with the keeper of the lowest "dive." They are men of wealth and business affairs who have invested their capital in this business for the same reason and from the same motive that other men have invested theirs in other manufacturing enterprises, such as boots and shoes, cloth ing, and iron-for purposes of gain. It is a legitimate business and enterprise, and they have invested their money in it as such; if it were not, they would not be engaged therein.

Their product, like all other legitimate products, is intended for the use and benefit of mankind. If diverted to any other purpose that is not useful or beneficial, they are no more responsible therefor than would be the manufacturer of a rope for the unlawful hanging of a person by others with that rope, or the manufacturer of firearms would be for the murder of some person with his gun. The responsibility for misuse is with the others and not with them.

While it may not be fully appreciated by all, this business is one of the most extensive in the whole country, employing as many people in its manufacture and sale and as closely connected with the general prosperity of the country as any other. The amount of capital invested in lands, machinery, structures, and plants for the purpose of carrying on the business can not fall much short of $150,000,000, if it does not in fact exceed it. The annual cost of its manufactured product is about $20,000,000, and the tax thereon about $80,000,000-a total cost of $100,000,000. Being the mere conversion of other products into this matter, its whole cost of $20,000,000 is the amount paid by it to others' labor. This gives employment to the laborer who raises the corn, the rye, the barley (malt), and other products of the farm-about 30,000,000 bushels of grain per annum-which, being consumed from day to day, takes the surplus from off the market and enhances the value to the producer of all the rest of his products. The vast amount of cooperagenearly 2,000,000 barrels per annum-gives employment to the laborer who fells the trees and rives out the staves in the woods; to the railroads that transport this timber to the shops, and labor to the cooper in manufacturing the barrels; thus employing many men at remunerative wages. These barrels must be securely hooped with iron, and large quantities are used for this purpose, which benefits the laborer in the mines, and at the furnaces, and in the mills.

The labor employed at the distillery and the furnishing and repairs of machinery, and supply of new machinery for worn-out machinery, is no inconsiderable item in the wages of labor. Upon the refuse or slops, cattle and hogs are fed and fattened for market, and as this item of feed is cheap and efficacious, these cattle and hogs are sold at lower rates, and thus bring down the cost of provisions to the laborer. The cost of production, including the taxes, makes a heavy demand upon the banker for money, and enables him to more profitably employ his surplus and maintain his rate of interest. The transportation lines are heavily employed in carrying this product of nearly 2,000,000 barrels per annum from place to place, for which they receive high freight rates, and can in turn pay their employees reasonable wages for their labor. Thousands of men are employed in marketing this matter from one end of the country to the other as wholesale merchants, brokers, and retail dealers, more than 250,000 being thus engaged, and allowing only one helper for each so engaged, it makes an army of laborers thus employed. I can imagine of no greater calamity that could befall a country like this than that the wheels of this great article of commerce should cease to revolve. The thousands of men throwu out of employment, turned back to seek a livelihood in other occupations, already

overstocked and congested with other labor, would entail misery and distress, unspeakable, upon all. So, taking it all in all, it is, in its various ramifications and connections, one of the most extensive business connections of the entire country, and worthy of a fair, candid, and unprejudiced consideration and of the best thought of the statesman. It is a remarkable fact to be observed with regard to the use of alcoholic stimulants, that the American people, the English, the German, and the French-the four greatest nations of the earth, who have advanced more rapidly in civilization, in the arts, the sciences, and in commerce-are the greatest consumers of this stimulant, and their condition compared with that of India, China, Turkey, and others who do not use alcohol as a stimulant is so marked as to be almost startling in effect. Is it that the ordinary or natural stimulant of business, the love of gain, is not sufficient of itself, or does mankind need an artificial stimulant to call forth his greatest efforts to attain the highest condition for material good? There must be some cause that has produced this pleasing effect.

Again, when the tax was advanced from 90 cents to $1.10 per gallon on all whisky in bond, it was done over the protest of the manufacturer, who claimed he had a contract to tax-pay it at 90 cents and had given bond to do so. But the Government, being pressed for immediate revenue, seized upon his product as legitimate prey, disregarded his protest, and laid an additional tax of 20 cents on all whisky in bond. The answer to his objection was that the distiller did not pay the tax; that it was paid by the consumer; that he added it to the selling price, and only advanced it for the time being, but he suffered nevertheless in the general loss and depression in his business.

This is indeed true that the consumer and not the manufacturer pays the tax, and can be illustrated by a simple statement: A has 2 barrels of whisky, made at the same time; one is in bond and the other is tax paid. B wishes to buy, and asks A what he will take a gallon for a barrel of whisky. A says, "Which barrel? I will take 20 cents a gallon for the one in bond (not tax paid), but must have $1.30 for the other, which is tax paid." Why? Because the tax paid has cost him $1.10 (the tax) more, which he has advanced. B buys the tax paid at $1.30 and pays for it; then A has not paid the tax, for he has recovered it back from B, but B has paid it; and if B consumes the whisky he has finally paid it; but if he sells, the person who finally consumes pays. Therefore, the price at which it is sold is regulated by the amount of tax paid, which is added to the price in bond; if at $1.10, the price is $1.30; at 50-cent tax it would be 70; and a reduction of taxes, as by some erroneously supposed, gives nothing to the distiller, nor does it take anything from the Government; for the Government can never get the tax except on consumption. The distiller does not have to pay the tax, but can export without payment. This is a constitutional provision and can not be abridged. If consumption should cease to-morrow and no more whisky be demanded for use, the revenue of the Government would cease to-morrow, for none would be tax paid; all would be exported. So, also, if all the whisky in bond were destroyed by fire in a single night, it would not affect the receipts of the Government; for other would be made to-morrow, tax paid, and take its place.

