clxvi 



of taxation. The result was a considerable decline in the revenue^ 

 while at the same time there was reason to suppose that the real con- 

 sumption had increased and not decreased. 



13. The object of the reforms initiated in 1884 was to provide a 

 remedy for these evils. To ensure sufficient personal attention being 

 paid by the renters to all parts of the farms and to admit of the smaller 

 capitalists with local knowledge competing for them, the size of the 

 farms had to be reduced ; but as it would, at the same time, have been 

 distinctly a retrograde step to allow small renters to establish stills of 

 their own for the supply of tracts served by central distilleries, the 

 expedient was adopted of separating the privileges of manufacture and 

 sale, which had hitherto been leased out conjointly. As regards the 

 former, the policy has been to leave the manufacture and supply of 

 spirits to licensed vendors " free " wherever possible, that is to say, to 

 make it cease to be a monopoly and to permit any one, who chooses 

 to embark in the business of distillation, to obtain a license to work a 

 distillery and to sell the liquor manufactured to licensed vendors at 

 prices mutually agreed upon between them from time to time and not 

 fixed by Government. The existence of sufficient competition between 

 distillers being essential to the success of this scheme, it was experi- 

 mentally tried at first in a limited number of localities, and being found 

 to answer was extended to all the districts brought under the excise 

 system with the exception of a few special tracts where, owing to the 

 absence of railway communications or other causes, the privilege of 

 manufacture is still, for the present, granted as a monopoly. The 

 principal advantages of the '' free supply ^' system, as it is called, are 

 that it affords encouragement to distillers to lay out capital in the 

 adoption of the most recent improvements in the methods of manufac- 

 ture, without the fear, so long as they comply with excise regulations, 

 of having the right of distillation taken out of their hands after any 

 definite period, as would be the case when the privilege is granted as a 

 monopoly ; that by reducing the cost of liquor, it increases the margin 

 left for the Government taxation out of the price realizable from the 

 consumers, and that it enables licensed vendors to exercise some 

 choice as to the distillers from whom they can purchase their liquor, 

 and thus to adapt the liquor supplied by them to some extent to the 

 tastes of the consumers. The duty of maintaining preventive estab- 

 lishments has been undertaken by Government. The realizable 

 taxation varies, as already pointed out, in different parts of the country, 

 depending as it does on the habits of the people, the price which they 

 can pay and the facility with which illicit liquor can be made with 

 impunity ; and in order to obtain the highest duty that it is possible to 

 get in different localities, the taxation was divided into two portions ; 

 the first being the still-head duty payable when the liquor leaves the 

 distilleries and fixed at rates sufficiently low to enable the renters of 

 the vend farms to suppress the sale of illicit liquor where necessary, 

 and the second being the lump sums paid for the privilege of sale by 

 the vend-farmers and determined by public competition. By these 

 arrangements the total taxation leviable in different places is intended 

 to adapt itself to their varying circumstances by a natural process ; 

 and when, by the combined action of the preventive establishments 

 maintained by Government and of the renters working in their own 

 interest to displace illicit by licit consumption, unhampered by artificial 



