this bill, in the beginning of the section, these words:

That in all cases arising under the internal revenue laws where, instead of commencing or proceeding with a suit in court, it may appear to the Commissioner of Internal Revenue to be for the interest of the United States to compromise the same

That seems to refer to a civil proceeding, although technically not necessarily so. But the proviso at the end of the section reads thus:

That it shall be lawful for the court at any stage of such suit or criminal proceedings to continue the same for good cause shown on motion of the district attorney.

The whole matter by this section in the future is to be left with the district attorney, as it has been in the past.

Now, sir, you start out with this great fact: that substantially the enforcement of this law heretofore has been almost a total failure; in view of the fact that there have been less than twelve convictions where there have been thousands of offenses, you may say a total failure; and yet you leave the machinery for compromising and defeating this system in the same hands in which it has almost totally failed heretofore. Sir, the compromise system is the bane of our revenue system. Let us have no compromise at all. Let us have every case tried through. If you leave that door open at all the great body of offenders will walk out through it. They have done so heretofore, and they will do it again. I want no compromise. If there is an offense committed, let it be tried out. If the man is innocent, let the court say so; if the man is guilty, let the court say so; but when you prepare a door of compromise and leave it open in the law the great body of offenders will march out through it, as they have done heretofore. Are we such Bourbons here that we cannot learn anything by experience? That would seem to be the fact.

Mr. SHERMAN. The only question now before the Senate-and it is rather surprising. after running along almost through the bill, that we should all at once be stopped by such a small pebble-is whether the compromises provided for by this section shall be approved by the solicitor of internal revenue or by the Secretary of the Treasury. That is the only question before the Senate. The general merits of the proposition to allow compromises to be made will come up at a later stage, when it will be open to amendment. I say the question we are to vote upon--no motion to amend is in order at present-is whether we shall make compromises upon the advice and consent of the solicitor of internal revenue or of the Secretary of the Treasury. Now, let us look at that for a moment. The solicitor of internal revenue is an officer of secondary importance, a mere adviser of the Commissioner of Internal Revenue, a mere aid of a bureau officer. There is none now appointed, and the duties of the office are being performed by a clerk. Therefore, to make his opinion a check upon the Commissioner of Internal Revenue would be the same as to say that the Secretary of the Treasury's action must depend upon the opinion of a clerk, because that is the effect of it.

Mr. MORTON. I did not argue that question. I argued against the whole section.

Mr. SHERMAN. I know; but that is not before us at present. That is what I am complaining of. The point before us is quite a different question from the one that has been argued.

Mr. MORTON. I think it is before us. Mr. SHERMAN. Now we interpose the Secretary of the Treasury, and require his advice and consent to every compromise that is made in every individual case. Under existing law the Secretary of the Treasury has nothing to do with compromises unless his regulations require it. The Senator from Maine says that under the existing regulations they must be submitted to the Secretary; but under the law the Commissioner of Internal Revenue passes finally upon them, subject, however, to

such regulations as may be made. Now we provide that no compromise can be made except with the written assent of the Secretary of the Treasury; and further than that, in order to show that it cannot be done upon insufficient information, we require another officer to file his opinion in writing, setting out certain facts, the basis of the opinion by the Secretary of the Treasury.

It may be said that we ought to make the opinion of the solicitor of internal revenue final. That would not be right. Otherwise, we ought to leave it entirely to him. But with the aid of this written opinion the case is made up, goes to the Commissioner of Internal Revenue, is decided by him, and if his opinion in favor of compromise is approved by the Secretary of the Treasury in that particular case, it is made unless, forsooth, a suit has been commenced. If a suit has been commenced, the bill, as it came to us from the House of Representatives, required the assent, in addition, of the district attorney. In order to avoid the objection to that I intended, at the proper stage of this bill, to move to strike out so much of it as provides for the assent of the district attorney, and to require the assent of the Attorney General. This would make it harmonious. In all matters that arise before suit, the case must be settled by the Commissioner of Internal Revenue with the advice and consent of the Secretary of the Treasury, and npon the opinion in writing of the solicitor of internal revenue. That surely is a sufficient guard. After a suit is commenced I would require all these other aids or checks, and in addition to them the opinion of the Attorney General.

To require the opinion of the Attorney General in advance on matters not brought into court at all would be to burden him with the whole weight of the business of the Commissioner of Internal Revenue. Thousands and tens of thousands of cases arising out of ignorance or mistake or misapprehension or errors on the part of officers come to the Commissioner of Internal Revenue, and are decided as matters of formula. If every one of those cases must be brought before the Secretary of the Treasury or the Attorney General we might as well provide for half a dozen Attor neys General. He could not do it. But when a suit has been commenced and is pending, and a proposition is made to compromise that suit, we may then properly ask for the opinion of the Attorney General. There is, then, a good deal of force in the objection made by the Senator from Indiana that the opinion of the district attorney, who, perhaps, is interested, or who, by possibility, may be corrupt, or who is lazy, indolent, careless, and would rather settle a suit than try it, should not be final. I think it would be very proper there to interpose the opinion or assent of the Attorney General.

Mr. EDMUNDS. Will the Senator permit me to ask him if there is any provision in this bill fixing within what lapse of time after a seizure is made, an information or proceeding shall be filed in court against the property seized?

Mr. SHERMAN. That reminds me of another observation. More than nine cases out of ten are cases where no seizure has been made. For instance, suppose a mistake in the case of the income tax. The question comes before the Commissioner of Internal Revenue whether a certain man has been assessed properly for income. There may be no seizure. There may be no property to seize. The only remedy may be by suit. The Commissioner of Internal Revenue has the case made up before him, and he may say, "it is better on all the facts of the case to take so much money in settlement of this claim than to commence suit."

Mr. EDMUNDS. in an income case. must be personal.

Mr. SHERMAN.

