The Government certainly can receive no benefit by the passage of this bill. If it becomes a law, every acre that can be acquired under it will undoubtedly be secured by the Indians at one-sixth of the price that is demanded, and would be cheerfully paid by citizens, if permitted to purchase.

The committee, therefore, recommend the indefinite postponement of the bill.

IN THE SENATE OF THE UNITED STATES

MAY 13, 1874.-Ordered to be printed.

Mr. GOLDTHWAITE submitted the following

REPORT:

[To accompany bill S. 142.]

The Committee on Claims, to whom was referred the bill (S. 142) for the relief of Nathaniel McKay, have had the same under consideration, and make the following report:

The bill asks that the Secretary of the Treasury be authorized to refund to the builders of the steamers La Portena, Edward Everett, F. W. Lincoln, Azalia, and N. P. Banks, a sum not exceeding $6,574being the amount of revenue-tax found to have been paid on the hulls and engines of said steamers, to be paid out of any funds in the Treas. ury not otherwise appropriated.

That the taxes were assessed upon the vessels mentioned in the bill, is established by extracts from the files of the Internal-Revenue Office, showing the assessments against McKay & Alders, duly certified by the Commissioner. This evidence shows that the vessels referred to were assessed at the dates and amounts as follows:

The evidence of the payment of these assessments is to be found not only in the letter from Luke Bemis, set forth in the House report, but also by the following extract from a communication to the committee from the Commissioner of the Internal Revenue, under date of April 30, 1874. As to the correctness of these assessments, it is to be ob

served that no tax or duty was on steamboats as such until the act of 3 March, 1863, which imposed on all steamboats (not including the engine) thereafter built, a tax of 2 per centum ad valorem, (12 Stat., p. 717,) and by the same act on marine engines 3 per centum ad valorem, (12 Stat., p. 716.) The next act, that of June 30, 1864, imposed the tax, not on steamboats, (not including the engines thereafter to be built,) but on the hulls of steamboats as launched, (not including engines and rigging,) thereafter built, made, constructed or finished, a duty of 2 per centum ad valorem." (13 Stat., p. 267.)

The act of March 3, 1865, amended the act of June, 1864, by striking out the paragraph relating to "hulls as launched," and inserting in lieu thereof the words "finished, including cabins, inner and upper works," (13 Stat., 476;) and further amended the same act by striking out the paragraph in relation to steam-engines, and inserting in lieu thereof the words on steam, locomotive, and marine engines, including the boilers and all their parts, a duty of 5 per cent. ad valorem. (13 Stat., 476.) The same act also, (sec. 5, p. 483,) provided an increase by one-fifth, or twenty per centum the rates of duty imposed in section 94 of the act of June, 1864, whether ad valorem or specific, with the exception of certain articles in no wise connected with ships or engines of any kind. (13 Stat., 483, sec. 5.) The assessment thus made, however obnoxious it may be to criticism, is explained by a communication from the Commissioner of Internal Revenue, who, in answer to the question by the committee as to whether the assessments made upon the steamers named in the bill by Otis Clapp, esq., formerly assessor of the fourth collection-district of Massachusetts, included with the values of the hulls of said steamers the values also of their upper-works, responded "that if the assessments were made in accordance with the provisions of the law in force at the time, and as those provisions were interpreted by the Commissioner of Internal Revenue, and embodied in printed instructions furnished to all local revenue officers, they were levied on the hulls of said vessels, including cook-house, forecastle, binnacle, cabin, and pilot-house, together with their masts and spars," and that these values were assessed upon such aggregate value. The Commissioner further states that the taxes assessed by Mr. Clapp were upon such aggregated values. Though he "has no means at hand of verifying the fact" he "has not the slightest doubt." Your committee, upon these statements made by the officer charged with the duty of directing the assessments, is satisfied that the taxes were assessed as stated by him. Upon the question of drawback, the same officer, in a letter to the committee of the 30th April, states "that, after the payment of these taxes, a claim was filed in this (his) office for a drawback under the provisions of the 171st section of the act of June 30, 1861. This claim was rejected by the Commissioner of Internal Revenue at that time, mainly for the following reasons:" The statute provided that there shall be an allowance on drawback on all articles' on which any internal duty or tax shall have been levied, except raw or unmanufactured cotton, refined coal-oil, &c.," "equal in amount to the duty or tax paid thereon, and no more, when exported." Now, under the first internal-revenue law, the act of July, 1862, no express provision was made for taxing vessels. If taxed at all, they would have had to be held liable under the general provisions of the 75th section "as articles, goods, wares, and merchandise," and the rate of tax would have been 3 per cent. ad valorem. But Mr. Boutwell, the first Commissioner, decided that under that law" vessels and steamers that are built and launched in the ordinary manner are exempt from taxation."

