vision has been very well changed to provide for the appointment of a specific number, not exceeding twenty. You want as many as may be needed for the districts in which spirits are distilled and tobacco is grown and manufactured; and if twenty are enough-upon that I give no opinion-I am willing to agree to it, and make them general supervisors, though the object is undoubtedly to supervise those particular manufactures.

Then it will be observed, and I call the attention of the chairman of the committee to the provision, that they afterward dispense with general agents in the section which is now under consideration, but they do retain the local inspectors. In conversation with the honorable chairman he thought it was not the intention to retain the local inspectors, but by looking at the preceding section he will see that it was the intention to retain them, because if you look on page 59 you will see that in speaking of the power of the supervisor of internal revenue, it is said:

"He shall have power to transfer any inspector, gauger, or storekeeper, from one distillery or other place of duty to another, or from one collection district to another within his district, and may by notice in writing suspend from duty any inspector, gauger, or storekeeper."

And then in the succeeding section they abolish the Treasury agents, special and general, but say nothing about inspectors. Now, the Committee on Finance have provided for another class of officers, who are in fact general agents, and authorize the Commissioner of Internal Revenue, "whenever in his judgment the necessities of the service may require them, to employ competent persons, not exceeding fifty in number at any one time, whose term of service shall continue at the pleasure of the Commissioner;" and then they strike out all the district inspectors, by adding the words:

That from and after the passage of this act no general or special agent, by whatever name or designation he may be known, of the Treasury Department in connection with the internal revenue, and no district inspectors, except as provided for in this act, shall be appointed, &c.

It may be very well to substitute gaugers and inspectors and supervisors in districts where tobacco is raised and manufactured, where those officers may be needed; and perhaps a small number of general supervisors all through may be useful; but in other districts, in my judgment, you cannot dispense, and it was not the intention of the House of Representatives evidently to dispense with the local inspectors altogether. The number of them has always been within the control of the Secretary of the Treasury. The Secretary by this new provision will undoubtedly be relieved of the necessity of appointing a great number of them; but if Senators will think a moment they will see that the information gained by local inspectors, which they have of the business of their immediate neighborhood, of the property of men, of the income of men and the business which they do, is absolutely essential to the collection of the revenue, more especially that part of it which arises from the income

tax.

I cannot give a better example of it than my own State. We distill no liquor there; we raise no tobacco there. The revenue, such as there is, is derived from other sources. Of what use in the world for looking up the sources of revenue there would be these agents, of whom there may be fifty, who are to be sent wherever the Commissioner may want to send them? He will only send them in cases where he fears there may be fraud. They will not be on the spot, will not have the power to know what the property of men is, or the income of men, or the business of men that produces income. You want local knowledge on these points.

Iink it vastly better, therefore, and it will work a great deal better, to leave the provision as the House of Representatives had it, and rely upon your storekeepers and gaugers and supervisors with reference to the two great sources of revenue, spirits and tobacco, But

when you come to all the other matters, and especially in districts where there are no spirits and tobacco manufactured, you must have the local knowledge of this set of men, because you see that if you strike down the inspectors you have no local agents except the collectors and assessors and their assistants, who have duties of their own to attend to, and they will not do and never have done this particular kind of business, and that is the reason why inspectors have been found necessary more or less in all the States. There has never been but two in the State of Maine, and they have been found sufficient. I suppose there has not been more than one in the State of New Hampshire and one in the State of Vermont, though perhaps there may be two in each of those States. You want the local knowledge of such men and the bestowal of their time upon ascertaining what the revenue ought to be.

ining the law, I am satisfied, as the Senator from Maine is, that it did not do that, that it abolished the special and general agents, but left the district inspectors. The question was then with the committee whether we should continue these local officers in their offices or whether we should provide some other mode of detecting frauds; and that is the question presented to the Senate.

After consideration we thought it better to give to the Commissioner of Internal Revenue authority to employ temporarily, from time to time, upon compensation to be fixed by him, dependent on the character of the service, contingent or absolute, a certain number of inspectors or detectives, because they are detectives, with authority to send them from Washington wherever he might have reason to believe a fraud had been committed. For instance, there is a famous detective in the city of Chicago who it is believed can pursue any kind of fraud or allegation of fraud until he solves the riddle; and it is said that no one can avoid his detective power. It is important sometimes for the Commissioner of Internal Revenue to have it in his power to employ persons of that kind, men of great experience, to whom large pay has to be given; sometimes, perhaps, contingent pay. It was thought better to entrust him with this power to employ temporary service, even if it costs more, in order to follow out threads of fraud which may be in his possession from other officers. These inspectors are merely local officers; they, per

I hope, therefore, that this amendment will not be adopted, but that the section will be left substantially as it was passed by the other House originally. I think it will work much better and produce a better effect. I am told that the Commissioner of Internal Revenue favors this view of the case, and I think, unless he has changed his opinion entirely from what he said to me, he would be opposed to striking out all provision for local inspectors, and the Senator from Ohio will see by looking at the latter part of the previous section that that was not the design of the House. I hope that this amendment will not be adopted, or, at any rate, if it is, that the number provided for will be cut down, and the local inspectors left wherever the Commissioner may see fit to appoint them, as there are some places where they will be absolutely needed.

