CORNELL UNIVERSITY LIBRARY Cornell University Library HJ6622 .A6 1891 The histo™ ot.Mi'L,aiJfflteffi'fflllli!ll ol)n Cornell University Library The original of this book is in the Cornell University Library. There are no known copyright restrictions in the United States on the use of the text. http://www.archive.org/details/cu31924030223964 II. THE HISTOEY OF TARIFF ADMINISTRATION IN THE UNITED STATES From Colonial Times to tlie McKinley Administrative Bill. STUDIES IN HISTORY, ECONOMICS AND PUBLIC LAW. EDITED BY THE UNIVERSITY FACULTY OF POLITICAL SCIENCE OF COLUMBIA COLLEGE. Volume I.] [Number 2, THE HISTOET OF TARIFE ADMINISTRATION TS THE UI^ITED STATES From Colonial Times to the McKinley Administrative Bill. John Dean Goss, Ph.D. ' New York. 1891. TABLE OF CONTENTS. PAGE Introduction 7 Chapter I. The Colonial Perioq 10 1. Virginia customs administration 12 2. Massachusetts customs administration 14 3. New York customs administration 17 Chapter II. The National Tariff Administration of the Eighteenth Century 24 1 . Customs officers 24 2. Entry of goods and collection of duties 26 3. System established by act of 1799 28 Chapter III. The Development of the System Established BY the Act of 1799 up to the Civil War ... 33 1. Prevention of undervaluation ^^ 2. The auction system 37 3. Appraisement reforms of 1830 40 4. Payment of duties in cash 46 5. The "similitude section" and the warehouse system . 47 6. The administrative remedy by appeal to the Secretary of the, Treasury 54 Chapter IV. Tariff Administration from the Civil War TO 1890 57 1. Attack on the warehouse system 57 2. TripHcate invoices 59 3. Dutiable value 61 4. Appraisement at the port of New York 62 5. Transportation in bond 63 (V) vi TABLE OF CONTENTS. PAGE 6. Special agents and general orders 64 7. Searches and seizures 66 8. Compensation of customs officers 68 9. Repeal of the moieties clause 69 10. Repeal of discrimination against goods from the far East 71 11. Dutiable value and similitude section under the act of 1883 71 12. Classification of sugars under the act of 1883 ... 73 13. Passengers' baggage 74 Chapter V. The McKinley Administrative Bill of 1890. 76 I. General purposes of the late tariff acts 76 - 2. Increased stringency of provisions to prevent fraud . . 78 3. Remedies against appraisement and classification ... 81 4. Abolition of damage allowances 84 5 . Manufacturing in bond and drawbacks 84 6. AboUtion of fees 87 Conclusion. General Tendencies of Tariff Administration IN the United States . . / 88 THE HISTOET OF TARIFF ADMINISTRATION IN" THE u:n'ited states. INTRODUCTION. Taxes are necessary for all governments, and the method of their collection has always been the problem of administrators. Let us take it for granted as long since settled that indirect taxation is the best form from an administrative standpoint. Its most frequent and productive application is now found in the taxation of imports. Import taxes, striking the goods in transit, meet them at their weakest point ; the machinery of collection can be made simple and accurate in its workings, while the expense of collection may be reduced to a minimum. Our national government has seen fit (with a few brief ex- ceptions) to confine itself to indirect taxation, and throughout its history has derived the bulk of its revenue from taxes on imports. If the aim of the United States tariff had been ex- clusively financial, a better knowledge of administrative meth- ods, derived from a study of foreign institutions, an acquaint- ance with the necessary requirements combined with a devel- oped business ability, would ere now have solved the problem and would have given us a customs administration simple and (7; 8 TARIFF ADMINISTRATION [82 fair, if not — under our present civil service methods — of the highest efficiency and economy. But the adoption of the policy of protection, the very logic of whose honest application com- pelled the taxation of an almost innumerable list of articles, and the very general introduction of ad valorem rates vastly complicated the problem. Another and very difficult element was thus introduced ; for the collecting organs, in levying and receiving the tax, not only had to find imported goods and determine their bulk and general nature, but were also com- pelled to ascertain their value. To do this accurately for a single class of articles requires an intimate knowledge of its innumerable grades, qualities and textures; an extensive ac- quaintance with foreign markets, with freight rates, commis- sions, insurance and a multitude of details imperfectly ac- quired even by a lifelong business experience. Even in standard articles there remains a wide margin of error; while in the numberless new and rare miscellaneous products that are daily increasing in amount, the assessment of valuation in many cases, must be based upon mere conjecture. The point of greatest friction in any tax system is obviously that of payment ; and the greatest patriotism, the strictest per- sonal and business integrity, have been found insufficient to deter men from deceiving the government in all possible ways. The ideal system is that in which the assessor and the taxpayer are as nearly as possible in hearty accord, and where a fair, open spirit prevails in all their dealings. Not only has the opposite condition of things been firmly established in the United States, but this seems to be the legitimate outcome of any system of ad valorem duties. Furthermore, the immense development of the consignment system^ has brought it about that a vast body of importers, especially in New York — where four-fifths' of our imports land — are unnaturalized foreigners, out of sym- pathy with our institutions, and openly and avowedly using every advantage in their dealings with our government. ' Finance Report, 1885, Vol. 11., p. vi. 83] IN THE UNITED STATES. g As a consequence of these peculiarly embarassing condi- tions our present customs system has grown to be what it is; and if in its study we find great imperfections or even great injustice, let us in each case remember the manner of its growth — the unhealthy conditions that have fostered these unseemly results. If in its present state we find many things to criticise and some to condemn, let us see whether a brief re- view of its history will not lead us to conclude that it has been one of progress, auguring well for the future. CHAPTER I. THE COLONIAL PERIOD. The colonists were farmers, and the farmer of that day was also blacksmith, mechanic, carpenter, cobbler, weaver and jack of all trades. Not only did the colonial farmer hew his own timber, build his own house, make his own furniture, con- struct his own rude implements, wear home- spun, eat of his own raising and drink of his own brewing; but the few things that he bought came mostly in exchange, and were as limited as were his wants and as simple as were his habits. Among a people living thus it is small wonder that the revenue from any system of indirect taxation should but barely pay the cost of its collection. Indeed, the result of attempts to enforce the measures by which England sought to gain a revenue from the colonies was usually a net deficit; while the colonies themselves experienced great difficulty in raising money for their own affairs.^ Direct trade relations with other countries were limited, and in the case of some arti- cles prohibited, by the British Navigation Laws; and though we hear much of a flourishing illicit traffic, we find that the colonial marine was engaged mainly in the fisheries, and that general commerce was small in amount and confined to few articles. Then again we are struck with the simplicity of the laws, the comparative independence of each official, the hatred of restraint and disregard of all rules, that made every officer a mild autocrat and every underling a sturdy insubordinate. As Professor Sumner^ has so plainly pointed out, the national 'Kalb states that after the seven years' war the colonies were all in debt, Life of J. Kalb by Frederick Knapp, p. 291. ^ Life of Hamilton. (10) 85] IN THE UNITED STATES. II characteristics of the pre-revolutionary and revolutionary times were by no means what we have since come to regard as American. The revolutionists had unlimited time to talk vaguely on ab- stract matters of freedom, representation and government; they delighted to get together and discuss their wrongs and rights; but their knowledge of good administrative methods was slight, while their interest in governmental efficiency was not apparent. All their ideas were colored with extravagant notions of individual liberty. It is not strange, therefore, that we find them greatly lacking in administrative ability. They hated system, they hated restraint of any kind, and naturally proved anything but efficient administrative officers. Various obnoxious English customs acts were passed from time to time, and more or less successful attempts were made to enforce them; but the manner of their enforcement seems to have been left largely to the discretion of the resident English officials, who were far from being exemplary administrators. The whole effect of these laws, instead of instructing the colo- nists in methods of revenue collection, was to familiarize them with methods of evasion, and to emphasize that almost univer- sal desire to cheat the government, whose presence to-day, even among otherwise honorable people, is such a curious phe- nomenon in public ethics. Before the adoption of the Consti- tution, however, nearly all the colonies had imposed slight taxes upon imports. The methods of collection were in most cases prescribed with great looseness if at all; while the agents designated were usually local officers whose functions as col- lectors of imports were added to, and inextricably confused with, a multitude of other entirely inconsistent duties. In order to obtain a general survey of the various systems' in vogue in the colonies, it will be well to take a chief repre- sentative from each system — Virginia for the southern system, Massachusetts for the New England system. New York for the Middle States system. The conditions in these colonies were typical of all the others in the respective classes. 