Obrazy na stronie
PDF
ePub

1868.

THE CONGRESSIONAL GLOBE.

my opposition to this amendment of the committee.

every

It appears to me that there is no use in the meters and measures which will cost the distillers a thousand or twelve hundred dollars apiece if you are to put a specific tax of $1 50 a bushel upon the corn that is to be converted into whisky. The adoption of this amendment will be, in effect, a tax of eighty or ninety cents a gallon on good whisky, whereas it will reduce the tax on mean whisky to about thirty-five or forty cents. I state here before the Senate that three gallons of good copper distilled whisky cannot be made from one bushel of corn. After you have gone on and adopted your meters and your measures, and compelled distiller in the United States at an expense of one thousand or twelve hundred dollars to adopt those meters, why, then, do you say you will tax corn $1 50 a bushel if converted into whisky? Sir, it is a premium on mean whisky and a severe tax on good whisky. More than six or eight quarts of good copper distilled whisky cannot be made from one bushel of corn; but if you let the worm run until it gets to high wines and low wines, you may then make four or five gallons of whisky I hold that it is a fraud upon to the bushel. the country. All the whisky used for medical purposes in the United States will then be taxed from eighty to ninety cents per gallon, and the mean whisky, four or five gallons of which may be made from a single bushel of corn, will be taxed from thirty-five to forty cents a gallon.

I call upon the Senate to look at this measure and tell me why it is necessary to have your meters showing the precise number of gallons manufactured, and then say that a tax shall be imposed of $1 50 on every bushel of corn manufactured into whisky? Every gallon of whisky manufactured for medical purposes, for the purposes of health, will be subjected under the provisions of this law to a tax of eighty or ninety cents; whereas the mean whisky, the rifle whisky, which is said to kill at forty yards, may be manufactured at thirty-five or forty cents. If these gentlemen are to go to the expense of meters and measures to show what quantity of liquor they have manufactured at their establishment, tax them according, tax them by the gallon as you propose to do; but do not compel a man to make three gallons of whisky from one bushel of corn when it is impossible to make that much good whisky from a bushel of corn. From six to eight quarts of good copper distilled whisky is just as much as can be made from a bushel of corn. Why, then, offer a premium by legislation for mean whisky, and impose a double tax upon good whisky? Tax it fifty cents a gallon as you propose; and if you are going to discriminate at all, discrimnate in favor of good whisky, and not in favor of mean whisky, which this provision in this bill does.

It cannot be done.

I hope that the Senate will strike out this amendment-for it is an amendment of our Committee on Finance-and stand on the bill as it came from the House. Take this bill from beginning to end, and, in my opinion, it is about double as good as it came from the House as our committee have made it. As far as I have been able to examine their amendments, in every instance, according to my judgment, they are in error, and especially in this proposition, because, if I discriminated at all, I would discriminate in favor of good whisky, and not against good whisky.

Mr. SHERMAN. This section simply provides a mode and manner of ascertaining the production of the distillery, and prescribes the rules and terms by which a collector or assessor can determine the productive capacity of the distillery. Among other modes of ascertaining that, it provides that three gallons of whisky shall be counted for every bushel of grain used. In all the distilling I know of the It says that not grain yields more than that. less than three gallons shall be counted for every bushel of grain. Usually a bushel of 40TH CONG. 2D SESS.--No. 240.

[ocr errors]

grain yields three gallons and a quarter or a
half, according to my information. This lan-
guage that we have inserted here was inserted
at the request of the Commissioner of Internal
Revenue, and is the language of the present
law, which prescribes the same rule and mode
of ascertaining the capacity of the distillery.
The Senator from Kentucky sees in this amend-
I should
ment a great deal of evil and error.

be very sorry, indeed, to dispense with any
good whisky or encourage the production of
any bad whisky; but this amendment does not
do that. It simply prescribes a rule and mode
of ascertaining the capacity of the distillery.
The quantity of spiri to be made in the dis-
tillery is afterward gauged and tested in the
mode provided by law. This is nothing more
than providing approximate rules by which the
quantity of whisky distilled at a particular
place shall be ascertained.

Mr. FOWLER. I should like to ask the
chairman of the committee a question. After
the number of bushels of grain is ascertained,
are the distilleries to be taxed at the rate of
three gallons for each bushel?

Mr. SHERMAN. The quantity on which they have to pay tax is not determined by this section. This is a mode of ascertaining the capacity of the distillery:

That on the receipt of the distiller's first return
in each month, the assessor shall inquire and determ-
ine whether said distiller has accounted in his
returns for the preceding month for all the spirits
produced by him.

It is a mere question as to whether the dis-
tiller has made a proper return. Then it says:
"And to determine the quantity of spirits thus
pro-
to be accounted for," these rules shall be
vided; that is, every bushel of grain which
goes into the distillery, an account of which is
provided for in a previous section, shall be
accounted equal to a productive capacity of
three gallons.

Mr. FOWLER. Suppose he returns seven
hundred, does he not have to pay $1 50 for
each bushel?

Mr. SHERMAN. He will have to produce from that bushel three gallons; but if the grain is not consumed, or if it is consumed for some other purpose, as a matter of course he does not pay.

It is a mere mode of ascertaining the capacity of a distillery. I maintain that there are no distilleries in Kentucky but what make three gallons of spirits from a bushel of grain. They may make some good spirits; but then they work off the balance into low wines or some other grade of spirits; but I maintain that all of them produce at least three gallons to the bushel.

haps, where a man makes whisky for his own use and for his neighbors around, and where quality is looked to more than anything else, they will make about eight quarts or two gallons to the bushel; but in all large distilleries where it is made for sale, for gain, they make from three to four gallons to the bushel. In these small distilleries, where whisky is made on a small scale, for home use or the use of neighbors, and where quality is looked to almost exclusively, as stated by the Senator from Kentucky, they make from seven to eight quarts to the bushel; but where it is made on a large scale, and for commerce and trade, they make from three to four gallons to the bushel.

