Evening star., 1934-05-02
ILLICIT RUM SEEN
TOOCOSTLY TOU.S.
BootIegged Liquor Exceeds
Legal Product, OBJ
server Says.
BY DAVID LAWRENCE.

The truth about prohibition since
repeal seemed incredible as the infor-
nation came in from various parts of
the country during the last several
months, but it remained for the Fed
eral alcohol administrator, Joseph
Choate, jr., to make public record OF
the way the Government is being
cheated out of taxes.
No estimates are given as to the
amount OF money being lost by the
Government, but Mr.. Choate does say
that the Illicit traffic in liquor, both
manufacture and distribution, is in
excess Of the legitimate industry.
This means that the public is pa
troniZing the bootlegger extensively.
While those who want alcoholic bev-
erages in States which are still dry by
law are naturally buying from Illicit
agencies, the fact is beginning to be
borne in on officials here that the
bootleggers are pretty well entrenched
in the wet States, too.
A variety of reasons account for
this unfortunate state of affairs. One
is the stupidity of the Federal author
tiles, who promptly cut out funds for
enforcement the moment repeal came
Another is the short -sightedneSS of
State governments, which have legal
lied distribution by State stores and
then failed to provide the necessary
capital to buy sufficient quantities of
liquor to take care of the demand.
Loss Is Great.
1t can be proved that hundreds of
millions of dollars which are sorely
needed to help balance the budget or,
if you like, to pay for relief eXpendi-
lures, are not being collected by the
Treasury Department because there
are not enough Federal agencies or
a sufficiently effective prohibition en-
forcement to make sure that the taxes
are collected. In a sense the public
Is hardly to blame. 1t sometimes
cannot tell the difference between
lawful and unlawful products. The
boOtleggerS and Illicit manufacturers
are adept in making labels and even
in forging revenue stamps. Old bot
ties are refilled. In one large city
the charge is made that the hotels are
serving more bootleg products than
lawful liquor. Much of it bears the
labels and brands that are well
known. Smuggling is extensive but
unlawful manufacture inside the
United States is even more wide
spread.
Mr.. Choate has taken a practical
view of the whole business. Both he
and his able assistant, Harris Will
nngham. who have been studying
every aspect of the problem for the
Federal Government since repeal, are
insistent that the job of Federal CO.
ordination. until the States are ready
to do the job of regulating the liquor
traffic, cannot be regarded as a SIM
pie matter of drawing up codes and
making regulations.
Trade to Bo0tIeggers.
Indeed, as Mr.. ChOate himself
AYERS, some of the regulations set up
by the States have had the effect of
driving trade directly to the bootleg
gers by making it difficult for the law
full distillerS to carry on business.
What is needed, of course, Is
broad view of how to get revenues
into the Treasury, assuming the de-
mand to be what it is.
Mr.. Choate estimates the amount OF
consumption as far exceeding pre-
prohibition days and shows by the
number of stills seized that the illegal
consumption at present is enormous.
Funds for enforcement are essential
If only as a business proposition. Ten
million spent in enforcement would
bring in 10 times that amount in tax
collections. AS for the protection that
would be given the legitimate indus
try, which is paying its taxes and
giving employment to more people
right along and buying more farm
products and bottles and raw mate
rials, there is no doubt that a policy
of practical cooperation between the
Government and the new industry will
do more, ultimately, to get temper
ance than restrictive rules.
The Treasury has recommended
and the President has approved the
lifting of the import embargoeS. This
helps in a sense because it brings in
new liquor, but it also strikes at the
legitimate American industry, which,
on the one hand, is threatened by
the bootleggers who smuggle from
Canada and pay no tariffs or revenue
taxes and, on the other hand, by the
influx of foreign goods, which tend to
compete with American brands at a
time the legitimate businesses are
trying to get a foothold.
The pronouncement by Mr.. Choate
may be regarded as the beginning Of
a common sense view of the problem
of alcohol distribution, which has
grown more and more complicated
since repeal. For the Illicit traffic
still holds sway The Government is
not getting anywhere near the taxes
it should. The States which were
supposed to know how to handle the
question are floundering around with
different systems that are not effec-
tive in competing with the Illicit
trade. And more liquor is being con-
sumed than ever. So the advocates
Of temperance are losing out, the
Federal and State governments are
1OcioO ont