Mr. JUDD. I renew the amendment to the amendment for the purpose of explaining in a very few words my conviction and belief. I observe, from the course of the discussion this morning, that there is a very general concurrence of sentiment that the tax on distilled spirits as at present fixed by law cannot be collected. Discreditable as that may be to the parties really responsible for this condition of affairs, it is a condition not to be disregarded in the framing of our revenue laws. While my conviction is that the larger part of these frauds upon the Government are attributable to the administration of the present law and the executive department of the Government, I cannot exclude entirely from my consideration the fact that the high rate of taxation and the enormous profits derived from the violation of law has been one proof of the causes that induced the present position. My conviction is that if this law and its enforcement were a private enterprise men honest to execute would be found. If the rules of honesty and business capacity, that prevail ordinarily among our business men, were applied to the execution of the present law, instead of receiving from this source only about fourteen million dollars during the past year the Government would have received $100,000,000. But the history of the country, and its administration during the last year shows, distinctly and clearly, that under the present system we were not to collect the present tax. Impunity induces boldness, and we are degenerating daily, and the influence of this demoralization is extending wider and wider; and the combinations to defeat the execution of revenue laws are growing stronger. The skill displayed in violating law if applied to any honest calling would entitle the possessors to honor and renown. We cannot change || the Administration, as has been recently demonstrated, and the question recurs can we do anything so as first, to prevent in any degree these frauds upon the Government, and secondly, to obtain the largest amount of revenue for the Government. It is perfectly evident || that the tax of two dollars has not given us fifteen cents per gallon during the last year. The gentleman from New York [Mr. PRUYN] says not five cents. My desire was to state it large enough, so that if there was any error it would be against my position and not in its favor. Hence no man should be alarmed at the proposition of my colleague from Peoria [Mr. INGERSOLL] to reduce the tax to twentyfive cents, if by reducing the tax to that figure we shall do something towards restoring the moral tone of those dealing in this article, by removing the temptation to defraud. At that price the Government will obtain more revenue than it has obtained during the last year at the present rate of two dollars as fixed by the present law.

I say, then, let us, in accomplishing these objects, cut off, according to the illustration of the gentleman from Pennsylvania, [Mr. KELLEY,] the entire tail at once. Let us not make another experiment upon this question. If it

forty-five cents per gallon, it requires sixtyseven and a half cents worth of molasses to make a gallon of spirits. It will cost something like ten cents to manufacture it, which brings it to seventy seven and a quarter cents. You cannot make a gallon of these fraudulent spirits from molasses and sell it in the market for less than about eighty or eighty-eight cents. It may become lower hereafter; but this being the case, I doubt whether we have gone too high in fixing sixty cents. If the House prefer fifty cents as the direct tax on whisky, I will suggest when we come to that point, to increase the tax upon capacity.

[Here the hammer fell.]

Mr. HARDING. I move to strike out twenty-five cents, and in lieu of it to insert twenty-six cents.

whole to fifty cents per gallon is as high as a safe collection of the revenue will warrant. The specific levy of thirty-five cents, adding to that the license, will, in my view, accomplish what is desired by this bill, that is, take away the temptation for fraud and give the Government a fair income from this article of luxury. In the present situation of the country it is safer, Mr. Chairman, to err on the side of reduction. If things continue as they have been this source of revenue will substantially cease. At any rate, the experiment must be made, and the fears expressed that there will not be revenue enough to meet the wants of the country will be dismissed in consideration of the condition of the receipts from this source. My desire is that we shall so frame this bill as to fix the entire levy, whether by special tax or otherwise, at an amount not exceeding fifty Now, Mr. Chairman, I wish to say to the cents. To do this we must, according to the committee, while I am as anxious to obtain a estimates made by the chairman of the Com-large amount of revenue from this source as mittee of Ways and Means, as to the amount from licenses, &c., reduce the special tax to about thirty-five cents. If you add to that the amount of the license tax, as provided in this bill, you have a rate of about fifty cents per gallon. And I repeat again, Mr. Chairman, that my belief is that unless we destroy illicit distillation and put an end to these frauds, we shall get no revenue, and that the only sure method under the control of the legislative department of the Government is to reduce the taxes.

Mr. SCHENCK. I observe that there is manifested by the House a good deal of harmony on this subject, not only among mem bers, but between the Committee of the Whole and the Committee of Ways and Means. The Committee of Ways and Means have made a recommendation to the House of sixty cents as the amount of the direct tax. They do not ask to have it considered in any other light than as a recommendation. They will be perfectly satisfied with any figure that the House may, in its discretion, think it wisest to fix. Indeed, the committee were somewhat divided upon the subject, some favoring a tax a little below sixty cents, and others a tax a little above that amount. The common purpose we all had in view was to fix an amount of tax which shall be collected, and which in process of being collected shall not be subject to those evasions and frauds which have been the disgrace of the country.

any gentleman upon this floor, I am fully convinced, after considerable observation bestowed on this subject during the last three or four years, living, as I do, in the neighborhood of distilleries, that no considerable amount can ever be realized from the tax upon distilled spirits if we put this tax at a higher figure than twenty-five or thirty cents.

