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the tax included, there shall be a tax of only | two dollars, and that where the market value exceeds eight dollars, and is not over twelve dollars, the tax shall be four dollars. It seems to me that this ought to meet the requirements of those sections of the country that produce tobacco for the manufacture of cheap cigars. It seems to me this arrangement will meet all the wants of the country.

Mr. MORRILL. I withdraw my amendment. Mr. SCHENCK. I wish to modify my amendment before the vote is taken by inserting the word "other" at the end of the eleventh line. I now move, pro forma, to strike out the last words of the paragraph, with a view simply to say I do not appreciate the force of the argument which objects to ascertaining the value exclusive of the tax. The gentleman says there is no market value until the tax is laid and included in the computation. He says there must be first a sale and the tax included to get up the market value. I think so long as the rule of subtraction is to be found in our arithmetics we can find what is the market value exclusive of so much deducted from the market value which may be the amount of the tax as easily as we can put the tax on. As a gentleman near me says, it is only a question of arithmetic, of simple subtraction and addition, and nothing else.

But the gentleman from Vermont [Mr. MORRILL] says it will open the door to fraud; and so does the experienced gentleman from Massachusetts [Mr. BOUTWELL] who has just addressed the House. Why? Because we have not provided sufficiently against fraud in this legislation heretofore. The other day some gentlemen representing a New York tobacco interest called on me and finding I was not much impressed with the force of their argument, said, 'If you will make this particular classification we will evade it, as we have done before." "How?" I inquired. "We will sell to our journeymen the leaf tobacco, let them manufacture it, then we will buy it back for just as much as will pay them reasonably their wages and call that the market value, and then we will sell for whatever we can get for it and pay the tax according to that market value."

Mr. STEVENS. That is the way in which it was done before.

Mr. SCHENCK. I say, therefore, all that is needed is to classify or adopt something approaching the ad valorem system, and have appraisements made so as to prevent these fraudulent appraisements. I will read an amendment I propose to offer further on in the bill as an amendment to the amendment intended to be moved by the gentleman from Wisconsin, [Mr. PAINE.] He proposes to require the appraisement shall be made by the inspecting and appraising officers under certain regulations, so as to prevent these fraudulent arrangements between the manufacturer and his journeymen. I propose to add to that the following:

And in addition to other regulations it shall be the duty of the inspector or assessor who appraises any cigars, cigarettes, or cheroots, to examine the manufacturer thereof or his agent under oath, which oath shall be administered by the inspecting and appraising officer and reduced to writing, and. signed by such manufacturer or his agent with a view to ascertaining whether such manufacturer has any interest direct or indirect in any sale that has been made or any resale to be made of said cigars, cigarettes, or cheroots, by the concealment of which he seeks to obtain a false, fraudulent, or deceptive appraisement.

I know oaths in custom-houses and under excise laws are taken most loosely and seem to have but little binding force ordinarily upon consciences; but oaths may be prescribed connected with a system of appraisement, and the party shall endanger himself and put himself in jeopardy of the penitentiary if he undertakes to commit a fraud.

[Here the hammer fell.]

Mr. WASHBURN, of Massachusetts. Mr. Chairman, it seems to me some gentlemen have been laboring under erroneous ideas. I believe if the committee generally understand the question they will be in favor of that form of tax that will produce the most revenue. 39TH CONG. 1ST SESS.-No. 173.

Now, for one, whatever course may be adopted, if we can encourage our home industry in producing the article by a certain system of taxation and at the same time secure the most revenue I believe the great majority will be in favor of that system whatever it may be. It is true that this or that individual may be in favor of a particular plan, because it is bounded by his own particular section. But I wish the committee for a moment to look at the amendment of the gentleman from Ohio, [Mr. SCHENCK.] The gentleman complains, as I understand him, of the present tax on account of the fact that the article of tobacco which sells for ten cents a pound is taxed the same as that which sells for twenty cents. But what is the remedy he proposes? The gentleman's amendment does not obviate the difficulty. He proposes by his amendment to tax the individual who manufactures cigars worth $12 50 a thousand just as much as the one who manfactures cigars worth twenty dollars. Or if one manufacturer makes cigars worth forty dollars a thousand and another makes cigars worth forty-one dollars the gentleman would make the latter pay forty dollars extra tax, thereby carrying out the very plan and system which he objects to under the present law.

The gentleman says that under the present law he who raises tobacco worth ten cents a pound pays the same tax as he who raises tobacco worth twenty cents. And yet he brings in an amendment which proposes that the man who manufactures cigars worth forty dollars a thousand shall pay twenty dollars tax, but he who makes cigars worth $40 50 a thousand shall pay forty dollars tax. What is that but introducing the same principle which he objects to under the present law?

I wish to say a word in regard to the statement of the gentleman from Pennsylvania, [Mr. STEVENS.] He says that the system which has been adopted has destroyed the trade in Pennsylvania, while it had operated in favor of tobacco-growers in Connecticut. Now, the fact is that in the Connecticut valley there was only one half the tobacco raised last year that was raised the year before, and scarcely a pound of it has been sold. While the gentleman's constituents complain about having their tobacco on hand, and not being able to sell it, the same fact is true in regard to the raisers of tobacco through the Connecticut valley, and instead of its being worth forty to fifty cents a pound they would be glad to sell it now at from twenty to twenty-five

cents.

Mr. STEVENS. I would inquire whether they are planting tobacco this year.

Mr. WASHBURN, of Massachusetts. They did not plant last year, owing to the tax, but about one half what they planted the previous year, and the probability is this year they will not plant more than one half what they did last year. The gentleman asks, where is the difficulty? The constituents of the gentlemen from the West have their tobacco on hand and have not been able to sell it. The same is true in the Connecticut valley. Where, then, is the difficulty? It lies, not in the excess of tax, but under the tariff. As has been demonstrated during the past year imported cigars pay a tax of about ten dollars a thousand, and that is just about the amount of the excise tax. Accordingly they have been imported from Havana cheaper than the manufacturer can afford them here. And thus foreign cigars have come in and have taken the place of our own manufactured cigars. There is the difficulty. What, then, is the remedy? Raise the tariff. Make it so that he who uses tobacco shall be obliged to use the American production, and then you will find a very great difference in the state of things.

