The following statistical comparison, extracted from the United States Census of 1900 and the Inland Revenue Returns by Mr W. O. Tatum (New Encyclopedia of Social Reform) and here presented in tabular form, is highly instructive. It shows the population and number of liquor dealers paying the United States tax in two prohibition states, one state under what is considered the best licensing system, and South Carolina.
| State. | Population. | Wholesale Liquor Dealers. | Retail Liquor Dealers. |
| Maine (Prohibition) | 694,466 | 51 | 1366 |
| Kansas (Prohibition) | 1,470,495 | 129 | 3125 |
| Massachusetts (Licence) | 2,805,346 | 617 | 5092 |
| S. Carolina (Dispensary) | 1,340,316 | 13 | 534 |
This table may be said to epitomize the results of the United States restrictive liquor laws. It presents examples of three different systems; the proportion of retail liquor sellers to population is—under complete prohibition, 1 to 508 and 1 to 475; under licence and local prohibition, 1 to 530; under dispensary and local prohibition, 1 to 2509. But the remarkable thing is the enormous amount of illicit traffic existing under all three systems. It is incomparably greatest under complete prohibition because the whole of the traffic in these states is illicit. In South Carolina one of the wholesale dealers and 388 of the 534 retailers were illicit. In Massachusetts the number cannot be stated, but it is very large. If the whole state were under licence the total legal number of licences, which is limited in proportion to population (see above), would be 3400; and in that case there would be some 1700 illicit retailers. But a large part of the state, probably more than half, is under local prohibition, so that the majority of the 5000 retail dealers must be illicit. These facts, which are typical and not exceptional, reveal the failure of the laws to control the traffic; only partial or spasmodic attempts are made to enforce them and to a great extent they are ignored by common consent. The illegal trade is carried on so openly that the United States revenue officers have no difficulty in collecting the federal tax. It is not a satisfactory state of things, or one which countries where law is respected would care to imitate. The example is a good lesson in what to avoid.
Taxation.—Mention has been made above of the federal and state taxation imposed on the liquor trade. The former is uniform; the latter varies greatly, even in those states which have adopted the “high licence.” This system is intended to fulfil two purposes; to act as an automatic check on the number of licences and to produce revenue. It was introduced in Nebraska in 1881, when a tax of 1000 dollars (£200) was placed on saloons (public houses) in large towns, and half that amount in smaller ones. The practice gradually spread and has now been adopted by a large number of states, noticeably the populous and industrial north-eastern and central states. In Massachusetts, where the high licence was adopted in 1874 when the state returned to licensing after a trial of prohibition, the fees are exceptionally high, the minimum for a fully licensed on and off house being 1300 dollars (£260); in Boston the average tax is £310. In New York state it ranges from 150 dollars (£30) in sparsely populated districts to 1200 dollars (£240), and in Pennsylvania it is much the same. In New Jersey, on the other hand, it ranges from £20 to £60; in Connecticut from £50 to £90; in Rhode Island from £40 to £80. In Missouri, which has a special system of its own and a sort of sliding scale, great variations occur and in some cases the tax exceeds £500. In Michigan it is uniform at £100. The mean for the large cities is £133. The revenue derived from this source is distributed in many ways, but is generally divided in varying proportions between the state, the county and the municipality; sometimes a proportion goes to the relief of the poor, to road-making or some other public purpose. The amount levied in the great cities is very large. It will be seen from the foregoing that the taxation of licences is much heavier in the United States than in the United Kingdom. The total yield was ascertained by a special inquiry in 1896 and found to be rather less than 12 millions sterling; in the same year the yield from the same source in the United Kingdom was just under 2 millions. Allowing for difference of population the American rate of taxation was 3¼ times as great as the British. It has been inferred that the liquor trade is much more highly taxed in the United States and that it would bear largely increased taxation in the United Kingdom; that argument was brought forward in support of Mr Lloyd George’s budget of 1909. But it only takes account of the tax on licences and leaves out of account the tax on liquor which is the great source of revenue in the United Kingdom, as has been shown above. The scales are much lower in the United States, especially on spirits, which are only taxed at the average rate of 5s. 8d. a gallon against 11s. (raised to 14s. 9d. in 1909) in the United Kingdom. Mr Frederic Thompson has calculated out the effect of the two sets of rates and shown that if British rates were applied to the United States the average yield in the three years ending 1908 would be raised from 44 millions to 76 millions; and conversely if American rates were applied to the United Kingdom the average yield would be lowered from 36 millions to 23 millions. Taking licences and