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Updated: May 12, 2025
That the Inland Customs dues of China are vexatious there can be no doubt; yet it is open to question if the combined duties of all the likin-barriers on any one main road extending from frontier to frontier of any single province in China are greater than the ad valorem duties imposed by our colony of Victoria upon the protected goods crossing her border from an adjoining colony.
By the ad valorem principle all articles are taxed according to their cost or value, and those which are of inferior quality or of small cost bear only the just proportion of the tax with those which are of superior quality or greater cost. The articles consumed by all are taxed at the same rate.
A striking illustration of these frauds will be exhibited in the report of the Secretary of the Treasury, showing the custom-house valuation of articles imported under a former law, subject to specific duties, when there was no inducement to undervaluation, and the custom-house valuations of the same articles under the present system of ad valorem duties, so greatly reduced as to leave no doubt of the existence of the most flagrant abuses under the existing laws.
The yarn produced is of the coarser descriptions, and is only saleable to the native weavers of cotton cloth, by the excessive duty put on grey cotton twist of British manufacture, which is 40 per cent. on a high ad valorem valuation if imported by a Spanish ship, and 50 per cent. if by any foreign vessel, amounting virtually to a prohibition on its importation.
In my last annual message, to which I respectfully refer, I stated briefly the reasons which induced me to recommend a modification of the present tariff by converting the ad valorem into a specific duty wherever the article imported was of such a character as to permit it, and that such a discrimination should be made in favor of the industrial pursuits of our own country as to encourage home production without excluding foreign competition.
The Spaniards take a great quantity. Tanned skins, especially the red, or Morocco, are exported at ten per cent, ad valorem. Slippers pay a dollar the hundred. The haik or barracan is exported in great numbers to the Levant by the pilgrims. The vessels, also, that carry pilgrims from Morocco, return laden with these and other native manufactures.
The new bill, in short, proposes to substitute for the old duty of eight per cent. ad valorem a new one of fifteen cents the pound weight.
In the same year, 1783, Congress made another attempt to remedy the financial situation by proposing the so-called Revenue Amendment, according to which a specific duty was to be laid upon certain articles and a general duty of five per cent ad valorem upon all other goods, to be in operation for twenty-five years.
The Tariff Board reports that no equitable method has been found to, levy purely specific duties on woolen and worsted fabrics and that, excepting for a compensatory duty, the rate must be ad valorem on such manufactures. It is important to realize, however, that no flat ad valorem rate on such fabrics can be made to work fairly and effectively.
These desultory grants proved to be so unsatisfactory that, in 1781, even before the Articles of Confederation had been ratified, Congress asked for a grant of additional power to levy a duty of five per cent ad valorem upon all goods imported into the United States, the revenue from which was to be applied to the discharge of the principal and interest on debts "contracted... for supporting the present war."
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