entry. The banks collecting drafts against merchants in Bogota, Medellin, Mani-
zales and other cities have, all, branches or agencies in Barranquilla or Cartagena.
Copies of bills of lading could be mailed to them by shippers, the banks making
entry or endorsing to customer's agents upon telegraphic instructions from the
bank or branch at buyer's place of business. Anyhow, the matter is of little im-
portance to prevent the adoption of a principle so advantageous to trade as a whole.
Another matter worth mentioning is the diversity of taxes and regulations
regarding traveling agents or salesmen.
In no two countries are these taxes and regulations alike. Some countries
have established a tax for the entire country, others for each province, and others
for each (or some only) of the municipal districts. The tax, in some cases is so
high that it makes it prohibitive for all except the few privileged large concerns
who enjoy this advantage against the smaller ones.
The principle of taxation seems to be that the travelers "do business" and
that were they not taxed they would have an advantage over the domestic con-
cerns who pay income tax and other dues. Should this reason be accepted the
same should apply to all concerns "doing business" by mail, they are not taxed
and still they "do business."
It is confusing the traveling salesman with the peddler. The distinction,
however, is evident. The traveling agent takes orders, stimulates the trade,
theoretically, and is no more than what can be called a "living letter."
They do not sell merchandise except to importers (or would-be importers)
but never to the public directly. So long as they do not carry merchandise they
are not merchants, they are only agents for a foreign merchant who might avoid
the tax could he be convincing enough to sell by mail only.
The occasional visit of traveling agents, as stimulating the trade as a whole,
is nothing injurious to the country, it deprives nobody of anything and rather they
assist in the advancement at large of the country by introducing new articles of
consumption, arousing healthy competition, teaching new methods of production and
distribution, expanding the commercial knowledge of the people and what is more
important, serving in the end as living propaganda for the countries they visit.
No better actual information is obtained of the world itself than is furnished by
traveling agents who in fulfilling their mission, study the different countries and
circulate more or less profusely the information gathered. There is no reason on
earth to penalize them.
Every country has a right to impose its taxes, and the right of so doing, in
this case, is not questioned.
But again we have the annoying diversity of them and their unreasonable-
ness in some cases. Also the diversity of regulations to which they are subject.
It would be reasonable to establish a tax, if it has to be, commensurate with
the importance of the business done. If a man can sell one million dollars in a
country in one trip, he should pay more than the one who can sell ten thousand.
A lot would be gained if such tax was graded covering not the actual traveler but
the firm he represents so that within the economic year another traveler of the
same firm would not be taxed again. The more men that visit a country the better.
Finally the question of duties and regulations on samples and other means
of publicity is another annoyance that stands in the way of a smooth and rapid
expansion of trade. Regulations of samples and advertising matter, with or without
value, are not alike in scarcely two countries out of the twenty.
Some countries allow the importation of travelers' samples in bond; others
collect duty and refund a part of it if re-exported within certain time; others treat
them in a different way.
There is no question as to the right of each and every country of establish-
ing all kinds of regulations to suit themselves, with or without reason. But they
are all naturally interested in advancing their trade at large and inducing the
settling of more people and their interest in the country. Trade is the best in-
ducement, and all that helps trade is, or may be, a factor in the inducement.
It may be far fetched to link the better facilities granted to samples with
any kind of improvement to the country. However, small factors combined with
each other, and with other large ones, achieve, in the end, sometimes what never
could have been expected.
292 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
Facilities granted to the importation and display of samples may serve to
stimulate competition from other countries and improve trade in general. New
articles which must be demonstrated do not succeed if described on paper alone.
New designs may not be well shown except in fact.
It is true that too many facilities may breed abuse and that the trade and the
Government may suffer because of free importation of samples of articles which
are not intended as such. But this can be duly regulated everywhere on a similar
pattern. Social and ethical conditions are almost the same in the twenty countries
and the experience of all combined may produce a very reasonable and intelligent
manner of treating them in all.
Advertising is more or less handicapped in some if not all the twenty coun-
tries. The circularizing of catalogues, pamphlets, posters, etc.; should be encour-
aged rather than restricted everywhere. No modern business can today live if it
is not properly supported by advertising which is perhaps the finest and most subtle
form of valuable and agreeable instruction.
These comments are not new. As said before, some are as old as 30 years.
They are repeated with the idea that perhaps at this gathering of practical men
something more efficient than has been done might be done now.
All the recommendations and resolutions of the different Pan American
Conferences, while tending to the same end the betterment of commercial relations
between the United States and its twenty sister republics have too long a course
to follow to achieve results.
