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is thus a market from which ready-built yachts may be selected by an American who wants one at once.

2. The cost of building a yacht in England is, of course, much less than in the United States, and so is the cost of furnishing.

The CHAIRMAN. The point that I am interested in is this: The difficulty is that these yachts do not come in; they are not imported. Mr. PAYSON. The answer to that is that they are imported.

Mr. DALZELL. Have they American registry?

Mr. PAYSON. They have not registry as such, but the Treasury authorities issue what they call a certificate and give it to an unregistered vessel which does not carry either freight or passengers, and that certificate protects them in this country.

Now, coming to the question of these ships not being an importation, I insist that they are an importation, and nothing but an importation. The difficulty with the situation grew out of this. There was an attempt made in 1896, and under the tariff act of 1890, to impose a duty on a yacht, the Conqueror, which was built abroad for one of the Vanderbilts. She cost about $700,000, and everything about her was put on abroad.

An attempt was made to collect the duty, and the Supreme Court decided at the October term, 1896, that as the act of October 1, 1890, required duties to be levied on all "articles," "imported from foreign countries," and, as none of the schedules mentioned ships or vessels, eo nomine, a pleasure yacht, under the legislation then in force could not be held to be a dutiable manufactured "article."

But there is nothing to prevent Congress from so declaring now, and we urge that it be done in the coming bill at an ad valorem of 75 per cent.

An importation, Mr. Chairman, is simply this: Something that is made, grown, or produced in one country and carried to another. Whether it is on the dutiable list or not by law is another proposition. But simply because, in these days, and under the policy which obtained then, the Supreme Court decided it was not dutiable, that does not prevent Congress, nor is there anything illogical in it, from providing by law, as I shall submit later, from declaring that these ships should be treated as manufactured articles. Why should they not be? It is purely and simply a matter of luxury, indulged in by the wealthy citizens of the country. Millions and millions of dollars are invested.

I have a partial list of these yachts, which I will furnish.

The CHAIRMAN. I do not think we need to argue that. The only question is a legal one. Of course if you will file a brief, we will read it.

Mr. PAYSON. I will be glad to.

Mr. DALZELL. Did we ever impose a tax on yachts under any tariff law?

Mr. PAYSON. No, we never have.

As I said in my opening, Mr. Chairman, all I care for now is to secure the attention of this committee with reference to the importance of this proposition, and that it shall not be said that a Republican Congress, or indeed a Congress composed of Republicans and Democrats, shall allow the shipyards of this country to remain idle

while millions and millions of dollars are expended abroad for the purposes of pleasure, simply and solely, when everything that can be secured by going abroad in this way can be better supplied by American workmen.

I have here the list of foreign-built yachts owned by Americans:

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THE MARINE SUPPLIES ASSOCIATION OF AMERICA FILES LIST OF FOREIGN-BUILT PLEASURE YACHTS.

Hon. HENRY S. BOUTELL, M. C.,

149 BROADWAY,

New York, December 22, 1908.

House of Representatives,

Washington, D. C.

DEAR SIR: Referring to your letter of December 12, 1908, to Messrs. Geo. B. Carpenter & Co., Chicago, Ill., in regard to their letter to you of the 9th instant, I herewith beg to inclose a list showing some of the foreign-built pleasure yachts owned by American citizens and sailed on these waters, together with the estimated value and tonnage. As to the difference in cost of having these yachts built at home and abroad, would say that it is about 25 per cent cheaper abroad, not on account of the cost of steel, but owing mostly to the better wages paid here for skilled labor and partly for cost of fittings.

Thanking you for the interest you are taking in this matter and assuring you that it is greatly appreciated by this association, we are, Respectfully, yours,

MARINE SUPPLIES ASSOCIATION OF AMERICA, By ARTHUR FALK, Secretary.

LIST OF FOREIGN-BUILT YACHTS OWNED BY AMERICAN CITIZENS.

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HENRY B. JOY, DETROIT, MICH., WRITES RELATIVE TO FOREIGNBUILT YACHTS AND RECOMMENDS AMENDMENT TO LAW.

DETROIT, MICH., December 29, 1908.

Hon. SERENO E. PAYNE,
Chairman Ways and Means Committee,
Washington, D. C.

DEAR SIR: I am a small yacht owner, and if I build a yacht of moderate dimensions, I pay American wages and American_prices for material. If I was a "rich guy," and could afford to go to Europe and have my yacht built, I could get foreign cheap material and cheap labor.

As a yacht owner, I most cordially favor an amendment to the existing laws which permit a foreign-built yacht to sail under an American flag free of duty.

Yours, very truly,

HENRY B. JOY, Packard Motor Car Co.

L. E. PAYSON, WASHINGTON, D. C., SUBMITS SUPPLEMENTAL BRIEF RELATIVE TO YACHTS BUILT ABROAD.

WASHINGTON, D. C., January 6, 1909.

COMMITTEE ON WAYS AND MEANS,

Washington, D. C.

GENTLEMEN: Protectionists and free-traders alike in this and in other countries, though differing sharply and irreconcilably on every other fiscal question, are in perfect accord on this one fact-that costly articles of luxury and voluntary use are proper objects of taxation and most legitimate sources of public revenue. This sig

nificant agreement of the two contrasting schools of economic thought has long been exemplified in the tariff law of the United States, whether that law was based on the principle of revenue and protection, as now, or, as sixty years ago, on the principle of revenue only. Thus in the fiscal year 1907 our imports of spirits, wines, and liquors were made to yield an income of $15,797,000; tobacco and cigars, $26,125,000; diamonds and other precious stones, $3,170,000; automobiles, $2,100,000; perfumery, cosmetics, etc., $801,000; jewelry, $653,000. These luxuries, these articles of voluntary use, in our tariff, as in all tariffs, are made to bear particularly high rates of duty, with the cordial assent of legislators of all political faiths and with the unanimous sanction of the people.

