It is gratifying to note that with the labor shortage and the intense effort of some of our manufacturing establishments to utilize the services of children under 16 and over 15 years of age but a slight increase over the preceding year is shown. The number of children employed in 1917 was 1,635 and the number employed in 1918 was 1,651, showing an increase of 26 children employed. It may be confidently stated that the provision included in the National Revenue Act of 1918, known as a Tax on Employment of Children, will materially reduce the number of children employed in the industries of the State. After the Supreme Court of the United States declared unconstitutional the Federal Child Labor Law of September 1, 1916, immediate steps were taken to accomplish the end in view in a manner not in conflict with the limitations imposed by the constitution as interpreted by a majority of the court. Of the various plans considered, the one laying a tax on the product of child labor was adopted, such a provision being incorporated in the act to provide revenue, approved February 24, 1919, and reads as follows:

PROVISIONAL REGULATIONS COVERING THE ADMINISTRATION OF TITLE XII OF THE REVENUE ACT OF 1918, TAX ON EMPLOYMENT OF CHILD LABOR.

Title XII of the revenue act of 1918, approved February 24, 1919, provides an excise tax on the employment of child labor.

The law provides that the first taxable year for the purposes of Title XII shall begin sixty days after the passage of the act. This period will, therefore, begin on April 25, 1919.

These provisional regulations are issued for the guidance of collectors of internal revenue and others concerned, pending the completion and promulgation of regulations in more detail.

Title XII of the revenue act of 1918 reads as follows:

TITLE XII.-TAX ON EMPLOYMENT OF CHILD LABOR.

SECTION 1200. That every person (other than a bona fide boys' or girls' canning club recognized by the Agricultural Department of a State and of the United States) operating (a) any mine or quarry situated in the United States in which children under the age of sixteen years have been employed or permitted to work during any portion of the taxable year; or (b) any mill, cannery, workshop, factory, or manufacturing establishment situated in the United States in which children under the age of fourteen years have been employed or permitted to work, or children between the ages of fourteen and sixteen have been employed or permitted to work more than eight hours in any day or more than six days in any week, or after the hour of seven o'clock post meridian, or before the hour of six o'clock ante meridian, during any portion of the taxable year, shall pay for each taxable year, in addition to all other taxes imposed by law, an excise tax equivalent to 10 per centum of the entire net profits received or accrued for such year from the sale or disposition of the product of such mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment.

SEC. 1201. That in computing net profits under the provisions of this title, for the purpose of the tax, there shall be allowed as deductions from the gross amount received or accrued for the taxable year from the sale or disposition of such products manufactured within the United States the following items:

(a) The cost of raw materials entering into the production;

(b) Running expenses, including rentals, cost of repairs, and maintenance, heat, power, insurance, management, and a reasonable allowance for salaries or other compensations for personal services actually rendered, and for depreciation;

(c) Interest paid within the taxable year on debts or loans contracted to meet the needs of the business, and the proceeds of which have been actually used to meet such needs;

(d) Taxes of all kinds paid during the taxable year with respect to the business or property relating to the production; and

(e) Losses actually sustained within the taxable year in connection with the business of producing such products, including losses from fire, flood, storm, or other casualties, and not compensated for by insurance or otherwise.

SEC. 1202. That if any such person during any taxable year or part thereof, whether under any agreement, arrangement, or understanding or otherwise, sells or disposes of any product of such mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment at less than the fair market price obtainable therefor either (a) in such manner as directly or indirectly to benefit such person or any person directly or indirectly interested in the business of such person; or (b) with intent to cause such benefit; the gross amount received or accrued for such year or part thereof from the sale or disposition of such product shall be taken to be the amount which would have been received or accrued from the sale or disposition of such product if sold at the fair market price.

SEC. 1203. (a) That no person subject to the provisions of this title shall be liable for the tax herein imposed if the only employment or. permission to work which but for this section would subject him to the tax, has been of a child as to whom such person has in good faith procured at the time of employing such child or permitting him to work, and has since in good faith relied upon and kept on file a certificate, issued in such form, under such conditions and by such persons as may be prescribed by a board consisting of the Secretary, the Commissioner, and the Secretary of Labor, showing the child to be of such age as not to subject such person to the tax imposed by this title. Any person who knowingly makes a false statement or presents false evidence in or in relation to any such certificate or application therefor shall be punished by a fine of not less than $100, nor more than $1,000, or by imprisonment for not more than three months, or by both such fine and imprisonment, in the discretion of the court.

