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the gentleman from Illinois [Mr. INGERSOLL] a question in regard to this bill before I vote upon it.

Mr. RANDALL, of Pennsylvania. I cannot yield the floor for any such purpose. I call the previous question on the motion to refer.

The previous question was seconded and the main question ordered; and under the operation thereof the motion to refer was agreed to.

Mr. RANDALL, of Pennsylvania, moved to reconsider the vote by which the bill and the pending amendment were referred to the Committee on Banking and Currency; and also moved that the motion to reconsider be laid on the table.

The latter motion was agreed to.

ENROLLED BILLS SIGNED.

Mr. COBB. from the Committee on Enrolled Bills, reported that they had examined and found truly enrolled joint resolution and a bill of the following titles; when the Speaker signed the same:

A joint resolution (S. R. No. 61) to extend the time for the construction of the first section of the Western Pacific railroad; and

An act (S. No. 186) amendatory of the act to provide for reports of the decisions of the Supreme Court.

LINCOLN SQUARE, ETC.

Mr. INGERSOLL, from the Committee for the District of Columbia, reported a bill providing for grading East Capitol street and estab lishing Lincoln square; which was read a first and second time.

The bill was read in full. It authorizes the Commissioner of Public Buildings to grade East Capitol street from Third street east to Eleventh street east, and to cause the square at the intersection of said street with Massachusetts, North Carolina, Tennessee, and Kentucky avenues, between Eleventh and Thirteenth streets east, to be inclosed with a wooden fence, and the same shall be known as "Lincoln

square;" and the sum of $15,000 is appropri

ated for that purpose.

The bill was ordered to be engrossed and read a third time; and being engrossed, it was accordingly read the third time.

The question was upon the passage of the bill.

Mr. INGERSOLL. I call the previous question on the passage of the bill.

Mr. SLOAN. Does not this bill go to the Committee of the Whole, as containing an appropriation?

The SPEAKER. This bill does contain an appropriation. But it is too late to raise that point of order, the bill having already been read the third time without objection. Mr. FARNSWORTH.

bill?

Is this a private

The SPEAKER. It is too late to raise that point of order now.

Mr. FARNSWORTH. Will it be in order to move to refer this bill to the Committee of the Whole?

The SPEAKER. If the previous question is not seconded that motion will be in order. The question was taken; and upon a division there were-ayes 28, noes 31; no quorum voting.

Tellers were ordered; and Messrs. INGERSOLL and ELDRIDGE were appointed.

The House again divided; and the tellers reported-ayes fifty-nine, noes not counted. So the previous question was seconded. The main question was then ordered; and under the operation thereof the bill was passed.

Mr. INGERSOLL moved to reconsider the vote by which the bill was passed; and also moved that the motion to reconsider be laid on the table.

The latter motion was agreed to.

CANAL AND SEWERAGE COMPANY.

Mr. WINDOM. I would inquire of the Chair if this is a private bill. We have had three or four general bills considered this morning, and I think it is hardly fair to other committees that the time set apart for private business should be taken up by general business. The SPEAKER. The Chair is of opinion that this is a private bill within the rule.

Mr. F. THOMAS. As the morning hour has nearly expired, I hope the gentleman from Illinois [Mr. INGERSOLL] will consent to withdraw this bill at this time and report it on some future day. Does the Chair decide this to be a private bill?

The SPEAKER. In the opinion of the Chair, this is a private bill, being for a corporation. The Chair made a decision at some length some days ago in regard to what should be considered public and what private bills, quoting precedents from the parliamentary practice of Great Britain.

Mr. F. THOMAS. Will the gentleman from Illinois [Mr. INGERSOLL] consent to the suggestion I made a moment ago?

Mr. INGERSOLL. I cannot consent to it. Mr. F. THOMAS. The bill can hardly be read through during the remainder of the morning hour. I think the gentleman better withdraw the bill now and report it on some future day.

Mr. INGERSOLL. I cannot consent to withdraw it, but I am willing that it shall go over for consideration until next Friday. I want it to be considered as unfinished business, to come up at that time.

Mr. F. THOMAS. I must ask the Speaker's permission to state the peculiar characteristics of this bill.

Mr. INGERSOLL. I must object to that, as I have already consented to the arrangement that this bill should go over to next Friday.

Mr. F. THOMAS. Then I rise to a point

of order.

another bill in regard to a hospital. Mr. INGERSOLL. I desire to report

Mr. F. THOMAS. Will the gentleman consent to withdraw the sewerage bill? Mr. INGERSOLL. I must decline to do that.

Mr. F. THOMAS. I do not desire the bill to be before the House at all, if I can prevent it, until the parties interested can be heard before the committee.

Mr. INGERSOLL. I make the point of order that what the gentleman from Maryland [Mr. F. THOMAS] is saying is not upon a point of order.

Mr. F. THOMAS. The gentleman will hear me through. I therefore raise the point of order, because I want the bill recommended by the committee to take the course I have indicated. Now, in regard to the character

of this bill

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Mr. INGERSOLL. I would have no objection to the gentleman going on if I did not wish to pass this hospital bill.

Mr. F. THOMAS. I was about to say this is no ordinary bill; and when I have stated its character I think the Chair will rule that this is a public corporation.

Mr. INGERSOLL. I rise to a point of order.

The SPEAKER. The gentleman from Maryland is occupying the floor upon a point of order, and is now stating it.

Mr. F. THOMAS. This bill, Mr. Speaker, proposes to seize $400,000 worth of property of the Chesapeake and Ohio Canal Company. It therefore affects parties outside of the District of Columbia. The Chesapeake and Ohio Mr. INGERSOLL, from the Committee for Canal Company, under a charter granted by the District of Columbia, reported back, with Congress, and by the States of Maryland, Viran amendment, Senate bill No. 190, to incor-ginia, and Pennsylvania, has made a very porate the District of Columbia Canal and expensive structure at the mouth of this little Sewerage Company.