Therefore a reduction of tax gives nothing to the distiller on whiskies in bond, and the only advantage to the distiller is the same advantage to the Government, in that it breaks up and destroys the illicit and fraudulent distilling, which robs the Government of its revenue and the honest distiller of any profit. As a large amount of these spirits was made under the 90-cent tax, and upon which the tax was advanced

to $1.10, and is still in bond and has not been tax paid, and considerable has been, it would seem to be but equitable and fair to reduce the tax to 50 cents on all, and thus equalize the whole matter in this way. It can not be claimed that on this which was produced under the 90cent tax a reduction is giving anything to the distiller, unless it is first admitted that the Government, by reason of its power, has first taken something from him to which it was not entitled, by increasing the tax thereon.

This is not a question of sentiment; it a question of cold business, and should be treated from the business standpoint alone.

Relying, therefore, upon the usual standard of American statesmanship for a fair and unprejudiced consideration from the standpoint of the interest of the Government for needed revenue, as well as the individual interest of all concerned, whether it be the manufacturer, the dealer, the banker, or the laborer, we appeal to you to give us that relief which is demanded by the unusual conditions of the times, and to reduce this tax of $1.10 per gallon, which does not produce revenue, to 50 cents per gallon, which will produce revenue, thus taking away all inducements which now exist for violation of the laws and the perpetration of fraud, and which tend so strongly to the encouragement of malefactors.

Respectfully submitted.

J. B. THOMPSON.

APPENDIX.

THOMPSON'S TABLE.

Consumption per capita of distilled spirits from materials other than fruit, and tax thereon and revenue therefrom.

NOTE 1.-The above table is made up from statistics obtained from the Commissioner of Internal Revenue's report and from the Bureau of Statistics as to population. The fiscal years and the calendar years being different, we have attempted, as far as possible, to separate them and show the per capita consumption for each fiscal year under each percentage of taxation. In this way the same calendar year appears twice in the same fiscal year, part of the calendar year being used to make up the fiscal year, a proportionate part of the population of each calendar year being used. NOTE 2.-We have not included distilled spirits from fruits in our estimates, because for several years in the sixties and seventies the taxes on them were different from the taxes imposed on distilled spirits from other materials. The quantities, however, are very small and would not affect the general average or change the per capita in any way. It would have been difficult to have separated them, and, for purposes of estimate, they are wholly immaterial.

NOTE 3.-The estimate for 1860 is based on the census of that year obtained from the Bureau of Statistics.

[Extract from letter of Commissioner of Internal Revenue as to accuracy of foregoing table.]

Hon. WALTER EVANS,

WASHINGTON, D. C., January 8, 1897.

House of Representatives, Washington, D. C.

SIR: I have the honor to return herewith certain tables of statistics prepared by Mr. John B. Thompson for use before the Ways and Means Committee upon the hearings now in progress on the tariff bill, which tables I have examined in compliance with your request, and with trilling exceptions have found the computations therein to be accurate.

[Report of Commissioner of Internal Revenue, 1896.]

WITHDRAWALS FOR CONSUMPTION DURING THE LAST TWO FISCAL YEARS.

The quantities of distilled spirits, formented liquors, manufactured tobacco, snuff cigars, cigarettes, and oleomargarine on which tax was paid during the last two fiscal years are as follows:

The quantity of tax-paid spirits (60,635,356.1 gallons) withdrawn from distillery warehouses during the fiscal year ended June 30, 1896, is less than the quantity (74,176,239.5 gallons) withdrawn from distillery warehouses during the fiscal year

ended June 30, 1895, by 13,540,883.4 gallons, the decrease being distributed among the different kinds known to the trade as follows:

If the quantity, 703, 120.3 gallons (as stated by the Chief of the Bureau of Statistics), of exported domestic spirits reimported during the year upon payment or a oustoms duty equal to the internal-revenue tax be added, the quantity virtually withdrawn from distillery warehouses during the year ended June 30, 1896, is found to be 61,338,476.4 gallons, or 14,440, 164.1 gallons less than during the year 1895, including the 1,602,401 gallons reimported and tax-paid during that year.

There were also tax-paid withdrawals of spirits from general bonded warehouses amounting to 6,216,284.1 gallons which should be added to the above, making the total domestic spirits, exclusive of fruit brandy, withdrawn from bond on payment of the tax, or of a duty equal to the tax, 67,554,760.5 gallons, or 20,232,794.5 gallons less than the quantity so withdrawn during the fiscal year ended June 30, 1895. The tax actually paid on spirits withdrawn from distillery warehouses and general bonded warehouses and on reimported domestic spirits was as follows:

The relatively favorable showing as to receipts as compared with withdrawals is due to the increased rate of tax under the act of August 28, 1894, from 90 cents per gallon to $1.10 per gallon.

'The quantity as stated by the Chief of the Bureau of Statistics is 703,520.6 gallons, but the amount of duty ($773,432.30) reported by him as collected represents the duty at $1.10 per gallon (the present rate of internal-revenue tax) on 703,120.3 gallons only. To avoid a possible overstatement, this latter quantity is given in this place.