2d Session.

Part 2.

RICO.

TAX ON BAY RUM GIVEN PORTO RICO.

FEBRUARY 5, 1907.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed.

Mr. UNDERWOOD, from the Committee on Ways and Means, submitted the following as the

VIEWS OF THE MINORITY.

[To accompany H. R. 25122.]

The undersigned members of the Ways and Means Committee dissent from the views of the majority of the committee, heretofore filed, on the bill (H. R. 25122) entitled "A bill to impose a tax on bay rum brought from Porto Rico into the United States."

The bill provides that a tax of $1.10 per proof gallon shall be collected at the port of entry on each gallon of bay rum coming from Porto Rico, by the collector of internal revenue of the district in which the port is located.

Notwithstanding the fact that this tax is collected by a collector of internal revenue, it is an import tax levied on an article of commerce coming from Porto Rico to the United States and clearly in conflict with the now established principle that the trade relation between this country and Porto Rico shall be free from discriminating taxation.

We hold that if it is necessary to equalize taxation between the two countries, the internal-revenue laws of the United States should be extended to Porto Rico on the same terms and under the same conditions that they are applicable in the United States.

We further find that the government of Porto Rico collects a tax on the alcohol contained in bay rum at least equal to if not greater than the tax now paid by the manufacturers of bay rum in the United States, and to pass this bill would amount to a direct discrimination. against bay rum manufactured in Porto Rico, and amount to a prohibitive duty against its coming into the United States.

LAND DISTRICTS IN ALASKA.

JANUARY 30, 1907.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed.

Mr. LACEY, from the Committee on the Public Lands, submitted the

following

REPORT.

[To accompany H. R. 25041.]

The Committee on the Public Lands, to whom was referred the bill (H. R. 25041) relating to land districts in Alaska, having had the same under consideration, respectfully submit the following report: Your committee recommend that the bill be amended as follows: Strike out the word "emoluments," in line 9, page 2, and insert "commissions; and in line 12, page 2, strike out the word "emoluments" and insert "commissions;" and at end of line 14, page 2, insert the following: "Provided, That no other salary than aforesaid shall be paid to such registers and receivers."

Several years ago, under the impression that there would be considerable demand for public lands and mineral patents in northern Alaska, Congress passed a bill creating land offices in that region. There was so little demand for the services of such officers that, in the interest of economy, the law was repealed. The registers and receivers under the law as applicable to Alaska each received salaries of $1,500 in addition to the fees and commissions of their offices and the fees were only nominal.

There has now arisen a demand for offices at Nome and Fairbanks, but there is not sufficient business to justify the establishment of such offices in the usual way. But there is sufficient necessity to justify the establishment of these offices in the manner proposed in this bill. The first land office in Alaska was created under similar circumstances, and two Territorial officials were designated as register and receiver ex officio. While the business remained very small this plan was found to work well and to be adequate to the needs of the Territory. Similar conditions now prevail at Nome and Fairbanks. The miners. there are now beginning to ask for patents for their claims, and the vast distances from Fairbanks and Nome to Juneau make the proceedings very slow and expensive. The business can be transacted by the clerks and marshals acting ex officio as registers and receivers. They can well afford to do this additional work for the fees and commissions; but the receipts of the offices would not justify the appointment of registers and receivers with the salaries provided by law. As amended your committee recommend that the bill do pass.

WITHDRAWAL FROM BOND, TAX FREE, OF DOMESTIC ALCOHOL.

JANUARY 31, 1907.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed.

Mr. HILL, of Connecticut, from the Committee on Ways and Means, submitted the following

REPORT.

[To accompany H. R. 24816.]

The Committee on Ways and Means, to whom was referred the bill (H. R. 24816) entitled "A bill to amend an act entitled 'An act for the withdrawal from bond, tax free, of domestic alcohol when rendered unfit for beverage or liquid medicinal uses by mixture with suitable denaturing materials,"" approved June 7, 1906, beg leave to submit the following report, and recommend that said bill do pass, with the following amendments:

On page 2, section 2, lines 7 and 8, after the word "distilleries" strike out the words "but not exceeding five in number of such central plants in any one collection district."

