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Home -> Orville Marcellus Powers -> Commerce and Finance -> Chapter XLVI

Commerce and Finance - Chapter XLVI

1. Chapter I

2. Chapter II

3. Chapter III

4. Chapter IV

5. Chapter V

6. Chapter VI

7. Chapter VII

8. Chapter VIII

9. Chapter IX

10. Chapter X

11. Chapter XI

12. Chapter XII

13. Chapter XIII

14. Chapter XIV

15. Chapter XV

16. Chapter XVI

17. Chapter XVII

18. Chapter XVIII

19. Chapter XIX

20. Chapter XX

21. Chapter XXI

22. Chapter XXII

23. Chapter XXIII

24. Chapter XXIV

25. Chapter XXV

26. Chapter XXVI

27. Chapter XXVII

28. Chapter XXVIII

29. Chapter XXIX

30. Chapter XXX

31. Chapter XXXI

32. Chapter XXXII

33. Chapter XXXIII

34. Chapter XXXIV

35. Chapter XXXV

36. Chapter XXXVI

37. Chapter XXXVII

38. Chapter XXXVIII

39. Chapter XXXIX

40. Chapter XL

41. Chapter XLI

42. Chapter XLII

43. Chapter XLIII

44. Chapter XLIV

45. Chapter XLV

46. Chapter XLVI

47. Chapter XLVII

48. Chapter XLVIII

49. Chapter XLVIX

50. Chapter L

51. Chapter LI

52. Chapter LII




It is frequently not convenient for an importer to pay the
duty upon an invoice of foreign goods immediately upon their
arrival. He may have imported the goods to meet a demand
several months later. He imports the goods when he can get
them or when he can huy them to advantage, and holds them
until the demand for them arises. Many foreign
warehouses articles, such as the laces of Switzerland or the
rugs of Persia are made in the cottages or homes
of the people. These are bought up by middlemen who go about
collecting them, brought down to the seaport and there disposed
of to American buyers who purchase for our market. Such
purchases must be shipped to America at once. Even in coun-
tries where the factory system prevails it is often necessary for
our merchants to place their orders far in advance of the demand.
This of necessity requires large capital, and as the duty is a con-
siderable item, it is a great convenience to merchants to be able
to leave the goods in the hands of the Government without pay-
ment of the duty until they are needed for sale.

A bonded warehouse is one designed especially for the stor-
age of imported goods awaiting payment of the duty by the
importer. Such warehouses are frequently owned by private in-
dividuals, but are constructed under the supervision of the Grov-



eminent and are fire-proof. They are under the absolute control
of the Government and are isolated from other buildings. A
Government officer known as storekeeper is in charge of each

warehouse. He is held responsible for the records
storekeeper and safe-keeping of the contents. No goods can be

delivered from the warehouse without a written
permit from the Collector of the port, which must be presented
to the store-keeper. He checks all goods into the warehouse,
and when a permit for delivery is presented, he checks out the
goods needed by the importer. Goods may be left in a bonded
warehouse three years without payment of duty.

Bonded warehouses are, for convenience, divided into several
classes. Class 1 consists of warehouses owned or leased by the
Government and are known as General Order Stores. This class
is the receptacle for all unclaimed, abandoned or seized merchan-
dise, the owners of which have not complied with the law. Class

2 is for the special and exclusive use of the firm or corporation

owning it. It is usually located near the business
classes house of the firm, and contains no goods except

theirs. It is in charge of a government store-
keeper and subject to the same restrictions as other warehouses.
Its entrances and exits are separated and its keys are held by the
store-keeper who checks the receipt and delivery of goods. Class

3 is for the general storage of goods in bond. Any importer can
store his goods in Class 3 warehouse.

When the goods are landed at a port of entry the merchant
to whom they are consigned gets notice of their arrival, and if
he does not desire them for immediate consumption he enters the
goods for the bonded warehouse, or if they are in a warehouse at
some port, he enters them for re-warehousing, gets a permit to
transport them to the warehouse near to his busi-
ness nome > an d without paying duty transports
them to his home port and places them in a bonded
warehouse, almost as convenient to him as his own store, and


there he may allow them to remain until his customers call for
them. When the goods are received at the bonded warehouse
the storekeeper inspects the condition of the packages, opens an
account with that merchant and enters the number of the bond
on his book with the number of cases and marks on the same, to
await the pleasure or wants of the owner.

