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Marvin, Maynard, McClurg, McKee, Mercur, Moore, Moorhead, Mullins, Myers, Newcomb, O'Neill, Orth, Paine, Pike, Pile, Plants, Poland, Polsley, Pomeroy, Price, Raum, Robertson, Sawyer, Schenck, Scofield, Shanks, Shellabarger, Smith, Spalding, Starkweather. Aaron F. Stevens, Thaddeus Stevens, Stewart, Stokes, Taylor, Thomas, Trowbridge, Twichell, Upson, Van Aernam, Van Wyck, Ward, Cadwalader C. Washburn, Henry D. Washburn, William B. Washburn, Welker, William Williams, James F. Wilson, John T. Wilson, Windom, and the Speaker-108.

NAYS-Messrs. Adams, Axtell, Barnes, Beck, Brooks, Cary, Chanler, Eldridge, Getz, Golladay, Grover, Haight, Holman, Hotchkiss, Humphrey, Jones, Kerr, Knott, Marshall, McCormick, McCullough, Niblack, Nicholson, Phelps, Pruyn, Robinson, Sitgreaves, Taber, Lawrence S. Trimble, Van Auken, and Woodward-31.

NOT VOTING-Messrs. Archer, James M. Ashley, Baker, Banks, Barnum, Bingham, Boyer, Bromwell, Burr, Cake, Churchill, Reader W. Clarke, Cook, Dawes, Dodge, Donnelly, Fields, Finney, Fox, Glossbrenner, Hill, Hopkins, Asahel W. Hubbard, Richard D. Hubbard, Hulburd, Hunter, Johnson, Kitchen, Laflin, Loan, Lynch, Mallory, McCarthy, Miller, Morrell, Morrissey, Mungen, Nunn, Perham, Peters, Randall, Roots, Ross, Selye, Stone, Taffe, John Trimble, Burt Van Horn, Robert T. Van Horn, Van Trump, Elihu B. Washburne, Thomas Williams, Stephen F. Wilson, Wood, and Woodbridge-55.

During the roll-call,

Mr. GETZ said: On this question my colleague, Mr. GLOSSBRENNER, is paired with Mr. CAKE and Mr. MORRELL.

The roll call having been concluded, The SPEAKER. On the question, Will the House, on reconsideration, agree to the passage of the bill to admit the States of North Carolina, South Carolina, Louisiana, Georgia, Alabama, and Florida to representation in Congress, notwithstanding the objections of the President?-the yeas are 108, and the nays are 31. Two thirds having voted in the affirmative, the bill has again passed the House, and will be transmitted with the objections of the President to the Senate for similar reconsideration.

PROTEST OF DEMOCRATIC MEMBERS. Mr. BUTLER. I ask unanimous consent to submit the following resolution :

Resolved, That twenty thousand copies of the protest of the Democratic members of the House against the admission of the Representatives from Arkansas be printed for the use of the House.

Mr. ELDRIDGE. I hope the gentleman will say fifty thousand copies.

Mr. BUTLER. Agreed; I have no objection to that.

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The SPEAKER. Is there objection to the reception of the resolution as modified, to be referred under the law to the Committee on Printing?

No objection was made; and the resolution, as modified, was received and referred under the law.

Mr. ELDRIDGE. I hope the committee will report it back at once, if they can.

TEST OF LIFE-SAVING APPARATUS. The SPEAKER. The Chair has received the following communication, which he will lay before the House for the information of members:

WASHINGTON, D. C., June 25, 1868.

To Hon. SCHUYLER COLFAX,

Speaker of the House of Representatives: Having come here for the sole purpose of giving an exhibition before the honorable members of Congress to prove the benefits of the life-saving apparatus of the National Life-Saving and Ship-ballasting Company, to take place Friday the 26th instant at six o'clock p. m., Hon. Gideon Welles, Secretary of the United States Navy, has kindly furnished me with a United States steamer, which will be in readiness at the foot of Seventh street wharf to convey such members of both Houses as wish to participate in this exhibition.

Trusting to have the honor of proving before your honorable body the great benefits of this life-saving apparatus, I have the honor to remain, most respectfully, your obedient servant,

M. L. ROSSVALLY, General agent National Life-Saving and Shipballasting Company. INTERNAL TAX BILL.

Mr. SCHENCK. I now insist upon the regular order of business.

The House, under the order heretofore made, accordingly resolved itself into the Committee of the Whole on the state of the Union, (Mr.

BLAINE in the chair,) and resumed the consideration of the bill (H. R. 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.

The pending question was upon the motion of Mr. O'NEILL, to strike out the following section:

SEC. 62. And be it further enacted, That all distilled spirits in any bonded warehouse shall within one hundred days after the passage of this act be withdrawn from such warehouse, and the tax paid on the same; and the casks or packages containing said spirits shall be marked and stamped and be subject in all respects to the same requirements as if manufactured after the passage of this act. And any distilled spirits remaining in any bonded warehouse for a period of more than one hundred days after the passage of this act shall be forfeited to the United States.

Mr. O'NEILL. I will withdraw my motion to strike out this section, and move instead to strike out all after the enacting clause and insert in lieu thereof the following:

That all distilled spirits in any bonded warehouse shall, on and after the passage of this act, pay, in addition to the tax unpaid upon the same, one per cent. a month upon the amount of the said tax while remaining in any bonded warehouse as aforesaid. Mr. SCHENCK. I hope that amendment will not be adopted. Whisky now in bond is that which has paid no tax. The tax at present is two dollars per gallon. It has been in bond for various periods of time; some of it for but a few months, probably, but some of it for years, during all of which time the United States has been playing the part of the warehouse-keeper for the owner. I have always thought there ought to have been some limitthere was none originally made, I supposeto the time during which whisky can be left in bond, because it is generally presumed to be an article that grows better with age, unlike some of us here, I suppose. But the proposition now is to leave it in bond for an indefinite time, upon the condition that there is paid upon it what is called a tax, but which in fact will be storage fees, at the rate of one per cent. a month. Now, I am afraid the whisky will leak, by some means or other, just about as Even if it did not leak, I would object to the much as the one per cent. would amount to. United States becoming for an indefinite time the warehouse-keeper for the owners of this whisky. The system being now changed, and the tax reduced from two dollars to fifty cents per gallon, the Committee of Ways and Means have thought it but wise to make provision requiring that within a given time all this whisky shall be taken out of bond, and the tax paid upon it; the time being limited to one hundred days, which is perhaps not too short a time for the purpose, with the condition that at the end of that time it should be forfeited.

