The Providence news. (Providence [R.I.]) 1891-1906, 1897-08-07
COMPENSATORY Rates
And Drawbacks.

And Drawbacks.
Two terms often used i'm tariff dis
cussion by experts. but rarely under
stood by others. are compensatory
rates" and drawbacks"
All through the preparation of the
Dingley tariff the figuring of compen-
satory duties was necessary, as II must
be in every scientifically prepared tar
iff for protection based upon the specific
principle and framed for the purpose OF
benefiting both the producers of raw
materials and the makers of finished
goods. In some of the earlier protective
tariffs the necessity for compensatory
rates was either ignored or not under
stood. probably the latter and the re-
suit was occasionally such as entirely
10 defeat the end desired.
Compensatory rates are devised for
application to the manufactured prod
uct made from dutiabe imported ma
terials and exceed the rates on the raw
material by enough to allow for the
difference in wages here and abroad and
also to compensate the manufactures
for the loss of material in the processes
of manufacture. AS there was closer
figuring OF compensatory rates in the
preparation OF the wool schedule than
any other. an illustration in point may
best be drawn from that schedule.
The duty on raw wool is from 10 to
II cents pound. and II might he
thought that manufactured woolen
goods would be sufficiently protected
by an increase patching the advance in
wages here, but this Is not so, since in
actual practice IL has been found that
il requires from three to three and a
half pounds OF unsecured raw wool TO
make one pound of yarn, while the
equivalent Of about four pounds of the
unwashed raw product is needed for
every pound of finished cloth,
The most elaborate experiments and
calculations were entered into on be-
half Of the committee to determine ex-
actly how high TO fix the compensatory
rates rendered necessary by this state
OF facts. and this meant vast amount
of additional work that was not done
at all by the committee preparing the
Wilson German tariff. This was not.
however because OF neglect on the part
of that committee, but simply because
compensatory duties are not necessary
in ad valorcm tariffs. the rates OF
which, being according TO value" must
necessarily increase in exact ratio with
the increased value of the goods from
additional labor, waste or any other
cause.
The system OF drawbacks provided
for in the Dingley law is practically the
same as that of the Wilson German
tariff. yet not much is known about II
by the general public. Drawbacks are
allowed to exporting manufacturers
whenever il is shown that imported ma
terials on which duty has been paid
have been used in manufacturing the
goods TO be imported. The determna-
tion OF these drawbacks Is very inn
portant part of the regular work of the
customs service.
For instance. IL a manufactures OF
peppermint essence should use French
peppermint oil in its making and then
should export the whole or part or his
product he would be entitled to draw
back payment from the United states
| equal 10 the amount of duty paid on the
| quantity Of oil actually used In the es-
sence sent abroad and in order to fix
/ upon the amount of drawback 10 which
! the manufactures Is entitled govern
/ ment chemists must carefully analyze
! samples of the essence. After they have
! ascertained the proportion OF oil the
/ bottles must be measured TO obtain
/ their contents and the invoice sent TO
I
examined and compared with the actual
shipment 10 make sure that the amount
/ claimed Is strictly in accordance with
( the facts. The instance given above Is
/ a simple one, and IL can be readily seen
that sometimes articles for export re-
quire the attention of many experts IN
stead Of two or three.
In addition tn all this, the books OF
| the customs service have To be care
fully searched to see IL the importations
on which drawback IL claimed nave
actually been made and IL the export
ing manufacturer should chance TO
| claim too much his name is promptly
] placed upon one cf those little lists of
men who are willing TO take more than
their due from their Uncle Samuel that
are kept TO be referred to In suspicious
! cases.
The first year after the legal establish
ment Of the drawback system not
| nearly all the exporting manufacturers
entitled TO such payments made apph-
cation for them. This was not because
Il OF any generous disinclination TO take
| money from the government. but be-
cause they were. ignorant OF their legal
rights. and this ignorance has not been
altogether dissipated even yet. Year
by year. however. the proportion q.
drawback payments has increased and
the customs officials expect a larger In
crease this year than In any twelve
month since the establishment Of the
system.