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3 4 REPORT OF THE SECRETARY OF THE TREASURY.

REPORT OF THE COMMISSIONER OF CUSTOMS.

T R E A S U R Y :D EPA RTMENT,

Office of Commissioner of Custoins, October 15, 1867. SIR : I have the honor to present you my annual report :

In the accounting branch of this bureau the number of customs accounts

re-ceived for acljustment during the fiscal year ending June 30, was 4,449

Number adjusted 4,278 Number returned to First Auditor 48

Number of estimates received 2,288 Number of requisitions druAvn 2,256 Number of returns received and examined : . . . 5,262

Number of letters received 1 5,143

Number of letters Avritten 13,430 Amount of requisitions made : $15,210,529 94

In the branch of captured and abandoned property and internal and coastAvise

intercourse the number pf accounts received was as follows 107

Number passed 126 Number returned to the Auditor 27

Number of letters received. 420 Number of letters recorded : 522 Number of letters written.' ' 512

Number of requisitions drawn , 103 Amount of requisitions made : . $3,430,867 48

I t will be ob?erved that the number of accounts is small,.but the amounts as shoAvn by the requisitions very large. They are of a most perplexing character, and involve great labor and careful investigation.

In my last annual report I spoke of the perplexity experienced by this office, calling for patience as well as care, OAving to the inexperience of most of the customs officers in the States lately in rebellion, and the difficulty of getting those sufficiently acquainted Avith business generally to^ acquire a knowledge of the rcA^enue laws and the duties of their respective offices. This perplexity has been considerably lessened by one year's experience, but has by no means wholly ceased. Tlie accounts of some of the officers in those States have been in great confusion, but order is gradually coming out of chaos. Another source of em-barrassment A\diich then existed and Avas mentioned in my last report, namely, the absence in some parts of those States of the proper law officers and courts Avhereby the revenue laAvs could be enforced, has been in a great measure removed by the resumption by the judicial officers of their respective duties.

I feel it my duty to call your attention to the fact that the compensation allowed by law to some of the collectors and other officers of customs in most of the States lately in rebellion is wholly inadequate to pay for the services of men competent to perform the duties of those offices ;• and the same remark ^ may be made in regard to the compensation alloAved by law to some officers of customs in other States. The salaries of these officers were fixed Avhen a very diflferent scale of prices for labor, rent, provisions, and clothing prevailed than (that which now rules the market^ in other Avords, when money was Avorth very much more than it now is, and would command a very large share more of the necessaries of life, especially that money or currency in Avhich officers of the government, except foreign-ministers and consuls, are paid. In some instances it has been impossible to obtain the services of competent men for the compen-sation allowed by laAv, and resort has been had to the plan of conferring double appointments and compensations, though the duties performed are those belong-Digitized for FRASER

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REPORT OF THE SECRETARY OF TIIE TREASURY. 35

ing to a single office only—a practice only justifiable upon the ground of abso-lute necessity. It has become necessary that the laws relating to the compen-sation of customs officers should be revised ; and I shall have the honor of submitting a bill for that purpose to you, to be submitted to Congress should it meet your approbation.

If it becomes me to speak of the officers of customs, T have great pleasure in saying that, Avith some exceptions, I can bear testimony of their competency, fidelity, promptitude, and earnestneS'S in perf irming the duties of their respective offices; and on the part of collectors, of requiring this of those under their supervision. As a general rule, I doubt Avhether the revenue laAvs were ever more rigidly enforced, and their duties more faithfully and efficiently.performed by the customs officers than thisy have been for the last two or three years. Most of the collectors have had several years' experience in their several posi-tions, which is no less necessary and important to the proper discharge of their duties than it is in other branches of busine.ss, professions, trades, agriculture, or the arts—an idea quite at A^ariance with the popular one, which is, that any-body can perform the duties of any. office, even without experience or training. Smuggling, the prevention of which is assigned to this offi*ce, has been less successful during the past year than it has been heretofore, since our high tar.fi" of duties upon foreign importations'so strongly tempted the cupidity of the smug-gler. I t has only been repressed, however, by constant, unremitted \ngilance on the part of customs officers and the special agents who have been necessarily employed to watch and counteract the smuggler, detect, his operations, seize him and his smuggled goods, and prosecute the cases in court. The moment this vigilance is relaxed, or the sentinels set to watch the operations of contrabandists withdraAvn, that moment Avould be seen, of felt, the same activity among those who prefer unlawful to lawful employment and gains, as existed before they were so closely watched, and so relentlessly pursued, arrested, and prosecuted. They are only intimidated, not annihilated; their name is legion, and they swarm along the whole frontier.

Special agents and detectives, acting under my instructions, have, during the past year, been very successful in ferreting out and bringing to light case's of smuggling which had been successfully accomplished one, two, and, in some in-^stances, three years before—among these some large operations—in all of which

the evil doers have been compelled to disgorge not only their ill-gotten gains, but in some cases large sums besides. Detection, in these instances, has come upon them Avith chilling surprise. They had flattered themselves that time had obliterated their tracks, and that their large profits Avere secure in their vaults, or as investments in other operations; but to be suddenly and unexpectedly con-fronted by an officer ofthe law, in their fancied security, and compelled either to *' own up," and compromise as best they could, or be bound over to court, was such *'a change of the spirit of their dreams " as they had not calculated on. Those who have thus been overtaken are not likely to re-engage in similar illegal transactions. Many a wholesome lesson of this kind has been inflicted during the past year, to the great benefit of the public treasury. Bnt smuggling has not ceased; it has sought other and more devious roads than those heretofore tra-velled, and is carried on in a more systematic way "by those who undertake it on a larger scale, and with corresponding capital. I have reason to believe that extensive combinations have been formed by men in this country and iu Europe, who have large means • at command, to run foreign goods into this countVy without the payment of duties. Indeed, those combinations have existed for some time past, and they have probably been, to a considerable extent, success-ful in their operations.

The facilities for smuggling afi'orded by ;the gieaticxtent of our frontier, and its peculiar and varied nature, have been fully portrayed in former reports. ,They are apparent to the most casual observer,; but no one can fully realize Digitized for FRASER

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36 REPORT OF THE SECRETARY OF THE TREASURY.

them who has never travelled along our northern boundary line from Eastport, lyiaine, to Port Angeles, Washingtou Territory, a distance of from three to four thousand miles, or who has never attempted to stop blockade-running along our. southern coast. But perhaps, after all, the port of NCAV York—a labyrinthine world of itself—affi^rds as great, if not greater, facilities for defrauding the revenue, by evading payment of duties, as any other locality; and I have reason to believe that the most of what is done there is done on a large scale.

Tt has been found ineffectual to rely upon the ordinary officers of customs for the prevention of smuggling—to ferret out, pursue, arrest, and bring to justice the!?e violators of the laws, to procure the necessary testimony to convict them— in short, to enforce the law and its penalties upon them, to do which often requires months of labor, hutidreds of miles of travel, and a considerable expen-diture of money. This cannot be done by ordinary customs officers, Avhose duties require them to be daily on duty at the same place. Even collectors are unable to give the time and attention necessary to perform this peculiar work— a work requiring special aptitudes for its successful accomplishment which few collectors, and few men, possess.. I have, therefore, been compelled, by neces-sity-, to ask for the appointment of and to employ special agents, assistant agents, and inspectors, Avhose labors haA^e been arduous, incessant, and highly success-ful. True, they are stimulated by the hope-of pecuniary reward, namely, the share allowed by law to the informer, out of all fines, penalties, and forfeitures; but who is not stimulated by the hope of gain ? Who can be expected to work for the public night and day, in hot weather and in cold, in fair weather and in foul, often exposed to its inclemencies for many days and nights at a tirae, for the mere pleasure or honor of serving the government?