In any State designated by such board an employment certificate or other similar paper as to the age of the child, issued under the laws of that State, and not inconsistent with the provisions of this title, shall have the same force and effect as a certificate herein provided for.

(b) The tax imposed by this title shall not be imposed in the case of any person who proves to the satisfaction of the Secretary that the only

employment or permission to work which but for this section would subject him to the tax, has been of a child employed or permitted to work under a mistake of fact as to the age of such child, and without intention to evade the tax.

SEC. 1204. That on or before the first day of the third month following the close of each taxable year, a true and accurate return under oath shall be made by each person subject to the provisions of this title to the collector for the district in which such person has his principal office or place of business, in such form as the Commissioner, with the approval of the Secretary, shall prescribe, setting forth specifically the gross amount of income received or accrued during such year from the sale or disposition of the product of any mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment, in which children have been employed subjecting him to the tax imposed by this title, and from the total thereof deducting the aggregate items of allowance authorized by this title and such other particulars as to the gross receipts and items of allowance as the Commissioner, with the approval of the Secretary, may require.

SEC. 1205. That all such returns shall be transmitted forthwith by the collector to the Commissioner, who shall, as soon as practicable, assess the tax found due and notify the person making such return of the amount of tax for which such person is liable, and such person shall pay the tax to the collector on or before thirty days from the date of such notice.

SEC. 1206. That for the purpose of this act the Commissioner, or any other person duly authorized by him, shall have authority to enter and inspect at any time any mine, quarry, mill, cannery, workshop, factory, or manufacturing establishment. The Secretary of Labor, or any person duly authorized by him, shall, for the purpose of complying with a request of the Commissioner to make such an inspection, have like authority, and shall make report to the Commissioner of inspections made under such authority in such form as may be prescribed by the Commissioner with the approval of the Secretary of the Treasury.

Any person who refuses or obstructs entry or inspection authorized by this section shall be punished by a fine of not more than $1,000, or by imprisonment for not more than one year, or both such fine and imprisonment.

SEC. 1207. That as used in this title the term "taxable year" shall have the same meaning as provided for the purposes of income tax in section 200. The first taxable year for the purposes of this title shall be the period between sixty days after the passage of this act and December 31, 1919, both inclusive, or such portion of such period as is included within the fiscal year (as defined in section 200) of the taxpayer.

ARTICLE 1. In Title XII of the revenue act of 1918, the following words and terms as used therein, signify as follows:

(a) "Person" includes individuals, partnerships and corporations; (b) "Corporation" includes associations, joint stock companies and insurance companies;

(c) "Secretary" means Secretary of the Treasury;

(d) "Commissioner" means Commissioner of Internal Revenue; (e)

"Under the age of sixteen years" means those children who have not yet completed their sixteenth year;

(f) "Under the age of fourteen years" means those children who have not yet completed their fourteenth year:

(g) "Eight hours in any day" means the actual period of employment and shall be reckoned from the time the child is required or allowed to be at the place of employment until he or she stops work for the day, exclusive of one continuous period of a definite length of time during which the child is off work and not subject to call for duty of any kind;

(h) "Six days in any week" means six consecutive days, no one of which shall consist of more than eight hours of working time. A day shall not begin before 6 o'clock a. m. and must not extend beyond 7 o'clock p. m.

ART. 2. Canning clubs exempted from liability to tax by the provi sions of section 1200 are boys' and girls' canning clubs, as that term has been heretofore generally applied, which are conducted in good faith as canning clubs only and which are recognized as such by the agricultural department of the State in which they are located and by the United States Department of Agriculture.

