PRINCIPLES OF TAXATION. 317 



lessons deducible from it, which, may in brief be summarized as 

 follows : 



Whenever a government imposes a tax on any product of in- 

 dustry so high as to sufficiently indemnify and reward an illicit or 

 illegal production of the same, then such product will be illicitly 

 or illegally manufactured ; and when that point is reached, the 

 losses and penalties consequent upon detection and conviction 

 no matter how great may be the one or how severe the other will 

 be counted in by the offenders as a part of the necessary expenses 

 of their business ; and the business, if forcibly suppressed in one 

 locality, will inevitably be renewed and continued in some other. 

 It is therefore matter of the first importance for every govern- 

 ment in framing laws for the assessment and collection of taxes to 

 endeavor to determine, not only for fiscal but also for moral pur- 

 poses, when the maximum revenue point in the case of each tax is 

 reached, and to recognize that in going beyond that point the gov- 

 ernment " overreaches " or cheats itself. 



Obviously those who in the past have shaped the policy of the 

 United States in respect to the taxation of distilled spirits for the 

 purpose of revenue have, for the most part, never studied this as- 

 pect of the case or cared to encourage any one to do so ; but, on 

 the contrary, as has been somewhat humorously expressed, " they 

 have held out to the citizen, on the one hand, a temptation to vio- 

 late the law too great for human nature as ordinarily constituted 

 to resist, and in the other writs for personal arrest and seizure of 

 property, and, thus equipped, have announced themselves ready 

 for business." 



The data officially collected and reported by the Internal Rev- 

 enue Department of the United States Treasury furnish the only 

 reliable basis for obtaining approximately correct answers to the 

 following questions : 1. To what extent, through a well-considered 

 system of taxation, can the manufacture and sale of distilled 

 spirits be made available as sources of national revenue ? 2. What 

 has been and is the probable per capita and aggregate annual con- 

 sumption of this class of spirituous liquors by the people of the 

 United States ? The first of these questions is eminently perti- 

 nent to the legislator ; the second, to the student and advocate of 

 social reform. 



The experience derived from the taxation of distilled spirits 

 previous to 1869 by the Federal authorities was so unnatural and, as 

 it were, spasmodic as to debar its use for the determination of any 

 general or average conclusions, and limits inquiry to the results 

 which followed in subsequent years (1870-1894), under lower and 

 more rational rates of taxation, and a more efficient and intelligent 

 fiscal administration. And for the purpose of making a clear ex- 

 hibit of these, attention is asked to the following table (prepared 



