In compliance with Senate resolution of January 21, 1885, documents relating to the collection of the tax on distilled spirits. FEBRUARY 2. 1885.-Referred to the Committee on Finance and ordered to be printed. TREASURY DEPARTMENT, January 26, 1885. SIR: In compliance with the resolution of the Senate of the 21st instant, directing the Secretary of the Treasury "to communicate to the Senate copies of all official letters and other correspondence in his Department of date subsequént to the 30th of November, 1884, relating to the collection or postponement in any manner of the tax upon distilled spirits, and not accompanying his communication to the Senate in response to its resolution of the 13th instant," I have the honor to transmit herewith the following-described documents, viz: (1.) Letter of the Commissioner of Internal Revenue, dated January 24, 1885, in response to the Secretary, pursuant to the resolution of the Senate. (2.) Petition of John B. Thompson (without date) to the Secretary of the Treasury. (3.) Letter of the Commissioner of Internal Revenue, dated December 2, 1884, written at the request of the Secreatry, in reply to Mr. Thompson's petition. (4.) Letter of the Acting Secretary, dated December 5, 1884, to Mr. Thompson, transmitting the Commissioner's letter. (5.) Letter of the Commissioner of Internal Revenue, dated December 13, 1884, to the Secretary, suggesting that the opinion of the Attorney-General, be requested as to the power of the Department to make a certain regulation. (6.) Letter of the Secretary, dated December 15, 1884, to the Attorney-General, asking his opinion as suggested. (The opinion of the Attorney-General, under date of December 24, 1884, in respouse to the Secretary's request, will be found in document No. 8 of this series, printed in Circular No. 282.) (7.) Letter of Phillip B. Thompson, James O. Broadhead, and James B. Beck, dated January 3, 1885, to the Commissioner of Internal Revenue. (8.) Circular No. 282, dated January 3, 1885, on the "assessment and exportation of spirits," issued pursuant to the opinion of the AttorneyGeneral, by the Commissioner of Internal Revenue, and approved by the Secretary January 6, 1885. (9.) Circular No. 283, relating to the "exportation of spirits in bond," issued January 15, 1885, by the Commissioner of Internal Revenue with the approval of the Secretary. Very respectfully, H. MCCULLOCH, Secretary. Hon. GEORGE F. EDMUNDS, President of the Senate pro tem. (1.) TREASURY Department, OFFICE OF INTERNAL Revenue, Washington, January 24, 1885. SIR: In response to Senate resolution of January 21, 1885, calling for copies of all official letters and other correspondence in this Department "of date subsequent to the 30th of November, 1884, relating to the collection or postponement in any manner of the tax upon distilled spirits, and not accompanying the communication to the Senate in response to its resolution of the 13th instant," referred by you to this office on the 23d instant, I have the honor to state that some months ago this office was urged with great persistency by John B. Thompson, jr., esq., a distiller of Harrodsburg, Ky., to extend and enlarge the time prescribed in the then existing regulations for the exportation of distilled spirits in bond. The first written communication upon the subject was from Mr. Thompson to you and myself jointly, said paper being without date, a copy of which is inclosed. My reply to that letter was dated December 2, 1884, and a copy thereof is herewith transmitted. Besides being a distiller, Mr. Thompson is a lawyer of ability, and his propositions of law applicable to the case were insisted upon with great zeal and not less ingenuity and force. His renewed efforts, notwithstanding my letter of December 2, were seconded by several members of Congress whose constituency were vitally interested in the subject, and finally I addressed you a letter under date of December 13, 1884, a copy of which is inclosed. After you had transmitted the last-mentioned communication to the honorable Attorney-General, and had propounded to him such inquiry thereupon as seemed to you advisable, and after that officer had returned his answer thereto, Messrs. J. B. Beck, J. O. Broadhead, and Philip B. Thompson, jr., presented a written communication, under date of the 3d instant, a copy of which is also inclosed. While I could not yield to the views contained in the last-named paper, with your approval, I did, under the authority of section 3330, Revised Statutes, and in deference to the opinion of the honorable Attorney-General, make Regulation No. 282, a printed copy of which is also inclosed. Subsequently an additional Regulation, No. 283, was issued, a printed copy of which I inclose. When the Senate resolution of the 13th instant upon the same subject was referred to this office it was regretfully observed that its language was probably inadvertently too narrow to cover any correspondence of this office upon the subject except Circular No. 282. It may not be improper to remark that while this office had not entertained, nor theretofore acted upon, a view of the law similar to that expressed by the Attorney-General, still I did not doubt that it was proper to conform its action to the law as expounded by the head of the Department of Justice. The persons interested in the