Tho'employment of this force has* been somewhat expensive; but the table here presented Avill show that their employment has been profitable to the gov-ernment, as comparing receipts and expenditures. They have caused much more to be paid into the treasury than the payment of their expenses has taken out of it. But besides what has been paid into the treasury through their instru-mentality, they have been the means of large amounts of duties being paid which would not.have been, but for their vigor and vigilance in detecting, pursuing, arresting, prosecuting, and causing to be punished, those violators of the laws. Wherever they have operated they have given the shmggler neither peace nor rest.

You Avill observe that this table does not show the money paid into the trea-sury as compromises and compositions, Avhere no merchandise has been seized, Avhich amounts to a large simi, not less, probably, than $200,000.

You will note that the labors of those Avho have been employed in the pre-A^entive service, under my instructions, haA'e been exclusively upon terra firma; I have control of no means Avhatever of pursuing smugglers on the water. The revenue cutters, Avhose object, in part, at least, it is presumed, is to perform this serAnce, are in no degree under my control. That many of these cutters have done, any thing to prevent smuggling, I presume will not be claimed by their ofiicers, not from want of inclination, perhaps, to render service, but from their Utter unfitness. The vessels, or steamers, used as revenue cutters are altogether too large for the service. They can be seen afar off by the small craft, by means of winch smuggling on the coast is done, and long ere the cutters can descry the latter they have taken shelter behind some island, run into some inlet, bayou, or river, within ten miles of Avliich, perhaps, the cutters cannot approach. W h a t is needed, .in place of the.se large and very expensiA'-e steamers, is small, light-draught boats, that have speed enough to overhaul any water craft, and which will require not more than five hands to man them. With such crafts, smuggling along the coast may be prevented ; with those now in the service, never. Econ-omy and efficiency both, I think, require that the prei?eva boats, with a few excep-tions, should be replaced by such a^i 1 have indicated. ' Large boats, such as the Digitized for FRASER

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REPORT OF THE SECRETARY OF THE TREASURY. 37

Mahoning, at Portland, should be retained at some ports to render service to ships in distress; but for the purpose of preventing smuggling they are of little use. In some localities on the lakes, small, light-draught, fast boats would be emi-nently useful; and especially would they be on the St. Lawrence, the Detroit, tiie Huron, and the St. Mary's rivers, where nothing but these can prevent illegal traffic being carried on almost ad libitum. •

Statement shovnng the estimated value of seizures made in the various collection districts of the United States, during the fiscal year ending June 30, 1867 ; also the additional expense incurred thereby.

District. RaDQ:OX . B a t h . Belfast . . . , F r e n c h m a n ' s b a y . -K e u u e b u i d c . . . . - . M a c h i a s P a s s a i n a o noddy - - . . . . C a s t i n e -P o r t l a n d a n d F a l m o u t h ". Saco .' W a l d o b o r o u g h W i s c a s s e t ^ Y o r k . P o r t s m o n t h , N . H V e r m o n t Bristol a n d \ Y a r ; e n Newport . - - . . : P r o v i d e n c e .:. ' Fairfield : . . Midd letovvn '... N e w H a v e n N e w L o n d o n Stonino'ton , . B a r n s t a b l e

Bos ton and Charlestown . . . . * • •. E d e ' a r t o w n F a l l R i v e r . Gloncester • . . f^ Marblehead . . . N a n t u c k e t . . . ' N e w Bedford NewbnrvDort P l y m o u t h . . . . Salem and B e v e r l v Buffalo Creek Cham plain D u n k i r k Genesee N e w York N i a g a r a •. /. O s w e g a t c h i e Oswego S a g H a r b o r . . •. B r i d g e t o w n . . . B u r l i n g t o n

Great EP'J'" HarV)or L i t t l e E P ' P ' H a r b o r N e w a r k : • . . . . . P e r t h A m b o y E s t i m a t e d v a l u e . $ 3 , 2 8 1 . 0 0 2,5:-59 00 55 58 33 70 3, 942 85 8,680 54 16,125 00 15,626 27 15,400 00 3,764 .36 56,984 08 7,680 00 3,200 00 ' 135 05 • 303 00 4 1 , 9 5 4 49 286 00 25 00 5 , 4 3 3 00 147 96 14,213 40 12,725 40 21,990 20 96 63 4, 807 48 731,070 35 15,557 08 18,274 22 . 2 , 8 6 9 00 271 48 Additional e x p e n s e . ••$4, 527 34 12 38 18 92 7.64 82 1,766 25 1.2,287 50 248 S6 389 92 15 00 2, 676 50 912 .50 130 00 112 .50 4 , 7 5 9 30 3 , 8 4 5 75 2,131 02 , 563 25 11,709 16 2 , 7 3 7 50 5,195 50 ;^-188 50 118 00

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38 REPORT OF THE SECRETARY OF THE TREASURY. Statement showing the estimated value of seizures, h^c.—Continued.

District. Philadelphia, Penn. Erie, Penn Delavyare. . : - . Georgetown, D. C Annapolis •Baltimore Easton Alexandria C herrystone Ricbmond

Norfolk and Portsmouth Petersburg Tappahannock York town Beanfort Pamlico ' Albemarle Wilmington Beaufort Charleston Georgetown

Brunswick, Ga., (no report.). Savannah, Ga

St. Mary's, Ga

Mobile, Ala •.. Pearl River, Miss

Natchez, Miss Vicksburg, Miss New Orleans, La Appalachicola, Fla. Feri.iandina, Fla • Key VVest, Fla

Pensacola, Fla St. Augustine, Fla St. John's, Fla

St. Maik's, Fla ' Brazos de Santiago, T e x a s . . . Saluria, Texas, (no report.).. Texas, Texas

Paso del Norte, Texas Cuyahoga, Ohio Miami, Ohio Sandusky, Ohio Detroit, Mich Port Huron, Mich Michilimackinac, Mich.... Michigan, Mich

Chicago, 111

Milwaukee, Wis - .

Minnesota . . ' . San Francisco, Cal

Oregon, (no repoi t.)

Pugei's Sound, Wash. T e r . . . Montana and Idaho

Special agents Special inspectors . -Estimated value. 114 00 1,198 44 110 00 3,440 59 8,777 87 317 70 187 35 "iai'oo 218,443 39 3,710 00 687 42 299 04 231 00 198 98 7,850 23 5,460 00 226 56 15,114 59 4,79i 15 6,609 60 5,400 00 35,252 52 1,050 00 139 30 137,355 83 3,511 72 1,268, 140 40 Additional expense. 1,298 17 571 55 587 48 38 07 39 39 26 00 178 10 14 94 9 00 6 00 95 51 135 50 769 00 7,742 85 264 00 8 50 1,199 83 246 38. 41,401 58 6,840 67 ° 116,582 99.