Now, sir, before the war, as will be remembered by gentlemen who hear me, whisky or alcohol sold for about sixteen cents per gallon by wholesale. The tax of sixty cents now proposed by the Committee of Ways and Means is about four times what the article sold for previous to the war. It is certainly, at least, three times the value of the article. This is an inducement to fraud. Where a man has fair remuneration for honest labor there is no inducement to perpetrate fraud; but fraud upon the revenue is invited where the tax is so much greater than the cost of the production of the article itself. If we wish to collect the revenue from this source we must reduce the tax to the sum I have stated. While I have great confidence in the ingenuity with which the committee have framed this bill, and while I approve the means of distributing the tax, taxing the capacity, taxing the barrel, taxing the product, and so on, yet, sir, I wish to say that, in my judg ment, it does not prevent fraud. We are to have a system of stamps. Stamps are to be put upon the barrels. How do they prevent parties from drawing out the contents of the barrel and filling it with illicit whisky? I confess I do not see how that can be prevented by this system of stamps. I am of the opinion that the tax can only be collected at the distillery. The moment you permit the party to remove the whisky from the distillery without paying the tax and to allow it to be transported in bond that moment you open the door to fraud. We have had experience enough already on that

It is not worth our while, however, to stand here kicking at the "whisky ring" or fighting it, because it is very hard to ascertain what that ring is. I sometimes doubt whether it really has an existence as an organization. It is a sort of myth. In saying this I do not mean to be understood as saying that there is not a band of rascals in the country making money by frauds in reference to whisky; but these men, so far as I have been able to dis-point. If you permit the whisky to go in the cover, while they are all ready to cheat the Government, are almost all ready at the same time to cheat each other. If there is anything that a distiller or a whisky dealer engaged in these frauds suspect more than anything else it is that the revenue officer with whom he is colluding will cheat him; and the revenue officer who is trying to get blackmail is just about as fearful that the distiller or the dealer from whom he expects to get it will cheat him

a gallon, with the additional taxes by way of licenses, &c., provided for in this bill will have the effect of preventing these frauds and realiz ing the proper amount of the revenue, let us go below sixty cents, and my judgment, Mr. Chairman, is, that if both forms of taxation when computed together make a tax of seventy-six cents on a gallon, as estimated by the chairman, [Mr. SCHENCK,] there is a margin of profit to the fraudulent that will continue the system in operation, and that we shall have gained nothing for the Government. The only effect is in a measure to reduce the profits of the parties concerned in defrauding the Government. I think that a tax amounting in the

cars for exportation, what opportunity is there for fraud? What opportunity for changing the barrels? They will have depots where that can be done.

Why, sir, our distilleries in Illinois did a profitable business until we allowed the transportation of whisky in bonds without paying the tax. The moment that was allowed our distilleries in Peoria were closed. How they continued up to that time I know not.

In the brief time allowed me I can only fore, have them all to fight; and whether you throw out a few disconnected ideas. There call them a "whisky ring' or by any other are, Mr. Chairman, millions of money invested name, there is a large number of dishonest in the manufacture of distilled spirits. Let us persons throughout the country, official and put this tax so low that the men interested in unofficial, against whom we have to protect this illicit distillation will have to give it up; the Treasury. How shall we do it? say for, sir, it costs more to manufacture whisky and we all seem to be agreed upon the point-in an illicit way than in the regular and legal by putting the direct tax low enough to take away the inducements to this fraud. What shall be the amount? The reason I have declared my willingness to assent to a tax of fifty cents is that the great proportion of the present fraud comes from the distillation of spirits from molasses. Now, it takes a gallon and a half of molasses to make a gallon of spirits; and the present price of molasses being

mode. Let us have the honest manufacture protected against the illicit distilleries. Then the Government will collect more revenue; and that can only be done by reducing the tax. [Here the hammer fell.]

Mr. LOGAN. Mr. Chairman, I rise to oppose the amendment for the purpose of having an opportunity of giving my views in reference to the tax upon distilled spirits. We

attempted, sir, at one time to prevent frauds in distilled spirits in this country by trying, if possible, to get the Administration to appoint none but honest men for the collection of the revenue. I made the best fight I could on that subject, but failed. For that I have received any amount of abuse, for which, however, I care nothing. They have even gone so far as to employ a man who has vilified me all winter in my own State and who is now running around this city like a vulture.

But, sir, becoming satisfied that this cannot be done, then what is the next best thing for us to do in order that the Government shall not be defrauded of all the revenue? Believing that the House have determined to reduce the tax, I desire to recur to the argument that I made on the first occasion, which was that I was in favor of collecting it at the distillery, so that the distiller himself shall be willing to pay it rather than employ dishonest means of evading the law.

Now, sir, the committee have reported sixty cents. As a matter of course I agree to that report, and am willing to stand by it if the House so agree. But I say now that if the

additional tax is an inducement to fraud I am in favor of reducing it to less than that. I prefer myself to fix fifty cents, although, so far as the report of the committee is concerned, I have concurred in it. With this reduced taxation there will be no inducement to fraud. Now, sir, I have never been in favor of giving the whisky men—the rings, as they are termed, and perhaps correctly-more advantage under the law than they ask themselves. If there is a whisky ring-and I have no doubt of it myself, at least there is some organization of the kind, though it may not be a ring-let us give them no more than they ask. How, then, are we to destroy them? Now, I was in favor last winter of keeping the tax at two dollars. Why? Because we have twenty-five million gallons in bond which would give us a revenue of $50,000,000. I was desirous of having that $50,000,000 paid on those spirits in bond before we reduce the tax. That was one reason why I advocated retaining the present tax. But as it seems the tax is to be reduced, I want to get as much as I can from whisky in bond and whisky out of bond. At twenty cents we would get very little, at thirty cents more, at forty cents more, and at fifty cents still more. But with even fifty cents we will only get $12,500,000 on the amount of spirits in bond. I am in favor of fifty cents, but at whatever sum the tax is fixed I am in favor of collecting it at the distillery.