But in the present practice of the United States there is one strange, glaring, almost incredible exception to this sound principle of taxation-the most costly and extravagant of all articles of voluntary use, the consummate luxury of luxuries, is absolutely exempt not only from customs duties, but from almost every other contribution to the cost of government. This is the pleasure yacht of the millionaire.

A wealthy American who purchases and imports a foreign automobile for use both in this country and in summer tours of Europe is compelled to pay a customs duty of 45 per cent upon the value of a machine costing perhaps from $5,000 to $8,000, on the first arrival here. But this same wealthy man, purchasing a foreign steam yacht at a cost of from $500,000 to $1,000,000 for use on our harbors, bays, and coasts and occasional tours abroad, is required to pay not one cent of customs duty and only a trivial tonnage tax of perhaps from $200 to $400 on the first arrival from a foreign port, and a little more than half of that thereafter.

A SUBSTANTIAL DUTY RECOMMENDED.

Last year six very rich men built in Europe each a large, elegantly appointed steam yacht, adapted for around-the-world cruising. The total cost of these floating palaces probably exceeded $3,000,000. Yet their total contribution to the national revenue on first arrival here could not have been, in tonnage taxes, as much as $3,000, or onetenth of 1 per cent of their valuation. Not only were the hulls, machinery, and full nautical equipment admitted at this insignificant tonnage tax, but all their beautiful and costly furnishings, their elaborate cabinetwork, upholstery, china, glassware, and silverware, even the uniforms of their officers and men, were brought in entirely free of customs duty, though the rates upon these articles if imported separately would have been from 35 per cent to upward of 100 per cent ad valorem. Under these circumstances it is not unreasonable to ask that foreign-built yachts hereafter purchased by American citizens shall be made subject to a duty of 75 per cent ad valorem in the revised tariff now being prepared by the Committee on Ways and Means. To this end the following draft of a definite proposal is submitted:

Section. Upon any foreign-built yacht purchased after the passage of this act by a citizen of the United States there shall be levied and collected a duty of 75 per cent ad valorem, to be payable at the time of the first arrival of said yacht within the jurisdiction of the United States after said purchase if said yacht was purchased outside the jurisdiction of the United States, or at the time of the purchase if said

yacht was purchased within the jurisdiction of the United States, but this duty shall not be levied more than once on the same yacht.

Any yacht upon which the duty has been paid as above prescribed shall be entitled to all the privileges and shall be subject to all the requirements prescribed by sections 4214, 4215, 4217, and 4218 of the Revised Statutes and acts amendatory thereto in the same manner as if said yacht had been built in the United States, and shall be subject to tonnage duty and light money only in the same manner as if said yacht had been built in the United States.

A LUXURY OF MILLIONAIRES.

It has been said that these foreign-built yachts are a luxury of millionaires. Looking at the list of 74 foreign-built yachts drawn from Lloyd's American Yacht Register for 1908 and appended, it might be added that many if not most of them are the luxuries of multimillionaires. Such great and stately vessels as the Atalanta, 1,303 tons gross, of George J. Gould; the Alcedo, 983 tons, of George W. C. Drexel; the Iolanda, 1,647 tons, of Mortan F. Plant; the Lysistrata, 1,942 tons, of James Gordon Bennett; the Margarita, 1,780 tons, of A. J. Drexel; the North Star, 1,818 tons, of Cornelius Vanderbilt; the Valiant, 1,823 tons, of W. K. Vanderbilt; the Varuna, 1,573 tons, of Eugene Higgins; the Warrior, 1,097 tons, of F. W. Vanderbilt; and the Liberty, 1,607 tons, of Joseph Pulitzer-these powerful ocean-going steamships, as large as the average United States cruisers of thirty years ago, not only require each a considerable part or all of one million dollars for their building and equipment. but the total income of from two to five million dollars for their annual maintenance.

A substantial revenue duty upon these luxurious foreign-built craft will be more effective than any other expedient which your honorable committee can devise to equalize the burdens of taxation. It is a frequent and often well-founded complaint that those who can afford to contribute most to the public revenues actually do contribute least in proportion to their resources. It is this thought which inspires efforts to establish a graduated income tax or a similar tax on the distribution of great fortunes. A tax like this advocated on foreign-built yachts would reach with certainty and precision the very men who ought to and are able to bear a liberal share of the cost of the Government which has made possible their great prosperity.

TAXING THOSE ABLE TO BEAR IT.

Such a tax as is proposed upon foreign-built yachts would not be in any way an exaction upon men of small or moderate means, because as a rule only large and costly pleasure vessels are importedof recent years only those large enough to cross the Atlantic under their own power. The smallest yacht of European construction on the accompanying list is of 17 tons net, or such a vessel as only a distinctively wealthy man would buy or own, and there are only six of less than 100 tons gross. There are besides a few small craft built on the lakes in Canada. The thousands of small yachts in American waters, owned and run by men of small or moderate means, are practically all of American construction. Such small yachts are built here almost as cheaply and, most yachtsmen believe, more skilfully and thoroughly than in foreign countries, because of the native aptitude of the American race for the shipbuilding and sailing

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