From Tench Coxe
Revenue Office, December 11th 1792.
I have the honor to communicate to you some remarks, upon the laws relative to the duties on distilled Spirits, wines and teas, in regard to points which appear to require legislative interposition.
The Admission of Kentucky (late a Survey of Virginia) into the union as an entire new Member,1 renders it expedient to consider whether the Number of Districts allowed by the 4th. section of the act of March 3d 17912 should not be encreased to fifteen, subject to alterations by the President as before. Clauses giving the power to appoint a Supervisor and Inspectors therefor, with the usual power in the Supervisor (see 18. section)3 to appoint the subordinate officers of Inspection will become necessary, if Kentucky be erected into a district.
The territory of the United States Northwest of the Ohio, and that South of the Ohio will require that provision be made concerning them, being at present without the territorial limits to which the Presidents power (Section 4. Act of March 3d. 1791) of appointing Supervisors and Inspectors of the Revenue is extended.4
Although the Duties should seem to accrue in the North Western and Southern territories under the general Words “within the United States” yet the fourth section of the Act of March 1791 creates some question, when it declares that “the United States shall be divided into fourteen districts each consisting of one State” and thus leaves those territories out of the arrangement. There is danger at least that an ill use may be made of this Circumstance with a Jury interested to narrow the law, in a trial for a penalty or forfeiture. It may be well that the words “and the territories thereto belonging” should be added, and that the President of the United States for the time being should be generally authorised to make such temporary provision of districts, surveys and divisions and of Supervisors and other officers as future contingencies might require, untill order could be taken thereon by the legislature. For this purpose it might be well to create a duty to report such temporary arrangement to the legislature at the next ensuing session. The Case of North Carolina5 suggests that this power should apply to alterations of the districts and Surveys within the limits of the fourteen original States, which have been and thereafter may be made.
At present only the lowest rate of duty (seven cents) applies to Spirits distilled in places other than Cities, Towns & Villages, and in distilleries within Cities, Towns & Villages whose Stills are of less capacity than four hundred Gallons, whatever may be the proof,6 altho’ Spirits made in the other Town distilleries are charged with seven, eight, nine, eleven, thirteen & eighteen Cents. This when perceived will ruin the trade of the large town distilleries, who now pay more than three fourths of the revenue. On this part of the law two questions arise, whether it be not contrary to the constitution 1st to impose absolutely seven Cents on Spirits distilled in the class of large distilleries in Towns, and to vary and diminish it by the election to pay 54 Cents Annum on the class of small distilleries in Towns and on all stills in the Country, and 2dly to demand 18 Cents for 6th proof Spirits in the larger distilleries in Towns and only seven Cents for the same proof in all other places and distilleries. All excises and other duties are required by the Constitution to be uniform throughout the United States. Should this appear to be a bar against these differences in future, the Idea of a demand by the distillers of reimbursement for the time past will merit reflexion.
Questions having been made whether stills without heads will operate to prevent the extension of the Election to distilleries wherein they may be erected if with such Stills the capacity of the whole be above the privileged size (400 Gallons) and it being possible that the owners of Stills might by the secretion of the head, evade the penalties for non-entry and other provisions of the laws, it appears expedient to introduce an explanatory clause relative to such Stills.7
It has been thought by some of the officers of the Revenue that licences for terms less than a Month are consistent with the law, and by others that licences for one or more months with a fraction of a Month added are legal—that is for 1½ or 2½ Months. To prevent erroneous Verdicts the law might be rendered more precisely explicet. See Section 1 Act of May 1792.8 The same explanation is requisite in regard to the prohibition to distill otherwise than by licence of the Still, during all the remainder of a Year, for any part of which a Monthly licence shall have been granted.9
As the term during which entries of Stills shall be made has elapsed,10 it merits consideration whether a new term for that duty prior to June next should not be established by law, or whether a requisition to enter within a given time all stills which have not been marked, or at least exhibited to an officer of Inspection for the purpose of marking should not be made.
The lien on the Still created by the 8th Section of the Act of May 8th 1792 applies only to Stills paying by the capacity.11 It appears expedient to extend it to all Stills in which Spirits are manufactured.
