WAREHOUSING SYSTEM. A plan for permitting the importer or manufacturer of goods which are subject to customs or excise duties to postpone the payment of such duties until withdrawal of the goods for consumption. Such goods must be dellosited in warehouses, either public or private, hut undo• the super vision and emitrol of revenue aim's. The ad vantages of such a system to merchant or manu facturer are the saving of interest on the sum of duty charges, the saving of duties on goods de stroyed or damaged before withdrawn] for con sumption. and ill the ease of imported goods con venience in reifxportation. In Continental Euro pean countries the same end was attained in the eighteenth century by the creation of free ports, where goods might be 'hired, manufactured, and without paying customs duties, and the same practice is in use in some European countries to-day. In the United States, up to 1842, credit for duties was granted the importer, provided he could furnish satisfactory security that the duties would be paid within a specified time.
The warehousing system was introduced in England and France toward the close of the eighteenth century. In France the system was established on a broad basis in 1832. and has undergone little change. Goods are stored in either public or private warehouses, the latter requiring official sanction and official supervi sion. The importance of the private warehouse in France is relatively far greater than in Eng land or America, owing to the greater prom inence of excise duties in French finance. To establish public warehouses wherever dutiable ar ticles are manufactured would call for too great a cost to the national treasury. In England. dur ing the latter half of the nineteenth century the warehousing system underwent a great development. The merchant with goods in bond ed warehouse has practically the same control over his property as he would have if they were in his own storehouse. Such operations as re packing may be performed in the warehouse, as also bottling of liquors, roasting of coffee, etc. If any waste accompanies such processes, a corre sponding deduction is made from the quantity of goods on which duties must be paid.
In the United States the warehousing system was established in 1846, when it was enacted that goods might be deposited in public warehouses for a period not exceeding one year. In 1854 the establishment of private warehouses was per mitted. According to the new law goods in warehouse not removed within one year, but with in three, are subject to an additional payment equal to ten per cent. of the original duties, to
gether with increased charges for storage and supervision. Since 1890 the period within which goods may be withdrawn without payment of additional duty has been three years. After this period has expired, the goods are forfeited and must he sold, the Secretary of the Treasury being authorized to pay the proceeds, over and above the duties and charges and expenses of sale, etc., to the consignee o• owner of the goods.
Bonded warehouses for imported goods are classified under six heads, ( I ) Government bonded warehouses. the buildings being owned or leased by the Government, and in the immediate custody of the Collector of Custmns. (2) Im porters' bonded warehouses—private warehouses, established by the Secretary of the Treasury as a special provision for a large importer. (3) .Private bonded warehouses conducted by pri vate parties who carry on a general storage business. Permission from the Secretary of the Treasury is prerequisite to the establish ment of such warehouses, and the Government retains control over them and the goods stored. (41 Private bonded warehouses consisting of yards or sheds for the storage of bulky products. (5) Private bonded warehouses consisting of bins, etc., exclusively for time storage of im ported grain. (0) Private bonded warehouses exclusively for the storage of imported wines and spirits. The growth of American export trade has resulted in the establishment of non enumerated bonded warehouses for the manu facture of articles from imported materials in tended for exportation. Commodities otherwise subject to excise, but intended for exportation, may escape the tax if manufactured in these bonded manufacturing warehouses.
The rise of the internal revenue system as result of the Civil War made it necessary to es tablish warehouses where the home manufacturer might leave his products under bond, beeoming responsible for payment of taxes only upon their withdrawal for consumption. The plan was fended largely on the that otherwise the importer would have a great advantage over his domestic competitor. Bonded warehouses for the storage of distilled liquors were established in 1868, molder the name of distillery warehouses. Tice rise of the manufacture of brandies led to the establishment of special bonded warehouse: for the storage of distilled spirits made from fruit. A third class, general bonded warehouses, was established in 1894, to be used exclusively for the storage of spirits distilled from materials other than fruit.