NORBERT WIENER, Editorial Staff of The Americana.
DUTY (customary taxes; in the constitu tional struggles of mediaeval England, so claimed by the sovereigns as of ancient usage and allowance), a tax or impost levied on the exports and imports of a state or district. Apparently, they were at first port fees for the use of the government quays, warehouses, weights and measures, etc.; but in very ancient times they became a general source of revenue, and used for sumptuary purposes. The con stitutional prohibition of export duties leaves it applicable in the United States to imports alone. Few countries now levy a tax on 'ex ports and such a source of revenue no longer holds •a place of importance in the fiscal sys tems of modern nations. The South American states levy some duties on exports, such as that on shipments of nitrate from Chile and that on exports of coffee from Brazil; and in 1901 Great Britain imposed a tax of one shilling per ton on all coal exported. But, generally speak ing, the term customs duties means duties on imports. In countries of developed commerce these have always been the favorite means of taxation with governments and subjects alike, by a rare and significant harmony. The latter prefer them to direct taxes, as distributing the burden in small unperceived amounts on their daily income, in place of a few severe annual exactions. The former prefer them as making it possible not only to raise a far greater revenue with far less criticism, but actually to win popularity by increasing the burden, in most countries—a unique feature in administrative policy. Direct taxes have been the fertile parent of rebellions; customs duties have gen erally been popular in proportion to their magnitude. The latter fact is due to two other traits inherent in import taxes; that they furnish an apparent means of transferring the tax burden largely to the foreign producers, and of giving the native producer the monopoly of the Thome market.* It is obvious that the two are more or less self-contradictory—that the foreigner can share the payment only in proportion to his share of the market, and that if imports were annihilated all taxes would be direct ; but the discussion of this subject belongs to the question of protective tariffs (see Pao TECTION ; also FREE TRADE; GREAT BRITAIN THE FREE TRADE MOVEMENT and THE TARIFF REFORM MOVEMENT). Here it need only he said
that it is not necessary for dutiable articles to be such as are produced within a country, for a tax to be in action: they may be high-grade articles needed in manufacturing, the charge upon which forces a resort to in ferior native materials, or increase the price of the better goods. This increase is always much greater than the duty, .as it includes interest on the extra capital needed to carry on busi ness with the costlier articles, and a further charge for the restricted market due to height ened price.
Customs duties must belong to one of two classes: those charged on given units of weight or measure as the pound, ton, yard, gallon, etc., called specific duties; and those charged by a percentage on the estimated value called ad valorem duties. On many kinds of goods the two are combined in what are called compound duties; and a variant of the ad valorem system is what is called-the minimum duty, under which all goods costing less than a certain sum are assumed to have cost that amount and are taxed upon it. In the old English disputes between king and Parliament specific duties were called °tonnage') (so much per ton) ; and ad valorem duties °poundage') (such a per cent on the esti mated value in pounds sterling), though levied so as not to be purely ad valorem.
The merits of the two systems are not unani mously agreed upon ; indeed, each has its spe cial demerits and disadvantages, which are grave from the standpoint of national welfare. It is fair to say, however, that most of the difficulty of the specific duty lies in the attempt to use it for protective purposes, and that of the ad valorem duty in its enormous volume ; that a specific duty for revenue only loses most of its objectionable features if levied on the proper articles, and that a low ad valorem duty would be free from most of the objections of a high one. This will be evident from a glance at each.