1,017,182 more seals of which 508,591 would be females. Thus the total loss of female seals in the eight years must have been not fewer than 1,525,773, to say nothing of the 763,087 males that were killed or died as a result of pelagic sealing. 6. The growth of the herd is directly dependent upon the number of breeding females in the herd. The total increase in any year can not exceed the number of breeding females. In view of this essential fact, and in the light of the figures showing the enormous destruction of female seals by pelagic sealing, which it is believed are conservative and trustworthy, we are convinced that the sole important cause of the decrease of the fur-seal herd during the last decade has been pelagic sealing, and that land killing as practiced on the Pribilof Islands during that time has had nothing to do with the diminution of the herd. After a careful examination and consideration of all the evidence, we find that the administration of the fur-seal service by the Department of Commerce and Labor and by the Bureau of Fisheries of that department has been in accordance with the law; that the regulations issued from time to time by the department and the instructions issued to the agents have been properly observed; that the fur-seal herd has been handled intelligently; and that the charges have not been sustained. BIRD MCGUIRE. H R-62-3-vol 1-31 TAX ON ADULTERATED BUTTER. JANUARY 31, 1913.-Committed to the Committee of the Whole House on the state of the Union and ordered to be printed. Mr. HAUGEN, from the Committee on Agriculture, submitted the following REPORT. [To accompany H. R. 27279.] The Committee on Agriculture, to whom was referred the bill (H. R. 27279) to change the tax imposed on the manufacturers of adulterated butter to the same amount as that imposed on the manufacturers of process or renovated butter, having had the same under consideration, report it to the House with the recommendation that the bill do pass. The bill reads as follows: Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the sentence in the second clause of section four of chapter seven hundred and eighty-four of the United States Statutes at Large, volume thirtytwo, page one hundred and ninety-five, reading, "Manufacturers of process or renovated butter shall pay fifty dollars per year, and manufacturers of adulterated butter shall pay six hundred dollars per year," be, and the same is hereby, amended to read as follows: "Manufacturers of process or renovated butter or adulterated butter shall pay a tax of fifty dollars a year. Section 4 of the act of May 9, 1902 (the oleo law), reads as follows: That for the purpose of this act "butter" is hereby defined to mean an article of food as defined in "An act defining butter, also imposing a tax upon and regulating the manufacture, sale, importation, and exportation of oleomargarine," approved August second, eighteen hundred and eighty-six; that "adulterated butter" is hereby defined to mean a grade of butter produced by mixing, reworking, rechurning in milk or cream, refining, or in any way producing a uniform, purified, or improved product from different lots or parcels of melted or unmelted butter or butter fat, in which any acid, alkali, chemical, or any substance whatever is introduced or used for the purpose or with the effect of deodorizing or removing therefrom rancidity, or any butter or butter fat with which there is mixed any substance foreign to butter as herein defined, with intent or effect of cheapening in cost the product of any butter in the manufacture or manipulation of which any process or material is used with intent or effect of causing the absorption of abnormal quantities of water, milk, or cream; that "process butter" or "renovated butter" is hereby defined to mean butter which has been subjected to any process by which it is melted, clarified, or refined and made to resemble genuine butter, always excepting "adulterated butter" as defined by this act. " * Every person who engages in the production of process or renovated butter or adulterated butter as a business shall be considered to be a manufacturer thereof. * * * Wholesale dealers in adulterated butter shall pay a tax of $480 per annum, and retail dealers in adulterated butter shall pay a tax of $48 per annum. Every person who sells adulterated butter in less quantities than ten pounds at one time shall be regarded as a retail dealer in adulterated butter. * * That every person who carries on the business of a manufacturer of process or renovated butter or adulterated butter without having paid the special tax therefor, as required by law, shall, besides being liable to the payment of the tax, be fined not less than $1,000 and not more than $5,000; and every person who carries on the business of a dealer in adulterated butter without having paid the special tax therefor, as required by law, shall, besides being liable to the payment of the tax, be fined not less than $50 nor more than $500 for each offense. The special taxes imposed by this (the oleomargarine law) as amended are: Manufacturers of oleomargarine... Wholesale dealers in oleomargarine, colored artificially to look like butter... Retail dealers in adulterated butter... Manufacturers of process or renovated butter.. TAXES ON PRODUCT. Oleomargarine (artificially colored), 10 cents per pound. Process or renovated butter, cent per pound. $600 480 200 48 6 600 480 50 Under the law and its administration, if a creamery manufactures and sells butter made out of sweet, pure, clean, and wholesome cream, and if through some oversight of the butter maker or his inability to reduce its moisture content to 16 per cent, even though the butter maker may do his very best in working and washing it to reduce the moisture content to 16 per cent, or if on account of climatic conditions or otherwise the butter absorbs moisture while in transit or at its destination and is found by a revenue collector to contain more than 16 per cent of