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lowers, but few in number it is to be hoped, however, say, “Let the Union slide;" but the party to which I belong, the great party of the Union, say "No; we love the Union; it gives us life, protection, homes, plenty, liberty, individual freedom, and by the Eternal it shall be preserved.''' Now, I hope the gentleman understands to which party I belong.

The hour of half past four o'clock p. m. having arrived, the House, pursuant to order, took a recess until half past seven o'clock

p. m.

EVENING SESSION.

The House reassembled at half past seven o'clock p. m.

TAX BILL.

Mr. MORRILL moved that the rules be suspended, and that the House resolve itself into the Committee of the Whole on the state of the Union on the special order.

The motion was agreed to.

So the rules were suspended; and the House accordingly resolved itself into the Committee of the Whole on the state of the Union, (Mr. DAWES in the chair,) and resumed the consideration of the special order, being a bill of the House (No. 513) to amend an act entitled "An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes," approved June 30, 1864, and acts amendatory thereof.

The first section of the bill which was under consideration is as follows:

That on and after the 1st day of July, 1866, in lieu of the duties on unmanufactured cotton, as provided in an act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes, approved June 30, 1864, as amended by the act of March 3, 1865, there shall be paid by the producer, owner, or holder, upon all cotton produced within the United States, and upon which no tax has been levied, paid, or collected, a tax of five cents per pound, as hereinafter provided; and the weight of such cotton shall be ascertained by deducting four per cent. for tare from the gross weight of cach bale or package; and such tax shall be and remain alien thereon, in the possession of any person whomsoever, from the time when such cotton is produced as aforesaid until the same shall have been paid; and no drawback shall in any case be allowed on raw or unmanufactured cotton of any tax paid thereon when exported in the raw or unmanufactured condition. But no tax shall be imposed upon any cotton imported from other countries, and on which an import duty shall have been paid.

The pending question was on the following amendment offered by Mr. LYNCH :

Provided, That any producer may procure an exemption of not more than six hundred pounds of cotton in any one year, as follows:

assessby 18

Upon exhibiting the same to the assistant assessor of the district where said producer resides and where the cotton was raised, at the place of production, and making oath that he raised and now owns said cotton, and satisfying the assistant assessor that his sworn statement is true, the assistant assessor shall fitly mark the bale or bales of said cotton with the number of pounds, being not more than six hundred as ascertained by weight then and there, and with the following words: "Cotton produced in the ment district in the collection district in and owned by him on the day of and exempt from taxation;" filling said blanks with the designation of the assessment district and also of the collection district, the name of the State. the name of the producer and owner, and the date when said exemption is so ascertained and marked thereon. The assistant assessor shall give to said producer a certificate of such exemption setting forth the above facts, and also the place of production as near as can be, and the payment of his fee. He shall also make a full record of all such exemptions and transmit a transcript of the same to the assessor. The assistant assessor shall be allowed a fee of two dollars for all his services in each case of exemption, to be paid by the producer. Any person swearing falsely in procuring such exemption; and any person using or attempting to use the exemption certificate or marks provided for in this section with intent to procure exemption for any other cotton than that which was lawfully exempted as such certificate and marks set forth; also, any person selling or giving away, purchasing or receiving such certificate or marks with intent to defraud or to aid in defrauding the revenue shall be liable, upon conviction thereof, to a fine of fifty dollars or to not more than three months' imprisonment. Under the provisions of this section no cotton in its unmanufactured state shall be exempt from taxation for more than ten months after the date of its marks or certificates of exemption. Any person, other than the producer named in the certificate and marks aforesaid, who shall subsequently to such exemption claim property in any cotton so exempted, by virtue of an ownership prior in date to such exemption, shall forfeit all such cotton; and any cotton

with reference to which the owner or his agent shall commit any violation of this section shall also be forfeited.

Mr. MORRILL. Mr. Chairman, the amendment pending, offered by the gentleman from Maine, [Mr. LYNCH,] provides that a certain amount, either six hundred or one thousand pounds of cotton-six hundred pounds, I believe-shall be exempt from tax throughout the South wherever cotton is produced.

Mr. LYNCH. If the gentleman will allow me, I will modify my amendment.

Mr. MORRILL. Very well.

Mr. LYNCH. I withdraw my amendment, and move to add to the section the following:

Provided, That any producer may in each year procure an exemption of not more than six hundred pounds of cotton produced by himself and owned by him from planting to baling and exemption, by complying with such regulations as the Commissioner of Internal Revenue shall prescribe, under the direction of the Secretary of the Treasury.

Mr. MORRILL. In my judgment, this amendment, if adopted, will be utterly destructive of all revenue from this source. And as

I know my friend from Maine [Mr. LYNCH] is in favor of a tax upon cotton, I trust he will withdraw it.

But before yielding the floor let me say that if this amendment should be adopted every piccaninny in the South would have six hundred pounds of cotton to be exempted. All of the land would be leased or so managed that every workman, whether employed for wages or otherwise, would come forward with what would appear to be a valid claim for an exemption, and if this amendment should be adopted, I should regard it as equivalent to the rejection of this proposition to tax cotton.

Mr. LYNCHI. I should be very sorry to propose any amendment here which would defeat the object of the committee in levying a tax upon cotton. When I offered my first amendment, I stated that my object was to encourage the small producers of cotton in the South; and also to follow out the general principle of the bill which exempts the small manufacturers of the North, the miners that produce a small amount, and incomes to a certain amount. I think there will be no more difficulty in guarding against fraud in the exemp tion of this amount than there is in guarding against fraud in the exemption of $600 worth of manufactured goods.

It is hardly to be supposed that a planter can farm out to all his hands his plantation, while he really owns all the crop, and have every one of them come forward and make oath that they each own six hundred pounds of cotton, and obtain exemption papers upon that amount under any regulations that may be made by the Commissioner of Internal Revenue. I do not see that the farmer can attempt that any more successfully than the manufacturer at the North can share out his factory and thus avoid the five per cent. tax.

