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Senator Underwood, who presided with such courtesy and fairness in the hearings in this room in 1913, in a recent interview is quoted as saying:

That in order to carry the great load we must all get ready for a wider and wider distribution of taxes. In many ways this war is rapidly being brought closer and closer home to us, and there will be a more widespread sharing of the burden of taxation. This greater distribution, when found necessary, can be brought about through consumption taxes on necessities. This is a field that we have scarcely touched, and we will not go far into it, of course, until pressed to do so by necessity.

The Senator also referred to the opportunity presented by stamp taxes, a form of taxation to which we have not "resorted to to any considerable extent."

There is another source of revenue, another "field that we have scarcely touched." I refer to revenue derived from customs duties. With importations the largest in value in our history the percentage of revenue derived is the smallest in our history. In 1850 and for several years thereafter the average ad valorem rate of duty on all imports was about 23 per cent. In 1861 it had dropped to 14.21 per cent, but we fought the Civil War from 1862 to 1865 with an average customs duty of 31 per cent, and during the prosperous reconstruction period, when our industries showed remarkable growth and expansion, the average rate of duty was 44 per cent. From 1872 to 1890 it averaged about 30 per cent; then, during the period of the Gorman-Wilson law, about 21 per cent; during the Dingley law, about 28 per cent; and for the last year of the Payne-Aldrich law, 18.58 per cent.

But the average ad valorem rate on all imports for the nine months ending March, 1918, was only 6.21 per cent.

The following table shows the total imports, the per cent of dutyfree imports, the duties collected, and the average ad valorem rate of duty for the calendar years 1912 to 1917, and for nine months of the fiscal year 1918:

United States imports, duties collected, and average rate of duty, 1912–18.

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The following table shows the amount of revenue derived from taxation in the United Kingdom for the fiscal years ending March 31, 1914-1918. It will be seen that the amount of revenue derived from customs duties has doubled since the beginning of the war, whereas our revenue from customs is less than half of what it was in 1912, in spite of the need of all possible revenue from every legiti

mate source.

United Kingdom revenue from taxation.

[Prepared by the Bureau of Foreign and Domestic Commerce, Department of Commerce.]
[Amounts in thousands of pounds sterling.]

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There is, then, ample warrant and justice for an argument for increased revenue from customs duties. Instead of $206,000,000 of revenue from customs duties for the calendar year 1917, the revenue from those imports would have been $618,000,000 if even the low average rate of the Gorman-Wilson law had been applied.

It may be well to state in this connection that the United Kingdom raised in customs duties for the fiscal year 1917-18, £71,261,000, or approximately $350,000,000. We raised in customs duties for the calendar year 1917, $206,000,000. England raised in customs duties for that year nearly $8 per capita. We raised about $2 per capita. It is estimated that for the current fiscal year over $100,000,000 will be added to the receipts from customs duties in the United Kingdom, making the receipts from customs duties for the fiscal year ending March 31, 1919, $460,000,000, or $10.25 per capita. If our revenue from customs duties yielded an equal amount per capita the receipts from customs in this country would be $1,050,000,000. But instead of a possible revenue from customs of $1,050,000,000, our receipts from customs for the fiscal year ending June 30, 1918, based upon the yield for nine months ending March, 1918, will be only $168,000,000, or $1.60 per capita.

It is evident that England's customs tariff is a tariff for revenue. It is equally evident that ours is not.

The total receipts of the United Kingdom from all taxes for the fiscal year 1917-18 will be £613,000,000, or about $3,000,000,000. Thus England raises from customs duties about 11 per cent of its total revenue derived from taxes. Our revenue for the current year will be about $4,200,000,000. Our receipts from customs duties will be about $168,000,000, or only 4 per cent of the total amount of revenue derived from taxation.

The Constitution empowers Congress "to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States," and from the days of our first Congress it has been customary to raise a very considerable portion of the Federal revenue from duties on imports. In fact, customs duties as an appropriate and effective

source of national revenue were so highly regarded in the early days of the Republic that President Jefferson in his message to Congress December 5, 1801, said that

There is reasonable ground for confidence that we may now safely dispense with all the internal taxes and that the remaining sources of revenue will be sufficient to provide for the support of the Government, to pay the interest of the public debts, and to discharge the principals within shorter periods than the laws or the general expectation has contemplated.

From the days of Jefferson down almost to these present anxious times customs duties have been relied upon as a very considerable source of revenue by all administrations. During the campaign of 1912 Woodrow Wilson, then candidate of the Democratic Party for election to the Presidency, said:

You can't have free trade in the United States because the Government of the United States is of necessity, with our division of the field of taxation between the Federal and the State Governments, supported in large part by the duties collected at our ports.

It did not escape the attention of that able Democratic President, James Madison, who followed Jefferson in the White House, that "duties laid on imported articles may have an effect which comes within the idea of national prudence.' We are in the midst of the greatest crisis in our history. We need the utmost devotion and the most patriotic and enlightened service of every man and woman in the Nation. Our young men by the millions will carry our flag to distant battle fields and many of them will pay the last full measure of devotion. The country asks that partisanship yield to patriotism and theories to necessity. Immense sums of money will be required to see the Nation through to renewed liberty and to a conclusive. victory. No legitimate source of revenue should be neglected, and that source, sanctioned by the Constitution and approved by time and precedent, revenue derived from customs duties, should become a recognized and integral part of our revenue legislation; not only because we need to utilize every possible source of revenue, but because, as President Madison said, duties laid on imported articles "have an effect which comes within the idea of national prudence." Mr. GARNER. Does the gentleman object to being interrogated? Mr. MARVIN. Not at all, sir.

Mr. GARNER. If I understood you correctly, you said that the English Government is now collecting $10 and something per capita while we are collecting $1.60 per capita.

