Mr. Winser to Mr. Seward.
Sonneberg, September 17, 1877. (Received Oct. 11.)
Sir: Referring to my dispatch No. 235, under date of the 5th instant, in which I endeavored, in a general way, to give an idea of the prevailing opinion in this country that the commerce between the United States and Germany can best be promoted by a modification of our tariff, the high rates of which, it is argued, place burdensome restrictions upon many branches of German industry and hamper the lively exchange of natural products and manufactured goods between the two countries, I have the honor to-day to present some further information upon this phase of the subject in question.
Since my last dispatch to the Department was sent off, I have received a number of letters from leading manufacturers and merchants of the Sonneberg consular district in response to an inquiry which I had recently addressed to them asking their views as to the best methods of encouraging and developing trade between the United States and Germany. My question was purposely framed in the simplest manner, in order to avoid the slightest suggestion of leading the witnesses. I scarcely looked for the striking unanimity which characterizes all the answers. Without any exception, the responses concur in saying that our tariff must be modified before business between the two nations can recover from its existing languishing state and subsequently be increased to a more satisfactory volume. The value of this agreement in belief consists in the fact that it expresses the opinion of representative men in all the prominent branches of industry of this region, who are separated from each other by long distances; and the promptness with which I have received the answers to my letters shows that there could have been no conference between the writers as to the tenor of the replies.
I think it best to translate these letters for the information of the Department, and to give in each case * * * the character of the business which is carried on.
1. From Sonneberg (toys):
Daring the past few years commerce everywhere has suffered under many hinderances, and the causes thereof have been much discussed and the methods of recovery therefrom have been greatly sought after. In Germany, after the overthrow of our hereditary enemy, an attempt was made to reach a measure of commercial prosperity which was before impossible, in consequence of the dread of the inevitable contest. But the spirit of enterprise was all too hopeful. Existing business establishments were unduly enlarged, and numbers of new ones were founded, joint-stock companies, which turned out mainly to be arrant swindles, were launched on every side; and after these baseless fabrics fell into ruin a long time was required to bring matters once more into quiet channels and to their proper poise. But it is now to be expected that the united and vigorous commercial policy of the empire will exert the best fostering and strengthening influences upon languishing business. At the present moment the Russo-Turkish war presses heavily upon our commercial interests, in spite of the fact that the opinion is general that the war will be confined to its present territory.
The negotiations between Germany and Austria on the new commercial treaty between the two nations approach completion, and it is rumored that Germany has obtained many important concessions. With the discussion of the rates of duty between Germany and France, with which country our present commercial treaty will soon expire, all the chambers of trade and industry in Germany are now busy, in order to bring their views and experience to the knowledge of the imperial government. With Russia, also, a country which, until now, it might be said, has followed a purely Exclusive policy, a commercial treaty will no doubt be concluded at the close of the war which will be commensurate with the interests of both countries, and Germany will certainly have to thank her united leardership for securing so satisfactory a desideratum.[Page 69]
And especially with America would a prompt and reciprocally mutual active business be established if the United States would recede from their present incongruous protective-tariff system, which is no longer adapted to existing commercial conditions, and adopt a more liberal customs policy. Should this not take place, the producing classes in Germany will find themselves compelled to strive for the introduction of a discriminating tariff against the United States. Otherwise merchandise from America will be introduced into Germany without the payment of any duty, or, at most, of a very small duty, and so seriously injure our domestic manufactures; while, on the other hand, our goods, in consequence of the high protective tariff of the United States will be supplanted more and more, and eventually be driven out of the American market.
Without reciprocity in this regard, commerce between Germany and the United States will never reach its legitimate development. Formerly, this reciprocity was not felt by us to be a necessity, because our cheap labor enabled the manufacturers of this country to secure a good market for their wares in the United States in spite of the heavy tariff. But now since labor-saving machinery is so generally used and goods are produced in bulk, the advantage of German cheap labor has proved illusory, and there must be reciprocity if the commerce between the two nations is not in future to be very seriously injured.
