Time:    Tue Apr 01 23:50:27 1997
Date:    Tue, 01 Apr 1997 23:49:23 -0800
To:     (Recipient list suppressed)
From:    Paul Andrew Mitchell [address in tool bar]
Subject: SLS: Insider's view of Internal Revenue by L.E. Chittenden
         "His Register of the Treasury" (fwd)

<snip>
>
>Greetings,
>
>Please read below for some interesting information.
>
>A book published in 1891 in New York by Harper & Brothers, Franklin
>Square, the title of which is "RECOLLECTIONS OF PRESIDENT LINCOLN AND
>HIS ADMINISTRATION", and Authored by L.E. Chittenden His Register of the
>Treasury has some very interesting information.  Some excerpts are
>provide below.
>
>Page 4
>	"When I took charge of a bureau in the Treasury, I naturally wished to
>understand the theory of its construction. What were the functions of
>the several bureaus? their relation to the secretary and to each other?
>I wanted a history of the institution. Mr. Hamilton was its reputed
>creator. What were his plans? his objects? How did he propose to secure
>them?
> 	No such history existed. The memoirs of Mr. Hamilton were silent upon
>the details of this the greatest work of his life. The only printed book
>which gave any promise of the information I wanted was a work by "Robert
>Mayo, M.D., Compiler of a New System Mythology," published in 1847. In
>these thin quartos, buried in an indigestible mass of circulars,
>instructions and decisions of secretaries, were a few details of the
>functions of the different bureaus, and that was all."
>
>Page 4 & 5
>"By its complete control of the finances during the war it was a might
>power for evil as well as for good. The fate of the nation depended upon
>its competent management. Directed by an able financier who could
>reinforce the military and naval departments by the confidence born of a
>strong national credit, ours was one of the strongest governments on
>earth. In the hands of an incompetent secretary, careless of the
>national credit, the future promised was bankruptcy, defeat in the
>field, and a divided union."
>
>Page 342
>	"Secretary Chase was opposed upon principle to any system of direct
>taxation which required a force of revenue officers for its collection.
>His chief objection was, that it would create an inquisition into the
>private affairs of the people to which they were unused, and which could
>not fail to become disagreeable and offensive. To the cases cited of
>Great Britain and other powers, where a large revenue was collected
>under such a system, he replied that the revenue was obtained from few
>articles or sources; that his kind of taxation had been so long in use
>that its evils had been reformed; the people had become accustomed to it
>and its burdens were light. Whereas here, the whole subject was novel,
>and the tax would necessarily be laid upon a much larger number of
>articles."
>
>	"But Secretary Chase had constantly before him one controlling fact, to
>which the general public gave but little attention. The Treasury was the
>weakest point in the national defences and the constant source of
>impending peril. The national credit was as necessary to a restoration
>of the Union as oxygen to life. If that became bankrupt, a divided union
>and a confederacy founded upon negro slavery were as inevitable as
>death."
>
>Page 343 & 344
>	"The secretary invited suggestions from a number of gentlemen for the
>structure of the Internal Revenue Statutes. These suggestions arranged
>themselves in two classes. One class proceeded upon the assumption that
>men were naturally dishonest, and that they would regrard a fraud upon
>the United States as an evidence of shrewdness rather than a crime, as a
>credit rather thatn a stigma. The other insisted that the nation was now
>experiencing a grand and most creditable development of patriotism,
>which led it to regard the payment of necessary taxes as a duty, and
>which would no more tolerate frauds upon the Treasury than it would any
>other form of treason."
>
>	"The first of these classes consequently proposed an internal revenue
>system which should enforce the collection of taxes by heavy fines,
>penalties, and forfeitures, which should be divided with informers and
>spies. As these informers would require instruction in their labors, in
>order to become experts, they proposed a bureau of detectives in the
>Treasury, presided over by a chief, with such a number of subordinates
>as should be found necessary, all to be salaried officers of the United
>States."
>	"The general plan of the second class proposed considerable rewards for
>prompt returns and payments, in deductions from the amount of the tax.
