LIBRARY OF THE NEW YORK STATE COLLEGE OF HOME ECONOMICS CORNELL UNIVERSITY ITHACA, NEW YORK Cornell University Library HF2651.S603M4 The American silk industry and the tarif 3 1924 013 820 364 Cornell University Library The original of tiiis book is in tine Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924013820364 PUBLICATIONS OF THE AMERICAN Economic Association THIRD SERIES. VOLUME XI 1910 PUBLISHED BY THE AMERICAN ECONOMIC ASSOCIATION LONDON : SWAN SONNENSCHEIN & CO. igio American Economic Association Quarterly Formerly published under the titleof Publications of thr Amsrican Economic Association THIRD SERIES ISSUED QUARTERLY Vol. XI, No. 4 Price, $4.00 per Ybar THE AMERICAN SILK INDUSTRY AND THE TARIFF by FRANK R. MASON, A. M. Sometime Austin Teaching Fellow in Economics in Harvard University. DECEMBER, 1910 published by the American Economic Association Cambridge, Mass. LONDON: SWAN SONNENSCHEIN & CO. Copyright, 1910, by American Economic Association Printed by Princeton University Press CONTENTS OF VOLUME ELEVEN, THIRD SERIES NUMBER PAGES 1. Papers and Discussions of the Twenty-Second Annual Meeting, New York City, Dec. 27-31, 1909 1-386 2. Handbook of the Association, 1910 1-79 3. The Child Labor Policy of New Jersey. By A. S. Field - 387-616 4. The American Silk Industry and the Tariff. By F. R. Mason 617-794 SUMMARY. PART I. The American Silk Industry. Introduction. In all countries early silk manufacture J\as required assistance 2 Causes which prevent the growth of the industry inde- ' pendently 3 General View of the Industry. The great increase of Civil War duties 4 Amount of domestic production ^. 5 Imports : 6 Relation of home production to consumption. Caution to be observed in interpreting figures — 7— Different divisions of the industry 9 PART II. The Raw Silk. Nature of the Silk Fibre : Early Supplies from the Orient. Differences between reeled and spun fibres 11 Importance to American manufacture of careful reeling. . 12 Silk "throwing" prepares the raw yarn for use in the loom 14 Difficulties arising from poor quality of Chinese silk 15 a. American reels in China, 1840 16 b. Troubles from adulteration 17 1-. Unsatisfactory nature of Chinese yarns 18 Japanese raw silk in the seventies 18 a. Early difficulties 19 b. Efforts of Japanese to improve their product. ... ig Chinese and Japanese threads compared 20 Imports from China explained. Comparison of prices. Chinese policy 24 The London raw silk market 25 Asiatic and European threads compared 26 Recent Raw Silk Problems : Sericulture in the United States. Imports of Italian yarns in the early eighties 28 American reeling machines in Italy 29 vi American Economic Association Importations from all countries in recent years: the policy of Japan 30 Sericulture in the United States. Difficulties 33 Raw silk culture in California and other states since i860. 34 Efforts of the Department of Agriculture to foster seri- culture since 1898 36 Conclusions as to silk growing in this country 38 PART III. Geographical Distribution of the Industry. 5. Early Centralizing Forces. Connecticut's early manufactures 40 Spread of industry due to failing supply of domestic raw silk 41 Influence of imported supplies 42 Importance of proximity to New York City 43 Concentration in New Jersey after the Civil War 44 Factors acting on localization of laces, fringes, and trimmings 47 Experiment with Chinese labor, California, 1875 49 6. Pennsylvania and the New Manufactures. Revolution of throwing machinery and employment of children 50 Rush of manufacturers to Pennsylvania 51 Comparative advantages of central and isolated locations 51 Growth of New Jersey manufactures compared with those of Pennsylvania since 1890 52 Numbers of men, women, and children employed in Pennsylvania and in the whole United States 53 Pennsylvania and New Jersey compared as to production of ribbons and broad goods 54 Problem of the future 55 PART IV. Survey of the R,«ltes of Duty Imposed by the Various Tariff Acts. 7. Legislation 1864-1883 : Specific and Ad Valorem Duties. The revenue duty of the Civil War 56 General ad valorem rate reduced from 60 per cent to SO per cent in 1883 57 Progress under lower duties 58 Comparison of ad valorem and specific systems 58 Defects of Act of 1883 61 Attempts at specific schedule for silks 62 Summary vii The Act of 1890. The specific system in the House Bill 64 Attempt to raise duties by a change of system 66 Some duties raised apparently without cause 67 Pile fabrics and lace duties 68 Act of 1890 in the Senate. Reduction of rates 69 The conference committee and the final bill 70 The influence of J. and J. Dobson 70 Results of Act of 1890 71 The Wilson Bill of 1894. Political situation y^ The House Bill — lower duties on silks 74 The Senate amendments 74 The contest over pile fabrics 7S Causes of distress in pile fabrics industry 75 Reduction of the specific rates 78 Higher rates on velvets than on plushes 79 Final outcome of Act of 1894 80 The Dingley Tariff of 1897. Financial conditions. Higher duties 81 Specific schedule on silks long planned 82 Conditions in the industry analyzed 83 Most lines of silk production were prosperous 83 Extreme protectionist disposition of Congress 85 Influence of the Connecticut manufacturer 87 The Senate debate 88 Flaws in the specific plan pointed out 89 Final outcome 94 Resltlts of the Silk Rates in the Tariff of 1897. Imports since 1897 — their various amounts 95 High rates on cheap goods, low rates on most expensive articles 99 Some rates excessive 100 Defective working of specific schedule loi Dress goods importations since 1899 102 The Tariff Act of 1909. New schedule prepared by the Silk Association of America 102 Increase in duties not protested 103 General agreement as to advisability of a specific schedule 104 Specific rates now applied to spun silks, thread, and throw- ing silks 105 Analysis of the re-classification of piece goods 106 viii American Economic Association Reductions : lowering of the minimum on piece goods and velvets ; lower rates on handkerchiefs 107 Artificial silk ; the principle of compensation 108 Good features of the Act of 1909 109 PART V. Recent Changes and Present Status of the Industry AS Regards Protection. 13. Americaxtzation of the Industry and Dependence on Protection : Silk Throwing and the Thread Manu- factures. Revolutionary changes beginning about 1890 no The industry becomes Americanized ill Thrown silks ; new automatic machinery 112 Thrown silks cheaper here than abroad 114 Sewing silk — long independent of tariff 116 Considerable amounts exported 117 14. Dependence on Protection : Comparison of American and European Methods of Production. Industrial characteristics 117 Domestic as distinguished from foreign products 118 The very cheap hand-loom products 118 The very expensive hand-loom products 119 Machine-made products i2i Characteristics here and abroad 122 15. Dependence on Protection : Ribbons. Growth of the American ribbon industry 123 Great cheapening in cost of ribbon manufacture. Ameri- can inventions 124 Highly figured weaves more costly in labor 125 The American manufacturer cannot diversify his patterns 126 Extent to which ribbon industry is dependent on tariff protection J28 16. Dependence on Protection : Broad Goods. Enormous increase in production 129 Improvements in American broad looms 130 Protective stimulus, competition, and overproduction 135 Some broad goods now made here as cheaply as in Europe 136 Certain kinds not suited to American conditions of pro- duction . ,0 Conclusions as to dependence of broad goods manufacture on tariff _,, 141 17. Dependence on Protection : Other Fabrics. Trimmings. Hand looms and power looms in America. Summary ix Distinction as to kinds that can be produced here and kinds that cannot 144 Tapestries and curtains. Most kinds cannot profitably be made here 147 Braids — history of their manufacture 148 a. Adaptability of the various kinds of braid to condi- tions of production here 151 Artificial silk. .* 152 Pile fabrics 153 a. Decline in production of plushes 155 b. Pile fabrics and protection 156 Knit goods : conditions of production 156 a. Underwear — difficulties of manufacture 157 b. Gloves, mitts, hosiery — adaptability to production in this country 158 Laces and their manufacture 162 a. Decrease in production, increase in importations.. 163 b. Unsuitable to conditions of production here 164 Conclusions 164 18. Dependence on Protection : Various Opinions. Opinions of manufacturers 166 a. Always one-sided 166 b. Mr. Cheney's arguments for protection 167 c. The argument based on lower prices 169 d. The "cheap labor" arguments 170 Opinions of silk manufacturers 170 a. American and European silks are two entirely different products 170 Opinions of buyers 171 a. Market demands for domestic and foreign silks. . . . 172 Personal experiences 173 19. Conclusion. Silk Industry due to protective tariff 175 Serious obstacles to growth of industry 17s The obstacles cleared away 176 The American silk manufacture is still partly a young industry 177 Bibliography 179 PROLOGUE. Those who have become accustomed to look for cer- tain landmarks in current literature dealing with the evolution of particular industries will in the present in- stance miss much that is familiar. It has been conceived that the growth of the American silk industry has been profoundly influenced by only a few important factors, which have accordingly been given separate treatment in the several parts. The history of the industry is there- fore viewed in longitudinal sections and not in chrono- logical detail. Problems of promotion and capitalization, of combination and integration, of the size of the indus- trial unit, so prominent in many cases, are held to have played a wholly minor part in the development of the silk manufacture. Questions of wages and labor supply and of the competition of the industry for the several factors of production, have been grouped for considera- tion as parts of the larger factors through which they have exercised their influence. My thanks are due to the members of the Department of Economics of Harvard University for aid and en- couragement during the preparation of this thesis. Es- pecially am I indebted to Professor F. W. Taussig, undei whose supervision the materials were gathered, for read- ing the manuscript and correcting errors of fact and expression ; and to Professors E. F. Gay and C. J. Bullock, for many valuable suggestions as to arrrangement and form. Frank R. Mason. Harvard University, December 22, 19 10. Part i. THE AMERICAN SILK INDUSTRY. I. INTRODUCTION. The purpose of this investigation is to consider the history and present status of the silk industry in the United States and to examine its relation to the customs tariff. Perhaps no better example of an industry created and built up under the stimulus of high tariff duties exists in this country. For this reason, if for no other, the issues involved are clear-cut and definite. The question of the relations that exist between a protected industry and the tariff, however, is one that must be approached with singular care. This is demand- ed not only because of the magnitude of the interests involved, but also because of the wide divergence of opinion among economic students of the subject. Argu- ments that favor, and theories that oppose, protective duties as such are as old as the study of economics, yet we are almost as far as ever from any general concurrence of opinion on the matter. New light on the old question may perhaps be gained by attacking the problem in a different way, — by an inductive study of particular cases. An investigation of the American silk industry with this idea in view will be worth while, therefore, not only because of the interest and importance attaching to the subject itself, but also as throwing a side light on a much mooted question of economic policy. That our silk industry may justly claim to be the di- rect product of a protective duty and a subsequent pro- tective policy, no one can doubt. But this is not peculiar 2 American Economic Association [6i8 to the American industry. Probably never since the Dark Ages has the manufacture of silks arisen in any state as a spontaneous or independent growth. In the Italian cities before the Renaissance period, where the industry first took firm root in Europe, its immigration from Asia Minor and Constantinople was attended by protection in the shape of gild privileges, freedom from tolls, and the like.^ The famous industry at Lyons was the direct result of an Ordinance of King Louis XI, in 1464, directing the Lyonnese to set aside 2000 livres for the support of silk weavers and to offer attractions to master artisians to settle in Lyons. ^ In like manner the Prussian industry was propped and bolstered up by Frederick the Great.^ In England the fabrication of silks was fostered by bounties, gild privileges, and pro- tection from foreign competition, for over four hundred years, from 1454 to i860.* Although the initial expense for looms, the outlay for machinery, and the lack of technical skill have had their share in preventing the inauguration of this industry un- aided, these difficulties are not insuperable. More ser- ious is the fact that the raw material has to be imported from abroad and is extremely expensive. Above all the variable nature of the demand for an article that is by no means a necessity must always operate strongly against establishing the manufacture without assistance. It is true that considerable imports from foreign coun- tries always precede manufacture at home; this might be considered to furnish a market; but this alone is not sufficient. Even after the use of silk goods has become ' Robt. Pohlmann, Wirtschaftspolitik der Florentiner Renaissance, PP- 49, 50, 64, 74, 99. "Godart, Ch. I. ' SchmoUer and Hintze, Die Preussische Seidenindustrie, Vol. III. * Cunningham, Growth of English Industry and Commerce, silk references. See also Allen, Silk Ind. of World, p. 53. 619] The Silk Industry and the Tariff 3 considerable, the demand will fluctuate so violently from year to year that a new industry can hardly hope to stand unassisted the strain of a series of dull years. Governmental powers do not always see this, and in years of active consumption wonder is expressed that home manufacturers do not take up so profitable a business. In fact, the starting point of government support to the silk industry has usually been a mercantilistic sense of uneasiness at the loss of money in payment to foreigners for an unnecessary article, a luxury pure and sim- ple. Thus Louis XI in 1466 complained that "200,000 livres annually leave our kingdom of France in pajonent for these goods, which moneys we desire to retain at home."' These reflections led to the establishment of the industry at Lyons, a city which was already the center of the imported silk trade. Even after the market is made and the use of the articles may be supposed to be established, nothing is more fickle than the demand for silk products. When the manufacture is firmly established it can withstand a period of slack demand : and one that reaches out to foreign markets may offset losses in one direc- tion with gains in another. But the silk industry in its initial stages is the sport of every ill wind that blows. Subject to every whim and fancy of Dame Fashion, wide fluctuations occur from year to year, un- preventable and unforeseen. This year plushes are in favor, the next year figured broad goods; this year the velvet manufacturers are working their looms over- time, next year their storerooms will be clogged with surplus stocks. Add now to the ups and downs due to fashion those normal fluctuations attributable to the pros- perity or depression of the country, and the result will 'See Godart, pp. 9-1 1. 4 American Economic Association [620 show the wide range of the instabihty of the demand for silk goods. For when hard times come there are few things more quickly selected as suitable for curtail- ment of expenditures than the outlay for silken fabrics. Food, raiment, and shelter must under all circumstances be provided; it is only when people have a luxury fund at their disposal that their thoughts turn to unnecessary articles such as those derived from the cocoon of the silkworm. These considerations explain why it is that official sup- port and material encouragement have always been nec- essary before the initial steps could be undertaken. As applied to the United States, we see that on the whole it would be surprising if such a manufacture had grown up without the stimulating influence of a protective tariff. 2. A GENERAL VIEW OF THE INDUSTRY. It is to the Civil War tariff that we must turn for an explanation of the imposing figures that represent the total annual output of American mills of late years. True, before that time there had been a moderate tariff, and there had been some slight production of silk goods in this country. Since 1824 the general duty applying on these products had ranged between 24 and 30 per cent, and a modest manufacture, consisting of thread and small trimmings, had sprung up. The census of i860 shows some $6,000,000 (really $3,600,000) as the value of the American output of that year.« During the war, however, the tariff on imported silken fabrics, which had never been made here, was raised to an ad valorem rate of 60 per cent. Moreover, the speculative period following the years 1862 and 1863 greatly increased the °U. S. Census i860, pp. C-CI. 62 1 ] The Silk Industry and the Tariff 5 consumption of luxuries. These years saw the real be- ginnings of our silk industry. The Census of 1870 re- ports a jump in the output to $12,739,000 in value. These figures represent paper-money prices, and for this and other reasons are probably wide of the truth.'^ The Census of 1870 is so notoriously unreliable that any data based on its figures can not be trusted. Yet the growth of the industry from 1865 onward was at a very rapid rate, as is attested by the customs data for the imports of raw silk. As we shall see later,^ all raw silk used in this country is imported. The imports of the raw material quadrupled between i860 and 1870, hence it is fair to assume that the manufactur- ing industry increased several fold, if it did not actually grow to four times its previous dimensions. A refer- ence to the tables of production for succeeding years shows that on the average the United States manufacture has, until recently, more than doubled for every decade, though the increase has not been at all uniform. i860 $ 6,400,000 1870 12,739,000 1880 41,033,000 1890 87,298,000 1900 107,256,000 1905 132,000,000 The foregoing figures for United States production include duplications. The net figures® are : i860 $ 3,800,000 1870 10,000,000 1880 34,500,000 1890 69,200,000 1900 92,500,000 1905 118,500,00 ' Wyckoff, Amer. Silk Manuf., p. 41, and Silk Goods, p. 5. ' Infra, pp. i2ff. 'Census Reports and Statistical Abstract. The net figures are obtained by eliminating from the gross results materials and products twice included. 6 American Economic Association [622 Thus, in forty-five years, the home production, omit- ting dupHcations, has jumped from less than $4,000,000 to upwards of $118,000,000. In the first two decades it more than trebled. From 1880 to 1890 it more than doubled, and the increase since 1890, while not so great relatively, shows steady and continuous growth. The United States is now the largest silk producing country in the world.-'" Perhaps the most striking illustration of the phenome- nal growth of the American industry is revealed by a comparison of the figures representing respectively the home production and the imports from abroad. The importations have fluctuated violently from year to year, owing to causes already commented upon. On the aver- age, however, the values of incoming goods have re- mained practically stationary for the past thirty-five years and stand today at very nearly the same figure at which they stood in 1873 — about $30,000,000. The enormous increase in the use of silk goods in this country has been filled up almost entirely by the domestic product. The following figures show the yearly production, im- portation, and the percentage of one to the other for the decennial years. Per cent home production Imports U. S. Production to imports (in millions of dollars) i860 30 6.4 21% 1870 25 12.7 50% 1880 32 41.0 133% 1890 38 87.2 2IS% 1900 30.8 107,3 340% 1905 33 132.0 400% These figures, taken from the census reports for the various years and the Statistical Abstract for 1906, would seem to indicate that of the home demand the home pro- ^"New York Times, January 10, 1909. Letter of Mr. Charles Cheney of South Manchester to Mr. Carnegie. 623] The Silk Industry and the Tariff 7 duction satisfies at present about 85 per cent ; but several facts that must be taken into consideraion afifect seriously the accuracy of this statement. It must be remembered that the value of the imported goods is the official invoice made out and sworn to by the importer. The temptation to put the invoice below the real value is so strong that the undervaluation is often said to be as high as 25 to 50 per cent; though under the partly specific schedule that now applies on silk textiles this tendency is doubtless not so marked as it used to be. But even if we disregard altogether the underscaling of the import valuations, an- other and more important correction must be made before we can use the figures. The value of the home products is determined in the usual way by ascertaining the whole- sale prices, the prices at which goods are sold by the manufacturers to the wholesalers or middlemen. This is not true of imported goods. Before selling them to the wholesaler here, the importer has to pay a heavy tax, and must sell his goods at an advance over the invoiced price sufficient to cover the customs duty. It must not be forgotten that the import statistics do not represent Unit- ed States figures, but French prices, German prices, Ital- ian, Japanese, and even Chinese prices. ^^ To derive American figures from the customs returns, an increase of from 50 to 70 per cent must be added, according to the particular duty that each particular class of goods has to pay. An importation of silks rated at $30,000,000 may easily represent goods for which the consumer pays — at wholesale prices — from $45,000,000 to $50,000,000 It becomes impossible, then, to state with accuracy what our estimated 85 per cent of total home consump- tion supplied by domestic manufacturers really reduces to. The opinion seems general, however, among men ' " Wyckoff, Silk Manuf., p. 91. 8 American Economic Association [624 acquainted with the conditions of demand and supply in the silk markets, that American silks satisfy between 70 and 75 per cent of the total demand. ^^ Mr. Franklin Allen, former president of the American Silk Asso- ciation, who compiled the report in the Census for 1900, computes that probably 75 per cent of the total amount paid by American purchasers for silks is spent for domestic products. The proportion in 1905 is con- siderably larger. 1^ This computation allows for differ- ences in prices between foreign and homemade goods. Using the official statement as a starting point then, let us see where our home producers stand as regards the various kinds of silk goods now in use. In getting at the real selling value of the imported silks, it is probably safe to add to the figures for importation 70 per cent for customs duties, freight, insurance, and profit." We shall make this allowance in the succeeding statements. Between particular classes of goods results vary some- what. Sewing thread and machine twist have always lent themselves readily to American methods of manu- facture, and practically all the silk thread used in this country is made at home. Plain ribbons and narrow goods have more recently come into the same class, and of our ribbons 85 per cent is made here, allowing for duties, freight, profits, and so on. Of broad goods we supply only some 67 per cent of the demand, of velvets and plushes, 50 per cent. On other goods, such as trim- mings, braids, knit pieces, curtains, and laces, varying proportions prevail. These goods all follow the general rule that the more individual and fancy articles are made in smaller and smaller proportions in this country. The ''Thirty-second Ann. Kept. Silk Assn., p. 21. (for 1904). "U. S. Census Bull. No. 74, p. 174, " U. S. Census 1900, Vol. IX, p. 209. 625] The Silk Industry and the Tariff 9 predominance of the American manufacturer shows itself in goods that require a minimum amount of hand labor and of personal attention for their production, and of which large amounts can be turned out of the same pat- tern and quality. The woman who feels that she must wear "something different" sets in motion the looms of France and Germany. Such is the extraordinary growth and present import- ance of an industry which it is safe to say is due almost entirely to the accidental cause of the need of a greater revenue with which to carry on our Civil War. The duty imposed at that time remained unchanged in the years succeeding the war. Under the stimulus of a vigorous protective policy the enormous and varied silk manufactures of today have come into existence. We have here, then, an example, and a striking one, of an industry practically created by protection; for the small output of sewing silk that existed before the Civil War can hardly be called a silk industry. We have seen how improbable would have been the erection of any consider- able manufacture of silk products but for a stimulus and support of just such a kind as that afforded by our Civil War duty. That duty, though laid with other purposes in mind, has had results as significant as they are as- tounding. It presents the questions of how far the American industry has progressed toward a position of, independence; how far it owes its future, as it does its wonderful past, to the protective wall that has hitherto sheltered it from foreign competition; and what proba- bility there is of seeing some day a varied, independent, and progressive silk industry in America. The problem before us is not such as can be solved ofifhand. Even to understand it requires a thorough ex- amination of the conditions under which silk goods are lo American Economic Association [626 produced in this country, the obstacles that in the past have stood in the way of successful manufacture here, and those that still remain to be overcome. The nature of the task brings us therefore in logical sequence to a consideration of the raw material of which silk fabrics are made. Part ii. the raw silk. 3. NATURE OF THE SILK FIBRE: THE EARLY SUPPLIES FROM THE ORIENT. The raw material from which the most strong, most durable, and most beautiful fabric in the world is made differs in its origin and natural characteristics from the basic material of any other texture known to man. The essential feature which differentiates raw silk from all other fibres is that the strands from the silkworm co- coon are taken off in a continuous thread, while those of the cotton plant or sheep's wool come in short lengths which must be twisted and spun together before they can be woven in the loom. The cocoon of the silkworm is, for commercial pur- poses, divided into two parts. The outer part, of a yellowish color, consists of fairly strong fibres, which cannot be reeled off in a continuous strand. The outer hull is therefore peeled from the cocoon and set aside, to be treated in the same manner as the boll of the cotton plant; that is, it is spun into a continuous thread before it can be used on the loom. The textiles so made are known as spun silks, but they possess neither the durability nor the rustle and beauty of the reeled silk products. The inner section of the cocoon, of a yellowish brown color, differs from the outer hull in that the fibre can be taken off in an unbroken thread. The cocoon is drop- ped into a basin of warm water along with from two to 12 American Economic Association [628 seven others, and the loose threads are joined to make two strings, which are then twisted together into a single thread. This process is known as reeling. The single cable is wound on a spool which turns by power. The reeled silk is made into hanks or skeins of a certain length (usually 333^^ yards, sometimes 500 yards), and in that condition it is marketed. The machine which reels the threads from the cocoon is called a filature or reel. The word filature more prop- erly applies to an establishment where reeling is carried on. Originally it required a single operator to attend to the product wound on each spool. Improvements have taken place in this class of machinery, and now a single operator can attend to as many as twenty-four spools at once.i In the history of improvements in reeling a strange paradox appears. The finest reels in the world, whether in use in Italy,^ in France, in China, or Japan, are of American make.^ Yet there is no commercial filature at present in this country.* The paradox is ex- plained by the fact that we can not reel the silk from cocoons in this country because it is impossible to get the cocoons. The raw material has to be put into com- pact form for shipment. Moreover, labor is too ex- pensive here to use it for reeling. Yet the necessity of our manufacturers for well-reeled silk has induced them to put time and money into the improvement of reeling machinery, and to make every effort to get the machines into use in other countries.^ In using the raw silk sent to this country, our manu- ' See description of reels in Special Cons. Rept., Vol. 15, pp. I40ff. ' Cons. Trade Repts., Vol. 18. "Allen, Chronology, p. 9. Also Special Cons. Rept., Vol. 15, pp. 131-52. ■* Cf. Wyckoff, Silk Goods, p. 10. 'Ibid., p. II. 629] The Silk Industry and the Tariff 13 facturers have met with innumerable difficulties. It hap- pens that conditions of manufacture in the United States require that the raw silk be of uniform strength and thickness. The cost of labor is so great here that we cannot afford, as they can in countries where labor is cheap, to stop a machine in order to pick out flaws and irregularities in the threads. Now the filaments from cocoons vary greatly in quality, dependent upon the breed of the worms, the climate in which they are reared, the food and care they receive, and other circumstances af- fecting their health and growth. As a consequence, there occur great irregularities in the size, strength, luster, and cleanness of the filaments. Many of these diversities may be avoided if the cocoons are carefully sorted before reeling, so that all of each grade of fibre may be brought together. Moreover, even after the outer hull has been stripped off, the filament of the inner hull is of uneven strength and thickness, for the layers nearest the insect are of thicker and stronger fibre than those of the part farther away. All these variations have to be taken into consideration in reeling, the more skillful reeler being the one who can put upon the spool a thread of even thickness and strength. To do this may require that three, four, five, or more filaments, from different cocoons, be united to make a single thread. Even after this is done, the different skeins must be carefully assorted and sometimes re-reeled to make a perfect fibre. The contrast between the raw silk used here and that delivered to European weavers for making the same class of goods is very striking. What is regarded as "poor silk" by our manufacturers, is accounted very fair material for delivery to the weaver abroad. The operator there can pick out "slugs" and irregularities, he can 14 American Economic Association [630 stop to tie knots, he can go through all those processes, costly in labor, by which defects in the raw material are eliminated before the perfect fabric is completed. Though provided with imperfect fibre, he is supposed to turn out cloth free from defects. The raw silk, so received, is not by any means ready for the loom. About a dozen distinct processes must be gone through first, which are known collectively as "throwing."" The silk must be wound, cleaned, "picked", doubled, twisted, rewound, and reeled again to turn the fine and delicate raw into more substantial yarn. The silk when thus treated is named, according to the part of the fabric it is intended to form, singles, tram, or organsine. Singles is made by giving the single thread a twist to make it stronger and firmer. Tram, forming the woof, or filling, consists of two or three threads just sufficiently twisted to make them hold together — on the average, about one turn to the inch, but varying ac- cording to the kind of article proposed to be made. Or- gansine, forming the warp threads, is made of two or more singles, according to strength and thickness de- sired, twisted together in a direction contrary to that of the singles of which it is composed. Silk that has reach- ed the organzine stage is not accounted raw silk by our customs officials. Asia has been the chief source of our supplies of raw silk ever since the earliest successful manufacture. The first importation of this material into the United States was in 1828. For many years, however, the Asiatic supply was unsatisfactory. It came by way of Europe, before the overland route was opened. At that time, we got only the stuff that Europe rejected.'^ Our small 'Anglo-Saxon "Thrawan", to twist or turn. ' Wyckoff, Silk Goods, p. 25. 631] The Silk Industry and the Tariff 15 manufactures of sewing silk were then made on hand machines, on which weaker fibres could be used, and were of rather inferior quality.^ The stronger, cleaner, more carefully reeled material made in France and Italy was too costly to be worked with profit, as power looms were not in use at that time. By 1835 large supplies were coming from China, through Europe; but the threads were carelessly reeled, filled with slugs and dirt, and lacking in every requirement as to uniformity in size and strength. The makers of sewing silks before long began to appreciate the necessity of having clean and uniform fibres as raw material for their products. The use of machinery to make sewing thread was being adopted,® and the cost of labor to pick out flaws and im- perfections encroached more and more on the profits of the silkmen. The protests over the qualities of Chinese raw silk grew louder and louder, but to no avail. ^° By 1840 the situation had become so unbearable that an im- portant effort was made to secure the better preparation of the Chinese silk for the market. ^^ It had been wound by hand from stationary bomboo sticks up to that time, a most primitive and unhappy method. Improved reels, comprising a winding frame moved by a crank and one or two other improvements, were sent to China. Samuel W. Goodridge, of Hartford, Connecticut, sent ten of these reels, and A. A. Low, of New York, sent sixteen of them.^^ Instructions also were forwarded as to re- reeling the fibre and assorting the sizes. The machinery proved too much for Asiatic intelligence or gave too great a shock to Oriental prejudices, for the new reels " Wyckoff, Silk Goods, p. 14. * Wyckofif, Silk Manuf., pp. 42, 43, 44. "Allen, Chronology, pp. 8 and 9. "Wyckoff, Silk Manuf., p. 43. "Allen, Chronology, p. 9. i6 American Economic Association [632 were not used. A more determined attempt was made several years later. Late in 1853 Mr. John T. Walker, a prominent raw silk importer of New York City/^ went to China to see what could be done to relieve the situation. Noting that reeled silks from Canton were superior to those coming from Shanghai, he sent a num- ber of bales from the latter place to Canton to be re- reeled. As the Canton reels were built on the American idea, Mr. Walker sent both reels and reelers to Shanghai to introduce the new style of winding.^* The first re- reeled silk reached New York in 1854. The lesson was not well learned, however, for the silk soon deteriorated and importation ceased. The efforts to secure better silk before mentioned were made by those interested in sewing thread and the subsidiaiy braid industry. With the Civil War and the higher tariff begins the modern period. With the manu- facturers of ribbons and other new products now inter- ested, the problem became a much more serious one. Ribbons must have a uniform surface ; clean, uniform raw silk was a vital necessity. Protests proving unefifective, finally in 1867 renewed attempts weix made to induce the Chinese to make the kind of silk we were willinsr to buy, and this time a firm of American sewing silk and ribbon manufacturers started a branch establishment in China. Ezra R. Goodridge and Company sent out Mr. Frank Goodridge to set up a filature in China and to carry on there the business, which has continued to the present day.^' After all the pains taken to cure the faulty reeling in China, and when trouble from this source was thought "Wyckoff, Silk Manuf., p. 146. J. T. Walker, Son & Co., raw silk importers, 8i Pine St., New York. "Allen, Chronology, p. 45. ''Ibid., p. 9. 633] The Silk Industry and the Tariff 17 to be nearly over, our manufacturers found themselves face to face with another and as serious a difficulty. Ob- serving that the American demand was for the coarser and heavier^^ threads, the Chinese began to adulterate the raw silk. Acetate of lead was added in large quanti- ties, to increase the weight ; the practice became a crying evil by 1870. Vigorous protests were entered, and the Silk Association finally memorialized the Chamber of Commerce at Shanghai to put a stop to the adulteration. ^'^ In 1874 the Taotai issued a proclamation to the Chinese producers of silk, with letters of instruction to the chief officials in the silk districts. The proclamation ends, "Let all engaged in the preparation of silk be careful to obey these instructions, select the good from the bad, and constantly study how to improve the quality of their products until they are perfect, and on no account allow the least adulteration or infraction of what is necessary to make it perfect."^* In the following year there was considerable improvement. Mr. Seth Low, an importer of New York, writes, "The quality of the Shanghai 1874-5 silk has been good, and the re-reels seem to have been less weighted than last year. They have also, as a whole, been well reeled and clean we notice a largely increased call for Shanghai raws. The Canton silks that have reached New York have also been of ex- cellent quality, and unusually fine in thread. "^^ The improvement, however, was rather short-lived. In time the adulteration began again, and has continued to the present day, though stopped from time to time by " Machine weaving requires a coarser and stronger thread than hand weaving, because the strain is greater. " Third Ann. Rept. Silk Assn., pp. 20-21. "Taotai's Proclamation to the Producers of Silk, 20th 3rd Moon. in Third Ann. Rept. Silk Assn., p. 20. '"Ibid., p. 59. 1 8 American Economic Association [634 vigorous protest from Europe and America. Chinese silk at best falls short of the highest standards. Less than one fourth of our raw material now comes from China, and our purchases from that country are declin- ing, both relatively and absolutely.^" Only a lively awak- ening of the Chinese to their own interests in the matter of purity and reeling can restore their dwindling signifi- cance as a raw silk producing country. About the time of the last mentioned serious attempt to establish better filatures in China, the Japanese began to awaken to their possibilities as a silk producing coun- try. Some of the new machines were copied and set up in the island kingdom, and favorable reports of the Japa- nese raw silk began to appear in articles published in this countiy. The Japanese seem to have been too eager, however, and tried to forge ahead too rapidly. The de- mand for silkworm eggs became so enormous that a "profit of nearly ten times that on the cocoon or raw silk was realized on the sale of eggs."-^ All hands turned from reeling to the propagation of worms ; in many cases the stock was so increased that the proper care and nur- ture of the worms became impossible. From 1870 to 1874 there was constant complaint as to the quality of Japanese silk. The reeling too, neglected during the mania for egg-producing, grew careless and turned out material unfit for use in this country. The government now took a hand in the matter. In 1874 the Hon. Tet- snoske Tomita, Vice-Consul of Japan at New York, visit- ed the silk districts of his country and collected eighty- two samples of raw silk.^^ These he presented to the " Rept. Com. and Nav. 1909, p. 317. '^ Letter of Tetsnoske Tomita, Vice-Consul of Japan, to the Silk Association, February 3, 1875; Third Ann. Rept. Silk Assn., pp. 22-3. " Third Ann. Rept. Silk Assn., pp. 2off. 635] The Silk Industry and the Tariff 19 Silk Association, with a detailed report, describing the state of affairs in Japan, and asking the cooperation of American manufacturers toward bettering conditions there. Suggestions were requested regarding improve- ment of quality, strength, smoothness, twisting and reel- ing, adaptation to this market, and other requirements.^* The samples examined were declared to have the general fault of being too thin and too uneven for use in our mills. The American loom uses only the coarser threads, for the reason that they increase the yardage, as well as possess the strength necessary for rapid machine weav- ing.2* The Japanese government took immediate action on receipt of this report; and the year 1876 marks the begin- ning of the rise of Japanese raw silk. A number of new and improved reels were sent to that country, and the government not only saw to their introduction into the establishments in Japan, but even set up an enormous filature on its own account. The government establish- ment has continued to the present day, constantly grow- ing in size and efficiency. It not only brings a large revenue to the state, but serves as a model for all the other establishments in the empire. In it all the lat- est devices and improvements are experimented with and tried out before being definitely adopted. In the begin- ning skilled operatives from Europe were imported,^^ along with the best of European and American machin- ery ; since then native labor has gradually been educated. Every effort was made to turn out the kind of raw ma- terial best fitted for use in this country. "In 1875 there were already 300 places in Japan for the filature reel- ^ Letter of Tetsnoske Tomita to the Silk Association, Third Ann. Rept. Silk Assn., p. 22. =^ Allen, Silk Ind. of World, p. 26. "Wyckoflf, Silk Goods, p. 11. 20 American Economic Association [636 ing of silk."