Mr. SHERMAN. I hope the Senators present will give me their attention for a few minutes while I state the reasons that actuated the committee, and then they can decide as to the best class of officers to be employed for the detective service. The existing law provides for detective service, for revenue agents, special agents, and revenue inspectors. The duties of inspectors are defined by existing law, and the provision in regard to them is:

"That the Secretray of the Treasury may appoint inspectors in any assessment district where in his judgment it may be necessary for the enforcement of internal revenue laws or the detection of frauds, and such inspectors and revenue agents aforesaid shall be subject to the rules and regulations of the said Secretary, and have all the powers conferred upon any other officers of internal revenue in making any examination of persons, books, and premises which may be necessary in the discharge of the duties of their office. And the compensation of such inspectors shall be fixed and paid for such time as they may be actually employed, not exceeding four dollars per day and their just and proper traveling expenses."

They are local officers appointed for detective service only; they have no powers except simply for the detection of frauds and look after the observance of the revenue laws. The House of Representatives, by section fortyeight of the bill, undertook, as we supposed, to strike out all detective officers and special agents. The Commissioner of Internal Revenue had the impression, and so stated to the committee, that the section repealed all authority to employ district inspectors; but on exam

likes in the district. They may not have the general knowledge and information required for this service, and at four dollars a day they are not likely to have. Their pay is too small to secure the character of service needed, and we propose to give to the Commissioner of Internal Revenue power to secure the service he needs.

The Senator may be correct in supposing that it is proper to give him a certain number of district inspectors, and the amendments are in such shape that the Senate can divide them; but I consider it vital to give the Commissioner of Internal Revenue power to employ the kind of service he needs. The present Commissioner will go out soon; but whoever is at the head of the office should have power to employ the best detective talent in the United States of America for the time being to follow up any frauds that are alleged.

When we reached this section last night the Senator from Illinois [Mr. TRUMBULL] and the Senator from Vermont [Mr. EDMUNDS] admitted the importance of this service, admitted that fifty was not an unreasonable number, admitted that the mode and character of employment here proposed was advisable, but they said they were troubled with a constitutional difficulty; that as the Constitution conferred the power of appointment of inferior officers upon the President, the heads of Departments, or the courts of law, according to the discretion of Congress, these persons could not be employed temporarily by the Commissioner of Internal Revenue because the employment is not by the President, the head of a Department, or a court of law.. I did not think there was anything in that suggestion, and I do not now. There are more than a dozen officers who are neither heads of Departments nor courts of law who are now authorized to employ persons in just such language as is used here. The Superintendent of the Goverument Printing Office employs a whole army of people and fixes their pay almost without any limitation, or with only a general limitation. In the navy-yards hundreds of people are employed every day on indefinite pay, not by the head of a Department, but by a master workman, an inferior grade of officer. The officer in charge of the public buildings and grounds in this city employs great numbers of persons. So of the architect of the Treasury extension. I thought over this morning of more than a dozen officers who now exercise the power, according to law, of employing and

discharging people and fixing their pay; so that I think there is no constitutional difficulty. Mr. FESSENDEN. None at all. This is nothing but an employment, not an office.

Mr. SHERMAN. So I said last night; but these learned lawyers thought there was some grave constitutional question. I think reflection must convince anybody that the power to employ persons temporarily in the discharge of the duties devolved on an officer may be confided to that officer, and it is not necessary to have those persons appointed by the President and Senate, or by the President alone, or by the head of a Department, or by a court of law.

time presupposes that there is to be fraud going on continually of an enormous character all over the country, and that he must have a large force of detectives. It strikes me that if he were limited to a less number it would answer the purpose, though of course if you have a good officer he will not use any more than he wants, and so no harm will come by providing for fifty. But the Senator will perceive, and the Senate must see, that these men are only to be used on special occasions to hunt out particular frauds, and they are to be sent from Washington for that purpose. It is well that there should be such a class of officers; but they do not make up for the constant vigilance and supervision of officers who are on the spot. The small leaks are constantly occurring and it needs vigilance and care to guard against them. These detectives can know nothing about them and can find out nothing about them, whereas a vigilant and careful local officer on the spot, looking at the manner in which the collector and assessor perform their duties, and looking up the sources of revenue can render very great service to the Treasury. I speak of that from some little personal knowledge, for I have known of cases where they have been of great value. You get men that are shrewd, men that devote a certain portion of their time to that business, what is necessary, and they get their four dollars a day. You can find shrewd men who are willing to take that, and who do.

If there is no constitutional objection to conferring this power upon the Commissioner of Internal Revenue, there are many reasons why it ought to be conferred upon him, and not upon the Secretary of the Treasury. The Commissioner of Internal Revenue is charged with the important duty of enforcing the revenue laws; the power of the Secretary is simply supervisory. It may be vitally important to give the Commissioner of Internal Revenue power to detect offenders, even without the knowledge of the Secretary of the Treasury. The Secretary of the Treasury is a political officer, more or less affected by political influences, and disposed to appoint persons to office for political reasons. If a detective applied to the Secretary of the Treasury for office, he would have to show that his political opinions were those of that great officer in position at Under these circumstances, while I am perthe time. In order to make his application to fectly willing that as many of these detectives the Secretary, he would have to be right on to be at the command of the Commissioner of political issues. But if the Commissioner of Internal Revenue as he may need, shall be Internal Revenue, having a suspicion of fraud granted to him, and approve very much of that or collusion in any collection district, or desir-idea and certainly do not design to make any ing to watch the conduct of any subordinate, was at liberty, without consulting any one, to just say to Mr. Pinkerton or any one else,

You go and follow out this suspicion of mine; see whether there is any ground for it; do whatever is necessary to detect it, and I will pay you a liberal compensation dependent on the character of the service," it might be of great advantage to the Government.

opposition to it, yet I say, it will not do, unless you mean to leave all chances of small leakages open, not to be looked after, which in the end amount to a great deal, to dispense with the local inspectors; and as I said before, it is quite evident that the House of Representatives did not mean to dispense with them. They perceived the necessity of having them still kept. Undoubtedly the number will be very much diminished, when you have appointed the gaugers and storekeepers and supervisors for whom this bill provides. The probability is that the committee were led to strike them out from the consideration that they were legislating in this bill for nothing except liquor and tobacco. That is nominally so; but by changing the whole phraseology of these sections as the Committee on Finance propose, they dispense with all these other officers who are needed for other things, a separate class entirely. Whatever the Senate may do with the first amendment to the fiftieth section, I hope they will strike out the other, which dispenses entirely with the local inspectors, for I am satisfied that many of them are exceedingly useful and that as a class they are necessary to be kept.