But now look at the bill as it stands. The fine-cut chewing-tobacco of about the same quality that is used in making the best cigars pays a tax of forty cents a pound, and it takes of this tobacco after the waste is thrown out about ten pounds to make a thousand cigars.

Now, under the present tax, take the very best cigars that are manufactured and you tax it a dollar a pound, while the same article in the form of fine-cut chewing-tobacco pays only forty cents.

[Here the hammer fell.]

Mr. PAINE. I hope the gentleman from Ohio [Mr. SCHENCK] will accept the amendment of the gentleman from Pennsylvania, [Mr. STEVENS.] It seems to me that it must be entirely acceptable to him in principle.

Mr. SCHENCK. After consultation with our friends from the West, I have concluded to accept the amendment proposed to my amendment by the gentleman from Pennsylvania.

Mr. SCHENCK's amendment as modified was read, as follows:

On cigarettes, or small cigars, made of tobacco, inclosed in a wrapper or binder, and not over three and a half inches in length, and on cigars made with twisted heads, the market value of which (exclusive of the tax) is not over six dollars per thousand, a tax of two dollars per thousand.

On all other cigars four dollars per thousand and forty per cent. ad valorem: Provided, That in assessing the said ad valorem duty the first ten dollars valuation shall not be assessed.

Mr. HUBBARD, of Connecticut. I move to strike out the last word of that amendment. I have felt some regret, Mr. Chairman, at hearing the gentleman from Pennsylvania [Mr. STEVENS] and the gentleman from Ohio [Mr. SCHENCK] and the gentleman from Wisconsin [Mr. PAINE] speak upon this question, as it seemed to me, under the influence of localities. The gentlemen seemed to vie with each other in the ambition to advertise to the country through the columns of the Globe that they grow a very inferior quality of tobacco in their States. [Laughter.] One would be satisfied, from listening to their arguments, that the article. which they raise in their respective States is hardly fit to be boiled up into a concoction to kill the nits on their calves. [Laughter.]

Mr. STEVENS. Let me say to my friend from Connecticut that I admit that they raise tobacco and onions in his State far superior to those we raise in Pennsylvania.

Mr. HUBBARD, of Connecticut. If that be so, I want to know why it is that the gentleman envies us the superiority of our prod

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Mr. DAVIS 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 pending question was on the following amendment offered by Mr. SCHENCK: Strike out from line twenty-two hundred and nine to twenty-two hundred and eighteen inclusive, and insert in lieu thereof the following:

On cigarettes, or small cigars, made of tobacco, inclosed in a wrapper or binder, and not over three and a half inches in length, and on cigars made with twisted heads, the market value of which (exclusive of the tax) is not over six dollars per thousand, a tax of two dollars per thousand.

On all other cigars four dollars per thousand, and forty per cent. ad valorem, exclusive of the tax: Provided, That in assessing the said ad valorem duty the first ten dollars valuation shall not be assessed.

Mr. SCHENCK. Having accepted the amendment proposed to my amendment by the gentleman from Pennsylvania, [Mr. STEVENS,]

all that confusion which arose from having the expression "exclusive of the tax" instead of "the tax inclusive" is done away with. I am willing, therefore, to accommodate that portion of my amendment which remains, which is only one clause, to the ideas of the chairman of the Committee of Ways and Means, and although he is not here I will make that concession to him, and modify my amendment to that it shall read "the tax included," and provide that the tax shall be eight dollars instead of six dollars.

Mr. HUBBARD, of Connecticut. Not to be outdone in generosity by my friend, the learned gentleman from Pennsylvania, [Mr. STEVENS,] who admitted this afternoon that my State can beat his in growing onions, I will admit before the whole House that Pennsylvania can beat Connecticut in raising cabbages. [Laughter.] And I will admit that my learned friend represents the largest onion-consuming constituency in the world, as the uncooked article when sliced up is so very nice to flavor sour-krout. [Renewed laughter.] And I will say in the hearing of my friend from Wisconsin [Mr. SLOAN] that his State has very many advantages over mine, of which he has cause to be proud. His constituents can raise, peradventure, a hundred bushels of corn per acre, while mine can raise scarcely ten bushels per acre. I know very well that his constituents pay an income tax upon this, but they do not pay any tax unless their gains shall exceed $1,000 a year.

I hardly know what acknowledgment I ought to make to the two learned gentlemen from Ohio [Mr. SCHENCK and Mr. LAWRENCE] for having advertised Connecticut tobacco, unless I admit what is generally conceded and understood, that the State of Ohio is great, if not the great- | est in the business of producing wines.

I ought, perhaps, to apologize to the House for having detained them so long with these remarks. But the fault lies at the door of the gentleman from Pennsylvania, [Mr. STEVENS,] for he introduced into the debate the savory subject of leeks or onions, and I was compelled to reply to him.

Now, the State of Connecticut does not seek to obtain any advantage over the middle or western States; nor is she willing that they shall obtain any unjust advantage over her. This paragraph, as amended on the motion of the chairman of the Committee of Ways and Means, [Mr. MORRILL,] if I understand it, does not confer any advantages at all upon Connecticut with reference to this article of tobacco. And if the people of Connecticut, by their diligence and industry, have succeeded by long experience in raising a better article of tobacco upon her sterile soil, covered with rock, than can be raised on the rich soil of Pennsylvania, all I can say is, that other parts of the country, if opened to fair competition, will, within a short time, within a year or two, be enabled to go ahead of Connecticut in this interest. And I think it would be no more than just for me to say in the hearing of the gentleman from Pennsylvania [Mr. STEVENS] that if the rich soil of his State is not adapted to the raising of tobacco, then they ought to abandon that business and raise more corn and more wheat.

[Here the hammer fell.]

The question was upon the amendment of Mr. SCHENCK as modified at the suggestion of Mr. STEVENS.