Mr. KELLEY. I move pro forma to amend the amendment by striking out the last word, for the purpose of saying that if the amend ment of my colleague [Mr. O'NEILL] does not prevail I will move to extend the time for the removal of whisky now in bond from one hundred days, as now proposed, to six months.

There is a special trade connected with whisky which deserves the consideration of this House. The general business of raw whisky for alcohol is one trade, and the manufacture of fine whiskies for the table and general use is another. These provisions of this section aims specially, though undesignedly, at the latter class of goods. The tax of fifty cents adds one hundred and fifty per cent. to the cost of western whisky, and one hundred per cent. to the cost of that produced in the eastern States, and if demanded immediately will absorb the capital that would otherwise be employed in production. Whisky gains in quality and value with age. Whisky three, four, or five years old is another thing than new whisky as to price in the market. That carefully distilled from grain, either Bourbon or Monongahela, is bringing in our market today from seven to twelve dollars a gallon where its age is well established.

Now, are we ready to declare that no man not worth millions of dollars who can embark

fifty per cent. of more of his commercial capital in Government tax shall be able to hold whiskey for ripening? I am sure no interest of the country can be subserved by such action as that. There is no reason why a man who may deposit his whisky one day after this law goes into effect shall have one year on which to pay the tax, while another man who deposits it the day before shall on pain of forfeiture pay his tax within one hundred days. The provision embodied in this section will compel every man who has a large stock of fine whisky in bond who is not a millionaire and able to add to his investment hundreds of thousands of dollars by paying the tax to throw his stock upon the market. This pressure is to be applied all over the country. It will produce panic. It will compel the sacrifice of that which has been adding to the wealth of its owners and the country by the improvement imparted to it by the lapse of time during which its owner has been losing interest and paying the expense of storage. When the war came on there were stocks of fine whisky in the country ten or fifteen years old which were bringing from five to seven dollars a gallon. That class of whisky competed for supremacy among epicures and bon vivants with French brandy and was beginning to be an article of exportation to England and France. The high tax interrupted the growth of that export trade. And now by the provisions of this section all such stock in bond is to be thrown upon market, and men who are endeavoring to build up a great trade are to be sacrificed.

Now, sir, I am not here to ask any special, privileges for distilled spirits that other indus-" tries do not enjoy, and when we make other industries pay a tax of one hundred and fifty per cent. upon the cost of production, and when we require those engaged in them to embark three fifths of their capital in Government taxes, other industries will be upon the same level with this, and may ask to hold stock in bond. There is no analogy between this and any other interest except tobacco, which, as a luxury, is also heavily taxed.

[Here the hammer fell.]

Mr. MULLINS. I rise to oppose the amendment on the same ground advocated by the chairman of the committee. It is evident to every gentleman who has heard the able argument of the gentleman from Pennsylvania who preceded me that it must come to this and nothing more. I give all credit to what he has said about the quality and value of whisky being increased by its age. I speak from theory, and not from practice. I have not such an experimental knowledge on the subject as some others. Now, the gentleman from Pennsylvania desires this whisky to remain in bond at the expense of the United States, while its value is being increased to the owner. Every one of us is interested in the revenue that is to accrue from this tax, and I believe that it ought to be paid promptly so the Government shall get the benefit of it in order to as rapidly as possible extinguish our great national debt. The gentleman's theory is, however, that it should be kept in bond as long as possible, at the expense of the Government, for the benefit of the owners. I am against it. He reverses the argument. He says this is for the poor men. It is not so. It is the rich who hoard up liquor. They keep it for weeks and months in the bonded warehouses at the expense of the Government. They have their liquor locked up and make the Government keep it for them. I am opposed to it. I think it is nothing but class legislation. It is the bowing of the law to the rich. It is hoarding up this liquor at the expense of the Government. I say let it go upon the market and let us have the tax upon it. The Government needs all this tax to pay the public debt, and it ought to have it.

[Here the hammer fell.]

Mr. COVODE. My colleague [Mr. KELLEY] withdraws his amendment, and I renew it for the purpose of giving my views on this subject. As I stated a few days ago, I live in a district

where there are now one million nine hundred thousand gallons of whisky in bond, as reported to me by the collector of the district. Now, the effect of compelling these distillers to pay this tax on that quantity in one hundred days will be to put them at the mercy of capitalists who furnish them money. They have already exhausted their ability to borrow money to keep their distilleries running, and now to compel them to pay this tax would force them to put their whisky into market or to accept whatever conditions the bankers and moneyed men of the country require of them for the purpose of raising the money to pay this vast amount. It will require $1,000,000 in that district in which there is to-day a banking capital of only $50,000. They will have to go into the eastern market and get the money on such terms as they can, or put their whisky in the market at once, which must unquestionably depress the price and cause a great loss to the owners.

Mr. INGERSOLL. I rise to oppose the amendment. Mr. Chairman, what is the necessity of legislating in regard to when this particular article shall be put on the market any more than as to when corn or flour or any other article of trade or commerce shall be put on the market? Why not leave it subject to the laws of trade? If you have twenty-five million gallons of spirits in the warehouses, let it be taken out whenever there is a demand for it. If you undertake to legislate as to when it shall be put on the market, why not legislate to fix the price, and at such a price that shall be remunerative to the owner. Whenever the price will justify its sale the owner will sell it without any requirement of law. He will gladly pay the Government tax whenever he can sell it at a profit. The owners of these twenty-five million gallons would have taken them out of bond at any time since the tax of two dollars per gallon was imposed if they could have sold them at the cost even of production above the tax. There is not a gallon of whisky in New York made from grain that has not cost fifty cents a gallon to make it. Some of it has been manufactured, perhaps, two years ago, and has been held by the owner at a cost of not less than ten dollars a barrel in addition to the original cost. Now, you propose to place them at a great disadvantage with those who make whisky to-day. Old high wine is no better for manufacturing purposes or redistillation than new. But you allow a distiller to make whisky at a tax of fifty cents, and he may redistill it or do what he pleases with it, while those who happen to be so unfortunate as to have made it two years ago and held it till now at a cost of nine or ten dollars a barrel by insurance, leakage, and storage, you compel to pay four dollars a barrel in addition and take it out of bond in one hundred days or you will forfeit it to the Government. There are twenty-five million gallons now in bond that are required to pay this tax in one hundred days or suffer confiscation by this bill. Now, why not leave it in bond until there is a demand for it? If there is a demand for it you will get your tax as fast as it is taken out without breaking faith with the manufacturer and bankrupting him beside. Leave it to be called for when there is a demand for its consumption. Then it will be brought out perhaps in thirty, sixty, or ninety days, or six or twelve months, just as it is required for trade, commerce, or consumption. That is the way this should stand, and in no other way.

