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In exercising his authority, Gallatin declared that, in deciding those cases to which the power of remitting in whole or in part applied, and in graduating the amount of penalty in those where it appeared improper to grant an unqualified remission, he had been invariably governed by the following principles. The first was enforcing the laws; the second, reducing the penalty to that amount, and requiring only that portion, which appeared sufficient for the purpose of preventing infractions; and the third wast uniform rules of decision, so far as the diversity of cases rendered them practicable. In applying these principles to individual cases, several circumstances were considered, the degree of negligence manifested by the party, the importance for the safety of the revenue of the particular provision which had been infringed, the encouragement due to the vigilance of the officers, and, when necessary for the purpose of checking illegal importations, the profit derived from the transaction. But the gain to the Treasury had never influenced him, or "even been thought of" in making a decision.

The number of cases decided by Gallatin was twelve hundred and ninety-seven. In ninety-two of these he decided there was an intention to defraud the Government, and no remission was granted. Absolute remission had been granted in eight hundred and eightyeight cases, generally on payment of costs, and in three hundred and seventeen cases the fines had been mitigated. In about twothirds of these nothing more had been inflicted than the payment of sums, generally inconsiderable, which were given to the customhouse officers. The expenses incurred in prosecuting for offences against the revenue laws considerably exceeded the amount actually recovered and paid into the Treasury. Those penalties, therefore, had not been a source of revenue.

Individuals were constantly applying to Congress for remission of duties in cases not provided by law, but in the collection of which it was urged some peculiar hardships would be sustained. In one case, a large amount of goods had been landed in New York, and a fire had occurred, destroying the warehouse and its contents. Applications were founded on a great variety of circumstances too numerous to describe. Not infrequently, when the Secretary had decided against an applicant for the remission of a fine or forfeiture, Congress was asked to grant relief. Cases of

this character were so numerous that the reader may be led to ask why was not a proper tribunal instituted for disposing of them, instead of dividing the power and responsibility between the Secretary of the Treasury and Congress? Surely, the creation of an adequate tribunal, composed of either existing officials or other individuals, would have relieved Congress and the Secretary of the Treasury from the performance of a duty which could have been more perfectly and satisfactorily performed by some other body,

Applications were often made to Congress to grant relief to those who had given bonds to secure the payment of duties. This was more especially the case with those who had become sureties. In another class of cases, the applicants sought to obtain a drawback. Such cases were very frequent.

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In the beginning, Congress provided that all duties on imported merchandise, except brandy and geneva, which was re-exported, should be returned within a specified time. One per cent. of the duties, however, was retained to cover the expense of entering and storing such merchandise. In respect to salted fish and provisions, the law provided an allowance "in lieu of a drawback of the duties imposed on the importation of the salt employed and expended therein." A glaring defect in the law was soon discovered. vessel arriving from a foreign port with a portion of her cargo destined for the United States, was obliged to pay duties on the whole, and even to land those articles which required weighing, measuring or gauging in order to ascertain the duties. Nor did the allowance of drawbacks obviate the difficulty. This was a very serious defect in the law, but, like other defects, could not be remedied until the next session of Congress, when the law was thoroughly revised.

The original design of the law for raising a revenue on imports was to tax, consumption, and the allowance of a drawback was to favor trade. In his famous report on manufacturing, Hamilton recommended the exemption from duty of nearly all materials employed in manufactures. To this rule he observed there should be some exceptions. Three examples, illustrating three classes of exceptions, were given. In the first example, the material itself was extensively consumed, and consequently a fit and productive source of revenue. Such a commodity was molasses. It was "just that the consumers of it should pay a duty, as well as the

consumers of sugar." Another exception was that of a manufacture, the competition of which with a similar domestic article it was desirable to restrain. The manufacture itself partook of the nature of a raw material, and by a further process could be converted into a manufacture of a different kind, the introduction or growth of which it was desirable to encourage. Cottons and linens in their white state fell under this description. A duty on those imported was proper to promote the domestic manufacture of similar articles in the same state. A drawback of that duty was equally proper to encourage the printing and staining at home of those which are brought from abroad. When the first of those manufactures had attained sufficient maturity to furnish a full supply for the second, the utility of the drawback ceased. A third exception, he contended, should be made when the material itself was produced in sufficient abundance here to furnish a cheap and plentiful supply to the manufacturer requiring it. Hemp either did, or was soon expected to, exemplify a commodity of this class.

