Evening star., 1901-08-13
ALLEGED
Undervaluations in Imported Jap
anese Silks.
MILLIONS LOST TO GOVERNMENT
Matter Said to Have Been Going
on for Years.
MIR. sPAULDING'S STATEMENT

New York this morning to the effect that
millions of dollars in customs duties had
been lost to the government through false
invoices as to weight and value of Japa-
nese silks imported into the United States
at that port, Assistant Secretary Spaulding.
who has charge of customs affairs for the
Treasury Department, today said:
About two weeks ago a man named
Beach and another whose name l have for
gotten came into my office and stated to me
that they had knowledge Of the fact that
Silk Examiner Brown at New York was in
the pay of a prominent New York silk i'm
porting firm, receiving $4,000 a year as
compensation for undertaking. their silk
invoices. and that Brown also received pay
from another silk concern. They also
stated that large invoices of Japanese silks
were then on their way to New York, con-
signed to these firms. and that they were
daily expected to arrive. l told them that
it was of the highest Importance that they
give me the names Of the firms they had
charged with fraud in connection with
these importations, and asked them to put
them that If they would give me a single
definite fact or any information upon which
1 might act 1 would start an investigation
at once and that letter to the appraiser
would be in the appraisers hands the fol-
lowing morning. They went away saying
that they would write out their statement
and would shortly return.
They did return in the afternoon, but
stated that 1t would be necessary for them
to go back to New York, as they had found
that they did not have sufficient data with
them upon which to base a specific state
ment of facts. / told them that as they
were to return to New York 1 very much
wished they would call on Appraiser Wake
man the next morning and lay their facts
before him, and that 1 had no doubt he
~v{ry1 cH1 tow hi
they agreed to do and left the department,
and while / have heard nothing further
from them l assume that they communlcat-
ed with the appraiser, especially as the de-
partment has received a preliminary report
from Mr.. Wakeman stating that he had
begun an investigation of alleged frauds
in connection with japanese silk importa-
tions. Whether the investigation will de-
VelOp anything of the magnitude indicated
in the published statement 1 have no pres
ent means of knowing, but 1 am sure the
matter will be probed to the bottom"
There is no doubt that. the department
a most thorough investigation Of the whole
matter, and If the charges are true will
ascertain that fact
Frauds Alleged for Years.
According to the New York story. the
frauds upon the government have been go
ing on for years, and several examiners OF
silks have become wealthy as a result Of
collusion with silk importing firms Not
only have examiners become rich, but the
silk importers who were engaged In the
affair were able to undersell all their COM
petitors and then make heavy profits from
their practice 1t was this state OF affairs
and the holding up Of invoices that caused
complaint from importers that something
was wrong.
When Appraiser Wakeman received In
formation Of what was alleged to be going
on he began to call in goods for examina-
tion. If he was not given the name Of the
firms that were said to be in collusion he
had to call in the goods of a number Of
firms, so as to make a beginning. In max
Ing denominations much time had to be
taken, and this caused loud complaints.
In one instance Mr.. Wakeman called In
goods and had them examined by new
examiner The latter returned a report
that the invoice was correct. Not satisfied
with this Mr.. Wakeman assigned another
examiner to the work and he reported
gross frauds both as to weight and value.
1t is asserted THAT one invoice Of goods
was assessed tosbe due customs amounting
to $4,000 when as matter of fact the
dues to the government should have been
as much as $4,000. This gives an idea of
the amount Of money that could be made
by transactions Of the kind charged If off,
cials and importers were inclined to enter
into arrangements with each other.
Such frauds could probably be carried
out in Japanese silks better than in any
other class Of goods. Under the tariff
schedule relating to silks goods that contain
more than 40 per cent Of silk pay a duty of
So per pound, goods that contain between
30 and 40 per cent of silk pay $1.3O pound
and goods that contain less than 30 per
cent pay either specific rate of 80 cents a
pound or 90 per cent of their value to the
government. The opportunity for fraud is
present in invoicing both the quality and
weight. A high-grade silk can be invoiced
as of the lowest grade and the weight
could be put down at much less than the
real facts. There is always room for dif-
ference of opinion between experts, how
ever, as to the classification of silks, and
that Is one matter to be considered in con-
nection with the charges that are now he
ing investigated. If fraud is really discov
cred the law provides proper punishment
for importers and examiners and in case
of legal proceedings much stress would he
laid on the question of classification.