By Treasury Decision No. 25 of the Bureau of Industrial Alcohol, signed by the Commissioners of Industrial Alcohol and Internal Revenue, and approved by the Secretary of the Treasury on January 19, 1934, part three of Regulations 7, Treasury Department, May 1930, relative to the production, fortification, tax payment, etc., of wine and the production of grape brandy for fortification was made applicable to brandy plants and the warehousing, etc., of brandy produced for any lawful purpose. Part three was, therefore, in effect as to brandy during the period beginning on January 19, 1934, and ending on June 26, 1936. The relation of this period to the bill and this report will clearly appear from this report. Paragraph 431 of Regulations 7 provided during the period just mentioned that after being run into locked receiving tanks at the brandy distillery the brandy would be:

"(a) Transferred to weighing tank, gauged, and conveyed by pipe line to the winery; or

"(b) Transferred to weighing tank, gauged, and conveyed to tank cars for shipment to a winery; or

(c) Transferred to weighing tank, gauged, and conveyed to storage tanks in the brandy deposit room, pending removal to the winery by pipe line; or

"(d) Transferred to weighing tank, gauged, and conveyed to storage tanks in the distillery bonded warehouse, where such warehouse is provided; or

"(e) Drawn into casks, gauged, and removed to a winery or to a bonded warehouse, or placed in the brandy deposit room, pending removal to a winery or bonded warehouse."

It is apparent from this paragraph that the Treasury Department authorized (1) the conveyance of brandy by pipe line to bonded warehouses for storage in warehouse storage tanks, or (2) the deposit of brandy in warehouse in casks. Regulations 7 provided further:

"PAR. 433. When brandy is transferred to storage tanks in the brandy deposit room or warehouse, after gauging, as above provided, it will be regauged by weighing tank before removal unless it is drawn into packages and then gauged.' "PAR. 456. The allowances provided in section 50 of the act of August 27, 1894, as amended, for losses of spirits in warehouse by leakage, evaporation, and soakage, will be made on packages of brandy deposited in bonded warehouses, under the conditions set forth in such law.

"PAR. 457. No allowance can be made for losses under section 50 of the act of August 27, 1894, as amended, from receiving tanks in the distillery or from storage tanks in the brandy deposit room or in the warehouse, and the tax must be paid on all such losses: Provided, however, That where there is a deficiency of not over one-half of 1 per cent on such tanks, the same will be ascribed to variation in gauge, there being no evidence to the contrary, and no tax will be exacted thereon.' Since paragraph 456 provided that the allowances under section 50 of the act of August 27, 1894, would be made on packages (casks, par. 431) of brandy deposited in the bonded warehouse, and since paragraph 457 provided that no allowances would be made for losses from storage tanks in the warehouse, it follows that no losses were authorized to be allowed from packages (casks) filled from storage tanks. It is obvious that packages filled from storage tanks in the warehouse are not "deposited" therein, because the spirits were deposited (prior to the date of filling the casks) when they were conveyed to the warehouse storage tanks.

I have given this brief outline of the loss allowance and the application of the law: (1) in order that it may clearly appear that at no time heretofore has it been the practice, or permissible under the law and regulations, to grant the allowances as to packages filled from storage tanks in warehouse; and (2) because it has been brought to my attention by the officials of the Bureau of Internal Revenue that inquiry has been made of them heretofore concerning allowances of losses from wooden packages filled from warehouse storage tanks during the period commencing on or shortly after December 5, 1933, and ending on or before June 26, 1936, by persons who believed that after adoption of the repeal amendment the rule as to loss allowances had been changed. There is, of course, nothing in the regulations to indicate to anyone that the adoption of the twenty-first amendment in any way affected the internal-revenue laws relating to the allowance of losses from distilledspirits packages. Only the prohibitory laws which depend for their validity on the eighteenth amendment were affected by the twenty-first amendment.

