ing regulations on the above subject, issued by the Secretary of the Treasury. JOSEPH J. LEWIS, Commissioner. TREASURY DEPARTMENT, June 21, 1865.

Section 46 of the Internal Revenue Act, approved June 30, 1864, provides that whenever the authority of the United States shall have been re-established in any State where the execution of the laws had previously been impossible, the provisions of the act shall be put in force in such State, with such modifica. tion of inapplicable regulations in regard to assessment, levy, time and manner of collection, as may be directed by the Department.

Without waiving in any degree the rights of the Government in respect to taxes that have heretofore accrued, or assuming to exonerate the tax-payer from his legal responsibility for such taxes, the Department does not deem it advisable to insist at present upon their payment, so far as they were payable prior to the establishment of a collection district embracing the territory in which the tax payer resides.

But Assessors in the several collection districts recently established in the States lately in insurrection, are directed to require returns, and to make assessments for the several classes of taxes for the appropriate legal period preceding the first regular day on which a tax becomes due after the establishment of the district-that is to say, in the several districts in question the proper tax will be assessed upon the income of the year 1864, inasmuch as the tax for that year is due upon the thirtieth day of June, subsequently to the establishment of the district. All persons found doing any business for which a license is required will be assessed for the proper license from the first day of the month in which the district is established.

Persons engaged in any business for which monthly or quarterly returns are required to be made will be assessed for the month or quarter for which returns should be made at the first return day after the establishment of the district; and the same principle will apply to those taxes which are payable at different periods. A manufacturer of tobacco, for instance, in a district, established after the first and before the twentieth day of May, will be assessed upon his sales for the month of April.

When any manufactured articles are found in the hands of a purchaser, and it is shown to the satisfaction of the Assessor that the goods were actually sold and passed out of the hands of the manufacturer before the commencement of the period for which he is properly taxable, the articles will not be subject to tax in the hands of such purchaser, unless transported beyond the limits of the States lately in insurrection.

The holder of any distilled spirits, manufactured tobacco, or other article which is liable to seizure on account of the absence of inspection marks, may present to the Assessor the evidence that the articles in his hands, or under the circumstances which obtain in the particular case, are not subject to tax, except as above stated; and, if the Assessor is satisfied, he will cause the packages to be so marked that they may be identified and sold without liability to seizure. Whenever any Collector shall have reason to believe that the holder of any goods on which tax has not been paid intends to remove the same beyond the limits of the States lately in insurrection, and to evade the payment of the tax, he will seize the goods and take the necessary steps for their condemnation, unless the holder shall give bond, as hereinafter prescribed, for the transportation or exportation of the goods, or shall return the same to the Assessor, and pay to the collector the amount of tax that shall be found due. In all cases in which a seizure shall be made under these instructions, the Department, on being informed of such seizure, will consider the case, and extend such measure of relief as the facts shall justify.

In the States of Virginia, Tennessee, and Louisiana, collection districts were some time since established, with such boundaries as to include territory in which it has but recently become possible to enforce the laws of the United States.

In those districts, the rule laid down above will be so modified as to require the assessment and collection of the first taxes which become due after the establishment of assessment divisions in the particular locality.

Whenever assessments are to be made, based upon transactions which may have been carried on in a depreciated currency, it will be proper for the Assessor to ascertain the amount of the income, or value, or sales, or receipts, in lawful money of the United States, according to the best information which he can ob tain as to the average value of such depreciated currency for the period covered by the assessment.

The duties upon cotton and spirits of turpentine are, by a special provision of the statute, made payable by the person in whose hands the articles are first found by officers of Internal Revenue. With reference to those articles, there fore, the rule laid down will not apply, but assessments will be made wherever they are found.

Whenever any person holds, as a purchaser, any articles which, under the Internal Revenue laws, may be transported under bond, and desires to transport the same to any Northern port or place, he may apply to the Assessor to have the amount of tax ascertained and determined. The proper examination having been had, the Assessor will certify the amount of duties thereon to the Collector, and the Collector will thereupon grant a permit for their removal, after the execution of a bond for their storage in bonded warehouse, such permit and bood being in the form required by the regulations for the establishment of bonded warehouses. On or before the tenth day of each month, the Assessor will trans mit to the Office of Internal Revenue, a statement showing the amount of duties thus certified during the month preceding, and the Collector will, on or before the same date, transmit a descriptive schedule of all bonds thus taken by him in the course of the preceding mouth.

