4. Increase in technical utilisation of alcohol. - After 1887, there was a constant increase in the consumption of alcohol for technical purposes. It was recognised that the most important field in which this consumption could be looked for was in its application to the production of heat, light, and power. Alcohol burners and cooking apparatus had been used for a long time. Its application for illumination and the generation of power were, however, new. But in order to accomplish anything of real importance, the price of alcohol had to be reduced to such a point that it could compete with petroleum.

5. Distillation tax, 1895, and bonus on industrial alcohol. - Freedom from taxation did not suffice for the purpose desired. The distillation tax was accordingly brought into force in 1895. The revenues from this source were used for paying a refund or bonus on the alcohol used in Germany for other than beverage purposes. In other words, the money necessary to lower the price of industrial alcohol was raised within the distilling industry itself. The result was that from 1895 to 1896 the quantity of alcohol used industrially increased from less than 19 million to more than 21 million gallons.

6. Increase in potato culture - From 1897 the production of alcohol in Germany made enormous strides, and, as a result of progress in the cultivation of potatoes, harvests increased to an extraordinary degree. The increased production of alcohol was due not only to the larger yields, but also to the cultivation of potatoes richer in starch and to improvements in technology.

In several years after 1887, the financial success of the distilleries was not great. The price fell by about 5d. per gallon, while the Kontingent did not afford a sufficient substitute for the reduction in price. Moreover, the prices of alcohol were regulated by the Berlin Chamber of Commerce in such a way that they were relatively low during months in which the alcohol was in the hands of the distiller, but they were raised as soon as the producers had disposed of the spirit. The result was that the dealers and not the manufacturers enjoyed the greatest part of the profits.

7. Co-operation in marketing. - It was soon recognised that relief would come only from the co-operative disposal of the alcohol produced. Various attempts in this direction were made, and a number of provincial sale associations were organised. It was, however, only with the third attempt that these efforts were crowned with success.

8. Organisation of the Central Association. - In 1899 the "Society of German Distillers for the Disposal of Alcohol" was established. This included practically all the distilleries. This organisation made a contract for nine years, since renewed for a further period of nine years, with the "Central Organisation for the Disposal of, Alcohol," which was also a new organisation including nearly all the rectifiers of alcohol. The Distillers' Society agreed to turn over to the Central Association all their alcohol, and the Central Association undertook to dispose of the alcohol on the best terms possible for a certain compensation primarily for the rectification of the spirit. The essential feature of this arrangement was that the distillers were no longer at the disadvantage of low prices at the time they wanted to dispose of their product.

The Central Association from the outset regarded the increase in demand as its prime object, and for this purpose the Technical Section of the Central Association was created. The main objects of this section were as follow, viz.: -

(a) To test and develop apparatus for heat, light, and power.

(6) To establish stores for the sale of such apparatus.

(c) To start a literary campaign for the application of alcohol to household needs.

(d) To send exhibits to various centres.

(e) To organise a retail trade in denatured alcohol of the required strength and at a stable price.

9. Success of the Central Association. - In 1899, the consumption of industrial alcohol was 23 1/2 million gallons, and by 1906 it had increased to 39 million gallons. The increase would have been greater had it not been for the fact that in 1901-2 the development of industrial alcohol had to overcome the serious obstacle of the removal of the distillation tax of 1895. In spite of the increased use of industrial alcohol, it became difficult to establish an equilibrium between production and consumption because of the enormous increase in the production of potatoes. The surplus of alcohol was increasing from year to year.

10. Voluntary regulation of production. - In 1902, the surplus exceeded 26 million gallons, with the result that some means had to be found for the regulation of production. A successful appeal was made to the agricultural distillers, about 90 per cent, of whom agreed voluntarily to reduce their output by about 18 per cent. The result was that the surplus carried over in the following year fell to about 8 million gallons. The regulation of output henceforth became a standard feature of the distilling industry.

11. The potato the principal source of alcohol. - Of 64,860,000 acres of arable land in Germany, 8,150,000, or 12.5 per cent., were planted with potatoes in 1901, while only 3,090,000 acres, or 4.75 per cent., were devoted to cereals. The yield of potatoes in bushels of 60 lb. per acre rose from 1575 in 1896 to 205 in 1907. Potato-growing forms one of the best supports for rational methods of agriculture, especially where circumstances are unfavourable - as in a large part of Germany - to the cultivation of the sugar-beet. In fact, thousands of agricultural undertakings in Germany owe their existence to the distilleries.

In 1908 about 6,400 agricultural potato distilleries were in operation in Germany, the production of spirits from other sources in that country being insignificant.