protective measure, adopted in conformity with a report of
the House Committee of Commerce and ISTavio-ation, dated
February 21, 1803. In this report, occasioned by a great
number of petitions from the manufacturers of over a dozen
articles, the statement that the existing imposts did " not
operate as protecting duties to our infant manufactures,"
was coupled with the recommendation, that a plan be sub-
mitted for laying new and more specific duties on im-
ported goods, wares and merchandise, in such manner as
neither to increase nor diminish the revenue. Accordingly,
a number of raw materials, among them the bark of the
cork tree, were declared free of duty, and the list of articles,
130 LIQUOR LAWS OF THE UNITED STATES.
paying specific duties was so extended as to include most
of the manufactures of tlie petitioners.* From tliese changes
of the law it will readily be inferred that the new fiscal policy,
though apparently aiming at a tariff for rev^enue only, did not
exclude considerations of a Protectionist character ; in fact, in
his report relative to the above proposition for laying new
specific duties, Gallatin expressed the opinion that the legisla-
ture should introduce, from time to time, such modifications as
might appear most favorable to the agricultural and manufactur-
ing interests of the country. Petitions for the protection of
manufactures continued to be presented in great numbers, even
after the suspension of foreign commerce had considerably
decreased importation, and contributed no little to the develop-
ment of our industries.f In 1809 Gallatin was instructed
to report a specific plan for the encouragement of manufac-
tures ; but he failed to do so for the want, as he claimed, of
sufficient information. In 1810, however, he proposed, in a
general way, the alternative of increasing the import duties or
granting loans to manufacturers, for which latter expedient, as
we have seen, the first Congress had established a few prece-
dents. At about the same time — the danger of a war with
either England or France becoming more and more imminent
— he reiterated the opinion formerly expressed, that no other
sources of revenue save increased import duties and loans
would be required in case of a conflict with a foreign nation.
He thought that these duties might be doubled without
inconvenience or danger. A more suggestive intimation could
not have been given to the domestic manufacturers; in conse-
quence of it, petitions poured in from all quarters, and received
favorable consideration on the part of the Congressional com-
* This additional list included the duty on black quart bottles, men-
tioned in the preceding chapter.
f In the " Digest of Manufactures of 1810," the total value of domestic
products is estimated at $120,000,000.
CHAPTER VI. 131
mittees to whom they were referred. The protection of the
domestic maimfactnre of ardent spirits from foreign materials
was not again prayed for since the rejection of the petition
mentioned in the last chapter ; but the Secretary of the Treasury,
who, unlike his predecessors, ignored the moral side of the ques-
tion, and, unless forced to do otherwise, treated the internal liquor
traffic as a sort of political touch-me-not, repeatedly expressed
the opinion, that these articles could well bear additional duties.
Thus when, on the 18th of January, 1811, he was asked to
give his opinion as to what particular articles could, without
injury, be taxed more heavily than they were at the time — the
object being to make good the deficiency likely to grow out of
a proposed inhibition of the importation of articles coming
from Great Britain and her colonies — he stated that spirits,
wines, teas, sugar and coffee would under any circumstances
continue to be imported, and that therefore an increase of
duties on these articles would be most productive.
Seeing that the liquor question had proved such a danger-
ous stumbling-block to former administrations, it is not much
to be wondered at that, by a tacit understanding on the part
of the executive officers, a noli-me-tangere policy was pursued
in all matters relating to country distilling. Yet it must not
be concluded from this, that the temperance movement was
entirely lost sight of. While no one seemed sufficiently coura-
geous to take up the gauntlet thrown down by the distilling
farmers of the country, the idea of diverting popular taste
from distilled to fermented liquors continued to be agitated, as
has been seen from the Digest of Manufactures of 1810.
