PRINCIPLES OF TAXATION. 315 



The results of such, legislation were immediate and most re- 

 markable. Illicit distillation practically ceased the very hour 

 the new law came into operation. Industry and the arts experi- 

 enced a large measure of benefit from the reduction in the cost of 

 spirits ; while the Government collected during the second year 

 of the continuance of the new rate and system, with compara- 

 tively little friction, three dollars for every one that was obtained 

 during the last year of the two-dollar tax. Assuming, as is war- 

 ranted, that with a continuance of the two-dollar tax there would 

 have been no increase in the revenue from distilled spirits beyond 

 what accrued in 1868 the last year of its "existence the gain in 

 revenue to the Government in the succeeding two years from the 

 adoption of the fifty-cent rate was at least sixty millions of dol- 

 lars. Furthermore, but for the injudicious but popular speech 

 (to which reference has been made) at an opportune moment in 

 committee by a statesman who had bestowed but little attention 

 to the subject, the reduction of the tax from two dollars to fifty 

 cents per proof gallon would undoubtedly have been anticipated 

 by a year, and attended with like gainful results. The cost of 

 this speech, therefore, to the national Treasury may be rightfully 

 estimated as at least ten millions of dollars. The record of this 

 chapter of the tax experience of the United States also forcibly 

 illustrates the impolicy and disaster of embodying any fiscal 

 policy in statute enactments without a previous study and full 

 comprehension of all the elements involved. 



For the first but incomplete fiscal year (1869) under the fifty- 

 cent tax the revenue increased to the extent of nearly $20,000,000, 

 or from $14,290,000 in 1868 to $33,735,000 in 1869 ; or, including all 

 taxes on the manufacture and sale of distilled spirits, licenses, etc., 

 from $18,655,000 in 1868 to $45,071,000 in 1869. During the next 

 fiscal year (1870) there was a further increase in the total revenue 

 of $10,534,864, or from $45,071,000 in 1869 to $55,606,094 in 1870. 



lery or warehouse ; and next, that none of the indirect and supplementary taxes could be 

 assessed or collected until after the direct tax (of fifty cents) had been paid ; the license 

 taxes, for example, varying according to the product of the distillery, and payable in block, 

 at different specified times. A great and novel object here sought for, namely, of dimin- 

 ishing the inducements to fraud, by directing the collection of the direct and supplementary 

 taxes on spirits as respects persons, places, and times, was fully achieved ; for, although the 

 aggregate of the direct and indirect tax on spirits undoubtedly increased their cost to their 

 final consumers, the largest possible gain to the distiller from the evasion of the separate 

 and comparatively small indirect taxes which contributed to this increase, even apart from 

 the risks of punishment involved, were too small to be worthy of his attention. The effort, 

 therefore, to attempt to minimize by sophistical reasoning the remarkable effect of the 

 reduction in 1868 of the tax on distilled spirits to fifty cents has no rightful claim for 

 consideration, and unquestionably was prompted by a very general but unwise public 

 sentiment, that it is desirable always to subject the manufacture and sale of spirituous and 

 fermented liquors to exceptionally high rates of taxation. 