Mr. PAINE. I rise to propose an amendment to which the gentleman from Ohio [Mr. SCHENCK] referred this afternoon. His amendment having been modified by accepting the amendment of the gentleman from Pennsylvania, [Mr. STEVENS,] I move to amend it by adding to it the following:

And the Secretary of the Treasury shall prescribe

such regulations for the inspection and valuation of cigars, cheroots, and cigarettes, and the collection of the tax thereon, as shall in his judgment be most effective in the prevention of inequalities and frauds in the payment of such tax: Provided, That such regulations shall not be in violation of law.

Mr. SCHENCK. I have an amendment to

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Wisconsin [Mr. PAINE] which I understand he is willing to accept.

lation for preventing the soil of the Connecticut valley from growing better tobacco than the Mr. STEVENS. I would suggest to the western soil. Now, seems to me, that instead gentleman from Wisconsin [Mr. PAINE] that of varying your legislation, as you do, session he better not embarrass the amendment of the after session, for the purpose of accommodatgentleman from Ohio [Mr. SCHENCK] by offering some local interests, you should wait until || ing his amendment at this time. He can offer the laws of trade can regulate all the discrepit afterward as a new amendment if this shall ancies of which you complain. I know very be adopted. well that the adoption of the amendment proposed by the gentleman from Pennsylvania will utterly destroy the manufacture of the higher grades of cigars and turn the whole cigar interest of the country into the manufacture of cheap cigars.

Mr. PAINE. I will withdraw my amendment for the present.

The question recurred upon the amendment of Mr. SCHENCK.

Mr. DEMING. I move, pro formâ, to strike out the word "ten" and insert "five." So much has been said in this debate, since the subject of the battle of cigars has been introduced, about Connecticut tobacco, Connecticut seed leaf, and Connecticut cigars, that a stranger present in this Hall would suppose that it was the purpose of legislation on internal revenue here to strike down an interest which is assumed to be a flourishing one.

Now, it seems to me that if, in spite of all the changeable legislation upon the subject of tobacco and cigars, the Connecticut tobacco interest has contrived to live, but live at a "poor, dying rate," this is no reason why it should be either envied or assailed.

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I withdraw my amendment.

Mr. HOOPER, of Massachusetts. I move to amend the amendment of the gentleman from Ohio by striking it out and inserting in lieu thereof the following:

On cigarettes, or small cigars, made of tobacco, inclosed in a wrapper or binder, and not over three and a half inches in length, and on cigars made with twisted heads and on cheroots and on cigars known as short-sixes, the market value of which is not over eight dollars per thousand, a tax of two dollars per thousand.

On all other cigarettes and cigars, the market value of which is over eight dollars and is not over twelve dollars per thousand, a tax of four dollars per thousand.

On all other cigarettes and cigars a tax of four dollars per thousand, and in addition forty per cent, ad valorem on the value beyond twelve dollars per thousand, to be assessed on the excess beyond twelve dollars per thousand.

It has been stated here, and I presume stated correctly, that in Ohio and in the Northwest the tobacco and cigar interests are entirely broken down and dilapidated. We have even I believe the amendment I offer covers been told by one gentleman that in his city of the object of the gentleman from Ohio [Mr. thirty thousand inhabitants, where, previous SCHENCK] and the gentleman from Pennsyl to this taxation, they manufactured nine mil-vania, [Mr. STEVENS.] I think it speaks for lion cigars annually, they do not manufacture itself, and I will make no further remarks. even one at the present time. Well, now, I am ready to assume all this as true. But I know very well this is the universal cry and the universal appeal of all interests that are attempting to escape taxation; and I must accept all these statements of constituents with many grains

of allowance.

It has also been assumed here that the tobacco interest of the Connecticut valley is in a vastly flourishing condition, so as to excite the envy of the Northwest. I wish to state that this assumption is entirely unfounded-that the tobacco and cigar interests of the Connecticut valley were never more depressed than they are at the present time, and that we have no reason whatever to exult over our western brethren. The truth is that the tobacco interest in this country universally is depressed-the result, in my judgment, of four causes: first, excessive taxation; second, a low tariff; third, the poor condition of last year's crops; and fourth, the excessive influx of southern tobacco in consequence of the cessation of hostilities. The remedy is, not to tinker your revenue law every session for the purpose of elevating the interest of one section of the country to the depression of another, but in the first place to raise the tariff, and in the next place to wait for better crops and until the laws of trade shall regulate a glutted market.

Let me say, in regard to the amendment proposed by my distinguished friend from Pennsylvania, which has been accepted by my friend from Ohio, that its effect will be to destroy entirely the manufacture of the higher grades of cigars. But notwithstanding this taxation, we can enter into competition with you of the West in the manufacture of the lower grades of cigars. I doubt very seriously whether by this taxation you are promoting your own interests; for the Connecticut seed leaf, which is the subject of so much envy here, goes in large quantities to Cincinnati, to Chicago, to Detroit, and is there employed by cigar manufacturers for the purpose of manufacturing the higher grades of cigars. It goes also to Philadelphia and to Pittsburg; and while my distinguished friends are attempting to protect the cigar interests of some country districts, they are breaking up the manufacture of the higher grades of cigars in the cities. It is fortunate for us that no system of legislation can render western tobacco as marketable as eastern to

offer to the amendment of the gentleman from bacco, unless you adopt some system of legis

Mr. STEVENS. It does not quite come up to my idea, because it says twelve instead of ten. It makes the tax more severe than I would make it. I ask my friend from Ohio whether it does not give us as much as we can get. I am willing to accept it.

Mr. SCHENCK. I am inclined to think it effects the object. It affords a little more room for the manufacture of cigars. I accept it with the understanding that it shall remain open to my friend from Wisconsin [Mr. PAINE] to make his amendment.

Mr. PAINE. I hope my friend from Ohio will accept the amendment.

Mr. SCHENCK. I accept it, and yield the floor to the gentleman from Wisconsin to offer his amendment in regard to appraisement, without which I think this legislation will not be perfect.

Mr. PAINE. I agree with the gentleman from Pennsylvania. I had better offer my amendment hereafter as an independent proposition. I will offer it hereafter, when the gentleman can submit his amendment to the amendment.