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vate bill.

Mr. F. THOMAS. I believe that the Speaker has not read the bill, or he would not so decide. I say this with great respect.

The SPEAKER. Private bills relate generally to individuals or corporations. May's Parliamentary Practice states that private bills "are for the interest of an individual, a public company or corporation, a parish, a city, a county, or other locality." It must not be a general bill in its enactinents, but "a bill for the particular interest or benefit of a person or persons. Under this principle, which is laid down with a number of illustrations in the vol ume referred to, the Chair has no doubt that this bill is a private bill and can be reported on private bill day. Whether the bill should pass or not is a question for the House to determine.

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The morning hour has expired, and the bill goes over till next Friday.

CONTESTED ELECTION.

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Mr. DAWES. I rise to call the resolution reported by the Committee of Elections in the case of Follett vs. Delano. I stated to the

House yesterday that if members would take the trouble to read the report I would not occupy any time in the discussion of the case. I have no doubt that gentlemen have read the report; and I shall not therefore detain the House by any remarks in explanation of it.

siderable importance as a question of practice. The case involves a question which is of conThe committee, I may also mention, found some difficulty in settling questions of law arising in the case, but no difficulty as to matters of fact. If the members of the House are satisfied with the positions as to law and practice embraced in the report, they will find no difficulty, I apprehend, in voting for the resolution of the committee.

The resolution reported by the committee was read, as follows:

Resolved, That Hon. Columbus Delano is entitled to the seat occupied by him in this House as the Representative from the thirteenth district of Ohio in the Thirty-Ninth Congress.

Mr. DAWES. If no gentleman desires to oppose this resolution, I call the previous question.

The previous question was seconded and the main question ordered; and under the opera tion thereof the resolution was agreed to.

Mr. DAWES moved to reconsider the vote by which the resolution was agreed to; and also moved that the motion to reconsider be laid on the table.

The latter motion was agreed to.

Mr. DAWES, from the Committee of Elections, reported the following resolution; which was read, considered, and agreed to:

Resolved, That there be paid to Charles Follett, Esq.. $1,500 in full for time spent and expenses incurred in out of the contingent fund of the House, the sum of contesting the right of Hon. Columbus Delano to a seat in this House as a Representative from the thirteenth district in Ohio.

Mr. DAWES moved to reconsider the vote and by which the resolution was agreed to; also moved that the motion to reconsider be laid on the table.

The latter motion was agreed to.
LEAVE OF ABSENCE.

Mr. HUBBARD, of West Virginia, asked leave of absence for Mr. LATHAM for one week. Leave was granted.

EQUALIZING BOUNTIES.

Mr. SCHENCK, from the Committee on Military Affairs, reported a bill to equalize the bounties of soldiers, sailors, and marines who

served in the late war for the Union; which was read a first and second time, referred to the Committee of the Whole on the state of the Union, and ordered to be printed.

Mr. SCHENCK. I give notice that on some early day, when members shall have had an opportunity to examine the bill, I will ask that the Committee of the Whole on the state of the Union be discharged from the consideration of the bill, and that it be put on its passage. TELEGRAPH LINES.

Mr. ALLEY, from the Committee on the Post Office and Post Roads, by unanimous consent, reported back House bill No. 575, to aid in the construction of telegraph lines, and to secure to the Government the use of the same for postal, military, and other purposes; which was read a second time, ordered to be printed, and recommitted to the Committee on the Post Office and Post Roads.

PRIZE MONEY.

The SPEAKER laid before the House a communication from the Secretary of the Treasury, in reply to a resolution of the House of April 9, 1866, on the subject of prize money; which was laid on the table and ordered to be printed.

CONTESTED ELECTION.

The SPEAKER laid before the House additional testimony in the contested-election case of Koontz vs. Coffroth; which was referred to the Committee of Elections.

TAX BILL.

Mr. MORRILL moved that the rules be suspended, and that the House resolve itself into the Committee of the Whole on the state of the Union on the special order.

The motion was agreed to.

So the rules were suspended; and the House accordingly resolved itself into the Committee of the Whole on the state of the Union, (Mr. DAWES in the chair,) and resumed the consideration of the special order, being a bill of the House (No. 513) to amend an act entitled "An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes," approved June 30, 1864, and acts amendatory thereof.

The pending question was on the amendment offered by Mr. STEVENS to add to the paragraph in relation to cigar-makers the following:

Provided, That journeymen cigar-makers and apprentices who work for others shall not be considered as included within this proviso.

The question being put on the above amendment, no quorum voted.

Tellers were ordered; and the Chairman appointed Messrs. ASHLEY, of Ohio, and JENCKES.

The committee divided; and the tellers reported-ayes 51, noes 43.

So the amendment was agreed to.

Mr. STEVENS.. I move to strike out the word "five," in line seventeen hundred and ninety-seven, and to insert in lieu thereof "fifteen;" so that the clause shall read, "shall pay the duties on such cigars within fifteen days after purchasing them." Also, the same amendment in line eighteen hundred and two, so that the clause shall read, "and any such purchaser who shall neglect for more than fifteen days to pack and have such cigars duly inspected, and pay the duties thereon," &c.

The amendments were agreed to.

