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CHAPTER I.

THE MAGNITUDE OF THE LIQUOR TRAFFIC.

SECTION 1. INTRODUCTORY.

The proper scope of an investigation under this head is set forth in the introduction to the Federal Labor Report from which the material for this chapter has for the most part been drawn.

"A report on the economic aspects of the liquor problem to cover the various phases of the subject should consider monetary conditions; the agricultural and other products used in the production of liquors; the manufacture of liquors as a distinct industry; the transportation of liquors from the place of production to that of consumption; the consumption of and the traffic in liquors; the revenue derived from the manufacture and traffic; the laws regulating the collection of revenue; and the experience and practice of employers in relation to the use of intoxicants.

"The agricultural products used in the manufacture of liquors form as a rule, a very small proportion of the total of such products, and it is therefore not possible to ascertain the capital, the number of employes, etc., represented by such portion. The transportation of liquors forms a very small proportion of the land and water transportation business of the whole country, and it is impossible to estimate the capital and number of employes represented by it. Of the remaining subjects enumnerated above, reliable and fairly complete data in regard to the production of liquors were found in the reports of the Commissioner of Internal Revenue and the publications of the census office. To obtain information in regard to the traffic in liquors

and the revenue derived from the manufacture and traffic, as well as the experience and practice of employers in relation to the use of intoxicants original inquiry was necessary."

It should be added that all discussion of the laws relating to the collection of revenue has been omitted while the material on the experience and practice of employers in relation to the use of intoxicants is taken up under another head. As before stated, the facts here presented are arranged in the same form as in the federal report, along the lines suggested in the above quotation. The aim has been to bring that report down to date so far as possible and at the same time to eliminate various minor tables which are not deemed important. Wherever possible the tables have been compiled from the original reports, the census figures being for 1900 instead of 1890 and those from the Internal Revenue reports for 1903 instead of 1896.

SECTION 2. THE PRODUCTION OF LIQUORs.

Table I shows the number of breweries and distilleries in operation in the United States and the quantity of production, also an estimate of the quantity of domestic wines produced during each fiscal year from 1880 to 1903 inclusive. The table is compiled from the reports of the Commissioner of Internal Revenue and from the Statistical Abstract of the Treasury Department and while not absolutely correct in every detail, it shows in an entirely satisfactory way the trend of the production in the various industries.

It appears that the output of fermented liquors has been steadily increased from 13,347,111 barrels in 1880 to 46,720,179 barrels in 1903, the highest point yet reached in their production. There were but two years, 1894 and 1899, in which the output was less than in the year preceding. The production of fermented liquors has more than tripled since 1880. Significantly enough the production of both distilled spirits and of wines was larger in 1902 than it had ever been in the history of the country. It cannot therefore be truthfully said that the production of fermented liquors is driving out the other industries. Indeed as the Federal Labor re

port says: "There is no apparent relation between the two." The production of distilled spirits was 91,378,417 gallons in 1880, this increased to 119,528,011 gallons the next year; then again came a period of decreased production which continued until 1890 when 111,101,738 gallons were produced. The rise continued until 1893 when it culminated with an output of 131,010,330 gallons. In the decline which followed, the lowest point of production for the entire period was reached, 64,279,075 gallons in 1897. Since then there has been a marked increase. The highest point the production has yet reached was attained in 1903, with an output of 148,206,875 gallons. From these figures the only generalization safely to be made is that the distilled liquor industry is subject to alternate periods of high and low production. The general tendency however is upward but that tendency is by no means as marked as the course of production for malt liquors.

The column representing the production of wines exhibits an even greater irregularity. The explanation here readily suggests itself. The amount of wine produced is directly and entirely dependent on the grape crop which is always uncertain. The great bulk of the wines consumed are of American production and the low per capita consumption of wines as compared with the other two kinds of liquors may be thus accounted for.

The course of production of the various kinds of distilled spirits such as bourbon whisky, rye whisky, alcohol, rum, etc., has not been discussed because such discussion would have neither significance nor profit.