That is my theory. But I believe, from what I have learned, that it is the best plan. When you allow transportation in bond for any pur pose whatever you allow an opportunity for fraud. My friend from Iowa [Mr. ALLISON] knows that from his own town over eight hundred barrels were transported last year to New York which never paid one dollar of tax.

[Here the hammer fell.]

Mr. MILLER rose, and was recognized by the Chair, but yielded to

Mr. LOGAN, who said: I move to amend by striking out sixty and inserting forty-five. Mr. EGGLESTON. How did the gentleman keep the floor?

where whisky is distilled. Mr. Curtis, of my own State, was president of that convention. They resolved first that

"In order to confine the opportunities of fraud to as small a space as possible and avoid the multiplication of expensive officials, we recommend that the tax be assessed and paid at the still, or when the spirits leave warehouse class A,' and that class 'B' warehouses be entirely abolished."

The convention made that recommendation to us last winter.

careful consideration of the facts presented, and after conference with many of the principal dealers and manufacturers from all sections of the country, the commissioners are of opinion that with the maintenance of the present tax of two dollars per gallon the quantity of distilled spirits which may be expected to be produced and rendered subject to assessment for the immediate future will be from forty-two to forty-five million gallons." In 1865 the Government realized near sixteen million dollars; in 1866, over twenty-nine million dollars; in 1867, over twenty-eight million dollars, and the present year, from returns already made, it will exceed but little over thirteen million dollars at two dollars per gallon; and of that the expense of collecting will be near three million dollars. I do not believe, Mr. Chairman, in the doctrine contended on this floor that two dollars tax per gallon cannot be collected. I am satisfied if honest men were selected as revenue officers its collection could be enforced; still I admit that the enormous tax of two dol

An argument is made here that western men will be crippled by that measure. It is no such thing. I will tell you what the effect will be on the West. The moment you collect the tax at the distillery warehouse and pass a bill for feiting the real estate in case of fraud you drive the distilleries to the side of the cornfields, which is the proper and legitimate place for them to be. That will be the effect of it. When you collect the tax at the distillery you drive them from the places where frauds are committed and put them where frauds cannot be committed. That will be the effect, and hence I am for that principle.

Now, Mr. Chairman, I desire to read another resolution of this whisky convention. They resolved that inasmuch as the tax was likely to be reduced to fifty cents a gallon it should be collected at the distillery with a stamp; and they say "that any barrel of distilled spirits found leaving a distillery or class 'A' warehouse, without such stamp, should be condemned and destroyed and the distiller fined $300 for each barrel; and that any person who shall buy an unstamped barrel of crude dis tilled spirits should be liable to the same penalties as the distiller."

[Here the hammer fell.]

Mr. MILLER obtained the floor.

Mr. SCHENCK. I ask the unanimous consent of the committee that all debate upon this section shall close in fifteen minutes.

Mr. BOUTWELL, Mr. COVODE, Mr. INGERSOLL. and others objected.

Mr. SCHENCK. Well, as gentlemen seem to be full of the subject, let the debate go on. Mr. COVODE. I represent a great whisky district, and I want to say something before the debate is closed.

Mr. MILLER. Mr. Chairman, it cannot be expected that within the brief period allowed members to discuss this section of the bill under consideration that any one member can present his views fully. The question under this section is as to the amount of tax to be imposed on distillation of spirits. I confess, Mr. Chairman, that a tax of two dollars per gallon on an article that costs but thirty cents to manufacture appears to be exorbitant, and is

Now they talk about the whisky ring. Last winter there was a whisky convention in Washington city, represented by people from Missouri, Illinois, and every State in the Union

that of Great Britain and, perhaps, Russia. The amount of whisky annually manufactured in the United States is variously estimated; some make it fifty million gallons, others seventy-five million, and others even as high as one hundred million gallons. The able Commissioner of Internal Revenue, (Mr. Rollins,) in his last annual report, page 18, says, that "after

and therefore am in favor of reducing the tax, believing that by doing so the Government will realize a greater amount of revenue from whisky tax. But I am opposed to making the tax less than fifty cents per gallon. Some of the gentlemen contend that it ought to be reduced as low as twenty-five cents. Such a reduction, in my opinion, would be wrong and greatly reduce the revenue, and the result would be that Congress would find it necessary shortly to raise it again. Much has been said in regard to the "whisky ring." Mr. Chairman, the only effective means, in my opinion, to thwart the frauds of that ring is to put the tax at a reasonable rate, say fifty or sixty cents per gallon, and enforce the collection by stringent laws. I agree, Mr. Chairman, with the honorable gentleman from Illinois [Mr. LOGAN] that the tax ought to be collected at the distillery. One great drawback to the revenue is the numerous useless officers employed, which absorbs a large amount of the revenue, and this abuse ought to be corrected at once. Now, Mr. Chairman, I would say to the committee let us fix the tax at a fair rate, have no more officers employed than absolutely necessary, and I have no doubt we will realize from distilled spirits from thirty to thirty-five million dollars per annum.

Mr. FARNSWORTH. I am not among those who can say "I told you so," when we put this tax at two dollars per gallon, for I did not then suppose there was so much rascality and corruption in the country as the sequel has proved to be the case. But I am now a thorough convert to the propriety of reducing this tax so far, after securing the revenue, as to prevent the demoralization and corruption in the country.

The only question now before the Housefor I believe members are generally in favor of the reduction of the tax now imposed-is, how low shall we reduce the tax? Now, I do not believe with the gentleman from Pennsylvania [Mr. KELLEY] that we should reduce the tax so low that the cost of producing grain whisky, with the tax added, shall be as low as the cost of producing molasses whisky without

the tax.