^" In 1901 there were 391 1 manufactories and 418,065 families in that country engaged in the reel- ing of raw silk from the cocoon. ^'^ The success of these efforts on the part of Japan to meet the requirements of the silk manufacturers of the United States in the matter of raw material was instan- taneous and almost marvelous. The cordial relations es- tablished between the members of the Silk Association and Japanese producers resulted in turning the attention of silk importers to the raw silk coming from the island empire. Communications, once established, were quickly extended. Strangely enough, the improvement in Japa- nese fibres was accompanied by one of the periodical slumps in quality and purity characteristic of the Chinese product. It is interesting to compare the imports of raw silk from the two countries during the next few years. Imports of Raw Silk. China Japan 1873 $4,386,523 $ 240,000 1874 2,022,352 45,583 1875 594.906 166,539 1876 79,874 3,787,417 1877 233,390 4,371,886 The figures show the large use of the Chinese silk during the early seventies, when the Chinese producers were still turning out good silk under the stimulus of the new reels and the presence of an American establishment with improved equipment. The table also betrays the relapse in the quality and decline- in the quantity of silk turned out by the Japanese while they were engao-ed in the egg-raising mania. The increase in the Japanese ex- ports from $166,000 in 1875 to $3,787,000 in 1876 is chara cteristic of the energy and enterprise of the Japa- " Third Ann. Kept. Silk Assn., p. 22. '"Fifth Fin. and Ec. Ann. of Japan, p. 148. 637] The Silk Industry and the Tariff 21 nese when once their minds are bent on accomplishing a desired result. They were aided, as it happened, not only by the deterioration in the quality of the Chinese article, but also by the increased manufacture of silk goods in this country, which, as is elsewhere noted, took a sudden swing upward about this time.^® The hold thus gained on the American market was never lost by the Japanese, though of course there have been many ups and downs in the quantities of raw silk sent here since then. Too much reliance must not be placed in mere figures of export from any country of such an article as raw silk. There are few things in this world more uncertain to predict than the size of the raw silk crop in any one year. The smallest changes in weather, temperature, moisture, or general climatic or meteorological conditions, have great influence on the activities of the silkworm.-® Moreover, he is a prey to numerous maladies, so that even if he is not killed by a sudden change in the weather, he may fall ill from one of the many diseases which his flesh seems heir to, and the fibre of his cocoon reflects such disorders. For instance, from about 1864 to 1878 the silkworm of Italy was beseiged by a disease called "pebrine", and the crop became less by from 10 to 70 per cent than the average crops before the plague.^" The Chinese silk received during 1875, 1876, and 1877 is characteristically described by Mr. William Ryle, then " United States manufactures, in millions of dollars : 1870 12.7 1874 16.3 187s 21.3 1876 21.2 1880 34-S " Wyckofif, Silk Goods., p. 12. "Ibid., p. 13. 22 American Economic Association [638 Vice-President of the Silk Association." "The Shanghai silks" — where Goodridge & Company's filature was lo- cated' — "have been fully up to the average in quality, but some of the lower grades have been very dirty and most abominably adulterated, as much as 21 per cent of adulteration having been detected in one lot." Of the new Japanese raw silk just beginning to be produced under the changed conditions we have just described, Mr. Ryle says,^^ "After so much complaint has been made in the past years, it is very gratifying to report that the small quantity received from Japan this season has been of good quality, and some of it particu- larly well adapted to requirements of our trade. In winding, the silk proved equal to any from Europe, and was so uniform as not to vary more than 4 deniers in two threads." Very different is Mr. Ryle's description of the Chinese product and of the many difficulties arising from its use. For instance, he states that the Chinese betrayed a queer sense of business honesty and gives several ex- amples of contracts unfulfilled and of adulterations. "The opportunity to cheat the foreigner was too much for Mon- golian virtue to resist," he says of one case where pure silk was paid for and poor silk delivered. He concludes : "One would suppose that the loss of business arising from such deceitful practice would induce more faithful ful- fillment of contracts; but experience proves that all con- siderations are inoperative to make the Chinaman honest in his dealings with the foreigner." Mr. Ryle's report has been quoted to show exactly what was the situation as regards Chinese and Japanese silk, and to indicate the nature of the problems with which our manufacturers have had to grapple in secur- "^ Fourth Ann. Kept. Silk Assn., p. 30. "Ibid., -p. 31. 639] The Silk Industry and the Tariff 23 ing an adequate supply of raw material adapted to the changing character of the silk industiy of this country. One would think, from the extraordinary efforts made by Japan to improve the quality of her silk supply, that the Chinese would pull themselves together to meet the competition of their Japanese rivals. This expectation would be supported by an inspection of the rapid rise in the figures showing the silk coming from China to this country. Imports of Raw Silks.*^ China Japan Italy 1877 $ 233,390 $4,371,886 $19,979 1878 2,957.617 831.353 1879 4.374,965 2,191,287 1880 6,794.065 3,546.132 I88I 6,015,359 3,270,068 14,000 1882 4.846,865 4.588,139 1883 4,370,684 5.589,152 74,804 1884 3,013,401 5,064,512 2,384,000 i88s 3,199.811 5,272,113 2,408,000 The figures are not explainable in that way however. The Chinese way of meeting competition was, not to make better silk, but to lower the price. The com- plaints about the quality of the raw material from China continue unabated. The Secretary of the Silk Associa- tion, writing in 1879, says, "The importations from China have increased during the year, but the silk has not im- proved in quality, being adulterated at least as much as hitherto."^* In 1880, the year of maximum importation for this period, he writes, "There has been no im- provement in Chinese silk : the complaints of adulter- ation and other defects are more pronounced than gygj. "35 jjj jggj there is the same story, in almost ex- '^ Repts. Com. and Nav. for corresponding years. "Seventh Ann. Rept. Silk Assn., p. 10. '^Eighth Ann. Rept. Silk Assn., p. 3. 24 American Economic Association [640 actly the same words : "There is no improvement to be noted in China silks ; the re-reels are adulterated as much as ever, that is to say, as much as they can be."^" Why then this continued importation of Chinese silk? In the first place, silk from China is cheaper than that from Japan. For purposes of comparison there follow a few samples of prices, including European silk as well. London Prices pee Pound of Raw Silk." Chinese Japanese Italian 1870 30/6 32/6 4S/6 1873 28/6 30/6 47/ 1877 29/6 34/6 47/ A further illustration of this phase of the situation is given by a comparison of quantity and value of the im- ports from Japan and from China in 1884. The Report for that year reads, "If estimated by values, only one fourth of last year's imports of raw silk came from China, but being of lower price than Japan or European, the quantity of Chinese silk exceeded one third of the whole." Besides the consideration of price, there have been other reasons for the continued use of Chinese silk. There is evidence that the Japanese did not in every year maintain the high standard of quality that marked their first efforts to meet the American demand. The consump- tion of their reeled threads was so enormous that in their efforts to increase production they became overhasty and careless. In 1879, when the imports exceeded $2,000,000, the raw silk report reads, "There has been a large in- crease in the receipt of raw silk from Japan. The quality has not, however, been quite satisfactory in all instances, owing to a want of care in preparing this silk for the "Ninth Ann. Rept. Silk Assn., p. 10. "By H. Zweifel and Company, in Eighth Ann. Rept. Silk Assn.. Appendix. 641] The Silk Industry and the Tariff 25 market The silk from the best filatures is not open to this criticism."^® Besides the deterioration and other difficulties encoun- tered in the use of Japanese silk, there is still another cause for the continued importation of Chinese silk dur- ing this period, despite its adulteration and poor quality The manufactures of silken fabrics in this country were making enormous strides during the period under review. TJiis is shown by the total imports of raw silk.^® 1873 $6,460,000 1874 3,854,008 1875 -1.504,306 1876 6,778,000 1877 6,792,937 1878 5,103,937 1879 8,371,025 1880 13,837,809 Japan was unable to supply this enormous demand, and in consequence there was nothing to do but to fall back on the product of China. Toward the end of this period we find the raw silks of France and Italy also coming into favor. Something may be said in this place about the London raw silk market. During the first half of the nineteenth century, and for some time afterward, the great raw silk market, especially the market for silk coming from the Far East, had been London. The natural market for silks coming by vessel around the Cape of Good Hope was London, and the considerable silk industry of England was built on the fact that their factories had first choice of Oriental silk. The opening of the Suez canal, however, brought a change in this state of affairs. London is not, by geo- '^ Seventh Ann. Rept. Silk Assn., p. 10. " Repts. Com. and Nav. for corresponding years. 26 American Economic Association [642 graphical position, the center of the silk industry of Eu- rope. Very little of the large quantity of silk produced in France and Italy ever went to London. Its natural market was Marseilles. To Marseilles now went the ships coming from the East by way of the Suez canal. The importance of the London market slowly declined, though it still had splendid facilities for the handling and reasserting of raw silk. During the seventies, the time of which we have just been speaking, imports from Lon- don were still considerable, and, though declining in amount, average nearly $1,000,000 a year for the de- cade. Imports from London^ Raw Silk." 1873 $1,198,000 1874 995,000 187s 949,900 1876 576,000 1877 1,113,000 1878 526,000 1879 871,339 1881 200,000 1882 364,000 1883 277,000 1884 43,000 i88s 4S,ooo By 1884, however, the attractiveness of silk directly ob- tainable from Japan and China, and the increased im- ports from France and Italy, left no economic reason for the continued importations from London on a large scale. The figures dropped to some few thousands, and have remained inconsiderable ever since. It is hard to give a compact statement of the compara- tive advantages, for the American manufacturer, of raw silk from the Orient and raw silk from Europe. We have already laid stress on the importance in this country of having raw material that is strong and uniform. Now " Repts. Com. and Nav. for corresponding years. 643] T"h<^ Silk Industry and the Tariff 27 it is perfectly true that from France and Italy come the most perfect specimens of raw silk made in the world. Great attention is paid there to the breeding and propa- gation of the worms, artificial climate is often produced for their benefit, and no efforts are spared to insure a strong and beautiful fibre. Moreover, the reeling is done in the most perfect manner, by skilled operatives, usually on American machines. The natural conclusion would be that since our manufacturers are forced by economic necessity to use only the best raw material, they must use the product of Europe. The conclusion would be accurate were it not for other considerations. In the first place, European raw silk is much more expensive than that from the Far East. The labor which produces it is paid much higher. Moreover, Japan and China are now turning out raw silk that an- swers almost all purposes as to strength and uniformity. In the years before the seventies, when Oriental silk was so poorly prepared and reeled, nearly the whole of the American manufacture was carried on by means of hand looms. These machines do not need so strong a fibre to prevent breaking, as the strain is not so great, and they can easily be stopped to pick out flaws and straighten tangles and loose ends. Had power machinery come into wide use before the seventies it is undoubtedly true that the kind of raw material we were getting then from the Orient would have been unsuitable, and we should have had to use European fibres. It is significant, however, that improvement in Oriental threads preceded and accompanied the application of power to weaving machinery in this country. The fila- ments from the Far East soon reached such a degree of perfection as to answer all the demands of American conditions of manufacture. 28 American Economic Association [644 Yet there is, and always has been, an economic place for the raw silks of France and Italy in America. Satis- factory as the Oriental products have become, the best filaments from Europe are slightly smoother, slightly stronger, slightly more uniform, than the East can pro- duce. The very finest silk manufactures of this country are made out of this raw material. Especially on the highest grades of plain dress goods, handkerchiefs, and laces, where durability, uniformity of surface, and luster are imperative, and where cost is a consideration of minor importance, the raw silk of France or Italy is indis- pensable. 4. RECENT RAW SILK PROBLEMS. SERICULTURE IN THE UNITED STATES. The years from 1880 to 1884 mark the beginning of several changes in the factors of our consumption of raw silk. In the first place, the difficulties experienced with both sources of supply from the Orient naturally turned the eyes of our manufacturers to the European article. About 1 88 1 our consumption of silk from France and Italy began to assume large proportions. Consumption of European Raw Silk.^ France Italy 1880 $825,000 1881 1,343,817 $14,000 1882 2,831.759 1883 3,607,958 74,804 1S84 1,734,518 2,384,000 1885 1,382,800 2,408,000 1886 895,000 4,148,000 1S87 1,340,000 4,622,000 The sudden increase in the figures from Italy with a corre sponding decrease in those from France is only ap- ^Repts. Com. and Nav. for corresponding years. 645] The Silk Industry and the Tariff 29 parent. The Italian threads had been shipped from Mar- seilles up to 1883, thereafter they came from Italy direct — mostly from Naples. There are several reasons why most of our European supply comes from Italy. Italy holds first place among the European raw silk producing countries. Its threads are cheaper, and if reeled well, the product from Italy is as good as that of France, if not better. The climate of Italy is more conducive to the health and strength of the silkworm than that of France, hence the filaments from the cocoons tend to be stronger. The finest raw silk in the world comes from Piedmont. The cost of labor is lower in Italy, and the raw silk can be sold cheaper. The only trouble is to get the reeling done as well. In Italy, as in the Orient, American reeling ma- chines have been established, resulting in an immediate improvement in the uniformity and cleanness of the threads.^ About 1882 American reels were introduced even in France, and resulted in a marked increase of out- put per unit of labor. Mr. Briton Richardson stated in 1889 that by the use of the new reels "French operators can reel a pound of silk per day, whereas one-half pound was the average output in 1881."* For some purposes French reeled silk is still used in this country, and a small amount continues to be imported every year. The poor quality of the Asiatic silks is not the only cause of the increased use of European thread during the early eighties. Two other factors in the conditions of American manufacture have a direct bearing on the situation. One is the new production of broad goods, especially of plain dress goods. The other is the change from hand to power loom. Plain dress goods are harder 'Special Cons. Kept., Vol. 15, pp. 131-42. " Tariff Rev. Hearings, 1899-90, p. 604, 30 American Economic Association [646 to make than varied and figured goods, for the reason that the plain fabrics show every defect; and trifling variations in the mere thickness of a thread, which would be imperceptible in textures that are overlaid with orna- ment, become striking blemishes in an article of smooth and uniform surface. For these purposes the European product, though much higher in price than the Oriental, possesses the requisite qualifications in a more marked degree. Importations of Italian raw silk have so steadily in- creased since the early eighties that they now surpass in value those from China. The proportion of Euro- pean silk imported to this country has, however, re- mained fairly uniform, at about one fourth of our total consumption. Since the troubles with Japanese silk in the seventies and early eighties the quantity imported from Japan has steadily increased, and a constantly larger proportion of our raw material comes from that country. Considerably over one half of our raw silk is now Japa- anese. About one fourth comes from Europe, while the Chinese reels, once almost our sole source of supply, now send less than a qtiarter of the quantity at present con- sumed in the United States.* This country, which pro- duces no raw silk, is now the largest consumer of that commodity in the world. In spite of the enormous increase in the consumption of silk in this country, the proportions sent to us by dif- ferent countries have shown little change during the past twenty years.^ There is small need of following closely the fluctuations in the quantities imported from the va- rious countries since 1885-6, as the slight changes from year to year are only seasonable and such as are readily *Cf. Thirty-eighth Ann. Kept. Silk Assn., (1910), p. 24. " Thirteenth and Fourteenth Ann. Kept. Silk Assn., Secretary's Reports on General Trade Conditions. 647J The Silk Industry and the Tariff 31 traced to the good or bad crops in the corresponding countries. The general tendencies have been toward a relative ^increase in the proportions coming from Italy and from Japan, and a decrease in the proportions sent us by China. This is what we should expect when we consider the vital importance of perfect threads to the successful manufacture of silk under American condi- tions. The Chinese product has improved considerably since the eigthies; if it had not, none at all would now be imported; but Chinese silk at best has always fallen short of the highest standards. The policy of Japan has shown keen farsightedness and has resulted in wonderful progress, particularly in the last ten or eleven years. There had always been some complaint that raw silk from the East was ir- regular in the size and weight of the bales received, and that the gum was not always properly boiled off.® In Europe this matter is taken care of by a so-called "con- ditioning house," where the raw yarn is boiled off, weighed, and measured in accordance with certain stand- ards. A certificate is then issued guaranteeing the per- fect condition of the silk.'^ As our imports from Japan increased, complaints arose over the imperfect condition and short weight of the skeins received. The matter came before the Native Silk Guild of Japan and through that body was brought to the notice of the Emperor. In 1897, therefore, the Imperial Government set up a silk conditioning house in Yokohama, showing the entire sincerity of the Japanese in their efiforts to put the sale of raw silks on a satisfactory commercial basis. Documents were issued certifying to the quality and quantity of each bale of raw silk passing through the establishment.* For 'Thirty-second Ann. Rept. Silk Assn., pp. 28-9. ''Thirty-third Ann. Rept. Silk Assn., pp. 51-2. ' Thirty-fourth Ann. Rept. Silk Assn., p. 36. 32 American Economic Association [648 various reasons chiefly connected with lack of experience in such matters, the project was not at first a complete success. Many bales certified as perfect were found to be short in weight or too heavily gummed, that is, not boiled off properly. Confidence in the documents issued by the conditioning house declined. The experiment was not given up; its lack of success served only to stimulate the Japanese to further efforts. A letter from the Silk Association in 1904 brought an immediate and highly satisfactory response from the Association of Foreign Raw and Waste Silk Merchants of Yokohama.® The Native Silk Guild passed resolutions to the effect that every bale exported to this country must pass through the Imperial Conditioning House, and that the aforesaid establishment should be enlarged and reconstructed to meet all requirements. The government immediately promised to back up every resolution of the Guild. ^° Not only were all the innovations put through as prom- ised, but in the year following still another step was taken, on the sole initiative of the enterprising Japanese. Under the auspices of His Imperial Highness, Prince Fushimi, the Japan Silk Association compiled a book show- ing the trade marks of all the raw silk exporters. This was sent to the American Association with a letter from Baron Matsudaira, President of the Japanese body, saying, "I hope you will show the publication to the people inter- ested in silk weaving in your country, and should our raw silk be found defective in any way for the purpose in- tended, I hope you will be good enough to point out to us the trade mark of that particular bale, with full par- ticulars and sample thereof. Our organization will al- ways welcome your suggestions, and doing all in its power to warn our raw silk producers, will prevail upon ' Thirty-fourth Ann. Kept. Silk Assn., pp 40-41 ""Ibid., p. 46. 649] The Silk Industry and the Tariff 33 them to introduce such improvements as you may de- sire."ii As against such enterprise as this, other raw silk coun- tries are at a disadvantage. The last three years have witnessed a tremendous increase in the importations from Japan. ^^ In 1907 nearly two thirds of our raw material came from that country, and the proportion promises to become even greater. A word should be said in regard to sericulture in the United States. Experience in this and other countries ought to have proved long ago the insurmountable nature of the obstacles that stand in the way of any extensive raw silk industry in this country. Yet the subject comes up for more or less serious discussion eveiy few years. There seems to be an irresistible attraction in the idea of having industry entirely independent of other countries — the idea of the self-sufficing state. The truth is, in a large portion of the United States healthy silkworms can be bred and reared by anybody who has the time, patience, and mulberry trees at his command. The sole difficulty is to dispose of the cocoons at a profit. Since the disastrous ending of the Morus Multicaulis speculation in the early forties, the amount of raw silk raised in this country has at all times been a negligible element in the material used by manufacturers. It would be idle to give an exhaustive account of the many tri- fling experiments that have been attempted since that time. " Thirty-fifth Ann. Rept., Silk Assn., p. 28. ^ Imports of raw silk from Japan, from Repts. Com. and Nav. for corresponding years. 1904 $24,373,136 190S 27,141,000 1906 27,600,000 1907 38,461,000 1908 40,678,000 1909 44,689,000 24 American Economic Association [650 An example will suffice. In California, about i860, the cultivation of the mulberry was begun, and by 1865 250 pounds of cocoons were obtained. The industry was temporarily saved from disaster by an act of the Cali- fornia legislature, giving a bounty of $250 for planting 5000 mulberry trees and $300 per 100,000 cocoons. A speculation in silk raising followed. The operation of the Act proving unsatisfactory, the bounties were repealed. The product reached 1900 pounds by 1868. but, the sale of the cocoons proving unprofitable, the pro- ducers tried to divert their industry to the propagation of eggs for export to Europe. The speculation "raged with unabated fury for several years, inflicting severe losses."^^ The Commissioner of Agriculture reports that silk raising in California was extinct in 1878. The Census of 1880 made inquiries as to the amount of raw silk raised here in that year, but soon discovered that the expense of making an investigation would exceed the value of the result. There seem to have been in that year only two instances of the use of native silk in manufacture, and those of no commercial importance. One was in Williamsburg, Kansas ; the amount produced was less than five hundred pounds.^* At Salt Lake City, Utah, a small amount of home grown silk was used, but the whole amount produced in the territory was less than a thousand pounds. The experiment soon proved a fi- nancial failure, "the raw silk costing more than that from the Orient."^^ In the Report of the Tariff Commission of 1882 there was some discussion of stimulating the production of raw silk in this country. The Commission, however, received very little encouragement from testimony of the witness- "Rept. Com. of Agric, 1878, p. 495. "U. S. Census 1880, Silk Mfrs., p 64 "Ibid., p. 6s. 65 1 j The Silk Industry and the Tariff 35 es examined. Mr. Frank Cheney^" declared that to put a duty on raw silk to encourage its production here would be "a very losing business." It would be impossible, he asserted, for us to attempt sericulture in this country until our people were willing to accept the low scale of wages paid in the Orient, or at least in Europe. Reeling operatives in France receive 20 to 25 cents per day; in Italy from 1 5 to 20 cents. All the labor-saving machine- ry that it is possible for American ingenuity to devise in this industry is already in use in those countries. ^'^ A duty that would make silk raising possible would have to be prohibitory, and thus cut American manufacturers off from what would have to be for many years to come their chief sources of supply. During the eighties the production of raw silk was again attemped in California, while the experiments in Kansas and Utah have been continued sporadically. When the tariff revision of 1889-90 was under considera- tion, the Department of Agriculture made an investiga- tion of the sericulture industry, and advised the Tariff Committee of the House to hear testimony relative to encouraging raw silk production. The witnesses, how- ever, persisted in giving adverse testimony, in spite of the efforts of the members of the committee to elicit evi- dence in favor of protection. One manufacturer admitted that raw silk could be raised in this country if given enough protection, but when asked what protection he considered enough, answered, "Oh, about a thousand per cent."i« The House Committee, under the circumstances, could not see their way clear to recommending a duty on raw silk; but Mr. Philip Walker of the Department of '"Rel>t. Tariff Com.. 1882, Vol. 2, p. 2167. '■''Special Cons. Kept.. Vol. IS, PP- 131-2. " Tariff Rev. Hearings, 1889-go, p. 600. 36 American Economic Association [652 Agriculture made an extended report, advising a bounty of $1 a pound on all the raw silk manufactured. i'' This was put into the House bilP° and passed the lower body.^i The Finance Committee of the upper house recom- mended that the paragraph be omitted, and it thus failed to pass the Senate. It also failed in the Conference Com- mittee of the two houses, and possibly was never ex- pected to remain in the final bill at all. In 1894 a raw silk grower of California appeared before the Committee on Ways and Means and asked that a duty of 15 per cent be put on the importation of his product.22 The question came up again in 1897, and was discussed, but not very seriously. Nothing was done. In 1898, however, were taken the first steps of any consequence that have been known for over half a century to encourage the production of raw silk in this country, since, in fact, the repeal of the duty of 15 per cent on imports in 1857. In 1898 the Department of State issued a circular letter to our consuls in various cities of France and Italy, asking for minute accounts of silk growing and raw silk reeling in their localities, with descriptions of the machinery used. The replies of the consuls will be found in the Special Consular Reports.-^ From these it appears that the best reeling machines in use in those countries are of American make, that the labor is highly organized in large filatures for the most part, and that the operatives, though possessing a considerable degree of skill, are paid next to nothing. The Department recog- nized the fact that silk cocoons are of little value in a country vi^here there are no filatures for reeling off the " Tariff Rev. Hearings, 1889-90, pp. 6oiff. •°H. R. 9416, ^ Cong. Record, Part s, vol. 21, pp. 4246ff. " Tariff Hearings, 1893, p. 1022. "Special Cons. Rept., Vol. 15, pp. 131-52. 653] The Silk Industry and the Tariff 37 fibres. The manufacturer wants reeled silk, not cocoons ; and aside from the question of a cheap labor supply, there can be no filature in this country until there are enough cocoons to supply it with material on which to work.^* After the reports of the various consuls had been re- ceived, the whole matter was turned over to the Depart- ment of Agriculture. That body took immediate action, following a course that seemed best suited to answer the difficulties of the problem presented. Guaranteed eggs were procured from Italy, as well as a supply of mulberry cuttings. Two reels were purchased and two skilled reelers were brought over from France; these remained in Washington some months instructing several American girls in the art of reeling filaments from the cocoons. Manuals of instruction were then printed, giving minute directions for raising the worm and caring for the mulberry shoots. The eggs purchased from abroad were sent, on application, to all persons possessing mul- berry plants, and to those who had not, cuttings or seeds of the mulberry were forwarded.^* The idea of the bureau is to furnish a market for the cocoons. All cocoons raised are bought by the Department at current European prices. The cocoons are then reeled by the bureau's employees and the raw silk resulting therefrom is sold. The Secretary says : "It has been the aim of the Department to get mulberry trees planted in favor- able situations, to educate as many people as possible in the care of the worms, and, by purchasing the cocoons, keep its correspondents interested until the time comes when the establishment of commercial filatures will be possible. The recent invention of silk reels which greatly reduce the cost of reeling, and the establishment ^Cf. Wyckoff, Silk Goods, p. 32. ^ Kept. Sec. of Agric, 1905, pp. 65-6. 38 American Economic Association [654 of colonies of Italians and others skilled in silk culture at different places in the United States seem to point to the establishment of the industry before long."^" The Secretary's words evince more confidence than the actual state of affairs will support. There has been some increase in the raising of cocoons since 1902, but the trouble is that the "current European prices" are not sufficient to pay for the expense. A glance at the con- sular reports shows how great is the personal attention needed for each silkworm, and how small is the total quantity of silk derived from each cocoon. The raising of silkworms has recently been taken up in eleemosynary institutions, homes for the aged, and other places where there are people with a considerable amount of idle time on their hands,^^ but we are as far as ever from raising silk on a commercial scale. To bring this subject to a close, let us sum up such conclusions as we can reach in regard to sericulture in the United States. It is not advisable to undertake it anywhere on a large scale in this country. The industry is not likely to be profitable, especially if labor has to be hired for the undertaking. The wages paid to raisers of silkworms are considerably lower than those paid to reeling operatives, since no technical training is required. In fact, the work is usually done by the women of fami- lies. There is no possibility of applying machinery to the raising of silkworms or of conducting it in such a way as to make the labor in this country more efficient than it is abroad, and unless that is done, the labor- ers could not be paid more than the impossibly low wages prevalent in Italy or the Orient. Even if "Kept. Sec. of Agric, p. 66. "The industry was attempted by Mrs. P. Johnson, in charge of the Female Penitentiary at Sherburne, Mass., but has since been given up. 655] T'h^ Silk Industry and the Tariff 39 the cocoons could be raised, it seems almost as difficult to believe that a filature for reeling silk could ever be commercially profitable in this country. All the latest improvements in reeling silk are in use in other countries. In fact, American manufacturers immedi- ately send abroad any improvements in such machinery, as it is to their advantage to lower the cost of reeling. It may be admitted that the reeling of silk does offer op- portunities for the continued application of labor-saving machinery, since great advances have been made in this field in the past ten or fifteen years. A filature, however, is impossible without cocoons. The raising of silkworms can never be of commercial importance here until the price of raw silk has soared to impossible heights, or until the price of labor has fallen to levels as low as the wages paid to the poorest toiler in Eastern lands. The outlook at the present stage shows silk culture in the hands of those whose activities can hardly be said to be governed by economic laws. PART III THE GEOGRAPHICAL DISTRIBUTION OF THE INDUSTRY. 5. EARLY CENTRALIZING FORCES. The question of raw material and the problems con- nected with it having been considered, we now turn to the geographical distribution of the industry. The loca- tion of the silk manufacturing centers is a factor of vital importance to the success of the industry, for closely con- nected with it are the questions of labor supply, power, ground rent, taxes, and accessibility to raw silk and to markets. The ability of our manufacturers to compete with those of Europe depends largely on their advantages or disadvantages in these important factors. The location of an industry is seldom a matter of mere chance. Just as in the world at large every country has a comparative advantage over every other country in the production of certain articles, so in a single state certain localities have advantages over others in the production of various commodities. In considering the localization of the silk industry, it will be our task to point out where the different branches of the silk manufacture have been and are now located, what the general trend of con- centration has been, and what importance the factors just named have had in causing the industry to congregate in certain places. There are now upwards of twenty-five different states in which silk manufacture is carried on in some form or other, but the amount produced in most of these is in- 657] The Silk Industry and the Tariff 41 considerable. The five states of New Jersey, Pennsyl- vania, New York, Connecticut, and Massachusetts are the main sites of the American industry. Connecticut, which early stimulated the raising of raw silk by bounties, held the lead for many years. The ad- vantage of being the first in the field made it easier to build a new plant in that state, where there was plenty of labor skilled in the manufacture of sewing thread and where there were facilities for obtaining raw material, than in a totally new locality. In 1832 the bounty on reeled silk was increased to 50 cents a pound. ^ In 1834 Mr. Ward Cheney started a factory at South Manchester, the nucleus around which the great manufacturing estab- lishment of Cheney Brothers has since grown. After 1842 the raising of domestic silk fell off rapidly, and by 1844 had almost ceased,- although Congress tried to encourage silk culture by a duty of 15 per cent on imports.* Deprived of the hoped-for domestic supply, and further disheartened by the gloomy business outlook, a large number of the new silk manufacturers went to the wall. The production of sewing silk declined for a number of years, though it was never abandoned, in spite of the fact that the raw material had to be imported at a 15 per cent duty. The increase in imports* of raw silk taken together with the decrease in production of sewings shows to what extent domestic silk culture fell off. 'Wyckoff, Silk Manuf., p. 32. ^ Allen, Chronology, p. 24. ' U. S. Census i860, p. CI. * Imports Raw Silk, U. S. Census 1880, Silk Manuf., p. 47. 1843 $53,350 1844 172,593 1846 216,647 1848 354,973 1850 401,38s 1855 751,617 i860 1,340,676 42 American Economic Association [658 The change in the source of supply of raw material made many changes in the location of the industry. The raw silk now imported came almost entirely by the way of New York. As that city received also nearly all the foreign manufactured goods sent to this country, it be- came at once the natural market for the sale of silk articles. Prospective* manufacturers therefore turned their eyes toward the metropolis. Here was plenty of labor, here was the raw material, here was the market for the sale of the finished product. The chief drawbacks were that land was expensive and taxes high. From these conditions was evolved a new distribution of the industry. The manufacture of trimmings, as we shall see later,' is simple, and does not take up much space. Braids and trimmings were then made from sewing silk on simple hand machines. Two or three rooms would suffice to carry on a considerable amount of production. It is not strange, therefore, that New York now comes to the fore in the making of fringes, tassels, braids, and trimmings. The same conditions obtain in Boston and Philadelphia, and many establishments were started in these three cities.® By i860 Philadelphia was slightly in the lead; this preeminence she kept for a few years, owing possibly to lower cost of living and cheaper rents. New York was then a close second, and Boston third. New York soon took first place, and has ever since been the chief seat of the manufacture of fringes and trimmings. The amounts produced in other states were very small. '^ The price of land and the high taxes militated strongly against the establishment of the sewing silk manufacture in New York City. The making of sewing silk requires '■Infra., Part V. 'Allen, Chronology, pp. 23-5. ' U. S. Census i860, p. CIII. Also Wyckoff, Silk Manuf., p. 42. ^59] The Silk Industry and the Tariff 43 a plant and room for heavy machinery run by power. The problem then was to find a place where land was cheaper and taxes lower, yet near enough to the city to be sure of a large labor supply and the advantages of proximity to raw material and the selling market. Pater- son, New Jersey, a city of considerable size, only seven- teen miles away, seemed to be best suited to the require- ments of the situation. The first mill was erected there in 1840, by Mr. G. W. Murray of Northampton, Massa- chusetts.* The growth in New Jersey was slow for a time; in i860 there were only six establishments in that state, four of which were in Paterson. But in the amount of silk goods produced. New Jersey stood second among the states just before the Civil War.® During the war and in the years immediately following a large number of new concerns were started, but there is little information available as to the trend of localiza- tion. From the addresses of the new firms, one gets no idea of concentration in any particular spot. The newcomers seemed to have no particular choice. Massa- chusetts, New Jersey, New York, Pennsylvania, Con- necticut, and even Maryland were almost equally favored at first. By the end of the war, however, and for the rest of the decade, two distinct movements are noticeable. One is seen in the success and growth of the Massachu- setts concerns, due, as far as the evidence goes, to the enterprise and ingenuity of the manufacturers of that state. A number of clever ideas in preparing spool thread for the market made their product attractive to pros- pective buyers. At the same time some of the firms made and introduced to consumers measuring and strength- testing devices.^" Improvements in dyeing, making the ' Wyckoff, Silk Manuf., p. 43. Cf. Allen, Chronology, p. 18. ° U. S. Census i860, p. C. ""Allen, Chronology, p. 32. 44 American Economic Association [660 thread stronger and purer, were introduced and widely advertised, which added greatly to the reputation of Massachusetts silk thread." The Massachusetts industry was located mostly in the hilly western part of the state. The region abounds in small streams, furnishing an abundance of easily avail- able water power. The presence of water power has proved an important factor in concentrating cotton and woolen, as well as silk manufacture, in the same dis- trict.i= Another movement in the localization of the industry is the tendency toward concentration in Paterson. This is particularly noticeable, during the years following the war, in the new ribbon manufacture. At first the new firms, as we have seen, seemed not to favor any particular spot. Toward the end of the sixties there seems to be an ever increasing number moving from Massachusetts, Connecticut, and New York to Paterson. The newcomers are mostly English or German. ^^ Such are Strange and Brother, who began the manufacture of ribbons in New York City in 186 1-3, and who moved to Paterson in 1868. Louis Franke also began in New York, but joined the migration to Paterson. Wolfsohn, Meyenberg and Com- pany started in 1866 in New York, but they too eventually moved to Paterson. Aub and Hackenburg set up a plant in Philadelphia in 1863. L. R. Stelle and Sons began at Utica, New York, but moved to Paterson in 1866.