subject are manifestly entitled to all the rights the law gives them, and the honorable Attorney-General is the proper officer to state what the law is. The only difference of opinion was as to whether the spirits could lawfully remain in warehouse after the expiration of three years. I thought not, except for the time necessary to enforce the collection of the tax by lawful means. The Attorney-General advises that the spirits may lawfully remain in distillery warehouses after the three years expire, for a time reasonably required in the process of exportation, provided the proper declaration of a bona fide purpose to export is made, and a bond given that it will be done within that reasonable time, and they are, after those things are done, to be regarded as in process of actual exportation, although delays may come from the difficulty of getting advantageous transportation rates and other facilities. By this means the spirits may be retained in distillery warehouses free of expense, rather than subject the owner to certain expenses alleged be to incident to the mode formerly in vogue. It will be seen that Regulation No. 282 does not extend the bonded period on spirits not thus (at least constructively) in process of exportation. All it does is to remit the question of reasonable time to the decision of the several collectors of internal revenue, such time in no event to exceed the maximum of seven months. The erroneous idea that that regulation extended the bonded period became widespread in consequence of very indiscreet and inaccurate expressions in newspaper interviews and statements made by persons interested and otherwise. I have felt it not improper on this occasion to put these observations upon record, and also to add that inasmuch as the mode of collecting taxes past due is by the process or remedy known to the law as assessment, the fact that the regulations became operative on the 6th day of January was of no more consequence, so far as the collection or payment of the taxes was concerned, than if they had gone into effect on any other day of the month prior to the 12th. There is no other correspondence on the subject in this office. Very respectfully, Hon. HUGH MCCULLOCH, Secretary of the Treasury. WALTER EVANS, Commissioner. (2.) To the Hon. Hugh McCulloch, Secretary of Treasury, and Walter Evans, Commissioner of Internal Revenue: Your petitioner, John B. Thompson, a citizen of Harrodsburg, Mercer County, Kentucky, would most respectfully represent that he is now, and has for the last five years past been, engaged in the business of manufacturing what is known as Bourbon whisky for domestic and foreign use at the place of his residence, which is in the eighth collection district of Kentucky, and which process of manufacturing includes not only the production but the finishing and completion of such goods by time and age, for such goods are not complete and fit for use until long time has matured and ripened them, and are not salable for consumption, either at home or abroad. That he, as part of his business, is an exporter of said goods to foreign countries for storage, sale, and consumption. In carrying on such business he has met with some hardships which, he presumes, are not known to the Department, arising from the practical administration of certain rules and regulations which, while they may be theoretically proper, might with perfect safety to the Government be modified and ameliorated, thereby saving great risk, trouble, and expense to petitioner and all others engaged in such like business. The regulations now require, when goods are entered for export, regauged, and stamped, they shall be immediately withdrawn from the distillery bonded warehouse and delivered to the distiller, who is presumed to immediately deliver them to the transportation company, but which practically is not the case, and cannot be, because it is but seldom cars or other facilities for loading and transportation can be immediately had, hence the goods are compelled to lay out in the yard, exposed to the weather, which injures the cooperage, causing loss by leakage; they are uncovered by insurance, unless especially insured during this particular time, which is both short, uncertain, and expensive; they are at the risk of the distiller who has executed the bond, who, to insure their safety from theft and leakage, is compelled to have extra watchmen, while he must await either the pleasure or convenience of the transportation company to receive the same; and it is sometimes impossible to the road to receive or transport goods on account of floods, washonts, and accidents of various kinds not subject to their control. The rule says, immediately the bills of lading shall be delivered to the collector; practically we have been allowed thirty days after the execution of the export bond to deliver the through bills of lading, and even this cannot frequently be complied with, because after the bond is made and accepted, the stamps must be issued from office and delivered to the distiller; now considerable delay arises here, because of the immense pressure on the office for stamps; every one cannot be served at once; their time for sending them from office to distiller by registered mail; their time to notify gauger to attend and affix; the gauger being frequently engaged at