I think it is a matter of a great deal of importance that we encourage these small producers of the South by giving them the advantage of this exemption, and let them feel that the Government is a beneficent one. While at the North I would not encourage any class distinction, I would permit this at the South. I think it is for the interest of the Government that they should make the poor white people and the poor black people of the South feel that they had certain privileges and certain exemptions, and I think it is no more than right and just that the same principle should be applied at the South that is applied at the North. I will leave the House to decide the

matter.

Mr. MORRILL. I regard this matter to be quite as important as the gentleman from Maine [Mr. LYNCH] can regard it. And I would like to reach the point of being able to give these men the bounty which he proposes, for it is nothing less than a bounty. If we do not adopt the provision the gentleman proposes they will have nothing taken from them; they are as well off as they would be if we do not pass the law.

Now, let me say, in relation to this proposal, that there is a very great difficulty about it. This provision, if adopted, cannot be enforced.

By the provisions of this bill we provide for the collection of this tax when the cotton is removed from the district or when it is manufactured in the district where it is produced. If there is any one in any of those districts who raises cotton and who shall see fit to manufacture an amount of cotton equal to that allowed to persons in the North, he will have the same privileges of exemption as the man who manufactures cotton in the North. If we allow this six hundred pounds of cotton to be exempted for each producer, then every bale of that exempt cotton must be traced throughout the country wherever it goes. It is quite enough to be called upon to trace this cotton to the manufacturers or when it leaves the district. To undertake anything more would be futile, and in my judgment absolutely impossible.

Mr. LYNCH. I would like to ask the chairman of the Committee of Ways and Means [Mr. MORRILL] if there will be any more difficulty in putting the exemption stamp on the bale than to put a stamp on to show that it has paid the duty.

Mr. MORRILL. The cotton the gentleman proposes to exempt will be in very small parcels, about a bale and a half each, and it will come in from all quarters, whereas in the general administration of the law it comes in in large parcels.

Mr. LYNCH. I understand that each bale is to be stamped.

The CHAIRMAN. Debate has closed upon the amendment.

The question was taken on the amendment of Mr. LYNCH, and it was not agreed to.

Mr. UPSON. I move to amend this section by striking out the word "five" and inserting the word "three," as the tax per pound to be levied on raw cotton.

I will state briefly my reason for offering this amendment. I consider the tax proposed by the bill as exorbitant and calculated to have an injurious effect, that tax being equivalent to twenty or twenty-five dollars per bale.

Besides, it will be found, by an examination of the bill, that after the cotton is manufactured into fabrics there is to be an addition of five per cent. ad valorem; so that the consumer of this cotton, when it is manufactured, will have to pay that five per cent. duty added to this tax.

Although it is said that the consumers who will pay this tax will, to a considerable extent, be those in foreign countries, still a larger portion of these manufactures will also be used in this country. And I find that the producer is generally very desirous to exempt the product from tax, as in the case of petroleum, in regard to which the question was considered so urgent that a bill on that subject was yesterday rushed through as an independent proposition. Iinfer, from facts of this sort, that a tax of this kind does, at least in some cases, affect in a measure the producer as well as the consumer.

I submit that, in the present state of our country, a tax of five cents per pound on cotton would be a very heavy burden, and is calculated, I think, to work more injury than benefit. This tax will weigh heavily upon a large class of our people who make use of manufactures fabricated from cotton. The tax is now two cents per pound. I notice that some of the southern States, North Carolina for instance, have gone through the process of levying a tax of two dollars per bale on cotton to support their provisional governments. The article is also subjected to other local taxes in the States where it is produced.

Mr. STEVENS. If the gentleman from Michigan [Mr. UPSON] had not moved to reduce this tax, I should have moved to amend by striking out "five" and inserting "eight." I think there is very good reason why this one article should pay a very large portion of the, taxation which we are obliged to raise. If we

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had a right to lay an export duty, which the Constitution at present forbids, we could, with an export duty of ten cents per pound, raise $200,000,000 annually, while at the same time protecting our own manufacturers and selling abroad just as much cotton as we do now. Under the circumstances we must do the best we can. The only thing we can do is to lay an internal duty, and then allow a drawback upon that portion of the manufactured article which is exported. That is the only mode by which we can now do what we ought to do.

Mr. UPSON. I wish to inquire whether the object of the drawback is to enable us to sell more cheaply to foreign countries than to our own people.

Mr. STEVENS. The object of the drawback is to enable us to go into the markets of the world with our manufactures, where we cannot now go-to enable us to go where England is able to go by her free-trade system at home-to enable us to go to South America, to France, to the continent of Europe. If we would manage our concerns wisely, if we would lay a tax, for instance, of ten cents upon all of the article that is exported and nothing at home, there is not a market in the world to which the fabrics of this country would not find their way. We must approach the object as nearly as we can; and as we have to raise a considerable amount by internal taxation, let a portion of it be borne by those who raise the article of cotton and who created the necessity for this taxation.

Mr. UPSON. I thought the object was to benefit the home market.

Mr. STEVENS. Internal duty is not protection; it is just the reverse of protection. Mr. UPSON. I speak of the drawback. Mr. STEVENS. The object of the drawback is to enable the people of this country to send their manufactures advantageously into the markets of the world, without being overborne by the competition of the cheap manufacturing countries of Europe. How can we accomplish this except by a drawback as proposed by the bill? We now allow a drawback on whisky. We put no tax upon whisky exported. Why is this? It is that we may go into other countries and sell that article without being affected by the burdens of taxation which we are compelled to bear here. But it enables us to pay taxes in proportion, if we can sell a portion of our surplus production abroad at some kind of profit. And therefore, instead of sending the raw material abroad, let us now manufacture it here, and when we have manufactured it here, and our manufactories have been fully employed, let us send the product abroad to other countries where it is needed. But in order to do that you must take off a portion of the duty which is necessary here. Therefore I am opposed to the amendment of the gentleman from Michigan, [Mr. UPSON,] although I am deterred from saying anything about the eight cents tax, as I intended.

