No. 238.
Mr. Marsh to Mr. Fish,

No. 366.]

Sir: I have the honor to inclose herewith copies of letters from Messrs. Granet, Brown & Co. and Mr. Garbi, merchants, at Genoa, to this legation in relation to the new duty on petroleum imported into Italy from the United States, and of a correspondence between this legation and the ministry of foreign affairs on that subject. The correspondence does not seem to me to require any special comment on my [Page 307] part. I should observe, however, that at the time of my conversation with the minister of foreign affairs, on the 25th of June, reported in my dispatch No. 359, I was wholly unaware of the fact that the law had already been approved, and the time of its going into effect fixed by royal decree; and, injustice to the minister, I ought.to add that I have no doubt he was equally so.

The decrees were doubtless drawn up and presented to the King for signature at the instance of the minister of finance, and without the participation of the minister of foreign affairs, to the functions of which department the subject does not belong.

For the clearer understanding of the question, I beg leave to submit the following observations:

The early importations of petroleum into Italy consisted in a large proportion of burning-fluids exported from the United States to France in the crude form, refined in that country, and then re-exported on French account to Italy. The question of the rate of duty, therefore, interested France as well as the United States, and had, I believe, been under discussion between the Italian government and the French minister before the attention of this legation was called to the question.

At first, after some hesitation, these fluids were assimilated to bitumen, which, by the treaty with France, was admitted duty free, but about the close of the year 1803, in virtue of a circular from the minister of finance to the officers of the custom-houses, a duty of six francs per hundred kilograms was exacted upon refined petroleum, the crude fluid still being entered duty free, and this regulation has remained in force until the passage of the late law imposing a higher rate.

The Italian government regards these different constructions of the French treaty by its authorities as provisory only, and at all times subject to revision; and it contends that the fluids now so largely imported from the United States in various forms, all comprised under the generic name of petroleum, cannot be considered as having been contemplated by the treaty of 1863, because this product, under the designation of bitumen or any other used in that instrument, was at that time not known as an article of commerce, and hence the right remains to subject it to duty, independently of treaty provisions.

As most American petroleum is at present refined in the United States before exportation, France has little further interest in the question, and, as I am informed, does not contest the ground now taken by the Italian government.

I have not thought it expedient without instructions on the subject to enter into any discussion of the question of the legal construction of the treaty stipulations with France, or of what may be a still more difficult one, viz, whether we, not being parties to that treaty, but only entitled to the benefit of its provisions by the general stipulations of the treaty of 1838, between the United States and Sardinia, to which France was not a party, can, on that ground, be allowed to dispute a construction which is accepted by the parties to the first-named instrument.

The financial measure now resorted to by the Italian government is unequal and oppressive in its operation, and must certainly be regarded as savoring of undue harshness in its application. Although it cannot be said to be in the nature of direct retaliation, yet I have no doubt that its adoption is in no small degree to be ascribed to the high rate of duties levied by us on Italian marble, wines, and many other products, and I shall not be surprised if other features of our tariff system—such, for example, as the discrimination between the works of foreign artists [Page 308] and those of American artists residing in foreign countries, which excites much dissatisfaction’—shall induce the imposition of export duties on certain articles, or other modes of compensatory provisions of our tariff, which are complained of as greatly injurious to the industry of Italy.

I am, &c.,

GEORGE P. MARSH.
[Inclosure. 1 in No. 306.]

Sir: In the interests of our American correspondents who have been in the habit of exporting largly refined petroleum from the United States to Italian ports, we take the liberty of addressing you to inquire whether it is contemplated that the increase of duty on the said article now under the consideration of the Italian parliament shall be applied also to the cargoes aloft or loading in the American ports on the day when such augmentation of duty is enforced in Italy.

We are informed that upon a change in the tariff taking place some years since in sugar, coffee, and other produce, facility was allowed importers to introduce such goods as were then afloat, or about to sail for Italian ports, at the old duty upon the presentation of bills of lading, or other proofs of shipment at the time of the enforcement of the increased duty.

We should be glad to learn that an equal protection will not be denied to our American friends who have made or are making shipments in complete ignorance of the contemplated increase in the cost which the new duty will entail upon them.

Begging respectfully your consideration of the question, and a reply as soon as convenient,

We are your excellency’s obedient and humble servants,

GRANET, BROWN & CO,

His Excellency the Hon. George P. Marsh,
United States Minister Plenipotentiary, Florence.

[Inclosure 2 in No. 366.]

