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Public Debt.

such as will require frequent decisions upon repre- desirable to render the proposal of the Government sentations from the Treasury Department. It is, free from all real objections; that which has been in every sense, proper, that the documents re- urged with the most force, arises from the redeemceived by the Commissioners, and their determi-able quality of the new stock. nations thereon, should be fully recorded, and carefully preserved by some confidential person, to be appointed by them. An annual provision of a sum not exceeding two hundred and fifty dollars, for the services of a secretary, will be sufficient for the object, and is advisable.

The documents in the possession of the committee contain data upon which an opinion is now expressed, that a renunciation of the right of redemption, until the year 1819, would be attended with no inconvenience to the United States, by prolonging the existence of the Public Debt.

Considering the great amount of the debt in Holland, the unsettled state of that country, and the extensive operations which either a re-loan or direct reimbursement must occasion, it is conceived to be advisable that a discretionary power of appointing a commissioner or agent to superintend the foreign expenditures should be vested in

It is already known to the committee, that the proposal for converting the Foreign Debt into a funded domestic stock, has not been accepted by the creditors in Amsterdam and Antwerp. It was foreseen, that the trouble of maintaining a distant correspondence, the necessity of employing agents in this country, the chances of exchange and the charges of insurance and commissions, the President. would powerfully operate to deter the creditors Though it is not certain that such an appointfrom acceding to any commutation of their con-ment will be necessary, yet there are sufficient tracts on the principles proposed. The additional grounds to recommend a provision for such a coninterest of one half per centum was intended to tingency. counterbalance these inconveniences, which were accordingly estimated on a scale liberal for the creditors; whether the allowance will be considered by them as an adequate compensation, is uncertain. As, in accomplishing the object of a re-loan, the United States will necessarily have to oppose many interests and some prejudices, it is

I have the honor to be, with perfect respect, sir, your most obedient servant,

OLIVER WOLCOTT, Jun.,
Secretary of the Treasury.

The Hon. WILLIAM SMITH,

Chairman of the Committee of Ways and
Means of the House of Representatives.

Statement exhibiting the operation of the act, entitled "An act making further provision for the support of Public Credit, and for the redemption of the Public Debt," in respect to the reimbursement of the six per cent. stock, bearing a present interest.

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INTERNAL REVENUE.

Internal Revenue.

[Communicated to the House of Representatives, March 7, 1796.]

TREASURY DEPARTMENT, March 5, 1796. SIR: I have the honor to transmit herewith certain statements, which have been prepared by the Commissioner of the Revenue, in pursuance of the resolutions of the House of Representatives, passed on the 2d day of March, 1795, and the 26th day of February, 1796, with a report explanatory thereof, by that officer.

use, anticipated estimates of what each of the internal revenues might be expected to produce in the year 1796.

Other letters, partially circular, have been transmitted, at different times, to those supervisors who continued to be most in arrear as to these and their other returns. Besides which, special letters, as frequent, and in terms as urgent, as circumstances required and admitted, have been addressed to some of the supervisors, and indeed to other officers of the revenue, who, from considerations of weight, cannot be instructed immediately from the Treasury on ordinary occa

I have the honor to be, &c.,
sions.
OLIVER WOLCOTT, Jun.,
Secretary of the Treasury.
The SPEAKER of the House of Representatives.

A report of the Commissioner of the Revenue, required by the order of the House of Representatives of the 2d day of March, 1795, concerning the internal revenues of the United States.

tax upon spirits to the stills.