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REPORT OF THE SECRETxlRY OF THE TREASURY. 39

The foregoing statement, it will be observed, is somewhat incomplete, as from many ports no returns of seizures haye been made; but it gives a pretty correct idea of Avhat has been done during the past year, and the extra expense incurred in protecting the revenue. In my annual report last year I took occasion to remark that in putting down smuggling, much depends on the manner of en-forcing the laws upon those who are detected, arrested, and brought before the United States courts; that the mere forfeiture of the goods, or the imposing of light, trivial fines could never put a stop to this nefarious practice, I am now glad to believe that the courts, generally, before whom these offenders .are brought take the same view of the matter, and that it is only in exceptional cases that the convicted smuggler will find the court disposed to deal leniently with him. This will greatly aid the labors of the officers whose duty it is to protect the revenue.

By the act of 2d March, 1799, he Avho gives inforraation upon which for-feitures are made for violations of the revenue laws is entitled to one-fourth of the amount of such forfeitures, after deducting the necessary expenses. It has been by means of this incentive that so large an amount of smuggled goods have been seized during the past 3^ear; withdraAV it, and smuggling Avill become not only a highly profitable business, but one that may be prosecuted with comparatively little risk. I t is this hope of gain thus held out Avhich induces the. inhabitants, farmers and others, along the frontier, to give information to special agents and other officers of customs of smuggling going on near.them, or Avhich is intended to be effected. They give this information invariably under an assurance that their names are not to be made known, otherwise their property, if not their liA'es, would be in peril.' Withdraw this inducement, and their lips Avould be sealed and the smuggler secure.

I make these remarks because the act of March 2, 1867, does, in part, and to a very great extent, withdraw this inducement, and if it shall remain in force will greatly embarrass the preventive and protectiv^e operations of the customs (officers. I.most earnestly, therefore, recommend that Congress be asked to repeal said act, or so much of it at least, as materially changes the act of 1799, which has long proved so. beneficial and justified the wisdom of its authors.

The transfer to this office, from the Secretary's, of an. important branch of business, that relating to the warehousing of goods and keeping the warehouse accounts, creates the necessity of having six additional clerks. Of these, two should be of the fourth class and four of the third class.

I have respectfully to ask fbr a reclassification of the clerks of this bureau, and for an assistant messenger. This, you are aAvare, is one of the three revising bureaus. All accounts relating to revenue from customs, or Avhich haA^e to be paid out of appropriations to pay the expense of collecting revenue from cus-toms, which include customs accounts proper, marine hospital accounts, light-house accounts, accounts for the building and repair of custom-light-houses, and revenue-cutter accounts, after being audited by the First Auditor, are revised (and corrected if necessary) by this office; and it is a singular anomaly in offi-cial business that clerks of the first and second classes in this office revise and correct accounts which have gone through the hands of clerks of the third class in the P^irst Auditor's office. The law now authorizes in this bureau the follOAV-ing number of clerks, riamely : seven of the first class; nine of the second; six of the third; and two only of the fourth. I respectfully recommend that this number may be classified thus, namely : five of the fourth class; eight of the third ; eight of the second ; and .three of the first.'

Very respectfully, your obedient servant,

N. SARGENT, Commissioner of Customs.

Hon. H U G H MCCULLOCH,

Secretary of the Treasury^ ^ . Digitized for FRASER

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REPORT OF THE SECRETARY OF THE TREASURY.

31

selves, but, as x^recedents, iiwolAdng large amounts; and these require much and careful inA^estigation, as AA'CU of the common laAv and their

bearing upon the treasury and the xûblic Avelfare, as of the acts of Con-gress aild the dex3artiiiental xî'ccedents and regulaltions. As the xêriod of the Avax recedes, the claims arising out of it become more intricate, and the evidence in sux3X3ort of them more difficult to obtain. They are still Aêry numerous, and much time, labor, and money Avill yet be required for the settlement CAên of those over Avhich the laAvs liaAê giAên the executive dex3axtment jurisdiction.

Resx3ectfully submitted:

J. M. BRODHEAD,

Hon. HuaH MCCULLOCH, Comptroller,

Secretary of the Treasury,

REPORT OF THE COMMISSIOJS^ER OF CUSTOMS,

TREASURY DEPARTIVIENT, O F F I C E OF COJMMISSIONER OF CUSTOMS,

• ^ October 28, 1868. S I R : In comx3liance with the law and the regulations of the dex3axt-ment, I have the hoiior to x^resent to you my annual report of the opera-tions of this bureau, and such remarks and suggesopera-tions as I.deem x)ropex on the occasion. .

The following is a statement of the ordinary business x^erformed in the office of Commissioner of Customs from June 30, 1867, to July 1, 1868: Statement of customs accounts received and disposed of during the year

ending June 30, 1868. Period^ J u l y 18fi7 August, '867 September, 1867 October 1867 November, 1867.. December, 1867 J a n u a r y , 1868: F e b r u a r y , 1868 March 1868 .A.pril 1868 May, 1 8 6 8 - . . . J u n e , 1868 T o t a l s On h a n d J u l y 1,1867.. T o t a l ^3 > 8 < 417 291 ,351 408 . 402 •328 . 381 473 401 469 ,. 442 523 4,886 284 .5,170 p fl P < 488 , 284 296 476 393 332 384 445 441 479 414 504 4,936 fl u f-l fl •fl 2 fl rs < 3 3 6 5 8 6 3 . 10 4 3 6 8 65

i

3

1,443 1,310 880 863 . 1,117 918 . 880 983 991 1,176 1,215 1, 016 12, 792 > 9

. i

t

376 219 249 246 422 327 ; 325 366 907 901 901 809 6, 048 c' 1, 332 692 775 1,006 980 747 1,140 759 1,047 824 809 957 11,068 'O S f l fl^ 334 •209 214 218 289 .335 31.8 417 381 419 364 417 3, 915 • . 2 205 165 228 184 235 249 29 L 155 ' 258 179 138 244 2,531 Amoun t o f requisi -tions . $1,548,014 06 911, 705 57 1, 086, 292 59 849 171 54 1, 228, 521 40 1,251,590 75 1,169, 337 54 668, 545 96 1,159,307 62 953 416 32 1, 087, 4^5 63 1, 425, 403 67 13,338,792 65 DUTIES REFUNDED.

The ^nount of duties refunded diiriug 1868^wa& $154^.854 67.

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32 REPORT OF T H E SECRETARY OF T H E TREASURY.

CAPTURED AND ABANDONED PROPERTY AND INTERNAL AND COAST-AVISE COMMERCIAL INTERCOURSE ACCOUNTS.

In the division of captured and abandoned x3i'OX3ert3^ and internal and coastwise commercial intercourse, the number of accounts receiAêd and adjusted Avas as folloAvs: Accounts receiAêd, 92; accounts adjusted, 95; amount, $2,861,648 55; accounts returned to Auditor, 5; letters receiAêd, 238 • letters Avritten, 225; letters recorded, 818; requisitions, 156; ainount of requisitions, $311,776 9.9.

