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the police court proceedings had a good effect in drawing the attention of the public to the mal-practices of many of the Chinese spirit shops.
As the result of this case the demand for shellac as a denaturant has practically ceased, after the seizure no further application to denature with shellac was received. It is certain that less than two per cent. of the spirits of wine so denatured was ever used for the declared purpose of making varnish. The loss to the revenue in 1923 was as much as $150,000 by this fraud alone; this loss was gradually reduced as more attention was attracted to the firms concerned. It seems probable that the fraud had been going on for very many years, perhaps from the very beginning of liquor taxation in 1909. In each case a varnish shop was established, which actually did a considerable trade in varnish, and actually made varnish on the premises, but very little of the spirits drawn from bond for making into varnish was actually so used. After suspicion had attached to these varnish shops officers of the department were ordered to visit them, they saw the process of varnish manufacture being carried on, but did not ascertain the nature of the liquid raw materials being used. On their reports the suspicions aroused were to a certain extent allayed, but the inspection caused certain of the shops to cease drawing spirits of wine.
Altering samples.
Two attempts were discovered to import from Macau strong spirit composed of spirits of wine diluted to some extent, and to pass the liquor at the lowest rate of duty, arrangements having been made with the aid of an employee of this department to water down the samples taken for the purpose of ascertaining the correct alcoholic strength, so as to make the liquor appear to be of the actual strength declared. A conviction was obtained in one case for the fraud on the revenue, though the accomplice inside this office could not be identified; in the other case the accomplice in this office was identified and dismissed, there being not sufficient evidence to charge him with receiving a bribe.
Adulteration.
Steps were taken during the year to prevent the importation of adulterated spirit. Distilleries outside the Colony had been habitually sending spirit to Hong Kong, which was mostly composed of diluted commercial spirits of wine. Spirit imported recently has been of a greatly superior quality. In the past a large amount of the spirit sold as "Chinese" has been merely diluted raw commercial alcohol, this has been sold at much the same price as the genuine product of the Chinese type of still to the great profit of the seller, for at the cost of about 70 cents per gallon including labour a liquor could be made to sell at about $2.20 plus duty. As usual the victims of the fraud have been