Mr. MAYNARD. The gentleman from Pennsylvania withdraws the amendment and I renew it. I desire to say that I prefer the bill as it comes from the committee. I think it ought to pass in this shape, and for these reasons: I take it there is in the country now little or no whisky or spirits exported that have honestly paid the tax. All that is outside of the warehouses, or the greater portion of it, has been illicitly distilled. How much of it there is I will not undertake to say. The best information we have is that there are about twentyfive million gallons in bond. The annual pro

duce of the country is not far from ninety million gallons, and the amount now in bond is hardly the consumption of one hundred days. Those who are familiar with the manufacture of spirits, I presume, will bear me testimony that there will be very little liquor manufactured between now and the 1st of November, the summer season of the year not being favorable to this business. The one hundred days allowed by this bill will have elapsed by that time. The liquor that is now in bond will supply the demand of the country during that period, and when the fall distillation commences. the supply on hand will have gone out of the warehouses, the Government will have received the tax upon it, and we shall be ready to open new books and commence again. There is a great deal of force, it seems to me, in what has fallen from several gentlemen in respect to the burden that already exists upon the liquor that is in bonded warehouses, enough, as I think, to counterbalance the per-bushel tax and per-barrel tax which is specially imposed by the present bill as it comes from the committee. I do not think, therefore, that it is giving whisky in bond an undue advantage to allow it to be taken out by a payment per gallon the same as we require upon whisky that is now made, and that is a policy which will insure the tax on all that liquor which has been accumulating.

[Here the hammer fell.]

Mr. EGGLESTON. I rise to oppose the amendment. I am decidedly in favor of the amendment proposed by the gentleman from Pennsylvania [Mr. KELLEY] to extend the time for paying the duty on this whisky in bond to six months. I do not wish to be factious about this matter; but I know that if the Committee of Ways and Means will look at this subject as it really is, they will be in favor of that amend.

ment.

Now, my friend from Illinois [Mr. INGER SOLL] asks why should we not let the laws of trade regulate this subject the same as corn and other articles? I will tell him why. We have, as a Government, held out inducements to certain parties to pile up their products, their manufactures in bonded warehouses. By law we have held out those inducements, and they have so done. We have now reached a point where we are about to disband and disorganize those warehouses and tell them to take their stock away. We say by this bill that they must take it away in one hundred days. Well, we ask in justice to these parties that you give them at least six months. And why? Why, as the gentleman has well said, if you throw whisky on the market faster than the market will take it, you will glut the market and break it down so that there will be, as there has been heretofore, no sale whatever; but if you let it go out gradually it will all work off and the Government will get the money. Now, what does the Government lose by this? It may be said that the Government is paying to keep up the bonded warehouses; but is not the owner of the whisky paying for storage and insurance? Does he not have to stand more than the Government stands?

the whisky upon the market and sell it at what it will bring. What will the Government make by that process? But if you give these men six months then they will come out all right, and the Government will get the money without breaking down these parties. But otherwise you not only will not get the money, but you will break down these parties and outrage the feelings of the community where this tax is to be paid. All the whisky which is in bond now belonging to distillers is just that portion which they were unable to smuggle.

Mr. LOGAN. I must confess I am a little surprised to see the favor which this proposition apparently receives. My friend from Philadelphia, [Mr. KELLEY, ] who offered this amend ment, has submitted an argument upon it, which I have read in a letter which has been sent here.

Now, if gentlemen will examine the statistics they will find this to be the fact: within the last eight months after the passage of the bill by Congress to prevent the taking any more of this whisky out of bond without the payment of the tax-the majority of the whisky of the United States has been purchased for from fifteen to thirty cents per gallon, the greater portion of it at not more than eighteen cents per gallon, by large whisky speculators, and that whisky is now in bond. It has been held in bond waiting for the tax upon it to be reduced. And now the very moment you reduce the tax to fifty cents per gallon gentlemen get up here and asked that they be allowed six months to take it out of bond, so that they may be enabled to speculate more largely in it.

Now, I am opposed to any such proposition. If these men could afford to pay the tax of two dollars per gallon at once, they certainly can afford to pay the tax of fifty cents per gallon in a hundred days. If you ever expect to have the time commence when you can collect the revenue from this whisky you must have some time fixed when this whisky shall be taken out of bond, so as to let the new stock of whisky come forward. It is said that this is not fair, because the distiller who now makes whisky can put it in bond and keep it there a year. But the distillers are now to commence under the new law at fifty cents a gallon tax. These other men were under the old law at two dollars a gallon tax. Suppose a man owed you $400,000, and the debt was now due. He comes to you and says: "I am not able to pay this $400,000; great frauds have been committed upon the country, and you must reduce this debt." Well, you agree to reduce it to $100,000, just one quarter of the debt, and then agree to take his note for that $100,000 at one hundred days. Just as soon as you have reduced his debt three fourths, he asks you to extend the time to six months, just because you reduced his debt so much. That is the proposition of the gentleman from Philadelphia [Mr. KELLEY] and the gentleman from Cincinnati, [Mr. EGGLESTON.] After you have reduced the tax three fourths, then they ask you to extend the time in which that one fourth is to be paid. There is not a man with this whisky in bond who can have the impudence to come here and ask any such thing.

[Here the hammer fell.]

