New-York tribune., 1867-02-26
THE WHISKY FRAUDS.

Tha TIorse OF Representatives. on 'ho iVui 'i ~ W 80
,en,her last adopted the following resolution.
s, I, opbcly alleged great frauds are daily p,ar'ioti IN
w. payment and collection Of The 9leIs. & c s ,seeg o
s.e,'Jo f tbe Ia ,;o, ,,r11,rent; therefore , ,..
osui Of Revenue duties and as 70 5 % oa f @ pees
,o.esrn. 10 tie ore Of distilled spirits tobacco ana S5
o., so,1ton Otherass herewith si'h power " '' "
persons and gaPers ,-i..,
The Select Committee raised under the above reehcd
resolution report:
The COMMITTED was appointed the 10Th OF December
and entered upon sielr duties Immediately lhey pro
ccded 90 New York City cOmmencedt the eNamhal!on ol
tncss, ou the 18th Of December and continued thei'
tvest atoms IN that city and Philadelphia until the llh
r I,,nsry with the exception of a brief ntermission
,,Si %, ~: "Idays They then returned Washington
and coanucd examination of witnesses until tho lst
az Fc,rulrV, when the testimony was finally closed
in consequence Of tho limited duration or the present
session Of Congress- they have confined ther SSos
lyu and in these cities time would not permit teih 10
make thorough and careful inquiry as Tue import
Bnco VI the subject demands The dccOEpdl! iu5 e'F
derco is presented as part of tins report, ., ..
Much ut i. doubtless lacks point and pertnency-ue.
fects necessarily incident 10 the chaIaCtC oi Io
matter for iryCstgatiOn-au lnVeSuSatlOh Ill WHCh III
torestea Psrtes ana tlHEIns -; @ i,sto,ccs 0,efe
Hmne0. ana whose statebCIs IN sol'o .
usofu only far they could aid IN directing Gtenuoh
70 important sources OF testimony -, ,-.,.
Observation-Disclosures H. ucOmpeteueSs OF the investica-
ton enough has been elected TO satisfy your committee
spI;s and especially the latter the most stupcndous
frauds 7lctced against the Government III the col
nde~ it is believed that ot least seveneghths of the
entire amount W spirits manufactured under the present
law have escaped taxation YCur committee feel war
rantcd IN tho assertion that few II any, OF the large as
tcries the United States, now in operation are doing
Ale5tnate business. The conclusion, though sweeping
and apparently CensoTOus IN its terms, seems Justlcu ~
thc facts The tax on distilled spirits Is two dollars per
prices rsung from dollar and fifty cents 70 one dOuar
see how whisky the first cost OF which is from thirty 70
forty cents and tho tax upon which Is Two dollars can DC
manufactured and sold for the prices above naeu the
nroyiu tbe tax has been paid, constituting only about
tTohirs OF the actual cost. These facts are appalling
sud they excite apprehension well in reference TO tDe
morals of the people i'll regard TO their bearing upon
the public treasury and II the present CONDITION Oh al6
the principal sources OF internal revenue may now DC
deemed substantially exhausted. ,.,...,-.,,.
Tie evidence herewith reported containing vOlumnOus
statements ~ manufacturers and dealers as wen as te
officers OF internal revenue VIII snow the pIatcI & WOH
ings and OF the defects IN the laws Tor the cOec
.sde IN, necessity OF an elaborate report in detail but
ssue conclusions have been arrived NJ in the minds OF
sy dcSr ia suggest for the consideration OF the House.