Mr. MARVIN. Yes, sir.

Mr. GARNER. And that theirs was based evidently on a tariff for revenue while ours was not? Will you differentiate or explain how that is? Are you advocating a tariff for revenue only?

Mr. MARVIN. I am here advocating an increase of tariff duties in order to increase the revenues needed by the Government in this emergency.

Mr. GARNER. Then you are not advocating a duty at the customhouse for any other purpose than revenue?

Mr. MARVIN. I am not emphasizing the purpose for which the duty should be applied except to increase our revenues.

Mr. GARNER. I was trying to ascertain your viewpoint. England now collects $1,050,000,000, if I understood you, at the customhouses,

and our collections would be that much if we collected as much per capita as they do.

Mr. MARVIN. England collected in 1917-18 approximately $350,000,000 at the customhouse.

Mr. GARNER. That is how much per capita?

Mr. MARVIN. My estimate of $10.25 was based on the estimate of England's revenue from customs duty in the next fiscal year, which would be $100,000,000 more than raised in the last fiscal year, or $460,000,000, about $10.25 per capita.

Mr. GARNER. And that duty was levied with reference purely to getting revenue?

Mr. MARVIN. Not wholly; no, sir. If you will see the articles on which England has applied its duties, particularly since the war began, you will find that some of them have been in the nature of protective duties, on watches and clocks and automobiles and parts and articles of that nature; but the bulk of it is a pure revenue measure, of course.

Mr. GARNER. You are differing now from the statement in your original paper. In your original paper you said England was levying a duty at the customshouse purely for revenue purposes, whereas in this country it was based on a different theory. Now, I want to ascertain from you whether or not you advocate a tariff for revenue at this time at the customhouse based upon the same theory as the theory of England?

Mr. MARVIN. I am perfectly willing to have it based on the same theory that England has adopted, because England combines both, Mr. Garner.

Mr. RAINEY. Does your organization favor the English system of tariffs at the ports?

Mr. MARVIN. We do, with this modification, which has apparently come over the system employed in England during the last few years. I think England has adopted more of a protective policy than heretofore; perhaps more than we have in recent years.

Mr. RAINEY. As evidenced by these increased collections at the ports?

Mr. MARVIN. As evidenced by the articles upon which duties were placed and the purpose for which they were placed.

Mr. RAINEY. Now let me call your attention to the English tariff and the articles upon which they impose it at the present time. They collect on tobaccos and snuffs, £25.743,000; on tea, £13,962,000; on sugar, £8,848.000; on spirits, £5,324,000; on cocoa, coffee, and chicory, £1.761,000. In other words, of the total, £71.000, to which you called attention, they collect over £50,000 on the articles I have been mentioning here which are not competitive and upon which we do not collect anything at the ports. They come in here free. That is the English system of levying a revenue tariff, and of course that is a revenue tariff without any other element in it. Does your organization favor a tariff at the ports upon the articles I have mentioned? Mr. MARVIN. Pardon me one moment. If the gentleman will continue the reading of that list he will find that England

Mr. RAINEY (interposing). I will read the rest of it later. Those are noncompetitive things I have mentioned. There is no element of protection in there at all. Does your organization favor the English tariff on these articles which I have read?

Mr. MARVIN. We do not take into consideration in our revenue measures, so far as they are applied to this country, the policy of Great Britain. We look at our own interests and our own welfare. If we were framing or had anything to do with suggesting the framing of a revenue measure, it would be based on protective-tariff lines. I am not appealing to you to-day for protection, because this hearing was called for an increase of revenue, and I was suggesting a means by which, through increased tariff duties, revenues might be raised, regardless of the question of protection.

Mr. RAINEY. I understand that; but you have been calling attention to the English collections at the port as amounting to so much per capita, and to our own collections as being inconsiderable as compared therewith. Now, I have called your attention to the major portion of those collections, which are entirely upon articles noncompetitive; and to levy such a tax is exactly opposed to the protective theory for which you say your organization stands.

Now, let me call attention to the other items: On motor cars and motorcycles they only collect £541,000; on clocks and watches, to which you have called attention as indicating that they are levying protective tariffs, they only collect £244,000. The manufacture of clocks and watches is not an English business at all. That is a business which is conducted in Switzerland and in the United States and in France and in Germany. On cinematograph films they collect £184,000, and that is an American industry.

Mr. MARVIN. Evidently with the idea of protecting their market so that it may some day become a British industry.

Mr. RAINEY. So there is not any element of protection in this English tariff which you quote so approvingly at all.

Mr. MARVIN. After all, they applied needed protection to the very items the gentleman has referred to, and the purpose for which those taxes were increased and levied shows that England has a decided tread to-day toward a protective tariff; but what is the need, gentlemen, of going into that question at this time?

Mr. GARNER. We did not go into it at all.

Mr. RAINEY. You have gone into it yourself.

Mr. MARVIN. I simply suggested a source of revenue, and I have. suggested an increase of tariff duties. The purpose of that increase is for the majority members of the committee to determine. If they prefer a pure revenue system based upon taxes raised at the customhouse from noncompetitive imports, it is within their province to levy such a tax. If the country approves of that, of course, such a law would remain on the statute books.

Mr. RAINEY. Would it interrupt you if I asked you upon what articles you would increase the rate now?

I

Mr. MARVIN. I would rather not go into details now because, as say, I am not here for that purpose. I am here to make the suggestion that in a general way a larger portion of our revenue be raised from increased customs duties. I will be glad to make definite suggestions and if the committee wants me to, I will do it with a great deal of enthusiasm if the committee will say that they will adopt some of the suggestions.

Mr. RAINEY. We could not agree to that.

Mr. MARVIN. I know you could not.

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