But, although a perfect respect to the order of the House, and the proper duties of this office, have produced these early and repeated communications to the supervisors, it is not intended to convey the idea, that they, or the other officers of the revenue, have made less exertions than any other description of persons in the public service. For, it is believed, that a comparative view of TREASURY DEPARTMENT, their services and duties would produce different impressions. It is, however, true, that the emRevenue Office, Feb. 29, 1796. barrassments and difficulties of the revenue busiThe order of the House of Representatives ness have been met by inadequate exertions in having been made at the expiration of its last some instances. These cases have been the subterm, a report could only be made to the present jects of explicit communications with the proper House. On the day following the receipt of the officers. But it is doubted whether a complete order, circular letters, communicating the sub-remedy can be applied without transferring the stance thereof, were transmitted to the supervisors. These letters contained also explicit and When the order of the House was received at particular instructions, intended to insure the re- this office, the reflection occurred, that the first quisite attention to punctuality and to the neces- year of the five internal revenues established in sary details, as will appear from the annexed copy. 1794, would not terminate until the 30th of SepWith a view to expeditious and easy communi- tember, 1795; and that the revenues from both cations from the supervisors to the inspectors, kinds of domestic distilled spirits and from stills, printed copies were transmitted to the former, for would have their nearest annual period on the all of the inspectors of surveys as well as for 30th of June following the receipt of the order. themselves. As circumstances immediately pre-It was only on the same 30th of June that the ceding the order of the House had convinced those who had to pay the tax, that the revenue laws would be executed in future, and had removed some of the difficulties which had impeded and greatly disordered the antecedent business, it appeared expedient to reinforce, by the influence of this Legislative call, the injunctions which had been previously given to settle and return, as far as was then possible, all that remained in arrear. To prevent inconvenience from accidents, and to increase impression, duplicates of those letters were also transmitted.

existing arrangement of officers and compensations would have been in operation for an entire year in relation to all the revenues which are considered as parts of the system of internal taxation. It appeared desirable, therefore, and indeed necessary, to make preparation for statements, which should respectively terminate on those two days of June and September 1795, and a return of officers and compensations, as of the first of those days being the middle of the year. When, however, it is remembered, that the statements of the familiar and unembarrassed busi

One of the acts concerning snuff and snuffness of the customs, concentrated as they are, in mills, requiring an annual report of the revenue from that object to be made to Congress, a special circular letter upon that subject was transmitted to the supervisors, shortly after the circular communication above mentioned, and nearly six months before the expiration of the first year of the operation of the snuff tax.

each instance, in a single port and post-town, cannot be conveniently made up at the Treasury, for any year, until near the close of the year following, much longer time will appear necessary in the case of the internal revenues. Some of these are new, one litigated, and the largest of them has been the subject of forcible opposition and Immediately before the time when the five new coercion. They are moreover so scattered, that duties would have existed an entire year, other one or the other of them accrues in every counletters were transmitted to the supervisors, calcu-ty, and in almost every township of the United lated to promote their attention to the objects required by the House, and requesting them immediately to furnish, for Legislative and Executive

States.

The following statements, A, B, C, D, E, F, and G, contain an exhibition of all the returns,

Internal Revenue.

whether formal or irregular, which have been yet received at the Treasury. To those papers are added such supplementary estimates as we possess materials to justify. The paper H contains a list of the officers, with their compensations. The paper I is a copy of the act of the President, establishing those compensations. The paper K is the general statement of those revenues, with all the expenses of collection. The drawbacks are inserted in the particular statements of the several revenues, so far as they are ascertained. These statements are accompanied with some remarks, which may contribute to place the subject within the view of the Legislature.

1. The gross revenue from spirits distilled from domestic materials and from stills appears, by the accompanying statement and estimate A, to amount to 218,036 dollars and 164 cents, for one year, ending on the 30th of June, 1795.

The two earliest and largest estimates of that branch of the spirit tax, which were made in December, 1790, resulted in a gross amount of $270,000

But, since the passing of the

law of 1791, which was predicated on those estimates, the duty on spirits from domestic materials has been reduced from nine to seven cents, being two-ninth parts of the whole; for which, of course, there is to be deducted from the estimate The yearly duty upon the capacity of the still has also been reduced from sixty to fifty-four cents, since the passing of the act of 1791. This difference, taken upon only one-fifth part of the whole $270,000, gives the sum of Since that year, monthly licenses, not contemplated by the estimates, have been allowed by law, and an opinion is held at the Treasury, grounded on a report made upon experiments by distillers, that, in consequence of that allowance, the duty, in the case of stills employed on grain, may be easily reduced from seven cents to four cents and one-half, and in the case of fruit, from seven cents to four cents per gallon. If this be taken at the minimum of two cents and one half per gallon, it will justify a deduction of