That the manufacturers of malt liquors were fully conscious of
this favorable side-current of opinion, appears from a petition
of a number of New York brewers, submitted to the House
of Kepresentatives on the 3rd of February, 1812, in which
the prayer for protection was justified in the following
words :
132 LIQUOR LAWS OF THE mSTTED STATES.
It is not for us to expatiate on tlie benefits wliicli may result to the
community, as to tlie preference, in point of liealth, wliicli malt liquor may
Lave to that of ardent spirits, or of the policy of encouraging the one, and
of discouraging the other, in a moral point of view ; these are considera-
tions, so connected with individual and general good, and so according with
the system adopted by Congress promoting the manufactories of our coun-
try, and so congenial with the spirit of the nation, that we shall forbear
expressing much on the subject."
The impending declaration of war against Great Britain
furnished a temporary solution of the mooted question of Pro-
tection in all its far-reaching and multiform ramifications.
What to Gallatin threatened to become a Gordian knot was
now cut asunder by the sword of war. The same calamitous
occurrence completely subverted that financier's fiscal policy
and induced a qualified return to Hamiltonian principles of
taxation. "When the means for the preparations for war were
being discussed, a very extensive armament having already
been decided upon, Gallatin, on the 9th of January, 1812, in
answer to an inquiry made by the House, proposed among
other means of revenue, the imposition of a stamp duty ; a
direct tax; duties on carriages, auction-sales, refined sugar,
and spirits ; duties on licenses to distillers and to retailers of
wines, spirits, and any other species of merchandise. Com-
pelled by the inflexible logic of events to accommodate himself
to a public recantation of nearly all his strictures and criticisms
on the official acts of his first predecessor ; forced to recom-
mend the very measures the application of which he had erst-
while characterized as unjust, vexations and oppressive — he
naturally strove to present plausible excuses for his sudden
conversion to the fiscal creed of his former opponents, and to
show that, in his case, circumstances, difiering essentially from
those of the Hamiltonian era, rendered necessary and proper
what formerly was unnecessary and improper. In this attempt
he was least successful so far as his recommendation relative
to duties on domestic spirits was concerned ; — in truth, in his
CHAPTER VI. 133
argnmeT?"/ in fnvor of such taxes he, unconsciously perhaps,
adopted Hamilton's language, introducing his remarks with
this sentence :
There is not any more elegible object of internal taxation than ardent
Ipirits.
It was the mode of such taxation to which he now confined
his objections, and here a touching solicitude for the welfare of
country distillers — a powerful body of voters — was again per-
mitted to shape the guide for legislation. He deemed objec-
tions to an excise on sjjirits particularly strong with respect to
persons who were not professional manufacturers, and who,
only occasionally, distilled the produce of their farms ; and
even as to them he wished to have a distinction made between
farmers who distilled fruit, and those who used grain or other
material. His proposition in relation to this subject was
couched in the following words :
" That duties on the quantity of spirits distilled should be levied only
on spirits distilled from foreign materials, at the rate of ten cents per gal-
lon, distilled, and on other distilleries employing stills, the aggregate of
which shall contain more than four hundred gallons, at the rate of three
cents per gallon, distilled ; and that, instead of a duty on spirits or of licen-
ses in proportion to the time employed, all other distilleries should only pay
an annual tax of five dollars for each still solely employed in the distillation
of fruit, and of fifteen dollars for each still otherwise employed."
Excepting the rates, his proposed license-system corres-
ponded with that introduced during Washington's adminis-
tration. Ketailers of wine and of spirits generally were to
pay twenty dollars annually, and retailers of domestic spirits
fifteen dollars. The amount of revenue to be derived from
the manufacture of spirits was estimated at $400,000 ; that
from licenses at $50,000, including those which were to be
granted to retailers of foreign merchandise. The timid, al-
most apologetic manner in which the taxing of country stills
was proposed is easily traceable to the occurrences described
134 LIQUOR LAWS OF THE UNITED STATES.
in previous chapters ; it is so much in the sense of a political
captatio henevolentiae that a search for other motives seems
superfluous. Yet, in justice to truth, it must be stated that
there was at the time a general inclination, felt alike in many
countries of Europe and in the United States, to take it for
granted that unrestricted country distilling was an indispen-
sable adjunct of husbandry, enhancing or depreciating the
value of agricultural labor in proportion to the greater or les-
ser degree in which it was practised. This opinion prevailed
to an alarming extent in the Scandinavian countries and the
northern parts of Germany, and in no small degree in our
country. Among the advantages attributed to this primitive
manufacture was — to quote but one more in addition to the
many already cited — the security it was said to afford against
the desolation of possible famines, inasmuch as the cereals used
for distillation, in times of plenty, would form a surplus of
agricultural produce available for milling purposes, in times of
want. It is a matter for conjecture, however, whether Galla-
tin would have allowed such considerations to determine his
propositions, if his antecedents had not placed him in the
foremost ranks of those who held a restriction of country dis-
tilling to be unrepublican in theory, and oppressive in practice.
