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scribe, to any other bonded warehouse, or upon entry for and payment of duties, for domestic consumption. All labor performed and services rendered under these regulations shall be under the supervision of an officer of the customs, to be appointed by the Secretary of the Treasury, and at the expense of the manufacturer.

SEC. 25. That where imported materials on which duties have been paid, are used in the manufacture of articles manufactured or produced in the United States, there shall be allowed on the exportation of such articles a drawback equal in amount to the duties paid on the materials used, less one per centum of such duties: Provided, That when the articles exported are made in part from domestic materials, the imported materials, or the parts of the articles made from such materials shall so appear in the completed articles that the quantity or measure thereof may be ascertained: And provided further, That the drawback on any article allowed under existing law shall be continued at the rate herein provided. That the imported materials used in the manufacture or production of articles entitled to drawback of customs duties when exported shall in all cases where drawback of duties paid on such materials is claimed, be identified, the quantity of such materials used and the amount of duties paid thereon shall be ascertained, the facts of the manufacture or production of such articles in the United States and their exportation therefrom shall be determined, and the drawback due thereon shall be paid to the manufacturer, producer, or exporter, to the agent of either or to the person to whom such manufacturer, producer, exporter or agent shall in writing order such drawback paid under such regulations as the Secretary of the Treasury shall prescribe.

ADOPTED BY THE INTERNATIONAL AMERICAN CONFERENCE AND SUBMITTED TO CONGRESS BY PRESIDENT HARRISON, JUNE 19, 1890.

To the President:

DEPARTMENT OF STATE, Washington, June 4, 1890. (

I beg leave to submit herewith the report upon “Customs Union "adopted by the International American Conference.

The act of Congress, approved May 24, 1888, authorizing the President to invite delegates to this conference, named as one of the topics to be considered, "Measures toward the formation of an American Customs Union, under which the trade of the American nations shall, so far as possible and profitable, be promoted."

The committee of the conference to which this topic was referred interpreted the term "Customs Union” to mean an association or agreement among the several American nations for a free interchange of domestic products, a common and uniform system of tariff laws, and an equitable division of the customs dues collected under them.

Such a proposition was at once pronounced impracticable. Its adoption would require a complete revision of the tariff laws of all the eighteen nations, and most, if not all, of our sister republics are largely, if not entirely, dependent upon the collection of customs dues for the revenue to sustain their governments. But the conference declared that partial reciprocity between the American republics was not only practicable, but "must necessarily increase the trade and the development of the material resources of the countries adopting that system, and it would in all probability bring about as favorable results as those obtained by free trade among the different States of this Union."

The conference recommended, therefore, that the several governments represented negotiate reciprocity treaties "upon such a basis as would be acceptable in each case, taking into consideration the special situations, conditions, and interests of each country, and with a view to promote their common welfare."

The delegates from Chili and the Argentine Republic did not concur in these recommendations, for the reason that the attitude of our Congress at that time was not such as to encourage them to expect favorable responses from the United States in return for concessions which their government might offer. They had come here with an expectation that our government and people desired to make whatever concessions were necessary and possible to increase the trade between the United States and the two countries named. The President of the Argentine Republic, in communicating to his Congress the appointment of delegates to the International Conference, said:

"The Argentine Republic feels the liveliest interest in the subject, and hopes that its commercial relations with the United States may find some practical solution of the question of the interchange of products between the two countries, considering that this is the most efficacious way of strengthening the ties which bind this country with that grand republic whose institutions serve us as a model."

It was therefore unfortunate that the Argentine delegates, shortly after their arrival in Washington, in search of reciprocal trade, should have read

in the daily press that propositions were pending in our Congress to impose a heavy duty upon Argentine hides, which for many years had been upon the free list, and to increase the duty on Argentine wool. Since the adoption of the recommendations of the conference, which I herewith inclose, hides have been restored to the free list, but the duty upon carpet wool remains, and, as the Argentine delegates declared, represents the only concession we have to offer them in exchange for the removal of duties upon our peculiar products.

Only those who have given the subject careful study realize the magnitude of the commerce of these sister nations. In 1888 the combined imports of Chili and the Argentine Republic reached the enormous sum of $233,127,698. The statistics of Chilian commerce for 1889 have not yet been received, but the imports of the Argentine Republic for that year were $143,000,000. These imports consisted in the greater part of articles that could have been furnished by the manufacturers of the United States; yet in 1888, of the total of $233,000,000 imports, we contributed but $13,000,000; while England contributed $90,000,000; Germany, $43,000,000; and France, $34,000,000.

With our extraordinary increase in population, and even more extraordinary increase in material wealth, our progress in trade with South America has been strangely hindered and limited.

In 1868 our total exports to all the world were $375,737,000, of which $53,197,000 went to Spanish America-14 per cent.

In 1888 our exports to all the world were $742,368,000, an increase of 100 per cent., while but $69,273,000 went to Spanish America, little more than 9 per cent.; and the greatest gain (nine millions) has been noticed during the last two years.

It was the unanimous judgment of the delegates that our exports to these countries and to the other republics could be increased to a great degree by the negotiation of such treaties as are recommended by the conference. The practical, every-day experience of our merchants engaged in the trade demonstrates beyond a question that in all classes of merchandise which we have long and successfully produced for export, they are able to compete with their European rivals in quality and in price; and the reiterated statement that our Latin-American neighbors do not buy of us because we do not buy of them, or because we tax their products, has been annually contradicted by the statistics of our commerce for a quarter of a century. The lack of means for reaching their markets has been the chief obstacle in the way of increased exports. The carrying trade has been controlled by European merchants who have forbidden an exchange of commodities. The merchandise we sell in South America is carried there in American ships, or foreign ships chartered by American commission houses. The merchandise we buy in South America is brought to us in European vessels that never take return cargoes, but sail for Liverpool, Havre, Bremen, or Hamburg with wheat, corn and cotton. There they load again with manufactured goods for the South American markets, and continue their triangular voyages, paying for the food they are compelled to buy of us with the proceeds of the sale of their manufactures in markets that we could and would supply if we controlled the carrying trade.