$60,000

5,400

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37,500

102,900

And the sum of $167,100 will be left as the just and true residuum, after thus deducting, from the original estimate, the aggregate of those excisions from this duty which

have been actually made by the law of 1792. Instead of that sum, there can be no doubt, from the face of the statement A, that a larger amount has accrued and will be collected. And if the statutes concerning this branch of the revenue had not been greatly frustrated by the unavoidable want of a law officer, to prosecute the pleas of the United States in a productive district, a confident belief is entertained, that it would have yielded a sum nearly one-third larger than the residuum above stated.

To collect, with an effect really equal to previous estimates, so very small a revenue over the face of an extensive and sparsely-peopled country, under the disadvantages of necessarily imperfect and untried laws, of prejudice, and even opposition, will be considered as favorable to the general character of the revenue officers in the districts. It is, moreover, to be remembered, that there are some occasional circumstances, which might have been expected to produce a defalcation of the duties upon spirits from domestic materials. The excessive prices of grain, of marketable and exportable fruit, and of cider, have deprived the distillers of a very large portion of the means to employ their stills. In all places, the inducements to distil have been greatly diminished by the increased competition of the miller and merchant for every species of grain. It might have been supposed, too, that the great additional importations of foreign spirits*, of low priced wines, and of malt liquors, with the multiplication and extension of the manufactories of the latter, concurring with those circumstances, would have reduced the revenue on spirits from domestic materials, far below all former expectation. Yet this does not appear to be the case. It is worthy of remark here, that, on a calculation predicated upon the premised facts, the quantity of spirits, from fruit and grain only, which have been subjected to the revenue in the United States in the reported year, appears to be greater than the average of the same branch in England during the last thirty years, notwithstanding the more strict and rigorous nature of their laws. If these objects have produced there a greater sum, it is because the duty is much higher. A comparison with the same revenue, under the laws of certain of the States, would be still more favorable to the operation by the United States. Pennsylvania, for example, collected in the year 1790, from an excise of eight cents and eight ninths, upon foreign and domestic spirits and upon all kinds of wine, much less than is now collected from spirits made from domestic materials only, though her territory is crowded with emigrants consuming her produce, and she contributed very largely to the supply of the Western and Militia armies out of the crop of 1794.

*The quantity of foreign distilled spirits, imported in the year ending on the 30th September, 1790, was 3,678,199 gallons. That in 1794 was 5,699,369 gallons.

The quantity of wines, other than those of Madeira, imported in the year ending on the 30th of September, 1790, was 607,561 gallons. That in 1794, was 1,336,076 gallons.

The quantity of beer, ale, and porter, imported in the year

ring on the 30th September, 1790, was 70,564 gallons. That in

1794, was 331,458 gallons.

Internal Revenue.

2. The tax upon spirits distilled from foreign materials appears, by the same accompanying statement A, to amount to $141,989 15 for one year, ending likewise on the 30th day of June, 1795.

the Legislature. On these five duties, the following observations occur:

1. The auctioneer's tax, according to the statement B, amounts to $31,593 234, and falls considerably short of the estimate referred to. It is The estimates of 1790, already referred to, re- conceived that the numerous and extensive exsulted, in regard to the tax on spirits from molas-emptions in the proviso to the first section of the ses, in the gross amount of law, the very increased agency of brokers instead of auctioneers, in the business of the seaport towns, and the multiplication of the various objects which now form our circulating medium, have greatly affected this revenue.

