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All amounts which have become due to the United States under the agreement dated February 1, 1899, for the settlement of the indebtedness of the Central Pacific Railroad Company, have been paid by the railroad company in full, including interest on all outstanding notes to August 1, 1906.

The principal of all notes held August 1, 1906, amounted to $14,703,178.90, and first-mortgage bonds to the amount of $14,704,000 are held as security for the payment thereof.


The debt of Hawaii assumed by the terms of the joint resolution of July 7, 1898, consisted of $3,235,400 in interest-bearing bonds and $764,570.31 in postal savings deposits. This indebtedness has been fully paid by the United States, except $2,894.31 in postal savings certificates, not yet presented for payment.

The appropriation of $1,000,000 provided by Congress for the liquidation in part of awards made for property destroyed in suppressing the bubonic plague in the Territory in 1899 and 1900 has been practically expended. The First National Bank at Honolulu reports that 28 awards, amounting to $3,357.65, are now outstanding.


The most important legislation affecting internal revenue enacted by the last session of Congress is the act approved June 7, 1906, providing for the withdrawal from bond, tax free, of domestic alcohol rendered unfit as a beverage or for liquid medicinal uses by the admixture therewith of denaturing materials. This legislation is in harmony with similar laws adopted during the last fifty years by nearly all foreign countries. Its prime object is to furnish cheap alcohol for domestic and manufacturing purposes. The present internal-revenue tax per wine gallon on alcohol at 180 degrees proof is $1.98. This tax is removed by the act.

It is believed that by means of this legislation not only will the manufacturing interests of our country using alcohol be placed on equal footing with those of other countries, but there will be marked benefit to the people at large in securing a new product for the production of heat, light, and power, and that this new product will be a competitor with kerosene, gasoline, and coal in our domestic and farm life. The use of wood alcohol for domestic and manufacturing purposes will be largely, if not completely, displaced by this product.

There will be some loss of revenue to the Government through this new legislation, though the amount of such loss can not now be definitely stated, but the benefits accruing to the people will greatly outweigh the loss of revenue.

Regulations and instructions relative to the enforcement of the act (effective January 1, 1907) were promulgated by the Department September 29, 1906.

The receipts from internal-revenue taxes for the fiscal year 1906, as shown by collectors' reports, were $249,102,738, a net increase over 1905 of $14,914,761.63.

The following items show increases for 1906: Distilled spirits, $7,435,542; manufactured tobacco, $2,763,086.88; fermented liquors, $5,281,305.38; filled cheese, $1.40; mixed flour, $918.84; adulterated butter, $5,319.46; banks, bankers, etc., $50.10; total increases, $15,486,221.06.

The following items show decreases for same period: Oleomargarine, $35,440.88; process or renovated butter, $18,657.17; miscellaneous, $517,364.38; total decreases, $571,462.43.

The total expenditures for the maintenance of the Internal Revenue Service for the fiscal year 1906 were $4,727,170.11. The cost of collecting $1 of internal revenue was $0.019.

The following table gives a comparative statement of receipts for the fiscal years 1905 and 1906. For a more detailed statement reference should be made to the report of the Commissioner of Internal Revenue:



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a Includes $489,347.26 from playing cards, 283,991.62 from penalties. $142.148.22 from legacies on which the tax had accrued prior to the repeal of the act, and $8,346.66 from miscellaneous sources.

The total production of distilled spirits, exclusive of fruit brandies, was 145,666,125.1 taxable gallons against 147,810,794.3 gallons in 1905, a decrease of 2,144,669.2 gallons.

The production of fruit brandies decreased 1,004,512.5 gallons.

During the fiscal year 1906, 1,885 distilleries of all kinds were operated, an increase of 113.

The production of beer was 54,724,553 barrels, an increase of 5,202,524 barrels.


The past fiscal year shows the largest customs receipts in the history of the country. Over three hundred millions of dollars were collected in customs duties at the different ports. Previously, the fiscal year of largest customs receipts was 1903, when two hundred and eighty-six millions was collected. The following statement shows the relative standing and receipts of the 12 leading ports of the country, where customs receipts for the fiscal year ended June 30, 1906, amounted to at least one million dollars: 1. New York. $200, 698, 240 7. Baltimore

$4,933, 854 2. Boston 27, 337, 297 8. St. Louis..

2, 127,743 3. Philadelphia. 20,532, 928 9. Tampa..

1,679, 004 4. Chicago.. 9,997,904 10. Detroit..

1,595, 263 5. San Francisco... 7,449, 196 11. Port Townsend

1, 260, 409 6. New Orleans 6,548, 695 12. Cleveland .

1, 174, 662 At all ports, large and small, it cost the past year less than 3 cents to collect each dollar of customs revenue, the smallest cost yet reached. But there were many ports where the cost was out of all proportion to the revenue collected, and some where there were no receipts at all. This emphasizes again the necessity for legislation to bring about a rearrangement of customs districts.

The following table clearly sets forth the conditions in this respect:



Name of port.

Receipts. Expenses. berem-


Cost of collecting one dollar.