Now, crime is always expensive, and we should take that fact in consideration. A man does not steal a little when he risks a great deal of punishment. He will not set up a still in a secret place, and cannot afford to buy up revenue officers, and manufacture molasses whisky simply for what it costs to buy the molasses and make the whisky from it. He must make a large margin of profit before he will run the risk of punishment and pay the amount he must for purposes of corruption.

Now, it seems to me that a tax of fifty cents per gallon, the sum resolved upon by the convention of honest distillers last winter-as they called themselves, and I know nothing to the contrary-is about the right figure.

Mr. INGERSOLL. Allow me to correct my colleague. The amount recommended by

the convention of distillers was twenty-five cents per gallon.

Mr. FARNSWORTH. They were first satisfied with a tax of fifty cents per gallon. I remember a conversation I had with some members of that convention; and while they advocated reducing the tax to twenty-five cents per gallon, yet they told me that they could stand fifty cents per gallon; and that at fifty cents per gallon they thought the fraudulent distiller in New York, Philadelphia, or elsewhere could not compete with them. They said that when they created their distilleries beside the corn-cribs, where the corn is cheap, the man in New York could not import the corn and distill the whisky, cheat the Government out of the tax, and make money by it.

I would then reduce the tax to fifty cents per gallon, and make clean, square work of it, and then put a tax of a dollar for every two gallons, or twenty dollars per barrel, and then I would increase the tax on sales to five per cent. That I think would be easily collected, and it seems to me we could realize the whole tax, or very nearly the whole of it, at those rates of taxation, which would realize a very good revenue to the country. I have thus given my views upon this subject very briefly. [Here the hammer fell.]

Mr. MILLER. I withdraw the amendment to the amendment.

Mr. PILE. I renew the amendment to the amendment. If the city I represent, and the millions of grain growers who contribute to the trade and commerce of that city were not so vitally interested in this question of the tax on whisky and the production of whisky in this country, I should not presume to say a single word on this subject. From the discussion this morning I think it is apparent that three results are intended to be reached by every member who has participated therein. The first object sought is that the corrupt combination which now controls the manufacture of and trade in whisky shall be thoroughly and effectually broken up. The second is that we shall prevent the continued distillation of molasses, and restore the production of this arti cle to the grain of the West, and that its manufacture shall be carried on în localities where nature and the production of the grain has furnished the greatest facilities. These two objects being accomplished, we then desire that there should be collected from distilled spirits the largest amount of revenue that can possibly be secured. To attain this object, while at the same time effectually breaking up these corrupt combinations and restoring the production of this article to the distillation of grain and to localities from which it has been transferred by the frauds that have prevailed for the last three years, we should, I think, make the tax not more than forty cents.

The highest rate now named is, I believe, sixty cents, the lowest twenty, and I ask the attention of the committee to this single consideration: that it is of far more importance that these corrupt combinations be broken up, and the production of this article restored to the distillation of grain and to the localities where the grain is produced, than to secure to the Government the difference in revenue between thirty cents and fifty cents or forty cents and sixty cents; and if there is a difference of opinion among those who have given careful consideration to the subject as to whether a tax of forty or sixty cents will most effectually secure these objects, then it seems to me wiser that we should fix the lower figure than that we should incur any risk of the continuation of these corrupt combinations. If we fix the specific tax at forty cents, and then increase the tax, as I am in favor of increasing it, upon the fermenting capacity of the still from four to ten dollars per barrel, it will make the aggregate tax sixty to sixty-two and a half cents; five to eight cents lower than the amount to which the chairman of the Committee of Ways and Means thinks it could be raised, and yet prevent the distillation of whisky from molasses and imported articles. We had better

fix the rate six, eight, ten, or even fifteen cents below this figure than incur the slightest risk of the continuation of the distillation of spirits in small distilleries, hidden away in garrets and cellars. If we reduce the tax to forty cents, twenty cents below the figure fixed by the committee, the loss of revenue to the Government will not be important as compared with the risk of continuing for ten or twelve months longer the corrupt combinations that now control the manufacture of this article, defrauding the Government, corrupting the morals of the people, and preventing the collection of the revenue. I withdraw the amendment.

Mr. HIGBY. I renew the amendment. I rise rather for the purpose of seeking information than to attempt to impart it. In the course of the debate this morning the gentleman from Ohio [Mr. GARFIE. D] made the statement that, in addition to the tax of sixty cents a gallon, there is provided in the bill a tax of sixteen and a half cents not provided for in the present law. I ask the chairman of the Committee of Ways and Means whether that is the fact?

Mr. SCHENCK. I think that is substantially the case. Under the present law there is no other tax than the two dollars per gallon except the tax on the sales, which, being only one tenth of one per cent. on the amount above $25,000, amounts to next to nothing, and small special tax of $200 upon distillers.

a

Mr. HIGBY. Then this bill provides virtually for a taxation of seventy-six and a half cents as against two dollars under the present law. Mr. Chairman, from the earliest moment of the imposition of the tax upon this article of whisky, I believe in the Thirty-Eighth Congress, I have been in favor of the sum of fifty cents, together with the member from Ohio and many other members of the House at that time. And I will say to the gentleman from Illinois, [Mr. LOGAN,] who quoted from the proceedings of a certain gathering in favor of the reduction of the tax to fifty cents per gallon, that that was not an original idea with that body of men, for there has been a certain number of the members of the Thirty-Eighth and Thirty-Ninth Congresses who have always been of the opinion that the tax upon whisky should not be more that fifty cents. If that body of men were dishonest men and trying to defraud the Government it seems to me it would be their object to get the tax up to the highest figure, when they would have the opportunity to make more money than to have it reduced to the lowest figure.