That power ought to be exercised, and it seems to me that the number of these employés is not too great under all the circumstances. Still, if the Senate think fifty are too many at any one time, they can reduce the number. Even if the Senate think it important to keep these revenue inspectors in certain districts they ought to furnish the Commissioner of Internal Revenue with these agents to follow up the system that is proposed by this section. At present the Commissioner of Internal Revenue has not a single officer having his entire confidence, whom he can appoint and set to work in the discharge of this duty. The special agents and revenue agents are not appointed by him, but are appointed upon political influence. There are now three or four hundred of them scattered over this country that do not do much else than attend to politics. This bill wipes them out, dispenses with them entirely. By another law the number of general revenue agents was entirely unlimited, but Mr. FESSENDEN. No, sir; the amendby this bill they are abolished. Not one of ment as it stands is an amendment proposed thsese persons can now be called upon by the by the committee. I express the hope that it Commissioner of Internal Revenue to perform will not be adopted. I had thought of proposthis important duty, because they are all ap-ing to limit the number; but if the committee pointed either for political reasons or for local reasons as local agents.

As this is a divisible amendment, I trust the Senator from Maine will first allow the question to be taken on the first clause.

Mr. FESSENDEN. The Senator has convinced me in fact I made no opposition to itof the wisdom of putting it into the power of the Commissioner of Internal Revenue to employ these detectives; but according to his own showing they are only needed on special occasions. When the Commissioner thinks there is necessity to investigate affairs in any one district, he sends an agent he can trust. That is very well; he should have that power; but those things do not occur every day, and therefore it strikes me that the number of fifty at one

The PRESIDING OFFICER, (Mr. ANTHONY in the chair.) Does the Senator from Maine ask for a division of the question?

say that they are satisfied that even if you keep the local inspectors there ought to be as many as fifty of these agents I will withdraw any opposition and yield my judgment to that of the committee who have examined the subject. My impression is that the Commissioner cannot want as many as fifty at any one time to investigate matters in different parts of the country, because they are to investigate only particular cases for which they are sent.

Mr. SHERMAN. In regard to the number I will say that it was fixed after full conference with Mr. Rollins. He thought fifty might sometimes be useful. Sometimes two or three may have to be sent off ou the same errand. As a matter of course they will not be employed unless their services are required.

Mr. FESSENDEN. Very well; I make no objection to the number.

The PRESIDING OFFICER. The question is on the amendment proposed by the Committee on Finance.

Mr. CAMERON. Mr. President, I have a few words to say in regard to this bill. Mr. FESSENDEN. I ask the Senator if

he will not let us dispose of this section.

Mr. CAMERON. I would rather not. i have been waiting for an hour and a half t get an opportunity to say what little I desire to say, and I think I may as well do it now as at any other time.

Mr. FESSENDEN. I have been waiting here all day to get a chance to have this question settled.

Mr. CAMERON. To satisfy the Senator I will begin my remarks by reference to the motion now before the Chair, and by saying that I agree perfectly with the Committee on Finance as to the machinery for collecting the tax on whisky. I think it was very well gotten up by the Committee of Ways and Means of the other House, and was in very good shape when it was passed by the House; but the Finance Committee of the Senate have perfected it to a great degree, and have made great improvements on it. Hitherto one great trouble in collecting the tax on whisky has been in the means provided for doing it. Now, the difficulty I have with this measure is not in regard to the mode of collecting the tax, but it is with the bill itself.

Mr. President, I cannot give my consent to the proposed reduction of the tax on whisky, from two dollars to fifty cents per gallon. The arguments in favor of such a reduction are forcible, but they are not convincing to my mind.

From the beginning of the whisky frauds it has been the custom of dishonest distillers to place about one eighth of the amount manufactured in bond, with the intention of abandoning that portion to the Government. It was not possible, even for the "whisky ring," to steal all the tax levied, and this bonding of a small part of the manufacture was the result of shame rather than of duty to the Government. By abandoning a fraction, whenever payment became necessary, the pretext was secured for swindling the revenue of the tax on the remaining seven eighths boldly thrown on the market, and that proportion of the tax was openly stolen from the Treasury.

Mr. SCHENCK, the chairman of the Ways and Means Committee of the House, gives the amount of whisky now in bond at more than twenty-five million gallons. The Government now has a legal lien of two dollars per gallon on this whisky, amounting to $50,000,000. By this bill we deliberately forego our legal rights to $1 40 on each gallon of this whisky. By reducing the tax to sixty cents we make a present of $40,000,000 to those who have been constantly and systematically robbing us. Would it not be wiser to adhere to the two dollar tax, and realize the $50,000,000 now due, or, when the proper time arrived, confiscate and sell this twenty-five million gallons at the market rate, and so secure $37,500,000, or about twice as much as has ever been paid in one year from this source of revenue, which should pay us $200,000,000, and to that extent relieve the honest industries of the country.