12 TARIFF ADMINISTRATION [86 I. Virginia Customs Administration. One of the earliest colonial customs laws that is recorded, aside from those laws imposing dues upon tonnage, which were almost universal, was that passed by the Council of Virginia in 1657-8.^ In the compass of some twenty lines it provides for the collection of ten shillings a hogshead on all tobacco raised by the sale of Dutch^ goods and exported in Dutch vessels ; and that any person so required must make statement under oath of all goods brought in or tobacco exported. The commissioner of the county court was required to prevent fraud and to see that the Dutch made truthful statements to the governor's agent under penalty of double the amount involved. Tobacco being practically the sole export of the colony, this was in effect an import tax; but the first strict import duty was not laid till 1661,'* when rum and sugar were required to pay a certain impost and their unloading was forbidden except at appointed ports. The primitive mode of collection is indicated by the act of October, 1670, which ordered that duties be paid in "money or good bills of exchange," and not as theretofore in goods; and it appears that at this time the county courts appointed the collectors. In 1691 due entry was required stating the amounts, etc., of dutiable goods on board. The duty was to be paid, or bond given for its payment, before the goods were allowed to be put on shore. In case of false entry a penalty of ;£^iOO was imposed for each offense. No changes of importance took place in the import laws of 1 Henning, Statutes at Large, Vol. I., p. 469. " Dutch was interpreted to mean all foreigners. s The different authors of the Statutes at Large agree in calling this merely a penalty for not unloading at the prescribed places, but the wording of the Statute certainly warrants the statement of the text, which is further confirmed by the quaint heading of the bill — " Whereas excessive abuse of rum hath by experience bin found to bring diseases and death to diverse people and the purchasing thereof made by the exportation and unfurnishing the country of its owne supply and staple articles, be it enacted," etc. 87] IN THE UNITED STATES. 1 3 this colony until the revolution taxed its strength and com- pelled it once more to turn to this source for revenue. In October, 1779, "an act for raising a supply of money for the service of the United States " levied a tax of two and a half per cent, ad valorem on all goods "imported and bought to be sold again." This curious piece of legislation did not tax goods on their importation,, but on their subsequent sale — the tax to be paid by the purchaser; the "vender to render ac- count upon oath to the commissioners of tax" of every such sale exceeding ;^iooo, within one month after it was made, under penalty of triple the duties thereon. These commission- ers were empowered to examine every such purchaser on oath as to how much of the goods were " bought to sell again," and how much for his or his family's consumption, and the tax decided to be due thereon was to be collected by the sheriff in the same manner as other taxes. The "venders" of goods at retail were compellable to testify under oath as to the amount of their sales, and to pay an assessment on their stock in trade. Penalties in triple the amount of duties were stipulated through- out the bill, and suits brought to recover penalties had prefer- ence over private suits. It is not surprising that this remarkable enactment was su- perseded a year later by another act which, in addition to ton- nage dues, laid specific duties on wines, liquors, sugar and molasses, and upon " all imported dry goods except salt, mu- nitions of war and iron from Maryland, * * * one per centum upon the value to be ascertained by the cost thereof at the port where laden * * * or put on board by the cap- tain or owner of the vessel importing the same," to be paid in specie at the port of importation by the captain or owner and collected by the " naval officer." In case of non-payment, con- cealment or delay, the vessel was to be forfeited. A curious provision of this act, and one which puts our colonial legisla- tors in a somewhat ludicrous light, is the clause providing " as an encouragement to captains and masters" to make a true 14 TARIFF ADMINISTRATION [88 and faithful " return of dutied goods," that they should be allowed to import for each lOO tons burden of their vessel " 200 pounds worth of goods at first cost duty free." In November, 1781, on the recommendation of Congress, that body was empowered by the legislature of Virginia to levy a five per cent, duty, and to appoint collectors and make needful regulations [not repugnant to the state laws and con- stitution] for the collection of the same. The operation of the act was to be suspended until like action was taken by the other states. Entry was to be made within ten days, and the duty paid in cash, or bond given for six months. The ship master was to pay all duties, and was to be reimbursed by the owner of the goods in case they were imported by a person other than the shipowner. A limited provision Avas made for what we should call shipment in bond from one county to another; and the usual fines and penalties were prescribed. By this law false entry subjected the wrong doer to a fine of ;^I00, but in May, 1783, this was changed to ;^200 and forfeiture of the goods so entered. Again in October, 1783, following its rec- ommendations of the preceding April, Congress was empow- ered to collect certain duties under conditions similar to those of the act of 1781, with the added provision that the Governor was to appoint collectors, who were, however, to be remova- ble by Congress. It is needless to say that none of these later acts went into effect ; the states failing to agree and some absolutely refusing to act at all. 2. Massachusetts Customs Administration. In Massachusetts, in the earliest times, the collection of im- ports, like the collection of excises, was farmed out under the supervision of commissioners.^ The general import tax of November, 1668,^ was also to be administered by a body of ' Numerous references throughout the Records of the Massachusetts Bay Col- ony. Vol. IV., Pt. II., p. 410; Vol. v., p. 51. ■'Ibid., Vol. IV., Pt. II., p. 410. 89] IN THE UNITED STATES. 1 5 commissioners. The act of the following May^ (1669) out- lined the method of collection. Goods were to pay one penny for every twenty shillings value — this value to be ascertained by adding twenty per cent, to the value at the place whence imported. The " master, purser, boateswaine or skipper " of a ship upon its entering a port and before breaking bulk or land- ing any goods, must certify their value to the town treasurer or collector " by him empowered." The collector should there- upon enter in a book kept for that purpose a description of the goods, their marks and coverings, and the name of the person to whom sent. Before landing any goods the owner or im- porter " must signify the true value thereof by showing the just invoice " to the collector, who should forthwith enter the gross sum in his books and demand and receive the proper rates. In case of denial or delay in payment the collector might levy distress upon the goods. If the invoice were " falsified, concealed or not produced," the treasurer or collec- tor with the selectmen of each town concerned should rate the goods "according to their best discretion'' at not less than £^ per "tun." In a difficult or doubtful case the officer should "repaire to the governor and council, who would give direc- tions " for the execution of the law. The order of May 28, 1679,^ contained additional provisions requiring all collectors to take oath faithfully to perform their duties, and providing that no more than the legal fees of two shillings per pound be exacted. All dutiable goods were to be landed at appointed wharves, and goods landed without being entered should be put in a warehouse and secured by the col- lector until the owner made entry and paid the duties. In 1692^ the compensation of the commission appointed by the governor or council to supervise .collection was fixed at one-sixth of the receipts for their own services and those of 1 Records of the Massachusetts Bay Colony, Vol. IV., Pt. II., p. 418. 