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The Honorable Percy's pictures really made a big hit next day. I was almost sorry that he could n't be there to see. They passed from hand to hand, even to the captain, who pretended to look at them carelessly. Later the executive officer asked me privately: "How did you get hold of them? Can't you get at some of those poor devils on the rock and help 'em lay a complaint before a Federal Court?" To which I replied that the Blancomar was a ship according to legal fiction, and that the Oklahoma would better seize the rock and tow it in as a prize. "Hanged if I would n't like to," said the executive. From this I judged that perhaps I had not made the Oklahoma's mess love the Blancomar Phosphate Works Company.

Next evening La Pez slam-banged in from sea, and Señor Ortega, a gentle creature with a piratical cut and an amiable soul, brought me a letter. Over the top of the sheet was printed the heading in ink:

International Salvage Company

It was dated: "On board the American ship Blancomar, abandoned in mid-sea and seized for salvage by Robert McAllister, Richard Sutton, and Lindon Spencer, representing the I. S. Co."

"We 've landed all right, I mean boarded her," wrote Bob. "Have hoisted stars and stripes right side up again on her main truck, and at the fore the house-flag of the International Salvage Company, being a white table-cloth with a device in black (out of Dick's coat lining) showing the ace of clubs. Very fetching. You are hereby officially empowered as the shore representative, power of attorney, prime minister, and anything else that 's legal of the I. S. Co., to ship yourself or schooner La Pez to Gonaives and serve notice on Brother Weeks. Hope he 'll be angry Hope he'll be angry enough to give you an excuse to treat him like an egg-beat him up. Get busy. Be as painful as possible and then sit tight."

Mr. Weeks at Gonaives carried on extravagantly. He did not really get into a condition of mind wherein he could understand business till I offered him a little of Bob's prescription. Then he saw a great light, or even more; and when we got through he went sputtering to the telegraph bureau and sent a ruinously long

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cable message to his company in New York.

Four days afterward Señor Ortega sailed into Gonaives again with a smile almost as wide as his schooner, and brought another letter from Bob.

"It worked! It worked!" he wrote. "The company telegraphed to Washington for a war-ship, and Washington cabled to Guantanamo, and this morning our dear friend Oklahoma arrived in front of the rock, full of smoke and trouble. They sent a boat ashore, and the officers stopped for a while on the trail up the cliff to engage in literary recreation. We had a sign there saying: "These Phosphate and Mayhem Works Closed Till Further Notice. Admission by Ticket Only. Beware of the Dog.' I went aboard the ship and showed the captain the printed copies of the decision that the company so thoughtfully provided us with. Told him we had a perfect right to hold a rock for salvage as long as the courts called it a ship. He sat thinking for one hundred years. My watch said fifteen minutes, but it was a hundred years, just the same, because I could never have pictured so many different kinds of jails to myself in less than that space of time. At last he opened his marine mouth and instead of saying jail, it said that he was n't inclined to take hasty action in such a fine question of marine law. The Blancomar, he thought, was likely to stay put until the company could settle it in court. Then he steamed away, and it seemed to me as if the whole Oklahoma was grinning, even the guns. That dear captain-man's cable to the paternal government will be all right. Now you play trumps! Show Weeks the photographs you hold, and tell him he can pay us a reasonable sum for salvage or go to court and there tell the sad story of his company's phosphatic life. I think he'll scald the cables when he sees those pictures. So be good, and, remember! no reasonable offer refused! We don't want to take root here. Continued association with phosphate will undermine even the loftiest principles."

There was a P.S. saying: "For goodness' sake send some mineral water over by the schooner. And some brevas, black and extra strong. Also a pair of scissors. I'm going to cut Dick's hair."

More than a year afterward, Bob and

I were at Hampton Roads when a battle-. ship named Oklahoma came in. A native of the ward-room country came ashore on business, sighted us in the offing, and took us aboard as lawful prizes. The ward

room country flew friendly signals, and we knew that there was no feud between them and us. However, there was no mention made of a derelict named the Blancomar. Before we left, the captain took us aside and said: "Never fail to make yourselves at home aboard the Oklahoma while I 've got her. I like you. But, take my word for it, some day a toy government below the tropic will stand you two gay philosophers against a wall and-"

However, that was only his little joke. He knew that Bob and I never mix in politics or meddle with legal things, except in this case where we simply applied marine law practically and followed the rulings of an American court like good citizens.

Oh, the salvage? The company paid

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He borrowed a few hundred and left us, and we did n't see him again for quite a while. But about two months after he borrowed the money, he sent it back from New York; and about the same time Bob saw an item in a stray New York paper that told how an unknown ruffian, evidently of great strength and ferocity, had mauled the president of the well-known Blancomar Phosphate Works Company and nearly cut him in two with a rawhide, after which he made his escape and remained escaped.