^* Messrs. A. Soleliac and Sons began the manufacture of "Allen, Chronology, p. 33. "Wyckoff, Silk Manuf., pp. 113-15. " Allen, Silk Ind. of World, p. 15. Also WyckoflF, Silk Goods, pp. 45-6. " Allen, Silk Ind. of World, p. 14. The Ryles, Tilts, and Mr. G. Lambert were all English born. 66 1 J The Silk Industry and the Tariff 45 ribbons at New York; three years later the plant was transferred to Paterson. The attractions of the region around Paterson must have been considerable, if it was enough to induce so many men already established in other localities to trans- fer their whole plants to that place. Yet it is perfectly natural that a new industry should concentrate in a spot offering so many advantages. The older manufacture of sewing silks and twist had a reputation behind it. Con- necticut, and of late Massachusetts, had the organization, the skilled labor, the good repute, that goes toward the successful making and marketing of sewing silks, for the loss of which removal to Paterson could hardly com- pensate them. The ribbon industiy, then newly intro- duced, had all its reputation before it. Low taxes and cheap land, and above all nearness to the source of raw material and to the most natural market for the finished product, offered advantages that could not well be ignored. Throughout the later sixties and the early seventies this movement continued, until Paterson became recognized as the leading, almost the only, ribbon manufacturing city in the United States. Such new manufactures of sewing silks and twist as were started during and after the war of the rebellion were impelled to set up in New Jersey from much the same motives as appealed to the ribbon concerns. The census of 1870 is by no means accurate; but it may be worth noting that New Jersey is given the leading place in the census of that year in the value of silk goods produced, the figures being $2,678,161. Connecticut for the first time appears in second place, with $2,048,834 worth of product. New York (from its manufacture of braids and trimmings) occupies third place, at $1,211,385; while Massachusetts and Pennsylvania are nearly tied for fourth place, with 46 American Economic Association [662 a production somewhat less than $1,000,000. Massa- chusetts is slightly ahead of Pennsylvania.^^ During the next decade the situation in the silk in- dustry, so far as its localization is concerned, remained practically the same. What difference there was, may be attributed to the influence of the two new branches that were introduced during this time, broad goods and laces. For both of these, proximity to the silk center, New York City, offered advantages scarcely equaled by any other locality. As in the case of ribbon producers, most of the new broad goods manufacturers set up their establishments at Paterson or the immediate vicinity.-'® Many of the ribbon concerns already there added the production of broad goods to the output of their mills. The equipment and method of manufacture of spun silks partakes more strongly of the nature of cotton manufactures than anything connected with reeled silk products. The manufacture of spun silk had been going on in Connecticut since 1852. But the conditions of manufacture did not for a long time suggest the making of broad and narrow reeled silk products. Now, how- ever, we find the Connecticut manufacturers showing a strong tendency to branch out, and adding narrow and even broad goods looms to the equipment of their mills. It was their hope that the reputation they already en- joyed, together with their long experience in the mak- ing of silk thread and spun silks, would offset the benefits conferred by a more convenient location. The situation furnishes an illustration of an industry grow- ing up and prospering around the place where its earlier branches were first established, in spite of the advantages " U. S. Census of 1870. Massachusetts $937,000. Pennsylvania 919,024. " Allen, Chronology, pp. 38-41. 663] The Silk Industry and the Tariff 47 of some other naturally superior location. The silk mills of Massachusetts branched out also, but the silkmen of that state were more cautious, and confined their pro- duction of new articles almost entirely to ribbons. The case of lace manufacture presented different prob- lems from that of broad goods. Laces are like fringes and trimmings in that no large plant, no great floor space, is necessary for their production. Made from sewing thread, sometimes from spun silk, all the elaborate plant necessary to convert raw silk into weavable material, to design pattern cards, and so on, is not necessary. Again, silk laces are extremely liable to changes of fashion and taste, so that the output must be closely guarded both as to amount and kind. To answer all these conditions and requirements the city of New York, where the laces are sold and the demands of the consumers soonest known, offers advantages as to location unsurpassed by any other place. It is not surprising to find that city the chief seat of the manufacture of silk lace.^'^ We find therefore some changes in the geographical distribution of the industry in 1880. New Jersey is still first, but New York is now in second place, and Connecticut third. The proportions of production have also changed, both as to amount and kind, as is seen from the following table. Production 1880." Ribbons Sewings Broad Goods and Laces Trimmings Total Pounds. Yards. Yards. Pounds. VUue. New Jersey 25,580 6,975,655 8,794,100 50,40s $12,851,045 New York , 88,76s 1,427,439 10,302,696 403,330 9,368,025 Connecticut ■ 394,981 2,253,070 8,541,23s 695 5,438,075 Massachusetts . 273,816 99,120 573,320 39,787 3,491,093 Pennsylvania . . 23,110 101,000 1,915,000 192,824 2,853,16s "Wyckoff, Silk Manuf., p. 58. "U. S. Census 1880, in Wyckoff's Silk Manuf., pp. 57-8. 48 American Economic Association [664 It will be noted that for some unknown reason the census compilers have grouped together the items "rib- bons and laces." The production of New Jersey is mostly ribbons, that of New York mostly, but not en- tirely, laces. The advantages as to location enjoyed by Paterson are shared almost equally by many other towns in the vicinity of New York City. Long Island con- cerns are frequently mentioned, ^^ and many smaller towns farther west appear in the silk producing list.^** In these outlying towns all kinds of products are manu- factured — ribbons, thread, broad goods, and so forth — and these appear in the statistics for New York State. In the city itself nearly all the concerns are making laces, trimmings, braids, or novelties of one kind and another. ^^ In Massachusetts there appear only two large items, sewing thread and the compound product "ribbons and laces." Laces and trimmings were made in Boston for much the same reason that they were made in New York City : the small floor space necessary for their pro- duction lessens the expense for rents and taxes, while nearness to a fashion center offers obvious advantages. The ribbons were made mostly in the western part of the state, where the sewing thread manufacture first began — the dominant attraction here being a plentiful supply of water power. It is worthy of note that the manufacture of fringes and trimmings is the most widely scattered branch of the silk industry. Almost every large city, except those in the South, is or has been the seat of a more or less con- siderable trimmings industry. In 1880 Illinois returned "There were 18 firms in Brooklyn in 1883. Cf. Wyckoff, Silk Manuf., p. 133. "Ibid., p. 134. " Tenth Ann. Rept. Silk Assn., pp. 123-32. 665] The Silk Industry and the Tariff 49 a production of 12,220 pounds of trimmings, and noth- ing else. Every bit of this was made in the city of Chicago.^^ Ohio had 2187 pounds of trimmings in that year, all made in Cincinnati.^' Maryland showed 1784 pounds of trimmings, all made in Baltimore. The same is true of Missouri and Rhode Island, the cities of St. Louis and Providence showing each a small output of trimmings and small goods. In none of these states was any other silk fabric produced. The production of these states is listed as "trimmings and small goods." Manufactures so listed are for the most part of the simplest and narrowest kind. The fashioning of silk purses and collars, the covering of buttons, the making of tassels and fringes, might all come under this classi- fication. The production of such articles on a small scale would nattirally spring up in any large city to satisfy local dressmakers' and milliners' demands. California appears in the Census of 1880 as the pro- ducer of 9500 pounds of sewing silk and 4650 pounds of trimmings. The latter item represents the trimmings and small goods production of the city of San Francisco. The sewing silk is the result of a peculiar and interesting experiment on the part of some business men of Cali- fornia. In 1875 the Union Pacific Silk Manufacturing Company was formed, and inaugurated the employment of Chinese labor in silk manufacturing.^^ The plan was to turn out all kinds of fabrics; but, as might be expected, only a very small proportion of the laborers ever learned to take care of their looms intelligently. Better success attended the making of sewing silk and tram. The machinery used in turning out these articles ""Wyckoff, Silk Manuf.. pp. iio-ii. "Ibid., p. 13s. "Ibid., p. 107. ^ Third Ann. Rept. Silk Assn., p. 24. 50 American Economic Association [666 required much less intelligent attention than the more complex weaving looms. A later report stated that "the Chinese boys who are employed at the winding and filling machines give perfect satisfaction."^^ The ex- periment was watched with interest, but nothing more was ever heard from it. 6. PENNSYLVANIA AND THE NEW MANUFACTURES. The decade from 1880 to 1890 marks the beginning of a change in the geographical distribution of the silk industry of great and far-reaching importance. The latter part of this decade sees a remarkable advance in the improvement of throwing'- machinery. As each in- vention made the mechanism more and more automatic in its action, there was constantly less need for strong, intelligent, skilled labor. Consequently women and children began displacing men at the throwing machines.^ Toward the end of the decade and in the early nineties this tendency became more strongly marked. Manufac- turers of thrown silks began to cast about them for a place containing a plentiful supply of the cheap unskilled labor they required. The coal regions of Pennsylvania seemed to offer advantages unexcelled by any other locality. The miners' wives and children were then prac- tically unemployed, and could furnish an abundant supply of cheap labor. The mining regions of Pennsylvania offered many other advantages before unthought of. In the first place, fuel was much cheaper there than anywhere else; taxes and rents were very low. To add to these attractions, the rural towns, anxious to see the silk manufacturing plants " Third Ann. Rept. Silk Assn., p. 25. ^"Throwing"' is an early stage in the manufacture, preparing the raw silk for use in the loom. See p. 14 above. ^ U. S. Census 1900, Vol. IX, p. 212. 667] The Silk Industry and the Tariff 51 established in their midst, offered every inducement to prospective manufacturers. In many cases, taxes were re- mitted, land was presented outright or granted rent free, and in some instances even public subscriptions were taken up and the amount raised was offered as a bonus.' There was naturally an immediate rush to Pennsyl- vania on the part of thrown silk manufacturers. Many broad silk and ribbon establishments that had before done their own throwing in their own plants, now started branches or "annexes" in Pennsylvania. Later on, the whole plant might be moved to that state. In fact, from that time to the present day, it has been a serious problem with manufacturers whether an isolated or more central location offers the greatest advantages. On the one side are cheaper fuel, cheaper labor, lower taxes, less expense for factory space; on the other there is proximity to the market, to expert textile machinists, and to depots for all manner of supplies. There is also the advantage of having "trained employees, who can hardly be induced to move to country towns, where al- most all the operatives must first be instructed in their several tasks."* This much may be said, however : in any case where mechanical improvement has gone so far as to make the operations nearly if not quite automatic, and where tending the machine has become almost a perfunctory task, easily given to women and children, the industry migrates toward a district that will provide the kind of labor best suited to it. Manufacturers of thrown silks® in other localities have found it almost impossible to compete with the establishments in Pennsylvania. 'U. S. Census 1890, Manuf. Ind., Pt. Ill, p. 219. ''Ibid., pp. 219-21. • For an account of the development of automatic throwing machinery, see infra., p. 113. 52 American Economic Association [668 Since 1890 the factors that were then influencing the geographical distribution of the silk industry have been steadily growing in importance. The result has been, as might be expected, a most remarkable growth of the in- dustry in Pennsylvania. In 1890 Pennsylvania stood third in importance; in 1900 she was second. Silk Production in Millions of Dollars. 1890 1900 1905 New Jersey 30.7 39-9 42-8 Pennsylvania 19.3 3i- 39-3 New York 19.4 12-7 20.1 In 1905, according to statistics, New Jersey appears still to be slightly in the lead, but in the words of Mr. Franklin Allen, who compiled the Bulletin Report:* "When the figures are analyzed, Pennsylvania is in re- ality now the foremost silk manufacturing state in the Union." The reasons for this growth are in effect the same that caused the migration of the thrown silk industry there in the first place. An excellent illustration is fur- nished by the trend of events following the invention of the high speed automatic ribbon loom. This case is nearly parallel with that of the thrown silk machinery. The new loom requires less skill to run it, and has given employment to a new class of labor; whereas on the looms formerly in use men were needed, now women are generally employed. '^ New Jersey has long been the leading state in the manufacture of ribbons; yet since the invention of the high speed automatic loom in 1890 New Jersey's ribbon output^ has increased less than 'U. S. Census Bull., No. 74, p. 193. ' U. S. Census 1890, Manuf. Ind., Pt. Ill, p. 208. ' From $9,000,000 to $10,000,000. 669] The Silk Industry and the Tariff 53 $1,000,000, while in Pennsylvania the production of $1,- 195,231 in 1890 had jumped to $5,573,799 in 1905-^ Within the past ten years, there have been wonderful strides in the development of the power loom. The new inventions and improvements have all tended in one direction — toward making the machinery more and more automatic. As this goes on, the need of strong and skilled labor constantly declines. The machines are taken away from the male operatives and put into the hands of women. The manufacturer moves his estab- lishment to Pennsylvania. The change in the geographical distribution of the industry and the change in character of the labor supply go hand in hand. A glance at some of the statistics at once reveals the character and extent of the transition. First as to the throwing industry, and the employment of children.^" From 1880 to 1890 the number of children declined from 5566 to 2866. After 1890 children were put at throwing machines, and the number increased to 6413 in 1900 and 7366 in 1905. Looking at the figures for Pennsylvania alone, we discover that over two thirds of the children are employed in that state, the proportion rising rapidly from 1890 onward. In the whole United States only 9 per cent of the silk operatives are children, in Pennsylvania nearly 20 per cent. It might be mentioned in passing that the proportion of children employed seems at present to be slightly on •U. S. Census Bull. No. 74, p. 193. "Census Bull. No. 74, p. 186. Men. 1880 9,300 1890 17,600 1900 24,206 190S 27,037 Vomen. Children Children in U. S. in Penn. 16,396 S,S66 319 28,914 2,866 1,293 34,800 6,413 4,249 45.198 7,366 4,734 54 American Economic Association [670 the decline, even in Pennsylvania. This may be at- tributed largely to child labor legislation, but it has been said also that women have been found more satisfactory in some of the tasks that formerly were given to chil- dren. ^^ The changes in the last eight or ten years, as noted, have resulted in the displacement of men by women at machines in which the greatest strides in automatic de- velopment have been made. This is abundantly demon- strated by the figures since 1900. Employed in Silk Manufacturing. Men. Women. 1890 17,600 28,914 1900 24,206 34.800 1905 27,037 4S.198 It will be observed that from 1890 to 1900 the num- ber of men employed increased about one third, while the number of women in the same period increased only one fourth; from 1900 to 1905 the increase in the num- ber of men was very small, while female employment advanced remarkably. To put it another way: there were in 1905 21 per cent more laborers in the silk in- dustry than in 1900. Of this 21 per cent increase, 73 per cent were women and 16 per cent were men. In the whole industry today, 56 per cent are women, 34 per cent are men. But in Pennsylvania over three times as many women are employed as men.^^ The effect of these transitions is shown in the figures for the production of silk goods. If we compare Penn- sylvania with New Jersey, the state that has been the chief seat of the silk industry for nearly forty years, we find that the recent developments in labor supply, ma- chinery, and geographical location have produced some remarkable results. We have already spoken of the "U. S. Census Bull. No. 74, pp. i86ff. "Ibid., pp. 186-7. 671] The Silk Industry and the Tariff 55 change in the proportion of ribbons made in the two states. The declining importance of the older ribbon producing centers is strongly evidenced by the distress among New York and New Jersey manufacturers of these articles. ^^ Let us glance at another article, piece dyed broad goods. These are piece goods of simple patterns, made by machinery that has been almost completely revolu- tionized in the last few years. Since 1 900 the production of these goods has increased in New Jersey from 1.6 mil- lion yards to 3.8 millions. The increase in Pennsylvania has been from 1.7 millions to 7.3 millions of yards, during the same five years. ^* Even for skein-dyed broad silks, both plain and fancy, the figures are almost as remark- able. The production of New Jersey practically stood still, at $19,000,000; the output of Pennsylvania had increased from $10,000,000 to $15,000,000, nearly half as much again. ^^ It is interesting to note that the out- put of Pennsylvania in the plainer, simpler, piece-dyed goods is nearly twice as great as that of New Jersey. The influence of the factors that have brought about these remarkable changes is by no means at an end. Improvement in machinery is constantly going on, re- sulting in constant changes in the labor factor. The effect of this evolution on the cost of production of silk fabrics, and on the ability of our manufacturers to com- pete with the European establishments is reserved for discussion in Part V. For a full understanding of the factors connected with foreign competition, there is neces- sary a survey of the duties imposed by the different tariff acts, together with a consideration of the conditions of production as they exist today in the American industry. " See especially Thirty-second Ann. Rept. Silk Assn., p. 48 and Thirty-fourth Ann. Rept. Silk Assn., p. 95. "U. S. Census Bull. No. 74, p. 178. ^' Ibid., pp. 192-3. PART IV SURVEY OF THE RATES OF DUTY IMPOSED BY THE VARIOUS TARIFF ACTS. 7. LEGISLATION 1 864 TO 1 883 : SPECIFIC AND AD VALOREM DUTIES. The Tariff Act of 1864, which imposed a duty of 60 per cent on silk goods, was instituted entirely for pur- poses of revenue.^ The absence of any protective senti- ment is proven by the fact that sewing silks, twists, and spun silks, which alone constituted the items of domestic manufacture at that time, were set in 1864 at 40 per cent and 35 per cent, simply as articles less calculated to yield a large return in money. The war tariff put spun silks, for example, at 35 per cent, doubtless be- cause it was thought that this class of goods would not yield a satisfactory revenue if put at a higher rate. Spun silks are goods made from waste and defective silk fibre, which is treated like cotton or wool fibre before being woven : in other words, it is spun, as distinguished from the more perfect filaments, which are reeled direct from the cocoon. Spun silks are therefore less satisfac- tory and less valuable than reeled silks, and attract a class of people whose demand is easily frightened away by a very slight rise in the valuation. A duty above 35 per cent would, therefore, seriously curtail the importations. The main duty of 60 per cent was imposed on silk goods with the idea that they were articles of luxury. Spun ^The duty had been 24% until 1861. In that year it was ad- vanced twice, first to 30% and then to 40%. Allen, Chronology, p. 43. 673] The Silk Industry and the Tariff 57 silks have not nearly so clear a title to the term luxury. There is not, nor has there been since 1857, a duty on raw silk. It comes to this country in hanks of a certain length, reeled but not otherwise treated. If the process of manufacture were carried one step beyond reeling it would become gummed silk, which pays the same duty as the spun silks. The Civil War duties continued in force until 1883, unchanged and unattacked save by the forces that were contending for a general reduction of the heavy rates that had been called forth by the nation's necessities. As the exigency was now past, it was felt that the war tarifif had fulfilled its appointed task and should be at once discarded. The only difficulty was that the tariff had more than done its duty; it had not only provided the government with money, but had also provided the country with a growth of new industries whose very life depended on a continuance of the high scale of duties. It is not to be wondered at, in view of these circum- stances, that the Tarifif Act of 1883 could not be framed in such a way as to commend itself to all interests. The outcome showed, as might have been expected, a reduc- tion in the rates, but a reduction of so slight a nature as not materially to harm the principle of protection. The general ad valorem rate on silks was reduced from 60 to 50 per cent. The duties on thread and on spun silks were reduced from 35 to 30 per cent. The consequences of these changes were naturally slight. There are no statistics, no calculations, no sources of information of whatever kind that indicate any change in the amount or character either of the importa- tions or of home manufacturers. There was no com- plaint about the insufficiency of the protection granted 58 American Economic Association [674 by the lower rates. The net result seems to have been a reduction amounting to some 16 per cent in the cus- toms duty on articles that were before imported anyway, and a consequent lowering of the price to the consumer. In truth, the manufacturers had little cause to com- plain. The industry was growing so rapidly in the eight- ies that the tariff came in for less than its usual share of attention in the expressed opinions of manufacturers and jobbers. But in the history of industries that look to Congress for aid and protection, it seems impossible to find a condition, however prosperous, in which some grounds of complaint and some appeals for further as- sistance may not be discovered. So it is with the silk and a number of other protected industries of this period. The complaint in this case was not that the amount of the support was inadequate; it was directed against the form in which that support was granted. The differ- ent systems on which customs duties are levied have such a peculiar significance for the silk industry that perhaps it may be worth while to pause a moment to consider them. From 1846 to 1861 all of our tariff duties had been fashioned on the ad valorem plan, following the prin- ciples laid down in Robert J. Walker's Report of 1845 and the subsequent tariff act of 1846. The Act of 1861 and the subsequent war tariffs had departed materially from this principle in regard to some classes of goods, whereas with others, among them silks, the ad valorem principle was retained. This is perfectly natural; some things can be easily described both as to quantity, quality, and degree, and the entire amount of the duty based thereon cannot possibly be avoided short of actually smuggling in the goods. Other things, however, while they may easily be designated as to the nature of the 675] The Silk Industry and the Tariff 59 article and the amount, cannot possibly be described so as to differentiate the various grades and qualities the one from the other, and so permit a rate of duty on each that shall bear equally on all. The natural method of dealing with the latter is to tax them according to the value. Pig iron, for example, is pig iron the world over, and bituminous coal is on the whole bituminous coal. These may safely bear a duty specifying that so much shall be paid for each ton, and there is little danger that some pig iron will be paying 10 per cent of its value, while other kinds of pig iron will be paying 500 per cent. Most textile goods, however, occur in varieties almost infinite: they are thick, thin; closely or loosely woven; heavy, light; made of material good, bad, or in- different, dyed in a bewildering number of ways ; mixed with other fibres in every conceivable proportion. In fact it is impossible to select any of these specifications or any combination of them in such a way as to distin- guish accurately by this means goods of lesser value from the more valuable kinds. A duty on woolen goods specifying that, say, $1 shall be paid on each yard would make some cheap worsteds pay several times their value as an import tax, while the finer goods would surrender only a small fraction of their money price to the cus- toms officials. The chief fault to be found with a specific duty is that it is not uniform in its incidence either as to different grades of the same article, or as to the same grade over a period of time. For as improvements in manufacture go on and the price goes down, the specific duty exacts a constantly larger proportion of the value. But, while difficult in theory to apply equably, the specific duty has the crowning practical advantage of being easily and certainly assessed. If coal pays 75 cents per ton, the 6o American Economic Association [676 quantity imported can be weighed and controlled with comparative ease and certainty; every ton of it that is imported must pay exactly 75 cents to the government. An ad valorem duty, while it is perfect in theory and avoids all the faults of the specific rate, in practice lends itself to fraudulent devices of every description. The same article may be rated at different values in different ports, or at different times in the same port. Perhaps the greatest fault is that the importer may swear falsely to the invoice, and is always under the temptation to rate the value at the lowest plausible amount. This device is particularly dangerous because it may take many forms. The goods may be consigned to some irresponsible clerk who knows nothing about the qualities of the articles and will swear to any valuation that his principals command. These are only a few of the difficulties that arise under an ad valorem system. The natural result is that the advocates of protection strongly favor the specific method, both because the full amount of the duty is collected and because the amount of protection increases unperceived as improvements in methods of manufacture bring about lower prices; while the anti-protectionists favor the ad valorem rate, both because it is equable in principle and because it reveals unmistakably the precise amount of protection granted. We have seen that the Civil War acts had abandoned the ad valorem principle in the case of some classes of goods, but retained it in others. It was natural then that manufactures not protected by a specific duty on the articles they produced should feel that they were not enjoying the full benefit of the shelter against foreign competition which others more fortunate were receiv- ing in that manner. Attacks directed against the ad valorem system had been more or less constant ever 677] The Silk Industry and the Tariff 61 since our own first Act of 1789; but it was after the Civil War acts, and particularly after the Act of 1883, that protests became loud and vehement. If credence be given to even a small part of the testimony of the ag- grieved manufacturers, of business men, and even of economic theorizers, frauds of much more than ordinary enormity had arisen. The tariff hearings of the Fifty- first Congress contain page after page of evidence that goods of all kinds, and silks in particular, were being rated at from 50 to 75 per cent below their real value. Quite aside from opportunities for fraud due to the ad valorem system, clever importers began to discover weak places in the Act of 1883, and a bewildering variety of new schemes and of variations on the old were being employed to escape the duties. Schedule I, 324 (a), of this act reads, "hat trimmings of straw, feathers, lace, ribbon-ends, etc., 20 per cent ad valorem." Immediately an enormous demand for silk ribbon hat trimmings sprang up, so greatly out of proportion to the hats to be trimmed that, according to the witnesses before the Fi- nance Committee, the American industry was brought to a standstill.^ The testimony goes on to state that our ribbon looms had to be shut down entirely, the home dealer satisfying the demands of his customers from the imported "hat trimmings." Statements like these are doubtless exaggerated, but in so far as they are true they form an interesting com- mentary on the then state of our ribbon industry. The manufacture of ribbons in this country was at that time comparatively new, and was undoubtedly very depend- ent on a protective tariff. With 20 per cent of protec- tion our manufacturers seemed unable to cope with the foreigner in the production and sale of ribbons. It is 'Tariff Test. Senate, 1888-9, PP- 1222-3, 1846, etc. 62 American Economic Association [678 however doubtful if, even at that time, all the mills were shut down or were run at a loss. Another practice took advantage of the fact that the package in which goods were shipped was not included in appraising the value of the imports. Soon it was discovered that matches were arriving packed in beauti- fully wrought gold and jewelled cases. Thousands of dollars worth of 20 per cent "hat trimmings" arrived most carefully wrapped in yard upon yard of expen- sive broad silks, lace goods, velvets, and plushes. Many of these practices were such as commonly appear in any tariff system and would not be eliminated by a change to a "specific" schedule. Yet they added to the outcry against the prevailing system and to the demand that something new be tried. Not only the manufacturers, but also all importers not willing or able to resort to questionable practices pro- tested against a mode of levying duties that had so many vulnerable spots. It was argued that the act was loosely and carelessly framed ; that its ad valorem basis was not sufhciently protective ; and that on many classes of goods, particularly silks and fine textiles, enormous frauds were being perpetrated against the customs officials, frauds partly due to the loose wording of the act and partly to the weaknesses inherent in an ad valorem system. By 1886 the situation had become unbearable. In that year Mr. Briton Richardson of New York City called a meet- ing of all the silk importers of New York to devise some scheme by which an import duty could be arranged on the "specific" schedule plan.* The difficulties were known to be enormous, as it is almost impossible to discover any easily recognizable peculiarities through which silks of ' Tariff Rev. Hearings, 1889-90, pp. 59sff. Cf. also Ann. Silk Assn. Repts. for all these years. 679] The Silk Industry and the Tariff 63 lesser value can be distinguished from the higher priced articles. A dozen different plans were submitted, dis- cussed, and rejected. Finall)', the silkmen adopted the simplest plan of all, comprising a pound duty plus a yard duty; that is, goods were to pay duty according to the zvcight per yard, the lighter goods paying more on the assumption that the value per pound was greater. This plan was sent to Secretary Fairchild of the Treas- ury Department with the request that he let the customs appraisers try it to see how it would work out. The appraisers then applied the new scheme to some 600 samples of cloth, but, as might have been expected, with most disappointing results.* The plan is one which takes no account of the quality of the fabric, nor of the fineness of the workmanship. Light and flimsy goods would pay the highest rate, while heavy chasubles of exquisite workmanship would come in on the same basis as coarse and clumsy weaves. In this, as in practically all Ameri- can experience with duties on woven fabrics, it was found impossible entirely to abandon the ad valorem principle. The appraisers returned a report to Secretary Fairchild in which they showed the impossibility of a yard duty plus a pound duty, and recommended a pound duty combined with an ad valorem duty as the only schedule with specific features that stood any chance at all of working satisfactorily. 8. THE ACT OF 189O. Such was the situation preceding the tariff of 1890. The Act of 1883 had been satisfactory to no one and had been followed by bills and counter bills in both houses of Congress in 1884, 1886, and particularly in * Tariff Rev. Hearings (before Committee on Ways and Means), 1889-90, pp. 594ff. 64 American Economic Association [680 1888. In the latter year each of the two great parties brought forward a tentative tariff act, neither of which was intended to be ultimately passed, but designed to set forth party principles on the tariff question and to test the temper of the country as regards the line of policy each stood ready to deliver according as popular opinion showed itself in the ensuing election. The Republican victory in 1888 therefore seemed to justify a conclusion that the popular verdict had spoken clearly in favor of the policy of protection. The election, however, was close, and while the Republicans held a strong majority in the House, their majority in the Senate was not so great as to overthrow completely the Democratic oppo- sition and the conservative traditions of the senatorial body. The result was that, so far as the silk schedule is concerned, a very interesting little drama was enacted. The Republicans and the silk manufacturers stood squarely for a specific schedule; the Democrats and the conservative element in the Senate were banded together to uphold the ad valorem system. The deliberations of the House, therefore, brought forth a document filled with new and strange features. The old body of duties was hardly recognizable ; new measures, representing the specific schedule ideas of its creators, had been inserted wherever an opening seemed to present itself. In regard to the silk schedule, this bill^ as first reported by the House, marked a particularly radical departure from all preceding acts. It will be convenient to divide the discussion of the silk items in this bill into three classes, — dress goods, pile fabrics, and laces. The dress goods schedule was a complex affair, con- cocted according to the proportion of pure silk in a piece 'H. R. 9416. 68 1 ] The Silk Industry and the Tariff 65 of cloth, according to weight, and according as it was black, white, or colored. In addition to specific duties based on all other criteria, a straight 15 per cent ad va- lorem rate brought up the rear in every case. A single glance at the following table will show how complicated the system was. I. Piece goods weighing from i oz. to i^ oz. Undyed, per yd., containing io% to 25% silk $ .75" 25% to 50% silk I.2S +15% 50% to 75% silk 1.60 . If black 1.60 ad.val. If white or colored 2.25 II. Piece goods weighing from i^ oz. to 8 oz. per sq. yd., containing . etc., etc.^ One remarkable thing about the House bill is that, al- though it was not passed and so seemed destined to be- come dead history, it reappeared seven years later, and with some variations is the exact model on which the Tariff Act of 1897 was built. Another remarkable thing is that so far as can be discovered hardly a word was said about the new silk schedule in the House. It seems to have been prepared by a committee of men interested in silk manufacture and to have been pretty well threshed out by the Committee on Ways and Means. There are numerous petitions in the reports of the tariff hearings before this committee,^ asking for changes in one section or another of the specific schedule. Much testimony is also given as to how, when, and why the Committee on Ways and Means had arrived at this particular schedule. But in the House debates nothing was said about the silk schedule in detail. Probably few representatives were ' This tabulated and abbreviated form is that employed in the con- gressional debates. It is used here for convenience, as the word- ing of the actual bill would be intelligible only after careful study. " Tariff Rev. Hearings, 1889-90, pp. SQoff- 66 American Economic Association [682 intimately enough acquainted with the silk industry to be able to discuss the rates intelligibly. Moreover, they were interested in other items. Similarly the great in- crease in the rates on pile fabrics passed unnoticed, as we shall see later. What degree of protection this specific schedule would have afforded is a matter of conjecture. We have seen that there was no need, even no demand for higher du- ties as such; and the framers of the specific schedule claimed that the new bill contained only the old ad va- lorem rates specialized in order to do away with the frauds incident to the old-fashioned system. In fact, Mr. Briton Richardson asserted that many of the rates went below 50 per cent.'' Mr. F W. Cheney, a manufacturer of South Manchester, Connecticut, went even farther. He maintained that the rates would average only 40 per cent or so ad valorem.-' "All we can say about it", says Mr. Cheney, "is that we think the rates very low on the better class of goods, goods which are worth from $2.50 to $3.00 per yard. The duty on that will be only about 25 per cent. On goods worth $1.00 a yard, weighing about two ounces to the yard, it will be 30 per cent, and when you get down to the lower grades you will get 50 per cent and over." So far as can be gathered from a comparison of the rates on the House bill with the tariff of 1897, it ap- pears that the rates would have run considerably over 50 per cent. Whenever the two bills approach each other, there seems little to choose between them, and the 1897 schedule averaged much higher than 50 per cent. It was not claimed in 1890 that more than 50 per cent was wanted or needed for dress piece goods manufac- ' Tariff Rev. Hearings, 18S9-90, p. 596. ^Ibid., p. 59S. 683] The Silk Industry and the Tariff 67 tures. The testimony in the tariff hearings is all to the effect that 50 per cent was sufficient, but that the witnesses wanted it collected on a specific basis. In 1897 there was abundance of evidence that a large proportion of manufacturers were satisfied with the then existing duties, and were surprised that the rates had been raised. Here then rises an anomaly which must have struck every one who has studied the processes by which our present protective tariff system has been built up. Con- gress frequently seems to have given domestic producers more than they have asked for,'^ and admittedly more than was necessary to keep the industries on their feet. In the tariff hearings of 1893 several witnesses testified that the manufacturers of pile fabrics were getting along satisfactorily on 45 per cent.'' Mr. Fred J. Remer, rep- resenting the Astoria Mills of Long Island, said, "If you will ask any American manufacturer, he will tell you that 50 per cent is satisfactory." This was an industry which was given a protection of over 70 per cent in the very act under consideration, as will be seen later. It seems absurd to suppose that a legislature elected on a protective platform is determined to distribute protection lavishly on every hand whether the corresponding indus- tries need it or not. Yet we must either believe this or come to the conclusion that in times when the home manufacturers can urge no open plea for further assist- ance they bring hidden influence to bear upon legislators so that bills, when presented, contain unexplained in- creases in some of the items. This conclusion is borne out by the history of the duties on pile fabrics in this act. The manufacture of ° Cf. Tariff Hearings, 1896-7, where Mr. Chapman said he asked for no more than 45% on his products, but was given 50%. Vol. 2, p. 1737- ' Tariff Hearings, 1893, pp. 1022-40. 68 American Economic Association [684 velvets and plushes had been started in the United States in 1887 and 1888. As appeared later, some of the men interested in this branch of the industry vf&rt very in- fluential with both houses of the legislature, and were practically given carte blanche in devising the tariff rates on their products. This is made certain from testimony gathered in the tariff hearings in 1894. In that year Mr. John W. Stewart, 55 and 57 White Street, New York City, stated that the making of plushes began in this country in 1888 without especial assistance in the way of tariff duty. By 1890 it had attained considerable im- portance as to size, though the product was a very in- ferior article. In the 1890 House bill as first drafted, pile fabrics were given a duty that would raise the rate on them from 120 to 134 per cent, according to then pre- vailing prices.^ Mr. Stewart stated that this measure was due to the preponderant influence of one firm, the J. and J. Dobson Company, who were the sole bene- ficiaries of the new rates. On the passage of the bill in the House, they raised their prices 10 to 25 per cent. The velvet schedule on the House bill of 1890 read: Pile fabrics, containing more than 50% silk $3.50 lb. -|-IS% containing less than 50% silk 2.00 lb. -\-iS% These rates would bring the duty up to 120 to 134 per cent ad valorem. This of course was not allowed to stand; the Senate revised the items considerably; but we shall see later that the influence of J. and J. Dobson and some others interested in the velvet manufacture produced a remarkable effect on the rates appertaining to their products in the final bill. In addition to a higher schedule on dress goods and pile fabrics, the House bill carried an unnoticed eleva- ' Tariff Hearings, 1893, PP- i02off. 685] The Silk Industry and the Tariff 69 tion of the item on laces to 60 per cent. There is no ex- planation by the framers of the bill of the change in the lace duty. Laces, however, lend themselves to a spe- cific duty probably less than any other thing that passes under the eye of the customs official. They occur in such a wide range of values and forms as completely to defy description, at least description of the official kind. The inference is that the lace manufacturers, being de- nied a specific rate on their products, contrived to have the ad valorem rate raised to a par with that on broad goods. Only a word dropped here and there indicates the grounds, if any, on which the higher duty was based. It is said that laces are a more specialized product than the broad and narrow goods, require more labor, and so lend themselves less readily to American large scale mass production. Some of the lace manufacturers seem to have felt uneasy, not because the lace business was not growing, but because it was not growing as fast as some other lines, so that they were earning less on their invested capital than other silk producers. There is evi- dence® that the lace makers in this country, (together with the makers of knit goods) ^" were and have always been less prosperous than those interested in the less specialized branches of silk making. It is perhaps for these reasons that the 60 per cent on laces was kept by the Senate and remained in the bill as finally passed. The Senate greeted the House bill at once with ex- pressions of marked disapproval. The protectionists, it was felt, had gone too far. Every single duty in its elaborate specific silk schedule was cut out deliberately and reduced to the previous rate, 50 per cent at valorem. 