liquor taxation together he finds that the application of the British standards for both would still raise the total yield in the United States by 39%; and that even the exceptionally high rates prevailing in Massachusetts would, if applied to the United Kingdom, produce some 4 millions less revenue than the existing taxation. Other calculations based on the consumption and taxation per head lead to the same conclusion that the trade is actually taxed at a considerably higher rate in the United Kingdom. In the three years ending 1908 the average amount paid per head in taxation was 13s. 8¾d. in the United States and 17s. 6¾d. in the United Kingdom. It may be added that the method of taxing licences heavily has certain disadvantages; it stimulates that illicit trade which is the most outstanding feature of the traffic in the United States, and combined with the extreme insecurity of tenure involved in local option it gives licence-holders additional inducements to make as much money as possible by any means available, while they have the opportunity, for no compensation is ever paid for sudden dispossession. The notion that the trade will stand an indefinite amount of taxation is a dangerous and oft-proved fallacy.
European Countries.
With the exception of Sweden, Norway and Russia, which have special systems of their own, the continental countries of Europe have as yet paid comparatively little legislative attention to the subject of the liquor traffic, which is recognized by the law but for the most part freely permitted with a minimum of interference. Differences exist, but, generally speaking, establishments may be opened under a very simple procedure, which amounts to an elementary form of licensing, and the permission is only withdrawn for some definite and serious offence. Regulations and conditions are for the most part left to the discretion of the local authority and the police and are not burdensome. The reason for such freedom as compared with the elaborate and stringent codes of the United Kingdom and the United States is not less concern for public welfare but the simple fact that the traffic gives less trouble and causes less harm through the abuse of drink; the habits of the people are different in regard to the character of the drinks consumed, the mode of consumption and the type of establishment. Cafés, restaurants and beer-gardens are much more common, and mere pot-houses less so than in the English-speaking countries. Where trouble arises and engages the attention of the authorities and the legislature, it is almost invariably found to be associated with the consumption of spirits. In several of the wine-producing countries, which are generally marked by the temperate habits of the people, the widespread havoc among the vines caused some years ago by the phylloxera led to an increased consumption of spirits which had a bad effect and aroused considerable anxiety. This was notably the case in France, where an anti-alcohol congress, held in 1903, marked the rise of public and scientific opinion on the subject. Temperance societies have become active, and in some countries there is a movement towards stricter regulations or at least a demand for it; but in others the present law is a relaxation of earlier ones.
France.—The present law governing the licensing of establishments where liquor is sold for consumption on the premises was passed in 1880; it abrogated the previous decree of 1851, by which full discretion was vested in the local authorities, and freed the traffic from arbitrary restrictions. It provides that any person desiring to open a café, cabaret or other place for retailing liquor must give notice to the authorities, with details concerning himself, the establishment and the proprietor, at least 15 days beforehand; the authority in Paris is the préfecture of police and elsewhere the mairie. Transfers of proprietorship or management must be notified within 15 days, and intended transference of location 8 days beforehand. The penalty for infraction is a fine of 16 francs to 100 francs. Legal minors and persons convicted of certain crimes and offences—theft, receiving stolen goods, various forms of swindling, offences against morality, the sale of adulterated articles—are prohibited; in the case of crimes, forever; in the case of offences, for five years. Otherwise permission cannot be refused, subject to conditions which the local authority has power to lay down regulating the distance of such establishments from churches, cemeteries, hospitals, schools and colleges. But persons engaged in the trade, who are convicted of the offences mentioned above and of infraction of the law for the suppression of public drunkenness, are disabled, as above. The law practically amounts to free trade and the number of houses has increased under it; in 1900 there was one to every 81 persons. This proportion is only exceeded by Belgium. Under the Local Government Act of 1884 municipal authorities are empowered, for the maintenance of public order, to fix hours of closing, regulate dancing, forbid the employment of girls and the harbouring of prostitutes and make other regulations. The hours of closing differ considerably but usually they are 11 P.M., midnight or 1 A.M. The trade is lightly taxed; retailers pay from 15 to 50 francs a year; wholesale dealers, 125 francs; breweries the same in most departments, distilleries 25 francs. The excise revenue from liquor amounted to £20,000,000 in 1900.