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Albemarle (Elizabeth City), N. C...
Alexandria, Va..
Annapolis, Md..
Apalachicola, Fla
Barnstable, Mass
Beaufort, NC
Beaufort, S. C.
Brazos de Santiago (Brownsville), Tex.
Bridgeton, N. J..
Burlington, Iowa..
Burlington, NJ.
Cairo, ill.
Castine, Me..
Chattanooga, Tenn
Cherrystone (Cape Charles City), Va.
Eastern (Crisfield), Md
Edgartown, Mass
Frenchmans Bay (Ellsworth), Me
Galena, Ill.....
Georgetown, S.C
Great Egg Harbor (Somers Point), N.J
Humboldt (Eureka), Cal
Kennebunk, Me...
La Crosse, Wis..
Little Egg Harbor (Tuckerton), N. J.
Machias, Me
Michigan (Grand Haven), Mich..
Nantucket, Mass
Natchez, Miss..
New London, Conn..
Paducah, Ky....
Pamlico (Newbern), N.C.
Patchogue, N. Y.,
Port Jefferson, N. Y..

$10.00 $2,466. +5
980). 12 995.60

1,263. 44 3, 5.92.71

820. 44 3,733.06

125.00 1,373.53
1,293.08 3,300.90
5,767,97 41, 353.80

648.10 1,623.35

13.59 2:30.75

58.60 403.25 2, 278,22

4, 455, 71 31.88 5t14.13

1,022.9:3 66.30 2,792.42 459.08 2,651.59 418.08


504. 22 25, 79 542.08 825.90 1,373.35 1,635. 44


100.00 134. 45 366.00

10 505.31 1.103.21 4.52. 45 6, 480.53 9,538.49

370. 41

500.00 3,83897 5,137.05

1.70 473. 85
3,295.30 6,519.95


1019 ION ON OSO 919107

42. 118 5.776 8.58

21.019 1.663 1.788


4.217 1. 172


1.338 278,135



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The extension of the immediate-transportation privileges to San Juan, P. R., is again recommended. Merchandise arriving at a port in the United States from a foreign country for shipment to San Juan is now forwarded under procedure not adapted to such shipments, and in consequence there is unnecessary confusion and delay. The business is sufficiently large to justify such extension, and the requisite officers are at San Juan to appraise and classify the merchandise there in accordance with the law.

Special agents.

By the efficient work of the special agents and special employees of the Department considerably over á million dollars has been added to the revenue during the past year. The work of the agents abroad has been systematized. Each agent has been given a special station and territory, resulting in prompter and more effective service. The work of discovering and remedying undervaluation and wrong classification has received special attention and with excellent results.

The following statement gives a summary of the work of the special agents during the fiscal year ended June 30, 1906: Number of reports to the Department.

5,914 Number of seizures

2, 903 Appraised value of seizures

$263, 554.86 Number of arrests..

169 Number of suits commenced

79 Amount involved in suits.

$322, 402. 21 Number of suits pending:

99 Number of suits disposed of July 1, 1905, to July 1, 1906.

25 Number of customs districts examined

46 Amount recovered on account of seizures

$14,960. 82 Amount recovered on account of suits.

$2,904.74 Amount recovered on account of fines, penalties, and forfeitures.

$70,899.55 Amount recovered on account of undervaluation, improper classification, etc.

$1,021, 472, 41

SPECIAL TREASURY OPERATIONS. This being the fifth and last annual report submitted by the present head of this Department, it may not be deemed inappropriate to review briefly the financial operations of the Treasury for the five years last past.

1902 to 1906. Notwithstanding the expenditure of $10,000,000 to the Republic of Panama, and $40,000,000 to the Panama Canal Company for the right of way on which to construct the canal, and $10,000,000 expended in preliminary work upon the canal, and the issuance of $30,000,000 in bonds for continuing the work of construction, the bonded indebtedness of the Government has decreased during the last five years $14,000,000, the annual interest charge has decreased $4,000,000, the money in the Treasury to the credit of the general fund has increased nearly $50,000,000, while the total circulation in the country has increased $600,000,000, and the per capita circulation nearly $5.

The following is a summary covering the period: Bonded indebtedness February 1, 1902

$939, 094, 330.00 Bonded indebtedness November 1, 1906

925, 159, 250.00

Annual interest charge February 1, 1902
Annual interest charge November 1, 1906

13, 935, 080.00 27,866, 892.00 23, 848, 068.00

In Treasury to credit of general fund February 1, 1902.
In Treasury to credit of general fund November 1, 1906.

4,018, 824.00 174, 796, 646.00 223, 300, 810.00

Number of national-bank depositaries February 1, 1902
Number of national-bank depositaries November 1, 1906.

48,504, 164. 00

468 1, 106


$106, 629, 952.00 148, 975, 346.00

Aggregate holdings of depositary banks February 1, 1902.
Aggregate holdings of depositary banks November 1, 1906

Average holdings of depositary banks February 1, 1902.
Average holdings of depositary banks November 1, 1906

Average decrease
National-bank circulation February 1, 1902
National-bank circulation November 1, 1906.

42, 345, 394.00

227, 841.00 134, 697.00

93, 144.00 346, 437, 662.00 574,522, 374.00

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