ART. 3. The law imposes an excise tax, which is in addition to all other taxes imposed by law, of 10 per centum of the entire net profits received or accrued during each taxable year from the operations of every mill, cannery, workshop, factory, or manufacturing establishment, in which any child under the age of fourteen years has been employed or permitted to work, or in which any child between the ages of fourteen and sixteen has been employed or permitted to work more than eight hours in any day or more than six days in any week, or after the hour of 7 o'clock p. m., or before the hour of 6 o'clock a. m. The tax is also imposed on the entire net profits received from the operations of any mine or quarry in which any child under the age of sixteen years has been employed or permitted to work. Liability for the tax is established by the employment of any child laborer as defined by the statute. The product of the child's labor is not the basis for the imposition of the tax. In every case, the tax must be applied to the entire net income of the taxpayer.

ART. 4. Returns under this title are to be made as provided by section 1204 "on or before the first day of the third month following the close of each taxable year" under oath by each person subject to the provisions of this title "to collector for the district in which such person has his principal office or place of business, in such form as the Commissioner, with the approval of the Secretary, shall prescribe."

ART. 5. The term "taxable year" means a calendar year or a fiscal year ending in such calendar year during which the tax is imposed. The fiscal year means an accounting period of twelve months ending on the last day of any month other than December. The first taxable year, to be called the taxable year 1919, shall be the period between April 25, 1919, and December 31, 1919, both inclusive, or any fiscal year ending within the same period. Forms for making returns will be prepared and in the hands of collectors before the time arrives for the making of return. ART. 6. The collector shall transmit forthwith all such returns to the Commissioner (sec. 1205), "who shall, as soon as practicable, assess the tax found due and notify the person making such return of the amount of tax for which such person is liable, and such person shall pay the tax to the collector on or before thirty days from the date of such notice."

ART. 7. Actions to enforce the penalties provided for by sections 1203 and 1206 will be brought in the Federal courts by the United States district attorney of the Federal judicial district in which the offense occurs. ART. 8. Pursuant to statute the Child Labor Tax Board, consisting of the Secretary of the Treasury, the Commissioner of Internal Revenue, and the Secretary of Labor, has prescribed the following provisional regulations:

Certificate of age.-Certificates of age, in order to free from liability to taxation persons operating the business specified, shall be either:

(a) Federal age certificates for children between fourteen and sixteen years of age when employed or permitted to work in any mill, cannery, workshop, factory, or manufacturing establishment, and for children between sixteen and seventeen years of age when employed or permitted to work in or about any mine or quarry. Such certificates shall bear (1) the child's name; (2) birthplace; (3) month, day, and year of birth; (4) color; (5) sex; (6) kind of evidence of age accepted and age when physical age is accepted; (7) signature of the child; (8) name and address of child's parent, guardian, or custodian; (9) name and address of employer; (10) signature, address, and official designation of agent issuing the certificate; (11) date and place certificate was issued.

(b) An age certificate, working or employment certificate or permit, or other similar paper as to the age of the child, issued in accordance with the laws of the State in such States as are designated by the board. ART. 9. Proof of age.-Age certificate inspectors authorized to issue Federal certificates of age shall do so only after securing, examining, and approving proof of age as follows: The child shall make application to the age certificate inspectors in person, accompanied by parent, guardian or custodian, with documentary evidence of age, showing that he is fourteen years of age or over if the employment is to be in a mill, cannery, workshop, factory, or manufacturing establishment, or that he is between sixteen and seventeen years of age if employment is sought in or about a mine or quarry. Documentary evidence or proof of age, required in the order following, shall be:

(a) A birth certificate or duly attested transcript thereof issued by the registrar of vital statistics or other officer charged with the duty of recording births.

(b) A baptismal certificate or transcript of the record of baptism, duly certified, showing the date of birth and place of baptism of child. (c) A bona fide contemporary record of the date of the child's birth, comprising a part of the family record of births in the Bible, or other documentary evidence satisfactory to the board, such as a certificate of arrival in the United States issued by the United States immigration officers and showing the age of the child, a passport showing the age of the child, or a life insurance policy: Provided, That such other satisfactory documentary evidence has been in existence at least one year, and in the case of a life insurance policy at least four years: And provided further, That a school record or a parent's, guardian's, or custodian's affidavit or other written statement of age shall not be accepted except as specified in paragraph (d).

(d) A certificate signed by a public health physician or a public school physician, stating, in his opinion, the physical age of the child.