Germany.—The German law and practice are broadly similar to the French, but the several states vary somewhat in detail. Under the imperial law of 1879 inns or hotels and retail trade in spirits for on or off consumption may not be carried on without a permit or licence from the local authority which, however, can only be refused on the ground of character or of unsuitability of premises. This is the general law of the empire; but the state governments are empowered to make the granting of a licence for retailing spirits dependent on proof that it is locally required, and also to impose the same condition on inn-keeping and the retailing of other drinks in places with less than 15,000 inhabitants and in larger ones which obtain a local statute to that effect. Before a licence is granted the opinion of the police and other executive officers is to be taken. The licensing authority is the mayor in towns and the chairman of the district council in rural areas. The provisions with regard to the dependence of a licence on local requirements have been adopted by Prussia and other states, but apparently little or no use is made of them. Permits are very freely granted, and the number of licensed houses, though not so great as in France, is very high in proportion to population. Three classes of establishment are recognized—(1) Gast-wirthschaft, (2) Schank-wirthschaft, (3) Klein-handel. Gast-wirthschaft is inn-keeping, or the lodging of strangers in an open house for profit, and includes “pensions” of a public character; the imperial law provides that a licence may be limited to this function and need not include the retailing of liquor. Schank-wirthschaft is the retailing for profit of all sorts of drinks, including coffee and mineral waters; it corresponds to café in France and refreshment house in England; but the mere serving of food does not come under the law with which we are here concerned. Klein-handel is retail sale either for on or off consumption, and the liquor for which a licence is required in this connexion is described as branntwein or spiritus, and is defined as distilled alcoholic liquor, whether by itself or in combination. A licence for Schank-wirthschaft includes Klein-handel, but not vice-versa; none is required for the retail sale of wine which is the seller’s own produce. Licences may be withdrawn for offences against the law. Licensed houses are under the supervision of the police, who fix the hours of closing; it is usually 10 P.M., but is commonly extended to 11 P.M. or midnight in the larger towns and still later in the case of particular establishments. Some cafés in Berlin do not close till 3 A.M. and some never close at all. Persons remaining on the premises in forbidden hours after being ordered to leave by the landlord are liable to punishment. Serving drunkards and persons of school age is forbidden. Drunkards, in addition to fines or imprisonment for disorderly conduct, are liable to be deprived of control of their affairs and placed under guardianship. For music and dancing special permits are required. With regard to taxation, in Prussia all business establishments beyond a certain value pay an annual tax and licensed houses are on the same footing as the rest. Businesses producing less than £75 a year or of less than £150 capital value are free; the rest are arranged in four classes on a rising scale. In the three lower classes the tax ranges from a minimum of 4s. to a maximum of £24; in the highest class, which represents businesses producing £2500 and upwards (or a capital value of £50,000 and upwards) the tax is 1% of the profits. There is also a stamp duty on the licence ranging from 1s. 6d. to £5. The latter goes to the local revenue, the business tax to the government. Beer and spirits are also subject to an excise tax, from which the imperial revenue derived £7,700,000 in 1901; but the total taxation of the liquor trade could only be calculated from the returns of all the federated states.
The laws of France and Germany are fairly representative of the European states, with some minor variations. In Holland the number of licensed spirit retailers is limited in proportion to population (1 to 500), and the taxation, which is both national and local, ranges from 10 to 25% of the annual value.