Mr. WILSON, of Iowa. I move the following amendment:

That section ninety-three be amended by striking out all after the enacting clause, and inserting, in lieu thereof, the following: that all goods, wares, and merchandise, or articles manufactured or made, except refined petroleum, refined coal oil, gold and silver. spirituous and malt liquors, manufactured tobacco, snuff, and cigars, by any person or firm where the product shall not exceed the rate of $1,000 per annum, and shall be made or produced by the labor of said person or firm, or by his-or their family, shall be, and are hereby, exempt from tax. Where the product shall exceed such rate, and not exceed the rate of $3,000, the tax shall be levied, assessed, and collected only upon the excess above the rate of $1,000 per annum; and in all other cases the whole annual product, including any business or transaction where one party has been furnished with materials or any

part thereof, and employed by another party to manufacture, make, or finish the goods, wares, and merchandise, or articles paying or promising to pay therefor, and to whom the same are returned when so made and finished, shall be assessed, and the tax paid thereon by the producer or manufacturer: Provided, That whenever a producer or manufacturer shall use or consume, or shall remove for consumption or use, any articles, goods, wares, or merchandise which, if removed for sale, would be liable to taxation, heshall be assessed upon the salable value of the articles, goods, wares, or merchandise so used or so removed for consumption or use.

Mr. Chairman, I offer this amendment in the interest of the small manufacturers and the mechanics of the country. I offer it as a protection to that class of labor which fights its own battle with little aid from machinery. It affects mainly the hand-workers of the nation who depend more on their toil than they do upon capital for the profits which a year's business may secure to them. Its effects will be exhausted principally in shielding such as earn their bread by the sweat of their brows from unnecessary taxation; and this is the sole object of the amendment.

The only change which this amendment makes in the present law is to exempt from the manufacturer's tax $1,000 worth of the products of all manufacturers whose annual productions do not exceed $3,000 in value. So just a proposition as this ought not to require much discussion to win for it the approval of every member of the committee.

It will be remembered that the law defines a manufacturer to be

"Any person, firm, or corporation who shall manfacture by hand or machinery any goods, wares, or merchandise, exceeding annually the sum of $1,000, or shall be engaged in the manufacture or preparation for sale of any articles or compounds, or shall put up for sale in packages with his own name or trade-mark thereon any articles or compound, shall be regarded as a manufacturer.

This definition embraces almost every mechanic in the whole country, for there are very few whose productions do not annually exceed $1,000 in value, when both labor and materials are included in the computation. The profit to the mechanic, including the value of his own labor, often proves to be an insignificant part of the $1,000 of aggregate valuation placed upon his productions; and to him a tax of five per cent. upon the total result is grievously burdensome. All such taxation is opposed by every consideration of sound public policy. Productive industry should be fostered until it becomes strong enough to stand alone. The tax-gatherer should not be sent into the workshop until the workman has secured for himself and his family a reasonable support from the toil of his hands.

It is hard for hand labor to compete with machine labor, and to the former some advantage should be given. Without this great establishments crush out and destroy the lesser ones, as great fish are said to swallow up small ones. A combination of capital and machinery, if put on an equality in the tax laws with muscle, soon wear it out and drive its owner from the market. There is not a village in all the land whose mechanics do not feel how inexorably true this rule is. The great manufactories in the East play havoc with the mechanic shops of the West. And when this is done our workmen have not the advantage of resorting to the great workshops and manufactories for employment, as the mechanic of the East may. Our western mechanics when crushed out by the competition resulting from a combination of capital and machinery must change their pursuits and seek in some field new to them a support for themselves and their families.

We extend to the eastern manufacturer protection against the manufactures of the Old World through our tariff laws. Of this I do not complain; but at the same time, I must insist that our internal revenue laws shall be so framed as to protect, in some degree, the mechanics and small manufacturers of this country against the encroachments of those great establishments which have grown up under the fostering care of our tariff laws. It is true that the protection which the eastern manufacturer enjoys under our tariff laws would

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extend the same advantage to him in any other part of the United States; but in the West our manufacturing interests are in their infancy, and therefore it is that I say the tariff laws protect and foster eastern manufacturers. the course of time I hope the West, by the development of manufacturing establishments, will share equally with all other sections of the country in the advantages springing from the tarifflaws of the Government; and as one means looking to this end, I desire the adoption of this amendment as a protection to those who are to constitute our western manufacturers in the future.

The West must resort to manufacturing. Everything used and consumed in the West ought to be there manufactured. While it is the greatest food-producing region in the world, it should be one of the greatest manufacturing sections also. Cheap food and the comparatively low price of raw material are advantages which will some day tell in favor of the West. But to reach that day we must take present care of our workmen and mechanics.

The amendment which I have offered does not go as far and accomplish as much as I should like, but it seems to be the best that can be done at this time, and will afford some measure of relief. When I cannot get all I want it would not be wise to refuse a part.

Mr. MORRILL. I hope this amendment will not be adopted. There were in 1864 above sixty-three thousand manufacturers in the country who were taxed for licenses. I suppose that at least one half of that number manufactured less than $3,000. Therefore, if the amendment proposed by the gentleman should be carried, it would create a large deficiency in the revenue. It is giving an absolute bonus of fifty dollars to every manufacturer whose annual products exceed $3,000. They all sell in the same market, and if not subjected to the same tax those who are excepted have the advantage in the market. I might be very well content, living in New England as I do, where of course we shall receive the benefits of the amendment proposed by the gentleman from Iowa in a much larger degree than those who reside in his own region. But I think it is more than we ought to concede at the present time. It would be making too large a reduction of the revenue. The law as it is, exempting $600 from taxation, gives the small manufacturers $30 advantage. I do not see why we should allow any more, for it is nothing less than paying them a bonus of twenty dollars out of the Treasury. I therefore hope the amendment will be rejected.

The CHAIRMAN. Debate is exhausted on the amendment.