When goods arrive in any Northern port under such transportation bond, or under a permit issued by a Collector of Customs, under the regulations of May 9th, 1865, they will be received into the proper warehouse, established under the Internal Revenue laws, in the district into which the goods are brought, and the necessary certificates will be issued for the cancellation of the bond, in the same manner as if the goods were transported from another bonded warehouse. Whenever any person who is assessed for a license is found to have paid a license tax to a Special Agent, appointed under the regulations of the Treasury Department for commercial intercourse with insurrectionary districts, the Col lector will issue a license for the year ending May 1, 1866, and will collect only so much as may be due for the time intervening after the expiration of the li cense issued by the Special Agent.

The amount assessed and thus left uncollected will be abated when the proper claim is presented to the Commissioner of Internal Revenue.

H. MCCULLOCH,

Secretary of the Treasury.

CONTENTS OF JULY NUMBER.

ART.

1. The Atlantic Telegraph..

PAGE 9

2. The Mode of Restoration of the Rebel States to the Union. By Chas. P. Kirkland of N. Y. 19 3. Our Financial Policy....

4. Commercial Law.-No. 22. The Law of Shipping

5. Commercial Chronicle and Review....

6. Journal of Banking, Currency, and Finance.....

7. Statistics of Trade and Commerce.

8. Journal of Insurance.

39

то

THE

MERCHANTS' MAGAZINE

AND

COMMERCIAL REVIEW.

AUGUST, 1865.

THE DETROIT CONVENTION.

THE Commercial Convention at Detroit, after a session of four days, finally adjourned on the 14th of July. Its deliberations were confined principally to subjects relating to the commerce of the States directly lying upon the great lakes, reciprocity, and the Niagara ship-canal. Every other topic was passed over with little or no attention, laid on the table, or approved by silent resolution. The subject of finance, for examnple, which is vital to all commercial matters, was noticed cursorily. A preamble and resolutions, reported by Judge TREMAIN, were adopted without debate, to the effect the national debt was sacred, and that in any future adjustment of our tariff and revenue laws, the burden of taxation should be made to fall, as far as possible, equitably upon the necessities and luxuries of the people. But there was no attempt to put forth any suggestion which could apply practically to the problem which the statesmen of the country require all the wisdom and sagacity at their hand for successful solution.

The Committee on Agriculture and Manufactures presented a series of resolutions, which were adopted, declaring that for the purpose of securing a permanent recompense to American labor and its products, as well as from financial necessity, "a discrimination in favor of these productions upon which American labor depends for its present rosperity, should be exercised by the Government when imposing duties upon foreign imports, because when human industry and labor languish, its ability to respond to the excise demands must be correspondingly impaired." This com mittee, it should in justice be remarked, was in favor of free trade.

There was also a brief report made and adopted, recommending the General Government to improve the navigation of our rivers and keep the harbors in good condition.

But in the way of internal improvements, the Convention seems to have "played fast and loose." With remarkable prodigality it recommended that the State of New York should at once proceed to enlarge its canals to ship capacity, and adjust the tolls as much in favor of western produc

tion as possible. The Transit Committee went further; canals of these dimensions not being ample enough for them. They declared in their report that the annual increase of the productions of the States bordering upon and tributary to the northern lakes had exceeded the capacity of transportation of all avenues to the Atlantic, and that the canals and various lines of railroads to and from those lakes "are wholly inadequate to the demand of the increased and rapidly growing commerce." Hence they hailed the proposed enlargement of the Welland and St. Lawrence canals; and demanded, that in the event of the negotiation of any treaty of reciprocity between the United States and British Provinces, our Government should be careful to secure a guaranty of a sufficient depth of water to enable ocean steamers of not less than one thousand tons, cargocarrying capacity, to pass from Port Colborne, C. W., to tide-water. These measures are inconsistent, but the Convention had no time to con sider that. If the Erie Canal should be enlarged to ship capacity, or if we have a treaty of reciprocity with Canada, on those conditions there will be no necessity for a ship canal between the two lakes. The canals of Canada, beyond our borders, will be as serviceable as those within our boundaries.