Mr. MORRILL. Mr. Chairman, in the multitude of amendments I fail to see any improvement of the bill reported to the House, while I feel quite sure the gentleman from Ohio [Mr. SCHENCK] and his coadjutors are destined to triumph in anything he shall demand. I shall content myself, so far as representing the Committee of Ways and Means, in having a vote in the House on whatever proposition may be introduced into the bill.

I am quite satisfied gentlemen are mistaken that it is the excise law which has really caused the depression in the tobacco trade. It is universal. It pervades all sections of the country. It is as much felt in the Connecticut valley as in Ohio or in Wisconsin. The difficulty, whatever gentlemen may say, was that at the close of the war, a large amount of tobacco was let loose from the South. Gentlemen may suppose tobacco can be grown in latitude fortyfive or forty as cheaply as at the South, but they are mistaken. They will always produce tobacco at the South, especially the lower grades, cheaper than it can be done at the North. It has been in consequence of this influx of tobacco from the South that the tobacco trade has been depressed.

I will say, in addition, that the provision these gentlemen wish to put upon the law now exists,

and hence our woes, for the cigars imported are imported under the lowest valuation. We have no cigars paying a duty above the rate of fifteen dollars. It will operate in the same way if this provision be adopted.

There is another thing in regard to the introduction of foreign cigars. They are smuggled in. I wish some process could be found out by which we could prevent the large amount of smuggling now practiced. I have had occasion to say before the amount of smuggling of cigars is immense. I believe the regular steamships from New York to Cuba smuggle in more cigars than pay the duty.

And I will say further, in relation to this subject of cigars, that gentlemen must understand the pipe has grown somewhat more fashionable since the war, and that many who used cigars now use pipes.

[Here the hammer fell.]

Mr. STEVENS. Imove pro forma to strike out the word "the."

I want to state to the gentleman from Vermont facts are better than argument. He attributes the depression of the tobacco trade to the conclusion of the war in the South. If he will inquire he will find that in August, nine months before the war closed, every tobacco shop in my county shut up. There was not a single man who did not sell out because of the law.

Mr. SCHENCK. The tobacco of the South no more comes in competition with ours than cotton with wheat. Theirs is a gummy tobacco, used for plug and cavendish, and not fit for smoking, while ours is fit for smoking and not for chewing-tobacco.

Mr. STEVENS. It is very clear that the tobacco which we raise in Pennsylvania and Ohio, and all the West except Kentucky, is what is called the seed leaf, and the cigars made of that tobacco sell at twenty dollars a thousand, and it costs $12 50 to make them, independent of the tax. But the tobacco of Kentucky, except the Clarksville tobacco, is always in hogsheads for exportation, and does not come in competition with the seed leaf of any kind whatever.

Mr. GRISWOLD. I desire to ask the gentleman from Pennsylvania whether at the time of the depression to which he alludes there was not in the market a greater amount of manufactured cigars than there ever had been before, manufactured in anticipation of the tax.

Mr. STEVENS. Undoubtedly, but could they have gone on and made them under the ad valorem tax? As it was, it was impossible to go on because the direct tax, together with the cost, was more than they could sell the cigars for.

Mr. MORRILL. I want to ask the gentleman a question. Does he not know the fact that in every instance where we increase largely our duties upon any article the effect of it is to stop or check business for a time?

Mr. STEVENS. No, my friend behind me said it was at an end. I believe the war is just beginning-the copperheads on one side and the patriot armies on the other. [Laughter.] [Here the hammer fell.]

Mr. WASHBURN, of Massachusetts. I wish to call the attention of the House to some statistics. Some were given by the gentleman from Wisconsin, [Mr. PAINE.] I have some here coming from the internal revenue department, which I think will not be disputed.

The number of cigars manufactured under a graduated scale, similar to the one introduced by the gentleman from Ohio, [Mr. SCHENCK,] that is, under the law which was passed two years ago, was 530,491,902. Under that graduated scale the revenue derived was $2,667,405 19. Last year, under the specific duty of ten dollars, the whole number of cigars manufactured was 258,086,763. It will be noticed that that is less than half the number manufactured two years ago. But the revenue derived last year from less than half the quantity manufactured the year before was $2,580,867 63. In a word, to sum it all up, members of the House will see that less than half the quantity produced an equal amount of revenue under this specific act.

Now, I wish to state this to show that what I said when I was up before to-day was correct. No person in this House, probably, believes that a less number of cigars were smoked during the past year than the year before. That a far less number was smoked two years ago than were used previous to any tax, no one will deny. But that the number smoked has decreased during the past year, when the tax was simply ten dollars a thousand, no one will maintain. How, then, do you account for the discrepancy that less than one half the quantity of cigars have paid the duty? Simply from the fact that such has been your tariff that a great amount of cigars used in this country have come in under a duty of || ten dollars a thousand, making the tariff correspond to the excise tax. Accordingly, about half the cigars used during the past year have been manufactured abroad and imported into this country.

Well, the result has been this: that the raisers of tobacco not only in the West, but also in the Connecticut valley, have been unable to sell their tobacco to the manufacturer. When they go to him and ask him to purchase their tobacco the manufacturer in New York says, "No, we can import cigars at a less price than we can purchase your tobacco and pay the tax." Why? Because the tariff duty costs about the same as the excise tax, and cigars can be made at a less cost in foreign countries. Accordingly, the imported cigars take the lead in the market. But although we have manufactured half the quantity we have received the same amount of revenue as we had under the old law.

Now, what is the remedy for this evil? It is under the tariff. And here is a point upon which we shall not be divided by any sectional interest. When the question comes up in re

Mr. STEVENS. I know it is so, and therefore the best way to get a greater number of cigars made is to take off the tax altogether. Under the prior law there were over five hundred million cigars made. Last year theregard to the tariff, if there is a manufacture that were but three hundred and twenty-seven millions returned.

Mr. GRISWOLD. I would ask the gentleman if it is not the fact that cigars are offered in New York at this time at a less price than they can possibly be produced in this country.

