ABOLITION OF SPECIFIC DUTIES BY THE COMPROMISE ACT OF 1833: ITS
ERROR, AND LOSS TO THE REVENUE, SHOWN BY EXPERIENCE.
The introduction of the universal _ad valorem_ system in 1833 was
opposed and deprecated by practical men at the time, as one of those
refined subtleties which, aiming at an ideal perfection, overlooks
the experience of ages, and disregards the warnings of reason.
Specific duties had been the rule--ad valorems the exception--from
the beginning of the collection of custom-house revenue. The
specific duty was a question in the exact sciences, depending upon a
mathematical solution by weight, count, or measure: the ad valorem
presented a question to the fallible judgment of men, sure to be
different at different places; and subject, in addition to the
fallibility of judgment, to the chances of ignorance, indifference,
negligence and corruption. All this was urged against the act at
the time, but in vain. It was a piece of legislation arranged
out of doors--christened a compromise, which was to save the
Union--brought into the House to be passed without alteration: and
was so passed, in defiance of all judgment and reason by the aid
of the votes of those--always a considerable per centum in every
public body--to whom the name of compromise is an irresistible
attraction: amiable men, who would do no wrong of themselves, and
without whom the designing could do but little wrong. Objections
to this pernicious novelty (of universal ad valorems), were in
vain urged then: experience, with her enlightened voice, now came
forward to plead against them. The act had been in force seven
years: it had had a long, and a fair trial: and that safest of all
juries--Time and Experience--now came forward to deliver their
verdict. At this session ('39-'40) a message was sent to the House
of Representatives by the President, covering reports from the
Secretary of the Treasury, and from the Comptroller of the Treasury,
with opinions from the late Attorneys-general of the United States
(Messrs. Benjamin F. Butler and Felix Grundy), and letters from
the collectors of the customs in all the principal Atlantic
ports, all relating to the practical operation of the ad valorem
system, and showing it to be unequal, uncertain, unsafe--diverse
in its construction--injurious to the revenue--open to unfair
practices--and greatly expensive from the number of persons required
to execute it. The whole document may be profitably studied by all
who deprecate unwise and pernicious legislation; but a selection of
a few of the cases of injurious operation which it presents will be
sufficient to give an idea of the whole. Three classes of goods are
selected--silks, linens, and worsted: all staple articles, and so
well known as to be the least susceptible of diversity of judgment;
and yet on which, in the period of four years, a fraction over five
millions of dollars had been lost to the Treasury from diversity of
construction between the Treasury officers and the judiciary--with
the further prospective loss of one million and three-quarters in
the ensuing three years if the act was not amended. The document,
at page 44, states the annual ascertained loss during four years'
operation of the act on these classes of goods, to be:
"In 1835 - $624,356 In 1837 - 463,090
1836 - 847,162 1838 - 428,237
"Making in the four years $2,362,845; and the comptroller
computes the annual prospective loss during the time the act
may remain unaltered, at $800,000. So much for silks; now for
linens. The same page, for the same four years, represents the
annual loss on this article to be:
In 1835 - $370,785 In 1837 - 303,241
1836 - 516,988 1838 - 226,375
"Making the sum of $1,411,389 on this article for the four
years; to which is to be added the estimated sum of $400,000,
for the future annual losses, if the act remains unaltered.
"On worsted goods, for the same time, and on page 45, the report
exhibits the losses thus:
In 1835 - $409,329 In 1837 - 209,391
1836 - 416,832 1838 - 249,590
"Making a total of ascertained loss on this head, in the brief
space of four years, amount to the sum of $1,285,142; with a
computation of a prospective loss of $500,000 per annum, while
the compromise act remains as it is."
Such were the losses from diversity of construction alone on three
classes of goods, in the short space of four years; and these
classes staple goods, composed of a single material. When it
came to articles of mixed material, the diversity became worse.
Custom-house officers disagreed: comptrollers and treasurers
disagreed: attorneys-general disagreed. Courts were referred to,
and their decision overruled all. Many importers stood suits; and
the courts and juries overruled all the officers appointed to
collect the revenue. The government could only collect what they
are allowed. Often, after paying the duty assessed, the party has
brought his action and recovered a large part of it back. So that
this ad valorem system, besides its great expense, its chance
for diversity of opinions among the appraisers, and its openness
to corruption, also gave rise to differences among the highest
administrative and law officers of the government, with resort to
courts of law, in nearly all which the United States was the loser.