No. 118.
Mr. Evarts to Mr. Wing.

Sir: Referring to your note of the 10th instant, I have the honor to acquaint you of the reply of the Secretary of the Treasury, to whom the subject was referred, to the effect that the collector of internal revenue at San Francisco had been instructed on the 15th September, ultimo, to accept as surety on a tobacco manufacturer’s bond any good and solvent person, whether the owner of real estate or not.

Accept, sir, renewed assurances of my very high consideration,

[Page 242]

(Inclosure 1 in Mr. Evarts’ note.)

Mr. Sherman to Mr. Evarts.

Sir: I have the honor to acknowledge the receipt of your letter of the 17th instant, transmitting a copy of a note from the Chinese legation, in which it is alleged that the collector of internal revenue at San Francisco refuses to accept as sureties on the bonds of tobacco manufacturers wealthy Chinese merchants, unless they are owners of real estate, which few possess, thus compelling the cigar manufacturers to pay a bonus to owners of real estate to become their sureties.

With reference to the practice complained of in said note permit me to call your attention to a copy of a communication upon the subject, under date of the 20th instant, from the Commissioner of Internal Revenue, from which it appears that the collector at San Francisco, on the 15th of September last, was instructed to accept as surety on a tobacco manufacturer’s bond any good and solvent person whether the owner of real estate or not.

Very respectfully,

JOHN SHERMAN, Secretary.
[Inclosure 1 in Mr. Sherman’s No 5771.]

Mr. Raum to Mr. Sherman.

Sir: I have received and duly considered a letter of Hon. Wm. M. Evarts, Secretary of State, of the 17th instant, inclosing a communication from his excellency Yung Wing, of the 10th instant, with inclosures from L. H. Van Shaick, dated San Francisco, June 19, 1879, complaining that William Higby, collector of internal revenue, declined to accept as sureties on the bonds of cigar manufacturers, persons who could not qualify to the ownership of unencumbered real estate, thereby forcing the Chinese cigar manufacturers to pay a bonus to owners of real estate to sign as their sureties.

In reply, I have to state that an examination of the collector’s office at San Francisco, instituted several months ago, disclosed the fact of the irregularity and insufficiency of a number of manufacturer’s bonds of various character, whereupon the collector was directed by this office to carefully examine all the bonds in his office, and to require good and sufficient security to such as were insufficient.

Acting upon these instructions, the collector adopted the rule which, however, is not required by law, that the sureties must show themselves to be the owners of real estate. I am satisfied that Collector Higby acted in entire good faith in this matter, but, believing that the rule was harsh, and would lead to oppression, I addressed him a letter on the 15th September upon this subject, a copy of which is herewith inclosed, under the instructions of which letter he is now accepting as surety any good and solvent person whether he is the owner of real or personal property.

It is proper for me to say I am satisfied that the hardships growing out of Collector Higby’s order have been greatly exaggerated. I observe, in the inclosures of Mr. Van Schaik, strong letters from two ex-deputy collectors, recently removed by Collector Higby, whose statements are, no doubt, biased by that fact.

Assurances can be given to his excellency Yung Wing that the internal-revenue service in California will be so administered as to give Chinese residents the equal protection of the laws.

Very respectfully, your obedient servant,

[Page 243]
[Inclosure 2 in Mr. Sherman’s No. 5771.]

Mr. Raum to Mr. Higby.

Sir: The attention of this office has been called to the subject of the execution of bonds by tobacco and cigar manufacturers of your district who are Chinamen. It is alleged that they have been required to furnish sureties who are the owners of real estate, and that competent bondsmen, possessed of personal property, are rejected, and that thereby the manufacturers have been compelled to pay a large bonus to real-estate owners in consideration for their becoming sureties.

Neither the law nor the regulations limit the qualification of bondsmen to real-estate security, and where a collector finds that requiring such security works a hardship upon the manufacturer, it is improper to exact it where the manufacturer is able to give good security with persons possessing personal property only.

I desire that you shall investigate this subject, and take such action as will prevent any undue hardship upon this class of manufacturers.

Very respectfully,