moisture, the creamery is held up for a special tax of $600 and 10 cents a pound on the article; and if he fails to pay the tax imposed as required by law, besides being liable to the payment of the tax, he is fined not less than $1,000 and not more than $5,000; besides that, heavy taxes are imposed on dealers in adulterated butter, which are generally charged against the creamery by the dealers. On the other hand, the manufacturer of process or renovated butter, or one who buys rancid, decomposed, and unwholesome butter and through some process sweetens and deodorizes it and makes it look and taste like creamery butter, he is taxed only $50, or onetwelfth the tax imposed on the manufacturer of adulterated butter. Besides adulterated butter is taxed 10 cents per pound, while process or renovated butter, or oleomargarine, not artificially colored, is taxed but cent per pound. In other words, the special tax imposed on the manufacturer of adulterated butter, a superior article, is 12 times as great as the special tax imposed on the manufacturer of process or renovated butter, an inferior article, and the tax on the superior article is 40 times as great as that on the inferior article. Taking into consideration the quality of the three articles and the interpretation of the law by the Internal-Revenue Bureau and the hardship imposed on many innocent and well-meaning creamery men, the discrimination seems unwarranted and unjust, and in the opinion of many the taxes, penalties, and fines imposed on manufacturers of adulterated butter should be made, if not lower, the same as on renovated or process butter. A present exigency exists for the legislation to relieve a number of small creameries in different States who have unwittingly, as the department is impressed, left remaining in their butter product excessive moisture. The department will consider a reduction of the statutory tax a sufficient warrant to justify official discretion to be exercised in favor of a proportionate reduction in these pending cases, and the department is now awaiting the results of this legislation for such purpose. The proposed bill will afford some relief to many creameries unjustly imposed upon, and the committee unanimously recommends that the bill do pass. A brief prepared by Hon. A. J. Volstead, of Minnesota, presents the law as now administered and reasons why this bill should be enacted. The following quotations are made from the brief: In 1902 Congress passed a law (chap. 784, 32 Stat., p. 194) that defines adulterated butter, and that imposes a tax upon such butter and upon those who may be engaged in the business of producing it. It was sought, by this statute, to prohibit the manufacture of such butter. This appears clearly from the fact that the tax is so large that no one can afford to pay it. No complaint is made against that tax as applied to butter actually adulterated. But the Treasury Department has made a regulation that applies this tax to butter that is not adulterated, and not subject to the tax as we construe the law. Attention is called to this regulation with a view to its abrogation. A provision of the statute under which this regulation was made defines adulterated butter as "Any butter in the manufacture or manipulation of which any process or material is used with intent or effect of causing the absorption of abnormal quantities of water, milk, or cream." The regulation complained of provides in effect that any butter that contains 16 per cent or more of moisture shall be held to be adulterated though no process or material has been used to cause it to absorb an abnormal quantity of water. It is believed that this regulation is unauthorized and void. The only legitimate object of any regulation is to carry into effect the language of a statute. This regulation, instead of carrying into effect such language, ignores it and attempts to substitute for the definition of adulterated butter contained in the statute an entirely different definition. The statute requires that some material or process must have been used to cause the butter to absorb an abnormal quantity of water before it shall be subject to a tax. Butter made in the usual, time-honored, honest way would only have the usual or ordinary quantity of water, not an abnormal quantity. Normal conditions produce normal effects. The Good Book says, "Ye shall know them by their fruits. Do men gather grapes of thorns or figs of thistles? Even so, every good tree bringeth forth good fruit; but a corrupt tree bringeth forth evil fruit." Congress did not seek to change the usual method of making butter, but provided that should some material or method be employed with intent or that should have the effect of causing the butter to absorb more water than the quantity contained in butter made in the usual way, such butter should be subject to the tax. The regulation takes no account of the method by which butter is made, but asserts that 16 per cent is an abnormal quantity of water, and imposes the tax regardless of how innocent is the method of its production. This regulation was carefully considered by the United States District Court for the District of Minnesota in a civil case. (The United States v. 11, 150 Pounds of Butter-Milton Dairy Co., claimants.) This court held the regulation void. An appeal was taken to the United States circuit court of appeals (eighth circuit). (See 195 Fed., 657.) The circuit court affirmed the action of the district court in an opinion written by Judge Sanborn, dated April 17, 1912. The views of this court on the subject appear from the following excerpts taken from the syllabus prepared by the court: 1. "The intention of Congress in enacting and the true construction of the clause 'any butter in the manufacture or manipulation of which any process or material is used with intent or effect of causing the absorption of abnormal quantities of water, milk, or cream,' in act of May 9, 1902 (Chap. 784, No. 4, 32 Stat., 194, 195: U. S. |