314 POPULAR SCIENCE MONTHLY. 



average cost of production (even if estimated as higli as thirty 

 cents in currency), must have returned to the credit of corruption 

 a sum approximating $80,000,000. 



Another curious feature developed was, that the number of 

 distilleries in the country increased just in proportion as the tax 

 on spirits was augmented ; the inducement of the great profit to 

 be obtained from a high rate of tax the two-dollar rate especially 

 undoubtedly tempting many to engage in illicit manufacturing 

 who would be unwilling to do so with a certainty of realizing a 

 much smaller rate of profit. Of many curious examples of evidence 

 to this effect, the following reference is particularly interesting : 

 In the eighth collection district of the State of New York there 

 was, before the internal revenue law went into operation in 1862, 

 but one distillery. When the first tax of twenty cents per gallon 

 was imposed, six additional distilleries were started. Under the 

 sixty-cent rate about one dozen were in operation. But this 

 number, under the two-dollar tax, increased to about forty. Fur- 

 thermore, the tax collected at one distillery in the same district 

 in one month in 1864, under the sixty-cent tax, was one third 

 more than was paid in the aggregate by thirty distilleries in the 

 district in the eight months succeeding November, 1865, when the 

 tax was two dollars ; or, to state it differently, one distillery in 

 one month, in 1864, paid $58,819, at sixty cents per gallon, while 

 thirty distilleries in eight months in 1866 paid, at two dollars per 

 gallon, only $33,664. For the entire country the number of 

 licensed distilleries, which in 1864 was 2,415, was returned in 1868 

 at 4,721 an increase of double in the short space of four years. 



Thus confronted with positive evidence of astounding frauds 

 which the Government that put down a great rebellion virtually 

 confessed that it could not prevent, and a steadily diminishing 

 revenue from what ought to have been a steadily increasing source. 

 Congress finally became thoroughly alarmed, and, acceding to 

 the recommendation of the Special Commissioner of the Revenue, 

 reduced (in July, 1868) the direct tax on distilled spirits from two 

 dollars to fifty cents per proof gallon.* 



* The statement that the tax on distilled spirits was reduced from two dollars to fifty 

 cents per gallon in 1868 has been criticised (see letter of United States Commissioner of Inter- 

 nal Revenue, embraced in report of the Secretary of the Treasury for 1893) as not in ac- 

 cordance with the statement that the tax imposed in the above-mentioned year was not 

 fifty but seventy cents per gallon. The only warrant for such criticism to be found in the 

 circumstance that the statute of 1868, which fixed the direct tax on spirits at fifty cents per 

 gallon, and none other, also contained separate and independent provisions imposing 

 licenses, taxes on capacity of stills, and on the sales of dealers, with some modification of 

 the fees of gaugers and storekeepers ; and that these additional assessments brought up 

 the tax from fifty to seventy cents per gallon. But this reasoning overlooked two essential 

 features of the act, namely, that the direct tax on every proof gallon must be paid by the 

 distiller, owner, or other person having possession thereof, before removal from the distil- 



