PRINCIPLES OF TAXATION". 313 



found little favor in respect to its recommendation of tax abate- 

 ment ; and the general sentiment both in and out of Congress was 

 expressed by a leading member of the House of Representatives, 

 who publicly declared that " he was not ready to admit that the 

 nation which had put down such a great rebellion at the cost of 

 so much blood and treasure could not collect a tax of two dollars 

 a gallon on whisky." * The two- dollar tax therefore was allowed 

 to remain in force, and the tax experiences of the United States 

 from 1865 to 1869 inclusive, in respect to spirits, viewed from the 

 standpoint of finance, economics, and morals, constitute one of the 

 most interesting, instructive, and disgraceful chapters in its his- 

 tory. Under the strong temptations of large and almost certain 

 gains, men rushed into schemes for defrauding the revenue with 

 the zeal of enthusiasts for new gold fields ; and the ingenuity of 

 the American people has never had more striking illustrations 

 than was offered in their devices for evading the tax and provid- 

 ing for security against detection and punishment in so doing. 

 The parties concerned in these transactions also showed through- 

 out more ability than Congress and more shrewdness than the 

 revenue department of the national Treasury; and at a later 

 period a Secretary of the Treasury was obliged to resort to the 

 use of a cipher for his telegraphic and written correspondence, in 

 order to prevent the frustration of his plans for the enforcement 

 of the laws by Treasury officials who were specially charged with 

 their administration. The evidence in part confirmatory of these 

 statements is as follows : 



The revenue directly collected during the fiscal year 1866 (the 

 first full year under the two-dollar tax) from spirits distilled from 

 other materials than fruits f was $29,198,000, and in 1867 $28,296,000, 

 indicating an annual product respectively of 14,599,000 and 14,148,- 

 000 gallons. But during the succeeding year, 1868, with no ap- 

 parent reason for any diminution in the national production and 

 consumption of spirits, and with no increase, but rather a diminu- 

 tion, in the volume of imported spirits, the total direct revenue 

 from the same source was but $13,419,092, indicating a production 

 of only 6,709,546 gallons. 



As the consumption of distilled spirits in this latter year was 

 probably not less than 50,000,000 gallons, and as out of this the 

 Government collected a tax upon less than 7,000,000, the sale of 

 the difference at the current market rates of the year, less the 



, * Of the then leading members of Congress, only two the late President Garfield and 

 Hon. W. B. Allison, both members of the House of Representatives indorsed the recom- 

 mendation of the commissioner at the outset. 



f The revenue derived from the taxation of spirits distilled from fruits has always been 

 comparatively small: $283,499 in 1866 ; $868,145 in 1867. 



