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Mr. Iredell Meares, formerly deputy coll...

Mr. Iredell Meares, formerly deputy coll... image
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Mr. Iredell Meares, formerly deputy collector of customs at Wilmington, N. C, has given a description of the jute drawback frauds by which the government was robbed of 342,000 by the Jute Bagging trust. The law in force up to last October allowed a drawback of 90 per cent. (it is now 99) "on articles mannfactured of materials imported, on which duties have been paid." There are manufacturera in the United States, in various linea of trade, largely dependent upon foreign raw material to supply the needs of their business, and where they take the product of their factories, made entirely of imported dnty paid material, and export it to foreign markets, or where the purchasers of their product, who thereby indirectly p,ay the duty upon the raw material, export the mannfactured article to foreign countrie8, it would seem that the statute operates justly in refunding the duty. Jute is now on the free list by the McKinley law, but it is of interest still to recall these jute drawback frauds to show what steals are possible in our customs 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 f urther claim upon anybody for a refund of the duty. The cotton planter bought the bagging with the duty added to the price, and the ton iteelf sold with the dnty added. The exporting merchant was the last in the line of American pnrchasera to pay the duty, and if anybody was to receive the refund of duty from the government he was evidently the man. Henee the law provides that the exporter shall prodnee the certificate from the collector of the port where the dnty was originally paid; that "the exporter shall prodnee the eworn affidavit of the proprietor and foreman of the manufactory at which the article was manufactured." The law never contemplated that the importer of the raw material should receive the refund of duty unless he were also the exporter of the manufactnred article. Likewise, the law makes no provisión for a refund of duty to the manufacturer unless he himself exports his product. The law recognizes the principie that when goods made of foreign raw materials are sold, the seller makes back all that liad been paid in duties. Now, in the jute bagging referred to there was the grossest fraud. When, in 1883, it was determined to extend the drawback provisión to jute bagging the determination was not generally made public. Mr. Meares says: "The decisión of the department to this effect was made by letter to the collector of customs at New York, dated at Washington, Nov. 14, 1883, and signed by the assistant secretary of the treasury. uopies or tms letter were ïnclosed 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 1883. It is the custom of the department to issue in printed circular form for gratuitous distribution instructions of this kind. "Why was this not published in the monthly and yearly editions of instructions and decisions? It may have been intentionally withheld from too much public notice. In any event, it served well the manufacturera' purposes. It is not charged that they instigated the letter above quoted and had notice of it qnietly forwarded to the several ports by some one friendly to their scheme and having some power over the matter in the department at Washington, instead of publishing it widespread, butit is mentioned as one of the coincidences which so nicely fit in with the suspicious payment of the drawback claims cnssed. Had the intention of the departinent to allow jute bagging to become subject to drawback duty been given out publicly exporters would have immediately sought their rights in the premises, having notice of the law and regnlations, 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 Manufacturers' association or jute bagging trust got the infonnation, 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 importers, could produce evidence that they imported at certain times and in certain quantities the raw material, and as manufacturera they could furnish the required affidavits as to when and where this pile was made into bagging, but how could they identify this raw material in the exports? They could not, but they made a bluff at it. Mr. Meares writes: "With this evidence in hand, which nominally but substantially met the reqnirements of the regulations to produce evidence of import and manufacture of tñe arricie upon which the demand f or drawback is made, and armed by a power of attorney, the local agent watched the exportations of cotton at his particular port, and whenever local exporters cleared a cargo of cotton to foreign markets fie forthwith proceeded to file his claim, in behalf of the association, for the cayment of the drawback. duty, and during the season of 1883 and 1884 succeeded in collecting it at a number of the cotton ports. The form In which these claims are made state under oath of party making them that the particular lot of jute bagging therein stated to have been exported was manuf actuxed in the United States of the jute butts certified to in accompanying documenta as haring been imported and duty paid and the date of import, when, where and by whom manufacturad is insertec and worn to. "When it is remembered that it is a practical impossibility to f ollow this bagging from the factory, through the merihants' and farmers' hands, and back to vts place of exportation, after the rolls in which it was first sold have been ent up and separate pieces wrapped aronnd the cotton bales, andidentify it as that made frorn any particular importation, it will readily be seen that the certificates ñled as to import and manufacture are merely nominal, and substantiaUy proved nothing as to identity." These gentlemen seemed to have no fear of perjury before their eyes. They had to swear that the exported bagging was made solely from the jute butts imported, and manufactured as "in said entry stateü"- a thing which they could not possibly know. Of course a man who -wil! juggle with an oath in this fashion will not hesitate about mixing himself np with another man's property, but the nerve of this proceeding is something delightful. The exported property did not belong to the United States Bagging Manufacturera' association. That association was not exporting the cotton or the bagging. It had nothing to do with or no claim upon either. Yet it stationed an agent at every port in the United States who claimed and received five dollars a ton, less 10 per cent. , on a class of exporte to which it had not a shadow of title. It is interesting to note that the outrage which was" allowed under the Arthur administration was stopped shortly after Mr. Cleveland became president. This was not only very bad moráis, bnt it was very bad law, as Mr. Meares shows: "The collector at each port is required to determine whether the regulations are properly complied with, and whether the claim is properly and snbstantially proven. In the cases here discussed the drawback was paid to the manufacturers, althongh their names did not appear on the export manifest at the cnstom house as the shippers, in the face of the requirement of the Revised Statntes, section 3,038, which reads, 'All debentures shall be issued and made payahle to the original importer of the merchandise, entered for exportation, whenever the same shall be reqnested in writing, by the exporter, bnt not otherwise.' This is an express inhibition upon the government officials paying claims of this character, however well established otherwise, to any other person than the exporter, unless I so requested by him in writing, and it was totally disregarded by the collectors liquidating the refund here referred to. Investigation discloses the fact that the written authority required in all such cases was not produced by the claimants of the refund, as the law reqnired, and either through gross carelessness or connivance the claims were illegally and wrongfully paid." The amoant of money thus received by the enterprising manufacturer -was: In 1883, $107,183.06; in 1884, $116,683.72; in 1885, $18,525.40. Total, $242,392.18.