Mr. WILLIAMS. I do not know much about the manufacture of whisky; but taking the statement made by the Senator from Indiana, the necessity of this amendment, it seems to me, is perfectly obvious; for if you do not provide in the bill how many gallons shall constitute the product of a bushel, then these large distilleries may account for two gallons of whisky from each bushel of grain, and conceal or steal the other gallon; and these small distilleries to which the Senator has referred

Mr. MCCREERY. If the Senator will allow me to interrupt him, this bill provides that a meter shall be obtained by each distiller in the United States at his own expense. That will test the amount of whisky manufactured.

Mr. WILLIAMS. No matter about that. These meters have been tried, and they have not been found to be sufficient to prevent fraud; and this is only an additional provision. Where a certain number of bushels of grain are received into a distillery for the purpose of being manufactured into whisky it is necessary that the distiller should account for a certain number of gallons. The law requires him to do that; and it requires him for every bushel of grain to account for three gallons of whisky. So far as these small distilleries are concerned that make only say two gallons of whisky from a bushel of grain, the residue that is left is good for other purposes, I suppose; but if it is of no value, still the two gallons of whisky are so much more valuable than three would be, perhaps are worth so much more per gallon than if the grain had been converted into three gallons, that the owners of these small distilleries can afford to pay a little additional tax.

But, sir, it is impossible to provide by a general law for these particular and exceptional

cases.

The great bulk of the whisky manufacture in this country is made for sale, and the object of this legislation is to reach the large distilleries, and we must provide a law that will reach such a case and prevent frauds, even if it does in some cases operate with hardship upon the private distilleries that men set up and run for their own convenience and luxury or for the accommodation of their imme. diate neighbors. To undertake to say that there shall be no rule on this subject is to abolish one of the new guards which this bill undertakes to put upon distilleries to prevent fraud; and I do not think, therefore, that it is advisable to adopt the proposition.

Mr. FOWLER. I have taken some pains to ascertain the facts in regard to this question in my own State. The State of Kentucky occupies nearly the same relation toward the whisky-making business that Tennessee does. We have a large number of small copper-distilled distilleries in the States of Kentucky and Tennessee, and I apprehend in those distilleries every dollar of tax has been collected. There have been no frauds in any of those distilleries. Now, if they are compelled to pay a tax of a $1 50 on each bushel of grain conMr. DAVIS. The amendment of the comsumed, that will amount to a tax of seventyfive cents on the gallon, because I have been mittee is objectionable in two points of view. informed by those best calculated to give me There are two modes of distilling whisky: one advice on the subject that a bushel of grain is by the copper worm, and the other by steam. will not make in these distilleries more than about eight quarts or two gallons of whisky-The copper worm distilleries usually distill in good whisky-as has been stated. It is very evident, then, that this section is liable to the objection made by the Senator from Kentucky, and these persons will have to pay a tax of seventy-five cents on the gallon, instead of fifty cents, which will be paid by the large establishments where they make three, four, or five gallons, as the case may be, from a bushel of grain. I hope that this portion of the bill will be stricken out.

Mr. MORTON. Living in a State where there is great deal of whisky made, I have heard the subject talked about often, and I understand the truth to be about this: where there are small distilleries, private still, per

the season which begins about the 1st of November and ends about the 1st of June from one hundred and fifty to three hundred barrels. By that mode of distillation not more than two gallons on an average can be made, but by the steam mode something like four gallons an average can be made. The amendment, then, in its application to copper distillation, is too high by one third, and in its application to steam modes it is too low:

The whole quantity of spirits produced from the materials used shall be ascertained by reckoning not less than twelve quarts of proof-spirits for every bushel of grain used, nor less than seven tenths of one proof gallon of spirits for every gallon of molasses used.

Now, there is no man who knows anything about distilling whisky by the copper mode who will say that more than two gallons an average can be made to the bushel of grain. That is the average, but it is a high average. The average by steam is four gallons the bushel. If this provision read that the copper distilleries should be charged for two gallons the bushel, it would be right; and if in addition it provided that steam distilleries should be charged for four gallons per bushel that would be right. I tell the honorable Senator from Oregon, and also the honorable Senator from Ohio, the chairman of the committee, that it is as easy to make a product of four gallons by the steam mode of distillation as it is to make two gallons by the copper mode of distillation. The whisky ceases to run at a certain degree of strength in the copper mode; and everything that is left after that degree of strength has been reached goes into slop and is fed to stock hogs and cattle and mules.

Mr. WILLIAMS. I inquire of the Senator if that slop is not much more valuable than the slop of steam distillation.

Mr. DAVIS. It is something more valuable, but nothing like in the proportion in which this provision operates to the detriment of copper distilled whisky. You cannot possibly make three gallons average by the copper mode. The highest average, taking the whole whisky season, is two gallons for that mode.

I would make this suggestion to the honorable gentlemen: much the larger amount of whisky that is made is by the steam mode, because more gallons are produced by that mode; and in making the product in this amendment less than four gallons there is a serious injury done to the Treasury, because the product is four gallons the bushel average. That is a high average, I admit; but to put the average at three gallons would be too low. This mode, then, of ascertaining the true quantity of grain that is distilled is delusive and defective in that respect in relation to the steam mode, and it is equally incorrect and inaccurate in relation to the copper distilled mode, because it gives an average that is one half more than the real average. If the committee insist on adhering to this feature of the bill I think they ought to reduce the product as to copper distilleries to two gallons, and they ought to raise it as to steam distilleries to four gallons per bushel, which would be about right, and the real product of these two modes of distillation.

