This increase in the tariff was regarded as unwise by many conservative importers, as the temptation to defraud the government is made much greater than before. The change was even feared by honest dealers who were afraid that they could not successfully compete with dishonest importers who might smuggle gems into the country. In spite of a rather determined opposition the change was made and our most representative dealers have been making the best of the situation and have been doing all that they could to help prevent smuggling or at least reduce it to a minimum. Through their knowledge of the movements of diamond stocks and of prices they are able to detect any unduly large supply or any unwarranted lowness of price and thus to assist the government agents by directing investigation towards any dealer who seems to be enjoying immunity from the tariff. The question of the status of Japanese cultured pearls has been settled as follows. Paragraph 357 (quoted above) is ruled to cover them and they are thus subject to a 20% ad valorem tax. Carbonadoes--miners' diamonds--are free of duty, under paragraph 474. Crude minerals are also free of duty, paragraph 549. Paragraph 607 declares "Specimens of natural history and mineralogy" are free. In case the owner is not prepared to pay the tax on imported merchandise the government holds the goods for a period of three years pending such payments. In case an importer shows that imported merchandise was purchased at more than actual market value, he may deduct the difference at time of entry and pay duty only on the wholesale foreign market value, under Section III., paragraph 1. On the other hand, if the examiner finds merchandise to be undervalued on the invoice, such merchandise is subject to additional penal duties, but in case of disagreement between the importer and the examiner as to the actual market value, appeal may be taken to the Customs Court. Since the Philippine Islands are possessions of the United States, pearls from those islands may be admitted free of duty when the facts of their origin are certified to. In the case of precious stones which had their origin in the United States, but which were exported and kept for a time abroad it has been ruled that such stones may be imported into the United States free of duty. When precious or imitation precious stones are imported into the United States and subsequently mounted into jewelry which is then exported, the duty which was paid upon entry may be refunded less a deduction of 1%. The author wishes to extend his thanks to Examiner W. B. Treadwell of New York, for his assistance in regard to the subject dealt with in this lesson. BIBLIOGRAPHY