2/i5?(4, Vol. v., p. 214. ' June 24, 1692, Acts and Resolves, Vol. I., p. 30. 1 6 TARIFF ADMINISTRATION [90 their under officers; but two years later the commission was abolished, and the matter was given into the control of a single salaried commissioner, who was to appoint the under officers, and with the treasurer to determine their compensation.^ This remained the system until the Revolution. The de- tails of the methods of collection were slowly developed, the law being reenacted each year with a few changes and occa- sional additions down to 1784, the last year in which the reg- ular customs rates for the province were levied. At this time the law required the master of an arriving vessel to make re- port and deliver a written manifest to the commissioner within forty-eight hours after arrival. He must also take oath that the manifest contained a just and true account of all imported goods,^ and that he would report any others if discovered. If before this any goods were unladen, the master should forfeit ;^iOO.^ Owners or consignees of goods must make entry of them in writing, " produce an invoice of such goods as pay ad valorem',' and make oath before the collector in the following form :* "You, A. B., do swear that the entry of goods or merchandize, as by you made, and the value thereof annexed, is bona fide, according to your best skill and judgment, according to the price current or the market price of the said goods." • At first the treasurer was also to aid in their appointment. ''The law of June 9, 1696, Acts and Resolves, Vol. I., p. 236. 'Law of December 7, 1698, Acts and Resolves, Vol. I., p. 348, increased from ;^50, as required by law of 1697. * The law of June 18, 1697, provided that if the collector suspected the invoice he might compel the importer to make oath to it. In 1717 [June 22, Acts and Resolves, Vol. II., p. 77] all invoices were required to be sworn to, and the subse- quent laws contain many forms of oaths. At about this time the " original in- voice" was to be exhibited, and where it was suspected that the goods were con- signed on foreign account special oaths were required of the person by whom the goods were entered, that he was the real owner, and that no foreigner was in any way interested in the goods. This was rendered necessary by the retaliatory dis- criminating duties against foreign goods. 9l] IN THE UNITED STATES. 1 7 If the importer could not produce the invoice of liquors im- ported by him, the casks should be gauged at his expense and the duties levied thereon accordingly. Twelve per cent, was allowed for leakage,^ and damage allowance was made on " decayed wines " if claimed within twenty days after entry .^ All duties were to be paid before the goods were landed, though the commissioner might at his discretion give limited credits. The master was liable for the duties on all goods listed in his manifest that were not duly entered, and in order to protect himself might retain the goods until they were entered. The ship was also liable for any default of the mas- ter or in the payment of duties.* The naval officer was not to allow a ship to clear until a certificate was shown him, under the hand of the commissioner, that all duties had been paid. * Stores of the ship not to exceed three per cent, of the lading were exempt from entry. The commissioner and his deputies had power to administer oaths and to search for and seize all suspected goods. All penalties, fines and forfeitures recovered were to go one-half " to his majesty for the use of the prov- ince" and one-half to the informer.* It is interesting to notice that the salary of the commissioner for the year was :^6o " for his labor, care and expenses in said office." J. New York Customs Administration. The first acts of the Dutch West India Company with refer- ence to the new colony contained provisions for export and import duties. Specific rates were levied on furs and codfish, ^ and among the early ordinances of the Director and the 1 Act of June 24, 1692. •" Act of June 9, 1696. Acts and Resolves, Vol. I., p. 236. 'Law of December 2, 1698. Acts and Resolves, Vol. I., p. 350. *Law of June 29, 1700. Acts and Resolves, Vol. I., p. 436. = A similar provision is found in the laws of Virginia. « Freedom and Exemptions Granted by the West India Company, June 7, 1629. Laws and Ordinances of New Netherlands, pp. 6-8. 2 1 8 TARIFF ADMINISTRATION [92 Council of New Netherlands, one dated August 19, 1638/ required all tobacco exported to be brought to the approved warehouse, inspected by the regular inspector, and the export duty (five out of every one hundred pounds) paid, under penalty of forfeiture of the whole. The ordinance of April 3, 1642,^ imposed certain export duties and an import duty of ten per cent, "in kind of wares or money" to be paid the " Receiver of the Companies revenues." A little later (1648) ^ all goods were required to be entered with the " Fiscal, or, in his absence at the office of the Receiver," under penalty of forfeiture of the goods and the ship. Numerous acts followed, the most important being that of April 27, 1656.* Under it all goods were to be entered with the farmer of the revenue or his collector, who should attend at the weighing-house on certain hours of certain days therein prescribed. From him, after entry, the "shipper or mer- chant" would receive a permit of landing, setting forth the full quantity of goods to be unladen, by whom shipped and to whom consigned. The goods should thereupon be "trans- ported"* before sundown. Under this ordinance the " Fiscal" was to inspect all departing and arriving vessels. Later pro- visions^ forbade goods to be landed till entry had been made and the duties paid. Goods shipped to or from Amsterdam in its trade with this colony were sent through a special ware- house and there opened and marked.' Under the English rule, there was probably at first no great change in the manner of collection, for the law of April 16, 1693, required, as did the former Dutch law, that goods, ^ Ibid., XI. 16. ^ Ibid., -p. 31. ^ Ibid., p. 86. * Ibid., p. 220. ^ From the context this would appear to mean unladen. " Laws and Ordinances of New Netherlands, p. 350. ' Law of 1656, Ibid., p. 245. A peculiar prohibition is to be found among these ordinances, declaring that no person should be allowed to offset against duties due, claims against the Company bought by him from the Company's servants. Ibid., p. 410. 93] IN THE UNITED STATES. Iq whether exported or imported, be brought to the weigh-house in New York and the duties there determined. By refusal so ' to do the merchant rendered himself liable to certain forfeit- ures; in case of successfuf prosecution therefor, the informer or prosecutor was to get one-half of the sum forfeited, besides his costs. It is difficult to determine when the different features of the New York system were adopted. In 1720^ we find that the master, mate or purser of an arriving vessel should repair to the custom house and there " declare all the parcels " of dutiable goods that were on board. The owner or consignee of goods was then to make entry, with the collector or deputy, taking oath that the entry was according to the invoice. In case they were European goods, the entry was to be according to their "prime cost." A copy of the entry being given the treasurer, he should furnish a permit, upon the presentation of which the collector should allow all goods therein designated to be unloaded. At this time six weeks credit was allowed on duties. Twenty years later the system had farther developed, and we find it to be in outline as follows. ^ The master, mate or purser must within forty-eight hours after the ship's arrival deliver to the treasurer a sworn manifest under his hand, mentioning the quantities of all goods on board and the person to whom they were consigned. The consignee was to make particular entry of the goods, at the same time paying the duties, or, if over ten pounds, securing them to be paid on three months' time. If invoices were produced, he was required to take oath to the effect that the value as stated in the invoice was to the best of his belief the real and true value. If no invoice was produced, the treasurer was to ap- '• Acts of the Assembly, 1691-1725, Bradford, p. 197. ^ Law of November 3, 1740. Livingston & Smith, Laws of New York, Vol. I., p. 281. At this time, in addition to various specific duties, all European and East Indian goods imported were to pay five pounds for every one hundred pounds value " prime cost." There was also a duty on slaves imported, and quite extended provisions for its collection. 