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retaliate by an increase of duty on American exports, the gain from a duty on coffee would be infinitesimal; it might be more than offset. Mr. FORDNEY. We consume 1,200,000,000 pounds of coffee per annum and we consume 1,000,000,000 pounds of tea per annum. At 5 cents a pound on coffee and 5 cents a pound on tea we would get a revenue of from six to seven millions of dollars a year, but a tax upon tea or coffee-which is a tax on something we do not produceis a direct tax upon the people, is it not?

Mr. MARVIN. It is a direct tax.

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Mr. FORDNEY. It is equivalent to a consumption tax.

Mr. MARVIN, Yes, sir.

Mr. FORDNEY. Mr. Marvin, do you recommend a consumption tax on anything?

Mr. MARVIN. I do not, as a general policy, but in times of emergency, when so much is at stake, as it is to-day, it may become necessary to obtain revenue from sources that would not be approved under other conditions and in other times.

Mr. FORDNEY. There is no question, is there, that a consumption tax would be a direct tax upon the consumer?

Mr. MARVIN. It would be a direct tax upon the consumer.

Mr. STERLING. Mr. Marvin, you base your suggestions on the condition in which we find the country at the present time, do you not? Mr. MARVIN. Yes, sir.

Mr. STERLING. You abandon your theory of protection for the sake of revenue during the war?

Mr. MARVIN. I have not altogether: no. Personally I think that if we could devise a protective tariff that would, perhaps, decrease in some degree certain importations and, perhaps, decrease the amount of revenue derived from those importations, that we would make those things in this country, and that through an income tax. and other measures of that kind, a larger amount of revenue would be derived, and that the prosperity from that amount of increased production would be particularly beneficial to the country.

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Mr. STERLING. I assume that in time of peace, in normal times, you were imposing a tariff duty, you would impose it, first, with a view of protecting American industries, would you not?

Mr. MARVIN. Personally, I would. I think it is more important in normal times than revenue, because under a protective tariff, in normal times, we have always had ample revenue; in fact, we have piled up big surpluses.

Mr. STERLING. In these times, when revenue is the main purpose and main need of the Government, in imposing a tariff duty I take it that you would not frame a tariff duty strictly with the view of protection but with the view of raising the most revenue for the Treasury?

Mr. MARVIN. In this emergency I think tariff legislation should be framed to raise the most revenue.

Mr. STERLING. Do you not think that a consumption tax, during these times, would be a very good way of spreading the burden throughout all the country?

Mr. MARVIN. Yes, sir; and Senator Underwood said it would distribute the burden.

Mr. STERLING. And an excess-profits tax and an income tax, then, would impose a still heavier burden on those who were best able to pay them?

Mr. MARVIN. Yes, sir.

Mr. STERLING. You would not favor a plan whereby all taxes were to be raised by an income tax and excess-] s-profits tax and leave some of the people without any portion of the burden at all, would you? Mr. MARVIN. I should think that the duty to support and maintain. the Government is the main duty; it bears upon every citizen, and to the amount of their ability they should carry that burden.

Mr. STERLING. They should pay in proportion to their ability to pay?

Mr. MARVIN. Yes, sir.

Mr. STERLING. You said, in your remarks, I think, that under the Wilson-Gorman bill the rates there imposed would have produced $600.000.000 last year on imports, if those rates had been in force. Mr. MARVIN. Those rates, applied to the same amount of importations, would have produced about $618.000.000; that is, at the rate of 21 per cent instead of at the rate of 7 per cent.

Mr. STERLING. Did you compute what would have been produced last year on imports if the Payne-Aldrich tariff rates had been in

force?

Mr. MARVIN. Well, it would have been a trifle less than that. The rate in the Payne-Aldrich bill was 18.58 instead of 21 and some hundredths, as in the Wilson-Gorman bill; so that would make only a slight difference and bring it down under $600,000,000, rather than over that amount.

Mr. STERLING. I will ask you whether an ad valomem duty will produce more than a specific duty on imports? I suppose that would depend altogether on the rates, would it not?

Mr. MARVIN. Well, it would depend on the rates, of course, and on the values. With inflated values there would be a larger return than there would be under normal conditions.

Mr. STERLING. You could produce more revenue by one than the other, providing you fixed the rates high enough to do it, could you

not?