Mr. HOOPER, of Massachusetts. I move to amend the amendment by making it two cents instead of three.

I regret to differ from my colleagues on the committee upon this or any other item in this bill, and I believe it is the only important item in regard to which I differ from them. But my conviction is very strong against this tax.

The main object of this bill is to relieve the country from some portions of the burdens of taxation, and cotton is the only article on which the tax is increased-the present tax being two cents, equal to about nine dollars per baleand this bill proposes to increase it to five cents, or about twenty-two and a half dollars per bale. During the war Congress refused to impose more than two cents upon cotton. It seems to me unjust and impolitic, now that the war is over and every one desires to see the industry of the South revive and flourish, to oppress the production of cotton with this burdensome tax.

the consumers of the cotton. In the present
condition of the supply of cotton the tax must
come out of the producer. The price of cot-
ton both here and abroad will depend on the
extent of the supply, and whether you tax it
two cents or twenty cents the price will not be
affected by the tax until it operates to restrict
the production of cotton in this country.

It is a mistake to suppose that because we
produce more cotton than any other country,
or perhaps than all other countries, therefore
we have the monopoly of the article. What
ever tax we impose on cotton is paid by the
producer until it restricts the production; and
then it will operate as a bounty to encourage
its production in other countries.

We shall not force the foreign consumer or even the consumer at home to pay this tax. It must come out of the producer of cotton until the extent of the crop is so great that this tax will operate as a restriction upon its production.

Mr. MORRILL. Mr. Chairman, this sub-
ject is not a new one. It is very clear that if
the proposition which was made at the last
session of Congress to tax cotton five cents a
pound had been carried, we should have got
many millions of money without impoverishing
the country a dollar. Every dollar of it would
have been paid by the foreigner. And so long
as cotton remains at the present price, or until
it comes down to a much lower rate, the posi-
tion taken by the revenue commission without
a single exception, I believe, was that it would
continue to be the same; that the price levied
by the tax would mainly come out of the cotton
sent abroad. And not one of the manufacturers
were opposed to it at the time. It was accepted
provided a little pittance of drawback was given
upon manufactured cotton.

Now, if we are to have any revenue at all
of this sort let us put it at some figure that will
make it of some importance, and not whittle it
down to a point so fine that it will cost more
to collect it than the revenue is worth.
The CHAIRMAN. Debate is exhausted on
the amendment to the amendment.

The question being taken on the amendment
to the amendment, it was not agreed to.
Mr. PIKE. I move pro formâ to amend by
making it six cents.

The House ought to recollect in acting upon
this subject of cotton, that the other day we
passed a bill making an appropriation for the
next year of very nearly twelve million dollars,
in great part for the purpose of protecting,
encouraging, and assisting this raising of cot-
ton; that is to say, for the Freedmen's Bureau.
The necessity for that bureau lies in the fact
that the population in the South, both white
and black, need assistance for the next year,
and that they were largely engaged in raising
cotton and in raising the corn necessary for their
own subsistence. So that it is one of the neces
sities of our position that so long as we make
this large expenditure, such as we make in no
other section of the country, the region in which
we make this liberal expenditure should make
a liberal contribution in return.

Another consideration is, that it is necessary to keep up a standing army in that section of the country where cotton is raised. It will be necessary to employ a large portion of our Army in that section for the coming year, if not for years to come; and so long as these extraordinary expenditures are necessary in that part of the country, so long we should draw a revenue from that section somewhat to correspond with those expenditures.

Now, the revenue commission, viewing this simply as a revenue matter connected with safety to the production of cotton, and to its maintenance in the markets of the world as an article of export, have proposed a duty of five cents a pound. I am satisfied with that.

Mr. KASSON. I believe that from the first there has been no member of the Committee of Ways and Means more interested than myself in the question of taxing raw material in the hands of the producer. Upon this quesIt is not true that this tax will be paid by tion of cotton it has been treated by them

and I am willing to accept that propositionas an exceptional article that justifies the violation of the rules which we have applied to subjects of taxation generally in this country.

In the last Congress I endeavored to apply a similar rule to the production of tobacco, taking it off from the manufactured article and substituting it in a much less amount upon the raw material. The difficulty that we then encountered was the collection of the tax in that form without imposing a burden upon the producer. The same difficulty exists in respect to cotton, and in addition to that there seems to be a difficulty in the minds of many gentlemen in regard to the amount of this tax.

Now, one thing I apprehend is conceded on all hands, and that is that in respect to certain varieties of cotton, and only in respect to certain varieties, we are without competition in the production of the world. In the long staple, the most valuable kind, we have at present no successful competition. But there is in various parts of the world a production of a very large amount of cotton of an inferior quality, the short staple, which, if we tax the raw material too high in this country, will encroach, I think, upon the monopoly that this country has hitherto enjoyed.

The practical question, therefore, in my judg ment, is, whether we put the tax so high as on the one hand to develop the production in foreign countries of a superior article, and on the other to compel the increase of the amount of the inferior article in place of that we have hitherto sent into foreign markets from this country.'

It is upon that point that the principle I maintain applies. I do not believe that we have a permanent monopoly of the markets of the world in the production of cotton to the extent claimed by some. And I am as apprehensive in regard to this as I was on the subject of tobacco, that we may so affect the production of the raw material as actually to develop successful competition and take from ourselves the monopoly in the world that we now have.

I should have preferred that the committee had settled upon three cents, with a corresponding drawback on the manufactured article. I think both branches of the subject, the tax and the drawback, should be considered together.