20 TAEIFF ADMINISTRATION [94 point " one credible merchant and the importer another, who were to appraise such goods to the best of their judgments," the appraisement to be at the expense of the importer and to settle the real value of the goods. The certificate of the treasurer as to entry was addressed to the " land and tide waiter" ■* — an inspection officer having supervision of the ship and cargo — and permitted the free landing of the goods. The master must indicate at what wharf he would land them, and if landed at another should forfeit five pounds therefor. If goods were landed without permit they were to be forfeited. Sea stores were to be excepted from the manifest, and ten per cent, allowance might be made for leakage. Exported goods when reimported after once having paid duty might be ad- mitted free, on oath to that effect being taken and the circum- stances indicated. The next legislation of importance, aside from the conditional laws passed at the request of Congress and which never went into effect, was in 1784^ when a law of some completeness was enacted, levying specific duties on a considerable list of articles and an ad valorem duty of £2 lod on every ";^ioo value prime cost" on all goods imported excepting some few enunerated, and all goods, wares and merchandise of the growth, product or manufacture of the United States of Amer- ica or any of them. The provisions made in this act for collection are of con- siderable interest, as it seems more than any one other to have formed the basis for the first customs collection laws of the United States. It provides in outline as follows. Within seventy-two hours after a vessel's arrival at any harbor in the state (south or east of New York — except Sagg ' A term borrowed from the English law. When these officers were first intro- duced into the New York system does not appear, and their exact duties are no where defined. Section 10 of the law of December 12, 1753, [Van Schaak. Laws of New York, Vol. I., p. 326] requires that they should take* an oath not to accept any fee or gratuity whatsoever. See infra, law of 1 784. " March 22, Laws of New York, Vol. L, p. 599. 95] IN' THE UNITED STATES. 21 Harbor) the master, mate or purser, under penalty of ^loo for neglect and i^Soo for fraud, was to deliver to the collector of the port of New York an exact and true manifest of all " goods, wares and merchandise " which the ship had on board at the time of leavmg her last port or subsequently, and particularly specifying the " packages, bales, casks, chests, trunks, cases or boxes " with their marks and numbers, and the names of the owners or consignees. This manifest was to be sworn to according to a prescribed form, and the duties appearing due thereon were to be paid or secured before any goods could be landed. Goods landed in violation of this provision, or at any time between sunset and sunrise, were to be forfeited, and the master was to incur a penalty of double their value. If the collector suspected the manifest he might cause the ship to be thoroughly inspected by the " land and tide waiters," who might affix locks, for further protection, to all hatches, etc., of the vessel during the night. / The next step was for all persons having goods on board to make particular entry of such goods by exhibiting the original invoices, leaving copies of them and taking a prescribed oath as to their accuracy. The duties were ascertained, and if less than ^20 were to be paid in cash, or if exceeding that sum were to be secured by a bond with two sufficient sureties on three months' time. Thereupon the collector was to deliver to the importer a certificate directed to any land and tide waiter, stating that the duty on certain goods had been paid or secured and that they might be landed. But in case the col- lector suspected fraud in the invoice he might cause the goods to be examined, and any packages containing uninvoiced goods were to be forfeited. If any dispute arose as to the value of any dutiable goods, or in case of damage resulting to them on the voyage, appraisement might be had at the expense of the contesting importer. The collector was to appoint one merchant and the importer another, who upon taking oath before a justice of the peace well and truly to 22 TARIFF ADMINISTRATION [96 appraise the goods, were to determine their value; but in case they were unable to agree they might jointly appoint a third merchant to join them, the decision of any two being binding. Goods consigned to another state should be so declared in the manifest, and upon fulfilling certain formalities, the per- son exporting the goods might bring them in duty free, on executing z. bond with two sufficient sureties in double the amount of the duty. If within twelve months proof were not produced of the arrival of the goods at their destined port or of their loss at sea, the bond was to be prosecuted. Penalties pro- vided for might be sued in any court of record by any person, one-half to go to the state and one-half to the person bringing suit. The governor, with the consent of the council, was to appoint the collector, gangers, weigh-masters and land and tide waiters.'^ The collector was to give official bond, to keep books and render quarterly accounts.^ On November i8th of the same year, "an act for the estab- lishment of a custom house" was passed, which farther defined the form of official oaths and bonds, the duties and fees of cus- tom officers and provided for the appointment of a " surveyor and searcher," who had practical superintendence of the har- bor and of the "land and tide waiters." In 1786, New York granted to the United States certain im- posts enumerated, which were to be collected by the New York officials according to the New York law, their expenses to be deducted from the receipts.'* On March 12, 1788, the ' The duties of these ofScers were prescribed m the law, but are sufficiently in- dicated by their names. 'The pay of the New York collector was "a salary at the rate of ^^1200 per annum as a full reward and compensation for his services, and for house or office rent, clerk hire, fire-wood, messengers or servants to attend to the office, station- ery and all other contingent expenses whatever." ' With this style of support, it is little to be wondered at that the Continental Congress was never able to levy an impost duty. This act was to go into effect when the same imposts had been agreed to by the other states — a fine example of New York's dictatorial position. Q7] ^N THE UNITED STATES. 23 collector was empowered to appoint certain stores as bonded warehouses, wherein goods might be stored duty free, bonds being given in double the amount of the duties due. The duty was to be paid from time to time as they were with- drawn for use, or remitted in case they were exported within eighteen months after entry. CHAPTER II. 'NATIONAL TARIFF ADMINISTRATION OF THE EIGHTEENTH CENTURY. Under the confederation of 1777 the Continental Congress made numerous but futile efforts to induce the states to join in levying taxes on imports for the benefit of the common treasury .'^ Indeed this was about the only feasible method of raising revenue that the articles would allow. The first or second act passed after the organization of the Congress, under the constitution of 1787, was " an act for laying a duty on goods, wares and merchandise."^ Besides specific duties on a few articles, this law imposed ad valorem duties varying from fifteen to seven per cent, on certain enumerated articles and five per cent, on all other goods, with a few exceptions. In the same month "' an act to regulate the collection of duties," etc., was passed.^ This act divided the country into collection districts, and enumerated the ports of entry and de- livery, of which there must be at least one in each district. In some thirty-eight sections it proceeded to form the entire machinery and process of collection. It is plainly a hasty compilation from the laws of the various states — following very closely the late laws of New York, and even copying whole sections almost verbatim. I. Customs Officers. The collection districts were mapped out then with refer- ' Rhode Island was the most obstinate in its refusal to comply with the request of Congress, claiming that in some inscrutable way it would tend peculiarly to the detriment of her commerce. ^ Act of July 4, 1789. Statutes at Large, Vol. I., p. 24. • 'Act of July 31, 1789. Statutes at Large, Vol. I., p. 29. (24) 99] ^^ THE UNITED STATES. 