Mr. MARVIN. That is the idea exactly.

Mr. STERLING. The character of the tariff has nothing to do with the amount of revenue obtained, I take it, whether it be ad valorem or specific.

Mr. MARVIN. Well, in theory that would seem to be so, but in practice it does not work out that way, because of the opportunity there is under the ad valorem system to misrepresent prices-the question has been so thoroughly gone over and there have been so many arguments pro and con.

Mr. STERLING. If they should misrepresent the prices, then the raising of the rates a little higher to offset the misrepresentation would cure the evil, would it not?

Mr. MARVIN. But you know how difficult it is to raise the rates. Mr. GARNER. I am a little confused about two answers you made to Mr. Sterling. I understood you to say that you would levy the duties at the customhouse, so as to increase the production in this.

country, and, therefore, increase the revenues of the Government through an excess-profits and income tax.

Mr. MARVIN. I think it would result in that way. If we had a large production, we would have a larger revenue from taxes on that production.

Mr. GARNER. You would increase the collections at the customhouse through an excess-profits and income tax?

Mr. MARVIN. I hope you will take my answers to these questions in connection with the context in which they are given. I was asked whether I though a protective tariff would decrease the receipts of the customhouse. I said it might decrease certain importations, and in that sense decrease the amount collected on those importations, but that the protection afforded by those rates would stimulate the production of those goods in this country and give us a larger income on which a direct tax could be levied.

Mr. GARNER. If you were levying this tax-if you were going to prepare the schedules-would that be the theory on which you would work in fixing the rates?

Mr. MARVIN. I am a thorough believer and an honest believer in the advantage of the protective tariff policy, and if I were drafting a revenue law I would consider the advantage to the country of a protective tariff rate, because I believe it is more to our advantage to produce than it is to import.

Mr. GARNER. Perhaps I can get at your idea in this way: If you were going to make it your business to levy the rate at the customhouse, would you levy it on raw materials?

Mr. MARVIN. On such raw materials as we could raise in this country to advantage, because I believe we ought to be self-sustaining as far as possible.

Mr. GARNER. Would you levy it on the raw materials that a manufacturer had to go out and buy during this war?

Mr. MARVIN. I think, Mr. Garner, you asked me about the fixing of the price on wool. I do not think that a protective tariff on such raw materials would stimulate production where the price is limited to a certain figure, so that we can not apply a theory directly to particular items without knowing the conditions surrounding those items, taking into consideration the correlative facts.

Mr. GARNER. In other words, in making up this revenue at the customhouse, you would have to consider all of the approximately 4,000 items that are on the list?

Mr. MARVIN. Yes, sir; and I think in this emergency it is not so much a question of our economic condition as it is the question of the need of the Government, and that is the prime consideration.

Mr. COLLIER. Mr. Marvin, there is a question I wanted to ask you about the tariff on wool, when I yielded to Mr. Fordney. I understood you to say that you believe a tariff on wool would stimulate the production of wool in this country. The question I want to ask you is this, without pretending to go into any extended tariff discussion: How do you explain the fact that at the time of the enactment of the Dingley law, or about that time, we had about 63,000,000 sheep in this country, and from that time up to 1912, during the period when we had the highest protective tariff on wool perhaps in the history of the country the sheep decreased from 63,000,000

to 52,000,000, and at the same time the value of other farm animals increased from $3,000,000,000 to $5,000,000,000, an increase during that time of over $2,000,000,000 in value of other farm animals, whereas in the same time there was a decrease of nearly 12,000,000 in the number of sheep, and in the State of Texas-Mr. Garner has asked you several questions along this line-about the time of the enactment of the Dingley law there were 2,500,000 sheep in Texas, and in 1912 they had decreased to about 1,400,000, a decrease in the value of sheep of about $7,000,000; and at the same time other farm animals in the State of Texas increased in value something over $80.000.000. Now, if during the period of the highest protection on wool there was a decrease in the production of sheep in this country, how do you figure it out now that with an increased price on all meat products, and the Government itself wanting all the wool it can get, a tariff on wool would stimulate and increase the production of wool in this country?

