The Pamphlet Collection of Sir Robert Stout: Volume 56
Reorganization of the Appraising Department
Reorganization of the Appraising Department.
Second Section.—This section implies that dutiable value is to be ascertained by the appraising officer's and not by the Collector. It does not apply to merchandise that has been purchased "in the ordinary course of business." It applies to merchandise obtained by gift, or finding, as well as by manufacture. It applies to diamonds, and precious stones, if not obtained by purchase. The inquiries and decision are novel, which the appraising officers will, under it, be required to make in order to determine the value on which the rates of duty shall he levied by the Collector. It requires the appraising officers to ascertain and determine not only the cost of production of each article, not obtained "by actual purchase in the ordinary course of business, but the home value" in the principal markets of our own country. It makes either the former or the latter a minimum value.
I deem it my duty most urgently to suggest the inquiry whether or not the appraising department of the Government at New York, or page XXXV in any other of the collection districts, is equipped, or can be equipped, under the existing law, for making these two inquiries. Under the section the appraising officers must ascertain the cost of material, insurance, interest, commissions, superintendence, rents, the depreciation of plant, and a reasonable profit for manufacture, in a business carried on in a foreign country, three, or four, or possibly five thousand, miles away. Not only are the local appraisers to ascertain these facts, but their decisions will, under the existing law, be subject to re-exination on reappraisement, and again to re-examination by the Collector if the reappraisers shall disagree in regard to any of these occult elements. I am aware that the tendency of recent legislation, and notably that in respect to gloves, in 1873, which is contained in section 2013 of the Revised Statutes, and also that contained in the ninth section of the tariff act of 1883, has been to require, or permit, appraising officers to ascertain market value by other tests than the price at which similar goods are bought or sold, or are held for sale, by the owner, or the price which he expects to receive therefor, at his own place of business, after sale in the United States. The execution of both these enactments has given much em-barrassment to this Department. As an Appendix to this communication (marked A) I transmit a copy of a Circular Letter issued by this Department on July 7th, 1883, immediately after the enactment of the tariff Law of that year. I think the effect of requiring appraising officers to determine market value by ascertaining the cost of production will result in a litigious controversy, in nearly every case, over such cost, and that the Appraising Department, as at present organized, is not adapted for such an inquiry.
The second branch of the proposed new system, which requires the appraising officers to ascertain "the home value of imported merchandise in the principal markets of the United States," will be, as it seems to me, quite as difficult. Which will be the "principal markets of the United States" for merchandise imported into Alaska? Will not the market-places vary with the character of the merchandise? The Constitution ordains that "all duties, imposts and excises, shall be uniform throughout the United States." But how can that constitutional requirement be obeyed if duties are to be levied on the "home value" as defined by the second section of the proposed law? Will it be possible that duties on similar merchandise entered at Eastport in Maine, at New York, New Orleans, San Francisco, Portland in Oregon, and Alaska, can be uniform. If the duty is finally determined by the Collector, how can the appraising officers in advance of his deter- page XXXVI urination conveniently deduct the amount of duties from the "home value" ascertained by them? If cost of production, or home value, is to determine dutiable value, ought not the importer to be permitted to declare his appreciation of one or the other in his invoice or entry? Will not home value in the end be largely determined by foreign value? Shall silk goods, imported at St. Louis, pay fifty per centum upon their value at Boston, or at New York? In a word, does not the second requirement in the second section bring to the front the constitutional and other objections which apply to any and every ad valorem system based on home valuations?
The present magnitude of appraising work at the port of New York is not. I fear, correctly and sufficiently appreciated, either by legislators, or by the public at large. It certainly was not appreciated by me until I came to be responsible, in some measure, for its proper performance.
The tariff law of 1888 divides and classifies imported merchandise into fourteen schedules. The following tabular statement showing the value of the merchandise entered for consumption (including entries for immediate consumption and withdrawals from warehouse for consumption) at the port of New York, during the fiscal year ended June 30tli, 1885, may assist Congress to realize the proportions of the Government business transacted at that port.
|Schedule of the Tariff Act of March 3, 1883.||Values.||Regular Duty Collected.|
|A.—Chemical products||9,817,581)||3,023,115 05|
|B.—Earthenware, &c.||7,401,146||4,069.394 53|
|J.—Hemp and flax goods||24,187,052||6,691,250 04|
|K.—Wool and woollens||30,982,763||19,564, 086 84|
|L.—Silk and silk goods||25,994,740||12,782,237 81|
|Non-enumerated, (Section 2513, Revised Statutes)||474,410||188,594 09|
The sum total of the schedules shows that merchandise of the value of $382. 653,016 was received, examined, and delivered at the port of New York during the last fiscal year, and that §122,635,797 were actually levied and collected thereon. It is believed that no other government, no other port or metropolis, can exhibit, during that year, such an enormous volume of government business of a similar character as was transacted at the port of New York.page XXXVII
|Ad valorem portion of the compound rate||14, 728,481|
Or 38.9 per cent.
|Specific portion of the compound rate||12, 574, 610|
Or 61.1 per cent.