'Tariff Hearings, 1896-7, Vol. 2, p. 1744. Cf. Testimony of E H. Davis, of American Hosiery Co., New Britain, Conn.; also E. H. Billyeu, of Philadelphia Knitting Mills, Philadelphia, Pa. " See on this point the Tariff Hearings of 1909, First Print No. 3S, pp. SIS0-S4- 70 American Economic Association [686 The remarkable pile fabric rates received the same pun- ishment, a plain 50 per cent. The 60 per cent lace item alone remained untouched, the Senate apparently being willing to make some slight concession lest the entire schedule become a farce. The bill then went to a conference committee of both houses. The committee apparently had strong leanings toward the conservative attitude taken by the Senate. The bill came back with all the important items as the Senate had left them: dress and piece goods and rib- bons remained at the old rate, 50 per cent. But the velvet and plush schedule showed the powerful influence of Mr. Dobson and his friends. It will be remembered that three years afterward Mr. John W. Stewart, of New York, stated that the pile fabric rates of the House were proposed by J. and J. Dobson. In this testimony he was confirmed by others." "But," continues Mr. Stewart, pointedly, "when these rates" {i. e. the higher rates of the first House bill) "were fully studied out by those who pro- posed them, they came to the conclusion that they had asked for so much that the building of their own con- struction would most likely fall and crush them because of the inducement given to foreign manufacturers to come here and enter into competition with them." "Accordingly," Mr. Stewart goes on to say, "the sales agent and mill manager of the Dobsons called at our place of business, stated this fact, and asked for samples of our goods, with weights and prices, that they might reconstruct their recommendations so that a new scale might be arranged, which, while less likely to tempt foreign manufacturers to come here, would be sufficient to give them (the Dobsons) all they wanted." Mr. " Tariff Hearings, 1893, pp. I022ff. 687] The Silk Industry and the Tariff 71 Dobson is asserted to have said that he had no doubt as to his ability to efifect any desired alteration, as he had a very influential backing. "This", said Mr. Stewart, "was after the House had passed their bill, and we can only presume from what fol- lowed that he possessed all the influence he claimed." Mr. Stewart was right. Velvets and plushes, alone of all the products in the silk list, remained on a specific basis in the Act of 1890 as finally passed. The figures, however, are changed. The House bill had read : Velvets and Pile Fabrics. More than 50% silk $3.50 lb. + 15% Less than 50% silk $2.00 lb. + 15% The latter of these two items contemplated an exces- sive rate on the cheaper goods — the kind most largely made in this country at that time. The final Act placed the dividing line at 75 per cent of silk instead of 50 per cent, and made the rate on the cheaper goods $1.50 per pound instead of $2.00, while the 15 per cent at the end was left off altogether. It is probable that the alter- ations of Mr. Dobson were as much due to the action of the Senate in cutting his whole system down to a meager 50 per cent as to his self-interest. He prob- ably felt that to retain his specific schedule at all it was imperative that the amount of duty be lowered. The Act as passed read : Velvets and Pile Fabrics, More than 75% silk $3-50 lb. Less than 75% silk $i-50 lb. These rates were considerably lowered in subsequent tariff acts. Even in the high tariff of 1897, with specific rates on silk goods the rule and not the exception, the duty on all-silk velvets stood $1.50 lb. -f 15 per cent; on plushes, $1.00 lb. + 15 per cent, making for a consider- ably lower ad valorem duty. 72 American Economic Association [688 So far as can be discovered, very little was said in the House of Representatives in regard to the specific rates on silks, and nothing at all as to the duties on plushes and velvets, though many other and less con- siderable increases in the duties v^ere fought out to the bitter end by the opponents of high protection. Days and even weeks were spent in the discussions of high and low duties in general, in threshing out such subjects as steel, wool, woolen, and agricultural duties, yet the start- ling change in the silk pile fabric duties seem to have escaped the notice of all. It is doubtful if consumers and importers of these fabrics knew of the remarkable increase in the duty on them, as it attracted so little notice. It was to the interest of those responsible for the new rates to keep them out of sight, and dissentient voices, if there were any, were not heard. Nor was there any discussion in the Senate; apparently the only reason the items were lowered there was that they came under the observation of the Finance Committee, which care- fully went over every paragraph in the bill as reported from the House. A glance at the workings of the pile fabrics duty shows just what the result of the specific feature was. Beginning with 1889 the importations of plushes and velvets, and the duties paid, reckoned on an ad valorem basis, stand: Imports of Duties paid Plushes and Velvets. ad valorem. 1889 $5,407,000 45% 1890 5,070,000 45% (Specific duty) Plushes Velvets ad valorem equivalent. 1891 $4,030,000 $ 77,000 74%1 1892 2,450,000 112,000 76% ^average. 1893 3,001,000 181,000 73% 1894 1,935.000 117,000 60% 689] The Silk Industry and the Tariff y^i The sudden jump from 45 to over 70 per cent in the duty somewhat curtailed the importations, as may be seen. The lowering of the average rate in 1893 and 1894 is explained by a clause in the Act which read : "But in no case shall the duty be less than 50 per cent." The result was that importers found it profitable to bring in foreign goods of such high quality of fabric and work- manship that the specific rate amounted to less than 50 per cent of their value. Consequently a considerable por- tion of the pile goods imported in 1894 came in at 50 per cent, bringing down the average ad valorem equiva- lent of the duty suddenly from 73 to 60 per cent. Thus the wealthy classes, that alone could afford goods of the highest quality, secured them at a rate of duty nearly the same as before the high specific rate was imposed ; while those who were obliged ts^ use imported goods of inferior quality paid a rate of 75 per cent, So per cent, or even more. To sum up: the silk schedule of the Act of 1890 as finally passed contained two important changes : first, the increase of duty shown in the lace and pile fabric items; second, the beginnings of a specific system, at- tempted at first as to all the items, retained finally in the matter of plushes and velvets alone. The general char- acter of the whole Act of 1890 is reflected in its silk schedule, and the issue of a marked extension of the protective system was squarely presented to the country 9. THE WILSON BILL OF 1 894. The answer of the American people was remarkably prompt. The elections in November, 1890, resulted in an overwhelming defeat for the party of high protection. In 1892 again the Democrats won both the presidential and congressional elections. Mr. Cleveland, strongly 74 American Economic Association [690 opposed to high dtities, sat in the White House, while in the houses of Congress the RepubHcans were out- numbered 260 to 1 64. It was natural then that the party of free trade should look eagerly forward to coming into its own again; and its first step must naturally be the repeal of the obnoxious Act of 1890. Unfortunately for the hopes of the Democrats, cir- cumstances were not in their favor. The party was al- most rent in twain by the struggle over the repeal of the Silver Purchase Act. Again, while their majority in the House was nearly two to one, their hold on the Sen- ate was extremely precarious — 38 to 44 — so that, in- stead of being a compromise between the views of the two houses, the final act was as the Senate demanded. The House was forced to accept all the amendments of the upper body, preferring to do so rather than lose the measure entirely. President Cleveland showed his dis- appointment by ignoring the bill, which became a law without his signature, August 28, 1894. In the matter of silk duties the House bill contemp- lated some material reductions. On dress and piece goods the former rate of 50 per cent was to be retained, and the lace items were to be brought down from 60 per cent into the same class with the dress goods. Braids and webbings were separated and put at 40 per cent. The most significant change was in the pile fabrics, the high specific rates on which were clipped and reduced to a simple 45 per cent ad valorem. All manufactures not specifically named were to come in at 45 per cent also. These items, passed without much debate in the House, became veritable bones of contention in the Senate. The disaffected Democrats protested vigorously that while raw materials and the necessities of life might have some 691 J The Silk Industry and the Tariff 75 claim to a reduction of duties, silk goods were luxuries and should be heavily taxed. An attempt was made even to raise piece goods, handkerchiefs, and laces to 60 per cent, the high rate of the Civil War. The attempt failed however, and the 50 per cent of the House was ac- cepted without debate. Braids and webbings, set at 40 per cent by the House because they were not extensively made in this country, were at first set at 50 per cent but finally left at 45. The real conflict turned on the pile fabrics. The questions at issue here are interesting and will bear some scrutiny. It seems that when the J. and J. Dobson Company put their heavy specific rates on plushes and velvets into the Act of 1890 they overstepped the mark. The duties proved in many cases to be very high — from 70 to 120 per cent, rates which, combined withthepaucityof Ameri- can made products, caused an immediate rise in prices. Thereupon a number of enterprising foreign manufact- urers decided to transfer their establishments to this country.^ This indeed Mr. Dobson himself seems to have foreseen and feared. The transfer was quickly made; and hence between 1890 and 1893 nine large factories for the making of silk plushes and velvets were estab- lished, more than enough to supply the whole American demand. At the beginning the strangers, together with the Americans already started, flourished. It was the period when plush sacks, "seal plush" coats, and so on, were indispensable to every woman's wardrobe, from miner's wife to millionairess. But trouble arose. It was discov- ered that the American product was of very poor quality ; a black "seal plush" coat that looked a marvel of beauty when first put on had a reprehensible tendency to wear ' Tariff Hearings, 1893, p. 1022. 76 American Economic Association [692 bare and white in spots, and to lose its "fur" by square inches. This was undoubtedly due to the lack of skilled labor, lack of effective supervision incident to the establishment of a new industry, and to the hurry-up system too often characteristic of American factories, which subordinate careful work to speed, and quality to quantity. The English article, on the contrary, held its good ap- pearance. The demand for American plushes ceased almost as suddenly as it had begun, and just at the time when new factories were going up and constantly larger supplies flooding the market. The seal plush fad became limited to the few who could afford the English variety, and when the crisis of 1893 broke, the seal plush mania disappeared entirely. The position of the new plush and velvet factories now becomes plain. As shown in the tariff hearings, of the nine large concerns, all were in a very bad way, most were on the point of asking for a receiver, and some had already done so.^ "Testimony of Fred E. Kip, President, Salts Textile Manu- facturing Company, Tariff Hearings, 1893, pp. 1033-44. The state of affairs in the seal plush and velvet industry is well revealed by two letters written by manufacturers during the period 1890-94. The first was written by one of the proprietors of the Unicorn Mills at Catasaqua to their superintendent during a strike. "April 21, 1892. "Dear Sir: — Whenever the weavers want to come in again, on our conditions— that is, we want good goods, and no trashy goods, as they have made heretofore — we will reopen the mill, but not before that, under any circumstances. This is a question of life and death to this entire industry, consequently just as much for us as for the hands. There are now large stocks of such trashy seal plushes of domestic manufacture held here, which nobody wants, and we shall certainly not go to work to still further increase them. If we make better goods we get better prices, and if we get bet- ter prices we can pay better wages. "Yours truly, 'C. A. AUFFRUOEDT & CO." 693] The Silk Industry and the Tariff yj This state of affairs, confessed by the manufacturers themselves, had been brought on by the high specific rates on these products in the Act of 1890. Evidently from this example, to give a young industry too much protection is to spell its ruin. The high tariff is followed by high prices and big profits. Competition then sets in, prices are lowered, and worse still, the goods become cheaper and trashier^ until the whole industry falls into discredit — in this case, bankruptcy. To remedy the plight of the American plush manufac- turers, two very different lines of treatment were sug- gested. The first assumed that all the trouble was due Again from Mr. Wm. Degener of this company. "September 10, 1892. "The domestic manufacturers of seal plush have not had a very easy time so far. Seal plush is one of the most difficult articles to manufacture, and a great deal of time and money has been sacrificed by those who ventured into it, to attain something near that degree of perfection in color and finish which is absolutely necessary for its easy sale, and which state it appears can only be reached by long and costly experiment. Not every one, then, has succeeded in it. Soon after the start of this difficult industry, a few years ago, by but two factories, the change brought about by the McKinley bill made a few of the English seal plush manu- facturers believe that there was nothing more profitable than to transfer their plants here and rush into manufacturing the article in this country; so they did. As soon as the newcomers ap- peared in the market with their makes, the times became more difficult for all. Instead of holding up the market, as the first few starters had done, an unhealthy competition was inaugurated. There was a constant ' fight among the four or five mills for prices, and prices sank quickly to a level at which now none of them can live. As to upholstery plushes, the less said about them the bet- ter. There would be just a little profit in them for the manu- facturers, if some generous hand would come forward and make a present of the silk required. "Wm. Degener, of C. A. Auffeuordt Co." " As to the quality of the goods, this brief extract from the trade journal of the American Cloak Mfrs., to which trade all these goods go, bears eloquent testimony: "No fabric has suffered more from the cheapening process than the seal plush. The market has been flooded with inferior goods, the results of the experiments of the new manufacturers." Tariff Hearings, 1893, p. 1030. 78 American Economic Association [694 to foreign competition, and that the remedy was to raise duties still higher, while adopting stringent measures against fraud. The advocates of the other remedy pointed out that the duties on this class of goods were already so high as to be almost prohibitory, and that for- eign importations had nearly come to a standstill.'' The trouble could not therefore be due to foreign competition ; to make the duties higher would produce no change in the situation. They further maintained that the Ameri- can producers, unable in the beginning to turn out an article as good as the imported, had entered into ruinous competition with one another, because the high tariff of 1890 had offered such an extraordinary inducement to enter the field that more factories were built than were necessary to supply the American demand. This com- petition had resulted naturally in a rapidly increased pro- duction coupled with an accompanying deterioration of quality, until homemade velvets and plushes became so cheap that nobody wanted them. The industry of course was in a bad way ; but it was the high tariff that had got them into the slough, and a higher tariff could hardly pull them out of it. Indeed it was inconceivable that a higher tariff could affect the situation one way or another. Arguments like these were overwhelming, and the Committee on Ways and Means set the tariff on pile fabrics at 45 per cent lower than that covering the more important items of laces, handkerchiefs, and piece goods. The House followed the Committee's recommendations without comment of any kind, as indeed the subject had been thoroughly threshed out already. The Senate looked at the matter more conservatively, however, and refused to commit itself to a measure which seemed to that body to spell absolute disaster to the industry in America. ' Cf. Tables of importations for 1893-94 on page 72. ^95] ^^^ ■Silk Industry and the Tariff 79 After long deliberation the Finance Committee finally recommended that the specific duty be continued, but that the amount be lowered to $1.50 a pound for velvets and $1.00 a pound for plushes, a most material reduction from the previous rate, which had gone as high as $3.50 per pound. This recommendation was also the basis of the rates in the Tariff of 1897, the only difference' being that in each case 15 per cent ad valorem was added to the specific rate. It will be noticed that in this act the rate on velvets is higher than that on plushes. There are several reasons for this. The chief difference between velvets and plushes lies in the length of the pile. The longer pile of plush goods^ makes the manufacture of these fabrics more difficult : to give them a smooth and uniform finish requires considerable skilled hand labor. They are there- fore more valuable, on the average, than velvets." Broadly speaking, plushes are put into personal wearing material, while the velvets made in this country find their largest use in upholstery, curtains, and carpets. This statement must be taken with considerable reservation. Velvets are often made into dresses, and this is particu- larly true of the finer imported velvets, which are more largely used for wearing apparel than for other purposes. Domestic velvet goods can therefore be made in large quantities of a single pattern, while their quality is not so closely scrutinized as is that of an article of apparel. There were, therefore, some uses to which American velvets could be put, whereas homemade plushes were almost universally admitted to be hopeless. In fact, 'The Act of 1909 designates as "velvets" fabrics with a pile of 1-7 of an inch or less; while "plushes" are those with a pile exceed- ing 1-7 of an inch in length. 'Infra., p. 154. 8o American Economic Association [696 American velvets held their own fairly well during this whole period, the importations of foreign pile fabrics consisting almost entirely of plushes.'^ It was thought that there was greater hope that the manufacture of velvets might amount to something, so greater encourage- ment was given in that direction. The $1.00 a pound on plushes was intended almost entirely to represent a revenue duty on a luxury, and to prevent foreign plushes from invading a field for which American velvets might possibly have a chance to contend. These considerations explain the reasons underlying the only considerable re- duction in the silk schedule of 1894. Little was said in 1894 about changing either one way or another the most important item of all, that of dress and piece goods. The manufacturers kept strangely quiet, said only that they were satisfied with 50 per cent, and asked that this figure be not lowered.^ The importers were in agreement in saying that 50 per cent was a satis- factory duty for this class of goods, one on which they could continue to carry on the importing business in the future as they had in the past. Undoubtedly each side was fairl}^ satisfied with the situation as regards dress goods, and was afraid of asking too much, especially as each wished to fight for a serious change (in opposite directions, of course) in the pile fabrics duties. Though the Act of 1894 was highly unsatisfactory to the party which passed it, it was in the main a compro- mise measure such as would leave no especial bitterness rankling in the heart of either party. Nor was there any particular desire to change it; it seemed in fact that a serious and radical reversal of tariff policy within three ' Tables of importations on page 72. ' Tariff Hearings, 1893, pp. 1030-43. 697] The Silk Industry and the Tariff 81 short years was the last thing one might at that time expect. 10. THE DINGLEY TARIFF OF 1897. The years following 1894 were marked in the economic world by severe business depression; in the political world by money problems and the contest for free silver. The result of the hard times was a serious and ever- increasing deficit in our national treasury. It was natural to blame the tariff of 1894 for this state of affairs and to suggest the need of a higher tariff as a remedy for the bad financial plight of the government. The contest for free silver discredited the Democratic party and put the Republicans firmly in power in the administration and in both houses of Congress. Hence when President McKinley called the extra ses- sion of 1897, he asked Congress to deal only with the need of revenue for the treasury and with import duties. The House Committee had a bill already prepared; this was passed by the lower house almost without debate, being accepted as a party measure and passed under the pressure of party discipline. In the Senate affairs moved more slowly ; the Committee on Finance made an attempt to lower the rates made by the House, but the Senate amended these again, with a tendency toward the higher duties voted by the representative body. The bill as finally passed embodied in the main the ideas of the advo- cates of high protection. A mere glance at the silk schedule in the Act of 1897 shows at once the radical nature of the difference in char- acter between this schedule and any other that ever had been passed before. All the important items had been switched over from the simple ad valorem system to a 82 American Economic Association [698 complicated specific system, with the minimum principle elaborately developed, and many intricate schedules in- tended to single out for separate duties goods of every shade and degree. An example will suffice : On silk piece goods,^ 1. Containing 20% or less in weight of silk (a) if in the gum, $ .50 lb. (b) if dyed in the piece, .60 lb. 2. Containing 20% to 30% of silk (a) if in the gum, .65 lb. (b) if dyed in the piece, .80 lb. 3. Containing 30 to 45% in weight of silk (a) if in the gum, .90 lb. (b) if dyed in the piece, i.io lb. 4. Containing 30% or less in weight of silk, if dyed in the thread, or yarn : black, .75 lb. other colors, .90 lb. 5. Containing 30% to 45% in weight of silk, if dyed in thread or yarn ; black, I.IO lb. other colors, 1.90 lb. Another distinction was made according to weight : the lightest goods (those weighing less than y^ oz. per yard) paying the highest duty of all, $4.50 a pound, and so on through the whole schedule. In view of the various influences that had been brought to bear on the shaping of the silk schedule in the previous bills, and the various forms taken by those bills before reaching the final stage, this great change does not seem surprising. As far back as 1886 powerful influences had been brought to bear tending to put that schedule on a specific basis. The attempt failed for the time, as we have seen. The House bill of 1890 clearly reflected, however, the minds of the protectionists, and the forces that had been responsible ■ for its appearance were con- ' Rept. Com. and Nav., 1898. The tabulated and abbreviated form is used for convenience. 699] The Silk Industry and the Tariff 83 stantly at work along the same lines, so that a schedule of a smiilar character was bound to appear whenever circumstances favored. We need not be surprised, then, considering the conditions attending the passage of the Act of 1897, to find a specific schedule springing full- grown into being. It is difficult to discover whether the disappearance of the old system of levying the duties may be attributed to new and distressing conditions in the silk business, or whether it was brought about simply because it was a measure dear to the protectionists, sure to be adopted when the time was ripe. In general, the silk industry had suffered along with all other lines of business during the melancholy period from 1893 to 1897; yet its growth and expansion during the decade were enormous, and would seem to give little cause for complaint. It is worth while at this point to consider what general grounds there were for or against changing the tariff so as to give the industry a greater degree of protection. An examination of the more direct testimony yields results that are at first sight confusing. The abundant evidence given by the Committee on Ways and Means in the tariff hearings is unfortunately all of one color: disparagement of the ad valorem system and urgent de- mand for change. Anti-protectionists evidently were not encouraged to testify before the Committee. Yet in view of the constant trend toward specific duties seen in the tariffs of 1897 and 1909, much of this evidence is illumi- nating. Mr. E. C. Hovey, of the Textile Manufacturers' Asso- ciation of New York, was particularly convincing in his arguments on the need of a re-classification. He told of one case where fine goods had come in under a sus- piciously low invoice : a chemical test showed that the 84 American Economic Association [700 proportion of silk in the goods was so large that the raw silk alone was worth more than the invoice value of the merchandise. The importers were penalized $10,000 by the local appraiser. An appeal was made, said Mr. Hovey, to the Board of General Appraisers, who sustained the penalty.^ The delinquents then went to Washington and by some means or other got the whole fine remitted on the ground that no intention to commit fraud had been proven. This was based on a decision of the Attorney General of the United States that an intention to commit fraud must be proven before a party can be penalized. After that, according to Mr. Hovey, no one hesitated about undervaluing goods, as the penalty for doing so was practically removed, and dishonest importers could go on swearing to false invoices time without end.^ Messrs. Bister & Schmitt, New York importers and commission merchants, had much to say of the stool pigeon invoice (the practice of consigning goods to a clerk who could honestly swear he knew of no other invoice or valuation than the one furnished him by the principals). They maintained that this practice had now become so prevalent that it threatened ruin to honest im- porters (like themselves) who kept their hands clean of such practices. They also brought to light another device which seems to have made its first appearance about this time. In their own words, "Silks are now imported by so-called commission houses and sold for a certain commission, which leaves all responsibility as to the correctness of invoices to the foreign manufacturer." As the latter is of course outside the jurisdiction of the United States, no one could be prosecuted for a fraud of this nature. ^ Tariff Hearings, 1896-97, Vol. 2, p. 1747. ^ Much of this testimony is tinged with bitterness. 70i] The Silk Industry and the Tariff 85 It will be noted that all these practices represent faults inherent in the ad valorem system; they appear because the basis of determining the amount of duty is the valua- tion of the imported article.* Bister and Schmitt recom- mended a specific and ad valorem duty combined, running up to 10 cents a yard, plus 30 per cent, on different varie- ties of silk goods; a series of rates that would seem absurdly low to a protectionist, though Bister and Schmitt calculated it would amount on the whole to 45 or 50 per cent ad valorem.^ In addition there was much testimony indicating dis- tress among knit silk and lace manufacturers, who had had their protection cut down from 60 per cent to 50 by the act of 1894.^ But of these, more later on. On the other hand, there is abundant evidence that the silk industry was prosperous, and that the additional pro- tection afforded by the Act of 1897 was not insistently demanded by all manufacturers. In the first place, much complaint was made, especially in the Senate debates, that testimony in the tariff hearings was strictly limited to those advocating an increase of duties. In fact. Senator Jones of Arkansas presented a number of petitions from importers and jobbers, "who complained that the House Committee on Ways and Means refused to hear them, and gave ear only to Con- necticut and New England manufacturers" who were known to be desirous of an increase of duties.'' It is evident therefore that the tariff hearings per se are not a fair presentment of all sides of the question. Anything *By 1909 manufacturers and importers alike seem to have agreed that the specific system is the most satisfactory in practice. Cf. Tariff Hearings for 1909, First Print No. 23, pp. 2993-3010; Print No. S3, pp. 8083-S, and p. 8ogo. ° Tariff Hearings, 1896-7, Vol. 2, p. 1747. 'Ibid., p. 771, also pp. 1739 ff- ' Cong. Record, 1897, pp. 2005-10. 86 American Economic Association [702 can be proved if prejudiced witnesses of the proper kind can be produced. Yet even in this protectionist testi- mony we find proof that Congress was inclined to gener- osity toward manufacturers. Mr. William H. Chapman, a silk covered button manu- facturer, appeared before the Committee to ask considera- tion for his industry. Silk covered buttons were coming in from abroad at 45 per cent (under "other manufac- tures" in the Act of 1894) ; the "button forms" which he used were all made abroad, coming in at 10 per cent; so it would seem that this manufacturer might be troubled by foreign competition, as he had to pay duty on his raw material. The Committee, therefore, asked him if he wanted more protection. He said he would get along all right if they would only not put up the duty on button forms. Again they asked him if he didn't want to testify to his need of a higher rate of duty on his products. No, he said, that would be all right if they would not meddle with the duty on the button forms, his raw material. When the same question came up in another form, Mr. Chapman said, "Let them (silks and silk buttons) con- tinue as they are (45 and 50 per cent) ; I think other silk manufacturers would be satisfied with that."^ In spite of such direct testimony that 45 per cent was all the manu- facturers needed, the bill that went to the House and was passed by the Senate contained an elevation of the rate to 50 per cent. One might infer that the Committee was determined to force protection on the manufacturer. There are other bits of evidence that seem to point to the fact that the protectionists were determined to add to the duties on silk. In the debates in the Senate a number of sp eakers seemed to be surprised that so radical a ' Tariff Hearings, 1896-7, Vol. 2, p. 1737. Mr. William H. Chap- man, President, Williston and Knight, Easthampton, Massachusetts. 703 j The Silk Industry and the Tariff 87 change had been made in the silk schedule. Members from several states^ arose and declared that they had understood that their constituents were satisfied with the old rate of 50 per cent and could not see any reason why a change should be made. Petitions even were submitted. One petitioner^** said, "Our understanding is that the New Jersey manufacturers themselves suggested a straight 50 per cent ad valorem duty as being ample protection to them." The petitions presented by Jones of Arkansas, protesting that the House Committee on Ways and Means refused to hear those not desirous of higher rates, but "gave ear only to Connecticut and New England manu- facturers" seems borne out by an examination of the tariff hearings of 1897. Aside from one Pennsylvania manufacturer of knit goods and laces, and two firms of New York importers, all the testimony presented is from Massachusetts and Connecticut manufacturers. The meaning of this discovery is clearer when one learns that the firmest and most combative advocate of high protec- tion, the man who supported the new schedule of duties through thick and thin, who met every argument pre- sented in opposition to them, who left no stone unturned to discover virtues in the new scheme, was Senator Piatt of Connecticut. Out of all this evidence we may sum up : the party of protection was in power and was determined, almost com- pelled, to prove its power by producing a tariff of a pro- tective nature. Add to these motives that arising from a deficit in the treasury and consequent need of an increase in the revenue, and it may easily be imagined that rates of duty were raised, in many cases, with little regard to 'McBride of New York, White of California, etc. Cf. Cong. Record, 1897, pp. 2007 ii. "T. K. Stewart and Company of New York, Ibid., p. 2009. 88 American Economic Association [704 the needs of the protected industry, or even of the wishes of a majority of its representatives. It is not necessary to follow in detail the silk schedule of the House bill. As we have seen, a specific system had long been contemplated and many had been drawn up. The House Committee, determined beforehand on a change from the ad valorem system, had no trouble in devising a specific schedule. This was put through the House without change or even serious opposition; and so it was sent on to the Senate. In the upper house, however, there was interesting debate and more or less opposition. The rate on velvets had been $1.50 a pound in the Act of 1894. This had now been increased in the House by adding 15 per cent ad valorem to the specific duty. This addition was allowed by the Senate to continue without comment. It will be remembered that there was some prospect that velvets could be made in this country, while American plushes were felt to be almost hopeless. Hence the plush duty was only $1.00 a pound. The Senate probably felt that the 15 per cent would not make much difference, might give the velvet manufacturers a little of the assist- ance of which they stood in need, and could be safely conceded anyway for the sake of revenue. With plushes, however, it was different. The rate had been changed by the House from a straight $1.00 a pound to a mixed duty of $1.25 a pound, plus 15 per cent ad valorem. There was certainly less reason to increase the rate materially on plushes than on velvets, unless it were intended to bolster up an unprofitable industry at any cost. After some debate on the subject, the rate was lowered to $1.00 per pound plus 1 5 per cent, simply adding 1 5 per cent to the rate of 1894, as had been done in the case of velvets. It was when dress and piece goods came up that the 705] The Silk Industry and the Tariff 89 items of the House bill met serious opposition. Jones of Arkansas and several other senators arose and protested their surprise that the silk schedule had been so changed. They had understood that the silk manufacturers were satisfied with things as they were and had expressed themselves as content to have the old rates simply con- tinued. Complaints were heard on all sides on various features of the new schedule, and serious flaws in it were exposed. The principle on which it was based was denounced as unjust. The assertion of its advocates that the new schedule did not increase the amount of duty, but simply aimed at preventing fraud by requiring payment on a specific basis, was scoffed at as mere pretense. The last assertion is easily proved to be true. Not only do the new rates average much above 50 per cent reckoned on an ad valorem basis, and rise in many instances to 100 per cent and more, but the obvious intention of the framers of the act, to put the rates above the old ones, is shown by the clause, "the amount of duty in no case to fall below 50 per cent ad valorem," attached to all the specific rates. AH goods were to pay at least 50 per cent and as much more as the specific rate might bring it up to. In the course of the debate in the Senate in 1897, the advocates of the bill dropped their conten- tion that the specific scheme contemplated only 50 per cent ad valorem levied on a specific basis, and contended merely that none of the duties ran over 75 or 80 per cent, keeping a discreet silence as to what they thought the average would be.^^ Many senators pointed out the inherent injustice of the principle on which the new schedule was founded. All silk piece goods imported were to pay duty by the " Cf. speeches of Mr. Piatt of Connecticut. Cong. Record, 1897, pp. 2007-11. 90 American Economic Association [706 pound, regardless of the quality of the silk or the fineness of the workmanship. Obviously, on this scheme, goods of poorer quality would pay a much higher proportional rate than the better grades. Two pieces of the same weight per yard could easily vary in quality so much that one could be worth many times the other, yet both would pay the same duty, making the amount paid on one piece come to 50 or 60 per cent, while the other, if it came in at all, would have to pay 500 per cent on its value as a duty. In fact, the scheme excluded cheaper grades of goods altogether and put a high rate on articles of me- dium quality, while the most expensive silks escaped with a comparatively moderate duty. The new tariffs thus put the heavier burden of taxation on those who could not afford the more expensive articles from abroad. The minimum principle, introducing graduations by value, was felt, with all its faults, to be more just in incidence. It was a particular example of what could happen under the new tariff act that brought on the warmest opposition the bill had met, and caused even the staunch- est Republican to pause in his allegiance. Senator Jones of Arkansas led the chorus of protest against the ex- cessive rate on cheaper goods. There are certain kinds of Chinese, Japanese, and Indian cloths made from the cocoon of a silkworm that grows wild. The threads are of inferior quality and are not strong enough to be woven on a power loom. They are woven by hand and made into cheap waists and workingmen's blouses. These fabrics are very light, and as the raw silk costs only the labor of picking it off the bushes, are sold very cheap, as low as 8 cents per yard.^^ Tussore and chappe silks are ex- amples. They did not really compete with the reeled silk products, but many spun silk manufacturers feared " Cong, tiecord, 1897, p. 2009. 707] The Silk Industry and the Tariff 91 that they would prove dangerous. Senator Jones brought in a sample of goods of this kind. It weighed 4 ounces to the yard, the duty on which as provided in the bill, and as finally enacted, was $2.50 a pound. He presented the following table: Cost Weight per yd. Duty Ad Valorem 8c 4 oz. .62 ^c 770% He protested against 770 per cent. He also brought in many other samples of light weight but cheap silk goods, such as Chinese pongees, and shantung pongees made from the wild silk of India ; all of these bore duties from 75 to 700 per cent. Eighteen inch piece-dyed pon- gees, paying $3.00 a pound and weighing less than lys ounces per yard, stood thus : Cost Weight Duty per yd. Ad Valorem 17c 1.2 oz. 22.Sc 132% Duties much higher than this have subsequently been paid under the operation of the act, hence this example is far from being an exaggeration.^' "The following petition was sent to one of the senators from New York (McBride), and read in the Senate by Jones of Ar- kansas : "The undersigned, importers of silks, doing business in New York, desire to invite your attention to the rates provided in the pending tariff to be imposed on silk goods. Schedule L, as it came from the House imposes duties on many grades of silks imported by us that would be positively prohibitive and would practically de- stroy our business. We refer to Japanese silk, and goods made chiefly of spun silk, known as chappe, made in France and Switzer- land. At the same time European dress silks of the finer grades are to be admitted at reasonable rates, so that they can still be im- ported. "We have made full representations to the members of the committee having the silk schedule in charge as to these inequali- ties, and we have made verbal statements to such members, who appeared convinced thereby, but we fear these facts have been overruled before the full committee owing to the strong influence of a certain Connecticut manufacturer. 