to Mr. Lee
Washington , November 9, 1886.
Sir: I have to acknowledge your No. 217, of the 24th ultimo, giving your views and action in regard to the specific-gravity test of petroleum imported into Austria, and to say that your proposed presentation of the subject to the minister of foreign affairs is approved.
The Austro-Hungarian Government can be no less concerned than we are at the existence of a state of things which on the one hand permits the revenues of the state to be defrauded by the importation of so-called crude oil of 85 per cent, strength at the rates of duties intended to be assessed on a production of much lower grade, and which on the other permits a discrimination, in fact, against the American production which we can not for a moment suppose to have been intended, and against which, whether designedly established or not, we must feel called upon to remonstrate.
It is evident that the specific gravity test of crude petroleum is illusory, and a direct invitation to fraudulent evasion. It clearly needs to be replaced by a more modern and equitable test, resting on the percentage of illuminating oil, which is the only rational basis.
Modern processes necessarily work great changes and render obsolete tests which, at the time they were devised, may have been sufficient to protect the revenues, prevent fraud, and avert palpably unjust discriminations. An analogy is found in the color test of sugars, which for many years was adequate to determine the saccharine richness of the product and its real commercial value for the imposition of duties. But with the advance in mechanical methods of separation by the invention of the centrifugal treatment the color test became deprived of value, and so-called “crude” sugars, with a high crystallizable percentage, actually equal to low grades of refined sugars, were indistinguishable from pan sugars of very low grade, so that the aid of modern science had to be called in to apply the new test of the polariscope by which the true percentage of the crystallizable elements of the product is determined.[Page 17]
The Austrian specific-gravity test for petroleum has in like manner become untrustworthy, and needs to be replaced by a test which shall ascertain the intrinsic value of the illuminant element as the basis of taxing the crude oil intended for refining.
I am, etc.,