As was to be foreseen, the legislative majority, which in mat-
ters of finance had been accustomed to follow Gallatin's lead,
could not, at such short notice, be induced to reconcile what was
now asked of them with what they had been taught to regard as
the only proper and popular course. Even after war had been
declared, and when the prospects of raising suflicient revenue for
the defrayal of extraordinary expenses seemed anything but
brilliant, this plan of imposing direct and internal taxes failed
to find favor. It was reserved for a future day, when the exi-
gencies of war, arousing the patriotism of the people, might
be expected to so operate on popular disposition as to win its
approval for any measure deemed essential to the achievement
CHAPTER VI. - 135
of victory. Increased import duties were the only source of
_ revenue applied immediately after the declaration of war.
The tariff Act of July 1, 1812, imposed an addition of 100 per
cent, on all duties hitherto levied upon goods, wares and mer-
chandise imported into the United States, with a further
addition of 10 per cent, upon goods imported in foreign vessels.
The authorizing of new loans to the amount of twenty-seven
millions, and the issuance of treasury notes to the amount of
five millions were depended upon for the discharge of immediate
obligations necessarily contracted in the prosecution of the
war which, meanwhile, had been declared and carried on with
varying success on land and sea. When the thirteenth Congress
convened, in its first session (May 24, 1813), Madison in his
annual message represented the financial condition of the
government to be such, as to require the development of new
sources of revenue; unless this was done, the revenues for
1814, accruing under existing provisions, would prove insufii-
cient to cover the ordinary expenses, and the increased interest
on the public debt. As to the nature of these additional reve-
nues, Madison stated that the object in view could be best
attained by a well-digested system of internal taxes, " which
will have the effect, both of abridging the amount of neces-
sary loans, and of placing the public credit on a more satis-
factory basis." The Committee of Ways and Means of the
House, in reporting favorably on this part of the President's
message, recommended the re-introduction of the former in-
ternal revenue system, on the ground, that its principle had
before been sanctioned b^ a vote of the House of Eepresen-
tatives, and was therefore preferable to a new system, the prin-
ciples and details of which could not, under the pressure of
circumstances, receive that mature co7isideration which should
precede its adoption. Their proposition was, that a direct tax
amounting to $3,000,000 be levied, and internal duties be laid on
stills, refined sugar, retailer's licenses, sales of auction, carriages,
136 LIQUOR LAWS OF THE UNITED STATES.
bank notes, negotiaible paper and salt, amounting in the aggre-
gate to $5,465,000. A.t the same time the committee submitted
a separate bill for each of the objects of taxation named. By
an act " for the assessment and collection of direct taxes
and internal duties," approved July 22, 1813, the old system of
internal revenue, on a larger scale, of course, was re-introduced
with some modifications ; and on the 21:th of the same month
the act laying duties on hcenses to distillers of spirituous li-
quors received the President's approval. The first section of
this law provides that every owner of a still or other imple-
ment used for distilling spirits shall take out a licence, and, if
the amount of duties to be paid exceed the sum of five dol-
lars, shall execute a bond conditioned for the payment of said
duties at the end of four months after the expiration of the
term for which the licenses were granted. The second section
provides " that the licenses aforesaid shall and may be granted
for and during the following terms or periods, and on the pay-
ment or securing of payment as aforesaid of the duties under-
mentioned, namely : For a still or stills employed in distilling
spirits from domestic materials, for a license for the employ-
ment thereof for and during the term of two weeks, nine cents
for every gallon of the capacity of every such still, including
the head thereof; for one month, eighteen cents; for two
months, forty-two cents ; for four months, fifty-two cents ; for
six months, seventy cents ; for one year, one dollar and eight
cents. Half these rates of duty were to be paid upon stills
employed wholly in the distillation of roots. For stills used
in distilling spirits from foreign material the licenses were
as follows : for the employment of every still or stills during
one month, twenty-five cents for each gallon of the capacity ,
for tln-ee months, sixty cents ; for six months, one dollar and
five cents ; for one year, one dollar and thirty-five cents. For
every boiler, however constructed, employed for the purpose
of generating steam in distilleries, double the amount on each
CHAPTEK VI. 137
gallon of its capacity, which would be payable for said license
if granted for the same terms and to employ the same materials
for a still.