Mr. BECK. I advocate the view of this subject taken by the gentleman from Pennsylvania, [Mr. KELLEY,] though I would extend the time longer than he suggests. Much of this whisky, in fact all of the whisky that is made for home consumption and to be drunk without rectification or redistillation, has to be kept from one to two years before it is fit to be drunk. And the men who have been making that grade of whisky heretofore have been mak

Now, I want to tell gentlemen how it will operate in my city. One fifth of all this whisky, according to the report of the internal revenue department, is in the city of Cincinnati. About five million gallons, a little over one hundred thousand barrels, is in bond there. I tell the committee that the distillers do not own the whisky. The men who made the whisky own very little of the whisky that is in bond in that city. There are small rectifyers who have bought their one, two, and three hundred barrels. There are alcohol dealers who have bought it; there are druggists who have it; it has gone throughing it with the assurance, if not with the agreevarious shapes and trades; and there are commission merchants who have advanced money upon it. I say we should give them a chance to pay the money to the Government and take this liquor away. Suppose, at the end of the one hundred days, these men cannot pay the money, what is the result? You are then to put the officers of the law upon them and put

ment, that if they placed it in the hands of the Government, allowed the Government collecttors to take it and lock it up in their bonded warehouses and hold the keys, that this whisky should be allowed to remain, subject to the tax, until they could make a sale of it. if the Government can get its tax before the manufacturer gets his money as it does now,

And

that seems to be all the Government has a right to ask. That liquor has been so put into bonded warehouses, and held by the Government so that the distiller cannot touch it. There are now twenty-five million gallons of whisky in bond. It has been agreed that this shall be allowed to remain in the hands of the Government. Yet now it is proposed to require that this whisky shall be forced upon the market within one hundred days after the passage of this bill. The distillers of my district and that adjoining, represented by Colonel JONES, have in bond three million four hundred thousand gallons, the tax on which would be $1,700,000, and they are to be forced to put this upon the market in one hundred days. If that is done our distillers will have to stop business and go to work to raise money to take their whisky out of bond, or let it be confiscated and sold for whatever the speculator will give. Is this fair treatment on the part of the Government?

"But," it is said, "we have reduced the tax, and it can now be paid much easier." Not at all. Now the purchaser pays the tax. The important point to the manufacturer is that there shall be stability in the price. You now propose to compel the manufacturer to force on the market whisky made within the last six months, and which has been held back because purchasers have refused to buy, in expectation of the passage of this very bill making a reduction in the tax. If the manufacturers be now compelled to sacrifice this whisky within the next hundred days, the speculators will hold back till that time, and buy it all up at their own prices, to the ruin of the distiller. Why should not the owners of whisky be allowed as much time as the owners of imported goods when placed in bond. The Government, at any rate, gets its money as soon as the article is sold. Why should we kill the goose that lays the golden egg? I concur in the statement made a few moments ago by the gentleman from Pennsylvania, [Mr. KELLEY,] that this interest, from which the Government expects to raise its largest revenue, ought to be fostered and encouraged, instead of being crushed out by hostile legislation.

[Here the hammer fell.]

Mr. ALLISON. I desire to state briefly the || reason for the insertion of this section. Every gentleman must have observed that we have entirely changed, so far as this bill may take effect, the law in relation to the production of distilled spirits. We do this at the precise period of time when no distillery in this country can run. At this time grain is commanding such a price in the market as to prevent any honest distiller from commencing operations at this season of the year. No legitimate distiller will undertake the business of manufac turing whisky until the new crop comes in, because at the present price of grain whisky cannot be manufactured so as to compete with distilled spirits that have been already manufactured. There is very little whisky now on the market; and nearly all of that which is on the market is illicitly-distilled whisky. The amount of whisky now in bond is twenty-five million gallons, and this, it is estimated, is about what is necessary for the consumption within the one hundred days following the pas sage of this bill.

Mr. PILE. I desire to ask the gentleman from Iowa [Mr. ALLISON] whether he is not aware that since this bill has been agreed upon by the committee, fixing ninety days as the time for the removal of whisky from bonded warehouses, and fixing the tax at sixty cents, whisky in bond has increased in price at the rate of from eight to ten cents per gallon?

or shortened to some extent; but we need to get rid, at some early period, of the present system of bonded warehouses; and especially should we get rid of the system, now that we have adopted a principle whereby the tax on every gallon of whisky is to be collected at the distillery warehouse. Gentlemen say that a distiller can keep his whisky in bond a year under this bill. That is true; but he is in a very different position from the man who has whisky in bond in the city of New York. My friend from Illinois, [Mr. INGERSOLL,] who represents a large distilling district, must remember that there are men having four, five, or ten million gallons of distilled spirits in bond in the city of New York, and they Occupy a very different position from those who have their distilleries and distillery warehouses at Peoria, Dubuque, or other cities of the West. This whisky now in bond will be required at once for consumption in the country; and I believe it will be to the interest of every man who has whisky in bond, except those who are holding it for the additional value which it is to obtain from age, to bring it on the market, because the moment this new tax system goes into operation, most of our distilleries will resume the manufacture of distilled spirits.

[Here the hammer fell.]

Mr. O'NEILL. I withdraw the amendment. Mr. KELLEY. I renew it. Mr. Chairman, the gentleman from Illinois [Mr. LOGAN] closed his remarks by substantially expressing his surprise that anybody should assume to know anything about the commercial affairs of this country which he does not know, or should have considered any facts he has not specially considered. I have the vanity to assume that I do know a little more about the particular question before us than he does, and to know that the whisky of which I speak, that is in bond, has not been bought by speculators, although it may be true that persons may have attempted, and perhaps successfully, to speculate by purchasing new whisky in bond. I know one warehouse in the district of my friend from Alleghany, [Mr. MOORHEAD,] the owners of which have given bonds to the Government to the extent of $1,500,000 on whisky of their own distilling. I know, too, that that firm has in two years paid the Government over two million dol. lars, and that the whisky in bond belonging to it is much of it three or four years old, and that as an offset to the loss of interest and cost of storage, it has more than doubled in commercial value. They hold the fact that it is in bond as a certificate of its purity, age, and consequent value. It adds to its commercial value, as it shows it has not been doctored, but went there directly from the still of a well-known distiller of fine whisky. I ask gentlemen whether they are willing to sacrifice the men who are legitimately engaged in trade because the gentleman from Illinois asserts that others are taking advantage of the contingencies and seeking to profit by them? The Government will get from day to day the tax on the whisky demanded for consumption. These men have been paying tens of thousands, hundreds of thousands, and millions of dollars tax on this article of whisky, and indeed have paid all the tax that has been collected. The illicit distiller or dealer in whisky sought the concealment of night and got his goods off his hands as quickly as he could. His dealings have been surrep titious, while the honest dealer has sent his goods into bond. They are in the bonded warehouses. Yet, sir, this provision and the argument of the gentleman from Illinois are calculated to hurt the honest distiller whom we have already ruined by failing to collect the tax from the illicit distillers who were andersell

Mr. ALLISON. I believe that is the fact. Mr. INGERSOLL. I would like to knowing him. the authority for that statement.