The itscf very onerous. and offers great tenpa
- nos rscr n ss n crime 10 avoid taxation and hence
the temptations TO defraud the Goyernment. u view OF
lrce gains too frequently become rTeSstOe Nhae.er @
tax was ,sd 10 its present rate we can that there
tIo objections to reducing II at the present tDne one OF
which IS tlsi there spirits on hand alleged 70 nave
pa,d an iupOrt duty and yet perhaps this ducuty IS
more seou that real because is evident that large
You'd you'd suffer but ittie by reduction in the price
been brought into contempt tccdu-c
they not gidy enforced in the prosecution OF
Eases Of as1ected frauds Among an the seizures ana
fruOkyn and they have been numerous yonr committee
sannOt ascertain that single has been pursued to
xty has been Coufscated penalties have been col
lectd. but NOS single man has iet the utmost Igor OF
N The lAS That part OF your statute which makes nf
cheat the Government and awards imprisonment
has remained dead letter Even in case OF forfeiture
and sale OF property by OF the for illegal pac
the has IN many instances been appraised at
ueh less than its actual value nd III by the Noator OF
the law and again used for defaudng the Government
YOu rconitee also suggest for the OF tue
UOuse whether or not is wise TO continue IN tC Itea
uy Department the power to compromise and set cases
o sclic Tor violations OF the law 1t Is obviously dl
n the Commissioner OF Internal Revenue TO acquire
sufficient knowledge Of real facts in any given TO
make proper determination and final disposition OF It,
In most Instances lac must rely upon pdte statements
and depending very much for his information upon the
opinions and recommendations Of collectors, assessors
Snd inspectors TO say nothing Of the influence created by
political friends he is liable to be by the state,
st OF m 1!ee5 j PeTs9Rs M s so @ nod S 1 RU 66e
nbIe 70 other violations Of the laws Of the land The
.ses are prosecuted by public officers and evidence Is
received according 70 the rules Of law subject 10 the test
II cros,eXamDation. and liable TO rebuttal would be
nuch likely administer substantial justice would
secure greater degree Of public confidence aud would
heads Of eva doers.
work, not without deliberate calculation. lie looks over
tIe whole ground and weighs the probabilities. The
chauceS are nine out OF ten perhaps - ont OF that he
is not disturbed 0r called to an account at ALL If unfOr
tunltey he i detected and seized, what Is the cOnSe
GuGucff NcIluiIN UOluIN NtIg dHtIIulHS nc secs
Iprsnnnent 10 very rigorous prosecution before him
lilo has manufactured and disposed OF 5000 barrels
s%s % oH Rand T6e case goes 70 Wasaeton and is com
Irs'nscd M Vie layment OF me taxes on the 90 bar
the supposed, estimating the article at 90, though
he has lost tAe 80 barrels, he has put INTO his pocket
Your committee also suggest that the present bonded
wasebOusc system needs careful revision and radical a.
teraOu II would appear from the evidence that 10 this
system, - due very large portion Of the fraud by which
spirits the payment Of tax IL is source Of cor
rnpiioa both officer and manufacturer. Spirits
taken cut Of The bonded warehouse and others made to
supply their places spirits are transported ir9n ono dis
trct "a another un1 plant officer Is found. Barrels
fraudllonty branded Tax paid by the cOnniyance
~ the officer and sometimes forged stencil plates
used Barrel, relieved Of their contents and then
plcui-hod with water. On the subject Of bonded
houses The following eNuact ron the suggestion o. Mr..
J. c. Horton, wli be found pertinent and Instructive:
"Tho following Will illustrate how readily fraud
bo committed through tAis medium. suppose dlstler
~ thc West desires 10 send 400 barrels Of whisky 10 TINS
district a trasportaton bond saw for 1000 barrels
tpon this permit 70 ship 1000 barrels granted Now,
under this permit he VIII ship four lots Oi 900 barrels
each, each TOT corresponding n marks, numbers &c.
one lot he VIII slip via Baltimore, via Philadelphia
LOT via Erie Railroad. and the other via New-YOrk
sparfr and I'm fbr event of the seizure of either ot the
production Of the permit will at insure its release
which would be purely accidental thcy being hundreds
oi rncs apart This, however, is but way to per
pctratc fraud through this medium. After whisky has
been placed in bond may be withdrawn for redsta-
ton, rectcauOn, fOr change Of package, for export
tanshmcnt and under these various prctenses, thous-
snds OF barrels are covered up and lost sight Of"
similar practices spring up under permits Tor eXporta
ton. Information derived from the Treasury
parmcnt appears that Of the u Ot4 gallons Of spirits
on hand and removed bono" there the 3lst
81 December 1861 100 M gallons uuaccOuutedf for which
should INTO the Treasury over Sl0OOO IL II not
alleged that the entire amount unaccOunted for has been
fruduenty disposed O but i is fair To presume that
considerable portion Of II has been the market and has
contributed n small degree To the reduction Of the
price Of whisky 10 the rate OF 81 80 per gallon.
Were 20 adopt the suggestion heretofore made VIZ
60 the tax upon the capacity OF the STILL o. course
should De relieved OF all the questions and difficulties
that spring out Of the bonded warehouse system, and the
sMainS oi oinceT nlaae necessary 10y tnl syeh; buIH