I hope in this as in all similar subjects connected with the material interests of the country, no gentleman will attempt to put it on the ground of vindictive punishment upon the people of the South. It is the most dangerous element that we can introduce into our deliberations upon this as well as all other subjects. I say this for fear that some at least of my associates upon this floor may think that cotton will bear any amount of taxation we choose to put upon it, and that the burden will fall on the South. We in the North, who consume most largely, pay the burden in the first instance, and then the foreign consumers pay the residue of the burden in the second instance, after the drawback is allowed on the manufactured article.

I hope, therefore, that the tax will not be increased above five cents, nor decreased below three cents, and for myself, I should prefer to start the experiment on the grade of

three cents.

Mr. PIKE. I withdraw my amendment. Mr. BOUTWELL. I move to amend the amendment by striking out "three" and inserting in lieu thereof "two and a haif." I do it for the purpose of saying that I cannot concur with the Committee of Ways and Means in the policy of putting the duty at five cents per pound, and chiefly upon general reasons. So far as I can be supposed to have an interest in the manufacturing industry of the country, I do not know that the manufac turers are particularly concerned in the amount of the tax on the raw material, provided that the drawback on goods exported corresponds with the tax laid on the raw material. But I

concur with the gentleman from Iowa [Mr. KASSON] that if the tax be put at five cents, and there be not a drawback, it will destroy the manufacturing interests of the country.

But I object to it chiefly upon general grounds. It is pretty well known that in reference to all political matters concerning the South, and the restoration of that section of the country to its former relations to the General Government, I am, in some degree, uncompromising. But upon all questions affecting their material prosperity, upon everything relating to the restoration of commerce and social order, I am in favor of the most liberal policy on the part of the General Government.

Now, sir, if this tax be put at five cents, and the Representatives of the South return here, as they must do at some time, I cannot anticipate anything but well-founded opposition, and some degree of bitterness on their part, in reference to this matter. We should consider that this must be, to some extent, a tax upon the cotton-producing interest of the country, for, while a portion of this increase in price may be charged over to the manufacturers of this and other countries, it cannot be reasonably anticipated, when you impose the duty equal to fifty or seventy-five per cent. of the cost of producing the material in ordinary times, that such a tax will be paid by the consumers entirely.

from Vermont [Mr. MORRILL] allow me to
inquire whether this testimony was not taken
when the price of raw cotton was something
like twice what it is at the present time; and
also, too, when the anticipation of the quan-
tity of cotton in the South to be brought out
was something like a million bales, whereas in
fact we have obtained one million nine hun-
dred thousand bales or more?

Mr. MORRILL. I will give the gentleman
the full advantage of all the facts. The facts
were, as the gentleman intimates, that the price |
of cotton was very much higher than it is now.
But it has not fallen below the price that was
then anticipated by gentlemen who had in view
the levying of this tax or not below twenty-five
cents per pound.

Now, let me read from the testimony of Francis B. Crowningshield, the treasurer and manager of the Merrimack Company:

Question. You would scale tax according to the price?

Answer. I don't mean to say I would exactly do
that; but suppose, for instance, that cotton is not to
fall below twenty-five cents in the next three, four,
or five years, I should say it would bear a tax of
somewhere about seven cents."

Take the testimony of John A. Lowell:
"Question. Are you in favor of an export duty or
excise tax on cotton?

"Answer. I see no objection to it all.
"Question. In case an excise duty were levied, what
amount would you recommend?

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Answer. I have thought of the matter a good deal, and I have thought about five cents a pound would

The testimony of Mr. E. R. Mudge-a man of energy and great enterprise in the manufacturing business-is as follows:

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Question. Are you in favor of an export duty or excise tax on cotton?

"Answer. I should not object.

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Question. To what extent?

Previous to the opening of the war, in 1861, American cotton sold in the market of Eng-probably be a tax that would affect nobody." land, for about fivepence and three tenths, or something like twelve cents per pound. If you add five cents, or twopence ha'penny per pound, it must tend to increase the cotton production of other countries. Previous to the war the importation of East India cotton into Great Britain was between five hundred thousand and a million bales a year. During the war the importation of American cotton into Great Britain went down from one million eight hundred and forty-one thousand bales, to two hundred and eighty-one thousand and fifty bales last year, showing a loss of more than a million and a half of bales on the importations of American cotton. Now, the importations into Great Britain of all kinds of cotton have diminished only three hundred and twentyeight thousand bales, comparing the year 1861 with 1865, showing an immense increase in the cotton-growing interests of other parts of the world during the prostration of the business here.

Answer. I should say that from five to six cents might be imposed without detriment to the producing interest of the South for two or three years."

Now, if you impose a duty of fifty per cent. on the cost of producing the raw material in this country it must inevitably result in an increased production of cotton in other countries. I should much prefer that we should put the duty at something like three cents per pound, which corresponds with our general system so far as we can compare the duties on raw materials with the duties on manufactured articles which is observed in the revenue system of the country, and which is preserved in the bill now under consideration.

[Here the hammer fell.]

Mr. MORRILL. I merely desire to show to the gentleman from Massachusetts that gentlemen who are interested in this subject, and have given it great attention, differ with him as to the amount of tax that cotton will bear. I have recurred hastily to the report of the commission on the subject of internal revenue, and I will quote the names of certain parties who, I think, will be good authority with the gentleman.

I take first the name of Mr. William Dwight, a wealthy and distinguished manufacturer. He was asked if he recommended a tax of seven per cent. upon the raw material, and his answer was, "I do."

Another gentleman recommended a tax of only two and a half cents a pound, the only one I can call to mind who recommended so

low a tax. Erastus Bigelow, a gentleman well known for his enlightened views and practical information upon these subjects, was in favor of a tax upon raw cotton.

Mr. BOUTWELL. Will the gentleman

I will now give the testimony of William Amory, another distinguished gentleman, and the treasurer of some of the largest cotton manufacturing establishments in the country:

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Question. Would you recommend a tax as high as five cents?