In addition to the ordinary current AVork of the diAdsion during the six months ending on the 30th of June last there Avas performed the folioAving: Rex3orts written, 35 ; x3a;X3ers copied, 197; pax3ers transmitted, 420; X3ax3ers filed, 5, 673. These accounts are-many of them Aêry coinx3li-cated, and owing to the fact of the transfer of a large amount of property and money from one agent pf the department to another, and the X3eculiar relation of the military commanders in many districts i;o the treasury agents, it is often necessary in the examination of one account to xârtially examine scAêral others. The Aêry imperfect condition in Avhich many of these accounts reach the office, arising doubtless in a great measure from the unfavorable exigency in Avhich the agents Avere often placed and the length of time Avhich has elapsed since the serAdce Avas rendered, adds very much to the perplexity and labor.

In scAT^eral cases agents have failed to render any account, or have done so in such an imperfect manner that it has hitherto been impossible fbr the Auditor to state an account. In some instances this has occurred Avhere it is believed considerable amounts are involved.

AVAREHOUSE ACCOUNTS.

By your direction a diAdsion Avas organized in this bureau in the month of September, 1867, for the x^urpose of adjusting and keex3ing accounts with collectors of all merchandise Avarehoused and withdraAvn foi' con-sumption, transportation, or exportation, and of the bonds taken in pur-suance of laAv and the regulations.

PrcAdous to that time many collectors had failed to render any account of their Avarehouse transactions, AAdiile others rendered their accounts so imperfectly as to render them of little or no A^alue. To insure a strict accountability on the part of collectors, as Avell as to trace merchandise from the time of importation to the final payment of the duties or its exportation Avithoiit the limits of the United States, and the taking and cancelling of bonds, a circular Avas issued with your ax3proval X3resciibing to collectors a uniform mode of rendering their accounts monthly. Blank forms were printed and distributed to collectors and survej^ors.

Grreat difficulty has been encountered in obtaining the x3rox3er accounts from collectors, owing to the defectiA^e manner in which their books Avere kept and the AA^.ant of knowledge and skill in the art of bookkeepin g.

Books have been opened in this office dating from the 1st of July, 1867, in Avhich collectors and surveyors are charged Avith the duty on all merchandise entered for Avarehousing or rcAvaxehousing, and credited on all merchandise AvithdraAvn for consumption, transx3ortatioii, or exportation; and chaxged A\dth all bonds taken for transportation or exportation, and credited AA^hen the bonds are legally cancelled or deliv-ered to the district attorney for prosecution. Ko Avarehouse accounts wereTeceived from the First Auditor for adjustment until the first of February last, since Avhich time there liaA^e been adjusted in this office, up to the end of the fiscal year, four hundred (400) accounts. Five hun-dred and thirty (530) letters, have been received and tAvo hunhun-dred and tAventy-six (226) letters written in relation to those accounts. Pains Digitized for FRASER

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REPORT OF THE SECRETARY OF THE TREASURY. 3 3 has been taken by Adsiting various custom-houses to instruct collectors as Avell as to cause proper books and registers to be kex3t; and although it was difficult, in some instances, for collectors and their clerks to com-prehend the system of keex3ing the accounts, that task has been fully accom.x3lished, and the system is Avorking in a most satisfactory manner. By this system every bale of goods bonded for transx3ortation or exporta-tion is kex3t, as it Avere, under the eye of this office until it is finally dis-posed of and the duties thereon paid, if delivered for consumption, or the merchandise is landed abroad.

A s a general rule accounts are well kex3t and x3romx3tly rendered by collectors of customs; and this is OAving in no small degree to the fact that a large xôrtion of the collectors of customs, their deputies and clerks, in Avliat may be termed the loyal States, have acquired experience and a knowledge "of their duties by having been in their xêrforinance duiing a longer period than has, for some forty years x^^st, been iêr-mitted by the mutation of parties and the demoralizing rule of ^^ rotation inôffice^^ even among those of the same political affiliation. In some few collection districts xêtty and disgraceful personal and political squabbles —a desire on the x^'art of an asx3iring x3olitician to attain or retain a high position by the aid of government x>atronage disx3ensed by him through the hands of a pliant fidend—haAê caused changes in custom-house offi-' cers which in scarcely any instance liaAê improved the condition of the office, but in most cases proved injurious to the interests of the gOAêrn-ment, and, if I may use the expression, liaAê demoralized the accounts as Avell as the force employed in and about the custom-house. Still, as a general rule, it is the opinion of those who haAê long been familiar Avith customs afiairs, as well as my own—and I take great x^leasure in express-ing it—that there has been no time within the xâst thirty or forty years Avhenthe duties devohdng on collectors, naAâl officers, surveyors, dex3uty collectors, &c., &c., haAê been more faithfally and efficiently performed than they now axe.

This tribute from me is justly due to that highly meritorious class of public servants through Avhose hands come the reA^enue with AA^hich to X3ay the interest on our sacred x'>iihlic debt, and maintain untarnished the honor of the nation. But there are, unfortunately, excex3tions to this rule, of AAdiich I shall have occasion to sx3eak hereafter.

In regard to the accounts coming from officers of customs in the States lately in rebellion, I can only say that in most cases they are'quite satis-factory; in some admirably well kept and x^romptly returned; in others less satisfactory, but CAêrywhere an imx3roAêment is x^î'cex3tible Avliere the collector has been long enough in office to acquire a knowledge of his duties, or has a deputy wdio has had exx3erience enough to become, familiar Avith the revenue laAvs and the mode of keeping the accounts.

The accounts of collectors in the States lately in rebellion, prcAdous , and up to the moment of the rebeUion, haAê been a source of no little X3erplexity. In some cases they haAê been rendered ux3 to March, 1861; in others the collectors ceased to consider themselves as officers of the United States sometime prcAdous to that x:)eriod, and paid the moneys in hand over to the States to which they respectively belonged or to the ^^confederate" government. In some instances collectors there haA-e honestly X3aid the balances standing atgainst them at the time their States rebelled; and in one instance the collector receiAdng a draft from the Treasury Dex3artinent on the United States disbursing agent or deposi-tary, who refused to xây said clraft as the State had seceded from the Union, returned the draft to the dex3axtme.nt and X3aid the exx3enses Avhich had accrued and Avere to be met by this draft out of his own funds. By his accounts, correctly rendered, there is a balance of some four thousand

3 T Digitized for FRASER http://fraser.stlouisfed.org/ Federal Reserve Bank of St. Louis

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34 REPORT OF THE SECRETARY OF THE TREASURY.

dollars due him from the United States, AAdiich. accrued X3revious to the rebellion. In strict justice this ought to be x^aid; but the x^ayment is prohibited by the joint resolution of Congress of March 2, 1867.

Isdt the duty of this office to take thex3rox3er stex3S to. have all balances standing in faAôr of the gOAêrnment in those States at the breaking out of the rebeUion collected by process, of laAv, while payment of balances in favor of collectors is to be refu-sed'? Another question also arises: up to AAdiat time shall collectors in those States be held responsible to the United States; and, further, Avhere such collectors were compelled to pay moneys in their hands belonging to the United States to the States in which they respectively resided or to the confederate gOA^êrnment, can they be compelled to pay such moneys to this government'? I put the latter question, because it has in one case been decided by Judge Bryan, of the United States district court of South Carolina, in the negative, the court holding that the defendant Avas comx3eUed-by a X30wer AA^hich he could not resist and against Avhich the United States were unable to protect Mm.

