Alma record. (Alma, Mich.) 1878-1928, 1921-07-21
PROTECTION ON
!, VALUES GIVEN
FORDNEY EXPLAINS PRINCIPLE
FOR LEyYING DUTY ON PRO
DUCTION COSTS.

American valuation so as to give full
protection TO American industry i'm
spite of the decline in European mon
ey is made by Chairman Joseph W.
Fordney, of the House Committee on
Ways and Means. He says:
I'm further reference to American
valuation as a basis for assisting ad
valorem rates. There are two princi-
pal reasons for that change at this
particular time. First of all when
we collect the ad valorem duties on
the foreign valuation we must depend
very largely upon the honesty Of the
exporter in The foreign country TO
name in the invoice the correct for
eign value of those goods. A German
manufacturer before the Board of
Trade of Berlin pointed out that it
was the purpose and right and duty
of the foreigner to undervalue as far
as possible the goods which he export
ed 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 countries vary
extremely. Today Canadian money is
worth 50 cents on the dollar in our
money. The English pound with
par value of $4S6 has an exchange
value in our markets of $3.50, per-
haps a little above or a little below
that. Today the French franc with
par value of 1913 cents has an ex-
ka. sc 81.
The German mark with a par value
of 2.8 cents has an exchange value
here of LIS cents or thereabout. The
best obtainable information is that
the mark has a relative purchasing
power in Germany of s 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 prac-
ticable or equitable way except to
make all countries in the world pay
the duty upon the American valua-
ton, and all alike.
81 have drawn conclusion for the
purpose of giving you an example of
the various valuations. We know
that the highest production-cost coun-
try 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 the same article in
Japan is far below the cost Of pro-
duction in Germany. So that l have
taken this example. Suppose that a
merchant purchased identical articles,
both in quantity and quality, in Can
ada, in Germany, and in Japan, and
all three shipments were imported in
to 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
$1,000. The same goods could be pur-
chased in Germany for $500, and the
same goods could be purchased in ia
pan for $500. | know that there is q
greater margin Of difference than the
one | am giving. Suppose the duty
was an ad valorem Of % per cent.
Goods coming from Canada would pay
20 per cent on the value, or $3.50: the
goods coming from Germany would
pay 20 per cent on $500, or $500; and
the goods coming from Japan would
pay 20 per cent on their value i'm ia
pan, $500, or $l25. Therefore, Can
ada, the highest cost production.
would pay an ad valorem duty that
Japan paid, and that is the existing
difference right now. Now, 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 will offset the diff
ference between their cost and our
cost. Therefore in order to obtain the
American value of the Canadian
goods, 20 per cent ad valorem
makes the American value $3.50
Now, 20 per cent ad valorem on 81 $50
will yield the same amount of revenue
that 20 per cent will yield on the
Canadian value OF 81 900. But the
\ German goods must pay under the
terms of our bill 20 per cent on $3.50
the same as the Canadian, or $3.50
"Tbc japanese goods when brought
in must pay 20 per cent on 81 $50 and
not $500, and therefore they will pay
exactly the same duty as when i'm
ported from other countries.
Our present system widens the
margin of cost between these coun.
tries when the goods are laid dowr
ahere and pay ad valorem duties or
foreign values. Under our PROPOSE
ton of the American value all coun.
tries alike must pay duty assessed
on the American value. No matte,
what the foreign cost may be They
must pay exactly the same amount OF
duty here.
Many people came before our com
mittee and presented arguments fol-
and against the American Valuation
Invariably the importer opposed tn,
change from collecting adj valoren
duties on the foreign value to tn,
American value. Why? Because, m!