Branntweinmonopolgesetz is the name of the German spirits monopoly law introduced in 1919. It ensured total state control over all spirits and by-products and also introduced some changes to civil law and the rights and duties of local authorities.
Until this law was passed, all spirits were produced by private companies, which of course required a special (and rather expensive) licence; these companies then had to pay a very high spirits tax to the local authorities. Various irregularities in this process, as well as the large number of bootleggers, resulted in a large annual loss of tax, in addition to the high cost of an army of tax inspectors who were required to frequently inspect the various businesses.
It should be remembered that bootlegging was not considered a criminal offence (something for the police to deal with), but a tax offence, which fell under the jurisdiction of tax inspectors. Of course, a tax inspector was more expensive than a local policeman, but the latter usually knew his area much better. As a result of the new law, bootlegging was also made a criminal offence, which reduced the number of tax inspectors needed to ensure a regular flow of tax and increased the amount of money actually collected from the liquor tax.
These changes were so efficient that, a few years later, taxes on spirits were reduced, as the effort required to ensure the flow of taxes had been reduced to a minimum on the part of the state.
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