Mr. STEVENS. I cannot tell about that. It may be true. I suppose there is a great deal of smuggling in New York. I have no doubt they carry it on to a considerable extent.

Mr. MORRILL. Now that the war is at an end.

Mr. RANDALL, of Pennsylvania. I congratulate the gentleman from Pennsylvania [Mr. STEVENS] on the announcement he has just made, that the war is at an end. [Laughter.]

Mr. STEVENS. is not at an end. Mr. RANDALL, of Pennsylvania. You said so.

No, sir; I understand it

is confined to New England, Pennsylvania, or any other particular section, the question is forced upon us as a sectional one, and it is objected that we are building up one section at the expense of another. I rejoice to know that this is a question in which every portion of the West as well as New England, Pennsylvania, and New York is interested. I doubt not we will unite together on this question, and that the tariff will be fixed as it should be, and we shall all agree at least on one point, namely, that if the community will use tobacco, if they will smoke and chew, let them use our own productions, let them use those we raise on our own soil, whether in the West or in the East.

One word further. If the tax is to be altered, instead of being forty per cent. ad valorem, as my colleague [Mr. HOOPER] proposes by his amendment, if you are going to get a revenue it ought not to be more than twenty per cent.

Just look at the tax on smoking-tobacco. The amendment which has been adopted is ten cents a pound. Now, the man who raises tobacco can sell it for smoking-tobacco, the same quality which he has to pay four dollars a pound for if it is manufactured into cigars, and pay his ten cents a pound. Now, I wish to call the attention of every member of the House to this fact, that those who use this article when they can get it by paying ten or twenty cents a pound and use it in this manner, are not going to pay from two to four dollars a pound manufactured into cigars.

[Here the hammer fell.]

Mr. STEVENS. I withdraw the amend ment.

Mr. HOOPER, of Massachusetts. I renew the amendment of the gentleman from Pennsylvania, merely for the purpose of saying that I listened with great interest to the remarks made by my colleague, [Mr. WASHBURN,] because he has vindicated the importance of an amendment which I intended to propose before. the section was passed. I will read it now for information:

Provided, That the tax assessed and paid on cigars, cheroots, and cigarettes of domestic manufacture under this act shall also be assessed and paid on all imported cigars in addition to any duties imposed on the same under the tariff.

That I think will obviate the objection raised by my colleague. I wish to refer to another remark of my colleague in reference to the effect of the different rates of duties on cigars. He will find on looking at the return from the internal revenue department that all the cigars manufactured were gradually getting into the lowest rate of duty; that manufacturers were getting up cigars upon which the duty assessed was only three dollars.

Will

Mr. WASHBURN, of Massachusetts. my colleague [Mr. HOOPER] allow me to ask him a question?

Mr. HOOPER, of Massachusetts. tainly.

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Mr. WASHBURN, of Massachusetts. desire to ask my colleague this question: as he has proposed an ad valorem duty, then why not dispense with any other duty but a simple rate of ad valorem duty, so that we can understand it? Put all upon the single basis of thirty per cent. ad valorem duty, and have no other duty. Then if cigars cost ten dollars a thousand, they will pay thirty per cent. upon their value; if they cost fifty dollars a thousand they will also pay thirty per cent. upon their value. If you are going to have an ad valorem principle why not have one single rate of duty? Mr. STEVENS. If the gentleman from Massachusetts [Mr. HOOPER] will allow me to answer his colleague, [Mr. WASHBURN,] I will say that this is prepared with a view to prevent frauds where the price is less than twelve dollars a thousand. The rest pay a tax of forty per cent. ad valorem on the excess over twelve dollars a thousand.

Mr. HOOPER, of Massachusetts. I think my friend from Pennsylvania [Mr. STEVENS] has answered the question so successfully that I need say nothing further in reply to it.

But I wish to call attention to the effect of the valuation under the old system; if cigars were valued at twelve dollars a thousand, as it stands in the bill, the duty is four dollars a thousand, leaving net to the manufacturer the sum of eight dollars. If the value of the cigars is thirteen dollars, then the duty is ten dollars per thousand, leaving only three dollars to the manufacturer. Therefore if he increases the quality of his cigars so as to make them worth a dollar more than those he pays a tax of four dollars upon, he will get five dollars less for his own use than for the cheaper cigars, for by so doing he brings them under the operation of a higher rate of duty. And this ad valorem duty obviates that objection.

The great objection to the old system of fixing the duty upon the valuation was that you had to leave a space of five, six, or ten dollars to take up the difference in the value. Now, let us refer to the amendment of the gentleman from Ohio [Mr. SCHENCK] as at first proposed.

It

66 on cigars valued over twelve and not says, over twenty dollars, a tax of ten dollars per thousand." That would leave the cigar costing thirteen, fourteen, sixteen, eighteen, or nineteen dollars a thousand to bring less to the manufacturer than the cigar costing twelve dollars a thousand. Again, he says, 66 on cigars valued at over twenty and not over forty dollars, a tax of twenty dollars per thousand." And there the difficulty is increased. On a cigar costing twenty-five dollars a thousand the manufacturer would realize only five dollars besides the tax. This forty per cent. tax obviates that difficulty.

[Here the hammer fell.]

Mr. CONKLING obtained the floor, and said: I will yield to the gentleman from Massachusetts, [Mr. HOOPER,] for I desire to hear what he has to say on this subject.

Mr. HOOPER, of Massachusetts. I do not know but what I have said about all that I

desired to say. I merely wanted to call the attention of members to the objections to the change of duty with the change of valuation. Until the value of the cigars had very much increased, without reaching the next higher rate of duty, the manufacturer received much less from them in consequence of their being subject to a higher rate of duty. If members have listened to me I think they will perceive the weight of those objections, and that this system now proposed will entirely obviate the difficulty.

Mr. CONKLING. I would ask that the amendment of the gentleman from Massachusetts [Mr. HOOPER] be again read.

The CHAIRMAN. The gentleman from Massachusetts, [Mr. HOOPER,] as the Chair understands, merely read his amendment for information, and not for the action of the House.

Mr. CONKLING. I mean the one that he offered, and which the gentleman from Ohio [Mr. SCHENCK] accepted.

