INDUSTRIAL ALCOHOL IN THE UNITED STATES The principle of taxing and regulating alcoholic beverages is fundamental in all civilized countries, and this principle was applied to alcohol itself until industrial needs achieved special legislation, granting tax-free alcohol for industrial purposes.
On Dec. 17, 1897, a joint committee of Congress said "The uses of alcohol, other than as a beverage, are more largely and widely extended than is generally supposed. But while the use of alcohol as a beverage is purely voluntary its employment for all other purposes is legitimate and necessary. No article entering into the manufacture or the arts, whether of domestic or foreign production, performs more beneficial functions. There is scarcely a manufacturer in the country who does not use alcohol in the production of his goods to a greater or less extent." All ethyl alcohol previous to 1906 carried a heavy revenue tax that effectively restrained any increase in its industrial use. But in 1906 the Tax Free Industrial and Denatured Alcohol Act was passed by Congress, and the development of industrial alcohol manufacture may be said to date from the passage of this Act, by which the tax on alcohol intended "for use in the arts and in dustries and for fuel, light and power" was lifted, provided it had been denatured and rendered unsuitable for use as a beverage.
Supplemental laws were later enacted, With the result that the manufacture, distribution, sale and use of industrial alcohol has become vital. The advent of prohibition presented an added, and perhaps more potent, reason why the taxable pure ethyl alcohol should be replaced, as far as possible, with tax-free denatured alcohol, and Section io, Title III, of the National Prohibition Act provided for denaturing plants at which ethyl alcohol could be lawfully denatured "by the admixture of such denaturing materials as shall render the alcohol or any compound in which it is authorized to be used unfit for use as an intoxicatine beveraze." Under the provisions of Title III, the commissioner of Internal revenue was empowered to promulgate regulations covering the manufacture, distribution, sale and use of industrial alcohol.