25 ence to the state lines, no district lying in more than one state ; but this has long since been disregarded, and, as the result of subsequent legislation, district lines now have no reference to any local divisions. The officers provided for were the collectors, deputy collec- tors, naval officers, surveyors, weighers, measurers, gaugers an'd inspectors. Each district was allowed a collector at its port of entry and a surveyor at each of the ports of delivery. The ports of entry also had a surveyor and the larger ones a naval officer. Thus the higher officers of what has since become the normal port were the collector, naval officer and surveyor. ^ As their duties have in general remained the same, it may be profitable to notice how they were fixed by this act. The collector was to receive all reports, manifests and doc- uments, and to keep a record of them, to receive the entry of all ships and goods together with the invoices of the latter. He was to estimate the duties payable thereon and endorse the same on each entry; to grant all permits of unloading, ^i^c, and to employ all weighers, measurers, gaugers and inspectors in addition to such other persons as were necessary. With the assent of " the 'principal officer ' of the treasury department" he could designate store-houses for the safe-keeping of goods. The naval officer^ was to countersign all orders of the col- lector, to receive copies of all manifests, and to act in general as a check upon the collector. The surveyor was to superintend all weighers, measurers and gaugers, and to have general supervision of the boarding of arriving vessels and the inspection of their cargoes. The deputy collector was appointed by the collector, who was responsible for his acts, and might exercise the same au- thority as the collector. ' Appointed by the President by and with the advice and consent of the Senate. 2 The usefulness of this officer has been often doubted, and the abolition of the office altogether strongly urged. 26 ' TARIFF ADMINISTRATION [lOO 2. Entry of Goods and Collection of Duties. The main provisions of the act and the general method of entry and collection were the same as those previously ex- plained under the New York law of 1784. The master was to deliver two manifests to the boarding officer — one of which was signed and returned to him and the other transmitted to the collector (§ 10). He was also to make entry, under oath, within forty-eight hours after arrival of the vessel, and further entry of goods on board was to be made by the owners. (§11). The inspector took the place of the " land and tide waiter." He had the same functions except that at the expiration of fifteen days' from the arrival of the ship he was to take charge of all goods not yet unloaded and hand them over to the col- lector to be kept for nine months at the risk of the owner in the public stores. If not claimed within that time, they were to be appraised by two reputable merchants and sold for the benefit of the United States. Ad valorem duties upon all goods at the place of importa- tion should be " estimated by adding twenty per cent, to the actual cost thereof if imported from the Cape of Good Hope or any place beyond the same, and ten per cent on the actual cost if imported from any other place or country, exclusive of all charges" (§ 17). Before permit for landing goods should be given, the duties were to be paid in cash, if under fifty dollars, if more than that sum they might be secured by a bond. The bonds were to run from four to twelve months, according to the class of goods. They were to be signed by one or more sufficient sureties, and in each case of default to be prosecuted by the collector. Ten per cent, discount was allowed for prompt payment (§ 19). 'This limit, as found in § 56 of the law of 1799, remained the same until the Act of March 2, 1861, 36 Congress, Sess. II, Ch. 81, where eight days was allowed for a ship under 300 tons, twelve days for one between 300 and 800 tons, and fifteen days for those of over 800 tons. lOl] IN THE UNITED STATES. 2/ All drawbacks allowed by law' on the exportation of goods, wares and merchandise imported, should be paid or allowed by the collector at whose office the said goods, etc., had been entered and not otherwise, less one per cent, which was retained for the benefit of the United States (§ 31). The bounty al- lowed on the exportation of fish was to be paid in the same manner. If any officer should receive a fee or bribe he should for- feit not less than ;^200 nor more than ^2,000 for each offense, and be forever disabled from holding any office of trust or profit under the United States (§ 35). There was a penalty of not more than ^1,000 and imprisonment for not more than one year for false oath of importer or ship master. All penalties, fines and forfeitures were to be divided, one moiety to go to the United States, the other to the collector, naval officer and surveyor of the district, or any one or two of them in the district. But in all cases where there was an informant he should receive the moiety apportioned to the United States (§38); This law remained in force barely one year, and was re- pealed by the act of August 4, 1790,^ which was little more than a rearrangement of the one it superseded. This act still more hopelessly jumbled up the officers of the various dis- tricts, collectors being assigned to single ports within other collectors' districts, and the whole list being arranged seem- ingly without any system whatever. The only additional features of any importance were those regulating the unloading of vessels driven into port by stress of weather and allowing the sale of as much of the cargo as was necessary to pay for repairs. Certain allowances were made for tare, drafts, etc., on bulk goods. Two per cent, was allowed for leakage on wines, etc. Damaged goods in both ' Act of July 4 allowed drawbacks on all articles shipped within twelve months of their entry except on distilled spirits other than brandy or geneva. '^ Statutes at Large, Vol. I., p. 145, Chap. xxxv. 28 TARIFF ADMINISTRATION [l02 these acts were appraised in the same manner as goods with a false or defective invoice, or with none at all (§ 35).^ The President was also authorized to order revenue cutters to be built, officered and armed. No further changes of importance were made in custom regu- lations during the next nine years, although the tariff rates were raised and changed at various times. On March 3, 1797, ^ the percentages received by the different officers at the various ports on the gross receipts at their respective points were re- arranged and definitely fixed, and the compensations of the lower officers were stated.^ J. System Established by Act of ijgg. On March 2, 1799, all former laws were repealed and their place taken by the elaborate enactment which " has remained to this day as the foundation and the framework of subs^uent legislation for the taking possession of arriving merchandise and the levying and collecting of duties thereon."* Up to this time the yearly income from customs had never reached ten million dollars,^ and was far more evenly distributed among the different ports than it has since been. The num- ber of officers at any port was small and the collector had been allowed to use his own common sense and business ability with regard to the direction of office methods and de- tails of the administration, and might please himself as to the forms of most of the documents, bonds, etc., required to pass through his hands. But it was evident that to afford any adequate method of supervision or control, more minute regu- lations must be imposed and standard forms established. The system had been in operation so long that inspection of ' The laws of the colonies had been much more liberal than this, in some the allowance being fixed at as high as twenty per cent. ^ Statutes at Large, Vol. I., p. 502. * These were increased by act»of 1832 and maximum rates fixed. * Secretary Manning in Finance Report for 1885, Vol. II., p. iv. *In 1800 it was ^9,080,932. 103] ^^ ^^^ UNITED STATES. 