There may be no seizure
There the prosecution

As a matter of course

this section applies to all cases, and in the

great body there are no seizures. There are no seizures except in regard to whisky and tobacco. It seems to me the committee have sufficiently guarded this section. If the Senate, upon the second reading of the bill, choose to strike out the whole section, that is another question; but my own judgment is that you cannot administer the collection of the internal revenue without trusting somebody with the power to adjust disputes, and compromise both before and after suit. All the checks and all the guards that may reasonably be suggested to guard against the abuse of this power I am perfectly willing to vote for; but the power itself must be provided for by this bill.

Mr. EDMUNDS. Mr. President, I did not get any answer to my inquiry from the chairman of the committee, who I supposed was familiar with the bill, whether there is any provision in this proposed law for requiring a prosecution, as he calls it, a suit, to be commenced against any property seized within a definite period of time?

Mr. SHERMAN. No, sir. There is a statute of limitations against commencing it after a certain time.

Mr. EDMUNDS. That we understand. That is quite a different thing. The result of it then would be, as the section will stand with this amendinent put in, while the power of compromise would be left with the Commissioner of Internal Revenue, with his solicitor and the Secretary of the Treasury indefinite and absolute, there would be no obligation on the part of those officers, or anybody else, ever to commence a suit in the world. They might hang up a seizure, therefore, just as long as they pleased, until the party whose property had been seized could, through the instru mentalities that the Senator from Indiana has so well referred to, bring sufficient influence to bear to produce a compromise.

I do not see any difference in theory or in justice between requiring a check from the Attorney General's office after a libel, if that is the proper term, has been filed or before or after a seizure has been made. If you leave it as it now stands, a case may be hung up indefinitely; and then comes on the party whose property has been seized, who has committed the fraud, with his friends, and gets his member of Congress, or his Senator, to go first to the solicitor, and then to the Commissioner, and then to the Secretary. Failing there, he goes to the fountain-head of all honor and all pardon, the President of the United States; and at last through some of those officials he gets off entirely. That is altogether wrong in my opinion. It has been, as my friend from Indiana has said, the greatest abuse in this country this matter of compromising these claims before any process is filed in court where parties upon both sides can see exactly what the charge is, and exactly how much the Government would be entitled to have by way of forfeiture or the duplication of the tax, as the case might be made.

In the external revenue service experience has provided a much more satisfactory way. The laws and regulations prescribe that within ten days-I believe that is the number of days -a very short period of time after a seizure is made, a libel shall be filed, so that the judicial officers of the Government, whose bounden duty it is to protect the Government against frauds of this kind, will have their hand upon the prosecution, as well as the mere executive officers of the Government; so that you then have an additional safeguard not only as to the rights of the citizen whose property may have been illegally or improperly seized, but you have a safegard for the rights of the Government that no private settlement brought about by political favor, personal influence, corrup tion, bribery, or whatever improper influence may be brought to bear, can be had.

No provision of that kind is made here; and while you give an absolute and indefinite power of compromise and settlement to these mere executive officers, you do not impose upon

them any duty at any time which would be a corresponding check of proceeding against the property in court. The result is that you surrender the whole thing into their hands, and our experience has shown, as the Senator from Indiana has so well said, and I need not repeat it, that it has been the greatest abuse in the way of collecting taxes and the imposition of burdens that this country has ever experienced.

As the Senator from Ohio has said, all this does not necessarily and exactly arise upon this precise amendment; but when we are voting one thing out and another thing in without any explanation, the implication would fairly arise that we were satisfied with what we were voting in and were satisfied to leave it in that condition. I do hope we shall make some change that will impose upon these officers the duty of prosecuting the property in court so that there will be a check upon them, or else that we shall have this check enlarged by referrring it to some other department of the Government, like that of the Attorney General.

Mr. WILLIAMS. I wish to inquire of the Senator from Vermont if he understands that in every case of seizure it is necessary to prosecute a suit in court under this act?

Mr. EDMUNDS. I do not know whether it is or not. I know it ought to be. I know the Constitution says a man shall not be deprived of his property without due process of

law.

Mr. TRUMBULL. Before the Senator from Oregon goes on, I ask him to allow me to propose a distinct amendment and see if the Senator from Ohio and the committee will not agree to it. Instead of the committee's amendment, I suggest that we take the House section as it is down to the ninth line, and after the word "writing," in the ninth line, insert "and be approved by the Attorney General." Mr. JOHNSON. How will it read then? Mr. TRUMBULL. It would read in this wise:

That in all cases arising under the internal revenue laws where, instead of commencing or proceeding with a suit in court, it may appear to the Commismissioner of Internal Revenue to be for the interest of the United States to compromise the same, he is empowered and authorized to make such compromise with the advice and consent of the solicitor of internal revenue, whose opinion in the case, with the reasons therefor, shall be given in writing and be approved by the Attorney General and delivered to the Commissioner.

Then before the Commissioner settles the case he would have the opinion of the solicitor of internal revenue approved by the Attorney General.

Mr. SHERMAN. As I said before, I have an amendment on my table already prepared to make the opinion of the Attorney General necessary after suit is brought.

Mr. TRUMBULL. This would not subject the Attorney General to very great labor, because he would not prepare an opinion himself, but would revise and examine the opinion of the solicitor, and would have simply to indorse it "approved."

resistance by the party assessed, and the case comes before him in the light of a judicial officer. Now, the question comes up before him, "Shall I sue?' He decides that in the first place. He says "It is better on the whole for the interests of the Government that this matter should be settled." Under the existing law he can settle it without limitation.

Mr. EDMUNDS. Does that apply to seizures, or only suits for underrating taxation? Mr. SHERMAN. That applies to all proceedings of every kind and description.