2. From Ilmenau, Saxe-Weimar (toys mid fancy goods):
The existing commercial stagnation can only be overcome by the lapse of time. The overproduction which has characterized the last few years will entirely cease in the not distant future. The number of new enterprises and their bad results brought a multitude of evils in their train, which have deeply penetrated the body-politic. After recovery from these ills, and after the people are satisfied to earn their living by honest industry, healthy business conditions will return.
Nothing would contribute more to stimulate commercial intercourse and trade between the United States and Germany than a reduction of the American tariff and the gradual preparation of a free-trade system. Each country could then dispose of its own peculiar products and manufactures to better advantage.
3. From Limbach, Saxe-Meiningen (porcelain):
An improvement will only take place in business after the wealthier classes shall have recovered from the consequences of the crisis of 1873 and after the dread of war in Europe shall have ceased.
The high tariff upon goods of our manufacture which is imposed by the United States is very prejudicial to us there. By reducing the duty one-half, commerce between the two countries would receive a vigorous impulse.
4. From Wallendorf, Saxe-Meiningen (china-ware):
In our opinion, the best means of increasing the trade between Germany and the United States is to modify the American tariff. We are strong opponents of a protective tariff, and particularly of so high a tariff as that which is imposed upon our line of manufactures, and we strongly feel that no greater commercial activity can be brought about between the two countries until these duties shall be moderated. We believe also that an advance in this direction on the part of the great American Government— a reorganization of its customs policy and its system connected therewith—would place its credit on a better foundation, would secure sufficient protection to its industries, and would be cordially welcomed by the commercial world.
5. From Zeulenroda, Reuss (cotton hosiery):
The trade between Germany and the United States would be very greatly increased by a more skillful direction of customs politics. A reduction of the American tariff is absolutely necessary, as most of the rates of duty are now virtually of a prohibitory nature.
6. From Plane, Schwarzburg-Sondershausen (china goods):
The commercial depression, so far as it affects our trade in articles of luxury, is not felt by us. We strive to put upon the market only dearer and better kinds of goods, and as this cannot be done in large quantities, but, at the same time, does not affect the circulation of money, this effort of ours has the double advantage of not overcrowding the market and of keeping sufficient money in circulation. The cheapness of trashy goods misleads wholesale and retail dealers, entices people of slender means to purchase, and frightens the wealthier classes from buying. This cheapness, therefore, tends to keep money in the hands of the affluent and binds fresh burdens upon the backs of the poor. It sends money either into another channel of trade, or causes it to be locked up unproductively. The balefulness of overproduction in every branch of industry makes itself felt so heavily that it is not necessary to emphasize it further. The imposition of ad valorem duties by your government makes it especially easy to [Page 70]German industrialists to lull themselves with this error; and we, indeed, know of no other means of obviating this great evil of overproduction in every branch of industry than by exacting specific duties from all kinds of merchandise. On articles of necessity, of course, a lower rate of duty should be imposed, in order that business should in no way be diminished. Specific duties alone are the cure for the overproduction which gluts the market and brings commerce to a standstill.
7. From Katzhütte, Sehwarzburg-Rudolstadt (china goods):
According to our view, there are no means calculated to overcome the existing business stagnation until Europe is again blessed with quiet and peace. When confidence is restored, trade in many branches will revive. To increase the commerce between the United States and Germany there is one very simple method, and that is, America shall modify her enormously high import duties and send us in return for our goods large quantities of the necessaries of life at cheap prices.
8. From Suhl, Prussia (guns):
The commerce between the United States and Germany in my branch would be very greatly increased if the enormous import duty on guns in America were not imposed. Upon a gun which costs at Suhl 150 marks, a duty of 50 marks must be paid in America; while in Germany, on the contrary, the duty on the same gun would be imposed upon its weight and not upon its value. Therefore, the gun which costs 200 marks in America, inclusive of duty, costs in Suhl, inclusive of duty, 152 marks and 50 pfennige. If this enormous American duty could be removed, and only a rate similar to that of Germany imposed, business in my line would be greatly benefited.