[ocr errors]

Mr. MCCREERY. I have but a single remark to make. I desire that Senators shall vote understandingly on this question. The adoption of this provision establishes a tax of thirty-seven and a half cents a gallon on mean whisky, and a tax of seventy-five cents a gallon on good whisky. That is the precise operation of this amendment proposed by the Committee on Finance, that a gallon of good whisky is to be taxed seventy-five cents, and a gallon of inferior, mean whisky is to be taxed thirty-seven and a half cents. As the good whisky is used for medicinal purposes, as it is an article that is used in the practice of medicine and tends to promote the health of the country, I do insist that the Senate of the United States ought not to discriminate against the good and force up the mean. If you are going to tax by the gallon, tax by the gallon. You have said that

you will tax whisky fifty cents on the gallon. Be it so; but do not come in now and tax the product of a bushel of grain and say that three gallons of whisky shall be made from it, when three gallons of good whisky cannot be made from it, and when four gallons of mean whisky may be made and are made from it by the steam process, as my colleague has told you. I say that more than two gallons of good copper distilled whisky cannot be made from a bushel of corn. Tax by the gallon; put your tax at fifty cents a gallon, but do not come here and say in effect that good whisky shall be taxed seventy-five cents a gallon, and mean whisky thirty-seven and a half cents. I move to strike out this amendment of the committee.

Mr. BUCKALEW. The question is on the adoption of the amendment of the committee. The PRESIDENT pro tempore. That is the question.

Mr. BUCKALEW. If this amendment of the committee should be rejected, the section would be left perfect; there would be no imperfection in its construction. Then it would be left to the department of internal revenue to adopt such rules as it may think proper in ascertaining the amount. If it thinks proper to adopt this rule of three gallons to a bushel, so be it. I think it would be very well to leave the department free-handed. There seems to be controversy about the amount which can be produced from a bushel of grain, and perhaps it will depend, as has already been stated, upon the process of manufacture. The rule may be different in different establishments. I think the best thing is to leave the bill as the House had it in this respect, to allow the department by its orders, by its rules, to establish the mode in which the amount shall be ascertained. Without this amendment the section will read, and to determine the quantity of spirits thus to be accounted for, the whole quantity of spirits produced from materials used shall be ascertained" upon some intelligent and fair mode of computation. As the product may be different in different establishments, according to the habit of manufacture in different parts of the country, it seems to me we had better leave it where the House did, in the discretion of the department itself.

Mr. CATTELL. The statement made by the Senator from Kentucky in regard to the amount of whisky produced from a bushel of grain differs very much from the information which I have upon that subject. One of the largest distillers in the city of Philadelphia, and a distiller of fine whisky, informed me not long ago that the production from his distillery was four gallons and a fraction per bushel of grain. The entire production of his distillery for the year-and he showed me his books, which proved his assertion-was for every bushel of grain four gallons and a small fraction; five one hundredths, perhaps.

Mr. DAVIS. Will the honorable Senator inform the Senate by what mode his friend distilled, whether by the copper mode or the steam mode?

Mr. CATTELL. I cannot inform the Senator by what mode. I am only able to state this fact, which answers the remark of the other Senator from Kentucky that it was only mean whisky which could be produced in this quantity, that this gentleman informed me that very recently he had sold a thousand barrels of his whisky in bond at five dollars a gallon. So it could not have been a very mean whisky!

Mr. McCREERY. Has the Senator ever tasted that gentleman's whisky? [Laughter.] Mr. CATTELL. I believe I have. Mr. MCCREERY. Was it good?

Mr. CATTELL. I think it was. [Laughter.] Mr. DAVIS. The distillers of steam whisky resort to this expedient: they first get the product of the grain in the form of steam distillation, and for the purpose of giving it something like a tincture of good whisky they run it through a long copper pipe; and I suppose that was an expedient that the honorable Senator's friend resorted to.

Mr. CATTELL. I have no doubt the distillation of which I spoke was through copper stills. I ought to have stated when I was on the floor before, in answer to the inquiry of the Senator from Kentucky,[Mr. MCCREERY,] that I had taken this whisky medicinally. I forgot to make that qualification.

Mr. SHERMAN. I hope the Senate will retain this clause, because it is recommended to us by the Commissioner of Internal Revenue as indispensably necessary in furnishing a rule. It is copied from the old law, and no complaint has been made of it. The Commissioner of Internal Revenue and the special commissioner, Mr. Wells, thought it had been omitted by mistake; and I have no doubt it is I will say, however, to the Senator from

80.

Kentucky that if on the conference which will occur in regard to this matter any difficulty should appear by the introduction of this clause we can very easily arrange it. My own impression is that the clause is right now. The minimum product of a bushel of grain ought to be fixed by the law, and there is no trouble, I think, in the rate fixed. It is copied from the old law, and there seems to have been no trouble in its application.

Mr. MCCREERY. I am in favor of making a man pay tax according to the number of gallons he makes. If he makes one gallon, let him pay fifty cents; if he makes two let him pay a dollar; but do not say he shall make so much out of a bushel of corn, and thus make it to his interest to make the whisky as mean as possible. Do not let us offer a premium for mean whisky. Let him pay tax on what he makes, but do not offer a premium for mean whisky. Do not let it go forth from this Hall that if a man will make mean whisky he shall pay thirty-seven and a half cents a gallon, when if he makes good whisky he must pay from seventy-five to eighty cents a gallon tax. Do not let us send that forth as the judg ment of the Senate of the United States. If we discriminate at all let us discriminate in favor of good whisky, that which a man may take without hurt to his constitution or his health, that which physicians may administer to him and do administer to him in disease. If we are to discriminate at all let it be in favor of good whisky, and not say that that shall be taxed eighty cents a gallon, when mean whisky shall be let off at thirty-seven and a half cents a gallon, which is the positive and direct operation of this provision.

The PRESIDING OFFICER. The ques tion is on concurring in the amendment made us in Committee of the Whole.

as

The amendment was concurred in.