Mr. PILE. I know it is the fact in my own city.

Mr. ALLISON. Now, sir, we propose in this bill to fix one hundred days as the time within which this whisky must be taken out of bond. Possibly this time might be extended

Mr. INGERSOLL. yield me a minute?

Will the gentleman

Mr. KELLEY. I have but five minutes, and cannot yield twenty per cent. of the time allowed me.

The provision I am striving to amend affects those whom we have almost ruined because

they were disposed to pay the tax while the scoundrels all round them have been permitted to sell their whisky without paying any

tax.

If gen

It provides that within one hundred days they must gather up one hundred and fifty per cent. upon the prime cost of the whisky. What I propose, the extension of this time to six months, is a commercial necessity. tlemen will traverse the block from Dock to Front and Walnut to Spruce streets, Philadelphia, they will see warehouses containing several millions of capital embarked in these fine old whiskies, and there is no reason why the Government should compel their owners to sacrifice them and prostrate the general market. [Here the hammer fell.]

Mr. SCHENCK. I move that debate be closed on this section by unanimous consent. Mr. INGERSOLL. I want five minutes.

Mr. STEVENS, of Pennsylvania. I have an amendment which I will offer at the proper time, and if there be no objection I will have the Clerk read it.

Mr. SCHENCK. I do not object. Mr. STEVENS, of Pennsylvania. It is a substitute for section sixty-two.

The Clerk read as follows:

That one half of all distilled spirits now on hand in bonded warehouses shall be withdrawn within one hundred days after the passage of this act, and thereafter one half of the remainder within sixty days, and the balance within sixty days more: Provided, That this act shall work no remission of tax on distilled spirits already manufactured.

Mr. STEVENS, of Pennsylvania. I would like to offer that amendment and make a few remarks.

The CHAIRMAN. The amendment is not now in order.

Mr.

Mr. STEVENS, of Pennsylvania. Chairman, I am told that certain distillers and others have on hand an amount of whisky that Now, to collect it in one hundred days and to would pay a tax, if collected, of $80,000,000. compel them to raise the money in that time would be a great burden. It would distress those engaged in the business seriously. It is a legitimate trade with them, and I think they should have more time. If we provide they shall pay so much in one hundred days, and then so much in sixty days, it will be a great relief to them and will be no injury to the Gov

ernment.

I have added a proviso because I am not quite sure but that the effect of the passage of this act will be to repeal the uncollected tax. I incline to think it will, though I give no opinion, for I presume the committee have examined it. But I have added the proviso to save any difficulty about that. I would like to be able to offer this amendment and see whether it meets the approbation of the House.

The CHAIRMAN. The amendment will be entertained at the proper time. By unanimous consent it will be considered pending.

Mr. PRUYN. I suggest to the gentleman from Pennsylvania that from the reading of the last clause I understand it to say that it shall not take effect upon spirits already distilled. Does he intend to collect the two-dollar tax on that?

Mr. STEVENS, of Pennsylvania. No, sir; if there is any tax now assessed on anything which has been removed from the distillery the passage of this act before its collection Ï fear will be a remission of the whole of that tax. I give no positive opinion about it, however. I have added the proviso by way of precaution.

Mr. INGERSOLL. I move to amend the section by inserting the following:

Provided, That the days in which the market price in New York during that time shall be less than one dollar per proof gallon, including the tax, shall not be counted in the one hundred days.

If that amendment is adopted it will prevent any considerable loss, beyond the mere cost of the production of the distilled spirits to the owner. Suppose that the price in New York is only eighty cents, the tax included. Fifty cents of that goes to the Government, leaving thirty to be returned to the manufacturer. Now, I affirm here that there is not a gallon of whisky in New York which was made out of corn that

cost less than fifty cents a gallon without the tax; and when you add a tax of fifty cents that makes it cost one dollar. Now, if you want to do justice and at the same time collect your revenue, do not force a sacrifice upon the owners of these spirits; and if you do not want to, then count only the days to make up the one hundred when the market price shall be at least one dollar a proof gallon, which amounts perhaps to the mere cost, including the tax.

But I have other objections to this section. I am in favor of the original proposition to strike out this section. It has no business in the bill. I desire to call the attention of the committee to the fact that when every gallon of the twenty-five millions now in bond was manufactured it was made under the express authority of Congress that it should remain in bonded warehouses just as long as the maker of it should please to leave it; that it should only be withdrawn from bond at his option. Had the maker supposed that within a year after the passage of that act you would have declared that unless they should pay the tax in one hundred days after the passage of this bill their spirits should be forfeited and confiscated to the Government, do you believe they would have made a gallon? No, sir; instead of there being now twenty-five million gallons there would not have been a gallon in bond at this time. Sir, it is downright robbery on the part of Congress to declare a forfeiture of twenty-five million gallons of spirits unless the tax shall be paid within one hundred days. It is bad faith, it is in violation of every principle of right and justice. On the part of an individual it would so be considered. Perhaps it can be justified by some when the Congress of the United States does it, but not by me. It will not stand the test of common justice between man and man.

The question being taken on the amendment of Mr. KELLEY, to strike out "one hundred days" and insert "six months," there were-ayes 51, noes 49.

Mr. SHELLABARGER. I demand tellers. Tellers were ordered; and the Chair appointed Messrs. KELLEY and JUDD.

The committee divided; and the tellers reported-ayes 53, noes 48.