It might be better to proceed at this time in a different way. Instead of
appealing to the Governments through official channels, via the State Department
and the Ministry of Foreign Affairs and Finance, etc., why not appeal to them
through the commercial channels? Send a few men to visit those countries on be-
half of the commercial organizations of this country. Let them appeal to the busi-
ness men in Latin America and, with their support, appeal to each Government re-
questing the adoption of what is asked for. They are all reasonable, they are
all interested in the welfare of their countries. They can see that no underhand
profit is sought for, no business involved, and that it is just as much to their in-
terest as to ours to improve conditions.
And let them stay there until it is done. Otherwise we will continue to talk,
write, recommend and resolve without any other result than the poor consolation
of having tried again in vain.
SOUTH AMERICAN TARIFFS
BY DR. F. R. RUTTER, STATISTICAL ADVISER, BUREAU OF FOREIGN AND DOMESTIC
(Read at the Evening Session of Wednesday, June 4)
There are three features of South American tariffs to which the American
exporter takes exception. He objects to the form of the tariff and to the numer-
ous surtaxes because they complicate the system unnecessarily and make it diffi-
cult to ascertain the exact contribution that his shipment must bear. He objects
to the rates of duty in force as unnecessarily high and as bearing no obvious
relation to the character and value of the goods. He objects to the methods of
administering the tariff and especially to the numerous fines imposed, often for
acts or omissions of which he was unconscious.
Without question the tariffs of Latin-America are far more complicated than
those of any other region. During the eight years that have elapsed since the
meeting of the first Pan-American Conference there has been distinct improve-
ment. Colombia and Chile have adopted straight specific rates of duty in place
of the systems formerly employed. Salvador has eliminated the complicated system
of assessing duties and has consolidated the surtaxes into a single rate for each
article. Three years ago Ecuador imposed surtaxes of 125% per cent in addition
to the rates of .duty prescribed in the tariff. These have now been consolidated
into a single rate, but just recently a new surtax has been imposed. Paraguay
has also united its surtax with the regular import duty.
There has thus been distinct progress in the simplification of the tariffs,
although much is still left to be accomplished in this direction and the Pan Ameri-
TRADE REGULATIONS 293
can Union, representing as it does the Governments of all American countries is
in a peculiarly favorable position to urge further reforms.
The rates of duty, however, have not been reduced on the contrary there
has been some upward movement. This perhaps is unavoidable, for in South
America the Government depends mainly on import duties for its national reve-
nues and to a large degree for its local revenues. Imported goods are consumed
largely by the well-to-do and wealthy classes, whose demand in the majority of
cases is not materially diminished by the duties imposed.
The American exporter to Latin-America is, of course, interested in the
rates of tariff duty. He must know the charges that will be levied on his goods
in order to determine the probable extent of their sales. In order to determine
this it is greatly to his advantage that the duties be stated in the tariff clearly
But his much more immediate interest lies in the question of fines. ^ Many
instances have come to the attention of the Bureau of Foreign and Domestic Com-
merce where a reputable American exporter received from his South American
correspondent claim for a refund of fines imposed on the importer, but where the
exporter was not informed precisely why the fine was imposed or in what respect
he had been culpable.
In order to escape fines the importer must declare his shipments with great
precision. The article must, as a rule, be described in the terms of the local tariff.
The weight or other unit of quantity must be precisely shown. Any inaccuracy in
description causes the importation to be regarded as an attempt at smuggling and
the goods are liable to be confiscated or rather a fine equal to the value of the
goods may be imposed. It is natural that^ the importer who understates the
quantity may be penalized, but in at least one country an overstatement of quantity
also subjects the importer to a fine.
But this all has to do with the declaration submitted by the importer. How
is the American exporter concerned?
Goods are declared solely on the basis of the documents that the importer
receives. In some countries the law requires that- the declaration on the entry
shall agree with the invoice. Any inaccuracy in the documents received by the
South American importer consequently leads to a faulty declaration for which he is
penalized and he naturally looks to the exporter, who was responsible for the
initial error to make good his loss.
To avoid error on the part of the importer it is, therefore, imperative that
the exporter in this country shall describe the article accurately according to the
tariff of the country to which it is shipped; that he state precisely the quantity of
the article (neither more nor less; and that he transmit promptly the number of
copies of the various documents prescribed by the regulations of the importing
LATIN AMERICAN TARIFFS
By WILLIAM C. WELLS, CHIEF STATISTICIAN, PAN AMERICAN UNION.
