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SAN DIEGO, CAL., November 26, 1908.


Washington, D. C.

GENTLEMEN: The Treasury and court decisions bearing upon the Dingley law have played havoc with that act. To illustrate, 99 pounds of dried fish or herring, costing 6 cents a pound, are dutiable at 30 per cent of $5.94 $1.78; while 100 pounds, costing $6, pay three-fourths of 1 cent per pound, or 75 cents. (See paragraphs 258 and 261, Dingley law.) One hundred pounds make one-half barrel, at threefourths cent per pound; less than 100 pounds is provided for at 30 per cent. Hides pay 15 per cent. Skins are free. If dry, 12 pounds and under is a skin and free of duty; 12 pounds and over is a hide and dutiable at 15 per cent. If green, 25 pounds and under is a skin and free; 25 pounds and over is a hide and dutiable at 15 per


A $15 pony or cayuse and a $150 horse pay duty at $30 per head. A 400-pound sow is dutiable at $1.50. Her 10 pigs, one month old, are dutiable at $1.50 per head each.

Shingles at 30 cents per 1,000 simply feed the trust and rob the other fellow on the prairie. Lumber is ditto as to feeding and robbing. Whisky should be on the free list, as the duty on it only enriches the distiller.

A suit of woolen clothing costing $15 pays 44 cents per pound and 60 per cent. So if the suit weighs 4 pounds the duty would be $10.76. This is more than a half too high.

Linen drawn work pays 60 per cent, which is 30 per cent too high. No man living can figure out the duty on silk fabrics. The United States Board of Appraisers tried to, and the court set their decision aside and made a less intelligible ruling. Read the silk schedule, and then read the two decisions, and you will find them all as clear as mud.

Just why piling and telegraph and telephone poles are dutiable, and round timber and saw logs are on the free list, is a mystery to an old customs collector like the writer of this penciling.

I would put cigars on the free list and bust the trust, as $4.25 per pound and 30 cents per 100 internal-revenue tax is robbery to the consumer to enrich the trust. Cut it out.

Manufactures of shell pay 30 per cent, yet the courts hold that tortoise-shell pins and combs without settings or gems are jewelry and dutiable at 60 per cent, just because a woman wears them to decorate or hold her hair in place.

And so I might go on for a week noting the effect of the decisions. made as to the meaning of the Dingley law. It has been literally cut to pieces by decisions till no collector ventures to act till he consults the rulings. What are you going to do with the whole mess? I fear you have a task you wot not of.

I am in favor of a tariff that shall do what the Republican platform demanded-equalize the wage, etc. The Japanese have bought cotton in Arkansas and freighted it by railroad 2,500 miles and by

water 5,000 miles to Japan, made it into cotton clothing, and sent it back to the United States and paid 50 per cent duty on it, and sold it in competition with American-made goods. Wages did the work. Do you want to keep the pauper-wage Jap out of the United States and admit his pauper-wage-made goods free? That will not do by a jug full. And so it goes all along the line. A tariff for revenue defeated Bryan, and it ought to defeat any man. Respectfully,


Ex-Deputy Collector of Customs.



FRIDAY, December 4, 1908.

Colonel CLARKE. Mr. Chairman, so much has been said on the subject of an American valuation that it has occurred to me that a concise history of that subject in this country might be of interest at this time.

Mr. COCKRAN. What is that; undervaluation?

Colonel CLARKE. No, sir; it is as to the valuation of goods subject to an ad valorem duty on the basis of a home valuation instead of a foreign valuation.

The first tariff of the United States under the new Constitution was chiefly prepared by James Madison and was approved by George Washington, July 4, 1789. It provided that such duties as were made ad valorem should be assessed upon the imported goods according to "the value thereof at the time and place of importation." This was home valuation, although it must have been true at that time in many instances that there were no domestic products of a similar character to create a domestic standard of value. The provision, however, so far as appears, caused no discussion, and it continued until 1795, when foreign valuation was substituted, apparently also without discussion. It is highly probable that the lack of domestic standards at that time convinced everybody that foreign valuation was necessary. But our fathers were careful to require that all packing, transportation, and commission charges should be added to the foreign cost.

