LETTERS TO THE EDITOR.
THE IRON AND STEEL TRADES AND THE TARIFF COMMISSION REPORT.
[TO THE EDITOR OF THE "SPECTATOR."] Srn,—I should not intervene in the controversy in your columns in regard to iron and steel profits but for the fact that it has wandered a long way from the point at issue. You stated in your "News of the Week" (July 23rd) that— "Though the volume of our iron and steel industries has `relatively declined,' its [sic] profits have increased immensely, because, as always happens, we, the Free-trade country, have the pick of the industry. The iron and steel trade profits assessed to Income-tax in 1895-96 were £1,934,000 ; they were in 1901-2 .£6,600,203. That is a relative decline which we confess leaves us cold."
This paragraph means that during the period stated iron and steel profits increased 241 per cent., and that the increase arose in respect to the "pick of the industry." During the same period the gross amount of income assessed under Schedule D increased only 36 per cent. I assume that when you wrote your paragraph you had some authentic figures before you to justify your deduction from the Income-tax returns. Will you therefore kindly state your figures, and explain what branches of the iron and steel trade you include in the " pick of the industry," which has been so extraordinarily profitable ?
In your note on " H.'s" letter in the Spectator of July 30th you commented on the paragraph from the Report, but ignored the evidence to which he referred you. Your comments, however, gave away your case so far that you admitted that for some districts the view taken in the Report may be correct. How far, therefore, the Income-tax returns are fallacious was, in your opinion, on July 30th a question of degree. But you implied that the decision turned on the manner in which Income-tax officials do their work, a subject to which no reference is made in the Iron and Steel Report, and not on the nature of the income included in the returns made by iron and steel manufacturers. You appealed to "competent authorities," who apparently have expressed an opinion on this point which you say is "not new." If this is the case, you will no doubt be good enough to give your references.
Both you and Mr. Hugh Bell (Spectator, August 6th) insist that no alteration has taken place in the manner in which the returns are made, and therefore I presume that even if they are not an exact measure, they are a good index of iron and steel profits. But Mr. Hugh Bell at once supplies an answer to this view of the question. The increase in the Income-tax returns is steady and continuous. But, according to Mr. Hugh Bell, "the iron trade is subject to great fluctuations. At one moment it is in the depths of depression ; a few years later it is a mine of wealth." As a matter of fact, the proportions in which iron and steel and coal enter into the profits assessed under iron and steel have varied considerably in recent years. Taking one group of firms who supplied the Tariff Commission with information, the combined profits from steel and coal worked out at 7 per cent. per annum for the period 1894-98, steel alone showing 12 per cent. But for the period 1899-1903, while the combined profits showed an average of 15 per cent., steel worked out at 24 per cent. According to one of the witnesses quoted in the Report. of the Income-tax paid by his firm during the last five
years 36.69 per cent. was for profit on iron, 12.53 per cent. for profit on bye-products from blast furnaces, and 5018 per cent. for profit on coal and other things. Another manufacturer put the profit on coal at 55 per cent., in his case, of the profits assessed under iron and steel.
Mr. Hugh Bell does not question any of the conclusions of the Iron and Steel Report. This is the more remarkable because he has access to figures which reflect the practical experience of several firms in regard to profits, cost, continuous running, dump- ing, and other subjects dealt with in the Report. He will, no doubt, correct me if I am wrong, and state specifically on what conclusions he can furnish rebutting evidence, but his letter amounts to nothing more than an objection to the method of investigation adopted in the Report. So he indicates his own method. The Commission has decided on an orderly inquiry, taking one group of trades after another. "Although," say the Commissioners, " in making this Report on Iron and Steel, we have had before us sufficient evidence relating to other industries to justify the provisional conclusions we have reached, our final recommendations must necessarily be delayed until we have com- pleted our inquiry into all the trades—including agriculture— which may be directly or indirectly affected." But Mr. Hugh Bell is prepared to settle both the policy and its details at once by reference to the Income-tax returns, which are to be con- sidered without regard to anything in particular, and by an inquiry into things in general. Will Mr. Bell kindly explain how it is possible to arrive at any conclusion at all with regard to the " trade of the country as a whole " unless we get down to the facts of the various industries and measure the significance of the changes which are taking place ? There is no point whatever in his objection to the classification adopted, which, in fact, is that adopted by the Board of Trade in consultation with the Commercial Intelligence Committee, unless he is prepared to maintain that the industries he mentions have increased, that the increase compensates for the decrease of iron and steel, and that their prosperity is likely to be permanent, whatever may happen to iron and steel as defined in the Report. I may point out in passing that it is Mr. Hugh Bell, and not the Board of Trade, that includes iron ore in iron and steel. It is somewhat unusual to obtain the price of pig-iron by consulting Board of Trade figures on imports and dividing the value by the quantity. But if Mr. Hugh Bell likes exercises of that kind, he can take the returns of exports to England of the foreign countries concerned and deal with them in the same way. He will then obtain a somewhat different scale of prices. He can then, in the light of these figures, criticise the documentary evidence on " dumping" printed in the Report.
[By "the pick of the industry " we meant the manufacture of arms, machinery, implements, ships, and, to a large extent, carriages. The profits of these trades, if included in the Income-tax returns—they are not so included now—would go far to neutralise the coal trade profits, which are in certain cases included under the heading " Ironworks." Mr. Hewins, who appears to take his commission from Mr. Chamberlain
very seriously—more seriously, perhaps, than does the country as a whole—requires us " to be good enough" to give our references in regard to " the competent authorities " whose opinion we declared was on our side. Our words were : " We believe that in the opinion of the most competent authorities no very considerable amount of the profits of the iron trade, taken as a whole, arises from coal mines." To this we adhere. We do not propose, however, to name these authorities, though we can assure our readers both of their competence and bona fides. If this reticence should seem strange to Mr. Hewins, we may remind him that we are only adopting his own procedure. His Report does not give the names either of the witnesses examined or of the firms who express opinions. We read, that is, of Witness No. 5, and of Firm No. 350. Mr. Hewins has, doubtless, good reasons for thus withholding the names of his competent authorities. We will ask him to believe that our reasons for the like action are equally good. We can only add once more that in our belief " the most competent authorities " take our view of the Income-tax returns in regard to iron and steel.—ED.
Spectator.]
Previous page
