For instance, £10,000 worth of goods, paying 5 per cent. ad valorem, pay (1) At the fixed rate of 12d. per paper milreis, If the actual rate were adopted (2) At the rate of 16d. per paper milreis, £500 or 10,000 milreis. (B) But we have also to take into account the conversion of paper milreis into gold milreis to the extent of 40 per cent. Suppose the paper money debt to be 10,000 milreis as above. Under the 40 per cent. rule he must change 4,000 paper milreis into gold milreis, and the question is, as to what this will cost him. The gold vale is nominally worth 27d., the gold value of the paper milreis may be 27d. or less. Suppose it to be had at 16d. Then one paper milreis will only buy 16/27 of a gold milreis. The importer must, however, buy 4,000 gold milreis. His total payment in paper milreis will be— Under actual conditions when the milreis is worth 16d. per milreis, and the paper debt is first calculated on the basis of one paper milreis being worth 12 pence 6,000 plus 27/16 (4,000) or 12,750 paper milreis. Whereas if before conversion into gold he) 6/10 (7,500) plus 27/16 (4/10 of had been allowed to calculate the paper 7,500) = 4,500 plus 27/16 (3,000) or 9,562.5 paper milreis. Or, as things are, he pays an additional amount due to— Under actual conditions, when the paper milreis is worth 8d. per milreis, an importer pays on a paper debt of 10,000 milreis Whereas if there were conversion through 2,750 paper milreis. 3,187.5 paper milreis. out on the bases of the actual exchange 9,000 plus 27/8 (6,000) = 29,250 value of the paper milreis he would pay paper milreis. Or, as things are, he pays an additional amount due (1) To conversion into gold of But he gains by (2) Conversion into paper at a different rate to conversion into gold of 4,500 paper milreis. 9,750 paper milreis. We may now proceed to sum up as to the effects of the Brazilian system of converting into gold a fixed proportion of the paper debt due. So long as the paper milreis is worth less than the gold milreis, to change from the former to the latter is in effect to raise the duties and the rise in the duties is greater the greater the percentage to be converted, and the greater the premium on gold. If all the paper debt had to be converted, and the gold milreis were worth twice the amount of the paper milreis, the duties would be doubled: under the same conditions, if only 4/10 of the debt has to be converted, the extent of the rise would be 40 per cent. This still leaves us with the cumulative effect of both aspects of the present system. The effect of the gold conversion is always to raise the weight of the duty, so long as paper is below gold in value. The effect of the customs exchange rate is sometimes to increase and sometimes to diminish the burden. of the duty, according as to whether the customs rate is below or above the actual exchange rate. The two parts of the system may co-operate in raising the weight of the duty, or/ may, to some extent, counteract each other-i.e., when the exchange rate actually is below the customs conversion rate, when the extent of the total rise is mitigated. A somewhat curious arrangement exists in Bolivia (report cited, p. 24). "Bolivia has recently passed a law requiring the payment of a portion of the import duties in vales. In 1916 20 per cent. of the duties are to be paid by this means, and in subsequent years 50 per cent. until the issue is cancelled. Since the vales were placed on sale at a discount from their face value, this measure represents in effect a reduction in the import duties for payment in advance." The report does 1 1 So far as time of payment is concerned, the question is whether-apart from warehousing under bond-the entry of goods must lead to immediate payment of duties or not. The determination of the moment at which duty is payable must be distinguished from the determination of under what conditions an obligation to pay duty arises. The obligation to pay duties arises with and from importation, however defined, when the article in question is liable to duty; but the liquidation of the duty arises on the conclusion of determinate acts, and may be postponed for a determinate period. In general the position seems to be that goods can only be released for home consumption after payment of duties thereon, cf. U.K. Customs Consolidation Act, § 56. But in some cases at least entry for home consumption is not necessarily made the occasion for immediate payment of duties. In Germany, under § 12 of the Customs Tariff Law of 1902 : "Credit may, on application, be given for the maximum limit of three months, not state whether deferred payment is possible, and it seems at least as likely that the discount is an attempt to prevent this method of payment from becoming too onerous. subject to sufficient security being furnished and upon compliance with the regulations framed by the Bundesrath. "This credit does not apply to the payment of duties upon cereals, pulse, colza, and rape seed, or derivatives thereof produced by milling or malting. If such products are deposited in a public bonded warehouse or in a private warehouse (whether the latter be jointly locked by the customs or not), the duties credited for the storage term shall, if the goods enter consumption, bear interest at 4 per cent. for the full term of storage, according to rules to be issued by the Bundesrath." It will be noted that certain agricultural products and derivatives are excluded and the evasion of the law through warehousing under bond made impossible