Hamilton further observed that, when duties on the materials of manufacture were not laid for the purpose of preventing competition with some domestic production, the same reasons which recommended, as a general rule, the exemption of those materials from duties, would recommend the allowance of a drawback in favor of the manufacturer. Accordingly, such drawbacks were familiar to countries which systematically pursued the business of manufactures, which furnished an argument for the observance of a similar policy in the United States, and the idea had been adopted by the laws of the Union in respect to salt and molasses. Hamilton believed that the same principle could be beneficially extended to other articles.

Several years afterwards, when more revenue was wanted, the Secretary of the Treasury, Wolcott, recommended a tax on drawbacks. The Committee of Ways and Means considered the expediency of the measure. War was then raging in Europe, and it was contended, on the one hand, that, if such a tax were laid, it would not rest on our commerce or merchants, but on foreign nations who were the consumers of the re-exported commodities. While the war continued, they would certainly be obliged to purchase them from America alone, and would be under the necessity of repaying the tax, in addition to the price which otherwise would be demanded.

To this reasoning it was answered that the whole argument rested on the supposition of our ability to effect two things, both of which were very uncertain, namely,-to monopolize the business of supplying the countries in question with East and West India and China commodities, and " to compel those commodities to touch first at our own ports before they were carried to the places where they were consumed." For it was clear that if, by raising the price of the commodities, we should raise up competitors who could underbid us in the foreign markets, or should, by taxing them when they arrived at our own ports, lead our merchants to carry them directly from the places of their production to the places where they were consumed, without landing them in this country, in either case, the duty would be lost; in the first, by ruining altogether our trade, whereon the duty must depend, and in the second by turning the trade away from our own ports, where alone the duty could be collected. A duty of two and one-half per cent., which was the figure proposed, would amount to a large sum on a valuable cargo, and was a sufficient premium to tempt the avoiding of American ports. The Committee made no recommendation, but Congress tried the experiment. The duty imposed was two and one-half per cent., in addition to half that sum previously exacted for entering and storing such goods. But if the re-exportation occurred in foreign vessels which imported them, the drawback previously allowed was withheld.

Another defect early appeared in the law relating to this subject. Goods were entered into the United States, and then reexported to a foreign port adjacent to the dominion of this country. As the drawback was allowed when they were taken away, and they could be easily returned after re-exportion without the payment of a duty, the Government was defrauded of the revenues to which it was fairly entitled. This defect was partially corrected by the law of 1799.

Manufacturers were constantly trying to obtain more favorable legislation in the way of drawbacks on imported dutiable merchandise used in the manufacture of other articles which they desired to export. Cordage was one of the things which secured much attention from Congress. In 1793 it had been exported in considerable quantities, but, later, a duty of twenty dollars per ton was levied on foreign hemp. Of course, the levying of so heavy a duty

on the raw material was a serious disadvantage to the American manufacturer. But it did not appear expedient to Congress, either to increase the duty on the imported article, or to discontinue the allowance of the drawback on the re-exportation of foreign manufactured cordage. Congress, therefore, devised another remedy, namely, the payment to American manufacturers of a certain sum on all cordage exported, as equivalent to the duty on hemp. The same remedy was applied to other things.

Still the cordage manufacturers were not satisfied. They wanted either a discontinuance of the drawback on foreign cordage when exported, or an allowance of a drawback on the exportation of homemade cordage equal to the duty imposed on hemp. There were two grave difficulties in the way of granting such relief. The first was the contravention of the general principle adopted by the Government of allowing drawbacks on the exportation of imports; the other difficulty was the distinguishing of cordage made of American hemp from that made of the foreign material. These objections were subsequently made to similar applications of soap and candle manufacturers.

Sugar refiners frequently applied to Congress for similar assistance, which was desired for the same reason, chiefly, as had been given by the cordage, soap, and other manufacturers. The duty collected from this source has always been so large as to warrant our describing the manner in which the Government allowed drawbacks whenever sugar was exported.

At first, a duty of two cents a pound was collected on sugar refined within the United States. A similar duty was allowed as a drawback, besides three cents a pound to cover the duties paid on importations. When this regulation was made, the duty on crude sugar was one cent and a half a pound. As two pounds of crude sugar were needed to make one pound of refined, three cents per pound were allowed on exporting the refined article, and to this were added the two cents per pound paid for the excise,-the duty and the excise thus making a drawback of five cents a pound allowed in the beginning. By subsequent statutes, the duties on imported sugar were increased, but there was a corresponding increase of drawback. When, however, the internal taxes were repealed in 1802, the drawback on refined sugar, then amounting to seven cents a pound, ceased,

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