Mr. MARVIN. The theory of a tariff on wool is that it will make the wool industry sufficiently profitable to warrant a man engaging in that industry. The figures you have quoted show that men can engage in other lines of agricultural industry either to greater. profit or to greater personal comfort. It would indicate, sir, that the stimulation had not been sufficient; that the inducement had not been enough; and if you will compare other tariff periods you will find that while there was a decline under what you call the high protective tariff rates on wool, there was a much more rapid decline as those rates of duties and that degree of protection was reduced, showing

Mr. COLLIER (interposing). You do not mean to say, Mr. Marvin, that there was a higher tariff on other farm animals than there was on sheep and wool, do you, during those 12 years which showed a great decrease in the number of sheep and in the production of wool and at the same time a tremendous increase on all the other farm animals which did not have anything like such a high tariff?

Mr. MOORE. Mr. Marvin, can you not find a better answer to the question of the gentleman from Mississippi in the fact that the gentleman from Texas, Mr. Garner, succeeded in obtaining through the Underwood tariff a protection of about 150 per cent, in one form or another, to encourage the development and stimulation of the Angora goat in Texas?

Mr. MARVIN. Well, it was a very wise move on the gentleman's part. I think.

Mr. MOORE. I want to ask you while you are on the stand, because you come from a large industrial country which pays enormous taxes into the Treasury, and being interested, and those whom you represent in the textile industry, whether if we put a tax on raw wool. as some gentlemen have seemed to indicate we should do, we should not also put a tax on raw cotton?

Mr. MARVIN. You mean a custom tax?

Mr. MOORE. No; an internal tax-a revenue tax-a war tax. Judge Hull raised the question as to the propriety of putting a tax on raw wool which enters into your manufacture of woolen goods, and I am asking about the propriety of putting a tax on raw cotton, which also enters into your manufacture of cotton goods.

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I am asking whether if we should put a tax on raw wool we should not also put a tax on raw cotton which pays no tax at all?

Mr. HULL. May I interrupt

Mr. MOORE. I think it would be better to let the witness answer, because cotton is going to be just as interesting a subject as wool.

Mr. HULL. But I no not want to be put in an improper attitude. We are discussing customhouse taxation, and to take up internal taxation is another matter, which I will be glad to go into

Mr. MOORE (interposing). Then, perhaps, I did misunderstand the gentleman, because the illustration would be very unfair since much more wool is raised in foreign countries than in the United States, whereas the United States has a complete monopoly in the raising of raw cotton; but I wanted to ask the gentleman who comes from an industrial center, where they fabricate both raw wool and raw cotton, whether, if we should put a tax on raw wool or on raw wool products we should not also put a tax on raw cotton. Let us be fair about it and go right down the line.

Mr. MARVIN. I think so. I am not in favor of a policy that will make sheep of one and goat of another.

Mr.. MOORE. When we have got to raise $24,000,000,000 a year to pay our own expenses and the Treasury demands it, and when we have got to go into consumption taxes as you have already indicated in the opening of your address, quoting Senator Underwood on the subject also, the question is whether or not we should proceed to tax all along the line and include cotton as well as wool, and cotton products as well as woolen products.

Mr. MARVIN. As the gentleman said, the wider and the fairer the distribution of the taxes, the fairer and wiser is the system.

Mr. GARNER. Do you advocate an internal consumption tax?

Mr. MARVIN. I have not advocated that. I am here merely for the purpose of advocating increased customs duties.

Mr. MOORE. Do you not think that cotton has become such an immense necessity during war times, and of course, is a war necessity, that it might prove to be a very fruitful source of revenue, if we should impose some tax upon it and make it bear a part of the burden which the people of the United States have to bear to carry on this war?

Mr. MARVIN, Undoubtedly, much revenue could be derived from that source if thought wise and fair.

Mr. MOORE. Do you think if we imposed a tax on raw cotton it would seriously impair our ability to manufacture raw cotton into fabricated materials and also to pay excess profit taxes and other things to be derived from the manufacture of cotton products?

Mr. MARVIN, Oh, according to the present theory if a tax is put on the raw cotton, of course, the price would be fixed too.

Mr. MOORE, So long as it applies to other commodities, copper, iron steel, and things of that kind, why should it not apply to cotton, wool, grain, or any other substance that enters into the prosecution of the war?

Mr. MARVIN. There is no reason why it should not.

Mr. GREEN, Mr. Marvin, your answer to the gentleman from Mississippi with reference to the wool situation indicated a very clear insight into the course of trade and the natural trend of prices. Being

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