So the amendment was agreed to. The question was then taken on Mr. O'NEILL'S amendment, and it was disagreed to.

Mr. STEWART. I move to amend the section by adding to it the following:

And may be sold or disposed of for the benefit of the same in such manner as shall be prescribed by the Commissioner of Internal Revenue under the direction of the Secretary of the Treasury.

Mr. INGERSOLL. I move to amend the amendment by striking out the word "may" and inserting "shall."

Mr. STEWART. I accept that as a modification.

Mr. INGERSOLL. Very well; but I object to the amendment. It is a vicious amend

ment.

The question was taken on the amendment; and there were-ayes 49, noes 11; no quorum voting.

Mr. INGERSOLL demanded tellers. Tellers were ordered; and Messrs. INGERSOLL and STEWART were appointed.

The committee divided; and the tellers reported-ayes 62,-noes 86.

So the amendment was agreed to. The question recurred on the amendment proposed by Mr. STEVENS, of Pennsylvania.

Mr. ROBINSON. I make a point of order on that amendment. We have just adopted a clause that the time shall be six months.

The CHAIRMAN. The Chair overrules the point of order. This is a substitute for the section.

The question was taken; and the amend ment was disagreed to-ayes fifteen, noes not counted.

MESSAGE FROM THE SENATE.

At this point the committee rose informally, and the Speaker having resumed the chair, ||

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a message from the Senate, by Mr. GORHAM, its Secretary, informed the House that the Senate having proceeded in pursuance of the Constitution to reconsider the bill entitled "An act to admit the States of North Carolina, South Carolina, Louisiana, Georgia, Alabama, and Florida to representation in Congress," turned to the House of Representatives by the President of the United States with his objections, and sent by the House of Representatives to the Senate with the message of the President returning the bill, have resolved that the bill do pass, two thirds of the Senate agreeing to pass the same.

The Committee of the Whole on the state of the Union then resumed the consideration of the

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The amendment was agreed to.

Mr. INGERSOLL. I move to add to the section, as amended, the following:

Provided, That it shall be sold at public sale and to the highest bidder for cash, and all overplus arising from such sale shall be paid to the owner.

Mr. SCHENCK. I move to amend the amendment by adding the words:

But no such sale of distilled spirits shall be made for less than the taxes.

Mr. INGERSOLL. I agree to that. I accept it as a modification of my amendment.

The CHAIRMAN. The amendment, as modified, will be regarded as agreed to if there be no objection. The Chair hears none; and the Clerk will read the next section.

The Clerk read as follows:

SEC. 63. And be it further enacted, That any person owning, or having in his possession, any distilled spirits intended for sale, exceeding in quantity fifty gallons, and not in a bonded warehouse at the time when this act takes effect, shall immediately make a return, under oath, to the collector of the district wherein such spirits may be held, stating the number and kind of packages, together with the marks and brands thereon and the place where the same are stored, together with the quantity of spirits, as nearly as the owner can determine the same. Upon the receipt of such return the collector, being first satisfied that the tax on said spirits has been paid, shall immediately cause the same to be gauged and proved by an internal revenue gauger, who shall mark, by cutting, the contents and proof on each cask or package containing five wine gallons or more, and shall affix and cancel an engraved stamp thereon, which stamp shall be as follows: [Stamp for stock on hand. No. -.] Issued by Collector

district, State of ― ofDistilled spirits. Tax paid prior to (here engrave the date when this act takes effect.) - proof gallons. Gauged - — 18Gauger.

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All distilled spirits owned or held by any person, as aforesaid, shall be included in the same return, and the gauging shall be continuous until all the spirits owned or held by such person are gauged and stamped, as aforesaid, and a report thereof in duplicate shall immediately be made by the gauger to the collector and assessor of the district, showing the number of packages, contents, and proof of each package gauged and stamped; and one of said reports shall be transmitted by the collector to the Commissioner of Internal Revenue. No such spirits shall be gauged or stamped in any cistern or other stationary vessel. Any person owning, or having in possession, such spirits and refusing or neglecting to make such return shall forfeit the same; and all distilled spirits found, after thirty days from the time this act takes effect, in any cask or package containing more than five gallons, without having thereon each mark and stamp required therefor by this act, shall be forfeited to the United States. Any person who shall gauge, mark, or stamp any cask or package of distilled spirits under the provisions of this section, or who shall cause or procure the same to be done, knowing that the same were manufactured or removed from warehouse subsequent to the taking effect of this act, or that the taxes thereon have not been paid, shall, on conviction, be fined not less than $500 nor more than $5,000, and imprisoned not less than six months nor more than three years. All stamps required by this section shall be prepared, issued, and affixed upon casks and packages and canceled in the same manner as provided for other stamps for distilled spirits in this act, and shall be charged at the rate of twentyfive cents for each stamp.

Mr. SCHENCK. I rise to a question of order. The Chair did not know that we were objecting to the amendment of the gentleman from Illinois [Mr. INGERSOLL] to the last section.

The CHAIRMAN. The Chair understood the chairman of the Committee of Ways and Means to assent to the amendment with the modification.

Mr. SCHENCK. Not at all. I wanted to make the amendment not quite so bad as it was, but I tried to get a vote on it.

Mr. INGERSOLL. I make the point of order that we have passed that section.

The CHAIRMAN. It has been the uniform habit of this Chair-of the Speaker, carried into the Committee of the Whole-that where a misunderstanding has occurred-and the chairman of the Committee of Ways and Means states that that is the case now-the Chair will go back and take the vote over again. That is the uniform practice of the House and of the Committee of the Whole, and therefore, the Chair not having heard the call for a division, now takes cognizance of it, and will order a division.

Mr. SCHENCK. Then I hope the amend ment will be voted down.

Mr. RAUM. I wish to offer an amendment to the amendment, to come in immediately before it.

The CHAIRMAN. The Chair cannot entertain an amendment to the amendment. He goes back only on this point to correct a misunderstanding.

Mr. INGERSOLL. I suppose as we have gone back and as there was no debate on this proposition, that debate is now in order?

The CHAIRMAN. It is not; the Chair goes back merely for the purpose of a division.

Mr. INGERSOLL. I ask leave to modify my amendment so as to read, "the overplus beyond the taxes and costs.'