Mr. WILSON, of Iowa. I move to amend the amendment by striking out the last word. The argument of the chairman of the committee, that this is going to greatly reduce the revenue of the Government, is an entire fallacy. If you allow the exemption of $1,000 to every manufacturer in the United States it only amounts to about three million dollars. But this proposition is to allow it only to manufacturers whose products do not exceed in value the sum of $3,000 per annum. Therefore it will not exceed $1,000,000. But that, the gentleman says, is a bonus to the small manufacturers. Sir, that objection was not thought of when the committee voted in favor of retaining in the bill the section which allows a drawback of five cents a pound on all exported cotton goods, which is a bonus to the great manufacturers of the country, those who are receiving protection under the tariff laws in addition to that of the drawback of five cents a pound on cotton goods exported, taking out of the Treasury, as was shown at the time by my colleague, [Mr. ALLISON,] who is a member of the Committee of Ways and Means, more than three times the amount of money which this amendment would do in the way of reducing the aggregate amount of tax to be derived from the bill as reported by the committee.

Now, sir, I think it is time for us to establish the principle that our laboring men, our small

manufacturers, shall be relieved from this unnecessary taxation until they reach a point beyond that which is required for the support of themselves and their families. After you have passed the limit of $3,000 provided for by my amendment, then let your manufacturers be called upon. But send not the tax-gatherer into all your workshops where no machines are found, where only hand labor is performed. Let them have this protection. It is nothing but equal, fair, and just, and I hope the committee will indorse it.

I withdraw the amendment to the amendment.

Mr. SLOAN. I move to amend the amendment by striking out "$3,000" and inserting "$4,000," and I hope the amendment which I have proposed will prevail. There is no doubt in my mind that the system of taxation inaugurated in this country has borne more heavily upon the small manufacturers than upon any other class; and all will agree that they are among the most deserving of all classes in our community. While the manufacturing men with large capital have been fostered and have been growing richer, the business of the small manufacturers in every branch has been depressed throughout the country.

Now, in regard to licenses, the man who manufactures but one or two thousand dollars a year pays the same license as he who manufactures half a million or a million dollars, and it is of vital importance in the newer States, where we have none of these very large manufacturing establishments wielding a capital of millions of dollars, that we should foster the interest of the smaller manufacturers. They are the germ from which, if properly fostered, will grow up these large establishments which will in time pervade the West. It is, in my judgment, one of the most meritorious propositions that can be addressed to the committee. These small manufacturers have been oppressed by being required to pay double and triple taxes on articles which they were compelled to purchase from the larger manufacturers; and it is a step in the right direction to relieve from these accumulated taxes those who manufacture a less amount than $4,000 mainly with their own hands.

I regret exceedingly that the chairman of the committee has felt called upon to oppose the proposition which the gentleman from Iowa has made, calculated, as it is, to foster and build up our home industry. Three or four thousand dollars is a small sum in itself, and I think that in manufactories where but that sum is produced, at least the amount of $1,000 ought to be exempted entirely from taxation. I trust that upon reflection the able chairman of the Committee of Ways and Means will consent to this proposition. If he desires to make this revenue system, burdensome and oppressive as it is, popular with the people, here is an opportunity for him to do it.

[Here the hammer fell.]

Mr. MORRILL. Mr. Chairman, I have sometimes indulged a hope that in the course of a year or two we might be able to dispense with that taxation which now presses so heavily upon our home manufactures. But, sir, observing the tendency of the action of this committee, I am almost discouraged, and fear that we may not reach that happy time for some considerable period longer. I perceive that the tendency all over the House is to take such action for the benefit of individual interests as largely to reduce the amount of revenue to be derived under this bill.

I think the proposition of the gentleman from Iowa will not hold when he comes to contrast it with the action of this committee in relation to exported manufactures of cotton. If anything is a fallacy, it seems to me that that portion of the gentleman's argument might justly be so called. It has no sort of relation to a measure of this kind. That was merely a question whether our manufacturers should work or should not work, whether such articles should be made here or in Great Britain. It was simply a question whether we should give our own peo

ple employment or not. This is a question of how much we shall give to this smaller class of workmen. I am as sensible to their wants and requirements as any man can be. My people would receive as much benefit from this as any other. But I do think that when we have gone as far as the existing law goes, we have gone, perhaps, as far as we can well do in strict justice to all parties. If the gentleman will consent to modify his amendment so as to exempt only $1,000, and strike out the remaining portion of it, I will not object to it.

Mr. WILSON, of Iowa. Does the gentleman mean by that remark that he desires $1,000 to be exempted to all the manufacturers of the country?

MORRILL. To all manufacturers who do not manufacture over the amount of $1,000 || a year.

Mr. WILSON, of Iowa. That is the present law, and such an amendment would make no change in the law.

Mr. MORRILL. Well, I move to strike out that portion of the gentleman's amendment. The CHAIRMAN. There is an amendment to the amendment already pending.

Mr. SLOAN. I withdraw my amendment to the amendment.

Mr. ALLISON. I renew it for the purpose of saying a word or two. The proposition in the ninety-third section of the existing law only applies to that class of manufacturers who, themselves or by their families, produce to the amount of $1,000 by the existing law, or to the amount of $3,000 as provided in the amendment of my colleague, [Mr. WILSON.] Therefore, this applies only to that class of persons who are engaged themselves in the various classes of manufactures. It does not apply to the men who employ hands, or a large amount of machinery. I think that it is a just amendment, and that the Committee of Ways and Means ought to consent to it as proposed by my colleague.