There has been much criticism, especially since the beginning of the war
of Latin American Tariff laws and the methods of applying the laws. Very
little of the criticism is justified or even intelligent. It follows one of two lines of
thought: First, that the laws themselves are unfair to exporters (i. e. the foreign
manufacturer) or are constructed so as to give preferences to certain kinds of
goods as against other kinds, or contain schedules and classifications at variance
with the industrial and trade usages of all the world, and that these schedules are
often absurd. Second, that the administration of the laws is capricious, unfair, not
unform, even corrupt, and that fines and forfeitures are imposed for insignificant
It is safe to say that not one criticism or complaint in twenty has come from
anyone with a prior understanding of the operation of any tariff law outside the
ones criticised, the United States tariff law for example, or who appreciates how
any tariff law does and must affect the foreign shipper. To many exporters all
tariff laws, except those of their own country, are restrictive, bothersome, apparently
capriciously administered, illogical and even absurd. They know nothing about
how the laws of their own country are administered and nothing about how these
laws in the economic sense touch the foreigner, although they may have a very
294 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
true appreciation of how their own laws affect the industry of their own country.
Their only real knowledge .of the operation of tariff laws is when they first meet
them as exporters.
If such a one happens, first, to send his goods to Argentina or Cuba he finds
much to criticise; he would find just as much if his first) venture was to Spain or
Italy, and if he were a Spaniard or an Italian would find more if his first venture
was to the United States. One must understand that all tariff laws are in restraint
of trade, necessarily so even when not so intended, but often intended to be so.
Every entirely free country exercises to the fullest extent its right to construct its
tariff system for the benefit of its own industry, its own commerce or its own
revenue. It matters not if the system does hit the foreigner, in fact, hitting the
foreigner may be one of the purposes of the system. No country has gone farther
in this last direction than the United States and it may be added that no countries
are freer from this purpose than the Latin American.
Latin American tariffs are primarily for raising revenue. Most Latin Amer-
ican governments are apt to look at the particular tariff provision from the point
of how much revenue it will produce, and consequently rates are often raised or
lowered in experimental attempts to arrive at the high revenue producing mark.
A secondary purpose underlying Latin American tariffs is that which generally
speaking has been the chief purpose of the United States tariff laws and revisions
thereof to protect domestic industry. But the bases for the protection of domestic
industry through tariff laws do not exist in any of the Latin American countries
as in the United States. These countries are not manufacturing countries in the
sense that the United States and Western Europe is. A law intended to foster
an industry can never become a protective law until the industry exists, and then il
is protective only to the degree, in kind and quantity, to which this domestic in-
dustry is able to supply the domestic wants. Certain Latin American countries,
notably Brazil, Mexico, and Chile, have enacted tariff laws intended to be pro-
tective but the industries have in only a few instances responded in quantity, and
less often in kind, to the domestic demand, so that the foreign exporter may
ordinarily disregard the protective feature of Latin American, even of Brazilian,
Mexican and Chilean tariff laws and regard all such as being high tariff rates and
in a certain degree restrictive of trade. In other words, Latin American protective
laws are very apt to be not protective, although far above the revenue producing
There is no justice whatever in the criticism that Latin American systems
are unjust to the foreign exporter. On the average rates are less than the United
States rates under the present law and very much less under older laws. There
are some exceptions to this statement; Brazilian and Venezuelan rates are on the
average higher than United States rates and this is perhaps true of the Colombian
also. It is difficult to draw an exact comparison on account of the different class of
imports as well as the different bases of the laws, but of classes of goods that may
be comparable the duties in Latin American countries generally are on the average
less than United States duties, but they are not, even in Brazil with the highest
rates, restrictive to the degree that United States laws are restrictive. Brazilian
high rates do not exclude products to the extent that lower United States rates do.
If the foreigner has any right to complain on the score of injustice it is that his
product is excluded or unduly restricted. As a matter of fact, no foreigner, ^ least
of all an American, has any right to complain on this score. If it be a sin to
devise tariff systems in aid of domestic commerce and industry, then the United
States, Germany and France have been the chief sinners and nearly all the criticism
of Latin American tariff has come from these countries. There is more justice in
the criticism that Latin American tariff schedules do not reflect modern industry
and so are unscientific. But so are all tariff schedules, although not all are as
faulty as the Latin American. There is also justice in the criticism that Latin
American customs appraisals, i. e., so much of the appraisal as concerns the classi-
fication of goods, are not uniform, and especially that officials in different ports
appraise differently. But these defects arise from the same cause and it is a
cause very difficult to remove anywhere but especially difficult in the Latin American
countries. The faulty schedules can be corrected only by tariff experts who are
familiar with world industries both from the manufacturing and the commercial
side and have at the same 'time technical ability to construct tariff schedules in
Spanish (Brazil in Portuguese). No country is able to assemble any such group of
technicians unless it be a large industrial and commercial ccnmtry like England,
Germany, France and the United States are able to secure the next best services
TRADE REGULATIONS 295
and consequently we find the tariff systems of Germany, France, the United States
and the limited English lists best constructed and most nearly responsive to
industrial and commercial conditions. Most other tariffs are badly constructed and
the degree of badness in general is in proportion to remoteness from the world's
great industrial centers. The industrial expert is not the product of schools and
universities but of industry itself. He comes from the factories, not from the
libraries. Latin America nowhere produces such experts, and so if it needs the
services of such m f ust engage foreigners. The foreign industrial expert, unless his
disinterestedness be above suspicion, is a rather dangerous adviser in the prepara-
tion of schedules.