Gentlemen: The tariff bill, providing for imposing a duty of five francs on crude petroleum, and raising the duty on refined petroleum from six to nine francs, is still pending before the Italian senate. It is believed it will pass before the close of the session.

If passed, it is to take effect at a date to be fixed by royal decree, and I am informed at the foreign office that a reasonable time will-be allowed to save the rights of bona-fide shippers.

I am, gentlemen.

For the minister,
ARTONI.

Messrs. Granet, Brown & Co., Genoa.

[Inclosure 3 in No. 366.]

Gentlemen: Returning from Rome I find yours of the 1st instant, and will immediately bring the subject to the attention of the Italian government.

Before I can take any specific steps, however, I must have definite information as to–

1st.
The nationality of the owners of the petroleum shipped.
2d.
The time of shipment.
3d.
The nationality of the vessel by which the cargoes are shipped.
4th.
The quality and quantity of the article, and the., amount of duty levied upon it.

[Page 309]

I can interfere in no case unless it is susceptible of proof that the petroleum is exported solely on account of shippers of American nationality.

GEORGE P. MARSH.

Messrs. Granet, Brown & Co. Genoa.

[Inclosure 4 in No. 306.]

Sir: In a conversation I had the honor to hold with you at the ministry of foreign affairs at Florence, on the 25th of Jane last, I expressed the hope that the law passed by the parliament then in session, providing, among other things, for the imposition of an increased import duty an petroleum, but which I had not seen, was so framed as not to conflict with treaty stipulations, and at the same time to save the rights of American shippers who might have shipped, or made contracts for shipping, this article to Italy before the passage of the law in question could be known in the American market.

I understood you to say, in reply, that in fixing the date at which the law should take effect by royal decree, the equitable rights of bona-fide shippers would be considered, and provision made accordingly.

Importers of American petroleum at Genoa inform me that the additional duty is exacted on petroleum arriving at that port, although shipped before the passage of the law, and of course many days before the existence of the law could have been known to the exporters. The third article of the law (allegato C) is this:

Articolo 3. Con Decreto Reale saradeterminato il giorno in cuiandranuo in vigore le disposizioni di questa legge.”

The royal decree, (No. 280, series 2,) dated Turin. June 16, 1871, in the concluding paragraph runs thus:

“Ordiniamo che la presente, munita del sigilio * * * * * mandando a chiunque spetti di osservaralaedi farla osservare come legge dello stato.”

In this decree no specific day is appointed for the law to take effect, but I am informed that the revenue officers at Genoa consider the decree as giving immediate force and validity to its provisions, and collect duty accordingly.

I beg to be informed whether any other ordinance or provision than the decree referred to has been made, and that such measures may be taken as shall do justice to bona-fide shippers of petroleum arriving in Italian ports.

I avail myself of this occasion to renew to you the assurance of my high consideration.

For the minister,
GEORGE W. WURTS,
Secretary of Legation.

The Noble Chevalier Visconti Venosta,
Minister of Foreign Affairs.

[Inclosure 5 in No. 366.]

Sir: We have the honor to acknowledge the receipt of your letter of the 6th instant, and hasten to furnish the information you require. Messrs. T. Hess & Co. of New York, shipped to our consignment for sale on their account a small cargo of refined petroleum, consisting of 4,000 cases prime white brand “Oleophene,” by the Italian brig Niagara, Mr. G. Bartolomeo. The bill of lading is dated New York, April 22, and the vessel arrived in this port on the 9th instant.

The amount of duty we should have to pay under the new tariff would be as follows:

4,000 cases, at 38 gross killograms ==152,000 gross killograms, at 9 francs per 100 killograms, would amount to, francs 13,680.00
Emolument, 5 per cent 684.00
War taxes 10 per cent 1,436.40
Franc, gold 15,800.40

[Page 310]

Whereas under the old duty of 6 francs per hundred kilograms gross, without the additional 5 per cent, emolument, and 10 per cent, décimo de guerre, it would be only gold francs 9,120.

What makes the case especially hard for our American friends is, that a large cargo of refined petroleum in cases, which sailed fifteen days after the Niagara, made a shorter passage, and arrived a few days before the 1st of July. The consignee was thus enabled by paying the old duty at once, to commence sales at prices which, leaving him a large profit, would cause our friends a heavy sacrifice.