He did not deem it proper to assess and collect a tax upon a steamship as "an article," judging that if Congress had intended to levy a tax upon steamships or other vessels they would have more definitely indicated, as they did indicate in the amendatory act of March 3, 1863, such intention by them. In the absence of any express provision of law other than the general provisions of the seventy-fifth section, the Internal-Revenue Department refused to collect money into the Treasury, upon the construction that vessels and steamers are not sufficiently designated under the term "articles." With still greater propriety would it refuse to pay money out of the Treasury upon such a construction. Your committee entertain no doubt that the provisions of the seventyfifth section of the act referred to did not include vessels of any kind or description, for the reason that even if a steamboat could be regarded as an "article," it was not within the operation of the section which imposed duties only on such "articles, goods, wares, and merchandise," as were specified. The words are "upon" articles, &c., "hereinafter mentioned," and as no vessels of any kind are mentioned in the seventyfifth section, it follows necessarily that no vessel of any kind or description was subject to taxation under it. That the tax was illegally assessed. The result is, that as vessels were free from taxation under the provisions of the act of the 3d March, 1863, that no drawback or allowance could be properly made under it.

The act of June 30, 1864, provided that, from and after that date, there shall be an allowance or drawback on all articles on which any internal duty or tax shall have been paid, except raw or unmanufactured cotton, refined coal-oil, &c., equal in amount to the duty or tax paid thereon, and no more, exported, &c. (Stat. at Large, vol. 13, page 302,

sec. 171.)

In this act, however, the tax is imposed upon "the hulls, as launched, of steamboats" and "marine engines." (13 Stat., p. 268-9.) And if the taxes were paid on the steamers F. W. Lincoln, Edward Everett, and La Portena, in 1864 and 1865, the claimant is entitled to a drawback to the extent of the taxes thus paid by him upon the steamers and engines after the passage of the act: that is, on the F. W. Lincoln the sum of $1,124; the Edward Everett, $1,120; the La Portena, $2,520, on showing that these steamers were exported. This evidence is to be found in the certificate of the registry showing the exportation of the steamers as follows:

Register No. 51, issued at New York, July 24, 1865, of the steamer La Portena, 748.95 tons, "surrendered abroad," August 23, 1866.

Register No. 18, issued at New York, April 6, 1864, to the steamer N. P. Banks, 99153 tons, surrendered abroad March 24, 1867.

Register No. 75, issued at New York, November 30, 1866, to the steamer Edward Everett, 8049 tons, surrendered abroad July 1, 1868. As to the payments of the taxes assessed, your committee refer to the certificate of Otis Clapp, collector of the fourth district of Massachusetts, showing the assessment, and tending to establish the payment. As further evidence on this point, the committee have before it a communication from the Commissioner of Internal Revenue, under date April 30, 1874, in reply to a letter from the committee requesting information as to the payment of the tax of $6,574 assessed upon the vessels referred to; and, it so, whether it would be just and proper that the sum should be refunded by an act.

In reply to this question, the Commisssioner answers thus: "In reply, I have to inform you that while there is no direct evidence in this Office of the payment of this tax, inasmuch as the payments were made to the

collector of the fourth district of Massachusetts, there is still circumstantial evidence that such taxes were paid, which, to my mind, is entirely conclusive on that point.

"1. Those taxes all appear on the assessor's lists, which are on file in this Office, and which lists were certified to the collector by the assessor for collection.

"2. None of the taxes assessed upon the vessels and engines in question have ever been abated by this Office.

"3. The several lists on which the taxes assessed on the hulls and engines of the steamers N. P. Banks, F. W. Lincoln, Azalea, Edward Everett, La Portena, have all been closed and settled with the collector. They could not have been closed while any taxes remained unpaid or unabated, and, therefore, the taxes assessed upon McKay & Aldus must have been paid." The Commissioner further states that he entirely agrees with the report of the committee of the House of Repre sentatives that in justice and equity there is the same reason for the drawback of taxes paid upon the hulls and engines of those, as for drawback on agricultural implements or machinery shipped abroad, and believe it would be entirely just and proper for Congress to pass an act refunding to Messrs. McKay and Aldus the taxes so paid by them. Taking into consideration the facts as stated as a strong reason for refunding the entire tax, your committee think it but sheer justice to refund to the claimant the amount of the tax which was assessed with out authority of law upon the steamers N. P. Banks and Azalia. It adopts the views of the Commissioner of Internal Revenue and the rea sons of the House report in recommending to the Senate the passage of the bill referred to your committee.