, 1922-02-16
WHAT THE TARIEE DOES.

"The doctrine of supply and demand is simply the
expression of an ascertained economic law" notes the
american Economist. There is nothing arbitrary
about it. When there is a scarcity of any conmod;ty
the demand increases and the prices naturally become
higher because purchasers bid against each other. II
diamonds were as plentiful as ordinary pebbles they
would Jose their excessively high prices. II gold could
be chemically produced in quantities it would soon he
come a base metal Iron is now. a base metal be-
cause it is SO common, although it is in reality more
Valuable than gold, for it serves many more useful
purposes.
The statement that the tariff fixes prices is untrue,
supply and demand fix prices, in the last analysis, in
every instance. What the tariff does is to limit the
supply OF foreign products and increase domestic pro-
duction, a very different thing from price fixing. That
has been proven in countless instances. For instance.
the tariff on steel rails was $2s per ton for many
years. Yet for many years, and during those same
years, the market value of steel rails was $28 per ton,
or exactly what the duty amounted to. Wire nails
were for a long time sold for less than the tariff inn
posed on imported steel nails. The effect of placing
a tariff on steel rails brought the prices down from
over a hundred dollars per ton to an amount less than
the duty itself, although the price did not remain there.
For five years the prices were even less than the duty
falling in 1898 to $17.62 per ton. Prior to the impo-
sition of a duty on. wire nails the prices on the i'm
ported article were several times what they were sub
sequent to such duty imposition. In both the case of
steel rails and wire nails the lowering of the price fol-
lowing their being made dutiable was due to the fact
that prior to that time they were not made in this
country and we were obliged to pay just what the for
eign producers asked. But the imposition of a protec-
tive tariff induced domestic producers to enpare In
their manufacture and the lower prices resulted be-
cause of the increased supply and because of the fact
that there was domestic competition. With a home
supply we were not forced to depend upon foreign
producers and so were not at their mercy.
Prior to the enactment of the agricultural emer-
gency tariff we said that it would not result in in
creased prices for farm products, but that it would in
crease the opportunities for making sales of domestic
products in the home market. We said that foreign
es would not care to pay the price of admission to
this country and hence that our own farmers would
have a chance, whereas they had Heretofore been un-
dersold by foreigners who could produce at much low
dictions. Sales of American wheat in the home mar
ket have increased, but the prices have gone down be-
cause there has been an overproduction. Not only did
we import less wheat during the past year, but we ex-
ported over 81 millions of bushels more of wheat dur
ing the calendar year 1921 than we did during 1920.
W concedc that it would help the farmers for a
short time il congress should raise the prices of agri-
cultural products, but the final results would not prove
beneficial to them. 1t must be borne in mind that
is not the only productive industry. Min
ing and manufacturing share the field with it and.
what is more, furnish customers for agricultural prod
ucts. Agriculture is entitled to exactly the same kind
of treatment, the same measure of protection as are
mining and manufacturing. That is a proposition upon
which all sincere Protectionists unite. Now if the
prices Of agricultural products should be regulated by
the purpose being to increase the prices higher
than they would be fixed by law of supply and de-
mand, it would work injury to other Industries, un-t
less they should have the same benevolent treatment.
Manufacturing and mining are entitled to have the
Prices of their products boosted by law as much as isl