1911 Encyclopædia Britannica/Brewing/Trade

I. TRADE AND TAXATION

The preparation of beer on anything approaching to a manufacturing scale appears, until about the 12th or 13th century, to have been carried on in England chiefly in the monasteries; but as the brewers of London combined to form an association in the reign of Henry IV., and were granted a charter in 1445, it is evident that brewing as a special trade or industry must have developed with some rapidity. After the Reformation the ranks of the trade brewers were swelled by numbers of monks from the expropriated monasteries. Until the 18th century the professional brewers, or brewers for sale, as they are now called, brewed chiefly for the masses, the wealthier classes preparing their own beer, but it then became gradually apparent to the latter (owing no doubt to improved methods of brewing, and for others reasons) that it was more economical and less troublesome to have their beer brewed for them at a regular brewery. The usual charge was 30s. per barrel for bitter ale, and 8s. or so for small beer. This tendency to centralize brewing operations became more and more marked with each succeeding decade. Thus during 1895–1905 the number of private brewers declined from 17,041 to 9930. Of the private brewers still existing, about four-fifths were in the class exempted from beer duty, i.e. farmers occupying houses not exceeding £10 annual value who brew for their labourers, and other persons occupying houses not exceeding £15 annual value. The private houses subject to both beer and licence duty produced less than 20,000 barrels annually. There are no official figures as to the number of “cottage brewers,” that is, occupiers of dwellings not exceeding £8 annual value; but taking everything into consideration it is probable that more than 99% of the beer produced in the United Kingdom is brewed by public brewers (brewers for sale). The disappearance of the smaller public brewers or their absorption by the larger concerns has gone hand-in-hand with the gradual extinction of the private brewer. In the year 1894–1895 8863 licences were issued to brewers for sale, and by 1904–1905 this number had been reduced to 5164. There are numerous reasons for these changes in the constitution of the brewing industry, chief among them being (a) the increasing difficulty, owing partly to licensing legislation and its administration, and partly to the competition of the great breweries, of obtaining an adequate outlet for retail sale in the shape of licensed houses; and (b) the fact that brewing has continuously become a more scientific and specialized industry, requiring costly and complicated plant and expert manipulation. It is only by employing the most up-to-date machinery and expert knowledge that the modern brewer can hope to produce good beer in the short time which competition and high taxation, &c., have forced upon him. Under these conditions the small brewer tends to extinction, and the public are ultimately the gainers. The relatively non-alcoholic, lightly hopped and bright modern beers, which the small brewer has not the means of producing, are a great advance on the muddy, highly hopped and alcoholized beverages to which our ancestors were accustomed.

The brewing trade has reached vast proportions in the United Kingdom. The maximum production was 37,090,986 barrels in 1900, and while there has been a steady decline since that year, the figures for 1905–1906—34,109,263 barrels—were in excess of those for any year preceding 1897. It is interesting in this connexion to note that the writer of the article on Brewing in the 9th edition of the Encyclopaedia Britannica was of the opinion that the brewing industry—which was then (1875) producing, roughly, 25,000,000 barrels—had attained its maximum development. In the year ending 30th September 1905 the beer duty received by the exchequer amounted to £13,156,053. The number of brewers for sale was 5180. Of these one firm, namely, Messrs Guinness, owning the largest brewery in the world, brewed upwards of two million barrels, paying a sum of, roughly, one million sterling to the revenue. Three other firms brewed close on a million barrels or upwards. The quantity of malt used was 51,818,697 bushels; of unmalted corn, 125,671 bushels; of rice, flaked maize and similar materials, 1,348,558 cwt.; of sugar, 2,746,615 cwt.; of hops, 62,360,817 ℔; and of hop substitutes, 49,202 ℔. The average specific gravity of the beer produced in 1905–1906 was 1053.24. The quantity of beer exported was 520,826; of beer imported, 57,194 barrels. It is curious to note that the figures for exports and imports had remained almost stationary for the last thirty years. By far the greater part of the beer brewed is consumed in England. Thus of the total quantity retained for consumption in 1905–1906, 28,590,563 barrels were consumed in England, 1,648,463 in Scotland, and 3,265,084 in Ireland. In 1871 it was calculated by Professor Leone Levi that the capital invested in the liquor trade in the United Kingdom was £117,000,000. In 1908 this figure might be safely doubled. A writer in the Brewers’ Almanack for 1906 placed the capital invested in limited liability breweries alone at £185,000,000. If we allow for over-capitalization, it seems fairly safe to say that, prior to the introduction of the Licensing Bill of 1908, the market value of the breweries in the United Kingdom, together with their licensed property, was in the neighbourhood of £120,000,000, to which might be added another £20,000,000 for the value of licences not included in the above calculation; the total capital actually sunk in the whole liquor trade (including the wine and spirit industries and trades) being probably not far short of £250,000,000, and the number of persons directly engaged in or dependent on the liquor trade being under-estimated at 2,000,000. (For comparative production and consumption see Beer.)