2g accumulated records and comparison of forms and methods followed in the light of the experience which their operation had given, could furnish an ample basis on which to construct a more complete working system — a codification, as it were, of customs administrative law. This Congress proceeded to do, and with such remarkable skill and thoroughness that, although our revenues from imports have doubled many times over since then, and in spite of the bewildering complexity and variety of articles subject to duty as well as of the im- proved means of transportation and the many changes in the facilities and methods of conducting business, the act passed in 1799 has remained the trunk upon which all subsequent enactments have been grafted. It nils eighty-two pages in the statute book and goes into great detail, containing no less than fifty-six forms, prescribing eleven different bonds, indicat- ing fourteen different kinds of schedules and providing for nineteen separate oaths. The system provided for local agencies with the collectors at their head. The collector was the agent for communica- tion with the other departments and with the central author- ities. In the larger ports his more important acts were supervised by a naval officer, and his chief lieutenant out of doors was the surveyor. The duties of the minor officers were more or less minutely defined and were in general as pre- viously described. The country was again redistricted, this time on a definite plan, with one port of entry in each district at which the collector of the district resided. There might also be a surveyor, and possibly a naval officer, according to the importance of the district. Other ports of delivery of suf- ficient importance within the district were provided with sur- veyors. The principal officers were required to give bonds, and all officers were required to take oath that they would faithfully perform their duties. This was taken before any competent magistrate by the collector, and before the collector by all the other officers, and was then to be transmitted to the comp- troller. 30 TARIFF ADMINISTRATION [104 The provisions for the delivery of the manifest, its contents and form were exactly prescribed, but followed in general the provisions of the previous laws, except that special formalities and papers were required for cargoes containing spirits, wines or teas. Special bonds were required for shipnient from dis- trict to district or to a foreign port. The manifest was now required to contain a list of all passengers and a description of all their baggage, together with a complete account of all remaining " sea stores " and ship supplies, which of course were to be exempt from duty. "Wearing apparel, and other personal property, and the tools and implements of a mechanical trade only," belonging to persons who arrived in the United States, were free and ex- empted from duty (§ 40).^ Descriptions of all baggage and its contents were required to be furnished, and an oath taken that they were intended solely for the use of the person importing or for the use of his family. But in lieu of the latter declara- tion the collector and naval officer, whenever they saw fit, might cause the baggage to be searched and duty levied on all goods found therein, which in their opinion ought not to be exempted. In case any articles were found which were not enumerated in the entry, they were to be forfeited and the person in whose baggage they were found was to forfeit treble their value. Entry of goods by owner, agent or importer was to be made within fifteen days after the master's report, and the formalities therefor were fully described. As in the former laws, the collector was still permitted at his discretion to hold so much of the goods as he deemed sufficient to secure the duties, in place of sureties on the bond; and in case of de- fault on the bond he might sell them at public auction, render- ing the overplus to the importer. The duties of the various officers were more accurately mapped out than in the former acts; the forms of their certifi- ' For the present provisions see " Wearing apparel," Free List § 2 of the last act. I OS] IN THE UNITED STATES. ,1 cates to importers and their reports to the collector were pre- scribed, and the previous set of fines and penalties was left prac- tically unaltered. Over ten pages were filled with regulations respecting the exportation of goods on which drawback was allowed. In substance they required the exporter of imported goods enti- tled to drawback to show within one year after exportation if to Europe, or two years if to Asia, a certificate from the foreign consignee, receipting for and declaring to have received the goods, which were specifically described; this to be sworn to by the chief oflficer of the vessel bearing the goods and to be con- firmed by a certificate under the hand and seal of the consul or agent of the United States residing at such place, stating the same to be true or to be " worthy of full faith and credit." Where there was no resident consul or agent the certificate of the consignee was to be supported by that of two " reputable American merchants residing at said place, or, if there were no such American merchants, by the certificate of two reputable foreign merchants." This clause is of interest as being the first mention of consular participation in the verification of in- voices, and as probably suggesting the subsequent extension of this practice to imported goods also,^ which has since be- come a prominent feature and one of the greatest sources of annoyance and scandal in our entire revenue system. All officers of customs were forbidden under penalty of five hundred dollars to be concerned directly or indirectly in ship- ping or commerce. The act also repeats the " moiety pro- visions " of the old law with regard to the division of moneys received from fines and forfeitures, with the addition that when the information was contributed by any officer of a revenue cutter, one-quarter should go to the United States, one-quarter to the customs officers, and the remainder be divided among the officers. of the cutter "agreeably to their pay." It was further provided that, except in certain districts, no ' Act of April 20, 1818. 3 2 TARIFF ADMINISTRA TION [ 1 06 goods were to be brought into the United States except by sea and in vessels of at least thirty tons burden (§ 92). " Useful beasts '' imported for breeding puposes, upon oath or affirma- tion to that effect, were allowed to be brought in free. One section (§ 102), provided that cutters and boats used in the revenue service " shall be distinguished by an ensign and pendant [sic], with such marks thereon as shall be directed by the President." ^ The minimum size of casks and packages in which beer, wine, etc., should be imported was prescribed (§ 103). This is the forerunner of that vexatious legislation restricting the size and shape of imported packages; the cause of no little grumb- ling under our most recent tariffs. The remaining sections of the bill provided for the transportation of Canadian goods through our territory in bond, the goods being subject to entry and examination in the same way as goods imported for con- sumption. On the same day another and supplemental statute was passed fixing the rates of fees, the division of them among the various officers, and the compensation of the minor persons in the service. ' The revenue flag was adopted and announced in the circular of the Secretary of the Treasury, Aug. i, 1799. CHAPTER III. THE DEVELOPMENT OF THE SYSTEM ESTABLISHED BY THE ACT OF 1799 UP TO THE CIVIL WAR. I. Prevention of Undervaluation. After the passage of the exhaustive Act of 1799 very HttJe tinkering was done with customs administration for a number of years.^ From time to time minor regulations of httle im- portance were imposed, and special temporary measures were adopted during the war of 1812. In 1816 the pay of all the minor officers was increased one-half On March 3, 1817,^ the rule regulating the estimation of values on goods subject to ad valorem rates was changed so as to read " it shall be calculated on the net cost of the article at the place whence imported, exclusive of packages, commissions, charges of transportation, export duty and all other charges," with the usual additions theretofore established of twenty per cent and ten per cent, respectively. The next important act after that of 1799 was that of April 20, 18 18, whereby the time for which goods were to be held, when not admitted to entry because of the failure of importer to produce the original invoice, was shortened to six months (nine months if from beyond the Cape of Good Hope).^ And ' List of intervening Acts : March 2, 1 803, Statutes at Large, Vol. II., p. 209 ; February 22, 1805, Statutes at Large, Vol. II., p. 315; April 21, 1806, Statutes at Large, Vol. II., p. 399; February 4, 1815, Statutes at Large, Vol. III., p. 196; March 3, 1815, Statutes at Large, Vol. III., p. 231. 2 Statutes at Large, Vol. III., p. 369. ' Former laws had required the original invoice to be produced, but no special method of procedure in default thereof was established. The method probably followed was that prescribed where goods were not entered within the fifteen days allowed. Cf. supra, p. 26. 3 (33) 24 TARIFF ADMINISTRATION [lO§ the Secretary of the Treasury was given the authority, if he deemed it expedient, to direct the collector to admit the goods to entry on an appraisement. The President was to appoint two persons well qualified to perform that duty, at a salary of ^i.SdO per annum (at New York ^2,000), to be appraisers at each of the ports of Boston, New York, Philadelphia, Balti- more, Charleston and New Orleans. On taking oath " faith- fully to inspect and examine " goods, and to "report the true value thereof when purchased " to the collector, these persons, together with a disinterested resident merchant selected by the importer, were to act as a board of appraisement where ap- praisement should be required and directed (§ 9).