VOL. XXXI.

No. 9

The first tariff law of the United States was signed by George Washington on July 4, 1789. The average duties were low, but this law contained one provision the importance of which has been overlooked in much of our subsequent tariff legislation. That provision was that the ad valorem duties should be assessed upon imported goods in accordance with "the value thereof at the time and place of importation." It was because of this method of levying duties upon the American value of the imports that the low duties of that bill proved satisfactory and to a considerable degree efficacious.

This system of American valuation of imports continued until 1796. Foreign valuation was substituted at that time without any public explanation and without discussion. But the custom was retained of adding to the foreign cost all packing, transportation and commission charges.

In 1817 the importing interests scored another victory in the passage of a short supplementary act which provided that ad valorem 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." Within a year frauds and undervaluations became apparent, and Congress passed a law providing that the owner or consignee of goods subject to ad valorem duties 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." This was the beginning of a complex system of rules and regulations to overcome the difficulties of the system of foreign valuation, and to prevent and penalize frauds and undervaluations.

In a speech in the House of Representatives in support of the tariff bill of 1820, Henry Baldwin of Pennsylvania, chairman of the House Committee on Manufactures, said:

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," prescribed 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.

In April, 1830, Rollin C. Mallary of Vermont, chairman of the Committee on Manufactures, discussing the bill to prevent revenue frauds, said:

You cannot reach the person who swore 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.

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During the debate on the tariff bill of 1833, Henry Clay offered amendment that after 1842 the duties. should be assessed "on a valuation made at the port in which the goods are first imported." 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 right to declare the duty and allow to him the privilege to assess the value.

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 operationthe 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 importa tions. 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, and the bill as thus amended was enacted.

In 1842 a new tariff bill was passed which retained the provision for foreign valuation, but the law as passed provided in Section 27 that the Secretary of the Treasury should annually ascertain if the duties on any articles had exceeded 35 per cent 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 anomalous situation was presented of specifying foreign valuation for the collection of duties, and of retaining home valuation for the purpose of making recommendations.

In his first annual message to Congress, December 2, 1850, President Fillmore recommended the adoption of specific duties as a method of prethen venting undervaluation, and 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 recom

mend 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.

President Fillmore repeated this recommendation in 1851, and in his annual message of 1852, once more recurring to the subject, he said:

I, therefore, again most earnestly recommend the adoption of specific duties wherever it is practicable, or a home valuation to prevent those frauds.

Col. George C. Tichener, for years a special customs agent of the Treasury Department and for some time prior to his death president of the Board of General Appraisers, in a letter addressed to the Secretary of the Treasury in regard to importations of foreign goods, said:

I have found instances in some foreign countries where it was claimed that the prevailing market values for certain articles were different, lower, of course, for the export trade than for the home trade, and in some instances the prices for export to different countries differed. It appears to me that in such case either the home value there or here should be taken.

He expressed the opinion that "there is eminent propriety in assessing the duty according to the home value, instead of the unknown and uncertain value in the country of production." In his opinion, the difficulties thus encountered would not

be as great as are met in arriving at the true foreign market value of the immense quantities and kinds of goods imported.

Henry F. French, Assistant Secretary of the Treasury, appeared before the Tariff Commission of 1882 in response to an invitation of the Commission, and in the course of his testimony said:

I think the question whether your Commission should not recommend a home valuation instead of a foreign valuation is one of the most important you should consider.

England, or anywhere else, to asWhy should we go to India, or to

certain what the value is or was there, rather than to take the value in the port of importation, or in the principal markets of the United States, which would be the better term or better method? It seems to me that it is one of the curiosities in the law that such a provision should have existed from 1799 down to the present time; and I think it only exists now because nobody has really thought it possible to change a thing that has existed so long.

In the course of this testimony Mr. French said:

I think any person who should be told for the first time that we look abroad in order to find out what duty we should assess upon an imported article, would be very much puzzled to know what reason there could possibly be for so doing.