We all know that the manufacturers all over the country are protesting against this tax upon the industry of the country. I doubt not that it is the most obnoxious and burdensome tax we impose upon people; and I think we should relieve them of it as rapidly as we can. This is a step in the right direction; by first attempting to relieve the small manufacturers who are struggling to build up a business in the West as well as in the East. I hope next year we shall be able to reach a larger class, and relieve them, and levy the taxes on the luxuries of the country, upon which I believe we can raise a sufficient revenue. I trust, therefore, that the amendment of my colleague will prevail, and I withdraw my amendment to it.

The question recurred on the amendment offered by Mr. WILSON, of Iowa.

Mr. MORRILL. I move to strike out from the amendment the words "whose product shall exceed such rate, and not exceed the rate of $3,000, the tax shall be levied, assessed, and collected only above the rate of $1,000 per

annum.

Mr. HARDING, of Illinois. I am opposed to striking out the second clause of the proposed amendment of the gentleman from Iowa. I desire simply to say, without detaining the House, that I am in favor of his amendments.

I hold, Mr. Chairman, that it is only legiti mate to tax the wealth and luxury of the country. I hold it to be utterly opposed to correct principle to tax the means by which incomes are produced and also to tax the incomes. I hold such a system to be unequal in its effects. You tax a small manufacturing establishment which produces only $3,000 a year, and you also tax its income. What will you do with the gentleman who sits in his office and by skill and ingenuity produces an income of $3,000 a year? What does he pay under the income tax? It is the production of his wealth. Wealth is able to pay taxes; poverty is not. Now, the man who produces his income from his farm or from his factory should be taxed in the same way, on the product which he returns as income, and he should not be taxed

in addition on the ax, the hoe, the shovel, or the machine by which he works and delves to get that income. It is an inequality which is wrong. It is a tax upon the means by which wealth is produced.

Now, there are exceptions to this rule. We should tax the improvident investments of men and articles of luxury and extravagance. Put your tax upon such things, but by no means put it on the means by which incomes are produced. I am in favor of exempting all plows, threshing-machines, and those other machines which help to augment the resources of the country.

[Here the hammer fell.]

The question was taken on Mr. MORRILL'S amendment to the amendment, and it was disagreed to.

The question was taken on the amendment offered by Mr. WILSON, of Iowa, and it was agreed to.

The Clerk read as follows:

That section ninety-four be amended by striking out all after the enacting clause and inserting in lieu thereof the following: that upon the articles, goods, wares, and merchandise hereinafter mentioned, except where otherwise provided, which shall be produced and sold, or be manufactured or made and sold, or be consumed or used by the manufacturer or producer thereof, or removed for consumption, or for delivery to others than agents of the manufacturer or producer within the United States or Territories thereof, there shall be assessed, collected, and paid the following taxes, to be paid by the producer or manufacturer thereof, that is to say:

On candles, of whatever material made, a tax of five per cent, ad valorem.

On gas, illuminating, made of coal wholly or in part, or any other material, when the product shall not be above two hundred thousand cubic feet per month, a tax of ten cents per one thousand cubic feet; when the product shall be above two and not exceeding five hundred thousand cubic feet per month, a tax of fifteen cents per one thousand cubic feet; when the product shall be above five hundred thousand and not exceeding five million cubic feet per month, a tax of twenty cents per one thonsand cubic feet; when the product shall be above five millions, a tax of twenty-five cents per one thousand cubic feet. And the general average of the monthly product for the year preceding the return required by this act shall regulate the rate of tax herein imposed. And where any gas-works have not been in operation for the next year preceding the return as aforesaid, then the rate shall be regulated upon the estimated average of the monthly product: Provided, That the product required to be returned by law by any gas company shall be understood to be, in addition to the gas consumed by said company or other party, the product charged in the bills actually rendered by the gas company during the month preceding the return; and all gas companies are hereby authorized to add the tax imposed by law to the price per thousand cubic feet on gas sold: Provided further, That all gas furnished for lighting street lamps or for other purposes, and not measured, and all gas made for and used by any hotel, inn, tavern, and private dwelling-house, shall be subject to tax whatever the amount of product, and may be estimated; and if the returns in any case shall be understated or underestimated, it shall be the duty of the assistant assessor of the district to increase the same as he shall deem just and proper: And provided further, That gas companies located within the corporate limits of any city or town, whether in the district or otherwise, or so located as to compete with each other, shall pay the rate of tax imposed by law upon the company having the largest production.

Mr. HOTCHKISS. I move to strike out in line eighteen hundred and forty-four, all after the words "cubic feet" down to and including the words "cubic feet" in line eighteen hundred and fifty-one. I hope the chairman of the Committee of Ways and Means will agree to that.

Mr. MORRILL. I cannot agree to it. Mr. HOTCHKISS. Then I desire to call the attention of the committee to the pecu liarity of this provision in the law. Ostensibly it seems to be a tax upon gas companies, and a tax upon them in proportion to the amount they manufacture; but when you come to read the section through, you find that it is a tax upon the consumer, and the consumer is not taxed in proportion to the amount of the article that he consumes, but in proportion to the amount produced by the company; that is to say, if you consume gas that is produced by a small company, you pay ten cents per thousand cubic feet; but if the company that sup plies you is a large company, that manufactures upward of two hundred thousand cubic feet, then you must pay fifteen cents per thousand cubic feet for all the gas you consume.

It is a very singular provision of law, and I do not know upon what principle it is based. It is for this reason that I asked the chairman of the Committee of Ways and Means [Mr. MORRILL] to accept the amendment I have offered. I asked him to accept it because I did not wish to expose to this committee the absurdity of this provision.