If these balances are to be collected, proceedings should be instituted soon; otherAvise the bondsmen, in most cases, Avill be found to be x30or secuiity, as they are IIOAA^ in some instances, and the X3rincipals no better. • I liaAê again, as heretofore, resx3ectfully to call your attention to the complexity ofthe laAvs relating to the reAênue from customs. The acts X3assed by Congress in 1799 relating to this subject were, it is under-stood, draAv^n up with much care by some one or more fully conversant Avith the subject, and were, for the circumstances of the country and the condition of our commerce and navigation, as perfect a system as could be dcAdsed. But a long period of time has elapsed since then, and most remarkable changes have come over the country, demanding from time to time changes and amendments AAdiich have again and again, perhaps, been changed and amended, until AA^hat was once a comx)lete and admira-ble system, AAôrking most harmoniously, has become such a x>iece of comx3lex and mended inachinery as to make it A'cry difficult to compre-hend its Aârious xârts and much more to reconcile their incongruities.

To amend these would seem to be but putting patch upon patch with out improAdng them. The task,of adapting them to the present condition of the country by amendments is a hopeless one; the AA^hole should be recast in a ncAv code, and this could only be properly done by men who have had much experience in administering these laAvs, and who have had opportunities to observe and most sensibly to feel their defects, and Avho have the abiUty, natural and acquired, to perform the task in a manner creditable and beneficial to a nation second to none in commer-:cial importance and the extent of its navigation. If not thus performed, they had better remain as they are, much as they need codifying.

A t the time these laAvs Avere chiefly enacted, the channels of commerce were confined to bodies or streams of Avater, and ports Avere established where Aêssels arrived; UOAV, commerce breaks aAvay from these channels and SAveex3S over x^lains, mountains and A'âlleys, AvhercAêr it listeth; centres of trade and commerce sxpiing up far from Avater-coui'ses, and it nOAV becomes necessary to establish port§ of entry upon those overland commercial highways, and to proAdde for inspecting foreign goods imx3orted in cars, and treating these in the same manner that AA^C treat

foreign A^essels laden Avith merchandise. . I t i s my duty to bidng to your notice, that it may be presented to

Congress, the subject of compensation to officers of customs as xn'OAdded for by existing laws. The policy of the government in its earliest stages, as manifested by the passage of the*acts of 2d March, 1799, was that, as a Digitized for FRASER

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general rule, the offices of collector, naAâl officer and surveyor, AAdiere the two latter existed, should be self-sux3porting; that is to say, that such officers should be paid by the fees and commissions, fines, xênalties and . forfeitures xeceived. In cases where it Avas sux3posed that these sources of emolument AVOuld not furnish an adequate comx3ensation, a small salary Avas added; but there was no limitation or maximum of compensation fixed. The collector took all the fees and his commissions, no matter what they might amount to, and xâid aU the expenses of the custom-house, excex3t the comx3ensation of insx3ectors, which was then, as now, X3ayable out of the reAênues.

This act was materially altered by the act of 7th May, 1822, by which the comx3ensation of collectors AAâs limited, and they Avere required to render an account of aU the fees receiAêd. Yarious acts haAê since been passed i n regard to comx3ensation, not regulating it by any uniform rule, but making it almost as multiform as, the number • of officers emx3loyed. The compensation of nearly all the collectors was estabhshed at a period when the doUar of oui^ currency bore a very different relationshix3 to a bushel of wheat, corn, rye and xôtatoes, and a day's labor from Avhat it does now. The fees, too, Avhich furnished an imx3ortant portion of the compensation of collectors, Avere established in 1799, Avhen one dollar, for aU exchangeable purposes, Avas worth as much ^s four axe now. This dex3reciation in the Aâlue of our money, CAên gold and sihêr, has ren-dered it necessary to resort to exx3edients from time to time to carry on the business at some xôrts Avhere all the sources of emolument Avere wholly inadequate to defray the necessary incidental expenses of the office.

These exx3edients haAê had a tendency to throw the whole system into confasion, and to render it extremely x)erplexing and difilcult to keex3 the accounts in a x)roper condition; and furthermore, they liaAê substituted to some extent the discretion of the Secretary for a fixed rule of laÂv..

You are aware that in the act of 7th May, 1822, deputy collectors at all other than certain enumerated X30rts Avere aUoAved a comx3ensation not exceeding $1,000 per annum; the act declaring that siich dex3uty should not receiAê more than that sum in any one year "^^for any serAdces he may perform for the United States in any office or cax3acity.'' And yet, as our currency depreciated, it became imx30ssib]e to obtain the services of any man competent to perform the duties of a deputy collector for that compensation, and so, in spite.of this laAv, deputy collectors were also ax3pointed inspectors of customs, and thus xâid tAvo salaries, amount-ing in scA'cral cases to more than tAvice the com|3ensa.tion fixed by iav\'. The only justification of this, in my judgment, is that "necessity knoAvs no law." Such cases imx3eriously demand legislation; ancl legivSlation is needed to re-establish system and.proper rates of compensation to every grade of customs officers. In some cases the comx3ensation of the col-lector is a fixed sum, exclusiAê of fees, all of AAdiich he is to xây into the treasury; but the comx3ensation thus allowed is scarcely sufficient to Xây the simx>le board of a single x^crson, and no inducement to any coinx3eteiit indiAddual to accept the office, as, if honest, he must leaAê it poorer than when he AAênt into it, whether he holds it one year or ten.

COMPENSATION OF NAVAL OFFICERS AND SURVEYORS. Under and by Adrtue of the 5th section of the act of March 3, 1841, naval officers and surAêyors have claimed, and haAê, until within a year or two, receiAêd an annual compensation of $2,000 a year, OAêr and aboAê the comx3ensation alloAved them by the act of 7th May,, 1822. The question whether they were entitled to this additional comx3ensation came ux3 soon after I entered this office, and Avas decided by me in the Digitized for FRASER

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6b REPORT OF THE SECRETARY OF THE TREASURY.

negatiA^e. The subject, with my diecision, was, howcA^er, referred to the Secretary of the Treasury, Avho referred it to the Solicitor of the Treasury for his ox3inion. The Solicitor concurred with me, and the Secretary took the same AdcAV of the law, but soon after sent an. order susx3ending the ^ carrying of that decision into effect.

Since then the question has again been considered, and a similar decis-ion made here. " It Avas then aêferred to the Attorney General for his ox3inion, AAduch Avas given sustaining my .OAAm. These officers are now allowed onlj the compensation provided b}^ the act of 7th May, 1822. With this they axe, and have reason to be, dissatisfied, as by that act the salary of the surAêyor at ISTew Yoik and Boston is less^than that of a dex3uty collector, and less than that of some of the clerks. It is my duty, hoAvcAêr, as it is the duty of all executiAê officers, to execute the laAvs as wefind them; i t i s for Congress in its Avisdom to say AAdiether the laAvs shall be altered or not. I respectfuUy suggest that so much of the 5th section of the act of the 3d March, 1841, as relates to the com-pensation of coUectors, naAâl officers, and sui'Aêyors be repealed, and an act xâssed regulating the Avhole subject of compensation.

