have been enacted. During the fiscal year 1910 there were seized and destroyed 1,911 distilleries, as compared with 1,743 for the fiscal year 1909. In raiding these distilleries last year one officer was killed, 3 seriously wounded, and there were a number of minor casualties. Most cases of illicit distilling are found in the states of Alabama, Georgia, North and South Carolina.

RECOMMENDATIONS.

(1) Considerable complaint has been received from the collectors and officers of internal revenue throughout the country on account of the fact that their compensation is not as great as that received by officials holding similar positions in the customs service or in the postal service. An examination would indicate that this complaint is well founded. It is recommended that a careful investigation be made of this matter and, if found to be correct, that Congress should be asked to reclassify the salaries of collectors so that a collector of internal revenue whose receipts exceed $1,000,000 should be paid $6,000; that the minimum salary paid a collector be $3,000; that all fees and allowances for territorial extent or otherwise be abolished, and that the salaries for collectors ranging between the minimum and maximum be based on the same proportionate scale in accordance with the scale of collectors as at present.

It is recommended that the chief deputy in each collector's office be paid an amount not to exceed 50 per cent of the amount received by the collector. It is recommended that the cashier in the office of each collector be paid an annual compensation not to exceed 40 per cent of the amount received by the collector. The lack of a fixedscale of compensation in offices of these grades is a source of annoyance and is believed to be detrimental to the best interests of the service.

OTHER THAN TAX-PAID SPIRIT STAMPS.

(2) Enormous quantities of stamps are used by rectifiers, wholesale liquor dealers, and distillers for which no charge whatever is made. In addition to furnishing the stamps free of cost, the Government assumes all the expense of their transportation and distribution, the gauging and stamping of rectifiers' packages, and the issue, recording, and handling of wholesale liquor dealers' and transfer stamps. The actual cost to the Government in connection with these classes of stamps is no inconsiderable item. Attention has been called in previous reports of this bureau to this burden placed on the Government, and recommendations have been made for legislation requiring the payment of a small sum per stamp by the users of the same, sufficient at least to meet the cost of printing, handling, and affixing, and the gauging of spirits at rectifying establishments. After a careful examination of the matter I am of the opinion that a charge of 10 cents each would be sufficient to meet these expenses and leave a small margin in excess.

By reference to the annual report for 1905 the statement will be found which shows the relative number of these classes of stamps used at that time, and it is safe to say that the number being used at this time is largely in excess of that for 1905. I therefore recom

mend that legislation be requested placing a charge of 10 cents each on stamps for distilled spirits other than tax paid.

(3) Attention has heretofore been called to the difficulty in administration of the oleomargarine law owing to defects in the statute, and especially the impossibility of the enforcement of the collection of the dual rate of tax.

To remedy existing evils developed in attempts to enforce the provisions of the act of August 2, 1886, as amended by the act of May 9, 1902, it is recommended that legislation be requested for the enactment of a law taxing oleomargarine at a single rate. It is practically impossible to collect the higher rate of 10 cents per pound when oleomargarine of a different class is taxed at one-fourth cent per pound. The inducement for fraud in the classification of the product results in great loss to the Government.

(4) Under existing law internal-revenue agents are not empowered to administer oaths. In the execution of their duties it is often necessary to procure sworn statements of individuals for use as evidence in the prosecution of frauds. Not being authorized to administer oaths, the revenue agent must call for the services of a deputy collector of internal revenue, or take the person before some other officer endowed with power to administer oaths. This process causes loss of time and expense, and frequently defeats the purposes of the investigation.

I would therefore recommend that Congress be requested to amend section 3165, Revised Statutes, so as to include revenue agents and inspectors among the officers authorized to administer oaths in matters relating to the execution of internal-revenue laws.

(5) Outage or wantage.-Section 50, act August 28, 1894, as amended, contains a tabulated statement known as the Carlisle tables, setting forth the maximum amount at various ages that can be allowed on any package of distilled spirits held in bond. The records of this office show that the amounts allowed are not in accord with the actual wantage due to evaporation in warehouses under modern methods of aging spirits. Due largely to this statement of facts, the offense of equalization has been very prevalent. I am of opinion that that section should be revised and amended and a new table of allowances compiled in accordance with the actual losses sustained by evaporation or causes without the neglect of the owner of the spirits, as disclosed by the records of the past fifteen years.