The amendment was again read.

Mr. MORRILL. I would like to inquire of the gentleman from Massachusetts [Mr. HOOPER whether the tax is to be collected on the market value including the tax, or excluding the tax.

If the

Mr. HOOPER, of Massachusetts. gentleman from Vermont [Mr. MORRILL] will tell me how it is in regard to every other article in the tax bill I will answer his question. I think in reference to every other article in the tax bill it is not so stated whether the tax is included in or excluded from the value. It is so in regard to the tax on manufactures of every description.

Mr. MORRILL. I beg the gentleman's pardon; the tax on manufactures is on the amount of sales.

Mr. STEVENS. How is it on diamonds and other precious stones?

Mr. MORRILL. On the sales.

Mr. HOOPER, of Massachusetts. Then I suppose the market value of cigars would be fixed by the actual sales, as there is a section in the bill which provides that the taxes shall be paid on the sales.

Mr. MORRILL. I perceive after all the resolution and tenacity of purpose of my friend from Ohio, [Mr. SCHENCK,] that it was not so much for the interest of Ohio and other interests that he was suffering so much grief; but it was because other parts of the country were happy; it is that which made him so miserable. It was for the purpose of getting a little more tax laid upon Connecticut seed-leaf tobacco. However, I think it is useless for us to continue this argument any further. I have little doubt the amendment will carry. I move that the committee rise for the purpose of terminating debate upon this paragraph and the pending amendments.

The motion was agreed to.

So the committee rose; and the Speaker having resumed the chair, Mr. DAWES reported that the Committee of the Whole on the state of the Union had had under consideration the Union generally, and particularly the special

order, being 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, and had come to no resolution thereon.

CLOSE OF DEBATE.

Mr. MORRILL. I move that all debate in Committee of the Whole on the state of the Union on the pending paragraph of the special order terminate in one half minute after the committee shall resume the consideration of the subject.

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 orner.

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 pending question was upon the motion of Mr. SCHENCK to strike out the paragraphs relating to cigars, cheroots, &c., and insert the following in lieu thereof:

On cigarettes, or small cigars, made of tobacco, inclosed in a wrapper or binder, of not over three and a half inches in length, and on cigars made with twisted heads, and on cheroots and on cigars known as short-sixes, the market value of which is not over eight dollars per thousand, a tax of two dollars per thousand.

On all other cigarettes or cigars, the market value of which is over eight dollars and not over twelve dollars per thousand, a tax of four dollars per thousand.

On all other cigarettes and cigars a tax of four dollars per thousand, and in addition forty per cent. ad valorem on the value beyond twelve dollars per thousand, to be assessed on the excess beyond twelve dollars per thousand.

Mr. WRIGHT. I move to amend the amendment by striking out the whole of it, and inserting in lieu thereof the following:

And be it enacted, That in lieu of all other taxes or imposts upon tobacco, the same shall be taxed in the hands of the growers at the rate of twenty cents per pound.

The amendment of Mr. WRIGHT to the amendment of Mr. SCHENCK was not agreed to.

The question recurred upon the amendment of Mr. SCHENCK, and being taken, upon a division there were-ayes 46, noes 48.

Before the result was announced, Mr. SCHENCK demanded tellers. Tellers were ordered; and Messrs SCHENCK and BRANDEGEE were appointed.

The committee divided; and the tellers reported-ayes 57, noes 46.

So the amendment was adopted.

Mr. MORRILL. I ask unanimous consent to have the privilege of offering the following amendment hereafter. It was the intention of the committee to have inserted the provision in the bill:

Provided, That the taxes assessed and paid on cigars, cheroots, and cigarettes of domestic manufacture, under this act, shall also be assessed and paid on all imported cigars in addition to any duties imposed on the same under the tariff.

Mr. STEVENS. It ought to provide the same amount of tax.

There was no objection, and the amendment was reserved.

Mr. PAINE. I now offer my amendment. Add to the amendment last adopted:

And the Secretary of the Treasury shall prescribe such regulations for the inspection and valuation of cigars, cheroots, and cigarettes, and the collection of the tax thereon, as shall in his judgment be most effective for the prevention of inequalities and frauds in the payment of such tax: Provided, That such regulations shall not be in violation of law.

Mr. SCHENCK. I offer the following as an amendment to the amendment:

And in addition to other regulations it shall be the

duty of the inspector or assessor who appraises any cigars, cigarettes, or cheroots, to examine the mannfacturer thereof or his agent, under oath, which oath shall be administered by the inspecting and appraising officer, and reduced to writing, and signed by such manufacturer or his agent, with a view to ascertaining whether such manufacturer has any interest, direct or indirect, in any sale that has been made, or any resale to be made of said cigars, cigarettes, or cheroots, by the concealment of which he seeks to obtain a false, fraudulent, or deceptive appraisement.

Mr. PAINE. I accept the amendment as a modification of my own.

Mr. MORRILL. I ask that the amendment be reserved with the one I have just withheld. There was no objection, and it was agreed to accordingly.

The Clerk read as follows:

