lessons deducible from it, which may in brief be summarized as follows:
Whenever a government imposes a tax on any product of industry so high as to sufficiently indemnify and reward an illicit or illegal production of the same, then such product will be illicitly or illegally manufactured; and when that point is reached, the losses and penalties consequent upon detection and conviction—no matter how great may be the one or how severe the other—will be counted in by the offenders as a part of the necessary expenses of their business; and the business, if forcibly suppressed in one locality, will inevitably be renewed and continued in some other. It is therefore matter of the first importance for every government in framing laws for the assessment and collection of taxes to endeavor to determine, not only for fiscal but also for moral purposes, when the maximum revenue point in the case of each tax is reached, and to recognize that in going beyond that point the government "overreaches" or cheats itself.
Obviously those who in the past have shaped the policy of the United States in respect to the taxation of distilled spirits for the purpose of revenue have, for the most part, never studied this aspect of the case or cared to encourage any one to do so; but, on the contrary, as has been somewhat humorously expressed, "they have held out to the citizen, on the one hand, a temptation to violate the law too great for human nature as ordinarily constituted to resist, and in the other writs for personal arrest and seizure of property, and, thus equipped, have announced themselves ready for business."
The data officially collected and reported by the Internal Revenue Department of the United States Treasury furnish the only reliable basis for obtaining approximately correct answers to the following questions: 1. To what extent, through a well-considered system of taxation, can the manufacture and sale of distilled spirits be made available as sources of national revenue? 2. What has been and is the probable per capita and aggregate annual consumption of this class of spirituous liquors by the people of the United States? The first of these questions is eminently pertinent to the legislator; the second, to the student and advocate of social reform.
The experience derived from the taxation of distilled spirits previous to 1869 by the Federal authorities was so unnatural and, as it were, spasmodic as to debar its use for the determination of any general or average conclusions, and limits inquiry to the results which followed in subsequent years (1870–1894), under lower and more rational rates of taxation, and a more efficient and intelligent fiscal administration. And for the purpose of making a clear exhibit of these, attention is asked to the following table (prepared