The animus of the Convention, it should be remarked, was very unfriendly to the State of New York. Her conduct was maligned and misrepresented repeatedly by the speakers; and one of the resolutions, reported by the Committee on Transit, conveyed the significant threat that she would be deprived of a part of her commerce. It is couched in the following language:

Resolved. That the State of New York, geographically located on the highway of commerce between the great chain of lakes and the seaboard, having within her borders the metropolis of the nation, is bound by every consideration of interest and true policy, and the courtesy she owes her sister States, to improve and enlarge the shortest water communication between the lakes and tide-water; failing to do so she must not complain if a portion of her great inland commerce shall be directed through other and cheaper channels of communication.

This sentiment of the Convention found utterance in the remarks of Mr. ASPINALL, President of the Board of Trade of the city of Detroit. He asserted that the State of New York levied an exorbitant tax on the products transported on the canals, which, he declared, oftentimes exceeded the freight on the canals and Hudson River to the city of New York, or transportation on the lake one thousand miles, and sometimes equalled the latter and the ocean freight from New York to Europe altogether.

If by this "exorbitant tax " he meant tolls, this allegation is "altogether" unfounded; and therefore but for the other action of the Convention, would deserve to pass unnoticed. So far fron levying an exorbitant tax on Western productions, the Canal Board of this State have generally inclined to the policy of low tolls, seeking only to realize the amount necessary to pay the expenses of repairs and superintendence, and contribute for the interest, etc., of the debt incurred for construction of the canais. During the last few years, when the business done was at its maximum, the tolls were actually lower than they had been at former periods. The forwarders, principally Western men, raised their prices for transportation forty per cent, and the Legislature of Indiana transmitted a communica

tion on the subject to the Legislature of New York, asking its action to correct the evil.

Mr. J. V. L. PRUYN, of Albany, attempted to place the facts before the Convention. The canals of New York, he declared, are amply adequate to carry the trade to the seaboard for years to come. Not more than half the works and agencies on the Erie Canal are employed; and for some time past they have been so employed at positive loss. These works have not been tested to their fullest capacity. By taking the average it will be found that the works of New York are fully ample for all purposes required. The proposition of a ship canal is premature. New York, he added, borrowed capital for the construction of these works, and gave the benefit of it to the West.

Mr. Joy of Detroit, insisted that it was necessary and absolutely important to have a canal around Niagara Falls capable of bearing ships of 1,500 tons burden. The West in ten years will have two hundred million bushels of wheat and six hundred million of corn to transport; and the condition of our national finances is as good, he said, as it will be for forty years. One single break in the canal, such as occurred last spring, would cost this Western world more than enough to build this canal. Hence, he argued, they had a right to recommend to the Federal Government, in some manner, to give them an outlet to the ocean.

Mr. Joy's statements, if correct, would prove too much for his purpose. If the products of the "Western world" are to be so enormous, that those holding them are liable, in the event of a break in the canal, to losses more than enough to construct the proposed ship canal, it is manifest that their capitalists are sufficiently able to procure money and build such a canal for themselves. The railroads of the country and many of the canals were so constructed; and it is the height of bad policy, as well as in bad taste, to employ the machinery of a commercial convention and other appliances to lobby Congress and State Legislatures, when Western men are so able to do the work for themselves. If the financial condition of our nation is to be no better for forty years than it now is, Congress will have enough to do without entering upon the work of internal improvements, or subsidising private companies.

But there is a fatal weakness in the assumptions of these men of the West. Like their champion from the East, they are prone to talk with vehemence rather than candidly, to make strong assertions, and to drown the utterances of those who differ from themselves. They give large figures when speaking of their products, and insist that all that is required is transportation to the seaboard. Many of them, however, did not stop at this. They disclosed that what was wanted was to be able to carry their productions from the lakes to Europe, without breaking bulk. All this may be very well. It might enable them to dispense with the use of the ports of New York, Portland, and other towns on the sea-board. But it noteworthy that these unmatured statesmen appear not to have taken into their account that canals and other avenues of transportation, important as we must concede them to be, will not suffice for all the demands of commerce. Without a market somewhere, supply is of comparatively little value. This is the principal difficulty the present season, when the freights are about one-third less than they were in 1864.