The incomplete execution of the 9th section of the Act of May last,12 and the difficulty and importance of the operation required by that Section, attract particular attention. The exemption from certificates is extended to Casks (and of course to quantities of Spirits) larger perhaps than is necessary. The pack horses in the Western Country have usually two Casks of 10 or 12 Gallons for a load; and it is not uncommon for several to be conducted together. Tho’ it is desirable to leave tavern keeper’s supplies and family supplies as free from difficulty as is safe, yet it is equally desireable to bring all traders spirits under the regulations as far as may be practicable with convenience. It is therefore questionable whether large quantities conveyed in any Waggon, or by any troop of pack horses, or by any boat, should not be subjected to the requisition of certificates &c. tho’ in kegs and further, if more than one Cask and amounting to 12 gallons or upwards, (as well as if more than 20 gallons in a single cask as now) the Spirits might perhaps be as conveniently connected with Certificates as they are at present. There is however so much difficulty in devising a safe and certain method in which the marking of Spirits out of Cities, Towns and Villages can be effected as the law now requires, that it merits particular consideration and creates a desire that a duty upon the Still might be the only mode of imposing the Tax.13
The drawback is limited by the 11th section of the Act of May 1792 to quantities of 90 gallons and upwards.14 As a hhd put on board a Vessel for Sea Stores will very generally be from 95 to 120 Gallons, and as hhds or puncheons of 90 gallons and upwards are allways obtainable, it is plain that the drawback will be easily extended to Sea stores, to which it may be objected, that a consumption duty is thus avoided and lost, and a temptation to uncanalised proceedings in regard to drawback Certificates is created.
The 12th. section prohibits the importation of all distilled Spirits in Casks,15 which have been legally marked which would prevent the return of Spirits distilled in the United States from any foreign unfavorable market: but if this prohibition be repealed as it regards domestic Spirits, then by force of a clause in the impost or collection law no duty will be demandable, as they are Manufactures of the United States,16 and it is not clear that the law is sufficiently provisional to justify a second demand of excise on certified and marked Spirits, altho’ the duty will have been refunded on exportation.
It appears to be worthy of consideration whether the Spirits and Still ought not to be liable to forfeiture in all cases of manufacturing Spirits without having previously complied with the requisitions which the laws make in regard to the antecedent acts of the distiller. The 36th. Section of the act of March 1791 exempts the distillers employing one Still of 50 gallons or of less capacity, from the penalties prescribed for neglecting to report, to mark their houses, Vessels and apartments and to enter in books the Spirits distilled.17 The operation of this section is such, that, if uncertified Spirits should be proved to have been distilled in such a Still there would be no forfeiture: process could be instituted for the duty. It appears necessary to put such Spirits in regard to forfeiture, on a footing with all others. The extension of the regulations in regard to marking houses, and even as to marking Vessels and keeping books to Stills under or of 50 gallons also merits consideration.
The Supervisors and other officers have recommended strongly the allowance of fees for certificates and services in the business of the Revenue. Tho’ I mention this for information I cannot do otherwise than express my opinion against it.
The 41st. section of the act of March 1791 provides for Neglects of duty by the officers to the Injury of Individuals.18 A provision for similar Neglects to the Injury of the United States appears equally reasonable, tho’ it may prove more difficult to modify it satisfactorily.
The continuance of the 43d section of the Act of March 1791 being that relative to mitigations,19 appears to be recommended by the same good policy which dictated it, and the similar provision in the business of the Customs, and which continues in the latter.
Considering the state of things in several of the Surveys it appears to be worth reflexion whether the penalties for injury and opposition to officers should not be encreased and extended to cases of violent menaces and destruction of property. The laws against Arson are highly penal, but there are other modes of injuring the property of an Officer. A wooden house is easily pulled down and goods & chattels may be carried away.
It may be necessary that the regulations and provisions, which are applied to certain matters and cases in the 1st act be extended to similar matters and cases in the second and meditated Act, unless altered by them. There is already a penalty for making and using false certificates, but it is suggested for Consideration whether any pain or penalty should be provided for counterfeiting marks and numbers on Casks, Vessels and on Stills, or for defacing those legally made.
All the pains, penalties and general regulations concerning the certificates for and marks of Casks and Vessels containing foreign and domestic distilled Spirits appear to be applicable to the corresponding Objects in the business of Wines and Teas. Should this prove so on consideration it may be well to apply them by law.
Among the measures which are under consideration to effect the complete execution of the Revenue laws in the Western Counties of Pennsylvania &c the receipt of the duty in Spirits at some reasonable price is again suggested for Consideration.
Doubts have arisen in Connecticut and in some other Districts about the mode of proceeding by distress,20 wherefore clear and ample legislative directions and authority are desireable, and the more so because the subordinate officers of Inspection, from want of knowlege and Judgment in such proceedings, may innocently transgress in the execution of their Duties.