After the war of 1812, however, there was such a desire to cultivate peaceable and friendly relations, and the influence of the importing class became so great, that Congress seems to have been thrown off its guard, and after having enacted the liberal tariff of 1816 it passed a short supplementary act in 1817, which provided that ad valoren: duties" shall be calculated upon the net cost of the article at the place whence imported, exclusive of packages, commissions, charges of transportation, export duty, and all other charges." It seems astonishing that such an unfair exclusion of a large element in the cost of goods when landed in this country should have been made, but it was made.

Before long, however, frauds began to appear, and in 1818 Congress enacted that the owner or consignee of goods subject to ad valorem

duty must produce "the original invoice thereof " and swear that it "exhibits the true value of such goods, in their actual state of manufacture, at the place from which the same were imported," and that if such oath were not made within four months the goods should be subject to appraisal. The same law provided for two appraisers in the principal ports and also for merchant appraisers in certain cases. Thus the law began to grow complex in order to prevent increasing frauds. From that day to this various provisions calculated to further strengthen the law have been introduced, most of them necessitated by foreign valuation, until we have a system the efficiency of which depends more upon the men who work it than upon the strength and simplicity of its own provisions.

A few statesmen, however, from 1817 to near the present time, have studied the subject to see if a better way could not be discovered, and it will be profitable to us to examine their statements.


On the 16th of December, 1817, after it had been found that the new tariff, which was intended to be protective, was not yielding the revenue or affording the protection that was expected, Senator Nathan Sanford, of New York, moved that a committee of inquiry be raised, and supported his motion by a speech which shed considerable light upon the question and from which I make the following extracts:

Taking all the information which I have been able to obtain, and the estimates and opinions of well-informed men, in whose knowledge and judgment I have great confidence, as the basis of my own opinion, I can not estimate the loss to the revenue arising from these causes at less than 10 per cent.

It is probable that for many years after the commencement of the duties and the system of collection in 1789 the fraud of false invoices was not often practiced, but it is believed that this species of fraud had, before the late war, gradually gained much ground, as the duties were gradually increased and the methods of accomplishing the object with impunity became better understood.

If the committee reported on the subject, or if anything was done. about it, I fail to find a report of it.


When the tariff bill of 1820 was reported Mr. Henry Baldwin, of Pennsylvania, chairman of the House Committee on Manufactures, which then had charge of the tariff, in the course of an able speech in support of it, made the following allusion to the particular subject which we are now considering:

The mode of ascertaining the value of goods on which a duty is to be assessed has been attended with much difficulty-an almost constant war between the merchants and the officers of the customs, and has been often changed. The original mode of ascertaining the value at the time and place of importation," pi scribed by the act of 1790, was the fairest and most equitable; as an ad valorem duty it was in fact what it purported to be so much per cent on the value. But as a different standard of valuation has long since been adopted, it was thought best not so much to alter as to modify it.

In April, 1830, the Committee on Manufactures in the House reported an administration bill, the object of which was to prevent the enormous frauds on the revenue which were being perpetrated chiefly in New York City and which were depriving the country of much of the benefit of the tariff of 1828. The chairman of the com

mittee, Hon. Rollin C. Mallary, of Vermont, made an able speech, in which he set forth the methods of the frauds and showed the defects in the law which permitted them.

The principal method of fraud was by the use of double invoices— one for examination by the customs officials and the other for the consignee only. The former was very low, sometimes less than onehalf the cost of the goods, and yet it was upon that invoice that most of the duties were assessed. Mr. Mallary said:


I am informed by one of the appraisers that the invoice is used as evidence of the value of the goods which it contains. It is well known that, in commor practice, it is the only standard of valuation. Not more than seven or nine thousand dollars of woolen goods have been found by the appraisers undervalued in the invoice for the year past, although millions have passed through the custom-house. A part, if not all, of the undervaluations were discovered by an open examination of the goods imported in the ship Silas Richards, to which I have before referred. It may therefore be considered as the general practice of the appraisers to take the invoice value as the real value on which duties are to be assessed.

There is no check, no barrier, to the unprincipled adventurer. The door is thrown wide open. A mammoth might pass without touching his sides. It has already been decided by a large majority in the House that Senators and Members of Congress can not be trusted to compute their own mileage-that we can not trust the presiding officers of the House of Representatives with the appointment of a draftsman. If so, what are we to think of a Liverpool invoice? It makes little or no difference whether the duties are 20 or 50 per cent; the same relative advantages exist in favor of the foreigner-that is, he dares verify an invoice in Liverpool that an honest American merchant dares not do in New York. If the invoice is made out in this country by an agent, he can swear as to his belief of the cost abroad; the American merchant who purchases does not know the actual cost, and honesty will require him to declare truly; if he does not possess honesty, danger will compel him. He is within the reach of our own laws, where perjury is sometimes noticed. But you can not reach the person who swears falsely to an invoice in a foreign country. There he is perfectly safe. The truth is, sir, that the foreign valuation is the rotten part of our system.