I was about to say, Mr. Chairman, I had intended to sustain the committee in fixing the tax at sixty cents per gallon, although my own idea is that fifty cents is as high as the tax ought to be. If there is to be added sixteen and a half cents to the sixty cents, making seventysix and a half cents per gallon as an offset against two dollars a gallon, it seems to me we ought to come to the direct tax of fifty cents a gallon upon distilled spirits. That, in my judg ment, is what the tax ought to be.

In reply to what has been said, that it will be impossible to collect this tax, I will say we ought certainly to make the experiment of the machinery contained in the present bill. If it is not strong enough let us make the machinery stronger, and let us see whether we can collect this amount of fifty cents. If we find it is not strong enough, then when Congress meets again next December we can make it stronger and see whether we cannot defeat those who are defrauding the Government.

It seems to me that we ought never to make a great difference between the cost of the article manufactured and the tax imposed upon it. If the tax be many times more than the cost of the article it will leave room for fraud, and there is no more ingenious people than the American people in this and in all other respects.

The CHAIRMAN. The gentleman's time has expired.

Mr. HIGBY. I withdraw the amendment. Mr. PAINE. Mr. Chairman, I understand the question before the committee, if the

amendment to the amendment were withdrawn, would be the amendment of the gentleman from New York [Mr. VAN WYCK] to the tax fixed by the Committee of Ways and Means. I wish to know whether I am right in that statement?

The CHAIRMAN. That is so. If there be no amendment to the amendment pending then the question will be on the amendment of the gentleman from New York.

Mr. PAINE. The gentleman from California has withdrawn the amendment to the amendment, and I now propose an amendment to the amendment on which I shall ask for a vote of the House. I propose to amend the amendment of the gentleman from New York by fixing the tax at thirty-five cents per gallon. The chairman of the committee informs us that in addition to sixty cents per gallon there are other taxes imposed by the bill which, if the per gallon tax is fixed at sixty cents, amount in the aggregate to sixteen and a quarter cents per gallon, raising the tax to seventy-six and a quarter cents per gallon. If we put the tax at thirty-five cents then there will be added ten cents of the tax of four dollars on the barrel of forty gallons, three cents of tax in the shape of the three per cent. tax on sales at wholesale, one cent retail charges, and one cent and one quarter of tax of five dollars on capacity per day of mash, in all fifteen and a quarter to be added to thirty-five cents, making fifty and a quarter cents. I have made up my mind that fifty cents would be a fair tax. My amendment will make it almost exactly fifty cents. I should be willing to vote for a higher tax, but I should be unwilling to vote for a lower tax than thirty five cents in addition to the fifteen and a quarter cents proposed by the bill. I shall ask for a vote on my amendment of thirty. five cents which, with the fifteen and a quarter cents, will make the aggregate tax fifty and a quarter cents.

Mr. EGGLESTON. I wish to renew the amendment to reduce the tax to twenty-five cents. I am opposed to the other amendinent. I am from a district which pays more tax than any in the United States, with the exception of one or two, and yet there is not a distillery in the district. I am satisfied from what I have heard on this floor this morning that the object of members of the committee is to get as much money out of the whisky tax as they can. Now, if the Committee of Ways and Means had taken the course which I think they ought to have taken last November, and started this machinery then, we would have now been some thirteen or fourteen million dollars better off than we are. I am willing to shoulder a portion of the blame myself. But I sent two or three resolutions to the committee some time ago, one of them proposing to farm out the manufacture of whisky in this country. In that way I believe we could realize sixty million dollars per annum from the manufacture of distilled spirits.

Mr. STEVENS, of New Hampshire. Does the gentleman know of any civilized Government that ever farmed out the manufacture of spirits?

Mr. EGGLESTON. I know of no civilized or uncivilized country that does not collect the tax on spirits better than we are doing now. There is no country on earth that would let its revenue system be run as ours has been run in reference to the collection of this tax. Frauds have been committed all over the United States, under the eyes of the revenue department and of members of Congress. Remonstrances have been made against it, but it has gone on until the country has become demoralized in consequence of the failure to collect the tax.

Now, sir, if the committee will cut off the manufacture on whisky entirely, we would realize more money in the next six months than we have for the last six months. I sup: pose my friend from New Hampshire would. say that no civilized country would do that. But, sir, if you cut off the manufacture for six mouths you would get the tax of two dollars a

gallon on what is now in bond, and that would give you $50,000,000.

My opinion is we should make it twenty five cents per gallon and collect it at the distillery. Then you collect it on all that is made, and you would have more revenue than you get in the way it is running now. I am satisfied that the chairman of the Committee of Ways and Means is as well acquainted with the whisky question as any gentleman on this floor, because he is surrounded by distilleries in his district, where there are more of them, perhaps, than in any other district in the United States. I have a high appreciation of his opinion on this question. But, sir, I am satisfied the country is running to ruin by letting the present system run on in the way it is going, and I advise the chairman of the committee to get this bill out of the Committee of the Whole as soon as possible, with the tax fixed at twenty-five cents a gallon, or at all events reducing it; I am not particular as to the exact amount; put the previous question on it, and pass it as soon as possible. Hundreds of thousands of dollars are being stolen every day while we are debating this subject. I am satisfied that the machinery is as good as it can be, and I wish to have the vote taken as soon as possible. If I cannot get the tax reduced to twenty-five cents I will agree to thirty, fifty, or even sixty cents. I prefer it should be twenty-five cents. [Here the hammer fell.]

But

Mr. PAINE. I withdraw the amendment to allow the gentleman from Massachusetts to renew it.