The Supervisors of some of the districts are desirous that the distillers should be required by law to call on the officers of Inspection at stated times and places to pay the duties on their Stills and Spirits after the manner, which they allege, has been long prescribed in regard to the dues of the State. This idea is strongly recommended and pressed in South Carolina.
It merits consideration whether the officers of inspection ought not to be restrained from granting a new license until the duty accruing under the preceeding one shall have been paid and whether a distiller and Still employed in the manufacturing of Spirits after such accruing of duty, the same being unpaid, ought not to be subjected to a penalty or forfeiture.
There is no doubt that some distillers or importers are in the practice of purchasing second hand marked Casks with the Certificates originally issued to accompany them.21 A penalty on such sales of Casks with certificates, and on the purchases thereof would have some good effects. I submit also the Idea of obliging the dealers and others to return their certificates after Casks have been emptied.
It remains to be considered whether the officers of Inspection should be prohibited from owning or working Stills, and from buying and selling distilled Spirits, Wines and Teas. A circular enquiry into the extent in which the facts exist has been made, and it does not appear to be considerable in any District.22 In some, the connexion between the office and the occupations does not occur at all, so far as advice has been received.
The 42d. section of the act of March 1791 restrains the commencement of actions or suits to three Months after the matter or thing shall have been done or performed, for remedy of which the same shall be brought.23 This time is short in a country of so sparse a population as the United States is, and especially where such and so many difficulties are thrown in the way of the execution of the Revenue laws.
The United States are in so much danger of suffering in their Revenues from the Drawbacks on the exportation of Spirits, that I submit the propriety of a provision that no greater amount of drawback shall be allowed than shall be proved by the exporter to have been actually paid upon the Spirits exported, deducting therefrom the allowance of half a cent Gallon, and adding the Value of the duty on Molasses.
It has been represented that the annual and even Monthly licences are too low, and I am of opinion that the representation is justified by a comparison with the rate of Seven Cents (a low duty) with what the commodity will bear with the duties on foreign Spirits and with what is imposed on it by other Nations. A distiller of candor and good character has on application declared that he made 460 gallons of proof brandy in two Months working night and day with a still of 40¾ gallons on cider and peach Maubee or Mauby. His licence cost him of 8.¹⁵⁄₁₀₀. Dollars, and the duty on the Spirit at seven Cents would have been 32.²⁰⁄₁₀₀ Dollars. This is 1.¾ Cents Gallon. The benefit of his extraordinary industry ought perhaps to be his own, but had he made use of the days only the duties would not have been more than three Cents. It is certain that grain does not admit of near so great a profit to the distiller, and that is much the most usual material. This representation however is only made for information at this time, as there appear to be strong dissuasives against an increase of the duty by licence.
It might be well to provide that a distiller, on rendering up his licence, should make oath that he has not worked beyond the term for which it was granted. No greater hardship occurs in requiring an oath from him than from the distiller who pays by the gallon. In determining on this point the objections to oaths, as well general as those which have been made by the opposers of the excise,24 will require to be considerably weighed.
A separate communication will be immediately made, in regard to amendments having relation to the Judicial System.25
I have the honor to be with great respect, yr. most Obedt. Servt.
Commissr. of the Revenue.
The Secretary of the Treasury.
LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives.
1. “An Act declaring the consent of Congress, that a new State be formed within the jurisdiction of the Commonwealth of Virginia, and admitted into this Union, by the name of the State of Kentucky” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 189 [February 4, 1791]).
Thomas Marshall, inspector of Survey No. 7 in Virginia, had apparently proposed the creation of a separate revenue district for Kentucky (Coxe to Marshall, October 31, 1792, LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives).
2. “An Act repealing after the last day of June next, the duties heretofore laid upon Distilled Spirits imported from abroad, and laying others in their stead; and also upon Spirits distilled within the United States, and for appropriating the same” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 199–214).
For Thomas Marshall’s discussion of the need for this change, see Coxe to H, October 19, 1792, note 22.
5. On October 27, 1792, Coxe wrote to William Polk, supervisor of the revenue for North Carolina, concerning the liability of distillers for taxes accruing after the effective date of the revenue acts but before the appointment of collectors. In this letter Coxe drew a parallel between the North Carolina question and the situation in the western territories (LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives).
6. Edward Carrington, supervisor of the revenue for Virginia, had raised a question concerning a change inadvertently made by “An Act concerning the Duties on Spirits distilled within the United States” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 267–71 [May 8, 1792]) which necessitated this interpretation of the rates (Coxe to Carrington, July 30, 1792, LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives).