Mr. EDMUNDS. Read that clause. Mr. SHERMAN. I will read section fortyone of the present law, so that I shall not have to read it in another portion of the argument:

That it shall be the duty of the collectors aforesaid or their deputies, in their respective districts, and they are hereby authorized, to collect all the taxes imposed by law, however the same may be designated, and to prosecute for the recovery of any sum or sums which may be forfeited by law; and all fines, penalties, and forfeitures which may be incurred or imposed by law, shall be sued for and recovered in the name of the United States, in any proper form of action, or by any appropriate form of proceeding, qui tam or otherwise, before any circuit or district court of the United States for the district within which said fine, penalty, or forfeiture may have been incurred, or before any other court of competent jurisdiction. And taxes may be sued for and recovered, in the name of the United States, in any proper form of action before any circuit or district court of the United States for the district within which the liability to such tax may have been or shall be incurred, or where the party from whom such tax is due may reside at the time of the commencement of said action. But no such suit shall be commenced unless the Commissioner of Internal Revenue shall authorize or sanction the proceedings: Provided, That in case of any suit for penalties or forfeitures brought upon information received from any person, other than a collector, deputy collector, assessor, assistant assessor, revenue agent, or inspector of internal revenue, the United States shall not be subject to any costs of suit, &c.

Mr. EDMUNDS. That is not the question which I wished answered. I am alluding to a case of seizure for a violation of the law by fraud or otherwise, for the forfeiture of the very thing, as the seizure of a distillery of whisky. I wish to ask him if forfeitures of that kind are prosecuted by the collector of internal revenue instead of by the district attorney in court?

Mr. SHERMAN. As a matter of course, when an actual suit is commenced, it is by the district attorney. A seizure is not considered in these proceedings in the light of a suit. Provision is made for proceedings of various kinds before suit is commenced. A seizure is made by an officer, and finally by an appeal the merits of the case on the face of the papers, are brought before the Commissioner of Internal Revenue. He then, for the first time, decides whether he will appeal to the courts to enforce that seizure, or enforce that tax, or that claim, whatever it may be; and he directs it to be done either in one form of action or another. He directs a prosecution in criminal courts; he direct a qui tam proceeding; perhaps a seizure, or he directs a suit.

Mr. EDMUNDS. I am speaking of the case of seizure alone for the time being, so that we shall understand each other; whether in a case of seizure of property as forfeited, and which must be proceeded against in rem-"the United States against so much property seized for a violation of the revenue laws"-whether a prosecution of that description ought not to go into court, and be controlled by the same principles that relate to seizures for violations of external revenue, where, as the Senator knows, the law has always provided that the prosecution, as he calls it, the suit against it, the libel should be filed within ten, or a certain number of days? That is the point to which I wished to call attention.

Mr. SHERMAN. It would subject him to labor that the Attorney General cannot possibly perform. In order to understand this matter, you must take it generally; you have got to examine several laws. It is utterly impossible for him to do it, If the Senator wishes information on the subject, I will try to give it to him. The forty-first section of the internal revenue law, as it now stands, authorizes suits by collectors to collect all taxes and to enforce all fines, penalties, and forfeitures. No suit, however, can be commenced without the sauc. tion of the Commissioner of Internal Revenue. Mr. SHERMAN. I have already answered In the great multiplicity of these cases a suit that. As I understand it, it is not necessary does not grow out of one in a hundred of them. at all to go into court to commence a suit or They are decided first by the assessor, whose any proceedings in court to enforce a seizure. decision may, by appeal of the interested party, The officer goes on in pursuance of the authorbe finally brought to the Commissioner of ity conferred. He seizes the property and he Internal Revenue. No suit can be brought sells it. He proceeds to act as the executioner under the existing law without his sanction. of his seizure, to judge and sell the property. It comes up before him usually, first upon the As a matter of course the owner of the propassessment by the assessor, and then upon theerty has a right by proper proceedings to re

strain him, and to bring the case into court; but the officer may go on and enforce the sale of the property without any legal proceedings. However, upon complaint, and upon an appeal, in any stage of the proceedings, it comes before the Commissioner of Internal Revenue, and then he determines whether or not he will call to his aid the courts.

Mr. EDMUNDS. Do I understand the Senator from Ohio to say that in a case of seizure for a forfeiture instead of a seizure to enforce the collection of taxes by sale of the property, the collector of the internal revenue tax may dispose of that property finally without a decree of condemnation of a court?

Mr. SHERMAN. I do say so, and I say it has been done, and is done, and is provided for by this bill. The very portion of the bill which has been passed upon provides in case of forfeiture how the sale shall be conducted, the mode and manner of proceeding. As a matter of course any person believing himself injured has a right to appeal to the courts, and so the United States may, on an order of the Commissioner, appeal to the courts.

Mr. EDMUNDS. Then, may I ask my friend, if the United States have the right, under the power of seizure, to sell the forfeited property without any steps of a court at all, what is the object of their ever taking a step in court? Why file a libel if they can sell without a libel? That cannot be the construction of the act. I am very much mistakenmy friend from Ohio will pardon me if I say so-if he is not confusing himself by confounding the case of a seizure of a man's property under a warrant to compel him to pay what he owes, and the seizure of his property for a criminal violation of law which forfeits the property itself. In this last case I am very nuch mistaken, I repeat, if the law is not, and has not always been, that before the United States can dispose of that property they must file an information or a libel against it in a proper court, and have it tried where the claimant may appear and defend himself, and condemed by the judgment of the law. That is the class of cases that I am alluding to.

Mr. SHERMAN. I do not know that it is necessary for us to pursue the various and devious proceedings of the law; but I have stated to the Senate what I understand to be, and what is daily practiced, the ordinary mode of proceeding in the collection of internal revenue. Either party, the claimant or the United States, through the Commissioner of Internal Revenue, may at any time appeal to the aid of the courts.

Mr. EDMUNDS. What does the Commissioner want of the aid of the courts if he can sell the property?

Mr. SHERMAN. In not one case in a hundred is there property to seize. Mr. EDMUNDS. I am speaking of the seizure of property.