Mr. POMEROY. Now all the amendments made in committee have been disposed of, and I move to amend the bill by striking out fifty cents," in line five of section one, and inserting "two dollars." If it is more desirable to the friends of the bill I am willing to say $1 90, because I believe there is about ten cents per gallon additional tax in other forms; but in order that we may have the sense of the Senate I will simply move to strike out "fifty cents" and insert "two dollars." As the Senator from Indiana [Mr. MORTON] desires to address the Senate on this question, I yield the floor to him.

Mr. MORTON. Mr. President, I have but a very few words to say in regard to this proposition of the Senator from Kansas. The opinion in favor of reducing the tax on whisky from two dollars to fifty cents, or some sum thereabouts, I regard more as the result of a panic than anything else. I have never heard what I regarded as a good reason assigned for it. It was put on after considerable discussion, and I think will now be taken off, for I apprehend the vote will be that way here-as it has been in the House, so it will be probably in the Senate without any specific reason assigned for it beyond this: that you cannot collect a tax of two dollars, because there is such great temptation to commit fraud, but that you can collect a tax of fifty cents, for the reason that the temptation to fraud is not so great, and that the manufacturers of whisky will consent to pay that tax.

Mr. President, the whole thing is narrowed down to the simple question whether there is not a sufficient temptation under the reduced rate for the commission of fraud to induce its perpetration. Let me remark to you that the perpetration of frauds upon the revenue is much easier now than it was two, three, or four years ago; that the mode of committing these frauds is now perfectly understood; has been reduced, I may say, to a science, and the whole country, almost, has come to understand how it is done.

Another thing: those engaged in frauds upon the revenue have now found out their men, their officers, their collectors, their assessors,

1868.

on,

THE CONGRESSIONAL GLOBE.

their inspectors, their district attorneys. They know who they are, and that they can rely upon them. In other words, the machinery for committing these frauds is all prepared. It has and not to be invented, to be experimented tried, as it has been, but it now exists readymade. Under this law there will be a temptation to the extent of twenty-five dollars per barrel to commit fraud; a temptation yet under this law of twenty-five dollars per barrel, with The the machinery all prepared to hand. officers who will engage in the perpetration of the fraud are known, and the facilities are so much greater now than they were two or three years ago that manufacturers can, perhaps, make more money by frauds with the tax at fifty cents a gallon than they could two or three years ago with the tax at two dollars a gallon.

Mr. President, these facts cannot be disputed. Here is a tax of four dollars on the barrel and fifty cents on the gallon; call it in round numbers a temptation of twenty-five dollars on each barrel for the commission of fraud. Will you tell me that this is not sufficient to induce these men to perpetrate fraud? The Senator from Nevada stated the whole truth; it is an appeal to the manufacturers of whisky to pay some revenue, rather than a proposition to collect it. But, sir, the appeal will fail, for the reason that the temptations are still too strong, and the temptations will overcome the generosity that is appealed to.

Mr. President, I do not believe that this revenue will be collected better substantially than it has been before. That is to say, the temptations to fraud are so great that it will be perpetrated as heretofore in every part of the country; and all we shall gain by this bill will be in the new machinery that may have been devised and that would be equally operative in collecting the tax of two dollars as in collecting a tax of fifty cents.

We are throwing away a dollar and a half substantially on each gallon of whisky. We are conceding before the whole world that this Government has not the skill and the It is a concession to force to collect this tax. the robbers. It is almost a bargain made with the robbers. Why, sir, there are some countries in Europe that less than twenty-five years ago had to make terms with the highwaymen and banditti that invested the country. There were certain provinces in Italy that had to do that. I believe it has been done in Mexico within the last few years. And, sir, we are substantially making terms with the whisky thieves; we are asking them almost in the language of the Senator from Nevada, "How much will you consent to pay?" Mr. President, the principle upon which this bill has been brought here is wrong; it is shameful; it is disgraceful; it is a confession of weakness on our part that we have not the force nor the intellectual resources by which this tax can be collected.

I have heard as an excuse for this, all the blame laid on the executive department. While the executive department is to blame for much in the appointment of bad officers and the refusal to remove those, perhaps, that have been convicted of fraud, all the blame does not rest there. No, sir; the great fault and failure of our system has been in the failure to enforce the criminal laws of this country. If the committee had devoted themselves to the production of a new law by which the criminal laws would have been enforced, they would have made much more progress in the collection of this revenue.

As I had occasion to state yesterday, there is now no personal danger connected with the violation of the revenue laws. The only penalty is a compromise. The men engaged in this business have no horror of being disgraced; they do not care very much about being exposed, especially when they make a great deal of money by it; but there is not one of them who is not opposed to going to the penitentiary. I do not care how low down he is, I do not care how mercenary and utterly corrupt, still he has almost as much objection to going to the penitentiary as an

honest man has; but the fear of going to the
penitentiary has been removed; there has been
no personal danger connected with the viola-
tion of these laws. As I have said before, the
only penalty was a compromise, in which he
always got off by paying less than he would if
he had paid the honest tax in the first place.
So that there has been substantially a premium
offered in favor of committing frauds, with the
expectation of getting off by a compromise.
Why, Mr. President, there have been two or
three men convicted recently in New York.
It surprised the whole country. It has had a
business.
beneficial effect, too, in this
There has been one convicted at Richmond,
in Virginia, and that has had a good effect.
Mr. BUCKALEW. Several have been con-
victed.

very

Mr. MORTON. If there was one man con-
victed in every State and sent to the peniten-
tiary it would almost stop these frauds and you
could collect the two-dollar tax better than you
can collect this fifty cent tax under the opera-
tion of this bill. If only twenty-five out of the
hundreds of scoundrels that have been engaged
in this business had been tried and convicted
and sent to the penitentiary it would have saved
you from twenty-five to fifty million dollars.
The great failure in the whole business has been
the compromise system. I repeat it again; it
is just as plain as the sun in the heavens. What
explanation can be made?