Mr. MULLINS. I object.

The question was then taken upon the amendment; and it was not agreed to, there being upon a division-ayes 14, noes 92.

Mr. RAUM. I ask consent to offer another amendment to section sixty-two.

Mr. ALLISON. I object.

The Committee of the Whole then resumed the consideration of section sixty-three.

Mr. BOUTWELL. I wish to call the attention of the Committee of Ways and Means to this section on this point; there seems to be no provision in it for getting a tax on spirits that may be in bottles or vessels of any sort holding less than five gallons. It seems to me that opens the way for the disposition of an immense quantity of whisky which may be on hand on which the tax has not been paid.

Mr. ALLISON. The gentleman is mistaken. Mr. BOUTWELL. If the committee have considered the point that is enough.

Mr. ALLISON. The committee have considered it fully, and I do not think there is any necessity for any further provision.

No amendment was offered to section sixtythree.

The next section was read, as follows: SEC. 64. And be it further enacted, That all distilled spirits sold by order of court, or under process of distraint, shall be sold subject to tax; and the purchaser shall immediately, and before he takes possession of said spirits, pay the tax thereon. And any distilled spirits condemned before the passage of this act, and in the possession of the United States, shall be sold as herein provided. And if any tax-paid stamps are affixed to any cask or package so condemned, such stamps shall be obliterated and destroyed by the collector or marshal after forfeiture and before such sale.

No amendment was offered.

Mr. SCHENCK. I ask that the next section, relating to special taxes on distilled spirits, be read by paragraphs for amendment. No objection was made.

The first paragraph of section sixty-five was then read, as follows:

SEC. 65. And be it further enacted, That the following special taxes shall be, and are hereby, imposed, that is to say:

Distillers producing fifty barrels, or less, of distilled spirits, counting forty gallons of proof-spirits to the barrel, within the year, shall pay $200, and if producing more than fifty barrels shall pay in addition four dollars for each such barrel produced in excess of fifty barrels. And monthly returns of the number of barrels of spirits, as before described, distilled by him, shall be made by each distiller in the same manner as monthly returns of sales are made. Every

person who produces distilled spirits, or whe brews or makes mash, wort, or wash for distillation or for the production of spirits, or who by any process of vaporization separates alcoholic spirits from any fermented substance, or who, making or keeping mash, wort, or wash, has also in his possession or use a still, shall be regarded as a distiller: Provided, That no tax shall be imposed for any still, stills, or other apparatus used by druggists and chemists for the recovery of alcohol for pharmaceutical and chemical or scientific purposes which has been used in those processes.

Mr. SCHENCK. I move to amend the paragraph just read by inserting just before the proviso the following:

Provided, That a like tax of four dollars on each barrel, containing forty gallons of proof-spirits to the barrel, shall be assessed and collected from the owner of any distilled spirits which may be in any bonded warehouse at the date of the taking effect of this act, to be paid whenever the same shall be withdrawn from such warehouse under the provisions of the sixty-second section of this act.

I will explain in a few words the object of this amendment, which I have offered in pursuance of the instructions of the Committee of Ways and Means. There is a special tax provided in this paragraph upon distillers distilling fifty barrels a year or less of $200, and four dollars per barrel on each barrel additional. This special tax amounts to ten cents a gallon, and is in addition to the direct tax of fifty cents. Then there is the capacity tax, which will be some three and one third cents per gallon, and the tax on sales, which, of course, cannot now be estimated. We supposed it would not be unfair, and so the committee have decided to add at least as much as this special tax on whisky in bond in order to make the tax uniform so far as regards the distiller and the owner of the bonded whisky. The distiller who manufactures hereafter is not to be charged the two dollars per gallon that distillers heretofore have been charged, but only fifty cents per gallon. The tax on whisky now in bond is also brought down to fifty cents per gallon. And we propose to put the same special tax of four dollars per barrel on that whisky that is proposed to be put on whisky hereafter distilled.

Mr. PAINE. I send to the Clerk's desk to be read a communication relating to this subject which I have received from the firm of Armour, Plankington & Co., who are beef and pork merchants of the city of Milwaukee. They also have a house in Chicago and another in New York. It seems that they have on hand about five thousand barrels of whisky in bonded warehouses. Now, I have no knowledge as to the particulars which they set forth except what I derive from this letter. But I

can assure this committee that these gentlemen are among the very first business men of Wisconsin. They are not distillers or dealers in whisky, but beef and pork packers. I invite the attention of gentlemen to the facts and figures they give. By their statement it would seem that the expense incurred in storing and keeping this whisky, together with the loss in wastage, amounts usually to about sixteen cents per gallon, just about the amount of the additional tax laid by this bill over and above the direct tax of fifty cents per gallon. I ask the Clerk to read the letter.

The Clerk read as follows:

The CHAIRMAN. Debate is exhausted. Mr. BOUTWELL. I move to amend the amendment by inserting after the word "barrel," where it occurs the second time, the words and an additional tax of three and one third cents per gallon;" so that the proviso will read:

Provided, That a like tax of four dollars on each barrel containing forty gallons of proof-spirits to the barrel and an additional tax of three and one third cents per gallon shall be assessed and collected from the owner of any distilled spirits which may be in any bonded warehouse at the date of the taking effect of this act.

The CHAIRMAN. Does the gentleman from Ohio [Mr. SCHENCK] accept this as a modification of his amendment?

Mr. SCHENCK. Certainly not.

Mr. BOUTWELL. Mr. Chairman, I wish to explain to the committee what I understand to be the reason for this additional tax. I have fixed the additional tax at three and one third cents per gallon, which corresponds exactly with the amount of tax now levied in this bill upon distilled spirits according to the capacity of the distillery; that is to say the taxes altogether if this paragraph should be adopted, will amount to sixty-three and one third cents per gallon upon spirits to be hereafter distilled.