Answer. That would require a great deal of deliberation. You would have to put a tax on which would raise a very large revenue; and if you found there were five million bales-which I think very likely to occur much sooner than my friends generally-I should think you could reduce it much lower than

five cents."

But that was not the tenor of the general testimony.

Mr. GRISWOLD. Is there any evidence before the committee as to the price at which the English manufacturers would use American cotton exclusively?

Mr. MORRILL. I do not suppose that that would ever be the case. Surat cotton, valued usually at one third less than American cotton, will most likely always be used for some purposes.

[Here the hammer fell.]

Mr. BOUTWELL. I withdraw the amendment.

Mr. KASSON. I move pro formâ to amend the amendment by striking out "three" and inserting "four." I desire to refer to the effect of placing the tax too high upon the quality of the article that gets into the hands of the people. We all know that the high price of wool has resulted in the insertion, in all woolen fabrics which we are compelled to use, of a large amount of shoddy. And it is precisely in that direction that a heavy tax would produce the effect in this case; it would lead to a largely increased_introduction of an inferior kind of cotton. I refer to this in addition to what I said before in regard to the practical operation of this tax in increasing the price of cotton goods in the markets at home.

I beg again to say, in connection with this subject, what in effect was suggested by the gentleman from New York, [Mr. GRISWOLD,] that the consumption of this material by the English manufacturers is very much dependent upon the price at which they can obtain it. Suppose we put on a tax of five cents per pound, or the high tax per bale as suggested

by another gentleman, to be paid by the producer, or secured to be paid before the cotton leaves the plantation, which is substantially the effect of this amendment, that very moment you reduce the price of the labor of every freedman in the southern States. In proportion as you facilitate the production of cotton and increase the demand for it at home and abroad, just in that proportion do you enhance the price of the labor of the freedmen of the South.

Mr. UPSON. Let me inquire of the gentleman whether it is not a fact that at some seasons cotton has been raised and sold for six cents per pound.

Mr. KASSON. Unquestionably, and some qualities even lower than that. What I apprehend is that the production of American cotton may hereafter exceed possibly the demand which will exist for it at the high price at which our taxes will permanently fix it. It is this apprehension which makes me hesitate very much to vote for this tax of five cents per pound at the beginning. I should prefer to wait until we can ascertain what is to be the effect of the increase of two per cent. in our taxation.

Mr. GRISWOLD. I desire to state to the gentleman that I believe it is an established fact that at twenty-five cents per pound American cotton takes the preference in the markets of the world over every other kind of cotton.

Mr. KASSON. I should be glad to know the authority upon which that is stated, for I noticed that in the remarks of the gentleman from Vermont, the chairman of the Committee of Ways and Means, he cited the testimony of certain gentlemen in this country, and I was reminded of what transpired before the Committee of Ways and Means in the last Congress in reference to the tax upon tobacco. There were certain gentlemen who advocated most strenuously the imposition of a high rate of tax upon the raw material, declaring that we had the monopoly of the markets of the world, and that it made no difference what tax we might impose. When we followed up those inquiries, it was found that certain gentlemen back of the witnesses held a very large amount of tobacco on hand, then deposited in Europe, the price of which tobacco, would, by an increased tax, have been enhanced to such a degree as absolutely to make a fortune for the holders of it. I do not know that anything like this was the fact with the gentlemen who have testified in reference to the article of cotton; but I mention the incident to show the danger which is to be guarded against in cases where the personal interests of a witness may seriously affect his testimony.

Mr. HOOPER, of Massachusetts. I understood the gentleman from New York to say that American cotton at twenty-five cents per pound has the preference in the markets of the world over the cotton of any other country. I desire to inquire on what authority he makes that statement, as it seems to me

[Here the hammer fell.]

Mr. MORRILL obtained the floor. Mr. STEVENS. If the gentleman from Vermont will yield to me a moment, I desire to say, as some gentleman has spoken of cotton having been sold at six cents per pound, that gentlemen in whom I have full confidence, who have traveled through the South within the last two years, assure me that with free labor cotton can be everywhere produced there at one cent a pound.

Mr. WILSON, of Iowa. With the consent of the gentleman from Vermont, I wish to put a question or two to the advocates of the reduction of this tax, for the purpose of eliciting an answer upon a practical feature of this question.

The amendment which is proposed by my colleague [Mr. KASSON] will reduce the amount of tax proposed to be collected under the provisions of this bill to the extent of about nine million dollars. The amendment offered by the gentleman from Massachusetts [Mr. HOOPER] would reduce the amount to the extent of about twenty-seven million dollars. Now, I wish those

who advocate a reduction of this tax to state from what source they expect to make up that amount of money. The light which they may throw on this subject may have some effect upon my vote on these propositions relative to the tax on cotton.

The Committee of Ways and Means, in preparing this bill, have had in view the raising of a certain amount of revenue. If we reduce that amount by these amendments we must increase the tax upon some other articles or must include as subjects of taxation some artieles which are not now embraced in the bill. I hope, therefore, that those who favor this reduction will give us some light as to the artieles on which they propose an increase of taxation, as well as the articles not now included which they propose to embrace in the bill.

Mr. MORRILL. The gentleman from Iowa [Mr. KASSON] has made some allusion to the testimony taken before the revenue commission. That remark shows that the gentleman knows nothing at all about the character of the men who gave that testimony; for I undertake to say that there are no men in this country who stand higher where they are known-and they are widely known-than the gentlemen who gave their testimony before this commis

sion.

Let me make a single remark in relation to another point suggested by the gentleman from Iowa, the difficulty of collecting this tax from the people of the South. This bill has been prepared with great care, and is now presented after repeated revision. This tax will only be collected in the South when it goes to the large manufactories. There will not be a dollar collected of planters on their own plantations

on cotton for their own use. When it is removed from the district, however, then the tax will also be collected.