^ The col- lector might direct such appraisement whenever, in his opinion, " there shall be just grounds to suspect that goods, wares and merchandise * * * * have been invoiced below the true value " (§ 11). If the appraised value exceeded that declared in the invoice by twenty- five per cent., then in addition to the regular ten or twenty per cent., there should be added fifty per cent, on the appraised value. On this aggregate' amount the duties should be estimated.^ Prior to this time it had been customary for the collector to accept the invoice accompanied by the oath of the person making entry, as exhibiting the real dutiable value of the goods imported. But the greatly increased duties imposed in 1816 had proved too strong a strain on the consciences of many importers ; and the conviction had forced itself upon ob- servant persons that undervaluation was frequently resorted to. This legislation was thus adopted as a protection to the revenue and to the honest importer. 1 When appraisement was to be made in ports other than those above named, two respectable resident merchants selected by the collector, together with one chosen by the party in interest, were to constitute the board. ^ In all cases where the value thus appraised exceeded the invoice value by less than twenty-five per cent., the appraised value was to be taken as the true one. But wherever the invoice value exceeded the appraised value, the former was to govern in the same manner as if no appraisement had been made. log] ^^ THE UNITED STATES. 35 As a further protection against undervaluations it was pro- vided that in addition to the oath required of the owner, im- porter, consignee or agent on the entry of any goods, wares or merchandise,^ such owner, consignee, agent or importer should declare on oath, when goods were entered subject to an ad valorem duty, that the invoice produced by him " ex- hibits the true value of such goods, wares or merchandise in their actual state of manufacture, at the place from which the same were imported." In case of consignment if the person authorized to receive them did not appear to make this oath, the goods were to be stored at the owner's risk in the public warehouse. And if the oath was not made or produced within four months, the goods were to be subject to appraisement. It was also provided (§ 8) that goods imported and belong- ing to a person residing, at the time being, outside of the United States, should not be admitted to entry unless the invoice of the goods was verified in the manner prescribed (in the 5th section) before the consul of the United States at the port from which the goods were shipped, or before a consul of the United States in the country in which that port was situ- ated.^ He should further declare on oath as to whether he was in any way interested in the profits of their manufacture, and if so that the prices charged in the invoice represented the current value at the place of manufacture and such as he " would have received if the same had been there sold in the usual course of trade." By this law the value of goods subject to ad valorem rates was to be estimated by including all charges except commis- sions, outside packages and insurance. As an additional pre- caution against fraud in the invoice, the collector was required to cause at least one package of every invoice and one package at least out of every fifty packages to be opened and examined. If this package was found not to correspond with, or to be I Tliat required by the law of 1 799. ' If there were no consul in the country, the oath could be taken before a notary public or other officer authorized to administer oaths. 36 TARIFF ADMINISTRATION [no falsely charged in, the invoice, full examination of all goods contained in the invoice vi^as to be made. If any package were found to contain goods not described in the invoice, the whole of that package was to be forfeited and an appraisement of all the goods was to be taken, as prescribed in section eleven. Undoubtedly, as has often been claimed, frauds of some magnitude have been successfully perpetrated by collusion in the designation of the packages to be examined, as required by this section and its subsequent modifications. But as no good remedy except the cumbersome and expensive one of ex- amining all goods and packages has so far been proposed, and as this only demands for its honest enforcement that the officers be reasonably honest, we must really charge the frauds not to defective regulations but to dishonest service. It may be as well to state what we must always keep in mind in dealing with any method of tax collection ; namely: that, while avoiding the introduction of undue temptations in any form and restricting as far as possible all opportunities for col- lusion, we must proceed on the assumption that the public ser- vants are honorable. It is utterly and plainly impossible to do any work well with rotten machinery. During the years from 1818 to 1823, and more particularly in 1820, there arose in connection with the proposed increase in protective duties an active agitation for " reforms " and changes in the administration of customs revenue. Resolu- tions were introduced in Congress in December, 1819, for the abolition of drawbacks,^ and bills were framed providing for a considerable shortening of what seem to us the unreasonably long credits then allowed on importations. But the proposals met with such a storm of opposition and with such an over- whelming mass of arguments for the retention of the old sys- tem that nothing came of them, and the matter rested for'-ten years.^ Connected with this was the more successful outcry against the so-called "auction system." ' Cf. supra, pp. 27 and 31, and infra, p. 84. * See article in North American Review, Vol. XII., p. 60. in] IN THE UNITED STATES. 37 2. The Auction System. Whether the auction system was really a serious affliction to American merchants, we cannot strictly say.' It would seem that there would have been many other ways open for the accomplishment of the same results, had there been no such thing as the " auction system." But rightly or wrongly the merchants, oppressed by the hard times and " low prices " of that period, seeking for some cause or some unfortunate in- stitution on which to vent their spite, pounced upon this system, bitterly attacked it and made it the scape-goat of all their misfortunes.^ It was really a combination of circum- stances that made it prominent. But it was the loose methods of the custom house, and the inadequate protection against fraudulent undervaluation, together with the high duties of the tariff of 18 16 that rendered it oppressive; or we should rather say that it was these latter facts which formed the true oppression to the honest American importer, and not the much abused "system " which happened to be the final and most conspicuous, although really most innocent, part of a line of fraud that ran back through the custom house and had its impulse in the dull times and over-production in Europe. The stagnation in business in the years immediately follow- ing the last Napoleonic war was marked. The extravagant hopes of great commercial activity upon the renewal of the long-suspended trade relations, and the re-opening of the con- tinental markets, caused an immense production of goods in ' Cf. Essay on the Warehousing System and the Government Credits, pub- lished by the Philadelphia Board of Trade, 1828, p. 18. ^The auction system was very v^idespread and was prominent for many years. But as a cause for tariff evasion it may be easily overestimated. Indeed we have practically the same system of consignment to-day without any general use of the auction room. In this connection undue prominence is given the auction system by some writers. BoUes, in his " Financial History of the United States," finding a temptingly large literature on the subject, has utilized it to fill a considerable part of the space which he devotes to the discussion of customs collection. It is perhaps unnecessary to warn the reader against placing implicit confidence in Mr. BoUes' work. 3 8 TARIFF ADJMINISTRA TION [ 1 1 2 England, which impoverished Europe was unable to purchase. The great accumillated stocks of British manufacturers, in most cases produced on credit, necessitated the forcing of a market somewhere and at any price. Facilities were found for this, it is claimed, ready at hand in the auction system so pre- valent at that time. Foreigners would ship in their goods, the auctioneer giving the custom-house bonds, since it was necessary that these bonds be given by a citizen of the United States. As the goods were greatly undervalued in the invoice, and were immediately sold for what they would bring, there was very little expense in the transaction.