9. From Böhlen, Schwarzburg-Radolstadt (fancy woodenware):
I am sure from my own experience, and my opinion is fortified by the views of my American business friends, that a mutually profitable business between the two countries could be carried on were the import duty on our manufactures not so high as virtually to close the American market to them.
10. From Sonneberg (toys):
As trade is dull in almost every country, there is nothing to be done but to wait patiently until it improves. As to America, the imports could certainly be augmented if the duties were reduced, and the exports of that country would be increased if its manufactures were sufficiently known in Germany.
11. From Hüttensteinach, Saxe-Meiningen (china-ware):
The principal cause of the dullness in business results from overproduction in the period between 1870 and 1872. In those years all the factories in almost every branch of industry were enlarged and often doubled in size, producing more goods than could possibly be consumed. In consequence of this overproduction a reaction has supervened, which is only to be overcome when manufacturing and consumption go on pari passu. The commerce between the United States and Germany would certainly be promoted by reducing the tariff of the first-named country. An ad valorem duty of 50 per cent. on china-ware, for instance, is not in any sort of proportion to the duties imposed by other countries.
12. From Pössneck, Saxe-Meiningen (china-ware):
Our trade with the United States can only be increased by a modification of the excessive tariff of that country.
13. From Arnstadt, Schwarzburg-Sondershausen (kid gloves):
The means of obviating the existing stagnation in business are only to be found in gradually decreasing production to the requirements of consumption. Commerce between Germany and the United States may only be developed by reducing the exorbitant import duties in America.
14. From Nauendof, Saxe-Grotha (china-ware and dolls):
Without doubt, the high duties imposed in America upon my line of industry are the principal hinderance to a brisk trade. If the United States would only reduce the tariff to a suitable degree, business would increase proportionately.
15. From Sonneberg (toys):
The best method of advancing the trade between the United States and Germany is to reduce the duties to the minimum upon the productions of both countries, to abolish a protective system, and, at most, adopt a revenue tariff. Upon such sound principles as these, commerce on both sides would develop to a profitable and flourishing degree. The United States ought to give up their present prohibitive tariff and introduce in [Page 71]its stead a liberal customs policy; or conclude commercial treaties with particular nations on the system which has been found so efficient during the last fifteen years by France in her commercial relations with England, Germany, and Belgium. The adoption of any artificial means to overcome the depression in commerce and industry would fail of its end. The wounds which the heavy crises on both sides of the ocean have inflicted on the general welfare can only be gradually healed. The first necessity to such recovery is that we shall have safe and peaceful times; that burdensome taxes every where shall be lightened; that confidence shall be again awakened by a promotion of the general prosperity, and that the disturbing element of social democracy shall be cast out of the land.
16. From Lichte, Sehwarzburg-Rudolstadt (china-ware):
The present dullness of trade is partly to be attributed to the overproduction of former years, but principally to the unfavorable phase of political relations. As long as the latter, in general, are not radically improved and elucidated, commerce and industry, in my opinion, will not materially recover. And, on this account, I am not sanguine that any administrative measures which might be adopted would result in any commensurate, but only in moderate benefit. Any effort to promote the commerce between Germany and the United States, in my opinion, would earliest attain its object through a reduction of the American import duties. Without considering the fact that our exports of merchandise to the United States, in consequence of, the high tariff, must grow less every year, it is to be observed that the influence of the protective tariff in America constantly works in the direction of increasing the price of labor. As a result of this, it is extremely improbable that the manufactured goods of America can. successfully compete in the markets of the world with those of other lands, excepting, of course, those kinds which are produced through the agency of machinery.
There are a number of other letters besides those which I have translated, but they are all of the same general tenor. Those that are given sufficiently show the cumulative character of the testimony.
I am, &c.,