If any importing house, or if any number of importing houses, had received, handled and sold such an enormous quantity of most valuable merchandise, of every variety of fabric and form, I think it can be safely said that the conveniences, facilities and machinery for the transaction of such business would not have been like those which this Government has used, and is using, at the port of Now York, as regards the building, or buildings, in which this vast quantity of merchandise has been examined and appraised, the conveniences of space, air, light and other arrangements tending to promote accuracy and prevent confusion, to say nothing of the number, qualification, character and compensation of the agents employed.
The business of receiving, carting, examining, appraising, warehousing and delivering imported merchandise at the port of New York, is fairly divisible into three subdivisions. There are the buildings in which are the offices of the Collector, Naval Officer and Surveyor, wherein clerical work, and work of general administration, are con-ducted. There are the warehouses in which the merchandise is received and stored, with its complement of storekeepers, including the business of cartage. There is such work as is done out of doors, on the wharves, in weighing, gauging, measuring—which is under the supervision of the Surveyor. And finally there is, at the port of New York, in buildings separate and apart from the premises just described—the appraisers' stores, where all the vast and intricate work of ascertaining foreign values is carried on. These appraisers' stores are not owned by the Government, but a rental is paid therefor. The whole cost of the appraising force at New York, including appraisers, examiners, openers, packers, clerks, messengers, laborers and cartage, during the page XXXVIII last fiscal year, is exhibited in the accompanying document "Exhibit B."
I have in my Annual Report already alluded to this subject, and to the inadequate character of the force employed. The present Appraiser at New York, who is at the head of this enormous appraising establishment, or rather at the head of the force appraising such an enormous quantity of merchandise, is, I believe, a competent, upright and courageous officer. He has experience, zeal and fidelity. His salary is four thousand dollars a year, and, small as it is, it is the largest paid to any of the appraising officers at that port. The work of administration, supervision, examination and actual appraisement, placed upon him by the statute, would be altogether beyond the power of any one man even if the working hours of a day were an hundred instead of eight or ten, and if he had the physical endurance therefor. He is responsible, in theory, for the examination and appraisement of each and every article under all the fourteen schedules. But good administration of such an ad valorem system as ours requires that there be over each of the schedules as competent an appraising officer, whose salary, if the work be courageously and conscientiously performed, cannot, I had almost said, be too large. And as no one man can, in person, examine and appraise each and all of the articles in each schedule, there is needed over each one of the schedules subordinate appraisers, and examiners, whose aptitude and discrimination in the comparison of one fabric with another in order to ascertain foreign value, should command a much larger salary than is now paid to any member of our appraising force.
It must be borne in mind that what an appraiser, under our system, is required to ascertain, is all the facts in regard to values, and to ascertain them as they exist not in one's own city or locality, but in places removed by many thousand miles. The conclusions must necessarily be inferences from relevant facts. To perform that kind of work successfully, one may require facilities different from those required for successful buying and selling.
If our present ad valorem system is to be continued, if there is not to be a large substitution of specific for ad valorem rates, our existing appraising system should be reformed and enlarged. Still more necessary will such reformation and enlargement be if the requirements of the second section of the proposed bill are to be successfully enforced.
I fear that even so large reduction as by one-half of the existing ad valorem rates would not do away with the necessity for such reformation and enlargement. I have shown what happened in 1817, 1840, and 1857 when ad valorem rates were not as high by one-half or two-thirds page XXXIX as now. Whatever successful contrivances are in operation to-day to evade the revenue by false invoices, or by undervaluations, or by any other means, under an ad valorem system, will not cease even if the ad valorem rates shall have been largely reduced. They are incontestably, they are even notoriously inherent in that system. And while no system, not even that of specific rates is free from its own especial difficulties, which in that case are rather difficulties of impact and of distribution than difficulties of administration, it is my plain duty to set before Congress the nature and full extent of those difficulties which environ the administration of such laws as now exist upon our statute-books, accompanied by the ad valorem war rates of our present tariff and impinging upon 4,000 different articles.