Taxation and Regulations.—The development of the brewing industry in England is intimately interwoven with the history of its taxation, and the regulations which have from time to time been formed for the safeguarding of the revenue. The first duty on beer in the United Kingdom was imposed in the reign of Charles II. (1660), namely 2s. 6d. per barrel on strong and 6d. per barrel on weak beer. This was gradually increased, amounting to 4s. 9d. on strong and 1s. 3d. on weak beer in the last decade of the 17th century, and to 8s. to 10s. in the year 1800, at which rate it continued until the repeal of the beer duty in 1830. A duty on malt was first imposed in the reign of William III. (1697), and from that date until 1830 both beer duty and malt tax were charged. The rate at first was under 7d. per bushel, but this was increased up to 2s. 7d. prior to the first repeal of the beer duty (1830), and to 4s. 6d. after the repeal. In 1829 the joint beer and malt taxes amounted to no less than 13s. 8d. per barrel, or 41/2d. per gallon, as against 21/2d. at the present day. From 1856 until the abolition of the malt tax, the latter remained constant at a fraction under 2s. 81/2d. A hop duty varying from 1d. to 21/2d. per pound was in existence between 1711 and 1862. One of the main reasons for the abolition of the hop duty was the fact that, owing to the uncertainty of the crop, the amount paid to the revenue was subject to wide fluctuations. Thus in 1855 the revenue from this source amounted to £728,183, in 1861 to only £149,700.

It was not until 1847 that the use of sugar in brewing was permitted, and in 1850 the first sugar tax, amounting to 1s. 4d. per cwt., was imposed. It varied from this figure up to 6s. 6d. in 1854, and in 1874, when the general duty on sugar was repealed, it was raised to 11s. 6d., at which rate it remained until 1880, when it was repealed simultaneously with the malt duty. In 1901 a general sugar tax of 4s. 2d. and under (according to the percentage of actual sugar contained) was imposed, but no drawback was allowed to brewers using sugar, and therefore—and this obtains at the present day—sugar used in brewing pays the general tax and also the beer duty.

By the Free Mash-Tun Act of 1880, the duty was taken off the malt and placed on the beer, or, more properly speaking, on the wort; maltsters’ and brewers’ licences were repealed, and in lieu thereof an annual licence duty of £1 payable by every brewer for sale was imposed. The chief feature of this act was that, on and after the 1st of October 1880, a beer duty was imposed in lieu of the old malt tax, at the rate of 6s. 3d. per barrel of 36 gallons, at a specific gravity of 1.057, and the regulations for charging the duty were so framed as to leave the brewer practically unrestricted as to the description of malt or corn and sugar, or other description of saccharine substitutes (other than deleterious articles or drugs), which he might use in the manufacture or colouring of beer. This freedom in the choice of materials has continued down to the present time, except that the use of “saccharin” (a product derived from coal-tar) was prohibited in 1888, the reason being that this substance gives an apparent palate-fulness to beer equal to roughly 4° in excess of its real gravity, the revenue suffering thereby. In 1889 the duty on beer was increased by a reduction in the standard of gravity from 1.057 to 1.055, and in 1894 a further 6d. per barrel was added. The duty thus became 6s. 9d. per barrel, at a gravity of 1.055, which was further increased to 7s. 9d. per barrel by the war budget of 1900, at which figure it stood in 1909. (See also Liquor Laws.)

Prior to 1896, rice, flaked maize (see below), and other similar preparations had been classed as malt or corn in reference to their wort-producing powers, but after that date they were deemed sugar^[1] in that regard. By the new act (1880) 42 ℔ weight of corn, or 28 ℔ weight of sugar, were to be deemed the equivalent of a bushel of malt, and a brewer was expected by one of the modes of charge to have brewed at least a barrel (36 gallons) of worts (less 4% allowed for wastage) at the standard gravity for every two bushels of malt (or its equivalents) used by him in brewing; but where, owing to lack of skill or inferior machinery, a brewer cannot obtain the standard quantity of wort from the standard equivalent of material, the charge is made not on the wort, but directly on the material. By the new act, licences at the annual duty of £1 on brewers for sale, and of 6s. (subsequently modified by 44 Vict. c. 12, and 48 and 49 Vict. c. 5, &c., to 4s.) or 9s., as the case might be, on any other brewers, were required. The regulations dealing with the mashing operations are very stringent. Twenty-four hours at least before mashing the brewer must enter in his brewing book (provided by the Inland Revenue) the day and hour for commencing to mash malt, corn, &c., or to dissolve sugar; and the date of making such entry; and also, two hours at least before the notice hour for mashing, the quantity of malt, corn, &c., and sugar to be used, and the day and hour when all the worts will be drawn off the grains in the mash-tun. The worts of each brewing must be collected within twelve hours of the commencement of the collection, and the brewer must within a given time enter in his book the quantity and gravity of the worts before fermentation, the number and name of the vessel, and the date of the entry. The worts must remain in the same vessel undisturbed for twelve hours after being collected, unless previously taken account of by the officer. There are other regulations, e.g. those prohibiting the mixing of worts of different brewings unless account has been taken of each separately, the alteration of the size or shape of any gauged vessel without notice, and so on.

Taxation of Beer in Foreign Countries.—The following table shows the nature of the tax and the amount of the same calculated to English barrels.

Country.	Nature of Tax.	Amount per English Barrel (round numbers).
United States	Beer tax	5s. 9d.
Germany—
N. German Customs Union	Malt tax	1s. 6d
Bavaria	Malt tax	3s. 5d. to 4s. 8d., according  to quantity produced
Belgium	Malt tax	2s. 9d.
France	On Wort	4s. 1d.
Holland	On cubic contents of  Mash-Tun or on Malt	About 1s. 9d. to 3s. 3d., according to quality
Austro-Hungarian Empire	On Wort	6s. 8d.
Russia	Malt tax	5s. to 6s. 8d.

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1. They were classified at 28 ℔ in 1896, but since 1897 the standard has been at the rate of 32 ℔ to the bushel.