But, since the passing of the first law, in 1791, which was predicated on those estimates, the duty on this kind of spirits has been reduced from eleven to nine cents per gallon. Wherefore, there are to be deducted two-eleventh parts of $385,000, being

Allowances for leakage and for prompt payment were also made, for both of which there is yet to be deducted about

$385.000 00

70,000 00

315,000 00

6,662 50

$308,337 50

2. The taxes on snuff and snuff mills amount according to the statements C and D, to $9,511 84, and have proved apparently the least conformable with the Committee's estimate, though it is not known what proportion they expected from manufactured tobacco. This article, which is of much greater consumption than snuff, was not subjected to duty, as proposed by the Committee. An opinion prevails, and it is believed on just grounds, that the existing law, relative to this branch of the public revenues, is either constructed upon wrong principles, or is very defective in its provisions. It is understood, also, that the proThe revenue from spirits distilled from foreign ductiveness of this tax has been diminished by exmaterials, in the year ending with June, 1795, traordinary, though very natural exertions of the was, according to statement and estimate A, manufacturers of snuff to increase the stock on $141,989 15. The defalcation of this branch of hand before the operation of the duty; and it is the revenue appears, therefore, $166,348 35. But represented that, since the alteration of the printhe importation of molasses, in the year 1794, was ciple of the law, the larger mills, with great powless than that in 1791, by 3,700,000 gallons. Al-ers of water and capital, have been enabled to lowing something extraordinary for the portion which would not have been used in distillation, the duties on the remainder, at nine cents per gallon, would more than counterbalance that sum. To this deficiency in the supply of molasses, it is probable that something might be added for the increased consumption of it in substance on account of the high price of sugar. These circumstances not only explain the defalcation of the tax on spirits distilled in the United States from foreign materials, but afford ground of conviction, that a great revenue from this source has been prevented only by the extraordinary nature of the war in the West Indies. As to the future course of the business, there appears little uncertainty in the expectation that the restoration of the molasses trade, the reduction of the prices of 4. The tax upon carriages for the conveyance grain abroad and at home, and the increase of of persons appears, by the statement F, to have fruit, or even the two latter, should molasses con- produced $41,421 17. The members of the Le tinue to fail, will render the revenue from domes-gislature are generally informed that a question tic spirits highly valuable, especially if further modified by the Legislature.

The estimates of the duties on sales at auction, snuff and snuff mills, refined sugar, carriages, and licenses to retail wines and foreign distilled spirits, were formed upon grounds which are unknown at the Treasury, having been made by a committee of the House of Representatives. It appears highly probable, however, that any information which could have been attainable at that time, must have been very imperfect and uncertain, and it is to be remembered, that alterations in the bills which produced diminutions in the product, were made during their passage through

make snuff by license, so as to reduce the contribution on the pound of the manufactured commodity to a much less rate than eight cents.

3. The refined sugar tax amounts to $34,527 86, and appears, also, by the statement E, to fall short of the original estimate; but additions will be made when all the returns shall be received. The defalcation may be owing not more to the imperfection of the materials which the Committee could obtain to govern their opinions, than to the increased use of the fine Muscovadoes, and of the clayed and powdered white sugars, which are understood to have been imported in a greater degree than formerly. These have facilitated a prudent economy, to which the prices of many of the necessaries of life have invited the consumer.

has been raised, in an extensive State, about the constitutionality of the law which imposes it That circumstance is conceived not only to have diminished the revenue in that district, but in some other places. As it was, for obvious reasons, highly desirable to have this point immediately settled, every exertion was made, short of precipitating the decision, to bring it early before the District Court. The Judges of that tribunal were divided, and the case was carried by appeal to the Supreme Court of the United States. It was endeavored, on the part of the Government, to have the question finally argued in August last, but from circumstances on the side of the defendant,

Internal Revenue.

it became necessary to acquiesce in a postpone- They are, however, not considerable. For the ment until the February term. It is understood important service of checking, on land, the great that the revenue of the current year will be fur-import duties on those three articles, these revenue ther diminished by the unavoidable delay of a de-officers receive no other than the very small allow

cision.

