Alcohol can be denatured only in a Government bonded warehouse under the supervision of the Revenue officials, and when so denatured is marked under the supervision of the Revenue officials and can then be sent into commerce free of tax.
Economic uses of denatured alcohol.
Denatured alcohol, or industrial alcohol, is used extensively in the manufacture of coal-tar dyes, smokeless powder, varnishes, lacquers, ether, medi cines and pharmaceutical preparations, imitation silk, artificial vinegar, flavoring extracts, and in many other industries. The present law does not permit the•use of free alcohol, however, for making any medicinal preparations, and therefore it cannot be used free of tax in this country for making ether or any medicine or pharmaceutical prepara tion except in cases in which it is entirely elimi nated before the material goes into use. In other countries it is used for these purposes tax free.
Many manufacturing industries in this country have been prevented from development because of the high tax on the industrial alcohol which they were compelled to use. For example, the manufac ture of smokeless powder, except for Government use, has grown very slowly in the United States because such powder, made as it is usually with ether and alcohol, costs eighty cents to one dollar and twenty-five cents a pound when the tax on the alcohol must be paid. If tax-free alcohol could be used for making smokeless powder it probably could be made for thirty-five to forty cents a pound. At present prices of the material used in this country, viz., corn, the actual cost of a gallon of alcohol of 95 per cent strength is not much less than thirty cents. A gallon of such alcohol weighs, in round numbers, seven pounds, and requires four teen pounds of starch or sugar for its production. A bushel of corn will make not to exceed two and one-half gallons of such alcohol. At forty cents a bushel it is seen that the raw material for the making of a gallon of alcohol would cost at least sixteen cents, that is, the starch in corn is worth a little over a cent a pound. The cost of manufac turing and packing for market is not much less than fourteen cents, making the total cost of each gallon thirty cents. In order that fair profits may be secured, a gallon of denatured alcohol cannot be sold at retail at much less than forty cents.
In order that the price be brought lower cheaper raw materials must be secured. Perhaps the most hopeful source is found in the refuse of the sugar factories and refineries. The molasses which comes from the manufacture of high-grade sugar usually contains so many impurities as not to be suitable for consumption. This alcohol can be had very cheap. About two and one-half gallons of it will make one gallon of industrial alcohol. At eight cents a gal lon the material would cost just about as much as the quantity of corn necessary to make a gallon. As the sugar industry increases in this country and the processes of making sugar become more efficient, the molasses will be worth a less price and probably will furnish in the future a large part of the industrial alcohol required. The refuse of certain factories, such as those which can sweet corn, may also be utilized. The sandy fields of the south Atlantic coast may be made to produce large crops of sweet-potatoes and yams suitable for the manufacture of industrial alcohol.
At present it is seen that industrial alcohol cannot be used for many purposes in competition with gasoline. There are, however, many pur poses for which industrial alcohol can be used, as in the manufacturing industries mentioned. The immediate future, therefore, will see a very large increase in the quantity of alcohol used in this country for certain manufacturing purposes, but will not see much of an increase of the use of alcohol for driving engines, automobiles and like purposes. One important use of denatured alcohol will be for illumination and for heating purposes in the household. For these purposes gasoline is altogether too dangerous and denatured alcohol will naturally take its place.
The law authorizing the denaturing of alcohol did not make any changes in the law relating to the manufacture 'of alcohol. It follows, therefore, that alcohol which is manufactured for industrial purposes must be made under exactly the same supervision of the Internal Revenue as attends the manufacture of alcoholic compounds for beverage purposes.
Literature.
Farmers' Bulletins No. 268, Industrial Alcohol: Sources and Manufacture, and No. 269, Industrial Alcohol: Uses and Statistics, United States Depart ment of Agriculture, Washington, D. C.