other houses cannot come; so from all these causes the stamps are not on barrels until within a day or two of expiration of bond; then transportation must be had, and if delayed here, you can see at once that bills of lading cannot be had, and the goods are all this time held by the distiller, at his own risk and expense, excluded from safety and safeguards thrown around it while in possession of the Government officers, and in the bonded warehouse. After it starts upon the road, and arrives at port of export, it is subject to another delay, and to still greater inconvenience and expense. Transportation cannot be had at once, hence it must be handled and rehandled; it is permitted to lay upon the beach subject to all the changes of the weather, again to be especially insured while here, and is frequently so detained from four to ten months; if not left out upon the beach it is stored in warehouses at the port of expert, at the risk and expense of the owner, until some foreign-bound vessel will take them away, although the owner has plenty of warehouse room at home to take care of his own goods with perfect safety, as experience has shown, both to himself and Government, and without cost to either. Wherefore he asks that all rules and regulations be so changed and modified as to permit goods which have been entered for export, regauged and stamped to remain or be restored in the warehouse of the distiller, or some other intermediate warehouse, for such times as the same would be compelled to stay upon the road, on the beach, and in warehouses at port of export awaiting transportation by some foreign-bound vessel abroad, and which time by practical administration of the law has been shown to be from four to eight months, and that all bonds be changed and modified to meet such rule and regulation. It is within the authority of the honorable Secretary to so modify the rules and regulations as to afford the relief sought, and this your petitioners ask in view of the fact that no interest of the Government can possibly be jeopardized thereby. JOHN B. THOMPSON, JR. (3.) TREASURY DEPARTMENT, SIR: I have the honor to acknowledge the receipt from you by reference, on the 28th ultimo, of the petition of Mr. John B. Thompson, jr., distiller, of Harrodsburg, Mercer County, Kentucky. This petitioner states that as a part of his business he is an exporter of spirits to foreign countries, and that in pursuit of this business he has met with some hardships, growing out of the regulations of this Department governing the exportation of such goods. He says that the regulations now require, where goods are entered for export, regauged and stamped, they shall be immediately withdrawn from the distillery bonded warehouse and delivered to the distiller, who is presumed to immediately deliver them to the transportation company. He avers, however, that this immediate delivery cannot be made, and that consequently the goods are left out in the distillery yard, exposed to the weather, causing loss by leakage. He complains also of delay in the issuing of export stamps after the execution of the export bond, and of another delay at the port of export, where the goods are permitted to lie on the beach, subject to all changes of weather, unless they are stored in a warehouse at such port at the expense of the owner, wherefore he asks that all rules and regulations be so changed and modified as to permit goods which have been entered for export, regauged and stamped, to remain or be restored in the warehouse of the distiller or some other intermediate warehouse, for such times as the same would be compelled to stay upon the road, on the beach, and in warehouses at port of export awaiting transportation by some foreign-bound vessel abroad, and which time, by practical administration of the law, has been shown to be from four to eight months, and that all bonds be changed and modified to meet such rule and regulation. In reply to your request for a report on this matter, I have the honor to submit a copy of the Department Regulations, Series 7, No. 4, and supplements, governing the exportation of domestic spirits in bond, and to give below the history of a package of spirits exported under such regulations. I would first call the attention to the law quoted in Articles 1, 2 and 3, pages 3, 4 and 5, Series 7, No. 4, herewith, especially to the first paragraph on page 3, which reads as follows: "Distilled spirits may be withdrawn from distillery bonded warehouses, at the instance of the owner of the spirits, for exportation in the original casks or packages, without the payment of tax, under such regulations, and after making such entries and executing and filing with the collector of the district from which the removal is to be made, such bonds and bills of lading and giving such other additional security as may be prescribed by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury." Under the law and existing regulations, when Mr. Thompson desires to remove a package of spirits from his warehouse for exportation, he must file with the internalrevenue collector of his district a notice of his intention to export the package, giving the serial number thereof; also whether he intends to export it on a through bond direct to the foreign port, or on a bond conditioned for delivery to the collector of |