That section ninety-nine be amended by striking out all after the enacting clause and inserting in lieu thereof the following: that there shall be paid on all sales made by brokers and bankers, whether made for the benefit of others or on their own account, the following taxes and rates of tax, that is to say: upon all sales and contracts for the sale of stocks, bonds, foreign exchange, gold and silver bullion and coin, uncurrent money, promissory notes or other securities, a tax at the rate of one cent for every hundred dollars of the amount of such sales or contracts; and on all sales and contracts for sale negotiated and made by any person, firm, or company, not taxed as a broker or banker, of any gold or silver bullion, coin, uncurrent money, promissory notes, stocks, bonds, or other securities, not his or their own property, there shall be paid a tax at the rate of five cents for every hundred dollars of the amount of such sales or contracts; and on every sale and contract of sale, as aforesaid, there shall be made and delivered by the seller to the buyer a bill or memorandum of such sale or contract, on which there shall be affixed a lawful stamp or stamps in value equal to the amount of tax on such sale, to be determined by the rates of tax before mentioned; and in computing the amount of the stamp duty or tax in any case herein provided for, any sum less than $100 or any fractional part of $100 of value or amount on which tax is computed, shall be accounted as $100. And every bill or memorandum of sale or contract of sale, before mentioned, shall show the date thereof, the name of the seller, the amount of the sale or contract, and the matter or thing to which it refers. And any person or persons liable to pay the tax as herein provided, or any one who acts in the matter as agent or broker for such person or persons who shall make any such sale or contract, or who shall, in pursuance of any sale or contract, deliver or receive any stocks, bonds, bullion, coin, uncurrent money, foreign exchange, promissory notes, or other securities, without a bill or memorandum thereof as herein required, or who shall deliver or receive such bill or memorandum without having the proper stamps affixed thereto, shall forfeit and pay to the United States a penalty of $500 for each and every offense where the tax so evaded, or attempted to be evaded, does not exceed $100, and a penalty of $1,000 when such tax shall exceed $100, which may be recovered with costs of suit in any court of the United States of competent jurisdiction in the district, at any time within one year after the liability to such penalty shall have been incurred; and one half of the penalty recovered shall be awarded by the court to the person or persons who, in the judgment of the court, shall have first given the information of the violation of the law for which recovery is had. And the provisions of law in relation to stamp duties in schedule B of the act to which this is an amendment, shall apply to the stamp taxes herein imposed upon sales and contracts of sales made by brokers or bankers, and others as aforesaid. And there shall be paid on all sales by commercial brokers of any goods, wares, or merchandise a tax of one twentieth of one per cent. upon the amount of such sales; and at the end of every month or within ten days thereafter, every commercial broker shall make a list or return to the assistant assessor of the district of the gross amount of such sales as aforesaid for the preceding month, with the amount of tax which has accrued or shall accrue thereon, in form and manner as may be prescribed by the Commissioner of Internal Revenue, and pay to the collector the amount of tax thereon before the end of the month.

Mr. MORRILL. I move to amend as follows: line twenty-two hundred and twenty-five, after the word "brokers," strike out the word "and" and insert "banks or;" line twentytwo hundred and twenty-seven, strike out "and rates of tax;" line twenty-two hundred and twenty-nine, strike out "uncurrent money;" line twenty-two hundred and thirty-three, strike out "tax" and insert "paying a special tax;" line twenty-two hundred and thirty-four, after the word "broker," insert "bank or;" same line, after the word bullion" insert "foreign exchange;" line twenty-two hundred and fortysix, strike out the words "any sum less than $100 or;" line twenty-two hundred and sixtynine, strike out in the district;" line twenty; two hundred and seventy-eight, after the word "brokers" insert the word "banks;" and lines twenty-two hundred and eighty-two and twenty

two hundred and eighty-three, strike out "at the end of every month or within ten days thereafter" and insert "on or before the 10th day of each month.”

The amendments were agreed to.

Mr. DAVIS. I move to insert in line twentytwo hundred and sixty-two, after the word "thereto," these words, "with intent to evade the provisions of this act."

The amendment was not agreed to. Mr. COOK. I move to amend by inserting at the end of the paragraph the following:

Provided, That in estimating sales of goods, wares, and merchandise for the purposes of this section, any sales made by or through another broker on commission shall not again be estimated and included as sales by the party for whom the sale was made..

This precise provision has been incorporated in another section of this bill on page 48. The effect of it is to prevent duplicate taxes. All the produce of the western country is sold, in the first place, to persons who purchase at the depots and villages on the canals and railroads of the country. That produce is sold through commission merchants at Chicago or Buffalo or St. Louis. Under the ruling of the Commissioner of Internal Revenue heretofore, a duplicate tax upon such sales has been paidone eighth charged to the first purchaser, one tenth charged upon the same sale through the broker. This amendment is offered to prevent the duplication of these taxes. I will state, also, that the amendment has been submitted to the Committee of Ways and Means and approved by them.

Mr. HOOPER, of Massachusetts. I think that the gentleman misunderstands what it was to which the Committee of Ways and Means agreed. When a commission merchant takes out a license as a wholesale dealer, if a sale is made through another commission merchant, and he pays the tax as a wholesale dealer, the tax is not duplicated; but a sale by a broker, like an auctioneeer, is a distinct and separate way of selling, and that mode of selling is taxed under this bill. It was not intended that the wholesale dealer, selling through a broker or selling by auction, should be exempt from tax as a wholesale dealer.

Mr. WILSON, of Iowa. I desire to understand more clearly from the gentleman from Massachusetts the views of the committee on this question. If a merchant, for instance, at Chicago buys ten thousand bushels of wheat, which he ships to a broker at Buffalo, where the wheat is sold, does the person at Chicago pay the tax, and also the broker at Buffalo? If the gentleman intends to be understood to say that under the bill as it stands the tax is to be duplicated in this way, then I certainly think the amendment of the gentleman from Illinois should be adopted, because the person who purchases the wheat at Chicago does so for the purpose of selling it at Buffalo through an agent. The sale at Buffalo is in fact a sale by the merchant at Chicago. Yet, as I understand, it is proposed to duplicate the tax by taxing the whole amount of the sale made by the broker at Buffalo, and also requiring the shipper at Chicago to pay the tax on the whole amount there. That is not right.

Mr. HOOPER, of Massachusetts. In reply to the gentleman from Iowa, I wish to state that we had before us merchants from Chicago, who directed the attention of the committee to this very subject, and who were entirely satisfied with the provision which we inserted on the fifty-eighth page, commencing on the nine hundred and seventy-sixth line, the effect of which is, that if they send to a commission merchant at Buffalo to sell for them, the tax shall not be duplicated in estimating their sales. But the

business of a broker and the business of an auctioneer were considered entirely distinct from that of a merchant who takes out his license as a wholesale dealer; and the tax paid by the broker or by the auctioneer was considered as an additional tax to the tax paid by the commission merchant, so that if a merchant chooses to sell through a broker or through an auctioneer, the tax is to be paid.