(6) Substitute officers.-Under section 3153, as amended by act August 15, 1876, storekeepers, storekeeper-gaugers, and gaugers are appointed in accordance with civil service regulations by the Secretary of the Treasury upon the recommendation of the collector of the district in which they are to be employed. The number of these officers needed in each district in which distilling and warehousing of distilled spirits is done, fluctuates considerably. Under section 1, act March 3, 1885 (appropriation act for 1886), a collector is authorized to carry on his roll surplus officers not to exceed 15 per cent of the number employed. Owing to the necessity for this excess of officers and the regulation of this department that the work shall be distributed among all the officers as equitably as possible, and of the further fact that these officers are paid on a per diem basis only when under actual assignment, it is very difficult for a collector to avoid in

some cases working hardship and laying himself open to the charge of injustice or partiality in making assignments or continuing particular officers at work for longer periods than other officers. To avoid this trouble in the future, I have the honor to recommend that the method of employing these officers be changed so that instead of being appointed a storekeeper, storekeeper-gauger, or gauger, the officer shall first be appointed a substitute, and no more regular officers be appointed until the number of officers in each district shall have been reduced to the needs of the service, and that all temporary or emergency work be performed by such substitute officers. In this way the complaints of injustice and partiality will be largely avoided, the officers will become experienced in their duties before being put on regular assignments, and a collector will have opportunity to weed out persons who will not become efficient. I am of opinion that the change suggested is badly needed, and I have the honor to request that the necessary legislation be recommended for enactment.

NOTE. For details of the report of the Commissioner of Internal Revenue, see his annual report.

REPORT.

OF THE

SECRETARY OF WAR.

To the PRESIDENT:

WAR DEPARTMENT,

Washington, D. C., December 5, 1910.

I have the honor to submit the following report of operations of this department for the past year:

THE ARMY.

and distribution.

At the date of the last reports received from the military departments (October 15, 1910) the actual strength of the Actual strength Regular Army was 4,310 officers and 67,459 enlisted men, a total of 71,769. As compared with the strength reported last year, this shows an increase of 101 officers and a decrease of 4,381 enlisted men, making a net decrease of the Regular Army during the year of 4,280. These figures do not include the 3,486 men of the Hospital Corps, excluded by the act of March 1, 1887, from classification as part of the enlisted force of the army. There were also in the service 166 officers and 5,100 enlisted men of the Philippine Scouts. This is an increase of 9 officers and a decrease of 472 enlisted men during the year, making a net decrease of 463. Including the Hospital Corps and the Philippine Scouts with the Regular Army, there was a total net decrease from last year of 4,742. Since the date of my last annual report four more companies of Philippine Scouts have been given a battalion organization, making a total of 12 battalions organized under the provisions of the act of Congress of February 2, 1901. This was simply a grouping of a portion of the existing strength into a battalion organization and not an addition to the force of Philippine Scouts, which as indicated above shows a net decrease of about 9 per cent.

347

The geographical distribution of the army on October 15, 1910, including the Philippine Scouts but not including the Hospital Corps, is shown in the following table:

The distribution among the different branches of the service was as follows:

a Including 197 first lieutenants of the Medical Reserve Corps on active duty.
Not including 3,486 enlisted men of the Hospital Corps.

Maximum author. ized strength.

The maximum permanently authorized strength of the Regular Army on October 15, 1910, was 4,453 officers and 76,911 enlisted men. As compared with the corresponding date last year, this shows an increase of 22 officers and a decrease of 1,877 enlisted men, making a net decrease during the year of 1,855. The present authorized maximum strength of the Philippine Scouts is 180 officers and 5,732 enlisted men, an increase during the year of 2 officers and 1 enlisted man.

These figures do not include the Hospital Corps, which has an authorized strength of 3,500 men, but under the law is not to be counted as part of the enlisted strength of the army.