Rock Island daily Argus. (Rock Island, Ill.) 1886-1893, 1891-05-07
JUTE BAGGING FRAUDS.
HOW UNCLE SAM WAS ROBBED BY
THE sAeGlNG TRUST.

the Trust Pocketed the Exporters
Money-A Very Shady Transaction Fully
Exposed.
Mr.. Iredel Meares, formerly deputy
collector Of customs at Wilmington, n.
c., has given description of the lutte
drawback frauds by which the govern
ment was robbed of Se42, 900 by the Jute
BagGng trust. The law in force up to
last October allowed a drawback of 80
per cent. Gt is now 99 ION articles man.
ufactured of materials imported, on
which duties have been paid"
There are manufacturers in the United
States, in various lines of trade, largely
dependent upon foreign raw material to
supply the needs of their business, and
where they take the product of their fac
tories, made entirely of imported duty
paid material, and export it to foreign
markets, or where the purchasers OF
their product, who thereby indirectly
pay the duty upon the raw material, ex-
port the manufactured article to foreign
countries, it would seem that the statute
operates justly in refunding the duty.
Jute is now on the free list bv the
Mckinley law, but it is Of interest still
to recall these jute drawback frauds to
show what steals are possible in our Gus
kons system
The person entitled to a drawback Is
the exporter, and he alone. When the
manufacturer sold the bagging he made
the buyer pay him the duty on the jute,
and clearly he had no further claim upon
anybody for a refund of the duty. The
cotton planter bought the bagging with
the duty added to the price, and the cot
ton itself sold with the duty added. The
exporting merchant was the last in the
line Of American purchasers to pay the
duty, and if anybody was to receive the
refund of duty from the government he
was evidently the man. Hence the law
provides that the exporter shall produce
the certificate from the collector of the
port where the duty was originally paid;
that 1.-THE exporter shall produce the
sworn affidavit of the proprietor and
foreman of the mandatory at which
the article was manufactured"
The law never contemplated that the
importer of the raw material should re-
ceive the refund of duty unless ne were
also the exporter of the manufactured
article. Likewise, the law makes no pro-
vision for refund Of duty to the manu-
facturer unless he himself exports his
product. The law recognizes the princi-
pie that when goods made of foreign raw
materials are sold, the seller makes back
all that had been paid in duties
Now, in the jute bagging referred to
there was the grossest fraud. When, in
1888, it was determined to extend the
drawback provision to jute bagging the
determination was not generally made
public. Mr.. Meares says:
The decision Of the department to
this effect was made by letter to the
collector Of customs at New York,
dated at Washington, Nov. Il, 1888, and
signed by the assistant secretary of the
treasury. Copies of this letter were in
closed in communications separately
sent to each Office for the guidance of
collectors at smaller ports. The letter
does not appear, however, in the bound
volume of synopsis of treasury decisions
for the year 1888. 1t is the custom of the
department to issue in printed circular
form for gratuitous distribution instruc-
tons Of this kind.
"Why was this not published in the
monthly and yearly editions of instruc-
lions and decisions? 1t may have been
Intentionally withheld from too much
public notice. In any event, it served
well the manufacturers purposes. 1t is
not charged that they instigated the let
ter above quoted and had notice of it
quietly forwarded to the several ports
by some one friendly to their scheme
and having some power over the matter
in the department at Washington, in
stead of publishing it widespread, but it
Is mentioned as one of the condolences
which so nicely fit in with the suspicious
payment of the drawback claims dis
cussed. Had the intention of the de-
partment to allow jute bagging to be-
come subject to drawback duty been
given out publicly exporters would have
Immediately sought their rights in the
premises, having notice of the law and
regulations, but the manufacturers
would have been disturbed in their quiet
progress in collecting it."
As this ruling Of the department was
not properly published, the exporters of
cotton were not aware that a refund
of duty would be made; but in some
way the United States Bagging Manu-
facturers' association or jute bagging
trust got the information, and
the members of this trust went
quietly to work to gobble up what
belonged to the cotton exporters. The
members of the trust, being import
ers, could produce evidence that they
imported at certain times and in certain
quantities the raw material, and as man
ufacturers they could furnish the re-
quired afidavits as to when and where
this pile was made into bagging, but
how could they identify this raw ma
terial in the exports? They could not,
but they made bluff at it. Mr. Meares
writes:
with this evidence in hand which