A merchant may withdraw a portion of an importation by
paying the duties upon the goods covered by that consular in-
voice. Usually merchants have their foreign or-
r^orthTrT 31 ders ma de 11 P into convenient consular invoice
quantities, so that in case it is desired to withdraw
a special class of goods, it is not necessary to pay the duties on a
large quantity of other goods. All goods not withdrawn from the
bonded warehouse in the three years, are considered abandoned,
and are sold at public sale.

An American manufacturer may bond his factory to the Gov-
ernment* so that it will be possible for him to import raw mater-
Manufacturing ^ s > manufacture them into a finished product, and
Bonded ship this to a foreign country without the payment

of any duty upon the raw material. His factory
would then be called a manufacturing bonded warehouse, and
would be subject to the same regulations as other bonded ware-
houses, t


Ordinary warehouses are denominated free, or private, to
distinguish them from bonded warehouses. The Government
has no control over them. They are for general storage pur-
poses, or for that of imported goods on which the duties have
been paid. Manufacturers frequently have occasion to store up

*He may furnish the Government with a bond as security, and submit to
the regulations.

fA manufacturer may pay the duty on raw material imported, manu-
facture it into a finished product, ship this to a foreign market and receive a
refund of the duty paid on the raw material, under certain restrictions.
This refund is called a "draw back."


their products to meet the demands of the season when such
goods are salable. Wholesale houses frequently carry in ad-
dition to their regular stock, large quantities of
warehouses* 6 merchandise in store, especially when confident of
a rise in price. Goods seized under writs of replevin
or attachment are stored awaiting judicial sale. Furniture and
valuables are stored awaiting shipment or use, etc. Free or
private warehouses are owned and conducted by private individ-
uals as a business. The rates are less than in bonded ware-
houses, as the business is free from Government restrictions, and
are based generally upon the space occupied in cubic feet. The
warehouse receipt given by a private warehouseman is an assign-
able instrument and may be used at the bank as collateral secur-
ity for money borrowed, or in many instances warehousemen
make advances to the extent of one-half or three-fourths of the
value of the property stored, charging interest at ruling rates.
Perishable goods, of course, do not find their way into bonded
or private warehouses. They are placed in cold storage.


Out of the development of our modern domestic and foreign
commerce and transportation systems has come the cold storage
warehouse. By means of cold storage the preservation through-
out the entire year, of meats, fruits, poultry, dairy products, fish
and vegetables has been accomplished to such an extent that the

seasons have become practically eliminated, and
cold storage the prices of these necessaries of life have been

made uniform. In the season of abundance, in-
stead of becoming a glut on the market, these products are placed
in cold storage and preserved until trade conditions will warrant
placing them on the market. Cold storage warehouses are con-
structed w,ith specially built walls of great thickness, containing
insulating material such as asbestos, cork, charcoal, shavings,
etc., and every precaution is taken against the admission of out-


side heat. Formerly cold storage products brought a lower price
in the market than those that were fresh, but under improved
cold storage methods they now bring as high a price in the
market and in some instances even higher. Eggs stored in
March and taken out in November, sell as high as the fresh com-
modity. Eggs have been kept two years and found perfectly
sweet when used. Five or six months is the usual period of
storage with most products.

It is estimated by a reliable authority that products worth
over $500,000,000 are placed in cold storage annually, in the
United States. Thousands of tons of meat are stored for pres-
ervation awaiting distribution; between three and
united states ^ ve m iHi n cases of eggs find their way into the
cold stores each season; between one and one-half
and two million 60-lb. tubs of butter, besides large amounts of
oleomargarine, are stored; some two to three million barrels of
apples are put in the cold rooms each fall, as well as great
quantities of other produce, including vegetables of all kinds,
molasses, tobacco, silks, furs, upholstered furniture, etc.*

The greatest center of the cold storage industry up to 1902
was Chicago, it having long been the greatest railroad center
and center of supplies, and, being the first to engage extensively
in the cold storage of eggs, became the egg center of the country,
more than 600,000 cases of 30 dozens each finding
their way into the Chicago coolers each spring.
The greatest center, if Jersey City and Newark,
N. J., are included, is New York, partly because of the vast local
market and also because of her great export and import trade in
perishable goods.