In conclusion let me say, if gentlemen strike out this amount, they must be prepared to levy an equal tax in some other quarter.

Mr. KASSON withdrew his amendment. Mr. RAYMOND. I move pro forma to raise the tax to six cents. I do it merely to get an opportunity of saying I think five cents, the amount of tax reported by the committee, is one which the cotton crop will bear, at present at least. The immense sum by which the revenue provided for will be reduced if any change is made in the tax on cotton, seems to be conclusive that no change should be made.

The testimony which the committee has taken and especially what the commission took during their investigation on this subject, if gentlemen will examine it, I think they will find is conclusive on this point that five cents is a very fair medium tax on cotton. The chairman of the committee has submitted some of this testimony. More of it is published in this summary of the report, appendix No. 3, from which extracts might be read to the House to throw light on this subject. But there is no time in this form of debate to go into that. Mr. Derby a recognized authority on cotton in England, says, in his opinion, an excise tax should be levied, and that five cents is not too high.

All who accede to this amount of tax desire a drawback should be made on manufactured goods when exported. It seems to me we cannot do better than follow the recommendation of the committee. If any member of the House has the facts which will overthrow the evidence upon which that recommendation is made, then we will have some substantial argument to go upon.

It is urged this will be a discouragement to cotton culture. If it were a necessity the tax now fixed should be a permanent tax there would be weight in that argument. No one supposes the price of cotton will rule lower for a year or two to come. It is not the expectation of those who are most directly concerned in the manufacture of cotton goods. If five cents is not too high now and should prove to be too high when the next Congress revises the internal revenue system it can be reduced.

We are fixing it upon the price cotton will rule for the next two years.

Mr. MORRILL. I move that the committee rise to close debate.

The motion was agreed to.

The committee accordingly rose; and the Speaker having resumed the chair, Mr. DAWES reported that the Committee of the Whole on the state of the Union had, according to order, had the Union generally under consideration, and particularly House bill No. 513, to amend an act entitled "An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes, approved June 30, 1864, and acts amendatory thereof, and had come to no resolution thereon.

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CLOSE OF DEBATE.

Mr. MORRILL moved that debate be closed in ten minutes on the pending section of the bill.

The motion was agreed to.

TAX BILL-AGAIN.

Mr. MORRILL moved that the rules be

suspended, and that the House resolve itself into the Committee of the Whole on the state of the Union on the special order.

The motion was agreed to.

So the rules were suspended; and the House accordingly resolved itself into the Committee of the Whole on the state of the Union, (Mr. DAWES in the chair,) and resumed the consideration of the special order, being a bill of the House (No. 513) to amend an act entitled "An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes," approved June 30, 1864, and acts amendatory thereof.

Mr. HOOPER, of Massachusetts. Mr. Chairman, the proposition, I understand now, is to raise the tax to six cents. The gentleman who made that proposition said, if the tax be reduced below five cents it will be necessary to substitute some other tax to make up that amount. I think the gentleman is mistaken. By the returns from the Treasury Department it appears the revenue for nine months of this year has been $410,000,000. The estimates for the remaining three months of the year, which have been made on a very low scale, give $91,000,000 additional, making $501,000,000 as the total revenue of the year. From the actual data, my own impression is, the revenue of the year will not be less than five hundred and twenty millions. The Secretary of the Treasury says that $350,000,000 of revenue will give him not less than fifty millions to appropriate toward the payment of the public debt next year; and he places that as the maximum amount of revenue which ought to be raised for the year commencing the 1st of July next.

Now, I say the reduction of tax we have proposed in this bill, without anything additional upon cotton, would not amount to the difference between $350,000,000 and the revenues of the present year, even with considerable allowance for the falling off of production the next year; and of that I have no apprehension. The South has come in, and we are preparing for thirty instead of twenty million people. I think, at the same rate of tax, the revenue for the next year will be as great as for the present year. I think we need have no apprehension on that score if we levy a tax on cotton as it was during the past year, and at the rate imposed while the war continued, a rate which the last Congress refused to increase after an animated debate.

I hope the tax will not be raised; that cotton, a southern production, will not be singled out as the only article upon which we shall impose increased taxation.

Mr. STEVENS. The gentleman has spoken of the amount of revenue. I wish to know whether he considers it exceptional, or does he suppose, if our present rate of tax remains, that amount will be realized? [Here the hammer fell.]

Mr. BOUTWELL. When I was upon the floor before, I made a statement as to the amount of cotton introduced into Great Britain for consumption; that while the amount of American cotton between the years 1861 and 1865 fell off more than one million and a half bales, the total decrease of cotton consumed in England was only three hundred and thirtysix thousand bales. I say, also, that by the same tables, between the years 1861 and 1865, all the cotton imported into England, a portion of which was exported to the Continent in 1861, was over a million, exclusive of American cotton, while in 1865 the amount of cotton imported into England other than American cotton was two million bales and over, showing in four years the amount of that cotton was double.

Mr. DODGE. It strikes me the subject before the House to-night has a wider range than has been given to it in this debate. While we are looking at the income to be derived from cotton alone, we must not forget cotton is the basis upon which our importations are to be made in the future, and on any provision we make for the payment of the public debt we look to the duties on imports. We cannot have large importations unless we have some large article to export. There is nothing more important, to my mind, than that our country should gain as soon as possible the position we held in European markets previous to the war. We must not forget during these five years most gigantic efforts have been made to produce cotton in India; that where they produced cotton at a great disadvantage on account of the distance and cost of transportation, now, by means of railroads built by English capital, they are producing immense amounts of cotton. It strikes me, as a matter of importance to the United States, we should, as soon as possible. return to our normal condition, and raise not only twenty-five hundred thousand but five mil lion bales of cotton. When we do that the price of cotton cannot be sustained above twelve and a half cents per pound.

