new system work satisfactorily remains to be seen. As has already been said, no great trouble is likely to arise when the rates do not exceed some such figure as 30 per cent. But when goods are subjected to ad valorem duties as high as 45, 50, 55, even 60 per cent (for example, silk piece goods, silk apparel, china ware) the temptation to evasion becomes so strong that all the penalties in the world will not entirely prevent it. If specific duties are abandoned because deemed suspicious or impracticable, the only safe administrative policy is to keep the ad valorem rates moderate.

It has been pointed out time and again, in the preceding pages, that many reductions of duty made in this act of 1913 are likely to be without real effect. They serve to lower duties that have been prohibitory or abolish duties that have been nominal. Much the larger part of the changes are probably of this sort. Can it be said that they are worth while?

Beyond question, the consequences in industry and in prices that will ensue have been immensely exaggerated by both sides. Such exaggeration is the inevitable result of the tariff's having become an issue in elections. And apparently the tariff question cannot be other than one of party politics. It is enveloped in partisan controversy quite as much in England, Germany, France; and in these countries also the economic effects of protection are constantly over-stated. In our own country, the main channels of industry and trade have not been seriously deflected by the tariff system. The great bulk of our occupations would be conducted in the same way even under complete free trade. Such modifications as are now made in the tariff will call for readjustment in only a small fraction of the whole field of industry. And

by the same token, they will lower prices comparatively little. The expectation that the cost of living will be substantially lowered is doomed to disappointment.

None the less, it is worth while to make the changes; not only those of real consequence, but those of merely nominal effect. It is worth while, if for no other reason, because it may fairly be expected to put an end to the superstition that all prosperity is dependent on the maintenance of a rigid protective tariff. This superstition was indeed somewhat shattered by the crisis of 1907, and the period of depression that followed. But it has been so dinned into the public ear, — there have been such vociferous predictions of general disaster, of collapse for all manufacturing enterprises, of destruction to the American standard of living, that it is well to prove the industrial organism quite able to survive this general pruning. A more sober consideration of the tariff question may be expected to follow a proof its comparative unimportance, and then a greater attention to the social questions which constitute, after all, the inexorable problems of the century.

And yet, it may conceivably turn out that the old superstition will be strengthened, not put an end to, by the course of events under the tariff of 1913. An immense deal will depend on the accident of good or bad times during the years of President Wilson's administration. I say accident, meaning that in this regard the tariff itself will be of but little influence. The turn toward prosperity or the reverse, as the case may be, - will depend on factors quite different. Tho we are much in the dark concerning the causes of the periodic alternations of activity with depression, every competent observer will agree that among these

causes tariff legislation is the least important.

But the average person reasons, or rather feels, differently. If we have bad times for the next three or four years, he will hold the low duties responsible; if we have good times, he will give the low duties the credit. As is proved by the experience of 1846-57, and again by that of 1897-1907, a period of general prosperity leads to an acceptance of the existing tariff as satisfactory, whether it be one with a low range of rates or a high one. So it will doubtless be with the tariff of 1913.

Hence those who believe that our protective system has been partly misdirected, partly outgrown, the cause in some degree of unhealthy industrial development, but in even greater degree of political jobbery and exasperating fallacies, will pray for good times in the immediate future. The juncture would seem not unfavorable. The country is not, as it was in 1894, in the initial stages of a period of depression. It would seem to be rather in the middle of the usual cycle, and ready for an upward swing. But he would be rash who counted too confidently on the repetition of the precise sort of oscillation which has appeared in previous industrial cycles, or ventured to predict that this year or the next would usher in a stage of activity and prosperity. The event must be awaited; and the tariff of 1913 must take its chances of being held responsible for an outcome on which, after all, it can have little influence.

F. W. TAUSSIG.

HARVARD UNIVERSITY.

THE ADMINISTRATIVE PROVISIONS OF THE

REVENUE ACT OF 19131

SUMMARY

Action of House shipments, 33.

- Better statistical

The great use of ad valorem duties in the act, 31. and Senate, 33. Consigned and assembled Forms of declaration at Secretary's discretion, 34. returns, 34. Penalties strengthened, 35. Some hardship for importers obviated, 36. Ascertainment of foreign value, 38. Protest fees required; contingent attorney fees prohibited, 38.Character of hearings before General Appraisers, 40. — Fictitious cases by domestic manufacturers prevented, 41. Penalties, 42. Burden of proof in suits for value, 43. — Provisions on examination of books of foreigners and importers, 44. Conclusion, 45.

ONE of the most striking features of the new tariff is the wholesale adoption of the ad valorem method of assessing duties. Much may be said upon each side of the question of the rival merits of the ad valorem and the specific bases for levying duties; and Secretaries of the Treasury have differed fundamentally upon this question. But there can be little discussion upon the relative difficulties of administration of the two, or upon the ease with which frauds may be practised upon the revenue. The ad valorem method throws far greater difficulties in the path of the Treasury Department, both at the custom houses and abroad, and also immeasurably increases the opportunities, temptations, and facilities for fraud upon the part of the importer. As was aptly said by one of the ambassa

1 The revenue act of 1913 is entitled "An Act to reduce tariff duties and to provide revenue for the government, and for other purposes." Section I fixes the tariff duties. Section II levies the income tax. Section III, the one here under consideration, settles the administrative details of the tariff. Its paragraphs are listed under capital letters, A, B, C, D, and so on. Section IV contains miscellaneous provisions, on trade agreements (quite innocuous); modifications affecting Cuba, the Philippines, and Porto Rico; drawback arrangements; and so on, in considerable number.

dors at Washington from a foreign country where the specific method has been adopted; "We think our collectors can tell a pair of shoes from a grand piano very readily": and he might have added, “and from a gallon of whiskey, or a ton of coal, or a yard of cloth, and can count, gage, weigh, or measure them with ease and exactness." On the other hand, it is no simple matter for an appraiser in Cleveland, let us say, to ascertain with entire accuracy the exact value of a bale of wool in Afghanistan upon a day months past (the day of shipment); which is the job that is required of him under the ad valorem system. And this job, the Underwood Act has increased to a somewhat terrifying extent. For example, Schedule A, comprising chemicals, oils and paints, included eighty-three paragraphs in the tariff of 1909, of which fifty-eight were specific, eleven ad valorem, and fourteen both specific and ad valorem. The same Schedule in the act of 1913 includes seventy-one paragraphs, of which only twenty-two are specific, thirty-two being ad valorem and sixteen being both specific and ad valorem. And this illustration is typical of the whole measure.

Now it early became obvious to Mr. Underwood and his associates that the proper protection and collection of the revenues upon the ad valorem basis would require a clothing of the collecting force with all the powers necessary to prevent and punish frauds in undervaluation. As a natural consequence the administrative sections, which found their origin in the Customs Administrative Act of 1890, amended in some particulars by the Dingley act of 1897, and the Payne act of 1909, were gone over with the utmost care in order that the weak places might be strengthened and the powers of the government to get at the truth in matters of valuation might be made clear and summary.