Page:Popular Science Monthly Volume 48.djvu/346

314 average cost of production (even if estimated as high as thirty cents in currency), must have returned to the credit of corruption a sum approximating $80,000,000.

Another curious feature developed was, that the number of distilleries in the country increased just in proportion as the tax on spirits was augmented; the inducement of the great profit to be obtained from a high rate of tax—the two-dollar rate especially—undoubtedly tempting many to engage in illicit manufacturing who would be unwilling to do so with a certainty of realizing a much smaller rate of profit. Of many curious examples of evidence to this effect, the following reference is particularly interesting: In the eighth collection district of the State of New York there was, before the internal revenue law went into operation in 1862, but one distillery. When the first tax of twenty cents per gallon was imposed, six additional distilleries were started. Under the sixty-cent rate about one dozen were in operation. But this number, under the two-dollar tax, increased to about forty. Furthermore, the tax collected at one distillery in the same district in one month in 1864, under the sixty-cent tax, was one third more than was paid in the aggregate by thirty distilleries in the district in the eight months succeeding November, 1865, when the tax was two dollars; or, to state it differently, one distillery in one month, in 1864, paid $58,819, at sixty cents per gallon, while thirty distilleries in eight months in 1866 paid, at two dollars per gallon, only $33,664. For the entire country the number of licensed distilleries, which in 1864 was 2,415, was returned in 1868 at 4,721—an increase of double in the short space of four years.

Thus confronted with positive evidence of astounding frauds which the Government that put down a great rebellion virtually confessed that it could not prevent, and a steadily diminishing revenue from what ought to have been a steadily increasing source. Congress finally became thoroughly alarmed, and, acceding to the recommendation of the Special Commissioner of the Revenue, reduced (in July, 1868) the direct tax on distilled spirits from two dollars to fifty cents per proof gallon.