Somehow, Bob and I suspected that maybe the unknown ruffian was the Honorable Percy Algernon Sydney Blake Carothers.

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TH

THE A B C OF THE TARIFF

QUESTION

BY ANDREW CARNEGIE

HE Tariff will not down; on the contrary, it is to-day the foremost domestic question and promises to remain so through the next presidential campaign.

No issue arouses so much discussion with so little practical result, and yet it is a perfectly simple subject, with nothing obscure about it; the wayfaring man, the humblest toiler, can readily understand it and form a correct judgment. Let us try to give the A B C of it.

First: There are two kinds of tariff: one for Revenue, one for Protection. In neither of these should food or the necessaries of life be taxed, because these are consumed by rich and poor alike and Adam Smith's doctrine should never be lost sight of,-"Taxes should be paid by people in proportion to their ability to pay." The toiling masses, the people, have not the ability to pay which rich people have; therefore, the necessaries of life should always be free of taxation. This is fundamental, whether the tariff be for revenue or protection.

enue.

Let us first consider the tariff for RevThe Government must have revenue, and because tariff duties can easily be collected upon articles of luxury imported, it is wise, very wise, to avail ourselves of this source of revenue, because the few rich who have the ability to pay should be made to pay heavily upon luxuries, which the masses do not consume. Luxuries are superfluities, not necessaries, and mostly articles for foolish fashion or

unwholesome appetites, both demoralizing to their victims. Our Government obtains the enormous sum of, say, two hundred millions of dollars revenue annually upon these superfluities,-foreign silks, satins and linens, fashionable attire, jewelry, foreign wines, cigars, etc. The lives of the rich would be improved, and more truly refined, were these abandoned, for they are either vulgar or unsalutary. Therefore, the tax upon luxuries should always be that rate of duty which is found to yield the greatest revenue and it should be remembered that it is because these luxuries are costly that they are fashionable; hence the tax can be raised from time to time until a higher civilization is reached, when men will neither smoke nor drink and women discover that they are most refined when simply dressed, not when they resemble Indian squaws laden and bedecked with vulgar ornament. Meanwhile it is to be regretted there is no need for reducing duties at present upon deleterious and fashionable luxuries. As the demand is not lessening we can keep the taxes high.

On the other hand, duties should not be levied upon art treasures imported, because these tend to gravitate to public galleries and thus become the priceless possessions of the people. Although held for a time by their owners, a generation comes when an owner bereft of family, perhaps, or for other reasons, bequeaths them to the city. They are not "consumed" as luxuries are. So much for the revenue tariff.

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Now for that of Protection. Here the subject is also simple, though not so entirely one-sided. We must begin with new nations, and here we find that there is no exception. All aim at producing certain articles at home, and Protection seems to be a law of their being. Our own country, Canada, Australia, New Zealand, have protection and already even the South African republic announces its intention to "protect" certain industries. It is a natural national development and can not be crushed. Adam Smith approved the navigation laws because these encouraged the growth of trained seamen required for the British navy, which were then essential for the country's safetybut in one paragraph Mill may be accepted as having settled that question in our day. Many years ago the writer attended an interesting dinner in Birmingham, at which John Bright was present. He asked if I would give our friends the explanation which men of knowledge really had to offer for protection. I illustrated it by saying I had just visited an old English fort where I found a well many hundred feet deep which centuries ago a wise commander had sunk because he wished a sure supply of that indispensable article within the walls. A beautiful stream ran down the valley from which an ample supply could easily have been obtained, and then I quoted the paragraph from Mill to the effect that though it was always wise to buy in the cheapest and sell in the dearest market, yet we did not know which country would prove the cheapest producer until its resources were tested. Mr. Bright promptly responded, "Mill has done more mischief by that one paragraph than all the good his other writings will ever do." Laughter ensued and the subject was dropped.

Let me illustrate protection, from my own experience. Our country made no steel until Mr. Park of Pittsburg imported some hundreds of English steel workers from Sheffield. As a boy I saw them shooting quail and rabbits around Pittsburg. They even imported their dogs with them. Mr. Pitcairn followed, importing a full staff of window-glass workers from Belgium, at wages three times the Belgian rates. When the Civil War broke out, Mr. Gilead A. Smith was promptly sent to Britain to buy up steel

plates for the Pennsylvania Railroad, Baldwin Locomotive Works, etc. In those days we made no steel plates nor steel rails in our country, but were dependent upon Europe. Finally, it was seen that we must have a supply of that indispensable article, steel, within our own lines. Several attempts had been made to introduce the Bessemer steel process, at Troy, New York, on Lake Michigan, and at other points, but the result was failure. Most, indeed I may say all, of the pioneers failed or became embarrassed. The Joliet Steel Co., Illinois, The Freedom Iron Co. of Pennsylvania, The Cambria Iron Co., had all to be reorganized. Even the Pennsylvania Steel Co. was only saved from ruin by the Pennsylvania Railroad Co. advancing six hundred thousand dollars, equal to-day to several millions. After the Civil War Congress sent for the manufacturers and explained that it was ready to "protect" steel, and thirty per cent. duty was imposed. Steel rails, all imported, then cost $90 per ton. The duty was $28. To-day the price is $28 per ton home production, and the duty $4. No foreign supply is needed.

