“A tavern is a place where madness is sold by the bottle” is a saying that has been credited to Anglo-Irish satirist Jonathan Swift (1667-1745) since at least 1904, but there’s no documentary evidence of it in Swift’s writings. “TAVERNS A moralist observes ‘that at taverns madness is sold by the bottle.’” was published in The Laughing Philosopher; Or, Fun, Humour and Wit:
Being a Collection of Choice Anecdotes, many of which, never before in print, originated in or about “The Literary Emporium” (1825). No author was mentioned.
 
The tavern saying was much-cited in the 19th century (with no credit to Swift) and in the 20th century (with Swift almost always credited).
   
 
Google Books
The Laughing Philosopher; Or, Fun, Humour and Wit:
Being a Collection of Choice Anecdotes,
many of which, never before in print, originated in or about “The Literary Emporium”
Boston, MA: Printed for the publisher
1825
Pg. 26:
TAVERNS
A moralist observes “that at taverns madness is sold by the bottle.”
     
30 June 1827, Literary Cadet and Rhode-Island Statesman (Providence, RI), pg. 4, col. 6:
A moralist observes, “that at taverns, madness is sold by the bottle.”
 
Google Books
The Galaxy of Wit: Or, Laughing Philosopher;
Being a collection of choice anecdotes, many of which originated in or about “The Literary Emporium”
Volume I
By David Claypoole Johnston
Boston, MA: Sterkotyped by J. Reed
1830
Pg. 91:
TAVERNS. A moralist observes “that at taverns, madness is sold by the bottle.”
 
Google Books
Toasts and Tributes:
A Happy Book of Good Cheer, Good Health, Good Speed Devoted to the Blessings and Comforts of Life South of the Stars
Edited by Arthur Gray
New York, NY: Rohde and Haskins
1904
Pg. 182:
TAVERN
Taverns are places where madness is sold by the bottle. —Swift
 
Google Books
The Taproom Lawyer, or, The plain man’s vade-mecum and guide to the drinking laws of England and Wales
Conpiled by Michael Underhill
London: Chatto and Windus
1959
Pg. 99:
Taverns are places where Madness is sold by the Bottle.
Dean Swift
   
Google Books
The Beer Devotional:
A Daily Celebration of the World’s Most Inspiring Beers
By Jess Lebow
Avon, MA: Adams Media
2010
Pg. 205: 
“A tavern is a place where madness is sold by the bottle.” —JONATHAN SWIFT, AUTHOR