Mr. MORRILL. I ask whether the gentleman does not know that they have raised cotton so extensively in India as to produce a famine because of the non-production of food, and that an order has also been issued by the Pacha of Egypt by which the land devoted to the culture of cotton will be largely restricted in amount for the same reasons.

Mr. DODGE. That was very natural. It arose from the high price of cotton and the immense stimulus given to its production. All that will be exported; they will not raise so much as to starve hereafter. We are to meet a tremendous competition from India, such as we have not met before; and I apprehend no act can be passed by this Congress which will give English capitalists more than the imposition of this tax.

Mr. BOUTWELL. I withdraw my amend ment to the amendment.

The question recurred on Mr. Ursox's amendment; and being put, the said amendment was disagreed to.

The second section was then read, as follows:

SEC. 2. And be it further enacted. That the aforesaid tax upon cotton shall be levied by the assessor on the producer, owner, or holder thereof. And said tax shall be paid to the collector of internal revenue within and for the collection district in which said cotton shall have been produced, and before the same shall have been removed therefrom, except where otherwise provided in this act; and every collector to whom any tax upon cotton shall be paid shall mark the bales or other packages upon which the tax shall have been paid, in such manner as may clearly indicate the payment thereof, and shall give to the owner or other person having charge of such cotton a permit for the removal of the same, stating therein the amount and payment of the tax, the time and place of payment, and the weight and marks upon the bales and packages, so that the same may be fully identified; and it shall be the duty of every such collector to keep clear and sufficient records of all such cotton inspected or marked, and of all marks and identifications thereof, and of all permits for the removal of the same, and of all his transactions relating thereto; and he shall make full returns thereof, monthly, to the Commissioner of Internal Revenue.

No amendments were offered..

The third section was read, as follows:

SEC. 3. And be it further enacted, That the Commissioner of Internal Revenue is hereby authorized to designate one or more places in each collection district where an assessor or an assistant assessor and a collector or deputy collector shall be located, and where cotton may be brought for the purpose of being weighed and appropriately marked: Provided. That it shall be lawful for the assessor or assistant assessor and the collector or deputy collector to assess and cause to be properly marked the cotton wherever it may be in said district, their necessary traveling expenses to and from said designated place, for that purpose, being paid by the owners thereof.

Mr. SHELLABARGER. I move to amend that section by striking out in the seventh line the words "lawful for" and inserting in lieu thereof the words "the duty of." Also, by inserting at the commencement of the tenth line the word "provided;" and also by striking out in the eleventh line the word "being," and inserting "be" in lieu thereof; so that it will read :

That the Commissioner of Internal Revenue is hereby authorized to designate one or more places in each collection district where an assessor or an assistant assessor and a collector or deputy collector shall be located, and where cotton may be brought for the purpose of being weighed and appropriately marked: Provided, That it shall be the duty of the assessor or assistant assessor and the collector or deputy collector to assess and cause to be properly marked the cotton wherever it may be in said district: Provided, Their necessary traveling expenses to and from said designated place, for that purpose, be paid by the owners thereof.

. Mr. MORRILL. I have no objection to that amendment.

The amendment was agreed to.

The fourth section was then read, as follows: SEC. 4. And be it further enacted, That all cotton having been weighed and marked as herein provided, and for which permits shall have been duly obtained of the assessor, may be removed from the district in which it has been produced to any one other district, without prepayment of the tax due thereon, upon the execution of such transportation bonds or other security, and in accordance with such regulations as shall be prescribed by the Commissioner of Internal Revenue, subject to the approval of the Secretary of the Treasury. The said cotton so removed shall be delivered to the collector of internal revenue or his deputy forthwith upon its arrival at its point of destination, and shall remain subject to his control until the taxes thereon shall have been paid; but nothing herein contained shall authorize any delay of the payment of said taxes for more than ninety days from the date of the permits; and when cotton shall have been weighed and marked for which a permit shall have been granted without prepayment of the tax, it shall be the duty of the assessor granting such permit to give immediate notice of such permit to the collector of internal revenue for the district to which said cotton is to be transported, and he shall also transmit therewith a statement of the taxes due thereon, and of the bonds or other securities for the payment thereof, and he shall make full returns and statements of the same to the Commissioner of Internal Revenue.

Mr. KASSON. It strikes me that there is an omission in that section to which I desire to call the attention of the chairman of the Committee of Ways and Means. It provides that the cotton shall remain under the control of the collector or his deputy until "the taxes thereon shall have been paid," but says nothing of the necessary charges of its custody. I move to insert after the word "thereon,' the thirteenth line, the words " or any necessary charges of custody thereof."

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The amendment was agreed to. Mr. KASSON. I now move to strike out the word "one" where it occurs in the fifth line, so that the section will read:

That all cotton having been weighed and marked as herein provided, and for which permits shall have been duly obtained of the assessor, may be removed from the district in which it has been produced to any other district, without prepayment of the tax due thereon, &c.

I would inquire if it was the intention of the Committee of Ways and Means not to allow more than one removal.

Mr. MORRILL. The design of the committee was to allow the cotton to be moved from the place of production without pre-payment of the tax to the port of destination, whether it be Savannah, New York, or Boston. Mr. KASSON. Let me say that an important question is involved in this matter. of very great importance, when you levy a tax upon the raw material before it gets into consumption, that you allow the utmost freedom of transit and changing of hands, so that the

It is

tax may be collected as near the point of consumption as possible. This was the principle settled by the former Committee of Ways and Means on questions of this kind; and I am very desirous that the chairman of the Committee of Ways and Means shall consent to such liberty in the transactions of commerce as would be involved in the authority to make any number of changes of location under the security of bonds and under regulations to be prescribed by the Secretary of the Treasury. This is a very heavy tax, and it is going to be very inconvenient to commerce unless you, as far as possible, emancipate commerce from unnecessary restrictions; and as the cotton cannot be removed from the district until a

permit is given, let there be free transit from one point to another in the district.

