Daily Ohio statesman. [volume] (Columbus, Ohio) 1855-1870, 1867-08-05
tFrom the N. Y. Commercial Bulletin.l
-nT'he whisky Frauds.

= -s1ssa tFrom the N. Y. Commercial Bulletinl
The whisky Frauds.
The Governments investigations and the
Congressional discussions respecting the
whisky frauds July confirm, the rumors
that have been so rife upon the subject. 1t
: has been tstimated that the quantity of
4 whisky manufactured in the United States
amounted to two hundred millions OF gall
Ions, and the quantity. actually consumed
at one hundred millions of gallons. If the
: tax of two dollars q gallon on the whisky
consumed could be collected the Govern
ment would receive the magnificent rev.
Fenue OF two hundred millions of dollars.
But it has been calculated that the actual
receipts from this source during the cur
rent financial year will not amount to over
ten millions of dollars. This Is considera-
ssbly less than the amount derived from this
source last year, and falls far short of the
seaiculations of the Treasury Department.
The, whisky tax last year amounted to
So, ,000, 600. With the additional safeguards
derived from the stringent laws of the last
Congress. 1t was supposed that at least
$50 100000 would be received for the cur
rent year. The amazing disproportion be-
tween the known consumption of whisky
and the amount of the tax suggests sus-
picions of the most astounding frauds
which are more than borne out by the
facts. ,,.s-.. 3
TT is we'll known that the whisky made
at the present price of grain, with the tax
added, should sell for about $2.60 per gal
lon, while it is freely sold at from $1.20 to
$1.60 per gall6n, Notwithstanding the law
against the sale of liquor at rates below the
probable cost of production with the addi-
: tion of the tax.5sIt is patent then that the
, law is systematically evaded and still
more, that the revenue officers are in coll
fusion with the distillers. The bonded
warehouse system is a fruitful source of
kh<.A kIos- ,sa1rr ss.
rthe Government stores, and withdraw them
when required for consumption and sale.
But it appears that millions of gallons
have been withdrawn on fraudulent bonds.
BY lax construction of the law
liquor manufacturers are permitted; to
bonded warehouses in which their liquor
is stored, and in this way they contrive to
-eretain the virtual custody of their own
i1iquor. Distillers employing thirty or for
fty1 men, and producing from fifty to two
thousand barrels a month, return from one
tto5wehty-five barrels. Seizures are mat
ter of daily O currence: nearly all the dis
stilleries in this city and Brooklyn are now,
osor have been,under seizure, but the officers
compound for violation of law without the
knowledge of the Treasury. 1t has been
proved that idistillers have paid heavy PEN
alties tor which no returns have been made,
yet there are no removals or prosecutions
against fraudulentp producers are spasmodic
sand futile. s Es1i T.. s!.fei g. ,ssi q
The broad fact stands revealed that with
every increase of tax the amount of revenue
is diminished. This is a sig nificant fact that
eshould produce due effect upon our leg :
islators. While it is the duty of all persons
TO enforce the laws of the land upon this
land all other subjects, yet when it is clear
Iy seen that the execution of any law is so
Systematically eyaded as to become imprac-
.ncable.i it is time to inquire into its expedi-
epcy. 1t Is better to repeal or modify a law
that cannot be enforced. Experience shows
that the present whisky tax is a dead letter.
Iinformers, revenue collectors and govern
ment commissioners are multiplied, and
swallow a large proportion of the tax, 1t is
the misfortune of the present system that it
drives honest men utof the trade. Positive
premiums are offered to rascaiity. When
whisky can be openly procured in the
emarket at,rates averaging S1.5O per gallon,
tit is out OF the question for the best dis
posed manufacturers to pay a tax of 50 per
gallon. It would be q losing game. The
7statesmanlike course would be to yield to
sthe logic of events, and reduce the tax to
say a dollar a gallon. This reduction
would diminish the temptations to fraud,
and would undoubtedly increase the reve-
nue. fourfold and, at the same time, would
diminish the costs Of collection.
.-as0 Our legislators in this matter of the
whisky tax, as well as in some others. have
manifestly copied somewhat too closely the
revenue system of England. In that coun-
try the tax is higher than in the United
States, and constitutes the most profitable
source of revenue. But the relative differ
Iences between the United States and Eng
-land are overlooked. The small size of
England renders it possible for the govern
ment of that country to provide somewhat
against fraud. If the United States were
mo larger than England, and only the size
of the State of New York, the two dollar
tax ond whisky would be practicable.
In q country as large as all En-
'ropegit is manifestly impossible to
guard against fraud. In the Western
States whisky can be manufactured at a
cost Ofabout thirty cents gallon, and there
are hundreds of little stills in full blast in
remote localities in the West and South
that can never be reached by revenue de-
tectives. Even itsezed the trouble is not
.worth,the cost. A profit of at least dollar
a gallon can be derived from smuggled
whisky. Political economists hold that
when a tax exceeds thirty per cent
of the cost of production smuggling
becomes profitable, and cannot bt
prevented. But the whisky tax is
nearly five hundred per cent. in addi-
tion to the cost of production. 1t is nc
wonder that dealers and Government off,
GERS are corrupted by such tremendous
temptations to fraud. AS stated above the
true course would be to reduce the tax,
and thus diminish the temptations to eva.
sions of the law. Pending this reduction
we have very little confidence in special
revenue boards. investigating committees
or increased activity in the detective de-
partment, of, the Treasury, or the othel
agencies resorted to for the collection of tn,
excessive tax on liquor.
afF