Mr. SHERMAN. Then he must appeal to the courts, and where a private individual is aggrieved he has a right to appeal to the courts. Either side may appeal. The only question now is whether the solicitor of internal revenue or the Secretary of the Treasury ought to be selected as the advising aud consenting officer to a settlement. Whether the Attorney General ought to be added in the multiplied cases that would arise where no suit is to be brought, is for the Senate to decide. I say to impose that duty on the Attorney General where no suit is pending, to pass merely in revision upon the acts of the Commissioner of Internal Revenue in the ordinary discharge of his duty, would be to incumber his office with a mass of details totally inconsistent with the discharge of the duties of that high office. Even the amendment that I intend to propose, requiring his assent to the settlement of cases where suits are pending, will impose upon him a mass of labor which, in my judgment, will make it necessary to give him additional assistance more than the law now contemplates.

Mr. MORTON. The law already provided for the initiation of proceedings is very abun

dant, as read by the Senator from Ohio; and it is so clear that I believe no two Senators agree as to what it means. Mr. President, as was remarked by the Senator from Ohio, there is not much use in discussing this law here. Why?

Mr. SHERMAN. I did not say that. Mr. MORTON. "In discussing that question here," I understood you to say.

Mr. SHERMAN. I say it belongs to another stage of the bill. We are on the first reading of the bill, and no amendments to it are now in order except the amendments of the Committee on Finance.

Mr. MORTON. Perhaps this discussion is just as proper here as anywhere else; but a discussion as to what this law means is not very important at any time. It is practically a dead letter, and it has been. You might almost as profitably read from Robinson Crusoe or Baron Munchausen. The whole system is a failure. There is the great truth about it-it is a failure.

Now, Mr. President, let me refer once more to the amendment offered by the Senator from Illinois and that suggested by the Senator from Ohio. The Senator from Illinois proposes to throw an additional safeguard around this compromise by having it finally referred to the Attorney General. I will take the case of a compromise of an offense in a case where suit has not been commenced. The parties come before the Commissioner of Internal Revenue and the Secretary of the Treasury, or the solicitor of internal revenue, as the case may be. They present an ex parte statement, one that is very strong on their side and not on the other. They succeed in getting a compromise with the Commissioner of Internal Revenue, and the solicitor of internal revenue, not being any better lawyer, perhaps, and not having half the experience, they make out a case that is all fair on the face of it. It would perhaps satisfy you or me just by reading it; but bear in mind it is an ex parte case. They submit that to the Secretary of the Treasury. What time has he to go back to the original sources of information? Here is their paper that is fair on its face. He gives it his assent. Then they take it to the Attorney General, and the same paper, fair and unexceptionable on its face, making out a good case, receives his approval. What time has he to go to Cincinnati or St. Louis, or to send out there and make original examinations about the case? None at all. It is out of his power to do so. He is bound to take the case as it is sent to him.

Therefore I say that the proposition to send the case to him for revisal is a mere sham; it is a humbug that amounts to nothing. And thus it is with the whole system. It is an ex parte system that is a sham from beginning to end. If you do not believe it, I ask you again how it has worked? Just go back to your experience of nearly five years and ask yourself how it has worked. If men will not learn from experience they cannot learn from any source. How has it worked? As it has worked in the past so it will work in the future. And yet, sir, here we are about to reenact the same old folly, the same system which has led to the great loss the Government has sustained and the almost universal escape of these great criminals, some of whom, perhaps, are now, or very often are, sitting in our galleries, the finest gentlemen about the city, who have robbed the Government of millions and yet have gone harmless from the law. They have suffered no penalty but that of a compromise, and we are reenacting the same thing right over again.

Sir, if they can cheat the Government out of two dollars on the gallon they can cheat it out of fifty cents on the gallon on the same system. The temptation is not quite so great; but they have now learned the business; all the processes have been studied out. It is not half the trouble now to get up a fraud that it was three years ago, because they know how It is a trade; and it will just as well to get up a fraud now on fifty || 40TH CONG. 2D SESS.-No. 237.

to do it.

pay

them

cents a gallon as it did three or four years ago on two dollars a gallon, and they can do it just as easily. And here they find us coming in, constructing a great big door of compromise, through which they can travel without jostling each other, as they have done in times past.

Mr. MORRILL, of Vermont. Mr. President, I am as much in favor of closing the door against compromises as any Senator possibly can be; but it is indispensable that some party here in Washington should have the power of making compromises. As long as human nature is no purer than it is at the present day, there must be somebody to protect the honest tax-payer, or he will inevitably suffer if this power is not given. For instance, suppose that one of the officers either ignorantly or maliciously shall seize and confiscate the property of a tax payer; if it is ignorantly done, say that it is a mere mistake of figures; if it is maliciously, it is done for the purpose, say, of black-mail, of levying a contribution, or some. thing of that kind. When this comes to the knowledge of the officers here in Washington there ought to be somewhere a power lodged for compromise.

But allow me to say to Senators who were so earnest on this subject that all the fault is not here at the office of the Commissioner of Internal Revenue. We have had positively no convictions in the last six months

Mr. MORTON. Allow me to correct my friend from Vermont. I do not mean to say that the fault is here. I said last winter, and I say now, that the great power lodged in the hands of district attorneys has been fatal to prosecutions, because there have been no prosecutions.

Mr. MORRILL, of Vermont. The fault has been chiefly with the district courts. We have several district judges who have so charged that it was impossible that any jury should convict, and we have had in some places jurors who were in the interest of the "whisky ring" and would not convict.

There is another reason. Congress itself is not entirely exempt from blame. The district attorneys are not paid sufficiently to attend to these numberless cases. They are paid in some instances not more than their mere traveling expenses, so that they are no better off for attending to the cases than they would be if they stayed at home; and in some instances I am told that they cannot attend to the cases and pay their board and traveling expenses without absolute loss. These things ought to be remedied by Congress.

All that I rose for, Mr. President, was to protest against the idea which seemed to prevail from the current of the debate that there was great wrong and corruption here at Washington in relation to the compromise of cases. I do not believe it. There may be some errors, some blunders, some mistakes, and I am quite ready to go for a restriction of the rule; but it ought to remain there to some, at least to a moderate extent. If we find the courts all over the country, as they have done for the past six months in New York and in Richmond and in one other place, so charging the juries as to produce conviction, we shall have no trouble in executing the laws and collecting the revenue; but until we can do that, of course we shall fail.