Shortly after the passage of this law,* the following taxes
were imposed on licenses to retailers of spirits, wines, and mer-
chandise " in citieS; towns or villages, containing 300 inhabi-
tants within the limits of one mile square, viz : to retailers of
wines alone, twenty dollars ; of spirits alone, twenty dollars ; of
domestic spirits, fifteen dollars ; of merchandise other than wine
and spirits, ten dollars ; of merchandise including both intoxi-
cants twenty-five dollars.
The vote of the House on the final passage of the bill imposing
duties on licenses and distillers stood eighty-five to forty-nine.
The time for remonstrances on the part of the majority against
such measures of revenue, had passed. A preponderance of re-
verses over successes; the rapid progress of Indian hostilities, the
partial blockade of the coast, and, before that, the operations
of the Embargo and Non-importation Acts, by which the exter-
nal revenue was reduced to a minimum, and lastly the dispro-
portion between the amounts of the loans and the provisions
made for their ultimate liquidation, — all these things combined
to render an exercise of party discipline indispensable. Even
with the increase of revenue from internal and direct taxes,
the collection of which was not to commence until the year
after the passage of the law, the expenses of carrying on the
war could not be covered, and it was to be foreseen that, simul-
taneously with the authorization for new loans, an extension of
the new system of taxation would have to be effected. Both
Campbell, who succeeded Gallatin in the Treasury Depart-
ment, and his successor, Dallas, soon became convinced that
the only safety of the country lay in taxing the wealth of the
nation, in all its available forms, to whatever degree the exi-
* Act of August 2, 1813.
138 LIQUOR LAWS OF THE UNITED STATES.
o-eiicies of war might dictate. One of the schemes of the
latter financier, submitted to Congress on the 17th of October,
1814, included the taxing of a great number of articles of
domestic manufacture, among them ale, 'porter and strong
'beer / and another extended to silverware, household furniture,
gold and silver watches ; to incomes, and legal documents of
diverse descriptions.
When these suggestions were made, the fortunes of war
had turned against the Union : The entire coast had been block-
aded — encircled, as it were, by a " wooden wall ;" Maryland
and Massachusetts had been invaded ; the city of "Washington,
fallen into the hands of the enemy, was ransacked and partly
destroyed by fire ; Baltimore had been attacked ; a British war-
ship had ascended the Potomac as far as Alexandria, Ya. ; and
the financial condition of the country had become extremely
precarious, indeed, the Union was practically bankrupt. These
reverses were slightly offset, it is true, by the victory at Platts-
burg, the brave defense of Baltimore and the comparatively
successful operations against the British in the South ; yet, all in
all, the Union never was in narrower straits than at that time.
Under such circumstances, the state of affairs appealing power-
fully to the patriotism of the people and exacting, in self-
defense, unusual sacrifices, it was but natural that the old claim
of the domestic distillers, formerly magnified and dignified
into a so-called question of principle, became completely sub-
merged in the flood of great events. It was for this reason that
the recommendation of Dallas, to increase, far beyond existing
precedents, the internal duties on spirits, was accepted as a mat-
ter of course and encountered not a single challenge that might
have reminded one of the inveterate prejudice so often referred
to in these pages. It was contemplated by Dallas to tax spirits,
alike from domestic and foreign materials, at 25 cents per gal-
lon in addition to the duties already levied under the previous
law ; and in his computation of the probable income from this
CHAPTER VI. 139
additional duty he assumed 24,000,000 gallons to be the annual
production of spirits, excepting the products of stills of a
capacity of fifty gallons. The tax vrhich he had also proposed
to levy on ale, porter and strong beer was estimated to yield
a revenue of $120,000, at 2 cents per gallon, on a domestic pro-
duction of 6,000,000 gallons, annnually.