We may mention that the French government has, since our last communication, decreed that cargoes by vessels sailing before a certain date shall be introduced under the old duty. We cannot see why equal justice should not be accorded to shippers investing in merchandise for sale in this country also. This is the only cargo we have answering precisely to the conditions required, and in which we are not ourselves interested.

Awaiting the favor of your further communication, we are your excellency’s obedient and humble servants,

GRANET, BROWN & CO.

His Excellency the Hon. George P. Marsh,
Minister of the United, States of America, Florence.

[Inclosure 6.in No. 366.]

Sir: Referring to my note of July 9, in relation to the duty on petroleum imported into Italy from the United States, I have the honor to inclose herewith a copy of a letter from Granet, Brown & Co., merchants at Genoa, which points out clealy the hardships and loss to which American exporters of the article, who had made shipments before the passage of the law imposing new and higher duties on petroleum could have been known in the United States, are exposed. I am informed that this is not the only-case of this sort which, has occurred at Genoa, and that other cargoes of petroleum, shipped under similar circumstances, are daily expected to arrive at that port.

You will remember that for more than eight years American shippers of petroleum have been encouraged by the construction given by the Italian government to the existing treaty between Italy and France to consider the duty on this product as not subject to change by legislative action until the expiration of that treaty. In reliance upon the stability of this arrangement, large contracts have been made by American dealers for the purchase of supplies of petroleum from the producers, with special reference to the Italian trade. The interests of these dealers cannot but be Injuriously affected by any increase of duties upon a product the duties upon which were understood to be fixed by treaty for several years to come. I do not, however, at this moment, raise the question how far the construction hitherto given to the treaty in this respect by the Italian authorities is binding upon Italy, but I cannot refrain from expressing the confident belief that His Majesty’s government will see the justice of adopting some measure securing bona-fide dealers from the injurious effects of the sudden enforcement of a law which must operate as a surprise upon those who had shipped their goods, not simply without knowledge of the law, but even before its passage.

I avail myself of this occasion to renew to-you the assurance-of my distinguished consideration.

For the minister,
GEORGE W. WURTS,
Secretary of Legation.

The Noble Chevalier Visconti Venosta,
Minister of Foreign Affairs.

[Inclosure 7, in No. 366.]

His Excellency the United States Minister at Florence.

In my capacity of agent of the American firm Fabri & Channey, of New York, I beg to call the attention of your excellency to the following facts:

To provide for the continuous and large requirements of their trade in Italy, where they are the largest importers, Messrs. Fabri & Channey made six cargoes of petroleum to my consignment by the vessels hereafter described:

Nazzarino, chartered on the 2d of May, sailed on the 19th with 500 barrels and 6,197 cases for Gallipoli and Ancona; arrived on the night of the 30th of June.

[Page 311]

Emilia, chartered on the 5th of “May,’ sailed oil the 18th May with 5,360 cases for Brindisi; arrived on the 3d of July.

Vincenzo, chartered on the 19th of May, sailed on the 27th May with 5,714 cases for Civita-Vecchia.

Mary A. Thayer, chartered on the 26th of May, sailed on the 6th of June with 8,100 cases for Ancona.

Alfred, chartered on the 31st of May, left on the 9th of June with 500 barrels and 6,435 cases for Palermo and Catania.

McGilvery, chartered on the 9th of June, sailed on the 22d June with 19,855 cases for Genoa and Leghorn.

All these shipments were made from New York. I am ready to give all the proofs which may be required in support of these facts.

On the 17th of June a law was published in Florence by which the duty on refined petroleum was raised from 6 to 9 lire from the 1st of July instant, and the Italian government means to apply this law to all cargoes which had not been entered in the custom-house before 4 o’clock of the 30th ultimo.

Now, I leave to the good judgment of your excellency to appreciate whether the Italian government had the right to levy a higher duty, before a proper notification had been given to the country where all the refined petroleum comes from, and even more, to levy this higher duty on cargoes which had been made on the basis of the old duty, and had left before the new law could possibly be known, thus leaving to bona-fide shippers no option whatever but to lose a heavy amount, as it was no longer in their power to direct the vessels to some more hospitable harbor.

The delay given of fifteen days, probably intended to the benefit of floating cargoes, was evidently an unjust one, as there is no reason why, of all vessels which have left in utter ignorance of the new law, only those which were within twelve days of an Italian harbor would meet with an exceptional favor.

I hardly need to prove that the shipments above described were bona-fide operations, as it is a well-known fact that Messrs. Fabri & Channey have been shippers yearly for the last six years of over three millions of gallons, and it is very seldom the case they have not at any time five or six cargoes of petroleum floating; besides, had they had the intention of laying in a good stock before the new duty went in force, it is very evident, by comparing dates of charters with date of the law, they could not have operated with that intention.