Mr. MORRILL. I think if the gentleman will read the section he will see that the party may move the cotton to any other district upon giving the proper bonds or other security.

Mr. KASSON. There may be one removal. I want more than that.

The amendment was disagreed to.

Section five was then read, as follows:

SEC. 5. And be it further enacted, That it shall be unlawful from and after the 1st day of September, 1866. for the owner, master, supercargo, agent, or other person having charge of any vessel, or for any railroad company, or other transportation company, or for any common carrier, or other person, to convey, or attempt to convey, or transport any cotton -the growth or produce of the United States-to any point out of the district in which it shall have been produced, unless each bale or package thereof shall have attached to or accompanying it the proper mark or evidence of the payment of the revenue tax and a permit of the collector for such removal. or the permit of the assessor, as herein before provided, under regulations of the Commissioner of Internal Revenue, subject to the approval of the Secretary of the Treasury. And any person or persons who shall violate the provisions of this act in this respect shall be liable to a penalty of $100 for each bale of cotton so conveyed or transported, or attempted to be conveyed or transported, or to imprisonment for not more than one year, or both; and all vessels and vehicles employed in such conveyance or transportation shall be liable to seizure and forfeiture by proceedings in any court of the United States having competent jurisdiction, And all cotton so shipped or attempted to be shipped or transported beyond the collection district in which it was produced, without payment of the tax, or the execution of such transportation bonds and other security, as provided in this act, shall be forfeited to the United States, and the proceeds thereof distributed according to the statute in like cases provided.

Mr. HOOPER, of Massachusetts. I move to amend this section by striking out after the words "United States," where they first occur, the words "to any point out of," and inserting the words "from any point in;" so that that portion of the section will read, "transport any cotton, the growth or produce of the United States, from any point in the district in which it shall have been produced,' &c.

And I also move to amend by inserting after the words "subject to the approval of the Secretary of the Treasury," the following:

Nor to convey or transport any cotton from any State, in which cotton is produced, to any port or place within the United States without a certificate from the collector of internal revenue of the district from which it was brought, and such other evidence as the Secretary of the Treasury may prescribe, that the tax has been paid thereon; and such certificate and evidence as aforesaid shall be furnished to the collector of the district to which it is transported, and his permit obtained before landing, discharging, or delivering such cotton at the place to which it is transported as aforesaid.

As the section now stands, without this amendment, no railroad company, or common carrier, or any party could transport cotton in any part of the United States without having a permit from the collector of the district from which the cotton is taken, to make the transportation. We have provided in the previous sections for the tax on the cotton being paid before it is shipped from the State where the cotton is produced. When that shipment is made, this amendment proposes that evidence shall be had that the tax has been duly paid before the shipment was made. My object is that when the cotton arrives at New York, or Boston, or Cincinnati, the transportation of it shall be free like that of any other article; that the railroad that conveys it shall not be respon

sible for the fact that the tax has not been paid upon it.

I believe this amendment has the sanction of the Committee of Ways and Means.

Mr. MORRILL. I am not quite sure that I fully understand the amendment of the gentleman from Massachusetts, [Mr. HOOPER.] I will ask the gentleman if his amendment will cut off the right of transporting cotton in bond from one port to another.

Mr. HOOPER, of Massachusetts. There has been no power given by the previous sections to transport from one port to another. The power given in section four is to transport from the district where the cotton is produced to any one other district, meaning to cover the district from whence the cotton is shipped. For instance, cotton produced anywhere in Alabama or Louisiana may be sent from the district where it is produced to the port of New Orleans, from which it is usually shipped, and the tax on the cotton can be paid at New Orleans.

Mr. WILSON, of Iowa. I would inquire of the gentleman if the latter part of section five does not provide that this transportation may be in bond. The amendment which the gentleman proposes requires the tax to be paid before any person can transport cotton from the district.

Mr. HOOPER, of Massachusetts. the district where it is produced.

From

Mr. WILSON, of Iowa. Yes, sir; from the district where it is produced. I understand that under the fourth section cotton raised in Tennessee may be transported to Charleston, South Carolina, in bond, and the tax there paid. But under the amendment of the gentleman from Massachusetts [Mr. HOOPER] the tax must be paid before the shipment is made.

Mr. HOOPER, of Massachusetts. I beg the gentleman's pardon. The amendment allows the shipment to be made from Tennessee to Charleston. But it is confined to one district, the district of Charleston. There the duty must be paid. When it is shipped from Charleston to go to the North, to New York for example, a permit or certificate from the collector at Charleston must be obtained, and shown to the collector at New York to satisfy him that the tax on this cotton had been paid when it was shipped from Charleston. Then the collector at New York gives his permit to land it, and after that it is free to be transported anywhere, without imposing upon the railroad, the wagons, or the vessel the trouble of ascer taining that the tax has been paid.

Mr. KASSON. Let me ask the gentleman from Massachusetts whether it will not be necessary in that case to make provision for properly stamping or certifying the bale as free. We have these other provisions requiring that it shall be verified as liable to tax; and now the gentleman proposes that at a certain time it shall be discharged from that liability. But in the same market there will be other bales which will be liable to tax; and how will the discrimination be made after the cotton once leaves the ship?

Mr. HOOPER, of Massachusetts. In reply to that question, I beg to call the gentleman's attention to the fact that all the cotton has to be inspected and marked when the tax is paid, or before it is paid. My object is to provide for what actually occurs, that in handling these bales in the course of the different shipments these marks become erased. What I propose is that after the cotton arrives at New York or elsewhere in the North, it shall be assumed that the tax has been paid although the cotton may not have these marks upon it.

I am told that now, by the regulation, every bale of cotton must have attached to it a tag showing that the tax has been paid. But in point of fact those tags get destroyed in the course of the handling and shipment of the article. If you should examine the cotton in the factories of New England you would find that nine bales out of ten were without tags, or any other evidence that the tax had been paid. Under the bill, as it reads without the

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