Fish freezing and storing warehouses are now found in all
parts of the United States, including Alaska, as well as Canada

"These latter articles are placed in cold storage to protect them from
insects. The leading retail dry goods houses in our large cities provide cold
storage rooms for such articles, for their own as well as their customers'


and foreign countries. The great fish freezing and storing
houses in Washington, Oregon and Alaska, handle many millions
of dollars worth of fish annually. The fish are mostly halibut,
salmon and herring, and are frozen alive as caught, by placing
them in cold storage warehouses, from whence they are shipped

in refrigerator cars to the Atlantic cities and to
JJ^ t Europe. Cold storage of meat has reached its

greatest development in Great Britain, as that
country imports 60 per cent, of its meat supply. Vast quantities
are shipped from the United States, and besides a fleet of nearly
two hundred vessels is constantly engaged in carrying meat
from Australia, New Zealand and Argentina to England, the
meat being first frozen, and then kept frozen throughout the long
voyage across the tropics, in the cold storage holds of the ships.
By experiment it has been ascertained that certain tem-
peratures are best suited to the preservation of certain products
and in a well regulated warehouse it is comparatively easy to
maintain at all times the temperature best suited to the purpose.
Thus a temperature near the zero of Fahrenheit best preserves

fish, butter, ice cream, etc.; 20 to 28 furs and
Temperatures fabrics; 30 to 32 eggs; 31 to 33 apples, fresh

meat or cheese; 34 to 36, pears, peaches and
other delicate fruits, vegetables and the retarding of plant growth
in flowers out of season. All these varied temperatures are main-
tained in different rooms of the same warehouse at the same

The introduction of the refrigerating machine in 1890 gave
the first great impulse to the establishment of commercial cold
storage warehouses. Prior to that time ice and salt were the

only means of securing the desired temperature,

nd this method is still in use to a small extent, but

it is accompanied with serious objections, such as
the carrying away of the moisture from the melting of
the ice, the difficulty of obtaining sufficiently low temperatures


or of keeping them under absolute control at all times, and,
especially in the south, the excessive cost of the ice required.
All these objections were overcome by the introduction of the
ammonia or carbonic acid refrigerating machine. Liquid an-
hydrous ammonia, which can only be kept so under pressure,
when allowed to expand into a gas, absorbs heat. The refrigerat-
ing machine simply reconverts the gas into a liquid to be again
expanded, absorbing more heat, again liquefied and again ex-
panded the process being continuous so long as the machine
continues in operation.

The charges for cold storing vary greatly, and only on the
most staple goods are charges anything like fixed. Apples

usually pay 15c. per barrel for the first month
Charges and lOc. per month thereafter. Butter for long

storage in zero rooms at about l/8c. per Ib. per
month, at 5 below zero at l/6c. per Ib. per month. For eggs the
charge is about lOc. per case per month or 40c. for the season,
May to January. The ordinary charge for storage of furs is: for
muffs 75c. to $1.00 and for fur capes or garments $1.00 to $2.50
for the season of eight or nine months.

The cold storage warehouseman, in addition to receiving
goods from others for storage, is often a purchaser and owner
of a considerable portion of the goods he stores. In Europe
generally, and in this country to a small extent, negotiable ware-
house receipts are issued for these goods and used as collateral
Warehouse ^ or l ans - The lesser use of these instruments of
Receipts as credit in this country is due, partly at least, to

the absence of any definite system of inspection
and of licensing and hence the lender depends largely upon his
faith in the integrity of the individual warehouseman. The
very fact that the goods are termed "perishable" casts suspicion
upon them as security for loans even though they may be of
the most staple character and as safe as any personal property.
Insurance is a serious problem for the cold storage ware-


houseman, as a slight damage by fire to the refrigerating ma-
chinery might cause enormous damage to the

insurance goods stored; hence insurance companies have com-

pelled the warehouseman to become a co-insurer

or pay additional premium on a "consequential damage" clause

in the policy.

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