Economic Parasites a Business Menace

NORMAN REILLY RAINE March 15 1925

Economic Parasites a Business Menace

NORMAN REILLY RAINE March 15 1925

Economic Parasites a Business Menace

MacLean’s Magazine Do you smuggle? Perhaps you do, and think it is smart. Read this article to find its amazing growth.

NORMAN REILLY RAINE

HAVE you a double-barrelled conscience—one loaded with shot for crimes against the individual, the other charged with blank for offenses against the Provincial or Federal government?

If not, you are an exception, according to Customs officials, the most genial of whom has small faith in public ethics where smuggling is concerned, and who will quote cases without end to show that this ugly menace to our national economic system does not receive that consideration which its seriousness merits.

A birds’-eye view of the Dominion to-day would show three thousand miles of international border and hundreds of miles of ragged seaboard coast assailed by a neverresting enemy—the smuggler. Working, here covertly, there openly, he recruits his ranks from all walks of life. At one point a motor truck, laden with expensive fabrics, shoots across the line over an obscure country road or prairie flat. Across the International Bridge comes that evil social pariah, the coke fiend, with his concealed decks of narcotics, and walking beside him is your neighbor, John Doe, a few packets of cigarettes in his pockets, or a new shirt under the one he wore going the other way.

In the railway carriage at another point an otherwise impeccable lady states without a qualm that the tortoise-shell toilet set in her bag was bought in Montreal some months ago and is her personal property. A New York or Chicago merchant might contradict her, but he is not on the scene. A fast motor boat leaves an anchored schooner off the Cape Breton coast and lands an expensive consignment of French wines and liqueurs without the formality of notifying the Customs. A laden motor car is searched at the border of British Columbia and the State of Washington and a heap of fancy lingerie is removed from beneath the front seat, to a chorus of complaining women, who state flatly that they meant to declare it. When?—one wonders,—after they get it home to Vancouver?

And the significant thing about all this is that, with the exception of professional smugglers who do it for profit, most of these petty offenders regard the whole thing in the light of something “smart.” To outwit the Customs in such things is clever, and may be bragged about to friends before the home fire. Would they brag if they had dipped their hands in the pockets of those friends and sneaked out even the fraction of a cent? They would not—and yet they might as well have done so, for every stitch and item of goods smuggled across the Canadian border from the United States or any other country imposes an additional burden, infinitesimal in detail, heavy in aggregate, upon the already overburdened back of the Canadian tax payer.

Our Smuggling Bill

ECENT estimates have placed the value of goods illicitly brought into Canada from the United States at $15,000,000 annually. This is a conservative figure. Most of it comes in such things as dress goods, silks, and other textiles and fabrics, and the balance embraces automobiles and parts, jewellery, hats, shoes, shirts, wearing apparel (male and female), varnish, cigars, cigarettes, tobacco, dogs, alcohol, liquor, and hundreds of other articles which run almost the full scale of manufactured portable articles, singly and in bulk.

Queer tricks are played to cheat the Customs; nasty, dishonest tricks, put across by men and women who would be heartily ashamed of them if they had not the smuggling complex which refuses to see any wrong in swindling one’s fellow citizen and one’s government. Occasionally, however, such trickery stages a boomerang play as in the case of the man from Toronto.

This gentleman, whose business took him across the border at Niagara Falls several times a month, wrote a virulent letter to Ottawa, complaining against the alleged laxity of Customs officers at that point. Investigation of his somewhat vague charges did not substantiate them, and the matter was dropped, although the echo of his virtuous indignation was heard along the border for some time.

“We waited and gave no sign,” said the veteran Customs man who told me the tale, “and he went back and forth as usual, secure in his role of public-spirited citizen. Then one day we stopped and searched his car. He was rather noisy about it; you know—the idea of suspecting little Rollo. After we’d removed all the linen ■heets and wearing apparel with which he had the back of the car loaded, he came across with nearly $400 in fines without a whimper and was glad toget away.”

“Do you have many cases of under-valuation of goods that are declared?” I asked.