A check of the warehouse records covering fruit spirits and brandy in the State of California indicates that only two concerns filled packages with brandy or fruit spirits drawn from warehouse storage tanks. One of these concerns so filled 1,557 such packages. The other concern so filled, so far as is definitely ascertainable, 1,327 such packages. Of the packages so filled by the first-mentioned concern, there are only 2 left in warehouse. The packages withdrawn did not receive the

allowances for loss accorded packages filled at cisterns in distilleries and deposited in warehouses. Of the packages filled by the second concern there remain in storage 1,214. It appears, therefore, that the first concern has withdrawn 1,555 of the packages, paying full tax thereon without benefit of any allowance for loss by leakage or evaporation, and the second concern has withdrawn 113 of its packages, leaving on deposit 1,214 packages as to which, if the proposed legislation is enacted, they will receive the benefit of the loss allowance established by law on packages filled from cisterns and deposited in warehouses. In addition to the foregoing packages, Bureau records for the second concern show 703 barrels filled, with 184 remaining, which apparently were filled from tanks. Should it be established that these packages were all filled from tanks, the figures given above for the second concern would be increased accordingly.

In view of the above, it is clear that all brandy manufacturers should have been aware of the fact that under the law and regulations they would not be entitled to allowances of loss by leakage and evaporation from packages filled from warehouse storage tanks and that the manufacturers who so filled packages did so in disregard of the laws and regulations. Nevertheless, since only a few taxpayers, and a relatively small amount of revenue, are involved, the Treasury Department will interpose no objection to the passage of the bill.

The Department has been advised by the Bureau of the Budget that there is no objection to the submission of this report to your committee.

Very truly yours,

JOHN W. HANES, Acting Secretary of the Treasury.

Therefore, it is the unanimous recommendation of your committee

that the bill do pass.

O

SAN FRANCISCO MOUNTAIN SCENIC BOULEVARD CO.

JULY 13, 1939.-Committed to the Committee of the Whole House and ordered to be printed

Mr. KEOGH, from the Committee on Claims, submitted the following

REPORT

[To accompany S. 68]

The Committee on Claims, to whom was referred the bill (S. 68), for the relief of the San Francisco Mountain Scenic Boulevard Co., having considered the same, report favorably thereon without amendment and recommend that the bill do pass.

The purpose of the proposed legislation is to pay to the San Francisco Mountain Scenic Boulevard Co. the sum of $15,500 as full settlement of the claim of said company against the United States arising out of expenditures made for the benefit of the United States in construction of the San Francisco Mountain Scenic Boulevard within the Coconino National Forest in Arizona.

The facts are fully set forth in the Senate Report No. 334, which is appended hereto and made a part of this report. Your committee concur in the recommendation of the Senate.

[8. Rept. No. 334, 76th Cong., 1st sess.]

The Acting Secretary of Agriculture recommends favorable consideration of the bill.

The records of the Department show that, under the regulations relating to the administration of the national forests, a permit was issued on March 29, 1920, to the San Francisco Mountain Scenic Boulevard Co. authorizing it to construct a road across national-forest lands so as to reach the summit of the San Francisco Peaks, a high mountain in this locality. The road was to be constructed within a specified time and was to be maintained in a serviceable condition to meet tourist demands. It was expected that the permittee would reimburse itself for expenditures made in the construction and maintenance of the road by charging a toll for the privilege of passing over the road. The company seems to have had difficulty in financing the project, since the construction of the road was never completed although the period for building it was several times extended. The company was not successful in obtaining sufficient revenue in the way of tolls from the road to maintain the portion constructed in a safe and serviceable condition and therefore the Department, after due notice, on January 19, 1938, canceled the permit so that thereafter the company had no control over the road, but for all practical purposes it became the property of the United States since it was constructed on lands of the United States.

The records further show that a portion of the road which was constructed is of value to the Forest Service in the administration of the Coconino National Forest since it makes parts of that forest accessible which otherwise would not be accessible to vehicular traffic.. An examination by the Forest Service as to the cost of this part of the road, or rather what it would cost the Federal Government were it to construct a like road in this locality, indicates that the cost of such construction would be approximately $15,500, the amount stated in the bill. In view of the fact that this road is of value to the Government in the administration of the Coconino National Forest and that were the Government forced to construct a like road it would be put to an expense of approximately $15,500, the Acting Secretary states, "it is believed that it would be no more than equitable to pay the San Francisco Mountain Scenic Boulevard Co. the cost of such road construction and therefore this Department recommends S. 68 to the favorable consideration of your committec."