The PRESIDENT pro tempore. The question is on the amendment reported by the Committee on Finance to section one hundred and

mittee on Finance to propose to strike out the words "the district attorney," in the twentieth line of section one hundred and one, and all the words to the end of the section, and insert in lieu thereof "the Attorney General;" so that in cases where suits have been commenced and are pending the assent of the Attorney General shall be required to a compromise.

Mr. WILLIAMS. I think that amendmen is objectionable notwithstanding it comes fron the chairman of the Committee on Finance. I did not know that the committee had agreed to any such amendment. It seems to me that the district attorney is the person who must necessarily have personal knowledge of the transaction, and he ought to be required to recommend a discontinuance of a prosecution before it is discontinued or compromised by the Commissioner of Internal Revenue. The Attorney General has no knowledge of the subject at all, and can have none whatever except what he derives from other officers. The Commissioner of Internal Revenue has no knowledge on the subject except what he derives from others; and so of the Secretary of the Treasury. These officers here in Washington who are required to act, must necessarily derive their information from the officers in the district where the suit is pending. I would not object to an amendment requiring the consent of the Attorney General, also, in addition to the district attorney; but to strike out the district attorney and substitute the Attorney General it seems to me would be rather unwise.

4

He is an

Mr. SHERMAN. I am not authorized by the committee to accept such an amendment, but I have no objection personally to requiring the district attorney as well as the Attorney General. My own opinion is, however, that a district attorney ought not to have anything to do with the settlement of cases. interested party. His fees are somewhat contingent on the number of cases he tries. As a matter of course the Attorney General would not consent to the settlement of cases without some information from the district attorney, and I would rather just throw the responsibility where suits are pending on the Attorney General. The preceding part of the section provides that the Commissioner of Internal Revenue must go through all these matters and make an arrangement, if that is deemed better than a suit; and then it goes on to provide in addition that the assent of the district attorney must be had to a compromise in cases where suits are pending. The district attorneys are sometimes men upon whom we can not place entire reliability, and they are somewhat interested. They may have acquaintances who are interested. Their friends may be the parties implicated. Now, the Attorney General is a responsible officer here, and he would act probably on information derived from the district attorney. I am disposed, therefore, to require his sanction as the chief of the law department. I agree with the logic of the Senator from Illinois so far as suits are concerned, but I would not burden him with the matter before suits are brought. It is, however, for the Senate to say.

Mr. HOWARD. I hope the amendment will be reported.

The CHIEF CLERK. It is proposed in section one hundred and one to strike out, in lines twenty, twenty-one, twenty-two, and twentythree, the words "district attorney for the judicial district in which the suit or proceeding is pending, or of such other counsel as may be employed to conduct or prosecute the same on the part of the United States," and in lieu thereof to insert "Attorney General."

Mr. CORBETT. I have drawn up an amendment which I suppose is not in order at this time, but I may state it for the information of the Senate. I am opposed to striking out the district attorney, but I propose, after the word "pending," in line twenty-one, to insert "and his statement under oath that in his opinion said case cannot be maintained in court. Mr. HOWARD. Most of the cases that are

compromised must, of course, rest on the mere facts of the case rather than upon the law; and I do not see what additional security the Government gets from consulting the Attorney General. I do not think we shall derive any advantage at all from such a provision, for the very reason that as the case must depend on the facts which are not within his knowledge, his ecommendation would amount to very little indeed. The great difficulty is to make some provision for the settlement of cases of controversies as they happen to arise before they are brought into court. I think that a very dangerous practice. It cannot be denied that it will necessarily open the door to great temptation and to frequent frauds on the part of the officers of the Government, for it is in effect almost holding out an invitation to persons engaged in the administration of this law to get up cases against parties for the very purpose of compromising them and making something out of them and putting it into their own pockets.

I do not say that it is convenient, or even possible, perhaps, to frame a law which shall be entirely free from such an objectionable provision; but I think we ought to be very strict about it, and to give no more discretionary authority to officers of the Government than is absolutely necessary. Where the line is to be drawn I really am not able myself to see just at this time; but I am clear in one thing, that I would not impose on the Attorney General this additional burden contemplated by this amendment of the Senator from Ohio. He cannot look into the subject as it ought to be examined because he has not the means of ascertaining the facts of the case, Where do the facts come from? Where is the original proof, the original evidence upon which a compromise is to be made? It is presented in the irst instance ordinarily by the officers of the revenue to the district attorney. The district attorney is first informed by the informers what the facts are in regard to a particular case. He derives his information from them; and if afterward he undertakes to make any recommendation in the case, his recommendation must of course rest entirely on the veracity and reliability of his informers. These informers in many cases, not to say in most cases, we all know to be men upon whose veracity the world is not very generally willing to rely.

I think myself, if it were practicable, it would be safer for the Government in all cases to permit no compromise unless a suit had been actually brought in court and the pleadings put in, and something like the facts of the case developed before the public. After that, if the case should present peculiar grounds of hardship to the accused, so frame your bill that the facts may be made public, may be made known, and somebody held responsible for the compromise made.

As a question of principle, Mr. President, I certainly should be in favor of such a provision, and in favor of excluding from the law this discretionary authority to settle controversies before they have been brought into court. There is the point of difficulty in this whole case, that it is to be done privately, secretly, when the eyes of the world are not upon it, when it is impossible for the public really, in most cases I mean, to ascertain what the real nature of the case is.

It is

Mr. JOHNSON. Mr. President, the Senate has passed at this session-I am not sure whether the House of Representatives have concurred in it or not-a bill abolishing the solicitors of the Court of Claims and providing for the appointment of two Assistant Attorneys General, and casting upon these officers the duty of attending to suits in that court. very doubtful whether those two can properly discharge that duty, for there are some thousand or more of cases in that court; and the result of the measure will be to leave the Attorney General alone to attend to the business proper of his office as it exists under present laws, which is to give opinions to all the heads of Departments that may from time

to time request opinions of him, and to the President, and to try all the Government cases that may be in the Supreme Court either by appeal from the decisions of the Court of Claims or from the several circuits.