7. On October 29, 1792, Coxe wrote to George Gale, supervisor of the revenue for Maryland: “It would be very agreeable, if the distiller in Baltimore would so dispose of the still without a head as to prevent the discussion and decision of the two questions concerning it. Ingenuity, which, tho’ not so designed have a tendency to contravene or diminish the efficacy of any law on the part of the citizen, or which for the security of the Revenue may force the officers to act upon rules apparently too nice and strict, will often produce unpleasant discussions between them. The Still must be more valuable as a still than it can be as a boiler, because cheap Iron Vessels may be procured and copper is very high. It would appear that a distillery with such a Vessel so set up as to be capable of use would be in a situation more dangerous to the Revenue than one which has not such a vessel, and a question arises where is the head? Stills are never made without heads, and the head is a thing not likely to be lost or mislaid. It is more likely to be secreted, or put away for a time in some other part of a distillers possessions from whence it might be brought at Night, and used to the injury of the Revenue. Moreover the 22d. section of the act of the 3d of March 1791, really countenances an opinion that a still set up in a manner admitting its application to boiling, may be considered as one employed because the boiling process is the distilling process. The allegation of the distiller, that altho’ the still is set up and thereby the specific legal Evidence of its employment appears, it is only a boiler and has no worm (which the silence of the law makes an indifferent Circumstance) nor head (upon which a question may arise as the 1st section of the last act is worded) does not appear to satisfy the statute. Other questions have arisen about still heads, and the idea has been suggested by one ingenious distiller of reducing the head comparatively to nothing” (LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives).
9. Carrington wrote to Coxe on May 27, 1792, concerning licenses for fractions of a month. In reply Coxe wrote on June 3, 1792: “That part of your letter which relates to the licenses is under Consideration. It seems doubtful however whether fractions of Months can be taken into View, for the original requisition is to pay fifty four Cents per. Annum with the provision of a right to pay another rate for a smaller term, or any number of that Term. A term less than that specified in the permission does not seem to be allowable” (LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives).
10. Section 2 of “An Act concerning the Duties on Spirits distilled within the United States” provided that entries of stills should be made “between the last day of May and the first day of July in each year” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 268).
12. 1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 269–70. For the provisions of this section, see Coxe to H, September 19, 1792, note 3.
16. Section 24 of “An Act to provide more effectually for the collection of the duties imposed by law on goods, wares and merchandise imported into the United States, and on the tonnage of ships or vessels” (1 Stat. description begins The Public Statutes at Large of the United States of America (Boston, 1845). description ends 162 [August 4, 1790]).
20. On October 24, 1792, Coxe wrote to John Chester, supervisor of the revenue for Connecticut: “The mode of proceeding in case of a resort to legal measures under several different Circumstances having been under Consideration a determination in the Case contemplated in the Opinion of John Trumbull Esquire was necessarily post poned. That Opinion appears to be well founded, and it is thought best that you pursue the mode of distraint by the warrant of the Supervisor of the Revenue in such manner and form in all respects as are indicated by the common law of England, as it stood on the 4th day of July 1776. Should you be at a loss about the form of a warrant of distress or any other part of the proceedings it will be well to take the direction of a gentleman of the law acquainted with the practice and statutes of Connecticut and with the common law of England that in pursuing a conformity with the latter, a collision with the two former may be avoided. It would certainly have been better, if the mode of levying had been pointed out and that Idea is noted for attention whenever the Revenue law shall come before the legislature” (LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives).
21. See Benjamin Lincoln to H, February 15, June 6, 27, 1792; Robert Purviance to H, June 14, 1792. See also “Report on the Difficulties in the Execution of the Act Laying Duties on Distilled Spirits,” March 5, 1792.
22. On September 27, 1792, Coxe wrote in a circular letter to the supervisors of the revenue: “An intimation has been given in one of the late Gazettes, that an application would be made to Congress to prohibit the Officers of the Revenue from being concerned in Distilleries, Stills &c. One case occurred some time ago,… and the requisite steps had been taken to ascertain the precise state of the case in order that such measures might be adopted as would prevent an Officer of the Revenue from being able to injure the United States by reason of his being engaged in a pursuit which would be attended with circumstances of such manifest danger. I am desirous of being informed by you whether any instances exist in your respective districts wherein an Officer of Inspection has any relation to or participation in the ownership or employment of any Still, or Distillery, or to or in the purchase and sale of distilled spirits, foreign or domestic. Early and particular information will be very desirable” (LC, RG 58, Letters of Commissioner of Revenue, 1792–1793, National Archives).