“No, not many. It’s too risky if a man is carrying on a regular importing business. If we caught him undervaluing we’d go over his books for a long period back, and penalize him on what we found there, too.”

He smiled, broadly. “Sometimes a man deliberately courts a Custom fine to dodge something more serious. A car ran across the bridge one day and was stopped. Just as one of our men was about to examine it the driver stepped on the gas and shot away. We knew who he was, and later on we got him and fined him $600 for running away and evading examination. I suspect he had a couple of bottles of alcohol in his car at the time, and paying our fine was cheaper than being assessed $2,000 under the Ontario Temperance Act. But that’s not the end of it.

“I happened to know that he had been arrested in the States shortly before for running liquor from Canada, so I assessed him another $600 for evading export dues. He objected:

“ ‘I haven’t been convicted,’ he said.

“ ‘All right,’ said I, ‘would you like me to tell them what we got you to-day for?’

“ ‘I’ll pay your fine,’ he said, in a hurry, ‘for if you did I’d lose my case.’ ”

In practically every large Canadian city to-day is a district of retail dress-goods and women’s wear shops, many of which have secured a large portion of their stock from smugglers or their agents. Occasionally the merchant, who generally is a foreigner, does not know that the stuff is smuggled. In the majority of cases not only does he know, but he and his shop form part of that widelyramified system which, carefully organized, carefully guarded, cheats the government of this country out of hundreds of thousands of dollars annually.

To combat it large numbers of Customs officers and members of the Royal Canadian Mounted Police are kept busy when they are sorely needed elsewhere. The numbers of traders handling illicitly procured goods, and the quantity of such goods form one of the most serious obstacles which the legitimate merchant in the same line of business has to face.

He cannot hope to compete with stocks which have paid no Customs dues, particularly in the more expensive lines of silks and fancy dress goods, therefore, he does not buy from the manufacturer to the extent that he could if this condition did not exist. The manufacturer is forced to restrict output, which leads directly to unemployment. Thus the vicious circle. Unemployment creates a drain upon civic, provincial and national revenue, so that the country is cheated in two ways—directly, by the act of smuggling, and indirectly in its results. The fundamental dishonesty of smuggling is a thing that many estimable people overlook.

There is considerable agitation at the present time, by various public bodies, such as the Canadian Manufacturers’ Association whose members are vitally affected, to increase and hasten punishment of smuggling by changes in the present legislation governing it. To-day if caught sneaking goods across the international boundary, it is possible to escape prosecution by payment of double duty, or by allowing the material to be confiscated, as in the instance of a United States citizen who recently smuggled 100 dozen gold rings into Canada. He was caught, and told that he would have to pay double duty or the goods would be confiscated. He returned to his native shore leaving the rings in the hands of the Customs, who sold them at a rate much below their market value—which had the same effect upon legitimate jewellers generally as if the smuggler had disposed of them— and there the matter ended. If the legislation now contemplated goes through, the penalty for smuggling will be imprisonment without option of a fine, or both.

The man who runs a truckload of satins, or boots and shoes, or other manufactured articles across our border without paying import tariff is a swindler; the person who, through trickery with invoices, bills, or other documents, or by other means leads the Customs officers of the Dominion to believe that he paid less than he really did for his goods, thereby reducing the Customs charge, is a swindler; the dope peddler who comes across the line with his contraband drugs and plies a loathesome trade on the streets of Canadian cities is a swindler. What of the Canadian, man or woman, who brings into this country any dutiable article, and evades payment of duty?

We all have heard people say: “He just looked at us, and marked our stuff without examining anything. That’s his business, not ours. Why should we say anything?” Conscience salve! Tacitly, the Customs officer sometimes puts folk on their honor to declare dutiable stuff by his unspoken confidence that they will do so. Public honesty regarding smuggling does not justify this trust in a great many cases, and those most affected say that the only solution is to treat all smugglers alike, large and small. A counter argument is that to do so would work hardship upon many respectable citizens. The answer is simple. Don’t smuggle.

