SPIRITS. The following is a comparative statement showing the receipts from the several sources under "spirits" during the fiscal years ended, June 30, 1871 and 1872, with the increase and decrease from each source: The number of distilleries (other than fruit) registered during the last fiscal year was.. The number of fruit distilleries registered was. Total...... 511 3, 133 3,649 Of the distilleries, (other than fruit,) 456 were operated during the year, and of the fruit distilleries, 2,676. The returns to this Office for the last fiscal year show a total production, in taxable gallons, from materials other than fruit, of...... From fruit. Total yearly production...... 68, 275, 745 757,788 69,033,533 The following tabular statement shows the distribution of distilleries in the various States and Territories: Statement showing the number of distilleries registered and operated during the fiscal year ended June 30, 1872. Statement showing the number of distilleries registered, &c.—Continued. The following statement shows the number of grain and molasses distilleries in operation at the beginning of each month during the last fiscal year: The quantity of spirits in bond July 1, 1871, was.. The quantity entered in bond during the year ended June 30, 1872, was... .... The quantity remaining in bond July 1, 1871, as per present report, less than the quantity stated in the report for 1871, as shown by corrected reports of collectors received subsequent to the publication of the report for 1871, was.. Taxable gallons. 6,742, 118 68, 275, 745 64, 914, 471 10, 103, 392 2,242 The total quantity of spirits in the United States not in internal revenue warehouses on the 1st of May, 1872, was 39,672,197 proofgallons. I would recommend that section 54 of the act of July 20, 1868, as amended by the act of June 6, 1872, be further amended so as to authorize you, in a more explicit manner than at present provided, to require export bonds of persons applying to export distilled spirits for the benfit of drawback. It is desirable that the language on this point should be perfectly clear and unquestionable, inasmuch as the exportation of spirits on which the tax has not been paid will be affected thereby as well as that provided for in section 54. By the act of June 6, 1872, the fees of gaugers and the per diem compensation of storekeepers were made payable by the United States without re-imbursement by distillers, except by the increased rate of tax on distilled spirits, this increased rate having been determined partly by taking into account the amount heretofore paid for the services of such officers. But experience has already demonstrated that the amount to be paid will be not only greater (notwithstanding my most strenuous efforts to the contrary) than ever before, but also greater in proportion to the quantity of spirits produced. It is apparent that the retention of spirits in the warehouse after the distiller has ceased operations, extends the time for payment of the tax due, and is therefore for his benefit only. In view of this, and the foregoing statement, I would recommend that when a distiller has ceased operations, the pay of the storekeeper for subsequent services at his distillery warehouse, in consequence of spirits remaining therein, shall be re-imbursed to the United States by the distiller. FERMENTED LIQUORS. By the act of June 6, 1872, the act of July 13, 1866, so far as it relates to fermented liquors, was re-enacted with some amendments, made at the solicitation of the principal brewers of the United States, designed to afford brewers better facilities than heretofore for the conduct of their business under internal revenue laws. These concessions do not appear to have been of a character to endanger the public interests, as the following statement will show: The tax received on fermented liquors at $1 per barrel during the first quarter of the fiscal year ended June 30, 1872, was $2,217,291 93, while the receipts from the same source during the first three months of the present fiscal year amount to $2,684,241, an increase of $466,949 07. The average increase of about a million dollars annually during the last three fiscal years, as contrasted with the stationary character of the receipts during the four years next preceding, is certainly gratifying, but the increase during the first three months of the present fiscal year, as above stated, far exceeds that of any corresponding period in any other year since the organization of this Office. The tax received on fermented liquors, at $1 per barrel, was, for the years 1867. 1868.. 