Arizona republican., 1915-05-27
Custom Court Upholds Tar if Clause and Rules that Refund Applies to Goods Carried in Ships of All "Favored Nations" MAY CHANGE FISCAL
 POLICY OF U. $. Prospect of Refunding Eff teen Millions of Duties Already Collected and Shrinkage of Revenue Is Discussed.
ASSOCIATED PRESS DISPATCH


 WASHINGTON, May 26.-The so- called five per cent clause of the tariff law, granting a reduction of duties to that amount on goods i'm ported in. American ships, was sus- tained by the custom court, which held also that a five per cent rebate must be granted on all goods i'm ported in the ships of those countries with which the United States has favored nation treaties.
 As such treaties exist with prin- cipal countries of the world the ef- feet of tEe decision practically is to reduce the customs revenue by five per cent
 If the decision io sustained by the supreme court of the United states. to which it will be appealed, approx imately $15.O0O.0O0 in duties already received must be refunded.
 In a dissenting opinion Judge Dev- ries pointed out majority decision means that goods imported in about fifty-five hundred foreign vessels of favored nation countries shall receive this reduction of customs duties. Five per cent of the estimated cus- toms revenues for the present fiscal year would exceed $11,0O0OOO and in years to come the total would grow to even greater proportions.
 Moreover it is pointed out that the decision. if it stands the test of the supreme court, would be retroactive to the extent that it applies to inn portations into the United States since the approval of the Under wood-Simons law more than two years ago. including goods in bond, subsequently withdrawn without payment of this rebate.
 Government officials realize that the decision may have a profound effect upon the fiscal policy of the U. $. at present. the actual working balance is under fifteen mil lions. though possibly forty millions are available to be added to this if necessary. With the an nounced deficit in postal revenues. and no increases in external revenue nue or customs receipts now in sight talk of the necessity for the issue of Panama canal bonds has been revived in view of the pros pect of reduced customs revenues and the necessity for refunding the millions already collected. The pay ment of some eighty millions into the treasury due from the income tax, however. is counted on to delay any such emergency for several months.
 Todays decision in the customs court in part sustained the ruling of the board of general appraisers, and in part reversed that body
 In addition to it's findings regarding goods from abroad, the court held that merchandise from Cuba is en- titled to a reduction from the Cuban preferential treaty with the United States, and to further a discount of per cent from that amount
 The government, importers and American and foreign ship owners were parties to the suit The gov ment held that the clause applied to goods imported in ships of favored nations as well as those flying the American flag, and therefore that section must be held entirely inoper- ative unless the favored nation treaties were abrogated Importers were here interested particularly in the rebate
 Former Attorney General Me Reynolds held that the cause was imperative because of the conflict of existing treaties and in con- formity with this opinion, the re- bate has never been paid in any case. although the importers accepted the assessed duties in many instances under protest.