92 American Economic Association [708 Senator Jones, therefore, offered an amendment, re- taining the specific schedule, but making for lower rates on cheaper grades of goods. He also suggested that no silks should pay over 60 per cent ad valorem, which alone put the limit 10 per cent higher than the previous rates. It contained a tacit protest against rates aiming at a gen- eral increase of duty. At this formidable exhibition many professed protec- tionists showed signs of wavering. Mr. Teller of Colo- rado announced that he "believed in giving liberal sup- port to home industries as strongly as any man," but he had no hesitation in saying that no 700 per cent duty would receive his vote. Senators Gray and Mantle spoke in the same strain, adding that if the schedule went through as it was, they should vote for the amendment of Mr. Jones, prohibiting a duty amounting to more than 60 per cent. Mr. White of California declared : "I do not think the Connecticut manufacturer (a manufacturer of spun "We now appeal to you to use your influence with the committee to stay this impending injury to the commerce of New York and to us, your constituents. There is no question as to the facts. The specific rates provided in the bill are equivalent to go to 100% ad valorem on Japanese silks and no to 150% on chappe silks. On some of the cheaper grades of Chinese pongees the duty will be more than 700%. At the same time the rates on European dress goods, such as are used by persons of wealth, run from 40 to 70%, the lower rate applying to the most costly goods. These, however, must pay 50% ad valorem if the specific rate falls below that rate. "We indignantly protest against such an outrage, and we ask you to interpose and demand equality and uniformity of treat- ment by the committee, of all grades of silk goods imported. We have no objection to specific rates. We prefer them if they be fairly and equitably arranged. But this bill exhibits such glaring favoritism to the great Connecticut manufacturer, proposing as it does to crush out all foreign competition for his benefit, that we confidently appeal to you," etc. 709] The Silk Industry and the Tariff 93 silks at South Manchester), who is worth seven or eight milhons made in legitimate business under our favoring laws, is suffering at 45 per cent ad valorem. I do not suppose the Senator from Connecticut will say there is any general demand among the silk manufacturers of this country for anything more than a 50 per cent rate. Indeed, I was told day before yesterday by a silk manufacturer that the vast majority — I think he said 90 per cent — of those engaged in the business at Pater- son, had agreed on a so per cent rate."'^* Senator Mantle said: "Don't impose 700 per cent duty: 700 per cent is prohibitory, and if we intend to stop Japanese cheap silks from coming in, why not be manly and prohibit them outright?" Against all this opposition and counter-argument Sena- tor Piatt tried to make headway. He started in by saying that he believed no rate on the schedule went above 75 or 80 per cent. In fact, he had seen a report of the appraiser of New York in which it was stated that no rate on the new schedule went over 80 per cent. As to the 770 per cent pongee shantung, however, he was obliged to admit that he did not know about it. How- ever, he recovered himself in a moment and started to show that it was only Chinese silk after all; poor stuff, made by the cheapest labor in the world; the American workingman must be shielded from any possibility of competition from this low grade coolie labor ; his standard " There were a large number of petitions of the same general tone. One letter to Senator McBride was read in Senate by Mr. White : "Our understanding is that the New Jersey silk manufacturers suggested a straight 50% ad valorem as being ample protection to them . . . unscrupulous parties have taken advantage of the general unintelligibility of specific rates to introduce prohibi- tory duties.'' (Sigtned) "T. K. Stewart & Co." 94 American Economic Association [710 of living, and so on. This well-known line of reason- ing was interrupted by Mr. Teller, who said bluntly that he did not "care whose silk it was, no 700 per cent duty got his vote." Mr. Piatt therefore dropped the "cheap labor" argument and fell back on his original assertion that none of the rates went above 75 per cent — certainly none above 80 per cent. Hereupon Mr. Mills observed that if Mr. Piatt claims there is no rate above 75 per cent, "we'll test his faith in his own statements by an amend- ment that no duty be over 60 or 75 per cent." Mr. Jones's original amendment, that no rate be over 60 per cent, was now voted upon. As the event showed. Senator Piatt need not have worried. He had an argu- ment more powerful than all others in his favor, a party discipline too strong to be seriously shaken. Jones's amendment was lost, and even the later amendment, that no duty be over 75, then 100, then 200 per cent, were lost in succession. ^^ '°The full history of the fight is interesting. On Jones' 60% amendment the votes stood : Yeas Nays Not Voting 23 26 40 Mr. White next moved that no rate should be over 75%, and he urged that the Senate owed it to themselves to prove their faith in their own statements by voting for his amendment. The Sen- ate did not see it that way, however, and the votes stood 22 for, 24 against, and 43 not voting. Mr. White then moved that no rate should be over 100%. He also urged that we should not risk our vast exports to Japan by an excessive rate on a few million dollars worth of Japanese silks, which we have no object in keeping out anyway. The party stuck stolidly to its post, and the result showed: yeas 25, nays 28, 36 not voting. Mr. White kept doggedly at it. He now moved that no rate be over 200%. The Republicans, at this persistent hammering at their compact ranks, rose up in arms. Mr. Piatt said he objected on principle to inserting a "not more than" clause. It would cause endless complications and embarrasments. It would serve as a precedent for inserting a maximum schedule of duties, which a yii] The Silk Industry and the Tariff 95 That was the end of serious opposition to the new silk schedule. A few minor changes were made, some slightly increasing the House rates, and some lowering them; the only alteration worth noting was a reduction of the piece goods rate from $5.00 a pound for goods weighing less than 1^3 ounces per yard to $4.50 per pound. II. RESULTS OF THE SILK KATES IN THE TARIFF OF 1 897. At this point it might be well to glance at the general effect of the tariff of 1897 as revealed in the course of subsequent importations. The true importance of the bare figures is much more difficult to judge accurately than would seem at first glance. The year 1897 regis- tered a turning point in the industrial history of the coun- try. The previous four years had beeen marked by gen- eral economic depression and hard times. The end of this period saw enormous crops in this country sold at high prices in Europe. Simultaneously, combination and technical advancement in many of our most important industries resulted in the most prolonged period of pros- subsequent free trade Congress could lower to suit. A very acrimonious debate followed. The opposition urged that a maxi- mum limit was needed here to prevent a 700% rate. Mr. White showed that it would not establish a precedent, because p. 250 of the Act of 1894 reads : "In no case shall the duty exceed 8 cents per yard." But the opposition were fighting under insuper- able difficulties. Mr. Morgan tried in vain to secure recognition from the chair, dn order to make a speech in favor of the amend- ment. Mr. Piatt called for the roll and it had already begun be- fore Mr. Morgan finally got the ear of the speaker by shouting so loudly as to interrupt proceedings. He made a lengthy speech, summarizing all that had been said and emphasizing the question of Japanese trade. The Republicans, angry at the interruption rather than convinced by the argument, stood even more firmly than before — yeas 23, nays 28, not voting 38. ^6 American Economic Association [712 perity and high money incomes that this country has ever seen. As we have already noted, when people are prosperous the consumption of silk goods increases. And there is a superabundance of evidence that the consump- tion of silk goods increased at an unprecedented rate after 1897. Take the home of manufactures, — the pro- duction in 1890 was $87,000,000. From 1890 to 1897 the amount turned out increased but little, as the im- ports of raw silk in 1897 were about the same in quan- tity as in 1890, some five or six million pounds. The home production in 1897 could not have been much over $87,000,000, especially since the fall in prices had been considerable. Yet in 1900 it stood at $107,000,000, while the imports of raw silk for use in American mills increased to over 13,087,000 pounds ($45,000,000). By 1905 raw silk imports had increased to 19,000,000 pounds ($60,000,000) and the finished product stood at $132,000,000 (less duplications, $118,500,000), an increase of $20,000,000 in only five years.^ All these figures represent an absolute increase in the home con- sumption of silks, for the imports from abroad have not decreased since 1897, nor has any appreciable amount of the American product been exported. Neither is the increase due to a rise in prices, for all silks, espe- cially the domestic goods, have fallen in price since 1897.^ The fact remains that the enormous advance in the consumption of silk goods has been due to the ability of the consumers to spend more money on such goods. In view of this state of affairs, one would hardly expect the importations to fall off short of an almost absolute prohibition. As a matter of fact, there has been an * U. S. Census Bull. No. 74, pp. 173-5. ^Census Bull. No. 74, p. 178; also Twenty-ninth Ann. Rept. Silk Assn., p. 72. Cf. pp. 179-80, "Manufactures" in Bulletin. 713] The Silk Industry and the Tariff 97 increase in the total values of incoming silk fabrics since 1897. The figures since 1890 run : Total Imports of Silk Manufacturers (In millions of dollars) 1890 38.7 igoo 30.9 1891 37.9 1901 26.8 1892 31.2 1902 32.6 1893 39 1903 36 189-1- 24.8 1904 32 189s 31-2 1905 33 i8g6 26.6 1906 30 1897 25.2 J907 38 1898 23.5 1908 33 1899 25.1 1909 30 There has been an increase, but far from a relative in- crease. The highest figures since 1897 do not stand as high as those for 1890 and 1891, though there is every reason, aside from tariff considerations, why they should stand much higher. There is every reason to believe, therefore, that the specific features of the silk schedule in the tariff of 1897 have shut out a large quantity of goods that would have been imported had the old plan been continued. The cheaper handmade products have been excluded entirely by the specific schedule. Our con- clusions in regard to dress and piece goods are well borne out when we glance at the figures for handker- chiefs, laces, ribbons, knit goods, or pile fabrics. Hand- kerchiefs bear the same system of specific duties as dress goods, except that they come in under a minimum ad valorem duty of 50 and 60 per cent. They average about 64 per cent. Laces and knit goods pay 60 per cent, a straight ad valorem rate. Ribbons pay 50 per cent, due to the fact that our ribbon industry is not so much in need of protection as the broad goods. Pile fabrics pay the old duty with 15 per cent added. On all these fabrics, with their higher rate of duty, im- 98 American Economic Association [714 portations have perceptibly increased, showing that the larger demand for silk goods in the past ten years has led to larger consumption at prices made higher by the new tariff. Imports of Silk Goods (In millions of dollars) Dress and Piece Goods Laces 1808 lO.S 3.3 1899 13. 1 2.8 1900 15-4 3-2 I90I 1 1.9 3.2 1902 13.6 4.5 1903 140 S-o 1904 142 4.8 190S I5-I 4-7 1906 148 4.6 1907 13-5 70 1908 lo.i 5.9 1909 1 1. 2 5.6 If we glance at the specific rates now actually applying on the various fabrics, and the amounts of each kind that are imported, we meet with striking results. Un- fortunately, the various rates are so complicated as to be almost unintelligible to one not thoroughly acquainted with the thousand and one different varieties of silk cloth. We cannot follow out each rate in detail, but must be content to indicate the more marked results of the new system of duties. First of all, it should be noted that the basis of all the schedules is payment of duty by weight. Cloth weighing so much per square yard, regardless of the quality of the material or the fineness of the workman- ship, pays a fixed rate of duty. Thus at once the cheaper grades of goods are excluded, or come in at a heavy disadvantage ; they must pay the same duty as the costlier silks of the same weight per yard, hence a greater pro- Ribbons Velvets and Plushes 2.0 1-5 1-7 1-5 1.8 2.3 1.8 2-3 2.8 3-0 4-3 3-0 1-9 3-0 1-9 3-2 2.0 30 1.8 2.7 1-3 1-9 1.6 1-4 715] The Silk Industry and the Tariff 99 portion of their money value must be turned in to the customs officials. This line of reasoning is borne out by the facts : recent importations have tended more and more to run to costlier and finer silks, heavy chas- ubles, and draperies of exquisite workmanship. The dress goods that used to come in plain are now heavily figured and ornate with designs and elaborate patterns.* More- over, the uneven working of the Dingley tariff is seen in the way the duties paid look when put on an ad valorem basis. Every year millions of dollars worth of these expensive silks came in under the heading "on which specific duty does not amount to 50 per cent", their value being so great that they paid the minimum rate. On other goods the widest varieties of ad valorem duties prevail, showing the uneven working of the specific scheme. A few examples taken at random from the importations for 1899, ^ normal year, will show this.* „ ,, , .ad valorem Duty Value per unit equivalent 1. Dress goods, wt. ij^ to 8 oz., containing more than 45% in weight of silk $2.50 lb. $3.17 lb. 78.75% 2. Dress goods, wt. under J^ oz. per yd 4-50 8.39 53.59 3. Dress goods, dyed, wt. }i to l>^ oz. per yd 3-O0 3-38 88.83 4. Handkerchiefs, dyed, wt. Ys to 15^ oz. per yd 325 2.96 iog.69 5. Hdkfs., hemstitched, wt. i^ to 8 oz., containing more than 45% silk 2.50+10% 2.20 84.72 6. Hdkfs., hemstitched, ij^ to 8 oz. wt 2.25+10% 1.56 154-23 7. Dress goods on which duty is less than 50% 5°. To show the amounts imported under these various ' Allen, Silk Ind. of World, p. 28. *Rept. Com. and Nov., 1899. 100 American Economic Association [716 rates, we subjoin the following table, taken from the re- turns for the same year. Duty Value per unit ad valorem equivalent amount imported, 1899 I. $2.50 $3-17 lb. 75.78% $27,797 2. 4- SO 8.39 53-59% 106,329 3- 300 3.38 88.83% 3,134 4- 3-25 2.96 109.69% 975 5. 2.50+10% 3.3s 84.72% 445 6. 2.25+10% 1.56 154-23% 78 7- 50% 50% $4,000,000 {yi year) And so on, the figures in some cases running as high as 187 per cent ad valorem.^ It will be noted from the second table that the higlier the amount of duty the smaller the figure for importa- tions, a state of affairs that explains itself. There are, however, two points of interest to be noted in this con- nection. The first is as to the amount of goods excluded by the specific rates. At 180 per cent few goods can be imported at all, and the presumption is that if a few pieces do still come in at such a rate, the importations of goods of that description would be much larger at a normal rate of duty. Moreover, the imagination only could estimate the quantity of goods that if imported would have to pay over 180 per cent, but are absolutely excluded by the incapacity of the specific schedule to make a fair rate of duty for such articles. The second point to be noted is as to the value per piece of the different fabrics imported. This subject is too intricate to be gone into deeply, but a study of the figures reveals that as a general rule the goods paying the highest pro- portion of duties are of the smallest value per piece. The ' Probably the highest rate of duty paid was in 1905, on an impor- tation of silks of the value of $71, which paid $157 of duty, making 221% ad valorem. Rept. Com. and Nov., 1905, p. 974. 717] The Silk Industry and the Tariff loi article paying 53.59 per cent of duty averaged $8.39 per unit of quantity; that paying 78.75 per cent was worth only $3.17 a pound; the article paying 109 per cent was worth $2.96 per pound; while that paying 150 per cent was worth only $1.56 a pound. On still cheaper fabrics the rate would run, as we have seen, 200 to 700 per cent ; but these are not, cannot be, in fact, imported. This enormous inequality in the rates payable on differ- ent fabrics under the Tarifif Act of 1897 could be due only to the difficulty of specific description. With all its carefully worked out minuteness of detail, the official rate could not describe the goods and grade the duty thereon in such a manner that all would pay approxi- mately the same duty. In so far as the specific schedule was designed to do away with the inequalities that ex- isted under the previous ad valorem system, it could hardly be considered successful. There is still another reason for considering the new specific schedule a failure. After each clause in the para- graph dealing with dress and piece goods there is the pro- viso that in no case shall the duty be less than 50 per cent. This was to prevent goods of finer quality from coming in too cheaply, and was intended as an exception to the general rule. The exception in this case proved the rule. Most of the dress and piece goods since imported have come in as "others on which the specific duty does not amount to 50 per cent." In the year 1899, for example, the total value of dress and piece goods imported amounted to $13,048,000.^ Those paying 50 per cent amounted to $7,785,000, more than half. In the follow- ing year (1900) the fabrics paying specific duties amounted to only $4,300,000, while those paying the ' Rept. Com. and Nov., 1899, p. 337. I02 American Economic Association [718 minimum of 50 per cent came to $10,600,000. The proportion since then has been about half and half. Importation of Dress Goods. (in millions of dollars.) IC300 1901 iqci2 igo3 i'j04 J905 i';t6 1907 1908 19C9 Paying specific duties 43 S-3 5-9 7-4 7-i 8.3 7-5 4-9 3-0 5-5 Paying 50% ad valorem 10.6 6.7 7-i 6.9 6.8 6.3 6.1 8.5 7-1 5-6 These are the articles of finest quality, expensive goods that can be afforded only by the upper classes. How about the less expensive silks? They come in under a specific duty amounting to from 54 to 700 per cent, or are excluded altogether. As a schedule designed to do away with the faults of undervaluation that adhered to the old plan, the revised specific plan was a failure. About one half the dress goods since imported have come in under the 50 per cent ad valorem clause. The result has been to put a higher rate on the poorer classes of silks, with mystifying variations in the duties on the better grades. We shall see later what bearing it has had on the American industry. 12. THE TARIFF ACT OF I909. When the hearings on the tariff began in 1908-9, the Silk Association of America, representing in the main the interests of manufacturers, through its Committee on Revenue Laws,^ prepared an entirely new schedule of duties embracing a wide extension of the specific sys- tem. Immediately upon the promulgation of this schedule the House Committee was beseiged with criticism con- cerning it of the most contradictory character. The pro- ^The committee was composed of Messrs. F. W. Cheney, Chair- man : Jacques Huber ; Jos. W. Congdon ; Otto Andreae, Jr. ; and Charles F. Houser. 719] The Silk Industry and the Tariff 103 posed rates were thought by some to be too low,^ while others protested that they were too high.^ Consequently the House Committee followed the eminently safe plan of recommending no change at all. The old rates of the Dingley Act were accepted and passed by the lower house without debate. Although the Finance Committee of the Senate held no public hearings, private conference resulted in the restoration, with a few technical changes, of the new specific schedule prepared by the Silk Association. In spite of the obvious increases in the rates as thus re- ported, the silk schedule was allowed to pass the Senate without debate, and, with a few minor reductions in the Conference Committee,* became enacted into law. The absence of debate on so important a subject has a natural explanation. Increases in the duties on silks are not, in general, as bitterly contested as on other articles. Silk goods are considered by the public at large as a luxury, entitled to rank almost with wines and tobacco, on which an increase in taxation is regarded with more or less complacency. Since those in favor of lower rates cannot hope for a victory on more than a part of the items considered, they are inclined to save their ammunition for use in fighting for reduction on articles more commonly regarded as among the necessities of life. The salient characteristic of the new schedule is a wholesale application of the specific system, not only in substitution for previous ad valorem duties, but also in a stricter classification for fabrics that before had only ^ New York Journal of Commerce, February 27, 1909 ; letter of the Champlain Silk Company. ^U. S. Tariff Hearings, igo8-9, First Print No. 53, pp. 8083-5, and 8089-92. * U. S. House of Representatives, 6ist Congress, ist session, Re- port No. 20, pp. 26-7. The reductions were mainly due to the inter- position of President Taft at this time. I04 American Economic Association [720 loosely fallen within that system. Whatever the differ- ences of opinion between manufacturers and importers as to the precise amount of duty that should be levied, it must be admitted that both sides were at last agreed as to the desirability of specific rates, both on the ground of administrative advantage and in the interest of trade stability. The French Chamber of Commerce of New York, a body of silk importers, in a letter dated January 27, 1909, to the Committee on Ways and Means,'' ad- mitted that the ad valorem system gives rise to strife and bickerings which embitter all parties concerned, and in addition causes a mischievous uncertainty in market prices. Most of the importers who protested that the schedule of rates of the Silk Association were too high still declared themselves in favor of the specific system,® while efforts truly heroic were made by manufacturers of knit goods, laces, and embroideries to devise a specific system that would take these products out of the ad valorem group. ^ The first change of importance in the new schedule relates to spun silk. In the previous law a minimum system had applied: spun silk worth less than $1.00 a pound paid 20 cents a pound plus 15 per cent; it now pays 35 cents a pound. On spun silk worth more than $1.00 a pound, the new schedule enacts an elaborate series of rates according as the yarn is in singles, tram, or organzine ; according as it is dyed, colored, or bleach- ed; and varying by a differential based on thread num- bers. Spun silk in the form of singles, up to number 205, pays 45 cents a pound plus i-io of i cent per number per pound; above number 205 the duty is 45 cents a pound plus 1 5-100 of I cent per number per pound. The old rates " U. S. Tariff Hearings, 1908-9, First Print No. 53, p. 8090. 'Ibid., First Print No. 53, p. 8086, and No. 41, pp. 6283ff. ''Ibid, First Print No. 23, pp. 3005-10, and No. 35, p. 5150. 72 1 J The Silk Industry and the Tariff 105 had amounted to about 37 per cent ad valorem. In an estimate prepared by the Bureau of Statistics the new rates on spun silk were expected to average 50 per cent on the basis of past imports.* There is no doubt that we have here a considerable increase in the protection granted to Connecticut producers of spun silks; and it is significant that the chief manufacturer of these fabrics was the chairman of the Revenue Laws Committee which prepared the schedule.^ Both on thrown silk and sewing silk there are changes from the previous 30 per cent ad valorem to a specific duty. Sewing silk now pays $1.00 a pound in the gum and $1.50 a pound if ungummed; estimated to be equiva- lent to 58 per cent on the basis of past imports. As these products have been exported in increasing quanti- ties during recent years, it is difficult to see a ground for raising the duties, nor is there likely to be any con- siderable effect. The former flat rates per pound on pile fabrics have given way to a closer and more comprehensive specifi- cation. Velvets had paid $1.50 a pound plus 15 per cent. The 15 per cent is taken off for velvets weighing over 5% ounces per square yard, a slight reduction. For lighter weights, however, the duties now run up to $4.00 a pound. Similarly, plushes weighing over gYz ounces per yard are reduced from $1.00 a pound plus 15 per cent to a flat $1.00 a pound, but lighter weights now pay $2.40 a pound. There is here a slight reduction for some grades and a considerable increase for others. The nature of the new arrangement will be discussed in con- nection with the changes in the piece goods items. * U. S. Senate Document No. 128, p. 60, 6ist Congress, ist session. ' See U. S. Tariff Hearings, First Print No. 41, p. 7025, where the Cheney Brothers Company wrote that they had been unable to work out a specific rate on spun silks and advised the retention of the old duties. Evidently better success attended their later efforts in this direction. io6 American Economic Association [722 "Woven fabrics in the piece" are subject to an entire re-classification in the new schedule. It is obviously in- tended to increase largely the number of classes and nar- row down the specifications for each one in such a man- ner that a separate description and a separate rate of duty shall be provided for the larger part of the great variety of imported piece goods. For example, in 1897 there had been a single class for goods weighing from Ys ounce to i J^ ounces per yard. In 1909 separate class- es are made for fabrics weighing from 3^ to ^ of an ounce, % to I ounce, and i to ij^ ounces. Similarly on cheaper goods, more classes are made in the divisions, according to percentage of silk content. It is extremely difficult to compare the old rates and the new; where this is possible it appears that while some duties have been raised and others lowered, in many instances the complexities of the system screen a material increase.^" On cheaper goods and on the medium grades the in- creases are pretty general, as appears in the table given in the footnote. On the other hand a number of re- ductions will be noted, always applying on more expen- sive fabrics. On goods weighing less than ys ounce per yard the rate is lowered from $4.50 to $4.00 a pound. On goods weighing from 21^ to 8 ounces and containing over 50 per cent of silk the rate in the gum is reduced from $2.50 to $2.25 a pound, and when un- gummed, dyed, or printed, from $3.00 to $2.75 a pound. "The following comparison, showing the rates on cheaper goods, is fairly typical : 1897 1907 Weighing i^ to 8 oz. per yd. Weighing 2^ to 8 oz. per yd. In Gum. Gummed. In Gum. Gummed. Under 20% silk $ .50 lb. $ .60 lb. Under 20% silk $ .57^ lb. $ .70 lb. 20 to 30% " .65 " .80 " 20 to 3070 " .75 " .90 " 30 to 45% " .90 " 1. 10 " 30 to 40% " .90 " 1. 10 " Over 45% " 2.50 " 3.00 " 40 to 50% " 1. 10 " 1.30 " Over 50% " 2.25 " 2.7s " 723] The Silk Industry and the Tariff 107 The most striking reduction, one that appHes both to pile fabrics and to piece goods, is the lowering of the minimum clause from 50 per cent to 45 per cent. It seems clear that the aim of the new classification is to strengthen the grip of the specific system; to enlarge it so as to take in many of the fabrics which under the old law entered at the 50 per cent minimum, both of pile fabrics and dress goods. This object is secured largely by the upward movement in the specific rates, which, though difficult to analyze, is generally held to be con- siderable.^^ Tending in the same direction is the lower- ing of the minimum rate. Only when the specific rate does not amount to 45 per cent will fabrics be admitted on an ad valorem basis. Evidently the silk manufacturers do not intend that from 50 to 75 per cent of imported pile fabrics and piece goods shall enter on the ad valorem system in the future. Handkerchiefs furnish the one striking instance in the new schedule of the specific system abandoned as a fail- ure. Handkerchiefs had borne the same specific rates as piece goods in the previous act. These are now changed to a flat 50 per cent ad valorem for plain, and 60 per cent for hemstitched or embroidered pieces, the minimum rates of the previous act. The reason is of course that under the specific system nearly all imported handkerchiefs came in under the minimum clause, the proportion rising as high as 90 per cent in some years. '■^ In this item we see a slight concession in favor of lower rates. "U. S. Senate Document, 6ist Congress, ist Session, No. 77, pp. 60-62; also Senate Doc. No. 128, pp. 63-6. ^ Importations of Handkerchiefs. 1907 1908 1909 Specific duty $4i.Soo $38,600 $123,900 Minimum clause 356,000 264,400 236,800 io8 American Economic Association [724 Practically unchanged are the rates on ribbons, braids, embroideries, knit goods, and laces, which are left as before at 50 and 60 per cent ad valorem. The Lace and Embroidery Manufacturers' Association of New York attempted to work out a specific schedule on laces, and urged a "duty oi yi ol i cent a yard for each 100 stitches, plus 60 per cent,"^^ but for the most part it was admitted that a specific rate, while desirable, was im- practicable.^* Distinctly unique is the insertion of paragraph 405, dealing with artificial silk." The duty is : singles, 45 cents a pound; tram, 50 cents a pound; organzine, 60 cents a pound ; but in no case is the rate to be less than 30 per cent. Naturally the manufacturers of braids and embroideries using artificial silk came forward when this tax on their raw material was proposed and demanded a compensa- tory duty.^^ Hence we find introduced into the silk schedule for the first time the principle of compensation so familiar to those acquainted with the duties on woolen goods. On laces, braids, and embroideries made of arti- ficial silk a specific duty of 45 cents a pound is granted by way of compensation for the duty on the raw material, and in addition 60 per cent ad valorem, representing pro- tection. Imported fabrics made of artificial silk will thus bear a total duty amounting to 90 or 100 per cent. The silk rates have been widely considered the most conspicuous example in the Act of 1909 of a general in- crease of duties applied over an entire schedule." The increase in many of the items is only too obvious ; and it "U. S. Tariff Hearings 1908-9, First Print No. 35, p. 5150. "/&irf., p. 5153. ^' This article is described in Part V. " U. S. Tariff Hearings, 1908-9, First Print No. 23, pp. 3oi8ff. ; No. 35, p. 5147- "Quarterly Journal of Economics, November, 1909, p. 28; Jour- nal of Political Economy, Vol. 17, pp. 6o3ff. 725] The Silk Industry and the Tariff 109 cannot be denied that the extension of the specific system was made the pretext for substantial increases in the effective duties. It must be granted, however, that the f ramers of the schedule seemed to have had in mind some line of demarcation between fabrics which cannot be made in this country, and those which can be made here and which suffer more or less from competition with similar foreign products. Closely scanned, the increases in the silk rates will be found to apply mainly to articles of the latter class. These are fabrics of medium grade on which the specific duties in both the piece goods and pile fabric items have been advanced. The object has been to increase the amount of protection in the direction that would be most welcome to domestic producers. ^^ The reductions in the present law will be found to apply in the main to non-competitive articles of the very expensive variety. It has been explained that fabrics which come in under the minimum clause are objects of such high worth that the specific rate amounts to only a small proportion of their value. The lowering of the minimum to 45 per cent will reduce to some small extent the price of these fabrics to the consumer. The recession in the specific rates on certain high grade piece goods bears toward the same end. The duties on handkerchiefs are lower. It is unfortunate that no corresponding pro- vision was made for the admission of non-competitive fabrics of the very cheap variety, the exclusion of which under the specific system works a real hardship. On the whole it may be said that the silk schedule in the Act of 1909 emphasizes the principle of protection in a material increase of duties on all classes of goods which compete with domestic silk manufacturers ; revision downward has been applied only to a few expensive fabrics of European make that have no counterpart among the products of American looms. ' Thirty-eighth Ann. Rept. Silk Assn., p. 22. PART V RECENT CHANGES AND PRESENT STATUS: AS REGARDS PROTECTION. 13. AMERICANIZATION OF THE INDUSTRY AND DEPEND- ENCE ON PROTECTION : SILK THROWING AND THREAD MANUFACTURE. A rapid glance over the history of the silk industry in this country will show that it is divided into two clearly marked periods. The first, extending from the Civil War to about the year 1890, presents no problems differ- ent from those of a rapidly growing protected industry, following closely the example and pattern of the older European establishments, and entirely dependent on tariff protection. The characteristics of this earlier period, in so far as they bear upon the purpose of the present inves- tigation, have been sufficiently indicated in previous chap- ters. The evolutionary changes of the last score of years, however, present features that deserve close scrutiny. The industry begins to divorce itself from European example and precedent, branching out into directions typically American. The question is squarely presented, therefore, as to the extent to which the industry of today is capable of holding its own unaided against foreign competition. The change in the character of the silk industry that had its first impetus about 1888-90 was not due to acci- dental causes. It has already been noted that the arri- val of better raw material in the late seventies brought a wider use of power looms and at the same time stimu- lated investigation and experiment in the improvement 727] The Silk Industry and the Tariff iii of machinery. Our first power looms were naturally of foreign make. But it was soon recognized that they were unsuitable for conditions of silk weaving in Amer- ica. They were slow moving, aiming to save raw silk at the expense of labor, whereas in this country labor costs more than silk. Improvements went on slowly at first, not only because of lack of experience, but also because new plants were going up so rapidly that to get any equipment at all it was necessary to import the looms. The change from the old to the new does not become noticeable till the late eighties. The characteristics of the new period deserve notice. It is at this stage that our manufacturers branch out into new lines, turning to the production of goods not before attempted. Even more characteristic of the new period is the remarkable advance in invention and im- provement. No longer, as of old, are the eyes of our silkmen tur: ed to Europe for all that is thought worth while in machinery, patterns, fashions, new ideas. Our best looms are no longer imported from France, Germany and Switzerland; they are made at home, and begin to take on a distinct character of their own.^ The new machinery is adapted to conditions of production in this country.^ The idea running through it all is to save in the cost of hand labor, to make the operator more efficient, to increase the output per unit of labor. The new ma- chines run much faster than the old, so that the number of yards turned out by each weaver is increased. Auto- matic devices are invented that perform operations which before required time, personal attention, and care on the part of the operative.' ' Twenty-ninth Ann. Kept. Silk Assn., p. 50. 'Allen, Silk Ind. of World, p. 29. "U S. Census 1890, Manuf. Ind., pt. Ill, pp. 215-17, also Twenty- ninth Ann. Kept. Silk Assn., pp. 47, 54, etc. 112 American Economic Association [728 It shall be our task, therefore, to investigate carefully the conditions of production in all the important branches of the silk industry; to inquire how far invention and improvement have gone in each case, and what prospect there is for the future. The object held in mind through- out is to discover, if possible, in which branches of the industry invention and improvement have gone, or may yet go, so far that the increased efficiency of the labor employed in this country is sufficient to offset the higher wages paid here. In short, the aim is to find out what kinds of silk fabrics are or may be made as cheaply here as abroad, what branches of the silk industry are or may be independent of tariff protection from foreign compe- tition. The first branches of the silk industry that would naturally present themselves for consideration in this chapter are the raising of cocoons and the reeling of the raw silk, which have been discussed in the section on raw silk. We have seen already that silkworms are not, and cannot hope to be, raised in this country. The raw silk as it comes to this country is first sub- jected to the process known as throwing, which is de- scribed in an earlier part.* From a description of the processes one would be led to think that the manu- facture of tram and organzine differed very slightly from that of sewing silk. There are, in fact, many points of resemblance in the two processes. Sewing thread and thrown silk are both made directly from the raw silk in the gum, and both are formed by twisting two or more strands together. But there is a difference, both of kind and of degree. Throwing, much more complex than making sewing silk, consists in winding, cleaning, doubling, twisting, re-winding, and reeling the 'Supra, p. 14. 729] The Silk Industry and the Tariff 113 raw into more substantial yard. Thrown silk is looser and coarser as a rule than sewing silk. Tram, for in- stance, consists of two or more threads just sufficiently twisted together to hold perhaps one turn to the inch. Organzine is formed of two or more single threads, the single threads being each twisted one way and all the threads together twisted another way.' For reasons chiefly connected with the greater com- plexity of the processes, the manufacture of thrown silks did not reach a high state of development until some time after sewing silks had completely captured the American market. Thrown silks were still imported in the late eighties. But the decade from 1880 to 1890 witnessed in this country such remarkable improvements and inventions to facilitate the throwing of silk that the importations soon ceased.® The improvements were in the direction of making the process more automatic, at the same time increasing the speed of the spindles. By 1890 the spindles were making 10,000 revolutions per minute, a speed double anything ever before attempted.'' This is about the limit for speed, though in 1900 the average speed had slightly increased, the spindles making from 11,000 to 12,000 turns per minute.^ The new machines were not only faster; they were also more automatic in their operation and yielded better tram and organzine.^ The result was to turn the machines over to women' and children; the amount of skill and labor necessary to run the machines had almost reached a minimum, and there was no longer need for ° Allen Silk Ind. of World, p. 22. ' U. S. Census 1890, Manuf. Ind., Pt. Ill, pp. 222, etc. The state- ment in the text is comparative; a small amount is still imported occasionally for special purposes. ' Ihid., p. 222. •U. S. Census 1900, Vol. IX, p. 208. 'Ihid., p. 209. 114 American Economic Association [73° highly paid labor. ^" This development in the throwing process explains the two remarkable changes in the silk industry from 1890 to 1900, already considered. The number of children employed had declined from 5566 in 1880 to 2866 in 1890. In the ten years following, this number had increased to 6413/^ an evolution due almost entirely to the growth of the throwing industry. The second change is the spread of this industry to Pennsyl- vania. The development of the throwing branch formed the nucleus of the remarkable localization of the silk industry in that state. From 1890 to 1900 there was a continuous advance in throwing machinery. In 1895 a combined spinner and doubler was invented, which lessened still more the pro- portion of labor cost in making tram and organzine. From 1895 to 1900 over 90,000 new spindles were put into operation^^ in the United States. The new style of machine has since been adopted by several foreign countries, and in the technical schools of England and Switzerland.-^* A double-deck machine, driven by an end- less belt, has contributed greatly to economy of space, and resulted in putting a still larger number of spindles under the eye of one operator.^* An effort to solve the problem of spinning, doubling, and twisting organzine all in one process has resulted in practical machines, but it is too early to say at present whether they will be widely adopted or not. The throwing industry is now in a position independent of the tariff and impregnable from the assaults of foreign competition. Our factories, equipment, machinery, and "U. S. Census 1890, Manuf. Ind., Pt. Ill, p. 219. "U. S. Census 1900, Vol. IX, pp. 2ioff. "Ibid., p. 222. " Allen, Silk Ind. of World, p. 27. "U. S. Census igoo, Vol. IX, p. 223. 73 1 J The Silk Industry and the Tariff 115 organizations are the best in the world. For a number of years all the improvements and inventions in throwing machinery have come from the United States. Our operatives, even the children, tend more spindles and turn out a greater product per unit of labor than the most skilled workmen of Europe.^^ The cost of production of thrown silks is lower in the United States than anywhere else in the world. The progress made in this direction is almost unparalleled. Most of the silkmen now living can remember the time when the cost of having a pound of raw silk thrown into organzine or tram was upwards of $4.50. The average cost is now from 60 to 75 cents per pound. ^* The tariff on thrown silks is a useless in- cumbrance — a paragraph on our statute books that is writ- ten in a dead language. There is no feature in the conditions of silk manufact- ure that offers more encouragement that the American industry may some day be entirely self-supporting than the fact that we surpass all other nations in the prelimin- ary processes of preparing the raw material for use in the loom. Raw silk is an article comprising such great value in so small a bulk that the cost of transporting it to this country is an insignificant item in its selling price here. In fact, European looms are large users of Chinese and Japanese yarns. ^'^ It is encouraging to note that whatever difference there may be in the cost of the raw silk owing to transportation charges is made up to our manufacturers of finished goods by the lessened "U. S. Census, Vol. IX, pp. 223, 224. ^'Ibid., p. 218. "Fifth Fin. and Ec. Ann. of Japan, p. 94. Ibid., p. 54. Raw Silk exported 1904, in yen. To France I7,090,337 yen To Italy 10,639,18s " To Great Britain 227,096 " To United States 60,747,832 " ii6 American Economic Association [732 cost in this country of preparing the raw material for use in the loom. The recent progress in the throwing industry has resulted in putting the American weaver of broad goods and ribbons at least on equal terms with his foreign rival as regards the cost of the raw material. There is not much to add to what has already been said in regard to sewing silk and machine twist. Though the industry has been protected by a duty of only 30 per cent until very recently, the imports have been a negligible quantity for a number of years. The domestic produc- tion has shown few fluctuations; the amount has slowly increased to supply the demands of the home market. U. S. Production of Sewing Silk and Twist. 