Sometimes extraordinary methods are resorted to, to beat the Customs. The increasing use of automobiles makes it more difficult to detect them, for there are so many ingenious hiding places on the average motor car that it would need a large army of examiners and a tremendous amount of time to detect them all. One man, a foreigner, had fifteen or twenty pounds of cheese concealed in the hood of his car. It cost him fifty dollars in fines. Another man, travelling by pullman from New York to Montreal had eighty-six yards of fine silk hidden in his berth. It was confiscated. Old gas mains beneath the Niagara River, between Buffalo and the Canadian shore, were used for a long period by smuggling gangs. Special tubes, eight inches in diameter and of varying lengths, were used. A line was fastened to each end for hauling, and in this way it is estimated that large consignments of silks, jewelry, furs, liquor and other articles were transferred.

The Greeks Bearing Gifts

THE Customs man is an affable individual, as a rule;

he likes to be friendly with people, but he is human, too, and has few illusions regarding his personal charms. Too assiduous cultivation of his friendship, therefore, while at first it may be gratifying to him, inevitably leads to suspicion as to motives.

“Not so long ago,” said a revenue man when discussing his work, “it was noticed that one man who made frequent trips across the border would stop in for a chat, pass out a cigar now and then, and swap stories with the boys. He was a likeable kind of fellow, but he grew so darned fond of us that—well, it made us think. One day he came motoring back from the States after a few days’ trip. His car was thick with mud and dust and he looked as if he’d had a long drive. He stopped in to have a word or two with the inspectors, then drove away. That night we seized his car in Toronto, and it cost him $3,000 to get it released. He’d driven his old car over to the States, Continued on page 50

IT IS estimated that goods to the minimum value of $15,000,000 annually are smuggled into Canada from the United States, and that the yearly aggregate of all smuggled goods into this country from foreign lands is $20,000,000. Every article, no matter how small, which is smuggled into Canada contributes definitely to all of the following:

1. Retards reduction of Canadian per capita tax rate.

2. Creates unfair competition against Canadian retailers.

3. Curtails production by Canadian manufacturers.

4. Increases unemployment among Canadian workmen.

5. Brings want into Canadian homes.

6. Encourages foreign crooks to enlarge operations in Canada.

7. Attracts undesirable persons to Canadian territory.

8. Inspires contempt for Canadian law.

Economic Parasites a Business Menace

Continued from, page 14

bought a new one, had the floor man at the sales room change his license plates to the new car, sold the old bus, sprayed the new one with oil to pick up the dust and drove it home across the border. He came up for trial and was making rather a clever defense. We let him go on with it until he was confident he was going to get clear. Then we played our ace. The floor man who had so obligingly changed over the license plates was an operative of the United States Department of Justice, and he tipped us off. Our genial friend got back only $150 of his $3,000.”

Smugglers are quite unscrupulous as to the means they employ and will take advantage of anything and anyone. A youthful bride and groom, at the outset of their honeymoon, became acquainted with a fellow-passenger—a tall, finelooking man, with that intangible air of the world-traveler and cosmopolitan lent by good tweeds, sunburn and easy, engaging personality. The three became fast friends and, as they were all going to Chicago, planned to remain in company, stopping over at Niagara Falls for a day or two.

At Montreal, however, the tall stranger came to his two friends with an open telegram in his hand.

“Look here,” he said, “I’m awfully sorry but I won’t be able to go right on to 'he Falls with you. I’ve received a wire that I’ve got to run down to New York for a day, but I’ll join you at the Falls before you get away. You’re going to put up at the Blank House in the Falls, aren’t you? D’you mind taking this little parcel for me? It’s a birthday gift for my sister and she’ll call at the hotel and get it. Sure you don’t mind?”

They were pleased to oblige their charming friend, and took the little carefully-wrapped package and thought no more about it. At the United States end of the International Bridge the little bride was stopped and searched, and the parcel removed. It contained diamonds worth $56,000. Although innocent of intent to smuggle, the bride spent her honeymoon in jail, but it is satisfaction to note that the gentleman involved also was caught at Ogdensburg, and received something of what he deserved.