To avoid difficulties, as soon as the new law was made public I proposed to pay the duty before the 30th of June on all the petroleum cargoes I had then floating, and of which I could then produce the bills of lading. Not only this offer was refused, but I was obliged to pay the new duty on the Nazzarino, which arrived on the night of the 30th June or 1st July.

I have, therefore, no other way left but to apply to your excellency, as the best protector of all American interests, in order to obtain, in behalf of American citizens, a simple act of justice from the Italian government. The difference between the two duties on the cargoes above described is very nearly one hundred thousand lire, a very small amount for a government, but an extremely large one for a merchant. I remain,

ALESSANDRO GARBI.
[Inclosure 8 in No. 336.]

Sir: In my notes of the 9th and 15th instants I had the honor to call your attention, to the unjust loss which would be occasioned to merchants engaged in the petroleum trade by the new duties embodied in the law recently passed, and levied on consignments of that product exported by bona-fide shippers from the United States before the existence of that law could have been known there. In connection with the facts then stated, I inclose herewith a copy of a communication from the agent in this city of Messrs. Fabri & Channey, of New York, and beg for information whether any measures have been taken by His Majesty’s government for the protection of the interests of this important branch of the commercial relations between the United States and Italy.

I avail myself of this occasion to renew to you the assurance of my distinguished consideration

For the minister,
GEORGE W. WURTS,
Secretary of Legation.

The Noble Chevalier Visconti Venosta,
Minister of Foreign Affairs.

[Page 312]
[Inclosure 9 in No. 366.—Translation.]

Note from Italian ministry of foreign affairs.

Mr. Minister: By your notes of the 9th, 15th, and 20th instant, you called the attention of the government of His Majesty to the loss which the increased tariff on petroleum is causing American merchants who, before the publication of the law for raising the revenue, had shipped, or had contracts to ship, that product to Italy.

Yon remarked that the trade should have been informed of the tenor of this law before its application, and added that the date on which the law was to be enforced was not fixed by the royal decree of June 16, 1871, No. 260, second series, at the same time that article 3, of the supplement 6, provided that the day on which the provisions of this law were to be enforced would be determined by royal decree.

Taking this royal decree for basis, the custom-house authorities appeared in the wrong, when exacting from July 1 the duty on petroleum as fixed by the new law. For these reasons you recommended to the attention of this government the interests of American merchants who, in good faith, had made shipments of petroleum to Italy before the new law was known or promulgated.

I shall not now stop to examine at what period the minister of finance, impressed with the necessity of increasing the duties on certain imports, made, in accord with the committee of the chambers, his proposals to parliament.

I have only to observe that, by the royal decree of June 16, No. 264, second series, published in the official gazette of the 17th of last month, No. 163, the changes in the tariff on imports, cited in the supplement 6, to the law 260, were ordered to take effect on the 1st of July, 1871.

And even if article 3 of the supplement 6 to the law published with the royal decree No. 260, had not made the reservation of appointing the day on which its provisions should take effect; and even if the decree No. 264 had not provided for that reservation, the law in any case would become obligatory fifteen days after its publication by the terms of the codice civile, (article 1st, regulations concerning the promulgation, interpretation, and application of laws in general.)

Regarding, then, the rules for the application of new duties, the minister of finance observes that article 4 of the preliminary regulations for the custom-house provides that—

“Should any change be made in the duties on goods coming from abroad, or of foreign produce, the pre-existing duty shall be charged on those withdrawn from the warehouses, if the declaration to pass them through the custom-house has been made before the publication of the new duties.”

The declaration of the entry of the goods being obligatory at the moment of their entry, it is clear that the law, instead of making any exception in favor of merchandise afloat on the way, intends to subject it to taxation by the new tariff on arrival in the kingdom.

I trust, Mr. Minister, that the foregoing explanations, while they prove that the additional duty on petroleum was rightfully enforced on the 1st of July, will also suffice to show that the royal government finds in the law an obstacle which prevents the claims of the American merchants being taken into consideration, and it cannot, in consequence, although with regret, adopt any measure in favor of those products which, notwithstanding their having left before the publication of the changes in the tariff, arrived in the kingdom when these changes were in operation.

Accept, Mr. Minister, the assurance of my high consideration.

For the minister,
A. PEIROLERL