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back as far as 1875) which can now be repealed without danger to the revenue. Other statutes, old and new, are proposed to be modified to remove burdens on the intoxicating liquor producing and distributing industries when this can be done without sacrificing efficiency of execution of the law and certainty of collection of the tax. Some of the restrictions which have been removed or modified were imposed during national prohibition as an adjunct to that policy, and their necessity no longer exists. Other provisions of the bill are designed to close doors which are now open to the tax evader and to assure tax collection by providing for closer supervision of those liable for the various taxes under these laws and by providing for other administrative machinery under which tax collection will be speedy and sure.

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TITLE I

Section 1 contains the short title of the act.

Section 2 provides for the seizure and forfeiture of intoxicating liquor and containers thereof when the containers do not bear proper stamps, labels, and other markings required by Federal law or regulation and for seizure and forfeiture of such containers and contents when the containers are not accompanied by proper bills of lading or other documents required by Federal law or regulation.

Senator King. Does section 2 amplify the existing law?
Mr. HESTER. Yes; it does.
Senator KING. What changes does it make?

Mr. HESTER. Well, we think that there are defects in the present law. Where we would use, for instance, strips tamps or other stamps or labels that might be put on distilled spirits, that would not be covered. In other words, the distilled spirits themselves could not be forfeited, and the containers could not be forfeited.

Senator KING. Proceed.

Senator BAILEY. What is the purpose of inserting the clause “which is not accompanied by manifests, bills of lading, certificates, permits, or other documents required by such law or regulation”?

Mr. HESTER. For instance, we had one section in the antismuggling bill of last year which introduced a new feature into the law. Permits now have to be obtained from foreign consuls for shipment of distilled spirits into the United States, and that permit is connected up with the manifest.

Senator BAILEY. Is it understood that the holder of the article would have always to be ready to show his bill of lading?

Mr. HESTER. Only if the law required that it be accompanied by the bill of lading.

Senator BAILEY. Well, it is in the law. It says, “or other mark made in similitude of that required by such law or regulation, or which is not accompanied by manifests, bills of lading, certificates, perinits, or other documents required by such law or regulation.” I suppose this "law or regulation” relates to regulations that may be made in pursuance of this?

Mr. HESTER. That is right.

Senator BAILEY. What is the purpose of this? Wherein does it protect the Government? We have the stamp, there is a provision about that. I understand in commerce when anything is shipped there is a bill of lading goes with it, but I never heard that a man was re

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quired to keep it and be ready to show it at anytime. What is the purpose of that?

Mr. HESTER. I thought I had explained that. Senator BAILEY. You said you thought you had explained it? Mr. HESTER. Yes. This simply provides if the law requires a bill of lading to accompany it.

Senator BAILEY. I assume the law does. Why should they give permission if the law requires it? It is the presumption that the law is going to require it. What is the purpose of it?

Mr. HESTER. Mr. Berkshire will answer that.
Mr. BERKSHIRE. That is for protection of the revenue.

Senator BAILEY. Well, you collect the revenue by way of stamps. There is a full provision about the stamps. I do not get the relation between the stamps and the bill of lading.

Now, no purpose being stated, Mr. Chairman, I am going to suggest that it be stricken out. I am going to suggest to strike out “or which is not accompanied by manifests, bills of lading, certificates, permits, or other documents required by such law or regulation.” Of course, if it can be shown that there is a good purpose for it I will not insist upon my amendment, but I would like to know about this. Somebody wrote this bill. Whoever put this in ought to know why it was put in.

Mr. HESTER. Senator, may I say this: We will be very glad to consider that suggestion and if we feel we are wrong about it we will be very glad to suggest to the committee to take it out of the bill.

Senator King. The committee will consider the suggestion of the Senator.

Senator BAILEY. We will mark that. Senator King. It seems to me that the provision of the law here will be an interference with legitimate right of purchasers.

Senator Bailey. And it would not aid the Government, as far as I can see.

Senator KING. And it would not be any aid to the Government.