A new excise law was passed and approved before the end
of the year 1814, which provided that, after the 1st of Feb-
ruary, 1815,
There shall be paid upon all spirits, unless specifically excepted, which
after said day shall be distilled within the United States in any still or stills,
or in any other vessel, or by aid of any boilers, as defined in the Act of July
24th, 1813, in addition to the duties payable for licenses therefor, the duties
following, that is to say : For every gallon of such spirits distilled wholly or
in part from foreign material, twenty cents ; and for every gallon of such
spirits distilled from domestic materials, twenty cents.
In many respects this new law was far more rigorous than
its immediate predecessor, embodying many of the provisions
originally framed by Hamilton in his endeavor to prevent fraud.
Indeed, in the matter of entries under oath, and the giving of
security for the payment of the taxes as well as in regard to
the penalties imposed for evasions and violations of the act,
false swearing, etc., the law fully merited all the well-known
objections urged against the first Federal excise laws ; while,
in other respects, it relaxed somewhat the restrictions placed
upon distillers, by diminishing the minimum terms for which
licenses were to be granted, from a fortnight to one week, and
by providing for a corresponding decrease of duties to be paid
on the capacity of the stills so employed. Country distillers,
that is to say : owners of one still only, whose capacity did
not exceed one hundred gallons, and owners of boilers, whose
capacity did not exceed fifty gallons, had the option to pay
according to the old law, or twenty cents for every gallon dis-
tilled. Distillers of domestic spirits were accorded the right
140 LIQUOK LAWS OF THE UNITED STATES.
to sell their product in any cjuantitj, not less than one gallon,
thus making them, if they elected to avail themselves of the
privilege, distillers and retailers at the same time. A few days
after the passage of this act,* the duties on licenses to retailers
of wines and spirits were increased firty per cent. Although the
levying of an internal tax upon malt liquors had been recom-
mended simultaneously with the increase of taxes on ardent
spirits, it was not until the following January — when house-
hold furniture, watches and a great number of articles of
domestic manufacture were taxed — that the proposition was
acted upon. An ad valorem duty of six per cent, was then
imj^osed on ale, porter and strong beer, being a very low rate
compared with the taxes imposed on some articles of luxury —
on manufactured tobacco, for instance, the duty on which was
fixed at twenty per cent, ad valorem.
It is needless to narrate how, in the midst of multiply-
ing fiscal troubles, just at a time when changeable Bel-
lona began to smile upon our colors, the treaty of peace
was promulgated (February ITth), and put a period to the
lateral and upward movement of taxes and tax-rates. The
legislative minds, who, but four weeks ago had been occu-
pied in devising new sources of revenue, were now turned
to the task of reducing the income. A strong disposition
was manifested to at once abolish all internal taxes ; but
that would have robbed the Secretary of the Treasury of the
ability to bring order out of the chaos into which the war had
thrown the financial affairs of the country. The doubling of
import duties had been adopted as a war measure, and must
therefore be discontinued with the cessation of hostilities ; the
law in relation to it became inoperative by limitation, except
so far as it referred to ardent spirits. In view of this decrease
of revenues, from a source which was again beginning to flow
* December 31, 1814.
CHAPTER VI. 141
freely, the total abolition of internal taxes could not be thought
of. In order to facilitate a gradual reduction of these taxes,
however, it was proposed to retain the war tariff until the 30th
of June, 1816.* This income secured, Dallas would have re-
modelled the fiscal system on the basis of certain permanent
internal taxes and a comprehensive customs tariff, the latter to
be determined upon in accordance with the requirements of a
protective policy. It is worthy of note that Dallas, while
recommending the retention, among others, of the inter-
nal taxes on refined sugar, proposed to abolish entirely the
duties on distilled spirits, continuing in force only, at double