The writer has been before several congressional committees upon the tariff question, but never to ask an increase, always stating that reductions in duty could be made. Testifying before the present tariff was passed, I stated that the steel duty could now be abolished, which gave many people the impression that I had changed my views because I was no longer an interested party. On the contrary, I may cite a letter that appeared in the "New York Times" of December 28, 1908, from Charles Stewart Smith, ex-president of the New York Chamber of Commerce, saying that he heard me "tell President McKinley during his first term that steel no longer needed protection." The infant industry has grown to be a giant. Protection has done its work. Thus, steel vindicates the policy of protection and the rule for new countries is-encourage new industries when there is a prospect of finally getting thereby in due time a surer supply cheaper at home than the foreigner can give. If after proper patient testing it is clear that our domestic supply of any article cannot be obtained except at a higher price than the foreign, which has always to pay transportation to our shores,

then we should not pursue the experiment, unless the article is essential for our defense. We are now experimenting with our beet sugar supply. The Secretary of Agriculture, probably the ablest who has ever filled that position, thinks he can develop a home supply cheaply. Let us hope so, but should he be disappointed, then it becomes a question for consideration whether the protective duty should be maintained.

To-day no new "infant industries" are applying for protection. The country, and the protected manufactures generally, have attained to manhood, but there has been perfected in almost every industry, including railways, a system of combination which maintains standard prices, even when combination has not taken legal form,-understandings exist both national and international which practically produce the desired result and the consumer has to pay unfair prices. This development necessitates government regulation; hence we have the Court of Commerce charged with the duty of supervising prices and protecting the consumer from extortion. There will ensue a few years of irregular results, but steadily the court will approach and finally reach solid ground and become to industry what the Supreme Court is to law. Eventually we shall agree upon what a fair profit is upon capital and ability in each branch of production; also what is and what is not standard management, and how accounts are to be kept and what percentages if any are to be allowed for depreciation. It will be found that few, if any plants, fail to become more perfect than at first and appreciation, instead of depreciation, results. The annual repairs should embrace the adoption of new improvements charged properly to maintenance as part of running expenses, and the plants thus kept up to date.

It should be remembered that even without tariff the home producer has natural protection, which government cannot touch. For the foreign producer there is the cost of transport, generally from an inland location to the sea, then the sea freight and then again land transport to the consumer,-heavy items, and in addition, there comes the serious disadvantage of time consumed before the order can reach the foreign producer, and the article ordered can reach the purchaser in return,

-a disadvantage from which only articles. kept in stock here are exempt. There is also the danger of mistakes in the manufacture-wrong sections, patterns misplaced, etc., etc.,-which can be more promptly remedied by the home producer. Equally, or even more important, is the preference which the home producer has as a rule over the distant and unknown foreigner. Men naturally wish to favor with their orders neighbors who may have orders to give in turn, and, finally, there is an office force to be maintained by the foreigner or a commission to be paid sale agents. Truly, the foreign invader has a sea of troubles to encounter, amounting in the aggregate to a pretty fair measure of protection, even when the government admits foreign products duty free.

It has been held that the protective duty upon manufactures should equal "the difference between cost of labor at home and abroad, and a fair profit to the manufacturer." To both native and foreign manufacturer a fair profit is as clearly an element of "cost" as labor or material. There would be no production anywhere unless there were a fair profit. Abolish that and production ceases. The difference in the cost of labor is only one element in considering what rate of duty, if any, is required, for, as we have seen, the foreign manufacturer has many elements of cost and other disadvantages in reaching our domestic consumer, from which the home manufacturer is free. All of these points the Court of Commerce will have to consider when fixing the fair rate of a protective duty in addition, which at this late day it will not often be found necessary to make excessive.

There yet remains another and higher point of view. World conditions seriously affect the doctrine of protection. Steam has shrunk the world into a neighborhood. As no man lives by himself alone, so no country does. They exchange products to such an extent that last year international trade amounted to $37,000,000,000, the highest upon record. No nation can produce everything required. Our own country has to obtain its chief supply of manganese, essential for making steel, from foreign lands, our home supply being trifling. It exported to other lands last year to the value of $1,910,000,000, and bought from them to the value of $1,645,000,000.

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