The learned chairman of the Committee on
Finance I know has paid a great deal of atten-
tion to this subject; but how can he explain
the fact that up to this time out of many thou-
sand cases there have been less than twelve
convictions to imprisonment, while hundreds
and thousands of indictments have been found.
I know they have been found in Illinois, they
have been found in my State, they have been
found in New York; but what has become of
them? They have all got off the docket in
some way. The spirit of compromise emanat-
ing from the Treasury Department here, from
the Commissioner's department, has gone
abroad until the whole system has been de-
bauched and nearly destroyed.

As I had occasion to say yesterday, there
are perhaps some cases that ought to be coin-
promised. I believe that; but as between the
two evils of compromising everything and com-
promising nothing, I say we had much better
compromise nothing. Let us try that awhile.
We have tried the other and have ruined the
system. You intended only to compromise
with a few cases where perhaps it was proper
to do so; you have compromised all. You
have opened a door and the whole body of
criminals have marched out through it. This
bill contains the same door carefully and elab-
orately provided as it was before; and can auy
reason be shown why it will not have the same
operation?

Mr. President, I am one of those who be-
lieve that two dollars can be collected as well
as fifty cents on the gallon, and in doing that
we shall collect almost four times the amount
of revenue that we shall collect under this bill.
We are making a shameful concession of three
fourths of the revenue that we ought to collect
upon whisky.

We are doing it, too, without reason; we are
doing it under a kind of panic. I know just
how it started, and I know the kind of talk by
which it started. It started some three months
ago. It was said that the whisky men would
furnish enough money to carry the elections
in this country, and that the only way to defeat
that was by reducing the tax on whisky. That
was the beginning of this panic. Now, sir,
they will collect enough money with the tax
at fifty cents, for that purpose, if it can be
accomplished in that way, and as the Senator
from Vermont [Mr. EDMUNDS] suggests, apply
That
the balance that they do not have to pay.
reason is not a good one. Money will not
carry these elections. I have more faith in the
integrity of the people than that. I believe
after all money has but a small share in determ-
ining the result of these great popular move-

ments. But, Mr. President, if it has its share
they will get enough under the present bill to
answer all practical purposes.

Sir, this bill contains a shameful concession, one that ought to bring the blush upon the cheek of almost every American Senator; an acknowledgment to the plunderers of the Government that they have beaten us; and, in the language of the Senator from Nevada, we are now making an appeal to their generosity. "How much will you give?" as it might have been said by the prince or governor of a little Italian principality to a gang of banditti, “How much will you take to let travel go on through this principality?"

Then, Mr. President, let us look in the proper direction, let us look to the enforcement of the laws. You may talk about your meters and your improved machinery and your walls around the distillery, and all these numerous little arrangements that are prepared for in this and other bills; but what do they all amount to? As long as the criminals, well known as they are, walk the streets of every city in the finest clothes and driving the finest horses, what do all these petty, miserable, little arrangements amount to when the criminal laws are not enforced? Sir, you had better appropriate $1,000,000 to pay prosecuting attorneys; you had better appropriate money and present temptations on the side of officers to do their duty. You will make more money in that way than you will by beginning with a concession of three fourths of the whole amount of the tax to the thieves and then present the same facilities for escape after all that they have had before.

Mr. President, I had Mr. SHERMAN. resolved at one time not to say one word to endeavor to convince any Senator of the necessity of reducing the tax on whisky. It is a question that every man can determine for himself. What I say now is not at all for the purpose of convincing any one of what is plain and palpable to everybody, but rather for the purpose, on account of the remarks of the Senator from Indiana, of defending the Committee on Finance.

The

The Committee of Ways and Means reported the tax bill at this session to the House of Rep resentatives with the tax on spirits left at two dollars a gallon. They reported it in that shape to the House of Representatives, taking ground, however, that they would not attempt to fix the rate of tax on whisky, because that was a question the reasons controlling which were within the mind of every member of the House, and so they reported a bill leaving the rate to stand as in the existing law. House of Representatives, after full debate, after some five months' consideration, when the subject was presented in every possible form, and when various propositions were made, some to reduce the tax as low as twentyfive cents, finally fixed the tax at fifty cents a The whole machinery of the gallon and imposed special taxes equivalent to ten cents more. bill was then made to collect that tax, not a higher tax, but to conform to the rate fixed by the House. The bill has come to us. It is true a proposition was made in the Committee on Finance to change this rate; the members of the committee varying in their ideas just about as the members of the Senate do, some wanting it a little more, and some less; but on the whole we concluded that if there was to be any change in the rate of tax that change must be made by the Senate. I am perfectly willing that the Senate should take the responsibility, without any instruction or any information from the Committee on Finance as to the rate of tax.

Mr. President, I have heard before of my friend from Indiana's panacea for all the ills in the internal revenue system. He would not compromise with anybody; he would make an iron, unbending rule to put everybody in the penitentiary. I should be very willing to give him a $100,000 of that $1,000,000 he talks about, and make him prosecuting attorney of all the persons charged with crime under the

internal revenue laws. He says the Committee on Finance ought to have reported a criminal statute. We have had some experience of that kind.

Mr. MORTON. No, there are plenty of statutes, but you do not enforce them.

