The Pamphlet Collection of Sir Robert Stout: Volume 56
Treasury Department, February 16, 1886
February 16, 1886.
In my Annual Report i alluded to an invitation, conveyed "in some 2,000 circular letters to our manufacturers and merchants," re questing "their united co-operation in the improvement of our fiscal policy," and I added that "the replies received will hereafter be submitted to the consideration of Congress." I have asked permission of those whose communications seem to throw light on the subject, in a legislative sense, and I transmit, herewith, the opinions of the manufacturers and merchants who have given to me authority to do so, together with other matter pertinent to the subject.
My opinion in regard to our existing Tariff law is clear and positive, and is confirmed more and more by every day's widening experience in the administration of this Department. Soon after I entered thereon, less than a year ago, I became convinced that the investigations into the conduct of the customs service which had already been begun by my predecessor, Mr. McCulloch, were of pressing importance, and I continued them with energy. The result, up to the meeting of Congress, is contained in my Annual Report. Since that date, the need of additional legislation has, in my appreciation, become more imperative.
Two courses are, as I endeavored to intimate in my Annual Report, open to Congress. One is an enlargement of the free list, a reduction of the number of dutiable articles, a prudent substitution of specific for ad valorem rates, and a thorough revision and change of the existing rates and system. The other is partially indicated by a recent Senate Bill (No. 1153) which is now before me, and is in the direction of deterrent legislation which shall, by more stringent rules, and new contrivances in the form of fines and punishments, so operate on the fears of importers as to induce them to present truthful invoices, and make on entry a correct declaration of the foreign value.
These two courses are not necessarily alternative. Both may be pursued together. But, in my opinion, it is expedient that an attempted reduction and simplification of rates shall precede a revival of "Coercion Laws" on the subject.
It would be inconvenient, if not impossible, for me to fully set forth all the considerations which constrain me to this opinion. In the daily page II supervision by the Head of this Department of the collection of the customs revenue at one hundred and sixteen separate ports, or places of entry, he naturally, and necessarily, as I have discovered, receives very distinct impressions of what is possible, and what is practically impossible in administration,—the causes, reasons and precise character of which cannot be defined and expressed in writing, short of a stenographic report of all its multifarious daily business. A large part of the general facts and considerations which have influenced my conclusions I endeavored to exhibit in my Annual Report. The unwillingness of those who are not customs officials to really aid, and not embarrass, those who are charged with the execution of the existing tariff law, is each day most painfully impressed upon me. It is felt in this Department, not only when fines, or punishments, are to be inflicted for acts of commission, or of omission, in making entries, but also when the Department is, by reason of an ambiguity in the statute, required to decide between a higher and a lower rate. The indefiniteness of the language too often used in making commercial designations, and in prescribing rates, encourages domestic manufacturers, on the one side, and importers, on the other side, to press considerations on the Department, in favor of this policy or that policy, this theory or that theory, suitable enough for Congress, but altogether unsuitable for an executive officer, who is required to ascertain the intention of the law-makers, as best he may, from the language finally sent to, and approved by, the President. One sometimes is made to feel that the ambiguity and confusion of the tariff statute were intentional, and that a controversy between opposing selfish interests which could not be, or was not, adjusted in the committee-room of either House, had been transferred, by a sort of common consent, to this Department, and to the Courts. The influence of such ambiguity is especially seen and felt in the appraising and liquidating departments, and is, I suspect, at the bottom of much of the disorder which dishonors the customs revenue by the improper practices and strife thus engendered at the large ports. That ambiguity should be, first of all, removed by a careful revision of the existing laws. A pertinent example of such ambiguity is in the 7th Section of the Tariff law of 1883, which has recently been interpreted by the Supreme Court, and to which in my Annual Report I asked the immediate attention of Congress. That section was most carefully studied by my learned predecessor, Mr. Folger, who as a member and Chief-Justice of the New York Court of Appeals had large experience in the examination of statutes. It was subsequently studied by the Attorney-General who gave an elaborate opinion to this Department. It was page III debated in New York before Judge Wallace, and interpreted by him in an opinion from the bench. These well-trained executive and judicial officers substantially agreed in their conclusions. But the justices of the Supreme Court were recently unanimous in condemning as an error what had been decided. The section seems to have been most successfully drawn if ambiguity was sought by the draughtsman, but most unsuccessfully if clearness was the object. I again, most earnestly, commend the section to the revision of Congress, aided by the recent opinion of the Supreme Court, and urge the announcement of a clear and unmistakable rule on the subject, under which the business of importation, and of the liquidating officers of the custom-houses, can be safely carried on. The task of applying the recent decision to the reliquidation of old entries, where protests and appeals have been made, will be full of perplexity, doubt, and most inconvenient responsibility, but such confusion and uncertainty will, I hope, not be allowed by Congress to long disturb future importations.
"By communications to this Department, it appears that the import duties, as charged and collected on articles of like kind at the several custom-houses, are not uniform throughout the United States, whereby like articles of commerce imported into some of the States, whereon the duties are paid at the lower rates there charged by the officers of the customs, can be, and are transported to other States, and sold for less than like articles can be afforded, when imported and entered at the ports of other States, where a higher rate of duty is charged. The Constitution of the United States ordains, that 'all duties, imposts, and excises shall be uniform throughout the United States'—'No preference shall be given by any regulation of commerce or revenue to the ports of one State over those of another.' The act of the Congress of the United States to provide revenue from imports, intends that the duties shall be uniform throughout the United States. But practically, and in fact, different duties on like articles are charged and collected at different custom-houses. By such want of uniformity the Constitution is offended, the act of the Congress is offended, the prudent schemes of merchants, and the due profits of commercial enterprises are disconcerted, the interests and conveniences of customers are injuriously affected. Justice due to the officers of the customs at the several ports of the States requires me to say, that in seeking to perform their duties faithfully, the want of perspicuity and exact definiteness in the enactments of the law has given rise to their differences of construction. The varieties of duties levied, in fact, at different ports by the respective officers of the customs, so tending to incommode and baffle the important operations of commerce, and to give a preference to the ports of one State over those of another, are subjects demanding the exercise of the superintending authority of the Secretary of the De- page IV partment of the Treasury. * * * The sovereign power of taxation is the source from whence the most widespread wrongs, oppressions, and ruin of the people flow in all governments. The safeguard against abuse of the taxing power of government intended by our Constitution, is in confiding that power to the Congress. It would ill become the executive department to take money from the pockets of the people by implication and constructive enlargement of the acts of the legislature. When the Congress, in the exercise of their power of taxation, have not spoken expressly and clearly; when the words of the law leave room for rational doubt as to a higher or lower rate of taxation, the decision of the executive officers should be in favor of the lower rate. In so doing, the executive action is certainly within the limit prescribed by the law. To take the highest rate of taxation, in such dubious cases, would be hazarding a supplement to the legislative will, and an inroad into the region of the legislative department. Such a mode of construction by the executive department would not be lenient and remedial, but onerous and penal."
I hope I may be permitted, by way of preface and explanation of my views in respect to tariff revision, to set forth, as briefly and clearly as I can, what, in my appreciation, is the real condition of the existing tariff system, and the causes, or circumstances, which have brought it to that condition. If there is an evil therein to be remedied, a logical method of procedure will be to ascertain definitely what the evil is, and how it has come into existence. My own estimate of the evil, and its causes, may be at fault, and if so, that fault will naturally infect my suggestions of a remedy, and my criticism of a remedy proposed by others.