Most Latin American schedules are antiquated and most of them were con-
structed from the retail dealer's standpoint with the very limited view such dealers
have of industrial production. Many of the schedules are so out of date that no
attempt has been made to appraise articles within the classifications. Such schedules
are abandoned. Latin American tariffs might be revised so as to respond in some
degree to world industry and commerce with the assistance of industrial, commercial
and tariff experts from Europe or the United States, but it would not be advisable
to go very far in elaborating schedules. Outside of the fact that the industrial ex-
pert might be prejudiced in favor of the industrial methods of his own country or
of one industry as against a competing industry and the danger that schedules pre-
pared under such advice would be lop-sided is the fact that highly elaborated
schedules require the same measure of expert attainments in interpretation as in
confection. Although a Latin American country might secure the services of ex-
perts in manufacture to assist in framing schedules no Latin American country
could secure a corps of industrial experts to act as appraisers. The expense would
be prohibitive. The cost of administering the United States tariff law is greater
than the customs duties of any Latin American country. The cost of administering
a tariff law composed of schedules requiring industrial expert appraisements would
be greater proportionally in Latin America than in the United States, since the
appraiser would of necessity have to be a foreigner or a native trained in foreign
industrial plants. Such men require more money than the home-trained industrial
available in United States customs' houses. But disregarding costs arising from
higher salaries and larger bodies of appraisers is the fact that no corps of ap-
praisers in sufficient number could be secured by any non-manufacturing country.
Even if desired, no Latin American country can administer an ad valorem tariff
law unless the rates are made so low as to make negligible the danger of 'under-
valuation, or, disregarding the questions of revenue and unfair competition, it
chooses to incur this danger. Turkey and China with low rates have been ex-
amples of undervaluation running riot, although the inducement to fraud was not
great. Neither can any Latin American country properly and fairly administer a
specific tariff with schedules requiring expert professional appraisement except to
a very limited degree. The ideal Latin American tariff law is one with specific
rates, and schedules and classifications understandable alike by the non-expert
importer and the non-export appraiser. Such a law does not satisfy the theorist,
but it is the only kind that can be fairly administered and produce the required
revenue. As a matter of fact, such in general is the type of all Latin American
tariff laws. If the schedules and classifications were modernized and drawn a little
farther awayi from the retail dealer's point of view they would ordinarily need no
other change or improvement.
UNIFORMITY OF CUSTOMS LAWS AND REGULATIONS
BY NICOLAS HERNANDEZ, OF HAVANA, CUBA.
As the Conference will without doubt discuss matters that will principally
have in view the development of commerce between the countries of the American
continent, we respectfully wish to submit to you the proposition that the customs
regulations and tariff laws be placed on a scientific basis; that is to say, that all
countries composing the Pan American Union adopt identical custom regulations
governing general questions and that in regard to tariff laws they should introduce
identical general classifications, leaving to each country the rate of duty to be assessed
in accordance with its own general interests, and the sub-classification of its own
products in so far as the necessities of the case may demand. In regard to the
question of tariffs for instance, a commission should be appointed that after having
studied the question should draft a law to be submitted to another Conference to
which all countries should send representatives, each one with full power to enter
into an agreement that the proposal as agreed upon by that Conference be enacted
296 SECOND PAN AMERICAN COMMERCIAL CONFERENCE
into law, so that only the rate of duty may vary in each country, which rate of
duty as has been said, should be left to be fixed by the Congress of ecah country
for itself. The different points that would present themselves for consideration on
account of their' importance are the following :
In connection with the weight of merchandise enormous absurdities are com-
mitted ; for instance, the weight of packing is treated as part of the weight of
dutiable merchandise, the result being that such extremely fine and delicate articles,
as silk and others, are packed in insufficient containers in order to avoid the pay-
ment of the same rate of duty on packing that may be assessed against articles of
The latter should be assessed a certain percentage of their value, severe
penalties being imposed for undervaluation both against the importer who under-
values the goods in his declaration and against the employees of the custom house
who by collusion make themselves accomplices in such attempts at fraud. The
United States, through its consuls, is informed of the prices on merchandise, and
when invoices are presented on the valuing of merchandise the consul notifies the
custom house where the goods are entered, and then the shipment is appraised at