Mr. HESTER. Under section 3 (a) of the bill, any person convicted of having in his possession any smoke, gas, or fume device, or explosive, or firearm as defined in the National Firearms Act, while violating any Federal law, or law of any Territory or possession or the District of Columbia, relating to intoxicating liquor, is subject to a fine of not more than $5,000 or imprisonment for not more than 10 years, or both. Persons engaged in or aiding in violating the law relating to liquor are also to be held to be in possession of the device, firearm, or explosive. No penaliy is provided in this subsection for possession of a machine gun or saved-off shotgun or rifle, but under subsection (b) a penalty of imprisonment for not more than 20 years is provided if the offender is convicted of possession, while violating the liquor law, a machine gun as defined in the National Firearms Act or sawedoff shotgun or rifle.

I might say this, that today there is no law that specifically deals with smoke, gas, or fume devices or explosives, and the only way that the Federal Government can prosecute a bootlegger who uses any of these devices is on the ground that he is obstructing the Federal officer in the performance of his duties.

Senator BAILEY. All right. Now have you sufficiently defined the expression, "smoke, gas or fumes?" I understand an automobile makes smoke, gas, and fumes. Do you mean to say it would include

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the use of an ordinary automobile or do you mean one equipped for the purpose of emitting fumes or a smoke screen?

Mr. HESTER. An automobile equipped for the purpose of emitting smoke, gas, or fumes.

Senator BAILEY. Why not write it that way?

Mr. HESTER. Well, we will be very glad to take that under consideration, if it does not accomplish that.

Senator Bailey. I think we should get the law in a very specific and definite way. I am not in favor of any more law than is necessary with respect to anybody, but I would like to have any law that we have to be definite.

Mr. HESTER. We will be very glad to consider any criticism you have to offer.

Section 3 (c) provides for the seizure and forfeiture of such devices, explosives, and firearms. The provisions of the National Firearms Act under which such articles may be disposed of to law-enforcement agencies and under which such articles may not be sold are made to apply.

Section 4 amends the present law which punishes killing or assaulting Federal agents while engaged in the performance of their duties. The effect of the amendment is to broaden the scope of the statute to punish assault upon or killing any officer, employee, agent, or other person in the service of the customs or internal revenue. The present law is limited to officers of these services.

I might say in this connection, Senator, that one of the reasons for this provision is because of á case that occurred in your own State, where a volunteer was called in to assist a revenue officer and was thrown into a vat of hot mash and lost his life. That is one of the cases that will be brought in. He will be an agent within the meaning of this, and it would be a Federal crime to do that. He had to be prosecuted under the State law.

Senator BAILEY. For throwing him into a vat of mash?

Mr. HESTER. Yes; and I am satisfied he lost his life because of that.

Senator BAILEY. Down in North Carolina that is held to be murder.

Mr. HESTER. There was another case recently where a policeman was called into service and lost his life. He was shot. His murderer could have been punished under the Federal law under this section here.

Senator BAILEY. What do you have here? You say, "All persons engaged in any such violation or in aiding in any such violation.” You mean the violation of the Firearm Act there?

Mr. HESTER. No.

Senator BAILEY. It says "shall be held to be in possession or control of such device, firearm, or explosive." Does that refer to possession and control of a submachine gun? Now you are raising a presumption, it appears.

Mr. FORREST. Section (b) starts off, “Whoever, when violating any such law, has in his possession or in his control a machine gun, or any shotgun or rifle”, and so forth, that relates back to the law of the United States relating to the manufacture, taxation, of transportation of or traffic in intoxicating liquor.

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Senator Bailey. Then you have there, “All persons engaged in any such violation or in aiding in any such violation shall be held to be in possession of such machine gun, shotgun, or rifle.” Suppose I was driving down the road with some illicit liquor, it is presumed I am armed.

Mr. FORREST. It means if you were driving a car loaded with liquor and I was sitting beside you with a machine gun you would be jointly charged with the possession and intended use of the machine gun.

Senator BAILEY. That is not what the language says. You correct the language and make it say that. You could say “Any person in the same vehicle or in an accompanying vehicle.

Mr. FORREST. I see.
Mr. HESTER. We will take that up.
Senator BAILEY. I would be glad to have you correct that.
Mr. HESTER. We are happy to have your suggestion.

