PRINCIPLES OF TAXATION. 311 



cents again finds explanation in the fact that when it became evi- 

 dent to the distillers that the fiscal necessities of the Government 

 would soon compel an advance in the tax upon their product, and 

 that such increase would not be made applicable to stocks on hand 

 on which the lower rates had been assessed and paid, they pushed 

 their production to the uttermost in order that they might take 

 advantage of the great increase in the market price of all spirits 

 after the advanced rates had taken effect ; all which anticipations 

 were fully realized. Thus, of the 85,295,393 gallons on which the 

 Internal Revenue Bureau assessed and collected the spirit tax for 

 18G4 69,000,000 in excess of the product of the preceding year at 

 least 70,000,000 gallons were manufactured prior to the 7th of March 

 and were released from Government control by the payment of 

 the twenty-cent tax only ; and as after the 7th of March, 1864, the 

 market price of the greater part of this increased product, which 

 had not been allowed to pass into consumption, was advanced in 

 accordance with the advance in the tax i. e., forty cents per gal- 

 lonit is clear that $28,000,000 at least were thus at once legislated 

 into the pockets of the distillers and speculators concerned. 



Again, immediately after the imposition of the sixty- cent rate 

 in March, 1864, nearly all the distilleries once more suspended 

 operation ; the country was acknowledged to be overstocked with 

 tax-paid whisky, and the Government almost ceased to collect 

 taxes upon its manufacture. In May, however, the project for a 

 further increase in the rates began to be again agitated in Con- 

 gress, and as soon as its realization became probable, all the dis- 

 tilleries speedily resumed operations. How great at that time 

 was the capacity of the loyal States for production may be in- 

 ferred from the circumstance that the number of distilleries in 

 the country, which according to the census of 1860 was 1,138, had 

 increased in 1864 to 2,415. 



On the 1st of July, 1864, the tax was again advanced from sixty 

 cents to a dollar and a half per gallon ; and during that month the 

 entire product of the country of which the revenue officials could 

 take cognizance was only 697,099 gallons. How great a " stock on 

 hand," the result of manufacturing under the twenty and sixty 

 cent rates of tax, was carried over the 1st of July and experienced 

 the advance of ninety cents per gallon in market price in conse- 

 quence of the advance in the tax from sixty cents to a dollar and 

 a half, can not be accurately known ; but 60,000,000 gallons would 

 certainly be a low estimate ; and on this amount the profit that 

 accrued to private interests was at least $50,000,000. 



On the 1st of January, 1865 (the succeeding year), the tax was 

 further advanced to two dollars per proof gallon, when all the 

 operations above described were repeated, with all the benefits to 

 private or speculative interests derived from former experiences, 



