New-York tribune., 1890-01-17
THE DRAWBACK SYSTEM.
ITS RELATIONS TO DOMESTIC MANUFACT-
URES AND THE EXPORT TRADE.
AN ARGUMENT IN FAVOR OF RETAINING THE

garded bv you as sufficient for my addressing
you on that subject.
ANY law taxing imports whether for election or
for revenue necessarily affects the inte s OF those
desiring to export merchandise on which such tax has
been paid The effect Is substantially the same in case
the merchandise be exported I'm condition imported.
or in case II be exported In condition changed by some
process OF manufacture Merchandise on when duty
has been paid or that made from material on when
duty has been paid, cannot other things being equal
be placed in foreign market on an equal footing with
like merchandise which has not been subject to pay
! ment OF duty.
The bonded warehouse system, which permits with
drawal Of merchandise for export without payment OF
duty practically relieves the exporter of foreign goods
exported In condition as imported from the di'"i-
vantages which import duty without such system
would subject him. The law allowing drawback oi the
duties paid on the material used in the manufacture
Of the articles exported Is designed to relieve ana SUD
stantally does relieve. the exporter Of such domestic
manufactures the disadvantages to which he w"ud
otherwise be subjected in foreign markets because OF
duties paid on material. In most cases articles made
from imported material on which duties have been paid
cannot be profahly exported without drawback OF the
duties paid such material
The existing feeling Of opposition to all DRAWBACKS
can have no good reason for being" unless IL De IN
ability to understand the facts and principles above
noted.
The conditions Of expectation Of merchandise manu-
featured from imported material so many ana so
variable that they cannot be subject to permanent
statutes. This fact recognized by Congress h
the law Of August D. 17G1, now section Bob KeNl'eu
Statutes, which provides that drawback shan be
allowed and authorizes the secretary Of the Treasury
| 10 prescribe the necessary regulations. From the
beginning the Treasury Department has administered
this law in liberal spirit This policy has resulted
I'm generally fair and successful administration, anu
has substantially accomplished the purpose ot ule
law. The two exceptional cases in which the law
! afan r1N f4fti IL
israon and were in no way chargcabe TO fault In
the law. Parties opposed 10 the law have Imagined
and charged many miscarrages. which, on nvestlsa-
ton have turned out to DE only failures on the part
Of tho fault finders to understand the purpose OF te
law.
Unfortunately tho law has come 10 be regarded by
some as a piece Of class legislation designed for the
especial benefit Of American Manufacturers when In
fact designed only to remove as far as possible
a disadvantage 10 which merchandise manufactured
in tho United states from imported material was
subject in foreign markets by reason of an import
tax on such material. Jndcr the existing warehouse
| syscm foreign manufactures may be imported and
placed in warehouse, and without payment Of any
duty may be withdrawn for expectation 20 foreign
markets. To enable merchant 20 export an article
manufactured I'm the United states in place Of Ike
imported article the law undertakes 10 return to the
exporter the duties paid on the Imported material
used The interest Of the manufactures Of the article
I
than that Of the aborcr employed by the manufacturer
or ~ the farmer or stock raiscr who feeds the borcr
| In cases where party Is both manufacturer and
porter. that party Is entitled 10 receive drawback
solely because of his being tho exporter, as in that
capacity he i, obliged to meet competition in the
foreign market.
In most cases merchandise Is exported by some
party other ian the manufacturer. and In very many
cases the expectation Of the article on which dra"
back is allowed is only incidental to the expectation
of other article, In the Of bags exported
filed with grain. -four etc. and tin cans exported
filed with petroleum, turpcntine, fish. fruits ana
meats The application Of the drawback law reduces
the cost Of placing domestic product, n foreign mar
kct- 20 what that cost would bc In there
import duty the materials used I'm the manufacture
Of the packages In which such products are exported
Certain manufacturing interest, have undertaken 10
persuade the secretary Il the Treasury ~ administer
existing law that exporters Of domestic products might
be forced to buy export packages from them. and
these manufacture, now iu~trucung Congre,, so
to revise and amend the drawback law that exporters
VIII be obliged 10 purchase package, Of their make
instead Of using other packages equally scrviccablr
and costing less. These manufacturer, hav" -uh-ttn
tal reasons for trying to make the Department and
Congrcs, forget that the object Of the back system
give any manufacturer the right Indirectly
or throttle the export trade Of the country.
! since the right To- claim drawback clearly bcong>
to the party Who place, the exported article the
I
party only should be recognized iu the Law. The
condition, Of expectation such To- make 10 DIM
cult many case, - determine VINO /, the exporter
Of merchandise shipped ownership 0f much "i mat
vessel Where mcr, ,hundi>e j, shipped from Interior
points on through" bll, Of ladfus, ownership often
Ghlnsc, while the -,od, are in transit nom point OF
,hpmcut tu port Of expectation. Ihcor AMI other
! conditions mahc 1t practically impossible Tor an rN
ccutIvc officer secure tho Information which would
make him competent to decide how and where To ap-
ply the term exporter. The bill OF Ldhs, Nhch m
dll business transactions b, recognized d- th" com
mcrciM title To IN" merchandise covered thereby.
always reveals a party "0o j. either tne exporter or
hi, agent. These facts clearly indicate the confusion
which would rc,ut from legal requirement that the
Government should IN allowing drawback dc.i tfe,iN
with the exporter only, and 20, clearly Indicate tha
the Government may safely, ana should deal with
the exporter, either dirc'tIf or throu-h M, a-'ut
some opponent, claim that the present drawback
i IN" mH"ia' Iurr 81 an Hr'I'r L" De- ,NP"I'H' i"
give, opportunity 10 swear that such article Wd~
made from imported material, thu, laying tine fouudl
ton for "a claim drt, back hy means oi which the
| Government would be- defrudcd. Raw sugar, sab
lcct Ia import duty imported other sugars are
produced in m" nitrd states. ANA other, are I'm
ported frc" of duty from the sandwich Islands. re-
finer may refine Cuban, Hawaiian and domestic
| euEarS ana may put oh thc nome market uc Ir"tu''
Of Cuban sugar. ana export or sell for expectation
| start the manufacture Of tin plate, in tni-
inot Of imported plates procure pla., from which to
manufacture cans for export. \ manufacturer of bag
tl. n,orr than th, Imported art'c. would to,t bro
| cure like article Of domestic manufacture aud from
|
quantity ard Kind of imported uHlcrd tp make bags
for domestic What ha, been said Of the manu-
iarturc, named De- said of all manufactures
| crptug such a, made from material the like of
which i, not produced In tbs country. The Opuor
tunily for perjury and fraud the p1rt Of the manu-
facUrcr and exporter T.. In a the ca-c, noted, clearly
manifest. To get the measure Of TIE danger t. which
the revenue il exposed because II these Opp'rtuui
ties. IL Is only To ascertain the ~tcngtn oi
the motive impulse to which manuia' tur'r> and
cNporcr9 are subject Thorough search discovers no
| reason why rctlucr Of SUGAR should sec aIar for
port the product of sugars grown IN The nti'l
state, the sandwich Islands and put on the home
market the product of su-lr, on which import
| duty has been paid Absolutely nothing could h'
gained by perjury and fraud In the case Considered
| In case Of TIN cans. condcra Is les than nothing
could be- gained by the OF like means Perjury
md lIsmd the nari Of mnmmlclmr-rc Ol bigt Moud