OPIUM ACTS.

ACT OF JANUARY 17, 1914.

AN ACT Regulating the manufacture of smoking opium within the United States, and for

other purposes.

Be it enacted, etc., That an internal-revenue tax of $300 per pound shall be levied and collected upon all opium manufactured in the United States for smoking purposes; and no person shall engage in such manufacture who is not a citizen of the United States and who has not given the bond required by the Commissioner of Internal Revenue. Every person who prepares opium suitable for smoking purposes from crude gum opium, or from any preparation thereof, or from the residue of smoked or partially smoked opium, commonly known as yen shee, or from any mixture of the above, or any of them, shall be regarded as a manufacturer of smoking opium within the meaning of this act.

SEC. 2. That every manufacturer of such opium shall file with the collector of internal revenue of the district in which his manufactory is located such notices, inventories, and bonds, shall keep such books and render such returns of material and products, shall put up such signs and affix such number to his factory, and conduct his business under such surveillance of officers and agents as the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, may by regulation require. But the bond required of such manufacturer shall be with sureties satisfactory to the collector of internal revenue, and in a penal sum of not less than $100,000; and the sum of said bond may be increased from time to time and additional sureties required, at the discretion of the collector or under instructions of the Commissioner of Internal Revenue.

SEC. 3. That all opium prepared for smoking manufactured in the United States shall be duly stamped in such a permanent manner as to denote the payment of the internal-revenue tax thereon.

SEC. 4. That the provisions of existing laws covering the engraving, issue, sale, accountability, effacement, cancellation, and the destruction of stamps relating to tobacco and snuff, as far as applicable, are hereby made to apply to stamps provided for by the preceding section.

SEC. 5. That a penalty of not less than $10,000 or imprisonment for not less than five years, or both, in the discretion of the court, shall be imposed for each and every violation of the preceding sections of this act relating to opium by any person or persons; and all opium prepared for smoking wherever found within the United States without the stamps required by this act shall be forfeited and destroyed.

SEC. 6. The provisions of the act of October first, eighteen hundred and ninety (Twenth-sixth Statutes, page fifteen hundred and sixty-seven), in so far as they relate to the manufacture of smoking opium, are hereby repealed.

Approved, January 17, 1914. (38 Stat. 275.)

Constitutionality of the act.

Section 1 of the act imposing an internal-revenue tax on smoking opium made in the United States, and prohibiting its manufacture, except by citizens who have given bond, held constitutional. (Lee Mow Lin v. United States, 250 F. 694.)

E

Expert evidence.

In a prosecution for illegally manufacturing smoking opium, the testimony of an expert chemist and analyst that in h's opinion the opium in question, which he had analyzed, was of domestic manufacture and made from crude gum, based on the difference in the morphine content between such opium and the foreign-made article, held properly admitted. (Lee Mow Lin v. United States, 250 Fed. 694, 1918.)

Indictment of aliens.

Where an indictment charged that defendants did "engage in the business of manufacturers of opium for smoking purpos s, without having given the bond required by law of manufacturers of opium for smoking purposes" and in the trial the fact appeared that each of the defendants was not a citizen of the United States but was a Chinese person; as there was no proof that defendants had failed to give the bond required by the commissioner and as he could not have required a bond of the defendants, the statute restricting the right of manufacture to United States citizens, there was a failure to prove. an essential element of the indictment and therefore they could not be convicted. (Lee Mow Lin et al. v. United States, 240 Fed. 408, 1917; Aff. 250 Fed. 694, 1918.)

Failure to give bond.

The Government, on prosecution for manufacture of opium for smoking purposes without the giving of the bond required by law, viz, "the bond required by the Commissioner of Internal Revenue,' must show that said Commissioner had, by regulation, required a bond, and what it called for. (Chin Sing v. United States, 227 Fed. 396, 1915.)

Noncompliance with regulations.

The Government, on prosecution for manufacturing opium for smoking purposes without doing certain things, as required by the Commissioner of Internal Revenue, with the approval of the Secretary of the Treasury, by regulations made by said commissioner under authority of law, must show the making of the regulations and what they were. (Id.)

Failure to stamp.