by ante-dating the date of obligation by the addition of an interest charge. This was done in the supposed interest of agriculture, and the purchaser of internally produced articles of the kind in question, since these in paying for their purchases really pay the duty in paying the higher price. The regulations contained in the Act, otherwise merely give the seal of imperial legislative approval to measures which had existed from the early days of the Customs Union, but which had hitherto been regulated by each State separately-though owing to the general adoption of the Prussian law of 1828 there was in fact uniformity. It will be noticed that the importer cannot demand credit as of right (Rechtsanspruch); it is a privilege optionally granted by the authorities. (Trautvetter, op. cit., p. 190, et seq.) In addition, the following instances may be cited:— . . "Duties must be paid in cash in all South American countries except Ecuador, Colombia, Paraguay, and Uruguay. The acceptance of a note for the payment of duties is said to be the usual custom in Ecuador. Limited credit is allowed to customs brokers in Uruguay; under a blanket bond, payment in Colombia may be made within 15 days after the removal of the goods; and in Paraguay, as a temporary measure in view of the reduction of the limit for customs storage, a note with indorsement is accepted. Formerly credit was allowed in other countries (of South America), but the practice has gradually been discarded." (Report, etc., p. 44.) NOTE IV. TO CHAPTER IX. THE POST WAR SITUATION IN EUROPE AND THE PAYMENT OF CUSTOMS DUTIES. THE interest which regulations of the kind analysed in the previous note have, for the student of tariff matters, been greatly increased by the collapse of European currencies as a consequence of the war. This decline in the value of currencies has in effect reduced the weight of the tariff walls very considerably, for so long as payment can be made in depreciated paper, and the rate of duty remains unaltered, the actual burden of the duty declines in proportion to the depreciation. It has consequently become necessary for the various States to amend their tariff laws in order to make the actual/ rates correspond more closely to the actual value of money. We have already had occasion to mention the "coefficients " of increase introduced by the French Government,1 and the French case is only one among many. The necessary reform has taken two main shapes, the ultimate effects of which are the same. It was possible to alter the rate of duty, or it was possible to define the coin in which the duty was to be paid. If payment in gold is demanded, the effect is to raise the duty in correspondence with the fall in the gold value of the currency, and thus allows the Government to raise the duty, without directly altering the rates in the tariff. The following analysis does not pretend to exhaustiveness,` since the situation varies almost from week to week. Germany (B.T.J., 25/12/19, p. 709).-Law of 21st July, 1919, provides that the duties should be paid in gold. "Under §§ 1 and 2 of the proclamation issued thereunder, when payment of such duties was made in paper money, the duty was to be increased by an agio (Aufgeld) to be fixed in▾ 1 See above, Chap. VI., Note II. accordance with the value of the mark. Proclamations were issued week by week. . Temporary powers of suspension given to Finance Minister by the law of 8th December, 1919. Austria (B.T.J., 19/6/20, p. 777)." A decree of the Austrian Minister of Finance, dated 18th May, provides that, as from 28th May, Austrian customs duties when paid in bank notes have to be paid at twenty times the rate inscribed in the tariff. Prior to the enforcement of this measure, payment could be made in banknotes at six times the nominal rates." Italy (B.T.J., 22/4/20, p. 558)." By decrees of 25th November, 1917, and 30th June, 1918, it was provided that sums payable in gold in respect of customs duties might be ✓ paid direct to the customs in paper currency with the addition of 50 per cent. to the amount payable. The Gazetta Ufficiale (Rome) for 8th April contains a decree, dated 6th April, which provides that, from the date of publication of the decree, the amount payable is to be increased by 100 per cent. when paper currency is used." Portugal (B.T.J., 1/1/20, p. 25). Decree No. 6,263 of December 2, 1919, in its first article provides that— "The Government is authorised to double the present import duties and surtaxes on all the articles annexed to decree No. 5,612 of 10th May, 1919, and to include in that schedule goods and merchandise which are not indispensable for the preservation of life and the development of national industry. "The duties which are leviable or shall become leviable on the goods or merchandise to which this article refers, shall be paid in gold, the conversion being made by taking the value of 50 per cent. of the same duties in pounds sterling at the rate of the day, and the remaining 50 per cent. at the par rate of 4 escudos for each pound. "The payment of the duties may be made in currency or by means of the guias ouro referred to in Decree No. 4,133 of 18th April, 1918." Roumania (B.T.J., 3/6/20, p. 748).—Decision of April 20 decreeing the collection of customs on a gold basis, such duties, when paid in paper, to be collected at five times the rates prescribed in the Roumanian tariff. Brazil (B.T.J., 8/4/20, p. 8/4/20, p. 498).—“ H.M. 498). H.M. Commercial Secretary at Rio de Janeiro reports that the Minister of Finance |