1869.... $5,819,345 49 1870. $6,081,520 54 7, 159, 740 20 8,009,969 72 The number of persons engaged in the manufacture of fermented liquors during the fiscal year ended June 30, 1872, was 3,421, distributed as follows: Alabama, 5; Arizona, 10; Arkansas, 1; California, 226; Colorado, 36; Connecticut, 25; Dakota, 6; Delaware, 2; District of Columbia, 15; Florida, 2; Georgia, 4; Idaho, 12; Illinois, 216; In diana, 169; Iowa, 171; Kansas, 46; Kentucky, 46; Louisiana, 16; Maine, 1; Maryland, 72; Massachusetts, 56; Michigan, 189; Minnesota, 114; Mississippi, 2; Missouri, 124; Montana, 36; Nebraska, 23; Nevada, 41; New Hampshire, 5; New Jersey, 83; New Mexico, 8; New York, 479; North Carolina, 1; Ohio, 288; Oregon, 31; Pennsylvania, 443; Rhode Island, 4; South Carolina, 2; Tennessee, 11; Texas, 44; Utah, 16; Vermont, 4; Virginia, 13; Washington, 14; West Virginia, 17; Wisconsin, 292. I would recommend that sections 18 and 22 be so amended as to provide for packages known as "thirds." The act of March 2, 1867, authorized their use to accommodate brewers west of the Rocky Mountains, who are compelled to send their products from their breweries to the consumer or retailer on the backs of mules; this sized package being specially adapted to such a mode of conveyance. "Thirds" appear to have been omitted in the act of June 6, 1872, through inadvertence, and they should be restored. The amendments made by the act of June 6, 1872, to section 59 of the act of July 20, 1868, as amended April 10, 1869, relating to the special taxes for selling spirituous and malt liquors and wines, were, it has appeared to me, intended simply to provide that, in addition to the former classes of liquor dealers, there should be two classes at a lower special tax authorized to sell malt liquors only, leaving to the former classes of liquor dealers the privilege of selling malt liquors which they previously possessed; also leaving unchanged the exemption from special tax as wholesale dealers extended to brewers who sold fermented liquors of their own production at the brewery in the original packages. Nevertheless that intention is not so clearly expressed by the language of the section as amended as is desirable in so important a provision of law. To prevent the injustice which might be done by acting upon a more technical construction of the language used as to the several classes of liquor dealers and malt liquor dealers, I issued on the 30th of September last instructions to assessors and collectors to make assessments and collections in accordance with the above expressed view of the intentions of Congress, until I could bring the question to the attention of that body; and I also suspended the collection of all assessments which had been made contrary to that construction. In view of this, I would respectfully recommend that the language of the section be made more explicit. I would also recommend that retail dealers in malt liquors be limited in their sales to quantities less than five gallons, and that those selling in quantities of five gallons and upwards be required to pay the wholesale dealer's tax. TOBACCO. The total receipts from tobacco for the fiscal year ended June 30, 1872, were $33,736,170 52. Compared with the total receipts for the fiscal year ended June 30, 1871, the following results are shown: Year ended June 30, 1872, tobacco-chewing, &c., and snuff. Showing a decrease in class 32 cents of. Year ended June 30, 1872, tobacco-smoking, scraps, shorts, &c... Showing an increase in class 16 cents of.. $18,674,569 26 20,677,717 84 2,003,148 58 $5,896, 206 33 4,882,821 83 1,013,384 50 Year ended June 30, 1872, cigars, cheroots, &c.... $7,566, 156 26 6,598, 173 24 Showing an increase on cigars, &c., of.. Year ended June 30, 1872, received from sale of export stamps.. Decrease from sale of export stamps..... Year ended June 30, 1872, received from dealers in leaf tobacco.... Increased collection from dealers in leaf tobacco Year ended June 30, 1872, received from dealers in manufactured to- Increased collection from dealers in manufactured tobacco...... Year ended June 30, 1872, from special taxes of tobacco and cigar manufacturers Year ended June 30, 1871, from special taxes of tobacco and cigar manufacturers Increased collection from special taxes of tobacco and cigar 967,983 62 $53,576 25 66, 147 00 12,570 75 $260,487 62 221,661 98 38,825 64 $1,102,357 89 970,017 96 132,339 93 $182,816 31 162, 367 33 20,448 98 Showing an increase in the total receipts from the manufacture and sale of tobacco in all its forms, over the receipts from the same sources for the preceding fiscal year, of $157,263 34. ANNUAL PRODUCTION. The quantity of manufactured tobacco represented by the collection of taxes from this source for the fiscal year ended June 30, 1872, is as follows: The number of cigars, cheroots, &c., on which taxes were collected during the last fiscal year, was 1,527,705,972. From the above statement it will be seen that the entire product of manufactured tobacco reported for the fiscal year ended June 30, 1872, exceeds the total product of the preceding fiscal year by 1,431,892 pounds, while the aggregate quantity which reached taxation for the last fiscal year was only 73,815 pounds in.excess of the quantity which reached taxation the preceding year. During the last fiscal year the quantity of class 16 cents, or smoking tobacco, was increased by 6,333,654 pounds, while the quantity of class 32 cents, or chewing tobacco, was diminished by 6,259,839 pounds, as compared with the preceding year. This change in the relative proportions of the two classes of tobacco was owing, no doubt, in a great measure, to the agitation of the question of taxation during several |