ance which is just referred to. A puncheon of 5. The statement G exhibits the gross revenue spirits, worth one hundred dollars, yields to some from licenses to retail wines and foreign distilled one of them in a district, no more than two spirits, at $54,731 54, so far as returns have been cents and one-half; and a cask of wine, worth received at the Treasury. It was to be expected forty dollars, yields, in like manner, but a single that the amount would fall considerably below cent. The supervisors and inspectors' office rent, the original estimate, because the spirit licenses fuel, and clerk hire, the value, or hire, of the colwere confined to the retailers of foreign spirits, lectors' horses and their keeping, together with contrary to what seems to have been the first in- their own expenses when on the road, are deductention of the Committee. This not only dimi- tions from their emoluments. The postage of letnished greatly the number of licenses, but is sup-ters and packets, which greatly contribute to swell posed to have facilitated evasions of the law. It the incidental expenses, are all returned into the is not doubted, that the occurrence of the month public Treasury, except the allowances to the post of entry (September) so soon after passing the li- officers. Most of the supervisors, and several of cense act, may have prevented that timely pro- the inspectors, perform necessary and important mulgation of it which was necessary to the per-duties, auxiliary to some of the officers of the sevefect collection of this tax. A similar reflection arises with greater force in regard to the carriage tax; and, indeed, the arrangements necessary to carry into execution the several laws concerning the five new duties, required more time than intervened between the beginning of June and the month of September.

ral Executive Departments, on terms very far, indeed, below what would be accepted by any special agent, public or private.

TENCH COXE, Commissioner of the Revenue.

[CIRCULAR.]

TREASURY DEPARTMENT,

The statements and estimates accompanying this report contain the substance of all the returns and documents concerning the internal revenues for the year to which they relate. Such papers The paper H contains the names of nearly all as may be received during the course of the sesthe officers employed in the business of the inter-sion, are proposed to be digested into a supplemennal revenues throughout the United States. Judg-tary statement. ing by a comparison with facts in the scene most adjacent to the Seat of Government, these are less numerous than the corresponding officers of the States. The collectors, alone, of the revenues of the State of Pennsylvania, all of which are of course internal, are believed to be very many more in number, as well in fact as in proportion to the respective aggregates of the taxes, than all the officers of every description employed in that district to superintend and collect the six duties of the United States, which are the subjects of this communication. Throughout the Eastern parts of the Union, it is understood that there is a collector of their taxes in every township, which must give a number greater, in that quarter alone, than that of all the officers of the internal revenues of the United States. In the other parts of the Union, it is believed that there is considerably more than the proportion of one collector of State dues in each county, on a medium. It is certain that the internal revenue officers of every class, upon the Federal Establishment, are fewer in number, although one description of them (the auxiliary officers) has been appointed for the sole purpose of bringing conveniently near to the payers of certain of the taxes, an office of entry and application.

The apparent emoluments of the officers, and the expenses of collection, though not higher than has been expected, if accurately considered, must be taken in conjunction with several connected circumstances.

Some of the supervisors and inspectors have allowances for preparing or signing certificates for foreign distilled spirits, wines, and teas, which, not being conveniently separable, appear, in their general mass of charges, on the internal revenues.

Revenue Office, May 16, 1795. GENTLEMEN: I have been obliged to postpone, until this day, a communication to you concerning a resolution of the House of Representatives of the 2d of March last. It did not reach my hands till yesterday afternoon. The resolution requires, that there be laid before the next Congress "such a statement of the internal revenues as will ascertain, with precision, the nett product thereof, and the expense of collection;" also, "a list of all the officers employed in that service, and the compensation allowed to each of them."

Completely to effect these several objects, and as the basis of the relative observations and explanations which should accompany the statements from the Treasury, it is necessary that early and particular attention be paid to the following points:

1. The completion of all the returns and abstracts relative to retailers' licenses, sales at auction, carriages, refined sugar, and snuff and snuff mills, until the 30th of September next, on which day the first year of those revenues will end.

2. The completion of all the returns and abstracts relative to the distillation in cities, towns, and villages, and from foreign materials, from the first day of July, 1791, until the 30th day of September, 1795, the return for each quarter, now unreturned, to be transmitted to the Treasury, as soon as completed.

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