Financially Handicapped

IT IS seldom indeed that the Canadian smuggler is given a jail sentence, which, perhaps, is sufficient answer to the question why they flourish. There is the exception, but it is so rare that it does not act as a deterrent to the trade. The Canadian Customs and Revenue service, working under an inadequate appropriation, can do little more than scratch the hide of this bete noir of the legitimate Canadian business man. The total appropriation for the Customs Service is $350,000 annually. Out of this the full length of the border must be protected, tide-water coasts patrolled, half a dozen cutters maintained and smugglers run

down. Of this sum only $100,000 is available for the land forces, according to recent figures.

“It is discouraging, sometimes,” said a Customs inspector of many years’ experience. “I know a man in the federal legislature who is one of the most bitter critics the service has. Why don’t we stamp out the smuggler? he roars: Why don’t we do this and that? Yet he is one of the stoutest opponents against any increase in the Customs appropriation, and fights every measure brought up which provides for more rigorous punishment of offenders. A lot of the public are like that, too. If they do not want to spend the money for adequate protection, they might at least give us their personal co-operation in stamping out the trade. If every Canadian who had occasion to cross the border would determine to play square with our government by declaring the goods brought back, no matter how small, and would denounce the petty thief who is trying to get away with it, the result would be the same as if they doubled our present appropriation, and in addition there would be the satisfaction of knowing that they were helping to protect Canadian industries and keep Canadian workmen employed.”

The leaven of humor enters into the life of the Customs officer to help keep it sweet. Among the crowd leaving the Canadian side of a St. Lawrence river ferry landing one day was a lady whose remarkable train attracted the attention of the Customs inspector on duty. He walked up beside her and touched her arm, then, when she turned, pointed to ten or twelve feet of excellent fancy silk dress goods which trailed on the ground from beneath her skirt. Her face flushed with righteous indignation.

“If you were a gentleman you wouldn’t be looking at a lady’s feet,” she snapped. But that did not prevent him from collecting double duty for the several yards of the material which she had wrapped around her body.

Disposal Sales Scored

MERCHANTS generally decry the method used by the Customs service in disposing of appropriated goods. It is seldom, they say, that the articles are

sold by experienced valuators. As a consequence, they are auctioned off far below a reasonable price, and the goods flood the market precisely as they would had they been sold by the smuggler—and case after case has occurred wherein the smugglers have allowed the stuff to be confiscated, bought it back at public sale, and resold it at a good profit.

Occasionally people go to considerable trouble to smuggle into the country goods on which there is no tariff. The ignorance of a one-legged gentleman from the United States cost him dear in this respect. Shortly after entering Canada he fell and injured his hip. On the other limb he wore an artificial leg, in the hollow butt of which he had concealed a number of fine diamonds. He had invested his savings in them at home, and planned to make a tidy profit in the wilds of Montreal, (where diamonds are about thirtyfive per cent, cheaper than in the United States). But the real blow came when he got into trouble with his own Customs people, through trying to smuggle them back.

Some of these examples taken singly, did not mean a great deal in the total of Customs revenue, but in the aggregate the loss through petty smuggling is enormous. Every citizen who secretes across a few cigarettes, cigars, tobacco, a shirt or two, a pair of silk stockings, a beaded bag, a blouse, a lace collar or any other thing petty in itself is helping to swell the grand total against our country’s economic well-being, and when added to such items as the recent seizure in a Quebec town of cotton goods valued at $20,000 which had been smuggled in from the United States the result is disastrous. In the present condition of Canadian industry every available and legitimate cent of revenue must be garnered; every dollar with possible purchasing value within the country must be kept in Canada; Canadian tax payers, merchants, wholesalers, manufacturers and workmen must be protected. The seriousness of the smuggling evil to this country cannot be overemphasized, and the Canadian who participates in, or is accessory to, smuggling in the slightest degree not only is dishonest but is an economic traitor to his country, his neighbors and his friends.