It is claimed that an increase of revenue will follow a reduction of this tax as proposed in the bill before us. I doubt this very seriously. Whisky can be produced, I am informed, for forty cents per gallon. The poposed tax of fifty cents is one hundred and twenty-five per cent. of the cost of production. I believe it is much more. But I take the figures as I find them. The amount annually distilled is, say, one hundred million gallons. On this vast amount a tax of fifty cents per gallon is enough to excite the cupidity of the rogues who have been defrauding us, and enough to satisfy even the greed of the "whisky ring. For if, under the reduced rate, we

collect as much as we now do, and I have no idea we will collect more, there will remain unpaid and stolen the sum of $30,000,000 a year as a premium on villainy.

I am satisfied that it is not good policy to reduce this tax now. It is a virtual admission that we cannot enforce the laws. The remedy does not lie in a modification of the laws, but in their enforcement. It may be that for a few months longer we must continue in the disgraceful attitude of a Government unable or unwilling to execute its laws, But had we not better continue the struggle until an honest Administration under Grant shall relieve us, than to abandon the contest to a corrupt combination of law-breakers and escaped criminals leagued in this stupendous villainy? There are plenty of men in this country who have both the nerve and the integrity to collect this tax; and when it shall become possible to secure the appointment of one such any tax we may choose to levy will be collected, depend upon it.

To surrender to this organized theft, and to admit the whisky ring" to be the masters of the Government, may meet with favor from those to whom peace is precious; but it will not satisfy minds used to grappling with difficulties, and to overcoming opposition. We have the unquestioned right to levy whatever tax we please on whisky, and I am one of those who believe that we have the power to collect whatever we may choose to levy on this purely luxurious product. The English Government levys, and collects, ten shillings, or $2 47 per gallon on spirits, and I am unwilling to admit, by the proposed reduction, that we are not equal to the task of collecting our revenues. A nation which suppressed the rebellion should not be guilty of this disgraceful surrender to

the " whisky ring.' The immense majority

of the American people respect the laws, and pay, without resistance, what you impose upon them; in their name I protest against the passage of this bill, because it still further oppresses the honest tax-payers to enrich that band of thieves who have conspired to defy your laws, and to debauch and corrupt your public life. That conspiracy has already succeeded in making the revenue service a nest of robbers, and this bill is their payment for that work. These convictions account for the earnestness with which I renew my protest against its passage.

I have other grave objections to this reduction. The burdens of taxation should be borne by just such luxuries as whisky, wines, and tobacco. I know that, under the incoming Administration, this whisky tax can be and will be collected. If you reduce the tax on spirits now can you restore it a year hence? No candid man will assert that an increase can be passed after a surrender, which plainly admits our inability to enforce the payment now. It is not statesmanship to tamper with laws to suit temporary emergencies; especially laws which produce revenue should not be hastily changed. They should never be touched at the dictation of an admittedly corrupt combination engaged in defying them.

If the hope of increased revenue from this measure should be disappointed, if a less amount shall be collected than at present, which I fear, then must the inevitable deficit be made good by the honest and now suffering industries of the country. I, for one, will not place these interests in danger of additional burdens by relieving the most undeserving of all our productions from its just share of the expenses of the Government.

When the tax was fixed at two dollars per gallon an immense remission of taxes was made in the interest of the whisky manufactures. All whisky in first hands was allowed to go free of tax, and this was the entering wedge to all the corruption which has followed. How much we were mistaken as to the determination to collect this tax may be shown by a reference to the debates of the House of Representatives. If my memory is not at fault, General SCHENCK, the able chairman of the House Committee of

Ways and Means, at the beginning of this session declared that the two-dollar tax could and would be collected. This opinion prevailing, another large remission of taxes (about one hundred million dollars) was made in favor of the manufacturers. The result of all this must be a large deficit. What assurance have we

now that an increased revenue will follow a diminution of this tax. What fair reason have we to hope that we can again restore this tax, when an honest Administration shall make its collection possible? I have no idea that a reduction of the tax will yield or secure an increased revenue, nor have I any hope that we may restore the two-dollar tax if we now abandon it. If I am right, I know that an enormous deficit must result from such legislation as this bill contemplates, and that this deficit must be made up by taxation which shall press with severity upon interests now staggering under heavy burdens.

I cannot approve legislation which makes such a danger possible, and I submit to Senators whether we ought not now to insist on the retention of the tax at two dollars per gallon, and throw on the present Administration and its supporters the odium of cheating the revenue at every point and on every pretext.

By continuing to fight this universal corruption until a new order of things shall relieve us, we not only do our duty, but we lay bare the robbers, whose shameful thefts are the cause of so much danger and so much national disgrace, and we will fill the Treasury by a tax of which no one will complain.

One very important consideration with me is that we should give permanence to such laws as affect values. An honest manufacturer of whisky is not so anxious about the sum per gallon you tax his product as he is that the sum shall be fixed and reliable. It is large operators and speculators who are benefited by these changes in the revenue laws.

At this moment it is publicly announced that one of these wealthy speculators has bought an interest in bonded whisky, so large that he actually controls the whisky in bond, and the price of it in this country. This immense interest has been bought by this man for ten cents per gallon, and the passage of this bill will enable him and his associates to make millions, while the honest producer can justly claim that we are unsettling the basis of his business without benefiting any one except those who have become conspicuous in their opposition to the enforcement of the laws, and their accomplices who occupy high positions in the Government.

But my opposition to a reduction of the tax is intensified because of the improved machinery for the collection of whatever tax we may decide upon, which this bill secures, We are now collecting less than ten per cent. of the whisky tax. I hope that this bill will secure, even under the present order of things, not less than fifty per cent. of this tax; and I am certain that under an honest administration we shall be able to collect nearly all of it. suming this, how will we stand relatively? With a tax of fifty cents we shall obtain $25,000,000 per year for the balance of this administration. After it passes away we shall, no doubt, succeed in collecting $40,000,000 per annum, or just the amount we now present to the "whisky ring," in the vain hope of developing honesty in that batch of ruffians.

As

Now, let us calculate what would be the result if we retain the two-dollar tax, and it will appear that until the 4th of March next we may secure a revenue at the rate of $100,000,000, and after that period $180,000,000 a year, every cent of which will be so much taken off the better industries of the country and placed on that one which ought to pay the most heavily.

In every view of this case I hold it to be our duty to refuse to make the proposed reduction. Gentlemen favor this bill because under the corrupt influences now at work the "whisky ring" are enabled to cheat the Government out of vast sums, and with these sums

so stolen they may carry the elections next November. Will gentlemen who make this a pretext for voting a reduction of the whisky tax be good enough to demonstrate, if they can, that the people can be bought, and, if so, why the $40,000,000 we now present to the "ring" owning the bonded whisky is not sufficient for their purpose?

If money stolen from the revenues can elect a Democratic successor to Johnson, does any sane man doubt that it will be stolen? I do not, for an instant doubt this, but I am determined that they shall steal this money and bear the odium of the theft, and by no means wheedle me into voting a corruption fund of $40,000,000 into their pockets to enable them to defeat that man whom no one else has ever defeated.

Mr. BUCKALEW. I suggested some objections to this particular amendment last evening, which I will now repeat with some additional thoughts which I will state.

Here are a large number of appointees pro vided for without any designation; no name given. What are they to be? Commissioners, agents, superintendents, inspectors? They are called "persons," the most general term which could possibly be selected.

In the next place, it is a little remarkable that there is not the slightest attempt to define their duties; the section does not prescribe what they shall do! They may do anything, so far as this amendment is concerned, that the Commissioner of Internal Revenue tells them to do. Are they to be engaged in inspecting establishments on which taxations imposed? Are they to examine and assess property? Are they to make collections of money that is to come into the Treasury under the revenue laws? Are they to detect frauds, pursue investigations with reference to those indirect and corrupt influences which we encounter in administering our system? What are they to do? The amendment does not inform us. I venture to say this is the most vague and indefinite designation or appointment to public duty of which our legislation bears any account.

Again, sir, it is a little remarkable that while compensation is provided for, no rate is fixed.

Here are fifty persons or officials, whichever you call them, who may be engaged continuously in the public service; there is no limitation of time, and their compensation may be anything which the Commissioner of Internal Revenue may choose to fix. If he chooses to pay them twenty dollars per diem the faith of the Government is pledged to the appropriation of that money, or rather to its payment, for I suppose general appropriations would cover this outlay of public funds. me read this amendment in connection with my remarks:

Let

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

That is a very remarkable amendment, and as I understand this is to supply all the existing provisions which relate to the appointment of agents of the Treasury Department in connection with the internal revenue, and also for the appointment of district inspectors except as provided in other parts of this act. I am very reluctant to assent to anything so vague, indefinite, and in my judgment so liable to abuse as the new system of appointment of revenue persons, I suppose I may call them, proposed in this amendment. As to the numher of them I have no means of information. I am perfectly content to take the judgment of the committee as to that.

The PRESIDING OFFICER. The question is on the amendment proposed by the Com

mittee on Finance.

The amendment was agreed to.

Mr. FESSENDEN. There is another amend

ment proposed to the thirteenth line of the same section to insert the words "and no distriet inspectors." I move to amend that by striking out and no district," and inserting "except inspectors;" and then after "inspectors' insert the word "and."

The PRESIDING OFFICER. The amendment will be reported.

The CHIEF CLERK. The Committee on Finance propose after the word "revenue," in line thirteen of section fifty, to insert the words "and no district inspector."

The Senator from Maine moves to amend the amendment by striking out the words "and no district," and inserting "except;" and after "inspectors" to insert "and;" so as to make the clause read:

That from and after the passage of this act no general or special agent, by whatever name or designation he may be known, of the Treasury Department in connection with the internal revenue, except inspectors and except as provided for in this act, shall be appointed, &c.

The amendment to the amendment was adopted.

The amendment, as amended, was agreed to. Mr. FESSENDEN. Now, to carry that out, it will be necessary not to agree with the committee in inserting the words "or inspectors on the next page.

Mr. SHERMAN. I have no disposition to press this matter; but one great complaint that has been made has been that an inspector has been appointed for almost every district in the United States. How true that is I cannot tell. I have no doubt this will continue them in office.

Mr. FESSENDEN. They can be reduced and will be unquestionably when you come to appoint these other officers, but there are some districts where there must be inspectors where we cannot get along without them.

The PRESIDING OFFICER. The amendment will be reported.

The CHIEF CLERK stated the amendment of the Committee on Finance to be to insert the words "or inspectors" after " agents," in line sixteen of section fifty.

The amendment was rejected.

Mr. FESSENDEN. I move the following as an additional section to come in at the end of the bill:

And be it further enacted, That the penalty provided by law for issuing any instrument, document, writing, or paper without being duly stamped, may be remitted by the collector in the manner and cases specified in section nine of the act approved July 13, 1866, entitled "An act to reduce internal taxation to amend an act entitled An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes,' approved June 30, 1864, and acts amendatory thereof," at any time prior to the 1st day of January, in the year 1869, or at any time within one year after the making and issuing thereof.

I can explain this in a word if it needs any explanation. The chairman understands it. Section nine of the act referred to provides for remedying the difficulties occasioned by the want of a stamp. The provision is substantially that wherever a stamp has been omitted, it may in certain cases and in a certain way be put on afterward on paying the proper sum and paying the penalty affixed of fifty dollars. Then there is an additional provision that that penalty in different cases where the collector is satisfied that the stamp was omitted by accident or misunderstanding, without any intention to deter the Government, may be remitted, also. The provision is that it may be remitted at any time before the month of August of that year, or at any time within one year after the date of the instrument, application being made for the purpose. This amendment merely provides that the time within which the penalty may be remitted may be continued up to the 1st day of January next.

We have to pass these acts every once in a while in order to prevent a good deal of evil to the community.

It is merely continuing the time within which the collector, in old cases, where they come to the knowledge of persons may remit the penalty. My attention has been called to it by a let

ter I received from West Virginia stating a very hard case, and I presume there are many cases of that kind in the southerns States, particu larly where they do not know the trouble until they come to use papers in court. In such cases, where there was no intention to defraud the revenue, to impose the penalty of fifty dollars would be very oppressive.

The amendment was agreed to.

Mr. MORRILL, of Vermont. I desire to propose an amendment to section fifty-four, pages 70 and 71. It will be noticed by Senators that in the case of drawbacks the bill of lading is to be sent to the collector of customs at the port of entry, and then another transmitted to the Commissioner of Internal Revenue. It is deemed to be better that this should be confined to the collector of the port of entry and the returns made to the Secretary of the Treasury instead of the Commissioner of Internal Revenue, and I am about to propose amendments to effect that object. In line five move to strike out the words "in charge of exports" and insert "of customs." Then in line nine I move to strike out "Commissioner of Internal Revenue" and insert "Secretary of the Treasury." In lines fortyfour and forty-five I move to strike out "sent to the collector of customs at said port of entry and;" at the end of line forty-five, to strike out "the other;" in line forty-six, to strike out "entry shall be ;" and in line fortyseven, to strike out "Commissioner of Internal Revenue and insert "Secretary of the Treasury;" so as to make the clause read:

One bill of lading, duly signed by the master of the vessel, shall be deposited with the said collector, to be filed at his office with the entry retained by him; one of said entries shall be, when the shipment is completed, transmitted with the duplicate of the bond to the Secretary of the Treasury, to be recorded, &c.

In line fifty I move to strike out the words "in charge of exports" and insert in lieu thereof the words of customs," and at the end of that line and the beginning of the next to strike out the words "the internal revenue" and insert "6 a customs;" so as to read: order or permit signed by the collector of customs and directed to a customs gauger," instead of an internal revenue gauger.

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The PRESIDING OFFICER. These amendments are to a section which has been inserted. Mr. MORRILL, of Vermont. I propose to include all my propositions in one amendment after I have read all I propose. On page seventy-two, line fifty-five, I move to strike out "internal revenue" before the word "gauger;" and at the end of the line and beginning of the line fifty-six to strike out the words in charge of exports ;" and then, at the end of line fifty-six, and beginning of the next line, to strike out the words "Commissioner of Internal Revenue" and insert "Secretary of the Treasury;" and in line fifty-eight to strike out "in charge of export;" so that the clause will read:

The casks or packages shall be inspected and gauged alongside of or on the vessel by the gauger designated by said collector, under such rules and regulations as the Secretary of the Treasury may prescribe, &c.

Now, Mr. President, in order to effect all these changes I move to substitute the section as amended as I propose for the present section fifty-four. The effect is to place this matter in charge of the collector of the port of entry and the Secretary of the Treasury instead of the officers of internal revenue and the Commissioner of Internal Revenue.

Mr. POMEROY. The several amendments produce that effect?

Mr. MORRILL, of Vermont. Yes, sir; and I move it all in one amendment now. I move to substitute the section, as amended, for the section as it stands in the bill.

Mr. SHERMAN. It is right. The Commissioner of Internal Revenue requests that the amendment be made.

The PRESIDING OFFICER. The amendment of the Senator from Vermont proposing to modify what has been already amended is not strictly in order.

Mr. SHERMAN. I suggest that the bill be reported to the Senate and then it can be done. Mr. POMEROY. It can be done now by general consent.

The PRESIDING OFFICER. The amendment will be received if there be no objection. The question is on the amendment of the Senator from Vermont.

The amendment was agreed to.

Mr. DAVIS. I desire to suggest an amend ment. I do not see the necessity or propriety of more than one mode of taxation of whisky. The first section of the bill provides for a tax of fifty cents upon each and every gallon. There are other sections of the bill that impose a special tax, one a tax of four dollars for every cask of forty gallons, "and the collector shall proceed to collect the same as in cases of other assessments for deficiencies." These two classes of tax upon whisky and the different modes of collection tend to complicate the system. It seems to me that the more simple the system can be of taxation upon whisky the better for the tax-payer, and for the Government also. I think it would be much better that there should be but one tax imposed upon whisky. If the tax of fifty cents is not sufficient for the purpose of revenue let the additional special tax of four dollars per barrel be comprehended in an increase of the tax of fifty cents.

There are some other objections to this special tax of four dollars a barrel. It will be equivalent in large distilleries to a daily payment of tax. That is what some gentlemen write to me who are engaged in the distillation of whisky. I will read a paragraph from one of their letters:

"You will observe that the tax as imposed by sections twelve and sixty-five on future distillation are all collected monthly, which is equal to cash. A distiller making, say twenty-five barrels of whisky per day, will have to pay, perhaps, not less than $120 per day of taxes in cash.'

The tax being made payable monthly he deems to be equivalent to a tax collectable each day. I suppose there is very little difference. A man engaged in distilling whisky making that quantity will have to keep his deposits in bank from which to pay this tax monthly; and it would make very little difference to him whether he paid it daily or monthly. But it seems to me that a system of taxation cannot be too simple. In proportion as you simplify it you make it acceptable to the people who have to pay the tax; you make it easily comprehensible by them, and by the officers who are to collect the tax. Certainly there is much greater liability to misunderstandings and to vexatious delays and impediments under this double system of taxing whisky than there would be upon a simple principle of taxing it so much per gallon.

I think that the honorable chairman of the Committee on Finance could, without any sacrifice of the interests of the public Treasury, include both systems in one simple mode of taxation. Let the amount that shall be collected upon whisky, the total aggregate amount, be payable by a simple tax of so much per gallon.

It

There is another objection to the special tax. That is payable before the whisky is sold. is payable monthly; it is payable, therefore, as a general rule, before the sale of the whisky. Large operators will have to advance a considerable sum in the way of this special tax before they can have the opportunity of selling their whisky and obtaining the money to pay the tax by the sale of the article. I think, and would respectfully suggest to the honorable chairman, that the system might be simplified and improved both in relation to the complexity that the two modes of taxation produce and the time of payment of the tax. I merely throw it out as a suggestion.

Mr. SHERMAN. I do not wish to discuss this question, because I hope we shall be able to get the bill reported to the Senate before five o'clock, and avoid an evening session.

I desire to say that the Committee on Finance considered itself concluded upon the amount

of tax to be levied upon whisky; not so precluded but that we could propose amendments; but the discussion in the other House, and the general concurrence of sentiment throughout the country in a measure precluded us from opening the question as to the rate of tax upon whisky. I regret myself exceedingly to surrender the large tax now imposed upon whisky. I thought at the time it was adopted that it was too high. I believed then that a dollar a gallon could be collected, and I still think that a dollar a gallon might be collected. But the general feeling in the country has been one of disgust at the failure to collect the whisky tax. The manifest frauds throughout the land, the gross and immoral practices that have grown out of it, have convinced men of the necessity of breaking them up even at the surrender of the tax, and I think the general judgment of the moral men of the country is that it is better to surrender this whole tax and all the revenue to be derived from whisky rather than to continue a rate of tax that is entirely for the benefit of what is called the whisky ring. It is a general satisfaction to the people throughout the country that this enormous profit, which went to the worst men in the country, should be broken up even at the sacrifice of a considerable amount of revenue. At any rate, the committee did not choose to open the question, although any Senator is at liberty to do so. We reported the fifty-cent rate because we found it in the bill.

In regard to the double tax referred to by the Senator from Kentucky, I will say that in the first place I thought the whole tax might properly be levied on spirits when sold, but I am now satisfied that it is better to divide the tax. This limitation prevents small distilleries from running to advantage. The minimum tax is levied on distilleries producing a hundred barrels or less. Consequently the small distilleries that produce twenty or thirty or forty barrels are at a disadvantage. It is to the interest of the Government to break them up, because the amount of revenue derived from these small distilleries does not pay for the gauger and proper officers to take charge of them. The tendency of the special tax we impose is to break up the small distilleries and confine the business to distilleries of a larger size.

I tried last night to get the Senate to raise the minimum. Instead of a hundred barrels I would make it five hundred, and that would have a more beneficial effect, by stopping the distillation of spirits at the small stills, where it cannot be properly watched. This arrangement divides up the tax, and they pay it monthly. It is put on in such a way that it is almost impossible to defraud the revenue. Most of the distillers prefer this division of the tax. Besides, by it the Government gets a uniform revenue, while by the other system the whisky may remain in store twelve months without the Government getting any tax, and in the mean time the Government lose by the wastage, the stealing and the fraud that may occur in store during these twelve months. Under this system we at least get the tax upon the product as it is distilled paid monthly, assessed by the gauger, and ascertained by the storekeepe. It is no inconvenience, but rather, I think, a matter of convenience to the distiller, because the monthly payments break up the amount of his tax, and there is no difficulty in ascertaining it, because the same machinery which ascertains the producing capacity also ascertains the amount that is to be taxed when it is taken out of store. I will not debate it longer.

Mr. POMEROY. I am not going to occupy the time of the Senate, but I wish to say that if the Senator from Ohio expects that reducing this tax to fifty cents is going to make every. body honest, and that he will collect it, he will be, I think, mistaken. I read the debate in the other House, and I was sorry to see that our friends had all stampeded before the whisky ring. So I suppose it will be unavailable to try to make any effort here not to concur in

the tax of fifty cents per gallon, though I say distinctly that I have no more faith in collecting fifty cents on the gallon than I have in collecting two dollars.

Mr. SHERMAN. If my friend will allow me, as I find there is a general disposition in the Senate to avoid a recess to-night and to sit a little longer and try to finish this bill, I desire to submit a motion

Mr. POMEROY. I am not going to take two minutes.

Mr. SHERMAN. I move that the recess for to-day be dispensed with, so that we may proceed along until we finish the bill. It will not take long.

Mr. BUCKALEW. I suppose the Senator means only to go on until the bill shall be reported to the Senate.

Mr. SHERMAN. No; I think we can pass it pretty soon. I move to dispense with the recess for to-day.

The motion was agreed to.

Mr. POMEROY. I was only going to observe that when there has been an organized system in the country of defrauding the Government that organization will exist, and when they cannot defraud it in dollars they will defraud it in dimes, and they will keep it up. If we all stampede before the whisky ring, and give it possession, I have no more faith that we shall collect the revenue at fifty cents than that we could do it at two dollars. The machinery of this bill, I think, has been well drawn and carefully guarded, and I do not know that it can be improved upon; but for the Congress of the United States and the American people to come down to say that we cannot collect a reasonable tax, a tax that other Governments can collect, not more honest than ours or more efficient, to say that there is a ring which beats the Government and beats the revenue officers, and that we will retire from the field and say that they may have their own way, and that we will only take fifty cents on the gallon, is not only, as the Senator from Pennsylvania [Mr. CAMERON] said, humiliating, but I do not believe in the policy of it, and we shall not get the revenue by it. I will content myself by voting against it.

Mr. COLE. Mr. President, I cannot bring myself to the point of acquiescing in a reduction of the tax on whisky from two dollars to fifty cents a gallon. It seems to me that it will be an acknowledgment exceedingly humiliating to us as a nation. I believe the machinery which is provided by this new bill that we are about to act upon is very complete; every exertion, at all events, has been made in committee to make it perfect; and if it is sufficient to collect fifty cents tax on whisky I am quite satisfied that it will be sufficient to collect a larger tax. If it is not sufficient to collect two dollars tax we had better leave the machinery as it is. I do not see that we are going to add to the revenue by dropping down from two dollars tax to fifty cents tax, with, at at the same time, a confession that our machinery is imperfect. The "whisky ring," if there be such a concern, and nobody can question its existence, will cheat as readily for the purpose of avoiding the tax of fifty cents as they will for the sake of avoiding a tax at a larger rate.

The tax upon whisky collected in Great Britain, as I am told and believe it to be the fact, is $250 a gallon-ten shillings a gallon. They are able to collect it very closely. They are able to collect, I believe, about all of that description of tax. We, it seems, are not so successful. But the presumption is, or ought to be, that we are improving our machinery, that we are getting it so nearly perfected that we can collect more and more of the tax. The machinery, no doubt, has been imperfect from the start so as to admit of many frauds; but it takes some time to perfect any description of machinery. Senators need not be reminded that the steam engine was many years in becoming perfected; and the means by which any particular description of tax is to be collected cannot be made perfect at once. With

this presumption that is now before us that the machinery about to be provided if this bill passes will be more efficient to collect the tax, we ought not certainly at the same time that we provide this machinery reduce the tax from two dollars down to half a dollar. I have thought all along since this matter has been discussed that we might reduce it from two dollars to one dollar, but to reduce it to one quarter what it was, and to do that in fear that we shall be unable to collect the tax because it is large is a confession which I think we ought not to make, and for one I am quite unwilling to make it.

Mr. VAN WINKLE. Is it in order to offer an amendment now?

The PRESIDENT pro tempore. An amendment is in order.

Mr. VAN WINKLE. I offer the following amendment, to come in as an additional section:

And be it further enacted, That so much of all acts and parts of acts as impose any internal revenue tax on illuminating or other mineral oils, and on the product of the distillation, redistillation, or refining of crude petroleum, or of crude oil produced by a single distillation of coal, shale, peat, asphaltum, or other bituminous substances, together with all provisions relating to returns, assessments, warehousing, and bonding, and all other provisions for determining the quantity of mineral oil distilled for the purpose of securing the payment of the tax thereon, be, and the same are hereby, repealed; and no tax imposed by existing laws on such oils or products in the hands of the producer or manufacturer, or his agent or agents, at the passage of this act and unsold, shall be collected.

Mr. President, when a similar bill was before the Senate in the spring I proposed a reduction of this tax of one half, and at that time gave many, as I think, good reasons for it. At any rate, the proposition was carried through both Houses. I presume it may be said that I ought to have asked for the whole then. There were reasons then assigned which it may not be necessary to repeat now except very briefly. I will only say that notwithstanding the reduction of one half the tax, it is still an extraordinarily high tax. It amounts to about one hundred per cent. on the crude material out of which this oil is manufactured. It is made an exception to all other manufactures of its class in this that a tax for any amount whatever is continued upon it. Now, when a disposition has been manifested in both Houses of Congress to relieve our manufactures from taxation as far as possible, I do not think there is any good reason why this article should be singled out to bear a tax when others are let go.

:

This provision, I think, is germane to this bill, because petroleum and its products constitute one of the three articles which are subject to this host of inspectors and gaugers, and I do not know what all, in order to collect the tax on that which is consumed at home. It is loading an article of general use, an article of necessity, an article which now enters into the consumption of almost every family in the land out of the cities where gas is used, and even there, with unnecessary trouble and burdens, and thereby is interfering greatly with the business.

But, Mr. President, there is another reason, and one upon which I rely most in asking the favor of the Senate for this amendment. Within a very few years this article of petroleum in its manufactured state, and also in its crude state to a less extent, has become an article of export; so that the amount now exported from this country annually is about thirty million dollars. There is hardly any other article I presume at this time, to the amount to which it is exported, that is as valuable; and certainly it cannot be denied by anybody, and it will not be doubted by anybody, it will not be pretended even, that it is not the true interest of this country to encourage every article of export that we can produce. It saves the specie from being drained from the country; it tends to pay off our foreign debt of whatever nature; and of course recommends itself, therefore, rather as a thing to be encouraged than a thing to be depressed.

Now, sir, what is the consequence of the tax? This oil that is exported, it is true, is