The Government, on prosecution for manufacturing opium for smoking purposes without stamping it in such a permanent manner as to denote payment of the internal-revenue tax thereon, must show existence of a stamp therefor, required by regulations of the Commissioner of Internal Revenue with the approval of the Secretary of the Treasury. (Id.)

SPECIAL TAXES AND STAMP TAXES.

ACT OF OCTOBER 22, 1914.

GENERAL PROVISIONS.

Acts of 1862 and 1898 considered.

The provisions of the acts of July 1, 1862, and June 13, 1898, are considered in construing stamp taxes under the act of October 22, 1914. (In re Hawley, 220 Fed. 373, 1915.)

Construction.

The rule that the internal-revenue law should be strictly construed in favor of exemption is but a rule of construction, which yields when the intent of the statute is manifest. (In re Hawley, 220 Fed. 373, 1915.)

Constitutionality.

The statute is not void, as imposing (sec. 3) a direct tax upon the property of a banker merely because of his ownership of such property as the act does not tax property as such but levies a special license tax upon one engaged in a particular business, because of the privilege he is exercising, and the fact, if true, that the amount paid is the same as would be paid had all the property of the banker been taxed on an assessed value basis, is merely incidental and accidental. (Real Estate Title, Ins. & Trust. Co., v. Lederer, 229 Fed. 799, 1916.)

The tax imposed by section 3 (1) of this act upon bankers for capital used in the banking business is a franchise tax, and is not subject to attack on the ground that it is a direct tax not apportioned. (Anderson v. Farmers' Loan & Trust Co., 241 Fed. 323, 1917.)

SECTION 3-OCCUPATIONAL TAXES.

SPECIAL TAXES.

SEC. 3. That on and after November first, nineteen hundred and fourteen, special taxes shall be, and hereby are, imposed annually as follows, that is to say:

First. Bankers shall pay $1 for each $1,000 of capital used or employed, and in estimating capital surplus and undivided profits shall be included. The amount of such annual tax shall in all cases be computed on the basis of the capital, surplus, and undivided profits for the preceding fiscal year. Every person, firm, or company, and every incorporated or other bank, having a place of business where credits are opened by the deposit or collection of money or currency, subject to be paid or remitted upon draft, check, or order, or where money is advanced or loaned on stocks, bonds, bullion, bills of exchange, or promissory notes, or where stocks, bonds, bullion, bills of exchange, or promissory notes are received for discount or sale, shall be a banker under this act: Provided, That any postal savings bank, or savings bank having

no capital stock, and whose business is confined to receiving deposits and loaning or investing the same for the benefit of its depositors, and which does no other business of banking, shall not be subject to this tax.

Second. Brokers shall pay $30. Every person, firm, or company, whose business it is to negotiate purchases or sales of stocks, bonds, exchange, bullion, coined money, bank notes, promissory notes, or other securities, for themselves or others, shall be regarded as a broker: Provided, That any person having paid the special tax as a banker shall not be required to pay the special tax as a broker.

Third. Pawnbrokers shall pay $50. Every person, firm, or company whose business or occupation it is to take or receive, by way of pledge, pawn, or exchange, any goods, wares, or merchandise, or any kind of personal property whatever, as security for the repayment of money loaned thereon, shall be deemed a pawnbroker.

Fourth. Commercial brokers shall pay $20. Every person, firm, or company whose business it is as a broker to negotiate sales or purchases of goods, wares, produce, or merchandise, or to negotiate freights and other business for the owners of vessels, or for the shippers or consignors or consignees of freight carried by vessels, shall be regarded as a commercial broker under this act.

Fifth. Custom-house brokers shall pay $10. Every person, firm, or company whose occupation it is, as the agent of others, to arrange entries and other custom-house papers, or transact business at any port of entry relating to the importation or exportation of goods, wares, or merchandise, shall be regarded as a custom-house broker.