It is no answer to my objection to say that a large company can produce gas cheaper than a small company can produce it. That is not so, and they charge the same prices that the small companies do; and any increase of expense or price is visited upon the consumer. I think that under any circumstances a tax of ten cents per thousand cubic feet is large enough.

The large companies are located in the large towns where labor costs more and materials are more expensive; and you are breaking down these gas companies, while you are relieving every other light from taxation. You take off the tax from petroleum and coal oil, and all we now ask is that you shall not make the tax upon gas so burdensome upon consumers that they

cannot use it at all.

Mr. MORRILL. I am extremely obliged to the gentleman from New York [Mr. HOTCHKISS] for his exceeding great reluctance to expose the absurdity of the existing law, and therefore the absurdity of this bill. And I I am as reluctant as he can be to do anything of the kind, to expose the absurdity of his argument. Mr. HOTCHKISS. That is all fair. Mr. MORRILL. If the gentleman had studied the subject so as to understand it, he probably would not have made this motion. This subject underwent a thorough examination two years ago by the Committee of Ways and Means. We had before us the representatives of gas companies from all parts of the country, from Cincinnati, Chicago, Philadelphia, New York, and from many other towns and cities. The bill prepared at that time was based upon the information we derived from those men who knew something about the manufacture of gas. We ascertained then that the smaller companies could not manufacture gas so cheaply as the larger ones in any of those places, and that there must be a difference in the amount of taxation we imposed upon them, or it would not bear equally upon the different companies. And not only all the smaller companies but the larger companies agreed that the different rates proposed by the existing law were correct and proper in themselves. I trust, therefore, that the amendment of the gentleman from New York [Mr. HOTCHKISS] will not prevail.

The amendment of Mr. HOTCHKISS was not agreed to.

Mr. STEVENS. I do not know as I fully understand this paragraph; at all events I will move to amend it by striking out the following:

And all gas companies are hereby authorized to add the tax imposed by law to the price per thousand cubit feet on gas sold.

I was a member of the Committee of Ways and Means when the bill now a law was under consideration. I supposed then, as I presume we all did, that we were taxing gas companies to some extent. And we proposed a tax higher in proportion to the number of cubic feet they made upon the ground that the small companies found it cost more in proportion to produce a few thousand cubic feet than it did the large companies to produce hundreds of thousands of cubic feet. After the production has reached a certain amount all the increased cost is for material, the cost for labor being the We therefore proposed to tax the larger companies a higher rate, because we supposed they could better afford to pay it than the smaller companies.

same.

But how has it resulted practically? Just in proportion as the companies could make the gas more cheaply, just in that proportion has the consumer been taxed. If the companies made their large quantities of gas so cheaply that they could afford to pay the higher tax, that tax has been charged upon the consumer and

the companies have paid no tax. Now, unless you will adopt the amendment I have proposed, instead of taxing the companies in proportion to the facilities with which they make their gas, and the profits they derive from its manufacture, we will be taxing the consumer in proportion to the facilities with which the companies make the gas. Now, I cannot understand why we should do that.

Now, I take some humiliation to myself for having agreed to this when this subject was before the Committee of Ways and Means two years ago. I confess that I then fell into the absurdity that my friend from New York [Mr. HOTCHKISS] did not want to expose here. And now I suppose I have fallen into the other absurdity that my friend from Vermont [Mr. MORRILL] referred to a few moments ago. But upon looking over this paragraph I cannot see how it is that we charge these companies one

cent.

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Mr. MOORHEAD. He gets his gas cheaper. Mr. STEVENS. He does not get it any cheaper in the end, if you add a tax to it, be cause it can be made more cheaply.

Mr. MORRILL. I shall be compelled to refresh the memory of my friend from Pennsylvania, [Mr. STEVENS,] who has been so busy upon the Committee on Appropriations that he hardly recollects the reasons for this provision. Of course it will be seen at once that it is not necessary to put this provision in the law in regard to any manufacturer that is not in some way limited by local law as to price. Of course the manufacturer of any article, whether it be gas or anything else, can charge the private citizen whatever he pleases.

Mr. STEVENS. Then why not strike this out?

Mr. MORRILL. I know many gas companies that have not raised their price at all since this tax was imposed, but they have paid the tax notwithstanding the increased price of coal.

But this provision meets only such cases as these: many cities and villages have chartered companies with the express limitation that they shall furnish the gas for street lamps at a rate named in the charter, and the price of coal having more than doubled within the last three or four years they have been compelled to manufacture gas not only at a loss but to pay the tax upon the amount consumed for municipal purposes, and this provision is intended only to remove the difficulty these companies will labor under if this provision is not inserted in the law. It is a proper and necessary provision, and should not be stricken out.

Mr. LE BLOND. I move, pro formâ, to amend the amendment by striking out the last word.

I trust that the motion to strike out this clause will prevail, for two reasons. First, I think it is of but little consequence whether this provision is retained or stricken out, so far as the action of these companies is concerned, for it is very apparent that the companies will charge the tax upon the consumer in the end. The consumer will have to pay it. It will not come out of the company. Another reason why this clause should be stricken out is, that I do not conceive this Congress has authority to say to these companies in the respective States, "You may charge this tax upon the consumers." This is a matter that should be left to the States alone. All that this Congress can ask is, that the States pay the amount with which they are assessed in this particular, leaving the States to regulate

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been referred to; and I also concur in the remarks of my distinguished friend from Pennsylvania. I think that the Committee of Ways and Means have certainly been in error in reporting this bill in this shape. I think that the gas companies in all the cities of the United States have been making money enough to enable them to pay this tax themselves. I will say to the chairman of the committee, that so far as the cities of the West are concerned, in almost all cases, so far as my knowledge extends, the payment of this tax is imposed by the companies upon the consumers, private and public. In many cities the gas companies have contracts for ten, fifteen, or twenty years, and their stock is selling at two or three hundred per cent. above par; yet they collect this tax from the consumers, whether individuals or municipal corporations. This is certainly wrong.