It is very obvious that duties so extensive as these can be of themselves hardly adequately discharged by any one man. They require not only a high order of ability and great professional knowledge, but they require the greatest possible industry; they will take up nearly all the time any man can devote to them. Now, it is proposed by this bill to cast upon him duties that will very seriously increase his labors, and duties which I think he is very unfit to discharge. He cannot know except through the district attorney of the district where the case may be pending, or through the Commissioner of Internal Revenue, what the facts of each case are; and when he is called upon to decide on statements made by those officers, either individually or conjointly, it will very often happen that whether he is to dismiss the suit or not will depend upon how he may view the facts in each case. Sometimes it may depend upon his opinion of the law. In the execution of this internal revenue bill, I can imagine that hundreds and hundreds of cases will be sent to him almost monthly that it will be impossible for him properly to attend to; and the result will be, unless he declines altogether for want of time, if he attends to them all, that he will take the statement of the district attorney or the Commissioner of Internal Revenue.

It is true, as stated by my friend from Indiana, as I believe, that one of the difficulties which we have had in connection with the revenue under this particular tax has been a want of integrity on the part of some of the subordinate officers, and perhaps that want of integrity may have been found in some of the district attorneys. We cannot expect to find integrity in all the multitude of officers the United States have. That would be almost a chimerical hope. But we must trust the officers; and the only safeguard that we have against suffering from their want of integrity is to be found, I think, in punishing them criminally. Make it a criminal offense for a district attorney to settle a case wrongfully, and knowing that it is wrongful, and he will, perhaps, very seldom be found to commit that wrong.

But what I rose for was merely for the purpose of saying that the bill, by the amendment proposed by the honorable chairman in behalf of the committee, will so add to the labors of the Attorney General that it will be impossible for him properly to discharge them.

The amendment was agreed to.

The Committee on Finance proposed to amend the bill by striking out sections one hundred and two and one hundred and three,

which are as follows:

Banks and Bankers.

SEC. 102. And be it further enacted, That there shall be levied, collected, and paid a tax of one twelfth of one per cent, each month upon the average amount of the deposits of money, other than public money of the United States, subject to payment by check or draft, or represented by certificates of deposit or otherwise, whether payable on demand or at some future day, with any person, bank, association, company, or corporation engaged in the business of banking, and a tax of one fourth of one per cent. each month on the average amount of all deposits of public money in their possession to the credit of the Treasurer or any disbursing officer of the United States; and a tax of one twenty-fourth of one per cent. each month, as aforesaid, upon the capital of any bank, association, company, or corporation engaged in the business of banking, and on the capital employed by any person in the business of banking, beyond the average amount invested in United States bonds; and a tax of one sixth of one per cent. each month upen the average amount of circulation issued by any bank, association, corporation, company, or person, including as circulation all certified checks and all notes and other obligations calculated or intended to circulate or to be used as money, but not including that in the vault of the bank, or redeemed and on deposit for said bank. And a true and accurate return of the amount of circulation, of deposit, and of capital, as aforesaid, and of the amount of notes of persons, State banks and State banking associations, and of States, cities, towns, or other municipal corporations, paid out by them for the previous month, shall be made and rendered monthly by each of them to the assessor of the district in which such bank, associa

tion, corporation, or company may be located, or in which such person has his place of business, with a declaration annexed thereto, verified by the oath oraffirmation of such person, or of the president or cashier of such bank, association, corporation, or company in such form and manner as may be prescribed by the Commissioner of Internal Revenue. And for any refusal or neglect to make or to render such return and pay the tax, any such bank, association, corporation, company, or person so in default shall be subject to and pay a penalty of $200, besides the additional penalty and forfeitures in other cases provided by law; and in default of such return the several amounts subject to tax shall be estimated by the assessor, or assistant assessor, on the best information he can obtain. And in the case of banks with branches, each branch shall make a separate return, and the tax shall be assessed on each severally. And so much of the forty-first section of the act to provide a national currency secured by a pledge of United States bonds, and to provide for the circulation and redemption thereof, approved June 3, 1864, as imposes a tax on the banks organized under that act, and requires returns to be made to the Treasurer of the United States, be, and is hereby, repealed: Provided, That the deposits in associations or companies known as provident institutions, savings-banks, savings funds, or savings institutions, having no capital stock and doing no other business than receiving deposits to be loaned or invested for the sole benefit of the parties making such deposits, without profit or compensation to the association or company, shall be exempt from tax on so much of their deposits as they have invested in securities of the United States, and on all deposits less than $500 made in the name of any one person; and the returns required to be made by such provident institutions and savings banks shall be made on the first Monday of January and July of each year, in such form and manner as may be prescribed by the Commissioner of Internal Revenue.

SEC. 103. And be it further enacted, That every national banking association, State bank, or State banking association, corporation, company, or person engaged in the business of banking, shall pay a tax of ten per cent. on the amount of notes of any person. State bank, or State banking association, or of any State, town, city, or other municipal corporation, used for circulation and paid out by them, and such tax shall be assessed and paid in such manner as shall be prescribed by law, and by the Commissioner of Internal Revenue: Provided, That this section shall not apply to banks, persons, or institutions which are in liquidation and which have not issued any notes for circulation for a period of more than one year.

The amendment was agreed to.

Section one hundred and four, now become one hundred and two, to which no amendment was proposed, was read, as follows:

SEC. [104] 102. And be it further enacted, That when any tax is imposed, and the mode or time of assessment or collection is not provided for, the same shall be established by regulation of the Commissioner of Internal Revenue; and the Commissioner is authorized to make all such regulations, not otherwise provided for, as may become necessary by reason of any change of law in relation to internal revenue made by this act.