Section 5 gives courts having jurisdiction of proceedings involving seizure or forfeiture of any vessel or vehicle seized or forfeited under Federal law the power to refuse to order the return on bond to the claimant of the vessel or vehicle. The return on bond can be denied by the court in its discretion and upon good cause shown by the United States. The object of this provision is to remove mandatory requirements of return now a part of the present law. It has been shown that, in many instances, during the time the question of whether the vessel or vehicle is subject to forfeiture is being litigated, the claimant has, by filing bond, been able to repossess the vessel or vehicle and reuse it in law violation.

Senator KING. Is that in harmony with existing law under which returns may be made of seized property alleged to have been used in violation of law?

Mr. HESTER. The law today compels the court to return upon a bond being filed, that is about all. This makes it discretionary with the court, so as to make it impossible for the bootlegger to get his vehicle back and use it if the Government can convince the court that he should not have it returned to him.

Senator BAILEY. That is simply an order of confiscation. Have you got anything in here relating to mortgagees and the rights of mortgagees?

Mr. HESTER. No; I do not think we have.

Senator BAILEY. I think you should, and also the right of conditional salesmen. Most all the automobiles today are sold on that basis. I think the manufacturer or the salesman ought to be protected, if he is interested in the property.

Mr. HESTER. In what respect, Senator? Senator BAILEY. You have it right here, to seize and take any vessel or vehicle "for the violation of any law of the United States, the court having jurisdiction of the subject-matter may, in its discretion and upon good cause shown by the United States, refuse to order such return of any such vessel or vehicle."

If I am an automobile manufacturer and I should sell one to you on $15 down and $15 a month, I see it advertised that way, when it is seized you own only a $15 interest and I have got a $400 interest in it, and I am perfectly innocent. Why should I lose my equity?

I Mr. HESTER. I see the point you have in mind.

Senator BAILEY. I think you should put a provision in there covering that. Write the provision right at this point.

Mr. BERKSHIRE. I think he has all the rights of the present law to come in and protect his interest. That does not deal with that situation, sir.

Senator BAILEY. Explain about his rights under the present law.

Mr. BERKSHIRE. Section 709 of the Revenue Act of 1926 or 1928 gives him the right to come in and petition for the remission or mitigation of the forfeiture of the car if he is an innocent mortgage holder.

Senator BAILEY. He has that right on the face of the law, but they can take the car and hold it 6 or 8 months and it would deteriorate to the point where it would not be worth anything. The Government can do that pending the trial, or they can take the car and sell it and give the proceeds to the original owner and he has no other remedy. That is the law now.

Mr. BERKSHIRE. Under the new act that has been passed at the last session, the enforcement act, he has the right to go into court right now.

Senator BAILEY. I would like it stated here. Just give the vendor his proper rights under the law.

Mr. HESTER. Under the liquor law and the repeal act which was passed I think at the last session (it was approved about the 27th of August) there is a provision in there which permits the owner to take his case in court.

Senator BAILEY. This is in addition to that and may affect the validity of that, or it might impair it.

Mr. HESTER. You have raised a good point here.

Senator King. This is a subsequent act and it might modify existing law.

Senator Bailey. Let us put the proviso in right at that point that will fully protect the vendors who are innocent.

Mr. HESTER. We would like to consider it and submit the matter

to you.

Senator King. You may do that. Proceed.

Mr. HESTER. Section 6 contains definitions of the terms vessel, vehicle, and firearm as used in title I of the bill.

TITLE II

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Sections 201 and 202 amend sections 3287 and 3295 of the Revised Statutes, respectively, so as to permit distillers and their employees to do such marking and branding and such mechanical labor pertaining to gaging required under the sections

Senator BAILEY. Where are you now?
Mr. HESTER. Title II, sections 201 and 202.

Senator BAILEY. Let us take section 6. You state, “as used in this title the word 'vessel' includes every description of watercraft used, or capable of being used." You do not mean that, do you?

Mr. HESTER. That is the definition of a vessel today.

Senator BAILEY. How about the airplane? You know that your words here that govern watercraft, in line 6, page 4, cover every description of watercraft used or capable of being used in water and air, but it seems to me that is confined to watercraft alone.

A flying machine is not a watercraft and it would be outside of this law.

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