Let me put a case. Suppose that a gas company makes a contract with the city of Cleveland to furnish gas to that city for fifteen years at a certain price. Under the provision of this bill the company will add the tax to the price of the gas, and they will collect it by law. This is decidedly wrong. We make no such provision in reference to other taxation. Other manufacturers are not thus provided for. We must remember that gas companies are monopolies. When they get a contract to light a city they get an exclusive contract. They will not take a contract unless they get it for the entire city. I believe that these companies should have no greater privileges than individuals engaged in any branch of manufacturing. Mr. LE BLOND. I withdraw the amendment to the amendment.

Mr. GRISWOLD. I renew it. I desire, Mr. Chairman, to correct a statement made by the gentleman from Ohio, [Mr. EGGLESTON,] who has just taken his seat. I cannot say what may be the financial condition of gas companies in the State which he so well represents here, but so far as regards those in my own State I venture the assertion that, instead of being highly remunerative to the stockholders, five out of six of those companies, during the last five years, have not made dividends equal to the legal interest on the capital invested.

Let me suggest, also, to my venerable friend from Pennsylvania, [Mr. STEVENS,] that the price of the gas made by these different companies is in proportion to the amount of gas they make and the cost of manufacture, just as much as in regard to any other article of manufacture. I desire to say to him, further, that in most cases the gas companies in the State of New York are restricted as to price by their charters; and I know of my own knowledge that within the last five years not only have those companies been unable to declare div idends, but if they had not had the option of adding this tax to the price charged for gas they would have been obliged to discontinue business. It is literally true that gas companies, instead of being highly remunerative associations, have, within the last five or six years, been among the least remunerative corporations in the country. I withdraw the amendment to the amendment.

Mr. DODGE. I move to amend by inserting after the word "companies" in line eighteen hundred and sixty-three the words "whose rate of charge is restricted by charter;" so that the clause will read:

And all gas companies whose rate of charge is restricted by charter are hereby authorized to add the tax imposed by law to the price per thousand cubic feet on gas sold.

Mr. GRISWOLD. The amendment of my colleague may be very well, so far as it goes; but most of the companies in the State of New York are to a certain extent, if not entirely, restrained by their charters in reference to the price they may charge for gas. In many cases, for instance, where a charter is granted by a city, the company is bound during the continuance of the charter to furnish the city with gas at a stipulated price, that price in most

cases merely covering the cost, and being sometimes less than the cost of manufacture.

Mr. LE BLOND. I would like to ask the gentleman from New York [Mr. GRISWOLD] one question. In cases where the authorities of the respective States in which these gas companies are located have fixed the price to be paid, does the gentleman propose by such a law as this to override the action of the States?

Mr. GRISWOLD. I propose that we shall do in regard to gas companies just as we do in reference to any other manufacturing companies. When our internal revenue law was enacted it provided specially that where contracts as to price had been made the party making the contract should have a right to add the tax.

I know what I am talking about. I know that the stock of gas companies in Ohio is worth two hundred per cent., and yet in every instance they put the tax on their bills. I want it taken off.

[Here the hammer fell.]

Mr. CONKLING. The theory on which this section is based no doubt is this: that the great gas companies, the very extensive manufacturers of gas, can make that article cheaper than the smaller companies; that because they can make it cheaper they will do so; that the price of gas in the large cities will therefore be less than in the smaller cities; and further, that for the same reason the consumer can afford to have the great companies pay a larger tax and yet the net cost to him not be as great as it would be if the smaller companies supplied it,

Mr. LE BLOND. I would like the gentle-paying a less tax and incurring a greater cost man to state whence, in his view, Congress derives the power to override the action of States in matters of this kind.

Mr. GRISWOLD. Let me say to the gentleman that I do not conceive that the question of State rights has anything to do with this matter.

Mr. LE BLOND. Well, I think it has everything to do with it.

Mr. MORRILL. I desire to say merely a word or two lest the House should be led astray by the statements as to the immense profits of these companies. I am somewhat acquainted with the history of quite a number of these corporations in the United States, and I am satisfied that but few of them have made large profits. One company in New York, the Manhattan Company, another in Boston, and I believe one or more out West, have made large profits; but, taking them generally, throughout almost the whole country, you can buy their stock at less than par.

Mr. Chairman, in relation to the provisions in this respect of the bill now before us, I think that we had better leave them as they are. It is not contended that the amendment proposed will affect the price of gas to the ordinary consumer. With regard to ordinary consumers the companies, whether this clause be in or out of the bill, will have the same right to add the tax or not, as they deem proper. The effect of the provision in the bill is simply this that where in cities these companies are bound by their charters, or by requirement of law, to furnish gas at a certain rate, they are allowed to add to that rate the amount of the tax.

Mr. EGGLESTON. I move pro formâ to amend the amendment of the gentleman from New York [Mr. DODGE] by striking out the last word.

I desire to correct a misapprehension into which members may have been led by some of the statements which have been made. It has been said that the price charged by these companies has in many cases been so low that they could not realize any profit. My friend on my left [Mr. GRISWOLD] says that the price in his city is four dollars per thousand feet. Now, I undertake to say that gas can be furnished in his city for three dollars per thousand feet, and still give an immense profit to the company manufacturing it.