Section [one hundred and five] one hundred and three was next read, as follows:

SEC. [105] 103. And be it further enacted, That where not otherwise distinctly expressed or manifestly incompatible with the intent thereof, the word "person,' as used in this act, shall be construed to mean and include a firm, partnership, association, company, or corporation, as well as a natural person; and words of the masculine gender, as applied to persons, to mean and include the feminine gender; and the singular number to mean and include the plural number; and the word "State" to mean and include a Territory and District of Columbia; and the word "county" to mean and include parish, district, or other equivalent territorial subdivision of a State.

Section [one hundred and six] one hundred and four was next read, as follows:

SEC. [106] 104. And be it further enacted, That all acts and parts of acts inconsistent with the provisions of this act are hereby repealed: Provided, That all the provisions of said acts shall be in force for levying and collecting all taxes properly assessed or liable to be assessed, or accruing under the provisions of former acts, the right to which has already accrued or may hereafter accrue under said acts, and for maintaining and continuing liens, fines, penalties, and forfeitures incurred under and by virtue thereof. And for carrying out and completing all proceedings which have been already commenced or that may be commenced to enforce such fines, penalties, and forfeitures, or criminal proceedings under said acts, and for the punishment of crimes of which any party shall be or has been found guilty: And provided further, That no office created by the said acts and coutinued by this act shall be vacated by reason of any provisions herein contained, but the officers heretofore appointed shall continue to hold the said offices without reappointment until their successors, or other officers to perform their duties, respectively, shall be appointed as provided in this act: And provided further, That whenever the duty imposed by any existing law shall cease in consequence of any limitation therein contained before the respective provisions of this act shall take effect, the same duty or tax shall be, and is hereby, continued until such provisions of this act shall take effect; and where any act

is hereby repealed, no duty or tax imposed thereby shall be held to cease in consequenc of such repeal, until the respective corresponding provisions of this act shall take effect.

Mr. SHERMAN. I move to amend that section by striking out the word "and" before"continuing," in the eighth line, and by inserting after the word "continuing" the words and enforcing."

The amendment was agreed to.

Mr. SHERMAN. I move further to amend the section by striking out lines ten, eleven, twelve, thirteen, and fourteen, as follows:

And for carrying out and completing all proceedings which have been already commenced or that may be commenced to enforce such fines, penalties, and forfeitures, or criminal proceedings under said acts, and for the punishment of crimes of which any party shall be or has been found guilty.

And inserting in lieu thereof:

But this act shall not be construed to affect any act done, right accrued, or penalty incurred under former acts and every such right is hereby saved; and all suits and prosecutions for acts already done in violation of any former act or acts of Congress relating to the subjects embraced in this act may be commenced and proceeded with in like manner as if this act had not been passed.

The amendment was agreed to.

The Chief Clerk read the following amendment reported by the Committee on Finance, to be added to the bill as section one hundred and five:

SEC. 105. And be it further enacted, That in any case where there has been a refusal or neglect to pay any tax imposed by the internal revenue laws, and where it is lawful and has become necessary to seize and sell real estate to satisfy the tax, the Commissioner of Internal Revenue may, if he deems it expedient, direct that a bill in chancery be filed, in a district or circuit court of the United States, to enforce the lien of the United States for tax upon any real estate, or to subject any real estate owned by the delinquent, or in which he has any right, title, or interest, to the payment of such tax. And all persons having liens upon the real estate sought to be subjected to the payment of any tax as aforesaid, or claiming any ownership or interest therein, shall be made parties to such proceedings, and shall be brought into court as provided in other suits in chancery in said courts. And the said courts shall have, and are hereby given, jurisdiction in all such cases, and shall, at the term next after such time as the parties shall be duly notified of the proceedings, unless otherwise ordered by the court, proceed to adjudicate all matters involved therein, and to pass upon and finally determine the merits of all claims to and liens upon the real estate in question, and shall, in all cases where a claim or interest of the United States therein shall be established, decree a sale, by the proper officer of the court, of such real estate, and a distribution of the proceeds of such sale according to the findings of the court in respect to the interests of the parties and of the United States.

The amendment was agreed to.

The next amendment was to insert:

SEC. 106. And be it further enacted, That the internal revenue laws imposing taxes on distilled spirits, fermented liquors, tobacco, snuff, and cigars, shall be held and construed to extend to such articles produced anywhere within the exterior boundaries of the United States, whether the same shall be within a collection district or not.

The amendment was agreed to.

Mr. SHERMAN. I have several amendments to propose now, mostly of a verbal character that are not printed. In line five of section three, on page 4, I move to strike out the word "or" before "starch," and after "starch" to insert "molasses."

The amendment was agreed to.

Mr. SHERMAN. On page 9, after the word "business," in line three of section seven, I move to insert "after the passage of this act and on the 1st day of May of each succeeding year."

The amendment was agreed to.

Mr. SHERMAN. On page 11, in line thirtyfour of section eight, before the word "conditioned," I move to insert "such bonds shall be."

The amendment was agreed to.

Mr. SHERMAN. In line twelve of section seven, line ten of section eight, and line thirtyseven of section eight, I move in each case to strike out the words "this act" and insert "law."

The amendment was agreed to.

Mr. SHERMAN. On page 13, I move to strike out all of section ter after the word

"provided," in line twenty. The words to be stricken out are:

And, in like manner and under like restrictions and provisions, there shall be ascertained, recorded, and reported, the capacity of every establishment now existing, or that may be hereafter commenced, for redistilling distilled spirits.

The amendment was agreed to.

Mr. SHERMAN. On page 15, after the words "carried on," in line nine of section twelve, I move to insert "nor within six hundred feet from premises authorized to be used for rectifying."

27

The amendment was agreed to.

Mr. SHERMAN. On page 19, before the word "spirits," in line eighteen of section sixteen, I move to insert "low wines or."

The amendment was agreed to.

Mr. SHERMAN. After the word "condenser," in the next line, I move to insert, "back to the still or doubler, or forward." The amendment was agreed to.