The per diem of insx3ectors of customs is limited by law to four dollars a day; in some localities two and a half or three dollars a day is a fair coinx3ensation; but in others. New Orleans and other extreme southern X3orts, four dollars is an inadequate remuneration for the sei'A'ices of men of sufficient capacity, x3robity, and actiAdty to xêrform the duties of an tiispector as they should be performed, in a climate AAdiere out-door duties such as those x^îformed by insx3ectors axe almost certain, duringthe summer months, to subject the officer to serious, exx3ensiA'e, and, in many cases, fatal sickness. Besides, officers inadequateh' xâid can hardly.be expected to shoAv that zeal, Adgilance, and alacrity in the performance of their duties Avhich is desira.ble and CAên necessary for the xH'otection of the revenue, and may at times be strongly tempted to.makeup deficien-cies by coiiAênient blindness, to the great loss of the government. If an officer is expected to be aboAê tem.x3tation he must be kept aboAê Avant, though, unfortunately' this does not always secure the gOAêrnment against indifierence and unfaithfuUiess.. i

, ' SURAHEY^ORS OF CUSTOMS.

A t each of the ports of Boston, l!^eAv York, Philadelphia, Baltimore, JSTCW Orleans, and San Francisco a large force of insx3ectors is emx3loyecl under the general sux3erintendence of the surA'eyor.

'The 21st section of the act of 2d March, 1799, declares that " t h e siir-Aêyor shall superintend and direct all i.nsx3ectors, Aveighers, measurers, and gaugers within his port, and shall, once CAêry week, report to the collector the name or names of such inspectors, Aveighers, gaugers, and measurers as ma^^ be absent from, or neglect to do, their duty," &c. Though one of the three most imx3ortant officers of customs, the surAêyor is little more than a subordinate of the collector. Though he has charge of the insx3ectors, and is resx3onsible for the faithful xêrformance of theii duties, he has not the xÔAA-er to dismiss or susx3end them for negligence or incompetency; he can only rex3ort to the collector the name or names of such as may b6 absent from, or neglect to do, their dnity. There may be more than are required to perform the duties, or there may not be enough, but he has no xÔAver to 'remedj^ either CAdl. I think the laAv in this respect, so far as relates to the ports aboAê named, at least, should be changed. I respecitfully submit that the surA'cyors at these ports be made index3endent of the collector; that inspectors, weighers, measurers, and gaugers be ax3i3ointed on the nomination of the surAêyor, who shall exercise the same poAver in resx^^^ct to them as is UOAA^ A'Csted in the col-Digitized for FRASER

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lector, and that he shaU have.exclusiye jurisdiction over all matters of inspection, weighing, gauging, and ineasuiing; in short, oyer all the out-door business of the custom-house, or that w^hieh is x><3rfbrmed by inspectors, weighers, gangers, and measurers..- /

The in-door business at these seyeral ports is quite as iriuch as any man can x3rox3eilypeidbrm;>ah€j to relieve the collectors ©f all resx36iisi-bility in regarcl to inspecting, Aveighing, ^^^ measuring wiU enable theni to give more attention to their OAvn ])TOi^eT duties.

The contest Avîth ;sinugglers has been carried on during the past year Avith, such success that it has in a great measure ceased on some xôrtions of the northern froritier; and along the remainder it has been upon a diminished sfeale. Since the passage of the internal reATênue act, reducing\ the tax on whiskey, allinducement to smuggle that article into the United States has been removed; indeed, the onlj^' articles which can noAv be clandestinely introduced with a profit sufficient to warrant the risk of detection arfe silks, velvets, ribbons, gloves, oi3ium,;ormorx3hine, jewelry, laces, and other snlall, light articles of great Aâlue; all these can be x^nt up in packages of small bulk and introduced in such a manner as to elude the vigilatnce of the local custoins officers, who make few or no seizures at the present day, nearly all being made through inforniation obtained by secret means.

And it may be .proper here to remark that a force of 20 or 25 men iindei* the control of one man AAdll accomplish more in the Avay of xî'C-ventiiig and detecting frauds upon the rcAêniie than the AA hole local force ~ upon t h a t frontier; and the same remark is equally applicable to CAêry other portion of our frontier, coast and inland. In the language of one of my agents, who has had large exx3erience and great success in detect-ing frauds, "The men noAy engaged in the contraband, trade are the equals in wealth, shrewdness, and cunning to any of the best business in en in the cduntry. Their X3lan s are laid to secure the safe introduction of their prox3erty before it leaves the foreign territory. Let a merchant of known pecuniary resxionsibility from any one of our cities Adsit Montreal or Liverpool, and he Avitl find men Avho will contract to deliver goods at his own door without the payment of duties." Can the gOAêrnment exx3ect to successfully combat this warfare upon the reAênue Avithout the aid of shrcAvd, sagacious, vigilant men acting in concert and unison, though stationed at distant xôints from each other! As obstacles to success to such men, our local, inexperienced, and easily deceived local inspectors are scarcely AAôrth consideration. I do not AAdsh tO/impugn the probity of this class of officers; generally they are honest and faiths fiil^ but at such large ports as iNeAv York^ Pliiladelx3hia, Baltimore, Charleston, and I^CAV Orleans it is almost certain 'that among the sub-ordinate officers, apx3ointed as tfiey are^ there will be some who cannot, ox have no desire to, resist temptation, and who are therefore ifsed by smugglers to aid them in x^crpctxating their fraiids. To x^TCvent the clandestine introduction of goods in'this way is one of the most difficult tasks Ave haAê to accomx)lish. If the sentinel on guard x3roves treacher-ous, and[ can be bribed by the enemy, where is the safety of the camx3? That Ave'have such traitors among customs officers I regret not t o b e able to doubt."-' ' '-' "- . \ . • • • ' > • . •

The •sx3ecial agents acting nnder .my instructions on the northern and-* northeastern •frontier liaA^e by their-'Adgilance and tact been able to dis-, Ct3vex many fraudulent transactions which'l\ad occurred one, tw^o, three, ox four years ago, and bring them to light. Some of these Avere upon a Digitized for FRASER

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38 REPORT OF THE SECRETARY OF, THE TREASURY;

large scale. In most of these cases the guilty x>arties Avere merchants of good stancling in the community, men Avho Avould have .spurned and X3erhax3S resented the charge of dishonesty, had any of their neighbors been so inconsiderate as to make it.

Their alarm and anxiety on learning that ^^ a chiel Avas among them takings notes,^' and that there Avas great probability that they would have to answer for their; deeds done in the d^ark, in open court, may weU be imagined., To have .transactions which they had fondly hoped Ayere buried in oblivion rise up to stare them in the face like Banquo's ghost, Av^s Avell calculated to disturb their equanimity. The bringing to light such old cases and comx3eUing such respectable men and highly esteemed citizens to disgorge their ill-gotten gains, has had more effect in intimi-dating them and others than the. detection in the act of^ a dozen case^ ; o f s m u g g l i n g . ' ' • • : : " _ . ; • y; 7' •';'.;;"'•/;.",;.;, y - V V ^ V ! ' " 1 . 7 ' • '• • ' '.• '• '•- • •^•-v .'-."