Your committee concur in the view of the Department, and it is accordingly recommended that the bill do pass.

The letter of the Acting Secretary of Agriculture is appended hereto and made a part of this report.

DEPARTMENT OF AGRICULTURE,
Washington, March 8, 1939.

Hon. M. M. LOGAN,

Chairman, Committee on Claims,

United States Senate.

DEAR SENATOR LOGAN: Receipt is acknowledged of your letter of February 13 enclosing copy of S. 68, a bill for the relief of the San Francisco Mountain Scenic Boulevard Co., and asking for a report thereon.

The proposed legislation would direct the Secretary of the Treasury to pay to the San Francisco Mountain Boulevard Co. $15,500 as full settlement of the claim of the company against the United States growing out of expenditures made in the construction of a road within the Coconino National Forest, Ariz.

Under the regulations of this Department relating to the administration of the national forests, a permit was issued on March 29, 1920, to the San Francisco Mountain Scenic Boulevard Co. authorizing it to construct a road across national forest lands so as to reach the summit of the San Francisco Peaks, a high mountain in this locality. The road was to be constructed within a specified time and was to be maintained in a serviceable condition to meet tourist demands. It was expected that the permittee would reimburse itself for expenditures made in the construction and maintenance of the road by charging a toll for the privilege of passing over the road. The company seems to have had difficulty in financing the project, since the construction of the road was never completed although the period for building it was several times extended. The company was not successful in obtaining sufficient revenue in the way of tolls from the road to maintain the portion constructed in a safe and serviceable condition and therefore the Department, after due notice, on January 19, 1938, canceled the permit so that thereafter the company had no control over the road but for all practical purposes it became the property of the United States since it was constructed on lands of the United States.

A portion of the road which was constructed is of value to the Forest Service in the administration of the Coconino National Forest since it makes parts of that forest accessible which otherwise would not be accessible to vehicular traffic. An examination by the Forest Service as to the cost of this part of the road, or rather what it would cost the Federal Government were it to construct a like road in this locality, indicates that the cost of such construction would be approximately $15,500, the amount stated in Senate bill 68.

In view of the fact that this road is of value to the Government in the administration of the Coconino National Forest and that were the Government forced to construct a like road it would be put to an expense of approximately $15,500, it is believed that it would be no more than equitable to pay the San Francisco Mountain Scenic Boulevard Co. the cost of such road construction and therefore this Department recommends Senate bill 68 to the favorable consideration of your committee. Sincerely,

HARRY L. BRown,
Acting Secretary.

JESSIE M. DURST

JULY 13, 1939.-Committed to the Committee of the Whole House and ordered to be printed

Mr. KEEFE, from the Committee on Claims, submitted the following

REPORT

To accompany S. 809]

The Committee on Claims, to whom was referred the bill (S. 809) for the relief of Jessie M. Durst, having considered the same, report favorably thereon with an amendment and recommend that the bill, as amended, do pass.

The amendment is as follows:

Line 12, after the word "Act", strike out the period, insert a semicolon, and add the following language:

And provided further, That such claim be filed within six months after the passage of this Act.

The purpose of the proposed legislation is to waive the requirements and limitations of sections 17 to 20 of the Compensation Act, and to leave the Commission free to determine the merits of Mrs. Durst's claim for injuries alleged to have been suffered by her on or about May 25, 1936, while in the performance of her duties as an employee of the Works Progress Administration at Fond du Lac, Wis., and to afford her such measure of relief as the facts when established may show her to be entitled to under the Employees' Compensation Act of September 7, 1916, as limited by the act of February 15, 1934, as amended.

The facts are fully set forth in Senate Report No. 482, which is appended hereto and made a part of this report. Your committee concur in the recommendation of the Senate.

[8. Rept. No. 482, 76th Cong., 1st sess.)

The records show that on May 25, 1936, at about the hour of 10:30 a. m. claimant was ordered by her superior officer, Miss Ruth M. Pfeil, director of Works Progress Administration project No. 3138, to arrange the garments to be on exhibit at Waukesha, Wis., May 26, 1936; that she was instructed to go