>Their principle reliance, however, was upon the honesty of a patriotic
>people, who,  if properly encouraged by the Treasury would constitute a
>great army of unpaid agents for the collection of the taxes, besides
>paying their own, since no man who bore his own share of the burdens of
>war would permit his neighbor to escape from the same burdens by fraud
>or dishonesty. This plan wholly dispensed with detectives and paid
>informers."
>	"I took a somewhat active part in the discussion of the subject, and,
>at the request of the secretary, prepared a written argument, in which
>it was claimed that the employment of an army of detectives was
>inconsistent with the dignity of the government, and would exert a
>corrupting influence upon the people. I also stated that in my
>experience as a lawyer I could not remember that I had ever met with a
>professional detective who could be trusted; that the reason was
>probably to be found in the fact that a man who used deception and
>falsehood as the tools of his trade became incapable of distinquishing
>them from truth, so that he would use either, as at the moment seemed
>most expedient. Such a man's mind was not likely to be controlled by
>conscience, nor were perfect candor and sincerity towards an employer to
>be expected from one whose ordinary line of action in the pursuit of a
>criminal must necessarily involve a constant exercise of the opposite
>qualities. It was also stated that the people, knowing that such agents
>were employed by the Treasury, would infer that honesty and integrity
>were no longer appreciated, and would lose all interest in the honest
>execution of the laws, concluding that, as they got no credit for fair
>payment of their taxes, they might just as well evade them whenever they
>could. The results would necessarily be a general demoralization of the
>public service and a thorough corruption of the public mind."
>	"The advice of the class first mentioned finally prevailed. After long
>hesitation the secretary decided upon the employment of detectives, and
>the first internal revenue act of 1862 was framed upon the theory that
>the taxpayers were the natural enemies of the government, who would
>avail themselves of every opportunity to defraud it, and evade the
>payment of their taxes. The laws for the collection duties upon imports
>were amended so as to conform to the same theory. Heavy penalties were
>imposed by the internal revenue and the tariff laws, which were to be
>devided between the government and the informers. Statutes were enacted
>which gave to irresponsible detectives powers of visitation and
>inquisition into the business of the citizen which were intolerable
>enough to have provoked a revolution if the country had not been already
>involved in war.
>	"The Detective Bureau was established as one of the regular bureaus,
>not under the control of the commissioner of internal revenue, or the
>commissioner of the customs, as it should have been, if permitted to
>exist, but as an annex to the office of the secretary. One L.C. Baker,
>who had acquired some notoriety as a detective, was appointed its chief.
>By some means, never clearly understood, his jurisdiction was extended
>to the army, and he exercised his authority in all the departments and
>throughout the United States."
>
>Page 346
>"How large his regiment ultimately grew is uncertain, but at one time he
>asserted that it exceeded two thousand men.
>	With this force at his command, protected against interference from the
>judicial authorities, Baker became a law unto himself.  He instituted a
>veritable Reign of Terror. He dealt with every accused person in the
>same manner; with a reputable citizen as with a deserter or petty thief.
>He did not require the formality of a written charge; it was quite
>sufficient for any person to suggest to Baker that a citizen might be
>doing something that was against the law. He was immediately arrested,
>handcuffed, and brought to Baker's office at that time in the basement
>of the Treasury. There he was subjected to a brow beating examination,
>in which Baker was said to rival in impudence some heads of the criminal
>bar. This examination was repeated as often as he chose. Men were kept
>in his rooms for weeks, without warrant, affidavit,or other semblance of
>authority. If the accused took any measure for his own protection, he
>was hurried into the Old Capitol Prison, where he was beyond the reach
>of the civil authorities. Baker's subordinates in other cities emulated
>and often surpassed the example of their chief. Powers such as they
>exercised were never similarly conferred by under any government
>claiming to be enlightened."
>
>
>
>Hope you enjoyed.
>Joe Hill
>
>
>
>

========================================================================
Paul Andrew, Mitchell, B.A., M.S.    : Counselor at Law, federal witness
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