The tariff on pearls at present operative in the United States is so indefinite as to have led to much serious misinterpretation and misunderstanding, as well as to an endless chain of lawsuits, often resulting in serious loss to the dealer or client who imports. As a consequence of the enforced outlay of large sums for unexpected and additional duties, the importer, who was both ready and willing to pay what seemed to him a just duty, often found that, where he had quoted a price to a customer, he was a loser by the transaction; and if, to escape this loss, he endeavors to dispute the payment of the duty, he becomes involved in an expensive and occasionally unsuccessful lawsuit. On the other hand, a private buyer who has paid all that he feels he can afford at the time for a necklace, expecting to pay a duty of 10 per cent. and interpreting the law to mean a duty of 10 per cent., may be called upon to pay a duty of 60 per cent., or have the notoriety of a public lawsuit, because the pearls have been strung, or because it is held that they had recently or at some former time been assembled as a necklace. In other words, if the pearls constituting such a necklace are bought at various times from various people, either here or in Europe, and not as a necklace, the duty is held to be 10 per cent., but if they are sent in one shipment, a duty of 60 per cent. is levied. As it is held that pearls assembled in the form of a necklace have a greater value than before they were so assembled, the purchaser might naturally expect to pay the 10 per cent. duty on this higher value, but instead of this a 60 per cent. duty is demanded on the higher assembled value.

The ambiguity of this clause of the tariff is such that a logical ruling should be made by some superior official such as the Secretary of the Treasury. As the law is now interpreted, a pearl worth $20,000 can be brought in with a duty of 10 per cent.; the addition of a simple gold wire makes it a piece of jewelry, with a duty of 60 per cent. It would seem that an amendment might be made to the tariff by which an importer, whether a private buyer or dealer, could be called upon to pay a 60 per cent. duty on a high valuation of the setting of the ring, brooch, or jewel, such as $20, $25 or $50; while the contents of the ring or ornament, whether a pearl, diamond, emerald, or a collection of stones, should pay a duty of only 10 per cent. This duty would sufficiently protect the jewelry industry, and would at the same time prevent the levying of an unjust and unexpected impost upon a fine pearl or gem of any kind.

It is eminently desirable that those residing in the United States who purchase pearls in foreign countries, should, if possible, consult with the United States consul in the city where they make their purchase, in case they wish to bring the pearls into the United States. In this way a proper declaration can be made, they will be correctly instructed as to the duties upon the pearls, whether unstrung, strung, or set, and they will thus avoid all complications when they reach the United States. Of course, this may not be necessary should the firm with which they are dealing be able to attend to the matter for them.

It must not be forgotten that the duty of 25 per cent. on precious stones, which was imposed during Cleveland’s administration, was enacted for the purpose of obtaining an increased revenue for the government, and there is no doubt but that the time was one of great financial stress. Yet even with the duty two and a half times as high as in the previous years, only a small fraction was added to the income of the Government. But one adequate explanation can be given of this remarkable decrease in the recorded imports, more especially when we consider that legitimate dealers could, at that time, buy precious stones in New York City for less than it cost them to purchase them abroad and pay the duty. It seems, therefore, that a 10 per cent. rate is calculated to produce the best and most satisfactory results in every way.

As examples of the difficulties encountered in the attempt to arrive at a proper classification of pearls we cite the following cases which have been the subjects of recent litigation: In 1901, two very valuable collections of pearls were brought to this country. One of these consisted of 45 drilled pearls weighing in all 672⅛ grains and entered at $60,734; the other, of 39 pearls, having an aggregate weight of 678¾ grains and entered at $63,070. At first a duty of 20 per cent. ad valorem was imposed upon these pearls under Section 6 of the Tariff Act, treating them as “unenumerated articles partly manufactured,” according to the rule that had been followed since the enactment of the present tariff. This was protested, and the case was brought before the Board of Appraisers.[[407]] Subsequent to the protest, however, the collector reliquidated the entry of the 45 pearls and imposed upon them a duty of 60 per cent. ad valorem, as pearls set or strung. This was done in view of Judge Lacombe’s decision in another notable case which had been taken shortly before to the Circuit Court of Appeals.[[408]] This decision was to the effect that pearls in any form not especially covered by paragraphs 434 or 436 of the Tariff Act should be referred to one or the other of those paragraphs, by similitude, according to the provisions of Section 7 of the Act.

The testimony taken before the Board of Appraisers revealed the fact that each of the collections of pearls had been inclosed in a handsome silk-lined morocco case, with a groove running through the center; in this groove the pearls were laid, the largest one in the middle and the others disposed on either side, graduated according to their size; the row or series having the effect of a necklace, although the pearls were unstrung. The importer testified that this arrangement was only made in order to enable him to judge of the size and quality of the pearls, and evidence was given showing that it was necessary to rebore some of them and to ream out the holes before any use could be made of the pearls in jewelry. Nevertheless, the appraisers adhered to their opinion that these gems had been selected especially to form a necklace, and that the time and labor requisite for the assembling of a carefully matched and graduated series of pearls suitable for a necklace constituted the main factor in its production, since the cost of stringing it was trifling; they, therefore, considered that such a series of pearls was dutiable, by similitude, under paragraph 434 of the Tariff Act as jewelry. An application was made to the Circuit Court of the Southern District of New York for a review of the appraisers’ ruling,[[409]] the judge decided against the petitioner,[[410]] and an appeal was then taken from his decision. On December 12, 1904, the Circuit Court of Appeals decided that the pearls were dutiable, by similitude, at 10 per cent. ad valorem, under Section 7, paragraph 436, and the excess of duty collected was refunded.

Another case has to do with a collection of 37 pearls, entered at $220,000, brought to New York in January, 1906. Duty to the amount of $22,000 (10 per cent. ad valorem) was paid by the importer, but the entry was liquidated at 60 per cent. and $110,000 additional duty demanded. This was paid and a protest was made to the Board of General Appraisers, who decided in favor of the petitioner. The Government appealed and the case[[411]] was tried in the United States Circuit Court on February 24 of this year (1908). It was shown that the pearls had been worn several times in Paris as a necklace, but the defense held that, as they were loose when imported and were not worth more collectively than separately, this was not material. The judge decided for the Government and an appeal has been taken in June, 1908.

PERSIAN PRINCESS AND LADIES IN WAITING
From a Persian illuminated manuscript of the eighteenth century, in the library of Robert Hoe, Esq.

The proper classification of half-pearls has also been a matter of controversy. This question was brought before the Board of General Appraisers in New York on a protest[[412]] entered in 1897 against the imposition of a duty of 20 per cent. on several lots of so-called half-pearls imported during that year. This duty was imposed under Section 6 of the Tariff Act, providing for a duty of 20 per cent. on “unenumerated partly manufactured articles.” The petitioner claimed that half-pearls were dutiable at 10 per cent. ad valorem, “either directly or by similitude or component of chief value, under paragraph 436, or as precious stones, under paragraph 435 of the Tariff Act.” After hearing the testimony of a number of competent and reliable experts connected with some of the leading houses dealing in precious stones and pearls, the appraisers decided that the evidence showed that pearls, being the product of animal secretion, could not properly be denominated stones, and that they were not in fact so designated commercially. At the same time, half-pearls could not be looked upon as “pearls in their natural state,” since time and labor had been expended in their production; it was, therefore, evident that paragraph 436 did not apply to them. For this reason the original ruling was reaffirmed.