France taxes imports as we do, and in 1880, her merchants suffered, as ours do now, for the lack of transportation facilities with the Argentine Republic. Under liberal encouragement from the government, direct and regular steamship lines were established between Havre and Buenos Ayres, and as a direct and natural result, her exports increased from $8,292,872 in 1880 to $22,996,000 in 1888.

The experience of Germany furnishes an even more striking example. In 1880 the exports from Germany to the Argentine Republic were only $2,365,152. In 1888 they were $13,310,000. "This result," writes Mr. Baker, our most

useful and intelligent consul at Buenos Ayres, "is due, first, to the establishment of quick and regular steam communication between the two countries; second, to the establishment of branch houses by German merchants and manufacturers; and third, to the opening of a German Argentine bank to facilitate exchange.'

There is no direct steamship communication whatever between the United States and the Argentine Republic; and there are no direct banking facilities. The International American Conference has earnestly recommended the establishment of both; but reciprocal exchanges of tariff concessions will be equally effective in stimulating commerce and in increasing the export of the products of which we have the largest surplus not only to the progressive republic named, but to all the other American nations.

The conference believed that while great profit would come to all the countries if reciprocity treaties should be adopted, the United States would be by far the greatest gainer. Nearly all the articles we export to our neighbors are subjected to heavy customs taxes; so heavy, in many cases, as to prohibit their consumption by the masses of the people. On the other hand, more than 87 per cent. of our imports from Latin America are admitted free, leaving but 12 per cent. upon which duties may still be removed. But mindful of the fact that the United States has, from time to time, removed the duties from coffee, cocoa, India-rubber, hides, cinchona bark, dye and cabinet woods, and other Latin-American products, our government may confidently ask the concession suggested.

The increased exports would be drawn alike from our farms, our factories, and our forests. None of the Latin-American countries produce building lumber; the most of them are dependent upon foreign markets for their breadstuffs and provisions; and in few is there any opportunity or inclination for mechanical industry.

The effect of such reciprocity would be felt in every portion of the land. Not long ago the Brazilian Mail Steamship Company took the trouble to trace to its origin every article that composed the cargo carried by one of its steamers to Rio de Janeiro, and the investigation disclosed the fact that thirtysix States and Territories contributed to the total, as follows:

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The 12 per cent. of our imports from Latin America upon which duties are still assessed consists only of raw sugar and the coarse grades of wool used in the manufacture of carpets.

The sugar-growing nations comprise four-fifths or forty millions, of Latin America; but with geographical conditions against them, their free labor can not successfully compete with the coolie labor of the European colonies. A slight discrimination in their favor would greatly stimulate their agricul tural interests, enlarge their purchasing power, and tend to promote friendly

sentiments and intercourse.

The wool-growing nations are Chili, Uruguay, and the Argentine Republic, and from them our manufacturers of carpets receive a great portion of their supply. It was most strongly urged by the delegates who had carefully studied this subject that the free admission of coarse wools from these countries could not prove injurious to the wool growers of the United States, because the greater profit derived by them from the higher grades discourages, if it does not actually prohibit, their production. On the contrary, they maintained that the free importation of the coarse wool would result in a large reduction in the cost of the cheaper grades of carpets, and enable the manufacturers of the United States to secure an enormous export trade in these fabrics. It was also suggested that the use of the coarse wools for the purpose of adulteration in the manufacture of clothing might be prevented by requiring that imports withdrawn for the manufacture of carpets should be so designated to exempt them from customs dues, and the existing duty retained upon those used for other purposes.

The wool growers of the Argentine Republic protest against what they consider a serious discrimination against their products in the tariff laws of the United States, which impose a duty upon the gross weight instead of the value of the article.

The Argentine wools are much heavier in grease and dirt than those from Australia and New Zealand, which is said to be due to unavoidable climatic conditions, and sell at a lower price. But the imports from the three countries are subject to the same duty. This fact was very strongly urged, to the end that at least equal advantages should be given to the products of a friendly country with which we are endeavoring to build up a trade.

The Argentines desire the free admission of their coarse wool, and other Latin-American states desire the free admission of their sugar to the ports of this country, with the understanding that our peculiar products shall, in turn, be admitted free into their ports. At present, by reason of the high duties levied by them, the chief articles of our production are beyond the purchasing power of the great mass of the people in those countries, and are luxuries which only the wealthy can enjoy.

Excepting raw cotton, our four largest exports during the last fiscal year were breadstuffs, provisions, refined petroleum, and lumber.

The following statement shows the total exports of each of said articles in 1889, and the proportion exported to Latin America:

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Exported to

Total Exports. Latin America.

$123,876,423

104,122,328

$5,123,528

2,507,375

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These figures should be closely studied. It would be difficult to understand, but for the explanations given in the conference, why, out of the three hundred millions of staples exported from this country, only fifteen millions should be consumed in all Latin America with its population of 50,000,000 people, when the United States is the only source of supply for those articles which are regarded by us as the necessaries of life.

The foreign delegates all agreed that this proportion could be increased many fold by extending to their people the ability to purchase; and the ability to purchase rests, in their opinion, upon reciprocal concessions.

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