1875 $6,420,833'' 1880 6,783,855 1890 8,o68,2i,-5 igoo 10,246,000" 1905 10,146,000 The simple processes of twisting several fibres to- gether and then winding and spooling them readily lend themselves to the application of machinery. The product is uniform and any amount may be manufactured with- out "overworking" any one pattern. There is no definite limit to the number of threads that can be attended to by one person, so there is opportunity for the exer- cise of intelligence and skill as an offset to the higher wages paid in this country. Lastly, the threads used in the manufacture of sewing silk are stronger and more heavily twisted than those used in the making of broad goods, and the likelihood of breakage is materially re- duced. The manufacture of sewing silk has long been almost automatic, the only labor required being that of keeping a supply of raw silk on the spools. Sewing " Allen, Silk Ind. of World, p. 31. " U. S. Census Bull. No. 74, p. 174. 733] The Silk Industry and the Tariff 117 silk is the only branch of the industry that came into existence without protective stimulus, and is practically the only silk product that is now exported to other coun- tries.^** The exports of silk manufactures are not classi- fied, unfortunately, in the government reports. The fol- lowing table shows our total exports of silks, and probably represents for the most part sewing thread and twist. U. S. Exports of Silk Manufactures.^ 1894 $283,765 1902 $301,758 1895 256,181 1903 412,41s 1896 300,884 1904 466,519 1897 224,660 1905 620,572 1898 297,074 1906 595,124 1899 290,729 1907 670,189 1900 252,608 1908 720,368 1901 244,678 1909 847,894 There is not the slightest doubt that the manufacture is entirely independent of tariff protection, and would be unaffected by the abolition of the present duty. The rate now standing on our statute book is a dead letter; it is of no consequence to the industry, and brings no revenue to the government.^^ 14. DEPENDENCE ON PROTECTION : COMPARISON OF AMERICAN AND EUROPEAN METHODS OF PRODUCTION. Before passing on to the subject of ribbon and broad goods manufacture, it may be well to point out some of the important differences between the kinds of goods made '°Rept. Ind. Com., Vol. 14, "Silk Manufactures." '^Repts. Com. and Nav., for respective years. Also, Wyckoff, Silk Goods, p. 23. ^ In the Act of 1909 the duty on sewing silks was changed from 30% to a specific rate. The new rate is estimated to yield as much as s8% ad valorem. Cf. U. S. Senate Doc. No. 77, 6ist Cong., First Session (published June 3, 1909), p. 61. ii8 American Economic Association [734 and their methods of production in Europe and in this country. One thing our home industry can not do; that is, turn out silks on hand looms. The cost of labor skilled enough to run a hand loom is between two and ten times as much in this country as in other parts of the world. In France, Germany, England, and Japan, hand looms are still largely used and' have their legitimate economic place in the silk industry. How do hand fabrics differ from those woven by machines? Machine weaving re- quires the silk fibre to have two qualities, strength and uniformity. It must be strong to stand the strain incident to weaving done by power, because a broken fibre causes a great loss of time and labor. It must be uniform because a single flaw will ruin the appearance, and hence the value, of an otherwise perfect piece of cloth; and a constant watch for flaws on the part of operators re- quires still more labor and often an entire stoppage of the machine to remedy the faults. Two widely different kinds of fabrics are made on hand machines. Where the fibre is not uniform, and where it is not strong, the hand loom comes into play. Weak fibres are not so liable to break when woven by hand as when employed on the high-tension power loom; if they do break the machine can be stopped and the fault rem- edied in much less time. It has been said that it costs five times as much to stop a machine in America as in France.^ The loss from the added cost of labor in other countries is more than made up by the facts that much cheaper raw material may be used, that the expense of sorting and unifying the threads is done away, and that far less expensive equipment is required. In this coun- try the added expense of labor outweighs every other consideration. ' Wyckoff, Silk Goods, p. 26. 735] The Silk Industry and the Tariff 119 The products turned out under these conditions are of comparatively inferior quality. They are less strong, less uniform, and less pleasing in appearance than the articles turned out on the machines of America. They used to form one of the considerable items of export to this country, and went to the making of workingmen's blouses and cheap shirt waists.^ The tariff of 1897, as we have seen, operated particularly heavily on the cheaper grades of silks, for these pay the same specific duty as finer silks of equal weight per yard. The result is that the users of cheap silks are either deprived entirely of these articles or are compelled to pay a much higher price for them. We must return to the hand loom, for we are not yet done with it. Not the only economic function of the machine turned by human power is the making of cheap products. At the opposite end of the scale it reappears, namely, in the making of goods of much finer and more individual qualities than the power loom can turn out.^ Among other disadvantages of the power loom is the impossibility of producing on it patterns of great intricacy and elaborate workmanship. Patterns, figures, designs of many kinds may indeed be turned out in great variety, but the requirement for all is that they must be repeating patterns, and must be such as to appeal to the taste of a large number of customers. The loss of time and labor in getting up new patterns and setting a power loom into shape to produce them is so great that American looms find it impossible to make a profit except by producing and reproducing the same patterns again and again. On the hand loom, with its less intricate mechanism, this may readily be done. In fact, it is easy to produce a ' Cong. Record, 1897, p. 2009. 'Allen, Silk Ind. of World, p. 28. I20 American Economic Association [736 single piece of cloth of a peculiar pattern that distin- guishes it from any other piece of cloth in the world. Those whose aim is to wear something different from what thousands of others are wearing must turn to the hand loom article. American manufacturers, being obliged to conform to a uniform taste, cannot profitably under- take to produce peculiar or elaborate patterns that either would appeal to only a few, or would be so expensive that only a few could afford to purchase them. Another advantage of the hand loom is the possibility of producing on it absolutely finer grades of cloth than the power loom can turn out. This is due to the slower movement of the machine, the possibility of giving the fibres close inspection and exercising greater care in the weaving. Goods woven on hand looms will take a higher finish.* Heavier fabrics can also be turned off on the hand loom, as the power loom is limited in respect to size of the thread that may be employed.^ Add to these factors the advantages derived from greater possibilities in the way of design, ornamentation, and exquisite work- manship, and it becomes evident that the hand loom is capable of producing silks that no power driven machine can hope to rival. These are the goods that we see coming in under the item, "on which the specific duty is less than 50 (now 45) per cent." Of high intrinsic value, the specific duty intended to apply on silks of average quality would let these in at a rate less than that applying under the lowest of the old ad valorem systems, were it not for the qualifying clause of the act. The purchasers of silks of these kinds belong 'The finishing process (called appret) on the finest fabric is highly developed in Europe. It cannot be done here, both because it involves a great amount of skilled labor, and because the secrets of the art are jealously guarded. 'Allen, Silk hid of World, p. 28. 737] The Silk Indiistry and the Tariff 121 generally to the wealthy classes of the community. Under the conditions that have prevailed since the passage of the Act of 1897, the consumers of the finest silks seem to be in exactly the same position as before. Their products come in as before at a low ad valorem duty. Concerning this part of the tariff there is apparently no one to complain. Goods comparable to the finest hand made products of Europe are not attempted in this coun- try, and their import and sale here does not oppose the interests of any makers of corresponding stuffs. Still, it is true that manufacturers of high grade silks are in- dignant that the best foreign goods pay a duty of only 45 per cent, while other fabrics are taxed from 54 up to 200 per cent, and more. The probability is that some who used the medium grades of French dress goods when the uniform rate was 50 per cent have been impelled by the higher prices induced by the specific rates on these to turn to the highest quality of hand made goods, on which the rate de facto has not been changed. We now turn our attention to perhaps the most im- portant question of all, what conditions govern the pro- duction of the medium grades of foreign fabrics, those that come most closely into competition with the home made fabrics. The goods under consideration are made under conditions more nearly similar to those of the articles made at home than is the case with the very cheap or very expensive hand loom products. They are made on power driven machines,® with the advantage of cheaper labor (and possibly labor of greater technical skill). Foreign machines are run more slowly and more individual attention is given to the weaving by the opera- tor. There is more trouble taken to prevent waste of ' Even in Switzerland, where the power loom has attained its great- est development in Europe, the number of hand looms exceeds the power driven machines. Cf. Allen, Silk Ind. of World, pp. 41 and 49. 122 American Economic Association [738 thread through breakage, thread ends, and throwing away of flawed fibres, which forms an element of expense in American conditions of production, but which at home is not so expensive as would be the cost of the labor necessary to avoid the waste. In Europe the operators have the machines in their own homes for the most part (or in small ateliers where four or five workers live to- gether), and labor ten, twelve, and even sixteen hours per day. In this country the work is carried on in large factories, and nine or ten hours per day is the limit of the workable time. In the matter of quality of products there is little difference. The Americans have perhaps a slight advantage in the matter of using the latest ma- chinery and in the fact that strong and uniform threads are used, while Europeans gain through the closer per- sonal attention given to the weaving processes. There is one point, however, in which foreign manufacturers have a noticeable advantage over those at home ; the cost of labor being cheaper, they can afford to change patterns oftener and make fabrics in greater variety on the more expensive power loom products. Hundreds of thousands of dollars worth of French silks are sold here every year at a higher price than an equally good or even better American cloth, simply because the patterns are of a greater variety and give evidence of foreign manufact- ure. One of the commonest pleas to silk producers in the yearly reports of the Silk Association of America is that they give more attention to variety in cloths and patterns.'^ But to change a pattern costs time and labor, and these are expensive ; of a unique design a manufacturer can risk making only a small amount, while there is the extra cost of making up a pattern and setting up the machine. The American fears the competition of foreign power- ' Thirty-fourth Ann. Rept. Silk Assn., pp. 22-24. 739] The Silk Industry and the Tariff 123 woven fabrics, not because they are better, but because they are made with cheaper labor and they are attractive because of their "infinite variety." These are practically the only products on which the specific tariff applies and which continue to be imported. The specific rate on these averages about 54 per cent.* The result has been a raising of price to the consumers, who have turned their demand partly to the American products, and for the rest have continued to buy the old articles at the higher price. It is doubtful just how much the importations of the medium grade of foreign silk fabrics have been cut off by this application of the specific schedule to their case, for the reason that under the old ad valorem plan, when everything paid 50 per cent flat, there was no telling just what proportion of importations was cheap, medium, or high grade goods. To deal with this phase of the situation, we must consider the more recent history of the conditions prevailing in the American industry in regard to these products. 15. DEPENDENCE ON PROTECTION : RIBBONS. It will be remembered that the manufacture of ribbons was the first result of the Civil War tariff; and indeed the narrow goods industry has long stood next to sewing thread and twist manufacture in its adaptability to Amer- ican conditions of production. In 1900 85 per cent of the ribbons used in this country were made at home; at present the proportion is even larger. The follow- ing figures show the yearly domestic production, com- pared with the foreign importations since 1890. U. S. Production of Ribbons Imports of Ribbons 1890 $17,081,000 $1,900,000 igoo 18,467,000 1,800,000 I90S 21,890,000 1,850,000 'Rept. Com and Nav., 1898-1908, Imports for consumption. 124 American Economic Association [74° Ribbon importations of late years have been limited to those of fancy design and pattern, especially such as are heavily brocaded and figured, and Parisian novelties.^ Ribbons are woven, like broad goods, but not with a flying shuttle ; there is a fixed shuttle or spindle that moves back and forth with great rapidity, somewhat resembling the shuttle in a sewing machine. In no branch of the industry has American inventive genius been so actively employed as in perfecting the ribbon machines.^ Up to 1890 the principal improvements were directed toward increasing the speed of the mechanism.^ At that time all the looms were of German and Swiss manufacture or pattern.* The year 1889 marks an important step in the development of the industry ; in that year was invented in the United States the so-called "high speed automatic ribbon loom."^ Under the old method of handling the warp it was necessary to employ men on the looms. On the new machines the warp is placed on beams similar to broad silk looms, and is let off automatically from each beam, making it unnecessary for the operator to go behind the loom for this purpose. It is noteworthy that this new device not only increased the rate of out- put, but increased also the efficiency of the labor em- ployed. The next steps were in the direction of increas- ing the number of shuttles on each loom, so that the opera- tor could attend to more ribbon lengths at one time.* The latest invention along this line is the "double-deck batten"''^ making two "decks" of shuttles all within easy reach of the operator. ' Thirty-second Ann. Rept. Silk Assn., p. 49. ''Allen, Silk Ind. of World, p. 29. ''U. S. Census 1890, Manuf. Ind., Pt. Ill, pp. 221-2. *U. S. Census 1900, Vol. IX, pp. aopff. "Alien, Silk Ind. of World, p. 29. ' From Mr. Frank Essex, of Paterson, N. J. ' U. S. Census Bull., No. 74, p. 182. 741 ] The Silk Industry and the Tariff 125 The new ribbon looms are almost as automatic as the simple braid and thread-making machines, the only care of the operator being to keep a supply of thread on the spools and to tie up broken ends. This statement applies more particularly to plain ribbon weaving. For ribbons with designs and patterns innumerable devices have been invented, too complex and technical to describe. Each device, however, which adds to the complexity of the pat- tern, decreases the speed of the loom and increases the amount of labor necessary to turn out a given unit of product. Since 1889 there have been great advances made in the devices which produce ornate and figured weaves, the first of these being a swivel attachment which makes embroidered effects that before had been possible only on the hand loom.® Since then there have been many improvements and inventions, some for turning out new patterns and figures, but mostly directed toward adapting the new devices for use on high speed looms.* The re- sult is that now most of the figured ribbons can be turned out on the high speed automatic looms at practically as low a proportionate cost for labor as the simpler kinds. In spite of all that has been done in this direction, it is nevertheless still true that the ribbons of very fancy designs cost proportionally more in labor than the simpler kinds. The more complex and diversified the pat- tern, the more does the product offer itself to competition from the foreign made article. The chief trouble seems to lie in the cost of labor in changing pattern cards. The more ornate articles are limited in the amount that can be turned out of one pattern, for any peculiar design is likely to hit the taste of a few only. Again, the most complex and heavily figured weaves cannot as yet be *U. S. Census 1890, Manuf. Ind., Pt. Ill, p. 221. ' Twenty-ninth Ann. Rept. Silk Assn., p. S4- 126 American Economic Association [742 made, even in large quantities of a single pattern, without a more than proportional cost for labor. The result has been a vastly increased production of the same old designs, such as will satisfy the general run of customers. In fact, the industry has suffered considerably from over- production.^" Again and again the cry has arisen that the product of American mills should be diversified. "The Yankee manufacturer", says a contributor to the Silk As- ciation Reports, ^^ "can compete mechanically with, if not outstrip, any looms of the Old World. But unfortunately, it stops there; he has come to the parting of the ways; quantity, quantity is the one sign that attracts him. Qual- iy, ideas, ingenuity, textures, originality are left for others to exploit. . . . We must learn to diversify our man- ufacturers more. In the mad scramble for yards all else is forgotten. The weaver's motto is not 'how good, but how many' and the mill owner encourages him to the full extent."i2 No wonder. The field where the domestic manufact- urers' greatest profit lies, is not in the direction of a product which requires more skill, more workmanship, more labor per yard ; development in that direction leads very quickly to the point where the cost of production exceeds the selling price of the product. His only hope is in the opposite course, away from the field where the foreigner, with his cheap skilled labor, stands so strongly intrenched. In one way, the aim of both is the same: to get the greatest value out of each unit of expense, to arrange their factors of production in the most economical way. With the price of labor much higher in this coun- try th an abroad, the domestic manufacturer must econo- " Thirty-fourth Ann. Kept. Silk Assn., p. gz;Thirty-first Ann. Kept. Silk Assn., p. 41. " Thirty-fourth Ann. Rept. Silk Assn., p. 22. " Thirty-second Ann. Rept. Silk Assn., p. 48. 743] The Silk Industry and the Tariff 127 mize on labor and lay greater stress on the use of ma- chinery. He must turn out fabrics in the making of which the part played by machines is proportionally the greater, and the part played by labor correspondingly less. The monotonous simplicity and uniformity of our products may be regrettable from the artistic point of view, and may lead to "overproduction" ; but the cry for diversity would lead our manufacturers in the wrong direction. Ribbons of complex desig-ns and patterns are still made here. There are two causes for this. One is that the ribbon industry is protected by a duty of 50 per cent on importations from abroad. Thus narrow goods requiring proportionally more labor than the plain uni- form weaves may still be made here and sold at a price lower than the price of the foreign article plus the duty. On the other hand competition among domestic pro- ducers^* in the fabrication of the plain goods has so re- duced profits^"* that many find it advantageous to under- take the more complex kinds. The higher prices which these bring compensate for the cost of the additional labor employed, while not high enough to enable the for- eigner to send his goods in over the tariff barrier. Undoubtedly a certain portion of the ribbon industry is still dependent on the tariff for protection. The larger part, however, seems to be within hailing distance of in- dependence. Recent inventions have made the operation of many ribbon looms almost automatic. The double- deck batten loom not only increases the yardage output of the operator, but is a machine which calls for a display of quickness, general intelligence, and mechanical ability on the part of the operator rather than for technical skill. Development of mechanical appliances along these '^ Thirtieth Ann. Rept. Silk Assn., pp. 27-38. "/bj(i., pp. 49-50. 128 American Economic Association [744 lines offers promise that the American ribbon loom worker may before long turn out products more cheaply than his European brother all along the line. Most kinds of rib- bons are already produced here as cheaply as they can be made abroad, and would hold the domestic market against foreign competition even if there were no tariff to raise the price of the European product. This is par- ticularly true of the plainer fabrics and designs that will hit the average taste. Ribbons of complex and ornate designs suitable for power-loom weaving probably could not hold their own without some degree of protection. They must be turned out more slowly, their labor cost is greater. The amount of labor and technical skill re- quired for these goods, however, has been constantly de- creased by new inventions adapting Jacquard and swivel attachments to the high speed automatic looms. -^^ Im- provements may go to such a point as to make it possible to turn out ribbons of the most complex repeating pat- terns with as small a proportion of labor cost as the plain weaves. These are the articles on which a continuation of the protective policy could be justified, on the ground that a little more development might in time make their production as cheap here as abroad. In that case we might hope to see a very considerable part of our ribbon industry completely emancipated from dependence on a protective tariff. Let us summarize briefly : The plainer kinds of ribbons and those of repeating patterns can be made here as cheaply as abroad. Those of very complicated design, if suitable for power loom weaving, could not at present be made without tariff protection, but give promise of continued development and ultimate independence. There are, however, ribbons of special and unique pat- " Allen, Silk Ind. of World, p. 29. Also U. S. Census Btill, No. 74, p. 182. 745] The Silk Industry and the Tariff 129 terns, fashionable novelties and specialties, not suitable for mechanical weaving, vi^hich cannot be produced to advantage in this country ; they are hand-loom products. A very few of them are made here under the stimulus of tariff protection, but their makers find it almost impossible to compete in the market with foreign goods, the home prices of which are raised more than 50 per cent by the import duty and cost of transportation. There is an economic loss involved in continuing artificially to stim- ulate the production of such fabrics in the United States. The labor used in making them could be more produc- tively employed in other industries, and the removal of the tariff on handmade specialties would result in an appre- ciable lowering of price to consumers. 16. DEPENDENCE ON PROTECTION: BROAD GOODS. Closely analagous to conditions in the ribbon industry are those applying to the manufacture of broad goods. The situation is more complicated in the latter case, how- ever, because of the greater variety of the products and the greater importance of this branch of the industry. The problems presented are, therefore, most difficult, and must be approached with the utmost care. The manufacture of silk dress goods in the United States has now reached proportions truly enormous, this class alone representing more than half the total silk pro- duction in the country. Production of Dress Goods in America. Increase 1880 $4,115,205 1890 22,900,000 590% 1900 52,152,000 127% 1905 66,917,000 28% It will be remembered that the fj.brication of piece 130 American Economic Association [746 goods had been started only a few years before 1880. The increase from 1880 to 1890 was largely a natural growth, aided materially by the betterment in the grades of raw silk received from the East and the concomitant change from hand loom to power weaving. The increase during the next decade, from $23,000,000 in 1890 to $52,000,000 in 1900, was due to several causes. The growing use of silks, the better organization of mills and factories, the higher tariff and better business condi- tions after 1897 all contributed their share. Greater than any other factor, however, in causing an expan- sion of 127 per cent in the output, was the progress in the invention and improvement of weaving machinery. The stimulus from this source began about 1888 with a swivel loom attachment which produced embroidered ef- fects that before had been possible only on the hand loom. A number of other appliances followed in quick succession — winders, doublers, wrappers, quillers, and Jacquard dobbies too numerous to mention. Some of these were of foreign, but most were of American ori- gin. ^ Distinctly peculiar to this country are all appli- ances aiming to increase the speed of the weaving or the rate of the output. In fact, nearly all the foreign in- ventions were adaptable only to slow-moving looms, and to make them of use required that they be entirely made over to fit our rapidly moving machinery. With all this change and improvement the American loom was acquiring gradually a character of its own, which distinguished it more and more appreciably as time went on from the power looms in use in Europe. One might think that the new inventions and constantly new appliances would make for greater complexity, a greater number of intricate parts. Quite the contrary ^U. S. Census i8go, Manuf. Ind., Pt. Ill, p. 221. 747] The Silk Industry and the Tariff 131 is true. Ready as are our manufacturers to experiment with new devices, and to adopt those that are successful, there is one requirement that every new invention must possess. SimpHcity is the keynote that runs through all our machinery.^ Everything that is complex or in- tricate is viewed askance. There are several natural reasons for this. In the first place, the American weaver is not a skilled artisan. He has no time to go to a train- ing school to learn the technical details of any particular branch of the industry; but give him a simple machine, and he will grasp its running operation without special schooling. Second, complexity of mechanism means not only greater skill and more training, but more labor time ; there are more parts to break or get out of order, there are more chances of broken threads in awkward places. Third, it is evident that simplicity makes for greater speed in running, and a higher rate of output. Lastly, complex mechanism costs more to make. For many years these factors have been active in shap- ing the course of evolution of American weaving ma- chinery. Nowhere had inventive genius in connection with the power loom been so notable as in the United States.^ The result cannot be better expressed than in the words of Mr. Jacques Huber in a report made to the Swiss government on the silk industry of the United States. "A factor not to be left unnoticed is the world- renowned simplicity of American machinery, which en- ables a simple weaver to do work which in other coun- tries can only be done by the most skilled and experi- enced."* Americans have long been ahead in cotton ''Twenty-ninth Ann. Rept. Silk Assn., p. 54! also Allen, Silk Ind. of World, p. 26. ' Thirtieth Ann. Rept. Silk Assn., pp. 52-54- Allen, Silk Ind. of World, p. 29. * Twenty-ninth Ann. Rept. Silk Assn., p. 54 (iQOi)- 132 American Economic Association [748 weaving,' but experiment and invention in the case of silk weaving machinery came late, and it is only within the past ten or fifteen years that we have forged ahead of other nations in this respect. As an illustration of the differences that have grown up during recent years between domestic and foreign looms, the writer was given an account of the history of a certain English ribbon loom which came by a curious process into the possession of Mr. Frank Essex, of Pat- erson, New Jersey. The loom was imported under the impression, which later proved to be false, that it em- bodied some new and valuable ideas in ribbon weaving. The manufacturer who first brought the loom from Eng- land found the mechanism so complicated that he could not even discover how to make ribbons on it. He there- fore sold it at half price to another man who had great confidence in his ability to make the thing go, but it proved to be a white elephant on his hands as well. It was thereupon sold to Mr. Essex for a mere song. He spent a whole afternoon and evening studying it out, and finally solved the problem of making ribbons, but de- clared it was totally unfit for use in this country. He thought, however, that by tearing down the whole back side of the loom and fitting it with the simpler and more efficient American appliances he might make it go. The loom is now in use in his mill, but is not by any means as satisfactory aS" a machine of domestic make. The most pronounced features of American power looms are today their light construction, ease in handling, simplicity in operation, accuracy of weave, and moderate cost.* Especially encouraging is the fact that ' Montgomery's Cotton Manufacturing in the United States takes note of this as early as 1840. 'Allen, Silk Ind. of World, p. 29; also cf. Twenty-ninth Ann. Rept. Silk Assn., p. 49. 749] The Silk Industry and the Tariff 133 the machinery is practically all made in the United States.'^ The Crompton and Knowles Loom Works of Worcester, Massachusetts, one of the largest loom mak- ing concerns in the world, turn out every variety of broad goods and ribbon loom in use in this country. The superiority of their products over the looms made in Europe is now generally recognized.^ Nor are there any signs of a halt in the forward march of improvement. There has probably been more progress in improved weaving machinery in the last decade than in the three preceding decades.^ The me- chanical devices, all working automatically, have ef- fected a truly remarkable saving in time, labor, and material. The Jacquard loom has undergone so many alterations and improvements in the last ten years as to have become almost a Hew loom.® Especially notice- able are the increase of speed and the saving of pattern cards. The older looms used to require a long pattern or indicator chain. The chief advance is in saving this pattern and in producing duplications. Moreover, by dispensing with this long and cumbersome attachment the machine is capable of a much higher speed.^° By the two-weave multiplier and the manifold multiplier, two, three, or more distinct weaves are produced in the loom and indicated from the same pattern chain. The list of improvements is long, and cannot be described without going too far into technical details ; but they all tend to increase the efficiency of the labor employed in weaving, to make possible the fabrication of articles with less labor than had before been necessary. ' Twenty-ninth Ann. Rept. Silk Assn., p. 54. Report of Mr. Jacques to the Swiss Government. ' Twenty-ninth Ann. Rept. Silk Assn., pp. 5Sff- "Allen, Silk Ind. of World, p. 27. ""U. S. Census 1900. Vol. IX, p. 223. Thirtieth Ann. Rept. Silk Assn., p. 52. 134 American Economic Association [750 This review of the development of conditions of pro- duction in the broad goods industry explains the enor- mous increase in the output in the last fifteen years. Aided by a higher protective tariff, by general business prosperity, and by improvements that caused a marked decline in the cost of production, the annual output jumped from $52,000,000 to $67,000,000 in only five years." Another indication of development is seen in the new equipment installed from year to year. New Looms Installed."^ Broad Goods Narrow (Ribbons only) 1901 2328 3S6 1902 ssoo 312 1903 3797 450 1906 1268 383 From 1901 to 1905 there were no less than 18,000 new broad looms and 2200 ribbon looms put into opera- tion. ^^ Naturally growth could not continue at such a rate indefinitely. The constantly larger stocks of goods put upon the market brought a natural fall of prices.^* In 1906 the secretary of the Silk Association writes of the "extreme low prices"^^ which have caused "a serious depression in the silk trade." In the same report he says, "In point of yardage (in 1906) the silk business has been greater than in any preceding year . Machinery equipment has been greatly added to and has been in fairly active operation, while the product has gained largely in distribution and consumption." " U. S. Census Bull. No. 74, p. 174. " Thirty-first Ann. Rept. Silk Assn. p. 24, 1901 and 1902. Thirty- second Ann. Rept. Silk Assn., p. 20, 1903. Thirty-fifth Ann. Rept. Silk Assn., p. 18, 1906. " Thirty-fourth Ann.. Rept. Silk Assn., p. 24. "Allen, Silk Ind. of World, pp. 37-38. Also Thirty-fourth Ann. Rept. Silk Assn., pp. 20-21. ^Ibid., p. 21. 75 1 ] The Silk Industry and the Tariff 135 In a word, the silk industry today is in a position that has been characteristic of so many protected industries in this country. Aided by a higher protective tariff, and in this case by marked economy of production, large profits for a while attended the making of silk fabrics. The large profits have resulted in a rush of capital to the industry; new plants have been put up and old ones enlarged.^® The resulting enlargement of production has been followed by competition among pro- ducers, lower prices, and lower profits. The lowering of profits has been put off longer than would otherwise be the case by the constant progress in the economy ef- fected in the cost of production. On the other hand, the evil day has been somewhat hastened by the deprecia- tion in the value of gold, which has put up the price of raw silk and of wages paid to labor. ^^ The situation has brought forth another result that deserves mention. Increasing competition and desire to undersell his rivals, at first led the manufacturer to in- crease his quantity of output at the expense of quality. The fabrics deteriorated sadly for several seasons, until by 1906-7 loud complaints were heard from consumers.^* It might be said, it is true, that this is a sound economic trend; that progress under American conditions of pro- duction lies, as we have seen, in the direction of large output of plain fabrics. But the analogy in this case is not a true one. Our advantage over the foreigner lies, it is true, in plain fabrics, or those of the simpler pat- terns ; but that does not mean goods of inferior quality. Our looms are capable of turning out perfect weaves, "Cf. U. S. Census figures: 1890 No. Plants 472 Capital (millions of dollars) Si " Thirty-fifth Ann. Rept. Silk Assn., p. 17. " Thirty-fourth Ann. Rept. Silk Assn., pp. 22 and 24. 1900 I90S 483 624 81 109 136 American Economic Association [752 in fact are noted for their excellence in that respect. The increase in yardage output which results from over- hasty or inferior work is very small, much too small, in fact, to make up for the loss of value in the article so made. There is a certain standard of quality to which silk goods, more than any other fabrics, must attain, or they quickly lose favor in the eyes of consumers. It is written in the economic laws of the country that our looms must move rapidly, but it is as sternly true that they must not turn out inferior goods. It is encouraging to note that these truths have within recent years come to be realized by the American pro- ducer of silk goods. Protests from consumers, a falling off in sales, and a growing predilection for honest articles of foreign make even at higher prices have warned the domestic manufacturers that the poorer goods could not be sold at a profit. -^^ "Practically unanimously", says the secretary's report for 1907,^° "they resolved on honest construction of the fabric." The result is said to have been a restoration of the former prestige of domestic silks, and considerably better conditions in the silk trade. ^^ This review of the recent conditions in the dress goods industry clears the way for some general conclusions as to its relations with the tariff and its profitable future. In the first place, it may be safely said that the wonder- ful progress made in the last fifteen years, and especially the last ten years, practically place the manufacture of most dress goods in the same class with ribbons as regards its adaptability to American conditions of pro- duction. The ever increasing application of labor saving " Thirty-fourth Ann. Rept. Silk Assn., pp. 24-5. " Thirty-fifth Ann. Rept. Silk Assn., p. 17. ^Ibid., pp. 16-17. Semi-Ann. Rev. Silk Trade, 1908, "Trade Pros- pects." 753] The Silk Industry and the Tariff 137 devices in this industry, together with progress in the throwing branch — which has resulted in lowering the cost of his raw material to the dress goods producer — has operated to diminish the advantage the foreigner has always had in the matter of lower wages to such an extent that many kinds of dress goods are now made as cheaply in this country as abroad. Price comparisons here and abroad are almost impossible, owing to the dif- ficulty of being sure that the articles compared are of exactly the same grade and quality; but, so far as the opinion of experts can be trusted, we begin to hear fre- quent accounts of dress goods cheaper here than in Eu- rope. Mr. Franklin Allen writes in his "Silk Industry of the World",^^ "In the fall of 1900 . . plain and fancy silks were sold 50 per cent cheaper than the pre- vious year, and for much less than in any European capital." This condition was brought about, he explains, because of a surplus production, but the incident is in- structive as showing that our dress goods may sell for "much less than in any European capital." Quite as striking and significant are the words of a foreign con- tributor to the Silk Association reports, "We have long since on this side of the water given up the claim to regulate silk prices ; America is now the all-powerful reg- ulator. Uncle Sam makes sunshine and rain in the silk trade. "23 The Hon. J. H. Gallinger, United States Sen- ator from New Hampshire, speaking before the mem- bers of the Silk Association, said, "The improvements in power loom making in America have been so marked that no country in the world is so well equipped relatively as the United States for a low priced production of silk goods. Steadily improving equipment in machinery, ^Published in 1904. '^ Thirty-second Ann. Rept. Silk Assn., p. 20. 138 American Economic Association [754 large crops of raw material, and the keenest domestic competition, have all been factors in reducing prices of manufactured goods."-^ We have yet to consider whether domestic prices would not in the long run average as low as the foreign. In the section dealing with the results of the Tariff of 1897 ^^^ course of recent importations of dress goods was considered at some length. We have seen that there are certain kinds of broad fabrics which cannot be produced here in competition with Europe. The spe- cific duties, as was seen, fall so heavily on the cheaper hand loom fabrics as practically to prevent their importa- tion. Within the last few years there has been an in- crease in the very cheap silks imported from Japan, but these are made largely with "wild" silk and have been coming in under the head of "spun or waste silks" at about 35 per cent.^" Another kind of hand loom product not made here is the very valuable broad silk fabric. Weaves of highly complicated design and great variety of materials require extremely slow production and the most skillful of operatives. These fabrics, under the peculiar working of the recent tariffs, have paid only 45 or 50 per cent duty, and have furnished a little more than half of our importations of dress goods. Between the two stand the debatable ground, the machine-made products of medium grades, in which our manufacturers compete with those of foreign make. The average duty paid on all goods is some 54 per cent, so that we may say that the duties paid by fabrics of this kind that now enter the country lie somewhere between 54 and 60 per cent. Let us consider the character of these products. First of all, there are goods of unique and limited de- ^ Twenty-ninth Ann. Rept. Silk Assn., p. 72. ^ Thirty-third Ann. Rept. Silk Assn., p. 36, also p. 82. Thirty- fourth Ann. Rept. Silk Assn., p. 88. 755] The Silk Industry and the Tariff 139 signs, of which no great quantity can be turned out of a single pattern. The labor cost of stopping looms and making new patterns which have a very limited market is too great for our producers. In this class should be in- cluded many "specialties" and "Parisian novelties" which, though usually more suitable for the hand loom, can sometimes be made on European power machines. It is extremely doubtful if a much higher tariff would prevent the continued importation of fabrics of this kind, and as the demand for them, owing to their peculiar nature, is stricly limited, it is equally doubtful whether a lower tariff would increase appreciably the amount sent over here. In fact it is hardly true to say that they compete, except in an indirect way, with fabrics made here. Second, there are certain very closely woven goods known as mousseline or messaline fagonne, which are imported in large quantities.^^ These are "beaten" very closely, containing a great many picks — sometimes as many as 160 picks to the inch, — and as in this country most manufacturers have to pay the operative a wage based on the number of picks, in reality it almost prohibits their manufacture here.