Mr. BOUTWELL. Irenew the amendment not because I favor it, but for the purpose of objecting to the policy of reducing the tax materially below the report of the committee. It is useless to suppose that the reduction of the tax even to twenty cents will operate very essentially in the way of deterring persons from attempting to defraud the revenue. These attempts were inaugurated when the tax was twenty cents, and they will be renewed and persevered in even if you put it at twenty cents. At present the object to be looked at is to raise from the tax on distilled spirits money enough after making due allowances for such frauds as will be committed to enable the Government to go on without returning to the taxation of those articles which have been exempted by previous legislation. Assuming that we can collect the tax on eighty million gallons, as we might with honest and efficient public officers, at sixty or seventy cents a gallon, we have a revenue of fifty or sixty million dollars a year from distilled spirits, and this revenue is needed to enable the country to avoid getting into debt or imposing taxes on articles already exempt.

The point to which I wish to direct the attention of the committee is this: that we cannot be justified before the people of this country in reducing the tax below the revenue wants of the Government without making another effort to collect it at that point. We abandon the tax of two dollars a gallon because it has proved, under the circumstances that exist, impracticable to collect it; but we are not justified in putting the tax below the revenue wants of the country until an effort shall have been made, extending beyond the term of the present administration of the Government, when we hope to have our revenue laws better administered than they are to day. If we put the tax below fifty cents we certainly shall be deficient in the necessary revenue to carry on the Government, and think there is the piv otal point upon which we should legislate at this time. I do not accept the theory that even at twenty cents you will drive distilling back to the grain growing districts. Unless the tax is collected in the maritime ports, if it is collected in the grain-growing district, it will be cheaper to send the grain to New York and other maritime ports where there are opportunities of defrauding the Government and evading the payment of the tax and manufac ture the whisky there than to manufacture it in the West and pay the tax there.

There is another point upon which I wish to remark, and I make the remarks now, because I intend, if I do not change my views on further examination, to offer an amendment to the report of the committee, unless the committee shall see fit to propose it themselves, which I should much prefer, to separate by law, and in the license granted, the business of distilling for export and for the manufacture of medicine from the general business of distilling in the country, so that transportation in bond shall be limited to the product of those distilleries that are licensed for the purpose of engaging in the business of manufacturing for export only. The great frauds upon the revenue heretofore have been in consequence of the transportation bonds being violated. The business of manufacturing for export will be from four to five million gallons a year. That will employ a certain number of distilleries. Those distilleries cannot have a monopoly of the business because they come in competition with the foreign distiller who also manufactures for export to the consuming countries of the world.

[Here the hammer fell.]

Mr. SCHENCK. It was my purpose to make some reply to the amendment offered by the gentleman from Wisconsin, [Mr. PAINE,] but the gentleman from Massachusetts, [Mr. BOUTWELL,] although renewing that amendment, has submitted to the House most of the views, anticipating mine, against its adoption. I was going to put my opposition to the amendment mainly upon the ground of the question of revenue which it involves. In their anxiety to bring about a wholesome condition of things, as it is supposed, in the collection of the tax on whisky, so as to prevent evasion and frauds, gentlemen must take care that in their underbidding of each other they do not come to a point where we shall cease to have that revenue which we ought to have and which we must have from whisky, tobacco, and articles of this kind, unless we are to be thrown back upon oppressive taxes to be imposed upon other industrial pursuits.

Now, sir, I suppose the production of distilled spirits to be from eighty to ninety million gallons. The whole tax imposed by the proposed bill, then, will scarcely bring the amount of tax up to the $70,000.000 estimated by the Committee of Ways and Means as being neces sary in order to help out the other taxes for the support of the Government.

But if the proposition should prevail to reduce the tax to thirty-five cents instead of sixty cents, including these indirect taxes as a part of the fifty cents, which is assumed to be all that is necessary in the aggregate, we should get below that standard, even if we collected the whole tax, and there must necessarily be a deficiency of some twenty, thirty, or forty millions, probably about thirty millions. I believe, sir, that something equivalent to that which is proposed by the committee can, if enacted into a law, be enforced, and that up to that point we can, with reasonable certainty, count upon a collection of the taxes.

But the gentleman from Wisconsin is wrong, it seems to me, in another proposition. He counts as a part of his fifty cents this three, four, or five per cent. on the aggregate of the wholesale and retail dealers' sales. That is nothing to the distiller. That is a tax imposed upon the trade in this article after it has been produced and has passed out upon the market of the country, and therefore it is not fairly to be counted as a part of the fifty cents.

the tax.

My colleague Mr. EGGLESTON] complains that we have not adopted a system suggested by him at some former time, of farming out All I have to say on that point is that under the Governments of some of the eastern countries this system of farming out taxes has been tried, and being made a matter of individual speculation has become so hateful that even the submissive people of those countries have risen against it. If we should attempt in this country to let a body of private individuals have the benefit of some fifty, sixty,

or eighty millions of taxation upon assuming to collect the tax and pay a certain amount to the Government, I would not give the snap of my finger for the lives of the agents employed in collecting that tax. Our people would never submit to anything of the kind. Quieter, more submissive people than ours are not disposed to submit to that mode of collecting taxes. I therefore hold such a system to be entirely out of the question.

We are now endeavoring to impose and arrange our taxes in such a way as in the aggregate to raise sufficient revenue for the purposes of the Government; and I think the Committee of Ways and Means are not much out of the way in the figures which they submit.

Now, Mr. Chairman, I desire that the debate upon this particular section shall be brought to a close, gentlemen having been heard pretty generally all around; and unless the committee will give unanimous consent I will move that the committee rise in order to terminate debate in twenty minutes. There are, I belive, no other amendments to be offered requiring discussion, excepting one which I think a very good one; but I will confine my proposition to closing debate upon the particular subject of the amount of the direct tax. I ask unanimous consent that debate on that question be closed in twenty minutes.

