Papers Relating to Foreign Affairs, Accompanying the Annual Message of the President to the First Session Thirty-eighth Congress, Part II

Mr. Seward to Mr. Chase.

Department of State, Washington, March 21, 1863.

Sir: Referring to your communication of the 17th. July, in regard to certain provisions of the “act increasing temporarily the duties on imports, and for other purposes,” and more particularly the section of that act relating to the verification of invoices, I have now the honor to acquaint you that the instructions upon the subject embodied in circulars Nos. 17 and 29, (copies of which are herewith transmitted,) after having been submitted to the Treasury Department, were transmitted to all our consular officers for their instruction and guidance.

The department is quite aware of the frauds which have heretofore been perpetrated by a system of undervaluation and double invoices, one for the customhouse, and the other for the seller of the imported goods, for the prevention of which frauds various provisions were introduced into the acts of the 30th August, 1842, and the 10th of August, 1846, which were explained and enforced by the treasury circulars of the 11th, 26th, and 28th of November, 1846, and the 7th of August and 26th of December, 1848; and also, that the introduction into the act of the 17th of July, of the provision which requires all invoices to be authenticated by our consular officers abroad, was intended by the framers of that act to meet and correct the fraudulent devices which still continue to be practiced, greatly to the detriment of our revenue.

It has, however, been found, in executing the provisions of the act, that difficulties have arisen which were not anticipated at the time of its passage.

The 17th section of the act requires the oath to an invoice to be administered by a consular officer of the United States, or, if there be no such officer in the district, by some officer duly authorized to administer oaths.

The difficulties in the way of the execution of, this provision are two-fold:

First. In very few foreign countries are our consuls authorized, by treaty stipulation or by the local law, to administer oaths.

Secondly. In scarcely any country are the local officers permitted to administer such oaths as are required by our revenue laws.

This you will more clearly perceive from a perusal of the despatches, herewith enclosed, of which a list is annexed.

In Great Britain, a consul of a foreign state, although authorized by the laws of his own country to administer an oath in verification of a document to be used in such country, would not be recognized by the English law as a person duly authorized to administer an oath, unless also authorized by some enactment of Parliament, of which there is none. Nor would an indictment lie for a false oath to an invoice administered even by a justice of the peace or a commissioner duly qualified to administer oaths, for the reason that the English law does not recognize such oaths as criminal acts.

In France, neither the consul of the United States nor any local magistrate can administer an oath to a French citizen, of the character required by our revenue acts, which would be held valid by a French court of law, unless—which is, perhaps, hardly probable—the case might be brought within the provisions of the 6th article of the consular convention with France.

In Prussia, we are informed by our consul at Aix la Chapelle, that it has always been known that an oath administered by a consul has no legal force.

In Sweden, such an oath has only a moral, and not a legal force.

In Italy, the Italian law does not recognize oaths of this nature, (mercantile oaths,) it matters not by whom administered.

In Germany, a consul is not authorized by any of the governments to administer oaths, although he is not prohibited from doing so, and no local magistrate is allowed to administer affirmatory oaths except in open court; hence it follows that the law of Germany, by which oaths are limited to the least number of cases possible, does not regard a false statement made upon oath before any foreign consul as perjury, but as simply a fraud, though aggravated by being perpetrated before an official person, and on a solemn occasion.

An examination of the law of other countries would disclose, it is believed, similar results.

It will thus be seen that some further legislation may be hereafter requisite, unless the objects which the government has in view in protecting the revenue can be accomplished by departmental regulation.

An examination of the revenue laws of other countries shows that it is the policy of foreign governments to limit, as far as possible, the number of cases in which oaths are required to be taken; and, as oaths of the character required by our revenue laws are neither known nor regarded as having legal force, it may be inferred that such oaths, when taken by subjects of foreign countries, not familiar with our laws, before our consuls or in our custom-houses, are regarded as mere forms, and without any authoritative or moral sanction.

