A Compilation of the Messages and Papers of the Presidents. Volume 9, part 1: Benjamin Harrison

by Benjamin Harrison

It will be seen that the law permits merchandise arriving at the ports of New York, Boston, Portland in Maine, and at other ports specially designated by the Secretary of the Treasury, for places in the adjacent British Provinces, to be entered at the custom-house of the port where it is landed and conveyed through the territory of the United States without the payment of duty, under regulations to be prescribed by the Secretary of the Treasury. As these goods come immediately and fully under the inspection of our customs officers at the principal ports, are entered there and remain until they cross our border into Canada fully under our supervision, there is little or no danger involved to our revenue. The regulations prescribed by the Treasury for conducting this traffic seem to me to be adequate.

As to merchandise imported into the United States from a contiguous foreign country, it is provided by section 3102 that the inspection at the first port of arrival in the United States may be avoided if the vehicle in which the same arrives has been sealed or closed by some officer of the United States duly authorized at some point in the contiguous country. When the act of closing or sealing conformably to the regulations of the Treasury has been effected, the car or other vehicle may proceed without unnecessary delay to the port of its destination, as named in the manifest of its cargo, freight, or contents, and be there inspected. This privilege, however, is subject to such examination at the point of entry to the United States as may be necessary to prevent fraud. It is important to be noticed that the merchandise to which this section refers is described in section 3100 as merchandise, etc., "imported into the United States from any contiguous foreign country."

A practice has grown up, and a traffic of considerable dimensions under it, of allowing merchandise from China and Japan, purchased and imported from those countries by our own citizens and landed at ports in the Dominion of Canada, to be there loaded into cars, which, being sealed by an officer of the United States or some one supposed to represent him, are forwarded through the territory of Canada, across the entire continent, and allowed to cross our frontier without other inspection than an examination of the seals. The real fact is that the American consul can not and does not either compare the manifest with the contents of the cars or attach the seals. The agents of the transportation companies are furnished by the consul with the seals and place them upon the cars. The practice of sealing such merchandise, notwithstanding it has been allowed by the Treasury for some years, I think is unauthorized. Such merchandise is not imported from a "contiguous country," but from China and Japan.

It has never become subject to the Canadian revenue laws as an importation from Japan to Canada, but by force of the treaty or by the courtesy of that government has been treated as subject to the revenue laws of the United States from the time of landing at the Canadian port. Our Treasury seal has been placed upon it; Canada only gives it passage. It is no more an importation from Canada than is a train load of wheat that starts from Detroit and is transported through Canada to another port of the United States. Section 3102 was enacted in 1864, two years before sections 3005 and 3006, and could not have had reference to the later methods of importing merchandise through one country to the other.

The practice to which I have referred not only equalizes the advantages of Canadian seaports with our own in the importation of goods for our domestic consumption, but makes the Canadian ports favored ports of entry. The detentions under this system at the Canadian ports are less than when the merchandise is landed at a port of the United States to be forwarded in bond to another port therein. Full effect should be given to section 3102 as to merchandise imported into the United States from Canada, so far as the appropriations enable the Treasury to provide the officers to do the work of closing and sealing. It will, however, be required that all this kind of work be done, and carefully done, by an officer of the United States, and that the duty shall in no case be delegated to the employees of the transportation companies. The considerations that it is quite doubtful whether a fraud committed in Canada by one of our agents upon our revenue would be punishable in our courts, and that such a fraud committed by anyone else certainly would not be, and that even if such acts are made penal by our statutes the criminal would be secure against extradition, seem to me to be conclusive against the policy of attempting to maintain such revenue agents in Canadian territory.

I come now to discuss another element of this international traffic, namely, the transportation of merchandise from one "port" in the United States to another "port" therein over the territory of Canada. This traffic is enormous in its dimensions, and very great interests have grown up in the United States in connection with it. Section 3006 authorizes this traffic, subject to "such rules, regulations, and conditions as the Secretary of the Treasury may prescribe;" but the important limitation is from "port" to "port." Section 3007 of the Revised Statutes, which exempts sealed cars from certain fees, preserves the terms of the preceding section—from "port" to "port." It seems to me that sections 3006 and 3007 contemplate the delivery of the sealed cars at a "port" of the United States, there to be examined by a revenue officer and their contents verified; but in practice the car, if the seal is found at the border to be intact, is passed to places not "ports" and is opened and unloaded by the consignee, no officer being present. The bill or manifest accompanying the merchandise and the unbroken seal on the car may furnish prima facie evidence that the amount and kind of merchandise named in the manifest and said to be contained in the car came from a port in the United States, but certainly it was not intended that the merchandise should go to the owner without an official ascertainment of the correspondence between the bill and the actual contents of the car.

I pass at this point any discussion of the question whether as a national policy this traffic should be promoted. It is enough to say that as the law stands it is authorized between "ports" of the United States, and that the rules, regulations, and conditions to be prescribed by the Secretary of the Treasury must not, in view of this declaration of the legislative will, be further restrictive of the traffic than may reasonably be necessary to protect the revenues of the United States. In determining whether further regulations are reasonably necessary to prevent frauds against our revenue it is not conclusive, at least, to say that frauds against the revenue under the existing system have not been discovered. The question is, Are the regulations such as to provide proper safeguards against fraud, or are they such as to make fraud easy to those who have the disposition to commit it? If all cars carrying this merchandise are carefully and honestly inspected at the point of lading and are securely closed during the transit, the revenue would be secure, for the proper lading of these cars is not subject to duty. Frauds can only be perpetrated by introducing products not subject to free entry. In practice the seals and locks provided by the Treasury Department do not give security that these cars, in the long transit in which they are free from observation by officers of the revenue, may not be opened and dutiable merchandise added.

The duplication of the seals used, composed of wire and lead, is easy, and the opening of locks scarcely less so. If, however, the cars, when they arrive in the United States, either at the point where our boundary is crossed or at some other port of the United States, were subject to the inspection of a revenue officer before the delivery to the consignee or owner, the manifest could be verified. The inspection, however, is now limited to an examination of the lock or seal. The car is not weighed or opened to verify its contents. I do not think this is an adequate protection against the surreptitious introduction into the cars, while on foreign territory, of dutiable articles. It will be seen by the letter of the Secretary of the Treasury that grain the product of the United States is now largely transported in American vessels to Canadian lake ports, and after being there placed in elevators is sent east in cars sealed by agents of the Treasury.

No observation is taken of this grain until its arrival in Canada, where only the amount and grade are noted by a Treasury agent, and a like amount in grade and quantity (though it may be not the identical grain) is by such agent billed and sealed in cars for carriage to the United States. I do not find any statute authorizing this practice. Section 3006, which authorizes this interstate trade through Canada, is limited to merchandise passing from "port" to "port" of the United States, and plainly means that such merchandise shall be taken up by our revenue officers at a "port" of the United States as a starting point.

The following are the conclusions at which I have arrived: