Mr. MORRILL. I withdraw my amendment to the amendment, and in order to accommodate all parties, as there seems to be a disposition to make a little change in this provision, I move to amend the amendment of the gentleman from Kentucky by inserting fifteen cents instead of five.

The amendment to the amendment was agreed to-ayes 47, noes 46.

Mr. MALLORY's amendment, as amended, was then adopted.

Mr. MALLORY. I move an amendment that the tax on cigars be reduced from fifty to forty cents per pound. I have no hope, Mr. Chairman, that this amendment will prevail, because I know it is the purpose of members to load this product of our country with the very heaviest tax that they think it can possibly bear. I believe that they have gone so far toward the attainment of this object as to have now loaded it with a tax that it cannot bear. I believe that the product will break down under the tax. If I thought it possible to achieve my purpose I would have moved an amendment reducing the tax on manufactured tobacco in every form in which it is spoken of in this bill, because my conviction is fixed-and I believe the operation of the law will prove the correctness of that view-that the rate of taxation now imposed on tobacco in its various forms will result in diminishing its production to an extent so large as to lessen the revenue materially that would be derived from a tax on this product at a much lower rate than the committee proposes to impose upon it. I merely protest now against the system which, it seems, is to be fixed on this country, of taxing whisky and tobacco, the two great products of the growing and flourishing West, at a rate greater than the products of any other section of the Union are taxed.

I know that when an individual or country is supposed to be able to bear a good deal, a good deal is apt to be imposed upon him or it. Gentlemen seem to rely on the fertility of that great western region, on the industry and energy of its people, as being sufficient to redeem them from the consequences of any amount of taxation inflicted on them by this bill. But I suggest to gentlemen that it is the last feather that breaks the camel's back, and that they may, in this practice, go so far as to render patience no longer a virtue on our part. The time will come when the strength of that region will give it the preponderance in the Halls of Congress. And l'admonish gentlemen who are now so busy in inflicting on us every species of burden and oppression, to beware of the day when our strength will enable us to turn upon them and revenge ourselves for the injury which they are now inflicting upon us. I had rather that this system were abandoned. I had rather that fairness, equality, and justice should characterize our legislation, so that that people, when they attain this degree of power which they will reach, will look upon you with kindness and regard, will have nothing to retort upon you, will have no injury to redress, no rankling wrongs to remember. I admonish the gentleman from Pennsylvania [Mr. STEVENS] that the time will come when the great West, having legislative power in these Halls, will perhaps lay a stronger hand upon iron than he is disposed to have done, or upon coal, or upon petroleum, although we are using the latter so much in the West that I do not think we should punish you as much as ourselves by taxing it heavily.

But, Mr. Chairman, I do not wish that this discrimination shall be persevered in. I have no hope, however, of seeing abandoned. But I must be permitted, nevertheless, to enter my solemn protest against it here.

Mr. STEVENS. Mr. Chairman, I am very sorry that my friend from Kentucky has got into the minatory humor this morning. It always makes me feel bad to hear threats.

one.

ing product in my own district. Last year, according to the accounts that I have, my county raised and sold over two million dollars' worth of tobacco. Connecticut raises a very large quantity of tobacco in proportion to her other cropsmuch larger than her wheat crop.

The gentleman must see that the system of taxation all over the world reduces the taxes to the fewest possible number of articles, and those generally articles of luxury. England now raises her vast revenue, not from five or six hundred articles of taxation, but from seventy or eighty. Is tobacco heavily taxed by this bill? The highest rate is sixty cents a pound. The tax on tobacco in England is $2 25 per pound. The tax now on cigars ranges from eight dollars per thousand, which is the lowest practical amount, up to forty dollars per thousand. This bill reduces the tax to ten dollars per thousand on the average. To be sure, it includes a certain class of cigars not included in our present tax; that is, Havana cigars, the foreign article; for we were of opinion that, without some such system as this, the frauds which are now practiced to such an extent as almost to render the tax a nullity, could not well be avoided. We have, therefore, reduced very materially the tax upon cigars from its present amount; yet we believe that this reduced rate of taxation will produce three or four times the amount of our present revenue from this source. We do not see how it will be possible to escape the payment of this taxation, where no frauds in counting can occur, where the question is simply one of weight. Under the present law, large quantities of cigars manufactured in this country are passed off as Havana cigars.

We believe, therefore, that the system proposed in this bill will produce, not perhaps as much revenue as the present system would if it could be enforced, but vastly more than we can ever realize under the present system. We believe that we have reduced the rate to the lowest figure possible, if we are to raise sufficient revenue to carry on this war and pay the interest on the public debt.

I am sure that the gentleman from Kentucky is willing that the products of his section shall pay their full proportion of taxation. I do not object that my constituents, largely engaged in tobacco raising, should bear their full proportion, nor do I believe that they will complain or think themselves unjustly burdened because many of the States raise no tobacco at all.

Mr. MALLORY. The distinguished chairman of the Committee of Ways and Means, in replying to what I had the rashness to say a few moments ago, spoke of Jove giving his nod. I do not suppose the gentleman could have alluded to me when he made that remark. He knows that he is regarded by the House and the country as the Jupiter Tonans of this body. The time was

when he

"Shook his ambrosial curls and gave his nod, The stamp of fate, the sanction of a god.”

I never go to England, sir, to borrow philosophy on this subject. If I did, I would fail to impose upon any production of this kind any tax at all. That is the English system. Tobacco is taxed enormously in England, some $2 45 per pound; but the gentleman must recollect that tobacco is not raised in England. Spirits and wines in all forms are taxed high in England, but they are not produced there. There is a high tax upon whisky, brandy, and wines. They contribute for that reason largely to the revenue of the Gov

ernment.

Mr. STEVENS. Does the gentleman say that they do not produce whisky in England?

Mr. MALLORY. They do to a limited extent. I suggest to the gentleman from Pennsylvania that England does not produce to a sufficient extent the material out of which whisky is made, for the population cannot spare it, as they need it for food.

Mr. STEVENS. The excise duty upon the domestic article there is very high now.

Mr. MALLORY. That results from the enormous excise imposed upon small quantities.

The gentleman supposes that Pennsylvania will become a large producer of tobacco. He says that it is a large producer now. Let me say to him that that will not continue long, because everybody knows that tobacco is an exhaustive crop. You cannot continue to raise tobacco in a region where cereals are valuable. When labor in his State becomes dearer and land higher in price, the production of tobacco will be abandoned. It will only be produced where the land is fertile and where the deterioration of it is not so objectionable as it is in Pennsylvania.

[Here the hammer fell.]

Mr. L. MYERS. Mr. Chairman, I am opposed to the amendment offered by the gentleman from New York, [Mr. BROOKS,] but in reality rise more for the purpose of asking the Committee of Ways and Means a question upon a subject of great interest to the people, before we have passed by the section altogether. I am surprised that the matter has not been mentioned before.

There is a general belief that the interests of the Government would be best subserved in this particular by levying a tax upon tobacco in the leaf. Such a tax would in a great measure avoid the large frauds on the revenue, which it is on all hands admitted have been practiced under the present law, and which the bill before us evidently contemplates will again be attemptedfrauds which injure the honest manufacturer as well as the Government. It would obviate the need of passing a multiplicity of taxes on tobacco in its various forms, and a multiplicity of regulations which the assessor and inspector will find it difficult to carry out successfully; and still further, it would enable us to repeal à section which imposes upon cigar makers an obligation not required of any other class of employés. I allude to the provision requiring cigar makers to return monthly, upon oath and under severe penalties, an account of all cigars made by them as em

He did have an influence in this House, and it trembled before him. But I must say that I think that time is passing away. I observed the other day an intimation from the distinguished gentle-ployés or otherwise. It is contended that this man himself which showed that the power of Jove was diminishing. I saw, too, that his nod had ceased to produce its accustomed effect in this House when the gold bill failed here so remarkably. If, therefore, the appellation used by the gentleman was intended for anybody, it must have been for himself. It must have been one of those lessons which, I have no doubt, the gentleman often gives himself to correct his ways, if those ways need correction.

Mr. Chairman, the gentleman from Pennsylvania says that the true theory of taxation is to impose taxes upon one or two articles for the purpose of raising revenue.

Mr. STEVENS. I did not say that. I said

Mr. MALLORY. Well, the fewest number. I take issue with the distinguished gentleman on that subject. The great purpose of taxation should be to make it equal and uniform; to distribute it as largely as possible throughout the whole land, and make it operate as far as possible upon every individual in proportion to his ability. That I regard as the true theory of the Government. For his protection by the Government, he must support the Government by his

business cannot be assimilated to any other, and that to prevent fraud the paragraph must stand. A tax upon the raw tobacco will certainly enable us to do away with it, and as I believe, its assessment, with the establishment of bonded warehouses to receive this product, and an allowance of a drawback equivalent to the tax upon all leaf tobacco exported, will add to the revenue. I now ask the gentleman from Vermont [Mr. MORRILL] why the many recommendations for such a tax have passed by unheeded.

Mr. BROOKS. I withdraw my amendment. Mr. MALLORY. I renew it. The gentleman from Pennsylvania inquires why the Committee of Ways and Means have not responded to the call of the country, which he seems to regard as almost unanimous, to lay the tobacco tax on the leaf. I will state to the gentleman, in the first place, that we were not so well satisfied as he is that that call is unanimous. Nor do I believe it is at all extensive when you compare it with the call made upon us by the country not to tax the leaf. The Committee of Ways and Means in coming to the decision to which they arrived, consulted the purchasers of tobacco, the manufacturers of tobacco, and the inspectors and collectors

THIRTY-EIGHTH CONGRESS, 2D SESSION.

ment, to insert it at the commencement of the paragraph. I offer it for this reason: a large quantity of vinegar is made out of what is called "singlings," a coarse kind of distillation, which is used for nothing else. Upon that article, which is afterward converted into vinegar, a duty of two dollars per gallon is levied, calling it "whisky." When it is converted into vinegar, it sells at thirtythree cents a gallon. Hence any one can see that in large distilleries no vinegar can be possibly made. It is to prevent the consequent enormous waste and breaking up of business that I have offered my amendment. The gentleman from Vermont [Mr. MORRILL] thinks it would open the door for fraud. I cannot see that. I cannot see how that article can be used in any other way than in the manufacture of vinegar. Hence it is that I have proposed to tax vinegar, but not to tax the second time the material out of which it is manufactured.

Mr. MORRILL. The gentleman from Pennsylvania says he cannot see how frauds will be practiced under the proposed amendment which he has offered. I will endeavor to show to the committee how they will be practiced, even though the gentleman from Pennsylvania may fail to see it. Under the amendment which he proposes the material from which the vinegar is made is not to be taxed. Of course, any person who holds a quantity of singlings has only to say, whether truly or falsely, that he holds it for the purpose of manufacturing vinegar, which will leave it exempt from taxation. It travels free, and cannot afterward be traced or followed. I think that, under these circumstances, we should have a great many vinegar manufacturers. The Committee of Ways and Means, in this bill, have already proposed that these singlings, if used for this purpose, shall be subject to duty only according to their actual proof, instead of paying a tax of two dollars per gallon; that is to say, if the singlings contain only thirty or forty per cent. of whisky, instead of the usual proof, they shall be subject to a pro rata duty, and not a duty of two dollars per gallon. That is all the relief that the Committee of Ways and Means at first thought it wise to give to this article; and all that I think it is now safe to give.

Now, let me state how fraud may be practiced in another way in this article. The committee will understand that it may be redistilled and made into whisky. Parties may therefore hold it for the very purpose of redistilling and making it into whisky; while to the collector and assessor they disavow or do not disclose any such purpose. Mr. PENDLETON. If it is redistilled, does it not pay the tax of two dollars?

FRIDAY, FEBRUARY 17, 1865.

Clerk's desk; otherwise I shall offer it as an independent proposition. It covers, I think, the whole ground of what was originally intended. I do not know whether my colleague's amendment will be adopted; but if it should be I desire that my proposition shall be incorporated with it.

My colleague's amendment proposes to tax this vinegar directly. Probably it is the fairest way. Then the gentleman adds a proviso that the article from which the vinegar is made shall not be taxed. But, sir, there is a new process by which vinegar is manufactured from corn; and in view of this I think that the amendment would leave a loophole for misconstruction hereafter. The article from which the vinegar is made, the corn, would not be taxed; but the Commissioner of Internal Reveuue would in all probability decide that under the law the fluid generated in the process of distillation in making this vinegar would be liable to be taxed. In the process of what has been termed by the Commissioner distillation, there is produced what he calls a "low wine," which has scarcely an appreciable relation to whisky-not further certainly than one and a half or two to fifty-five. It is an article useless for any other purpose, and which in reality should not be taxed. But by a previous section of this bill we have provided that the duties on it "shall be collected on the basis of the actual proof." I agree with my colleague that this is really in no degree a spirit or whisky which should be taxed. I hope, therefore, that his amendment will prevail if it includes in it what I suppose he meant, that neither the article from which this vinegar is made nor the fluid produced in the process of manufacture shall be taxed.

Mr. MORRILL. I desire to ask the gentleman from Pennsylvania [Mr. L. MYERS] whether this article could not be obtained from distilleries at this low proof, then mixed with other liquor of very high proof, and sold as whisky, without having paid any duty at all on the low proof.

Mr. L. MYERS. In reply to the gentleman I would state that this is in reality not spirits. It is, in fact, a different article-more like rain water than spirits. True, it was adjudged by the Commissioner of Internal Revenue to be a distillation, but it is not spirits within the intent of the term, is only produced in the process of this manufac ture, and it is useless to suppose could be obtained from distilleries and mixed with liquors of high proof. Such a course would not benefit the party taking it, for it is not proposed to exempt this fluid where not made in the manufacture of vinegar, and the fraud would be detected and punished. Beside this, if distilled further or mixed with other distillations to make it spirits or whisky the tax upon it as such would have to be paid. I only desire to prevent the misconstruction which might arise hereafter, should we pass the amendment exempting the article from which vinegar made, and not the fluid produced in the manu

facture.

NEW SERIES.....No. 51.

may purchase from the distiller a large amount of whisky, alleging that it is for the purpose of making vinegar, and he will pay no tax upon it. If, then, instead of putting it into the market as vinegar, he puts it there as whisky, nobody pays a tax upon it. It seems to me that there is a difficulty which does open the door to fraud wider than the gentleman from Vermont has indicated.

Mr. STEVENS. In order to avoid that difficulty I will withdraw my amendment. Instead of saying the materials out of which it is made I will say "singlings."

The question recurred on Mr. STEVENS'S amendment.

Mr. MORRILL demanded tellers.

Tellers were ordered; and Messrs. STEVENS and MORRILL were appointed.

The committee divided; and the tellers reported -ayes 47, noes 49.

So the amendment was rejected.
The Clerk read, as follows:

That section ninety-six be amended by inserting, after the words "concentrated milk," the words "cider, sugar, and molasses, made from other articles than the sugar

cane."

The ninety-sixth section is as follows:

SEC. 96. And be it further enacted, That newspapers, boards, shingles, laths, and other lumber, staves, hoops, shooks, headings, and timber partially wrought and unfinished for chairs, tubs, pails, hubs, spokes, felloes, snaths, lasts, shovel and fork handles, match-wood, umbrella stretchers, alcohol made or manufactured of spirits or materials upon which the duties imposed by law shall have been paid, bone dust, plaster or gypsum, malt, burning fluid, printers' ink, flax prepared for textile or feiting purposes until actually woven, marble and slate or other building stones in block, rough and unwrought, charcoal, coke, all flour and meal made from grain, bread, and breadstuffs, butter, cheese, concentrated milk, paraffine, whale and fish oil, value of the bullion used in the manufacture of silver ware, silver bullion rolled or prepared for platers' use exclusively, materials prepared for the manufacture of hoop skirts exclusively and unfit for other use, (such as cut tapes and small wares for joining hoops together,) shall be, and hereby are, exempt from duty. And also all goods, wares, and merchandise, and articles made or manufactured from materials which have been subject to and upon which internal duties have been actually paid, or materials imported upon which duties have been paid or upon which no duties have been imposed by law, where the increased value of such goods, wares, or merchandisere, and articles so made or manufactured, shall not exceed the amount of five per cent. ad valorem, shall be, and hereby are, exempt from duty.

Mr. HOOPER. I move to strike out "

and," and insert" cider vinegar, sugar, or. The amendment was agreed to.

sugar

Mr. HOLMAN. I move to add the following: That the Secretary of the Treasury is directed to refund to the persons entitled to receive the same the taxes which have been collected from manufacturers of molasses from sorghum, under the act to which this is an amendment.

Mr. Chairman, I understood the gentleman from Vermont [Mr. MORRILL] to say yesterday that the principal object was to exempt molasses made from sorghum, or imphee, and that that was effected by the act of July, 1864. There is no question whatever but the gentleman from Vermont is correct. Section ninety-three provides that molasses produced from sugar-cane, and not from sorghum or imphee, shall pay a tax of five cents per gallon. In spite of this clear exception, the Commissioner of Internal Revenue has construed the act, and imposed this duty of five cents upon it, and it has been paid all over the country. These manufacturers have been required to pay it. Whatever the Commissioner may suppose to be the law, undoubtedly will be carried out. In this there has been a clear misapprehension of the law, and I think that the tax which has been collected ought to be refunded. I know of no interest which under the circumstances is entitled to so much encouragement. I indorse the views expressed by the gentleman from Vermont in reference to a tax upon maple sugar. It was most ridiculous to suggest it, and I think that it was rather suggested for amuse ment than otherwise. Yet there is tenfold the reason for the encouragement of the manufacture of this article, which enters so largely into the social and domestic necessities. It needs encouragement, not by direct means, but by relieving it as far as may be from the burdens of taxation. I

hope we will do what is right in this matter, and refund the money which has been improperly paid.

Mr. MORRILL. I think if we were to go into the matter of executing the law, we should find plenty of business on our hands. In this case, as in all others, parties paying the tax have their proper remedy. They can appeal from the decision to the Commissioner of Internal Revenue. I trust the gentleman will not persist in his proposition, and if he does that the committee will vote it down. I think, however, that the parties to whom the gentleman alludes, as well as all others, will be entirely content if the law shall be so fixed that they shall not hereafter pay a tax upon this article. The amendment was not agreed to. The Clerk read the following clause:

That section one hundred and three be amended by inserting, after the words "foreign port," the words "and the amount actually paid for canal tolls by any person or coinpany owning or possessing or having the care or manageinent of any canal-boat or other vessel shall be deducted from their gross receipts," and by inserting, after the word "fare" wherever it occurs in the proviso to said section, the words "or freight."

Mr. STROUSE. I move to amend that clause by striking out all after the words "foreign port, the words" down to and including the word "freight," and inserting in lieu thereof the following:

And the amount actually paid for canal tolls, towing, and expenses of running or sailing any canal-boat, barge, or other vessel, shall be deducted from their gross receipts.

I offer this amendment for the purpose of doing justice to a very meritorious class of our citizens. I had the honor of introducing a resolution, which was referred to the Committee of Ways and Means, some time ago, embodying the principles of this amendment. The committee reported to some extent favorably upon it; but I believe they labored under some misapprehension in regard to it. I cannot better or more forcibly bring this matter to the attention of the committee than by having read one of the many memorials received by me from men engaged in boating upon our internal waters, but received too late to have them referred to the Committee of Ways and Means. The Clerk read the memorial, as follows: To the honorable the Senate and

House of Representatives of the United States: The undersigned owners or lessees of boats engaged in the business of carrying coal on the waters of the Schuylkill canal, in Pennsylvania, respectfully represent, that under the provisions of section one hundred and three of the act of Congress, approved June 30, 1864, entitled "An act to provide ways and means for the support of the Government, and for other purposes," (the section referring to railroads, steamboats, ferry-boats, and bridges,) and the construction placed upon the same by the Commissioner of Internal Revenue, the tax imposed upon them is unduly burdensome, aud in their view disproportionate with other subjects of taxation specified in said act, and operates greatly against the owners and lessees of canal-boats.

Those engaged in the business of carrying in canal-boats, for hire, are subject to the following expenses:

First. The investment in boat, mules, and gearing. Second. An annual taxation of ten cents per ton on the tonnage of the boat, payable at the custom-house in Philadelphia. Third. The expense of keeping the boat in repair; the feed and care of the mules or horses; the cost of loading, unloading, and wharfage; in trips to New York, the cost of towage and the expense and hire of workmen and boatmen to run the boat. Fourth. The toll due the canal company. Fifth. The general State and United States taxes. Your petitioners represent that they do not object to a just and reasonable tax upon their earnings, but that under the provisions of said act, and the construction thereof by the Commissioner of Internal Revenue, they are compelled to pay a tax of two and one half per cent. on the gross amount which they collect, including all expenses of running the boat, loading and unloading, the amount of tolls and towage.

Your petitioners further represent that such taxation operates in such manner as to increase their tax in proportion to the increase of their expenses, a principle of taxation which they believe to be unjust. Your petitioners make the following estimate average of receipts and expenses of a canal barge of from one hundred and seventy-five to one hundred and eighty tons for the year 1864:

From Pottsville to New York about eight trips can be made in one season.

For this the boatmen receive, per trip, about......$550 00 Expenses of tolls, wharfage, labor, &c.........

485 00

65 00 .4,400 00 520 00 110 00 $410 00

But the internal revenue, two and a half per cent. on $4,400, is......

Which would make, for eight trips, net.........

The cost of a canal barge of one hundred and seventy-five to one hundred and eighty tons is from $2,300 to $2,800. The above sum of $410 includes the personal services of the owner or lessee in running the boat. The wear and tear of the boat is not included in the above estimato.

Your petitioners therefore pray your honorable bodies to repeal the said section one hundred and three in said act, and to make such other just and reasonable legislation in lieu thereof as will not operate as against them. And we will ever pray, &c.

Mr. STROUSE. I do not know that I can add anything to this truthful statement made by the memorialists to the House and Senate. Although the memorial I have had read comes to me from

the State of Pennsylvania, the statement of their complaints and grievances applies not only to Pennsylvania, but equally to the New York canal, the Ohio river, the Northwest, and the East.

It will be observed that, under the present law, the captain, the owner, or the contractor of the boat, pays two and a half per cent. upon the gross earnings of the boat; that is the entire amount, not excluding the amount paid out for tolls, for the hands, the bowsman, the steersman, the driver, and other employés. Thus he is taxed two and a half per cent. upon money which is not his earnings, but which is paid out for the purpose of keeping the vessel in a condition to carry freight. Such an act is unjust, and I seek by my amendment simply to have the tax paid upon the net earnings only of the boat.

Mr. BROWN, of Wisconsin. I move a substitute for the entire amendment; I move to amend section one hundred and three of the tax bill, to which the pending clause refers, by striking out the words "shall be subject to and pay a duty of two and one half per cent. upon the gross receipts," and insert in lieu thereof the words, “shall be subject to an income tax of five per cent. upon the net receipts." I will explain my object. I have received numerous communications from the owners of vessels in my own State-and I know similar complaints are made elsewhere-that under the provision of the law by which you tax the gross receipts of vessels, you frequently tax parties who really derive no profit from the use of such vessels. The owner of a vessel may receive $10,000 a year from its use as his gross receipts, and yet there may not be a single dollar of profits. A case of that kind was related to me in connection with this very provision.

Now, it seems to me that the taxation should be upon the profits derived from the use of the vessel. A man makes $10,000 during the summer season perhaps, but in the fall his vessel encounters a storm and is partially wrecked. The repairs will eat up all his profits, and it will be adopting a new principle to refuse to deduct such charges and expenses.

I will change the language of my amendment, so as to make the words to be inserted read, "shall be subject to an income tax of two and a half per cent. upon all net receipts under $3,000, and five per cent. upon all net receipts over $3,000."

The CHAIRMAN. The Chair will state to the gentleman that the amendment proposed by him is not in order, as there are no such words as those he proposes to strike out.

Mr. BROWN, of Wisconsin. The amendment in the bill relates to section one hundred and three of the tax bill, and I move an entire substitute for that amendment.

Mr. MORRILL. Mr. Chairman, the amendment of the gentleman from Pennsylvania [Mr. STROUSE] and the amendment of the gentleman from Wisconsin [Mr. BROWN] are both designed to reach ultimately the same purpose. We have already made the experiment of trying to collect some revenue upon the net receipts of canal-boats, steamboats, &c., and found it a failure; we could not collect any considerable amount of revenue. The law was, therefore, changed so as to impose a tax of a smaller amount upon the gross receipts. The same principle was adopted in relation to railroads. The Committee of Ways and Means, upon representations from various parts of the country, thought that to include the tolls which these canal-boats actually pay was rather oppressive; and they have therefore proposed to relieve them from that part of the tax, and they do not propose to go further and include the various expenditures which the gentleman from Pennsylvania has included in his amendment. I think the parties generally will be satisfied with the proposition of the Committee of Ways and Means, and I hope that neither of the amendments will prevail.

Mr. PIKE. I appeal to the gentleman from

Wisconsin [Mr. BROWN] to withdraw his amendment until we can take a vote on the amendment of the gentleman from Pennsylvania, [Mr. STROUSE,] and then I will offer a proposition repealing the duty on gross receipts altogether.

Mr. BROWN, of Wisconsin. I will withdraw my amendment for that purpose.

The question now being on Mr. STROUSE'S amendment,

Mr. ANCONA demanded tellers.

Tellers were ordered; and Messrs. MORRILL and STROUSE were appointed.

The committee divided; and the tellers reported -ayes 67, noes 47.

So the amendment was agreed to.

Mr. PIKE. I now move to insert after the words "foreign ports," in line five hundred and ninety-eight, the words "nor upon the receipts of any vessel subject to tonnage duty." The act of July last provided for a tax of two and a half per cent. on the gross receipts of coasting vessels. I am told that the amendment of the gentleman from Pennsylvania [Mr. STROUSE] embraces my amendment. I would like to have the clause read as it now stands.

The Clerk read the clause as amended.

Mr. PIKE. That does not answer my purpose. My proposition is entirely different. The proposition which has been adopted by the committee is to tax the net receipts. My proposition is to exempt coasting vessels altogether from the taxation of two and a half per cent., in order to have the tax placed upon tonnage as a tonnage duty. The present tax of two and a half per cent. upon the earnings of coasting vessels does not apply to foreign vessels. The provincial vessels which come into our markets with similar cargoes to our coasting vessels do not pay the two and a half per cent., while our vessels running alongside of them have to pay the two and a half per cent. On the river upon the banks of which

I live a vessel casts off from the wharf on one side of the river and carries her cargo to Boston or New York, and she pays a duty of two and a half per cent. upon her freight; but a vessel which casts off from the other side of the river does not pay it. It is consequently a bounty to provincial vessels. A large amount of foreign shipping, made so by transferring American shipping to the amount of five hundred thousand tons, is, by the act of July last, exempt from taxation. My proposition is that it shall pay a tonnage tax, and in that way we shall obtain more revenue than under the present system, and lay the tax upon foreign as well as upon domestic tonnage.

Of course in this bill we cannot lay a tonnage tax; but the Committee of Ways and Means propose to bring in a bill to revise the tariff, and in that way we can lay a tonnage tax. It is a matter of considerable moment. A tonnage tax of twenty cents a ton would yield $3,500,000 annually. I am not satisfied of the amount that this two and a half per cent. tax will yield; but I have no idea that it will yield one third that amount, for, according to the decision of the Commissioner, this result comes to pass: if a man owns the vessel and cargo he pays no tonnage tax, because the Commissioner decides that the vessel does not earn money separately from the ownership, and that consequently she is not liable to be taxed. But if a man does not happen to own both vessel and cargo, and he sends his vessel abroad for hire, he is obliged to pay a tonnage tax.

Mr. SPALDING. Mr. Chairman, I am opposed to the amendment, and for this reason: an act was passed at the last session of Congress regulating the admeasurement of vessels, and the effect of it has been that many of our screw-propeller freight vessels on the lakes, that would carry perhaps four hundred and fifty tons of freight, are made to measure eighteen hundred or two thousand tons; and now, if this tax be laid on the tonnage, we shall be "jumping from the frying-pan into the fire.'

I would not object to the tax on tonnage if the tonnage were made up under the old law. I believe that the evils under which transportation companies labor are remedied by the amendment proposed by the gentleman from Pennsylvania, [Mr. STROUSE,] and, as representing the commercial interests of the lakes, I am content with that.

Mr. BLAINE. I desire to add a single word, Mr. Chairman, in support of the pending amendment, and I shall consume the brief time allowed

me in illustrating the point at issue by a practical example, the details of which are personally known to me.

During the past summer a ship-owner in my district-a highly responsible and intelligent gentleman-chartered to Government a vessel of four hundred and fifty tons to carry a cargo of coal from Philadelphia to New Orleans, for the gross sum of $6,000. For the vessel's disbursements in Philadelphia for painting, calking, repair of sails, manning, provisions, and port charges, the captain drew on the owners for $3,075 35. For the vessel's disbursements in New Orleans for various charges the captain drew for a further sum of $1,410 70. Procuring no business in New Orleans she was compelled to proceed to Boston in ballast, where to pay off her crew and meet other expenses there was a further disbursement of $1,176. At Boston the vessel chartered to go to Philadelphia in ballast for cargo, and at Philadelphia, before a dollar of the new charter was available or even earned the captain again drew for $576. Total disbursements from time of leaving Philadelphia to return for another cargo, $6,238 05.

At this point the Government paid the $6,000 in certificates of indebtedness, then selling at ninetyfour, the owners thus receiving but $5,640 in cash for the period during which the actual disbursements in cash were $6,238 05, showing a net cash loss for the time of about six hundred dollars, or, to be precisely accurate, $593 05, besides the interest on advance, nearly two hundred dollars

more.

And now, sir, after this melancholy experience the tax collector came forward and demanded of the owner of the vessel two and a half per cent. on the $6,000 which the Government paid as above, and on top of all losses already incurred actually compelled him to pay $150 under that section of the internal revenue law which we are now seeking to amend. And the example I have given, sir, is by no means solitary. The experiences of very many ship-owners engaged in the coasting trade would show similar dismal results, and the conviction among that entire class of men-as honorable and patriotic citizens as the Republic can boastis that the law is oppressive in the extreme and based on radically erroneous principles of taxation.

There is no analogy between this tax on the gross receipts of vessels and the tax on the gross receipts of railroad companies. In the case of the railroads the law allows them to add the tax directly upon the regular rates of fare, and many of the companies have construed this in the scriptural sense of liberality-being asked for one mile, they readily go the "twain." But this mode of relief, or of shifting the burden upon the general public, is not practicable in the case of vessels. There is no way in which it can be evaded or dodged or placed on other shoulders or divided between other parties. It comes remorselessly upon the enterprising ship-owner, and whether his voyage has been a profit or a loss, whether it enriches or impoverishes him, the tax is all the same, without discrimination and without mercy. A man's profit in business affords a fair basis of taxation; but it is a cruel mockery of one's misfortune to assess a tax upon losses. I trust, therefore, Mr. Chairman, that this unwise and unjust tax will be repealed, and that the commercial men of the country who do so much to sustain our finances and our honor will be relieved from its oppressive exactions.

Mr. BROWN, of Wisconsin. I move an amendment in the nature of a substitute, to strike out the whole clause, and insert in lieu thereof the following:

That section one hundred and three be amended by striking out the words "two and a half per cent. upon gross receipts" and inserting "two and a half per cent. upon the net receipts under $3,000, and five per cent. upon the excess."

The amendment of the gentleman from Maine, in favor of which I withdrew my substitute, does not reach the evil as regards the lakes. The evil, as the gentleman from Maine has just remarked, is that the vessel-owners pay a tax upon their losses and also upon their expenses; whereas the true foundation of the tax should be the net earnings. I propose, in my amendment, to adopt the principle of taxing the net earnings of those vessels; and this obviates as well the ob

jection which the gentleman from Maine raises as applied to coasting vessels, as the objection raised by the vessel-owners on the lakes.

Mr. BLAINE withdrew his amendment. The amendment of Mr. PIKE was agreed to. The substitute of Mr. BROWN, of Wisconsin, was adopted.

Mr. WORTHINGTON. I move to amend by adding the following:

That section one hundred and three be amended by adding the following after the word "vehicle:"

Provided, That this section shall not apply to those teams, wagons, and vehicles used in transporting logs for lumber from the forests to the place or places of manufacture, or to the teams or vehicles used in the transportation of ores from the mines where the same are excavated to the place where they are reduced or worked.

Mr. Chairman, I offer this amendment to obviate any difficulty that might arise from the uncertainty of the phraseology of section one hundred and three of the law of 1864. The revenue officers in the State of Nevada are already collecting from the teamsters and those engaged in hauling logs as well as mineral ores a general tax of one half of one per cent, upon the gross proceeds, necessarily collectible only after the reduction of the ores. This operates as a hardship, and if continued will involve the suspension of that sort of business; for it is frequently a greater percentage than the teamsters receive for their labor. No one can know the value of the rock until after its reduction. Very often rock that is considered valuable fails to pay the necessary expenses of reduction.

I do not suppose that the imposition of this tax was contemplated when the act was passed; but as the Commissioner of Internal Revenue has decided that this tax is properly levied in such cases, I think it eminently just that this amendment should be adopted, in order to remedy the hardship that now exists.

The amendment was agreed to.

Mr. HOOPER. I move to amend by inserting, after line six hundred and ten, the following:

That section one hundred and ten be amended by inserting after the words "1st day of July, 1864," the words, "Provided, That on and after the 1st day of July, 1865, in lieu of the rates of duty on circulation prescribed by this section, there shall be levied, collected, and paid, a duty of one quarter of one per cent. each month upon the average amount of circulation issued by any bank, association, corporation, company, or person; and from and after the 1st day of January, 1866, a duty of one half of one per cent. each month upon the average amount of such circulation as aforesaid. And whenever the outstanding circulation of any bank, association, corporation, company, or person, shall be reduced to an amount not exceeding five per cent. of the chartered or declared capital, said circulation shall be free from taxation. And whenever any State bank or banking association has been converted into a national banking association, and such national banking association has assumed the liabilities of such State bank or banking association, including the redemption of its circulation; or, in case a national banking association shall become the owner or possessor of the assets, or liable for the redemption of the circulation of any State bank that has surrendered its charter or ceased to exist, such national banking association shall be held to make the required return and payment on the circulation outstanding, so long as such circulation shall exceed five per cent. of the capital of such State bank or banking association."

