lection of existing rates by new and severe coercive laws, is set forth in the Bill now before the Finance Committee of the Senate, "to prevent frauds upon the Customs Revenue." I desire to call attention to that

proposed legislation, not only because it so clearly shows the direction in which Congress must go if coercion rather than tariff-reform is to be the policy, but because it enables me to exhibit the executive aspect of the tariff problem, with which aspect I am now chiefly concerned.

The Bill which is now before the Finance Committee of the Senate, is in these words:

SECTION 1. That whenever the dutiable or foreign market value of any article of merchandise imported into the United States, and subject to "ad valorem" duty, or to duty based in whole or in part on values, is found by the appraising officer to exceed the invoice or entered value thereof, whether such invoice or entered value shall be set forth in a certified invoice, a "pro forma" invoice, or in a statement in the form of an invoice, there shall be levied, collected and paid in addition to the duties now imposed by law on such merchandise a further sum equal to 2 per cent. of the total appraised value for each 1 per cent. of the increased valuation as ascertained by the appraisers in excess of the entered value; and if such appraised value shall exceed the entered value more than 15 per cent. the entry shall be deemed fraudulent, and the collector of customs shall seize such merchandise and proceed as in cases of forfeiture for violations of the customs laws.

SEC. 2. That in addition to the methods now authorized by law for determining actual foreign market or dutiable value, and to assist in the ascertainment of such value in the appraisal or reappraisement of any article of imported merchandise, wholly or partially manufactured, and subject to "ad valorem" duty or to duty based in whole or in part on values, when such merchandise has been consigned by any person or persons in any other country to a person or persons, agent, partner or consignee in the United States, or has been obtained otherwise than by actual purchase in the ordinary course of business, it shall be the duty of the appraiser or appraisers to determine, first, the cost of production of such merchandise at the time and place of manufacture, such cost of production to include cost of materials and manufacture, all incidental expenses, insurance, interest, commissions, superintendence, rent, depreciation of plant, finishing and preparation for shipment, and a reasonable profit for manufacture not less than 10 per centum, and, second, the home value of such merchandise, which shall be ascertained by deducting from the wholesale price thereof in the principal markets of the United States the amount of duties thereon and the cost of transportation from the last port of exportation to the port of importation, and in no case shall the dutiable value of such merchandise be appraised. upon original appraisal or reappraisement at less than the cost of production or the home value thereof, ascertained as herein provided.

SEC. 3. That if any owner, consignee or agent of any merchandise subject to ad valorem duty or to duty based in whole or in part on value shall knowingly make or attempt to make an entry thereof by means of any false invoice or false certificate, of a consul, vice-consul or commercial agent, or of any invoice which does not contain a true statement of the actual cost of such merchandise if purchased or if obtained other

wise than by purchase of the actual market value thereof at the time of exportation to the United States, in the principal markets of the country from whence the same has been exported or by means of any other false or fraudulent document or paper, or by means of any other false or fraudulent practice or appliance whatsoever such merchandise or the value thereof shall be forfeited to the United States.

SEC. 4. That one-half of all moneys which shall be hereafter paid into the Treasury of the United States from fines, penalties or forfeitures incurred for violations of the customs-revenue laws, shall constitute a fund from which may be paid from time to time, on the joint order of the Secretary of the Treasury and the Secretary of State, who are hereby created a board for this purpose, such sums as they may in their discretion determine, to meritorious officers of the customs or consular service who shall have been instrumental in the detection or punishment of frauds upon the customs revenue, and the Board thereby created shall annually make a report of their doings hereunder to Congress, stating in detail the names of parties to whom has been paid, their positions in the public service, the nature of the services rendered, and amount paid to each.

SEC. 5. That the sixteenth section of the act entitled "An act to amend the customs-revenue laws and to repeal moieties," approved June 22, 1874, be and the same is hereby repealed. And in all suits or informations brought where any seizure is made pursuant to any act providing for or regulating the collection of duties on imports or tonnage, if the property is claimed by any person, the burden of proof shall lie upon such claimant, provided that probable cause is shown for such prosecution to be judged of by the courts.

SEC. 6. That all acts and parts of acts inconsistent with this act are hereby repealed.

First section. I respectfully invite a consideration of the question whether confusion and difficulty may not arise in the execution of the first part of this section if it shall become a law. Under our existing system there is the certified invoice value, which is the minimum value for imposing ad valorem duties. There is the entered value, which, when greater than the invoice value, defines a line of value below which the Collector cannot levy ad valorem rates. There is the market value to be ascertained and reported by the appraising officers. And finally, there is the dutiable value, the decision of which by the Collector under general instructions by the Head of this Department is by law made final and conclusive unless certain steps be taken by the importer. Section seven of the Tariff act of 1883 (which section has recently been before the Supreme Court of the United States for interpretation) concerns market and dutiable value. There are other provisions of law, scattered here and there throughout the statutes, which, under certain conditions, may make the dutiable value unlike the market value in the principal markets of the country of exportation, which is to be ascertained by the appraisers, and to which last value I assume the first section refers when it uses the phrase "Foreign market value." Sec

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tion 2900 of the Revised Statutes inflicts a penal duty whenever the appraised (not dutiable) value shall exceed by ten per centum or more the entered value. But the section of the proposed bill now under consideration makes a change by levying the penal duty whenever the "appraising officers" shall find that the dutiable value shall exceed the entered value.

The language used in describing, and defining, the rate or amount of additional duty would be more satisfactory if it indicated to importers, and to the country, more clearly what the ratio of that additional duty will be. The "total appraised value," referred to in the first section, may not be the same as dutiable value, but is the entered value to be compared, in the infliction of a penalty, with the appraised value, as found by the appraisers, or with the dutiable value, as finally decided by the Collector, and against which a protest, appeal and suit can be applied?

