AGEICULTUEAL ALCOHOL IN GERMANY. 5 



therefore, has increased fully 2^ fold. If it be remembered that the 

 percentage of yield assimied for 1855 was taken rather higher than 

 was in all probability obtained on the average, this ratio becomes 

 favorable. 



TAXES ON THE FINISHED PRODUCTS. 1887. 



While the tax on the mash capacity, therefore, had had a very 

 beneficial effect on the technology of alcohol and on the industry as 

 a whole, the legislation of 1887 had, at least at first, a very different 

 effect. In addition to the mash-capacity tax, a tax was levied on the 

 finished product when disposed of (Verbrauchsabgabe). This sec- 

 ond tax was higher than the first and was graded according to the 

 quantity of whisky produced. A certain amount (Kontingent), 

 supposed to equal the consumption for beverage purposes established 

 on the basis of the statistics of the previous period of 5 years, was 

 taxed at the rate of 50 cents per gallon. The surplus alcohol above 

 this estimated amount (Ueber kontingent) was taxed at the rate of 

 70 cents per gallon. The alcohol used for industrial purposes was 

 not affected by this legislation, since the tax paid was refunded, as 

 will be shown later. 



The considerably increased price for whisky resulted in a corre- 

 sponding diminution in the consumption. The amount consumed 

 shortly before this law went into effect has been estimated at 

 79,252,500 gallons (300,000,000 liters) (Wittelshofer and Behrend, 

 1906, p. 363), whereas in 1887 it dropped to 57,325,975 gallons 

 (217,000,000 liters), that is, about one-third. In the long run it did 

 not pay to produce more alcohol than the demand called for. A con- 

 siderable reduction in the quantity of alcohol produced had to be 

 the inevitable result. Such a setback to a most important agricul- 

 tural industry was equivalent to a setback of agriculture at large. 

 In this setback the South German States (Bavaria, Wurttemberg, 

 and Baden) did not share to the same extent as the North German 

 States, since this law applied only to the northern group. In order 

 to persuade the southern States to accept the same taxation and to 

 join the whisky-tax union (Branntweinsteuergemeinschaft), thereby 

 making it effective for the entire German P^mpirc, these States were 

 given a more liberal assignment at the lower tax rate. As a result, 

 the distilleries of these States produced but very little surplus alco- 

 hol; that is, practically all of their alcohol was taxed at the rate of 

 50 cents per gallon (50 mai-ks per hectoliter) and hut very little at 

 70 cents per galh>n (70 marks per hectoliter). 



The setback which was the immediate eH'cct of the law of 1887 

 was, in part at least, counterbalanced by other effects which were 

 the indirect outcome of the legislation. While (he (Jerman distilling 

 industry possibly never faced the [)rol>i(iii of prohibition, the legis- 



