312 POPULAR SCIENCE MONTHLY. 



and a consequent very large extension of the sphere of partici- 

 pants in the resulting profits. 



In short, all the available evidence indicates that the profits 

 realized by distillers, dealers, and speculators, through Congres- 

 sional legislation having reference to the taxation of distilled 

 spirits from July 1, 1862, to January 1, 1865 a period of two and 

 a half years and exclusive of any gains accruing from evasions 

 of taxes, and with every allowance for overestimates, must have 

 approximated $100,000,000. 



After the establishment of the two-dollar rate on the 1st of 

 January, 1865, there was again a period of inactivity on the part 

 of those interested in the manufacture of distilled spirits. The 

 stocks on hand, manufactured in anticipation of the advances in 

 rates, were very large, and, the markets being over-supplied, there 

 was little legitimate inducement for activity on the part of dis- 

 tillers. The profits realized or made prospectively certain had 

 been, moreover, enormous, and no further advance in the rate of 

 tax could be anticipated. Under such circumstances there was an 

 apparent disposition on the part of manufacturers and speculators 

 to wait and see what developments in legislation and business 

 would follow the termination of the war in favor of the Union, 

 which was then everywhere recognized as approximately certain. 

 These developments were not long in manifesting themselves. 



The tax of two dollars per proof gallon (amounting to more 

 than 1,500 per cent on the average cost of production) and the 

 enormous profits contingent upon the evasion of the law, coupled 

 with the abundant opportunity which the law through its imper- 

 fections, and the vast territorial area of the country, offered for 

 evasion, created a temptation which it was impossible for human 

 nature as ordinarily constituted to resist. This view was taken 

 by the Ee venue Commission in a report to Congress through the 

 Secretary of the Treasury in February, 1866 ; and the chairman of 

 the commission, after a thorough investigation of the subject and 

 the collection and presentation of a large amount of evidence, ex- 

 pressed the opinion that the attempt to collect a two-dollar tax 

 was utterly impracticable, and that the longer it was retained the 

 less would be the revenue and the greater the corruption. He also 

 coupled this opinion with a recommendation that a tax of fifty 

 cents per proof gallon, with a judicious license system for recti- 

 fiers and dealers, be substituted as likely to be most productive of 

 revenue and most efficient for the prevention of illicit distilling 

 and other revenue evasions. 



This report, although attracting much attention by reason of 

 the singular revenue experiences of the preceding four years 

 which it detailed (and which the public, with its thought concen- 

 trated on the results of the war, had in a great degree overlooked), 