^'^ In fact, our manufacturers have never been able to produce mousselines, in spite of many^® repeated attempts. These goods cannot be said to compete with anything made here, except in the sense that some purchasers might use mousselines if they were cheaper instead of some other kind of broad fabric. Besides the two classes of goods described, mention should be made of fabrics which are imported from spe- cial or peculiar causes. Some, for example, were im- ported because of the unwise deterioration in the quality of the goods which our looms turned out from 1903 to ^ Thirty-second Ann Rept. Silk Assn., p. 47. " Mr. M. C. Migel to the Silk Association, ibid., p. 48. ^ Thirty-fourth Ann. Rept. Silk Assn., p. 82. 140 American Economic Association [75^ 1906. The result was a wider demand for the better European fabrics.^® Sometimes a sudden change of fash- ion favors certain patterns or weaves imported from abroad before our looms can set to work on them, though it is as likely to be the domestic article that is so favored. In recent years New York has set the fashions for this country rather than Paris. ^'^ We see, therefore, that except for importations due to causes of an accidental nature, the power-loom dress goods now actually sent to this country are practically limited to specialties and mousselines. The demand for all other kinds of machine-made broad goods, those that would really come nearest to competing with American products if imported, is now satisfied normally by domes- tic products. This result has been attained only within recent years, and must be attributed partly to the tariff and partly to the advance in mechanical appliances. True, the tariff protection is usually given almost the entire credit. Mr. Paul Schultz of Crefeldt made the state- ment at the St. Louis Exposition that "The high tariff had killed the silk trade that formerly Germany had with the United States."^^ It is undoubtedly true that the Tar- iff of 1897 i^^y fairly be given a great deal of credit for stimulating invention and mechanical improvement. The industry had not developed then as it has since. The chief importance of the Act of 1897, viewed from the standpoint of protection, was to curtail the importation of certain machine-made products of rather elaborate de- sign and pattern. A large part of the inventions were in the direction of producing these patterned and embroid- ered effects by automatic appliances, or adapting such ap- pliances to high-speed looms. All such products are now " Thirty-fourth Ann. Rept. Silk Assn., p. 25. " Allen, Silk Ind. of World, p. 39. " Thirty-fourth Ann. Rept. Silk Assn., p. 6I7. 757] The Silk Industry and the Tariff 141 made in the United States.*^ Yet it is a question whether these improvements might not have been made without the aid of the tariff. The recent advances made in the throwing branch, in their way as remarkable as the im- provements in broad goods looms, were achieved without any special protective stimulus. It may be, however, that the higher prices on products of this kind, due to the in- creased import duties, furnished just the spur needed to induce the invention of mechanical appliances that would make their manufacture possible in this country. We come at length to our general conclusions as to the dependence of the broad goods industry on protection from foreign competition. It is probably safe to say that many kinds of broad goods are made as cheaply here as in Europe. Our rapidly moving machines, and the appliances for the saving of time and labor, have now reached the point where the greater cost of labor here is, in the case of many fabrics, offset by the greater efficiency of each operator. Moreover, the progress made in the throwing of silks does away with one of the greatest obstacles to freeing the industry from dependence on the tariff. The nature of the silk fibre has long stood in the way of the independence of the silk manufacturer; it has prevented that extensive use of labor-saving ma- chinery which is characteristic of American industry. That obstacle is in a fair way of being eliminated. The raw material now costs the American weaver of broad goods no more, if as much, as it does the foreigner. The silk manufacturer should before long be in the same position as the manufacturer of cotton goods. The chief advantage enjoyed by the latter now is that his industry is longer established. This is not to say by any manner of means that we "Allen, Silk Ind. of World, pp. 26, 27, 30. Thirty-fourth Ann. Rept. Silk Assn., pp. 81, 83, etc. 142 American Economic Association [758 can hope to excel the foreigner in the making of all broad silks. We cannot compete in hand-loom products. As we have seen, however, the inferior cheap hand-loom products compete with nothing made in this country. The more expensive hand-loom goods are not made here, and their value is so great that it is doubtful if they would be sold, even with the tariff removed, at prices low enough to bring them into competition with our machine made goods. The field for the use of these more expen- sive hand-loom goods is more or less limited, and is for the most part a field for which the American machine made fabrics are not suitable. They are used for heavy furniture coverings, tapestries and curtains, for church vestments and altar cloths, and where fabrics intermixed with gold and silver are required.^* As these novelties cannot possibly be made here, to keep the tariff on them confers no benefit on any manufactures now existing in this country. When we come to consider the machine-made products, the situation is different for different classes of goods. The dress goods known as mousselines cannot be made here. Almost the same is true of the so-called "special- ties," and Parisian novelties. They are not attempted here because no large amount can be turned out of one pattern. They satisfy only a limited class of people, and as there is no corresponding domestic product, the tariff on them might be removed without affecting any branch of the American silk industry. With regard to other machine-made broad goods there is room for controversy. Many, perhaps most, kinds of power-loom broad goods, particularly those of simple and uniform patterns, can be made here as cheaply as abroad. Even goods of considerably elaborated figures and em- broidery work could be made here without special tariff " Allen, Silk Ind. of World, p. 28. 759] The Silk Industry and the Tariff 143 protection, granted that the patterns be such that large amounts can be turned out of one kind. There are, how- ever, certain kinds of goods that must be woven more slowly, some figured and embroidered fabrics that re- quire more attention and care — more labor — on the part of the operative. The rule in general holds good with broad fabrics as with ribbons ; even when made on power looms, the more elaborate and intricate the pattern, the greater is the proportion of labor involved in their cost of production. On the whole, the entire removal of the tariff would affect only a part of the broad goods industry — the manufacture of those highly complicated fabrics on which the automatic devices are not yet perfect, or are as yet applicable only to slowly moving looms. It seems probable that in time American ingenuity will perfect the machinery necessary to reduce the labor cost of these textures so that they can be made as cheaply here as abroad. This part of the industry is still young and has not yet reached its point of highest development. For goods of this restricted class, a tariff duty is still neces- sary for their continued production in America. If the duty could be so arranged as to cover these goods alone, it would be advisable to continue to protect them in the hope that they might in time reach a position of inde- pendence. Whether the tariff should be kept on the whole industry for the benefit of the few who make these goods is a serious question. So far as the development of the industry is concerned, it is doubtful if the removal of the tariff would postpone by a great deal the time when the advance of mechanical invention will enable us to make all kinds of power-loom dress goods as cheaply as they are made abroad. We have seen in the case of the throwing industry that the stimulus of high protection was not 144 American Economic Association [760 necessary to foster improvements ; competition, as in this case, might prove a more efifective spur. It is safe to say, then, that there is now^ no economic justification for the tariff on hand-loom broad fabrics, whether of the very cheap or the very expensive variety, nor on mousselines or specialties, none of which are made here. 17. DEPENDENCE ON PROTECTION : OTHER FABRICS. If an attempt were to be made to classify the different branches of the silk industry on the basis of their adapt- ability to American conditions of production, it would be almost impossible to say in which class many articles belong. The fabrics which we have just considered belong partly to one and partly to the other class. On the whole, however, a large part seem to offer promise of immediate or eventual independence. Of the articles we are about to consider no clear-cut statement can be made. It may be said, however, that the production of many of them contains features which must be scrutinized carefully, before one can say that they are fitted for suc- cessful independent manufacture in this country. A most interesting branch of the industry is the manu- facture of dress and military trimmings. The conditions of production of these goods is so peculiar, however, that first it may be well to consider the proportion of hand looms and power looms in use in recent years. ^ Power Looms Hand Looms Broad Narrow Total Broad Narrow Total 1874 1,189 888 2,077 779 728 1,507 187s 1,428 1,260 2,688 i,oos 809 1,814 1880 3,103 2,218 s,32i 1,629 1,524 3,153 1890 14,866 5,321 20,822 413 1,334 1,747 1900 36,825 7,432 44,257 164 9 173 190S 47,725 8,500 56,225 none none 'Allen Silk Ind. of World, p. 3L From U. S. Census Reports for different years. 761] The Silk Industry and the Tariff 145 It will be noticed that up to 1880 the number of hand looms on broad and narrow fabrics remained about the same. In 1890 the hand looms making narrow fabrics were about three times the number in use on broad goods. In 1900 the total number of hand looms was inconsider- able, and at present there are practically none. These variations are explained by a consideration of the con- ditions governing the manufacture of trimmings. In 1890 a small number of hand looms were employed in making patterns, bookmarks, badges, and so forth, while others were engaged in weaving fine tissues, veils, and other specialties. The larger proportion of the hand looms in use in 1890, however, was devoted to the manu- facture of dress and military trimmings.^ We find in this an explanation of the decline in the production of trimmings in this country from 1880 to 1900. Trim- mings must not be confused with braids or fringes. The latter are simple uniform cords or cables of various twists and braids, of which an indefinite amount can be turned out on a power machine. Trimmings are short, elabo- rately patterned articles, of which only a small amount can be turned out at one time, usually produced on a special order. This is particularly true of dress and cloak trimmings. Military and upholstery trimmings are less elaborate and can usually be made on power looms. A large amount can often be turned out of a single pattern, but this is not always true. With these facts in mind, let us glance at the course of production of trimmings since 1880. The entire value of the trimmings produced in 1880 was $8,300,000, while in 1890 it was $8,500,000. The value of the military and upholstery trimmings increased in the sum of $2,700,000 or 190 per cent; that of dress = U. S. Census Bull. No. 348, p. IS- Cf. also U. S. Census of 1890, Manuf. Ind. Pt. Ill, p. 221. 146 American Economic Association [762 cloak trimmings decreased $2,500,000, or 36 per cent.^ The value of the dress goods made from 1880 to 1890 increased from $4,100,000 to $15,200,000; that of ribbons proper from $6,000,000 to $17,100,000; an in- crease beside which the figures for trimmings stand wait- ing for an explanation. The United States Census Report in 1890 says, "The decrease in the latter item" (dress and cloak trimmings) "can only be attributed to adverse fashions."* When one remembers, however, the fact that the dress and cloak trimmings were made on hand looms, and that the use of power looms for the military and upholstery class is more or less limited, another explanation of the decline in pro- duction seems possible. Let us glance now at the figures of output for 1900. Here we see at once that adversity of fashions can not possibly serve as the explanation. The total value of the production of trimmings of all kinds has declined during the decade from $8,500,000 to the inconsiderable figure of $2,300,000, a decrease of 73 per cent.° More significant still is the decline in the use of hand looms ; the looms operated by hand for all kinds of narrow goods, including ribbons, have decreased from 1334 to 9. The conclusion is obvious. Cloak and dress trimmings are products adaptable only to hand loom weaving. The amount of one pattern that can be produced is strictly limited, and such articles stand outside the pale of Ameri- can conditions of manufacture. Of upholstery and mili- tary trimmings this much can be said. When simple, uniform patterns, of which amounts are ordered large enough to make it worth while to put a power loom in motion, we can and still do produce them. In fact, the °U. S. Census Btdl. No. 348, p. 10. * Ibid., p. II. ' U. S. Census 1900, Vol. IX, p. 203. 763] The Silk Industry and the Tariff 147 uniformity of the article recently turned out has led to a great outcry that more attention should be given to diversifying the product." Quantity rather than quality has been the trend. Yet it is only by producing trim- mings of simple patterns in great amounts that the value of the output has increased from $2,300,000 in 1900 to $4,100,000 in 1905. In the plain machine-made trim- mings we can compete with the foreigner ; when the pat- tern is elaborate, or heavily set with gold threads, or wanted only in small amounts, it must be procured from the looms of Europe. Labor here is more productive if employed in other directions. Almost parallel with the movement in the output of trimmings come the statistics in regard to tapestries and curtains. Articles of this kind, if the purchaser desires them of silken material, are usually wanted of elaborate pattern and heavily ornamented with gold threads. Gold threads can be inserted only by the most painstaking per- sonal care on a hand loom. Naturally, too, the amount that can be turned out of one pattern is almost always strictly limited to an individual order. We are not sur- prised, therefore, to find a decrease in the production of goods of this class. The output of $4,000,000 worth in 1890 had shrunk to $1,000,000 in 1900, a decrease of 72 per cent.'' These articles can not be produced to advan- tage on a power loom. There is another reason for this, besides those already given. Tapestries and curtains are usually very heavy and thick in texture. We have already mentioned the limitations of the power loom in regard to the weaving of very heavy fabrics f the double threads, practicable on the hand loom, are impossible on a power machine. Where simple plush or velvet curtains are ' Thirty- fourth Ann. Rept. Silk Assn., p. 22 (1906). ' U. S. Census 1900, Vol. IX, p. 203. 'See also U. S. Census 1900, Vol. IX, pp. 210-11. 148 American Economic Association [764 wanted we can still make them; where the texture need not be particularly heavy, where the pattern required be not too ornate or heavily figured or decorated with gold threads, our mills can supply the demand. Where the requirements are otherwise, the purchaser must turn to the products of European looms. Articles such .as these form a large item in the importations from foreign countries. As in the case of trimmings, the output of curtains and tapestries has increased slightly since 1900, from $1,000,- 000 to $1,500,000. This is explainable in part by the increased attention given by manufacturers to the simpler designs and patterns and in part by the fact that these heavy fabrics allow a considerable admixture of cotton. The greater proportion of tapestries made of late contain more or less cotton, but the values of these are included in the figures for silk goods.® This gradual exclusion of the gold figured and more ornate curtains from our domestic looms is another illustration of the American producer adapting himself more successfully to the field in which his greatest advantage lies. The hand loom tapestries are left to the foreigner to manufacture. One other item, the class of goods known as braids, suffered a serious decline in the last decade. The pro- duction of braids has undergone considerable change in the last half century. Probably there is no single item in the whole line of silk goods made in America that has suffered so much from the ingenuity, energy, and enter- prise of European manufacturers. Braids once formed a considerable part of the silk production of this country. In earlier times they were made of sewing threads simply braided together, and the industry, it seemed, had nothing to fear from foreign competition.^"' The first shock came ' U. S. Census Bull. No. 74, p. 179. '" Wyckoff, Silk Goods, p. 47. 765] The Silk Industry and the Tariff 149 in the seventies, when it was discovered that the French were making braids from spun silk, which, so far as ap- pearance went, differed inappreciably from the reeled silk product. ^^ For very narrow goods the spun silk article can scarcely be told from one made of reeled silk. Our manufacturers promptly adopted the new method, and during the eighties held their own very well. Production of Braid in United States." 1880 $995,695 1890 2,771,382 1900 1,522,56s Then the French began to introduce variations on the sim- ple braid. All kinds of twists, turns, figures, embosses, raised gold and silver threads, and so on, were introduced, in a variety quite bewildering but wonderfully attractive. Novelty was the keynote. Our manufacturers rather un- wisely tried to follow the pace set by the foreigner.^^ In 1889 Mr. Henry W. Schloss, a prominent braid manu- facturer, and president of the Manufacturers' Associa- tion of New York, appeared before the Tariff Commit- tee.i-* He stated in effect that the French and German braids had of late been made with gold, silver, and tinsel threads, and to keep his hold on the market he was com- pelled to follow the same ideas. The additional labor required was large; the new machinery was expensive, but he had installed it. When he tried to get the gold threads and tinsel, however, he found himself at a loss owing to the fact that the articles he wanted were not made in this country and that there was a duty of 25 per cent on their importation. He asked therefore that a "Wyckoff, Silk Goods, pp. 38ff. "U. S. Census 1900, Vol. IX, p. 209. " Tariff Rev. Hearings, 1889-90, pp. 6ooff. "/&irf., p. 601, Testimony of H. W. Schloss. Se also Tariff Hear- ings, 1908-09, No. 23, p. 3022. 150 American Economic Association [766 duty of 60 per cent be imposed on braids, to enable him to keep on with his plans. The duty of 45 per cent was raised in 1890 to 50 per cent, and with this degree of protection he had to be satisfied. All these new features required more and specially designed machinery; each new figure and pattern required that the process of pro- duction be given more personal attention, more skilled labor. Strangely enough, the addition of skilled labor, instead of hastening production, retards it : each yard has to be given special attention, the machine has to run more slowly. Thus the braid manufacturers were led slowly outside the field within which American conditions require the successful producer to confine himself. Four years later, in the hearings before the Tariff Committee in 1894, Mr. Schloss, who was still struggling along in his attempts to keep up with the foreign-made product, made another special plea for an increase in the duty on braids. ^^ He complained that braid production required much skilled labor and very expensive machinery. Most of the machinery, and all the best parts, had to be im- ported from abroad, paying a duty of 45 per cent. The spun yarn of which his goods were made was obtained at much less expense in France, as it bore a duty of 35 per cent when imported here. Spun yarn made here sold at the full amount of the foreign price plus the duty, there- fore much of his raw material was imported. Mr. Schloss claimed, therefore, that his industry enjoyed only about 15 per cent of protection. As for speed of output, he brought out the significant fact that an ordinary weaving loom could turn out from 500 to 800 yards of ribbon per day, as the flying shuttle can ply through two widths of broad goods or through half a dozen to a dozen or more "° Tariff Hearings 1893, P. 771- Also Tariff Rev. Hearings, 1889- go, p. 600. 767] The Silk Industry and the Tariff 151 ribbons, while the braiding machine, with its single width production, is good for only 72 yards per day. The difficulties experienced by American manufacturers in trying to follow the pace set by foreigners under such trying conditions may be imagined. The production dropped from $2,800,000 in 1890 to $1,500,000 in 1900. And yet, in the fabrication of the simple braids, producers in this country have no difficulty whatever in holding their own. Machines for simple braiding have reached the point where they work absolutely automatically. While on a visit to the factory of Mr. Frank Essex in Paterson, after working hours, the writer was shown a braiding machine which turns out a plain white band about three- quarters of an inch in width. Mr. Essex kindly turned on the power and let it run for over an hour, absolutely unattended, while we inspected the other parts of his establishment. Braids of this character can be produced as cheaply here as anywhere, and the American product has recently been narrowing down to this class of goods. This explains in part the remarkable increase in the manu- facture of braids and bindings from $1,500,000 in 1900 to $3,500,000 in 1905.^® The American manufacturer, in this as in other things, has done well to limit his output to braids that can be turned out on automatic machines. In regard to the tariff on braids, trimmings, tapestries, and the like, our conclusions are obvious. The simple kinds can be made without tariff protection, the more elaborate and gold threaded varieties cannot be made with it. The duties apparently benefit no one and merely raise prices to consumers of the foreign but non-com- peting articles. A curious recent development in the conditions of the industries devoted to the manufacture of fringes, braids, "U. S. Census Bull. No. 74, p. 181. 152 American Economic Association [768 and trimmings, is the growing use of artificial silk.^'' A remarkably close imitation of silk has recently been in- vented in Germany, composed chiefly of carded cotton and cellulose." This has been coming to New York in ever- increasing quantities," in the form of silk yarn, paying a duty of 30 per cent. Selling much cheaper than real silk yarn, the new product has offered too tempting a prospect of larger profits for our makers of braids and trimmings to resist. The notable increase in the imports of "spun silk yarn" of recent years indicates the impetus that has been given to the prdouction of artificial silk braids and trimmings. Imports of Spun Silk Yarn. 1902 $4S9>253 1903 788,399 1904 1,125,565 1905 2,305,847 These figures represent principally artificial silk yarns. ^° This state of affairs presents some curious problems. For most purposes the physical and chemical qualities of the artificial silk unfit it for use in making honest fabrics. Artificial silk is very thick, and has the property of dis- tending and disintegrating in water. It greatly excels natural silk in brilliancy. For passementerie goods and trimmings it has proven so suitable that for such purposes it is even preferred to natural silk."^ The American manufacture of velvets and plushes " Thirty-third Ann. Rept. Silk Assn., p. 52. "Ibid., pp. 9iff. "Ibid., p. 53. Also Thirtieth Ann. Rept. Silk Assn., p. 50. " Thirty-second Ann. Rept. Silk Assn., p. 52. As seen in the review of the tariff rates imposed in 1909, artificial silk now bears a specific duty levied by the pound. The manufacture of this pecu- liar article seems to have been started about 1905. See Tariff Hearings 1908-09, First Print No. 35, p. 5147. ^ Thirty-second Ann. Rept. Silk Assn., pp. 92-3, also Tariff Hear- ings 1908-09, First Print, No. 23, p. 3018. 769] The Silk Industry and the Tariff 153 presents some interesting features. The year 1888 marks the first serious attempt to produce pile fabrics here."" The method of production seems to have been an adaptation, at first, of the processes by which cotton plushes and velvets are made. The new fabrics had cotton backs and the pile alone was silk; nor was any attempt made at figured or ornamented surfaces.^* An account has already been given of the pile fabric items in the Tariff of 1890, showing how a specific duty was imposed bringing the rate up to an equivalent of 75 per cent ad valorem. The result was one that frequently ensues when an industry is sud- denly encouraged by protection from foreign competition, with an alluring prospect of high profits and monopoly of the home market. There followed a mushroom growth of plush and velvet manufacturing plants, and several foreign producers transferred their establishments to this country. Then came a period of heavy production, home competition, and lowering of prices. The product, origi- nally not of the highest quality, became cheaper and more trashy, while the manufacturer attempted to meet the lower prices by lower cost of production. Reductions in wages were followed by numerous strikes,^* and by 1894 practically the whole industry was in the receiver's hands. ^^ After 1894 the industry returned to normal conditions. Under a tariff reduced in 1894, but still somewhat higher than that enjoyed by other branches of the silk industry, our manufactures of pile fabrics have had a slow but steady growth. The competition from Europe has com- pelled a higher quality of fabric, but on the whole the cheaper grades can be manufactured here with profit. ''Tariff Hearings, 1893, p. 1022. ""U. S. Census i8go, Manuf. Ind., Pt. Ill, pp. 220-21. " Tariff Hearings, 1893, pp. 1029-30. ^ Supra., Sec. 9. 154 American Economic Association [.77^ Pile fabrics do not lend themselves as readily as other articles of silk to the conditions of power-loom produc- tion,-® and the better grades of European manufacture are still made by hand. Improvements have taken place, however, that brighten the prospects of this industry for the future. The attachment of the swivel loom makes possible the production of embroidered and ornamented effects that before were obtainable only on the hand loom.^'^ More recently there has been invented a very efficient silk velvet ribbon loom^^ which runs at high speed and works almost automatically. On the whole, the plush trade has been prosperous of late years. ^® The produc- tion of $5,000,000 worth in 1900 was an increase of 57 per cent over the total produced in 1890. Considering the fact that the industry had but just started two years previous to i8go, the increase in 1900 is not large. Still, it shows that it is not declining, and a continuation of tariff protection in this case may be necessary to its de- velopment. A noteworthy phase of the pile fabric situation is the change in the proportion of plushes and velvets. In 1890, while there are no figures given for the two items sepa- rately, it is well known that by far the larger proportion of pile fabrics manufactured was plushes.^** Of the de- terioration in American plushes and the change in fashion we have already spoken.^^ In 1894 the rage for seal plushes began to die out, and our manufacturers turned their attention to the cheaper, plainer, more uniform velvets. In 1900 there were 5,122,249 yards of velvets ^' Wyckoff, Silk Goods, p. 34. " U. S Census 1900, Vol. IX, pp. 212-13. == Allen, Silk Ind. of World, p. 29. "Testimony of Mr. Frank Cheney before the Industrial Commis- sion. Vol. XIV, "Silk Manufactures." '°U. S. Census i8go, Manuf. Ind-, Pt. Ill, p. 217. " Cf . pp. 75-80. 77 1 ] The Silk Industry and the Tariff 155 made, to 3,848,684 yards of plushes.^^ The value of each was very nearly the same, $2,480,000, as plush cloth on the average is about one-third more valuable than velvet. In 1905 this tendency was even more marked; the number of yards of plushes produced has declined since 1900 from 3.8 millions to 2.5 millions, while the manufactures of velvets have increased from 5.1 millions of yards to 7.3 millions.*^ There is an increase in the total quantity pro- duced of nearly a million yards, but as plushes are the more valuable fabric the change in the proportion has resulted in a slight decrease of the total value of the pile fabrics production. The case of plush and velvet manufacture furnishes an excellent example of the tendency of American manufac- turers to turn their energies to the line in which conditions of production in this country give them the greatest ad- vantage. This tendency has become strongly manifest in recent years. Velvets of uniform grades can be turned out in unlimited quantities, and are not so diversified as plushes. Velvets made in the Unted States are used mostly for carpets and upholstery, and their defects are not so carefully scrutinized in these as in articles of wearing apparel like plush textiles. Hence velvets can be made with a smaller amount of labor and greater use of machinery than plushes. The decline in the produc- tion of plushes marks the desertion of a field where our manufacturers struggle under disadvantages.** The pile fabrics industry cannot as yet be regarded as one particularly well fitted for the conditions of produc- tion peculiar to this country. Protected by a tarifif that has for many years been higher than on other silk fabrics, '" U. S. Census 1900, Vol. IX, p. 207. " Census Bull, No. 74, p. I79- "U. S. Census 1900, Vol. IX, pp. 207-8. Also Thirty-fourth Ann. Rept. Silk Assn., pp. 94-5. 156 American Economic Association {.77^ large quantities are still imported. The finishing and preparing of these goods for the market is a very delicate process, requiring considerable hand labor and technical skill. It seems entirely possible, however, that the ap- plication of automatic mechanical inventions has not as yet gone as far as it may. New devices are constantly appearing, and the recent invention of the high speed automatic velvet ribbon loom seems to give promise that pile fabrics may in time be made as cheaply here as abroad. In fact, the industry is still young. As in the case of certain kinds of dress goods that seem not yet to have reached their highest development, a protective tariff is still necessary to keep it alive, and may give an oppor- tunity to the pile fabrics manufacture to reach in time a position independent of foreign competition. In the list of silk goods the production of which has been doubtfully profitable in the United States, stands the class known as knit fabrics. The industry, started during the eighties, began to attain importance about the same time that velvet and plush manufacture was intro- duced. The Tariff Act of 1890 raised the amount of protection on knit goods from 50 to 60 per cent. This seemed to give the industry the impetus it needed, and several large firms grew up devoted to the making of knit fabrics. ^^ The Tariff of 1894 reduced the protec- tion to 50 per cent, and this, together with depressed busi- ness conditions, seems to have brought profits down to the vanishing point. In the hearings before the Tariff Committee in 1896-7, Mr. E. H. Davison, of the Ameri- can Hosiery Company, stated that his plant was being run at a loss.^^ Numerous other manufacturers cor- ■^ Tariff Hearings 1896-7, pp. 1737-8. "Ibid., p. 1738. 773] The Silk Industry and the Tariff 157 roborated this statement.'*^ The general complaint is that knitting involves large expense for labor and a very slow rate of production. Knit underwear and hosiery are made by a special process — the garment is modeled into shape as the knitting proceeds. This is slow and expen- sive compared with ordinary weaving, and involves much labor. "We are inclined to think", said Mr. Davison, "that in no other branch of goods is the proportion of hand labor to the cost of goods so large as in the manu- facture of fashioned underwear and hosiery." This is undoubtedly an exaggeration, as Mr. Davison himself confessed that the manufacture survived on 60 per cent duty in 1890, and he asks for no more than that. There are, unfortunately, no separate statistics for knit goods given in the census report on silks for 1900,^^ and we cannot, therefore, compare the production in 1890 with that in 1900. From other sources. Silk Association re- ports and trade journals, however, we may judge that the knitting industry suffered some decline during the decade ; and we may gage, with a fair degree of accuracy, the state of conditions in the industry. It would seem, at first sight, that a knitting machine would require little personal attention. Each machine, however, requires an operator, and the output is much slower than on weaving looms. Not only the knitting itself, but other factors in producing knit goods, demand much personal attention. One item of expense arises from the fact that knit garments are sold not' in bulk, but by the piece. This means careful folding and packing of each garment. Moreover, in the finishing process each *' Notably Mr. Ira Dimock, of the Nonotuck Mills, Florence, Massachusetts. ** U. S. Census 1900, Vol. IX, p. 213. Hosiery and knit goods are reported as a separate industry and are not in a form to compare with the figures as reported in previous years. 158 American Economic Association [774 garment has to receive much the same sort of care that is given by a tailor to a suit of clothes. The seams and edges have to be pressed together; the facings, buttons, and often braid and fringes have to be put on. It is in the same class as the tailor-made suit, which costs so much more in this country than the ready-made garment.*^ It should be noted that in the case of cotton knit underwear most of this careful, painstaking finishing process is not necessary, the braids, fringes and facing being usually absent from this class of goods,, and they being generally put up in lots of a dozen or so to a box. The manufac- ture of cotton knit underwear is a large and flourishing industry. Knit goods therefore seem to stand somewhere in the half-way stage. On the whole it might be safe to say that the silk knit goods industry is rather more dependent on the tariff protection it receives than most silk fabrics. At 60 per cent it thrives ; at 50 per cent it is in a more or less precarious position. At that point foreign goods threaten its hold on the market. For this reason the manufacture of such articles almost passes outside the sphere in which American conditions of production find their greatest advantage. There are, however, certain other knit goods products in the case of which these conditions do not obtain in so great a measure. Particularly does this hold true of smaller articles, such as gloves and plain hosiery. There is evidence that the production of these goods is increas- ing at a rapid rate, and that their manufacture is in a prosperous condition.** It is easily seen that in the smaller fabrics the expense for labor is much less than is the case with large garments. The pressing of seams, "" Tariff Hearings 1896-7, Vol. II, pp. 1738-40. *" Thirty-fourth Ann. Kept. Silk Assn., p. 96. Thirty-fifth Ann. Rept. Silk Assn., p. 65. 775] The Silk Industry and the Tariff 159 sewing on of buttons and fringes, careful packing of each article, and general finishing that make the expense for hand labor bulk so large in the cost of production of underwear, are almost entirely absent in the case of silk hose and gloves. In certain qualities of these goods we have an advan- tage over the foreign producer. The chief condition of success in knitting manufacture in this country is that the machines run at as rapid a rate as possible. The strain on the thread, when a knitting machine is run rapidly, is even greater than in the case of the power loom weaving broad goods. Only the best and most expensive raw silk can therefore be used. In Europe, however, where expense for labor is smaller, and where the cost of the raw silk is more of a consideration in the running expenses, the machines are operated much more slowly, and consequently thinner and cheaper raw silk can be employed. The knit goods made in this country are therefore of better and stronger material than those im- ported ; or perhaps it would be truer to say that the foreign article, if as strong and uniform as that made here, can- not come in over the 60 per cent duty and be sold in com- petition with our own knit goods — speaking more par- ticularly of hose and gloves. Consumers have not been slow to recognize the fact that American silk hose and gloves are superior to the foreign,*^ especially as the Europeans have not been guiltless of the charge of adul- teration.*^ In consequence, the demand for American made hose and gloves has gradually increased.*^ The foreigner has practically been shut out in all the higher grades, "and even in the lower qualities the uncertainty "■Thirty-first Ann. Rept. Silk Assn., p. 43. (1903.) " Thirtieth Ann. Rept. Silk Assn., p. 50. " Thirty-fifth Ann. Rept. Silk Assn., p. 65. (1907.) i6o American Economic Association \.77^ and irregularity of the sizes, as well as the suspicion of adulteration, have worked against their general use."** Another factor that has favored the American producer is his close touch with the domestic markets. This is more particularly true of gloves and mitts, the demand for certain kinds of which has of late far exceeded the supply, and has caught the foreigner unprepared.*^ A particular example is the fashion which set in some years ago of wearing silk gloves of very long arm length, a style that accompanied the reign of short sleeves.** On account of the suddenness with which this fashion spread, it was difficult to keep pace with the demand. The mills have been working overtime, while many new people have recently entered the field.*''^ Whether this pros- perity is due only to a temporary caprice of Dame Fashion, or to the fact that we have certain advantages over the foreigner in the production of these small knit goods, the producers themselves do not exactly know.*^ There is evidence, however, which goes to show that the sudden demand for long knit gloves is only an added factor in the prosperity of the industry. In 1903, before the long glove episode, Mr. Albert G. Jennings, of Brooklyn, wrote to the Silk Association, "The Fabric Silk Glove trade has shown a marked improvement."*® In 1902 Mr. Julius Kayser of New York wrote, "The increase in the manufacture and sale of silk gloves for the past year has been very decided."^" He sets the production for the year at a million dollars in round numbers, and adds, "The class of goods produced is of a very high " Thirty-first Ann. Kept. Silk Assn., p. 43. "/6,V., p. 44. *° Thirty-fifth Ann. Rept. Silk Assn., p. 65. "Ibid., p. 66. "/fcirf., p. 65. Report of Mr. JuMus Kayser to the Silk Association. ■" Thirty-first Ann. Rept. Silk Assn., p. 43. " Thirtieth Ann. Rept. Silk Assn., p. 50. Tjyl The Silk Industry and the Tariff i6i order, and has entirely superseded the inferior article formerly imported. "^^ Even stronger evidence of our ability to compete with the foreigner in small knit fabrics is the prosperity in the silk hose branch, where the fluctuations of fashion cannot exercise so large an influence on the demand. In 1906 Mr. A. McCaflum, a prominent manufacturer of hosiery in Northampton, Massachusetts, wrote to the Silk Asso- ciation : "The silk hosiery business is in a flourishing condition . . . there are a number of new factories start- ing up in different parts of the country. "^^ The situation in the knit goods industry as a whole bears out fairly well the conclusions we attempted to draw from a consideration of the conditions under which the various articles are produced. Of the underwear and larger garments made in America we hear very little now- adays ; silk buyers for the large department stores say that the greater proportion of such articles comes from abroad. There was no exhibit of such goods at the St. Louis Ex- position.^^ Conditions of production in this country make it more profitable to turn out gloves, hosiery, and other fabrics which do not require so much personal atten- tion from the operatives. Whether even these could hope to survive with a pro- tective tariff much less than 60 per cent, however, is doubtful. The knitting machine requires more labor per unit of output than does the weaving loom. In the case of cotton knit goods we find considerable quantities pour- ing into this country from abroad over the tariff barrier. Not only is the cost of labor much cheaper abroad, but " Cf. Tariff Hearings, igop, First Print No. 23, pp. 3005-10, and No. 47, p. 6283. The advantage over the European article seems to have been due to a patent process for strengthening the finger-tips. '^ Thirty-fourth Ann. Kept. Silk Assn., p. 96. ''Ibid., p. 86. i62 American Economic Association {.77^ the slower running of the machines makes possible the use of a much less expensive raw material, thus giving French and German manufacturers a double advantage. The American silk knit goods industry cannot hope to be independent of tariff protection from competition abroad until knitting machines be invented which are more automatic in their operation than any now known of. The chief improvements so far have been in the direction of increasing the speed of the machines, and considerable advance has been made in that direction.^* The advan- tage of foreign manufacturers in turning out knit goods is not by any means as great as it was ten years ago.