Table II taken from the twelfth census shows for the United States the number of establishments, the capital, number of salaried officials, wage earners and total wages paid, the cost of materials used and the value of the products resulting. It will be noticed at once that according to the reports of the Commissioner of Internal Revenue as shown in Table I there were 3,614 distilleries in operation in 1900 and 1,816 breweries while the census report gives but 967 distilleries and 1,509 breweries. The discrepancey is explained as follows: "A large proportion of the distilleries shown by the internal revenue reports to have been in operation were small establishments engaged in distili

ing fruit brandies and in operation for only a short time in the fall of the year. The number of distilleries shown by the census reports is the number that was in operation at the time of the enumeration during the month of June and would necessarily not include the fruit distilleries referred to. This condition may also account in part for the discrepancy in the number of breweries shown by the reports of the two offices, as the number given on the internal revenue reports is the number paying the internal revenue tax, irrespective of the length of time they were in operation during the year, while the number given in the census report is the number the enumerators found in operation. The discrepancy is also accounted for in part by the fact that when two or more distilleries or breweries were owned by the same corporation, firm or individual, and located in the same county or city, they were counted as one establishment in the census reports. In the internal revenue reports the actual number of distilleries in operation and the number of internal revenue stamps issued to breweries are shown. Then in all probability the census enumerators neglected to report some establishments that should have been reported."

The tables should therefore be accepted with the above cautions. There is no reason to doubt, however, the substantial accuracy of the figures presented and the conclusions drawn from them may safely be relied upon, as the output of the omitted establishments is in most cases relatively small.

From the table it appears that the total amount invested in the production of alcoholic liquors, represented by 2,385 establishments reporting, was $157,674,087; the cost of materials used was $70,512,012; the wages paid to the 52,575 employes amounted to $42,307,128 and the total value of the products was $310,615,466. Table III presents a comparison with the two preceding census years, 1880 and 1890. The table seems to warrant the conclusion that there is no relation between the number of establishments and the output or perhaps more accurately that the census figures as to the number of establishments are without significance. It appears from the table that there has been a decided increase in the amount of capital invested, the number of men employed, the wages paid and the

value of the product; at the same time there has been a marked decline in the cost of the materials used. There is no reason to think that this is entirely due to a general decline in the price of the materials used nor to an increased efficiency in the methods of production. The explanation is more probably due to the fact that much of what might properly be given under the heading "cost of materials" appears under a heading omitted from the comparison, namely, "miscellaneous expenses."

To take up the classes of liquors separately, Table II shows that there were 1,509 establishments engaged in the production of malt liquors with a capital of $415,284,468; that they employed 7,153 salaried officials and clerks receiving for their services $13,046,540, and 39,532 wage earners who were paid $25,826,211. The miscellaneous expenses were $109,329,231; the materials used cost $51,674,928 and the product was valued at $237,269,713.

Nine hundred sixty-seven establishments were engaged in producing distilled liquors. Their capital was $32,551,604. In their employ were 661 salaried officials to whom was paid $889,606 and 3,722 wage earners who received $1,733,218. The miscellaneous expenses aggregated $73,218,227. The materials used cost $15,147,784 and the value of the product was $96,798,443.

There were but 359 establishments reported as manufacturing vinous liquors; their capital was $9,838,015. In their employ were 661 salaried officials to whom were paid $365,498. The wage earners numbering 1,163 received $446,055. Miscellaneous expenses amounted to $552,338; the cost of materials was $3,689,330 and the product was valued at $6,547,310. The cost of materials approximates the value of the output much more closely in the case of vinous liquors than in malt or distilled liquors.

Table IV is a presentation of statistics relative to the manufacture of malt. This industry is one which depends for its existence almost entirely on the fermented liquor industry; for this reason an adequate presentation of the scope and influence of the liquor industry involves the statistics for malt as well. The table shows that since 1880 there has been a marked ten

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