Sixth. Proprietors of theaters, museums, and concert halls, where a charge for admission is made, having a seating capacity of not more than two hundred and fifty, shall pay $25; having a seating capacity of more than two hundred and fifty and not exceeding five hundred, shall pay $50; having a seating capacity exceeding five hundred and not exceeding eight hundred, shall pay $75; having a seating capacity of more than eight hundred, shall pay $100. Every edifice used for the purpose of dramatic or operatic or other representations, plays, or performances, for admission to which entrance money is received, not including halls or armories rented or used occasionally for concerts or theatrical representations, shall be regarded as a theater: Provided, That whenever any such edifice is under lease at the passage of this act, the tax shall be paid by the lessee, unless otherwise stipulated between the parties to said lease.

Seventh. The proprietor or proprietors of circuses shall pay $100. Every building, space, tent, or area where feats of horsemanship or acrobatic sports or theatrical performances not otherwise provided for in this act are exhibited shall be regarded as a circus: Provided, That no special tax paid in one State, Territory, or the District of Columbia shall exempt exhibitions from the tax in another State, Territory, or the District of Columbia, and but one special tax shall be imposed for exhibitions within any one State, Territory, or District.

Eighth. Proprietors or agents of all other public exhibitions or shows for money not enumerated in this section shall pay $10: Provided, That a special tax paid in one State, Territory, or the District of Columbia, shall not exempt exhibitions from the tax in another State, Territory, or the District of Columbia, and but one special tax shall be required for exhibitions within any one State, Territory, or the District of Columbia: Provided further, That this paragraph shall not apply to Chautauquas, lecture lyceums, agricultural or industrial fairs, or exhibitions held under the auspices of religious or charitable associations.

Ninth. Proprietors of bowling alleys and billard rooms shall pay $5 for each alley or table. Every building or place where bowls are thrown or where games of billards or pool are played and that are open to the public, with or without price, shall be regarded as a bowling alley or a billiard room, respectively.

Tenth. Commission merchants shall pay $20. Every person, firm, or company whose business or occupation it is to receive into his or its possession any goods, wares,

or merchandise to sell the same on commission shall be regarded as a commission merchant: Provided, That any person having paid the special tax as a commercial broker shall not be required to pay the special tax as a commission merchant: Provided further, That this provision shall not apply to commission houses run upon a cooperative plan.

Section 3 (1)Special tax on bankers.

What, if any, of the capital of a corporation engaged in banking and other kinds of business, is employed in banking, within act October 22, 1914, is a fact to be found. (Real Estate Title, Ins.

& Trust Co. v. Lederer, 229 Fed. 799, 1916.) "Constitutionality."

See also this case under

A corporation, engaged not only in the banking business, but also in the title, insurance, and other kinds of business kept entirely separate from its other moneys a sum equal to its aggregate of deposits, and a sum equal to the aggregate of its capital and surplus invested on chosen securities, called "capital investments." Its capital investments were invested in real estate and other investments of a less mobile character than investments commonly termed "liquid," while the deposits were invested in securities which were more readily convertible into cash, and these investments were kept separate from its other investments. It from time to time put out statements of its financial condition, showing its assets to consist of cash on hand, etc., and showing the aggregate amount of its liabilities, in which were included, to balance the statement, the amount of its capital stock, surplus, and undivided profits, which were not less than the amount which measured the tax imposed on it under the act of October 22, 1914, and paid by it. Held, That the fact did not show that it did not use or employ any part of its capital in banking and it was not entitled to recover back such tax, as the character of a banker's investments can have no bearing upon the question of the amount of capital invested in the business, and the capital, surplus, or undivided profits, either separately or in a lump, can not be segregated from a bank's other assets and identified as such. (Real Estate Title, Ins. & Trust Co. v. Lederer, 229 Fed. 799, 1916.) A trust company, chartered to do a banking as well as a trust company business, which was authorized to discount commercial paper and accept drafts, and which held investments to an amount exceeding its capital, surplus, and undivided profits, opened a so-called capital investment account, to which bonds and mortgages were debited to an amount exceeding the capital, surplus, and undivided profits. The trust company, while doing a trust company business, also did a considerable banking business. Held, That when a trust company is organized, obtains subscription for capital stock, and then opens its doors and begins business, its assets comprise all its property, and it is liable for taxation upon that portion of its capital and surplus actually employed in the banking business, regardless of its artificial