A fcAV such cases have been ferreted biit at Philadelphia and I^ew York, and more, i|] is hoped,^ will be brought to light and their authors

t o j u s t i c e . •-^ •• = • - - • • - • . •'^.= ' - - - - • \ : - . ' - - • •" •••• ^ = -...:•, ...•-:•:..••:.••• ' ^ u - :

Along the southern coast from Charleston, South Carolina, to the Rio Grande, but niore especially froni Key West to the latter place, smug-gling has been prosecuted Avith as much actiAdty knd success, probably, during the xâst year and up to the present moment as at any former X3eriod; and such is the character of the coast, the^ facilities offered by the many convenient and out-of-the-way bays, bayous, inlets, and rivers accessible to small Aêssels, the disposition of the inhabitants to fayor illicit trade, and the indivSpOsition: of juries as well as.soihe of the judges to convict anyône charged with violating the revenue laws, even ux3on the most positiAê testimony, that the task of stopping this contraband trade is,an exceedingly perx3lexing aiid arduous one. But in refcrcne'e •to 'this I refer; to' the rexioi^t, of •-Captain J. ,C.' Dutch,' hereafter .given.',',

' • • • •-^' ; • ,•;.- ^ • R E P G R T S ^ O F ' S P E C I A L - A G E N T S . ' . ; ' •';-? ' ;;-•' ' • '• '•

The following extracts from the anntia;lrex3orts made to me by speciai -agents Fl Carlisle, General iN". M. Curtis,.'KW.'Bingham, DaAds, Hart-ley, Godwin, and Dutch,• acting under my instructions, will shov,^, not the work that they have performed during the past year, for that Avould be impossible, but the results Of their labors :

Extract from Mr. Carlisle's reports (Mr. Carlisle hW charge of the frontier from Nidgdra to. Lake Superior.)

• As preliminary I would*state: that since the first of March last a portion of the expenses charged" to and paid by the custoins department were incurred through my investigations' (under special instructions) relative to certain frauds upon .the revenue of the Post Office Department.' It would seem .proper, therefore, that lii this comparison of "results a;hd expenses" the customs should either receive credit into so much as this portion of expenses 1 amount to, or of a part Vf the .Tesults obtained from this investigation in the;"rn.atter of | frauds upon the Post Office Department." I, however, give the acttial resolts, and expenses I on account of customs, making the frauds on the Post Office Department, a subject of a special report, showing the results and expenses which have been paid by. the customs. '

The " results""given include ,on]y those pbtained in cases worked up, by myself or the officers acting with me. . ,.>

Persons arrested 115; of this number ninety-three (93) haA-e' bVen convicted and'paid I lines from $50 to $3,000; 16 are under indictment, and six (6) have been discharged; andl ...were made iii lhe States of New York, Termont, Illinois, Wiscorisin, and'ilichigan. .

The net amount paid as fines was $18,938 _341 ?!Net'pr6c^eds of-seizures, v . . . ^ . v . . . . ^ . . . v . - . . ^ . . ' . - . . . .,.:^^

Total moneys realized ^.. 21,203 22l

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REPORT OF THE SECRETARY OF THE TREASURY. . 39

We have now in court waiting adjudication claims amounting to $31,500. •. The officers detailed to act under my directions from time to time during this period,, and

the compensation paid them while so employed, including travelling expenses, w.ere as fol-lows, viz:

Wm. Hutchinson, 9 months' expenses and compensation...: $1^815 00 D. E. Mosely, 8 months' expense's and compensation 1,573 00 George W. Smith, 12uionths' expenses and compensation. 2,540 00 George AV. Smith, 8 months'expenses and compensation.. 1,615 90 General J. G. Parkhurst, 3 months' expenses and compensation 679 59 Add my own during this period - 5,432 86 Total expenses 13,656 35

RECAPITULATION OF RESULTS AND EXPENSES.

Moneys paid into the treasury $21,203 22 Claims in court 31,500 00 T o t a l . . . 52,703 22 Deduct expenses • 13,656 35 Difference i 39,046 87 You will readily understand that .the foregoing results have been obtained only by the expenditure of much time and labor, and that the "offences" producing them occurred (^some of them at least) three years ago, and have required a good deal of manipulation to bring them to light.

Extract from General Curtis's report. (General Curtis has charge of the frontier from Niagara to Rouse's Point.)

Number of seizures made by me during the year ending June 30, 1868: Two (2) horses at Cape Vincent; settled for $400; expenses $6.

Ninety-three (93) head of stock cattle at Plattsburg district; " i n court;" $2,421 currency value. Other seizures were made by collectors on my information, of which 1 am not able to make a specific report.

The number of suits instituted and their result: Suits, six ; result not yet known. These eases are instituted fpr fraudulent entries of lumber for large sums, and the evidence is most complete and conclusive against all parties.

General Curtis enumerates seventeen (17) cases compromised for various sums from $28 up to $2,600 each, chiefly for fraudulent undervaluation of hoops, pease, lumber, &c., and states the aggregate settled in currency to be $8,611 66; the aggregate settled in gold to be ^1,143 10; the aggregate value of seizures, $.2,821.

Compensation for services for the year ending June 30, 1868 $2,190 00 Expenses for same period 2,443 02

4.633 02

Report of N. W. Bingham. (Mr. .Bingham has charge of the frontier from Rouse's Point, to and including-the coast of Maine.)

I have the honor to submit the following report, setting forth the result of the labors of our force in the detection of smuggling, for the year ending June-30, 1868 :

AVhole number of seizures during the year, 50. Number of criminal prosecutions during the year, 23.

Fines and] penalties received on submissions to the department, and recovered in court during the year, 144.

Imprisonments and convictions during the year, 6. , Amounts already received as fines, penalties, and forfeitures from the above.. ^. $83,910 15

Less the costs 1,500 25 Net amount 82,409 90 Moiety accruing to the United States $41,204 95 Estimated safe value to the government of suits now pending... 20,000 00 Total net amount to the governraent 61 204 95

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40 REPORT OF THE SECRETARY OF THE TREASURY,

Expenses ofthe force employed—N. W. Bingham, salary and mileage $3,998 30

•Rent of r o o m . . , . . . ' . . . . . 300 (|); " -Salary and. expense account of officers Kimball,. Burnham, Davis,

Morehouse, Toole, Peaslee, Ames, and Hutchins 14,500 00 ^ 'Total expense of f o r c e . . . , , . . . . . , ^ v . . . / . - - , - . . . - - - r . ^^...r>.rr.v-il8,.7^^ Deduct frpm total amount accruing to the government.... . . . 42 406 65 Net profit to the United States oii money already received,-.;... .^^ . . . $22,"406 65 Add safe estimate for suits now pending, of the above . . . . . . ^ . . . ^. 20, OGO , 00

T o t a K - . : . . . J . . . : . ; . • . . : • • . . ^ ^ . ' . . . ^ . . 1 . . . . • . . • . . • . . . • . ' . . . • . . . . ^;4^,'4b6;6^ In addition to the above is the extra duty of 10 per cent, that was paid upon 33 pipes of gin, exported from warehouse to St. John's and returned to .Boston without having beeu unladen from"t:he vessel, and'which instead of being.seized' was axlmitted again to warehouse at Boston by paying said additional duty., Ofthe amount received as_ above, there has been distributed to collectors and informers only about $10,366 77, the residue remaining either

in the h'easury or with" the cblleetors. " • " ' • ' ' ' ' " " " - - . - • • - • I beg to add that the ad damnum in- the writs in suits now pending amounts to several

hundred.thoiisand dollars. ' . • . . • . ... ^ As to what we have been able to accompirsh by way of the prevention of smuggling, and thereby adding to the revenue, of course no proximate estimate can be made,; but I think it fair to say that the reventie cannot have been increased; in the matter of duties, less than'the amount of rnoney that we have collected, viz., about-$84,000 ; to which, if.we add the net profit, as above stated, we shall have the sum of $126,406 65.