66

Mr. SHERMAN. On page 30, section twenty-three, I move to strike out, in lines four and five, the words, and shall be immediately removed into the distillery warehouse;" at the end of line five to strike out the word "and ;" and after the word "proved," in line six, to insert and marked," so as to make the section read:

That all distilled spirits shall be drawn from the receiving cisterns into casks, each of not less capacity than twenty gallons wine measure, and shall thereupon be gauged, proved, and marked by an internal revenue gauger, &c.

The amendment was agreed to.

Mr. SHERMAN. In line ten of the same section, after the word "shall," I move to insert "be immediately removed into the distillery warehouse, and the gauger shall."

The amendment was agreed to.

Mr. SHERMAN. On page 39, in lines nineteen and twenty of section twenty-eight, I move to strike out the words "on all money accounted for by him for tax collected on distilled spirits.

The amendment was agreed to.

Mr. SHERMAN. On page 49, in line two of section forty-two, after the word "distillery," I move to insert "nor distilling apparatus."

The amendment was agreed to.

Mr. SHERMAN. On page 56, in line twenty of section forty-eight, I move to insert the words "and sold," after "manufactured;" and in the same line, after the words "put up," to insert and sold."

66

The amendment was agreed to.

Mr. SHERMAN. On page 73, at the end of section fifty-five, I propose to insert:

And whenever in the opinion of the Commissioner of Internal Revenue any distillery or other warehouse shall become unsafe or unfit for use, or the merchandise therein shall for any reason be liable to loss or great wastage, the Commissioner may discontinue such warehouse, and require that the merchandise therein shall be transferred to such other warehouse as may be designated by him within such time as he shall prescribe. Such transfer shall be made under the supervision of the collector, or such other officer as may be designated by the Commissioner; and the expense thereof shall be paid by the owner of such merchandise; and if the owner of such merchandise shall fail to make such transfer within the time prescribed, or to pay the just and proper expense of such transfer, as ascertained and determined by the Commissioner, such merchandise may be seized and sold by the collector, in the same manner as goods are sold upon distraint for taxes, and the proceeds of such sale shall be applied to the payment of the tax due thereon and the costs and expenses of such sale and removal, and the balance paid over to the owner of such merchandise.

The amendment was agreed to.

Mr. SHERMAN. On page 79 I move to strike out the clause which has been agreed to in regard to retail liquor dealers, and substitute for it the following:

Retail dealers in liquors shall pay twenty-five dollars. Every person who shall sell or offer for sale foreign or domestic spirits, wines, ale, beer, or other malt liquors, and whose annual sales, including the sales of other merchandise, do not exceed twenty-five

dollars, shall be regarded as a retail dealer in liquors. The amendment was agreed to:

Mr. CAMERON. I desire to offer an amend.

ment striking out fifty cents and inserting two dollars as the tax on whisky per gallon.

Mr. SHERMAN. I am not quite through with the amendments of the Finance Committee.

Mr. CAMERON. Then I give way for the present.

Mr. SHERMAN. On page 85, in lines seven and eight of section sixty-one, I move to strike out the words "except snuff, which may, at the option of the manufacturers, be put up" and insert " or."

The amendment was agreed to.

Mr. SHERMAN. In line seventeen of section sixty-one, on page 86, I move to strike out "can be" and insert "has."

The amendment was agreed to.

Mr. SHERMAN. In lines six and seven of section sixty-seven, on page 93, I move to strike out the words, "the manufacturer's name and."

The amendment was agreed to.

Mr. SHERMAN. In section eighty-nine, line four, page 114, I move to strike out "conclusive" before "evidence" and insert "prima facie.

The amendment was agreed to.

Mr. SHERMAN. I offer an amendment now to come in at the end of the bill:

And be it further enacted, That all provisions of this act which requires any use of revenue stamps for denoting the tax thereby imposed, shall take effect at the end of sixty days from the passage of this act: Provided, That if at any time prior to the expiration of the said sixty days it shall be shown to the satisfaction of the Secretary of the Treasury that a longer delay is necessary for the preparation and due delivery of any such stamps, he shall be authorized to fix a day not later than the 1st day of December next for putting said provisions, relative to the use of either of such stamps into operation, and shall give public notice of the day so fixed and determined upon, which day shall then be held and taken to be the time when that portion of this act which requires the use of revenue stamps for denoting the tax thereby imposed, shall have effect. The amendment was agreed to.

Mr. SHERMAN. Now, I believe, all the amendments of the committee have been acted on except those on pages 59 and 60 to section fifty, which were passed over informally last night. I ask that they be acted on.

The PRESIDENT pro tempore. The amendments to the fiftieth section which were passed over will now be considered.

The CHIEF CLERK. The Committee on Finance propose to insert as part of section fifty before the word "that:"

That the Commissioner of Internal Revenue shall have power, whenever in his judgment the necessities of the service may require, to employ competent persons, not exceeding fifty in number at any one time, whose term of service shall continue at the pleasure of the Commissioner of Internal Revenue, who shall perform such duties and at such places as may be required of them by the Commissioner of Internal Revenue, at a rate of compensation to be determined by the said Commissioner before the commencement of his employment.

Mr. FESSENDEN. I have been looking at that amendment and the other amendments in that section, and my opinion is that to adopt the amendment will be injurious. It is a change from the provision made by the House of Representatives, which, I think, is much better. To understand it you will have to look back a little. The House provided in the preceding section, on page 57:

That the Secretary of the Treasury, on the recommendation of the Commissioner of Internal Revenue, shall appoint one officer for each United States judicial district to be called a supervisor of internal revenue on distilled spirits and tobacco, whose duty it shall be to reside in such district and keep his office, &c.

The Committee on Finance have changed that, and I think have changed that section for the better. Instead of confining it to supervis ors of distilled spirits and tobacco in each judicial district, they have provided for the appointment of a specified number of general supervisors of internal revenue. It is quite obvious that you do not want a supervisor of distilled spirits and tobacco in every judicial district, for there are many judicial districts in the United States where no spirits are distilled, and no tobacco grown. Therefore that pro