RESPONSIBILITY FOR SEIZURES.

The last clause of the first section covers a large range of inquiry. not only into the existing law but into the existing machinery for its enforcement. The legal effect, in practical administration, of the last clause of the first section of the proposed bill, if it shall become a law, will be, to require the Collector to seize all merchandise embraced in an entry whenever the appraising officer shall report to him an appraised value which shall exceed the entered value by more than fifteen per cent., and to report the seizure to the District Attorney for prosecution. The section does not declare distinctly whether the Collector shall seize upon a report by the local appraiser, or whether he shall await a reappraisal, or whether if the two reappraisers disagree he shall await his own decision between them. If the law commands the Collector to seize merchandise on a report to him by an appraising officer of a specific fact, to wit, a difference of fifteen per centum between the entered and the appraised value of merchandise, then the Collector should not be held responsible in damages for the consequences of the seizure.

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The fifth section of the proposed law provides for burden of proof in case probable cause is shown for the prosecution. But if the law peremptorily commands the Collector to seize, it is to be inferred that no Court will say that a probable cause did not exist for a seizure specifically commanded by the law. What will be the effect of the proposed first section, on a trial for forfeiture under a seizure made in obedience to the section? The third section punishes by forfeiture an entry "knowingly made or attempted to be made by a false invoice." Is not

the jury to pass upon the question of guilty knowledge? But if the law declares that every entry of merchandise "shall be deemed fraudulent" if the appraised value shall exceed the entered value by more than fifteen per cent., what discretion will be left to the jury if the evidence shall be that the appraised value did thus exceed the entered value? I shall return to this branch of the subject again when I come to consider the second section. Is it probable that appraising officers will advance values above fifteen per cent. if they realize that such important consequences as forfeiture of the merchandise will follow? It will be observed that the first section does not require appraising officers to inquire into the intent with which the invoice was made and the entry was presented, but the proposed law infers a fraudulent intent from the finding by appraising officers of value greater by fifteen per cent. than the entered value. If this section shall become a law, may not merchandise be forfeited without anybody, or any tribunal, considering, or deciding, the question of guilty knowledge and criminal intention?

It will not escape the attention of Congress that the first section of the proposed bill requires the Collector to levy and enforce the payment of the regular duty, and the penal or additional duty prescribed therein. The third section enforces a forfeiture under the conditions herein prescribed, and requires a suit to be begun against the person having made the entry to recover the value of the merchandise if the same cannot be proceeded against "in rem," but does the bill contemplate that the forfeiture shall be in addition to the regular duty and penal duty which may already have been paid? If the merchandise shall have passed out of the possession of the Government, and is seized, or, if the merchandise cannot be found and a suit be brought to forfeit the value, then of course both the regular and penal duty will have been paid thereon. If it be the intention of the law that, in case of forfeiture, the penal duty, and the regular duty, shall be returned to the person making the entry, there should be a provision in the law authorizing the Secretary of the Treasury to draw his warrant for the duties to be returned?

PRO FORMA INVOICES.

In the volume of documents transmitted to Congress with my Annual Report on "The Collection of Duties," will be found (pp. 65, 591, 675) a reference to the manner in which Sections 9, 10, and 11 of the “AntiMoiety Law" of June 22d, 1874, have been used to defraud the revenue by the presentation of what have come to be called "pro forma invoices." From the enactment of that law up to October, 1878, an

entry by pro forma invoice was treated, as to its liability to penal duty, as an entry made on the original invoice under Section 2900 of the Revised Statutes. During the last named year, an importation of diamonds having been made in the port of New York unaccompanied by a certified invoice, the importer was permitted by the Collector, under the law of 1874, to present "a statement in the form of an invoice," purporting to show the foreign value of the diamonds at 21,550 francs. They were appraised at 27,264.45 francs, and thereupon the additional duty of twenty per cent. was levied by the Collector under Section 2900 of the Revised Statutes. The importers insisted that this section did not apply, inasmuch as the statement, "in the form of an invoice," which accompanied their entry, was not an "original invoice" within the meaning of Section 2900. The question was referred by this Department to the Attorney-General for advice, who, in an opinion dated October 4th, 1878, upheld the contention of the importers. He advised the Department that the law of 1874 initiated a mode of procedure entirely distinct from that described in Section 2900 of the Revised Statutes, inasmuch as the former contains no provision for an addition to the entry. He suggested that if the importer had presented the statement "in the form of an invoice," with intent to defraud the revenue, the importer could be criminally punished and the diamonds forfeited, under the twelfth section of the Act of 1874. As a consequence, the number of pro forma invoices presented at the port of New York, during the year 1884, was nearly 30,000, of which more than 1,700 covered merchandise valued at more than $100. When my attention was called to this condition of affairs I invited the AttorneyGeneral to reconsider the opinion of his predecessor, Mr. Devens, but on August 27th, 1885, the Department of Justice sustained the previous opinion. According to the law, as it stood prior to 1884, only the Head of this Department could authorize an entry without the production of a certified invoice unless the value of the importation might be less than $100, in which case the Collector could admit it to entry without the production of the triplicate invoice and without submitting the question to the Secretary of the Treasury, if the Collector "is satisfied that the neglect to produce such invoice was unintentional, and that the importation was made in good faith, and without any purpose to defraud, or evade, the revenue laws." But the law of 1874 gave to the Collector discretion in the execution of Sections 9, 10, and 11. The facts clearly show that the law of 1874 was inconsiderately and carelessly administered. Such inefficiency at the several ports may now exist, but this Department is unable to sufficiently guard against it.