Mr. WILSON, of Iowa. But, Mr. Chairman, the difficulty is, that when the sale is made through a broker both the broker and the owner of the goods are required to pay a tax, though it is but one sale. The party in Chicago does not sell to the broker in Buffalo, but ships to him a cargo of wheat to be sold for him. It is one transaction.

Mr. COOK. For the purpose of saying a word further on this subject, I move to amend The proviso on page 48 effects a very differthe amendment by striking out the last word. ent tax from the one imposed in the section under consideration. For the purpose of fixing the amount of license to be paid by the wholesale dealer or by the broker, the sale, according to the proviso on the forty-eighth page, is not to be counted twice. Now, for the purpose of fixing the tax on sales, to be paid by the broker and the merchant, the same sale ought not to be counted twice. The effect of it is, that upon every pound of produce raised in the western country a tax is duplicated every time the produce changes hands between the producer and the final market. This is a tax which has worked oppressively and grievously. It is not just. Notwithstanding the remark of my friend from Massachusetts, I undertake to say that this provision was brought to the attention of the Committee of Ways and Means. The gentleman misapprehends, I think, the intention of the committee in relation to this subject. The very place where the amendment should come in, and the very words in which it should be couched, were certainly agreed upon between the committee and myself.

I withdraw the amendment to the amendment.

Mr. RANDALL, of Pennsylvania. I renew the amendment to the amendment, that I may have the opportunity to say a word or two on this subject.

I am in favor of this amendment, because I believe that these taxes, as provided in this section, have become burdensome and interfere directly with trade. There is, first, as the gentleman from Iowa has stated, a revenue tax paid by the owner. Then there is a tax levied upon the broker, who receives upon his sales but a half per cent. commission. The tax levied upon that commission is, under the terms of this bill, one twentieth of one per cent. For example, a commercial broker sells $500,000 worth of goods, upon which he receives a commission of one half per cent., which is $2,500. That broker is taxed upon his sales one twentieth of one per cent., so that he pays to the Government $250 out of his $2,500an enormous and most unjust rate of taxation. I think there is no part of this bill which burdens trade as much as this. I hope, therefore, that the amendment of the gentleman from Illinois will prevail, because it will facilitate the interchange of commodities between the West and the East.

I withdraw my amendment to the amend

ment.

Mr. COOK. In order to obviate the objection of the gentleman from Massachusetts, while still accomplishing my purpose, I modify my amendment so as to read as follows:

Provided, That in estimating sales of goods, wares, and merchandise for the purposes of this section, any sales made by or through another broker upon which a tax has been paid shall not be estimated and included as sold by the broker for whom the sale was made.

Mr. HOOPER, of Massachusetts. I think that is correct.

The amendment was agreed to.

Mr. THAYER. I move to amend by inserting after the word "thereto," in line twentytwo hundred and sixty-two, the words "with intent to evade the payment of said tax;" so that the clause will read as follows:

Who shall deliver or receive such bill or memorandum without having the proper stamps affixed thereto with intent to evade the payment of said tax, shall forfeit and pay to the United States a penalty of $500, &c.

This, as will be observed, is in substance the same amendment that was offered by my

friend from New York, [Mr. DAVIS.] If the section as it stands is designed to impose these heavy penalties upon a mere inadvertence in the omission of the proper stamp, if it means for example to impose a penalty of $1,000 for a mistake in the quality of the stamp which is put upon the note, without regard to the intent of the party incurring the penalty, then I say that such legislation is without any precedent, and is unjust and tyrannical. Sir, the language employed here either is designed to impose this penalty where the omission occurs from mere inadvertence or it is not so designed. If such is not the purpose, then there is no harm in the amendment, and it ought to be adopted. But if the object is to impose such heavy penalties as these upon a mere inadvertence which may happen to any man engaged in business, then I say it is impolitic and unjust.

Mr. MORRILL. Mr. Chairman, I fear that the amendment goes further than the gentleman from Pennsylvania desires. I think that it would certainly throw upon the Government the whole burden of proof that fraud was intended.

Mr. THAYER. I think that it would be the opinion of any lawyer, upon a question of this kind, that the omission of the stamp would give rise to a prima facie inference that the neglect was intentional with the purpose of evading the tax, and the only effect of the amendment is to throw open for explanation the conduct of the party prosecuted for the penalties. That is the only effect of the amendment. Without the amendment the penalty is incurred whether the intent to evade the revenue laws existed or not. With the amendment the man who willfully violates the law is equally exposed to punishment as now.

Mr. MORRILL. I do not suppose that it would be possible to convict a man of a crime unless it could be shown that there was a willful purpose to commit the crime. But I think this amendment will weaken the provision very much, as, if I understood it, it throws the burden of proof on the Government.

Mr. HALE. I desire to make a suggestion to the gentleman from Pennsylvania. I think the objection to his amendment may be obviated by a very simple change. I suggest to the gentleman that instead of inserting his amendment where he proposes, he add at the end of line twenty-two hundred and seventy-four this proviso:

Provided, That if it shall appear that the omission was without intent to evade the provisions of this section the penalty shall not be incurred.

Mr. THAYER. I will accept that modification of my amendment. My only intention is to screen those who act in good faith.

Mr. PRICE. I had such an amendment written out and intended to offer it. It is in these words:

Provided, The said omission to affix the stamp shall be with the intention to defraud the Government.

Mr. THAYER. I will offer the amendment in this shape. I move to insert at the end of line twenty-two hundred and seventy-four the following:

Provided, That when it shall appear that the omission to affix the proper stamp was not with the intent to evade the provisions of this section, said penalties shall not be incurred.

The amendment was agreed to.

Mr. MORRILL. I move to amend on page 100 by inserting in line twenty-two hundred and seventy-two, after the word "awarded," the words and distributed;" and by striking out after the word "court" the words "person or persons," and inserting in lieu thereof the words "between the United States and the informer, if there be one, as provided by law;" and also by striking out in line twenty-two hundred and seventy-one the words one half of."

66

The amendment was agreed to.
Mr. WRIGHT. I move to strike out the

following clause:

And one half of the penalty recovered shall bo awarded by the court to the person or persons who, in the judgment of the court, shall have first given

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