Mr. INGERSOLL. I object.

Mr. SCHENCK. I move, then, that the committee rise for the purpose of terminating debate.

On the motion there were-ayes 69, noes 30. So the motion was agreed to.

The committee accordingly rose; and the Speaker having resumed the chair, Mr. BLAINE reported that the Committee of the Whole on the state of the Union had, pursuant to the order of the House, had under consideration the Union generally, and particularly the special order, being House bill No. 1284, to change and more effectually secure the collection of internal taxes on distilled spirits and tobacco, and to amend the tax on banks, and had come to no resolution thereon.

Mr. SCHENCK. I move that when the House shall again resolve itself into the Committee of the Whole on the state of the Union upon the special order, all debate upon the amount of direct tax on distilled spirits shall terminate in twenty minutes.

Mr. INGERSOLL. Say thirty minutes.

Mr. SCHENCK. I yield to the importunities of a great many gentlemen, and modify my motion so as to limit debate to thirty minutes. The motion was agreed to.

MESSAGE FROM THE PRESIDENT.

A message in writing from the President of the United States was presented by Mr. W. G. MOORE, his Private Secretary.

The motion was agreed to; and the House accordingly resolved itself into the Committee of the Whole on the state of the Union, (Mr. BLAINE in the chair,) and resumed the consid eration of the special order, being the bill (H. R. No. 1284) to change and more effectually secure the collection of internal taxes on distilled spirits and tobacco, and to ameud the tax on banks.

The CHAIRMAN. By order of the House all debate on the question of fixing the amount of taxation per gallon on distilled spirits wil terminate in thirty minutes. The pending question is upon the amendment of the gentleman from Massachusetts, [Mr. BOUTWELL ] Mr. BOUTWELL. I withdraw the amendment.

Mr. COVODE. Mr. Chairman, I desire to renew the amendment offered some time ago by the gentleman from Missouri [Mr. PILE] TO strike out "sixty" and insert" forty," so as to make the amount of the tax forty cents per

gallon. I had come to the conclusion, Mr. Chairman, that fifty cents is the proper amount at which to fix the direct tax; but since learning that the bill, as reported by the committee, contemplates au indirect taxation of from sixteen to twenty cents additional, I have become satisfied that this will place the aggregate taxation so high that there will be room for enormous frauds.

Prior to the war the southern States consumed annually thirty million gallons of whisky, manufactured principally in the North and West.

Now the southern people make their own whisky, and they make it, to a large extent, without the payment of the tax. When I was in Louisiana, two years ago, my attention was called to six extensive distilleries then being carried on in Rapides parish, and paying neither tax nor license. Some months ago I received a letter from Dr. Waters, secretary of the convention then in session at New Or leans, stating that those distilleries continue to run, and do not pay one cent of tax or license.

The great object in reducing the tax is to put an end to the frauds which have existed; and if a specific tax of fifty cents per gallon should be adopted as the aggregate of the taxation on whisky, I believe we could thereby accomplish the object sought; but if there be in addition an indirect tax of sixteen to twenty cents, I believe we cannot accomplish that object. At the present time the South is not only making its own whisky, but is sending into the North for sale whisky that has never paid the tax. We must break up this system of fraud, and in endeavoring to do it let us take such measures as to accomplish it at once.

Mr. GRISWOLD. I desire to suggest to the gentleman from Pennsylvania [Mr. CovODE] that he loses sight of the fact that the aggregate of this tax is distributed. An aggregate tax of seventy-five cents, distributed among the distiller, the seller, and the consumer, is no greater practically than would be a tax of fifty cents at the still.

Mr. COVODE. I understand that; but if you examine the proceedings of the court at Richmond a few days ago, you will see that the men engaged in perpetrating frauds on the Government know how to get over everything of that kind. Four of them paid the Government officer $30,000 for permission to cheat the Government out of $250,000 a year; and then, upon being found guilty in court, they are sentenced to pay the enormous fine of $1,000 or upward, and to undergo an imprisonment of one year or more.

Mr. Chairman, I represent a district which pays more tax on whisky than any other district of the United States. I believe that in my district will be found the largest number of distillers that have acted in good faith. They have been shut out from the market for the last six months. What I desire is that the Government shall collect the tax; and if it were possible to collect the tax of two dollars per gallon I would never propose a reduction, but they have not collected one tenth of that

amount.

[Here the hammer fell.]

Mr. ARCHER. Mr. Chairman, this House is proposing in this bill to make what seems to me to be a strange admission, that a law of the United States providing for the collection of a tax cannot be enforced. Now, sir, if this Government is the Government that we have always supposed it to be, the present tax on whisky ought to stand. And I say it ought to stand if for no other reason than the vindication of the Government. If this country could enforce its laws against ten million people in arms against it, I say it presents a strange spectacle if it cannot enforce a law to collect

the taxes.

Mr. Chairman, if the energies which this House has displayed and its committees have displayed for the last three months in investigating the impeachment or the evidence against the President, had been used in the investigation of the frauds against the Government or this question of the whisky tax, its collection

could have been euforced; and if a committee had been appointed by this House and used the same energy as the committee used in looking up the evidence against the constitutional head of this Government, I say that those who have violated the law in reference to this whisky tax would before this time have been brought to punishment.