May it not be well, then, to notice carefully the modes adopted by the older governments of Europe for the prevention of frauds in the collection of their revenues?

And, in this connexion, I beg leave to invite your attention to the memorandum of Mr. Drouyn de l’Huys, which accompanies the note of Mr. Dayton, our minister at Paris, in which he explains the system of “pre-emption” which is adopted in the French custom-houses; (by this term it is to be understood the government reserves to itself the right to take, on its own account, at the invoice price, any articles therein which it considers to be undervalued.)

Mr. Drouyn de l’Huys observes, that “the adoption by the federal government of this system, eminently favorable to commerce, and at the same time efficacious against fraud, would be, in effect, the best means of remedying the inconveniences of false declarations of value, which it is difficult to prevent in requiring an oath deprived of legal sanction.” He concludes by observing “that the French and English governments, whom a long practice has permitted to appreciate the utility of pre-emption, have not hesitated to introduce it, by common consent, in 1860, into their conventional custom duty.”

A step in this direction was taken by the enactment of the provisions of the 18th section of the act of 30th August, 1842, and the instructions of the Secretary of the Treasury to collectors and appraisers, in accordance therewith, of the 28th November, 1846. To what extent the system is now in operation this department has no knowledge.

I may be pardoned also for suggesting that perhaps, in view of the difficulties indicated by our consuls at Belfast and Lyons, in their remarks on obtaining the true valuation of such articles as linens and silks, except by professional experts or individuals of long experience, such a change in our system of appraisement and home valuation as is indicated in an article in Hunt’s Merchants’ Magazine, volume 37, pp. 679–684, might be found worthy of consideration, especially as it is understood that it has heretofore attracted the favorable regard of the Treasury Department.

I will thank you, after making such use of the information therein as you think proper, to return the despatches which are herewith enclosed.

I should also be pleased to receive from you any suggestions which you may think best adapted to meet and overcome the difficulties which have arisen in executing the law of Congress to which I have invited your attention.

I have the honor to be, sir, your obedient servant,

WILLIAM H. SEWARD.

Hon. S. P. Chase, Secretary of the Treasury.

[Circular No. 17.]

Department of State, Washington, July 31, 1862.

To the Consular Officers of the United States:

At the instance of the Secretary of the Treasury I have to call your attention to the twenty-second section of the “act increasing temporarily the duties on imports, and for other purposes,” of which a newspaper copy has already been transmitted to you.

You will perceive “that the privilege of purchasing supplies from the public warehouses duty free” is “extended, under such regulations as the Secretary of the Treasury shall prescribe, to the vessels-of-war of any nation, in ports of the United States, which may reciprocate such privilege towards the vessels-of-war of the United States in its ports.” A copy of the “regulations” of the Secretary of the Treasury, to which reference is here made, will be transmitted to you.

You are instructed, immediately after the receipt of this circular, to communicate a copy of the provision of the law above mentioned, and also of the “regulations” of the Secretary of the Treasury, to the chief local authority of the consular district in which you reside, and ascertain if the “privilege of purchasing supplies from the public warehouses duty free” is now or will be extended to the vessels-of-war of the United States. You will, immediately after obtaining this information, communicate it to the Secretary of the Treasury, and also to this department.

Your attention is likewise directed to the provisions of the seventeenth, eighteenth, and nineteenth sections of the same act. A copy of these three sections is hereto annexed.