^ Opposition raged for years against the system, and New York finally levied a tax upon auction sales.^ Of course the only remedy for these frauds was found in the deterrent legislation which commenced in i8i8, and which was further perfected by the Act of March i, 1823. This drew a plain distinction between goods purchased abroad to be im- ported by the purchaser, and those not actually acquired by bargain or sale, but imported by the manufacturer. This legislation set out at length the forms of entry and the oaths to be administered by the collector. They were all very full and explicit, and apparently left no room for quib- bling or deceit without perjury. 1st. The consignee, importer or agent, was to swear in sub- stance that the invoice presented was the only one received, ex- pected or known to exist ; that it was unaltered ; that nothing was concealed to the disadvantage of the United States ; that on receipt o{ any other invoice it would be made known to the collector; and that to the best of his knowledge and belief the invoice produced exhibited the actual cost or the fair 'The total receipts from such sales between 1810 and 1828 are estimated at ^225,000,000. ''■ See Remarks on the Auction System as practiced in New York (N. Y., 1828.). Memorial presented to Congress by the citizens of Philadelphia, Feb., 1817, and Memorial from the State of Delaware; in the Addresses of the Philadelphia So- ciety for the Promotion of Industry, pp. 265 and 274. 113] IN THE UNITED STATES. 39 market value of the said goods, etc., " at the time or times and place or places where procured or purchased," and no other or different " discount, bounty or drawback, but such as has been actually allowed on the same." 2d. The owner's and purchaser's oath was very much the same as the foregoing with the added clause, that the invoice contained a "just and faithful account of the actual cost of said goods, and of all charges thereon, including charges of purchasing, carriage, bleaching, dyeing, dressing, finishing, putting up and packing.'' 3d. The manufacturer's and owner's oath was the same as the second, except that in place of the words " actual cost," are substituted : " a just and true valuation of the goods at their fair market value." Section seven repeated in slightly changed form the require- ment^ of authentication by a United States consul or commer- cial agent or a public officer. In case of the absence of such authentication, the goods were to be deemed suspected and liable to the same additions and penalties as in case of fraudu- lent invoices. Practically the same regulations as to appraisement were retained, but with the addition (§ 18) that in all cases where the owner, consignee, importer or agent was dissatisfied with the appraisement it would be lawful for him to employ, at his own expense, two respectable resident merchants who, after being duly qualified, should act with the two official ap- praisers as a board of appraisement, and should report the value of the goods if they agreed therein and, if not, the cir- cumstances of their disagreement, to the collector. If the im- porter were still dissatisfied he might appeal the case to the Secretary of the Treasury who was fully empowered to decide thereon. One-half the excess of duties, caused by adding fifty per cent, in case the reappraisement raised the invoice more than twenty-five per cent., was to be divided, according to the ' § 8, see supra, p. 35. 40 TARIFF ADMINISTRATION [114 moieties clause of the act of 1799, except that in no case should the appraisers be entitled to receive any part thereof. Under this act dutiable value was estimated by including all charges except insurance. But the appraisers were to value goods at the "current value at the time of exportation in the country where the same may have been originally manufact- ured or produced." J. Appraisement Reforms of 18 jo. Although these laws must have been a check to the grosser frauds upon the revenue, the importer's invoice was still received in the majority of cases as correct, and no exami- nation or appraisement was ordered unless the suspicions of the collector happened to be aroused. It was becoming evident, however, that a scheme of valuation which relied so com- pletely on the honesty of none too scrupulous foreign import- ers was a direct discrimination against native dealers, and placed too high a premium upon perjury, with too slight means for its detection to work at all justly. The tariff law of May 19th, 1828,^ declared that in all cases where ad valorem rates were levied upon goods imported, it should be the duty of the collector to have them appraised at their actual value, " any invoice or affidavit thereto, to the contrary notwithstanding," and that in all cases where the actual value so ascertained should exceed the invoice value by ten per cent., fifty per cent, additional should be charged; that is, the duties should be raised one-half The stringency of this provision, however, was greatly lessened by a proviso that nothing in the section should be construed to impose this fifty per cent, additional for a variance of a bona fide invoice of goods from their actual value. About this time the general discussion of the tariff and the continued prominence of tariff questions in the public mind seems to have called some attention to the methods of its ad- ministration as well. ' Statutes at Large, Vol. IV., p. 274. 115] IN THE UNITED STATES. 4I No better opportunity could be offered for a change in methods than that which a change of principles affords. When the people begin to distrust an old principle, they are apt to distrust all things connected with it. When they attempt to discard a settled policy, they are willing to throw off with it many of the purely incidental features of its applica- tion. They are then open to reforms, changes, even ex- periments. That there was need of reform in the customs administration was plainly evident in many directions. A mere examination of the records of some departments is suffi- cient to condemn them. As a sample of the inefficiency of parts of the service and the general laxness in the system of public accounts prevalent at this time, it is only necessary to state that during the seven years preceding 1828 the nominal exports of spices on which drawbacks were obtained, in spite of the fact that they were not produced, but, on the contrary, were extensively consumed in the United States, exceeded the nominal imports by ^168,155. As further illustrative of the condition of the service under the method of compensation in large part through fees,i it may be mentioned that in many places the inspectors received more than double the compen- sation of the collectors who employed them.^ Great em- barrassment in the conduct of business was also experienced by the various ways in which these fees were computed. There was hopeless lack of order in the classification of the various ports. At some the custom houses were built or pur- chased by the government ; while at others the collectors were compelled to furnish them at their own expense. The report of the Secretary of the Treasury for 1829 called the attention of Congress to some of the objectionable features of the prevailing practice, and indicated certain necessary re- forms which Congress partially incorporated in the law of May 28, 1830. 1 See repealing laws of 1870 and 1890, infra, pp. 68 and 87. 2 Report of Secretary Ingham, December, 1829. 42 TARIFF ADMINISTRA TION [ 1 1 6 The President was authorized to appoint an additional ap- praiser for New York/ and the Secretary of the Treasury to appoint not exceeding four assistant appraisers, two in Phila- delphia and two in Boston,^ " who shall be practically ac- quainted with the quality and value of some one or more of the chief articles of importation." They were to examine such goods as the principal appraisers might direct, and report the value to them for revision and correction before it was handed to the collector. But in any case where the collector deemed the appraisement too low he might direct a reappraisement, either by the principal appraisers or by three merchants desig- nated by him for that purpose. If the importer was dissatis- fied with the appraised value, he should apply to the collector in writing, stating the reasons for his opinion. Thereupon the collector was to appoint one merchant " skilled in the value of such goods," and the merchant was to appoint another. In case of disagreement, these two were to appoint an umpire. When a majority of them agreed, they should report the result to the collector. In case this differed from the value set by the government appraisers, the collector was to decide between them. 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