Mr. SHERMAN. I hope the Senator does not expect the Committee on Finance to enforce criminal statutes. We reported one criminal statute, and the Senate refused to agree to it because it was so harsh, and this bill contains at the end of almost every section a clause making something a penitentiary offense. So there are enough criminal statutes, enough offenses defined to fill all your penitentiaries and jails. The Senator asks, then, why these laws are not enforced? In the first place, so gross and palpable has been the corruption caused by the failure to collect the tax on whisky that these people have bought their way through the meshes of the law, district attorneys and courts, and assessors and collectors and inspectors, and so on through the whole list. Why? Because the temptation is so enor mous, the fund is so great, the amount in their possession and control is so vast, that they are able to break through all the meshes of the law. I do not know why more cases have not been prosecuted, but I have authority to say from the Commissioner of Internal Revenue-and I give it only on his statement, because I have no information on the subject except what I derive from him-that he has attempted to settle no cases involving penitentiary offenses, that his settlements have usually been confined to smaller matters in regard to the ordinary machinery of managing the internal revenue, and that no case involving a criminal offense had been settled except with the approbation of the judge or the district attorney, one or both. This officer, I have no doubt, has endeavored to do the best he can, though he has not in all cases evinced the energy and vigor which some think he ought to have shown.

Mr. CAMERON. Allow me to say that I know some cases where settlements were made that the district attorney did not recommend. I know of one case of a thousand barrels of whisky

Mr. SHERMAN.

A criminal case?

Mr. CAMERON. I will state the facts, and the Senator can judge. There was one case where I was told, and believed, one thousand barrels of whisky were in the hands of an individual of great power, not far from my place. The Senate may remember that I took great pains a year ago to have a Democrat made collector of a certain district, because I believed he would honestly enforce the law, and it was a district where other men seeking the position were in league with large distilleries. In that district I was told of one thousand barrels of whisky in the possession and under the control of a certain man which he got through somehow or other without paying any tax. Although information of that fact was brought here by the collector, the man escaped in some way, not through the courts, but through the officers here, and as I am told through a member of Congress. I know another case where $40,000 was gotten from a distiller, and the money is still in the custody of the Treasury Department here or some officer of it, and the most strenuous and determined exertions have been made for a year to get the collector removed who exposed that fraud of the $40,000. The trouble is not in the courts.

Mr. ANTHONY. Allow me to say to the Senator from Ohio that several cases have been brought to my knowledge where considerable seizures of whisky have been made, and in the opinion of the prosecuting officer there was no possible doubt that it would be forfeited to the Government; but without any consultation with him, and, so far as he knows, without any consultation with the court, though there may have been consultation without his knowledge, he was directed to discontinue the suits, suits in which he had no doubt the Government would prevail. I do not know where the blame is, or whether there is any blame in the mat

ter, but I think it is a very bad system that permits such things.

[ocr errors]

Mr. CAMERON. Allow me to make a further statement. There is one case of fraud in my immediate neighborhood where a man was removed who was an inspector or something of that kind, because I knew he was engaged in fraud. He was out for a little while, and then suddenly was reinstated, and within the last ten days the Commissioner of Internal Revenue came to me and said, "I have been compelled to reinstate that person. It is not necessary for me to mention his name. I know that members of Congress interfere in such If a man of influence in a district is convicted in the public mind of fraud, his member of Congress will go to the Department and get a release. I have now mentioned the case of a man who I knew was engaged in frauds, knew by evidence so strong that I could not resist it, and he has been reinstated.

cases.

Mr. SHERMAN. Now, coming back to the declarations I made before, I say again, on the authority of the Commissioner of Internal Revenue, that no criminal case has been settled except upon the recommendation of either the judge or the district attorney, so I am informed; and the statements made by the Senator from Pennsylvania and the Senator from Rhode Island are not inconsistent with the truth of this statement. That in cases of forfeiture settlements have been made which are totally indefensible, if the facts are as stated in the public prints and stated here by Senators, is manifest and palpable; but if I was in the place of the Senator from Rhode Island, or the Senator from Pennsylvania, I would make a specific charge, and if I found that a high officer of the Government was guilty of gross neg. lect, or of malfeasance, I would bring the matter before the Senate of the United States with date and figures and amounts, and submit it to the other House as the basis for an impeachment proceeding. That is the remedy. If I knew, in the language of the Senator from Pennsyl vania, of a distinct case of a man guilty of a palpable fraud, who was found guilty of that fraud, and then restored to office after examination, I would bring that to the attention of the House of Representatives.

Mr. CAMERON. I did not say that he was found guilty, but I say that I knew he was guilty of fraud, and so represented it to the Department, and he has been reinstated.

Mr. SHERMAN. I come back to the point again: are we not all satisfied that it is impos

strong a temptation that no law, no machinery, will enable us to collect it, and therefore the Committee on Finance simply report back this bill unaltered in this respect. If, however, the Senate choose to raise the rate it is for them to do it. Something is said about a tax of $2.50 being collected in England. How is it done? If you give us the machinery adopted in England we can collect three dollars tax; but would our people submit to it? What is the English system? By their system of special licenses and prohibitions they confine the whole process of distilling spirits to about ten hands, ten great corporations, with vast capital, and those ten corporations distill all the spirits for the kingdom of Great Britain, and they do it under penalties and under a system of monopoly that our people would not submit to. Even the little attempts we make to restrain small distilleries and confine the distillation of spirits to the large distilleries are strongly opposed in the Senate.

The English system would uproot every distillery in the United States of America, destroy the whole of this property, and then charter corporations with capital so vast that the whole people would cry out against the monopoly, and I do not believe it would be possible, even if every member of the Senate and every member of the House believed it was better to organize this system of monopolies, to pass a bill fastening it on the country. There is one establishment in England that I was in which covers six acres of ground, and it can only be maintained by a vast aggregation of capital, and it is substantially run by the British Government. Are we prepared for that system? If we are, if we are willing to break down all the distilleries and substantially put the monopoly of this business into the hands of the Government to be operated only by great moneyed corporations, then we can collect three dollars or two dollars and a half, but the public judgment in this country would not tolerate it, and it would be idle for us to propose such a proposition.