When the compromise tariff bill of 1833 was pending in the Senate, which bill, it will be remembered, proposed a sliding scale of reductions of duties to 20 per cent in 1842, at which figure they were to remain, Henry Clay moved an amendment that after 1842 the duties should be assessed "on a valuation made at the port in which the goods are first imported." A great debate arose, in which Clay took part. Mr. Clay said:

Now the valuation is made in foreign countries. We fix the duties, and we leave to foreigners to assess the value on articles paying ad valorem duties. This is an anomaly, I believe, peculiar to this country. It is evident that the amount of duty payable on a given article, subject to an ad valorem duty, may be affected as much by the fixation of the value as by the specification of the duty. And, for all practical purposes, it would be just as safe to retain to ourselves the ascertainment of the value and leave to the foreigner to prescribe the duty, as it is to reserve to ourselves the right to declare the duty and allow to him the privilege to assess the value.

The effect of this vicious condition of the law has been to throw almost the whole import trade of the country, as to some important articles, into the hands of the foreigner. I have been informed that seven-eighths of the importation of woolens into the port of New York, where more is received than in all the other ports of the United States together, are in their hands.

Now, sir, it seems to me that this is a state of things to which we should promptly apply an efficient remedy; and no other appears to me but that of taking into our own hands both parts of the operation-the ascertainment of the value as well as the duty to be paid on the goods. If it be said that we might have in different ports different rules, the answer is, that there could be no diversity greater than that to which we are liable from the fact of the valuation now being made in all the ports of foreign countries from which we make our importations. And that it is better to have the valuations made by persons responsible to our own Government and regulated by one head than by unknown foreigners, standing under no responsibility to us.

The amendment was adopted, 26 to 16, and the bill as thus amended was enacted.

The compromise tariff was a failure, not because it contained the provision for home valuation, but because it provided insufficient and decreasing protection. Foreign buying increased, domestic industry suffered, and the panic of 1837, though immediately caused by the financial troubles of the day, was gradually superinduced by the decline of industry resulting from the diminishing tariff. In nohistory have I seen it charged that the difficulty was caused by home valuation, for it should be borne in mind that the new policy was not to go into effect until 1842.

The new tariff of 1842, though enacted by a Whig Congress, returned to foreign valuation, and apparently without discussion of that question, but it provided in section 27 that the Secretary of the Treasury should annually ascertain if the duties on any articles had exceeded 35 per centum ad valorem on the average wholesale market value of such articles "in the several ports of the United States for the preceding year," to enable him to make such recommendations as he might deem necessary. Thus the tariff returned to foreign valuation for the collection of duties, but preserved home valuation for the purpose of making recommendations, but as this amounted to nothing, it may truthfully be said that the only actual trial of home valuation was from 1789 to 1795 and during the brief period from June 30, 1842, as provided in the compromise tariff, to August 30 the same year, when the new tariff was approved.

The Walker tariff, in 1846, made all duties ad valorem, and retained foreign valuation.

In his first annual message to Congress, December 2, 1850, President Fillmore made a strong argument for specific duties as a means of preventing undervaluation frauds, and then added:


As before stated. specific duties would, in my opinion, afford the most perfect remedy for this evil; but if you should not concur in this view, then, as a partial remedy, I beg leave respectfully to recommend that instead of taking the invoice of the article abroad as a means of determining its value here, the correctness of which invoice it is in many cases impossible to verify, the law be so changed as to require a home valuation or appraisal, to be regulated in such manner as to give, as far as practicable, uniformity in the several ports.

He returned to the subject in his annual message in 1851, but Congress failed to act, and in his third annual message, December 6, 1852, President Fillmore recurred again to the subject and stated the case with great force, as follows:

Another question, wholly independent of protection, presents itself, and that is, whether the duties levied should be upon the value of the article at the place of shipment, or, where it is practicable, a specific duty, graduated

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