Mr. HOLMAN. I rise to a point of order. My point is, that this is not properly an amendment to the pending bill, but is an amendment to the original act. I submit that it is not germane to any provision of the bill now before the House.

The CHAIRMAN. The Chair overrules the point of order.

Mr. HOLMAN. I very respectfully appeal from the decision of the Chair.

The CHAIRMAN. The gentleman from Massachusetts [Mr. HOOPER] proposes to insert at the end of line six hundred and ten an amendment to section one hundred and ten of the original act. Upon that the gentleman from Indiana raises the point of order that section one hundred and ten not being embraced within the amendments presented by the committee, it is not now in order to amend that section of the original act. The Chair holds that the pending bill brings up the whole of the original act, and therefore he overrules the point of order. The gentleman from Indiana appeals from the decision of the Chair. Mr. HOLMAN. I withdraw the appeal.

Mr. HOOPER. Mr. Chairman, I wish to say, in regard to that amendment, that it has been prepared with some care to carry out the recommendation of the Secretary of the Treasury in his annual report, and also the recommendation

of the Comptroller of the Currency. One objec is to put a tax upon the circulation of the State banks which have been converted into nationa banks, or which have gone out of existence and their circulation assumed by the national banks which shall be sufficient to put a stop to their cir culation. The other, and I may say the principa object, is to bring about one system of currency or bank paper throughout the country. So long as State banks continue to issue circulation it is intended to put a larger and disproportionate tax upon it. Another object is to require national banks which have assumed the circulation of State banks that have gone out of existence to make re turns, as there seems no one now required by law to make such returns.

Mr. WILSON. I propose the following as a substitute:

That section one hundred and ten be amended by inserting after the words "1st day of July, 1864," the words, "Provided, That on and after the 1st day of April, 1865, in lieu of the rates of duty on circulation prescribed by this section, there shall be levied, collected, and paid, a duty of one half of one per cent. each month upon the average amount of circulation issued by any bank, association, corporation, company, or person; and from and after the 1st day of September, 1865, a duty of one per cent, each month upon the average amount of such circulation as aforesaid. And whenever the outstanding circulation of any bank, association, corporation, company, or person, shall be reduced to an amount not exceeding five per cent. of the chartered or declared capital said circulation shall be free from taxation. And whenever any State bank or banking association has been converted into a national banking association, and such national banking association has assumed the liabilities of such State bank or banking association, including the redemption of its circulation, or in case a national banking association shall become the owner or possessor of the assets or liable for the redemption of the circulation of any State bank that has surrendered its charter or ceased to exist, such national banking association shall be held to make the required return and payment on the circulation outstanding, so long as such circulation shall exceed five per cent. of the capital before such conversion of such State bank or banking association; and no national banking association after it shall have received from the Comptroller of the Currency any of its notes for circulation, shall pay out the notes of any State bank or banking association; and no State bank or banking association shall issue for circulation any notes of its own or of any other State bank or banking association after the 1st day of April, 1865."

Mr. Chairman, I was not one of those who in the Thirty-Seventh Congress voted for the adoption of the present national banking law. I did not believe that it was for the interest of the country to adopt that system of banking. I did, however, vote for the amendatory act because I thought that was an improvement of the original one. But it is now the established policy of the Government, and I think that it should be made the exclusive policy of the country so far as banks of issue are concerned. In order to arrive at that end I propose by this substitute to prohibit State banks or banking associations issuing notes for circulation after the 1st day of April, 1865.

I regard as next in importance to taxation the reduction of the volume of the currency, because it will make our taxes of greater value, although the same in amount, and reduce the price of everything the Government has to purchase. Now, sir, I do not think that it is owing to the issue of paper currency that the price of everything in the country is so inflated, for I presume that a like amount of gold and silver in circulaWe have tion would produce the same effect. an example of the effect produced in California where the circulation is gold and silver. I will read, in illustration of this idea, an extract from a work on foreign and domestic commerce:

"It is contended by the commercial journals of San Francisco that the currency of California, which is mostly coin, is more abundant in proportion to population and wealth than that of the Atlantic States. The Mercantile Gazette of February 12, 1864, represents the amount in circulation on the Pacific coast at $25,000,000; that the population of California with adjoining State (of Oregon) and Territories is six hundred thousand; which gives $11 60 per capita. The total value of real and personal property on the Pacific coast is estimated by the Gazette to be $340,000,000, of which $25,000,000 is about seven per cent. The currency of the loyal States east of the mountains, notwithstanding its expansion to meet the exigencies of the nation, is below those ratios to population and property. The population of the loyal States and of the insurrectionary districts which are held by the Army (in June, 1864) is twenty-four million. If the currency was at the Calffornia standard-forty-one dollars per capita-its aggregate amount would be $984,000.000; and a proportion of seven per cent. upon the total valuation of property would give an equal aggregate."

This shows that the amount of specie circulation on the Pacific coast is greater per capita than is the paper circulation in the remainder of the