You will observe that it is provided by the seventeenth section of the act, “that from and after the 1st day of November, 1862, no goods, wares, or merchandise subject to ad valorem or specific duty, whether belonging to a person or persons residing in the United States or otherwise, or whether acquired by the ordinary process of bargain and sale, or otherwise, shall be admitted to entry, unless the invoice of such goods, wares, or merchandise be verified by the oath of the owner, or one of the owners, or, in the absence of the owner, one of the party who is authorized by the owner to make the shipment and sign the invoice of the same, certifying that the invoice annexed contains a true and faithful account, if subject to ad valorem duty and obtained by purchase, of the actual cost thereof, and of all charges thereon, and that no discounts, bounties, or drawbacks are contained in the said invoice but such as have actually been allowed on the same; and when consigned or obtained in any manner other than by purchase, the actual market value thereof; and if subject to specific duty, of the actual quantity thereof; which said oath shall be administered by the consul or commercial agent of the United States in the district where the goods are manufactured, or from which they are sent; and if there be no consul or commercial agent of the United States in the said district, the verification hereby required shall be made by the consul or commercial agent of the United States at the nearest point, or at the port from which the goods are shipped, in which case the oath shall be administered by some public officer duly authorized to administer oaths, and transmitted, with a copy of the invoice, to the consul or commercial agent for his authentication; and this act shall be construed only to modify, and not repeal, the act of March 1, 1823, entitled ‘An act supplementary to, and to amend an act entitled ‘An act to regulate the collection of duties on imports and tonnage,’ passed March 2, 1799, and for other purposes,’ and the forms of the oaths therein set forth shall be modified accordingly. And there shall be paid to the said consul, vice-consul, or commercial agent, by the person or persons by or in behalf of whom the said invoices are presented and deposited, one dollar for each and every invoice verified, which shall be accounted for by the officers receiving the same, in such manner as is now required by the laws regulating the fees and salaries of consuls and commercial agents.”

You will carefully notice that, under the foregoing provisions of law, all invoices of goods imported into the United States must be verified by a consul, vice-consul, or commercial agent of the United States, provided there is such an officer in the country where the goods are manufactured or from which they are sent. Great abuses have sprung from the practice, which has prevailed to some extent, of the verification of invoices by the consular officer residing at the port of shipment instead of the one within whose consular jurisdiction the goods have been manufactured or prepared for exportation. Consular certificates, under such circumstances, must be often granted without due knowledge of the contents of the invoices or the prices of the goods designated therein. The recent act prohibits such a practice, and it can no longer be tolerated. It will be made the duty of the officers of the customs to scrutinize very carefully all invoices of goods presented for entry, and should there be reason to believe that the invoices have been undervalued, or any attempt has been made to defraud the revenue of the United States, the full penalty of the law will be enforced.

Consular officers are not to verify invoices or issue a consular certificate as a matter of course, but only after a careful and thorough examination.

The appraisers of the United States will be instructed to report all cases which may come to their knowledge of invoices improperly authenticated, and the name of every consular officer by whose negligence or fraud such consular certificate is granted. Should it appear that the complaint is well founded, a repetition of the offence will furnish ground for the immediate removal of the delinquent.

It is in the power of the consular officers of the United States, by due attention and vigilance, to do much towards checking and preventing the numerous frauds which are practiced upon the revenue; and they are earnestly enjoined to regard their efforts for these objects as the most important services which they can render in connexion with the faithful collection of the revenue.

The attention of the consular officers of the United States in the British North American provinces is directed to the proviso, which they are instructed carefully to observe, of the seventeenth section of the above-mentioned act, which prescribes “that nothing herein contained shall be construed to require for goods imported under the reciprocity treaty with Great Britain, signed June 5, 1854, any other consular certificate than is now required by law;” and also to the third section of the “act to further provide for the collection of the revenue upon the northern, northeastern, and northwestern frontiers, and for other purposes.” This section is as follows:

“Sec. 3. And be it further enacted, That goods imported under the reciprocity treaty with Great Britain may be entered at any port on the northern, northeastern, and northwestern frontiers of the United States, upon satisfactory evidence being given to the collector at the port where such goods are offered for entry that they are of the growth or production of Canada, without the consular certificate now required.”

Consular officers are instructed that so much of the sixteenth chapter of the consular regulations on the subject of the verification of invoices, and of the thirty-second chapter in regard to the duties of consular officers in the British North American provinces, and also of the consular tariff of fees, as is inconsistent with the provisions of the acts to which reference is herein made, is, from the date at which the said acts respectively take effect, annulled.