^^ The smaller articles could probably now be produced at a profit if the tariff protection were lowered to 40 or 50 per cent; but a much greater saving in the cost of labor must be effected before the industry can hope to be really self-supporting. Very similar to the case of knit goods fabrics is the lace making industry in this country. Laces were first made about 1870-71, when Metz and Paris were besieged, causing the supply of laces from those centers to be sud- denly cut short.'' '^ As may be imagined, lace machines are very elaborate, intricate, and expensive affairs. As in the case of knitting machines, the output is much slower than that from the weaving loom. With lace machines as with knitting machines, only the strongest and most uniform of threads can be used, the raw silks of Italy and France alone being available." The amount of labor necessary to turn out a certain quantity of lace is large. Not only do the machines work slowly, but a grea t deal of clipping of threads has to be done to cut "U. S. Census 1890, Mamif. hid., Pt. Ill, p. 222. " Thirtieth Ann. Rept. Silk Assn., pp. 52-4. "" Wyckoff, Silk Goods, p. 52 ''Ibid., p. SI. 779] The Silk Industry and the Tariff 163 away superfluous fibres carried by the machinery from one point to another across the web. It seems strange that we have been able to make laces at all, in competition with foreign goods. There are two or three causes that have contributed to making lace manufacture possible in this country. First, foreign laces are mostly made by hand,^® or on hand ma- chines. Power lace machines, slow as they are compared with weaving looms, yet move much faster than the crocheting needle or the hand machine. Second, the demand for particular kinds of laces often springs up so suddenly that our manufacturer, in closer touch with the domestic market, can anticipate the foreign producer in satisfying many temporary fads. Third, protected by a duty of 60 per cent, there are many kinds of laces, espe- cially those of simple patterns, which can be made and sold here cheaper than the foreign product. The production of laces in 1880 was $437,000. In 1890 it had declined to $261,750. To compete with the European manufacturer in a product so essentially one in which he has an advantage — a product requiring plenty of cheap, skilled labor, and so little suited to mass pro- duction — requires a protection of at least 60 per cent. From 1883 to 1890 the duty on laces imported from abroad was only 50 per cent, and at the end of the period our manufacturers were in hard straits.^* From 1890 to 1894, and from 1897 to the present time, laces have enjoyed the protection of a duty of 60 per cent, and except for the period 1894 to 1897 our manufactures of lace rapidly grew, up to 1900. In that year the production had increased to $803,104. During this time the Ameri- can product was gradually tending toward the simpler and more uniform designs, leaving the varied, elaborate, ='Wyckoff, Silk Goods, p. 54- " Tariff Hearings, 1888-9, P- 596. 164 American Economic Association [780 and fancy textures to the foreigner.®" Since 1900 our manufactures of laces have suffered a dechne, while the importations have steadily increased. It is as though the foreigner, seeing the duties on broad goods and ribbons raised, and having no especial advantage over American producers in the fabrication of those articles, turned to laces as a field in which he could successfully compete. Imports of laces have risen from $3,000,000 in 1900 to an average of $5,000,000 or $6,000,000 in the last few years. The domestic production in 1905 was only $745,- 000.®' The output is still in the nature of plain goods.®" One great difficulty that has always confronted the makers of lace goods in this country is the securing of sufficient skilled labor. "The scarcity of expert workmen", says Mr. Franklin Allen in the Census Bulletin report, "has prevented the domestic manufacturer from insisting upon such qualities of workmanship as would be demanded of them abroad. The condition in this country of more machines than there are men to run them, tends to care- lessness in the work."®^ Mr. Albert Gould Jennings, of Brooklyn, New York, says, "New machinery and con- stantly improving methods have required such experi- enced labor as only the old manufacturing centers abroad can furnish." There is perhaps no feature in the conditions of lace production that offers less encouragement that it may some day become an independent American industry than this requirement of high technical skill. The one feature in which the American laborer surpasses the workingman of all other nations is his native intelligence, his ingenuity, " Thirty-first Ann. Rept. Silk Assn., p. 42. "^ U. S. Census Bull, No. 74, p. 174. Imports of laces, 1907, $6,686,000. "^ Thirty-first Ann. Rept. Silk Assn., p. 43. ''U. S. Census Bull., No. 74, p. 179. 781] The Silk Industry and the Tariff 165 his quick grasp of mechanical principles. In any industry- requiring general intelligence and mechanical skill, but no particular training in any one line, the workmen of this country stand preeminent for efficiency. In any in- dustry demanding specialized technical training he is not at home. The demand for skilled technical labor in the lace making industry relegates it at once to Europe, where the labor surpasses ours in efficiency. While it cannot be said that the silk industry as a whole has reached a position where it is not liable to suffer from the entire removal of the tariff, it is undoubtedly true that certain portions no longer stand in need of protection. In this class we may place the manufacture of thread and the throwing industry. The plainer kinds of ribbons can be made as cheaply here as abroad. Practically the same is true of dress goods. In the case of fabrics of highly elaborated designs that can be turned out only in limited quantities, European novelties, and so on, the tariff merely raises the price to the consumers. This is also true of hand-loom products of the very dear and the very cheap variety. When we come to braids, fringes, curtains, and trim- mings, we find that the plain and simple kinds that are adaptable to large-scale power weaving can be success- fully made here, probably as cheaply as abroad ; the more elaborate varieties cannot compete with the foreign pro- ducts even under the present high tariff, and give little promise of ever doing so. Pile fabrics and knit goods are not much more than able to hold their own with the assistance of the duties now appertaining to those goods, and the "young indus- tries" argument for protection would probably apply here. The manufacture of laces does not appear to be suited to American conditions of production and the industry 1 66 American Economic Association [7^^ is struggling along, suffering from constantly increasing foreign competition in spite of the high duties. Protec- tion in this case involves a seemingly permanent economic loss. 1 8. DEPENDENCE ON PROTECTION: OPINIONS OF MANU- FACTURERS, IMPORTERS, AND BUYERS. Conclusions reached by an investigator who views the subject from the outside ought to be supplemented by a consideration of the opinions of those on the inside. It is natural to suppose that those most directly interested in the silk trade, as producers, importers, or retailers, will be better informed than any others in regard to the eco- nomic status of our silk industry. From this class of men comes all the testimony in the reports of the various Tariff Hearings. To hope for scientific results from this source, how- ever, is to meet with disappointment. Precisely because these men are interested, it is next to impossible to get from them an unbiased opinion. Ask any manufacturer whether he thinks the domestic silk industry is dependent on the tariff, and nine times out of ten he will answer, in a tone of finality, that without protection the entire industry would go to the wall. Ask him if the prices of many silk fabrics are not as cheap here as in Europe, and he will admit that it may be so. Does he think that these particular branches of the industry still need protection? "Certainly they do ; we pay our weavers twice what they pay in England or France. Take away protection, and wages here would drop to European levels. Perfectly obvious." Occasionally, however, urgent need calls forth from some intelligent manufacturer a more satisfactory defence of his position. Such was the letter of Mr. Charles 783] The Silk Industry and the Tariff 167 Cheney to Mr. Andrew Carnegie, printed in the New York Times for January 10, 1909. It may perhaps be worth while to examine certain parts of this letter in detail. Mr. Cheney begins : "You have stated without quali- fication that it is your belief that a protective tariff is only justifiable in order to give new industries a chance to take root and establish themselves, and that when one has become well established, or has had a fair chance to do so, it should be weaned from its protection and forced to fight its own battles without further government assist- ance." He combats this contention on the ground that "there are many industries, . . . now thoroughly organ- ized or established, which could with almost certainty face their competitors in the open market without fear, but for one thing — the great difference in cost of labor in the United States and in lands across the seas." Mr. Cheney admits that in certain industries prices are lower here than in Europe, in spite of higher wages. "But", he continues, "you will readily admit that a similar result cannot be expected all along the line. In the large ma- jority of cases^ we cannot hope that inventive skill, supe- rior organization, and better business methods will be factors large enough to overbalance the added cost of labor ; and, even if they should do so temporarily, it could only be so for a very short time, as every improvement in machinery and method is now heralded about the world almost instantly, and people of other countries are about as quick as we are to seize every advantage." Mr. Cheney concludes that for this "large majority of cases" protec- tion should be continued. This whole argument is based on the assumption that the government should continue indefinitely to bolster up ' The italics are mine. i68 American Economic Association [7^4 all industries that are running at an economic loss, even when there is no hope that they will ever become inde- pendent. The consumer, for example, must expect for- ever to pay double prices for woolen goods, and the in- dustry should always be artificially stimulated, although the laborers who produce woolen goods are not half as efficient as when employed in other fields. Surely it is apparent that if the woolen weavers were making steel, for example, their product would sell for enough to buy from abroad twice as much woolen goods as they now can make. No one advocates breaking up a great in- dustry and throwing thousands of laborers out of work by a sudden removal of tariff support; few will deny a reasonable amount of protection to an industry which may some day hope to become independent ; but to bolster up permanently a manufacture that must always, from an international standpoint, be unprofitable, is to tax the nation at large for the temporary advantage of a few men, and to retard the development of the nation's re- sources in the fields where lies its greatest hope of success. Though few will subscribe to Mr. Cheney's conclusion, there is room for serious difference of opinion as to his premises. His intimation that the silk industry, in par- ticular, is entirely dependent on tariff protection, cannot be allowed to pass unchallenged. Our exports of silk goods, already exceeding half a million dollars annually and steadily growing,^ prove conclusively that there are some branches of the industry that no longer need fear to meet foreign competition in the open market. Some other branches of the domestic manufacture, as we have seen, have not yet reached their highest development, but give promise of ultimate independence. In fact, it is ' Cf . Testimony of Mr. Julius Kayser before the Tariff Committee of 1909, in regard to the exports of silk goods ; Tariff Hearings igog, First Print No. 23, p. 3009. 785] The Silk Industry and the Tariff 169 possible that the silk industry is more deserving of sym- pathetic treatment at the hands of the tariff reformers than Mr. Cheney has made it out to be. Certain kinds of pile fabrics and knit goods should be protected, not because they can never hope to be made here as cheaply as abroad, but precisely because they can. The laces, heavy tapestries, novelties, and other fabrics the produc- tion of which requires a great amount of hand labor, are the only branches that fit into Mr. Cheney's characteriza- tion of the industry as a whole. It is because these pro- ducts are not suited to American conditions of manufac- ture, and can never hope to be made here as cheaply as abroad, that their production ought not to be artificially stimulated. A common contention among manufacturers is that home competition has made prices lower than if we had been obliged to depend on foreign products alone. There may be some truth in this, though perhaps not in the sense that the manufacturers intend. In so far as domestic prices are lower than those in Europe, the statement is undeniably true. It might also be true in another sense. If there were no domestic industry, and the American demand were greater than foreign producers of silks could supply, prices both here and abroad would be higher. There is little doubt, however, that if there had never been any domestic manufacture French and German and English establishments would now be in a position to supply the American market. If the statement is in- tended to mean that prices would be kept at artificial levels by European producers, in the absence of domestic com- petition (which is the only interpretation that would justify continued support of an industry that can never hope to compete on equal terms with the foreigner), it is easily proved to be without foundation. The keen rivalry 170 American Economic Association [786 of French, German, and English manufacturers keeps prices at their lowest levels in all markets. A combina- tion to raise prices between such widely scattered concerns would be impossible; if at all effective, it would have to include Asia as well as Europe. A case analagous to the one supposed is found in our imports of raw silk, amount- ing now to over $70,000,000 annually.^ Here, apparently, is a splendid opportunity for the foreigner to put up prices. Yet no one will maintain that we pay more for raw silk because there is no domestic competition, or that prices here are higher, by more than transportation charges, than those in Europe. Many manufacturers, in speaking of the high wages paid in this country, stoutly assert that they are due to protection, and maintain that if the tariff were removed wages in the silk industry would be lowered to the level of those paid abroad. Surely it is late in the day to have to insist that high wages in general are not due to gen- erosity on the part of manufacturers, but to the productive power of the laborers themselves. The silk weaver would not accept a decrease in his wages from $12 to $5 per week, because he can make $12 worth of steel or of shoes or of typewriters in a week, and receive that much pay for his labor. In the woolen industry he really can make only about $6 worth of cloth, and the consumer is taxed enough more than that to make up current wages to him and profits to the manufacturer. In the silk lace industry he makes laces that sell for $800,000 annually, but which are worth only about $500,000 in the world market.* The consumer is taxed $300,000 a year to keep the manufac- ture alive. If the lace makers were employed on some 'Semi-Ann. Rev. Silk Trade, August, 1908. * As the lace industry is on the decline, though protected by a duty of 60%, we may assume that domestic laces sell for the full amount of the foreign price plus the duty. $500,000 + 60% = $800,000. 787] The Silk Industry and the Tariff 171 of the cotton goods we export, their product would be worth $800,000 or more, and the country would be richer by $300,000 a year on account of the change. While this is true of lace and some other fabrics, in most branches of the silk industry, as we have seen, the laborer is worthy of his hire ; his product is worth, in the world market, the $12 a week which he receives. The general productive power of the laborer, which regulates his wages, cannot be impaired by removing a tariff duty. If there are difficulties in the way of getting consistent conclusions from manufacturers, the case is not inuch different when we apply to the silk importers. Though conservative in their public utterances for fear of dam- aging their case, in private their views on the present tariff on silks are very highly colored. Of real value, however, is their knowledge of the kinds of fabrics that continue to be imported, and those that are at present excluded, under the present protective regime. The opinion seems general among importers that very few things which compete directly with American silks are now sent to this country. More than that, many of them maintain that, while importations would undoubtedly increase if the tariff were removed, only a few branches of the domestic industry would be affected thereby. Their contention is that American and European silks are^two- entirely different, distinct, and separate products, used for different purposes and supplying different demands. Foreign silk fabrics they divide into two classes : the very cheap hand loom products, already described, and the more expensive silks, whether made by hand or by ma- chine. The American article comes between these two, and supplies a demand which neither of the foreign varieties could satisfy. Twenty or thirty years ago, it is said, silk dresses were a sort of government bond in a 172 American Economic Association [788 lady's wardrobe, and when bought were intended to return an unfaihng interest in rustHng splendor for sev- eral seasons. That demand was satisfied, and so far as it now exists, is still satisfied by European silks of the better variety. But times have changed. The debutante or the society matron must have several silk dresses a year, in no one of which does she dare to appear more than a few times. So long as her gown looks well during the period she has use for it, the society woman is not curious as to its lasting qualities after she has discarded it. The demand for goods of this kind is satisfied by American silks. An importer showed the writer two pieces of silk, one of European make, and the other American. To the inexperienced eye there was very little difference between the two. Holding up the foreign made article the im- porter said, "This piece sells for twice the price of the other; if there were no tariff it would sell for about half as much again; but there is no demand for it. It will wear twice as long as this American sample, and for some purposes it might be considered twice as valuable, but there are very few purchasers who would pay more for one than for the other. If the tariff were taken off, we should sell more of the European article on account of the lower price we could make on it, which would be a good thing for us; but it would not encroach on the market for the American product. They are two dif- ferent things, like coal and kindling wood; one is good for certain purposes, the other is useful in other fields: Europe makes one, we make the other." Another importer, speaking on the same subject, de- clared that Germany and France could not make the goods most largely in demand in the American market and sell them at American prices. Poorer goods, made of cheap fibres, they can put on the market at very low prices, 789] The Silk Industry and the Tariff 173 but the inferiority of these articles is obvious to the most unpracticed eye. Better goods than ours, made of good fibres on slow-moving machines or hand looms, are made abroad, but these cannot be sold as cheaply as domestic silks. Fabrics of good appearance and moderate price, such as are made here, cannot be produced abroad. The strain of rapid weaving impairs the wearing qualities but cheapens the cost of production of the American article, without injury, however, to its appearance. These statements, and the conclusions to be drawn from them, are more or less substantiated by those who have had experience in purchasing silks for retail distribution. The silk buyers of the great retail stores are more in- terested in fashion changes and price quotations than in tarifif questions or the dependence of the domestic industry on protection; but their acquaintance with market con- _^ditions and demands of consumers is of value. They agree that the demand for foreign silks of the better grades is comparatively limited. Where heavy tapestries, curtains, altar cloths, and similar things are wanted, Euro- pean fabrics are favored. Women of peculiar or eccentric taste, who want to wear "something different" and can afford to pay for it, will often prefer the foreign silk because of its unique pattern. Fabrics desired for un- usual purposes, such as state dresses, theatricals, house decorations, and "novelties" of various kinds, are sup- plied as a rule from European stocks. Nevertheless, by far the greater part of the American demand is for American goods, for fabrics that will answer the average purpose and can be bought for a moderate price. Silk textures that will satisfy this general class of customers are very seldom seen in the Paris or London shops. Perhaps it may not be out of place to close this chapter with a few personal observations and experiences. During 174 American Economic Association [790 a month spent in Paris in the summer of 1908 the writer visited most of the shops where silk fabrics are on sale. He was amazed, as every visitor to the French capital must be, by the wonderful exhibitions of high grade silks of every variety of pattern, weave, and workmanship. Cheap silks, "pongees," "chappes," "tussahs," and others of inferior grade, were also there in abundance. But good looking fabrics of moderate price were conspicuous by their absence. In the Bon Marche the writer bought a silk ceinture for which he paid 25 francs; he was later shown an apparently exact duplicate of American make at Marshall Field's in Chicago that retailed at $4.50. Many will recall similar experiences. A homely case that will make the situation clear to everybody is the matter of neckties. There is an abundance of silk ties in Paris that retail at a franc or less. Made of spun or "waste" silk, they are not particularly attractive; no more so than our cheap half -cotton ties. The cravats that sell for about fr. 2.50 are not very much in evi- dence; such as are displayed are distinctly inferior in taste and appearance to the common 50 cent American necktie. The "stylish," wearable cravats begin at five or six francs. Here one enters Beau Brummel's para- dise : there are no better scarfs made anywhere. A few of them are seen in this country, retailing from $2 up. It is easy to conceive that if the tariff were entirely re- moved on these articles the market for the domestic pro- duct would be very little affected. The inferior ties would sell for about a quarter of a dollar, with few purchasers ; the medium grades would have no chance at all of com- peting with our ordinary 50 cent neckties; the better grades, which compete with nothing made in this country, would sell for upwards of $1.50. There is no need to attempt to make any general de- 791 ] The Silk Industry and the Tariff 175 ductions from the opinions of tiiose on the field. Utter- ances so diverse cannot well be harmonized. If this resume, imperfect as it is, has thrown any light on the position of American silks in reference to foreign com- petition and the market demands, it has served its purpose. 19. CONCLUSION. The conclusions to be derived from our study of the American silk industry have been for the most part already indicated. We have before us an illustration, and a remarkable one, of the principle of protection to young industries. Sheltered from foreign competition by heavy import duties, the manufacture of silk fabrics has increased from almost nothing to proportions that make the industry in this country in size of output the first in the world. ^ The results attained are the more extraordinary from the fact that the difficulties in the way seemed at first sight insuperable. We did not make the raw material, and such supplies as were obtained from abroad were not only inadequate as to amount, but were for many years dis- couragingly unsuited to conditions of successful produc- tion here. The raw silk cost our manufacturers more by at least the transportation charges here, and we had none of the organization that centuries of successful manufacture had given to the European. These were, however, faults that might be cured. A difficulty that ' In 1900 France and the United States stood very nearly equal, France being slightly in the lead. In 1905 the domestic production stood at $132,000,000 (gross) and that of France at $129,000,000 Though price comparisons are not possible, and statistics for the lasl few years are not available, the United States is undoubtedly now in the lead. Our consumption of raw silk is now much greater than that of any other nation. Cf. Allen, Silk Ind. of World, p. 63, also N. Y. Times for Jan. 10, 1909, letter of Mr. Charles Cheney, of South Manchester, Massachusetts, to Mr. Andrew Carnegie. 176 American Economic Association [792 could not be remedied was the great difference in the wages received by laborers here and those abroad. In addition, the machinery was not made in this country, and had all to be imported. These are only a few of the obstacles that seemed to block the way to a successful manufacture of silk fabrics in the United States. One by one the difficulties have been cleared away or their influence obviated. The struggle for more satis- factory supplies of raw silk extended over nearly half a century. Machinery had to be invented and sent abroad to secure the better reeling of the yarns. It is only re- cently, as we have seen, that commercial agreements with eastern countries have at last secured a supply of raw silk that is suitable to conditions of production in America. Through nearly all this period, however, the raw ma- terial for weaving cost the American manufacturer more than it cost his foreign rival. Less than a score of years ago began a remarkable development in the throwing industry, the invention of machinery that resulted finally in lowering the cost of preparing the raw silk for weaving to a point below that prevailing in any other country. The disadvantage of higher cost of raw material has at least disappeared. The higher wages paid in this country have presented a problem more difficult than all others to solve. As we have seen, in the case of certain fabrics, no solution has as yet been arrived at. The only hope lay in developing machinery and mechanical contrivances to such a point that the higher cost for labor would be offset by a cor- respondingly greater efficiency on the part of the opera- tive. We have seen to what extent this has taken place. The first step was the making and perfecting of machines of our own. This done, attention was turned toward adapting them to the high priced labor conditions of this 793] The Silk Industry and the Tariff lyy country. Beginning with the throwing industry, and extending to ribbons, and within the last ten years to broad goods, mechanical progress has resulted in steadily increasing the output per unit of labor. The machines have run more rapidly and have been made more auto- matic in their operation. The results have been indicated. The production of most varieties of silk goods in America has increased by leaps and bounds, and prices have gone steadily down in a period when the price levels of the world have been steadily rising.^ In view of all these facts, it must be concluded that the policy of protecting young industries has been justified in the case of the American silk industry. The "young industries" argument for protection is different from any other in favor of high duties. The principle of protec- tion to young industries assumes that new manufactures are not always able to hold their own against the older, long established manufactures of other countries : that if sheltered from foreign competition during the formative period of their growth they will eventually be able to forego artificial safeguarding. Only when an industry so protected has reached a position of independence can the principle be said to be justified. A considerable part of all the silk industry would prob- ably continue to prosper were the tariff removed entirely. Our exports of silk manufactures have more than doubled in the last ten years.* Most of the difficulties that have stood in the way of successful and independent manu- facture have been removed. Some few goods, already 'Besides references in text, see U. S. Census Bull, No. 74, pp. I78ff. Average value of American broad silks, 1900 — 45.6c. yd. Average value of American broad silks, 1905 — 43-Sc- yd. 'Supra, p. 117. 1/8 American Economic Association [794 enumerated, the production of which is not suitable to conditions in this country, form exceptions to the fore- going conclusions. Their continued production involves an economic loss. The application of strict economic doctrine to the silk schedule would involve the removal altogether of duties on fabrics of the latter class. It is recognized that such a course, though highly beneficial from the standpoint of national economy, could scarcely avoid individual loss and a serious disturbance of vested interests. The issue here is that of public against private interest. Yet whatever may be the trend of future legis- lation on this and other disputed points, it is apparent that the tariff of the past has in the silk industry reared itself a proud monument; and whatever the anomalies and in- consistencies in the individual schedules, more praise than blame attaches to the ultimate results achieved. BIBLIOGRAPHY. The abbreviations generally used in the footnotes for sources frequently referred to will be found in paren- theses following the titles. Allen, Franklin. The American Silk Industry, Chron- ologically Arranged. New York, 1876. (Allen, Chronology). Silk Industry of the World. Written for the Ency- clopedia Americana : issued in pamphlet form. New York, 1904. (Allen, Silk Ind. of World). Annual Reports of the Commissioner of Commerce and Navigation. Washington, 1873 — . {Arm. Rept. Com. and Nav.) Annual Reports of the Commissioner of Labor. Wash- ington, 1884 — . (Ann. Rept. Com. Labor.) Annual Reports of the Silk Association of America. New York, 1873 — . (Ann. Rept. Silk Assn.) Bell, T. F Jacquard Weaving and Designing, Boston, 1900. Congressional Record, i860 — . (Cong. Record.) Cunningham, W. Growth of English Industry and Commerce. Fourth Edition, University Press, Cam- bridge, 1905-07. Evans, C. H. Import Duties from 1867 to 1883. Gov- ernment Printing Office, 1884. Fifth Financial and Economic Annual of Japan. Pub- lished at Tokio by the Japanese Government, 1905. (Fifth Fin. and Ec. Anin. of Japan.) Fox, T. W. The Mechanism of Weaving. London, 1894. Godart, Justin. L'ouvier en soie. Lyon, 1899. (Go- dart.) Industrial Reports of Pennsylvania. Philadelphia^ 1885 — . i8o American Economic Association [796 International Bureau of Commerce and Industry of the South American States. Washington, 1878. Lilly, A. T. The Silk Industry of the United States from 1766 to 1874. New York, 1875. Metcalf, M. a. Knit Goods Manufacturing. Boston, 1906. Parisset^ a. Histoire de la fahrique lyonaise, Lyon, 1901. PossELT, F. A. Textile Machinery. Boston, 1900. The Jacquard Machine. Boston, 1903. PoHLMNANN^ RoBERT, WirtschaftspoUtik der Floren- tiner Renaissance. Leipzig, 1878. Rayner, Hollins. Silk throwing and Waste Silk Spin- ning. Boston, 1906. Reports of the Bureau of Statistics, of the Department of Commerce and Labor. Washington, 1900 — . {Rept. Bur. of Stat.) Reports of the Department of Agriculture. Washington, 1889 — . {Rept. Dept. Agric.) Reports of the Industrial Commission. Washington. 1900. {Rept. Ind. Com.) Report of the Tariff Commission, 1882. House Mis. Doc, No. 6. 47th Congress, 2d Session. {Rept. Tariff Com., 1882.) Report on Reduction of the Tariff, Taxation, and Collec- tion of the Revenue, 1885-86. House Report No. 1620. 49th Congress, ist Session. {Rept. Rev. Tariff, 1885-86.) RoNDOT, Natalie. L'industrie de la soie en France. Lyon, 1894. Schmoller, Gustav, and Hintze, Otto. Die Preus- sische Seidenindustrie im 18 Yahrhundert und ihre Begrundung durch Friedrich den Grossen. Berlin, 1892. 797] Bibliography i8i Semi-Annual Review of the American Silk Trade. New York, 1900 — . Tariff Documents, 1888. House Report No. 1496. 50th Congress, 1st Session. Tariff Hearings before the Committee on Ways and Means, 1893. House Doc. 213. 53d Congress, ist Session. (Tariff Hearings, 1893.) Tariff Hearings before the Committee on Ways and Means, 1896-97. House Doc. No .338. 5th Con- gress, 2d Session. (Tariff Hearings, 1896-97.) Tariff Hearings before the Committee on Ways and Means, 1909-10. First Print, Numbers 21 to 57, 6ist Congress, ist Session. (Tariff Hearings 1908- 09.) Tariff Revision. Hearings before the Committee on Ways and Means, 1889-90. House Mis. Doc. No. 176. 51st Congress, ist Session. (Tariff Rev. Hearings, 1889-90.) Tariff Testimony taken by the Finance Committee of the United States Senate, 1888-89. Senate Report No. 2332. 50th Congress, ist Session. Taussig, F. W. The Tariff History of the United States. Fifth Edition. New York and London, 1903. The New York Journal of Commerce for February 27, 1909. The New York Times for January 10, 1909. Letter of Mr. Charles Cheney to Mr. Andrew Carnegie. The Textile American. Boston, 1890 — . United States Census of i860. United States Census of 1870. United States Census of 1880. Report on the Silk Manu- factures of the United States. (U. S. Census 1880, SilkMfrs.) United States Census of 1890. Report on Manufacturing 1 82 American Economic Association [798 Industries, Part III. (U. S. Census 1890. Manuf. Ind. Pt. III.) United States Census of 1900. Report on Manufactures, Volume IX. (U. S. Census 1900, Vol. IX.) United States Census Bulletin, Number 74, 1905. (U. S. Census Bull., No. 74.) United States Census Bulletin, Number 348, 1890. (U. S. Census Bull., No. 348.) United States Consular Trade Reports, 1880 — . (U. S. Cons. Trade Rep.) United States Special Consular Reports, 1890 — . (U. S. Special Cons. Rep.) Wyckoff, W. C. The Silk Goods of America. New York, 1879. (Wyckoff, Silk Goods.) Silk Manufacture in the United States. A reprint of the Report on Silk Manufactures in the Census of 1880. New York, 1883. (Wyckofif, Silk Manuf.) American Silk Manufactures. New York, 1886. (Wyckofif, Am,. Silk Manuf.) Publications of the American Economic Association FIRST SERIES Volume I, 1886 No. Price in paper I . Report of Organization of the American Economic Asso- ciation. Pp. 46. $ ,50 2-3. *Relation of the Modem Municipality to the Gas Supply. By E. J. James. Pp. 66. .75 4. Co-operation in a Western City. By Albert Shaw. Pp. 106. .75 5. •Co-operation in New England. By Edward W. Bemis. Pp. 136. .75 6. "Relation of the State to Industrial Action. By H. C. Adams. Pp. 85. .75 Volume II, 1887 1 . Three Phases of Co-operation in the West. By Amos G. Warner. Pp. 119. .75 2. Historical Sketch of the Finances of Pennsylvania. By T. K. Worthington. Pp. 106. .75 3. The Railway Question. By Edmund J. James. Pp. 68. .75 4. Early History of the English Woolen Industry. By W. J. Ashley. Pp. 85. .75 5. Mediaeval Guilds of England. By Edwin R. A. Seligman. Pp. 113- -75 6. Relation of Modern Municipalities to Quasi-Public Works. By H. C. Adams and others. Pp. 87. .75 Volume III, 1888 1 . Statistics in College, by C. D. Wright ; Sociology and Politi- cal Economy, by F. H. Giddings; The Legal-Tender Decisions, by E. J. James. Pp. 80. .75 2. Capital and Its Earnings. ' By John B. Clark. Pp.69. .75 3. The Manual Laboring Class, by F. A. Walker ; Mine La- bor in the Hocking Valley, by E. W. Bemis ; Report of the Second Annu^ Meeting. Pp. 86. .75 4-5. *»Statistics and Economics. By Richmond MayoSmith. Pp. 127. i-oo 6. The Stability of Prices. By Simon N. Patten. Pp. 64. .75 Volume IV, 1889 1. Contributions to the Wages Question: The Theory of Wages by Stuart Wood ; Possibility of a Scientific Law of Wages, by J. B. Clark. Pp. 69. .75 2. Socialism in England. By Sidney Webb. Pp. 73. .75 3. Road Legislation for the American State. By J. W. Jenks. Pp. 83. -75 4. Third Annual Meeting: Report of the Proceedmgs. Pp. 123. , -75 5 Malthus and Ricardo, by S. N. Patten ; The Study of Statistics, by D. R. Dewey ; Analysis m Political Econ- omy by W. W. Folwell. Pp. 69. .75 6 "An Honest Dollar. By E. Benjamin Andrews. Pp. 50. .75 Publications of the American Economic Association Volume V, 1890 1. The Industrial Transition in Japan. By Yeijiro Ono. Pp. 122. i.oo 2. Two Essays on Child-Labor. By W. F. Willoughby and Clare de Graffenried. Pp.150. .75 3-4. Papers on the Canal Question. By E. J. James and L. M. Haupt. Pp. 85. 1.00 5. History of the New York Property Tax. By J. C. Schwab. Pp. 108. 1.00 6. The Educational Value of Political Economy. By S. N. Patten. Pp. 36. .75 Volume VI, 1891 1-2. Fourth Annual Meeting : Reports, Papers, Discussions. i.oo 3. Government Forestry. Papers by Pinchot, Bowers, and Fernow. Pp. 102. .75 4-5. Municipal Ownership of Gas in the U. S. By E. W. Bemis. Pp. 185. 1.00 6. State Railroad Commissions. 3y Frederick C. Clark. Pp. no. .75 Volume VII, 1892 I. *The Silver Situation in the United States. By F. W. Taussig. Pp. T 18. .75 2-3. **Shifting and Incidence of Taxation. By E. R. A. Seligman. Pp. 424. (Revised). 2.00 4-5. Sinking Funds. By Edward A. Ross. Pp. 106. i.oo 6. The Reciprocity Treaty with Canada of 1854. By F. E. Haynes. Pp. 70. .75 Volume VIII, i8g? I. Fifth Annual Meeting: Report of the Proceedings. Pp.130. .75 2-3. Housing of the Poor in American Cities. By M. T. Reynolds. Pp. 132. i.oo 4-5. Public Assistance of the Poor in France. By E. G. Balch. Pp. 180. I.oo 6. First Stages of the Tariff Policy of the U. S. By Wil- liam Hill. Pp. 162. I.oo Volume IX, 1894 Sixth Annual Meeting : Hand-Book and Report. Pp. 130 .50 1-2. ** Progressive Taxation in Theory and Practice. By Ed- win R. A. Seligman. Pp. 222. {See igo8 No- 4). i.oo 3. The Theory of Transportation. By Charles H. Cooley. Pp. 148 .75 4. Sir William Petty. By Wilson Lloyd Bevan. Pp. 102. .75 5-6. Papers on Labor Problems. By J B, Clark, C. D. Wright, D. R. Dewey, A. T. Hadley, and J. G. Brooks. Pp. 94. .75 Volume X, 1895 Seventh Annual Meeting : Hand-Book and Report. Pp. 138. .50 1-3. The Canadian Banking System, 1817-1890. By R. M. Breckenridge. Pp. 478. 1.50 Publications of the American Economic Association 4. PoorLaws of Massachusetts and New York. By John Cum- mings. Pp. 136. .75 5-6. Letters of Ricardo to McCuUoch, 1816-1823. Edited by J. H. Hollander. Pp. 204. (/« Cloth $2.00) T.25 Volume XI, 1896 1-3. Race Traits and Tendencies of the American Negro. By F. L. Hoffman, Pp. 330. {In Cloth $3 00) 1.25 4. Appreciation and Interest. By Irving Fisher. Pp. no. .75 •General Index to Volumes I-XI (1886-1896). .25 (Supplied free to owners of sets upon application to the Secretary.) Any volume in paper, $4.00 ; in cloth, $s.oo for a single volume, $4.00 for each addi tioaal volume ordered at the same time. Vol. XI, in paper, $2.00; in cloth, $2.50. Set of II volumes in cloth, with index, $41.00. •Numbers starred are sold only with the set ; but those double starred can be obtained ia revised edition. For information apply to the Secretary. Note. — During 1896-1899 the Association issued its publications in two series, viz. : the bi-monthly Economic Studies, and the ** new series ** of larger monographs printed at irregular intervals. In igoo it reverted to the policy of issuing its monographs, now called the "third series" of the publications, at quarterly Intervals. ECONOMIC STUDIES Volume I, 1896 Eighth Annual Meeting : Hand Book and Report. Pp.178. .50 1. The Theory of Economic Progress, by J. B. Clark ; The Re- lation of Changes in the Volume of the Currency to Pros- perity. By F. A. Walker. Pp.46. .50 2. The Adjustment of Wages to Efficiency. Three Papers: Gain Sharing, by H. R. Nowne ; The Premium Plan by F. A. Halsey; A Piece-Rate System, by F. W. Taylor. Pp. 83. 5° 3. The Populist Movement. By Frank L. McVey. Yp. 81. .50 4. The Present Monetary Situation. By W. Lexis. Trans- lated by John Cummings. Pp. 72. .70 S-6. The Street Railway Problem in Cleveland. By W. R. Hop- kins. Pp. 94- -55 Volume II, 1897 Ninth Annual Meeting: Hand-Book and Report. Pp. 162. .50 1 Economics and Jurisprudence. By Henry C. Adams. Pp.48. .50 2 The Saloon Question in Chicago. By John E. George. Pp. 62. .50 ^ The General Property Taxin Californi.i. By Carl C. Plehn. Pp.88. „ -5° 4 Area and Population of the U. S. at Eleventh Census. By W. F. Willcox. Pp. 60. -5° c A Discussion Concerning the Currencies of the British Plan- tations in America, etc. By William Douglass. Edited bv C. J. Bullock. Pp. 228. -SO 6 Density and Distribution of Population in U. S. at Eleventh Census By. W. F. Willcox. Pp. 79. 5° Publications of the American Economic Association Volume III, 1898 Tenth Annual Meeting: Hand-Book and Report. Pp. 136. .50 1. Government by Injunction. By William H. Dunbar. Pp.44. .50 2. Economic Aspects of Railroad Receiverships. By H.H Swain. Pp. 1 18. .50 3. The Ohio Tax Inquisitor Law. By T. N. Carver. Pp. 50. .50 4. The American Federation of Labor. By Morton A. Aid- rich. Pp. 54. .50 5. Housing of the Working People in Yonkers. By E. L. Bogart. Pp. 82. .50 6. The State Purchase of Railways in Switzerland. By Horace Michelle; translated by John Cummings. Pp. 72. .50 Volume IV, 1899 Eleventh Annual Meeting: Hand-Book and Report. Pp.126 .50 1. I. Economics and Politics. By A. T. Hadley. II. Report on Currency Reform. III. Report on the Twelfth Census. Pp. 70. .50 2. Personal Competition. By Charles H. Cooley. Pp. 104. .50 3. Economics as a School Study. By Frederick R. Clow. Pp. 72. .50 4-5. The English Income Tax. By J. A. Hill. Pp. 162. i.oo 6 (and last). *The Effects of Recent Changes in Monetary Standards upon the Distribution of Wealth. By Francis S. Kinder. Pp. 91. .50 Price of the Economic Studies I2.50 per volume in paper, $3.00 in cloth. The set of four volumes, in cloth, g 10.00. NEW SERIES The Cotton Industry. By M. B. Hammond. Pp. 382. {In cloth $3. 00.) I.JO Scope and Method of the Twelfth Census. Critical dis- cussion by over twenty statistical experts. Pp. 625. {In cloth $2 JO.) 2.00 Both volumes, in cloth, $4.00. THIRD SERIES Volume I, 1900 1. Twelfth Annual Meeting: Papers on Trusts (3) ; Railroad problem (3) ; Economic theory (3); Public finance (2); Consumers' league; Twelfth census. Pp. 186. i.oo 2. The End of Villainage in England. ByT. W.Page. Pp.99, i.oo 3. Essays in Colonial Finance. By members of the Associa- tion. Pp. 303. 1.50 4. Currency and Banking in the Province of Massachusetts Bay. By A. McF. Davis. Part I : Currency. Pp. 464 -f- ig ohotogravure plates. {In cloth $2.00). 1.75 #/ ^ ^^M^ ^ ^ / ^••n / , *• '/ A. Jl