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The Pamphlet Collection of Sir Robert Stout: Volume 56

Simplicity of Tariff Laws From 1789 to 1818

Simplicity of Tariff Laws From 1789 to 1818.

The levy and collection of duties on imports has come to be extremely artificial and technical. It was not so in the beginning. By all the earlier Collection Laws, and down to 1818, the invoice to be presented on an entry was to contain "the prime net cost, "at the place of exportation, meaning thereby the actual price paid in money, and not the market value if the two were unlike. There was no special provision for an invoice of merchandise obtained by gift, or in part by money and in part by gift, or for merchandise consigned hither by a manufacturer. Up to 1818 the punishment for an intent, and an attempt, to evade the payment of duty known to be legally chargeable, was confiscation for either one of three defined offences. One was the presentation of an invoice which intentionally did not display the actual cost. Another was the intentional entry of packages by a false denomination, or description, in order to defraud the revenue. The third was the concealment of any merchandise on a vessel, or elsewhere, (such as not putting it on the manifest,) in order to evade payment of duties, or the page V landing without a permit, which was the offence of smuggling. It should also be kept in mind that up to 1818 the Collectors of Customs levied ad valorem rates on the invoice value unless they had reason to suspect a fraud in the invoice. There was no appraising staff. When an invoice value was suspected, two merchants were selected to appraise the merchandise. From then till now, there have been, side by side, two classes of tariff legislation; one class prescribing the rates to be levied, and one class providing the machinery for enforcing and levying the rates. The work of enacting a law of the first class was entered upon in 1789, on the motion of Madison, even before the President had been inaugurated, so empty was the new treasury. In the resolution introduced by him, proposing a temporary system of imposts, the rates seem to be about equally divided between specific and ad valorem. In the law as finally enacted some twenty of the specifications were specific rates and fifteen ad valorem rates. The debate which arose thereon in the House foreshadowed, and indeed developed, the conflict of economic and constitutional opinions, which has been so prominent in more recent polities, excepting only the question of constitutional power in Congress to levy duties on imports for the sole purpose of protecting, or aiding, a particular industry which appears not then to have been seriously mooted. The argument, that smugglers marked the line beyond which rates could not be carried, was earnestly pressed. In this early day frauds on the revenue by false invoices, and by undervaluations on appraisements, had not been developed into the cunning art that it has since become. In 1790, the rates were revised and increased, but preserving, so far as can now be ascertained, much the same relation between specific and ad valorem. Gerry, Sedgwick and Ames renewed a presentation of the danger from smugglers, which Sherman characterized "as an insulting imputation on the American mercantile character," and warned his colleagues to take care lest, by suggesting the probability of smuggling, they encouraged it. As a safeguard, however, the Collection Act was re-enforced by new and more stringent provisions. In 1797 the Federal treasury needed an additional sum of §1,229,000 a year. The average rate then levied on all imports was 16 per cent. A resolution passed the House to raise the money by a direct tax on lands, houses and slaves, but a bill to that end was finally defeated, and 011 the suggestion of one of my predecessors in this Department, Mr.Wolcott, additional rates on imports were levied, preserving about the same relation, as I infer, between specific and ad valorem. In 1801, one of the most illustrious of my predecessors, Mr. Gallatin, said to Congress: page VI

"Without any view to an increase of revenue, but in order to guard as far as possible against the value of goods being underrated in the invoices, it would be eligible to lay specific duties on all such articles, now paying duties ad valorem, as may be susceptible of that alteration."

From this date of 1801 to the tariff law of April 27, 18.1.6, there was no legislation which can pertinently illustrate for us to-day the proper relation of specific to ad valorem rates, or what shall be done now to prevent revenue frauds. Down to 1807 the growth of American manufactures was very slow. Our capital was richly rewarded on the sea, and there it remained. But in that year two new and powerful influences supervened, which were the violation of our neutral rights by the armed belligerents, England and France, and the commercial restrictions inflicted on ourselves. Those causes largely expelled our capital from the sea and kept out foreign fabrics. Manufactures naturally started with a bound. It was the era of Berlin and Milan Decrees, of Orders in Council, of Embargo, of Non-intervention Acts, and finally of war for "Free Trade and Sailors' Rights."

The results of the war, the condition of the country, and the reception of large quantities of the accumulated products of British manufacture sold at auction prices in our cities, called into being the decidedly protective tariffs of 1824 and 1828, and increased the use of ad valorem rates. Then came the tariff of 1832, the "compromise" of 1833, the protective tariff of 1842, the revenue ad valorem tariffs of 1846 and 1857, and, finally, the civil war legislation on the tariff which began in 1861 and has continued till to-day. What the relation was between specific and ad valorem rates in the tariff laws of 1816, 1818, 1824, 1828 and 1832 can be seen at a glance by consulting a comparative tabular statement transmitted to the House of Representatives by my predecessor, Mr. McLane, on February 8, 1833.