66

Now, sir, if we go on legislating in this way this whisky ring,' or the men who are setting the law at defiance which fixes the tax on whisky at two dollars a gallon, will set a law at defiance if the tax be fixed at fifty cents or any other sum. I say it is due to the dignity of the Government that, instead of repealing the tax on whisky, this House should take such measures as will bring those who violate the law to a proper punishment, and the energy of this House ought to be brought to bear for that purpose. When the majesty of the law has been established, and not before, let us legislate for the reduction of this tax.

Mr. WOODBRIDGE. I move to insert two dollars a gallon.

Mr. PAINE. I rise to a point of order. As the question stands there is no chance for that

motion.

The CHAIRMAN. The gentleman is correct, but the Chair will explain. The pending amendment to the amendment is to insert thirty-five cents. The bill which the Clerk will read is very obligatory that it is not in order to strike out what has once been inserted.

The Clerk read as follows:

"Although it is not in order to strike out by itself what has been inserted, it may be moved to strike out a portion of the original paragraph comprehending what has been inserted, provided the coherence to be struck out be so substantial as to make this effectively a different proposition."

The CHAIRMAN. If sixty cents be stricken out and any other sum inserted it will cut off all further amendment on that point; and the Chair has thought it agreed with the pleasure of the House to allow a wider range of debate than that rule would call for, of course, within the thirty minutes to which the debate has been limited.

Mr. PAINE. I withdraw the point of order. Mr. COVODE. I withdraw my amendment. Mr. WOODBRIDGE. I now move to insert "two dollars."

Mr. Chairman, it will be recollected by yourself and others who were members of the Thirty-Eighth Congress, that when the internal revenue law was inaugurated in the course of the discussion two views were taken in regard to the tax on whisky, one that it should be taxed heavily, because its use was immoral, and the other because it was an article of lux

ury. I then thought it should be considered like any other article of commerce, and that, although its improper use engendered immorality and vice, other considerations were more important in determining the amount of the tax which should be imposed. After much examination and discussion Congress settled upon two dollars a gallon. At the time this seemed to be satisfactory to the country. No such difficulties in the execution of the law appeared as to induce the Thirty-Ninth Congress to diminish the tax. We are now, however, told that the tax must be reduced in order to enable us to collect it, or, in other words, that in our law-abiding and law-respecting country there is no power whereby the law, as it now stands in this regard, can be executed.

Such an assertion is an assault to our Government and our people. All I suppose will admit that the article of whisky, so far as taxation is concerned, must be regarded as a luxury, and all will also admit that it is wise political economy to obtain revenue from luxuries so far as possible. Thereby the productive industry of the country is relieved, and the price of those articles which necessarily enter into the consumption and comfort of the laboring man reduced. Upon this ground whisky can well bear the tax of two dollars a gallon. It is now proposed to reduce the tax to sixty cents. The only argument in favor of such reduction, so far as I have heard, is that if we

impose a higher tax the law cannot be enforced. A whisky ring scares Congress out of its adherence to duty and propriety, and regulates our legislation at its will. Such is a fair statement of the proposition, and what cowards we are!

The fault, sir, is not in the law. The difficulty is not in the alleged fact that combinations of wicked men can at pleasure defeat the execution of the law. The fault is in the Government itself. The law is good enough. The two-dollar tax can be collected. In order to execute the law we must have for the chief revenue officer a man of large intellectual endowment, of iron will, of marked executive power. The various subordinates should be responsible to him and subject to his control. When a subordinate proves himself to be incapable or dishonest he should be turned out, and politics should have nothing to do with it.

My own State, sir, has nothing but a general interest in this matter. I do not suppose that there has been a gallon of whisky distilled within its boundaries for many years, and perhaps there is as little drank there as in any section of the country. All our people are burdened with taxation, and it is our duty to lighten that burden as far as possible, and at the same time preserve every national obligation according to the letter and the spirit.

My policy would be to tax whisky and tobacco, articles of mere luxury, heavily, and with a fair and moderate tax upon petroleum, stamps, and two or three other articles, raise the required revenue.

[Here the hammer fell.]

Mr. ORTH. Mr. Chairman, in the very limited time allotted us by the order of the House it is impossible to do anything like justice to so vast and interesting a question as the one now under consideration.

Revenue and taxation in their various forms always affect to a greater or less extent the business interests and commercial relations of a people, and hence the legislator should exercise his power over these measures with great caution. A change of taxation, either in its amount or its mode of collection, will to some extent affect the values of property; it may depress one species of property and appre ciate another species; and we should prevent, if possible, too great a difference in these extremes of appreciation or depression. Our people, with singular unanimity, have long since agreed that alcohol, (or whisky,) for many reasons, should be made to bear a very large proportion of the public burdens. How best to accomplish this object has for years engaged the attention both of the public and of Congress. Could the present tax be collected by the officers of the Government and placed in the national Treasury there would be no demand for its reduction.

But it is a melancholy fact that our laws are evaded and disregarded. Interested parties and corrupt officials are appropriating to themselves millions of dollars of the public revenue, thus defrauding the national Treasury and increasing the burdens of the honest taxpayers of the country, and we have now to meet the question whether we shall permit such a state of affairs to continue longer, to the disgrace of the country both at home and

abroad.

It is most humiliating, but the fact stares us in the face, and cannot be controverted, that this Government is not to-day able to enforce its laws for the honest collection of the rev enue on this particular species of property.

I have not the time to enter at length upon the causes which produce this sad result; but most prominent is the belief that the executive branch of the Government is derelict in its duty, and offers no effective resistance to the rings of plunderers who now appear to control it.

To the legislative department of the Govern ment there is but one remedy left, and that is to reduce this tax to such a point as will enable the honest manufacturer of whisky to compete with its illicit production. That point, in my judgment, is that which places the tax nearest