administration, not offering
the temptation to undervaluation and misrepresentation that _ad
valorem_ rates do; on the other hand, specific rates do not adjust
themselves to price changes as _ad valorem_ rates do. If the prices of
goods go up the specific rate is relatively less and affords less of
"protection" to the domestic producer; whereas if prices go down (as,
in general trend, the prices of manufactured goods have done most
of the time) the specific duties are relatively greater. To take a
historical example, the specific rate of 6-1/4 cents a yard on cotton
goods in 1816 which was at first in fact only about 25 per
cent, within a few years became about 75 per cent and absolutely
prohibitive. For this reason specific rates have most often been used
in acts intended to increase the "protective" duties and often as a
device for immediately raising rates; while _ad valorem_ rates have
been more often used in acts prompted by the desire for less drastic
exclusion and for a more adequate revenue; but there is no essential
connection between the protective policy and specific rates. Indeed,
in the period from 1897 to 1909, when most prices were rising, many
of the specific rates under the Dingley Act, intended to be strongly
protective, afforded less and less "protection."[1]
Sec. 3. Some technical features of the tariff. All goods not subject to
duties are said to be on the _free list_. It is customary to group
articles in _schedules_, of which there are fourteen in the law of
1913, designated from A to N (for chemicals, pottery, metals, wood,
etc.), but the rates are not uniform for all the articles in each
schedule. _Drawbacks_ are a certain amount, the whole or a part, of
the duties that have been paid on imported commodities, which is
paid back by the government on the reexportation of the goods.
_Compensatory duties_ (or compensatory rates) are those levied on
certain manufactured articles with the purpose of raising their price
as much as domestic producers' costs are raised by a tariff on their
raw materials. Examples are a duty on woolen goods to offset a duty on
wool, or a duty on shoes to offset one on hides. They may be intended
to be partial or complete or more than sufficient, and are likely in
any case to work either more or less to the advantage of the domestic
producer than was intended. It may be that the conditions of supply
are such that the home price of the raw materials is raised little
or non
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