Also in line 10, same section, after the word "warehouses" insert "without the payment of internal revenue tax."

Also, on the same page strike out the whole of section 3, and insert in lieu thereof the following:

SEC. 3. That alcohol of the required proof may be drawn off, for denaturation only, from receiving cisterns in the cistern room of any distillery for transfer by pipes direct to any denaturing bonded warehouse on the distillery premises, or to closed metal storage tanks situated in the distillery bonded warehouse, or from such storage tanks to any denaturing bonded warehouse on the distillery premises, and denatured alcohol may also be transported from the denaturing bonded warehouse, in such manner and by means of such packages, tanks or tank cars, and on the execution of such bonds, and under such regulations as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may prescribe. And further, alcohol to be denatured may be withdrawn without the payment of internal-revenue tax from the distillery bonded warehouse for shipment to central denaturing plants in such packages, tanks, and tank cars, under such regulations, and on the execution of such bonds, as may be prescribed by the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury.

On page 3, after section 4, insert as section 5:

SEC. 5. That the provisions of this act shall take effect on September first, nineteen hundred and seven.

Thus far in the second session of the Fifty ninth Congress there have been introduced five bills for the amendment of the free-alcohol act approved June 7, 1906. One by Mr. Hill, of Connecticut, providing for the application of the law to the manufacture of ether, chloroform, and other definite chemical substances where the alcohol is changed into some other chemical substance and does not appear in the finished product; also for the establishment of denaturing bonded warehouses other than those provided for in the original law, which restricted these establishments to applications from distilleries only; also for cheapening the cost of the product to the consumer by providing for transportation of such product by tank cars and other more economical methods of transportation than obtain for beverage spirits.

A bill introduced by Mr. Marshall, of North Dakota, added to the provisions of the bill introduced by Mr. Hill, to provide for cheaper and more economical methods of handling alcohol to be denatured at the large industrial distilleries, and also for the practical adoption of the German locked still and tank system for agricultural distilleries; but made no reference to the capacity of such distilleries. A bill introduced by Mr. Volkstead, of Minnesota, providing for somewhat similar regulations with reference to agricultural distilleries limited to a capacity of not exceeding 30 gallons output per day.

A bill introduced by Mr. Gronna, of North Dakota, looking to a similar liberalizing of the provisions of the law with reference to agricultural distilleries with an output not exceeding 15 gallons per day.

By direction of the committee the bills introduced by Mr. Marshall and Mr. Hill were referred to the Treasury Department for examination and report thereon, and the following replies were received, accompanied by a new bill as a practical substitute for all pending measures, and under instructions of the committee this bill was introduced by Mr. Hill, of Connecticut, and has become H. R. 24816, the bill now under consideration.

The honorable SECRETARY OF THE TREASURY.

TREASURY DEPARTMENT. Washington, January 18, 1907.

SIR: I have the honor to return herewith House bill No. 22657 and House bill No. 24131, with letters addressed to you concerning these bills by the chairman of the Ways and Means Committee of the House of Representatives, and. as requested by you, I give the opinion of this office relative to these measures. I agree with the main purposes of both bills and have the honor to recommend the passage of a bill hereto attached, embracing the provisions of both, with such modifications as I deem proper, and for which I give reasons.

Section 1 of both of the House bills is identical. I suggest that this section be amended by adding at the end thereof the words "as alcohol," believing that the addition of these words would make the object of the section absolutely clear and leave nothing to be inferred. The office bill inclosed contains this addition.

It will be noted that if this section becomes law it will allow the use of denatured alcohol for the production of ether, chloroform, and similar sul stances which are used both for medicinal purposes and also for industrial and manufacturing purposes, as there is no limitation upon the use to which the product will be placed.

SECTION 2.

Section 2 of House bill No. 22657 is identical with section 3 of House bill No. 24131.

The object of these sections is to afford to every dealer and consumer mutual