In the other European countries, which are somewhat similar to our own, the tax varies from fifty to seventy-five cents. In Germany I think it is about thirty-six cents. In most of the other European countries, except England, it is about the rate proposed by this bill. It must be remembered that this is a vast country, covering many times the boundaries of Great Britain; that it has exposed frontiers where whisky may be smuggled; that it has vast deserts and great plains and unoccupied country; and very much of the fraudulent whisky in this country has been distilled in the various distilleries in the cities. Why, sir, it is supposed that about one third of all the fraudulent whisky has been distilled from molasses. Molasses may be distilled under this desk by a little machine that is sold at from ten to fifty dollars in the city of New York. It may be done in a garret, in a cellar, or in a shop; yes, it may be done in a box. As long as you maintain your present tax of two dollars this fraudulent distillation will go on, and all the detectives that the United States can employ, all the penitentiaries you may threaten, all the trials and prosecutions you may institute will not prevent this fraudulent distillation of whisky, if it can be made, as it can now be made from molasses in a little copper jug, you may say, when a single barrel distilled under the present act would pay a man eighty dollars a day.

sible for some reason or other to collect the tax of two dollars a gallon on whisky? I was the last man to yield my opinion on that sub-d ject. I was always opposed to the high rate of tax fixed by the law, two dollars, and preferred one dollar, but at the beginning of this session I made up my mind that it was the duty of Congress to deliberate upon some mode of collecting the two-dollar tax; but when the House of Representatives, the proper organs of the people, who directly represent the people, and who by the Constitution have power to originate revenue bills, have by their own motion after full consultation determined that they would only collect a tax of sixty cents a gallon on whisky, is it wise for the Senate at this stage of the session to go back on this proposition and change it, and thus ran the risk of a controversy between the two Houses on a question vital and vitally necessary to be decided? That is the point. The Committee on Finance did not feel themselves at liberty to reopen the question; and if they had reported this bill with a substantial change from the proposition of the other House, they would not have been justified unless they were able to give clear and conclusive reasons for that change. If the Committee on Finance now stood here demanding that the judgment of the House of Representatives was not right, we should have to support that demand with strong and conclusive reasons.

On the other hand, there is a general acquiescence by the country that it is impossible to collect the two-dollar tax; that it presents so

Mr. MORTON. And under the proposed act it would pay him twenty-five dollars.

Mr. SHERMAN. No, sir; there is where the Senator is mistaken. No whisky can be distilled from molasses under this bill. It can only be distilled from molasses at from one dollar to $1 10 a gallon. Perhaps I state it too low. The reduction to fifty cents utterly destroys that business. If you keep the tax above that, so that molasses spirits may be distilled, as a matter of course this molasses trade can supply the whole market, and it may be done in an illicit and improper way, and you cannot detect it, because it requires no

12

[ocr errors]

machinery. You cannot distill from grain without having mash-tubs and pipes and all the paraphernalia of a distillery; but you may distill from molasses without any of this paraphernalia. The process is more simple than the conversion of molasses into sugar-a very simple process, indeed.

It has been stated to us that a tax higher than sixty cents on the gallon would still encourage and leave open this chance for fraud. ulent distillation from molasses. This bill is framed upon the idea that in all the process of distillation from grain, every stage of it may be marked, may be tested. Officers have been devised, gaugers and inspectors have been provided, and all the machinery necessary for collecting this tax.

Now, I warn the Senate if you follow the advice of Senators and leave the tax at two dollars the machinery which is provided for in this bill is not adapted to the collection of that tax. The machinery was made by the Committee of Ways and Means for the collection of a lower tax. If you attempt to maintain the two-dollar tax you cannot collect it with this additional machinery, because you cannot collect a two-dollar tax except by having much more rigorous measures than are proposed by this bill. I, however, leave the question for the Senate to determine. My conviction is that if the Senate should raise this from fifty cents to one dollar or two dollars they will have to take the back track before the close of the session. For this Congress to adjourn without some adjustment of the question of the tax on whisky would be a crime as bad as the fraudulent distillation of spirits or any of the crimes committed against the revenue laws. We must settle this question; and I assure Senators that if they attempt to continue this tax at two dollars a gallon the whole machinery of this bill must be changed to adapt it to that rate, and long delay will occur again. However, that is a matter for the Senate to determine. I will not detain them longer.

Mr. MORTON. I have but a remark to make in answer to the Senator from Ohio. He states on the authority of the Commissioner of Internal Revenue that no penitentiary cases have been compromised except with the approbation of the court or the district attorney.

In the first place, the idea of compromising a criminal case in advance upon the recommendation of the court is somewhat novel, because the court until trial has no means of knowing anything about the case more than people outside; and it is not the practice of courts to give their opinions in favor of dismissing criminal cases. I should look with some degree of suspicion upon the conduct of any court that would go out of its way for the purpose of recommending that a man indicted for a penitentiary offense connected with the revenue should be compromised with and discharged. I have never known such a case. But the courts operate upon the advice of district attorneys who are their advisers under the law, and as a general thing where the prosecuting attorney asks a court to non pros. or dismiss a case, it will be done. According to that statement it is brought down to the operation of the district attorney and the judge of the court. We understand that but few convictions have taken place, and in fact but few trials have taken place; but we all know that there have been a great number of offenses committed and a great number of indictments have been found. Then it comes down to this, by the statement of the Commissioner of Internal Revenue, that those offenses are passed by and those indictments are non pros. by the advice of the district attorney or of the court.

There are many murders committed throughout the country, and in one fourth of all the cases of murder there are trials and convic tions, although it is a crime that is usually committed with great secrecy; but in not one case out of one hundred is there a trial and a conviction for a fraud upon the revenue, although they are committed with far less secrecy, far more easy of discovery, and it is far more easy

[ocr errors]

to convict in them. Take the case of forgery: it is not too much to say from my experience in the practice of the law, that in one third of all cases of forgery that are brought to the public attention there are convictions; and yet it is a crime that is committed with great care, and usually by a person of more education and skill than a common thief.

