on less than 7,000,000 gallons, leaving to the credit of corruption from the sale of the balance of concurrent annual product, at market rates, of from $80,000,000 to $100,000,000. But with a reduction of the tax to fifty cents per proof gallon the annual revenue, including all taxes on the process of manufacture and sales, increased the first year to $45,000,000, and the second to $55,606,000.
By the Act of August 28, 1894, the rate of tax on distilled spirits, which had been in force for fifteen years and was working satisfactorily, was prospectively advanced from ninety cents to a dollar and ten cents per proof gallon. Note the result. For the first six months of 1894 the average monthly revenue which accrued from the lesser tax was about $8,000,000. Then the prospective profits from the increase of the tax were anticipated to such an extent by speculators, that the revenue increased during the month of July and for the first twenty-seven days of August to $19,064,000 and $31,470,000 respectively, representing an aggregate gift to the speculative interest of about $24,000,000. The increased rate of tax having become operative, the revenue for the month of September declined to the comparatively small sum of $510,696. Stated generally, the total receipts from the direct tax of ninety cents per proof gallon during the fiscal year 1893 was $89,231,000; for 1894, with increased rate for part of the year, it was $79,862,000; for 1895, $74,741,000; for 1896, $75,327,897. That a considerable part of this recent decline has been due to a contemporaneous depression of the business of the country is beyond question; but what is to be inferred from the following official statement as to the manner in which the decreased production of spirits in the United States distributed itself during the year 1895: decrease in the production of alcohol, neutral or cologne spirits, 16,065,000 gallons; increase in the production of Bourbon whisky, rye and miscellaneous liquors, 6,924,773 gallons? These figures do not include illicit production, which is certainly very considerable; and one effect of the increase of tax in stimulating this business may be inferred from the fact that the number of illicit stills seized and destroyed increased from 1,016 in 1894 to 1,874 in 1895.
Another point of interest in connection with the increase of the rate of taxation on distilled spirits in 1894, and to a certain extent contingent on such increase, is, that the business of manufacturing whisky has been so stimulated, with a resulting over-production, that the average market price of this commodity, exclusive of taxes, has been reported as below the cost of manufacture, and in accordance with this view of the situation nearly all the large distillers of the country have united in suspending operations.
Under a former rate of duty of ten per cent on the importation