Much embarrassment has been experienced on account of the provisions of the act of March 2, 1867, by which the.government, iTom.-the net proceeds of seizures of a greater value'than $500, receives a sum equivalent to the duties, which in the case of spirits and drugs, in nine cases out of ten, results in leaving nothing for the informer. This is not only a great injus-tice to him who risks his property, reputation, and perhaps life, to give valuable information to the government, but is.actually,, in a'fiiiancial-point of view,-b{id policy'for the govern-ment. And since it has become known that such is the law, I -have found it almost impos-sible to iriduce persons t.o give me information. ,. t - . '. •..' • ^^.-^ • • : . . : ; - ' ' At the best, with the existing p.ublic sentiment upon the coast and frontier, men are very loth to aid .the government atthe expense of their neighbors, and, therefore.,-instead of les-sening the inducements for them to aid the customs officers in tho. discharge of th.eir duties for the collection and protection of the revenue, it clearly seems to me that they should;be materially increased.' • ,. .', . •

iReport of T, Davis,- '

Mr. T. DaAds, located at Boston, reports the following sums as paidin to the custom-house through him, namely:

' - 1 8 6 7 . • ' ' • • : • - • - • . . . . - • .^v;- - ; . - • - • - ^ -•• • ^ ' ' . ,-, • . . ? > „ , / . - / ' , . ' • • ; • . - •

September 12, fine (settledFebruaiy 7, 1 8 6 8 ) . . . - . : . - V . $193 00 September 16, fine (settled February 7,1868).».. ' . . . - 275 00 September 16, fine (settled February 7,1868) - -: 258 00

Septeniber 25, fine (settled February 3, 1 8 6 8 ) . . . 1,392,00 September 25, fine (settled February 3, 1868)...^ . . . / . . . . - . . : . - . : . - . . . . V . . . ' . . - 5 , ' 3 0 O d ) O

September 26, fine (settled February 7,1868)...: . . . . . . 547v-5t3^ September 26, fine (settled February 7, 1868). ../....''... - . . . . . . . > . . -. ^ 182 50 November21, fine (settled May 2, 1868). ,...'...,.' •. '353 00^ November21, fine (settled May 2, 1 8 6 8 ) . . . - . , . . . - • . . . .;.w....;. >. . 40Q .00

1 8 6 8 . " , " • •• • . . • ; : ; ' • - .•' : ; • . : : . • - ....

January 18, seizure, (appraised value, c i g a r s ) . - . . . . . . J . . ^ - . . \ . . . _ . . . : . 1, 300 00 March 20, seizure, (appraised value) ^ . . . - . . . '168 ^00 May 6, seizure, (appraised value, s i l k ) . . . — . . . -'--'.•... -. - - 400 • 00

Total . : . . . 10,769 00 . A suit is pending in th^ United States district cpurt .agains^t Mes,.s.rs. Thayer & Lincoln, , merchants, of Boston, charging them with'purchasing smuggled goods, knowing them, to

be smuggled. At first trial the jury disagreed. There is also seizure of the schooner Martha Anna, at Portland, Maine, not yet disposed of. , , .;

The number of seizures which occurred in September, 1867, may be attributejd to the, return of passengers from the Paris Exposition, b}^ steamer. • ; • , j ;

(46)

Report ofUdioard Hartley, special agent, in charge of the collection districts on the seaboard of the middle States and Chesapeake bay.

During the last fiscal year, Mr. Hartley reports, as the total collection made by himself and a3sistaiit from all sources as $31,029 63, and that there are before the courts in his district property aAvaiting adjudication for frauds on the rcAênue Aâlued at 160,000. Through his efforts smug-gling on the DelaAvare and Chesapeake bays has diminished, and at the port of PhUadelphia it-has nearly ceased. He has also done much to break up the fraudulent imi3ort.ation of so-called free lunib.er from.the» St. Croix iiAêr to the Atlantic ports south of IiTew England.

Mr. Hartley is, however, principally emi3]oyed under j o u i direct orders in the exammation of goA^ernment offices ancl other special business, and is reported to haA^e effected considerable reduction of expenses by the iischarge of unnecessary and incompetent officials, and the correction 3f abuses at ports Adsited. He reports the fblloAving:

Schedule of collections made by E. Hartley, Special Agent of the Treasury, for the year ending June 30, 1868.

Amount of collections of fines, penalties, and forfeitures $16, 029 "63 By correction of entries, and collection of unpaid duties 15, 000 00 Total 31,029 63-Deduct estimated expenses of force 5,000 00 26,029 63 Cases in court, two ; value of property, $60,000.

CriminaPcases pending, one.

Cases settled, one : amount of decree, $639 25.

Extract from the report of /f. N. I.'Godwin, stationed dt Norfolk, Virginia. By reference to the foregoing statement it will be observed that I have, during the year nding June 30, 1868, besides attending to various other duties, been instrumental in causing 0 be paid into the treasury about eighteen hundred dollars ($1,800) in currencj^ and over ifteen thousand dollars ($15,050) in gold, vvhich it Avould probably not otherwise have eceived. I have, also, been enabled to save to the government two thousand three hundred

nd thirty-five dollars ($2,335) in other Avays. . At present, whatever smuggling is carried on, I feel sure is done by vessels trading from

he south, coastwise north, who get the goods, &c., from vessels coming on tbe coast from he AVest IndieSju^ This can be only guarded against by examining these vessels on their rrival north, w^ich is not 'often done, hence the undertaking.

'Extract from report of Captain J. C. Dutch, having charge of the coast from North Carolina to Pensacola.

The actual results of my year's work show as follows:

loneys received on compromises, in gold. $14,189 06 'ines, penalties, forfeitures, and currency 9,150 00 ;y decree of court 3,500 00 Lmounts claimed in suits instituted on goods smuggled 28,353 40 'enalties in suits instituted , ^ . . . 50,000 00

During the year I have travelled on the South Atlantic and Gulf coast 10,650 miles. Owing to the lack of transportation much of my travel has been performed in small boats, anoes, and on horseback, which, in the hot and sickly climate, makes the labor very hard ud uncomfortable.

From personal observation I find smuggling is done principally, and in large amounts, ia aree ways:

1. By fraudulent invoices, as in the cases compromised, before mentioiied.

2. By the inefficiency and complicity of customs officers, as in the case of the schooner trapeshot, where 48 demijohns of gin were entered as washing fluid. .

3. The mnch larger part of the smuggling in my district is done by transferring goods .-om vessels from foreign ports to small crafts and boats' in the bays and rivers, or by land-tig them at points below the customs and boarding offices. For this business tho broken