Then,

The distinguished chairman of the committee states, as I have understood him, that in the eastern cities the gas companies are so benevolent toward the consumers that they actually refuse to add this tax to their bills. again, he tells us that the stock of these companies is not remunerative-that the companies are poor. If this be the fact, all I can say is that they are model corporations. I believe that we should now place a firm hand upon these monopolies, and say to them that they shall pay their proportionate share of taxes as well as individuals who do business as manufacturers. When you say to the plow-maker and to the maker of reaping-machines that they shall not add the tax to the cost of manufacture you ought not to give to the gas companies the power to add it to their manufacture.

in the manufacture of gas. That, I think, is a fair statement of the theory upon which this section is based.

Now, what is the fact in practice? Surely we all know-certainly my colleague knowsthat in the city of New York the gas consumer pays a larger price than we pay in the city of Utica. I find it to be the fact in practice that the great gas companies charge a higher price, and then they take the tax which they have to pay, without even disguising it in name, and put it in so many words upon the bill, so much in addition for taxes, and the consumer pays it.

Now, unquestionably this is a great evil, and I think the amendment of the gentleman from Pennsylvania [Mr. STEVENS] looks in the right direction; and I think the amendment of my colleague [Mr. DODGE] would be better if in place of saying "where the rate is fixed by charter" he would modify it by saying "where it is restricted by law."

Mr. DODGE. I accept that modification.
Mr. EGGLESTON. I withdraw my amend-

ment to the amendment.

Mr. DAVIS. I renew it. I desire to say that I believe under the present law no great injustice is done to anybody. And I believe I know something about the manufacture of gas. I think my colleague [Mr. CONKLING] is mistaken when he says that he pays less for gas in the city of Utica than he would have to pay in the city of New York. My impression is that gas costs a dollar a thousand more in the city of Utica than in New York. It certainly costs more in Syracuse, and I presume it must in Utica. In New York the price is limited by the charters of the respective companies, and they have been appealing in vain for the last two or three years to the Legislature for authority to increase the price to the consumer, because they were unable to pay a dividend on their stock.

The Manhattan Company, in New York city, it is true, as was said by the chairman of the committee, has been prosperous. But why? Because in 1861, anticipating the great trouble which we were to have in this country, they bought three or four hundred thousand tons of coal in England, and imported it at a low price. Consequently they have had this large amount on hand, and have been able to man. ufacture at the old price, while companies not thus restricted have raised the price one or two hundred per cent.

I wish to say a word in reply to a suggestion made by the gentleman from Ohio, [Mr. LE BLOND, who asks whether we have power to make this provision, as it now exists in the law. I believe that in regard to every contract of this nature, and every tax of this nature, the national Government is supreme. The Government has the power of taxation, and no State has any authority to say to the national Government that a tax levied for national purposes may not be repaid in some way to the company or to the party who pays it.

Mr. LE BLOND. If the gentleman will allow me a moment, I do not question the right of Congress to tax, but I do question the right of Congress to say that this tax that we have levied shall be charged over against the con

sumer and thus increase the rate that he is required to pay by the amount of the tax that the Government levies, when the States themselves may have limited the price that those contracters shall furnish gas. You simply do away with the law of the States in that matter, and it does not reach the question of the right of Congress to tax at all.

Mr. DAVIS. The gentleman then puts it on the ground that there is no authority under the Constitution to impair the validity of a contract. That proposition I deny.

[Here the hammer fell.]

Mr. DAVIS. I withdraw the amendment to the amendment.

The question recurred on the amendment offered by Mr. DODGE, as modified at the sug gestion of Mr. CONKLING, to insert the words

whose rate of charge is restricted by law" so that the clause will read, "and all gas companies whose rate of charge is restricted by law are hereby authorized to add the tax imposed by law to the price per thousand cubic feet on gas sold ;" and it was not agreed to.

The question recurred on the motion of Mr. STEVENS, to strike out the paragraph. Mr. LAWRENCE, of Ohio. forma, to strike out the last word.

move, pro

This proposition, it seems to me, is very objectionable as it stands in the bill. In name it proposes to tax the gas companies when in fact it exempts them from all taxation. It is a delusion and a fraud upon its face, and it is a kind of legislation which we ought not to encourage. I do not quite agree with my friend from Ohio, that we have not the power to prothe price of gas. I suppose that the high power vide by law that this tax may not be added to which Congress exercises in enacting a tax law is sufficient to enable us to frame any provis effectual, and if it be necessary to provide by ion which may be necessary to make the tax law that the tax may be added to the consumer we have power to do so. And while we have power to do that we have power also, it seems to me, to say it shall not be added.

What I want to propose-and I will suggest it to the chairman of the committee-is that instead of striking out this clause we strike out these words, "and all gas companies are hereby authorized," and to insert "and no gas company shall;" so that it will read :

And no gas company shall add the tax imposed by law to the price per thousand cubic feet on gas sold.

Then if it is found that gas companies do not make dividends, let the Legislatures authorize them to increase the price. But let us not by law profess to levy a tax on gas companies when in fact we are doing no such thing, but exempting them.

[Here the hammer fell.]

Mr. MORRILL. That would be a very sin gular proposition, and one for which I do not

suppose anybody intends to vote. The proposition to strike out this part of the law authorizing a company to add the tax will not benefit the consumers, for whatever amount of loss from corporations they will be subject to on that account they will be likely to add to the price charged to consumers of their gas.

I move that the committee rise to terminate debate on this paragraph.

The motion was agreed to.

So the committee rose; and the Speaker having resumed the chair, Mr. DAWES reported that the Committee of the Whole on the state of the Union had had under consideration the Union generally, and particularly the special order, being bill of the House No. 513, to amend an act entitled "An act to provide internal revenue to support the Government, to pay interest on the public debt, and for other purposes," approved June 30, 1864, and acts amendatory thereof, and had come to no resolution thereon.

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