[In the tariff act of August 5, 1909, the President of the United States was authorized to supply "persons" "to secure information*' regarding the working of the tariff laws. He appointed a "Tariff Board" of five members, with H. C. Emery, professor of economics in Yale University, as Chairman. The Board has made reports on the Pulp and news-print paper industry (preliminary) Feb., 1911, and (another report) May, 1911; on Wool and manufactures of wool (Schedule K of the tariff of 1909) Dec. 20, 1911; on Chemicals, oils and paints (Schedule A) Feb. 7, 1912; and on Cotton manufactures March, 1912. The report on Wool, the most voluminous of these, contains 1280 pages of painstaking and detailed information. The main findings of the investigation are compressed in the letter of submittal to the President, from which we here extract nearly one-half, retaining the portions dealing with costs and prices, but omitting the discussion of tariff duties.]

Wool costs [page 10]. The result of the raw-wool investigation establishes the fact that it costs more to grow wool in the United States than in any other country; that the merino wools required in such great volume by our mills are the most expensive of all wools produced; that the highest average cost of production of such wool in the world is in the State of Ohio and contiguous territory; and that the lowest average cost on similar wool is in Australia.

It is not possible to state in exact terms the actual cost of producing a pound of wool considered by itself, for the simple reason that wool is but one of two products of the same operation.

That is to say, flocks produce both fleeces and mutton - products entirely dissimilar in character and yet produced as the result of the same expenditure for forage and for labor. The board has deemed it best, therefore, for the purpose of this inquiry, to treat fleeces as the sole product and charge up against their production the entire receipts from other sources. This method gives an accurate return so far as the general results of flock maintenance are concerned; results which are comparable as between various sheep-growing regions.

In order that results from the different sections and from different countries might be more comparable, the item of interest on investment - which varies from 4 to 6 per cent in Australia and from 8 to 10 per cent in our Western States - was left for consideration in connection with profits. For a similar reason the actual production cost of harvested crops fed to flocks was used instead of the market value of same. On this account the expense charges shown are materially lower than those commonly quoted in the industry.

Figured in this manner, the board finds:

That after crediting the flock with receipts from all sources other than wool, the latter product, in the case of the fine merino wools of the United States, is going to market with an average charge against it of not less than 12 cents per pound, not including interest on the investment.

That the fine wools of the Ohio region are sold bearing an average charge for production of 19 cents per pound.

That in the States east of the Missouri River wool production is incidental to general farming. Here producers, with the exception of certain-named districts, lay more stress upon the output of the mutton than of wool, and in such cases the receipts from the sale of sheep and lambs ordinarily cover the flock expense, leaving the wool for profit. The position of the fine-wool producers, however, not only of the Ohio region, but of the far West, is radically different.

That in the western part of the United States, where about two-thirds of the sheep of the country are to be found, the "fine" and "fine medium" wools carry an average charge of at least 11 cents per pound, interest not included.

That if account is taken of the entire wool production of the country, including both fine and coarse wools, the average charge against the clip is about 9 1/2 cents per pound.

That in South America the corresponding charge is between 4 and 5 cents per pound.

That in New Zealand and on the favorably situated runs of Australia it seems clear that at the present range of values for stock sheep and mutton the receipts from other sources than wool are carrying the total flock expense. So that taking Australasia as a whole it appears that a charge of a very few cents per pound lies against the great clips of that region in the aggregate. While the board cannot undertake to name an exact figure in that case, it is certain that the Australasian costs at large fall materially below the average South American.

That in the Western United States the capitalization per head of sheep (inclusive of land) is $5.30 upon which a gross profit of 6.2 per cent was realized during the twelve months under review. The interest rate in that region ranges from 8 to 10 per cent per annum.

That the labor, forage, and necessary miscellaneous expenses in the Western United States exceed $2 per head per annum as against an estimated cost, covering the same elements of expense, of less than $1 in Australia and about $1.15 per head in South America. . . . [Here are discussed wool duties and their effects.]

Relative prices [page 14]. On the other hand, prices in this country on the fabrics just referred to are not increased by the full amount of the duty. A collection of representative samples was made in England of goods ranging from those which cannot be imported at all to those which are imported continually. These were then matched with a collection of samples of American-made cloths which were fairly comparable, and the mill prices compared for the same rate. It is found that on goods entirely excluded the nominal rates of duty would reach an ad valorem rate of 150 or even over 200 per cent., but that the American fabric is actually sold in

the market at from only 60 to 80 per cent higher than similar goods sold abroad.

On sixteen samples of foreign goods, for instance, none of which are imported, the figures are as follows:

Thus, though the nominal duties on such fabrics equal 184 per cent, the actual excess of the domestic price over the foreign price on similar fabrics of this kind is about 67 per cent. This is the result of domestic competition.

At the present time the industry in general is on a competitive basis. Certain specialities may be produced in limited quantities by particular firms which cannot be duplicated successfully by their competitors. This might be the result of secret processes or of some special skill in designing or finishing. This may mean a wide margin of profit per unit of product in individual cases. It should also be noted that even in the case of standard goods the industry is one peculiarly dependent on fashion, and the manufacturer who happens to succeed in anticipating the shifting public demand may sell his goods upon a wide margin over the cost of manufacture and make large profits. Under ordinary circumstances the average manufacturer will find that he can sell a part of his output with a good margin of profit, and that another part which does not meet the public demand will have to be sold close to the cost price or even below.