Now, there are certain spirits held in bond, some having been so held one year, some two, some three years, decreasing in quantity while thus stored, but increasing rapidly in value. The letter which has been read upon the suggestion of the gentleman from Wisconsin [Mr. PAINE] does not bear at all upon this question. In spite of the storage, the leakage, the wastage, spirits kept in bond increase in value. It will be seen that if this tax be omitted those who have spirits in bond derive an advantage from the policy of the Government in not taxing old spirits in a sum corresponding to the tax to be hereafter imposed upon new spirits. For example, spirits waste, according to the statement of that letter, at the rate of eight gallons to the barrel in eighteen months; in fact, by evaporation alone, about one gallon and a half in a year. These spirits when taken out of bond will be regauged, so that a barrel of spirits which when it went into bond contained forty gallons, having been reduced to thirty-five gallons by evaporation, will pay a duty of sixty-three and one third cents per gallon upon the thirty-five gallons only, while the men who hereafter manufacture new spirits will be obliged to pay the tax upon the new spirits at the rate of forty gallons to the barrel, thus paying tax upon five gallons more in each barrel than the man who has held his spirits two, three, or five years in a bonded warehouse, because the latter escapes the tax on the amount which has been lost by wastage, leakage, and everything of that kind; while the value of the spirits has increased not in proportion to the loss in measurement and the expenses of keeping it from year to year, but in a much greater proportion in consequence of the increasing age of the spirits. New spirits are worth at the present time, minus the tax, only thirty cents, the cost of manufacture, while old spirits which have been in bond two, three, or five years, are worth from three to seven dollars a gallon over and above the tax.

OFFICE OF ARMOUR, PLANKINGTON & CO., 129 BROAD STREET, NEW YORK, June 24, 1868. DEAR SIR: We have noticed in the public journals a movement on foot to make a special tax on spirits now in bond of ten cents per gallon, and wish to call your attention to a few facts showing the injustice of such a special tax. We have held from necessity about eighteen months some five thousand barrels of whisky on commission at an expense as follows, namely: Storage and labor eighteen months, 20@20c...... $3 80 although I think a great deal has been gained

Insurance, 1 bbl., average 55 gal., at 4c. $22 for eighteen months, 2 per cent. per annum..... Cooperage, 60c. per bbl., interest 7 per cent on

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$22

2.91 Leakage and evaporation at 4 gal. per bbl. at 40c.. 1 60 $9 13

Making a total cost per bbl. of or over sixteen cents per gallon. In view of these expenses incurred through lack of "Government protection" we think this special tax very unjust, and would thank you to give it attention when brought up. Yours, with respect,

ARMOUR, PLANKINGTON & CO. Hon. H. E. PAINE, Washington.

40TH CONG. 2D SESS.-No. 219.

Mr. SCHENCK. Mr. Chairman, I did hope that we should derive some tax within a hundred days from the large amount of whisky now in bond; but it has been the pleasure of the House to decide that we shall not get anything from this source until next winter. But,

to the holders, owners, dealers, or distillers who have whisky in bond, by the extension of the time to six months, still I believe it would be a hardship to exact from them to the letter all the taxes which may be calculated under the bill now proposed. The special tax at four dollars a barrel of forty gallons amounts, as I have already stated, to just ten cents on the gallon. The tax the gentleman proposes also to add may be estimated at about three and a half cents. It will be more on some whisky

and less on other whisky. Supposing whisky on the average brings twelve quarts or three gallons to the bushel and a tax of two dollars, every twenty bushels of mash would be equiv alent of course to a tax of two dollars on every sixty gallons. I agree with the gentleman in that calculation; but when the com. mittee looked over the whole ground they recollected there is now little regular distilling. It will not recommence, except slightly, at this season. The heat of summer is most unfavorable to distilling, and as distilling is not likely to come into competition with the man who has whisky in bond until late in the fall or the winter there is not much advantage in the holder of whisky in bond over the distiller in this matter of competition. Looking over the ground the committee came to the conclusion while fifty cents was not a proper charge upon this whisky in bond, being what is the charge on whisky taken from the distillery warehouse, yet there ought not to be, in all fairnessa, dded to that any more than ten cents, which will bring it up to whisky in bond. If this additional tax be extended to whisky in bond as an equivalent for the special taxes imposed on the distiller is to be based on any principle at all, as I think it is, that principle is, if you did not impose it, it would give the advantage to the dealer in whisky in bond, and give him the control of the market. [Here the hammer fell.]

Mr. BOUTWELL'S amendment to the amendment was rejected.

Mr. SCHENCK's amendment was agreed to. Mr. HOLMAN. I move to strike out the clause as amended.

Mr. BOUTWELL. I wish to move an amendment to perfect the clause.

The CHAIRMAN. That is first in order. Mr. BOUTWELL. In line seven, after the word "barrels," I move to insert as follows:

And the amount of said tax upon alcohol and rum shall be allowed as drawback when said articles are exported: this drawback to be in addition to the drawback of fifty cents per gallon in this act otherwise allowed; and the Secretary of the Treasury is hereby authorized to prescribe such rules and regulations as may be necessary to carry the provision into effect.

Mr. Chairman, it will be recollected that the previous amendment in reference to drawback, which the committee adopted, limited it to fifty cents, the amount of direct tax. This paragraph imposes an additional tax of ten cents a gallon on distillation of whisky. The amendment I have offered will allow drawback on alcohol and rum to the amount imposed by this section, to wit: ten cents per gallon in addition to that allowed by the previous section. The effect of this is to give sixty cents, while the aggregate paid is sixty-three and one third, which makes a difference against the exporter of three and one third cents. If the amendment is not adopted I think the action of the committee is equivalent to the abolition of the export trade altogether, for the export trade cannot stand a differential duty of thirteen and one third cents per gallon. I will say this is but an indirect way of enacting an inhibition of exportation. To impose a tax of sixty-three and one third cents and grant a drawback of only fifty cents is equivalent to a tax against exportation of thirteen and one third centsper gallon. I think the committee ought to deal fairly with this question. Either we should provide a drawback which allows this business to be carried on, or we should say distinctly that on grounds of public policy we will abolish exportation of this article altogether. I will say, so far as my experience of this business extends. that a drawback of fifty cents, with a tax of sixty-three and one third cents, is an abolition of the export trade of this arti cle. Therefore I hope my amendment will be agreed to.

Mr. PRICE. This is the same proposition that we have had before us this morning once before, and which we have voted down. I do not suppose it is necessary to make much of an argument in reference to the proposition, because the question has been fully and fairly

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