WILLIAM H. SEWARD.

[Circular No. 29.]

Department of State, Washington, November 20, 1862.

To the Consular Officers of the United States:

Many inquiries having been made by consular officers of the United States in regard to the operation of the seventeenth section of the tariff act of the 14th of July last, requiring all invoices to be verified by consular certificates, an extract from which, accompanying circular No. 17 of this department, has been heretofore transmitted to you, the following additional instructions upon the subject are given, at the instance of the Secretary of the Treasury, for your information and guidance.

First. It is the purpose of the department to make the execution of this law as little burdensome to shippers as may be compatible with its requirements, and to avoid, as far as possible, creating any new embarrassments in our foreign trade.

Invoices of all goods are to be verified by “oath administered by the consul or commercial agent of the United States, in the district where the goods are manufactured or from which they are sent.” For instance, goods manufactured in Manchester are shipped from Liverpool. In such a case the invoices are to be verified by the United States consul at Manchester, who is presumed to be better able to protect the interests of the revenue from fraudulent invoices, which is the aim and end of this seventeenth section.

Secondly. Articles of merchandize, such for example as clothes and jewelry, are brought to a certain condition in one place, and then sent to a second, and subsequently to a third, to receive some change in color, character, or value; and, when perfected, are brought to common centres of commerce for shipment, as Hamburg, Paris, Liverpool, or London, where they are invoiced. All such goods are to be certified by the consul of the district whence they are shipped, subject, however, to a wise discretion, which is always to be exercised by consular officers.

Thirdly. In those countries where foreign consuls residing therein are not permitted to administer oaths, or where oaths, to be valid, can only be administered by certain local officers, the oaths to invoices are not to be taken before a consular officer, but before some public officer duly authorized to administer oaths in the country, and the official signature of such officer is to be authenticated by the consular officer. But the consul is not thereby relieved from the duty of inspecting the invoice, and from reporting to the Treasury Department in regard to any attempt to defraud the revenue. For the authentication of a signature in these cases, the fee (No. 55) of two dollars, prescribed by the consular tariff, is to be charged.

Fourthly. It has been represented to the department that consular certificates are sometimes sold to shippers or others in blank, to be subsequently filled up by the consignee or shipper, and attached by them to invoices. This practice is highly reprehensible and wrong, tending, as it does, to destroy all confidence in consular certificates, and cannot be tolerated. Whenever a case of this character is reported to the department, it will be followed by the immediate dismissal of the officer committing the offence. The certificates must be carefully made, either upon the instrument itself which is verified or authenticated, or it must be attached thereto in such a manner as to render it unavailable for any other purpose.

Fifthly. In authenticating the signature of the local officer by whom the oath to an invoice is administered, care should be taken that the certificate of authentication should be on a separate paper, but attached to the certificate of the magistrate and to the invoice, in such a manner that it cannot be separated and used for another purpose.

Sixthly. Consuls are not to include the magistrate’s fee for administering an oath as a part of the fee for the authenticating of an invoice. With the fee charged by this officer for the service, neither the consul nor the government has any concern. The fee must be paid by the person requiring the service, and not by the consul.

Seventhly. In those countries where an oath to an invoice, to be of legal force, must be taken before a local magistrate or other officer, the oaths, both of Americans and aliens, must be administered by such officer, and not by the consul. The consul will authenticate the signature of such officer.

Eighthly. Consular officers in the British provinces are instructed that goods imported under the reciprocity treaty with Great Britain may be entered at any port on the northern, northeastern, and northwestern frontiers of the United States, upon satisfactory evidence being given to the collector, at the port where such goods are offered for entry, that they are of the growth or production of Canada, without the consular certificate now required; but invoices of goods entered at any other than ports on the frontiers above mentioned must be accompanied by the consular certificates now required by law.

Ninthly. Consular officers are requested to ascertain and report to this department if, under the laws of the countries in which they respectively reside, they are authorized to administer oaths.

WILLIAM H. SEWARD.