But in the cases of frauds upon the revenue there has not been one conviction out of a hundred cases. And so you may run through the whole catalogue of crimes, and you find a fair proportion of convictions to the whole number of cases that are brought to notice; but in the cases of these great frauds upon the revenue, where millions and millions of dollars are stolen in one month, more money stolen in one month from the Government than is taken in the way of common larceny and stealing in the country in five years, there are hardly any convictions. I say the common stealings and larcenies of the country in five years do not comprehend as much money as the Government is robbed of in one month in this way. And yet, sir, there have been less than one dozen convictions in all these States in four or five years, and we are now told the responsibility is thrown back on the district attorneys and on the courts. And yet this very bill again provides for compromising these cases, civil and criminal, upon the recommendation of the district attorneys and the courts-a continuation of the very means heretofore resorted to. I might almost ask what excuse there is for it. What justification can there be for this kind of legislation with this terrible experience staring us in the face, with this great loss of revenue, this vast body of crime unpunished, well known but unpunished criminals walking abroad at noon-day with impunity? And yet we propose to leave the same means in operation by which this thing has been accomplished.

Mr. WILLIAMS. Mr. President, I have heard the distinguished Senator from Indiana declaim upon this subject two or three times with great vehemence, and denounce everybody and everything because there was within this law a provision that suits or seizures might be compromised by the public authorities; and he imagines that he has discovered an infallible remedy for all the frauds that are committed anywhere in the United States in the revenue system because he has discovered that suits have been commenced and have been compromised by the district attorney and by the judge, assuming, of course, that the district attorneys and judges were corrupt, purchasable men. In my opinion that provision in the law has no more effect one way or the other upon the violation of the revenue laws than a spoonful of water would have upon the body of the ocean.

Each individual seems to imagine that he has the specific remedy, and if his particular idea shall be adopted all evils will be cured. Some think it lies in a very high tax; some think in a very low tax; some think that it lies in a certain kind of meter, and some in a certain sort of machinery; but the Senator from Indiana has discovered that it all arises out of this provision of the act which allows the district attorneys and the judges, with the assent of the Commissioner of Internal Revenue, approved by the Secretary of the Treasury, to compromise a suit. All these men, of course, are corrupt; otherwise they would not compromise a suit that ought not to be compromised!

Now, sir, the argument of the honorable Senator, it seems to me, is entitled to very little weight, for the very plain reason that it proceeds upon the ground that the district attorneys of the country are venal and corrupt men. If that be the fact, is it not perfectly evident that any district attorney can defeat a prosecution without a compromise? Suppose that an individual who has made his hundreds of thousands of dollars by defrauding the revenue is indicted for a violation of the law. Is it not easy for him to suborn the district attor

ney to induce him either not to subpoena the necessary witnesses to convict, or bribe the witnesses to be absent? May he not make any arrangement with the prosecuting attorney that he pleases? And the system proposed by the honorable Senator leaves it to the district attorney, without revision anywhere by any body, and under his system the only thing the criminal would have to do would be to hire the district attorney so to conduct the prosecution as to eventuate in an acquittal; and that is the usual course wherever district attorneys are bribed. But under the system here proposed no compromise can be effected without the consent of the district attorney, that consent to be approved by the Commissioner of Internal Revenue upon a statement of facts, and to that is now superadded the approval of the Attorney General.

Sir, all the men who are concerned in the collection of revenue testify that it is necessary that this power should exist somewhere, that it cannot with safety be abolished, for the collectors of internal revenue may abuse the powers with which they are invested. No civil officers, I undertake to say, in any country, were ever invested with more dangerous powers than are conferred on these revenue officers. If one was so disposed, he could seize the property of an honest man and compel him to buy his peace and the Commissioner of Internal Revenue would have no power in his hands to protect the man who was innocent, to prevent abuses of power in this way; but it is left exclusively for collectors and subordinate officers in the service to exercise this extraordinary power at their pleasure. The difficulty does not lie here; it lies, I undertake to say, in the excessive tax that was imposed upon this article, a tax that was too high at the beginning, and experience has demonstrated that it was too high, and that it cannot be collected.

If the history of the excise system demonstrates one fact more than another, it is that any tax which is so greatly disproportioned to the cost of producing the article as the whisky tax is disproportioned to the cost of whisky cannot be collected, as a general rule. That. is proved by the history of European countries. At the beginning of this session I took pains to look into this question and to read the various books I could lay my hands on upon the subject; and I was convinced-and no man can fail to come to the same conclusion who will examine the subject-that our experience in this respect has been like the experience of all other countries. When a gallon of whisky costs only forty cents to produce it, and you impose a tax of two dollars, there is a temptation to commit fraud that is irresistible, and that will produce fraud as long as men are as weak and as fallible as they are at this time. And it is not chargeable to one man or another man; it is chargeable to the selfishness and weakness of human nature. Sir, it is a tax that cannot in the nature of things be collected under our system of government at any rate. It is a tax that cannot be collected without the exercise of that tyrannical and arbitrary and absolute power over property and the rights of the citizens which the people of this country will not endure.

The Senator speaks of convictions for murder and convictions for forgery, and argues as though the violation of the revenue law stood upon the same ground. Let a man who has committed the crime of murder approach the honorable Senator or attempt to intrude into society, and how will he be treated? Will not all persons avoid him? Let a man who is known to be guilty of the crime of forgery endeavor to intrude himself into society, and what will be his reception? Men as to whom it is well known that they have made their hundreds of thousands of money by the violation of the revenue laws appear here and are treated and regarded as our most distinguished citizens. They glory in what they have done. Popular opinion is so perverted that it does not condemn this offense as it does the offense to which the Senator referred. Put a man

« PoprzedniaDalej »