puts 1t:
There Tin Germany the various cartels, or trusts,
received privileges amounting to subsidies which en-
able them to sell even at n loss in the different foreign
markets, and the taxpayers helped with their contribu-
tions in keeping up and extending the mercantile
fleets OF the country. Others among the belligerent
countries found it necessary or advisable to offer spe-
cial inducements to their own industries by giving
them. financial support in one form or another while
the war lasted, and this has continued to a greater OF
less extent since with regard, especially, to what are
Having captured the markets, the Germans could,
of course, recoup their losses by advances in prices,
Today the United States is faced with the proposition
OF private industries competing with somewhat social
lied industries in Europe and Japan. Naturally, if
our competitors persist in that policy and nothing is
done TO checLir ate it, the protective tariff win Gu
little figure in this country with respect to a larg.
number Of commodities, since the government of their
origin, having taken a hand in their production, mny
well &C II step further and rebate their manufactur-
ers fer the duties they have to pay to get into the
American narA-t; or, even without thas private in
dustries cannot long operate in competition with
those operated largely on government funds
There would be nothing decidedly novel in adopting
legislation to meet the situation. In fact it would be
little more than an extension of paragraph E, section
4 of the present tariff law, which is copied verbatim
from the Republican law of 1909 and which provides
that whenever a country shall pay or bestow, direct
ly or indirectly, any bounty or grant upon the expor-
tation of any article of merchandise from such coun-
try there shall be levied and paid, in all such
cases, in addition to the duties otherwise imposed by
this act, an additional duty equal to the net amount
of such bounty or grant, however the same be paid or
estowed."
But this could hardly be stretched to cover goods.
in the production Of which, a foreign government was
n party. In addition to the teamwork of government
and private capital, now pretty general with respect
20 European key" industries, may be mentioned the
recent action of the Japanese government in loaning
its credit to peg the price Of raw silk. We might well
levy a duty on that commodity, because of that ac-
ton, recouping our manufacturing consumers by way
Of drawback
The late Serene E. Payne, one of the authors of the
P~ayne-Aldrch tariff of 1909 had something of this
idea in mind when he advocated a countervailing duty
on coffee because of Brazilian valorization, a step
which he ultimately decided not to take because of
the pleas of certain Central American countries who
had pledged their coffee export duties for loans al
ready made.
Today the entry of governments into industry is
more pronounced than ever before in modern history,
= policy which is utterly condemned by the Repub-
tican party and strongly opposed by the majority of
the American people.