B^OW TO RAISE REVENUE. 733 



dollars for every gallon of alcohol tliat can evade taxation. The 

 annual loss of revenue consequent upon the proposed exemption 

 of alcohol will not be less than $10,000,000 and probably more, 

 all of which, under present revenue necessities, will have to be 

 made good by an equivalent increase of taxation on other com- 

 modities. 



The circumstance that some of the countries of Europe, espe- 

 cially Great Britain, allow alcohol mixed exclusively with naphtha 

 (methyl), and in very large stipulated quantities, to be exempt 

 from taxation, but the use of which, from the nauseous smell 

 and taste thereby imparted, is exceedingly limited, has no bear- 

 ing on the situation in the United States. In Europe the 

 procese of methylation is conducted under the close supervision 

 of revenue officials, as it must be in the United States. In the 

 former countries the number of grain distilleries, with bonded 

 warehouses attached, where the process must be mainly con- 

 ducted, is comparatively small. In the United States it is com- 

 paratively large; the number operated in the single State of 

 North Carolina in 1895 being largely in excess of the number in 

 the whole of Great Britain. If, in addition to the number of in- 

 spectors and gangers required at the distilleries for an honest ad- 

 ministration of the exemption, the number of druggists who use 

 alcohol in medicinal preparations (which has been officially esti- 

 mated as at least 32,000) and manufacturers of patent medi- 

 cines are taken into account, the problem confronting the admin- 

 istration of the Internal Revenue Department of the Government 

 might be well characterized as " appalling." In short, if the exact 

 truth in respect to this proposed modification of the taxes on dis- 

 tilled spirits were known, it would probably appear that the 

 people most interested in securing this exemption are the patent- 

 medicine manufacturers, who see a great extension of their busi- 

 ness in manufacturing cheap intoxicants without the compulsory 

 use of methyl, under the name of medicinal preparations, and 

 selling them by the bottle from the apothecary's shelf, rather 

 than from the bars of hotels and restaurants. And this assump- 

 tion finds much of confirmation in the circumstance that in re- 

 spect to the applications filed in the Treasury for rebates, or 

 damages for the non- execution of the exemption law, which are 

 very considerable, estimated at from $10,000,000 to $19,000,000, the 

 Internal Revenue reports that a large proportion of the claimants 

 are manufacturers of patent medicines, and also to some extent 

 the manufacturers of " mince pies " and candy. Recent investi- 

 gations instituted and reported by the Massachusetts State Board 

 of Health also show that many of the most noted patent medi- 

 cines, especially the so-called "blood purifiers," "nerve tonics," 

 and other remedies of like character, contain very large per- 



