and a consequent very large extension of the sphere of participants in the resulting profits.
In short, all the available evidence indicates that the profits realized by distillers, dealers, and speculators, through Congressional legislation having reference to the taxation of distilled spirits from July 1, 1862, to January 1, 1865—a period of two and a half years—and exclusive of any gains accruing from evasions of taxes, and with every allowance for overestimates, must have approximated $100,000,000.
After the establishment of the two-dollar rate on the 1st of January, 1865, there was again a period of inactivity on the part of those interested in the manufacture of distilled spirits. The stocks on hand, manufactured in anticipation of the advances in rates, were very large, and, the markets being over-supplied, there was little legitimate inducement for activity on the part of distillers. The profits realized or made prospectively certain had been, moreover, enormous, and no further advance in the rate of tax could be anticipated. Under such circumstances there was an apparent disposition on the part of manufacturers and speculators to wait and see what developments in legislation and business would follow the termination of the war in favor of the Union, which was then everywhere recognized as approximately certain. These developments were not long in manifesting themselves.
The tax of two dollars per proof gallon (amounting to more than 1,500 per cent on the average cost of production) and the enormous profits contingent upon the evasion of the law, coupled with the abundant opportunity which the law through its imperfections, and the vast territorial area of the country, offered for evasion, created a temptation which it was impossible for human nature as ordinarily constituted to resist. This view was taken by the Revenue Commission in a report to Congress through the Secretary of the Treasury in February, 1866; and the chairman of the commission, after a thorough investigation of the subject and the collection and presentation of a large amount of evidence, expressed the opinion that the attempt to collect a two-dollar tax was utterly impracticable, and that the longer it was retained the less would be the revenue and the greater the corruption. He also coupled this opinion with a recommendation that a tax of fifty cents per proof gallon, with a judicious license system for rectifiers and dealers, be substituted as likely to be most productive of revenue and most efficient for the prevention of illicit distilling and other revenue evasions.
This report, although attracting much attention by reason of the singular revenue experiences of the preceding four years which it detailed (and which the public, with its thought concentrated on the results of the war, had in a great degree overlooked),
